<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _________________
COMMISSION FILE NUMBER 1-7629
A. Full title of the plan and address of the plan, if different from that of
the issuer named below:
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
HOUSTON INDUSTRIES INCORPORATED
5 POST OAK PARK
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
Independent Auditors' Report Page 1
Financial Statements:
Houston Industries Incorporated Savings Plan:
Statement of Net Assets Available for Benefits,
December 31, 1994 Page 2
Statement of Net Assets Available for Benefits,
December 31, 1993 Page 3
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 1994 Page 4
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 1993 Page 5
KBLCOM Incorporated Savings Plan:
Statement of Net Assets Available for Benefits,
March 31, 1994 Page 6
Statement of Net Assets Available for Benefits,
December 31, 1993 Page 7
Statement of Changes in Net Assets Available for
Benefits for the Period January 1, 1994 Through
March 31, 1994 Page 8
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 1993 Page 9
Houston Industries Incorporated Savings Plan and
KBLCOM Incorporated Savings Plan:
Notes to Financial Statements for the Years Ended
December 31, 1994 and 1993 Page 10
Supplemental Schedules:
Houston Industries Incorporated Savings Plan:
Supplemental Schedule of Investments,
December 31, 1994 (Item 27a) Page 18
Houston Industries Incorporated Savings Plan and
KBLCOM Incorporated Savings Plan:
Supplemental Schedule of Assets Purchased and Sold
for the Year Ended December 31, 1994 (Item 27a) Page 21
Supplemental Schedule of 5% Reportable Transactions
for the Year Ended December 31, 1994 (Item 27d) Page 22
</TABLE>
Pursuant to Item 4 of Form 11-K, the financial statements and schedules
referred to above have been prepared in accordance with regulations of the
Employee Retirement Income Security Act of 1974.
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Houston Industries Incorporated Savings Plan:
We have audited, by fund and in total, the accompanying financial statements of
the Houston Industries Incorporated Savings Plan (the "Plan") as of December 31,
1994 and 1993 and for the years then ended and of the KBLCOM Incorporated
Savings Plan (the "KBLCOM Plan") as of March 31, 1994 and December 31, 1993, and
for the period from January 1, 1994 through March 31, 1994 and for the year
ended December 31, 1993, listed in the Table of Contents. These financial
statements are the responsibility of the Plan's and the KBLCOM Plan's
managements. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, by fund and in total,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1994 and 1993 and of the KBLCOM Plan as of March 31, 1994 and
December 31, 1993, and the changes in net assets available for benefits of the
Plan for the years ended December 31, 1994 and 1993 and of the KBLCOM Plan for
the period from January 1, 1994 through March 31, 1994 and the year ended
December 31, 1993 in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) the Plan's investments as of December 31, 1994, (2) the Plan's and KBLCOM
Plan's assets purchased and sold for the year ended December 31, 1994, and (3)
the Plan's and KBLCOM Plan's 5% reportable transactions for the year ended
December 31, 1994 are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's and KBLCOM Plan's
management. Such schedules have been subjected to the auditing procedures
applied in our audit of the basic 1994 financial statements and, in our opinion,
are fairly stated in all material respects when considered in relation to the
basic financial statements taken as a whole.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Houston, Texas
June 16, 1995
1
<PAGE>
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
============================================
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
---------------------------------------------------------------------------------
ALLOCATED
A ESOP B C D TOTAL
------------- ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS
Common Stock $268,973,203 $60,841,230 $329,814,433
Mutual Funds $ 64,942,949 64,942,949
Common/Collective Trusts 56,461,843 $ 540,934 57,002,777
U.S. Government
Obligations 4,728,927 4,728,927
U.S. Government Agencies 744,504 744,504
Corporate Bonds and Notes 4,699,721 4,699,721
Cash Equivalents 2,749,029 698,021 752,965 3,771,954 $15,666,542 23,638,511
------------ ----------- ------------ ----------- ----------- ------------
Total 271,722,232 61,539,251 122,157,757 14,486,040 15,666,542 485,571,822
------------ ----------- ------------ ----------- ----------- ------------
PARTICIPANT LOANS 15,683,437 11,311,466 1,615,814 3,262,725 31,873,442
------------ ----------- ------------ ----------- ----------- ------------
