-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UfIJQbCC9A29MV2i2DCRiJ0nWV9bhzfSTP2xokIM1ZDEwAgL3Dyz+6qaoTUMKzNh AJwOFlbWfDr7m2WiLJNE/A== 0000018540-00-000055.txt : 20000516 0000018540-00-000055.hdr.sgml : 20000516 ACCESSION NUMBER: 0000018540-00-000055 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL & SOUTH WEST CORP CENTRAL INDEX KEY: 0000018540 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 510007707 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01443 FILM NUMBER: 630550 BUSINESS ADDRESS: STREET 1: 1616 WOODALL RODGERS FRWY CITY: DALLAS STATE: TX ZIP: 75202 BUSINESS PHONE: 2147771000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL POWER & LIGHT CO /TX/ CENTRAL INDEX KEY: 0000018734 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 740550600 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12973 FILM NUMBER: 630551 BUSINESS ADDRESS: STREET 1: 539 N CARANCAHUA ST CITY: CORPUS CHRISTI STATE: TX ZIP: 78401 BUSINESS PHONE: 5128815300 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC SERVICE CO OF OKLAHOMA CENTRAL INDEX KEY: 0000081027 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 730410895 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12945 FILM NUMBER: 630552 BUSINESS ADDRESS: STREET 1: 212 E 6TH ST CITY: TULSA STATE: OK ZIP: 74119 BUSINESS PHONE: 9185992000 MAIL ADDRESS: STREET 1: P O BOX 201 CITY: TULSA STATE: OK ZIP: 74119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWESTERN ELECTRIC POWER CO CENTRAL INDEX KEY: 0000092487 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720323455 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03146 FILM NUMBER: 630553 BUSINESS ADDRESS: STREET 1: 428 TRAVIS ST CITY: SHREVEPORT STATE: LA ZIP: 71156 BUSINESS PHONE: 3182222141 MAIL ADDRESS: STREET 1: C/O SOUTHWESTERN ELECTRIC POWER CO STREET 2: 428 TRAVIS STREET CITY: SHREVEPORT STATE: LA ZIP: 71156-0001 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEST TEXAS UTILITIES CO CENTRAL INDEX KEY: 0000105860 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 750646790 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00340 FILM NUMBER: 630554 BUSINESS ADDRESS: STREET 1: 301 CYPRESS CITY: ABILENE STATE: TX ZIP: 79601 BUSINESS PHONE: 9156747000 10-Q 1 1ST QUARTER 2000 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 2000 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 (361) 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) 673-3000 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 May 11, 2000 Shares Central and South West Corporation 212,652,493 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 Registrant makes no representation as to information relating to the other Registrants. CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q MARCH 31, 2000 GLOSSARY OF TERMS..............................................................3 FORWARD-LOOKING INFORMATION....................................................5 PART I. FINANCIAL INFORMATION..................................................6 ITEM 1. FINANCIAL STATEMENTS.................................................6 CENTRAL AND SOUTH WEST CORPORATION.........................................6 CENTRAL POWER AND LIGHT COMPANY...........................................14 PUBLIC SERVICE COMPANY OF OKLAHOMA........................................20 SOUTHWESTERN ELECTRIC POWER COMPANY.......................................26 WEST TEXAS UTILITIES COMPANY..............................................33 NOTES TO FINANCIAL STATEMENTS.............................................40 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................................................56 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........69 PART II - OTHER INFORMATION...................................................71 ITEM 1. LEGAL PROCEEDINGS...................................................71 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................71 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................71 SIGNATURES....................................................................73 2 GLOSSARY OF TERMS The following abbreviations or acronyms used in this Form 10-Q are defined below: Abbreviation or Acronym Definition AEP.....................American Electric Power Company, Inc. AEP Merger .............Proposed Merger between AEP and CSW where CSW would become a wholly owned subsidiary of AEP Bankruptcy Code.........Title 11 Of The United States Code, as amended CLECO ..................Central Louisiana Electric Company, Inc. CPL ....................Central Power and Light Company, Corpus Christi, Texas CSW ....................Central and South West Corporation, Dallas, Texas CSW Energy .............CSW Energy, Inc., Dallas, Texas CSW International ......CSW International, Inc., Dallas, Texas CSW Services ...........Central and South West Services, Inc., Dallas, Texas and Tulsa, Oklahoma CSW System .............CSW and its subsidiaries DGEGS ..................Director General of Electricity and Gas Supply DHMV ...................Dolet Hills Mining Venture Diversified Electric ...CSW Energy and CSW International ECOM ...................Excess cost over market EITF....................Emerging Issues Task Force EITF 97-4...............Deregulation of the Pricing of Electricity - Issues Related to the Application of SFAS Nos. 71 and 101 EPA ....................United States Environmental Protection Agency EPS ....................Earnings per share of common stock ERCOT ..................Electric Reliability Council of Texas ESPS....................Electric Supply Pension Scheme Exchange Act ...........Securities Exchange Act of 1934, as amended EWG ....................Exempt Wholesale Generator FCC.....................Federal Communications Commission FERC ...................Federal Energy Regulatory Commission FMB.....................First Mortgage Bond FUCO ...................Foreign utility company as defined by the Holding Company Act Holding Company Act ....Public Utility Holding Company Act of 1935, as amended IBEW ...................International Brotherhood of Electrical Workers KWH ....................Kilowatt-hour LIBOR...................London Inter-Bank Overnight Rate LIFO ...................Last-in first-out (inventory accounting method) MD&A ...................Management's Discussion and Analysis of Financial Condition and Results of Operations MGP ....................Manufactured gas plant or coal gasification plant MMbtu ..................Million British Thermal Unit MW .....................Megawatt MWH ....................Megawatt-hour National Grid ..........National Grid Group plc NRC ....................Nuclear Regulatory Commission OFGEM...................Office of Gas and Electricity Markets PCB ....................Polychlorinated biphenyl PSO ....................Public Service Company of Oklahoma, Tulsa, Oklahoma Registrant(s) ..........CSW, CPL, PSO, SWEPCO and WTU SEC ....................United States Securities and Exchange Commission SEEBOARD ...............SEEBOARD Group plc, Crawley, West Sussex, United Kingdom SEEBOARD U.S.A..........CSW's investment in SEEBOARD consolidated and converted to U.S. Generally Accepted Accounting Principles SFAS....................Statement of Financial Accounting Standards SFAS No. 34.............Capitalization of Interest Cost SFAS No. 52 ............Foreign Currency Translation SFAS No. 71 ............Accounting for the Effects of Certain Types of Regulation SFAS No. 101............Regulated Enterprises - Accounting for the Discontinuation of Application of SFAS No. 71 SFAS No. 115............Accounting for Certain Investments in Debt and Equity Securities SFAS No. 121............Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of SPP ....................Southwest Power Pool STP ....................South Texas Project nuclear electric generating station SWEPCO .................Southwestern Electric Power Company, Shreveport, Louisiana 3 GLOSSARY OF TERMS (continued) The following abbreviations or acronyms used in this Form 10-Q are defined below: Abbreviation or Acronym Definition Texas Commission .......Public Utility Commission of Texas Texas Electric Operating Companies CPL, SWEPCO and WTU Texas Legislation......Texas Senate Bill 7, relating to deregulation of electric utility industry TNRCC...................Texas Natural Resource Conservation Commission Trust Preferred Securities.............Collective term for securities issued by business trusts of CPL, PSO and SWEPCO classified on the balance sheet as "Certain Subsidiary (or CPL/PSO/SWEPCO)-obligated, mandatorily redeemable preferred securities of subsidiary trusts holding solely Junior Subordinated Debentures of such Subsidiaries (or CPL/PSO/SWEPCO)" U.K. Electric...........SEEBOARD U.S.A. U.S. Electric Operating Companies or U.S. Electric.........CPL, PSO, SWEPCO and WTU UWUA....................Utility Workers Union of America Vale ...................Empresa De Electricidade Vale Paranapanema SA, a Brazilian Electric Distribution Company Valero..................Valero Refining Company-Texas, Valero Refining Company and Valero Energy Company WTU ....................West Texas Utilities Company, Abilene, Texas 4 FORWARD-LOOKING INFORMATION This report made by CSW and certain of its subsidiaries contains forward-looking statements within the meaning of Section 21E of the Exchange Act. Although CSW and each of its subsidiaries believe that their 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: - - increased competition and electric utility industry restructuring in the United States, - - the impact of the proposed AEP Merger, including any regulatory conditions imposed on the merger, the inability to consummate the AEP Merger, or other merger and acquisition activity, - - federal and state regulatory developments and changes in law which may have a substantial adverse impact on the value of the CSW System assets, - - the impact of general economic changes in the United States and in countries in which CSW either currently has made or in the future may make investments, - - 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, - - decommissioning costs associated with nuclear generating facilities, - - uncertainties in foreign operations and foreign laws affecting CSW's investments in those countries, - - the effects of retail competition in the natural gas and electricity supply businesses in the United Kingdom, and - - the timing and success of efforts to develop domestic and international power projects. In the non-utility area, the previously mentioned factors apply and also include, but are not limited to: - - the ability to compete effectively in new areas, including telecommunications and other energy related services, and - - evolving federal and state regulatory legislation and policies that may adversely affect those industries generally or the CSW System's business in areas in which it operates. 5 CSW CENTRAL AND SOUTH WEST CORPORATION PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. 6 Consolidated Statements of Income (unaudited) Central and South West Corporation Three Months Ended March 31, 2000 1999 -------- -------- (in millions, except per share amounts) Operating Revenues U.S. Electric $ 764 $ 697 United Kingdom 485 476 Other diversified 50 52 -------- -------- 1,299 1,225 -------- -------- Operating Expenses and Taxes U.S. Electric fuel 279 229 U.S. Electric purchased power 40 29 United Kingdom cost of sales 324 322 Other operating 268 251 Maintenance 44 41 Depreciation and amortization 149 132 Taxes, other than income 41 54 Income taxes 11 20 -------- -------- 1,156 1,078 -------- -------- Operating Income 143 147 -------- -------- Other Income and (Deductions) Other 13 13 Non-operating income taxes (4) (4) -------- -------- 9 9 -------- -------- Income Before Interest and Other Charges 152 156 -------- -------- Interest and Other Charges Interest on long-term debt 76 78 Interest on short-term debt and other 31 24 Distributions on Trust Preferred Securities 7 7 Preferred dividend requirements of subsidiaries -- 2 -------- -------- 114 111 -------- -------- Net Income for Common Stock $ 38 $ 45 ======== ======== Average Common Shares Outstanding 212.7 212.6 Basic and Diluted EPS $ 0.18 $ 0.21 ======== ======== Dividends Paid per Share of Common Stock $ 0.435 $ 0.435 ======== ======== The accompanying notes to consolidated financial statements are an integral part of these statements. 7 Consolidated Statements of Stockholders' Equity Central and South West Corporation (millions)
Accumulated Additional Other Common Paid-in Retained Comprehensive Stock Capital Earnings Income (Loss) Total --------------------------------------- ------- (audited) Beginning Balance -- January 1, 1999 $744 $1,049 $1,823 $8 $3,624 Sale of common stock -- 1 -- -- 1 Common stock dividends -- -- (370) -- (370) Other -- 1 (2) -- (1) ------- 3,254 Comprehensive Income: Foreign currency translation adjustment (net of tax of $15) -- -- -- (28) (28) Minimum pension liability (net of tax of $0.7) -- -- -- 2 2 Net Income -- -- 455 -- 455 ------- Total comprehensive income 429 --------------------------------------- ------- Ending Balance -- December 31, 1999 $744 $1,051 $1,906 ($18) $3,683 ======================================= ======= (unaudited) Beginning Balance -- January 1, 2000 $744 $1,051 $1,906 ($18) $3,683 Sale of common stock -- 1 -- -- 1 Common stock dividends -- -- (92) -- (92) ------- 3,592 Comprehensive Income: Foreign currency translation adjustment (net of tax of $4) -- -- -- (13) (13) Unrealized loss on securities (net of tax of $4) -- -- -- (7) (7) Net Income -- -- 38 -- 38 ------- Total comprehensive income 18 --------------------------------------- ------- Ending Balance -- March 31, 2000 $744 $1,052 $1,852 ($38) $3,610 ======================================= =======
The accompanying notes to consolidated financial statements are an integral part of these statements. 8 Consolidated Balance Sheets Central and South West Corporation - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) -------------- ------------- (millions) ASSETS Fixed Assets Electric Production $ 5,903 $ 5,901 Transmission 1,666 1,663 Distribution 4,923 4,896 General 1,341 1,437 Construction work in progress 279 205 Nuclear fuel 227 227 -------------- ------------- 14,339 14,329 Other diversified 382 353 -------------- ------------- 14,721 14,682 Less - Accumulated depreciation and amortization 6,002 6,008 -------------- ------------- 8,719 8,674 -------------- ------------- Current Assets Cash and temporary cash investments 138 270 Special deposits for reacquisition of long-term debt -- 50 Accounts receivable 1,018 1,140 Materials and supplies, at average cost 150 149 Electric utility fuel inventory 126 129 Under-recovered fuel costs 39 52 Notes receivable 55 53 Prepayments and other 80 84 -------------- ------------- 1,606 1,927 -------------- ------------- Deferred Charges and Other Assets Regulatory assets 201 219 Regulatory assets designated for securitization 953 953 Other non-utility investments 444 454 Securities available for sale 56 62 Benefit costs 204 202 Goodwill 1,299 1,330 Other 350 341 -------------- ------------- 3,507 3,561 -------------- ------------- $ 13,832 $ 14,162 ============== =============
The accompanying notes to consolidated financial statements are an integral part of these statements. 9 Consolidated Balance Sheets Central and South West Corporation - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) ------------- ------------- CAPITALIZATION AND LIABILITIES (millions) Capitalization Common stock: $3.50 par value Authorized: 350.0 million shares Issued and outstanding: 212.7 million shares on March 31, 2000 and 212.6 million shares on December 31, 1999 $ 744 $ 744 Paid-in capital 1,052 1,051 Retained earnings 1,852 1,906 Accumulated other comprehensive income (38) (18) ------------- ------------- 3,610 45% 3,683 47% ------------- -------- ------------- ------ Preferred Stock 18 --% 18 --% Certain Subsidiary-obligated, mandatorily redeemable preferred securities of subsidiary trusts holding solely Junior Subordinated Debentures of such Subsidiaries 335 4% 335 4% Long-term debt 4,088 51% 3,821 49% ------------- -------- ------------- ------ 8,051 100% 7,857 100% ------------- -------- ------------- ------ Current Liabilities Long-term debt due within twelve months 216 256 Short-term debt 1,104 1,346 Short-term debt - CSW Credit, Inc. 556 754 Loan notes 22 24 Accounts payable 547 581 Accrued taxes 162 187 Accrued interest 105 64 Other 196 175 ------------- ------------- 2,908 3,387 ------------- ------------- Deferred Credits Accumulated deferred income taxes 2,420 2,431 Investment tax credits 251 254 Other 202 233 ------------- ------------- 2,873 2,918 ------------- ------------- $ 13,832 $ 14,162 ============= =============
The accompanying notes to consolidated financial statements are an integral part of these statements. 10 Consolidated Statements of Cash Flows (unaudited) Central and South West Corporation
Three Months Ended March 31, ------------------------ 2000 1999 ------- ------- (millions) OPERATING ACTIVITIES Net income for common stock $ 38 $ 45 Non-cash Items and Adjustments Depreciation and amortization 155 139 Deferred income taxes and investment tax credits (15) (14) Preferred stock dividends 1 2 Changes in Assets and Liabilities Accounts receivable 118 185 Accounts payable (38) (72) Accrued taxes (28) (1) Fuel inventory 2 (18) Fuel recovery 16 23 Other 32 (40) ------- ------- 281 249 ------- ------- INVESTING ACTIVITIES Construction expenditures (163) (125) CSW Energy/CSW International projects (7) (41) Other (29) (17) ------- ------- (199) (183) ------- ------- FINANCING ACTIVITIES Common stock sold 1 1 Long-term debt sold 321 -- Reacquisition/Maturity of long-term debt (60) (1) Special deposit for reacquisition of long-term debt 50 -- Other financing activities 9 29 Change in short-term debt (440) (32) Payment of dividends (93) (95) ------- ------- (212) (98) ------- ------- Effect of exchange rate changes on cash and cash equivalents (2) (2) ------- ------- Net Change in Cash and Cash Equivalents (132) (34) Cash and Cash Equivalents at Beginning of Year 270 157 ------- ------- Cash and Cash Equivalents at End of Period $ 138 $ 123 ======= ======= SUPPLEMENTARY INFORMATION Interest paid less amounts capitalized $ 71 $ 86 ======= ======= Income taxes paid $ 3 $ 13 ======= =======
The accompanying notes to consolidated financial statements are an integral part of these statements. 11 CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES RESULTS OF OPERATIONS Set forth below is information concerning the consolidated results of operations of CSW for the three month periods ended March 31, 2000 and March 31, 1999. For information concerning the results of operations for each of the U.S. Electric Operating Companies, see the discussions under the heading RESULTS OF OPERATIONS following the financial statements of each of the U.S. Electric Operating Companies. COMPARISON OF THE QUARTERS ENDED MARCH 31, 2000 AND 1999 Net income for common stock decreased to $38 million in the first quarter of 2000 from $45 million in 1999 due primarily to higher depreciation and amortization expense and other operating expenses, partially offset by lower taxes, other than income and lower operating income tax expense. Other factors affecting earnings are discussed below. In the first quarter of 2000, the U.S. Electric Operating Companies and U.K. Electric contributed the following percentages to CSW's results of operations. Corporate U.S. U.K. Total Items and Electric Electric Electric Other Total --------------------------------------------------- Operating Revenues 59% 37% 96% 4% 100% Operating Income 59% 36% 95% 5% 100% Net Income for Common Stock 59% 81% 140% (40)% 100% Operating revenues increased $74 million, or 6%, in the first quarter of 2000 compared to the same period a year ago. U.S. Electric revenues increased $67 million, or 10%, due to: - - an increase of $46 million in fuel revenues due to higher fuel costs and purchased power, as discussed below, - - an increase of $31 million in other U.S. Electric revenues due primarily to higher transmission access revenues, despite an adjustment to transmission revenues as discussed below, and - - earnings cap adjustments recorded by SWEPCO and WTU in the first quarter of 2000. Those adjustments resulted from the final 1999 earnings cap filings made with the Texas Commission. See NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS - Electric Utility Restructuring Legislation for additional information. The increase in U.S. Electric revenues was partially offset by a $10 million reduction in non-fuel U.S. Electric revenues resulting from a 2% decline in KWH sales resulting from mild weather. In the first quarter of 2000, a true-up adjustment was recorded which decreased transmission revenues and transmission expenses by approximately $10.7 million under CSW's revised transmission coordination agreement, as described more fully in NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS to CSW's financial statements in its Form 10-K at December 31, 1999. The net effect of the adjustment did not significantly affect earnings. United Kingdom revenues increased $9 million, or 2%, in the first quarter of 2000 compared to the same period a year ago, due to higher revenues of $41 million from SEEBOARD's domestic gas supply company, Beacon Gas reflecting SEEBOARD's increased ownership interest in that company. The increase was offset 12 in part by a reduction in domestic electricity supply revenues following the opening of retail competition in that market. U.S. Electric fuel expense, increased $50 million, or 22%, because the average unit fuel cost increased to $1.81 per MMbtu in the first quarter of 2000 from $1.54 per MMbtu in the first quarter of 1999 due primarily to higher spot market natural gas prices. Purchased power expense increased $11 million, or 38%, for the comparison periods due primarily to a higher volume of economy energy purchases and capacity payments. United Kingdom cost of sales increased $2 million, or 1%, during the first quarter of 2000 compared to the same period a year ago due primarily to increased cost of sales from Beacon Gas reflecting SEEBOARD's increased ownership interest in that company, offset by the reduction in domestic electricity supply following the opening to competition in this market. Other operating expenses increased $17 million, or 7%, due primarily to increased power plant costs, expenses for CPL's portion of an early retirement and severance program at STP, and higher insurance costs. SEEBOARD operating expenses were higher reflecting SEEBOARD's increased ownership interest in Beacon Gas. Depreciation and amortization expense increased $17 million, or 13%, in the first quarter of 2000 compared to the same period last year due to increases of depreciable property at most CSW subsidiaries and accelerated amortization of certain regulatory assets as prescribed by state utility commissions. See MD&A - COMPETITION AND INDUSTRY CHALLENGES - Restructuring Readiness for additional information. Taxes other than income decreased $13 million, or 24%, due to lower ad valorem and Texas state franchise taxes. Operating income taxes declined $9 million, or 45%, in the first quarter of 2000 due primarily to lower taxable income. Interest and other charges increased $3 million, or 3%, in the first quarter of 2000 due primarily to higher average borrowings and marginally higher rates. 13 CPL CENTRAL POWER AND LIGHT COMPANY PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. 14 Consolidated Statements of Income (unaudited) Central Power and Light Company
Three Months Ended March 31, -------------------------------- 2000 1999 ---------- ---------- (thousands) Electric Operating Revenues $ 316,328 $ 282,278 Operating Expenses and Taxes Fuel 89,397 67,915 Purchased power 20,420 13,147 Other operating 74,296 61,827 Maintenance 16,422 15,226 Depreciation and amortization 54,198 43,114 Taxes, other than income 16,702 20,645 Income taxes 5,590 13,784 ---------- ---------- 277,025 235,658 ---------- ---------- Operating Income 39,303 46,620 ---------- ---------- Other Income and (Deductions) Other 270 (730) Non-operating income taxes 277 1,678 ---------- ---------- 547 948 Income Before Interest Charges 39,850 47,568 ---------- ---------- Interest Charges Interest on long-term debt 24,060 22,829 Distributions on Trust Preferred Securities 3,000 3,000 Interest on short-term debt and other 5,573 5,064 Allowance for borrowed funds used during construction (1,575) (873) ---------- ---------- 31,058 30,020 ---------- ---------- Net Income 8,792 17,548 Less: Preferred stock dividends 60 1,812 ---------- ---------- Net Income for Common Stock $ 8,732 $ 15,736 ========== ==========
The accompanying notes to consolidated financial statements as they relate to CPL are an integral part of these statements. 15 Consolidated Balance Sheets Central Power and Light Company
March 31, December 31, 2000 1999 (unaudited) (audited) ----------- ------------ (thousands) ASSETS Electric Utility Plant Production $3,155,806 $ 3,152,319 Transmission 568,131 566,629 Distribution 1,167,172 1,157,091 General 234,725 307,378 Construction work in progress 128,761 101,550 Nuclear fuel 226,970 226,927 ----------- ------------ 5,481,565 5,511,894 Less - Accumulated depreciation and amortization 2,235,154 2,263,925 ----------- ------------ 3,246,411 3,247,969 ----------- ------------ Current Assets Cash and temporary cash investments 3,186 5,830 Special deposits for reacquisition of long-term debt -- 50,000 Accounts receivable 62,635 64,482 Materials and supplies, at average cost 56,397 58,196 Fuel inventory at LIFO cost 24,786 26,434 Under-recovered fuel costs 29,968 30,911 Prepayments and other 2,977 5,353 ----------- ------------ 179,949 241,206 ----------- ------------ Deferred Charges and Other Assets Regulatory assets 208,888 226,076 Regulatory assets designated for securitization 953,249 953,249 Nuclear decommissioning trust 90,979 86,122 Other 80,786 93,228 ----------- ------------ 1,333,902 1,358,675 ----------- ------------ $4,760,262 $ 4,847,850 =========== ============
The accompanying notes to consolidated financial statements as they relate to CPL are an integral part of these statements. 16 Consolidated Balance Sheets Central Power and Light Company
March 31, December 31, 2000 1999 (unaudited) (audited) ------------ ------------ CAPITALIZATION AND LIABILITIES (thousands) Capitalization Common stock: $25 par value Authorized shares: 12,000,000 Issued and outstanding shares: 6,755,535 $ 168,888 $ 168,888 Paid-in capital 405,000 405,000 Retained earnings 733,957 764,225 ------------ ------------ 1,307,845 45% 1,338,113 48% ------------ ---- ------------ ---- Preferred stock 5,967 --% 5,967 --% CPL-obligated, mandatorily redeemable preferred securities of subsidiary trust holding solely Junior Subordinated Debentures of CPL 150,000 5% 150,000 5% Long-term debt 1,454,551 50% 1,304,541 47% ------------ ---- ------------ ---- 2,918,363 100% 2,798,621 100% ------------ ---- ------------ ---- Current Liabilities Long-term debt due within twelve months 100,000 150,000 Advances from affiliates 159,892 322,158 Accounts payable 96,120 88,702 Payables to affiliates 35,211 33,162 Accrued taxes 38,314 41,121 Accumulated deferred income taxes 1,478 2,103 Accrued interest 29,608 14,723 Other 24,027 19,330 ------------ ------------ 484,650 671,299 ------------ ------------ Deferred Credits Accumulated deferred income taxes 1,215,668 1,234,942 Investment tax credits 132,005 133,306 Other 9,576 9,682 ------------ ------------ 1,357,249 1,377,930 ------------ ------------ $ 4,760,262 $ 4,847,850 ============ ============
The accompanying notes to consolidated financial statements as they relate to CPL are an integral part of these statements. 17 Consolidated Statements of Cash Flows (unaudited) Central Power and Light Company
Three Months Ended March 31, -------------------------- 2000 1999 --------- --------- (thousands) OPERATING ACTIVITIES Net Income $ 8,792 $ 17,548 Non-cash Items Included in Net Income Depreciation and amortization 57,988 48,110 Deferred income taxes and investment tax credits (19,590) (9,785) Changes in Assets and Liabilities Accounts receivable 1,847 (3,668) Fuel inventory 1,648 (2,653) Material and supplies 1,799 1,713 Accrued interest 14,885 3,486 Accounts payable 6,744 (16,156) Payables to affiliates 2,049 (6,367) Accrued taxes (2,807) 6,487 Fuel recovery 943 9,109 Deferred charges, other 12,442 2,514 Other 8,643 (426) --------- --------- 95,383 49,912 --------- --------- INVESTING ACTIVITIES Construction expenditures (44,406) (37,018) Other (1,721) (1,600) --------- --------- (46,127) (38,618) --------- --------- FINANCING ACTIVITIES Issuance of long-term debt 149,426 -- Reacquisition of long-term debt (50,000) -- Special deposit for reacquisition of long-term debt 50,000 -- Change in advances from affiliates (162,266) 32,340 Payment of dividends (39,060) (39,056) --------- --------- (51,900) (6,716) --------- --------- Net Change in Cash and Cash Equivalents (2,644) 4,578 Cash and Cash Equivalents at Beginning of Year 5,830 5,195 --------- --------- Cash and Cash Equivalents at End of Period $ 3,186 $ 9,773 ========= ========= SUPPLEMENTARY INFORMATION Interest paid less amounts capitalized (includes distributions on Trust Preferred Securities) $ 15,348 $ 22,327 ========= ========= Income taxes paid/(refund received) $ -- $ (3,727) ========= =========
The accompanying notes to consolidated financial statements as they relate to CPL are an integral part of these statements. 18 CENTRAL POWER AND LIGHT COMPANY RESULTS OF OPERATIONS COMPARISON OF THE QUARTERS ENDED MARCH 31, 2000 AND 1999 Net income for common stock for the first quarter of 2000 was $8.8 million, a decrease of $7.0 million, or 45%, from the first quarter of 1999. The decrease resulted primarily from higher operating expenses, partially offset by an increase in revenues, as well as a reduction in preferred stock dividends. Electric operating revenues increased $34.1 million, or 12%, compared to the first quarter of 1999. Fuel-related revenues increased $20.1 million due to higher fuel and purchased power expenses as discussed in the following paragraph. Non-fuel revenues increased $14.0 million resulting primarily from higher miscellaneous transmission revenues. Fuel expense increased $21.5 million, or 32%, in the first quarter of 2000 when compared to 1999 due primarily to a rise in average unit fuel costs. The average unit fuel cost increased from $1.33 per MMbtu in 1999 to $1.81 per MMbtu in the first quarter of 2000, resulting mainly from higher spot market natural gas prices. Also contributing to the increase in fuel costs was a maintenance outage at STP Unit 1 which decreased nuclear generation by approximately 16% in the first quarter of 2000. The decreased nuclear generation was replaced by an increase in gas generation and purchased power. Purchased power expenses for the first quarter of 2000 increased $7.3 million, or 55%, when compared to the same period in 1999, due primarily to higher economy purchases, cogeneration purchases as well as increased reservation and capacity charges. Other operating expenses were $74.3 million during the first quarter of 2000, an increase of $12.5 million, or 20%, from the same period in 1999. The increase was due primarily to higher insurance expenses and expenses for CPL's portion of an early retirement and severance program due to restructuring at STP. Depreciation and amortization expenses increased $11.1 million, or 26%, in 2000 compared to the same period last year reflecting the final 1999 earnings cap filings made with the Texas Commission. See NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS - Electric Utility Restructuring Legislation and MD&A - Securitization of Generation-related Regulatory Assets and Stranded Costs for further discussion. Taxes, other than income, decreased $3.9 million to $16.7 million in the first quarter of 2000 resulting mainly from lower ad valorem tax expense. Income tax expense associated with utility operations decreased $8.2 million for the first quarter of 2000 as a result of lower taxable income and a decrease in the income portion of Texas state franchise tax expense. Preferred stock dividends decreased $1.8 million in the first quarter of 2000 as a result of the redemption of $160 million auction preferred stock in the fourth quarter of 1999. 19 PSO PUBLIC SERVICE COMPANY OF OKLAHOMA PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. 20 Consolidated Statements of Income (unaudited) Public Service Company of Oklahoma
