UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 1997
COMMISSION REGISTRANT, STATE OF INCORPORATION, I.R.S. EMPLOYER
FILE NUMBER ADDRESS AND TELEPHONE NUMBER IDENTIFICATION NO.
1-3146 SOUTHWESTERN ELECTRIC POWER COMPANY 72-0323455
(A Delaware Corporation)
428 Travis Street
Shreveport, Louisiana 71156-0001
(318) 222-2141
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ITEM 5. OTHER EVENTS
SOUTHWESTERN ELECTRIC POWER COMPANY (SWEPCO) RECENT DEVELOPMENTS
RESULTS OF OPERATIONS
Net income for common stock for the first quarter of 1997 was $12.8 million, a
9% decrease from $14 million for the same period of 1996. The decrease resulted
primarily from higher depreciation and amortization expenses as well as
increased tax expenses offset in part by increased non-fuel revenues. The
increase in depreciation and amortization expenses resulted from increases in
depreciable property while the increase in tax expenses was attributable to
increases in both income and non-income taxes. The increase in non-fuel revenues
reflects a 2.5% increase in retail kilowatt-hour sales which resulted primarily
from customer growth and increased usage.
TENDER OFFER/PROXY SOLICITATION
On April 16, 1997, SWEPCO's parent holding company, Central and South West
Corporation (CSW), completed a tender offer for any and all shares of SWEPCO's
outstanding preferred stock. SWEPCO's preferred shareholders tendered, and CSW
has accepted for payment, 52,614 preferred shares of SWEPCO's 4.28% Series,
23,092 preferred shares of SWEPCO's 4.65% Series, 37,228 preferred shares of
SWEPCO's 5.00% Series and 41,990 preferred shares of SWEPCO's 6.95% Series (or
approximately 31% of SWEPCO's outstanding preferred stock) pursuant to the
tender offer. SWEPCO intends to repurchase these preferred shares from CSW and
then retire and cancel the shares. The total consideration expected to be paid
by SWEPCO for the repurchased preferred shares is approximately $12.8 million.
Additionally, at a special meeting of stockholders held on April 16, 1997,
SWEPCO's preferred and common shareholders approved and adopted an amendment to
SWEPCO's Restated Certificate of Incorporation which eliminated a provision
limiting the amount of unsecured debt that SWEPCO can issue.
CAJUN ELECTRIC POWER COOPERATIVE, INC. (CAJUN) ASSET PURCHASE PROPOSAL
As previously reported, SWEPCO, Entergy-Gulf States and eight of the 12 Cajun
member cooperatives have submitted a joint plan to acquire Cajun's non-nuclear
generating assets. Resumption of the confirmation hearings in Cajun's bankruptcy
case have been postponed to May 12, 1997. See SWEPCO's 1996 Annual Report on
Form 10-K for additional information relating to this matter.
STATE LEGISLATIVE ACTIVITIES
Utility restructuring and retail competition legislation has been introduced,
and additional legislation may be proposed in the current session of the Texas
Legislature, which, if enacted into law, could significantly affect the electric
utility industry in Texas. As of April 1997, four separate bills have been filed
in the Louisiana legislature addressing the restructuring of the electric
utility industry in Louisiana, including the establishment of retail
competition. In March 1997, the Arkansas Legislature passed a resolution
directing interim legislative committees to study competition in the electric
power industry in Arkansas. The study will begin on December 1, 1997, or when
the Arkansas Public Service Commission issues a final order in a currently
pending rate proceeding filed by another electric utility company, whichever
occurs first. SWEPCO is unable to predict the outcome of this study or its
ultimate effect on SWEPCO. SWEPCO is also unable to predict whether any
restructuring and retail competition legislation will be enacted by the Texas
Legislature or the Louisiana Legislature, and if enacted, the ultimate form,
timing and effects of such legislation.
The Texas House of Representatives has passed a bill that would significantly
increase the amount of taxes paid by investor-owned utilities (IOU's) in Texas.
The bill includes a reduction of property taxes, an increase in existing sales
and gross receipts taxes and a new tax on coal. The bill would allow the IOU's
to flow the impact of the taxes through to their customers. The Texas Senate is
currently reviewing the bill. SWEPCO is unable to predict whether this bill will
be enacted, and if enacted, what its effect will be.
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CREDIT RATINGS
On April 28, 1997, Moody's Investors Service (Moody's) announced that it had
downgraded SWEPCO's first mortgage bond rating to Aa3 from Aa2, its senior
unsecured debt rating to A1 from Aa3 and its preferred stock rating to a1 from
aa2. Moody's has assigned a rating of aa3 to the Series A Preferred Securities
to be issued by SWEPCO's business trust, SWEPCO Capital I, and an A2
subordinated debt rating to the underlying Series A Debentures to be issued by
SWEPCO.
Also on April 28, 1997, Standard & Poor's Ratings Group (S&P) announced that it
had downgraded SWEPCO's first mortgage bond rating to A+ from AA-, its senior
unsecured debt rating to A from A+ and its preferred stock rating to A from A+.
Ratings are not recommendations to buy, hold or sell securities inasmuch as the
ratings do not comment as to market price or suitability for a particular
investor. Ratings are based on current information furnished to rating agencies
by SWEPCO and obtained from other sources. Ratings may be changed, suspended or
withdrawn at any time as a result of changes in, or the unavailability of, such
information.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHWESTERN ELECTRIC POWER COMPANY
Date: April 28, 1997
By: /S/ R. RUSSELL DAVIS
R. Russell Davis
Controller
