P R O S P E C T U S
5,813,369
TXU CORP.
Common Stock
Without Par Value
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DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN
This plan provides a convenient and economical way for holders of the
common stock of TXU Corp. and for U.S. residents who are not shareholders to
purchase shares of common stock and to reinvest cash dividends paid on shares of
common stock.
This prospectus relates to the offer and sale under the plan of
5,813,369 shares of common stock of TXU Corp. You should read this prospectus
carefully before you invest and keep this prospectus for future reference.
Shares of TXU Corp. common stock are listed on the New York, Chicago
and Pacific stock exchanges and trade under the symbol "TXU."
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE.
DATED JUNE 29, 2000
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TABLE OF CONTENTS
Page
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TXU CORP. AND ITS SUBSIDIARIES...............................................1
USE OF PROCEEDS..............................................................3
THE PLAN.....................................................................4
Purpose, Advantages and Disadvantages of Participation in the Plan......4
Eligibility.............................................................5
Participating in the Plan...............................................5
Share Purchases and Price...............................................8
Safekeeping.............................................................9
Sales of Plan Shares....................................................9
Termination of Participation...........................................10
Expenses...............................................................11
Administration.........................................................11
Reports to Participants................................................11
Certificates for Shares................................................12
Other Stock Transactions...............................................12
Voting of Shares.......................................................12
Responsibility of TXU Corp., the independent broker and
TXU Business Services..................................................13
Foreign Holders of Shares..............................................13
Modification or Termination............................................13
CERTAIN UNITED STATES FEDERAL INCOME TAX MATTERS............................14
U.S. Federal Income Tax Consequences...................................14
Tax Reports............................................................15
DESCRIPTION OF CAPITAL STOCK................................................15
INDEPENDENT ACCOUNTANTS.....................................................16
LEGAL REVIEW................................................................16
WHERE YOU CAN FIND MORE INFORMATION.........................................17
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TXU CORP. AND ITS SUBSIDIARIES
TXU Corp. (formerly Texas Utilities Company), is a Texas corporation
formed in 1997 as a holding company. TXU Corp. is the successor to Texas Energy
Industries, Inc., now known as TXU Energy Industries Company, the holding
company for the U.S. businesses in the TXU Corp. system prior to the August 5,
1997 acquisition of TXU Gas Company. Texas Energy Industries, Inc. was organized
in 1945 as Texas Utilities Company and was renamed TXU Energy Industries Company
in 1999. Through its direct and indirect subsidiaries, TXU Corp. engages in
o the generation, purchase, transmission, distribution and sale of
electricity;
o the gathering, transmission and distribution of natural gas;
o energy marketing;
o telecommunications, retail energy services, international gas
operations, power development and other businesses
primarily in the United States, Europe and Australia. TXU Corp.'s principal
direct and indirect subsidiaries are:
o TXU Electric Company (formerly Texas Utilities Electric Company),
an electric utility company engaged in the generation, purchase,
transmission, distribution and sale of electric energy in the
north central, eastern and western parts of Texas.
o TXU Gas Company (formerly ENSERCH Corporation), an integrated
company focused on natural gas. Its major business operations are
gathering, transmission and distribution of natural gas and the
marketing of natural gas and electricity. It operates primarily
in the north central, eastern and western parts of Texas and
engages in the wholesale and retail marketing of natural gas and
electricity in several areas of the United States.
o TXU Europe Limited, which includes Eastern Electricity plc, the
largest supplier (retailer) and distributor of electricity in
England and Wales. Subsidiaries of TXU Europe Limited also
include one of the largest generators of electricity and one of
the largest retail suppliers of natural gas in the United
Kingdom.
Other subsidiaries include:
o TXU Australia Holdings (Partnership) Limited Partnership. Its
principal operating subsidiaries include TXU Electricity Limited
(formerly known as Eastern Energy Limited), which purchases,
distributes, and retails electricity in the State of Victoria,
Australia, and the gas operations of TXU Networks (Gas) Pty. Ltd.
(formerly known as Westar Pty. Ltd.) and TXU Pty. Ltd. (formerly
known as Kinetik Energy Pty. Ltd.). In June 2000, a subsidiary
of TXU Australia Holdings (Partnership) Limited Partnership
entered into a 100 year lease of the assets of the South
Australian electricity generator, Optima Energy Pty Ltd (Optima
Energy). Optima Energy operates the gas-fired Torrens Island
power station in South Australia, which has a total power
generating capacity of 1,280 megawatts. The station currently
supplies 28% of South Australia's electricity needs.
o TXU Communications Company (formerly Lufkin-Conroe Communications
Co.). Through its subsidiaries TXU Communications Company is an
independent local exchange carrier providing regulated telephone
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service through access lines in southeast Texas. It also provides
access services to a number of inter-exchange carriers who
provide long distance services. In May 2000, TXU Corp. acquired
Fort Bend Communication Companies Inc. which provides
comprehensive communications services in several counties in
Texas near Houston.
Other wholly owned subsidiaries perform specialized functions within
the TXU Corp. system.
