SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____to_____
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-1443 Central and South West Corporation 51-0007707
(A Delaware Corporation)
1616 Woodall Rodgers Freeway
Dallas, Texas 75202-1234
(214) 777-1000
0-346 Central Power and Light Company 74-0550600
(A Texas Corporation)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(512) 881-5300
0-343 Public Service Company of Oklahoma 73-0410895
(An Oklahoma Corporation)
212 East 6th Street
Tulsa, Oklahoma 74119-1212
(918) 599-2000
1-3146 Southwestern Electric Power Company 72-0323455
(A Delaware Corporation)
428 Travis Street
Shreveport, Louisiana 71156-0001
(318) 222-2141
0-340 West Texas Utilities Company 75-0646790
(A Texas Corporation)
301 Cypress Street
Abilene, Texas 79601-5820
(915) 674-7000
Indicate by check mark whether the registrants (1) have
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrants were
required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
Common Stock Outstanding at April 30, 1995 Shares
Central and South West Corporation 191,225,584
Central Power and Light Company 6,755,535
Public Service Company of Oklahoma 9,013,000
Southwestern Electric Power Company 7,536,640
West Texas Utilities Company 5,488,560
This combined Form 10-Q is separately filed by Central
and South West Corporation, Central Power and Light Company,
Public Service Company of Oklahoma, Southwestern Electric
Power Company and West Texas Utilities Company. Information
contained herein relating to any individual registrant is
filed by such registrant on its own behalf. Each other
registrant makes no representation as to information relating
to the other registrants.
<PAGE> 2
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY
COMPANIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
MARCH 31, 1995
Page
Number
GLOSSARY OF TERMS 3
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements. (Unaudited) 4
Central and South West Corporation and Subsidiary Companies 5
Consolidated Statements of Income 6
Consolidated Balance Sheets 7
Consolidated Statements of Cash Flows 9
Results of Operations 10
Central Power and Light Company 12
Statements of Income 13
Balance Sheets 14
Statements of Cash Flows 16
Results of Operations 17
Public Service Company of Oklahoma 19
Consolidated Statements of Income 20
Consolidated Balance Sheets 21
Consolidated Statements of Cash Flows 23
Results of Operations 24
Southwestern Electric Power Company 25
Statements of Income 26
Balance Sheets 27
Statements of Cash Flows 29
Results of Operations 30
West Texas Utilities Company 31
Statements of Income 32
Balance Sheets 33
Statements of Cash Flows 35
Results of Operations 36
Notes to Financial Statements 37
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 45
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 47
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Security-Holders. 50
Item 5. Other Information. 53
Item 6. Exhibits and Reports on Form 8-K. 58
Signatures. 59
<PAGE> 3
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this text are
defined below:
Abbreviation or Acronym Definition
Agreement in Principle....... Agreement in Principle to settle certain CPL
regulatory matters
ALJ.......................... Administrative Law Judge
ANI.......................... American Nuclear Insurance
APS.......................... Arizona Public Service Company
Bankruptcy Court............. United States Bankruptcy Court for the Western
District of Texas, Austin Division, before
which the El Paso bankruptcy reorganization
proceeding, Case No. 92-10148-FM, is pending
Burlington Northern.......... Burlington Northern Railroad Company
Cimmaron..................... Cimmaron Chemical Company
Cities....................... Several cities in CPL's service territory
Court of Appeals............. Court of Appeals, Third District of Texas,
Austin, Texas
CPL.......................... Central Power and Light Company, Corpus Christi,
Texas
CSW.......................... Central and South West Corporation, Dallas, Texas
CSW Common................... Central and South West Corporation common stock,
$3.50 par value per share
CSWE......................... CSW Energy, Inc., Dallas, Texas
CSW System................... Central and South West Corporation and
subsidiaries
CWIP......................... Construction work in progress
Effective Date............... The effective date of the Modified Plan
Electric Operating Companies. CPL, PSO, SWEPCO and WTU
El Paso...................... El Paso Electric Company
FPA.......................... Federal Power Act
FERC......................... Federal Energy Regulatory Commission
Holding Company Act.......... Public Utility Holding Company Act of 1935, as
amended
HSR Act...................... Hart-Scott-Rodino Antitrust Improvements Act of
1976
Kwh.......................... Kilowatt-hour
Las Cruces................... City of Las Cruces, New Mexico
MCPC......................... Mid-Continent Power Company
MDEQ......................... Mississippi Department of Environmental Quality
Merger....................... The proposed merger whereby El Paso would become
a wholly owned subsidiary of CSW
Merger Agreement............. Agreement and Plan of Merger between El Paso and
CSW, dated as of May 8, 1993, as amended
MGP.......................... Manufactured gas plant or coal gasification plant
Mmbtu........................ Million Btu
Modified Plan................ Modified Third Amended Plan of Reorganization
Mw........................... Megawatt
Mwh.......................... Megawatt- hour
NEIL......................... Nuclear Electric Insurance Limited
New Mexico Commission........ New Mexico Public Utility Commission
NRC.......................... Nuclear Regulatory Commission
Oklahoma Commission.......... Corporation Commission of the State of Oklahoma
Oklaunion.................... Oklaunion Power Station Unit No. 1
Palo Verde................... Palo Verde Nuclear Generating Station
PRP.......................... Potentially Responsible Party
PSO.......................... Public Service Company of Oklahoma, Tulsa,
Oklahoma
RCRA......................... Federal Resource and Conservation Recovery Act of
1976
RFP.......................... Rate Filing Package
SEC.......................... Securities and Exchange Commission
SPS.......................... Southwestern Public Service Company
STP.......................... South Texas Project nuclear electric generating
station
SWEPCO....................... Southwestern Electric Power Company, Shreveport,
Louisiana
Termination Date............. Merger Agreement termination June 8, 1995
Texas Commission............. Public Utility Commission of Texas
TNRCC........................ Texas Natural Resource Conservation Commission
Transok...................... Transok, Inc. and subsidiaries, Tulsa, Oklahoma
Westinghouse................. Westinghouse Electric Corporation
WTU.......................... West Texas Utilities Company, Abilene, Texas
<PAGE> 4
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
(unaudited)
<PAGE> 5
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
<PAGE> 6
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Millions,
except per share amounts)
REVENUES
Electric operating revenues $ 514 $ 673
Gas 136 172
Other diversified 9 5
659 850
OPERATING EXPENSES AND TAXES
Fuel and purchased power 235 290
Gas purchased for resale 72 110
Gas extraction and marketing 28 22
Other operating 109 143
Maintenance 37 41
Depreciation and amortization 94 87
Taxes, other than federal income 37 49
Federal income taxes (43) 15
569 757
OPERATING INCOME 90 93
OTHER INCOME AND DEDUCTIONS
Mirror CWIP liability amortization 10 17
Other 25 6
35 23
INCOME BEFORE INTEREST CHARGES 125 116
INTEREST CHARGES
Interest on long-term debt 56 53
Interest on short-term debt and other 25 15
81 68
NET INCOME 44 48
Preferred stock dividends 5 5
NET INCOME FOR COMMON STOCK $ 39 $ 43
AVERAGE COMMON SHARES OUTSTANDING 190.8 188.5
EARNINGS PER SHARE OF COMMON STOCK $ 0.20 $ 0.23
DIVIDENDS PAID PER SHARE OF COMMON STOCK $ 0.430 $ 0.425
The accompanying notes to consolidated financial statements as they relate
to CSW are an integral part of these statements.
<PAGE> 7
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Millions)
ASSETS
PLANT
Electric utility
Production $ 5,809 $ 5,802
Transmission 1,393 1,377
Distribution 2,573 2,539
General 773 764
Construction work in progress 422 412
Nuclear fuel 161 161
Total electric 11,131 11,055
Gas 809 798
Other diversified 31 15
11,971 11,868
Less - Accumulated depreciation 3,961 3,870
8,010 7,998
CURRENT ASSETS
Cash and temporary cash investments 34 27
Accounts receivable 661 837
Materials and supplies, at average cost 163 162
Electric fuel inventory, substantially at
average cost 132 118
Gas inventory/products for resale 17 23
Under-recovered fuel costs -- 54
Accumulated deferred income taxes 34 2
Prepayments and other 35 42
1,076 1,265
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 515 516
Mirror CWIP asset 319 322
Other non-utility investments 314 394
Income tax related regulatory assets, net 276 216
Other 306 274
1,730 1,722
$ 10,816 $ 10,985
The accompanying notes to consolidated financial statements as they relate
to CSW are an integral part of these statements.
<PAGE> 8
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Millions)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock: $3.50 par value
Authorized: 350,000,000 shares
Issued and outstanding: 191.2 million shares
in 1995 and 190.6 million shares in 1994 $ 669 $ 667
Paid-in capital 573 561
Retained earnings 1,781 1,824
Total Common Stock Equity 3,023 3,052
Preferred stock
Not subject to mandatory redemption 292 292
Subject to mandatory redemption 35 35
Long-term debt 2,956 2,940
TOTAL CAPITALIZATION 6,306 6,319
CURRENT LIABILITIES
Long-term debt and preferred stock due within
twelve months 33 7
Short-term debt 897 910
Short-term debt - CSW Credit, Inc. 527 573
Accounts payable 216 286
Accrued taxes 62 111
Accrued interest 42 61
Refund due customers 52 --
Over-recovered fuel costs 57 21
Other 115 138
2,001 2,107
DEFERRED CREDITS
Income taxes 2,102 2,048
Investment tax credits 317 320
Mirror CWIP liability and other 90 191
2,509 2,559
$ 10,816 $ 10,985
The accompanying notes to consolidated financial statements as they relate
to CSW are an integral part of these statements.
<PAGE> 9
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Millions)
OPERATING ACTIVITIES
Net Income $ 44 $ 48
Non-cash Items Included in Net Income
Depreciation and amortization 105 94
Deferred income taxes and investment tax
credits (43) 20
Mirror CWIP liability amortization (10) (17)
Restructuring charges (23) --
Changes in Assets and Liabilities
Accounts receivable 23 29
Over and under- recoveries of fuel 90 (9)
Accounts payable (62) (39)
Accrued taxes (49) (35)
Refund due customers 52 --
Other (34) 16
93 107
INVESTING ACTIVITIES
Capital expenditures and acquisitions (100) (121)
Non-affiliated accounts receivable collections 52 49
CSWE projects 61 68
Other (7) (9)
6 (13)
FINANCING ACTIVITIES
Common stock sold 15 9
Proceeds from issuance of long-term debt 40 40
Retirement of long-term debt (1) (1)
Reacquisition of long-term debt -- (14)
Redemption of preferred stock -- (4)
Change in short-term debt (59) (30)
Payment of dividends (87) (85)
(92) (85)
NET CHANGE IN CASH AND CASH EQUIVALENTS 7 9
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 27 62
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 34 $ 71
SUPPLEMENTARY INFORMATION
Interest paid less amounts capitalized $ 89 $ 72
Income taxes paid $ 2 $ 6
The accompanying notes to consolidated financial statements as they relate
to CSW are an integral part of these statements.
<PAGE> 10
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Set forth below is information concerning the consolidated
results of operations for CSW for the three month period ending March
31, 1995. For information concerning the results of operations for
each of the Electric Operating Companies, see the discussions below
under the heading RESULTS OF OPERATIONS following the financial
statements of each of the Electric Operating Companies.
RESULTS OF OPERATIONS
COMPARISON OF THE QUARTERS ENDED MARCH 31, 1995 AND 1994
Net Income for Common Stock. Net income for common stock
decreased 9% to $39 million during the first quarter of 1995 from $43
million during the first quarter of 1994. Earnings per share
decreased to $0.20 from $0.23. The decrease reflects the impact of
the Agreement in Principle to settle CPL regulatory matters, increased
depreciation and amortization, increased interest costs and lower
earnings from mirror CWIP amortization. Partially offsetting these
factors were reduced operations and maintenance costs and lower ad
valorem taxes. See NOTE 2. Litigation and Regulatory Proceedings
for information related to the Agreement in Principle.