Three Months Ended March 31, ------------------------------- 2000 1999 ---------- ---------- (thousands) Electric Operating Revenues $ 161,329 $ 151,030 ---------- ---------- Operating Expenses and Taxes Fuel 71,586 61,881 Purchased power 20,666 14,044 Other operating 22,922 25,713 Maintenance 8,586 9,207 Depreciation and amortization 18,913 18,455 Taxes, other than income 7,217 8,059 Income taxes 68 1,143 ---------- ---------- 149,958 138,502 ---------- ---------- Operating Income 11,371 12,528 ---------- ---------- Other Income and (Deductions) Allowance for equity funds used during construction -- 81 Other 139 (1,311) Non-operating income taxes 83 709 ---------- ---------- 222 (521) ---------- ---------- Income Before Interest Charges 11,593 12,007 ---------- ---------- Interest Charges Interest on long-term debt 6,526 6,610 Distributions on Trust Preferred Securities 1,500 1,500 Interest on short-term debt and other 2,518 1,169 Allowance for borrowed funds used during construction (627) (192) ---------- ---------- 9,917 9,087 ---------- ---------- Net Income 1,676 2,920 Less: Preferred stock dividends 53 53 ---------- ---------- Net Income for Common Stock $ 1,623 $ 2,867 ========== ==========
The accompanying notes to consolidated financial statements as they relate to PSO are an integral part of these statements. 21 Consolidated Balance Sheets Public Service Company of Oklahoma - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) ------------------- ----------------- (thousands) ASSETS Electric Utility Plant Production $ 916,087 $ 916,889 Transmission 392,420 392,029 Distribution 907,281 897,516 General 211,038 217,368 Construction work in progress 54,529 35,903 ------------------- ----------------- 2,481,355 2,459,705 Less - Accumulated depreciation and amortization 1,116,888 1,114,255 ------------------- ----------------- 1,364,467 1,345,450 ------------------- ----------------- Current Assets Cash 2,943 3,077 Accounts receivable 27,725 34,584 Materials and supplies, at average cost 33,896 34,289 Fuel inventory, at LIFO cost 23,879 24,143 Under-recovered fuel costs -- 6,469 Accumulated deferred income taxes 21,955 19,145 Prepayments and other 2,463 1,668 ------------------- ----------------- 112,861 123,375 ------------------- ----------------- Deferred Charges and Other Assets 69,176 75,046 ------------------- ----------------- $ 1,546,504 $ 1,543,871 =================== =================
The accompanying notes to consolidated financial statements as they relate to PSO are an integral part of these statements. 22 Consolidated Balance Sheets Public Service Company of Oklahoma - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) -------------- -------------- CAPITALIZATION AND LIABILITIES (thousands) 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 126,642 142,018 -------------- -------------- 463,872 52% 479,248 52% -------------- ------- -------------- ------- Preferred stock 5,286 1% 5,286 --% PSO-obligated, mandatorily redeemable preferred securities of subsidiary trust holding solely Junior Subordinated Debentures of PSO 75,000 8% 75,000 8% Long-term debt 344,592 39% 364,516 40% -------------- ------- -------------- ------- 888,750 100% 924,050 100% -------------- ------- -------------- ------- Current Liabilities Long-term debt due within twelve months 30,000 20,000 Advances from affiliates 110,203 79,169 Payables to affiliates 29,204 34,043 Accounts payable 62,973 44,088 Customer deposits 17,974 17,752 Accrued taxes 6,527 18,480 Accrued interest 10,312 5,420 Over-recovered fuel costs 2,798 -- Other 5,856 5,085 -------------- -------------- 275,847 224,037 -------------- -------------- Deferred Credits Accumulated deferred income taxes 308,608 302,727 Investment tax credits 37,126 37,574 Income tax related regulatory liabilities, net 32,215 32,826 Other 3,958 22,657 -------------- -------------- 381,907 395,784 -------------- -------------- $ 1,546,504 $ 1,543,871 ============== ==============
The accompanying notes to consolidated financial statements as they relate to PSO are an integral part of these statements. 23 Consolidated Statements of Cash Flows (unaudited) Public Service Company of Oklahoma
Three Months Ended March 31, ------------------------------ 2000 1999 -------- -------- (thousands) OPERATING ACTIVITIES Net Income $ 1,676 $ 2,920 Non-cash Items Included in Net Income Depreciation and amortization 19,515 18,700 Deferred income taxes and investment tax credits 2,012 (1,967) Changes in Assets and Liabilities Accounts receivable 6,859 1,224 Prepayments and other (795) (2,990) Accounts payable 14,164 (19,898) Accrued taxes (11,953) (9,022) Accrued interest 4,892 2,581 Other deferred credits (18,699) 1,052 Fuel recovery 9,267 9,419 Other 7,250 (1,760) -------- -------- 34,188 259 -------- -------- INVESTING ACTIVITIES Construction expenditures (34,760) (21,299) Other (3,543) 1,775 -------- -------- (38,303) (19,524) -------- -------- FINANCING ACTIVITIES Change in advances from affiliates 31,034 30,901 Retirement of long-term debt (10,000) -- Payment of dividends (17,053) (15,053) -------- -------- 3,981 15,848 -------- -------- Net Change in Cash and Cash Equivalents (134) (3,417) Cash and Cash Equivalents at Beginning of Year 3,077 4,670 -------- -------- Cash and Cash Equivalents at End of Period $ 2,943 $ 1,253 ======== ======== SUPPLEMENTARY INFORMATION Interest paid less amounts capitalized (includes distributions on Trust Preferred Securities) $ 4,238 $ 6,125 ======== ======== Income taxes paid $ 2,850 $ 5,510 ======== ========
The accompanying notes to consolidated financial statements as they relate to PSO are an integral part of these statements. 24 PUBLIC SERVICE COMPANY OF OKLAHOMA RESULTS OF OPERATIONS COMPARISON OF THE QUARTERS ENDED MARCH 31, 2000 AND 1999 Net income for common stock for the first quarter of 2000 was $1.7 million, a decrease of $1.2 million compared to 1999. The decrease resulted primarily from a net increase in operating expenses and operating income taxes. Electric operating revenues increased $10.3 million, or 7%, higher during the first quarter of 2000 compared to the first quarter of 1999 due primarily to a $10.6 million increase in fuel-related revenues as discussed in the following paragraph. Non-fuel related revenues decreased $5.7 million due primarily to reclassifications related to CSW's transmission coordination agreement. Fuel expense increased $9.7 million, or 16%, for the first quarter of 2000 compared to the first quarter of 1999 due primarily to an increase in average unit fuel cost. The average unit fuel costs increased from $1.70 per MMbtu in the first quarter of 1999 to $2.05 per MMbtu in the first quarter of 2000 due primarily to increased natural gas prices. Purchased power increased $6.6 million, due primarily to higher economy energy purchases. Other operating expenses were $22.9 million in the first three months of 2000, an 11% decrease from 1999, due primarily to lower transmission expenses resulting from reclassifications related to CSW's transmission coordination agreement. Income tax expense associated with utility operations decreased $1.1 million due primarily to lower taxable income. Other income and deductions increased $0.7 million in the first three months of 2000 primarily as a result of the absence of losses on equity investments in 1999. Interest charges increased $0.8 million during the first quarter of 2000 when compared to the same period in 1999 primarily as a result of increased short-term borrowings during the first quarter of 2000. 25 SWEPCO SOUTHWESTERN ELECTRIC POWER COMPANY PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. 26 Consolidated Statements of Income (unaudited) Southwestern Electric Power Company
Three Months Ended March 31, ---------------------------- 2000 1999 ---------- --------- (thousands) Electric Operating Revenues $ 212,156 $ 197,064 ---------- --------- Operating Expenses and Taxes Fuel 89,352 76,271 Purchased power 11,698 6,193 Other operating 33,733 30,180 Maintenance 14,306 12,244 Depreciation and amortization 27,357 26,206 Taxes, other than income 10,924 15,794 Income taxes 1,428 3,807 ---------- --------- 188,798 170,695 ---------- --------- Operating Income 23,358 26,369 ---------- --------- Other Income and (Deductions) Allowance for equity funds used during construction -- 47 Other (282) (454) Non-operating income taxes 49 683 ---------- --------- (233) 276 ---------- --------- Income Before Interest Charges 23,125 26,645 ---------- --------- Interest Charges Interest on long-term debt 9,918 9,802 Distributions on Trust Preferred Securities 2,166 2,166 Interest on short-term debt and other 3,533 2,391 Allowance for borrowed funds used during construction (782) (367) ---------- --------- 14,835 13,992 ---------- --------- Net Income 8,290 12,653 Less: Preferred stock dividends 57 57 ---------- --------- Net Income for Common Stock $ 8,233 $ 12,596 ========== =========
The accompanying notes to consolidated financial statements as they relate to SWEPCO are an integral part of these statements. 27 Consolidated Balance Sheets Southwestern Electric Power Company - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) ----------------- ----------------- (thousands) ASSETS Electric Utility Plant Production $ 1,401,410 $ 1,402,062 Transmission 485,312 484,327 Distribution 963,814 958,318 General 333,115 333,949 Construction work in progress 70,390 52,775 ----------------- ----------------- 3,254,041 3,231,431 Less - Accumulated depreciation and amortization 1,404,261 1,384,242 ----------------- ----------------- 1,849,780 1,847,189 ----------------- ----------------- Current Assets Cash 2,476 2,018 Accounts receivable 32,167 45,511 Receivables from affiliates 11,425 6,053 Materials and supplies, at average cost 26,229 26,420 Fuel inventory, at average cost 59,547 60,844 Accumulated deferred income taxes 2,003 1,583 Prepayments and other 16,655 16,978 ----------------- ----------------- 150,502 159,407 ----------------- ----------------- Deferred Charges and Other Assets 102,943 101,202 ----------------- ----------------- $ 2,103,225 $ 2,107,798 ================= =================
The accompanying notes to consolidated financial statements as they relate to SWEPCO are an integral part of these statements. 28 Consolidated Balance Sheets Southwestern Electric Power Company - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) ------------ ------------ CAPITALIZATION AND LIABILITIES (thousands) 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 280,751 288,018 ------------ ------------ 661,411 47% 668,678 52% ------------ ------ ------------ ------ Preferred stock 4,706 --% 4,706 --% SWEPCO-obligated, mandatorily redeemable preferred securities of subsidiary trust holding solely Junior Subordinated Debentures of SWEPCO 110,000 8% 110,000 9% Long-term debt 645,527 45% 495,973 39% ------------ ------ ------------ ------ 1,421,644 100% 1,279,357 100% ------------ ------ ------------ ------ Current Liabilities Long-term debt due within twelve months 45,595 45,595 Advances from affiliates 13,289 140,897 Accounts payable 58,625 60,689 Payables to affiliates 40,532 37,353 Customer deposits 14,803 14,236 Accrued taxes 16,655 24,374 Accrued interest 12,731 9,792 Over-recovered fuel costs 3,612 2,888 Other 15,364 13,874 ------------ ------------ 221,206 349,698 ------------ ------------ Deferred Credits Accumulated deferred income taxes 388,631 380,495 Investment tax credits 56,528 57,649 Other 15,216 40,599 ------------ ------------ 460,375 478,743 ------------ ------------ $ 2,103,225 $ 2,107,798 ============ ============
The accompanying notes to consolidated financial statements as they relate to SWEPCO are an integral part of these statements. 29 Consolidated Statements of Cash Flows (unaudited) Southwestern Electric Power Company
Three Months Ended March 31, ---------------------------- 2000 1999 -------- -------- (thousands) OPERATING ACTIVITIES Net Income $ 8,290 $ 12,653 Non-cash Items Included in Net Income Depreciation and amortization 28,698 27,403 Deferred income taxes and investment tax credits 4,762 (4,510) Changes in Assets and Liabilities Accounts receivable 7,972 (4,130) Fuel inventory 1,297 (13,109) Accounts payable (2,173) (26,393) Payables to affiliates 3,179 (8,789) Accrued taxes (7,719) 11,121 Other deferred credits (25,383) 4,582 Other 6,343 (2,909) -------- -------- 25,266 (4,081) -------- -------- INVESTING ACTIVITIES Construction expenditures (28,062) (17,250) Other (2,645) 383 -------- -------- (30,707) (16,867) -------- -------- FINANCING ACTIVITIES Redemption of preferred stock -- (1) Proceeds from issuance of long-term debt 149,515 -- Retirement of long-term debt (450) (1,637) Change in advances from affiliates (127,608) 47,796 Payment of dividends (15,558) (27,057) -------- -------- 5,899 19,101 -------- -------- Net Change in Cash and Cash Equivalents 458 (1,847) Cash and Cash Equivalents at Beginning of Year 2,018 4,444 -------- -------- Cash and Cash Equivalents at End of Period $ 2,476 $ 2,597 ======== ======== SUPPLEMENTARY INFORMATION Interest paid less amounts capitalized (includes distributions on Trust Preferred Securities) $ 7,172 $ 14,485 ======== ======== Income taxes paid $ 1,205 $ 1,676 ======== ========
The accompanying notes to consolidated financial statements as they relate to SWEPCO are an integral part of these statements. 30 SOUTHWESTERN ELECTRIC POWER COMPANY RESULTS OF OPERATIONS COMPARISON OF THE QUARTERS ENDED MARCH 31, 2000 AND 1999 SWEPCO's net income for common stock for the first quarter of 2000 was $8.2 million, which was $4.4 million, or 35%, lower than the first quarter of 1999. The decrease resulted primarily from increased other operating and maintenance expenses and increased interest expense, offset in part by increased non-fuel revenues and lower taxes, other than income. Electric operating revenues for the first quarter of 2000 increased $15.1 million, or 8%, to $212.2 million compared to the same period of 1999. The increase resulted primarily from increased fuel-related revenues of $11.6 million due to higher fuel and purchased power expenses as discussed in the following paragraph and increased sales for resale to other utilities of $3.4 million as a result of increased demand. The increase in revenues was also affected by a $4.4 million true-up adjustment under the final 1999 earnings cap filing related to the Texas Legislation. See NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS - Electric Utility Restructuring Legislation for additional information. These increases were partially offset by decreased non-fuel-related revenues of $1.1 million due primarily to rate reductions in Louisiana and Arkansas implemented in December 1999 and a $1.9 million reclassification related to CSW's transmission coordination agreement. Fuel and purchased power expenses increased for the first quarter of 2000 compared to the same period in 1999. Fuel expense increased $13.1 million, or 17%, to $89.4 million resulting primarily from increased generation, which was offset in part by decreased average unit fuel costs. Average unit fuel costs decreased from $1.61 per MMbtu in 1999 to $1.56 per MMbtu in the first quarter of 2000 due to lower spot market coal and lignite prices. Also contributing to the decrease in average unit fuel costs was a decrease in natural gas generation because of its relatively higher costs per MMbtu. Purchased power expenses for the first quarter of 2000 increased $5.5 million compared to the same period in 1999 due primarily to an increase in firm energy contract purchases. Other operating expenses for the first quarter of 2000 were $33.7 million, an increase of $3.6 million, or 12%, compared to the same period in 1999 as a result of increased customer accounts expenses and increased insurance expenses, which were offset in part by decreased transmission expenses. The decrease in transmission expenses was due primarily to reclassifications related to CSW's transmission coordination agreement. Maintenance expenses for the first quarter of 2000 were $14.3 million, an increase of $2.1 million, or 17%, when compared to the same period in 1999, due primarily to increased tree trimming maintenance activities and increased overhead power line maintenance activities. Depreciation and amortization expenses were $27.4 million for the first quarter of 2000, an increase of $1.2 million, or 4%, when compared to the same period in 1999 due to changes in depreciation rates associated with rate-related settlements in Arkansas and Louisiana in 1999. Taxes, other than income decreased $4.9 million, or 31%, for the first quarter of 2000 compared to the same period of 1999 as a result of decreased ad valorem taxes expense and decreased franchise tax expense. 31 Income taxes associated with utility operations during the first quarter of 2000 decreased $1.4 million, a decrease of $2.4 million, due primarily to lower taxable income. Interest charges on short-term and other debt increased $1.1 million as a result of an increase in the level of short-term borrowings. 32 WTU WEST TEXAS UTILITIES COMPANY PART I. FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. 33 Statements of Income (unaudited) West Texas Utilities Company
Three Months Ended March 31, ------------------------------ 2000 1999 ---------- ---------- (thousands) Electric Operating Revenues $ 96,535 $ 81,052 ---------- ---------- Operating Expenses and Taxes Fuel 28,580 23,134 Purchased power 14,893 8,294 Other operating 19,761 20,133 Maintenance 4,862 4,178 Depreciation and amortization 11,241 10,774 Taxes, other than income 4,963 7,488 Income taxes 2,102 (247) ---------- ---------- 86,402 73,754 ---------- ---------- Operating Income 10,133 7,298 ---------- ---------- Other Income and (Deductions) Allowance for equity funds used during construction 62 96 Other (236) (199) Non-operating income taxes 84 219 ---------- ---------- (90) 116 ---------- ---------- Income Before Interest Charges 10,043 7,414 ---------- ---------- Interest Charges Interest on long-term debt 5,088 5,088 Interest on short-term debt and other 1,011 1,162 Allowance for borrowed funds used during construction (241) (143) ---------- ---------- 5,858 6,107 ---------- ---------- Net Income 4,185 1,307 Less: Preferred stock dividends 26 26 ---------- ---------- Net Income for Common Stock $ 4,159 $ 1,281 ========== ==========
The accompanying notes to financial statements as they relate t WTU are an integral part of these statements. 34 Balance Sheets West Texas Utilities Company - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) -------------- -------------- (thousands) ASSETS Electric Utility Plant Production $ 429,449 $ 429,783 Transmission 220,394 220,479 Distribution 405,349 403,206 General 110,537 113,945 Construction work in progress 25,524 15,131 -------------- -------------- 1,191,253 1,182,544 Less - Accumulated depreciation and amortization 498,389 495,847 -------------- -------------- 692,864 686,697 -------------- -------------- Current Assets Cash 3,078 3,810 Accounts receivable 43,148 50,579 Materials and supplies, at average cost 13,936 14,029 Fuel inventory, at LIFO cost 17,946 17,133 Accumulated deferred income taxes 408 -- Under-recovered fuel costs 9,291 14,652 Prepayments and other 2,713 2,883 -------------- -------------- 90,520 103,086 -------------- -------------- Deferred Charges and Other Assets Deferred Oklaunion costs 7,421 8,352 Other 45,806 63,070 -------------- -------------- 53,227 71,422 -------------- -------------- $ 836,611 $ 861,205 ============== ==============
The accompanying notes to financial statements as they relate to WTU are an integral part of these statements. 35 Balance Sheets West Texas Utilities Company - --------------------------------------------------------------------------------
March 31, December 31, 2000 1999 (unaudited) (audited) --------------- --------------- CAPITALIZATION AND LIABILITIES (thousands) 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 115,515 115,856 --------------- --------------- 254,965 49% 255,306 49% --------------- ------- --------------- ------- Preferred stock 2,482 --% 2,482 --% Long-term debt 263,728 51% 263,686 51% ------- ------- --------------- --------------- 521,175 100% 521,474 100% --------------- ------- --------------- ------- --------------- --------------- Current Liabilities Long-term debt due within twelve months 40,000 40,000 Advances from affiliates 4,602 21,408 Payables to affiliates 15,401 18,856 Accounts payable 38,585 39,611 Accrued taxes 12,647 12,458 Accumulated deferred income taxes -- 1,653 Accrued interest 8,525 4,165 Refund due customers 2,800 6,000 Other 6,157 4,799 --------------- --------------- 128,717 148,950 --------------- --------------- Deferred Credits Accumulated deferred income taxes 145,008 148,746 Investment tax credits 25,005 25,323 Income tax related regulatory liabilities, net 13,100 13,057 Other 3,606 3,655 --------------- --------------- 186,719 190,781 --------------- --------------- $ 836,611 $ 861,205 =============== ===============
The accompanying notes to financial statements as they relate to WTU are an integral part of these statements. 36 Statements of Cash Flows (unaudited) West Texas Utilities Company
Three Months Ended -------------------------- March 31, 2000 1999 -------- -------- (thousands) OPERATING ACTIVITIES Net Income $ 4,185 $ 1,307 Non-cash Items Included in Net Income Depreciation and amortization 11,241 11,051 Deferred income taxes and investment tax credits (6,073) (1,922) Changes in Assets and Liabilities Accounts receivable 7,431 367 Fuel inventory (813) (907) Accounts payable (1,026) (456) Payables to affiliates (3,455) (4,123) Accrued taxes 189 (4,543) Accrued interest 4,360 3,875 Fuel recovery 5,361 3,742 Other deferred charges 16,776 578 Other (1,310) (875) -------- -------- 36,866 8,094 -------- -------- INVESTING ACTIVITIES Construction expenditures (15,284) (12,445) Other (982) (2,077) -------- -------- (16,266) (14,522) -------- -------- FINANCING ACTIVITIES Payment of dividends (4,526) (7,026) Change in advances from affiliates (16,806) 14,061 -------- -------- (21,332) 7,035 -------- -------- Net Change in Cash and Cash Equivalents (732) 607 Cash and Cash Equivalents at Beginning of Year 3,810 2,093 -------- -------- Cash and Cash Equivalents at End of Period $ 3,078 $ 2,700 ======== ======== SUPPLEMENTARY INFORMATION Interest paid less amounts capitalized $ 1,214 $ 1,200 ======== ======== Income taxes paid $ -- $ 295 ======== ========
The accompanying notes to financial statements as they relate to WTU are an integral part of these statements. 37 WEST TEXAS UTILITIES COMPANY RESULTS OF OPERATIONS COMPARISON OF THE QUARTERS ENDED MARCH 31, 2000 AND 1999 Net income for common stock increased $2.9 million to $4.2 million during the first quarter of 2000 from $1.3 million in the first quarter of 1999. The increase was due primarily to increased non-fuel revenues and lower taxes, other than income, offset in part by higher operating income taxes. Electric operating revenues increased $15.5 million, or 19%, in the first quarter of 2000 when compared to the first quarter of 1999. Fuel-related revenues increased $8.5 million in the first quarter of 2000 compared to the same period last year due primarily to higher fuel and purchased power expenses as discussed below. Non-fuel revenue increased $7.0 million in the first quarter of 2000 compared to the same period last year due primarily to a true-up adjustment under the final 1999 earnings cap filing related to the Texas Legislation. See ITEM 1. NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS - Electric Utility Restructuring Legislation. Also included in this increase was an increase in revenues for services rendered but not yet billed. Fuel expense increased $5.4 million, or 24%, in the first quarter of 2000 compared to the first quarter of 1999, due primarily to an increase in average unit fuel cost from $1.75 per MMbtu in 1999 to $2.40 per MMbtu in 2000 related to an increase in the spot market price of natural gas. Purchased power increased $6.6 million to $14.9 million in the first quarter of 2000 compared to the same period last year due primarily to increased economy energy purchases. Taxes, other than income decreased $2.5 million in the first quarter of 2000 compared to the same period in 1999 due primarily to lower ad valorem and state franchise taxes. Income tax expense associated with utility operations increased $2.3 million in the first quarter of 2000 compared to the same period last year as a result of higher taxable income. 38 INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT NOTE 1. PRINCIPLES OF PREPARATION CSW, CPL, PSO, SWEPCO, WTU NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS CSW, CPL, PSO, SWEPCO, WTU NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES CSW, CPL, SWEPCO, WTU NOTE 4. COMMON STOCK AND DIVIDENDS CSW, CPL, PSO, SWEPCO, WTU NOTE 5. PROPOSED AEP MERGER CSW, CPL, PSO, SWEPCO, WTU NOTE 6. BUSINESS SEGMENTS CSW NOTE 7. SOUTH AMERICAN INVESTMENTS CSW NOTE 8. LONG-TERM DEBT CSW, CPL, SWEPCO 39 NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. PRINCIPLES OF PREPARATION General The condensed financial statements of the Registrants 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. These condensed financial statements should be read in conjunction with the financial statements and the notes included in the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 1999. The unaudited financial information reflects all adjustments of a normal recurring nature 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. CPL Nuclear Decommissioning of STP At the end of STP's service life, decommissioning is expected to be accomplished using the decontamination method, which is one of the techniques acceptable to the NRC. Using this method, the decontamination activities occur as soon as possible after the end of plant operations. Contaminated equipment is cleaned and removed to a permanent disposal location, and the site is generally returned to its original condition. CPL's decommissioning costs are accrued and funded to an external trust over the expected service life of the STP units. The existing NRC operating licenses will allow the operation of STP Unit 1 until 2027 and Unit 2 until 2028. CPL pays annual decommissioning costs based on the estimated future cost to decommission STP, including escalation for expected inflation to the expected time of decommissioning. CPL estimates its portion of the costs of decommissioning STP to be $289 million in 1999 dollars based on a study completed in 1999. CPL is accruing and recovering these decommissioning costs through rates based on the service life of STP at a rate of $8.2 million per year. The funds are deposited with a trustee under the terms of an irrevocable trust and are reflected in CPL's consolidated balance sheets as Nuclear decommissioning trust, with a corresponding amount accrued in Accumulated depreciation. On CSW's consolidated balance sheets, the irrevocable trust is included in Deferred Charges and Other Assets, Other, with a corresponding amount accrued in Accumulated depreciation. In CSW's and CPL's consolidated statements of income, the income related to the irrevocable trust is recorded in Other Income and Deductions, Other. In CPL's consolidated statements of income, the interest expense related to the irrevocable trust is recorded in Interest Charges, Interest on short-term debt and other. In CSW's consolidated statements of income the interest expense related to the irrevocable trust is recorded in Interest and Other Charges, Interest on short-term debt and other. At March 31, 2000, the nuclear decommissioning trust balance was $91 million. Foreign Currency Translation The financial statements of SEEBOARD U.S.A., which are included in CSW's consolidated financial statements, have been translated from British pounds to U.S. dollars in accordance with SFAS No. 52. All assets and liabilities are translated at the exchange rate at the end of the period and all income 40 statement items are translated at the average exchange rate for the applicable period. All the resulting translation adjustments are recorded directly to Accumulated other comprehensive income on CSW's Consolidated Balance Sheets. Cash flow statement items are translated at a combination of average, historical and current exchange rates. The non-cash impact of the changes in exchange rates on cash and cash equivalents, resulting from the translation of items at the different exchange rates, is shown on CSW's Consolidated Statements of Cash Flows in Effect of exchange rate changes on cash and cash equivalents. One British pound equals the following U.S. dollar amounts: 2000 1999 --------- ---------- At March 31 $1.59 $1.61 Weighted average for 3 months ended March 31 $1.61 $1.62 At December 31 -- $1.62 See NOTE 7. SOUTH AMERICAN INVESTMENTS for information regarding CSW's investments in Brazil and Chile. Securities Available for Sale CSW accounts for its investments in equity securities in accordance with SFAS No. 115. The investments have been designated as available for sale, and as a result, are stated at fair value. Unrealized holding gains and losses, net of related taxes, are included in Accumulated other comprehensive income on CSW's Consolidated Balance Sheets. Information related to these securities available for sale as of March 31, 2000 is presented in the following table: Original Unrealized Holding Cost Gains/(Losses) Fair Value ---------------------------------------------- (millions) Securities available for sale $110 $(54) $56 As of March 31, 2000, CSW International has invested $110 million in stock of a Chilean electric company. Management views its investment in Chile as a long-term investment strategy and believes this investment continues to have significant long-term value and that it is recoverable. Management will continue to closely evaluate the changes in the South American economy and its impact on CSW International's investment in the Chilean electric company. See ITEM 1. NOTE 7. SOUTH AMERICAN INVESTMENTS for additional information. Components of Other Comprehensive Income The following table provides the components that comprise the balance sheet amounts in Accumulated other comprehensive income. March 31, December 31, Components 2000 1999 ----------------------------------------------------------------- (millions) Foreign Currency Adjustments $(7) $6 Unrealized Losses on Securities (27) (20) Minimum Pension Liability (4) (4) ------------------------------ $(38) $(18) ------------------------------ 41 Risk Management CSW has, at times, been exposed to currency and interest rate risks which reflect the floating exchange rate that exists between the U.S. dollar and the British pound. CSW has utilized certain risk management tools, including cross currency swaps, foreign currency futures and foreign currency options, to manage adverse changes in exchange rates and to facilitate financing transactions resulting from CSW's acquisition of SEEBOARD. SEEBOARD has entered into contracts for differences to reduce exposure to fluctuations in the price of electricity purchased from the United Kingdom's electricity power pool. This pool was established at privatization of the United Kingdom's electric industry for the bulk trading of electricity between generators and suppliers. CSW accounts for these transactions as hedge transactions and any gains or losses associated with the risk management tools are recognized in the financial statements at the time the hedge transactions are settled. CSW believes its credit risk in these contracts is negligible. See ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK for additional discussion of these contracts. Reclassifications Certain financial statement items for prior periods have been reclassified to conform to the 2000 presentation. These reclassifications did not impact net income. 