Electric Industry Restructuring - Legislation was passed during the
1999 session of the Texas legislature that will restructure the electric utility
industry in Texas (1999 Restructuring Legislation). Among other matters, the
legislation:
o incorporates the concept contained in the stipulation in Docket
No. 18490 that earnings in excess of the earnings cap be used as
mitigation to the cost of nuclear production assets (see Note 13
to Financial Statements in TXU Corp.'s Annual Report on Form 10-K
for the year ended December 31, 1999);
o authorizes competition in the retail and generation markets for
electricity beginning January 1, 2002;
o provides for the recovery of generation-related and purchased
power related stranded costs and generation-related regulatory
assets;
o requires reductions in nitrogen oxide (Nox) and sulfur dioxide
(SO2) emissions;
o requires a rate freeze for all retail customers until January 1,
2002, and certain rate reductions for residential and small
commercial customers for up to five years thereafter; and
o sets certain limits on capacity owned and controlled by power
generation companies.
Certain provisions of the 1999 Restructuring Legislation may be subject to
different interpretation.
By September 1, 2000, each electric utility must separate from its
regulated activities its customer energy services business activities that are
otherwise already widely available in the competitive market. By January 1,
2002, each electric utility must separate ("unbundle") its business into the
following units: a power generation company, a retail electric provider and a
transmission and distribution company or separate transmission and distribution
companies. A power generation company generates electricity that is intended to
be sold at wholesale. In general, a power generation company may not own a
transmission or distribution facility and may not have a certificated service
area. A retail electric provider sells electric energy to retail customers and
may not own or operate generation assets. A transmission and distribution (T&D)
company may only own or operate facilities to transmit or distribute
electricity. TXU Electric and each other electric utility in Texas have filed
with the Public Utility Commission of Texas (PUC) a separation of their costs
into competitive and regulated components, proposed tariffs for their proposed
T&D utility and an initial estimate of their generation-related stranded costs.
In October 1999, TXU Electric filed a petition with the PUC for a
financing order (Docket No. 21527) to permit the issuance by a special purpose
entity of $1.65 billion of transition bonds secured by payments designed to
enable TXU Electric to recover its generation-related regulatory assets and
other qualified costs in accordance with the 1999 Restructuring Legislation. On
May 1, 2000, the PUC signed a final order rejecting TXU Electric's request for
the $1.65 billion and authorized only $363 million. TXU Electric believes this
ruling is inconsistent with the 1999 Restructuring Legislation and filed an
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appeal on May 2, 2000, with the Travis County, Texas District Court following
the receipt of a final order evidencing such ruling from the PUC. TXU Electric
expects that any difference between the $1.65 billion and the amount finally
authorized will continue to be deferred until securitization of
generation-related assets is addressed in 2002. TXU Electric is unable to
predict the outcome of these proceedings.
On January 10, 2000, TXU Electric filed with the PUC its business
separation plan as required by the 1999 Restructuring Legislation. This plan
describes how TXU Electric proposes to separate the provision of competitive
energy services from its regulated business activities by September 1, 2000 and
how it plans to unbundle its business. Only the T&D functions will continue to
be regulated. An independent organization certified by the PUC will oversee
transmission system planning and reliability in the State of Texas. Beginning
January 1, 2002, retail electric customers in Texas will be able to select their
electricity providers.
The principal executive offices of TXU Corp. are located at 1601 Bryan
Street, Dallas, Texas 75201 and its telephone number is (214) 812-4600.
USE OF PROCEEDS
TXU Corp. will not receive any proceeds from shares purchased for the
plan in the open market.
TXU Corp. will use the proceeds it receives from the sales of shares
of original issue common stock, together with funds from operations and other
sources, to invest in its subsidiaries, to retire securities of TXU Corp. and
its subsidiaries, to make acquisitions, to repay short term borrowings used for
any of those purposes and for other general corporate purposes.
TXU Corp. is unable to determine either the number of shares of common
stock that may be issued or purchased under the plan or the proceeds, if any,
that TXU Corp. may receive from the sale of shares.
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THE PLAN
PURPOSE, ADVANTAGES AND DISADVANTAGES OF PARTICIPATION IN THE PLAN
1. What is the purpose of the plan?
The Direct Stock Purchase and Dividend Reinvestment Plan of TXU Corp.
provides a convenient and economical way for holders of shares of TXU common
stock and others who qualify to participate in the plan to invest in TXU common
stock through the plan. Participation in the plan is entirely optional.
If you enroll in the plan, you may purchase additional shares of
common stock by reinvesting cash dividends paid on all or some of your shares of
common stock and/or by making optional cash investments. TXU Corp. will decide
whether the shares for the plan will be purchased in the open market by an
independent broker or acquired directly from TXU Corp. as original issue shares.
2. What are the advantages of the plan?
o Under the plan, you may designate what part of the dividends you
earn will be reinvested in TXU common stock. We will pay any
remaining dividends to you.
o We will credit to your plan account the purchase of fractions of
shares, as well as whole shares. This feature allows for full
investment of funds.
o You will not pay any commissions or service charges in connection
with purchases through the plan. However, we will charge a fee in
connection with the initial purchase of shares by someone that
does not already own TXU common stock. TXU Corp. will determine
the amount of the fee, from time to time. The plan authorization
form you complete will indicate the applicable fee.
o The plan's safekeeping feature relieves participants of the
responsibility for taking care of certificates for their shares.
o Under the plan, TXU Business Services simplifies your record
keeping by furnishing you with quarterly statements of account.
o You may sell shares held in the plan through the plan. If you
sell shares through the plan, we will charge a fee to cover the
costs to the plan of each sales transaction, plus any applicable
brokerage commission and resulting transfer taxes. TXU Business
Services will advise you of the amount of the fee at the time you
sell your shares.
3. What are the disadvantages of the plan?
You will have no control over the prices at which shares are purchased
or sold for your account, because
o purchases for your account will be made during periods prescribed
under the plan; and
o an independent broker will select the dates for sales of shares
made for your account after the plan administrator processes your
request to sell shares.