Operating Revenues. Operating revenues decreased 23% to $659
million from $850 million. This decrease reflects $50 million of
reserves for refunds and a $62.3 million write-off of fuel under-
recovery recorded in the first quarter of 1995, as a result of the
Agreement in Principle. In addition fuel revenues were lower in the
first quarter of 1995 as compared to the first quarter of 1994, as
described below. Total retail Kwh sales increased 2.6% in the first
quarter of 1995 as compared to the first quarter of 1994. Commercial
sales were up 2.2% and industrial sales were up 5%, while residential
sales decreased by less than 1%. Gas revenues decreased 21% to $136
million or during the first quarter of 1995 from $172 million in the
fourth quarter of 1994. This decrease was due to lower gas prices and
lower gas volumes.
Fuel and Purchased Power. Total fuel and purchased power expense
decreased 19% to $235 million from $290 million. Total fuel expense
decreased $50 million due to lower fuel cost. The total composite
unit cost of fuel decreased 24% to $1.60 Mmbtu from $2.11 Mmbtu,
reflecting lower gas, coal and lignite prices and increased use of
less costly nuclear fuel. Purchased power decreased $5 million or 33%
in the first quarter of 1995 as compared to the first quarter of 1994
due to increased generation from STP which replaced power that had
been purchased during the first quarter of 1994 when STP was out of
service.
Gas Purchased for Resale. Gas purchased for resale decreased 35%
to $72 million from $110 million. This decrease was due to a lower
average cost of gas.
Other Operating. Other operating expense decreased 24% to $109
million from $143 million. This decrease was primarily due to the
recognition of a $23.3 million regulatory asset for previously
recorded restructuring charges. Also contributing to the decrease is
the reversal of $4.3 million in rate case costs pursuant to the
Agreement in Principle and a reduction in employee related costs.
Maintenance. Maintenance decreased 10% to $37 million from $41
million. This decrease was due to lower levels of maintenance
activity at all the Electric Operating Companies, including lower
levels of maintenance associated with STP. Maintenance expenditures
at STP were lower in 1995 than the comparable period in 1994, but are
<PAGE> 11
expected to remain at higher levels than before the 1993-1994 STP
outage.
Depreciation and Amortization. Depreciation and amortization
increased 7% from $87 million to $94 million due to increases in all
classes of depreciable plant.
Taxes, Other than Federal Income. Taxes other than Federal
income decreased 24% to $37 million from $49 million. This decrease
was due primarily to lower ad valorem tax expense as a result of a
true up to prior years estimates.
Federal Income Taxes. Federal income taxes decreased $58 million
during the first quarter of 1995 when compared to the first quarter of
1994. This decrease includes a reduction of deferred federal income
taxes of $34 million, resulting from the Agreement in Principle as
well as lower pre-tax income.
Mirror CWIP Liability Amortization. Mirror CWIP liability
amortization decreased 41% to $10 million from $17 million. The
decrease reflects the original liability amortization schedule agreed
upon in the settlement of CPL rate cases in 1990 and 1991.
Other. Other income increased $18 million. This increase was
due primarily to recognition of $8.1 million of previously deferred
factoring income pursuant to the Agreement in Principle. Other income
also increased $3.2 million as a result of the $2.7 million net gain
on the sale by PSO of a non-utility fiber-optic telecommunication
property.
Interest on Short-Term Debt and Other. Interest on short-term
debt and other increased $12 million during the first quarter of 1995
as compared to the first quarter of 1994. This increase reflects
higher levels of short-term borrowing and higher short-term interest
rates.
<PAGE> 12
CENTRAL POWER AND LIGHT COMPANY
<PAGE> 13
CENTRAL POWER AND LIGHT COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
ELECTRIC OPERATING REVENUES $127,282 $263,229
OPERATING EXPENSES AND TAXES
Fuel 60,064 78,024
Purchased power 3,071 15,799
Other operating 23,534 54,774
Maintenance 17,205 18,559
Depreciation and amortization 37,000 34,301
Taxes, other than Federal income 9,475 19,919
Federal income taxes (53,623) 4,910
96,726 226,286
OPERATING INCOME 30,556 36,943
OTHER INCOME AND DEDUCTIONS
Mirror CWIP liability amortization 10,250 17,000
Other 8,096 1,038
18,346 18,038
INCOME BEFORE INTEREST CHARGES 48,902 54,981
INTEREST CHARGES
Interest on long-term debt 28,560 26,679
Interest on short-term debt
and other 5,299 3,969
Allowance for borrowed funds used
during construction (1,319) (653)
32,540 29,995
NET INCOME 16,362 24,986
Preferred stock dividends 3,896 3,458
NET INCOME FOR COMMON STOCK $ 12,466 $ 21,528
The accompanying notes to financial statements as they relate
to CPL are an integral part of these statements.
<PAGE> 14
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
ASSETS
ELECTRIC UTILITY PLANT
Production $3,076,059 $3,070,005
Transmission 456,941 451,050
Distribution 842,008 828,350
General 219,567 216,888
Construction work in progress 144,154 142,724
Nuclear fuel 161,114 161,152
4,899,843 4,870,169
Less - Accumulated depreciation
and amortization 1,437,831 1,400,343
3,462,012 3,469,826
CURRENT ASSETS
Cash 1,325 642
Special deposits 668 668
Accounts receivable 44,684 29,865
Materials and supplies, at average cost 65,922 66,209
Fuel inventory, at average cost 24,541 22,916
Accumulated deferred income taxes 12,650 --
Under-recovered fuel costs -- 54,126
Prepayments and other 1,754 2,316
151,544 176,742
DEFERRED CHARGES AND OTHER ASSETS
Deferred STP costs 488,775 488,987
Mirror CWIP asset 319,320 321,825
Income tax related regulatory assets, net 346,298 288,444
Other 104,148 76,875
1,258,541 1,176,131
$4,872,097 $4,822,699
The accompanying notes to financial statements as they relate
to CPL are an integral part of these statements.
<PAGE> 14
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value, authorized
12,000,000 shares; issued and
outstanding 6,755,535 shares $ 168,888 $ 168,888
Paid-in capital 405,000 405,000
Retained earnings 834,933 857,466
Total Common Stock Equity 1,408,821 1,431,354
Preferred stock 250,351 250,351
Long-term debt 1,468,001 1,466,393
TOTAL CAPITALIZATION 3,127,173 3,148,098
CURRENT LIABILITIES
Long-term debt due within twelve months 723 723
Advances from affiliates 214,663 161,320
Accounts payable 43,410 75,051
Accrued taxes 20,647 59,386
Accumulated deferred income taxes -- 13,812
Accrued interest 26,271 24,681
Over-recovered fuel costs 22,277 --
Refund due customers 52,250 --
Other 25,169 31,476
405,410 366,449
DEFERRED CREDITS
Accumulated deferred income taxes 1,126,418 1,087,317
Investment tax credits 157,085 158,533
Mirror CWIP liability and other 56,011 62,302
1,339,514 1,308,152
$4,872,097 $4,822,699
The accompanying notes to financial statements as they relate
to CPL are an integral part of these statements.
<PAGE> 16
CENTRAL POWER AND LIGHT COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
OPERATING ACTIVITIES
Net Income $16,362 $24,986
Non-cash Items Included in Net Income
Depreciation and amortization 43,984 37,414
Deferred income taxes and
investment tax credits (46,663) 10,671
Mirror CWIP liability amortization (10,250) (17,000)
Restructuring charges (23,330) --
Changes in Assets and Liabilities
Accounts receivable (14,819) 5,889
Fuel inventory (1,625) (4,108)
Accounts payable (31,641) (1,231)
Accrued taxes (38,739) (31,157)
Over- and under-recovered fuel costs 76,403 (10,556)
Refund due customers 52,250 --
Other (3,994) (4,444)
17,938 10,464
INVESTING ACTIVITIES
Construction expenditures (31,437) (36,472)
Allowance for borrowed funds
used during construction (1,319) (653)
(32,756) (37,125)
FINANCING ACTIVITIES
Retirement of preferred stock -- (3,581)
Change in advances from affiliates 53,342 53,733
Payment of dividends (37,841) (23,326)
15,501 26,826
NET CHANGE IN CASH AND CASH EQUIVALENTS 683 165
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 642 2,435
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,325 $ 2,600
SUPPLEMENTARY INFORMATION
Interest paid less amounts capitalized $29,056 $31,168
Income taxes paid/(refunded) $ -- $ --
The accompanying notes to financial statements as they relate
to CPL are an integral part of these statements.
<PAGE> 17
CENTRAL POWER AND LIGHT COMPANY
RESULTS OF OPERATIONS
COMPARISON OF THE QUARTERS ENDED MARCH 31, 1995 AND 1994
Net Income for Common Stock. Net income for common stock
decreased 42% to $12.5 million during the first quarter of 1995 from
$21.5 million in the first quarter of 1994. The decrease was due
primarily to the Agreement in Principle associated with several
pending regulatory proceedings. See NOTE 2. Litigation and
Regulatory Proceedings for information related to the Agreement in
Principle.
Electric Operating Revenues. Total revenues decreased $135.9
million, or 52%, in the first quarter of 1995 as compared to the first
quarter of 1994 due primarily to a $50.0 million reserve for refund
and a $62.3 million write-off of under-recovered fuel costs as a
result of the Agreement in Principle. Under the Agreement in Principle,
CPL will provide customers a one-time base rate refund of $50.0 million.
In addition, CPL will not charge customers for $62.3 million in
replacement power costs associated with the 1993-1994 STP outage.
Also contributing to the decrease in revenue was a $31.0 million
decrease in fuel revenue resulting from lower average unit fuel costs
and purchased power as discussed below. Partially offsetting the
decrease in fuel revenue was a $4.5 million increase in base revenue
which reflected a 5% increase in retail Kwh sales and a 39% increase
in lower margin sales for resale. The increase in retail sales is due
primarily to warmer weather as well as customer growth. The increase
in sales for resale is attributable to the increased availability of
lower cost generating capacity and warmer weather.
Fuel. Fuel expense decreased $18.0 million, or 23%, during the
first quarter of 1995 as compared to the first quarter of 1994. The
decrease in fuel expense was due primarily to a decrease in the
average unit cost of fuel from $2.23 per Mmbtu in the first quarter of
1994 to $1.37 per Mmbtu in the first quarter of 1995 resulting from a
decrease in the cost of gas and increased usage of lower unit cost
nuclear fuel. The decrease in the cost of fuel was partially offset by
a 26% increase in generation attributable to the restart of STP Unit 1
and Unit 2 in February and May 1994, respectively.
Purchased Power. Purchased power decreased $12.7 million during
the first quarter of 1995 as compared to the first quarter of 1994 due
to increased generation at STP which replaced power that had been
purchased during the first quarter of 1994 when STP was out of
service.
Other Operating. Other operating expense decreased $31.2 million
or 57% during the first quarter of 1995 as compared to the first
quarter of 1994. This decrease was primarily due to the recognition
of a $23.3 million regulatory asset for previously recorded
restructuring charges. Also contributing to the decrease is the
reversal of $4.3 million in rate case costs pursuant to the Agreement
in Principle and a reduction in employee related costs.
Maintenance. Maintenance expense decreased $1.4 million, or 7%,
during the first quarter of 1995 as compared to the first quarter of
1994, due primarily to decreases in transmission, distribution and
nuclear maintenance expenses partially offset by higher steam
maintenance expenses.
Depreciation and Amortization. Depreciation and amortization
increased $2.7 million, or 8%, during the first quarter of 1995 as
compared to the first quarter of 1994 as a result of higher
depreciable plant assets and the amortization of restructuring charges
associated with the Agreement in Principle.
<PAGE> 18
Taxes, Other than Federal Income. The $10.4 million decrease in
other taxes during the first quarter of 1995 as compared to the first
quarter of 1994 was due primarily to lower ad valorem tax expenses
resulting from true up of prior year estimates.
Federal Income Taxes. Federal income taxes decreased $58.5
million in the first quarter of 1995 as compared to the first quarter
of 1994 due primarily to the accelerated flowback of $34.3 million of
unprotected excess deferred income taxes in accordance with the
Agreement in Principle, as well as lower pre-tax income.