RECEIVABLES
Dividends and Interest 5,685,342 1,318,875 9,199 233,425 81,654 7,328,495
Fund Transfers (2,009,754) 1,125,023 207,255 677,476
Contributions
Employers 1,518,933 1,518,933
Participants 784,911 760,682 118,510 120,783 1,784,886
------------ ----------- ------------ ----------- ----------- ------------
Total 4,460,499 2,837,808 1,894,904 559,190 879,913 10,632,314
------------ ----------- ------------ ----------- ----------- ------------
CASH 461 1 1 1 464
------------ ----------- ------------ ----------- ----------- ------------
TOTAL ASSETS 291,866,629 64,377,060 135,364,127 16,661,045 19,809,181 528,078,042
------------ ----------- ------------ ----------- ----------- ------------
LIABILITIES
PAYABLES
Administrative Expenses 42,180 11,822 54,002
Contribution Refunds 593 350 943
ESOP Loans from Company
------------ ----------- ------------ ----------- ----------- ------------
TOTAL LIABILITIES 593 42,530 11,822 54,945
------------ ----------- ------------ ----------- ----------- ------------
NET ASSETS AVAILABLE FOR
BENEFITS $291,866,036 $64,377,060 $135,321,597 $16,649,223 $19,809,181 $528,023,097
============ =========== ============ =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
UNALLOCATED
ESOP TOTAL
------------ ------------
<S> <C> <C>
ASSETS
INVESTMENTS
Common Stock $276,817,401 $606,631,834
Mutual Funds 64,942,949
Common/Collective Trusts 57,002,777
U.S. Government
Obligations 4,728,927
U.S. Government Agencies 744,504
Corporate Bonds and Notes 4,699,721
Cash Equivalents 80,870 23,719,381
------------ ------------
Total 276,898,271 762,470,093
------------ ------------
PARTICIPANT LOANS 31,873,442
------------ ------------
RECEIVABLES
Dividends and Interest 5,811,977 13,140,472
Fund Transfers
Contributions
Employers 1,518,933
Participants 1,784,886
------------ ------------
Total 5,811,977 16,444,291
------------ ------------
CASH 464
------------ ------------
TOTAL ASSETS 282,710,248 810,788,290
------------ ------------
LIABILITIES
PAYABLES
Administrative Expenses 54,002
Contribution Refunds 943
ESOP Loans from Company 313,207,321 313,207,321
------------ ------------
TOTAL LIABILITIES 313,207,321 313,262,266
------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS $(30,497,073) $497,526,024
============ ============
</TABLE>
See notes to financial statements.
2
<PAGE>
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
============================================
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
----------------------------------------------------------------------------
ALLOCATED UNALLOCATED
A ESOP B C D TOTAL ESOP TOTAL
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS
Common Stock $315,880,671 $53,039,534 $368,920,205 $396,128,034 $765,048,239
Mutual Funds $ 55,123,859 55,123,859 55,123,859
Common/Collective Trusts 52,346,554 52,346,554 52,346,554
U.S. Government
Obligations $ 3,240,827 3,240,827 3,240,827
U.S. Government Agencies 5,594,623 5,594,623 5,594,623
Corporate Bonds and Notes 5,004,642 5,004,642 5,004,642
Cash Equivalents 2,704,513 656,133 1,985,455 609,929 $13,377,022 19,333,052 3,896,119 23,229,171
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
Total 318,585,184 53,695,667 109,455,868 14,450,021 13,377,022 509,563,762 400,024,153 909,587,915
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
PARTICIPANT LOANS 13,411,434 9,160,250 1,186,568 2,835,124 26,593,376 26,593,376
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
RECEIVABLES
Dividends and Interest 4,987,848 836,798 2,078,791 201,197 38,872 8,143,506 6,247,881 14,391,387
Contributions
Employers 1,335,002 1,335,002 1,335,002
Participants 570,924 538,003 70,575 74,221 1,253,723 1,253,723
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
Total 5,558,772 2,171,800 2,616,794 271,772 113,093 10,732,231 6,247,881 16,980,112
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
CASH 1 200,001 200,002 200,002
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
TOTAL ASSETS 337,555,391 55,867,467 121,432,913 15,908,361 16,325,239 547,089,371 406,272,034 953,361,405
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
LIABILITIES
PAYABLES
Forfeits to ESOP 5,267 5,267 5,267
Administrative Expenses 40,727 11,191 51,918 51,918
ESOP Loans from Company 332,488,713 332,488,713
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
TOTAL LIABILITIES 5,267 40,727 11,191 57,185 332,488,713 332,545,898
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
NET ASSETS AVAILABLE FOR
BENEFITS $337,550,124 $55,867,467 $121,392,186 $15,897,170 $16,325,239 $547,032,186 $ 73,783,321 $620,815,507
============ =========== ============ =========== =========== ============ ============ ============
</TABLE>
See notes to financial statements.