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You bear the risks of fluctuations in the market price of TXU common stock. (See
SHARE PURCHASES AND PRICE, and SALES OF PLAN Shares.)
ELIGIBILITY
4. Who can participate in the plan?
Any holder of record of shares of TXU common stock may participate in
the plan. Any non-shareholder meeting either of the following requirements may
participate in the plan:
o A person of legal age and a resident of one of the fifty states
of the United States or the District of Columbia; or
o An entity organized in one of the fifty states of the United
States or the District of Columbia.
Shares for which dividends are reinvested by the plan must be
registered in your name or held in your plan account. If you are the beneficial
owner of shares that are registered in another name and you want the dividends
on those shares reinvested by the plan, you must have those shares transferred
into your name.
PARTICIPATING IN THE PLAN
5. What steps must one take to participate in the plan?
If you hold TXU common stock in your own name, you may enroll in the
plan at any time by filling out a plan authorization form and returning it to
TXU Business Services at the address on the last page of this prospectus.
If you do not own TXU common stock, you may enroll in the plan by
completing and returning an authorization form, together with payment in an
amount not less than $500 nor more than $250,000. Payment should be made by
check or money order made payable to TXU Business Services. DO NOT SEND CASH.
TXU Corp. may, from time to time, authorize other methods of payment. In that
event, you will be notified of those other payment methods. TXU Business
Services will send you an authorization form on request (see ADMINISTRATION).
You must make one of the following elections on the authorization
form:
o FULL DIVIDEND REINVESTMENT: TXU Business Services will
automatically reinvest any cash dividends on shares held for you
in the plan and on shares registered in your name and held by you
in certificated form; or
o PARTIAL DIVIDEND REINVESTMENT: You will receive cash payment of
dividends on the number of whole shares you select from the
shares for which you have certificates and/or the shares held for
you in the plan. TXU Business Services will automatically
reinvest the cash dividends on all of your other shares; or
o CASH DIVIDENDS ONLY: You will continue to receive cash payment of
dividends on all the shares for which you have certificates and
the shares held for you in the plan.
We will register your plan shares in the name of the plan or its nominee and
credit them to your account in the plan.
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Whether or not you choose to reinvest dividends, you may make optional cash
investments.
If you are not a shareholder, your initial optional cash investment
may not be less than $500 nor more than $250,000. After that, each optional cash
investment may not be less than $25. Total optional cash investments for each
calendar year may not be more than $250,000. You will be under no obligation to
make any optional cash investments.
6. Can a participant transfer plan shares to start a new account for
someone else?
If you own shares as an individual, you may transfer the ownership of
some or all of your plan shares to start an account for another individual by
sending TXU Business Services written, signed transfer instructions. Signatures
must be verified in a manner satisfactory to TXU Business Services.
You may open a new plan account with a transfer of 10 or more plan
shares.
7. How do the FULL DIVIDEND REINVESTMENT feature and the PARTIAL DIVIDEND
REINVESTMENT feature of the plan work?
If you mark FULL DIVIDEND REINVESTMENT on your authorization form, TXU
Business Services will purchase additional shares of common stock for your plan
account with:
o all cash dividends on both the shares for which you hold
certificates in your name and your plan shares, and
o any optional cash investments you make.
If you mark PARTIAL DIVIDEND REINVESTMENT on your authorization form,
TXU Business Services will continue to make cash payments of dividends on that
number of your certificated shares and/or that number of your plan shares you
indicate on the authorization form. In addition, TXU Business Services will
apply to the purchase of additional shares for your account:
o all of the remaining cash dividends on both your certificated
shares and plan shares, and
o any optional cash investments you make.
If TXU Business Services receives your authorization to reinvest any
of your dividends on or before the record date for a quarterly cash dividend, we
will use your dividends for that quarter to purchase TXU common stock for your
account. If TXU Business Services receives your authorization to reinvest
dividends after the record date, we will pay those corresponding dividends to
you in cash and begin reinvestment of cash dividends on the next dividend
payment date. The quarterly dividend date is usually the first business day of
January, April, July and October. The record date is approximately three to four
weeks before the dividend payment date. For example: If the record date for the
July 1 dividend payment were June 6, TXU Business Services would have to receive
your authorization form on or before June 6, in order for dividends paid on your
shares to be used for dividend reinvestment on July 1. If TXU Business Services
received the authorization form after June 6, the July 1 dividend would be paid
to you in cash and your reinvestment of cash dividends would commence with the
next dividend payment date of October 1.
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8. How does the Optional Cash Investment feature of the plan work?
TXU Business Services will credit to your plan account on the last
business day of each weekly investment period the additional shares of TXU
common stock purchased with your optional cash investment during a weekly
investment period. A new weekly investment period begins each Tuesday and ends
on the following Monday or, if that is not a business day, the next business day
after that Monday.
We will not use optional cash investments to purchase shares during a
calendar week in which there is a dividend payment on the common stock. If we
receive your optional cash investment during the calendar week in which a
dividend payment occurs, TXU Business Services will invest it during the weekly
investment period that starts on Tuesday of the next calendar week. We will
credit shares purchased to your account at the end of the weekly investment
period during which they are purchased. We will pay no interest on optional cash
investments held by TXU Business Services for investment. You should time your
investment accordingly.
For example, Monday, July 3, 2000 is a dividend payment date.
o If we receive a cash investment between June 26 and June 30, we
will invest it between June 27 and July 3.
o If we receive a cash investment between July 3 and July 7, 2000,
we will invest it between July 11 and July 17.