Other Income and Deductions. The Mirror CWIP liability
amortization decreased $6.8 million when compared to the first quarter
of 1994. CPL is amortizing its mirror CWIP liability in declining
amounts over the years 1991 through 1995. The increase in other
income was also due to the recognition during the first quarter of
$8.1 million of factoring income pursuant to the Agreement in
Principle.
Interest Charges. Long-term debt interest expense increased $1.9
million during the first quarter of 1995 as compared to the first
quarter of 1994 as a result of increased debt outstanding.
<PAGE> 19
PUBLIC SERVICE COMPANY OF OKLAHOMA
<PAGE> 20
PUBLIC SERVICE COMPANY OF OKLAHOMA
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
ELECTRIC OPERATING REVENUES $148,416 $157,509
OPERATING EXPENSES AND TAXES
Fuel 70,473 70,086
Purchased power 4,743 13,115
Other operating 29,868 30,626
Maintenance 6,313 8,046
Depreciation and amortization 16,485 15,403
Taxes, other than Federal income 6,732 6,624
Federal income taxes 954 1,182
135,568 145,082
OPERATING INCOME 12,848 12,427
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used
during construction 480 96
Other 2,688 (102)
3,168 (6)
INCOME BEFORE INTEREST CHARGES 16,016 12,421
INTEREST CHARGES
Interest on long-term debt 7,399 7,398
Interest on short-term debt
and other 1,766 989
Allowance for borrowed funds used
during construction (598) (273)
8,567 8,114
NET INCOME 7,449 4,307
Preferred stock dividends 204 204
NET INCOME FOR COMMON STOCK $ 7,245 $ 4,103
The accompanying notes to consolidated financial statements as they relate
to PSO are an integral part of these statements.
<PAGE> 21
PUBLIC SERVICE COMPANY OF OKLAHOMA
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
ASSETS
ELECTRIC UTILITY PLANT
Production $ 902,929 $ 902,602
Transmission 346,433 346,433
Distribution 668,346 668,346
General 149,564 150,898
Construction work in progress 113,268 96,133
2,180,540 2,164,412
Less - Accumulated depreciation 875,973 859,894
1,304,567 1,304,518
CURRENT ASSETS
Cash 10,567 5,453
Accounts receivable 22,659 21,531
Materials and supplies, at average cost 40,559 39,888
Fuel inventory, at LIFO cost 17,477 17,820
Accumulated deferred income taxes 10,695 6,670
Prepayments 2,265 7,889
104,222 99,251
DEFERRED CHARGES AND OTHER ASSETS 56,402 61,345
$1,465,191 $1,465,114
The accompanying notes to consolidated financial statements as they relate
to PSO are an integral part of these statements.
<PAGE> 22
PUBLIC SERVICE COMPANY OF OKLAHOMA
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $15 par value, authorized
11,000,000 shares; issued 10,482,000 shares
and outstanding 9,013,000 shares $ 157,230 $ 157,230
Paid-in capital 180,000 180,000
Retained earnings 131,514 124,269
Total Common Stock Equity 468,744 461,499
Preferred stock 19,826 19,826
Long-term debt 378,127 402,752
TOTAL CAPITALIZATION 866,697 884,077
CURRENT LIABILITIES
Long-term debt due within twelve months 25,000 --
Advances from affiliates 61,670 55,160
Payables to affiliates 19,711 27,876
Accounts payable 49,432 59,899
Payables to customers 33,345 22,655
Accrued taxes 13,632 17,356
Accrued interest 5,681 8,867
Other 15,190 15,157
223,661 206,970
DEFERRED CREDITS
Accumulated deferred income taxes 283,032 281,139
Investment tax credits 48,313 49,011
Income tax related regulatory liabilities,
net 17,904 18,611
Other 25,584 25,306
374,833 374,067
$1,465,191 $1,465,114
The accompanying notes to consolidated financial statements as they relate
to PSO are an integral part of these statements.
<PAGE> 23
PUBLIC SERVICE COMPANY OF OKLAHOMA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
OPERATING ACTIVITIES
Net Income $ 7,449 $ 4,307
Non-cash Items Included in Net Income
Depreciation and amortization 17,637 16,496
Deferred income taxes and
investment tax credits (3,537) (378)
Allowance for equity funds used
during construction (480) (96)
Changes in Assets and Liabilities
Accounts receivable (1,128) 2,744
Materials and supplies (328) 3,457
Prepayments 5,624 (510)
Accounts payable (557) (15,611)
Accrued taxes (3,724) (4,037)
Other 3,091 (2,147)
24,047 4,225
INVESTING ACTIVITIES
Construction expenditures (23,770) (30,501)
Allowance for borrowed funds used during
construction (598) (273)
Other (871) (862)
(25,239) (31,636)
FINANCING ACTIVITIES
Changes in advances from affiliates 6,510 30,792
Payment of dividends (204) (5,204)
6,306 25,588
NET CHANGE IN CASH AND CASH EQUIVALENTS 5,114 (1,823)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,453 2,429
CASH AND CASH EQUIVALENTS AT END OF PERIOD $10,567 $ 606
SUPPLEMENTARY INFORMATION
Interest paid less amounts capitalized $11,361 $ 7,694
Income taxes paid $ 2,372 $ --
The accompanying notes to consolidated financial statements as they relate
to PSO are an integral part of these statements.
<PAGE> 24
PUBLIC SERVICE COMPANY OF OKLAHOMA
RESULTS OF OPERATIONS
COMPARISON OF THE QUARTERS ENDED MARCH 31, 1995 AND 1994
Net Income for Common Stock. Net income for common stock
increased 77% to $7.2 million during the first quarter of 1995 from
$4.1 million in the first quarter of 1994. The increase resulted
primarily from the sale of a non-utility fiber optic telecommunication
property.
Electric Operating Revenues. Revenues decreased approximately 6%
to $148.4 million during the first quarter of 1995 from $157.5 million
during the first quarter of 1994 due primarily to decreased fuel
recovery. PSO recovers its monthly fuel and purchased power expenses
currently in its revenues, and therefore the net decrease in these
costs resulted in lower revenues. Also affecting revenues was an
increase in sales for resale to other electric utilities due to
increased market place demand.
Fuel. Fuel expense increased less than 1% during the first
quarter of 1995 as compared to the first quarter of 1994 as a result
of a 20% increase in Kwh generation and an over-recovery of fuel costs
from customers which was previously recorded as deferred fuel expense.
Kwh generation was affected by the decrease in power purchases as
discussed below. These increases were partially offset by a reduction
in unit fuel costs. The average unit fuel cost for the first quarter
of 1995 was $1.72 per Mmbtu, a decrease of approximately 18% from the
same period last year. The decrease in per unit fuel costs reflects
lower costs for natural gas and coal. See Part II - OTHER INFORMATION
- - Item 1. Legal Proceedings for additional information related to coal
transportation.
Purchased Power. Purchased power decreased 64% to $4.7 million
during the first quarter of 1995 from $13.1 million during the first
quarter of 1994 due primarily to decreased purchases of economy
energy.
Maintenance. Maintenance expense decreased $1.7 million, or 22%,
during the first quarter of 1995 as compared to the first quarter of
1994 due primarily to decreased overhead lines maintenance activities,
primarily tree trimming.
Depreciation and Amortization. The increase in depreciation and
amortization expense of $1.1 million, or 7% during the first quarter
of 1995 as compared to the first quarter of 1994 was due primarily to
an increase in depreciable property.
Other Income and Deductions. Other income and deductions
increased $3.2 million primarily as a result of the $2.7 million net gain
on the sale of a non-utility fiber optic telecommunication property.
Interest on Short-term Debt and Other. Short-term debt and other
increased $0.8 million primarily to higher levels of short-term debt
at higher short-term interest rates.
<PAGE> 25
SOUTHWESTERN ELECTRIC POWER COMPANY
<PAGE> 26
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
ELECTRIC OPERATING REVENUES $169,240 $190,066
OPERATING EXPENSES AND TAXES
Fuel 63,191 87,190
Purchased power 5,463 4,559
Other operating 28,592 28,002
Maintenance 9,345 8,976
Depreciation and amortization 20,284 19,762
Taxes, other than Federal income 10,865 12,900
Federal income taxes 4,913 3,857
142,653 165,246
OPERATING INCOME 26,587 24,820
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used during
construction 1,449 667
Other 410 1,050
1,859 1,717
INCOME BEFORE INTEREST CHARGES 28,446 26,537
INTEREST CHARGES
Interest on long-term debt 11,321 10,813
Interest on short-term debt and other 2,848 1,580
Allowance for borrowed funds used during
construction (1,248) (393)
12,921 12,000
NET INCOME 15,525 14,537
Preferred stock dividends 778 840
NET INCOME FOR COMMON STOCK $ 14,747 $ 13,697
The accompanying notes to financial statements as they relate
to SWEPCO are an integral part of these statements.
<PAGE> 27
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
ASSETS
ELECTRIC UTILITY PLANT
Production $1,402,342 $1,401,418
Transmission 395,605 385,113
Distribution 755,367 733,707
General 221,838 213,563
Construction work in progress 130,707 149,508
2,905,859 2,883,309
Less - Accumulated depreciation 1,048,269 1,026,751
1,857,590 1,856,558
CURRENT ASSETS
Cash 557 1,296
Accounts receivable 48,947 54,344
Materials and supplies, at average cost 27,883 28,109
Fuel inventory, at average cost 74,168 61,701
Accumulated deferred income taxes 7,331 6,592
Prepayments and other 13,682 13,071
172,568 165,113
DEFERRED CHARGES AND OTHER ASSETS 54,749 57,536
$2,084,907 $2,079,207
The accompanying notes to financial statements as they relate
to SWEPCO are an integral part of these statements.
<PAGE> 28
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $18 par value, authorized
7,600,000 shares; issued and
outstanding 7,536,640 shares $ 135,660 $ 135,660
Paid-in capital 245,000 245,000
Retained earnings 312,209 297,462
Total Common Stock Equity 692,869 678,122
Preferred stock
Not subject to mandatory redemption 16,032 16,032
Subject to mandatory redemption 34,828 34,828
Long-term debt 594,489 595,833
TOTAL CAPITALIZATION 1,338,218 1,324,815
CURRENT LIABILITIES
Long-term debt and preferred stock
due within twelve months 6,445 5,270
Advances from affiliates 90,366 81,868
Accounts payable 37,621 50,138
Fuel refund due customers 14,293 12,200
Customer deposits 12,414 13,075
Accrued taxes 17,045 12,495
Accrued interest 7,461 17,175
Other 18,551 30,615
204,196 222,836
DEFERRED CREDITS
Accumulated deferred income taxes 369,430 365,441
Investment tax credits 80,005 81,023
Income tax related regulatory liabilities,
net 43,010 44,836
Other 50,048 40,256
542,493 531,556
$2,084,907 $2,079,207
The accompanying notes to financial statements as they relate
to SWEPCO are an integral part of these statements.
<PAGE> 29
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
OPERATING ACTIVITIES
Net Income $15,525 $14,537
Non-cash Items Included in Net Income
Depreciation and amortization 22,851 22,116
Deferred income taxes and
investment tax credits 407 440
Allowance for equity funds used during
construction (1,449) (667)
Changes in Assets and Liabilities
Accounts receivable 5,397 (4,974)
Fuel inventory (12,467) 12,730
Accounts payable (12,517) (7,593)
Accrued taxes 4,550 4,370
Accrued interest (9,714) (5,008)
Over- and under-recovered fuel costs 2,093 1,170
Other 1,115 7,704
15,791 44,825
INVESTING ACTIVITIES
Construction expenditures (19,853) (28,597)
Allowance for borrowed funds used during
construction (1,248) (393)
Other (1,609) (1,286)
(22,710) (30,276)
FINANCING ACTIVITIES
Change in advances from affiliates 8,498 (3,771)
Retirement of long-term debt (1,499) (1,365)
Reacquisition of long-term debt -- (1,714)
Payment of dividends (819) (6,841)
6,180 (13,691)
NET CHANGE IN CASH AND CASH EQUIVALENTS (739) 858
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,296 6,723
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 557 $ 7,581
SUPPLEMENTARY INFORMATION
Interest paid less amounts capitalized $20,581 $16,434
Income taxes paid $ -- $ 373
The accompanying notes to financial statements as they relate
to SWEPCO are an integral part of these statements.
