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 earliest event reported: February 4, 2000
Date of report: February 4, 2000
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) 673-3000
<PAGE>
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this text are defined below:
Abbreviation or Acronym Definition
AEP........................American Electric Power Company, Inc., Columbus, Ohio
AEP Merger.................Proposed Merger between AEP and CSW where CSW would
become a wholly owned subsidiary of AEP
Cajun Cajun Electric Power Cooperative, Inc.
CSW........................Central and South West Corporation, Dallas, Texas
CSW System.................CSW and its subsidiaries
Exchange Act...............Securities Exchange Act of 1934, as amended
MMbtu......................Million British Thermal Units
SWEPCO.....................Southwestern Electric Power Company, Shreveport,
Louisiana
FORWARD-LOOKING INFORMATION
This report made by SWEPCO contains forward-looking statements within the
meaning of Section 21E of the Exchange Act. Although SWEPCO believes that its
expectations are based on reasonable assumptions, any such statements may be
influenced by factors that could cause actual outcomes and results to be
materially different from those projected. Important factors that could cause
actual results to differ materially from those in the forward-looking statements
include, but are not limited to:
- - the impact of general economic changes in the United States and the states
in which SWEPCO either currently has made or in the future may make
investments,
- - the impact of the proposed AEP Merger including any regulatory conditions
imposed on the merger or the inability of CSW to consummate the AEP Merger,
- - increased competition and the restructuring of the electric utility
industry in the United States,
- - federal and state regulatory developments and changes in law which may have
a substantial adverse impact on the value of SWEPCO's generating and other
assets,
- - timing and adequacy of rate relief,
- - adverse changes in electric load and customer growth,
- - climatic changes or unexpected changes in weather patterns,
- - changing fuel prices, generating plant and distribution facility
performance,
- - costs associated with any year 2000 computer related failure(s) within the
CSW System, with the electric grid or with supplier(s) that adversely
affect SWEPCO and
- - risks associated with hedging and other risk management techniques.
<PAGE>
ITEM 5. OTHER EVENTS
In anticipation of filing a Securities and Exchange Commission Form S-3,
SWEPCO provides the following information.
Results of Operations
SWEPCO's net income for common stock for 1999 was $83.4 million, which is
$13.1 million, or 14% lower than in 1998. Factors contributing to the change
were increases in electric operating revenues, operating expenses and taxes, and
interest charges. Nonrecurring factors contributing to the change were the
write-off of Cajun acquisition expenses and an extraordinary loss resulting from
industry restructuring legislation in Texas and Arkansas.
Electric operating revenues for 1999 were $965.0 million, which is $12.1
million higher than in 1998. The change was primarily caused by an increase of
$32.2 million in the sales for resale market offset by a decrease in revenues in
the residential market of $19.9 million. All other markets remained relatively
stable with only slight increases in revenue. Other items affecting electric
operating revenues include fuel and transmission revenue related adjustments and
a $6.5 million charge against revenues to reflect the excess earnings provision
of the deregulation legislation passed in Texas.
Operating expenses and taxes for 1999 were $817.5 million, which is $15.3
million higher than in 1998. Fuel and purchased power expense increased by $10.1
million for 1999 when compared to 1998. The increase in fuel expense is largely
attributable to an increase in average unit fuel costs combined with a 3%
increase in generation. Average unit fuel costs increased from $1.63 per MMbtu
in 1998 to $1.66 per MMbtu in 1999 as a result of higher spot market natural gas
prices. The increase in purchased power expense is due to an increase in economy
energy purchases. Maintenance expenses for 1999 increased $13 million, or 25%
when compared to 1998. This change was the result of increased power station
maintenance, tree-trimming maintenance and overhead line maintenance.
Depreciation and amortization expenses for 1999 increased $3.9 million, or 4%
when compared to 1998 due primarily to higher levels of depreciable plant.
Partially offsetting these increases was a $3.3 million decrease in taxes, other
than income taxes for 1999, resulting from lower ad valorem taxes. Income tax
expenses associated with utility operations during 1999 decreased $9.5 million,
or 20% when compared to 1998 due to lower taxable income.
Interest charges for 1999 were $58.9 million, an increase of $3.8 million,
or 7% compared to 1998. This increase was the result of higher levels of
short-term borrowing and additional interest expense in connection with changes
to CSW's transmission coordination agreement.
Nonrecurring items that reduced net income for common stock in 1999 were
the write-off of Cajun acquisition expenses of $3.7 million, net of tax, as well
as an extraordinary loss of $3.0 million, net of tax. The extraordinary loss
reflects the effect of legislation passed in Texas and Arkansas which resulted
in the electricity generation portion of the SWEPCO's business no longer meeting
the criteria to apply Statement of Financial Accounting Standards No. 71,
Accounting for the Effects of Certain Types of Regulation.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
(12) Ratio of Earnings to Fixed Charges
12.1 - SWEPCO, Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
27.1 - SWEPCO, Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SOUTHWESTERN ELECTRIC POWER COMPANY
Date: February 4, 2000
By: /s/ R. Russell Davis
R. Russell Davis
Controller and Chief Accounting Officer
(Principal Accounting Officer)
Exhibit 12.1
Southwestern Electric Power Company
Ratio of Earnings to Fixed Charges
For Years Ended December 31,
1999 1998 1997 1996 1995
-----------------------------------------------------
(thousands, except ratios)
Operating income $147,524 $150,787 $139,409 $138,083 $162,776
Adjustments:
Income taxes 55,343 62,595 44,396 32,931 41,131
Provision for deferred
income taxes (17,098) (11,850) (2,244) 2,849 6,287
Deferred investment tax
credits (4,565) (4,631) (4,662) (4,730) (4,786)
Charges for investments
and plant development
costs, net of tax -- -- (483) (21,815) --
Other income and
deductions (2,000) 1,115 3,578 312 178
Allowance for borrowed
and equity funds used
during construction 1,984 2,687 2,156 2,423 9,334
Interest portion of
financing leases 335 598 1,194 1,514 1,896
-----------------------------------------------------
Earnings $181,523 $201,301 $183,344 $151,567 $216,816
=====================================================
Fixed charges:
Interest on long-term debt $38,380 $39,233 $40,440 $44,066 $44,468
Distributions on Trust
Preferred Securities 8,662 8,662 5,582 -- --
Interest on short-term
debt and other 13,800 8,591 5,736 8,381 10,706
Interest portion of
financing leases 335 598 1,194 1,514 1,896
-----------------------------------------------------
Fixed charges $61,177 $57,084 $52,952 $53,961 $57,070
=====================================================
Ratio of earnings to fixed
charges 2.97 3.53 3.46 2.81 3.80
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0
4,706
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<TOTAL-OPERATING-EXPENSES> 817,503
<OPERATING-INCOME-LOSS> 147,524
<OTHER-INCOME-NET> (1,965)
<INCOME-BEFORE-INTEREST-EXPEN> 145,559
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229
<EARNINGS-AVAILABLE-FOR-COMM> 83,426
<COMMON-STOCK-DIVIDENDS> 96,000
<TOTAL-INTEREST-ON-BONDS> 38,380
<CASH-FLOW-OPERATIONS> 154,942
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