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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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS OF
TEXAS UTILITIES COMPANY
Commission File No. 1-12833
____________________
TEXAS UTILITIES 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
FINANCIAL STATEMENTS Page
____
The following financial statements are furnished for the Plan:
Statements of Financial Condition at June 30, 1998 and 1997..... 3
Statements of Income and Changes in Plan Equity for the
years ended June 30, 1998, 1997 and 1996...................... 4
Notes to Financial Statements................................... 5
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........................................ 7
PLAN ADMINISTRATOR'S SIGNATURE..................................... 8
EXHIBIT
The following exhibit is filed herewith:
Independent Auditors'Consent.................................. 9
2
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<TABLE>
<CAPTION>
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS OF
TEXAS UTILITIES COMPANY
STATEMENTS OF FINANCIAL CONDITION
June 30,
-------------------
ASSETS AND PLAN EQUITY 1998 1997
---- ----
<S> <C> <C>
Investment in Securities of Participating Employers --
Common stock of Texas Utilities Company,
At fair value as determined by quoted market prices
(Historical cost: 1998 -- $1,208,438; 1997 -- $779,569) (Note 2)...... $1,351,626 $704,652
Dividends receivable........................................................ 17,859 10,742
Cash and cash equivalents................................................... 123 426
---------- --------
Total Assets and Plan Equity........................................... $1,369,608 $715,820
========== ========
<FN>
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
3
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<TABLE>
<CAPTION>
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS OF
TEXAS UTILITIES COMPANY
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
For The Year Ended June 30,
----------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Additions (deductions):
Net investment income:
Dividends on common stock of Texas Utilities Company.............. $ 68,511 $ 41,604 $ 24,328
Interest.......................................................... 490 424 454
---------- -------- --------
Net investment income...................................... 69,001 42,028 24,782
---------- -------- --------
Appreciation (depreciation) of investments (Note 2)................. 218,087 (162,918) 89,838
---------- -------- --------
Contributions and deposits (Note 3):
Participating directors'compensation deferrals..................... 183,750 187,500 181,250
Company matching................................................... 183,750 187,500 181,250
---------- -------- --------
Total contributions and deposits................................ 367,500 375,000 362,500
---------- -------- --------
Total additions................................................ 654,588 254,110 477,120
---------- -------- --------
Withdrawals, lapses and forfeitures:
Distributions to plan sponsor....................................... 800 -- 472
Reversions.......................................................... -- -- 14,938
---------- -------- --------
Total withdrawals, lapses and reversions....................... 800 -- 15,410
---------- -------- --------
Net additions....................................................... 653,788 254,110 461,710
Plan Equity, Beginning of Year........................................ 715,820 461,710 --
---------- -------- --------
Plan Equity, End of Year.............................................. $1,369,608 $715,820 $461,710
========== ========= ========
<FN>
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
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DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS OF
TEXAS UTILITIES COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Plan Description -- The Deferred Compensation Plan for Outside Directors of
----------------
Texas Utilities Company (Plan) was approved and authorized by the Board of
Directors of Texas Utilities Company (Company) on May 19, 1995, effective
July 1, 1995. Members of the Board of Directors of the Company who are not
current or former officers or employees of the Company or any of its
subsidiaries (Outside Directors) are eligible to participate in the Plan.
The Plan allows Outside Directors of the Company to defer a percentage of
their compensation, which is defined as the annual Board retainer. The
Company will make a matching award equal to 100% of such deferred
compensation. The maturity period, elected by the participants, is not
fewer than 3 years and not more than 10 years. In the event a participant's
service is terminated because of death or disability, all amounts in the
participant's account shall mature upon such termination. If the
participant terminates service prior to the end of a Plan Year, the deferred
amount, the Company match and the dividend equivalent credits will be
recomputed as of the termination date. In the event a participant's
termination results for reasons other than death or disability, all amounts
credited to an account, except as provided in the event of a participant's
termination prior to the end of a Plan Year, shall mature at the end of the
applicable maturity period.
The number of participants at both June 30, 1998 and 1997 was 9.
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.
Expenses -- All costs and expenses of the Plan and its administration, are
--------
paid by the Company.
