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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DEFERRED AND INCENTIVE COMPENSATION PLAN OF THE
TEXAS UTILITIES COMPANY SYSTEM
Commission File No. 1-12833
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TEXAS UTILITIES COMPANY
(FORMERLY KNOWN AS TUC HOLDING COMPANY)
Energy Plaza, 1601 Bryan, Dallas, Texas 75201-3411
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS PAGE
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<S> <C>
The following financial statements are furnished the Plan:
Statements of Financial Condition at June 30, 1997 and 1996................................ 3
Statements of Income and Changes in Plan Equity for the
years ended June 30, 1997, 1996 and 1995................................................ 4
Notes to Financial Statements.............................................................. 5-7
Schedules I, II and III have been omitted because the
required information is shown in the financial statements, notes
or the information is not applicable to this Plan.
INDEPENDENT AUDITORS' REPORT........................................................................... 8
PLAN ADMINISTRATOR'S SIGNATURE......................................................................... 9
EXHIBIT
The following exhibit is filed:
Independent Auditors' Consent.............................................................. 10
</TABLE>
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DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30,
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ASSETS AND PLAN EQUITY 1997 1996
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<S> <C> <C>
Investment in Securities of Affiliated Employers --
Common stock of Texas Utilities Company,
At fair value as determined by quoted market prices
(Historical cost: 1997-- $16,270,478; 1996-- $11,435,143) (Note 2):............. $15,612,400 $14,493,246
Dividends receivable................................................................ 238,011 169,512
Cash and cash equivalents........................................................... 411 2,924
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Total Assets and Plan Equity............................................. $15,850,822 $14,665,682
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</TABLE>
See accompanying Notes to Financial Statements.
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DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
<TABLE>
<CAPTION>
Year Ended June 30,
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1997 1996 1995
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<S> <C> <C> <C>
Additions (deductions):
Net Investment Income:
Dividends on common stock of Texas Utilities Company....................... $ 934,499 $ 751,796 $ 932,142
Interest .................................................................. 5,966 2,830 4,942
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Net investment income ............................................. 940,465 754,626 937,084
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Realized gain on investments .............................................. 12,678 31 157
Unrealized appreciation (depreciation) of investments ..................... (3,716,159) 2,783,336 908,351
Contributions and deposits (Note 3):
Participating employees' salary deferrals ................................. 1,261,392 903,000 833,350
Employer matching and incentive awards .................................... 3,682,871 2,546,370 2,070,025
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Total contributions and deposits .................................. 4,944,263 3,449,370 2,903,375
------------ ------------ ------------
Total additions ................................................ 2,181,247 6,987,363 4,748,967
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Withdrawals, lapses and forfeitures:
Distributions to participants (Note 4) .................................... 678,236 3,340,178 702,963
Distributions to plan sponsor ............................................. 8,500 6,486 --
Forfeitures ............................................................... 309,371 -- --
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Total withdrawals, lapses and forfeitures ......................... 996,107 3,346,664 702,963
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Net additions .................................................. 1,185,140 3,640,699 4,046,004
Plan Equity, Beginning of Year .................................................. 14,665,682 11,024,983 6,978,979
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Plan Equity, End of Year ........................................................ $ 15,850,822 $ 14,665,682 $ 11,024,983
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</TABLE>
See accompanying Notes to Financial Statements.
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DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
1. Plan Description -- The Deferred and Incentive Compensation Plan of the
Texas Utilities Company System (Plan) was approved and authorized by the
Board of Directors of Texas Utilities Company (Company) on May 15, 1987,
effective July 1, 1987. The Plan was amended effective May 31, 1992 and
restated as of January 1, 1995. The Plan allows officers of the Company
and its subsidiaries (Companies) with the title of Vice President or above
to defer a percentage of their compensation not to exceed a maximum
percentage determined by the Organization and Compensation Committee of
the Board of Directors of the Company for each plan year and, in any
event, not to exceed 15% of the participant's compensation. The Companies
will make a matching award equal to 150% of the deferred compensation. In
addition, the Organization and Compensation Committee of the Board of
Directors of the Company also provides awards under the Annual Incentive
Plan with 50% of any such awards treated as incentive awards under this
Plan. Amounts credited to a participant's account are invested in shares
of common stock of the Company. On the expiration of the applicable
maturity period (3 years for incentive awards and 5 years for deferrals
and matching awards) the value of the participant's account is paid in
cash. To the extent that the amounts maturing under the Plan combined with
the eligible employee's other remunerations exceeds $1,000,000, the
maturity period shall be extended. In the event a participant's employment
is terminated because of death or permanent and total disability, all
amounts in the participant's account shall mature immediately. If the
participant terminates employment prior to the end of a Plan Year, the
deferred amount and company match will be recomputed as of the termination
date. In the event a participant's employment is terminated by retirement,
the participant will receive a distribution of his account at the end of
the applicable maturity period. If the participant terminates employment
by retirement prior to the end of a Plan year, the participant may have
previously elected to accelerate the balance of salary reductions. In the
event a participant's employment is terminated because of reasons other
than death, disability or retirement, all rights to any performance units
for maturity periods not yet completed shall be forfeited to the sponsor
except for amounts deferred by the participant and six percent per annum
interest on those amounts which is the minimum return for all participants
of the Plan.