You do not need to invest the same amount, or any amount, each week.
We will pay to you cash dividends on shares purchased with optional cash
investments or reinvest them in additional shares of TXU common stock on each
dividend payment date, according to your instructions.
Optional cash investments should be made by check or money order
payable to TXU Business Services. You may also make optional cash investments on
a regular basis by electronic funds transfer under the plan's Automatic Monthly
Electronic Deduction feature described below. Each optional cash investment must
be in an amount not less than $25. All your optional cash investments may not
total more than $250,000 in any calendar year. TXU Corp. may, from time to time,
authorize other methods of payment. In that event, you will be notified of those
other payment methods.
9. How can a participant make a cash investment?
You may make an optional cash investment when joining the plan by
enclosing with the authorization form a check or money order made payable to TXU
Business Services. Thereafter you may use the Automatic Monthly Electronic
Deduction feature or send a check or money order together with the form provided
with your statement of account or your account number or your social security
number. As stated above, TXU Corp. may, from time to time, authorize other
methods of payment. In that event, you will be notified of those other payment
methods.
10. What is the Automatic Monthly Electronic Deduction feature of the plan
and how does it work?
An Automatic Monthly Electronic Deduction feature is available to make
repetitive optional cash investments more convenient. You may make optional cash
investments in any amounts permitted under the plan from a predesignated U.S.
account. Automatic Monthly Electronic Deductions may be made from accounts at
any bank, savings association or credit union that is a member of the National
Automated Clearing House Association.
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To begin Automatic Monthly Electronic Deductions, you must complete
and sign an Automatic Electronic Funds Transfer Authorization Form designating,
among other things, the amount to be withdrawn each month and the account from
which funds are to be withdrawn, and return the form to TXU Business Services.
You must also provide a voided blank check. Your election to use the Automatic
Monthly Electronic Deduction feature will become effective as soon as
practicable after the Electronic Investment Authorization Form is processed.
Once you begin Automatic Monthly Electronic Deductions, TXU Business
Services will withdraw funds from your designated account on the 20th day of
each month (or, if the 20th day is not a business day, on the next business
day). Those funds will be invested in TXU common stock during the next weekly
investment period for optional cash investments.
You may change the amounts of your future Automatic Monthly Electronic
Deductions by completing and sending to TXU Business Services a new Electronic
Investment Authorization Form. You may terminate Automatic Monthly Electronic
Deductions by notifying TXU Business Services in writing. Your request will be
processed and will become effective as promptly as is practicable.
You may also choose the Electronic Deposit of Dividends feature. If
you do, TXU Business Services will deposit any cash dividends on your common
stock directly into the bank account you indicate.
11. How can I change my choices under the plan?
You may change your choices about investment under the plan by signing
a new authorization form and returning it to TXU Business Services or by
requesting a change in writing. TXU Business Services must receive your
instruction directing a change on or before the record date for the payment of a
quarterly dividend in order for your instructions to be effective on the next
dividend payment date.
SHARE PURCHASES AND PRICE
12. How are shares acquired for the plan?
Shares of TXU common stock are purchased for the plan either in the
open market by an independent broker on behalf of the plan or directly from TXU
Corp. as original issue shares. TXU Corp. decides how the shares will be
acquired.
13. How many shares will be purchased for my account under the plan?
The number of shares purchased for your account depends upon the
amount of cash dividends you reinvest and/or the amount of your optional cash
investments and on the purchase price of TXU common stock. (See FOREIGN HOLDERS
OF SHARES for restrictions on reinvestment of cash dividends applicable to
residents of a foreign country.) We will credit your account with that number of
shares, including fractional shares computed to three decimal places, that is
equal to the total cash amount to be invested or reinvested, divided by the
purchase price per share.
14. What will be the price of shares of common stock purchased under the
plan?
o Open Market Purchases. An independent broker will buy shares of
the common stock for the plan by purchasing them in the open
market. The price will be the weighted average price (excluding
any related brokerage fees, commissions or other service charges)
paid for all shares purchased by the independent broker during
the period in which the open market purchases are made. For
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optional cash investments, each weekly investment period
commences on Tuesday of a week and continues through and includes
the first business day in the following calendar week. Each
reinvestment of dividends will be made during the four business
days ending on a dividend payment date.
Except for any limitations imposed by federal or state securities
laws, the independent broker will have full discretion as to all
matters relating to open market purchases for the plan. The
broker will determine the number of shares, if any, to be
purchased on any given day, the time of day, the price to be paid
for shares, the markets in which shares are to be purchased
(which may include any securities exchange or over-the-counter
market) and the persons (including brokers or dealers) from or
through whom purchases are made.
o Original Issue Shares Acquired directly from TXU Corp. The price
of shares purchased directly from TXU Corp. is the average of the
daily averages of the high and low sales prices for the common
stock as it is reported on the consolidated tape for New York
Stock Exchange listed securities administered by the Consolidated
Tape Association
- for the optional weekly investment period, if optional
cash investments are being used to purchase shares, and
- for the four business days ending on a dividend payment
date, if dividend reinvestments are being used to purchase
shares.
SAFEKEEPING
15. What is the plan Safekeeping Service?
You may take advantage of the plan's cost-free safekeeping services
whether or not you make optional cash investments or reinvest dividends on your
shares. You may deposit shares you hold in certificated form into the plan, to
be held by TXU Business Services or its nominee, by delivering a completed
authorization form and the certificates to TXU Business Services. Do not endorse
the certificates. We will transfer the shares deposited into the name of TXU
Business Services or its nominee, as custodian, and credit them to your account
in the plan. We will distribute cash dividends paid on the shares or reinvest
them in shares of TXU common stock in accordance with your instruction on your
authorization form.
