SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[ x ] ANNUAL REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
EMPLOYEES' THRIFT PLAN OF THE
TEXAS UTILITIES COMPANY SYSTEM
Commission File No. 1-12833
TEXAS UTILITIES COMPANY
Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
FINANCIAL STATEMENTS
The following statements are furnished for the Plan:
Statement of Net Assets Available for Benefits,
December 31, 1997 3
Statement of Net Assets Available for Benefits,
December 31, 1996 4
Statement of Changes in Net Assets Available for Benefits,
for the Year Ended December 31, 1997 5
Statement of Changes in Net Assets Available for Benefits,
for the Year Ended December 31, 1996 6
Notes to Financial Statements 7
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes,
December 31, 1997 14
Schedule of Reportable Transactions for the Year
Ended December 31, 1997 17
INDEPENDENT AUDITORS' REPORT 18
SIGNATURE 19
EXHIBITS
The following exhibit is filed herewith:
Independent Auditors' Consent 20
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
SUPPLEMENTAL INFORMATION
------------------------------------------------------------------
Bond Interest Equity Equity
Common Index Income Income Index
Total Stock Fund Fund Fund Fund
--------- ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4):
Common Stock of Texas Utilities Company $508,774,106 $508,774,106 $ $ $ $
Mutual funds. . . . . . . . . . . 214,930,691 10,205,807 70,570,157 38,686,897
Guaranteed contracts. . . . . . . 36,484,761 36,484,761
Money market funds. . . . . . . . 6,126,309 299,924 5,826,385
FNMA/FHLMC* . . . . . . . . . . . 15,834,754 15,834,754
Participant loans receivable. . . 17,502,332
------------ ------------ ----------- ----------- ----------- -----------
Total investments. . . . . . 799,652,953 509,074,030 10,205,807 58,145,900 70,570,157 38,686,897
Cash. . . . . . . . . . . . . . . . 84,908 60,772
Contributions receivable from Employer-
corporations 3,926,110 1,748,452 73,486 279,839 505,243 410,385
Dividends receivable. . . . . . . . 9,984,700 9,984,700
Interest receivable . . . . . . . . 134,099 10,518 123,581
------------ ------------ ----------- ----------- ----------- -----------
Total assets . . . . . . . . 813,782,770 520,878,472 10,279,293 58,549,320 71,075,400 39,097,282
------------ ------------ ----------- ----------- ----------- -----------
LIABILITIES
Note payable (Note 3) . . . . . . . 250,000,000 250,000,000
Accrued interest payable. . . . . . 5,654,375 5,654,375
------------ ------------ ----------- ----------- ----------- -----------
Total liabilities. . . . . . 255,654,375 255,654,375
------------ ------------ ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS. . $558,128,395 $265,224,097 $10,279,293 $58,549,320 $71,075,400 $39,097,282
============ ============ =========== =========== =========== ===========
<FN>
*Federal National Mortgage Association/Federal Home Loan Mortgage Corporation
See accompanying Notes to Financial Statements.
</FN>
------------------------------------
Equity
Balanced Growth Loan
Fund Fund Fund
----------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4)
Common Stock of Texas Utilities Company $ $ $
Mutual funds. . . . . . . . . . . 24,347,711 71,120,119
Guaranteed contracts. . . . . . .
Money market funds. . . . . . . .
FNMA/FHLMC* . . . . . . . . . . .
Participant loans receivable. . . 17,502,332
----------- ----------- -----------
Total investments. . . . . . 24,347,711 71,120,119 17,502,332
Cash. . . . . . . . . . . . . . . . 24,136
Contributions receivable from Employer-
corporations 196,997 711,708
Dividends receivable. . . . . . . .
Interest receivable . . . . . . . .
----------- ----------- -----------
Total assets . . . . . . . . 24,544,708 71,855,963 17,502,332
----------- ----------- -----------
LIABILITIES
Note payable (Note 3) . . . . . . .
Accrued interest payable. . . . . .
----------- ----------- -----------
Total liabilities. . . . . .