3
<PAGE>
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
============================================
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
--------------------------------------------------------------------------------------
ALLOCATED
A ESOP B C D TOTAL
------------ ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends
Common Stock $ 21,742,169 $ 4,535,543 $ 26,277,712
Mutual Funds $ 3,447,633 3,447,633
Interest 206,043 42,446 200,247 $ 1,031,654 $ 647,944 2,128,334
NET APPRECIATION IN FAIR
VALUE OF INVESTMENTS (79,958,646) (13,430,186) (3,605,290) (1,407,712) (98,401,834)
------------ ------------ ------------ ----------- ----------- ------------
Total (58,010,434) (8,852,197) 42,590 (376,058) 647,944 (66,548,155)
------------ ------------ ------------ ----------- ----------- ------------
CONTRIBUTIONS
Participants 15,638,023 15,629,431 2,008,895 2,129,670 35,406,019
Employers
Allocations of ESOP
Stock 15,851,643 15,851,643
Cash 2,632,196 2,632,196
ESOP Contributions
------------ ------------ ------------ ----------- ----------- ------------
Total 15,638,023 18,483,839 15,629,431 2,008,895 2,129,670 53,889,858
------------ ------------ ------------ ----------- ----------- ------------
INTEREST ON PARTICIPANT LOANS 915,360 871,931 92,782 134,926 2,014,999
------------ ------------ ------------ ----------- ----------- ------------
FUND TRANSFERS
From Affiliate Plan 5,501,379 2,158,616 632,735 702,695 8,995,425
(To) From Other Funds (367,413) (59,325) 444,450 (771,905) 754,193
------------ ------------ ------------ ----------- ----------- ------------
Total 5,133,966 (59,325) 2,603,066 (139,170) 1,456,888 8,995,425
------------ ------------ ------------ ----------- ----------- ------------
ADMINISTRATIVE EXPENSES (218,128) (67,153) (17,903) (303,184)
------------ ------------ ------------ ----------- ----------- ------------
BENEFIT PAYMENTS (9,361,003) (1,062,724) (4,999,479) (767,243) (867,583) (17,058,032)
------------ ------------ ------------ ----------- ----------- ------------
INTEREST ON ESOP LOANS
------------ ------------ ------------ ----------- ----------- ------------
INCREASE (DECREASE) IN NET
ASSETS
AVAILABLE FOR BENEFITS (45,684,088) 8,509,593 13,929,411 752,053 3,483,942 (19,009,089)
------------ ------------ ------------ ----------- ----------- ------------
NET ASSETS AVAILABLE FOR
BENEFITS:
BEGINNING OF YEAR 337,550,124 55,867,467 121,392,186 15,897,170 16,325,239 547,032,186
------------ ------------ ------------ ----------- ----------- ------------
END OF YEAR $291,866,036 $ 64,377,060 $135,321,597 $16,649,223 $19,809,181 $528,023,097
============ ============ ============ =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
UNALLOCATED
ESOP TOTAL
------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Dividends
Common Stock $ 23,885,757 $ 50,163,469
Mutual Funds 3,447,633
Interest 80,729 2,209,063
NET APPRECIATION IN FAIR
VALUE OF INVESTMENTS (99,744,654) (198,146,488)
------------- -------------
Total (75,778,168) (142,326,323)
------------- -------------
CONTRIBUTIONS
Participants 35,406,019
Employers
Allocations of ESOP
Stock (15,851,643)
Cash 2,632,196
ESOP Contributions 19,224,425 19,224,425
------------- -------------
Total 3,372,782 57,262,640
------------- -------------
INTEREST ON PARTICIPANT LOANS 2,014,999
------------- -------------
FUND TRANSFERS
From Affiliate Plan 8,995,425
(To) From Other Funds
------------- -------------
Total 8,995,425
------------- -------------
ADMINISTRATIVE EXPENSES (303,184)
------------- -------------
BENEFIT PAYMENTS (17,058,032)
------------- -------------
INTEREST ON ESOP LOANS (31,875,008) (31,875,008)
------------- -------------
INCREASE (DECREASE) IN NET
ASSETS
AVAILABLE FOR BENEFITS (104,280,394) (123,289,483)
------------- -------------
NET ASSETS AVAILABLE FOR
BENEFITS:
BEGINNING OF YEAR 73,783,321 620,815,507
------------- -------------
END OF YEAR $ (30,497,073) $ 497,526,024
============= =============
</TABLE>
See notes to financial statements.
