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, 1999
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
TEXAS UTILITIES COMPANY
(doing business as TXU Corp)
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)
<PAGE>
TABLE OF CONTENTS
FINANCIAL STATEMENTS Page
The following financial statements are furnished for the Plan:
Statements of Financial Condition at June 30, 1999 and 1998 3
Statements of Income and Changes in Plan Equity for the
years ended June 30, 1999, 1998 and 1997 4
Notes to Financial Statements 5
Schedules I, II and III have been omitted because the
required information is shown in the financial statements or
notes, or the information is not applicable to this Plan.
INDEPENDENT AUDITORS' REPORT 9
PLAN ADMINISTRATOR'S SIGNATURE 10
EXHIBIT
The following exhibit is filed herewith:
Independent Auditors' Consent 11
2
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DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30,
-------------------------
ASSETS AND PLAN EQUITY 1999 1998
----------- -----------
<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: 1999 - $21,739,933; 1998 - $19,097,008) (Note 4) $24,529,573 $22,138,005
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . 340,376 292,514
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . 54 -
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . 13,023 527
----------- -----------
Total Assets and Plan Equity. . . . . . . . . . . . . . . . . $24,883,026 $22,431,046
=========== ===========
<FN>
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
3
<PAGE>
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,
------------------------------------------
1999 1998 1997
---------- ---------- -----------
<S> <C> <C> <C>
Additions (deductions):
Net investment income:
Dividends on common stock of Texas Utilities Company . . . . $1,340,506 $1,134,883 $ 934,499
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 12,573 9,817 5,966
---------- ---------- -----------
Net investment income. . . . . . . . . . . . . . . . . 1,353,079 1,144,700 940,465
---------- ---------- -----------
Appreciation (depreciation) of investments (Note 4). . . . . . (168,243) 3,701,127 (3,703,481)
Contributions and deposits (Note 5):
Participating employees' salary deferrals. . . . . . . . . . 1,560,650 1,285,409 1,261,392
Employer matching and incentive awards . . . . . . . . . . . 4,297,975 4,033,114 3,682,871
---------- ---------- -----------
Total contributions and deposits . . . . . . . . . . . 5,858,625 5,318,523 4,944,263
---------- ---------- -----------
Total additions . . . . . . . . . . . . . . . . . . 7,043,461 10,164,350 2,181,247
---------- ---------- -----------
Withdrawals, lapses and forfeitures:
Distributions to participants (Note 6) . . . . . . . . . . . 4,567,049 3,469,831 678,236
Distributions to plan sponsor. . . . . . . . . . . . . . . . 6,188 9,700 8,500
Reversions . . . . . . . . . . . . . . . . . . . . . . . . . 18,244 104,595 309,371
---------- ---------- -----------
Total withdrawals, lapses and forfeitures. . . . . . . 4,591,481 3,584,126 996,107
---------- ---------- -----------
Net additions . . . . . . . . . . . . . . . . . . . 2,451,980 6,580,224 1,185,140
Plan Equity, Beginning of Year . . . . . . . . . . . . . . . . 22,431,046 15,850,822 14,665,682
---------- ---------- -----------
Plan Equity, End of Year . . . . . . . . . . . . . . . . . . .$24,883,026 $22,431,046 $15,850,822
=========== =========== ===========
<FN>
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
4
<PAGE>
DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
1.Name Change -- In May 1999, Texas Utilities Company (TXU or the Company)
adopted TXU Corp as its assumed name and began conducting business as TXU
Corp.
2.Plan Description -- The Deferred and Incentive Compensation Plan of the
Texas Utilities Company System (Plan) allows elected officers of the Company
or a participating subsidiary of the Company (Employer Company) 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 (the Committee) 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 Committee 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 Company (as Plan 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,
1999, 1998 and 1997 were 66, 42 and 43, respectively.
3.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 except
expenses incurred in the acquisition or liquidation of investments, are paid
by the Employer-Companies.
5
<PAGE>
DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
4.Plan Investments -- The cost, market value and appreciation (depreciation)
of investments at and for the years ended June 30, 1999, 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
Number of Historical Market Appreciation
Shares Cost Value (Depreciation)
---------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
June 30, 1999:
Common stock of Texas Utilities Company . . . . . . . 591,960 (a) $21,739,933 $24,529,573 $(168,243)
June 30, 1998:
Common stock of Texas Utilities Company . . . . . . . 531,845 (b) $19,097,008 $22,138,005 $3,701,127
June 30, 1997:
Common stock of Texas Utilities Company . . . . . . . 453,355 (c) $16,270,478 $15,612,400 $(3,703,481)
<FN>
(a)Represents 0.21% of the outstanding shares of common stock of Texas Utilities Company (280,875,819 at June 30,
1999), except expenses incurred in the acquisition or disposition of investments.