----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS. . $24,544,708 $71,855,963 $17,502,332
=========== =========== ===========
</TABLE>
3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
SUPPLEMENTAL INFORMATION
------------------------------------------------------------------
Bond Interest Equity Equity
Common Index Income Income Index
Total Stock Fund Fund Fund Fund
--------- ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4):
Common Stock of Texas Utilities Company $501,493,060 $501,493,060 $ $ $ $
Mutual funds. . . . . . . . . . . 158,405,182 9,980,632 51,986,402 23,774,632
Guaranteed contracts. . . . . . . 39,854,969 39,854,969
Money market funds. . . . . . . . 8,330,033 416,912 7,913,121
FNMA/FHLMC* . . . . . . . . . . . 13,732,651 13,732,651
Participant loans receivable. . . 14,108,629
------------ ------------ ----------- ----------- ----------- -----------
Total investments. . . . . . 735,924,524 501,909,972 9,980,632 61,500,741 51,986,402 23,774,632
Cash. . . . . . . . . . . . . . . . 23,172 22,697 475
Contributions receivable from Employer-
corporations 3,486,710 1,541,935 104,242 253,017 445,333 272,619
Dividends receivable. . . . . . . . 9,827,440 9,827,440
Interest receivable . . . . . . . . 97,729 9,338 88,391
------------ ------------ ----------- ----------- ----------- -----------
Total assets . . . . . . . . 749,359,575 513,311,382 10,085,349 61,842,149 52,431,735 24,047,251
------------ ------------ ----------- ----------- ----------- -----------
LIABILITIES
Note payable (Note 3) . . . . . . . 250,000,000 250,000,000
Accrued interest payable. . . . . . 5,654,375 5,654,375
------------ ------------ ----------- ----------- ----------- -----------
Total liabilities. . . . . . 255,654,375 255,654,375
------------ ------------ ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS. . $493,705,200 $257,657,007 $10,085,349 $61,842,149 $52,431,735 $24,047,251
============ ============ =========== =========== =========== ===========
<FN>
* Federal National Mortgage Association/Federal Home Loan Mortgage Corporation
See accompanying Notes to Financial Statements.
</FN>
-----------------------------------
Equity
Balanced Growth Loan
Fund Fund Fund
----------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4)
Common Stock of Texas Utilities Company $ $ $
Mutual funds. . . . . . . . . . . 20,287,448 52,376,068
Guaranteed contracts. . . . . . .
Money market funds. . . . . . . .
FNMA/FHLMC* . . . . . . . . . . .
Participant loans receivable. . . 14,108,629
----------- ----------- -----------
Total investments. . . . . . 20,287,448 52,376,068 14,108,629
Cash. . . . . . . . . . . . . . . .
Contributions receivable from Employer-
corporations 237,778 631,786
Dividends receivable. . . . . . . .
Interest receivable . . . . . . . .
----------- ----------- -----------
Total assets . . . . . . . . 20,525,226 53,007,854 14,108,629
----------- ----------- -----------
LIABILITIES
Note payable (Note 3) . . . . . . .
Accrued interest payable. . . . . .
----------- ----------- -----------
Total liabilities. . . . . .
----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS. . $20,525,226 $53,007,854 $14,108,629
=========== =========== ===========
</TABLE>
4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
SUPPLEMENTAL INFORMATION
----------------------------------------------------------------
Bond Interest Equity Equity
Common Index Income Income Index
Total Stock Fund Fund Fund Fund
----- ------ ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR . . . . . . . . . $493,705,200 $257,657,007 $10,085,349 $61,842,149 $52,431,735 $24,047,251
------------ ------------ ----------- ----------- ----------- -----------
ADDITIONS
Income:
Dividends . . . . . . . . . . . . 39,426,906 26,350,581 656,758 3,867,952 819,966
Interest:
Investments . . . . . . . . . . 4,168,508 66,881 4,101,627
Loans . . . . . . . . . . . . . 1,568,490
------------ ------------ ----------- ----------- ----------- -----------
Total income . . . . . . . . 45,163,904 26,417,462 656,758 4,101,627 3,867,952 819,966
------------ ------------ ----------- ----------- ----------- -----------
Contributions:
Participating employees' savings. 38,187,697 9,522,936 1,210,220 4,528,877 6,355,596 4,668,878
Employer-corporations * . . . . . 18,260,226 18,260,226
------------ ------------ ----------- ----------- ----------- -----------
Total contributions. . . . . 56,447,923 27,783,162 1,210,220 4,528,877 6,355,596 4,668,878
------------ ------------ ----------- ----------- ----------- -----------
Net appreciation (depreciation) on
fair value of investments 38,654,411 12,693,821 182,568 10,798,617 6,996,969
------------ ------------ ----------- ----------- ----------- -----------
Total additions. . . . . . . 140,266,238 66,894,445 2,049,546 8,630,504 21,022,165 12,485,813
------------ ------------ ----------- ----------- ----------- -----------
DEDUCTIONS
Distributions to withdrawing participants 50,855,600 27,089,002 1,167,567 10,197,767 4,695,829 1,756,603
Interest expense and other fees (Note 3) 24,987,443 24,866,687 120,756
------------ ------------ ----------- ----------- ----------- -----------
Total deductions . . . . . . 75,843,043 51,955,689 1,167,567 10,318,523 4,695,829 1,756,603
------------ ------------ ----------- ----------- ----------- -----------
TRANSFERS BETWEEN FUNDS - Net . . . (7,371,666) (688,035) (1,604,810) 2,317,329 4,320,821
------------ ------------ ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR . . . . . . . . . . . . $558,128,395 $265,224,097 $10,279,293 $58,549,320 $71,075,400 $39,097,282
============ ============ =========== =========== =========== ===========
<FN>
* Reduced for forfeitures of $39,981.
See accompanying Notes to Financial Statements.