4
<PAGE>
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
============================================
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
-------------------------------------------------------------------------------
ALLOCATED UNALLOCATED
A ESOP B C D TOTAL ESOP TOTAL
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends
Common Stock $ 24,090,174 $ 3,527,272 $ 27,617,446 $ 31,767,683 $ 59,385,129
Mutual Funds $ 3,047,644 3,047,644 3,047,644
Interest 168,074 17,005 143,475 $ 994,153 $ 435,955 1,758,662 82,156 1,840,818
NET APPRECIATION
IN FAIR VALUE OF
INVESTMENTS 11,153,454 1,846,143 12,307,693 28,643 25,335,933 14,644,259 39,980,192
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
Total 35,411,702 5,390,420 15,498,812 1,022,796 435,955 57,759,685 46,494,098 104,253,783
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
CONTRIBUTIONS
Participants 14,294,697 13,559,271 1,757,726 2,069,571 31,681,265 31,681,265
Employers
Allocations of ESOP
Stock 13,298,087 13,298,087 (13,298,087)
Cash 3,159,045 3,159,045 3,159,045
ESOP Contributions 5,508,457 5,508,457
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
Total 14,294,697 16,457,132 13,559,271 1,757,726 2,069,571 48,138,397 (7,789,630) 40,348,767
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
INTEREST ON PARTICIPANT
LOANS 849,938 775,491 85,996 134,680 1,846,105 1,846,105
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
FUND TRANSFERS
(To) From Affiliate
Plan (53,937) (42,200) 22,579 (2,173) (29,943) (105,674) (105,674)
(To) From Other
Funds 881,756 (10,860) 523,320 76,173 (1,470,389)
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
Total 827,819 (53,060) 545,899 74,000 (1,500,332) (105,674) (105,674)
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
ADMINISTRATIVE EXPENSES (211,859) (63,875) (30,818) (306,552) (306,552)
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
BENEFIT PAYMENTS (13,351,636) (894,186) (5,859,806) (828,391) (936,458) (21,870,477) (21,870,477)
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
INTEREST ON ESOP LOANS (32,389,519) (32,389,519)
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 38,032,520 20,900,306 24,307,808 2,048,252 172,598 85,461,484 6,314,949 91,776,433
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS:
BEGINNING OF YEAR 299,517,604 34,967,161 97,084,378 13,848,918 16,152,641 461,570,702 67,468,372 529,039,074
------------ ----------- ------------ ----------- ----------- ------------ ------------ ------------
END OF YEAR $337,550,124 $55,867,467 $121,392,186 $15,897,170 $16,325,239 $547,032,186 $ 73,783,321 $620,815,507
============ =========== ============ =========== =========== ============ ============ ============
</TABLE>
See notes to financial statements.
5
<PAGE>
KBLCOM INCORPORATED SAVINGS PLAN
================================
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
MARCH 31, 1994
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
-----------------------------------------------
A B C D TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS $ 0 $ 0 $ 0 $ 0 $ 0
======== ======== ======== ======== ========
</TABLE>
See notes to financial statements.