2. LITIGATION AND REGULATORY PROCEEDINGS See the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 1999 for additional discussion of litigation and regulatory proceedings. Reference is also made to NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES and ITEM 2. MD&A for additional discussion of litigation and regulatory matters. Electric Utility Restructuring Legislation On June 18, 1999, legislation was signed into law in Texas that will restructure the electric utility industry in the state. The new law, among other things: - - gives Texas customers of investor-owned utilities the opportunity to choose their electric provider beginning January 1, 2002; - - provides for the recovery of stranded costs, which are defined as the excess of net book value of generation assets over the defined market value of those assets; - - requires reductions in nitrogen oxide and sulfur dioxide emissions; - - provides a rate freeze until January 1, 2002 followed by a 6% rate reduction for residential and small commercial customers, an additional rate reduction for low-income customers and a number of customer protections; and - - sets certain limits on capacity owned and controlled by power generation companies. 42 Pursuant to the legislation, rural electric cooperatives and municipal electric systems can choose whether to participate in retail competition. Delivery of the electricity will continue to be the responsibility of the local electric transmission and distribution utility company at regulated prices. Each utility must unbundle its business activities into a retail electric provider, a power generation company and a transmission and distribution utility. The Texas Electric Operating Companies filed their business separation, or "unbundling", plans with the Texas Commission on January 10, 2000. The filings give an overview of how the Texas Electric Operating Companies could separate into three separate companies to meet the requirements of the Texas Legislation. Specifically, the filing describes the financial aspects of separating each company, lists the functions that each of the new business entities will perform, describes how each company will physically separate its operations, discusses the accounting aspects of separation, describes how each company will handle competitive energy services, and introduces interim and permanent codes of conduct. In March 2000, the Texas Commission ruled that CSW's proposed plans were not in compliance with the Texas Legislation. CPL and WTU were ordered to provide revised plans by May 15, 2000, and SWEPCO by June 1, 2000, that would place legal title to the generation assets and to the wire assets of the companies into separate legal entities by January 1, 2002. Other separation issues were presented in a March 31, 2000 cost unbundling filing which will also be updated to reflect the new structure required by the Texas Commission. During 1999, legislation was also enacted in Arkansas that will ultimately restructure the electric utility industry in that state. SWEPCO will file a business unbundling plan in Arkansas in mid-2000. The financial statements of the U.S. Electric Operating Companies have historically reflected the effects of applying the requirements of SFAS No. 71. Pursuant to those requirements, the U.S. Electric Operating Companies have recorded regulatory assets and liabilities (probable future revenues and refunds) to reflect the economic effect of cost-based regulation. When a company determines that its operations or a segment of its operations no longer meets the criteria for applying SFAS No. 71, it is required to apply the provisions of SFAS No. 101. Pursuant to those requirements and further guidance provided in EITF 97-4, a company is required to write-off regulatory assets and liabilities related to deregulated operations, unless recovery of such amounts is provided through rates to be collected in a continuing regulated portion of the company's operations. Additionally, it is required to determine if any plant assets are impaired under SFAS No. 121. Electric utilities that have stranded costs under the Texas Legislation are allowed to recover generation-related regulatory assets that otherwise may not be recoverable in the future competitive market. All or a majority of those costs can be refinanced through securitization, which is a financing structure designed to provide lower financing costs than are available through the conventional utility cost of capital model. The securitized amounts are then recovered through a non-bypassable wires charge. On October 18, 1999, CPL filed an application with the Texas Commission to securitize approximately $1.27 billion of its retail generation-related regulatory assets and approximately $47 million in other qualified costs. Hearings were held before the Texas Commission in December 1999. On February 10, 2000, the Texas Commission tentatively approved a settlement, which will permit CPL to securitize approximately $764 million of regulatory assets. The Texas Commission final order authorized issuance of up to $797 million of securitization bonds including $764 million for recovery of stranded costs and $33 million for other qualified costs. The $764 million for recovery of stranded costs reflects the recovery of $949 million of regulatory assets offset by $185 million to reflect customer benefits associated with accumulated deferred income taxes. CPL had previously proposed to flow these benefits back to customers over the 14-year term of the bonds. An additional $287 million of regulatory assets originally requested by CPL in its securitization request has been included in the calculation of stranded costs in 43 CPL's March 31, 2000 filing to establish non-bypassable charges for transmission and distribution service. On April 11, 2000, four parties appealed the Texas Commission's securitization order to the Travis County District Court. One of these appeals challenges the ability to recover securitization charges under the Texas Constitution. CPL will not be able to issue the securitization bonds until these appeals are resolved. As a result, the securitization bonds are not likely to be issued until 2001. As a result of the scheduled deregulation of generation in Texas and Arkansas, CSW concluded that it should discontinue the application of SFAS No. 71 for the generation portion of the business for CPL and WTU and the Texas and Arkansas jurisdictional portions of the generation business for SWEPCO. Under the provisions of EITF 97-4, CPL's generation-related net regulatory assets were transferred to the transmission and distribution portion of the business and will be amortized as they are recovered through charges to customers. Management currently believes that all generation-related regulatory assets for CPL will be recovered as provided under Texas Legislation. If future events were to occur that made the recovery of these assets no longer probable, CPL would write-off any non-recoverable portion of such assets as a non-cash charge to earnings. CPL's amount of regulatory assets and stranded costs are subject to a final determination by the Texas Commission in 2004. The Texas Legislation provides that all such finally determined stranded costs will be recovered. Since SWEPCO and WTU are not expected to have net stranded costs, all generation-related non-recoverable net regulatory assets were written off as an extraordinary loss in 1999. Additionally, in 1999, the Texas Electric Operating Companies performed an accounting impairment analysis of generation assets under SFAS No. 121 and concluded there was no impairment of generation assets at that time. An impairment analysis involves estimating future net cash flows arising from the use of an asset. If the net cash flows exceed the net book value of the asset, then there is no impairment of the asset for accounting purposes. The Texas Electric Operating Companies will continue to review their assets for potential impairment if events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Texas Legislation also provides that each year during the 1999 through 2001 rate freeze period, utilities with stranded costs are required to apply any earnings in excess of the most recently approved cost of capital in a company's last rate case (if issued on or after January 1, 1992) to reduce stranded costs. As a result of this earnings cap, CPL recorded a net charge to earnings of $8.8 million in the first quarter of 2000 to reflect the impact of this provision. Utilities without stranded costs must either flow such amounts back to customers or make capital expenditures, at no charge to customers, to improve transmission or distribution facilities or to improve air quality. As a result, in the first quarter of 2000, WTU recorded an increase to earnings of $2.1 million and SWEPCO recorded an increase of $2.9 million to earnings from the effect of the earnings cap under the Texas Legislation. The adjustments were based on estimates and filings for 1999 made in 2000 and are subject to final determination by the Texas Commission. In March 2000, the Texas Electric Operating Companies filed earnings cap reports and CPL filed its ECOM report with the Texas Commission. Beginning January 1, 2002, fuel costs will not be subject to Texas Commission fuel reconciliation proceedings. Consequently, the Texas Electric Operating Companies will file a final fuel reconciliation with the Texas Commission which reconciles their fuel costs through the period ending December 31, 2001. These final fuel balances will be included in each company's true-up proceeding in 2004. 44 CSW continues to analyze the impact of the electric utility industry restructuring legislation on the U.S. Electric Operating Companies. The Texas Commission has established numerous task forces, including representatives from the Texas Electric Operating Companies, to address various issues associated with the Texas Legislation and to provide guidance regarding implementation of restructuring. Also see ITEM 2. MD&A - Securitization of Generation-related Regulatory Assets and Stranded Costs. CPL Fuel Factor Filing In January 2000, CPL filed with the Texas Commission an application for authority to implement an increase in fuel factors of $55.4 million, or 16.5%, on an annual basis effective with the March 2000 billing month. Additionally, CPL proposed to implement an interim fuel surcharge of $36.5 million, including accumulated interest over a six-month period to collect its under-recovered fuel costs beginning in April 2000. In the two months subsequent to the filing, CPL experienced approximately $12.7 million in over-recoveries of fuel expense, including interest. Subsequently, CPL entered into a settlement providing for an increase in fuel factors of $43.3 million or 12.9% and a surcharge of $24.7 million. The settlement as approved by the Texas Commission enabled the increased fuel factors to be implemented in March 2000 and the surcharge began in April 2000. CPL Municipal Franchise Fee Litigation In May 1996, the City of San Juan, Texas filed a class action suit in Hidalgo County, Texas District Court on behalf of all cities served by CPL based upon CPL's alleged underpayment of municipal franchise fees. The City of San Juan's third amended petition, filed in January 2000, asserted various contract and tort claims against CPL as well as certain audit rights. The third amended petition seeks actual damages of up to $200 million, punitive damages of up to $100 million and attorneys' fees. In December 1999, the City of Weslaco was added as an additional class representative. In March 2000, the City of Weslaco filed a fourth amended petition that asserts claims for breach of contract, conversion, fraudulent inducement, fraud, negligent misrepresentation, unjust enrichment, breach of the higher public utility duty, and declaratory relief. CPL filed a counterclaim for any overpayment of franchise fees it may have made as well as its attorneys' fees. CPL also filed a motion to transfer venue to Nueces County, Texas, and a plea to the jurisdiction and pleas in abatement asserting that the Texas Commission has primary jurisdiction over the claims. In May 1996 and December 1996, respectively, the Cities of Pharr, Texas and San Benito, Texas filed individual suits making claims virtually identical to those claimed by the City of San Juan. The suit filed by the City of San Benito has been voluntarily dismissed. In January 1997, CPL filed an original petition at the Texas Commission requesting the Texas Commission to declare its jurisdiction over CPL's collection and payment of municipal franchise fees. In April 1997, the Texas Commission issued a declaratory order in which it declined to assert jurisdiction over the claims of the City of San Juan. CPL appealed the Texas Commission's decision to the Travis County, Texas District Court, which affirmed the Texas Commission ruling on February 19, 1999. CPL appealed this ruling to the Austin Court of Appeals. In May 2000, the Court of Appeals affirmed the district court's decision. After the Texas Commission's order, the Hidalgo County District Court overruled CPL's plea to the jurisdiction. In July 1997, the Hidalgo County District Court entered an order certifying the case as a class action. CPL appealed this order to the Corpus Christi Court of Appeals. In February 1998, the Corpus Christi Court of Appeals affirmed the trial court's order certifying the class. CPL appealed the Corpus Christi Court of Appeals ruling to the Texas Supreme Court, which declined to hear the case. In August 1998, the Hidalgo County District Court ordered the case to mediation and suspended all 45 proceedings pending the completion of the mediation. The mediation was completed in December 1998 without resolution. On January 5, 1999, a class notice was mailed to each of the cities served by CPL. Over 90 of the 128 cities declined to participate in the lawsuit. However, CPL has pledged that if any final, non-appealable court decision in the litigation awards a judgement against CPL for a franchise underpayment, CPL will extend the principles of that decision, with regard to the franchise underpayment, to the cities that decline to participate in the litigation. The plaintiffs filed a motion to extend the time for the cities to decide whether to participate in the lawsuit. In December 1999, the court ruled that the class would consist of approximately 30 cities, and the plaintiffs' motion to extend the time for the cities to participate in the lawsuit was withdrawn. Although CPL believes that it has substantial defenses to the cities' claims and intends to defend itself against the cities' claims and pursue its counterclaims vigorously, management cannot predict the outcome of the municipal franchise fee litigation or its impact on CSW's or CPL's results of operations or financial position. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. CPL Valero Litigation In April 1998, Valero filed suit against CPL in Nueces County, Texas District Court, alleging claims for breach of contract and negligence. Valero's suit seeks in excess of $11 million as damages for property loss and lost profits allegedly incurred after an interruption of electricity to its facility in Corpus Christi, Texas in April 1996. The trial of this matter has been set for October 2, 2000. Management cannot predict the outcome of this litigation. However, management believes that CPL has valid defenses to Valero's claims and intends to defend the matter vigorously. Management also believes that the ultimate resolution of this matter will not have a material adverse impact on CSW's or CPL's consolidated results of operations or financial condition. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. PSO PCB Cases PSO was named a defendant in petitions filed in state court in Oklahoma in 1996. The petitions allege that the plaintiffs suffered personal injury and fear future injury as a result of contamination by PCBs from a transformer malfunction that occurred in April 1982 at the Page Belcher Federal Building in Tulsa, Oklahoma. Each of the plaintiffs seeks actual and punitive damages in excess of $10,000. All but four of the claims arising from this incident have been settled or dismissed by the court. During 1999, 11 cases were settled. Four cases remain pending. Management believes that PSO has defenses to the remaining cases and intends to defend them vigorously. Management believes that the remaining claims, excluding claims for punitive damages, are covered by insurance and that the ultimate resolution of the remaining lawsuits will not have a material effect on CSW's or PSO's results of operations or financial condition. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. 46 SWEPCO Lignite Mining Agreement Litigation SWEPCO and CLECO are each a 50% owner of Dolet Hills Power Station Unit 1 and jointly own lignite reserves in the Dolet Hills area of northwestern Louisiana. In 1982, SWEPCO and CLECO entered into a lignite mining agreement with the DHMV, a partnership for the mining and delivery of lignite from a portion of these reserves. On April 15, 1997, SWEPCO and CLECO sued DHMV and its partners in the United States District Court for the Western District of Louisiana seeking to enforce various obligations of DHMV to SWEPCO and CLECO under the lignite mining agreement, including provisions relating to the quality of the delivered lignite, pricing, and mine reclamation practices. On June 15, 1997, DHMV filed an answer denying the allegations in the suit and filed a counterclaim asserting various contract-related claims against SWEPCO and CLECO. SWEPCO and CLECO have denied the allegations contained in the counterclaims. On January 8, 1999, SWEPCO and CLECO amended the claims against DHMV in the lawsuit to include a request that the lignite mining agreement be terminated. In April 2000, the parties agreed to settle the litigation by SWEPCO and CLECO and agreed to buy DHMV's interest in the mining operations and to assume related debt and other obligations. The closing date for the settlement is June 30, 2000, which can be extended until December 31, 2000 by agreement of the parties. The court has stayed the litigation until October 30, 2000 to give the parties time to consummate the settlement agreement. Management believes that the resolution of this matter will not have a material effect on SWEPCO's results of operations or financial condition. CSW Energy, Texas-New Mexico Power Company Phillips Litigation In May 1997, equipment operated by an unrelated third party allegedly came in contact with a Texas-New Mexico Power Company transmission line rendering Texas-New Mexico Power Company's Old Ocean switching station inoperable. As a result, Phillips' refinery, in Sweeny, Texas, lost power. In October 1997, Phillips filed suit against Texas-New Mexico Power Company in the District Court of Brazoria County, Texas, seeking damages in excess of $36 million alleged to be caused by the loss of power to its refinery. Texas-New Mexico Power Company denies any liability to Phillips. In June 1999, Texas-New Mexico Power Company joined Sweeny Cogeneration Limited Partnership as a third party defendant to the pending litigation. Texas-New Mexico Power Company alleged that during the construction of Sweeny Cogeneration Limited Partnership's cogeneration facility adjacent to Phillips' refinery, Sweeny Cogeneration Limited Partnership negligently modified Texas-New Mexico Power Company's equipment supplying power to the Phillips refinery. Sweeny Cogeneration Limited Partnership believes these allegations are without merit and intends to vigorously contest all claims made against it. Management is unable to predict the outcome of this litigation. However, management believes the claim is covered by insurance and the resolution of this matter will not have a material adverse effect on CSW's results of operations or financial condition. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. 47 Other The Registrants are party to various other legal claims, actions and complaints 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. 3. COMMITMENTS AND CONTINGENT LIABILITIES SWEPCO Henry W. Pirkey Power Plant In connection with the South Hallsville 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, 2000, the maximum amount SWEPCO believes it may have to assume is $65 million, which is the contractor's actual obligation outstanding at March 31, 2000. SWEPCO South Hallsville Lignite Mine As part of the process to receive a renewal of a Texas Railroad Commission permit for lignite mining at the South Hallsville lignite mine and expansion into the Marshall South Lignite Project area, SWEPCO has agreed to guarantee the costs of mine reclamation of up to $85 million. Since SWEPCO uses self-bonding, the guarantee provides for SWEPCO to commit to use its resources to complete the reclamation in the event the work is not completed by the third party miner. At March 31, 2000 the cost to reclaim the mine is estimated to be approximately $36 million. SWEPCO Marshall Street Site SWEPCO owns a tract of land known as the Marshall Street site in Shreveport, Louisiana, which was previously a MGP site. The City of Shreveport may acquire the Marshall Street site from SWEPCO to expand its convention center. In 1999, environmental testing was performed at the site and contaminants were discovered that could be related to a MGP. SWEPCO is negotiating with the City of Shreveport to determine under what terms the city may acquire the Marshall Street site and who would pay for any potential clean-up costs related to the site. In the fourth quarter of 1999, SWEPCO accrued $4.0 million for SWEPCO's portion of any potential clean-up costs related to the Marshall Street site. SWEPCO Wilkes Power Plant Copper Limit Compliance The EPA has issued to SWEPCO with respect to its Wilkes power plant, an administrative order for wastewater permit violations related to copper limits. Planned compliance activities, including activities that have been conducted to determine the source of copper, were presented by SWEPCO to the EPA during an administrative meeting held on August 13, 1998. SWEPCO and the EPA negotiated a $41,500 penalty. The fine has been paid. Although the issue is not officially closed, no further action is expected. Clean Air Provisions of the Texas Legislation The Texas Legislation requires that grandfathered electric generating facilities be permited and reduce emission levels 50%. Final regulations are still being developed. The estimated total costs to comply with the expected regulations are approximately $1.5 million, $1.0 million and $0.5 million for CPL, SWEPCO and WTU, respectively. Expenditures have begun to meet the requirements of the legislation. Proposed Regional Control Strategy Regulations The TNRCC adopted regulations that require reductions in nitrogen oxide emissions for existing permited electric generating facilities in the East Texas Region in addition to the Clean Air provisions of the Texas Legislation discussed above. The implementation date is May 2003 for CPL and May 2005 for SWEPCO. The current estimate for compliance with the rules is as much as $38 48 million for CPL and $151 million for SWEPCO in capital projects costs and as much as $3 million for CPL and $11 million for SWEPCO in additional annual operating costs. SEEBOARD London Underground Commitment SEEBOARD has committed (pound)52 million, or $83 million (converted at (pound)1.00 equals $1.59), for costs associated with its contract related to the London Underground transportation system. In 1998, SEEBOARD, through its subsidiary, SEEBOARD Powerlink, signed a $1.6 billion, 30-year contract as a joint venture partner to operate, maintain, finance and renew the high-voltage power distribution network of the London Underground. SEEBOARD Third Party Pension Litigation In the U.K., National Grid and National Power PLC have been involved in continuing litigation regarding their use of actuarial surpluses disclosed in the 1992 and 1995 valuations of the electricity industry's occupational pension plan, the ESPS. A High Court decision in favor of the National Grid and National Power PLC was appealed. On February 10, 1999, the U.K. Court of Appeal ruled that the particular arrangements made by these corporations to dispose of part of the surplus were invalid due to procedural defects. This decision was confirmed at a later hearing of the U.K. Court of Appeal held in May 1999. The National Grid has appealed to the House of Lords, the highest court of appeal in the U.K., and a decision is expected in late 2000 or early 2001. The final outcome of this appeal cannot presently be determined. SEEBOARD employees are members of the ESPS, and SEEBOARD has made similar use of actuarial surpluses disclosed in the 1992 and 1995 valuations. As a result of subsequent legal clarification of certain issues arising from the hearing held in May 1999, the potential impact of the ruling on SEEBOARD increased. The amount of the payments cancelled by SEEBOARD in recognition of these surpluses amounts to approximately (pound)49 million, or $78 million (converted at (pound)1.00 equals $1.59), excluding any accrued interest. The U.K. Court of Appeal did not order the National Grid or National Power PLC to make payment into the ESPS, and the court indicated that any requirement to make such payments would be extreme since the relevant sections of the ESPS are already in surplus. In the event that the court finally decides a payment by SEEBOARD into the ESPS is necessary, such a payment is likely to create additional pension fund surplus, which SEEBOARD should then be able to utilize over the next several years to reduce pension expense. Management is unable currently to predict the amount of any payment that it may be required to make to ESPS, but the payment should not have a material adverse affect on CSW's results of operations or financial condition. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD - LOOKING INFORMATION. Diversified Electric Commitments and Contingencies In June 1998, the 330 MW Sweeny cogeneration facility, an entity 50% owned by CSW Energy, obtained permanent project financing. The $149 million of debt, with an effective interest rate of 7.4%, is unconditionally guaranteed by the project and is non-recourse to CSW Energy and CSW. Concurrently, the project repaid its outstanding note to CSW Energy for construction financing. 49 In October 1999, GE Capital Structured Finance Group purchased 50 percent of the equity ownership of Sweeny Cogeneration Limited Partnership. CSW Energy's after-tax earnings from the proceeds of the transaction were approximately $33 million and were recorded in the fourth quarter of 1999. The agreement between CSW Energy and GE Capital Structured Finance Group also provides for additional payments to CSW Energy subject to completion of an expansion of the Sweeny cogeneration facility. CSW Energy began construction in August 1998 of a 500 MW power plant, known as Frontera, in the Rio Grande Valley, near the city of Mission, Texas. The natural gas-fired facility began simple cycle operation of 330 MW in July 1999 and is scheduled to commence combined cycle operation in the second quarter of 2000. Pursuant to AEP's and CSW's stipulated agreement with several intervenors in the state of Texas related to the AEP Merger, CSW Energy may sell 250 MW of Frontera. See ITEM 1. NOTE 5. PROPOSED AEP MERGER for a discussion of divestiture of generating capacity. CSW International and its 50% partner, Scottish Power plc have entered into a joint venture to construct and operate the South Coast power project, a 400 MW combined cycle gas turbine power station in Shoreham, United Kingdom. CSW International has guaranteed approximately (pound)19 million of the (pound)190 million construction financing. Both the guarantee and the construction financing are denominated in pounds sterling. The U.S. dollar equivalent at March 31, 2000 would be $30 million and $302 million respectively, using a conversion rate of (pound)1.00 equals $1.59. The permanent financing is unconditionally guaranteed by the project. Construction of the project began in March 1999, and commercial operation is expected to begin in late 2000. CSW Energy's Colorado facilities are cogeneration plants with steam as a by-product of its electricity generation. In February 2000, notice was received that the lessee of the facilities utilizing the steam had filed for reorganization under Chapter 11 of the Bankruptcy Code, which could result in the lessee rejecting the leases. Should that occur, management is positioned to pursue other lease arrangements. Management believes the resolution of this matter will not have a material adverse effect on CSW's results of operations or financial condition. As of March 31, 2000, the lessee was continuing to operate the facilities under Chapter 11 protection. CSW, CSW Energy and CSW International have provided letters of credit and guarantees on behalf of CSW Energy and CSW International projects of approximately $78 million, $41 million, and $232 million, respectively, as of March 31, 2000. Numanco Commitment Numanco, L.L.C., which is a subsidiary of CSW Energy Services, Inc., and provides staffing services for nuclear-powered electric generating plans, has a bank commitment of $8.5 million to help fund its operations. CSW has guaranteed the bank commitment on behalf of Numanco, L.L.C. 4. COMMON STOCK AND DIVIDENDS CSW's basic 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. CSW's dividends per common share reflect per share amounts paid for each of the respective periods. At March 31, 2000, approximately $1.5 billion of CSW's subsidiary companies' retained earnings were available for payment of cash dividends by such subsidiaries to CSW. The amounts of retained earnings available for dividends attributable to each the U.S. Electric Operating Companies at March 31, 2000 were as follows. CPL - $734 million PSO - $127 million SWEPCO - $281 million WTU - $116 million 50 5. PROPOSED AEP MERGER On December 22, 1997, CSW and AEP announced that their boards of directors had approved a definitive merger agreement for a tax-free, stock-for-stock transaction. The combined company would serve more than 4.8 million customers in 11 states and approximately 4 million customers outside the United States. On May 27, 1998, AEP shareholders approved the issuance of the additional shares of stock required to complete the merger. On May 28, 1998, CSW stockholders approved the merger. On December 16, 1999, the merger agreement was amended to extend the term of the agreement to June 30, 2000. After June 30, 2000, either party may terminate the merger agreement if the merger has not been consummated. AEP is subject to the information requirements of the Securities and Exchange Act of 1934, as amended, and in accordance therewith, files reports and other information with the SEC. For additional information related to AEP, see AEP's Current Reports on Form 8-K, its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K, and the documents referenced therein. Under the AEP merger agreement, each common share of CSW will be converted into 0.6 share of AEP common stock. CSW stockholders will own approximately 40% of the combined company. CSW plans to continue to pay dividends on its common stock until the closing of the AEP Merger at approximately the same times and rates per share as in 1999, subject to continuing evaluation of CSW's earnings, financial condition and other factors by the CSW board of directors. Cook Nuclear Plant The Cook Nuclear Plant was shut down in September 1997 due to questions regarding the operability of certain safety systems that arose during an NRC architect engineer design inspection. The two-unit, 220 MW Cook Plant is owned and operated by AEP's subsidiary, Indiana Michigan Power Company. The confirmatory action letter was issued in September 1997 requiring Indiana Michigan Power company to address certain issues identified in the letter. In February 2000, Indiana Michigan Power Company was notified by the NRC that the confirmatory action letter had been closed. Closing of the confirmatory action letter is one of the key approvals needed to restart the nuclear units. Progress to restart the units continues. Refueling of Unit 2, the first unit scheduled to restart, was completed on April 14, 2000. The NRC's final Unit 2 pre-restart inspection began on May 8, 2000, which coincides with the planned reactor heat-up of Unit 2 and the return to operational service of common plant systems. When testing and other work required for restart are complete, Indiana Michigan Power Company will seek concurrence from the NRC to return Unit 2 to service. Refueling and maintenance work to restart Unit 1 will be performed after Unit 2 is returned to service. Any issues or difficulties encountered in testing of equipment as part of the restart process could delay the restart of the units. Expenditures to restart the Cook units are estimated to total approximately $574 million. Through March 31, 2000, $453 million has been spent. Merger Regulatory Approvals The merger is conditioned, among other things, upon the approval of several state and federal regulatory agencies. Some of the merger conditions cannot be waived by the parties. State Regulatory Commissions The U.S. Electric Operating Companies have received approval for the merger from their respective state regulatory commissions in Arkansas, Louisiana, Oklahoma and Texas. 