</FN>
---------------------------------------
Equity
Balanced Growth Loan
Fund Fund Fund
--------- ------- ------
<S> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR . . . . . . . . . $20,525,226 $53,007,854 $14,108,629
----------- ----------- -----------
ADDITIONS
Income:
Dividends . . . . . . . . . . . . 2,424,209 5,307,440
Interest:
Investments . . . . . . . . . .
Loans . . . . . . . . . . . . . 1,568,490
----------- ----------- -----------
Total income . . . . . . . . 2,424,209 5,307,440 1,568,490
----------- ----------- -----------
Contributions:
Participating employees' savings. 3,034,755 8,866,435
Employer-corporations * . . . . .
----------- ----------- -----------
Total contributions. . . . . 3,034,755 8,866,435
----------- ----------- -----------
Net appreciation (depreciation) on
fair value of investments 767,778 7,214,658
----------- ----------- -----------
Total additions. . . . . . . 6,226,742 21,388,533 1,568,490 t
----------- ----------- ----------- )
DEDUCTIONS
Distributions to withdrawing participants 1,955,133 3,391,371 602,328
Interest expense and other fees (Note 3)
----------- ----------- -----------
Total deductions . . . . . . 1,955,133 3,391,371 602,328
----------- ----------- -----------
TRANSFERS BETWEEN FUNDS - Net . . . (252,127) 850,947 2,427,541
----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR . . . . . . . . . . . . $24,544,708 $71,855,963 $17,502,332
=========== =========== ===========
</TABLE>
5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
SUPPLEMENTAL INFORMATION
-----------------------------------------------------------------
Bond Interest Equity Equity
Common Index Income Income Index
Total Stock Fund Fund Fund Fund
----- ------ ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR . . . . . . . . . $436,285,671 $255,145,372 $ 9,381,916 $59,131,833 $39,741,228 $14,199,403
------------ ------------ ----------- ----------- ----------- -----------
ADDITIONS
Income:
Dividends . . . . . . . . . . . . 32,741,442 24,774,042 617,486 3,308,064 543,710
Interest:
Investments . . . . . . . . . . 4,218,975 60,423 4,158,552
Loans . . . . . . . . . . . . . 1,034,094
------------ ------------ ----------- ----------- ----------- -----------
Total income . . . . . . . . 37,994,511 24,834,465 617,486 4,158,552 3,208,064 543,710
------------ ------------ ----------- ----------- ----------- -----------
Contributions:
Participating employees' savings. 38,209,981 11,876,022 1,384,975 5,214,578 5,380,553 3,478,445
Employer-corporations * . . . . . 15,492,474 15,492,474
------------ ------------ ----------- ----------- ----------- -----------
Total contributions. . . . . 53,702,455 27,368,496 1,384,975 5,214,578 5,380,553 3,478,445
------------ ------------ ----------- ----------- ----------- -----------
Net appreciation (depreciation) on
fair value of investments 9,614,596 (3,660,026) (373,024) 3,807,187 2,942,853
------------ ------------ ----------- ----------- ----------- -----------
Total additions. . . . . . . 101,311,562 48,542,935 1,629,437 9,373,130 12,395,804 6,965,008
------------ ------------ ----------- ----------- ----------- -----------
DEDUCTIONS
Distributions to withdrawing participants 18,886,884 11,278,509 330,831 3,658,383 1,965,341 548,841
Interest expense and other fees (Note 3) 25,005,149 24,935,072 70,077
------------ ------------ ----------- ----------- ----------- -----------
Total deductions . . . . . . 43,892,033 36,213,581 330,831 3,728,460 1,965,341 548,841
------------ ------------ ----------- ----------- ----------- -----------
TRANSFERS BETWEEN FUNDS - Net . . . (9,817,719) (595,173) (2,934,354) 2,260,044 3,431,681
------------ ------------ ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR . . . . . . . . . . . . $493,705,200 $257,657,007 $10,085,349 $61,842,149 $52,431,735 $24,047,251
============ ============ =========== =========== =========== ===========
<FN>
* Reduced for forfeitures of $24,209.
See accompanying Notes to Financial Statements.
</FN>
--------------------------------------
Equity
Balanced Growth Loan
Fund Fund Fund
--------- ------- ------
<S> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR . . . . . . . . . $16,112,220 $34,826,594 $ 7,747,105
----------- ----------- -----------
ADDITIONS
Income:
Dividends . . . . . . . . . . . . 1,585,519 2,012,621
Interest:
Investments . . . . . . . . . .
Loans . . . . . . . . . . . . . 1,034,094
----------- ----------- -----------
Total income . . . . . . . . 1,585,519 2,012,621 1,034,094
----------- ----------- -----------
Contributions:
Participating employees' savings. 2,971,069 7,904,339
Employer-corporations * . . . . .