SALES OF PLAN SHARES
16. How can I sell my plan shares?
You may request at any time in writing that TXU Business Services sell
all or some of your plan shares. TXU Business Services may require verification
of your signature in a manner satisfactory to TXU Business Services. TXU
Business Services will then instruct an independent broker to sell your shares
as soon as practicable after processing your request and will send you the
proceeds of the sale (less transaction fees, brokerage fees and commissions and
any transfer taxes). Unless you instruct otherwise, if fewer than all of your
plan shares are to be sold, your plan shares on which cash dividends are being
reinvested will be sold first.
Sale of plan shares between the record date and the dividend payment
date:
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If TXU Business Services receives your instructions for the sale of
some of your plan shares for which cash dividends are not being reinvested on or
after the record date for a dividend payment date but earlier than the dividend
payment date, those plan shares will be sold as described above. Cash dividends
on those shares will be paid on the dividend payment date in the usual manner.
If TXU Business Services receives your instructions for the sale of
some of your plan shares for which cash dividends are being reinvested on or
after the record date for a dividend payment date but earlier than the dividend
payment date, those plan shares will be sold as described above. Cash dividends
on those shares will be credited to your account under the plan and reinvested
in shares of TXU common stock.
If TXU Business Services receives your instructions for the sale of
all your plan shares for which cash dividends are being reinvested on or after
the record date for a dividend payment date but earlier than the fifth business
day before the dividend payment date, your plan shares will be sold as described
above. Cash dividends will be paid to you on the dividend payment date. However,
if TXU Business Services receives sale instructions after the fifth business day
before the dividend payment date, the dividends paid on the dividend payment
date will be credited to your account under the plan and reinvested in shares of
TXU common stock. After the applicable dividend payment date, all of your plan
shares will be sold, including the shares purchased with the most recently paid
dividends, and the proceeds sent to you.
Sales of less than 10 Shares, including fractional shares, without
fees:
If your account has fewer than 10 plan shares, you may sell all, but
not less than all, of those shares, including fractional shares, through the
plan without paying a transaction fee or any brokerage commission. TXU Corp. may
change or end this feature at any time after 30 days' prior notice to
participants in the plan.
17. How can I sell my certificated shares of TXU common stock through the
plan?
You must convert your certificated shares to plan shares by depositing
them for safekeeping (see SAFEKEEPING). After making the deposit you must give
TXU Business Services instructions to sell the shares (see SALE OF PLAN SHARES).
TERMINATION OF PARTICIPATION
18. When and how can I end my participation in the plan?
You may end your participation in the plan at any time by delivering a
written request to TXU Business Services.
If you stop participating in the plan, or if TXU Corp. terminates the
plan, TXU Business Services will send you certificates for whole shares of the
common stock credited to your account and a cash payment for any fraction of a
share. If TXU Business Services receives a request to terminate participation
earlier than the fifth day before a dividend payment date, any dividends that
would otherwise have been reinvested under the plan will be paid to you in cash.
If TXU Business Services receives your request to terminate
participation on or after the fifth day before a dividend payment date, we will
invest the dividends designated for reinvestment under the plan in shares of
common stock through the plan. The termination will take place after the
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dividend payment date. At that time we will send you certificates for whole
shares of common stock, including the newly purchased shares, and a cash payment
for any fraction of a share.
Once you are no longer a participant in the plan, cash dividends will
be paid directly to you in the ordinary course.
You may enroll again in the plan as a new participant by sending a
completed authorization form and, if you hold no shares at the time, an initial
investment of $500 to TXU Business Services (see EXPENSES).
EXPENSES
19. What fees and charges will I have to pay in connection with purchases,
sales or other services under the plan?
You will not pay any commissions or service charges for purchases of
common stock through the plan. We will charge to your account a transaction fee
of $10 if you are not a shareholder and you are making an initial investment
when you enroll. We will charge to your account a transaction fee of $10 per
transaction for selling plan shares. You will also pay any applicable brokerage
commissions and transfer taxes in connection with sales of your plan shares. TXU
Corp. will pay all other costs of administering the plan. You will pay any
applicable transfer taxes on sales of your plan shares. There is no charge for
the safekeeping of shares. There is a charge for researching account information
that has been archived for more than 12 months.
ADMINISTRATION
20. Who administers the plan?
TXU Business Services administers the plan, keeps records and sends
quarterly statements of account to participants.
Neither TXU Corp. nor TXU Business Services can assure you of a profit
or protect you against a loss on the shares purchased under the plan.
REPORTS TO PARTICIPANTS
21. What kind of reports will I receive?
You will receive quarterly statements of your account. They will show
the record of the cost of your plan purchases, withdrawals from the plan and
plan shares certificated during the calendar year. Your quarterly statement will
also show the price per share to be used in determining the tax basis of the
shares purchased with your reinvested dividends and/or optional cash
investments. You should keep your quarterly statements for tax purposes. (See
FEDERAL INCOME TAX MATTERS.) You will also receive copies of all reports sent to
the holders of shares of TXU common stock. The plan administrator may also
provide a statement of account upon request.
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CERTIFICATES FOR SHARES
22. Will certificates be issued for shares of common stock purchased
through the plan?