<PAGE> 30
SOUTHWESTERN ELECTRIC POWER COMPANY
RESULTS OF OPERATIONS
COMPARISON OF THE QUARTERS ENDED MARCH 31, 1995 AND 1994
Net Income for Common Stock. Net income for common stock
increased 8% to $14.7 million during the first quarter of 1995 from
$13.7 million during the first quarter of 1994.
Electric Operating Revenues. Electric operating revenues
decreased 11% to $169.2 million during the first quarter of 1995 from
$190.1 million during the first quarter of 1994. This decrease in
revenues was due primarily to a $16.3 million decrease in fuel revenue
resulting from lower average unit fuel cost and a decrease in
generation. Partially offsetting the decrease in fuel revenue was an
$8.5 million increase in base revenue, which reflected a 3% increase
in retail Kwh sales.
Fuel. Fuel expense decreased 28% to $63.2 million during the
first quarter of 1995 when compared to the first quarter of 1994, due
primarily to a 12% decrease in generation and a decrease in the
average unit fuel cost per Mmbtu from $1.90 in 1994 to $1.57 per Mmbtu
in 1995. The decrease in unit fuel costs was due primarily to lower
spot market natural gas prices.
Purchased Power. Purchased power expense increased approximately
$0.9 million or 20% in the first quarter of 1995 from $4.6 million
during the corresponding quarter in 1994 due primarily to increased
purchases of economy energy.
Taxes, Other than Federal Income. Taxes, other than Federal
income decreased 16% to $10.9 million during the first quarter of 1995
from $12.9 million during the first quarter of 1994 due primarily to
a decrease in ad valorem taxes.
Federal Income Taxes. Federal income taxes increased 27% to $4.9
million during the first quarter of 1995 from $3.9 million during the
first quarter of 1994 primarily as a result of higher pre-tax income.
Interest on Short-Term Debt and Other. Interest expense on short-
term debt and other increased approximately $1.3 million due primarily
to higher levels of short-term borrowings and higher short-term
interest rates.
<PAGE> 31
WEST TEXAS UTILITIES COMPANY
<PAGE> 32
WEST TEXAS UTILITIES COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
ELECTRIC OPERATING REVENUES $ 74,921 $ 83,319
OPERATING EXPENSES AND TAXES
Fuel 31,165 39,530
Purchased power 1,343 787
Other operating 14,064 15,963
Maintenance 2,949 3,939
Depreciation and amortization 8,064 7,805
Taxes, other than Federal income 5,826 5,499
Federal income taxes 1,614 1,309
65,025 74,832
OPERATING INCOME 9,896 8,487
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used
during construction (3) 3
Other 211 280
208 283
INCOME BEFORE INTEREST CHARGES 10,104 8,770
INTEREST CHARGES
Interest on long-term debt 4,840 4,383
Interest on short-term debt
and other 1,198 884
Allowance for borrowed funds used
during construction (167) (43)
5,871 5,224
NET INCOME 4,233 3,546
Preferred stock dividends 66 151
NET INCOME FOR COMMON STOCK $ 4,167 $ 3,395
The accompanying notes to financial statements as they relate
to WTU are an integral part of these statements.
<PAGE> 33
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
ASSETS
ELECTRIC UTILITY PLANT
Production $ 427,769 $ 427,736
Transmission 194,397 194,402
Distribution 307,388 308,905
General 72,986 73,938
Construction work in progress 32,485 23,257
1,035,025 1,028,238
Less - Accumulated depreciation 369,709 364,383
665,316 663,855
CURRENT ASSETS
Cash 3,827 2,501
Accounts receivable 26,554 23,165
Materials and supplies, at average cost 16,568 16,519
Fuel inventory, at average cost 9,174 9,229
Coal inventory, at LIFO cost 6,160 6,442
Accumulated deferred income taxes 3,605 3,068
Prepayments and other 1,759 1,091
67,647 62,015
DEFERRED CHARGES AND OTHER ASSETS
Deferred Oklaunion costs 26,708 26,914
Other 21,705 26,111
48,413 53,025
$ 781,376 $ 778,895
The accompanying notes to financial statements as they relate
to WTU are an integral part of these statements.
<PAGE> 34
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1995 1994
(Thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value, authorized
7,800,000 shares; issued and
outstanding 5,488,560 shares $ 137,214 $ 137,214
Paid-in capital 2,236 2,236
Retained earnings 136,671 132,504
Total Common Stock Equity 276,121 271,954
Preferred stock 6,291 6,291
Long-term debt 250,415 210,047
TOTAL CAPITALIZATION 532,827 488,292
CURRENT LIABILITIES
Long-term debt due within twelve months 650 650
Advances from affiliates 16,592 46,315
Accounts payable 20,603 35,407
Accrued taxes 3,248 7,452
Accrued interest 3,913 4,394
Other 4,554 4,329
49,560 98,547
DEFERRED CREDITS
Accumulated deferred income taxes 147,225 146,146
Income tax related regulatory liabilities,
net 9,245 9,217
Investment tax credits 31,552 31,882
Other 10,967 4,811
198,989 192,056
$ 781,376 $ 778,895
The accompanying notes to financial statements as they relate
to WTU are an integral part of these statements.
<PAGE> 35
WEST TEXAS UTILITIES COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1995 1994
(Thousands)
OPERATING ACTIVITIES
Net Income $ 4,233 $ 3,546
Non-cash Items Included in Net Income
Depreciation and amortization 8,411 8,183
Deferred income taxes and
investment tax credits 239 3,087
Changes in Assets and Liabilities
Accounts receivable (3,389) 3,479
Accounts payable (14,863) (28,416)
Accrued taxes (4,204) (7,452)
Under-recovered fuel costs 1,424 (4,871)
Other 9,326 (4,455)
1,177 (26,899)
NVESTING ACTIVITIES
Construction expenditures (9,311) (8,516)
Other (298) (433)
(9,609) (8,949)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 39,547 39,422
Reacquisition of long-term debt -- (12,125)
Change in advances from affiliates (29,723) 17,570
Payment of dividends (66) (5,151)
9,758 39,716
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,326 3,868
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,501 706
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,827 $ 4,574
SUPPLEMENTARY INFORMATION
Interest paid less amounts capitalized $ 5,955 $ 250
Income taxes paid $ 7,662 $ 5,827
The accompanying notes to financial statements as they relate
to WTU are an integral part of these statements.
<PAGE> 36
WEST TEXAS UTILITIES COMPANY
RESULTS OF OPERATIONS
COMPARISON OF THE QUARTERS ENDED MARCH 31, 1995 AND 1994.
Net Income for Common Stock. Net income for common stock
increased 23% to $4.2 million during the first quarter of 1995 from
$3.4 million in the first quarter of 1994. This increase was due
primarily to decreased other operating and maintenance expenses.
Electric Operating Revenues. Electric operating revenues
decreased $8.4 million, or 10%, in the first quarter of 1995 as
compared to the first quarter of 1994. This decrease was attributable
primarily to a $5.5 million decrease in fuel revenues and a $2.8
million decrease in lower margin off-system sales for resale. Also
contributing to the decrease was a 3% decrease in total Kwh sales and
an interim rate reduction of approximately $5.7 million on an annual
basis effective October 1, 1994.
Fuel. Fuel expense decreased $8.4 million, or 21%, for the first
quarter of 1995 as compared to the first quarter of 1994 due primarily
to a decrease in average unit fuel costs from $2.38 per Mmbtu in 1994
to $2.03 per Mmbtu in 1995. The decrease in unit fuel costs was due
primarily to lower spot market natural gas prices and a 4% decrease in
generation.
Purchased Power. Purchased power increased 71% to $1.3 million
during the first quarter of 1995 from $0.8 during the first
quarter of 1994, primarily as a result of additional economy energy
purchases made during the first quarter of 1995.
Other Operating. Other operating expenses decreased $1.9
million, or approximately 12%, in the first quarter of 1995 as
compared to the first quarter of 1994 due primarily to decreased
transmission expenses, decreased outside services, and lower employee
benefit costs.
Maintenance. Maintenance expenses decreased by $1 million, or
25%, during the first quarter of 1995 as compared to the first quarter
of 1994 due primarily to decreased electric plant expenses that
reflect plant overhauls in 1994 which have not occurred in 1995,
decreased transmission station equipment expenses which reflect the
accrual of warranty reimbursements, and decreased miscellaneous
distribution expenses.
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Principles of Preparation
CSW, CPL, PSO, SWEPCO and WTU
The condensed CSW, CPL, PSO, SWEPCO and WTU financial statements
included herein have been prepared by each registrant pursuant to the
rules and regulations of the SEC. Certain information and note
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
each registrant believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in each
registrant's Annual Report on Form 10-K for the year ended December
31, 1994.
The unaudited financial information furnished herewith reflects
all adjustments which are, in the opinion of management of such
registrant, necessary for a fair statement of the results of
operations for the interim periods. Information for quarterly periods
is affected by seasonal variations in sales, rate changes, timing of
fuel expense recovery and other factors.
2. Litigation and Regulatory Proceedings
CSW, CPL, PSO, SWEPCO and WTU
See each registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 for additional discussion of litigation and
regulatory proceedings. Reference is also made to Part II-OTHER
INFORMATION-Item 1. Legal Proceedings for additional discussion of
litigation matters.
CSW and CPL
Reference is made to CSW's and CPL's Annual Reports on Form 10-K
for the year ended December 31, 1994, for a discussion of regulatory
and other issues involving STP.
CPL Rate Cases
CSW and CPL
The Texas Commission General Counsel, several Cities in CPL's
service territory and others initiated actions in late 1993 and early
1994 requesting a review by the Texas Commission of CPL's base rates.
The requests for a review of CPL's rates arose out of the unscheduled
1993-1994 STP outage.
On April 5, 1995, CPL reached an Agreement in Principle with four
major parties to pending regulatory proceedings involving base rate,
fuel and prudence issues relating to STP. A final agreement is
expected in May 1995. The final agreement will then be presented to
the Texas Commission for approval. As discussed below, pursuant to the
Agreement in Principle, base rate and fuel refunds and the reduction
of CPL's fuel factors are to be implemented on an interim basis during
the summer of 1995. Hearings on the final agreement are expected
during the summer of 1995 and the final Texas Commission order is
expected in the fall of 1995.
Under the Agreement in Principle, CPL will provide customers a
one-time base rate refund of $50 million. In addition, CPL will
refund approximately $24 million as a result of an agreement that
customers will not be charged for $62.25 million in replacement power
costs and related interest primarily associated with the 1993-1994 STP
outage. There will be no ongoing change in base rate levels.
However, CPL will reduce its future fuel factors by approximately $55
million on an annual basis beginning no later than August 1995 due to
projections of lower fuel costs. CPL will continue to seek resolution
<PAGE> 38
of its remaining non-nuclear fuel costs through the current fuel
reconciliation proceeding, Docket No. 13650.
Details of the items in the Agreement in Principle which had
significant earnings impact during the first quarter of 1995,
including several accounting provisions, are set forth in the table
below:
Earnings Impact of Significant Provisions of
Agreement in Principle
Pre-tax After-tax
(millions)
Base Rate Refund $ (50) $ (33)
Fuel Write-off (62) (40)
Current Flowback of Excess
Deferred Federal Income Taxes 34 34
Capitalization of Previously
Expensed Restructuring and
Rate Case Costs 26 17
Recognition of Factoring Income 12 8
The Agreement in Principle additionally resolves (a) all STP
prudence issues through June 30, 1994, (b) potential claims of
excessive earnings for the five year period ending December 31, 1994
(a period in which CPL's rates were frozen), (c) certain issues with
respect to the treatment of mirror CWIP and (d) certain other pending
issues. The Agreement in Principle resolves two cases now pending at
the Texas Commission, the rate inquiry in Docket No. 12820 and the
prudence inquiry in Docket No. 13126. Other parties to the Agreement
in Principle besides CPL include the CPL Cities Steering Committee,
the Texas Commission General Counsel, the Texas Office of Public
Utility Counsel and the Texas Industrial Energy Consumers. The
Agreement in Principle may be subject to further hearings if any
party opposes the settlement conditions.