----------- ----------- -----------
Total contributions. . . . . 2,971,069 7,904,339
----------- ----------- -----------
Net appreciation (depreciation) on
fair value of investments 44,857 6,852,749
----------- ----------- -----------
Total additions. . . . . . . 4,601,445 16,769,709 1,034,094
----------- ----------- -----------
DEDUCTIONS
Distributions to withdrawing participants 288,308 816,671
Interest expense and other fees (Note 3)
----------- ----------- -----------
Total deductions . . . . . . 288,308 816,671
----------- ----------- -----------
TRANSFERS BETWEEN FUNDS - Net . . . 99,869 2,228,222 5,327,430
----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR . . . . . . . . . . . . $20,525,226 $53,007,854 $14,108,629
=========== =========== ===========
</TABLE>
6
<PAGE>
<PAGE>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following description is provided for general information purposes
only. Reference should be made to the Plan document for more complete
information.
General - The Employees' Thrift Plan of the Texas Utilities Company
System (Plan) is a defined contribution plan established in 1968 by Texas
Utilities Company and its subsidiaries (Employer-corporations). The
Employees' Thrift Plan Committee manages the operation and administration of
the Plan. Mellon Bank, N.A. serves as trustee (Trustee) and is custodian of
the assets of the Plan. In 1990, the Plan was amended to establish a
leveraged employee stock ownership provision. (See Note 3.) The Plan was
again amended effective as of January 1, 1993. Such amendments to the Plan,
among other things, established a pre-tax deferral feature in accordance with
Section 401(k) of the Internal Revenue Code of 1986, as amended (Code). The
Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended (ERISA).
The plan is intended to be a participant directed "individual account
plan" under ERISA Section 404(c). As such, the fiduciaries of the Plan are
not liable for any losses that are the direct and necessary result of
participant investment decisions. Participation in the Plan by employees of
the Employer-corporations who meet certain eligibility requirements is
entirely voluntary.
The Plan includes seven investment options, or funds:
Common Stock of Texas Utilities Company (Common Stock) -- invests
exclusively in Common Stock of Texas Utilities Company (Company);
Investment Grade Bond Index Fund (Bond Index Fund) -- purchases
units in the Vanguard Bond Index Fund -- Total Bond Market Portfolio;
Interest Income Fund -- invests in fixed-rate contracts with
insurance companies and other financial institutions;
Equity Income Fund -- purchases units in the Fidelity Equity-Income
Fund, which consists primarily of income-producing equity
securities;
Equity Index Fund -- purchases units in the Fidelity Spartan
U.S. Equity Index Fund, which consists primarily of common stocks
included in the Standard & Poor's 500 Index;
Balanced Fund -- purchases units in the Hotchkis and Wiley Balanced Income
Fund, which consists primarily of investments in equity securities,
fixed income securities and money market obligations; and
Equity Growth Fund -- purchases units in the American Express
IDS New Dimensions Fund (Class Y), which invests primarily in common
stocks of companies showing potential for significant growth, and also
invests in foreign securities and futures transactions.
Eligibility, Participation and Employee Savings - Any regular
employee of an Employer-corporation is eligible to participate in the Plan
after completion of at least six months of service prior to the date the
employee's participation is to be effective. An eligible employee has
completed six months of service after completing at least 500 hours of service
during any six-month period.
Under the Plan, except as limited by law, a participating employee may
invest, through pre-tax salary deferrals (Elective Deferrals) or after tax
payroll deductions (Payroll Deductions) each payroll period, a specified
amount ranging from 1% to 6% of regular salary or wages (Basic Employee
Savings). Participants electing the maximum Basic Employee Savings investment
may also invest, through Elective Deferrals or Payroll Deductions each payroll
period, an additional 1% to 10% of regular salary or wages (Supplemental
Employee Savings).
7
<PAGE>
<PAGE>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
Employer Matching Contributions - Matching contributions to
participant accounts by the Employer-corporations are made based on the
participants' Basic Employee Savings and years of service as follows:
Less than 10 years 40%
10 years but less than 25 years 50%
25 years or more 60%
No employer contributions are made with respect to Supplemental Employee
Savings.
Investment of Funds - All employer matching contributions, except as
provided below, are invested in Common Stock of the Company, however, each
participant may invest, in 10% increments, in the various seven investment
options with respect to the investment of Basic and Supplemental Employee
Savings. All assets of the Plan are held by the Trustee for the exclusive
benefit of participants and their beneficiaries. Separate account records for
each participant are maintained by the Trustee. The Trustee provides a
summary of financial performance by investment fund directly to Plan
participants.
A participant may change selected investment options for Employee Savings
as often as once a quarter by liquidating the investments attributable to
Basic and Supplemental Employee Savings and reinvesting such amounts in other
investment options as may be permitted under the Plan.
A participant who has completed at least ten years of Plan participation
and attained age 55 may annually instruct the Trustee to diversify up to 25%
of such participant's employer contributions account (reduced by amounts
previously so diversified) in the same proportion as the participant may
diversify such Basic and Supplemental Employee Savings. At age 60 and
thereafter, a participant may annually diversify up to 50% of such employer
contributions account (reduced by amounts previously so diversified).