Shares of common stock held in your plan account will be registered in
the name of TXU Business Services or its nominee. TXU Business Services or its
nominee will hold the certificates on your behalf. The number of your plan
shares is shown on your quarterly statements of your account.
If you request them in writing, TXU Business Services will issue to
you certificates for any number of your whole plan shares. Your plan account
statements will reflect any withdrawals. Mail your request for certificates to
TXU Business Services. TXU Business Services will hold any remaining whole
shares, and any fraction of a share, in your account as plan shares. We will not
issue certificates for fractions of shares under any circumstances. Unless you
change your election, we will continue to distribute or reinvest future cash
dividends on the shares for which certificates are issued in accordance with
your latest instruction.
You may not pledge plan shares. If you want to pledge your plan shares
you must withdraw them from the plan by requesting that certificates for the
shares be issued in your name.
We will maintain your accounts under the plan in the name in which
your certificates were registered at the time you entered the plan.
Consequently, certificates for whole shares will also be registered in that name
when they are issued to you.
OTHER STOCK TRANSACTIONS
23. If TXU Corp. issues a dividend payable in common stock or declares a
stock split, how does it affect common stock held in the plan?
We will add to your account any stock dividends or split shares
distributed on your plan shares. We will mail directly to you any stock
dividends or split shares distributed on your certificated shares as if you were
not participating in the plan.
We will reinvest cash dividends paid on shares that were issued as
stock dividends or stock splits on your plan shares in accordance with your
dividend reinvestment option in effect at the time of the cash dividend. If you
have directed that dividends should be paid to you in cash on some of your plan
shares, you will continue to receive cash dividends on the same number of shares
unless you send new directions to TXU Business Services.
24. If TXU Corp. sells additional shares of common stock through a rights
offering, how will rights to new shares be distributed.?
In a rights offering, we will mail directly to you warrants
representing rights on all of your whole certificated shares as well as your
whole plan shares as if you were not participating in the plan.
VOTING OF SHARES
25. How will my shares of common stock be voted at TXU Corp. shareholders'
meetings?
You will receive a proxy form indicating the total number of whole
shares you hold, including certificated shares and whole plan shares. You are
entitled to vote all your shares at any TXU Corp. shareholders' meeting.
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RESPONSIBILITY OF TXU CORP., THE INDEPENDENT BROKER AND TXU BUSINESS SERVICES
26. What are the limitations of liability of TXU Corp., the independent
broker and TXU Business Services for their acts or omissions under the
plan?
In administering the plan, none of TXU Corp., the independent broker
or TXU Business Services will be liable for any act done in good faith, or for
any good faith omission to act, including, without limitation, any claims of
liability arising out of the failure to terminate a participant's account upon
the participant's death prior to receipt of notice in writing of the death. You
should recognize that none of TXU Corp., the independent broker or TXU Business
Services can assure you of a profit, or protect you against a loss, on the
shares of the common stock of TXU Corp. purchased under the plan. You
participate in the plan at your sole discretion, risk and responsibility.
FOREIGN HOLDERS OF SHARES
27. What provisions are made for foreign shareholders?
In the case of a foreign holder of shares who is participating in the
plan and whose dividends are subject to United States income tax withholding,
TXU Business Services will apply an amount equal to the net cash dividend after
the deduction of taxes withheld to the purchase of shares of TXU common stock.
Optional cash investments received from foreign holders must be in United States
dollars. New participants in the plan must be either shareholders or residents
of the United States.
MODIFICATION OR TERMINATION
28. To what extent can TXU Corp. modify, suspend or terminate the plan?
TXU Corp.'s board of directors can suspend, modify, amend or terminate
the plan at any time. We will mail notice of any suspension, modification,
amendment or termination to all participants.
TXU Corp. may decide not to offer or sell its common stock under the
plan to participants residing in any jurisdiction or foreign country where, in
the judgment of TXU Corp., the burden or expense of compliance with applicable
blue sky or securities laws make the offer or sale there impracticable or
inadvisable.
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CERTAIN UNITED STATES FEDERAL INCOME TAX MATTERS
U.S. FEDERAL INCOME TAX CONSEQUENCES
The U.S. federal income tax consequences to a participant in the plan
may be summarized as follows:
With respect to reinvested cash dividends used to purchase shares in
the open market, a participant will be treated for federal income tax purposes
as having received on the dividend payment date a distribution in an amount
equal to the sum of (a) the cash reinvested and (b) the brokerage fees,
commissions or other service charges paid by TXU Corp. to obtain the shares.
That distribution will be treated as dividend income to the participant to the
extent of the current and accumulated earnings and profits of TXU Corp., as
determined for federal income tax purposes, and reported as such on Form
1099-DIV. The tax basis of the shares so purchased will be equal to the amount
of the distribution, including those charges paid by TXU Corp.
With respect to reinvested cash dividends used to purchase authorized
but unissued shares of common stock directly from TXU Corp., a participant will
be treated for federal income tax purposes as having received on the dividend
payment date a distribution in an amount equal to the cash reinvested, which
distribution will be treated as dividend income to the participant to the extent
of the current and accumulated earnings and profits of TXU Corp., as determined
for federal income tax purposes, and reported as such on Form 1099-DIV. The tax
basis of the shares so purchased will be equal to the amount of the reported
distribution.