CPL has operated with its current rates in effect for more than
four years under a previous rate freeze agreement. That rate freeze
expired December 31, 1994. Under the Agreement in Principle, CPL has
agreed not to file before September 28, 1995 for a change in base
rates. CPL anticipates that it will file a new rate case with the
Texas Commission after September 28, 1995 seeking to recover a retail
revenue deficiency and to replace non-cash earnings from mirror CWIP
with cash earnings. CPL is amortizing its mirror CWIP liability in
declining amounts over the years 1991-1995. Non-cash earnings of $68
million were recognized in 1994, a decrease from the $75.7 million
recognized in 1993. The remaining liability to be amortized for 1995
is $41 million, which will fully amortize the mirror CWIP liability.
Civil Penalties
CSW and CPL
In May 1995, the NRC staff informed STP management that it
revoked a proposed $100,000 civil penalty and associated violations
filed against HLP in October 1994. As previously reported, the
proposed penalty was the result of what the NRC believed was
discrimination against a contractor employee at STP who brought
complaints of possible safety problems to the NRC's attention. These
actions resulted from the findings of an NRC investigation of alleged
violations of STP security and work procedures in 1992. The incident
cited by the NRC is the subject of a contested hearing that is
scheduled in the spring of 1995 before a United States Department of
Labor judge.
<PAGE> 39
Power Purchases and Sales
CSW and PSO
MCPC
Reference is made to CSW's and PSO's 1994 Annual Report on Form
10-K for background on agreements PSO entered into in 1989 with MCPC,
a cogeneration development company located in northeastern Oklahoma.
The agreements provided, among other matters, that PSO would deliver
natural gas to MCPC for conversion to electrical energy and that MCPC
would supply energy to PSO. Subsequent to 1989, a series of disputes
arose between PSO and MCPC relating to the delivery of electric energy
by MCPC to PSO and the charges for the energy. The disputes involved
both a lawsuit in the District Court of Tulsa County, Oklahoma and
proceedings before the Oklahoma Commission.
On March 31, 1995, PSO, MCPC and the Oklahoma Commission Staff
signed a joint settlement resolving all issues pursuant to the various
proceedings before the Oklahoma Commission and the District Court.
The settlement, among other things, eliminated a requirement that MCPC
deliver an annual minimum of 394,200 Mwh of Assured Delivery Energy
and related provisions associated with underdelivery charges. Most
other provisions of the agreement between PSO and MCPC were kept
intact. Approval of the settlement by the Oklahoma Commission through
an order is expected in late May 1995. The settlement is on terms
satisfactory to PSO and will not have a material adverse effect on
CSW's or PSO's consolidated results of operations or financial
condition.
Rate Proceeding - Docket No. 13369
CSW and WTU
On August 25, 1994, WTU filed a petition with the Texas
Commission and cities with original jurisdiction to review WTU's
rates, proposed an interim across-the-board base retail rate reduction
of 3.25%, or approximately $5.7 million, effective October 1, 1994,
and sought until February 28, 1995, to develop and file a RFP. WTU
also requested the ability to "true-up", back to October 1, 1994, any
difference in revenue requirements upon final order of the Texas
Commission and proposed that any increases over the pre-October 1,
1994, base rates be implemented prospectively on the effective date of
the final order. WTU's fuel reconciliation, Docket No. 13172, which
was filed with the Texas Commission on June 30, 1994, was consolidated
with this proceeding in September 1994.
On February 28, 1995, WTU filed with the Texas Commission and
cities with original jurisdiction an RFP which indicates a revenue
increase of approximately $14.5 million. However, WTU simultaneously
filed with the parties a settlement proposal to reduce overall base
rate revenue by 3.25%, effective October 1, 1994, which would have an
annual impact in the rate year beginning January 1, 1996 of
approximately $5.9 million. The settlement proposal reflects WTU's
desire to maintain competitive rates, recognizes the importance of
competitive rates in the changing electric service marketplace, and
demonstrates WTU's strong commitment to the long-term success of WTU
and its customers. Although settlement was not reached by the May 8
extended deadline, WTU continues to remain open to settlement
negotiations.
On May 9, 1995, WTU filed an errata to its rate filing package
requesting a revised revenue increase of $12.6 million.
Unless a settlement accelerates the process, hearings are
schedule to begin August 14, 1995 at the Texas Commission, with a
final order anticipated in the fourth quarter 1995. Management cannot
predict the outcome of the rate proceeding or the fuel reconciliation,
but believes that the ultimate resolution of these matters will not
<PAGE> 40
have a material adverse effect on CSW's or WTU's results of operations
or financial condition.
Rate Case Proceeding - Docket No. 7510
CSW and WTU
On February 15, 1995, the Court of Appeals affirmed all aspects
of the District Court judgment relating to the Texas Commission's
allowance of non-Oklaunion depreciation rates and the surcharge of
rate case expenses, reversed the District Court's judgment relating to
the exclusion of deferred Oklaunion carrying costs in rate base, and
remanded the case to the Texas Commission to reexamine the issue of
deferred costs in light of the remand of Docket No. 7289. WTU filed a
motion for rehearing at the Court of Appeals seeking clarification of
certain aspects of its order and arguing that the Court of Appeals
erred in remanding the case to the Texas Commission for it to
determine to what extent deferred costs are necessary to preserve
WTU's financial integrity because the issue was not briefed or argued
to the Court of Appeals and was, therefore, waived. Other parties to
the proceeding also filed motions for rehearing. All motions were
denied by the Court of Appeals on April 26, 1995.
Further appeals of this case would be by Application for Writ of
Error to the Supreme Court of Texas seeking discretionary review by
that Court. WTU intends to file an Application for Writ of Error with
the Supreme Court of Texas to advance its argument that waiver has
occurred. Other parties to the appeal may also seek review by the
Supreme Court of Texas. WTU's Application for Writ of Error may, if
granted, prevent further review of financial integrity issues with
respect to deferred accounting in any remand of Docket No. 7510. If a
broader remand is permitted and if the Texas Commission concludes in
Docket No. 7289 that deferred accounting was necessary to preserve
WTU's financial integrity during the deferral period, the Texas
Commission must decide to what extent the deferred Oklaunion costs,
including carrying costs, were necessary to preserve WTU's financial
integrity.
For additional information regarding WTU's regulatory matters see
CSW's and WTU's Annual Reports on Form 10-K for the year ended
December 31, 1994.
Deferred Accounting
CSW, CPL and WTU
CPL was granted deferred accounting for certain STP Unit 1 and 2
costs and WTU was granted deferred accounting for certain Oklaunion
costs by Texas Commission orders. Decisions on deferred accounting
have been rendered in legal proceedings involving third parties in
1994 and 1995 that interpret the need to apply deferred accounting to
maintain the financial integrity of a utility. These decisions may be
the subject of additional appeals. Pending the ultimate resolution of
deferred accounting issues by the courts and the Texas Commission, CPL
and WTU are unable to predict how their deferred accounting orders
will be ultimately resolved by the Texas Commission.
If CPL's deferred accounting matters are not favorably resolved,
CSW and CPL could experience a material adverse effect on their
results of operations and financial condition. While CPL's management
cannot predict the ultimate outcome of these matters, management
believes CPL will receive approval of its deferred accounting orders
or will be successful in renegotiation of its rate orders, so that
there will be no material adverse effect on CSW's or CPL's results of
operations or financial condition.
If WTU's deferred accounting treatment is ultimately reversed or
is substantially reduced, WTU could experience a material adverse
effect on its results of operations. While management cannot predict
the ultimate outcome of these matters, management believes that WTU's
deferred accounting will be sustained by the Texas Commission on the
basis of the financial integrity standard and therefore the ultimate
<PAGE> 41
resolution of the issue will not have a material adverse effect on
CSW's or WTU's results of operations or financial condition.
For additional information on CPL's and WTU's deferred accounting
proceedings, see CPL's and WTU's Annual Reports on Form 10-K for the
year ended December 31, 1994.
3. Dividends
CSW, CPL, PSO, SWEPCO and WTU
The subsidiary companies' mortgage indentures, as amended and
supplemented, contain certain restrictions on the use of their
retained earnings for cash dividends on their common stock. These
restrictions do not limit the ability of CSW to pay dividends to its
shareholders. At March 31, 1995, approximately $1.4 billion of the
subsidiary companies' retained earnings were available for payment of
cash dividends by CSW to its shareholders. At March 31, 1995, the
amount of retained earnings available for payment of cash dividends to
CSW by the Electric Operating Companies was as follows:
Retained
Earnings
Available for
Company Dividends
(millions)
CPL $608
PSO 132
SWEPCO 312
WTU 137
4. Earnings and Dividends Per Share of Common Stock
CSW
Earnings per share of common stock are computed by dividing net
income for common stock by the average number of common shares
outstanding for the respective periods. Dividends per common share
reflect per share amounts paid during the periods.
5. Commitments and Contingent Liabilities
Proposed El Paso Merger
CSW
For information regarding the commitments and contingent
liabilities relating to the proposed El Paso Merger, reference is made
to PART II - OTHER INFORMATION-Item 5. Other Information.
Environmental
CSW and SWEPCO
For information regarding environmental issues, reference is made
to PART II - OTHER INFORMATION-Item 5. Other Information.
<PAGE> 42
CSWE Projects
CSW
Mulberry
CSWE has provided construction services to the Mulberry
cogeneration facility through a wholly-owned subsidiary, CSW
Development-I, Inc. The project achieved commercial operation in
August 1994 and added 117 Mws of on-line capacity of which CSW
Development-I, Inc. owns 50%. CSWE's maximum potential liability
under the fixed price contract is $29 million and will decrease to
zero over the next two years as contractual standards are met.
Additionally, CSW Development-I, Inc. has entered into a fixed price
contract of $14 million to construct the Mulberry thermal host
facility. At March 31, 1995, the estimated contract costs to complete
the host facility were approximately $42 million. The host facility
is expected to be completed by the end of the second quarter of 1995.
Negotiations are ongoing to determine if the costs exceeding the
contract will be absorbed by CSW Development-I, Inc. or allocated
between the partners as a capital contribution. Management does not
believe that an unfavorable resolution of this issue will have a
material adverse impact on CSW's consolidated results of operations or
financial condition. CSW has provided additional guarantees to the
project totaling approximately $42 million.
Ft. Lupton
CSWE has entered into a purchase agreement on the Fort Lupton
project through a wholly-owned subsidiary, CSW Ft. Lupton Inc., to
provide $79.5 million of equity upon the occurrence of certain events.
As of March 31, 1995, $43 million of equity had been provided. CSWE
has provided three letters of credit to the project totaling $18.3
million. During March 1995, CSW Fort Lupton Inc. closed permanent
project financing on the Fort Lupton facility which allowed CSW Fort
Lupton Inc. to repay its $100 million construction borrowings to CSW.
Orange
CSWE has committed to provide up to $125 million of construction
financing to the Orange cogeneration project in which CSWE owns a 50%
interest through CSW Development-I, Inc. Of this total, CSW
Development-I, Inc. has provided $85 million at March 31, 1995. The
103 Mw facility is expected to commence commercial operation in June
1995. CSW Development-I, Inc. expects to obtain third party permanent
financing for this project by year end.
Other
CSWE has posted security deposits and other security instruments
of approximately $14 million on five additional projects in various
stages of development, construction and operation.
Nuclear Insurance
CSW and CPL
As previously reported, in connection with the licensing and
operation of STP, the owners have purchased the maximum limits of
nuclear liability insurance, as required by law, and have executed
indemnification agreements with the NRC in accordance with the
financial protection requirements of the Price-Anderson Act.
The Price-Anderson Act, a comprehensive statutory arrangement
providing limitations on nuclear liability and governmental
indemnities, is in effect until August 1, 2002. The limit of
liability under the Price-Anderson Act for licensees of nuclear power
plants is $8.92 billion per incident, effective as of January 1995.