Unit Values - Participants do not have beneficial ownership in
specific securities or other assets in the various funds other than Common
Stock, but have an interest therein represented by units valued as of the
close of each business day. Generally, contributions to and withdrawal
payments from each fund are converted to units by dividing the amounts of such
transactions by the unit value as last determined, and the appropriate account
is charged or credited with the number of units properly attributable to the
participant.
Voting of Common Stock - Each participant may give the Trustee
confidential written instructions with respect to the voting, at any meeting
of shareholders, of the Common Stock allocated to the participant's account.
Effective January 1, 1993, the unallocated Common Stock held pursuant to the
leveraged employee stock ownership component of the Plan may be voted by the
Trustee in its discretion unless otherwise directed pursuant to a voting
procedure agreement.
Withdrawal from the Plan - Withdrawals from the Plan are governed by
applicable IRS regulations and provisions of ERISA. Penalties may apply in
certain instances.
A participant who terminates employment and has an account balance
greater than $3,500 may retain the funds in the Plan or withdraw them at any
time. Participants that terminate with balances equal to or less than $3,500
are required to receive a distribution after termination. To avoid taxation,
the taxable portion of any withdrawal made upon termination may be rolled into
an IRA or a qualified retirement plan sponsored by another employer.
8
<PAGE>
<PAGE>
The IRS has established rules governing distributions from the Plan after
the participant has attained 70-1/2 years of age.
A participant may withdraw a portion of after-tax Basic and Supplemental
Employee Savings without necessitating a total withdrawal from the Plan and
may exercise the limited privilege of an after-tax partial withdrawal at any
time after twelve months of participation in the Plan. Partial withdrawal may
be in any amount up to 90% of the current value of the participant's Basic and
Supplemental Employee Savings, or 90% of market value, whichever is less. A
further partial withdrawal by a participant may not be made until after the
expiration of twelve months following the last previous partial withdrawal.
In the event of an after-tax partial withdrawal, such amount will be paid
to the participant in cash or in shares of Common Stock to the extent such
stock is held in the participant's account for after-tax Basic and
Supplemental Employee Savings, at the option of the participant. No partial
withdrawal may be made of Elective Deferrals, Rollover Contributions, Employer
matching contributions, or income from such deferrals or contributions. A
participant may repay to the Trustee the amounts of any after-tax partial
withdrawal made after January 1, 1976, at any time. An after-tax Partial
withdrawal by a participant does not terminate participation in the Plan.
A participant may withdraw entirely from the Plan at any time even though
the participant continues in the employ of an Employer-corporation, except
that Elective Deferrals and Rollover contributions, Employer matching
contributions, or income from such deferrals or contributions cannot be
withdrawn until the attainment of age 59-1/2. Following total withdrawal from
the after-tax and/or pretax account(s), an employee will be ineligible to
contribute to the applicable segment(s) of the Plan for a period of twelve
months. Total withdrawal is also available upon termination of employment.
In the event of total withdrawal, that portion of the participant's account
which was derived from Basic and Supplemental Employee Savings will be
distributed in full to the participant or, in case of death, to the
participant's beneficiary.
In the event of total withdrawal due to participant's retirement or due
to permanent and total disability or death of the participant, that portion of
the participant's account which was derived from employer matching
contributions will also be distributed in full to the participant or, in case
of death, to the participant's beneficiary.
In the event of total withdrawal by a participant who continues in the
employ of an Employer-corporation and has a vested interest of less than 50%
of employer matching contributions, or terminates employment due to reasons
other than those discussed above, that portion of the participant's account
which was derived from employer matching contributions shall be distributed to
the participant only to the extent shown in the following Vesting Schedule
which is dependent upon the participant's years of service:
Years of Percentage of Total
Service Employer Contributions
Under 3 None
3 30%
4 40%
5 60%
6 80%
7 100%
9
<PAGE>
<PAGE>
Participants making withdrawals, other than partial withdrawals, may
choose from the following optional forms of payment: (a) shares of Common
Stock and/or publicly traded Fund units (to the extent permitted by the Fund)
credited to a participant's account; (b) single lump sum cash payment; or (c)
a combination of (a) and (b).
After a distribution in accordance with the above Vesting Schedule, any
remainder of employer matching contributions in the participant's account is
forfeited and used by the Employer-corporation to reduce the amount of future
employer contributions.
In the event of a total withdrawal made after January 1, 1976, by a
participant who is not 100% vested, the participant may repay to the Plan the
amount of such distribution at any time prior to the close of the Plan Year in
which the participant has completed five consecutive Break-in-Service years
and any amounts previously forfeited will be restored to the participant's
account.
In addition, participants may, after meeting certain qualifications as
defined by the Internal Revenue Service (IRS), withdraw a portion of their
vested 401(k) account balance based on a hardship qualification.
Federal Income Taxes - The Company has been advised by the IRS that the
Plan meets the requirements of Section 401(a) of the Code, as to form; that
the Trust established thereunder is exempt from federal income taxes under
Section 501(a) of the Code; and that employer contributions paid to the Trust
under the Plan are allowable federal income tax deductions to the
Employer-corporations subject to the conditions and limitations of Section 404
of the Code.