51 FERC On April 30, 1998, AEP and CSW jointly filed a request with the FERC for approval of their proposed merger. On March 15, 2000, the FERC conditionally approved the merger. Conditions placed on the merger include: - - Transfer of operational control of AEP's east and west transmission systems to a fully-functioning, FERC-approved regional transmission organization by December 15, 2001, which is the same implementation date included in the FERC's general order for regional transmission organizations that applies to all transmission-owning utilities. - - Two interim transmission-related mitigation measures consisting of market monitoring and independent calculation and posting of available transmission capacity to monitor the operation of AEP's east transmission system. - - Divestiture of 550 MW of generating capacity comprised of 300 MW of capacity in SPP and 250 MW of capacity in ERCOT. The FERC will require AEP and CSW to divest their entire ownership interest in the generating facilities that are to be divested. Alternatively, AEP and CSW may choose to divest the same or greater amount of capacity from different generating plants in their entirety. However, such generating plants must be of similar cost, operation and location characteristics of generating plants AEP and CSW originally proposed. - - AEP and CSW must complete divestiture of the ERCOT capacity by March 15, 2001 and divestiture of the SPP capacity by July 1, 2002. The FERC found that certain energy sales in SPP and ERCOT would be reasonable and effective interim mitigation measures until completion of the required SPP and ERCOT divestitures. The FERC will require the proposed interim energy sales to be in effect when the merger is consummated. On March 31, 2000, AEP and CSW submitted their compliance filing to the FERC. The filing outlined AEP's and CSW's plans to comply with the conditions placed on the merger by the FERC in its order issued March 15, 2000 conditionally approving the merger. As part of the filing, AEP and CSW requested the FERC to modify its order to allow the merger to be completed on May 15, 2000, if the SEC has approved the merger by that date. The FERC's merger order required AEP and CSW to make the compliance filing at least 60 days before completing the merger. On April 14, 2000, AEP and CSW filed a request for rehearing with the FERC. In the request for rehearing, AEP and CSW noted that they have agreed to implement the interim measures specified in the FERC's merger order and further stated that they do not expect the FERC to rule, prior to consummation of the merger, on the issues raised in the rehearing request. AEP and CSW requested that the FERC reconsider the evidence of record regarding: - - the FERC's conclusion that the merger creates vertical market power (the potential for manipulation of transmission due to the combination of generation and transmission assets); and - - the FERC's ordered modification of the system energy pricing mechanism. In addition, two other intervening parties filed requests for rehearing. One party had requested the merger be rejected unless FERC ordered divestiture of certain generation and transmission assets, but the request was subsequently withdrawn. The other party requested the merger be rejected due to market power concerns. 52 NRC On June 19, 1998, CPL filed a license transfer application with the NRC requesting the NRC's consent to the indirect transfer of control of CPL's interests in the NRC licenses issued for STP from CSW to AEP. CPL would continue to own its 25.2% interest in STP, and CPL's name would remain on the NRC operating license. On November 5, 1998, the NRC approved the license transfer application with a condition that the merger must be completed by December 31, 1999. The NRC has extended the condition relating to completion of the merger to June 30, 2000. SEC On October 13, 1998, AEP and CSW jointly filed an application with the SEC for approval of the proposed merger. The SEC merger filing requests approval of the merger and related transactions and outlines the expected combined company benefits of the merger to AEP and CSW customers and shareholders. Since then, AEP and CSW have filed several amendments to the application. Several parties have filed petitions opposing the proposed merger at the SEC. Other Federal The FCC has approved the transfer of control of licenses of several CSW entities to AEP, which will be effective upon completion of the proposed merger. The proposed AEP merger has received antitrust clearance from the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. United Kingdom The United Kingdom's Department of Trade and Industry approved the common ownership of the United Kingdom entities that would result from the proposed AEP merger, subject to certain conditions concerning the separate operation of their respective distribution and supply businesses. Other AEP and CSW have reached settlements with the Indiana Utility Regulatory Commission, the Kentucky Public Service Commission, the Missouri Public Service Commission, the Michigan Public Service Commission and various wholesale customers and intervenors in the FERC merger proceeding. The Public Utility Commission of Ohio has issued a decision stating that it would notify the FERC that it is no longer opposed to AEP's proposed merger with CSW and that it would no longer seek conditions to the merger. AEP and CSW have ratified a settlement agreement with local unions of the IBEW representing employees of AEP and CSW, and , as part of the settlement, the IBEW local unions have withdrawn their opposition to the merger. AEP has ratified a settlement agreement with local unions of the UWUA representing employees of AEP, and, as part of the settlement, the UWUA local unions will not oppose the merger. Completion of the Merger AEP and CSW have targeted consummation of the AEP Merger in the second quarter of 2000. The merger is conditioned, among other things, upon the approval of several state and federal regulatory agencies. All of such approvals, except from the SEC, have been obtained. The transaction must satisfy many conditions, including the condition that it must be accounted for as a pooling of interests. The parties may not waive some of these conditions. AEP and CSW continue the process of seeking regulatory approvals, but there can be no assurance as to when, on what terms or whether the required approvals will be received. After June 30, 2000, either CSW or AEP may terminate the merger agreement if all of the conditions to their respective obligations to close have not been satisfied. There can be no assurance that the AEP Merger will be consummated. 53 Merger Costs As of March 31, 2000, CSW had deferred $46.2 million in costs related to the AEP Merger on its consolidated balance sheet, which will be charged to expense if AEP and CSW do not complete their proposed merger. 6. BUSINESS SEGMENTS CSW's business segments include the U.S. Electric and U.K. Electric segments. The U.S. Electric segment is comprised of CSW's four domestic electric operating companies, CPL, PSO, SWEPCO and WTU. The U.K. Electric segment is comprised of CSW's foreign electric operating company, SEEBOARD U.S.A. The U.S. Electric segment's primary business is the generation, transmission and distribution of electricity. The U.K. Electric segment's primary business is the supply and distribution of electricity. Financial data for the business segments for the periods covered in this Form 10-Q is in the following table.
Other Eliminations CSW U.S. Electric U.K. Electric Segments & Reconciling Consoldiated ---------------------------------------------------------------- (millions) Three months ended March 31, 2000 Operating Revenues $764 $485 $57 ($7) $1,299 Net Income/(Loss) for Common Stock 23 31 (4) (12) 38 Total Assets at March 31, 2000 9,130 3,028 2,534 (860) 13,832 Total Assets at December 31, 1999 9,239 3,024 2,688 (789) 14,162 Three months ended March 31, 1999 Operating Revenues $697 $476 $60 ($8) $1,225 Net Income/(Loss) for Common Stock 32 27 -- (14) 45 Total Assets at March 31, 1999 9,014 2,966 2,579 (885) 13,674 Total Assets at December 31, 1998 8,994 3,032 2,745 (874) 13,897
7. SOUTH AMERICAN INVESTMENTS At March 31, 2000, CSW International owned a 44% equity interest in Vale which it had purchased for a total of $149 million. The investment is covered by a put option, which, if exercised, requires Vale to purchase CSW International's shares at a minimum price equal to the U.S. dollar equivalent of CSW International's purchase price. As a result, management has concluded that CSW International's investment carrying amount will not be reduced below the put option value unless there is deemed to be a permanent impairment. Since 1999, Vale has experienced losses of approximately $22 million, net of tax, related to the devaluation of the Brazilian Real. Pursuant to the put option arrangement, these losses are not reflected in the carrying value of the Vale investment. Conversely, CSW International will not recognize any future earnings from Vale until the losses are recovered. As of March 31, 2000, CSW International had invested $110 million in stock in a Chilean electric company. The investment is classified as securities available for sale. Based on the current market value of the shares and the quarter end foreign exchange rate, the value of the investment at March 31, 2000 was $56 million. The reduction in the carrying value of this investment has been reflected in Other Comprehensive Income in CSW's Consolidated Statements of Stockholders' Equity. Management views its investments in South America as a long-term investment strategy and believes these investments continue to have significant long-term value and that they are recoverable. Management will continue to 54 closely evaluate the changes in these South American economies and their impact on these investments. 8. LONG-TERM DEBT In February 2000, CPL sold $150 million of unsecured floating rate notes. The bonds have a two-year final maturity of February 22, 2002, but may be redeemed at par after one year. The interest rate will reset quarterly at the then current three-month LIBOR plus 0.45%. The initial rate, set February 18, 2000, was 6.56%. Net proceeds of $149.6 million were used to refund $100 million of FMBs maturing April 1, 2000 and to repay a portion of short-term debt. In March 2000, CPL reacquired $50 million of its 7 1/2% Series AA FMBs due March 1, 2020. The reacquisition was funded from the issuance of Series 1999B in December 1999 which was placed in a special deposit for reacquisition. In March 2000, SWEPCO sold $150 million of unsecured floating rate notes. The notes have a two-year final maturity of March 1, 2002, but may be redeemed at par after one year. The interest rate will reset quarterly at the then current three-month LIBOR plus 0.23%. The initial rate set March 1, 2000 was 6.34%. Net proceeds of $149.6 million were used to refund $45 million of FMBs maturing April 1, 2000 and repay of a portion of outstanding short-term indebtedness. In March 2000, $10 million of PSO's 6.43% medium-term notes matured. 55 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 the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 1999. Reference is also made to each Registrant's unaudited Financial Statements and related Notes to Financial Statements included herein. The information included therein should be read in conjunction with, and is essential to understanding, the following discussion and analysis. RESULTS OF OPERATIONS Reference is made to ITEM 1. FINANCIAL STATEMENTS for each of the Registrants' RESULTS OF OPERATIONS for the three month period ended March 31, 2000. LIQUIDITY AND CAPITAL RESOURCES Overview of CSW Operating, Investing, and Financing Activities Cash inflows from operating activities increased $32 million to $281 million for the first quarter of 2000 compared to the same period last year. The increase in cash inflows was due primarily to lower levels of payments on accounts payable and lower levels of fuel inventories for the comparison periods. Partially offsetting the increase in cash inflows from operating activities was a lower decrease in accounts receivable balances and a larger decrease in tax accruals for the comparison periods. Cash outflows from investing activities increased $16 million to $199 million for the first quarter of 2000 compared to the same period a year ago. The increase in these cash outflows was due primarily to higher levels of construction expenditures in 2000 at the U.S. Electric Operating Companies. Partially offsetting the increase in cash outflows from investing activities was a lower level of spending for CSW Energy and CSW International projects. Cash outflows from financing activities increased $114 million to $212 million for the first quarter of 2000 compared to the first quarter 1999 due primarily to short-term debt reductions at CPL and SWEPCO. Also contributing to these increased cash outflows were higher levels of maturities of long-term debt at CPL and PSO. Partially offsetting the increase in cash outflows from financing activities were cash inflows from the sale of long-term debt at CPL and SWEPCO, as well as a special deposit related to debt reacquisitions at CPL. Construction Expenditures CSW's construction expenditures, including allowance for funds used during construction, totaled $173 million for the three months ended March 31, 2000. Such expenditures for the U.S. Electric Operating Companies totaled $46 million, $35 million, $29 million and $16 million, for CPL, PSO, SWEPCO and WTU, respectively. Construction expenditures at the U.S. Electric Operating Companies were primarily for improvements to existing production, transmission and distribution facilities. The improvements are required to meet the needs of new customers and to satisfy the changing requirements of existing customers. CSW anticipates that the majority of the funds required for construction for the remainder of the year will be provided from internal sources. However, some long-term financing will likely be required. Other Financing Issues The CSW System uses short-term debt to meet fluctuations in working capital requirements and other interim capital needs. CSW has established a system money pool to coordinate short-term borrowings for certain of its 56 subsidiaries, primarily the U.S. Electric Operating Companies. In addition, CSW also incurs borrowings for other subsidiaries that are not included in the money pool. As of March 31, 2000, CSW had revolving credit facilities totaling $1.4 billion to back up its commercial paper program. On April 20, 2000, CSW obtained an additional $300 million revolving credit facility to back up its commercial paper program. In February 2000, CPL sold $150 million of unsecured floating rate notes. The bonds have a two-year final maturity of February 22, 2002, but may be redeemed at par after one year. The interest rate will reset quarterly at the then current three-month LIBOR plus 0.45%. The initial rate, set February 18, 2000, was 6.56%. Net proceeds of $149.6 million were used to refund $100 million of FMBs maturing April 1, 2000 and to repay a portion of short-term debt. CPL presently plans to replace FMBs with unsecured debt, which is expected to provide more financial flexibility as CPL unbundles its electric operations. In March 2000, CPL reacquired $50 million of its 7 1/2% Series AA FMBs due March 1, 2020. The reacquisition was funded from the issuance of Series 1999B in December 1999 which was placed in a special deposit for reacquisition. In March 2000, SWEPCO sold $150 million of unsecured floating rate notes. The notes have a two-year final maturity of March 1, 2002, but may be redeemed at par after one year. The interest rate will reset quarterly at the then current three-month LIBOR plus 0.23%. The initial rate set March 1, 2000 was 6.34%. Net proceeds of $149.6 million were used to refund $45 million of FMBs maturing April 1, 2000 and repay of a portion of outstanding short-term indebtedness. In March 2000, $10 million of PSO's 6.43% medium-term notes matured. CPL anticipates issuing securitization bonds in 2001 due to appeals from the Texas Commission's final order in the securitization proceedings. The preceding statement is a forward-looking statement within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information due to changes in the underlying assumptions. See FORWARD-LOOKING INFORMATION. PROPOSED AEP MERGER On December 22, 1997, CSW and AEP announced that their boards of directors had approved a definitive merger agreement for a tax-free, stock-for-stock transaction. The combined company would serve more than 4.8 million customers in 11 states and approximately 4 million customers outside the United States. On May 27, 1998, AEP shareholders approved the issuance of the additional shares of stock required to complete the merger. On May 28, 1998, CSW stockholders approved the merger. On December 16, 1999, the merger agreement was amended to extend the term of the agreement to June 30, 2000. After June 30, 2000, either party may terminate the merger agreement if the merger has not been consummated. AEP is subject to the information requirements of the Securities and Exchange Act of 1934, as amended, and in accordance therewith, files reports and other information with the SEC. For additional information related to AEP, see AEP's Current Reports on Form 8-K, its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K, and the documents referenced therein. Under the AEP merger agreement, each common share of CSW will be converted into 0.6 share of AEP common stock. CSW stockholders will own approximately 40% of the combined company. CSW plans to continue to pay dividends on its common stock until the closing of the AEP Merger at approximately the same times and 57 rates per share as in 1999, subject to continuing evaluation of CSW's earnings, financial condition and other factors by the CSW board of directors. Cook Nuclear Plant The Cook Nuclear Plant was shut down in September 1997 due to questions regarding the operability of certain safety systems that arose during an NRC architect engineer design inspection. The two-unit, 220 MW Cook Plant is owned and operated by AEP's subsidiary, Indiana Michigan Power Company. The confirmatory action letter was issued in September 1997 requiring Indiana Michigan Power company to address certain issues identified in the letter. In February 2000, Indiana Michigan Power Company was notified by the NRC that the confirmatory action letter had been closed. Closing of the confirmatory action letter is one of the key approvals needed to restart the nuclear units. Progress to restart the units continues. Refueling of Unit 2, the first unit scheduled to restart, was completed on April 14, 2000. The NRC's final Unit 2 pre-restart inspection began on May 8, 2000, which coincides with the planned reactor heat-up of Unit 2 and the return to operational service of common plant systems. When testing and other work required for restart are complete, Indiana Michigan Power Company will seek concurrence from the NRC to return Unit 2 to service. Refueling and maintenance work to restart Unit 1 will be performed after Unit 2 is returned to service. Any issues or difficulties encountered in testing of equipment as part of the restart process could delay the restart of the units. Expenditures to restart the Cook units are estimated to total approximately $574 million. Through March 31, 2000, $453 million has been spent. Merger Regulatory Approvals The merger is conditioned, among other things, upon the approval of several state and federal regulatory agencies. Some of the merger conditions cannot be waived by the parties. State Regulatory Commissions The U.S. Electric Operating Companies have received approval for the merger from their respective state regulatory commissions in Arkansas, Louisiana, Oklahoma and Texas. FERC On April 30, 1998, AEP and CSW jointly filed a request with the FERC for approval of their proposed merger. On March 15, 2000, the FERC conditionally approved the merger. Conditions placed on the merger include: - - Transfer of operational control of AEP's east and west transmission systems to a fully-functioning, FERC-approved regional transmission organization by December 15, 2001, which is the same implementation date included in the FERC's general order for regional transmission organizations that applies to all transmission-owning utilities. - - Two interim transmission-related mitigation measures consisting of market monitoring and independent calculation and posting of available transmission capacity to monitor the operation of AEP's east transmission system. - - Divestiture of 550 MW of generating capacity comprised of 300 MW of capacity in SPP and 250 MW of capacity in ERCOT. The FERC will require AEP and CSW to divest their entire ownership interest in the generating facilities that are to be divested. Alternatively, AEP and CSW may choose to divest the same or greater amount of capacity from different generating plants in their entirety. However, such generating plants must be of similar cost, operation 58 and location characteristics of generating plants AEP and CSW originally proposed. - - AEP and CSW must complete divestiture of the ERCOT capacity by March 15, 2001 and divestiture of the SPP capacity by July 1, 2002. The FERC found that certain energy sales in SPP and ERCOT would be reasonable and effective interim mitigation measures until completion of the required SPP and ERCOT divestitures. The FERC will require the proposed interim energy sales to be in effect when the merger is consummated. On March 31, 2000, AEP and CSW submitted their compliance filing to the FERC. The filing outlined AEP's and CSW's plans to comply with the conditions placed on the merger by the FERC in its order issued March 15, 2000 conditionally approving the merger. As part of the filing, AEP and CSW requested the FERC to modify its order to allow the merger to be completed on May 15, 2000, if the SEC has approved the merger by that date. The FERC's merger order required AEP and CSW to make the compliance filing at least 60 days before completing the merger. On April 14, 2000, AEP and CSW filed a request for rehearing with the FERC. In the request for rehearing, AEP and CSW noted that they have agreed to implement the interim measures specified in the FERC's merger order and further stated that they do not expect the FERC to rule, prior to consummation of the merger, on the issues raised in the rehearing request. AEP and CSW requested that the FERC reconsider the evidence of record regarding: - - the FERC's conclusion that the merger creates vertical market power (the potential for manipulation of transmission due to the combination of generation and transmission assets); and - - the FERC's ordered modification of the system energy pricing mechanism. In addition, two other intervening parties filed requests for rehearing. One party had requested the merger be rejected unless FERC ordered divestiture of certain generation and transmission assets, but the request was subsequently withdrawn. The other party requested the merger be rejected due to market power concerns. NRC On June 19, 1998, CPL filed a license transfer application with the NRC requesting the NRC's consent to the indirect transfer of control of CPL's interests in the NRC licenses issued for STP from CSW to AEP. CPL would continue to own its 25.2% interest in STP, and CPL's name would remain on the NRC operating license. On November 5, 1998, the NRC approved the license transfer application with a condition that the merger must be completed by December 31, 1999. The NRC has extended the condition relating to completion of the merger to June 30, 2000. SEC On October 13, 1998, AEP and CSW jointly filed an application with the SEC for approval of the proposed merger. The SEC merger filing requests approval of the merger and related transactions and outlines the expected combined company benefits of the merger to AEP and CSW customers and shareholders. Since then, AEP and CSW have filed several amendments to the application. Several parties have filed petitions opposing the proposed merger at the SEC. Other Federal The FCC has approved the transfer of control of licenses of several CSW entities to AEP, which will be effective upon completion of the proposed merger. 59 The proposed AEP merger has received antitrust clearance from the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. United Kingdom The United Kingdom's Department of Trade and Industry approved the common ownership of the United Kingdom entities that would result from the proposed AEP merger, subject to certain conditions concerning the separate operation of their respective distribution and supply businesses. Other AEP and CSW have reached settlements with the Indiana Utility Regulatory Commission, the Kentucky Public Service Commission, the Missouri Public Service Commission, the Michigan Public Service Commission and various wholesale customers and intervenors in the FERC merger proceeding. The Public Utility Commission of Ohio has issued a decision stating that it would notify the FERC that it is no longer opposed to AEP's proposed merger with CSW and that it would no longer seek conditions to the merger. AEP and CSW have ratified a settlement agreement with local unions of the IBEW representing employees of AEP and CSW, and , as part of the settlement, the IBEW local unions have withdrawn their opposition to the merger. AEP has ratified a settlement agreement with local unions of the UWUA representing employees of AEP, and, as part of the settlement, the UWUA local unions will not oppose the merger. Completion of the Merger AEP and CSW have targeted consummation of the AEP Merger in the second quarter of 2000. The merger is conditioned, among other things, upon the approval of several state and federal regulatory agencies. All of such approvals, except from the SEC, have been obtained. The transaction must satisfy many conditions, including the condition that it must be accounted for as a pooling of interests. The parties may not waive some of these conditions. AEP and CSW continue the process of seeking regulatory approvals, but there can be no assurance as to when, on what terms or whether the required approvals will be received. After June 30, 2000, either CSW or AEP may terminate the merger agreement if all of the conditions to their respective obligations to close have not been satisfied. There can be no assurance that the AEP Merger will be consummated. Merger Costs As of March 31, 2000, CSW had deferred $46.2 million in costs related to the AEP Merger on its consolidated balance sheet, which will be charged to expense if AEP and CSW do not complete their proposed merger. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. COMPETITION AND INDUSTRY CHALLENGES Restructuring Readiness CSW has initiated a restructuring readiness effort to prepare for competition in the states served by the U.S. Electric Operating Companies. This effort includes the development and implementation of a business separation plan and the system and process changes required to prepare for competition. The business separation plan filed with the Texas Commission in January, 2000, is discussed below. An analysis of the processes and systems in place and those needed in the future has been completed, and CSW is beginning the implementation phase of the restructuring readiness effort. 