The owners of STP are insured for their share of this liability
through a combination of private insurance amounting to $200 million
and a mandatory industry-wide program for self-insurance totaling
<PAGE> 43
$8.72 billion. The maximum amount that each licensee may be assessed
under the industry-wide program of self-insurance following a nuclear
incident at an insured facility is $75.5 million per reactor, which
may be adjusted for inflation, plus a five percent charge for legal
expenses, but not more than $10 million per reactor for each nuclear
incident in any one year. CPL and each of the other STP owners are
subject to such assessments, which CPL and other owners have agreed
will be allocated on the basis of their respective ownership interests
in STP. For purposes of these assessments, STP has two licensed
reactors.
The owners of STP currently maintain on-site decontamination
liability and property damage insurance in the amount of $2.75 billion
provided by ANI and NEIL. Policies of insurance issued by ANI and
NEIL stipulate that policy proceeds must be used first to pay
decontamination and clean-up costs before being used to cover direct
losses to property. Under project agreements, CPL and the other
owners of STP will share the total cost of decontamination liability
and property insurance for STP, including premiums and assessments, on
a pro rata basis, according to each owner's respective ownership
interest in STP.
CPL purchases, for its own account, a NEIL I Business
Interruption and/or Extra Expense policy. This insurance will
reimburse CPL for extra expenses incurred, up to $1.65 million per
week, for replacement generation or purchased power as the result of a
covered accident that shuts down production at STP for more than 21
weeks. The maximum amount recoverable for Unit 1 is $111.3 million
and for Unit 2 is $111.8 million. CPL is subject to an additional
assessment up to $2.1 million for the current policy year in the event
that losses as a result of a covered accident at a nuclear facility
insured under the NEIL I policy exceeds the accumulated funds
available under the policy.
On August 28, 1994, CPL filed a claim under the NEIL I policy
relating to the 1993 - 1994 outage at STP Units 1 and 2. NEIL is
currently reviewing the claim. CPL management is unable to predict
the ultimate outcome of this matter.
Henry W. Pirkey Power Plant
CSW and SWEPCO
In connection with the lignite mining contract for its Henry W.
Pirkey Power Plant, SWEPCO has agreed, under certain conditions, to
assume the obligations of the mining contractor. As of March 31,
1995, the maximum SWEPCO would have to assume is $82.5 million. The
maximum amount may vary as the mining contractor's need for funds
fluctuates. The contractor's actual obligation outstanding as of
March 31, 1995 is approximately $61.8 million.
<PAGE> 44
6. Federal Income Taxes
CSW and CPL
Due to the tax implications of the Agreement in Principle on the
financial statements of CSW and CPL the following reconciliation is
presented.
CSW
3 Months
Ended March 31,
1995
(millions)
Tax at statutory rates $ 2.5
Differences
Amortization of ITC (3.5)
Mirror CWIP (2.7)
Prior period adjustments (35.3)
Other (.2)
$(39.1)
Prior period adjustments reflect the accelerated flowback of $34.3
million of unprotected excess deferred income taxes in accordance with
the Agreement in Principle and are the primary reason for differences
between the statutory income tax rate and the effective tax rate for
the first quarter of 1995.
CPL
3 Months
Ended March 31,
1995
(thousands)
Tax at statutory rates $(11,822)
Differences
Amortization of ITC (1,447)
Mirror CWIP (2,711)
Prior period adjustments (35,289)
Other 1,129
$(50,140)
Prior period adjustments reflect the accelerated flowback of $34.3
million of unprotected excess deferred income taxes in accordance with
the Agreement in Principle and are the primary reason for differences
between the statutory income tax rate and the effective tax rate for
the first quarter of 1995.
<PAGE> 45
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Reference is made to Management's Discussion and Analysis of
Financial Condition and Results of Operations included in each
registrant's 1994 Annual Report on Form 10-K. Reference is also made
to each registrant's unaudited Financial Statements and related Notes
to Financial Statements included herein. The information included
therein and herein should be read in conjunction with, and is
essential in understanding, the following discussion and analysis.
Results of Operations
CSW, CPL, PSO, SWEPCO and WTU
Reference is made to in PART I-FINANCIAL INFORMATION ITEM 1.
Financial Statements.
Capital Requirements, Liquidity and Financing
CSW, CPL, PSO, SWEPCO and WTU
Construction and Capital Expenditures
Construction expenditures for the CSW System for the first
quarter of 1995 were $96 million. These construction expenditures
were primarily for improvements to existing production, transmission
and distribution facilities, as well as enhancements by Transok of
existing gas gathering and transmission systems. The improvements are
required to meet the needs of new customers and to satisfy the
changing requirements of existing customers. The CSW System
anticipates that the majority of all funds required for construction
for the remainder of the year will be provided from internal sources.
Short-Term Financing
The CSW System uses short-term debt to meet fluctuations in
working capital requirements and other interim capital needs. The
registrants, together with other members of the CSW System, have
established a money pool to coordinate short-term borrowings through
the issuance of CSW's commercial paper.
Long-Term Financing
The CSW System is committed to maintaining financial flexibility
by maintaining a strong capital structure and favorable securities
ratings which help to assure future access to capital markets when
required. CSW, in order to strengthen its capital structure and
support growth from time to time, may issue additional shares of its
common stock. At March 31, 1995 the capitalization ratios of each of
the registrants were as follows:
Company Common Preferred Long Term
Equity Stock Debt
CSW 48% 5% 47%
CPL 45% 8% 47%
PSO 54% 2% 44%
SWEPCO 52% 4% 44%
WTU 52% 1% 47%
CSW and WTU
On March 2, 1995, WTU sold to underwriters in a negotiated
offering $40 million of 7.50% First Mortgage Bonds, Series T, due
April 1, 2000. The proceeds of the bonds were used to repay a portion
of WTU's short-term debt, to provide working capital and for other
general corporate purposes.
<PAGE> 46
Recent Developments
Consolidated Taxes
As previously reported, in 1992 the Texas Commission changed its
method of calculating the federal income tax component of rates to the
"actual tax approach." This approach reduces rates by the tax
benefits of deductions which are not considered for or included in
setting rates for the utility.
On April 13, 1995, the Texas Supreme Court issued a decision
which holds that the Texas Commission is not required to use the tax
benefits associated with the losses of unregulated affiliates to
reduce tax expense in cost of service. The Texas Supreme Court also
ruled that the Texas Commission cannot include the income tax
deductions taken by the utility for disallowed expenses when
determining the utility's federal income tax liability.
This decision will allow CSW shareholders to retain the tax
benefits associated with disallowed expenditures. The decision also
does not require the Texas Commission to reduce rates by the tax
benefits associated with the losses of unregulated affiliates.
Regulatory Matters
CSW, CPL, PSO, SWEPCO and WTU
Reference is made to NOTE 2. Litigation and Regulatory
Proceedings for a discussion of each of the Electric Operating
Companies regulatory matters.
Proposed El Paso Merger
CSW
Reference is made to PART II-OTHER INFORMATION-Item 5. Other
Information for information regarding the proposed Merger with El
Paso.
For additional information relating to the proposed El Paso
Merger, See CSW's Annual Report on Form 10-K for the year ended
December 31, 1994.
<PAGE> 47
PART II - OTHER INFORMATION
For background and earlier developments relating to Part II
information reference is made to each registrant's 1994 Annual Report
on Form 10-K.
Item 1. Legal Proceedings.
Cimmaron Litigation
CSW
On January 12, 1994, Cimmaron brought suit against CSW and its
wholly-owned subsidiary, CSWE, in the 125th District Court of Houston,
Harris County, Texas. Cimmaron alleges that CSW and CSWE breached
commitments to participate with Cimmaron in the failed BioTech
Cogeneration project located in Colorado. Cimmaron claims breach of
contract, fraud and negligent misrepresentation with alleged damages
totaling $250 million, punitive damages of an unspecified amount, as
well as attorney's fees.
CSWE filed a counterclaim against Cimmaron and third-party claims
against the principals of Cimmaron on December 22, 1994, alleging that
they misrepresented and omitted material facts about their experience
and background and about the proposed cogeneration project. CSWE
seeks damages of $500,000, the earnest money paid when the letter of
intent was executed, the costs associated with due diligence and
punitive damages. On January 10, 1995, Cimmaron filed a first amended
original petition suing CSWE board members at the time, personally.
Pre-trial discovery on the case is presently underway with
depositions of the parties being taken during March, April and May
1995. Trial was originally set for the week of April 10, 1995, but
the parties filed a joint motion for continuance and the court re-set
the case for January 17, 1996. Management of CSW cannot predict the
outcome of this litigation, but believes that CSW and CSWE have
defenses to these complaints and are pursuing them vigorously and that
the ultimate resolution will not have a material adverse effect on
CSW's consolidated results of operations or financial condition.
Westinghouse Litigation
CSW and CPL
CPL and other owners of STP are plaintiffs in a lawsuit filed in
October 1990 in District Court in Matagorda County, Texas against
Westinghouse seeking damages and other relief. The suit alleges that
Westinghouse supplied STP with defective steam generator tubes that
are susceptible to stress corrosion cracking. Westinghouse filed an
answer to the suit in March 1992 denying the plaintiffs allegations.
The suit is set for trial in July 1995.
Inspections have detected early indications of stress corrosion
cracking in steam generator tubes at STP. Management believes the
steam generator tubes will continue to deteriorate. The STP owners
have authorized the plant to solicit competitive bids for replacement
of the STP steam generators in 1999 for Unit 1 and 2000 for Unit 2.
A preliminary damages report prepared by experts for the STP
owners estimates that replacement of the STP Unit 1 and Unit 2 steam
generators will cost approximately $285 million of which CPL's share
would be approximately 25 percent. The estimated replacement cost of
$285 million does not include replacement power costs, additional
operating expenses and other costs that are being sought from
Westinghouse in the pending litigation. Recoverability of these
amounts and the steam generator replacement costs from Westinghouse is
uncertain. Management believes that the ultimate resolution of this
<PAGE> 48
matter will not have a material adverse effect on CSW's or CPL's
results of operations or financial condition.
Burlington Northern Transportation Contracts
CSW and PSO
In June 1992, PSO filed suit in Federal District Court in Tulsa,
Oklahoma, against Burlington Northern seeking declaratory relief under
a long-term contract for the transportation of coal. In July 1992,
Burlington Northern asserted counterclaims against PSO alleging that
PSO breached the contract. The counterclaims sought damages in a
unspecified amount. In December 1993, PSO amended its suit against
Burlington Northern seeking damages and declaratory relief under
federal and state anti-trust laws. PSO and Burlington Northern filed
motions for summary judgment dispositive of certain issues in the
litigation. In March 1994, the court issued an order granting PSO's
motions for summary judgment and denying Burlington Northern's motion.
It was not necessary for the court to decide the federal and state
anti-trust claims raised by PSO. Judgment was rendered in favor of
PSO by the United States District Court in May 1994. In June 1994,
Burlington Northern appealed this judgment to the United States Court
of Appeals for the Tenth Circuit. In April 1995, the Tenth Circuit
entered an order reversing the District Court's decision in part and
affirming the order in part. On May 2, 1995, PSO filed a petition for
rehearing by the Tenth Circuit. Additional litigation in the District
Court may be necessary if PSO's petition for rehearing is not
successful. Management believes the ultimate resolution of this
matter will not have a material adverse effect on CSW's or PSO's
consolidated results of operations or financial condition.
CSW and SWEPCO
On January 20, 1995, a state district court in Bowie County,
Texas, entered judgment in favor of SWEPCO against Burlington Northern
in a lawsuit regarding rates charged under two rail transportation
contracts for delivery of coal to SWEPCO's Welsh and Flint Creek power
plants. The court awarded SWEPCO approximately $72 million covering
damages for the period from April 27, 1989 through September 26, 1994
and post-judgment interest and attorneys' fees and granted certain
declaratory relief requested by SWEPCO. Burlington Northern has
appealed the state district court's judgment to the Texas Court of
Appeals. This appeal is now pending.