Based on the Code and regulations issued pursuant thereto:
(a)Employer contributions under the Plan, and dividends, interest and
other income from Trust Assets are not taxable to the participant when
received by the Trustee and credited to the participant's account.
(b)Basic and Supplemental Employee Savings made by Payroll Deduction are
not deductible on the participant's federal income tax return.
(c)Basic and Supplemental Employee Savings which are Employee Elective
Deferrals reduce a participant's gross compensation as reported on
Form W-2 and are not taxable to the participant when received by the
Trustee and credited to the participant's account.
(d)Partial withdrawal of employee savings which were contributed to the
Plan through Payroll Deductions prior to January 1, 1987, represent
a return of employee savings and are not taxable to the participant
when withdrawn. Partial withdrawals of employee savings which were
contributed to the Plan through Payroll Deductions after December 31,
1986, are considered to include, for income tax purposes, an amount
of taxable income.
10
<PAGE>
<PAGE>
(e)A total withdrawal generally results in taxable income to the
participant equal to the gross distribution less Basic and Supplemental
Employee Savings made by Payroll Deduction. However, if the total
withdrawal meets the lump sum distribution requirements of the Code,
(i) any net unrealized appreciation in the value of distributable
Common Stock from the time of distribution will be tax deferred;
(ii) any additional appreciation in the value of Common Stock from the
time of distribution to the time of stock sale or disposition
will be treated as short-term or long-term capital gain
depending on the period the participant holds such stock; and (iii) the
taxable amount may be eligible for the special forward averaging
provisions of the Code.
(f)The taxable amount of a total or partial withdrawal may generally be
rolled over to an Individual Retirement Account (IRA) or other
qualified plan and payment of taxes may thereby be deferred, subject
to automatic income tax withholding of twenty percent (20%) on amounts
not distributed in Common Stock.
(g)The taxable amount of an account, subject to total and partial
withdrawal provisions, can be transferred directly to an IRA or other
qualified plan and payment of taxes may thereby be deferred.
Participants are encouraged to determine the effect on their federal
income tax liability of receiving distributions from the Plan.
Amendment, Modification, Suspension and Termination - It is the
intention of the Company to continue the Plan indefinitely; however, the
Company, by action of its Board of Directors, may amend, modify or suspend the
Plan at any time, or from time to time, and may terminate the Plan at any
time; and any Employer-corporation may withdraw from participation in the Plan
at any time upon thirty days notice.
In the event of termination of the Plan in whole or in part or
termination of participation of any Employer-corporation, each participant in
the Plan affected by such termination shall receive a distribution of the
entire balance in the participant's account, whether derived from Basic and
Supplemental Employee Savings or employer contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are
prepared under the accrual method of accounting.
Use of Estimates - The preparation of financial statements requires
the use of significant estimates and assumptions by management, actual results
could differ from those estimates.
11
<PAGE>
<PAGE>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
Valuation of Investment Securities - Participant investments in all
funds except for the Interest Income Fund are accounted for as units and
stated at fair value based upon closing sales prices on recognized securities
exchanges on the last business day of the fiscal year. The Interest Income
Fund insurance contracts and the financial institution investment contracts
are valued at contract value. Contract value represents contributions made by
participants, plus interest at the contract rates, less withdrawals or
transfers by participants. Fair value is estimated using discounted cash
flows. Following is additional information reported in the aggregate for the
Interest Income Fund:
Contract Value of assets as of December 31, 1997: $58,145,900
Fair Value of assets as of December 31, 1997: $59,030,084
Average Yield of assets on December 31, 1997: 6.67%
Return on assets for 12 months ending December 31, 1997: 6.83%
The average yield of assets on December 31, 1996 was 6.84%. The return on
assets for 12 months ending December 31, 1996 was 7.23%.
Expenses - All costs and expenses of the Plan and its administration,
except expenses incurred in the generation and administration of participant
loans and in the acquisition or disposition of investments, are
paid by the Employer-corporations.
Reclassification - Certain previously reported amounts have been
reclassified to conform to current presentations.
3. LEVERAGED EMPLOYEE STOCK OWNERSHIP PROVISION
In 1990, the Trustee, on behalf of the Plan, borrowed $250,000,000 in the
form of a note payable from an outside lender and purchased 7,142,857 shares
of Common Stock of the Company in connection with the leveraged employee stock
ownership provision (LESOP) of the Plan. The note was purchased from the
lender by the Company later in 1990. The note payable requires repayment of
principal over 17 years beginning in 1998. At December 31, 1997 and 1996, the
note payable bore interest at a fixed rate of 9.81% following its conversion
in January 1992 from a variable rate to a fixed rate. The note payable is
collateralized by 5,375,158 unallocated shares held by the Trustee at December
31, 1997.