60 Texas Business Separation Plan On January 10, 2000, CSW filed with the Texas Commission its business separation plan required by the Texas Legislation on electric utility restructuring. The business separation plan describes the approach proposed by CSW to unbundle the business activities of each of its Texas Electric Operating Companies into three entities: the Power Generation Company, the Energy Delivery Company and the Retail Electric Provider. Under CSW's business separation plan, all three new entities would continue to be owned by CSW. The Power Generation Company would own a CPL Power Generation Company and a WTU Power Generation Company. The Energy Delivery Company would own CPL, WTU and SWEPCO Energy Delivery Companies. Although the plan is directed to meet the requirements of the Texas Legislation, CSW expects the plan will also meet the restructuring requirements anticipated to be enacted in Arkansas, Louisiana and Oklahoma. As a result of rulings by the Texas Commission on March 16, 2000, CSW's unbundling plan will include full legal separations of the generating assets from the wires assets of CPL and WTU by January 1, 2002. This includes the structural separation of the management and control of the Energy Delivery Companies from the Power Generation Companies as well as the creation of a separate Retail Electric Provider. For CPL and WTU, unbundling will require that legal ownership of generation, transmission and distribution assets will be separated and transferred to or vested in separate entities, the CPL and WTU Power Generation Companies and Energy Delivery Companies, respectively. The CPL and WTU Energy Delivery Companies would be regulated utilities under Texas law. Office systems, computer systems, accounting systems and similar equipment would be segregated and an employee code of conduct would restrict information exchanges between employees of the regulated entities and the other business units. Because SWEPCO also is regulated in Arkansas and Louisiana, the Texas Commission deferred its decision on the appropriate separation for SWEPCO until interested parties have an opportunity to discuss issues that could result in a separation plan acceptable in each state. CSW believes that its total cost to restructure the CSW System, which includes costs for the Energy Delivery Company, Power Generation Company and Retail Electric Provider in implementing retail competition in its service territory, is approximately $200 million, including refinancing costs. Recognition in rates of the Texas jurisdictional Energy Delivery Company portion of these costs will be sought in the Texas Electric Operating Companies' cost unbundling filings to establish new Energy Delivery Company regulated rates during the year 2000. Proposed Energy Delivery Costs for Texas Retail Competition On March 31, 2000, CSW and its Texas Electric Operating Companies submitted a filing to the Texas Commission to request approval of the proposed energy delivery charge portion of customer bills when retail competition begins in Texas on January 1, 2002. These filings are part of the transition to retail competition for electricity customers in Texas as provided in the Texas Electric Restructuring Legislation. The ultimate effect of this transition will be a 6% reduction in the overall total bills for residential and small commercial customers when retail competition begins. These customers also will have the opportunity for additional savings by shopping for a new electric provider. The March 31, 2000 filing was made for CSW's new Energy Delivery Companies, which will deliver electricity to customers and will remain, regulated by the Texas Commission when retail competition begins. 61 The energy delivery charge will cover the following costs: - - Transmission system charge - - Energy delivery system charges including: - - Distribution charge - - Metering system charge - - Customer service charge - - Energy efficiency rider - - Nuclear decommissioning charge for CPL only - - Competition Transition Charge - - Transition charge to recover CPL's securitized regulatory assets as previously approved by the Texas Commission and other qualified costs - - Competition transition charge to recover CPL's remaining stranded costs - - Competition restructuring charge to recover one-time costs incurred to implement retail competition - - System benefit fund (approximately 50 cents per megawatt-hour) - - Municipal gross receipts for payment of franchise fees to municipalities A May 15, 2000 filing will further clarify the proposed costs for CPL and WTU. A similar filing for SWEPCO will be submitted June 1, 2000. The May 15 and June 1 filings became necessary after the Texas Commission chose not to allow CSW's proposed two-stage approach to unbundling, as filed in the Business Separation Plan on January 10, 2000. The March 31, 2000 filing envisions the continued recovery of costs associated with investments made under the regulated market structure that might be unrecoverable or left stranded in a competitive market. CPL is seeking recovery of stranded costs associated with its 25.2% ownership of STP. CPL currently estimates that its total amount of stranded costs is $2.08 billion. Of this amount, $949 million, less $185 million of associated tax benefits, has been approved for recovery by the Texas Commission through securitization. A second phase of securitization is expected to occur after the Texas Commission makes a preliminary determination of stranded costs, currently expected to occur in the first half of 2001. As part of the transition to competition, the legislation allowed electric utilities to securitize 100% of regulatory assets (regulatory costs whose recovery has been delayed until some future date) and 75% of the stranded costs identified in the Texas Commission's ECOM model. Continued recovery of the remaining 25% of stranded costs will occur through a competitive transition charge included in the energy delivery charge. The other significant costs driving the amount of the proposed energy delivery charge are planned new additions to transmission and distribution systems that deliver electricity to customers. Significant transmission line expenditures are being made by CPL and WTU to connect new independent generators to the electric system and to eliminate transmission bottlenecks, which could hinder competition. 62 Code of Conduct Under Customer Choice Legislation was enacted in Arkansas and Texas in 1999 to restructure the electric utility industry in those states. These two new laws require that the CSW System begin to separate its business activities into power generation units, retail electric providers and transmission and distribution units. Power generation units and retail electric providers will be non-regulated; transmission and distribution entities will continue to be regulated. The purpose of these laws and the separation they impose is to create financial and informational firewalls between regulated and non-regulated activities of the CSW System so that competitively sensitive information cannot be shared by regulated and non-regulated entities. In order to comply with the new Arkansas and Texas laws, the Registrants will follow a code of conduct, which requires the non-regulated business activities to operate separately from the regulated activities. Transactions between the regulated and non-regulated activities are subject to an information-sharing firewall and the requirement to act on an arm's-length basis. Regulatory Accounting Consistent with industry practice and the provisions of SFAS No. 71, which allows for the recognition of regulatory assets, the U.S. Electric Operating Companies have recognized significant regulatory assets and liabilities. As a result of legislation passed in Arkansas and Texas, the retail electricity generation business of CPL, SWEPCO and WTU, in those jurisdictions, no longer meets the criteria to apply SFAS No. 71. Instead, the principles of SFAS No. 101, as interpreted by EITF 97-4, have been applied. Management believes that CPL, SWEPCO and WTU currently meet the criteria for following SFAS No. 71 for the remainder of their electric utility business. Additional non-cash write-offs of regulatory assets and liabilities would be required if additional portions of the electric utility business of the U.S. Electric Operating Companies no longer meet the criteria for applying SFAS No. 71, absent a means of recovering such assets or settling such liabilities. Securitization of Generation-related Regulatory Assets and Stranded Costs Electric utilities under the Texas Legislation are allowed to recover generation-related regulatory assets and stranded costs that otherwise may not be recoverable in the future competitive market. All or a majority of those costs can be refinanced through securitization, which is a financing structure designed to provide lower financing costs than is available through the conventional utility cost of capital model. The securitized amounts are then recovered through a non-bypassable wires charge. On October 18, 1999, CPL filed an application with the Texas Commission to securitize approximately $1.27 billion of its retail generation-related regulatory assets and approximately $47 million in other qualified costs. The Texas Commission held hearings on December 7 and 8, 1999 on CPL's securitization application. On February 10, 2000, the Texas commission tentatively approved a settlement, which will permit CPL to securitize certain regulatory assets. The Texas Commission final order authorized the issuance of up to $797 million of securitization bonds including $764 million for recovery of stranded costs and $33 million for other qualified costs. The $764 million for recovery of stranded costs reflects the recovery of $949 million of regulatory assets offset by $185 million to reflect customer benefits associated with accumulated deferred income taxes. CPL had previously proposed to flow these benefits back to customers over the 14-year term of the bonds. An additional $287 million of regulatory assets originally requested by CPL in its securitization request has been included in the calculation of stranded costs in CPL's March 31, 2000 filing to establish non-bypassable charges for transmission and distribution service. 63 On April 11, 2000, four parties appealed the Texas Commission's securitization order to the Travis County District Court. One of these appeals challenges the ability to recover securitization charges under the Texas Constitution. CPL will not be able to issue the securitization bonds until these appeals are resolved. As a result the securitization bonds are not likely to be issued until 2001. Under the provisions of EITF 97-4, CPL's generation-related net regulatory assets were transferred to the transmission and distribution portion of the business and will be amortized as they are recovered through charges to customers. Management currently believes all generation-related regulatory assets for CPL will be recovered as provided under the Texas Legislation. If future events were to occur that made the recovery of these assets no longer probable, CPL would write-off any non-recoverable portion of such assets as a non-cash charge to earnings. CPL believes it will also have stranded costs, which are the excess of net book value of generation assets as defined over the market value of those assets. CPL's amount of regulatory assets and stranded costs are subject to a final determination by the Texas Commission in 2004. The Texas Legislation provides that all such finally determined stranded costs will be recovered. Since SWEPCO and WTU are not expected to have net stranded costs, all generation-related non-recoverable net regulatory assets were written off and reflected on their statements of income as an extraordinary loss in 1999. Additionally, in 1999, the Texas Electric Operating Companies performed an accounting impairment analysis of generation assets under SFAS No. 121 and concluded there was no impairment of generation assets at that time. An impairment analysis involves estimating future net cash flows arising from the use of an asset. If the net cash flows exceed the net book value of the asset, then there is no impairment of the asset for accounting purposes. The Texas Electric Operating Companies will continue to review their assets for potential impairment if events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. Texas Legislation and Final Fuel Proceedings Beginning January 1, 2002, fuel costs will not be subject to Texas Commission fuel reconciliation proceedings. Consequently, CPL, SWEPCO, and WTU will file a final fuel reconciliation with the Texas Commission reconciling fuel costs through the period ending December 31, 2001. These final fuel balances will be included in each company's true-up proceeding in 2004. Industry Restructuring Initiatives in Oklahoma The Oklahoma Legislature continues to consider several bills, which would provide the framework to implement retail customer choice as scheduled on July 1, 2002, pursuant to previously enacted legislation. PSO is unable to predict if legislation to implement retail customer choice will be enacted in the current session of the Oklahoma Legislature. RATES AND REGULATORY MATTERS Other Reference is made to NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS for information regarding fuel proceedings at CPL and SWEPCO. 64 U.K. ELECTRIC SEEBOARD Recent Regulatory Actions Following the completion of the phased-in opening of the United Kingdom domestic and small business electricity market to competition in May 1999, all customers are now able to choose their electricity supplier. SEEBOARD competes for customers in its own area as well as throughout the rest of the United Kingdom. The DGEGS has allowed a significant portion of the system development costs associated with the introduction of competition to be recovered by the regional electricity companies through a charge to all customers over the next five years. The DGEGS has also announced price restraints which set a maximum amount that existing electricity supply companies can charge their domestic and small business customers, taking into account its view of future electricity purchase costs. For SEEBOARD, these price restraints reduced prices in real terms by 6% for the regulatory year ended March 31, 1999, and a further 3% for the following regulatory year ending March 31, 2000. Regulatory Price Proposal for SEEBOARD On December 2, 1999, OFGEM published its final price proposals from its United Kingdom electricity distribution review. OFGEM has proposed revenue reductions in SEEBOARD's distribution business of 21%. In addition, OFGEM has proposed the reallocation of a further 12% of costs out of SEEBOARD's distribution business into its supply business. These proposals were accepted on December 20, 1999, and will take effect on April 1, 2000, and remain in effect for five years. OFGEM's proposals will reduce net income for SEEBOARD in the year 2000 by approximately $40 million, dependent upon the level of further cost reductions that can be achieved, and by approximately $60 million in 2001. CSW's net income from SEEBOARD U.S.A., its United Kingdom business segment, was $118 million for the twelve months ended March 31, 2000. OFGEM's price proposals for SEEBOARD will have a material adverse effect on the future results of operations of SEEBOARD U.S.A. and CSW, but are not be expected to adversely affect the financial condition of CSW. OFGEM also published the final price proposals for the electricity supply price review. OFGEM has recommended that the price cap for charges levied to electricity supply domestic and small business customers should be extended for two years from April 1, 2000. Overall, these proposals are expected to have a broadly neutral effect on the results of SEEBOARD U.S.A. In the fourth quarter of 1999, SEEBOARD's credit rating was downgraded to BBB+ due to recent U.K. regulatory action. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD-LOOKING INFORMATION. SEEBOARD - Third Party Pension Litigation In the U.K., National Grid and National Power PLC have been involved in continuing litigation regarding their use of actuarial surpluses disclosed in the 1992 and 1995 valuations of the electricity industry's occupational pension plan, the ESPS. A High Court decision in favor of the National Grid and National Power PLC was appealed. On February 10, 1999, the U.K. Court of Appeal ruled that the particular arrangements made by these corporations to dispose of part of the surplus were invalid due to procedural defects. This decision was confirmed at a later hearing of the U.K. Court of Appeal held in May 1999. The National Grid has appealed to the House of Lords, the highest court of appeal in 65 the U.K., and a decision is expected in late 2000 or early 2001. The final outcome of this appeal cannot presently be determined. SEEBOARD employees are members of the ESPS, and SEEBOARD has made similar use of actuarial surpluses disclosed in the 1992 and 1995 valuations. As a result of subsequent legal clarification of certain issues arising from the hearing held in May 1999, the potential impact of the ruling on SEEBOARD increased. The amount of the payments cancelled by SEEBOARD in recognition of these surpluses amounts to approximately (pound)49 or $78 million (converted at (pound)1.00 equals $1.59), excluding any accrued interest. The U.K. Court of Appeal did not order the National Grid or National Power PLC to make payment into the ESPS, and the court indicated that any requirement to make such payments would be extreme since the relevant sections of the ESPS are already in surplus. In the event that the court finally decides a payment by SEEBOARD into the ESPS is necessary, such a payment is likely to create additional pension fund surplus, which SEEBOARD should then be able to utilize over the next several years to reduce pension expense. Management is unable currently to predict the amount of any payment that it may be required to make to ESPS, but the payment should not have a material adverse affect on CSW's results of operations or financial condition. The foregoing discussion constitutes forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information. See FORWARD - LOOKING INFORMATION. DIVERSIFIED ELECTRIC CSW Energy CSW Energy presently owns interests in seven operating power projects totaling 1,308 MW which are located in Colorado, Florida and Texas. In addition to these projects, CSW Energy has other projects in various stages of development. CSW Energy began construction in August 1998 of a 500 MW power plant, known as Frontera, in the Rio Grande Valley, near the city of Mission, Texas. The natural gas-fired facility began simple cycle operation of 330 MW in July 1999 and is scheduled to commence combined cycle operation in the second quarter of 2000. Pursuant to AEP's and CSW's stipulated agreement with several intervenors in the state of Texas related to the AEP Merger, CSW Energy may sell 250 MW of Frontera upon completion of the merger. See ITEM 2. - MD&A, PROPOSED AEP MERGER and ITEM 1. NOTE 5. PROPOSED AEP MERGER for additional information. CSW Energy also has entered into an agreement with Eastman Chemical Company to construct and operate a 440 MW cogeneration facility in Longview, Texas. This facility is known as the Eastex Cogeneration Project. Construction of the facility began in the fourth quarter of 1999, with expected operation in early 2001. Excess electricity generated by the plant will be sold by CSW Energy in the wholesale electricity market. In October 1999, GE Capital Structured Finance Group purchased 50% of the equity ownership of Sweeny Cogeneration Limited Partnership. CSW Energy's after-tax earnings from the proceeds of the transaction were approximately $33 66 million and were recorded in the fourth quarter of 1999. The agreement between CSW Energy and GE Capital Structured Finance Group also provides for additional payments to CSW Energy, subject to completion of a planned expansion of the Sweeny cogeneration facility, which is expected to be operational in the fourth quarter of 2000. The preceding discussion contains forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information due to changes in the underlying assumptions. See FORWARD-LOOKING INFORMATION. CSW International CSW International was organized to pursue investment opportunities in EWGs and FUCOs and currently holds investments in the United Kingdom, Mexico and South America. CSW International and its 50% partner, Scottish Power plc have entered into a joint venture to construct and operate the South Coast power project, a 400 MW combined cycle gas turbine power station in Shoreham, United Kingdom. CSW International has guaranteed approximately (pound)19 million of the (pound)190 million construction financing. Both the guarantee and the construction financing are denominated in pounds sterling. The U.S. dollar equivalent at March 31, 2000 was $30 million and $302 million respectively, using a conversion rate of (pound)1.00 equals $1.59. The permanent financing is unconditionally guaranteed by the project. Construction of the project began in March 1999, and commercial operation is expected to begin in late 2000. At March 31, 2000, CSW International owned a 44% equity interest in Vale, which it had purchased for a total of $149 million. The investment is covered by a put option, which, if exercised, requires Vale to purchase CSW International's shares at a minimum price equal to the U.S. dollar equivalent of CSW International's purchase price. As a result, management has concluded that CSW International's investment carrying amount will not be reduced below the put option value unless there is deemed to be a permanent impairment. Since 1999, Vale has experienced losses of approximately $22 million, net of tax, related to the devaluation of the Brazilian Real. Pursuant to the put option arrangement, these losses are not reflected in the carrying value of the Vale investment. Conversely, CSW International will not recognize any future earnings from Vale until the losses are recovered. As of March 31, 2000, CSW International had invested $110 million in stock of a Chilean electric company. The investment is classified as securities available for sale and accounted for by the cost method. Based on the current market value of the shares and the quarter end foreign exchange rate, the value of the investment at March 31, 2000 was $56 million. The reduction in the carrying value of this investment has been reflected in Other Comprehensive Income in CSW's Consolidated Statements of Stockholders' Equity. Management views its investments in South America as a long-term investment strategy and believes these investments continue to have significant long-term value and that they are recoverable. Management will continue to closely evaluate the changes in these South American economies and their impact on these investments. The preceding discussion contains forward-looking information within the meaning of Section 21E of the Exchange Act. Actual results may differ materially from such projected information due to changes in the underlying assumptions. See FORWARD-LOOKING INFORMATION. 67 OTHER MATTERS Year 2000 On a system-wide basis, CSW initiated and implemented a year 2000 project to prepare internal computer systems and applications for the year 2000. These systems and applications include management information systems that support business operations such as customer billing, payroll, inventory and maintenance. Other systems with computer-based controls such as telecommunications, elevators, building environmental management, metering, plant, transmission, distribution and substations were included in this project as well. Cost to Address Year 2000 Issues As of March 31, 2000, cost incurred for the year 2000 project amounted to approximately $33 million, including $2 million in the first quarter of 2000. Transition Results to Date The results of the year 2000 project have all been positive. The CSW System completed the year 2000 transition without any year 2000 related problems. 68 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In 1997, CSW's board of directors adopted a risk management resolution authorizing CSW to engage in currency, interest rate and energy spot and forward transactions and related derivative transactions on behalf of CSW with foreign and domestic parties as deemed appropriate by executive officers of CSW. The risk management program is necessary to meet the growing demands of CSW's customers for competitive prices and price stability, to enable CSW to compete in a deregulated power industry, to manage the risks associated with domestic and foreign investments and to take advantage of strategic investment opportunities. The U.S. Electric Operating Companies experience commodity price exposures related to the purchase of fuel supplies for the generation of electricity and for the purchase of power and energy from other generation sources. Contracts that provide for the future delivery of these commodities can be considered forward contracts which contain pricing and/or volume terms designed to stabilize the cost of the commodity. Consequently, the U.S. Electric Operating Companies manage their price exposure for the benefit of customers by balancing their commodity purchases through a combination of long-term and short-term or spot market agreements. In response to the development of a more competitive electric energy market, CSW has received regulatory approval, which authorizes the U.S. Electric Operating Companies to conduct a pilot program offering power sales agreements at tariffed rates with a fixed fuel cost. To offset the commodity price risk associated with these contracts, CSW has purchased natural gas swaps and futures contracts. These arrangements cover estimated natural gas deliveries beginning in May 2000 and continuing for the remainder of the year. Natural gas volumes purchased to serve these contracts, for which CSW has secured swap or futures contracts, represents approximately 1% of annual natural gas purchases. Based on contractual commitments at March 31, 2000, CSW's natural gas futures and swap contracts and electricity forward contracts that are sensitive to changes in commodity prices include fair value of deferred gains or assets of $4.2 million. The swap and future contracts hedge a portion of the related commodity price exposure for 2000. Cash inflows on these contracts would offset lower margins on electricity sales to customers under tariffed rates with fixed fuel costs. The electricity forward contracts hedge a portion of CSW's energy requirements through August 2000. The average contract cost for forward purchases is $69 per MWH and $2.74 per MMbtu versus average fair market quotes at March 31, 2000 of $82.95 per MWH and $2.97 per MMbtu, respectively. The average cost for natural gas futures contracts is $2.67 per MMbtu and $2.38 per MMbtu for swaps versus a fair market value quote of $2.98 per month. SEEBOARD has entered into contracts for differences to reduce exposure to fluctuations in the price of electricity purchased from the United Kingdom's electricity power pool. This pool was established at privatization of the United Kingdom's electric industry for the bulk trading of electricity between generators and suppliers. At March 31, 2000, the gross value of such contracts for differences was approximately 93% of the expected power purchases for 2000. CSW has, at times, been exposed to currency and interest rate risks which reflect the floating exchange rate that exists between the U.S. dollar and the British pound. CSW has utilized certain risk management tools to manage adverse changes in exchange rates and to facilitate financing transactions resulting from CSW's acquisition of SEEBOARD. At March 31, 2000, CSW had positions in two cross currency swap contracts. The following table presents information relating to these contracts. The fair value of cross currency swaps reflect third party valuations calculated using proprietary pricing models. Based on these valuations, CSW's position in these cross currency swaps represented an unrealized loss of $36.5 million at March 31, 2000. This unrealized loss is 69 offset by unrealized gains related to the underlying transactions being hedged, which are included in long-term debt on CSW's consolidated balance sheet at a carrying value of approximately $411 million. CSW expects to hold these contracts to maturity. Expected Expected Cash Cash Inflows Outflows Contract Maturity Date (Maturity Value) (Market Value) - -------------------------------------------------------------------------------- (millions) Cross currency swaps August 1, 2001 $200 $210 Cross currency swaps August 1, 2006 $200 $227 For information related to currency risk in South America see DIVERSIFIED ELECTRIC - CSW International and ITEM 1. NOTE 7. SOUTH AMERICAN INVESTMENTS. 70 PART II - OTHER INFORMATION For background and earlier developments relating to PART II information, reference is made to the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 1999. ITEM 1. LEGAL PROCEEDINGS. Other Legal Claim and Proceedings 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 PART I. - NOTE 2. LITIGATION AND REGULATORY PROCEEDINGS and NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders of the Registrants since the last annual meeting was held. No annual meetings have been held in 2000 in contemplation of consummation of the merger. If the merger is not consummated for any reason, the Registrants will schedule annual shareholder meetings later this year. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS: (3) Articles of Incorporation and Bylaws. CPL 1 Amendment of the Bylaws of Central Power and Light Company, effective April 19, 2000, filed herewith. PSO 2 Bylaws of Public Service Company of Oklahoma, as amended April 18, 2000, filed herewith. SWEPCO 3 Bylaws of Southwestern Electric Power Company, as amended April 27, 2000, filed herewith. WTU 4 Bylaws of West Texas Utilities Company, as amended May 1, 2000, filed herewith. (12)Computation of Ratio of Earnings to Fixed Charges CPL - (Exhibit 12.1), filed herewith. PSO - (Exhibit 12.2), filed herewith. SWEPCO - (Exhibit 12.3), filed herewith. WTU - (Exhibit 12.4), filed herewith. 71 (27) Financial Data Schedules CSW - (Exhibit 27.1), filed herewith. CPL - (Exhibit 27.2), filed herewith. PSO - (Exhibit 27.3), filed herewith. SWEPCO - (Exhibit 27.4), filed herewith. WTU - (Exhibit 27.5), filed herewith. (b) REPORTS FILED ON FORM 8-K: CSW, CPL, SWEPCO and WTU Date of earliest event reported: January 10, 2000 Date of report: January 25, 2000 Item 5. Other Events and Item 7. Financial Statements and Exhibits, copies of news release and Texas Commission filing by CSW and its three electric utilities serving Texas jurisdictional customers announcing a business separation plan for "unbundling" Texas electrical utilities into three entities: a retail electric provider, a power generation company and an energy delivery company. SWEPCO Date of earliest event reported: February 4, 2000 Date of report: February 4, 2000 Item 5. Other Events and Item 7. Financial Statements and Exhibits, reporting SWEPCO's 1999 earnings in anticipation of filing a Form S-3 registration statement with the SEC for a new debt offering. Exhibits include a ratio of earnings to fixed charges and a financial data schedule. CSW, CPL, PSO, SWEPCO and WTU Date of earliest event reported: January 25, 2000 Date of report: February 14, 2000 Item 5. Other Events and Item 7. Financial Statements and Exhibits, news releases reporting regulatory approvals of AEP Merger from United Kingdom's Department of Trade and Industry and United States Department of Justice; news release reporting a settlement between CPL and the Texas Commission relating to the initial securitization of stranded costs; and the reporting of CPL's 1999 earnings in anticipation of a new debt offering. Exhibits include a ratio of earnings to fixed charges and a financial data schedule. 