(b)Represents 0.19% of the outstanding shares of common stock of Texas Utilities Company (279,572,743 at June 30,
1998).
(c)Represents 0.20% of the outstanding shares of common stock of Texas Utilities Company (224,649,557 at June 30,
1997).
</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 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.
Net plan investments value at June 30, 1999, 1998 and 1997 was $41.44, $41.62
and $34.44 per unit, respectively.
6
<PAGE>
DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
5.Plan Contributions -- Contributions by Employer-Companies and participating
employees' salary deferrals for the years ended June 30, 1999, 1998 and 1997
are as follows:
<TABLE>
<CAPTION>
1999
----
Participating Contributions
Employees' by Employer- Total
Employer-Companies Salary Deferrals Companies Contributions
------------------ ---------------- ------------- -------------
<S> <C> <C> <C>
Texas Utilities Company. . . . . . . . . . . . . . . . $ 264,750 $ 874,625 $1,139,375
Texas Utilities Services Inc.
and Others. . . . . . . . . . . . . . . . . . . . . 871,950 2,294,925 3,166,875
Texas Utilities Electric Company . . . . . . . . . . . 423,950 1,128,425 1,552,375
---------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . $1,560,650 $4,297,975 $5,858,625
========== ========== ==========
1998
----
Participating Contributions
Employees' by Employer- Total
Employer-Companies Salary Deferrals Companies Contributions
------------------ ---------------- ------------- -------------
<S> <C> <C> <C>
Texas Utilities Company. . . . . . . . . . . . . . . . $ 205,659 $ 783,489 $ 989,148
Texas Utilities Services Inc.
and Others. . . . . . . . . . . . . . . . . . . . . 515,150 1,568,225 2,083,375
Texas Utilities Electric Company . . . . . . . . . . . 564,600 1,681,400 2,246,000
---------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . $1,285,409 $4,033,114 $5,318,523
========== ========== ==========
1997
----
Participating Contributions
Employees' by Employer- Total
Employer-Companies Salary Deferrals Companies Contributions
------------------ ---------------- ------------- -------------
<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
---------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . $1,261,392 $3,682,871 $4,944,263
========== ========== ==========
The contribution for incentive awards amounted to $1,957,000, $2,105,000 and
$1,790,782 for the Plan Years ended June 30, 1999, 1998 and 1997,
respectively.
6.Plan Distributions -- During the year ended June 30, 1999, one participant
passed away. The value of performance units including dividend credits was
distributed to the named beneficiary in the amount of $480,200. A reversion
of the account resulted in a return to the Company in the amount of $18,244.
Maturing in June 1999 were employee salary deferrals and matching awards for
the Plan Year ended June 30, 1995 and the incentive awards made for the Plan
Year ended June 30, 1997. The distribution of matured deferrals and/or awards
of $5,523,092 represent the net proceeds obtained by the Trustee upon sale of
the associated assets (common stock of the Company) in July 1999.
Maturing in June 1998 were employees' salary deferrals and matching awards
made for the Plan Year ended June 30, 1994 and the incentive awards made for
the Plan Year ended June 30, 1996. The
7
<PAGE>
DEFERRED AND INCENTIVE COMPENSATION PLAN OF
THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
distribution of matured deferrals and/or awards of $4,086,849 represent the
net proceeds obtained by the Trustee upon sale of the associated assets
(common stock of the Company) in July 1998. Terminations from the Plan
resulted in net reversions for the Plan of $104,595.
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 reversions for the Plan of
$309,371.
7.Federal Income Taxes -- It is intended, 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 the 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.
8.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
<PAGE>
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 (the "Plan")
as of June 30, 1999 and 1998, and the related statements of income and changes
in plan equity for each of the three years in the period ended June 30, 1999.
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, 1999
and 1998, and the related plan income and changes in plan equity for each of
the three years in the period ended June 30, 1999, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
September 3, 1999
9
<PAGE>
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
-------------------------------
Plan Administrator
Organization and Compensation Committee
September 21, 1999
10
</TABLE>
<PAGE>
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 3, 1999, 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, 1999.
DELOITTE & TOUCHE LLP
Dallas, Texas
September 21, 1999