The LESOP shares are held by the Trustee until released and allocated to
participants' accounts proportionally based on current debt service payments
including interest to total debt service payments. Debt service payments are
made by the Plan from dividends received on the unallocated shares and, if
necessary, contributions from Employer-corporations. The market value of
shares released reduces the cash requirements of the Employer-corporations for
their funding obligation under the Plan. During the 1997 Plan year the number
of LESOP shares released and allocated to participant accounts was 231,864 and
during the 1996 Plan year the number of LESOP shares released and allocated to
participant accounts was 232,499.
4. PARTICIPANT LOANS
The Plan includes a loan feature allowing participants to borrow from
their pretax employee savings and rollover accounts and repay the loan with
after-tax payroll deductions. Participants are eligible to borrow up to 50%
of their vested pretax and rollover account balances, including Company
matching contributions, with the minimum amount of a loan being $1,000 and the
maximum being $50,000. Participants may repay the loan back into their
account(s) over a period from 1 to 5 years for a general purpose loan, and the
shorter of 15 years or their remaining mortgage term for a primary home loan.
The rate of interest charged is the Trustee's current prime lending rate plus
an additional 2%.
12
<PAGE>
<PAGE>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
5. UNIT VALUES
Units in each fund at December 31, 1997 and 1996, and net asset value per
unit, are presented below. All net asset values per share or unit exclude any
related participant loan receivables.
1997 1996
---- ----
Common Stock:
Number of shares 6,879,589 6,707,876
Net asset value per share* $44.46 $41.62
Bond Index Fund:
Number of units 1,011,477 1,014,292
Net asset value per unit $10.16 $9.94
Interest Income Fund:
Number of units 10,370,853 11,751,031
Net asset value per unit $5.62 $5.26
Equity Income Fund:
Number of units 1,346,502 1,213,785
Net asset value per unit $52.79 $43.20
Equity Index Fund:
Number of units 1,105,972 882,176
Net asset value per unit $35.35 $27.26
Balanced Fund:
Number of units 1,262,193 1,106,729
Net asset value per unit $19.45 $18.55
Equity Growth Fund:
Number of units 2,980,414 2,529,085
Net asset value per unit $24.10 $20.96
* The calculation of net asset value per share for Common Stock
includes the value of the LESOP note net of the value of the unallocated
LESOP shares.
6. SUBSEQUENT EVENTS
Effective January 1, 1998, the Plan was amended. In addition to certain
technical legal changes required by recent legislation, the amendments
included changes to: (1) the eligibility requirements for participation in
the Plan; and (2) the current Vesting Schedule. Additional administrative
amendments which became effective in April 1998 included Plan provisions
relating to: (1) allocations among the investment funds; (2) restrictions on
changes to Employee Savings; and (3) restrictions on certain types of
withdrawals.
Subsequent to year-end, the Plan Committee was notified by the Internal
Revenue Service ("IRS") that the Plan would be under examination. The Plan
years subject to examination will be the Plan years ending with or within the
tax years ending December 31, 1994, 1995 and 1996. The examination is
currently in a preliminary stage and no findings have yet been communicated to
the Plan Committee.
13
<PAGE>
<PAGE>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM -
SUPPLEMENTAL SCHEDULES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31,
1997
<TABLE>
<CAPTION>
Description of Investment,
Identity of Issue, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
or Similar Party Units, Par or Maturity Value Cost Current Value (1)
- ---------------- -------------------------------- ---- ----------------
(Dollars)
<S> <C> <C> <C>
COMMON STOCK
Common Stock
- ------------
Texas Utilities
Company (2) 12,259,617 shares $430,881,049 $508,774,106
Money Market Funds
Mellon Bank, N.A.(2) Cash management fund -
299,924 units 299,924 299,924
------------ ------------
TOTAL COMMON STOCK 431,180,973 509,074,030
------------ ------------
BOND INDEX FUND
Vanguard Bond Index
Fund -- Total Bond
Market Portfolio 1,011,477 units 9,958,835 10,205,807
------------ ------------
INTEREST INCOME FUND
Value of Interest in General Accounts
- -------------------------------------
Business Mens Assurance
Co. of America Contract No. 1207, 6.9%, due 2001 2,592,620 2,592,620
Safeco Life
Insurance Company Contract No. LP-1052795, 6.09%, due 2000 2,518,353 2,518,353
New York Life
Insurance Company Contract No. GA-30186, 8.04%, due 1998 2,694,392 2,694,392
Hartford Life
Insurance Company Contract No. GA-9260, 7.92%, due 1999 1,602,763 1,602,763
Jackson National Life
Insurance Company Contract No. G-1004-1, 5.81%, due 2001 2,092,432 2,092,432
John Hancock
Life Insurance Company Contract No. GAC-8897, 7.01%, due 2001 2,636,304 2,636,304
</TABLE>
14
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM - SUPPLEMENTAL
SCHEDULES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31,
1997
Description of Investment,
Identity of Issue, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
or Similar Party Units, Par or Maturity Value Cost Current Value (1)
- ---------------- -------------------------------- ---- ----------------
(Dollars)