72 SIGNATURES 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 12, 2000 /s/ Lawrence B. Connors ----------------------- Lawrence B. Connors 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 12, 2000 /s/ R. Russell Davis -------------------- R. Russell Davis Controller and Chief Accounting Officer (Principal Accounting Officer) 73 EX-12.1 2 EXHIBIT 12.1 EXHIBIT 12.1 CENTRAL POWER AND LIGHT COMPANY (CONSOLIDATED) RATIO OF EARNINGS TO FIXED CHARGES FOR THE TWELVE MONTHS ENDED MARCH 31, 2000 (Thousands Except Ratio) (Unaudited) Operating Income $287,355 Adjustments Income taxes 83,549 Provision for deferred income taxes 13,476 Deferred investment tax credits (5,207) Other income and deductions 7,712 Allowance for borrowed and equity funds used during construction 5,233 --------- Earnings $392,118 ========= Fixed Charges: Interest on long-term debt $88,644 Interest on short-term debt and other 20,007 Distributions on Trust Preferred Securities 12,000 --------- Fixed Charges $120,651 ========= Ratio of Earnings to Fixed Charges 3.25 ========= 74 EX-12.2 3 EXHIBIT 12.2 EXHIBIT 12.2 PUBLIC SERVICE COMPANY OF OKLAHOMA (CONSOLIDATED) RATIO OF EARNINGS TO FIXED CHARGES FOR THE TWELVE MONTHS ENDED MARCH 31, 2000 (Thousands Except Ratio) (Unaudited) Operating Income $98,653 Adjustments Income taxes 14,133 Provision for deferred income taxes 19,178 Deferred investment tax credits (1,791) Other income and deductions 1,570 Allowance for borrowed and equity funds used during construction 1,990 ----------- Earnings $133,733 =========== Fixed Charges: Interest on long-term debt $26,444 Interest on short-term debt and other 8,406 Distributions on Trust Preferred Securities 6,000 ----------- Fixed Charges $40,850 =========== Ratio of Earnings to Fixed Charges 3.27 =========== 75 EX-12.3 4 EXHIBIT 12.3 EXHIBIT 12.3 SOUTHWESTERN ELECTRIC POWER COMPANY (CONSOLIDATED) RATIO OF EARNINGS TO FIXED CHARGES FOR THE TWELVE MONTHS ENDED MARCH 31, 2000 (Thousands Except Ratio) (Unaudited) Operating Income $144,513 Adjustments Income taxes 44,325 Provision for deferred income taxes (7,846) Deferred investment tax credits (4,544) Other income and deductions (2,462) Allowance for borrowed and equity funds used during construction 2,352 Interest portion of financing leases 224 ------------ Earnings $176,562 ============ Fixed Charges: Interest on long-term debt $38,496 Interest on short-term debt and other 14,942 Distributions on Trust Preferred Securities 8,662 Interest portion of financing leases 224 ------------ Fixed Charges $62,324 ============ Ratio of Earnings to Fixed Charges 2.83 ============ 76 EX-12.4 5 EXHIBIT 12.4 EXHIBIT 12.4 WEST TEXAS UTILITIES COMPANY RATIO OF EARNINGS TO FIXED CHARGES FOR THE TWELVE MONTHS ENDED MARCH 31, 2000 (Thousands Except Ratio) (Unaudited) Operating Income $56,999 Adjustments Income taxes 10,822 Provision for deferred income taxes 7,869 Deferred investment tax credits (1,074) Other income and deductions 1,954 Allowance for borrowed and equity funds used during construction 1,089 ----------- Earnings $77,659 =========== Fixed Charges: Interest on long-term debt $20,352 Interest on short-term debt and other 4,580 ----------- Fixed Charges $24,932 =========== Ratio of Earnings to Fixed Charges 3.11 =========== 77 EX-3.1(II) 6 EXHIBIT 3.1 CENTRAL POWER AND LIGHT COMPANY BOARD OF DIRECTORS APRIL 19, 2000 AMENDMENT OF BYLAWS RESOLVED, that Article IV, Section 1 of the Bylaws is amended to read as follows: SECTION 1. A meeting of the shareholders shall be held on the second Thursday in April each year or on such other day as may, in any year, be specified by the Board of Directors. Each such annual meeting shall be held at such place and hour as may be fixed by the Board of Directors. RESOLVED, pursuant to Article XIV of the Corporation's Bylaws, Article VIII of the Bylaws is hereby amended to delete Section 5 in its entirety, which established the Audit Committee and the Nominating Committee of the Corporation pursuant to Section 1 of Article VIII. EX-3.2(II) 7 EXHIBIT 3.2 April 18, 2000 BYLAWS OF PUBLIC SERVICE COMPANY OF OKLAHOMA ARTICLE I STOCK AND TRANSFERS SECTION 1. Each holder of fully paid stock shall be entitled to a certificate or certificates of stock stating the number of shares owned by such stockholder. All certificates of stock shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary and sealed with the seal, which may be facsimile, of the Company and shall be countersigned by a Transfer Agent appointed by the Board of Directors. All certificates of Preferred Stock shall also be countersigned and registered by a Registrar, appointed by the Board of Directors, and the signatures of the President or Vice President and the Secretary or Assistant Secretary upon all such certificates of Preferred Stock may be facsimiles, engraved or printed. In case any officer who has signed or whose facsimile signature has been placed upon a certificate of stock shall cease to be such officer before such certificate is issued, such certificate may be issued by the Company with the same effect as if such officer had not ceased to be such at the date of its issue. SECTION 2. The capital stock of the Company shall be divided into such classes, with such respective designations, preferences and voting powers, restrictions or qualifications thereof, as are or shall be from time to time stated and expressed in the Articles of Incorporation of the Company, and amendments thereto. No holder of shares of stock of any class of the Company shall have any preemptive or preferential rights of subscription or purchase of any shares of any class of stock of the Company, whether now or hereafter authorized, and any and all shares of capital stock of any class of the Company, whether now or hereafter authorized, may, in the discretion of the Board of Directors, be offered and sold to the holders of any one or more classes of stock of the Company to the exclusion of any other class or classes, or may be issued and disposed of from time to time in such manner and to such persons, whether stockholders or not, and for such corporate purposes as may be determined by the Company's Board of Directors and without first being offered to stockholders. SECTION 3. Shares of stock shall be transferable only on the books of the Company, and, except as hereinafter provided, or as may be required by law, or by order of court in a proper proceeding, shall be transferred only upon the proper assignment and surrender of the certificates issued therefor. If an outstanding certificate of stock shall be lost, destroyed or stolen, the holder thereof may have a new certificate upon producing evidence, satisfactory to the Board of Directors, of such loss, destruction or theft, and upon furnishing to the Company a bond of indemnity, deemed sufficient by the Board of Directors, to protect the Company against claims under the outstanding certificate. SECTION 4. The Board of Directors shall have power to fix a time, not exceeding sixty days preceding the date of any meeting of stockholders, or the date fixed for the payment of any dividend or distribution or the date for the allotment of rights or the date when any change or conversion or exchange of shares shall be made or go into effect, as a record date for the determination of the stockholders entitled to notice of and to vote at such meeting or entitled to receive payments of any such dividend, distribution, or allotment of rights, or to exercise rights in respect to any such change, conversion or exchange of shares, and in such case only registered stockholders on the date so fixed shall be entitled to receive notice of said meeting or to receive payment of such dividend, distribution, or allotment of rights, or to exercise such rights of change, conversion, or exchange of shares, as the case may be, notwithstanding any transfer of any shares on the books of the Company after any record date fixed as aforesaid; provided, however, that the stock transfer books of the Company may be closed by order of the Board of Directors for a period not exceeding sixty days for the purpose of holding a meeting of stockholders, or paying a dividend, or for any other legal purpose, as the Board of Directors shall deem advisable. SECTION 5. If default shall be made in the prompt payment when due of any sum payable to the Company upon any subscription for stock of the Company, and if such default shall continue for a period of thirty days, then all right under the subscription in and to the stock subscribed for shall, upon the expiration of such period, cease and determine and become and be forfeited to the Company; provided that if at the expiration of such thirty-day period such right shall belong to the estate of the decedent, it may be forfeited only by resolution of the Board of Directors declaring forfeiture. The Company shall, within thirty days after such forfeiture, cause such stock to be sold at private or public sale, at its market value at the time of sale, and shall, out of the net proceeds of sale and upon surrender of any outstanding stock subscription receipt issued to evidence the subscription, pay to the recorded holder of such receipt the amount paid on the subscription prior to forfeiture, less the amount, if any, by which the total subscription price of the stock exceeded the net proceeds of sale. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. A meeting of the stockholders shall be held on the third Tuesday in April in each year or on such other day as may, in any year, be specified by the Board of Directors. Each such annual meeting shall be held at such place and hour as may be fixed by the Board of Directors SECTION 2. Special meetings of the stockholders may be called at any time by the Chairman, if there shall be one, the President, the Board of Directors, or by one or more stockholders holding not less than one-fourth of the outstanding shares of Common Stock of the Company, or in such other manner as may be provided by statute or by paragraph (7) of Article VI of the Articles of Incorporation, as amended. SECTION 3. Notice of the time and place of each annual or special meeting of stockholders, shall be mailed to the address, as shown by the Company's records, of each stockholder entitled to vote at such meeting not less than ten days before the date of the meeting, except in cases where other special method of notice may be required by statute, in which cases the statutory method shall be followed. The notice of a special meeting shall state the purpose of the meeting. Notice of any meeting of the stockholders may be waived by any stockholder. SECTION 4. Any meeting of the stockholders, whenever or however called and held, shall be legal and its proceedings valid if all of the stockholders eligible under the Articles of Incorporation, as amended, and the Bylaws to vote upon questions submitted at such meeting are present either in person or by proxy, or if a quorum be present in person or by proxy and either before or after the meeting each of the stockholders entitled to vote and who was not present in person or by proxy at the meeting signs a written waiver of notice or a consent to the holding of such meeting or any approval of the minutes thereof. SECTION 5. At any stockholders' meeting, except as otherwise provided in paragraph (7) of Article VI of the Articles of Incorporation, as amended, a majority of the stock outstanding eligible under the Articles of Incorporation, as amended, and the Bylaws to vote upon questions being submitted at such meeting must be represented in order to constitute a quorum for the transaction of business, but the stockholders represented at any meeting, though less than a quorum, may adjourn the meeting to some other day or sine die. SECTION 6. No notice of any adjourned meeting need be given to stockholders unless the adjournment be for thirty days or more, in which case notice shall be given as of an original meeting, provided, however, that at an adjourned meeting no business may be transacted other than that which might have been transacted at the original meeting unless notice thereof shall have been given as in the case of an original meeting. SECTION 7. At all meetings of stockholders each share of stock eligible under the Articles of Incorporation, as amended, and the Bylaws to vote upon questions being submitted at such meeting shall be entitled to such vote or votes as from time to time shall be provided in the Article of Incorporation, as amended, and such stock may be voted by the holder thereof in person or by his duly authorized proxy in writing duly filed with the Secretary of the Company. SECTION 8. The Chairman, if there shall be one, when present, or in his absence the President of the Company, or in the President's absence the General Manager of the Company, shall act as chairman, and the Secretary of the Company shall act as Secretary, of each stockholders' meeting. In the case of the absence of the Chairman, the President and the General Manager from any stockholders' meeting, the President of the General Manager shall select such officer or employee of the Company as either deems appropriate to act as chairman of such stockholders' meeting. In the case of the absence of the Secretary and the Assistant Secretary from any stockholders' meeting, the chairman of such stockholders' meeting shall nominate such person to act as secretary of such meeting as he deems appropriate and the stockholders shall vote on such nomination. ARTICLE III BOARD OF DIRECTORS SECTION 1. The number of directors constituting the entire Board of Directors shall be four (4). Each director shall hold office until the next succeeding annual meeting of the stockholders and until his successor shall have been elected and qualified, or until his earlier resignation or removal. SECTION 2. From and after October 28, 1987, the Board of Directors shall not elect as a Director or propose for election by the stockholders as a Director, any employee of the Company (other than a past or present Chief Executive Officer of the Company) whose service as such employee has terminated or will in normal course terminate on or before the date of his election by the Board or proposed election by the stockholders. SECTION 3. The Board of Directors by resolution may confer upon any former director the honorary title of Director Emeritus. The designation and number of directors emeriti shall be within the discretion of the Board. Directors emeriti shall not be members of the Board of Directors, nor counted toward a quorum thereof, but shall have the privilege of attending, without vote, the meetings of the Board. Directors emeriti shall receive no compensation, but may be reimbursed for necessary expenses in the manner and amount as if directors. SECTION 4. A regular meeting of the Board of Directors shall be held immediately after the annual meeting of stockholders in each year and at the same place where such annual meeting shall have been held, provided a quorum for such meeting be obtained. A regular meeting of the Board of Directors shall also be held quarterly thereafter, usually on the third Tuesday of January, April, July and October at the registered office of the Company, or when directed by the Chairman, if there shall be one, the President or the Board of Directors, at such other place within or without the state of Oklahoma as may be specified in the notice of the meeting. Written notice of each regular meeting stating the time and place and, if required by statute or the Bylaws, the purpose of such meeting shall be mailed, or telegraphed, at least one week before the date of such meeting to each director, unless such notice shall be waived by any director, in writing, either before or after such meeting. SECTION 5. Special meetings of the Board of Directors may be called at any time by the Chairman, if there shall be one, by the President, by a Vice President when acting as President, or by any two or more directors, by mailing to each director, not less than one week before such meeting, a written notice stating the time, place and purpose of such meeting, unless such notice shall be waived by any director, in writing, either before or after such special meeting. Special meetings of the Board of Directors may be held at any time at the registered office of the Company, or at any other place within or without the state of Oklahoma. SECTION 6. Notice of any meeting of the Board of Directors may be waived by any director, in writing, either before or after the meeting; and any director, by his attendance at any meeting, shall be deemed to have waived such notice. SECTION 7. Three members of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a less number may adjourn the meeting to some other day or sine die. The acts of a majority of the directors present at a meeting at which a quorum is present shall be the acts of the Board of Directors. The Chairman, if there shall be one, or in his absence the President of the Company, shall act as Chairman of the meeting; and the Secretary of the Company shall act as Secretary of the meeting. In the absence of both the Chairman and the President of the Company, the Board of Directors shall elect a Chairman of the meeting. In the absence of the Secretary, an Assistant Secretary of the Company shall serve as secretary of the meeting. In their absence, the directors shall elect a secretary of the meeting. The members of the Board of Directors may be paid such fees for attendance at meetings as the Board of Directors from time to time by resolution may determine. SECTION 8. The order of business at meetings of the Board of Directors shall, unless otherwise ordered by the Board of Directors, be as follows: 1. Reading and consideration of the minutes of the preceding meeting. 2. Reading of the minutes of meetings of the Executive Committee, if any, held since the last meeting of the Board of Directors. 3. Report of other committees, if any. 4. Reports from officers or other employees of the Company. 5. Consideration of any other business of the Company. ARTICLE IV COMMITTEES SECTION 1. The Board of Directors, by resolution adopted by a majority of the entire Board, may appoint an Executive Committee consisting of four or more directors, including the Chairman, if there shall be one, and the President of the Company. Any three directors on the Executive Committee shall be required for a quorum. The Executive Committee may be discontinued at any time by resolution adopted by a majority of the entire Board of Directors; but, after its creation and until it is discontinued, the members of the Executive Committee shall be appointed annually, by resolution adopted by a majority of the entire Board of Directors at the first meeting of the Board after the annual meeting of stockholders in each year. Vacancies in the Executive Committee shall be filled by resolution adopted by a majority of the entire Board of Directors. During the intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise all the powers of the Board of Directors in the management of the business and affairs of the Company except as to matters in respect of which specific directions shall have been given by the Board of Directors. All actions of the Executive Committee shall be recorded by the Secretary of the Company and be reported to the Board of Directors at its regular meetings. SECTION 2. The Board of Directors may appoint other committees, standing or special, from time to time from among their own number, or otherwise, and confer powers on such committees, and revoke such powers and terminate the existence of such committees, at its pleasure. SECTION 3. Meetings of any committee may be called in such manner and may be held at such times and places as such committee may by resolution determine, provided that a meeting of any committee may be called at any time by the Chairman, if there shall be one, or by the President of the Company. Not less than one day's notice of all meetings of the Executive Committee shall be given to each member of the committee personally, in writing, or by mail, or by telegraph, but no notice shall be necessary where a meeting is held with the consent of all the members of the committee. Members of all committees shall be paid such fees for attendance at meetings as the Board of Directors may determine. ARTICLE V OFFICERS SECTION 1. There shall be elected by the Board of Directors, at its first meeting (if practicable) held after the annual election of directors in each year, a President, a Secretary, a Treasurer, a Controller, and, if desired, one or more Assistant Secretaries, Assistant Treasurers, and Assistant Controllers. The Board of Directors also may provide for and elect at any time, a Chairman, a General Manager, one or more Vice Presidents, and such other officers, and prescribe such duties for them, respectively, as in the judgment of the Board of Directors may be required from time to time to conduct the business of the Corporation. Any two or more offices, except the offices of President and Vice President, President and Secretary, President and General Manager, and Chairman and any other office, may be held by the same person. All officers elected by the Board of Directors shall hold their respective offices, unless sooner terminated, until the first meeting of the Board of Directors held after the next ensuing annual election of directors and until their respective successors, willing to serve, shall have been duly elected and qualified. Any of such officers may be removed from their respective offices at the pleasure of the Board. SECTION 2. The Chairman of the Board shall, at his discretion, preside at all meetings of the stockholders and at all meetings of the Board of Directors. In the absence of the Chairman of the Board, the President shall preside at the meetings of the Board of Directors. He shall also have and may exercise such further powers and duties as from time to time may be conferred upon or assigned to him by the Board of Directors. SECTION 3. The President shall be the Chief Executive Officer of the Company and shall have general authority over all of the business and affairs of the Company and over all other officers, agents and employees of the Company. When the Chairman of the Board is not present, he shall preside at all meetings of the stockholders, and of the Board of Directors or, in the case of all meetings of stockholders when the Chairman of the Board and President are not present, the General Manager of the Company shall preside. In the case of the absence of the Chairman of the Board, the President and the General Manager from a stockholders' meeting, the President or the General Manager shall select such officer or employee of the Company as either deems appropriate to preside at such meeting. The President shall be a member of the Executive Committee, if there shall be one, and shall be ex officio a member of any other committee appointed by the Board of Directors. He shall preside at all meetings of the Executive Committee, if there shall be one. He shall have general and active management of the business and affairs of the Company, and full authority and responsibility with respect to making effective all resolutions of the Board of Directors. He shall execute bonds, mortgages, contracts and other instruments requiring the seal of the Company to be affixed, except where required or permitted by law to be otherwise signed and executed, and except where such duties shall be expressly delegated by him or the Board of Directors to some other officer or agent of the Company. He shall have authority when neither the Board of Directors nor the Executive Committee is in session to suspend the authority of any other officer or officers of the Company, subject, however, to the pleasure of the Board of Directors or of the Executive Committee at its next meeting, and authority to appoint and to remove and discharge any and all agents and employees of the Company not elected or appointed directly by the Board of Directors. He shall also have such other powers and duties as may at any time be prescribed by these Bylaws or by the Board of Directors. SECTION 4. The General Manager, if one is elected by the Board of Directors, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. In case the President, due to absence or any other cause, shall be unable at any time to attend to the duties of the office of President requiring attention, or in the case of his death, resignation, or removal from office, the powers and duties of the President shall, except as the Board of Directors may otherwise provide, temporarily devolve upon the General Manager, and shall be exercised by such General Manager as acting President during such inability of the President, or until the vacancy in the office of the President shall be filled. In case of the absence, disability, death, resignation, or removal from office of the President and the General Manager, the Board of Directors shall elect one of its members to exercise the powers and duties of the President during such absence or disability, or until the vacancy in one of said offices shall be filled, except that in the case of the absence of the Chairman, the President and the General Manager from a stockholders' meeting, the President or the General Manager shall select such officer or employee of the Company as either deems appropriate to preside at such meeting. SECTION 5. The Vice President, if one is elected by the Board of Directors, or Vice Presidents, if more than one is elected by the Board of Directors, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. SECTION 6. The Secretary shall attend all meetings of the stockholders, the Board of Directors and the Executive Committee, shall keep a true and faithful record thereof, and shall have the custody and care of the corporate seal, minute books and stock books of the Company. Except as may be otherwise required by law, the Secretary shall sign and issue all notices required for meetings of stockholders, the Board of Directors and the Executive Committee. Whenever requested by the requisite number of stockholders or directors, the Secretary shall give notice, in the name of the stockholders or directors making the request, of a meeting of the stockholders, the Board of Directors or the Executive Committee, as the case may be. The Secretary shall sign all documents and papers to which the signature of the Secretary may be necessary or appropriate, shall affix and attest the seal of the Company to all instruments requiring the seal, and shall have such other powers and duties as are commonly incidental to the office of secretary of a corporation or as may be prescribed by the Board of Directors or the Chief Executive Officer. SECTION 7. The Treasurer shall have charge of and be responsible for the collection, receipt, custody and disbursement of the funds of the Company, and shall deposit its funds in the name of the Company in such banks, trust companies or other depositories as the Board of Directors may authorize. Such funds shall be subject to withdrawal only in such manner as may be designated from time to time by resolution of the Board of Directors. The Treasurer shall have the custody of such books and papers as in the practical business operations of the Company shall be convenient or as shall be placed in the Treasurer's custody by order of the Board of Directors. The Treasurer shall have such other powers and duties as are commonly incidental to the office of treasurer of a corporation or as may be prescribed by the Board of Directors, the Chief Executive Officer or the Chief Financial Officer. Securities owned by the Company shall be in the custody of the Treasurer or of such other officers, agents or depositories as may be designated by the Board of Directors. The Treasurer may be required to give bond to the Company for the faithful discharge of the treasurer's duties in such form and in such amount and with such surety as shall be determined by the Board of Directors. SECTION 8. The Controller shall be responsible for the preparation, installation and supervision of all accounting records of the Company, preparation and interpretation of the financial statements and reports of the Company, maintenance of appropriate and adequate records of authorized appropriations, determination that all sums expended pursuant to such appropriations are properly accounted for, and ascertainment that all financial transactions are properly executed and recorded, and shall have such specific powers and duties as shall be delegated by the Board of Directors, the Chief Executive Officer or the Chief Financial Officer. The Controller may be required to give bond to the Company for the faithful discharge of the duties of the controller in such form and in such amount and with such surety as shall be determined by the Board of Directors. SECTION 9. Assistant officers, if any, shall assist the principal officers in the performance of the duties assigned to such principal officers, and in so doing each shall have the powers of their respective principal officers. In case of the absence, disability, death, resignation or removal from office of any of such principal officers, their duties shall, except as otherwise ordered by the Board of Directors, temporarily evolve upon such assistant officer as shall be designated by the Chief Executive Officer. Such assistant officers shall also perform such other duties as may be assigned to them from time to time by their respective principal officers, by the Chief Executive Officer or by the Board of Directors. ARTICLE VI MISCELLANEOUS SECTION 1. The corporate seal of the Company shall have inscribed thereon the name of the Company, between concentric circles, and the word "SEAL". Such seal may be used by the Company by causing it, or a facsimile thereof, to be imprinted, impressed or affixed or in any other manner reproduced. SECTION 2. The funds of the Company shall be deposited to its credit in such banks or trust companies as the Board of Directors from time to time shall designate and shall be withdrawn only on checks or drafts of the Company for the purposes of the Company. All checks, drafts, notes, acceptances and endorsements of the Company shall be signed in such manner and by such officer or officers or such individual or individuals as the Board of Directors from time to time by resolution shall determine. If and to the extent so authorized by the Board of Directors, such signature or signatures may be facsimile. Only checks, drafts, notes, acceptances and endorsements signed in accordance with such resolution or resolutions shall be the valid checks, drafts, notes, acceptances or endorsements of the Company. SECTION 3. No debt shall be contracted, for other than current expenses, unless authorized by the Board of Directors or the Chairman, and no bill shall be paid by the Treasurer unless previously certified by the head of the department in which it originated and the Treasurer is otherwise satisfied as to its propriety and accuracy. If the Treasurer is not so satisfied, the authority of the Chairman shall be secured before payment. SECTION 4. All dividends shall be declared by a vote of the Board of Directors. SECTION 5. The fiscal year of the company shall close at the end of December annually. SECTION 6. (a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and is not determined by the Board to have been guilty of misconduct in the performance of his or her duty to the Corporation. Provided, however, that no person shall be indemnified for amounts paid in settlement, unless the terms and conditions of such settlement have been consented to by the Corporation. And further provided that with respect to any criminal action or proceeding, such person had no reasonable cause to believe that his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that such conduct was unlawful; provided, however, that no indemnity prohibited by law shall be made. (b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation. Provided that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for misconduct in the performance of his or her duty to the Corporation unless and only to the extent that the District Court or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the District Court or such other court shall deem proper; and further provided that no indemnity prohibited by law shall be made. (c) The Corporation may indemnify, to the same extent as hereinabove provided, any person who is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Any indemnification under this Subsection (c) shall be made only upon the authorization of the Board of Directors, which may occur at any time prior to, during, or after final judgment or order, in any action, suit or proceeding to which such person is or is threatened to be made a party. No right to such indemnification is created by this Subsection (c). (d) Any indemnification under Subsections (a), (b) and (c) (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Subsections (a) and (b). Such determination shall be made (i) by the Board of Directors by majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, by independent legal counsel in a written opinion, if a quorum of disinterested directors so directs, or (iii) by the stockholders. (e) Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of such director, or officer, to repay such amount unless it shall ultimately be determined that such person is entitled to be indemnified by the Corporation as authorized in this Section. Such expenses incurred by other employees and agents with respect to which indemnification is claimed hereunder may also be advanced upon such terms and conditions, if any, as the Board of Directors deems appropriate. (f) The Corporation may, as authorized by the Board of Directors, purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by him or her in any such capacity, or arising out of this status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Section. (g) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Corporation pursuant to the foregoing provisions of this Section or the laws of the state of Oklahoma, in the event any claim for indemnification against such liabilities (other than for the payment by the Corporation of expenses, including attorneys' fees, actually and reasonably incurred by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted against the Corporation by such director, officer or controlling person in connection with the registration of any security under the Securities Act of 1933, the Corporation will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by the Corporation is against public policy as expressed by the Securities Act of 1933 and will be governed by the final adjudication of such issue. ARTICLE VII Unless otherwise ordered by the Board of Directors, the President shall have full power and authority on behalf of the Company, either in person or by proxy, at any meeting of stockholders of any corporation in which the Company may hold Stock and, at any such meeting, may possess and exercise all the rights and powers incident to the ownership of such Stock which, as the owner thereof, the Company might have possessed or exercised, if present. ARTICLE VIII AMENDMENT OR REPEAL OF BYLAWS The Bylaws may be altered or repealed or new Bylaws may be adopted (a) by a vote of the holders of a majority of the Common Stock present in person or by proxy at any regular or special meeting, duly convened after notice to the common stockholders setting out the purpose of such meeting, at which meeting a majority of the outstanding Common Stock is represented; or (b) by a majority vote of the entire Board of Directors at any regular or special meeting duly convened after notice of the purpose of such meeting, subject to the power of the stockholders to alter or repeal such Bylaws; provided that the Board of Directors shall not adopt, alter or repeal any Bylaw fixing the number, qualifications, classifications or terms of office of the directors, or any of them. * * * * * * * * I, Lina P. Holm, do hereby certify that I am the Secretary of Public Service Company of Oklahoma, an Oklahoma corporation, that I have in my custody and possession the corporate records and seal of said Company, and that the foregoing is a true and correct copy of the Bylaws of Public Service Company of Oklahoma, as amended at April 18, 2000, and which are in full force and effect on the date certified below. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Corporation this 18th day of April , 2000. Lina P. Holm, Secretary (SEAL) PUBLIC SERVICE COMPANY OF OKLAHOMA EX-3.3(II) 8 EXHIBIT 3.3 BYLAWS OF SOUTHWESTERN ELECTRIC POWER COMPANY (A Delaware Corporation) (A Member of the Central and South West System) As amended to April 27, 2000 (Recompiled April 27, 2000) ARTICLE I Offices The Corporation may maintain offices at such places as the Board of Directors may, from time to time, appoint. ARTICLE II Seal The corporate seal of the Corporation shall have inscribed thereon the name of the Corporation and the words "Corporate Seal, Delaware"; and such seal may be facsimile. ARTICLE III Stock and Transfers Section 1. Each holder of fully paid stock shall be entitled to a certificate or certificates of stock, stating the number of shares owned by such stockholder and the designation of the class (and series, if any) in which issued. All stock certificates shall be signed by the Chairman of the Company, the President, or a Vice President of the Corporation, and also by the Treasurer, the Secretary, an Assistant Treasurer, or an Assistant Secretary of the Corporation and shall be sealed with the corporate seal of the Corporation or a facsimile thereof; provided, that, however, if such certificates are countersigned by a Transfer Agent and/or registered by a Registrar, the signature of any such Chairman of the Company, President, Vice President, Treasurer, Secretary, Assistant Treasurer, or Assistant Secretary may be facsimile. Any such Transfer Agent or Registrar shall be a person other than the Corporation or employee of the Corporation, and shall be duly appointed by the Board of Directors. In case any one or more of such officers of the Corporation who have signed or whose facsimile signature or signatures have been reproduced upon any such certificate or certificates shall have ceased to be such officer or officers of the Corporation before such certificate or certificates shall have been issued or delivered by the Corporation, such certificate or certificates may be issued and delivered by the Corporation with the same effect as if such former officer or officers remained in office at the date of such issuance or delivery. Section 2. Shares of stock of the Corporation shall be transferable only on the books of the Corporation and, except (a) as may be required by law or by the order of a court in some proper proceeding, (b) as hereinafter provided, or (c) as the Board of Directors may otherwise expressly provide by resolution from time to time, shall be transferred only upon the assignment and surrender of the issued certificate or certificates representing such shares. Except as the Board of Directors may otherwise provide by resolution from time to time, in the event any issued certificate representing shares of stock of the Corporation shall be lost, destroyed or stolen, the holder thereof may have a new certificate for an equivalent number of shares of the same class issued to him in lieu of and to replace such lost, destroyed or stolen certificate upon producing evidence, satisfactory to the Board of Directors, of such loss, destruction or theft and upon furnishing to the Corporation a bond of indemnity, deemed sufficient by the Board of Directors, to protect the Corporation against any loss, damage or liability that may be sustained by reason of such lost, destroyed or stolen certificate and the issuance and delivery of such new or replacement certificate. Section 3. The stock transfer books of the Corporation may be closed by order of the Board of Directors for a period not exceeding fifty days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect. In lieu of closing the stock transfer books as aforesaid, the Board of Directors is authorized, in its discretion, to fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. ARTICLE IV Meeting of Stockholders Section 1. The annual meeting of the stockholders of the Corporation shall be held on the second Wednesday in April of each year or on such other day as may, in any year, be specified by the Board of Directors. Each such annual meeting shall be held at such place and hour as may be fixed by the Board of Directors. Section 2. Special meetings of the stockholders may be called by the Board of Directors or by a majority of the directors individually, or by stockholders holding not less than one-third in number of the total outstanding shares of capital stock of the Corporation entitled to vote, or in such other manner as may be provided in Article Fourth of the Certificate of Incorporation, as amended, of the Corporation, or as may at any time be provided by statute. Such special meetings shall be held at the office of the Corporation either in the City of Shreveport, Louisiana, or in the City of Wilmington, Delaware, as the notice of the meeting may specify. Section 3. Notice of the time and place of each annual meeting shall be sent by mail to the recorded address of each stockholder entitled to vote, not less than ten days before the date of the meeting. Like notice shall be given of all special meetings, except in cases where other special method of notice may be required by statute, in all which cases, the statutory method shall be followed. The notice of a special meeting shall state the object of the meeting. Notice of meetings may in all cases be waived by stockholders entitled to notice. Section 4. At all meetings of stockholders, except as otherwise provided in Article Fourth of the Certificate of Incorporation, as amended, a majority of the number of shares of stock outstanding and entitled to vote must be represented in order to constitute a quorum for the transaction of any business other than (a) adjourning from time to time until a quorum shall be obtained, or (b) adjourning sine die, and for any such adjournment a majority vote of whatever stock shall be represented shall be sufficient. Section 5. At all stockholders' meetings, except as otherwise provided in Article Fourth of the Certificate of Incorporation, as amended, holders of record of stock then having voting power shall be entitled to one vote for each share of such stock held by them respectively, upon any question or at any election, and such vote may, in all cases, be given by proxy, duly authorized in writing. Section 6. A full list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the residence of each, and the number of shares held by each, shall be prepared by the Secretary and filed in the office where the election is to be held, at least ten days before every election, and shall at all times, during the usual hours for business, be open to the examination of any stockholder. ARTICLE V Directors Section 1. The property and business of the Corporation shall be managed by a Board of Directors, which, except as otherwise provided in Article Fourth of the Certificate of Incorporation, as amended, shall consist of not less than three nor more than thirteen members. Except as otherwise provided in Article Fourth of the Certificate of Incorporation, as amended, the Directors shall be elected by a majority of votes of the stockholders entitled to vote, present in person or represented by proxy at the annual meeting of the stockholders, and each Director shall be elected for a term of one year, and until his successor shall be elected and shall qualify. Section 2. Except as otherwise provided in Article Fourth of the Certificate of Incorporation, as amended, any vacancy in the Board of Directors shall be filled by the Board, and each Director so appointed shall hold office until the next annual election, and until his successor shall be duly elected and qualified. Section 3. The Board of Directors may hold its meetings and may have one or more offices, and may keep the books of the Corporation (except the original or duplicate stock ledger) outside of Delaware, at such places as they may from time to time determine. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board may exercise all such powers of the Corporation, and do all such lawful acts and things as are not by law or by these Bylaws required to be exercised or done by the stockholders. Section 4. Without prejudice to the general powers conferred by the last preceding clause, it is hereby expressly declared that the Board of Directors shall have the following powers, that is to say: 1. From time to time to make and change rules and regulations, not inconsistent with these Bylaws, for the management of the Corporation's business and affairs. 2. From time to time, as and when and upon such terms and conditions as it may determine, to issue any part of the authorized capital stock of the Corporation. 3. To purchase, or otherwise acquire for the Corporation, any property, right or privilege which the Corporation is authorized to acquire at such price or consideration, and generally on such terms or conditions as it shall think fit. 4. At its discretion to pay for any property or rights acquired by the Corporation, either wholly or partly in money, stock, bonds, debentures or other securities of the Corporation. 5. To borrow money, to create and issue mortgages, bonds, deeds of trust, trust agreements and negotiable or transferable instruments and securities, secured by mortgage or otherwise, and to do every other act and thing necessary to effectuate the same. 6. To appoint and at its discretion, remove or suspend any and all officers, employees and agents, permanently or temporarily, as it may think fit, and to determine their duties and fix, and from time to time change their duties, salaries, and emoluments, and to require security in such instances, and in such amounts as it thinks fit. 7. To confer by resolution upon any officer of the Corporation, the power to choose, remove or suspend subordinate officers, employees and agents. 8. To appoint any person or corporation to accept and hold in trust for the Corporation, any property belonging to the Corporation, or in which it is interested, or for any other purpose, and to execute and do all such deeds and things as may be requisite in relation to any such trust. 9. To determine who shall be authorized on the Corporation's behalf, to sign bills, notes, receipts, acceptances, endorsements, checks, releases, contracts and other papers and documents. 10. To delegate any of the powers of the Board in the course of the current business of the Corporation to any standing or special committee, or to any officer or agent, or to appoint any persons to be the agents of the Corporation, with such powers (including the powers to subdelegate), and upon such terms as it shall think fit. ARTICLE VI Meetings of the Board Section 1. Regular meetings of the Board of Directors of the Corporation shall be held at such place and time as may be designated from time to time by the Board. Special meetings of the Board may be called by the Chairman of the Company, if there shall be one, or by the President, or by a Vice President when acting as President, or by any two directors, upon not less than two days' notice to each director, either personally or by mail or telegraph. Notice of any meeting of the Board may be waived in writing by any director, either before or after the meeting, and shall be deemed to have been waived by his attendance at such meeting. Section 2. A majority of the authorized number of directors fixed by the Bylaws shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a lesser number may adjourn from time to time until a quorum shall be obtained or may adjourn sine die. Section 3. At all meetings of the Board of Directors, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board, unless the act of a greater number of directors is required by statute. The Board shall keep minutes of the proceedings at its meetings. Unless otherwise restricted by the Certificate of Incorporation, as amended, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if, prior to such action, a written consent setting forth the action so taken shall be signed by all members of the Board or of such committee, as the case may be, and such written consent shall be filed with the minutes of the proceedings of the Board or of such committee, as the case may be. Section 4. All directors of the Corporation may be allowed such sum for attendance at any regular or special meeting of the Board as may be fixed by resolution of the Board and shall be reimbursed by the Corporation for any out-of-pocket expenses incurred for attendance at any such meeting. Nothing herein contained shall be construed to prevent any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE VII Officers Section 1. There shall be elected by the Board of Directors, at its first meeting (if practicable) held after the annual election of directors in each year, a President, a Secretary, a Treasurer, a Controller, and if desired, one or more Assistant Secretaries and Assistant Treasurers, and Assistant Controllers. The Board of Directors also may provide for and elect, at any time, a Chairman of the Company, a General Manager, one or more Vice Presidents, and such other officers, and prescribe such duties for them, respectively, as in the judgment of the Board of Directors may be required from time to time to conduct the business of the Corporation. Any two or more offices, except the offices of President and Vice President, President and Secretary, President and General Manager, and Chairman and any other office, may be held by the same person. All officers elected by the Board of Directors shall hold their respective offices, unless sooner terminated, until the first meeting of the Board of Directors held after the next ensuing annual election of directors and until their respective successors, willing to serve, shall have been duly elected and qualified. Any of such officers may be removed from their respective offices at the pleasure of the Board. Section 2. The Chairman of the Company, if there shall be one, shall when present preside at all meetings of the stockholders, of the Board of Directors, and of the Executive Committee, if there shall be one. He shall be a member of the Executive Committee, if there shall be one, and may attend any meeting of any committee of the Board, whether or not a member. He shall have such other powers and duties as may at any time be prescribed by the Bylaws or by the Board of Directors. In the event of death or incapacitation of the President and Chief Executive Officer, the Chairman, if there shall be one shall assume the duties of the Chief Executive Officer until a successor is elected. Section 3. The President shall be the Chief Executive Officer of the Company and shall have general authority over all of the business and affairs of the Company and over all other officers, agents and employees of the Company. When the Chairman, if there shall be one, is not present, the President shall preside at all meetings of the stockholders, of the Board of Directors, and of the Executive Committee, if there shall be one. He shall be a member of the Executive Committee, if there shall be one, and may attend any meeting of any committee of the Board, whether or not a member. He shall have general and active management of the business and affairs of the Company, and full authority and responsibility with respect to making effective all resolutions of the Board of Directors. He shall execute bonds, mortgages, contracts and other instruments requiring the seal of the Company to be affixed, except where required or permitted by law to be otherwise signed and executed, and except where such duties shall be expressly delegated by him or the Board of Directors to some other officer or agent of the Company. He shall have authority, when neither the Board of Directors nor the Executive Committee is in session, to suspend the authority of any other officer or officers of the Company, subject, however, to the pleasure of the Board of Directors or the Executive Committee at its next meeting, and authority to appoint and to remove and discharge any and all agents and employees of the Company not elected or appointed directly by the Board of Directors. He shall have such other powers and duties as may at any time be prescribed by the Bylaws or by the Board of Directors. Section 4. The General Manager, if one is elected by the Board of Directors, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. In case the President, due to absence or any other cause, shall be unable at any time to attend to the duties of the office of President requiring attention, or in the case of his death, resignation, or removal from office, the powers and duties of the President shall, except as the Board of Directors may otherwise provide, temporarily devolve upon the General Manager, and shall be exercised by such General Manager as acting President during such inability of the President, or until the vacancy in the office of the President shall be filled. In case of the absence, disability, death, resignation, or removal from office of the President and the General Manager, the Board of Directors shall elect one of its members to exercise the powers and duties of the President during such absence or disability, or until the vacancy in one of said offices shall be filled. Section 5. The Vice President, if one is elected by the Board of Directors, or Vice Presidents, if more than one is elected by the Board of Directors, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. Section 6. The Secretary shall attend all meetings of the Board of Directors, shall keep a true and faithful record thereof in proper books to be provided for that purpose, and shall have the custody and care of the corporate seal, records, minutes and stock books of the Corporation. He shall also act as Secretary of all stockholders' meetings, and keep a record thereof, except as some other person may be selected as Secretary by any such meeting, shall keep a suitable record of the addresses of stockholders, and shall, except as may be otherwise required by statute or by the Bylaws, sign, and by order of the Board of Directors, issue all notices required for meetings of stockholders, and of the Board of Directors. Whenever requested by a requisite number of individual stockholders, or individual directors, to give notice, for a meeting of stockholders or of the Board of Directors, he shall give such notice, as requested, and the notice shall state the names of the stockholders or directors making the request. He shall; sign all mortgages, and all other documents and papers to which his signature may be necessary or appropriate, shall affix the seal of the Corporation to all instruments requiring the seal, and shall have such other powers and duties as are commonly incidental to the office of Secretary, or as may be prescribed for him. He shall be sworn to the faithful discharge of his duty. Section 7. The Treasurer shall have charge of and be responsible for the collection, receipt, custody and disbursement of the funds of the Corporation, and shall deposit its funds in the name of the Corporation, in such banks, trust companies, or safe deposit vaults as the Board of Directors may direct. He shall have the custody of such books, receipted vouchers, and other books and papers as in the practical business operations of the Corporation shall naturally belong in the office or custody of the Treasurer, or as shall be placed in his custody by the Board of Directors, by the Executive Committee, by the Chairman of the Company, by the President, or by a Vice President or a General Manager when acting as President. He shall also have charge of the safekeeping of all stocks, bonds, mortgages and other securities belonging to the Corporation, but such stocks, bonds, mortgages and other securities shall be deposited for safekeeping in a safe deposit vault to be approved by the Board of Directors or by the Executive Committee, in a box or boxes, access to which shall be had as may be provided by resolution of the Board of Directors or of the Executive Committee. He shall have such other powers and duties as are commonly incidental to the office of Treasurer, or as may be prescribed for him. He may be required to give bond to the Corporation for the faithful discharge of his duties in such form and to such amount and with such sureties as shall be determined by the Board of Directors. Section 8. The Controller shall have general supervision and direction of matters pertaining to the function of the Accounting Department and related sections, including all matters pertaining to preparation of budgets, statistics, taxes and corporate matters, without excluding by this enumeration any other accounting functions not mentioned herein. He shall have general supervision over all books and accounts of the Corporation relating to receipts and disbursements, and the form of all vouchers, accounts, reports and returns required by the various departments. He shall see that the accounts of all officers and employees are examined from time to time and as often as practicable, and that proper returns are made of all receipts from all sources. He shall be responsible for the audit, verification and payment of all billings and voucher requisitions for any and all purposes which shall be submitted currently to him or to someone he designates on his staff. Payments shall be made forthwith if found satisfactory and correct unless deferment is properly requested and approved. No payments of billings and voucher requisitions shall be made unless previously certified to or approved by the head of the department in which it originates and by others authorized to approve such disbursements and unless he is satisfied of its propriety and correctness. He shall have full access to all contracts, correspondence and other papers and records of the Corporation relating to its business matters, shall have the custody of its account books, and other papers relating to the accounts of the Corporation, and shall have such other powers and duties as are commonly incidental to the office of Controller, or as may be prescribed for him. He may be required to give bond to the Corporation for the faithful discharge of his duties in such form and to such amount and with such sureties as shall be determined by the Board of Directors. Section 9. Assistant Controllers, Assistant Secretaries and Assistant Treasurers shall assist the Controller, the Secretary and the Treasurer, respectively, as the case may be, in the performance of the respective duties of such principal officers; and in case of the absence, disability, death, resignation or removal from office of any such principal officer, the powers and duties of such principal officer shall, except as otherwise ordered by the Chairman of the Company, the President, the Board of Directors or the Executive Committee, temporarily devolve upon his assistant or senior assistant if there shall be more than one. Such assistants shall also perform such other duties as may be assigned to them from time to time by their respective principal officers or the Chairman of the Company or the President or by the Board or the Executive Committee. ARTICLE VIII Indemnification Section 1. Each person who is or was or had agreed to become a Director or Officer of the Corporation, or each such person who is or was serving, or had agreed to serve at the request of the Board of Directors or an officer of the Corporation as an employee or agent of the Corporation, or as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified (including, without limitation, the advancement of expenses and payment of all loss, liability and expenses) by the Corporation to the full extent permitted by the General Corporation Law of the State of Delaware or any other applicable laws as presently in effect, or as may hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said laws permitted the Corporation to provide prior to such amendment); provided, however, that no person shall be indemnified for amounts paid in settlement unless the terms and conditions of such settlement have been consented to by the Corporation, and provided further that no indemnification for employees or agents of the Corporation (other than Directors and officers) will be made without the express authorization of the Corporation's Board of Directors. ARTICLE IX Committees Section 1. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee consisting of not less than three members of the Board, including the Chairman of the Company, if there shall be one, and the President of the Corporation. The Executive Committee may make its own rules of procedure and elect its chairman, and shall meet where and as provided by such rules or by resolution of the Board of Directors. A majority of the members of the Committee shall constitute a quorum for the transaction of business. During the intervals between the meetings of the Board of Directors the Executive Committee shall have all the powers of the Board in the management of the business and affairs of the Corporation including power to authorize the seal of the Corporation to be affixed to all papers which may require it, and, by majority vote of all its members, may exercise any and all such powers in such manner as such Committee shall deem best for the interests of the Corporation in all cases in which specific directions shall not have been given by the Board of Directors. Vacancies in the Committee shall be filled by resolution passed by a majority of the whole Board of Directors. The Executive Committee shall keep regular minutes of its proceedings and report the same to the Board when required. Section 2. The Board of Directors, by the affirmative vote of a majority of the whole Board, may appoint any other standing committees, and such standing committees shall have and may exercise such powers as shall be authorized by the Bylaws or by the resolution appointing them. ARTICLE X Order of Business at Directors' Meetings Section 1. The order of business at meetings of the Board of Directors shall be determined by the Chairman of the Company, if there shall be one and he shall be present, or by the President or other person acting as chairman of the meeting, unless otherwise ordered by the Board. ARTICLE XI Inspection of Books Section 1. The Board of Directors shall from time to time determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by statute or as authorized by the Board of Directors or by a resolution of the stockholders. ARTICLE XII Miscellaneous Section 1. The funds of the Corporation shall be deposited to its credit in such banks or trust companies as the Board of Directors, or its designee, may, from time to time, designate, and shall be drawn out only for the purposes of the Corporation, and only upon checks or drafts signed as herein authorized. All checks, drafts or orders for payment except "transfer checks" and "payroll checks" as hereinafter provided drawn upon the "General Account," the "Deposit Refund Account," and the "Mid-South Towers-SWEPCO Account" in any depository shall be signed on behalf of the Company by the President, a Vice President, the General Manager, the Treasurer or an Assistant Treasurer, or by any such officers or employees of the Corporation as may be designated for the purpose from time to time by resolution of the Board of Directors or of the Executive Committee; provided, however, that all such checks in amounts over $50,000 shall be signed manually by such officer, and provided that all such checks or orders drawn in an amount of $50,000 or less may be signed by the mechanical or facsimile signature of said officer. "Transfer checks," transferring funds of the Company from its General Account in any depository to its General Account in any other depository, may be signed on behalf of the Company by the mechanical or facsimile signature of said officers as defined above. "Payroll checks" drawn upon the Payroll Account or Accounts of the Company may be signed on behalf of the Company by the mechanical or facsimile signature of said officer as defined above. All deposits and funds of the Company in any depository shall be made, in the first instance, directly to the credit of the Company in its General Account in such depository, and no such deposit shall be made, in the first instance, directly to the credit of the Company in any Special Account, fund or deposit (herein called a "Special Account") of the Company in any depository, whether now or hereafter authorized or maintained. Section 2. Promissory notes issued by the Corporation shall be signed by the Chairman of the Company or the President or a Vice President and by the Treasurer or an Assistant Treasurer of the Corporation, or shall be signed in such other manner as the Board of Directors or the Executive Committee shall by resolution provide. When the Board of Directors or the Executive Committee shall by resolution so provide, the signature of an officer or employee designated or authorized to sign or countersign bonds, debentures, notes, drafts or checks issued by the Corporation may be facsimile. Section 3. No debt shall be contracted, except for current expenses, unless authorized by the Board of Directors or the Executive Committee, and no bills shall be paid by the Treasurer unless audited and approved by the Controller, or by some person or committee expressly authorized by the Board of Directors or the Executive Committee to audit and approve bills for payment. Section 4. The dividends upon the preferred stock, if declared, shall be payable quarterly on the first day of January, April, July and October in each year, unless different quarterly payment dates shall be fixed, in respect of any series of the preferred stock of the Corporation, by the Certificate of Incorporation, as amended, or by the resolution of the Board of Directors creating such series. All dividends declared upon the common stock shall be payable at such time as may be fixed by the Board of Directors. Before payment of any dividend or making any distribution of profits, there shall be set aside, out of the surplus or net profits of the Corporation, such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such purpose as the Board shall think conducive to the interest of the Corporation. Section 5. The fiscal year of the Corporation shall be the calendar year. ARTICLE XIII Amendment Section 1. Subject always to Bylaws made by the stockholders, the Board of Directors may make Bylaws from time to time, and may alter, amend or repeal such Bylaws at any regular or special meeting of the Board, but any Bylaws made by the Board of Directors may be altered, amended or repealed by the stockholders, at any annual meeting, or at any special meeting, provided notice of such proposed alteration, amendment or repeal shall have been included in the notice of such special meeting. EX-3.4(II) 9 EXHIBIT 3.4 May 1, 2000 WEST TEXAS UTILITIES COMPANY BY-LAWS --------------------------------- ARTICLE I. Offices. The corporation may maintain offices at such places in the State of Texas as the Board of Directors may, from time to time, appoint. ARTICLE II. Seal. The corporate seal shall have inscribed thereon the name of the corporation and the words "Corporate Seal, 1927 Texas". Such seal may be a facsimile. ARTICLE III. Stock and Transfers. Section 1. Each holder of fully paid stock shall be entitled to a certificate or certificates of stock stating the number of shares owned by such stockholder, and the designation of the class in which issued. All certificates of stock shall be signed by the President or a Vice-President of the Company and also by the Treasurer, Secretary, an Assistant Treasurer or an Assistant Secretary of the Company and sealed with the seal of the Company, which signatures and seal may be facsimile. All certificates of Common Stock shall be countersigned by a Transfer Agent appointed by the Board and all certificates of Preferred Stock shall be countersigned by a Transfer Agent and registered by a Registrar, appointed by the Board. In case any officer who has signed or whose facsimile signature has been placed upon a certificate is issued, such certificate may be issued by the Company with the same effect as if such officer had not ceased to be such at the date of issue. Section 2. Shares of stock shall be transferable only on the books of the Company, and, except as hereinafter provided, or as may be required by law, or by the order of a court in some proper proceedings, shall be transferred only upon the proper assignment and surrender of the certificates issued therefor. If an outstanding certificate of stock shall be lost, stolen or destroyed, a new certificate may, in the discretion of the Board of Directors, be issued in lieu thereof upon receipt of evidence, satisfactory to the Board, of such loss, destruction, or theft, and upon receipt by the Company of a bond of indemnity, deemed sufficient by the Board, to protect the Company against claims under the outstanding certificate. Section 3. The transfer books may be closed by order of the Board of Directors for short periods, not exceeding twenty-five days at any one time, for the purpose of paying a dividend, or holding a meeting of stockholders, or for any other legal purpose, as the Board of Directors shall deem advisable. Section 4. If default shall be made in the prompt payment, when due, of any sum payable to the company upon any subscription of stock of the Company, and if such default shall continue for a period of thirty days, all right under the subscription in and to the stock subscribed for shall, upon the expiration of such period, cease and determine, and all right under the subscription in and to the stock subscribed for shall be forfeited to the Company, but no right under the subscription in and to the stock subscribed for shall be forfeited unless and until the directors have caused a written notice to be served on the subscriber personally, or by depositing the same in the post office, properly directed to him at the post office nearest his usual place of residence, stating that he is required to make payment, setting forth the amount, at the time (which payment day must be not less than thirty days after the day the notice is served) and place specified in said notice, and if he fails to make the same, his stock and all previous payments thereon will be forfeited to the Company; and provided further, that if at the time for payment fixed in said notice, such right shall belong to the estate of a decedent, it may be forfeited only by resolution of the Board of Directors declaring forfeiture. The Company, shall, within thirty days after such forfeiture, cause such stock to be sold at private or public sale, at its market value at the time of sale, and shall, out of the net proceeds of sale and upon surrender of any outstanding stock subscription receipt issued to evidence the subscription, pay to the recorded holder of such receipt the amount paid on the subscription prior to forfeiture, less the amount, if any, by which the total subscription price of the stock exceeded the net proceeds of sale. ARTICLE IV. Meeting of Stockholders. Section 1. An annual meeting of the stockholders shall be held on the last Tuesday in March in each year or on such other day as may, in any year, be specified by the Board of Directors. Each such annual meeting shall be held at such place and hour as may be fixed by the Board of Directors. Section 2. Special meetings of the stockholders may be called by the Board of Directors, or by a majority of the Directors individually, or by the holders of not less than one-third in number of the total outstanding shares of capital stock of the Company entitled to vote, or in such manner as may be provided by statute or by Paragraph (7) of Article VI of the Charter, as amended. Section 3. Notice of the time and place of each annual meeting shall be sent by mail to the recorded address of each stockholder entitled to vote, not less than ten days before the date of the meeting. Like notice shall be given of all special meetings, except in cases where other special method of notice may be required by statute, in all which cases, the statutory method shall be followed. The notice of a special meeting shall state the object of the meeting. Notice of meetings may in all cases be waived by stockholders entitled to notice. Section 4. At any stockholders' meeting, except as otherwise provided in Paragraph (7) of Article VI of the Charter, as amended, a majority of the number of shares of stock outstanding eligible under the Charter, as amended, to vote upon questions being submitted at such meeting, must be represented, in person or by proxy, in order to constitute a quorum for the transaction of business, but the stockholders represented at an meeting, though less than a quorum, may adjourn the meeting to some other day or sine die. Section 5. At all meetings of stockholders each share of stock eligible under the Charter, as amended, to vote upon questions being submitted at such meeting shall be entitled to such a vote or votes as shall be from time to time provided in the Charter, as amended, and such stock may be represented by the holder thereof in person or a duly authorized proxy in writing duly filed with the Secretary of the Company. Section 6. A full list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the residence of each, and the number of shares held by each, shall be prepared by the Secretary and filed in the office where the election is to be held, at least ten days before every election, and shall at all times, during the usual hours for business, be open to the examination of any stockholder. ARTICLE V. Directors. Section 1. The Board of Directors shall consist of such number, not less than three nor more than fifteen members and, subject to the provisions of Paragraph (7) of Article VI of the Charter, as amended, shall be elected at each annual meeting of the stockholders. If for any reason such election shall not be held at an annual meeting, it may be subsequently held at any special meeting of the stockholders duly called for the purpose. Except as otherwise provided in Paragraph (7) of Article VI of the Charter, as amended, directors shall hold office until the next succeeding annual meeting of stockholders and until their respective successors shall have been duly elected and qualified; provided, however, the term of any director who is an employee of the Company or its Parent Company (other than a past or present Chief Executive Officer of the Company who retires), shall expire concurrently with the termination of such director's employment by the Company or its Parent Company. No person who has attained age seventy (70), and no former employee of the Company (other than a former Chief Executive Officer) who has retired from the Company shall be eligible for election as a director of the Company. Directors need not be stockholders. Section 2. Except as otherwise provided in Paragraph (7) of Article VI of the Charter, as amended, any vacancy occurring in the Board of Directors may be filled with the affirmative vote of a majority of the remaining directors though less than a quorum of the Board. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 3. The Board of Directors may hold its meetings and may have one or more offices, and may keep the books of the corporation at such places as they may from time to time determine within the State of Texas. In addition to the powers and authorities by these By-Laws expressly conferred upon them, the Board may exercise all such powers of the corporation, and do all such lawful acts and things as are not by law or by these By-Laws required to be exercised or done by the stockholders. Section 4. Without prejudice to the general powers conferred by the last preceding clause, it is hereby expressly declared that the Board of Directors shall have the following powers, that is to say: 1. From time to time to make and change rules and regulations, not inconsistent with these By-Laws, for the management of the corporation's business and affairs. 2. From time to time, as and when and upon such terms and conditions as it may determine, to issue any part of the authorized capital stock of the corporation. 3. To purchase, or otherwise acquire for the corporation, any property, right or privilege which the corporation is authorized to acquire at such price or consideration, and generally on such terms or conditions as it shall think fit. 4. At its discretion to pay for any property or rights acquired by the corporation, either wholly or partly in money, stock, bonds, debentures or other securities of the corporation. 5. To borrow money, to create, make and issue mortgages, bonds, deeds of trust, trust agreements and negotiable or transferable instruments and securities, secured by mortgage or otherwise, and to do every other act and thing necessary to effectuate the same. 6. To appoint and at its discretion, remove or suspend any and all officers, employees and agents, permanently or temporarily, as it may think fit, and to determine their duties and fix, and from time to time change their duties, salaries and emoluments, and to require security in such instances, and in such amounts as it thinks fit. 7. To confer by resolution upon any officer of the corporation, the power to choose, remove or suspend subordinate officers, employees and agents. 8. To appoint any person or corporation to accept and hold in trust for the corporation, any property belonging to the corporation, or in which it is interested, or for any other purpose, and to execute and do all such deeds and things as may be requisite in relation to any such trust. 9. To determine who shall be authorized on the corporation's behalf, to sign bills, notes, receipts, acceptances, endorsements, checks, drafts, bonds, mortgages, releases, contracts and other papers and documents; subject always to any requirements of law in respect thereof. If and to the extent authorized by resolution of the Board of Directors, the signature or signatures on checks and drafts may be facsimile. 10. To delegate any of the powers of the Board in the course of the current business of the corporation to any standing or special committee, or to any officer or agent, or to appoint any persons to be the agents of the corporation, with such powers (including the powers to sub-delegate), and upon such terms as it shall think fit. ARTICLE VI. Meetings of the Board. Section 1. Regular meetings of the Board of Directors shall be held at such place and time as may be designated from time to time, by the Board. Special meetings of the Board may be called by the Chairman or the President, or by a Vice-President when acting as President, or by any two Directors upon two days' notice to each Director, either personally or by mail or by telegram. Notice of any meeting of the Board of Directors may be waived in writing by any director, either before or after meeting, and will be deemed to be waived by his attendance thereat. Section 2. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board, but a less number may adjourn from time to time, until a quorum is obtained, or may adjourn sine die. Section 3. In all meetings of the Board a majority vote shall be decisive of all questions before the meeting, except as may be otherwise provided by law. The Board of Directors shall keep minutes of the proceedings of their meetings. Section 4. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board, an annual retainer payable in monthly or other convenient installments, a fixed sum for attendance at each regular or special meeting of the Board, or of any standing or special committee of the Board, and expenses of attendance, if any, may be allowed; provided, that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity, and receiving compensation therefor. ARTICLE VII. Officers. Section 1. There shall be elected by the Board of Directors, at its first meeting (if practicable) held after the annual election of directors in each year, a President, a Secretary, a Treasurer, a Controller, and, if desired, one or more Assistant Secretaries, Assistant Treasurers, and Assistant Controllers. The Board of Directors also may provide for and elect at any time, a Chairman, a General Manager, one or more Vice Presidents, and such other officers, and prescribe such duties for them, respectively, as in the judgment of the Board of Directors may be required from time to time to conduct the business of the Corporation. Any two or more offices, except the offices of President and Vice President, President and Secretary, President and General Manager, and Chairman and any other office, may be held by the same person. All officers elected by the Board of Directors shall hold their respective offices, unless sooner terminated, until the first meeting of the Board of Directors held after the next ensuring annual election of directors and until their respective successors, willing to serve, shall have been duly elected and qualified. Any of such officers may be removed from their respective offices at the pleasure of the Board. Section 2. The Chairman of the Board, if there shall be one, shall preside at all meetings of the stockholders and of the Board of Directors. He shall be a member of the Executive Committee, if there shall be one, and of such other committees to which he shall be appointed by the Board of Directors. He shall also have such other powers and duties as may at any time be prescribed by these By-Laws or by the Board of Directors. Section 3. The President shall be the chief executive officer of the Company and have general authority over all of the business and affairs of the Company and over all other officers, agents and employees of the Company, subject to the direction of the Board of Directors or Executive Committee. He shall have general and active management of the business and affairs of the Company, and full authority and responsibility with respect to making effective all resolutions of the Board of Directors. He may execute bonds, mortgages, contracts and other instruments on behalf of the Company, except those required by law, governmental regulations, or indentures and other agreements of the Company to be otherwise signed and executed or expressly required by the Company. He shall have the authority when neither the Board of Directors nor the Executive Committee is in session to suspend the authority of any other officer or officers of the Company, subject, however, to the pleasure of the Board of Directors or of the Executive Committee at its next meeting, and authority to appoint and to remove and discharge any and all agents and employees of the Company not elected or appointed directly by the Board of Directors. In any absence of the Chairman of the Board he shall, if present, have all powers and duties conferred upon the Chairman of the Board. Section 4. The General Manager, if one is elected by the Board of Directors, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. In case the President, due to absence or any other cause, shall be unable at any time to attend to the duties of the office of President requiring attention, or in the case of his death, resignation, or removal from office, the powers and duties of the President shall, except as the Board of Directors may otherwise provide, temporarily devolve upon the General Manager, and shall be exercised by such General Manager as acting President during such inability of the President, or until the vacancy in the office of the President shall be filled. In case of the absence, disability, death, resignation, or removal from office of the President and the General Manager, the Board of Directors shall elect one of its members to exercise the powers and duties of the President during such absence or disability, or until the vacancy in one of said offices shall be filled. Section 5. The Vice President, if one is elected by the Board of Directors, or Vice Presidents, if more than one is elected by the Board of Directors, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. Section 6. The Secretary shall attend all meetings of the Board of Directors, shall keep a true and faithful record thereof in proper books to be provided for that purpose, and shall have the custody and care of the corporate seal, records, minutes and stock books of the Company. He shall also act as Secretary of all stockholders' meetings, and keep a record thereof, except as some other person may be selected as Secretary by any such meeting, shall keep a suitable record of the addresses of stockholders, and shall, except as otherwise required by statute, or by the By-Laws, sign, and by order of the Board of Directors, issue all notices required for meetings of stockholders, and of the Board of Directors. Whenever requested by a requisite number of individual stockholders, or individual Directors, to give notice, for a meeting of stockholders or of the Board of Directors, he shall give such notice, as requested, and the notice shall state the names of the stockholders or Directors making the request. He shall sign all mortgages, and all other documents and papers to which his signature may be necessary or appropriate, shall affix the seal of the corporation to all instruments requiring the seal, and shall have such other powers and duties as are commonly incidental to the office of Secretary, or as may be prescribed for him. He shall be sworn to the faithful discharge of his duty. Section 7. The Treasurer shall have charge of, and be responsible for, the collection, receipt, custody and disbursement of the funds of the Company, and shall deposit its funds in the name of the Company, in such banks, trust companies, or safe deposit vaults as the Board of Directors may direct. He shall have the custody of such books, receipted vouchers, and other books and papers as in the practical business operations of the Company shall naturally belong in the office or custody of the Treasurer, or as shall be placed in his custody by the Board of Directors, by the Executive Committee, by the President, or by a Vice-President when acting as President. He shall also have charge of the safe keeping of all stocks, bonds, mortgages and other securities belonging to the Company, but such stocks, bonds, mortgages and other securities shall be deposited for safe keeping in a safe deposit vault to be approved by the Board of Directors or by the Executive Committee, in a box or boxes, access to which shall be had as may be provided by resolution of the Board of Directors or Executive Committee. He shall have such powers and duties as are commonly incidental to the office of Treasurer, or as may be prescribed for him. He may be required to give bond to the company for the faithful discharge of his duties in such form and to such amount and with such sureties as shall be determined by the Board of Directors. Section 8. The Controller shall have general supervision over all books and accounts of the Company relating to receipts and disbursements, shall arrange the form of all vouchers, accounts, reports and returns required by the various departments, shall examine the accounts of all officers and employees from time to time and as often as practicable, and shall see that proper returns are made of all receipts from all sources, and that correct vouchers are turned over to him for all disbursements for any purpose. At such time in each month as may be found practicable all bills for the previous month, properly made in detail and certified, shall be submitted to him, and he shall audit and approve the same, if found satisfactory and correct, but he shall not approve or audit any voucher unless it has been previously certified to by the head of the department in which it originated, nor unless satisfied of its propriety and correctness. He shall have full access to all contracts, correspondence, and other papers and records of the Company relating to its business matters, shall have the custody of its account books, original contracts and other papers relating to the accounts of the Company, except such as in the practicable business operations of the Company shall naturally belong in the custody of the Treasurer, or shall be placed in the custody of the Treasurer by the Board of Directors, by the Executive Committee, by the President, or by one of the Vice-Presidents when acting as President, and shall have such other powers and duties as are commonly incidental to the office of Controller, or as may be prescribed for him. He may be required to give bond to the Company for the faithful discharge of his duties in such form and to such amounts and with such sureties as shall be determined by the Board of Directors. Section 9. Assistant Secretaries, Treasurers or Controllers, when elected, shall assist the Secretary, the Treasurer or the Controller, as the case may be, in the performance of the respective duties assigned to such principal officers, and the powers and duties of any such principal officer, shall, except as otherwise ordered by the Board of Directors, temporarily devolve upon his assistant in case of the absence, disability, death, resignation or removal from office of such principal officer. They shall perform such other duties as may be assigned to them from time to time. ARTICLE VIII. Executive Committee. Section 1. The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of not less than three members of the Board, including the Chairman of the Board, if there be one, and the President of the Company. The Executive Committee may make its own rules of procedure and elect its Chairman, and shall meet where and as provided by such rules, or by resolution of the Board of Directors. A majority of the members of the Committee shall constitute a quorum for the transaction of business. During the intervals between the meetings of the Board of Directors the Executive Committee shall have all the powers of the Board in the management of the business and affairs of the Company, including power to authorize the seal of the Company to be affixed to all papers which may require it, and, by majority vote of all its members, may exercise any and all such powers in such manner as such Committee shall deem best for the interest of the Company, in all cases in which specific directions shall not have been given by the Board of Directors. Section 2. The Executive Committee shall keep regular minutes of its proceedings and report the same to the Board when required. ARTICLE IX. Order of Business at Directors' Meetings. Section 1. The order of business at meetings of the Board of Directors shall, unless otherwise ordered by the Board be as follows: 1. Reading and consideration of the minutes of the preceding meeting. 2. Reading of the minutes of meetings of the Executive Committee held since the last meeting of the Board. 3. Reading and consideration of communications. 4. Reports of standing and special committees. 5. Reports from officers of the Company. 6. The consideration of any other business of the Company. ARTICLE X. Indemnification. Each person who is or was or had agreed to become a Director, officer, employee or agent of the Company, and each person who is or was serving or had agreed to serve at the request of the Board of Directors or an officer of the Company as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, (including heirs, executors, administrators or estate of such person), shall be indemnified (including, without limitation, the advancement of expenses and payment of all loss, liability and expenses) by the Company against any liability asserted against him in such a capacity or arising out of his status as such a person, even though due to his own negligence, whether sole or joint and concurrent with the negligence of others, to the full extent permitted by the Texas Business Corporation Act or any other applicable laws as presently in effect or as may hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said laws permitted the Company to provide prior to such amendment); provided however, that no person shall be indemnified for amounts paid in settlement unless the terms and conditions of such settlement have been consented to by the Company and provided further that no indemnification for employees or agents (other than Directors and officers) will be made without the express authorization of the Company's Board of Directors. ARTICLE XI. Inspection of Books. Section 1. The Directors shall determine from time to time, whether, and, if allowed, when and under what conditions and regulations the accounts and books of the corporation (except such as may be statute be specifically open to inspection), or any of them, shall be open to the inspection of the stockholders, and the stockholders' rights in this respect are and shall be restricted and limited accordingly. ARTICLE XII. Miscellaneous. Section 1. No debts shall be contracted, except for current expenses, unless authorized by the Board of Directors or the Executive Committee, and no bills shall be paid by the Treasurer unless audited and approved by the Controller, or by some person or committee expressly authorized by the Board of Directors or the Executive Committee to audit and approve bills for payment. Section 2. All dividends shall be payable at such time as may be fixed by the Board of Directors. Before payment of any dividend or making any distribution of profits, there shall be set aside, out of the surplus or net profits of the corporation, such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board shall think conducive to the interests of the corporation. Section 3. The first fiscal year of the corporation shall be the period commencing October 1, 1927, and ending December 31, 1927, and thereafter each calendar year, commencing with the year 1928, shall be the fiscal year of the corporation. ARTICLE XIII. Amendments. Section 1. These By-Laws may be altered, amended or repealed by vote of a majority of the shareholders having voting power at any annual meeting or at any special meeting of said shareholders called for that purpose and, to the extent permitted by law, may also be altered, amended or repealed by the Board of Directors. EX-27.1 10
UT 0000018540 CENTRAL AND SOUTH WEST CORPORTION 001 CENTRAL AND SOUTH WEST CORPORATION 1,000,000 12-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 8,342 377 1,606 7 3,500 13,832 744 1,052 1,814 3,610 0 18 3,923 0 500 1,660 216 0 0 0 3,905 13,832 1,299 11 1,145 1,156 143 9 152 114 38 0 38 92 46 281 0.18 0.18
EX-27.2 11
UT 0000018734 CENTRAL POWER AND LIGHT COMPANY 003 CENTRAL POWER AND LIGHT COMPANY 1,000 12-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 3,246,411 2,546 179,949 5,939 1,325,417 4,760,262 168,888 405,000 733,957 1,307,845 0 5,967 1,254,551 159,892 350,000 0 100,000 0 0 0 1,582,007 4,760,262 316,328 5,590 271,435 277,025 39,303 547 39,850 31,058 8,792 60 8,732 39,000 19,701 95,383 0 0
EX-27.3 12
UT 0000081027 PUBLIC SERVICE COMPANY OF OKLAHOMA 004 PUBLIC SERVICE COMPANY OF OKLAHOMA 1,000 12-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 1,364,467 15,076 112,861 1,803 52,297 1,546,504 157,230 180,000 126,642 463,872 0 5,286 419,592 110,203 0 0 30,000 0 0 0 517,551 1,546,504 161,329 68 149,890 149,958 11,371 222 11,593 9,917 1,676 53 1,623 17,000 5,198 34,188 0 0
EX-27.4 13
UT 0000092487 SOUTHWESTERN ELECTRIC POWER COMPANY 005 SOUTHWESTERN ELECTRIC POWER COMPANY 1,000 12-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 1,849,780 5,820 150,502 5,052 92,071 2,103,225 135,660 245,000 280,751 661,411 0 4,706 605,527 13,289 150,000 0 45,595 0 0 0 622,697 2,103,225 212,156 1,428 187,370 188,798 23,358 (233) 23,125 14,835 8,290 57 8,233 15,500 9,178 25,266 0 0
EX-27.5 14
UT 0000105860 WEST TEXAS UTILITIES COMPANY 006 WEST TEXAS UTILITIES COMPANY 1,000 3-MOS DEC-31-2000 MAR-31-2000 PER-BOOK 692,864 877 90,520 9,501 42,849 836,611 137,214 2,236 115,515 254,965 0 2,482 263,728 4,602 0 0 40,000 0 0 0 270,834 836,611 96,535 2,102 84,300 86,402 10,133 (90) 10,043 5,858 4,185 26 4,159 4,500 5,088 36,866 0 0
-----END PRIVACY-ENHANCED MESSAGE-----