PCB Cases
CSW and PSO
As previously reported, PSO has been named defendant in complaints
filed in state court in Oklahoma alleging, among other things, that
some of the plaintiffs were contaminated with PCBs and other toxic by-
products following transformer malfunctions. As of May 1, 1995, the
complaints totaled approximately $395 million, of which amount
approximately one-third represents punitive damages. Some claims have
been dismissed, certain of which resulted in settlements among the
parties. The settlements have not had a material adverse effect on
CSW's or PSO's consolidated results of operations or financial
condition. Although management cannot predict the outcome of these
proceedings, management believes that PSO has defenses to these claims
and intends to pursue them vigorously. Moreover, management has
reason to believe that PSO's insurance may cover some of these claims.
Management also believes that the ultimate resolution of these cases
will not have a material adverse effect on CSW's or PSO's consolidated
results of operations or financial condition.
<PAGE> 49
Other Legal Claims and Proceedings
CSW, CPL, PSO, SWEPCO and WTU
The CSW System is party to various other legal claims and
proceedings arising in the normal course of business. Management does
not expect disposition of these matters to have a material adverse
effect on the registrants' results of operations or financial
condition. See NOTE 2. Litigation and Regulatory Proceedings for a
discussion of each of the Electric Operating Companies regulatory
matters.
<PAGE> 50
Item 4. Submission of Matters to a Vote of Security Holders.
CSW
(a) The annual meeting of stockholders of CSW was held on April 20, 1995.
(b) The stockholders elected five directors at the annual meeting.
The name of each nominee and the number of shares voted for or
against were as follows:
Nominee Votes for Votes against
Glenn Biggs 165,629,077 929,897
E.R. Brooks 165,533,583 1,025,391
Robert W. Lawless 165,601,238 957,736
James L. Powell 165,582,313 976,661
Donald M. Carlton 165,597,922 961,052
In addition, stockholders voted to approve the appointment of Arthur
Andersen LLP independent public accountants, as CSW's auditors for
1995, with 165,288,978 votes cast for approval, 664,580 votes cast
against approval and 605,416 votes abstaining.
(c) Other matters voted upon at the annual meeting of stockholders.
No other matters (other than procedural matters) were voted upon
at the annual meeting.
CPL
(a) The annual meeting of stockholders of CPL was held on April 13, 1995.
(b) Directors elected at the annual meeting were:
E. R. Brooks Pete Morales, Jr.
Robert R. Carey S. Loyd Neal, Jr.
Ruben M. Garcia H. Lee Richards
David L. Hooper Melanie J. Richardson
Harry D. Mattison J. Gonzalo Sandoval
Robert A. McAllen Gerald E. Vaughn
(c) Other matters voted upon at the annual meeting of stockholders.
No other matters (other than procedural matters) were voted upon
at the annual meeting.
<PAGE> 51
PSO
(a) The annual meeting of stockholders of PSO was held on April 18, 1995.
(b) Directors elected at the annual meeting were:
E. R. Brooks William R. McKamey
Harry A. Clarke Mary M. Polfer
Paul K. Lackey, Jr. Dr. Robert B. Taylor, Jr.
Paula Marshall-Chapman Robert L. Zemanek
Harry D. Mattison Waldo J. Zerger, Jr.
(c) Other matters voted upon at the annual meeting of stockholders.
No other matters (other than procedural matters) were voted upon
at the annual meeting.
SWEPCO
(a) The annual meeting of stockholders of SWEPCO was held on April 12, 1995.
(b) Directors elected at the annual meeting were:
Richard H. Bremer Dr. Frederick E. Joyce
E. R. Brooks Michael H. Madison
James E. Davison Harry D. Mattison
Al P. Eason, Jr. Marvin R. McGregor
W. J. Googe, Jr. William C. Peatross
(c) Other matters voted upon at the annual meeting of stockholders.
No other matters (other than procedural matters) were voted upon
at the annual meeting.
<PAGE> 52
WTU
(a) The annual meeting of stockholders of WTU was held on April 25,
1995.
(b) Directors elected at the annual meeting were:
Richard F. Bacon Tommy Morris
C. Harwell Barber Dian G. Owen
E. R. Brooks James M. Parker
Paul. J. Brower Dennis M. Sharkey
T.D. Churchwell F. L. Stephens
Glenn Files Donald A. Welch
Harry D. Mattison
(c) Other matters voted upon at the annual meeting of stockholders.
No other matters (other than procedural matters) were voted upon
at the annual meeting.
<PAGE> 53
Item 5. Other Information.
Proposed El Paso Merger
CSW
Background
In May 1993, CSW entered into a Merger Agreement pursuant to
which El Paso would emerge from bankruptcy as a wholly-owned
subsidiary of CSW. El Paso is an electric utility company
headquartered in El Paso, Texas, which had filed a voluntary petition
for reorganization under Chapter 11 of the Bankruptcy Code on January
8, 1992. On July 30, 1993, El Paso filed a Modified Plan, and on
December 8, 1993, the Bankruptcy Court confirmed the Modified Plan.
Under the Modified Plan, the total value of CSW's offer to acquire El
Paso is approximately $2.2 billion. The Modified Plan generally
provides for El Paso creditors and shareholders to receive shares of
CSW Common and/or securities of El Paso, or to have their claims cured
and reinstated.
The Merger is subject to numerous conditions set forth in the
Merger Agreement including, among others, receipt of all required
regulatory approvals and the absence of a material adverse effect or
facts or circumstances that could reasonably be expected to result in
a material adverse effect on El Paso. The Merger Agreement also
provides that CSW and El Paso have the right to terminate the Merger
Agreement under specified circumstances including, among others, the
failure of the Effective Date as defined in the Merger Agreement to
occur on or before the Termination Date, which is defined as 18 months
after the Confirmation Date or June 8, 1995. Required regulatory
approvals and filings in connection with the Merger include approvals
of the FERC, the SEC, the Texas Commission, the New Mexico Commission,
the NRC, and filings with the Department of Justice and the Federal
Trade Commission under the HSR Act. As of May 1, 1995 applications
for all federal and state required regulatory approvals were pending,
except that early termination of the waiting period was granted
under the HSR Act on April 28, 1995. Although CSW contemplates that
one or more additional required regulatory approvals may be
forthcoming on or before June 8, 1995, CSW does not expect that all
such required approvals will have been issued and become final before
that date. The Termination Date can be extended up to six months to
December 8, 1995 upon the mutual agreement of the parties. To date no
request has been received from or sent to El Paso to extend the
Termination Date.
On September 12, 1994, in a letter responding to an earlier
letter from El Paso dated August 5, 1994, CSW reiterated its position
that continuing service to Las Cruces is a material element of CSW's
bargain with El Paso and advised El Paso that the muncipalization
efforts in Las Cruces and other matters, including (i) the potential
loss of other customers in El Paso's service area, including the
Holloman Air Force Base and the White Sands Missile Range in New
Mexico, (ii) cracking in steam generator tubes at Palo Verde, (iii)
intense political and regulatory opposition to the Merger, and (iv) a
new "comparable transmission service" standard being imposed on the
Merger by the FERC, place the completion of the Merger in jeopardy.
CSW's September 12, 1994, letter further advised El Paso that the
foregoing matters, individually and cumulatively, constitute a
material adverse effect or failure of other closing conditions under
the Merger Agreement which, unless timely resolved, could preclude
closing of the proposed Merger.
By letter dated September 16, 1994, El Paso disagreed with the
positions set forth by CSW in its September 12 letter and asserted
that CSW's September 12 letter "has inflicted irreparable harm on El
Paso and the Merger process." Since September 1994, CSW and El Paso
have exchanged a number of letters relating both to their disagreement
with respect to the contingencies identified in CSW's September 12
letter as well as to various other issues under the Merger Agreement
and Modified Plan.
<PAGE> 54
Recent Developments
On May 11, 1995, El Paso filed an amended complaint with the
Bankruptcy Court in a existing adversarial proceeding seeking to
enjoin the Texas Commission from entering rulings which El Paso
believes are inconsistent with findings of fact entered by the
Bankruptcy Court.
Although CSW continues to use its best efforts to obtain the
required regulatory approvals and work toward consummation of the
Merger, CSW continues to monitor the aforementioned contingencies
which could preclude the consummation of the Merger. Based upon the
failure of El Paso to resolve the contingencies set forth above, the
likelihood that the required regulatory approvals will not be
obtained by June 8, 1995, and the potential impacts of the pending
Bankruptcy Court hearings, CSW believes that it is uncertain and
cannot presently predict whether, or if so when, the Merger will be
consummated.
If the Merger is not consummated, then under certain
circumstances set forth in the Merger Agreement CSW or El Paso would
be required to pay a $25 million termination fee to the other party.
Additionally, under certain circumstances, if the Merger is not
consummated, the Merger Agreement provides for CSW to pay El Paso a
portion of certain interest costs and certain fees and expenses
estimated as of March 31, 1995 to be approximately $20.5 million;
however, the actual amount, if any, that CSW may be required to pay
pursuant to these provisions depends on a number of contingencies and
cannot presently be predicted. If the Merger Agreement is terminated,
whether or not any termination fee is payable, CSW could be required
to recognize as an expense deferred costs associated with the Merger,
which amounted to approximately $40 million at March 31, 1995.
In the event that the Merger is not consummated, there may be
ensuing litigation between El Paso and CSW or among other parties to
El Paso's bankruptcy proceedings and either or both El Paso and CSW.
As previously reported, on October 11, 1994, the Bankruptcy Court
granted an application by El Paso to employ special litigation counsel
to advise El Paso as to ongoing activities with CSW and to assist El
Paso as to the best means of preserving its rights. El Paso has
recently taken the position that if, CSW attempts to terminate the
Merger Agreement without proper justification or otherwise breaches
the Merger Agreement, then litigation could ensue. The Merger
Agreement provides for specific performance as a remedy and other
damages may be available in the event of breach by either party
of the Merger Agreement.
Regulatory Approvals
The following discussion updates previous disclosure concerning
regulatory approvals required for the consummation of the Merger.
Texas Commission Applications
As previously reported, on March 3, 1995, the Texas Commission
issued an interim order in the El Paso rate case and in the proceeding
relating to the Merger with CSW. The interim order found the proposed
Merger to be in the public interest and provides for a $24.9 million
base rate increase for El Paso. The interim order adopted most of the
recommendations of the presiding officers. A significant revision to
the presiding officers recommendations was an increase in the allowed
return on equity from 11.5% to 12%. The presiding officers'
recommendations were adopted in the interim order for several
significant issues even though agreement was not reached by the Texas
Commission. CSW has taken the position that the interim order does
not grant the regulatory rate treatment required by the Merger
Agreement. El Paso has disagreed with this position. Motions for
reconsideration on various issues were filed by CSW and El Paso and
various other parties to the rate case. These issues included
conditioning approval of the Merger on resolution of the Las Cruces
<PAGE> 55
and Palo Verde issues, the rate treatment of the tax effects of lease
rejection damages, recovery of any acquisition adjustment and deferred
costs associated with the regulatory lag period prior to receiving
rate treatment for Palo Verde Unit 3. The Texas Commission considered
the motions for reconsideration at meetings on April 17 and May 3,
1995. On May 3, 1995, the Texas Commission heard oral arguments on
the motions for reconsideration of its interim order and the effect on
that order of the recent court decisions discussed below. The Texas
Commission held additional discussions on the motions for
reconsideration on May 10, 1995 and has scheduled a final interim
order meeting on May 16, 1995. It is uncertain whether the Texas
Commission will modify any of its previously adopted positions in its
initial first interim order. Pending resolution of these issues, the
Texas Commission allowed El Paso's bonded rates to remain in effect
until a subsequent interim decision is issued.
Recent court decisions at the Austin Court of Appeals and Supreme
Court of Texas may affect the Texas Commission's rulings on treatment
of the Palo Verde inventory plan for Unit 3 and actual taxes paid
methodology. At this time both court decisions are subject to motions
for rehearing. It is uncertain whether the courts' decisions will be
modified or whether the Texas Commission will modify its interim order
based upon such decisions.