<S> <C> <C> <C>
Metropolitan Life
Insurance Company Contract No. GAC-24686, 6.88%, due 2000 2,756,935 2,756,935
Metropolitan Life
Insurance Company Contract No. 18563-B, 6.75%, due 1998 825,470 825,470
Transamerica Occidental
Insurance Company Contract No. 51492, 6.33%, due 2001 2,520,685 2,520,685
---------- ----------
Total Value of Interest in General Accounts 20,239,954 20,239,954
Money Market Funds
- ------------------
Mellon Bank, N.A (2) Cash management fund -
5,826,385 units 5,826,385 5,826,385
---------- ----------
United States Government Obligations
- ------------------------------------
FNMA/FHLMC 15,634,170 units 15,834,754 15,834,754
---------- ----------
Other
- -----
Peoples Security Manager
Trust Contract No. BDA 00284TR, 6.68%:
ANB Multiple Mortgage - Backed Securities
Bond Index Fund 2,502,777 2,502,777
ANB Multiple Asset-Backed Securities
Bond Index Fund 4,151,337 4,151,337
ANB Multiple Short-Term
Corporate Bond Index Fund 2,476,579 2,476,579
ANB Multiple Long-Term
Government Bond Index Fund 1,211,550 1,211,550
ANB Multiple Intermediate
Government Bond Index Fund 4,682,686 4,682,686
ANB Multiple Intermediate
Corporate Bond Index Fund 1,219,878 1,219,878
---------- ----------
16,244,807 16,244,807
---------- ----------
TOTAL INTEREST INCOME FUND 58,145,900 58,145,900
---------- ----------
</TABLE>
15
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM - SUPPLEMENTAL
SCHEDULES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31,
1997
<S> <C> <C> <C>
EQUITY INCOME FUND
Fidelity Equity -
Income Fund 1,346,502 units 46,616,987 70,570,157
------------ ------------
EQUITY INDEX FUND
Fidelity Spartan U. S. Equity
Index Fund 1,105,972 units 26,186,801 38,686,897
------------ ------------
BALANCED FUND
Hotchkis and Wiley Balanced
Income Fund 1,262,193 units 23,163,490 24,347,711
------------ ------------
EQUITY GROWTH FUND
American Express IDS New
Dimensions Fund 2,980,414 units 52,655,183 71,120,119
------------ ------------
LOAN FUND
Participant Loans
Receivable (3) 17,502,332 units 17,502,332 17,502,332
------------ ------------
TOTAL ALL FUNDS $665,410,501 $799,652,953
============ ============
<FN>
(1) Current value for the Interest Income Fund is based on contract value.
(2) Party-in-Interest
(3) The rate of interest charged is the Trustee's current prime lending rate
plus an additional 2%. During 1997, the rate of interest charged ranged from
10.25% to 10.50%. Maturities range from 1 to 5 years for general purpose
loans and up to 15 years for a primary home loan.
</FN>
</TABLE>
16
<PAGE>
<PAGE>
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM - SUPPLEMENTAL
SCHEDULES
ITEM 27d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS
<TABLE>
<CAPTION>
Transactions involving an amount in excess of 5% of the fair value of
beginning plan assets.
Current Value
Of Asset
Identity of Description Purchase Selling Expense Incurred Cost of on Transaction
Party Involved of Asset Price Price With Transaction Asset Date Net Gain
- ---------------- ----------- ---------- --------- ----------------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Exceeding 5%
of Plan Assets (in
the Aggregate):
TU Company
Various Stock 33,337,665 -- -- 33,337,665 33,337,665 --
Various TU Company
Stock -- 28,412,752 -- 26,800,364 28,412,752 1,612,388
</TABLE>
17
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Employees' Thrift Plan Committee
Employees' Thrift Plan of the
Texas Utilities Company System:
We have audited the accompanying statements of net assets available for
benefits of the Employees' Thrift Plan of the Texas Utilities Company System
(the "Plan") as of December 31, 1997 and 1996, and the related statements of
changes in net assets available for benefits for the years then ended. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31,
1997 and 1996, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information by fund
is presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets
available for benefits and changes in net assets available for benefits of the
individual funds, and is not a required part of the basic financial
statements. The accompanying supplemental schedules of (1) assets held for
investment purposes at December 31, 1997 and (2) reportable (5%) transactions
for the year ended December 31, 1997 are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental information by fund
and supplemental schedules are the responsibility of the Plan's management.
Such supplemental information by fund and supplemental schedules have been
subjected to the auditing procedures applied in our audit of the basic 1997
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken
as a whole.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 22, 1998
18
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employees' Thrift Plan Committee has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
EMPLOYEES' THRIFT PLAN OF THE
TEXAS UTILITIES COMPANY SYSTEM
By /s/ Robert L. Turpin
Robert L. Turpin, Assistant Secretary
Employees' Thrift Plan Committee
June 22, 1998
19
<PAGE>
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-59961 of Texas Utilities Company on Form S-8 of our report dated June 22,
1998, appearing in this Annual Report on Form 11-K of the Employees' Thrift
Plan of the Texas Utilities Company System for the year ended December 31,
1997.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 22, 1998
20