The number of participants (current and former employees) at June 30,
1997, 1996 and 1995 were 43, 54, and 55, respectively.
2. Plan Investments -- The cost, market value and unrealized appreciation
(depreciation) of investments at June 30, 1997, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Unrealized
Number of Historical Market Appreciation
Shares Cost Value (Depreciation)
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<S> <C> <C> <C> <C>
June 30, 1997:
Common Stock of Texas Utilities Company............... 453,355 (1) $16,270,478 $15,612,400 $ (658,078)
June 30, 1996:
Common Stock of Texas Utilities Company............... 339,023 (2) $11,435,143 $14,493,246 $3,058,103
June 30, 1995:
Common Stock of Texas Utilities Company............... 313,513 (3) $10,502,256 $10,776,992 $ 274,736
</TABLE>
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(1) Represents 0.20% of the outstanding shares of common stock of Texas
Utilities Company (224,649,557 at June 30, 1997).
(2) Represents 0.15% of the outstanding shares of common stock of Texas
Utilities Company (224,602,557 at June 30, 1996).
(3) Represents 0.14% of the outstanding shares of common stock of Texas
Utilities Company (225,841,037 at June 30, 1995.)
The investment in the Company's common stock (stated in terms of
performance units for each participant) is stated at market value based
upon the last reported sale prices on recognized exchanges on the last
business day of the Plan Year. The cost basis of plan investments is
determined on an average cost basis. All costs and expenses of the Plan
and its administration, except expenses incurred in the acquisition or
disposition of investments, are paid by the Plan sponsors.
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DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
Net plan investments value at June 30, 1997, 1996 and 1995 is $34.44,
$42.75 and $34.38 per unit, respectively.
3. Plan Contributions -- Contributions by employer-corporations and
participating employees' salary deferrals for the years ended June 30,
1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997
Participating Contributions
Employees' by Employer- Total
Employer-Corporations Salary Deferrals Corporations Contributions
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<S> <C> <C> <C>
Texas Utilities Company ................ $ 216,187 $ 667,063 $ 883,250
Texas Utilities Services Inc. ..........
and Others .......................... 469,325 1,332,488 1,801,813
Texas Utilities Electric Company ....... 575,880 1,683,320 2,259,200
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Total ............................. $1,261,392 $3,682,871 $4,944,263
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</TABLE>
<TABLE>
<CAPTION>
1996
Participating Contributions
Employees' by Employer- Total
Employer-Corporations Salary Deferrals Corporations Contributions
--------------------- ---------------- ------------- --------------
<S> <C> <C> <C>
Texas Utilities Company ................ $ 183,000 $ 579,500 $ 762,500
Texas Utilities Services Inc. ..........
and Others .......................... 365,160 1,015,550 1,380,710
Texas Utilities Electric Company ....... 354,840 951,320 1,306,160
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Total ............................. $ 903,000 $2,546,370 $3,449,370
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</TABLE>
<TABLE>
<CAPTION>
1995
Participating Contributions
Employees' by Employer- Total
Employer-Corporations Salary Deferrals Corporations Contributions
--------------------- ---------------- ------------- --------------
<S> <C> <C> <C>
Texas Utilities Company ................ $ 177,000 $ 490,500 $ 667,500
Texas Utilities Services Inc. ..........
and Others .......................... 334,180 823,270 1,157,450
Texas Utilities Electric Company ....... 322,170 756,255 1,078,425
---------- ---------- ----------
Total ............................. $ 833,350 $2,070,025 $2,903,375
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</TABLE>
The contribution for incentive awards amounted to $1,790,782, $1,191,870
and $820,000 for the Plan Years ended June 30, 1997, 1996 and 1995,
respectively.
4. Plan Distributions -- Maturing in June 1997 were employees' salary
deferrals and matching awards made for the Plan Year ended June 30, 1993
and the incentive awards made for the Plan Year ended June 30, 1995. The
distribution of matured deferrals and/or awards of $3,469,831 represent
the net proceeds obtained by the Trustee upon sale of the associated
assets (common stock of the Company) in July 1997. Terminations from the
Plan resulted in net forfeitures for the Plan of $309,371.