A participant who purchases shares with optional cash payments will
recognize no taxable income upon such purchases except to the extent of
brokerage fees, commissions or other service charges paid by TXU Corp. to obtain
the shares, which amount will be treated as dividend income to the participant
to the extent of the current and accumulated earnings and profits of TXU Corp.,
as determined for federal income tax purposes, and reported as such on Form
1099-DIV. The tax basis of shares purchased in this manner will be the sum of
(a) the amount of the optional cash investment and (b) the amount of the
brokerage fees, commissions or other service charges reported on Form 1099-DIV.
A participant does not realize any taxable income when he receives
certificates for whole shares of the common stock credited to his account under
the plan, either upon request for certificates for those shares, termination of
his participation in the plan, or termination of the plan by TXU Corp. However,
gain or loss will be realized by the participant when shares are sold, either by
the plan at the participant's request to sell shares held in the plan when he
terminates participation in the plan, or by the participant after termination of
participation. In addition, a participant who receives, upon termination of
participation or termination of the plan by TXU Corp., a cash adjustment for a
fraction of a share credited to his account, will realize a gain or loss with
respect to that fraction. The amount of any gain or loss would be the difference
between the amount which the participant receives for his shares or fraction of
a share and the tax basis for those shares or that fraction of a share.
Participants who are non-resident aliens or non-U.S. corporations,
trusts and estates are subject to U.S. income tax withholding on dividends paid
on shares held in their accounts. The amount of withholding is determined in
accordance with U.S. Treasury Regulations, subject to adjustment by applicable
income tax treaties. Other participants may be subject to U.S. backup
withholding. For participants who are subject to U.S. withholding tax or backup
withholding, TXU Corp. will withhold the required taxes from the gross dividends
or proceeds from the sale of shares. The dividends or proceeds of a sale
received by the participant, or dividends reinvested on behalf of the
participant, will be net of the required taxes.
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For other tax consequences of participation in the plan, including
state and local income taxation, participants should consult their tax advisor.
The above federal income tax discussion is based on federal income tax
law as in effect as of the date hereof but is not intended to be complete or to
reflect every situation that could result from participation in the plan.
Participants should consult their tax advisors with respect to the impact of any
future legislative proposals or legislation enacted after the date of this
prospectus.
TAX REPORTS
The Form 1099-DIV mailed to each participant with respect to each
year-end will report the dividend income realized by the participant during the
year, including brokerage fees, commissions or other service charges paid by TXU
Corp. in respect of reinvested dividends or optional cash investments. A Form
1099-B will be furnished to the participant for any shares sold through the
plan.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of TXU Corp. consists of common stock,
without par value, of which 263,701,119 shares were outstanding on May 31, 2000,
and serial preference stock, par value $25 per share, none of which has been
issued. The following are rights and privileges of the common stock under the
laws of Texas and TXU Corp.'s articles of incorporation and bylaws.
Each share is entitled to one vote on all questions submitted to
shareholders and to cumulative voting at all elections of directors.
The common stock has no other preemptive or conversion rights. When
the shares offered in this prospectus are issued and sold, they will be fully
paid and nonassessable.
The holders of the shares of the preference stock do not have voting
rights, except that, if TXU Corp. fails to pay dividends on preference stock
equal to four full quarterly dividends, the holders of shares of preference
stock may vote for the election of one-third of the board of directors or two
directors, whichever is greater. If TXU Corp. fails to pay dividends equal to
eight full quarterly dividends, the holders of shares of preference stock may
elect a majority of the full board of directors. The approval of the holders of
two-thirds of the outstanding shares of the preference stock is required for TXU
Corp. to make changes in its capital structure that would affect those holders.
After the payment of all dividends due on the shares of any
outstanding preference stock, holders of shares of the common stock are entitled
to dividends when and as declared by the board of directors.
After payment of preference stock upon any dissolution or liquidation,
the remaining assets will be distributed to the holders of shares of the common
stock. Each share of the common stock is equal to every other share of the
common stock with respect to dividends and also with respect to distributions
upon any dissolution or liquidation.
The common stock of TXU Corp. is listed on the New York, Chicago and
Pacific stock exchanges. The transfer agent for the common stock is TXU Business
Services, Dallas, Texas.
On February 19, 1999, the TXU Corp. Board adopted a shareholder rights
plan pursuant to which holders of common stock were granted rights to purchase
one-one-hundredth of a share of Series A Preference Stock (Rights) for each
share of TXU Corp. common stock held.
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In the event that any person acquires more than 15% of TXU Corp.
outstanding common stock, the Right becomes exercisable, entitling each holder
(other than the acquiring person or group) to purchase that number of shares of
securities or other property of TXU Corp. having a market value equal to two
times the exercise price of the Right. If TXU Corp. were acquired in a merger or
other business combination, each Right would entitle its holder to purchase a
number of the acquiring company's common shares having a market value of two
times the exercise price of the Right. In either case, TXU Corp.'s Board may
choose to redeem the Rights before they become exercisable.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of TXU Corp. and subsidiaries,
except, with respect to the year ended December 31, 1998, TXU Eastern Holdings
Limited (now known as TXU Europe Limited), included in the TXU Corp. Annual
Report on Form 10-K for the year ended December 31, 1999 incorporated in this
prospectus have been audited by Deloitte & Touche LLP, independent accountants,
as stated in their report included in the TXU Corp. Annual Report on Form 10-K
for the year ended December 31, 1999. The consolidated financial statements of
TXU Europe Limited for the year ended December 31, 1998, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their report
included in the TXU Corp. Annual Report on Form 10-K for the year ended December
31, 1999. Those financial statements are not included in the Annual Report on
Form 10-K for the year ended December 31, 1999. The consolidated financial
statements of TXU Corp. and subsidiaries have been incorporated by reference
herein in reliance upon the respective reports of such firms given upon their
authority as experts in accounting and auditing.