3. Plan Investments -- The cost, market value and appreciation
----------------
(depreciation) of investments at June 30, 1998, 1997 and 1996 are as
as follows:
<TABLE>
<CAPTION>
Number of Historical Market Appreciation
Shares Cost Value (Depreciation)
--------- ---------- ------ --------------
<S> <C> <C> <C> <C>
Common stock of Texas Utilities Company--June 30, 1998 32,472 (a) $1,208,438 $1,351,626 $ 218,087
Common stock of Texas Utilities Company--June 30, 1997 20,462 (b) 779,569 704,652 (162,918)
Common stock of Texas Utilities Company--June 30, 1996 10,675 (c) 368,351 456,371 89,838
</FN>
(a) Represents 0.0116% of the outstanding shares of common stock of Texas
Utilities Company (279,572,743 at June 30, 1998).
(b) Represents 0.0091% of the outstanding shares of common stock of Texas
Utilities Company (224,649,557 at June 30, 1997).
(c) Represents 0.0048% of the outstanding shares of common stock of Texas
Utilities Company (224,602,557 at June 30, 1996).
</FN>
</TABLE>
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 price 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 sponsor.
Net plan investments value at June 30, 1998, 1997 and 1996 was $41.625,
$34.4375 and $42.75 per unit, respectively.
5
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4. Plan Contributions -- Contributions by the Company and participants'
------------------
compensation deferrals for the year ended June 30, 1998, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
Participating
Directors' Contributions Total
Company Compensation Deferrals by Company Contributions
--------------- ---------------------- ------------- -------------
<S> <C> <C> <C>
Texas Utilities Company
June 30, 1998 $183,750 $183,750 $367,500
June 30, 1997 $187,500 $187,500 $375,000
June 30, 1996 $181,250 $181,250 $362,500
</TABLE>
5. Distributions Payable -- During the year ended June 30, 1996, one
---------------------
participant retired from service as an Outside Director. The value of the
participant's 1,223.38 and 1,157.56 performance units at June 30, 1997 and
1996, respectively, and of the dividend equivalent credits earned thereon
will be determined on June 30, 1998, the end of the maturity period, and
distributed to the participant.
Maturing in 1998, Director deferrals and matching award for Plan year ended
June 30, 1996 - total $361,256.
6. Federal Income Taxes -- The Plan does not, and is not intended to, meet the
--------------------
requirements of a tax-qualified plan under Section 401(a) of the Internal
Revenue Code (Code). Therefore, the trust which the Company has established
under the Plan in order to provide Plan benefits is not exempt from federal
income taxes under Section 501 (a) of the Code.
Based on the Code and the regulations thereunder as currently in effect:
(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 the participant's income.
(c) Amounts distributed under the Plan will be taxable as ordinary income
to the participant in the year of such distribution.
7. Plan Administration Fees -- All administrative fees are paid by the
------------------------
Company, the Plan sponsor.
8. Amendment or 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 effective date thereof. Upon
termination of the Plan, the deferred amount, matching award, and dividend
equivalent credits will be recomputed as of the date of termination.
6
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INDEPENDENT AUDITORS' REPORT
Organization and Compensation Committee,
Deferred Compensation
Plan for Outside Directors of Texas Utilities Company:
We have audited the statements of financial condition of the Deferred
Compensation Plan for Outside Directors of Texas Utilities Company as of
June 30, 1998 and 1997 and the related statements of income and changes in
plan equity for each of the three years in the period ended June 30, 1998.
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, 1998
and 1997 and the related plan income and changes in plan equity for each of
the three years in the period ended June 30, 1998, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
September 22, 1998
7
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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 COMPENSATION PLAN FOR OUTSIDE DIRECTORS
OF TEXAS UTILITIES COMPANY
By /s/ Peter B. Tinkham
-------------------------------------
Plan Administrator
Organization and Compensation Committee
September 28, 1998
8
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
Texas Utilities Company:
We consent to the incorporation by reference in Registration Statement No.
333-32833 on Form S-8 of our report dated September 22, 1998, appearing in this
Annual Report on Form 11-K of the Deferred Compensation Plan for Outside
Directors of Texas Utilities Company for the year ended June 30, 1998.
DELOITTE & TOUCHE LLP
Dallas, Texas
September 29, 1998
9
