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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 March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES OF
TEXAS UTILITIES COMPANY
Commission File No. 1-12833
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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)
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TABLE OF CONTENTS
FINANCIAL STATEMENTS Page
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The following financial statements are furnished for the Plan:
Statement of Financial Condition at March 31, 1999.............. 3
Statement of Income and Changes in Plan Equity for the
year ended March 31, 1999..................................... 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 DIRECTORS OF SUBSIDIARIES OF
TEXAS UTILITIES COMPANY
STATEMENT OF FINANCIAL CONDITION
March 31, 1999
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ASSETS AND PLAN EQUITY
<S> <C>
Investment in Securities of Participating Employers --
Common stock of TXU, at fair value as determined by
quoted market prices (Historical cost: 1999 -- $100,037 (Note 3)... $103,974
Dividends receivable................................................. 1,424
Cash and cash equivalents............................................ 56
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Total Assets and Plan Equity....................................... $105,454
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<FN>
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
3
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<TABLE>
<CAPTION>
DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES OF
TEXAS UTILITIES COMPANY
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
For the Year Ended
March 31, 1999
------------------
<S> <C>
Additions (deductions):
Net investment income:
Dividends on common stock of TXU.............................. $ 5,723
Interest...................................................... 46
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Net investment income.................................. 5,769
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Appreciation (depreciation) of investments (Note 3)............. 4,201
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Contributions and deposits (Note 4):
Participating directors' compensation deferrals............ 102,000
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Total contributions and deposits....................... 102,000
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Total additions...................................... 111,970
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Withdrawals, lapses and forfeitures:
Reversions................................................. 6,516
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Total withdrawals, lapses and reversions................. 6,516
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Net additions.............................................. 105,454
Plan Equity, Beginning of Year.................................... --
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Plan Equity, End of Year.......................................... $105,454
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<FN>
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
4
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DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES OF
TEXAS UTILITIES COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Plan Description -- The Deferred Compensation Plan for Directors of
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Subsidiaries of Texas Utilities Company (Plan) was approved and authorized by
the Board of Directors of Texas Utilities Company, doing business as TXU
Corp (TXU or Company), on February 9, 1998, effective April 1, 1998. Members
of the boards of directors and/or advisory boards of directors of participating
subsidiaries 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 retainer, exclusive of any attendance fee or other 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 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 March 31, 1999 was 14.
2. Summary of Significant Accounting Policies:
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Basis of Accounting -- The financial statements of the Plan are prepared
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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.
Reversions -- In the event a participant's services are terminated prior to
- ----------
the end of the plan year, the unearned deferred amount and dividend equivalent
credits will revert back to the Company.
New Accounting Pronouncements -- In June 1998, the Financial Accounting
- -----------------------------
Standards Board issued Statement of Financial Accounting Standards Number 133
(SFAS 133) "Accounting for Derivative Instruments and Hedging Activities."
This statement, which is required to be adopted for annual periods beginning
after June 15, 2000, establishes standards for recognition and measurement of
derivative and hedging activities. The Plan has not yet determined the
financial statement impact, if any, of SFAS 133.
3. Plan Investments -- The cost, market value and appreciation
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(depreciation) of investments at March 31, 1999 are as follows:
<TABLE>
<CAPTION>
Number of Historical Market Appreciation
Shares Cost Value (Depreciation)
--------- ---------- ------ --------------
<S> <C> <C> <C> <C>
Common stock of TXU
-- March 31, 1999 2,476 (a) $100,037 $103,974 $4,201
- ---------------------
(a)Represents 0.0009% of the outstanding shares of common stock of TXU
(282,332,819 at March 31, 1999).
</FN>
</TABLE>
The investment in the Company's common stock 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 March 31, 1999 was $42.025 per performance unit.
Total performance units at March 31, 1999 was 2,509.30.
5
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DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES OF
TEXAS UTILITIES COMPANY
NOTES TO FINANCIAL STATEMENTS
4. Plan Contributions -- Contributions by participating Outside Directors for
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the year ended March 31, 1999 were $102,000.
5. Distributions Payable -- During the year ended March 31, 1999, two
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participants retired from service as Outside Directors. The value of the
participants' individual accounts were 154.72 and 103.15 performance units at
March 31, 1999 and the dividend equivalent credits earned thereon will be
determined at the end of their respective maturity period and distributed to
the participants.
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, 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. Amendment or Termination -- The Company's Board of Directors may amend,
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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 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 the Directors of Subsidiaries of Texas Utilities Company:
We have audited the accompanying statement of financial condition of the
Deferred Compensation Plan for the Directors of Subsidiaries of Texas
Utilities Company (The "Plan") as of March 31, 1999 and the related statement
of income and changes in plan equity for the year 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 audit.
We conducted our audit 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 audit provides 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 March 31, 1999
and the related plan income and changes in plan equity for the year ended
March 31, 1999, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 15, 1999
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 DIRECTORS OF SUBSIDIARIES OF
TEXAS UTILITIES COMPANY
By /s/ Peter B. Tinkham
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Plan Administrator
Organization and Compensation
Committee
June 29, 1999
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.
333-45657 on Form S-8 of our report dated June 15, 1999, appearing in this
Annual Report on Form 11-K of the Deferred Compensation Plan for Directors
of Subsidiaries of Texas Utilities Company for the year ended March 31, 1999.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 28, 1999
9