With respect to any unaudited consolidated interim financial
information included in TXU Corp.'s Quarterly Reports on Form 10-Q (Quarterly
Reports) that will be incorporated herein by reference, Deloitte & Touche LLP
applies limited procedures in accordance with professional standards for reviews
of such information. As stated in any of its reports that are included in TXU's
Quarterly Reports that will be incorporated by reference herein and in the
Registration Statement, Deloitte & Touche LLP did not audit and did not express
an opinion on such interim consolidated financial information. Accordingly, the
degree of reliance on any of its reports on such information should be
restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP is not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their reports on such unaudited interim
consolidated financial information because those reports are not "reports" or a
"part" of the Registration Statement filed under the 1933 Act prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the 1933
Act.
LEGAL REVIEW
The statements made as to matters of law and legal conclusions in this
prospectus under DESCRIPTION OF CAPITAL STOCK and in the TXU Corp. Annual Report
on Form 10-K for the year ended December 31, 1999 under Part I, Item 1 --
Business -- US Electric Segment -- Regulation and Rates and -- US Gas Segment --
Regulation and Rates, and Environmental Matters -- US Segments, incorporated by
reference, have been reviewed by Worsham Forsythe Wooldridge LLP, Dallas, Texas,
General Counsel for TXU Corp. and such statements are made upon their authority
as experts. At December 31, 1999, members of the firm of Worsham Forsythe
Wooldridge LLP, owned approximately 42,000 shares of the common stock of TXU
Corp.
The statements of law and legal conclusions under the caption CERTAIN
UNITED STATES FEDERAL INCOME TAX MATTERS have been reviewed by Thelen Reid &
Priest LLP, of counsel to TXU Corp., and such statements are made upon their
authority as experts.
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WHERE YOU CAN FIND MORE INFORMATION
TXU Corp. files annual, quarterly and special reports, proxy
statements and other information with the SEC under File No. 1-12833. Before TXU
Corp. began filing quarterly and annual reports with the SEC its predecessor
company, TXU Energy Industries, filed those reports under its old name, Texas
Utilities Company, (File No. 1-3591). These SEC filings are available to the
public over the Internet at the SEC's web site at http://www.sec.gov. You may
also read and copy any of these SEC filings at the SEC's public reference room
at 450 Fifth Street, N.W., Room 1024, Washington, D. C. 20549, or at the SEC's
public reference rooms in New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below:
o TXU Corp.'s Annual Report on Form 10-K for the year ended
December 31, 1999.
o TXU Corp.'s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2000.
o TXU Corp.'s Current Report on Form 8-K, dated May 16, 2000.
All documents filed by TXU Corp. under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, after the date of this
prospectus and before the termination of this offering are incorporated by
reference in this prospectus and will automatically update and supersede this
information.
The information incorporated by reference is an important part of this
prospectus.
You may request a copy of these filings at no cost, by writing or
contacting us at the following address: Corporate Secretary, TXU Corp., Energy
Plaza, 1601 Bryan Street, Dallas, Texas 75201; telephone number (214) 812-4600.
You may obtain more information by contacting the TXU Corp. web site
(http://www.txu.com). THE INFORMATION CONTAINED AT THE WEB SITE OF TXU CORP. IS
------------------
NOT INCORPORATED IN THIS PROSPECTUS BY REFERENCE AND YOU SHOULD NOT CONSIDER IT
A PART OF THIS PROSPECTUS.
The common stock of TXU Corp. is listed on the New York, Chicago and
Pacific stock exchanges (ticker symbol: TXU), where reports, proxy statements
and other information concerning TXU Corp. may be inspected. Reports, proxy
statements and other information concerning TXU Corp.'s predecessors may be
inspected at the New York, Chicago and Pacific stock exchanges.
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TXU Corp. will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus has been delivered, on the
written or oral request of that person, a copy of any and all of the documents
referred to above that have been or may be incorporated in this prospectus by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to TXU Business Services, Direct Stock Purchase Plan,
P.O. Box 130059, Dallas, Texas 75313-0059, toll-free telephone number (800)
828-0812.
-----------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
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All notices, inquiries and requests concerning the plan, including
initial optional cash investments from those who are eligible to participate in
this plan but are not holders of TXU Corp. common stock should be mailed to:
TXU BUSINESS SERVICES
P. O. BOX 130059
DALLAS, TX 75313-0059
All other optional cash investments, other than by automatic
electronic investment, should be mailed to:
TXU BUSINESS SERVICES
P. O. BOX 650459
DALLAS, TX 75265-0459
Please include your shareholder account number, social security number
and daytime telephone number on all correspondence, checks or money orders.
Persons who wish to communicate by telephone with TXU Business Services
concerning the plan may do so by calling either of the following numbers:
TOLL-FREE (800) 828-0812
LOCAL (214) 812-8100
The following information is available through the automated telephone
system:
o General transfer instructions as well as information regarding
lost certificates
o Information about the plan, which includes:
- How the plan works
- Optional cash investment acceptance periods
- Information regarding withdrawals from the plan as well
as requests for duplicate plan statements
o Information about an individual account, which includes:
- Account balance information including the number of
shares of the common stock held in the account and the
aggregate of optional cash investments not yet invested
- Year-to-date reportable income amounts
- Requests for duplicate 1099DIV's
o Dividend payment and record date information
o The option of speaking to a Shareholder Account Representative.
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