The Texas Commission severed fuel related issues from the El Paso
rate case and issued a final order which allows for El Paso to lower
its fixed fuel factors by $14.3 million annually and to refund $13.7
million in over-collected fuel costs over a twelve month period.
New Mexico Commission Application
As previously reported, on March 14, 1994, CSW and El Paso filed
an application with the New Mexico Commission seeking approval of the
pending Merger, the reacquisition of the leased Palo Verde assets and
certain accounting treatments. On February 10, 1995, the New Mexico
Commission Staff filed testimony recommending approval of each of
these requests. Hearings in New Mexico were completed on March 2,
1995. This revised schedule allows for the issuance of a final order
by the New Mexico Commission by June 1995. It is uncertain when
a final order may be issued by the New Mexico Commission.
On April 5, 1995, El Paso filed an application with the New
Mexico Commission for authorization to issue the securities under the
plan of reorganization. On May 1, 1995, the hearing examiner issued a
procedural order setting a hearing on the application for May 25,
1995. The schedule established by the hearing examiner allows for the
issuance by the New Mexico Commission of a final order by June 8,
1995. It is uncertain when a final order may be issued by the New
Mexico Commission.
FERC Application
As previously reported, on August 1, 1994, the FERC issued orders
in two proceedings that relate to the Merger. In an order issued
under Section 211 of the Federal Power Act, the FERC preliminarily
found that "a final order requiring SPS to provide the transmission
service requested by the Applicants would comply with the statutory
standards, once reliability concerns have been met." The FERC also
issued an order under Section 203 of the FPA in which the FERC ruled
that it will require merging utilities to offer transmission service
to others on a basis that is comparable to their own uses of their
transmission systems and consolidated the Section 203 and 205
proceedings of the FPA for hearing purposes.
<PAGE> 56
On April 11, 1995, the FERC ALJ who presided over the hearings
related to the Section 203 and Section 205 application issued a
decision finding the Merger to be consistent with the public interest.
The ALJ recommended that the Merger be approved subject to the FERC's
deciding a number of issues concerning transmission service. The FERC
will consider the ALJ's initial decision after all of the parties file
briefs setting forth their exception to the initial decision. It is
uncertain if the FERC will render a decision prior to June 8, 1995.
SEC Application
As previously reported, on January 10, 1994, CSW filed with the
SEC an application under the Holding Company Act seeking authorization
of the Merger and reacquisition of the Palo Verde leased assets. CSW
subsequently amended the application to eliminate the request for
authorization to engage in certain hedging transactions, at the
request of the SEC staff. CSW has subsequently amended and
supplemented the application and has filed a brief in response to
intervention petitions. On April 6, 1995, CSW filed an amendment to
the application in order to update and summarize for the SEC the
record of the other federal and state regulatory proceedings relating
to the Merger. In that filing, CSW requested the SEC to take action
promptly on the application and issue an appropriate order as soon as
possible. However, it is uncertain what action the SEC will take
with respect to the application, or when such action will be taken.
NRC Application
As previously reported, on January 13, 1994, APS, as operating
agent for Palo Verde, joined by El Paso, filed a request with the NRC
for (i) consent to the indirect transfer of El Paso's interest in the
operating licenses for Palo Verde Units 1, 2, and 3 that will occur as
a result of the Merger, and (ii) to amend the operating licenses for
Units 2 and 3 to delete provisions of those licenses related to El
Paso's sale and leaseback transactions involving those units. The
request to the NRC specifies that the proposed amendments to the
operating licenses and consent become effective on the Effective Date,
but it is uncertain whether and, if so, when the approvals and consent
will be granted.
HSR Act
On April 28, 1995, the FTC granted early termination of the
waiting period under the HSR Act.
Other
El Paso is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance
therewith files reports and other information with the SEC. For
additional information concerning El Paso, and the Proposed El Paso
Merger see El Paso's Annual Report on Form 10-K and the documents
referenced therein.
For additional information relating to the proposed El Paso
Merger see CSW's Annual Report on Form 10-K for the year ended
December 31, 1994.
Environmental Matters
CSW and SWEPCO
Biloxi, Mississippi MGP Site
SWEPCO has been notified by Mississippi Power Company that it may
be a PRP at the former Biloxi MGP site formerly owned and operated by a
predecessor of SWEPCO. SWEPCO is working with Mississippi Power
Company to investigate the extent of contamination at this site. The
MDEQ approved a site investigation work plan and, in January 1995,
SWEPCO and Mississippi Power Company initiated sampling pursuant to
that work plan. SWEPCO and Mississippi Power Company have learned that
<PAGE> 57
the samples collected in January 1995 were held by the contractor for a
period of time in excess of the permitted period and will have to be
recollected.
On an interim basis, SWEPCO and Mississippi Power Company are each
paying fifty percent of the cost of implementing the site investigation
work plan. That interim allocation is subject to a final allocation in
the future. SWEPCO and Mississippi Power Company are investigating
whether there are other PRPs at the Biloxi site. Until the extent of
the contamination at the Biloxi site is identified, it is unknown what,
if any, additional investigation or cleanup may be required.
Marshall, Texas MGP Site
SWEPCO conducted another round of groundwater sampling from the
site's groundwater monitor wells. Sample results from each of the nine
monitor wells indicate that there were no drinking water standards
exceeded for RCRA Metals. In April 1995, additional off-site soil
samples were collected and are being analyzed for metals concentrations
to provide for statistical comparison of on-site soils metals
concentrations with off-site or background levels. If metals
concentrations are determined to be comparable to background levels,
then SWEPCO will proceed with closure of the site under the TNRCC Risk
Reduction Rules Option that enable SWEPCO to place a deed restriction
on the site documenting the levels of any substances determined to be
above lab detection levels. If on-site metals levels are above
background levels then SWEPCO will proceed with a site specific risk
assessment as required under the TNRCC Risk Reduction Rules.
<PAGE> 58
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(12) Computation of Ratio of Earnings to Fixed Charges
CPL - (Exhibit 12.1)
PSO - (Exhibit 12.3)
SWEPCO - (Exhibit 12.4)
WTU - (Exhibit 12.5)
Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
CPL - (Exhibit 12.2)
(27) Financial Data Schedules
CSW - (Exhibit 27.1)
CPL - (Exhibit 27.2)
PSO - (Exhibit 27.3)
SWEPCO - (Exhibit 27.4)
WTU - (Exhibit 27.5)
(b) Reports on Form 8-K:
CSW
CSW filed a Current Report on Form 8-K, dated January 17,
1995, Item 5. Other Events, reporting developments in the
proposed El Paso Merger.
CSW filed a Current Report on Form 8-K, dated April 5,
1995, Item 5. Other Events, reporting developments in CPL
regulatory matters.
CPL
CPL filed a Current Report on Form 8-K, dated April 5,
1995, Item 5. Other Events, reporting developments in its
regulatory matters.
PSO
No Current Reports on Form 8-K were filed for PSO.
SWEPCO
No Current Reports on Form 8-K were filed for SWEPCO.
WTU
WTU filed a Current Report on Form 8-K, dated February 17,
1995, Item 5. Other Events, providing unaudited financial
information for the fiscal year ended December 31, 1994, in
anticipation of a debt offering by WTU.
<PAGE> 59
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, each registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized. The signature
for each undersigned registrant shall be deemed to relate only to
matters having reference to such registrant or its subsidiaries.
CENTRAL AND SOUTH WEST CORPORATION
Date: May 15, 1995 /s/ Wendy G.Hargus
Wendy G. Hargus
Controller and Chief Accounting Officer
(Principal Accounting Officer)
CENTRAL POWER AND LIGHT COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
WEST TEXAS UTILITIES COMPANY
Date: May 15, 1995 /s/ R. Russell Davis
R. Russell Davis
Controller and Chief Accounting Officer
(Principal Accounting Officer)
EXHIBIT 12.1
CENTRAL POWER AND LIGHT COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995
(Thousands Except Ratio)
(Unaudited)
Operating Income $249,863
Adjustments:
Federal income taxes 54,946
Provision for deferred Federal income taxes (30,673)
Deferred investment tax credits (5,789)
Other income and deductions 8,370
Allowance for borrowed and equity funds
used during construction 4,316
Mirror CWIP amortization 61,250
Earnings $342,283
Fixed Charges:
Interest on long-term debt $113,288
Interest on short-term debt and other 13,695
Fixed Charges $126,983
Ratio of Earnings to Fixed Charges 2.70
EXHIBIT 12.2
CENTRAL POWER AND LIGHT COMPANY
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995
(Thousands Except Ratio)
(Unaudited)
Operating Income $249,863
Adjustments:
Federal income taxes 54,946
Provision for deferred Federal income taxes (30,673)
Deferred investment tax credits (5,789)
Other income and deductions 8,370
Allowance for borrowed and equity funds
used during construction 4,316
Mirror CWIP amortization 61,250
Earnings $342,283
Fixed Charges:
Interest on long-term debt $113,288
Interest on short-term debt and other 13,695
Preferred stock dividend requirements 15,583
Fixed Charges and Preferred Requirements $142,566
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends 2.40
EXHIBIT 12.3
PUBLIC SERVICE COMPANY OF OKLAHOMA (CONSOLIDATED)
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995
(Thousands Except Ratio)
(Unaudited)
Operating Income $ 98,679
Adjustments:
Federal and state income taxes 32,851
Provision for deferred Federal
and state income taxes 4,621
Deferred investment tax credits (2,789)
Other income and deductions 3,723
Allowance for borrowed and equity funds
used during construction 3,222
Earnings $140,307
Fixed Charges:
Interest on long-term debt $29,595
Amortization of debt issuance cost 1,568
Other interest 3,053
Fixed Charges $ 34,216
Ratio of Earnings to Fixed Charges 4.10
EXHIBIT 12.4
SOUTHWESTERN ELECTRIC POWER COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995
(Thousands except Ratio)
(Unaudited)
Operating Income $147,689
Adjustments:
Federal and state income taxes 21,677
Provision for deferred Federal and
state income taxes 22,183
Deferred investment tax credits (4,246)
Other income and deductions 703
Allowance for borrowed and equity funds
used during construction 2,697
Interest portion of financing leases 2,141
Earnings $192,844
Fixed Charges:
Interest on long-term debt $43,903
Amortization of debt issuance cost 3,558
Other interest 5,278
Interest portion of financing leases 2,141
Fixed Charges $ 54,880
Ratio of Earnings to Fixed Charges 3.51
EXHIBIT 12.5
WEST TEXAS UTILITIES COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995
(Thousands Except Ratio)
(Unaudited)
Operating Income $56,172
Adjustments:
Federal income taxes 10,789
Provision for deferred Federal income taxes 5,529
Deferred investment tax credits (1,321)
Other income and deductions 4,141
Allowance for borrowed and equity funds
used during construction 592
Earnings $75,902
Fixed Charges:
Interest on long-term debt $19,004
Interest on short-term debt and other 3,849
Fixed Charges $22,853
Ratio of Earnings to Fixed Charges 3.32
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<FISCAL-YEAR-END> dec-31-1995 DEC-31-1994
<PERIOD-END> MAR-31-1995 MAR-31-1994
<BOOK-VALUE> PER-BOOK PER-BOOK
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<TOTAL-CURRENT-ASSETS> 67,647 0
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<OTHER-ASSETS> 20,744 0
<TOTAL-ASSETS> 781,376 0
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<RETAINED-EARNINGS> 136,671 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 276,121 0
0 0
6,291 0
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<SHORT-TERM-NOTES> 16,592 0
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<LONG-TERM-DEBT-CURRENT-PORT> 650 0
0 0
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<INCOME-TAX-EXPENSE> 1,614 1,309
<OTHER-OPERATING-EXPENSES> 63,411 73,523
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<OPERATING-INCOME-LOSS> 9,896 8,487
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<INCOME-BEFORE-INTEREST-EXPEN> 10,104 8,770
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66 151
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<TOTAL-INTEREST-ON-BONDS> 4,840 4,383
<CASH-FLOW-OPERATIONS> 1,177 (26,899)
<EPS-PRIMARY> .02 .02
<EPS-DILUTED> .02 .02
</TABLE>