6
<PAGE>
KBLCOM INCORPORATED SAVINGS PLAN
================================
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
------------------------------------------------------- ----------
A B C D TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS
Common Stock $4,774,406 $4,774,406
Mutual Funds $1,388,334 1,388,334
Common/Collective Trusts 407,342 $544,432 951,774
Cash Equivalents 235,759 47,709 14,480 $571,740 869,688
---------- ---------- -------- -------- ----------
Total 5,010,165 1,843,385 558,912 571,740 7,984,202
---------- ---------- -------- -------- ----------
PARTICIPANT LOANS 226,410 199,919 40,936 100,605 567,870
---------- ---------- -------- -------- ----------
RECEIVABLES
Dividends and Interest 76,406 58,268 187 1,652 136,513
Contributions
Employers 78,874 78,874
Participants 97,655 43,095 24,814 19,498 185,062
---------- ---------- -------- -------- ----------
Total 252,935 101,363 25,001 21,150 400,449
---------- ---------- -------- -------- ----------
CASH 11,869 13,949 7,886 9,200 42,904
---------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $5,501,379 $2,158,616 $632,735 $702,695 $8,995,425
========== ========== ======== ======== ==========
</TABLE>
See notes to financial statements.
7
<PAGE>
KBLCOM INCORPORATED SAVINGS PLAN
================================
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD JANUARY 1, 1994 THROUGH MARCH 31, 1994
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
------------------------------------------------------- ----------
A B C D TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FUND TRANSFERS
To Houston Industries Incorporated
Savings Plan $(5,501,379) $(2,158,616) $(632,735) $(702,695) $(8,995,425)
----------- ----------- --------- --------- -----------
DECREASE IN NET ASSETS AVAILABLE
FOR BENEFITS (5,501,379) (2,158,616) (632,735) (702,695) (8,995,425)
NET ASSETS AVAILABLE FOR BENEFITS:
January 1, 1994 5,501,379 2,158,616 632,735 702,695 8,995,425
----------- ----------- --------- --------- -----------
March 31, 1994 $ 0 $ 0 $ 0 $ 0 $ 0
=========== =========== ========= ========= ===========
</TABLE>
See notes to financial statements.
8
<PAGE>
KBLCOM INCORPORATED SAVINGS PLAN
================================
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
PARTICIPANT INVESTMENT FUNDS
----------------------------------------------
A B C D TOTAL
----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends
Common Stock $ 311,663 $ 311,663
Mutual Funds $ 91,611 91,611
Interest 13,769 6,389 $ 9,737 $ 18,289 48,184
NET APPRECIATION IN FAIR VALUE OF
INVESTMENTS 159,290 166,154 15,954 341,398
---------- ---------- -------- -------- ----------
Total 484,722 264,154 25,691 18,289 792,856
---------- ---------- -------- -------- ----------
CONTRIBUTIONS
Participants 922,349 512,379 223,529 185,596 1,843,853
Employers 744,947 744,947
---------- ---------- -------- -------- ----------
Total 1,667,296 512,379 223,529 185,596 2,588,800
---------- ---------- -------- -------- ----------
INTEREST ON PARTICIPANT LOANS 15,345 12,986 3,049 3,043 34,423
---------- ---------- -------- -------- ----------
FUND TRANSFERS
(To) From HI Savings Plan 96,137 (22,579) 2,173 29,943 105,674
(To) From Other Funds (17,265) 83,709 5,477 (71,921)
---------- ---------- -------- -------- ----------
Total 78,872 61,130 7,650 (41,978) 105,674
---------- ---------- -------- -------- ----------
BENEFIT PAYMENTS (253,722) (134,077) (47,021) (64,111) (498,931)
---------- ---------- -------- -------- ----------
INCREASE IN NET ASSETS AVAILABLE
FOR BENEFITS 1,992,513 716,572 212,898 100,839 3,022,822
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 3,508,866 1,442,044 419,837 601,856 5,972,603
---------- ---------- -------- -------- ----------
END OF YEAR $5,501,379 $2,158,616 $632,735 $702,695 $8,995,425
========== ========== ======== ======== ==========
</TABLE>
See notes to financial statements.