Maturing in June 1996 were the incentive awards made for the Plan Year
ended June 30, 1994. The distribution of matured deferrals and/or awards
of $601,240 represent the net proceeds obtained by the Trustee upon sale
of the associated assets (common stock of the Company) in July 1996.
Additionally,
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DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
during the year ended June 30, 1997, $76,996 was distributed to
participants terminating during the year for reasons other than death,
disability or retirement.
Maturing in June 1995 were employees' salary deferrals and matching awards
made for the Plan Year ended June 30, 1991 and the incentive awards made
for the Plan Year ended June 30, 1993. The distribution of matured
deferrals and/or awards of $3,340,178 represent the net proceeds obtained
by the Trustee upon sale of the associated assets (common stock of the
Company) in July 1995.
5. Federal Income Taxes -- The Plan is not intended to, and the Company has
been advised that: the Plan does not meet the requirements of a
tax-qualified plan under Section 401(a) of the Internal Revenue Code; the
Trust established thereunder is not exempt from federal income taxes under
Section 501(a); and the Company will be provided a corresponding federal
income tax deduction for the amount of income recognized by the
participant by reason of distributions under the Plan.
Based on the Internal Revenue Code and regulations promulgated thereunder:
(a) A participant's elective deferrals under the Plan, matching awards,
incentive awards, and any dividends, interest or other income thereon
will not be subject to federal income tax until the year such amounts
are paid or otherwise made available to the participant.
(b) Elective deferrals under the Plan are not deductible by the
participant on his or her federal income tax return, since elective
deferrals are not includable in participant's income until paid or
otherwise made available to the participant.
(c) Amounts distributed under the Plan will be taxable as ordinary income
to the participant in the year of such distribution.
6. Plan Administration Fees -- All administrative fees are paid by Texas
Utilities Company, the Plan sponsor.
7. Plan Termination -- The Company's Board of Directors may amend, terminate,
or suspend the Plan at any time. An amendment or modification of the Plan
may affect active participants as well as future participants, but no
amendment or modification of the Plan for any reason may diminish any
participant's account as of the amendment's effective date. Upon Plan
termination, all amounts credited to a participant's account shall be
deemed to have matured, as described in the Plan document.
8. Subsequent Event-- On August 5, 1997, pursuant to the previously reported
Amended and Restated Agreement and Plan of Merger dated as of April 13,
1996 among the Company, ENSERCH Corporation, a Texas corporation (ENSERCH)
and TUC Holding Company, a Texas corporation (TUCHC): (i) subsidiaries of
TUCHC were merged into Texas Utilities Company and ENSERCH (the Merger),
(ii) the Company and ENSERCH became wholly-owned subsidiaries of TUCHC,
(iii) TUCHC changed its name to Texas Utilities Company, (iv) the Company
changed its name to Texas Energy Industries, Inc. (v) all of the Company's
common stock held under the Plan was automatically converted into shares
of TUCHC on a one-for-one basis and (vi) TUCHC assumed sponsorship of the
Plan. Management has not determined whether the Merger will have any
additional effects on the Plan.
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INDEPENDENT AUDITORS' REPORT
Organization and Compensation Committee,
Deferred and Incentive Compensation
Plan of the Texas Utilities Company System:
We have audited the statements of financial condition of the Deferred and
Incentive Compensation Plan of the Texas Utilities Company System as of June
30, 1997 and 1996, and the related statements of income and changes in plan
equity for each of the three years in the period ended June 30, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan at June 30, 1997 and
1996, and the related plan income and changes in plan equity for each of the
three years in the period ended June 30, 1997, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
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Dallas, Texas
September 5, 1997
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Organization and Compensation Committee has duly caused this annual report to
be signed on its behalf by the undersigned thereunto duly authorized.
DEFERRED AND INCENTIVE COMPENSATION PLAN
OF THE TEXAS UTILITIES COMPANY SYSTEM
By /s/ Peter B. Tinkham
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Plan Administrator
Organization and Compensation Committee
September 19, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
23.1 INDEPENDENT'S AUDITORS' CONSENT
</TABLE>
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
Texas Utilities Company:
We consent to the incorporation by reference in Registration Statement No.
333-32841 on Form S-8 of our report dated September 5, 1997, appearing in this
Annual Report on Form 11-K of the Deferred and Incentive Compensation Plan of
the Texas Utilities Company System for the year ended June 30, 1997.
DELOITTE & TOUCHE LLP
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Dallas, Texas
September 19, 1997
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