9
<PAGE>
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
AND
KBLCOM INCORPORATED SAVINGS PLAN
================================
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
----------------------------------------------
1. ACCOUNTING POLICIES
In accordance with the provisions of the Houston Industries Incorporated
Savings Plan (Plan) and the KBLCOM Incorporated Savings Plan (KBLCOM Plan), the
financial records of the Plan and the KBLCOM Plan are generally kept and the
valuations of accounts of participating employees (Participants) are determined
on the cash basis. The accompanying financial statements of the Plan and the
KBLCOM Plan are presented on the accrual basis and, accordingly, memorandum
entries have been made to the accounting records of the Plan and the KBLCOM Plan
to reflect the accrual of dividends and interest earned but not received and
administrative expenses incurred but not paid. Dividend income for the year
ended December 31, 1993 includes five quarterly dividends of $0.75 per share due
to a change in the timing of Houston Industries Incorporated's Board of
Directors' declaration of dividends. Dividend payout was $3.00 per share in 1994
and 1993.
The Plan and the KBLCOM Plan recognize net appreciation or depreciation in
the fair value of its investments. Investments are reflected at fair value in
the financial statements. Fair value for securities listed on a national
exchange is principally determined using the last recorded sales price. Fair
value for mutual funds is determined using net asset value. Fair value for
common/collective trusts is determined using unit values as reported by the
common/collective trusts' sponsors.
2. SUMMARY OF THE PLAN
The Savings Plan of Houston Industries Incorporated (HII Plan) was amended
and restated effective January 1, 1994. Pursuant to such amendment and
restatement, the KBLCOM Plan was merged with and consolidated into the HII Plan,
the merged plan being the Plan. The assets of the KBLCOM Plan became assets of
the Plan. The Plan was also amended by three amendments effective on various
dates in 1994. The effects of such amendments are described in the remainder of
this note.
Investment Program
- ------------------
The Plan has four investment funds, Funds A, B, C and D (Funds), as follows:
FUND A: Invested and reinvested in shares of common stock of Houston Industries
Incorporated (Company).
FUND B: Invested and reinvested in, directly or indirectly through collective
investment media such as mutual funds and any common, collective, group or
commingled trust fund that invests primarily in equity securities and/or real
estate.
FUND C: Invested and reinvested in, directly or indirectly through collective
investment media such as mutual funds and any common, collective, group or
commingled trust fund that invests primarily in income-producing debt
securities.
FUND D: Invested and reinvested in, directly or indirectly through collective
investment media such as mutual funds and any common, collective, group or
10
<PAGE>
commingled trust fund that invests primarily in, (i) money market or other
short-term investments or (ii) annuity or investment contracts with life
insurance companies or other financial institutions under which certain
guaranteed interest is provided and a repayment of the principal amount is
guaranteed.
Pending the acquisition of an investment in an orderly manner for the Funds,
the Trustee (as hereinafter defined) and the ESOP Trustee (as hereinafter
defined) may temporarily hold funds uninvested or in short-term investments.
The assets of the Plan are held in trust by Texas Commerce Bank National
Association (Trustee) and State Street Bank and Trust Company (ESOP Trustee).
The Benefits Committee (Committee), appointed by the Board of Directors of the
Company as the administrator of the Plan, has appointed independent investment
managers to manage all or a portion of the assets of Funds B, C and D. The
investment manager for Fund D was terminated by the Committee in 1993, and the
Trustee began managing the assets of Fund D. The Committee has also retained an
investment consultant to provide investment advice with respect to Funds B, C
and D. The fees charged by the investment managers and the consultant are paid
by the Trustee out of Funds B, C and D.
A Participant has the right to direct the Trustee to invest his
contributions, but not matching contributions made by the employer (Employer
Contributions), in 10% increments in any/or all of the four Funds. Prior to
April 6, 1994, a Participant could invest his contributions either 100% in any
one Fund or 50% in any two Funds.
In 1994 and 1993, all Employer Contributions to the Plan were invested in the
ESOP (as hereinafter defined). In 1993 all Employer Contributions to the KBLCOM
Plan were invested in Fund A.
Employee Stock Ownership Plan
- -----------------------------
In October 1990, the Plan was amended and restated to add an employee stock
ownership component (ESOP) to the Plan. In connection with the ESOP, the
Company also executed an ESOP Trust Agreement (ESOP Trust) between the Company
and the ESOP Trustee.
The ESOP is a funding mechanism for a portion of the Employer Contributions
to the Plan. The ESOP Trustee purchased shares of the Company's common stock in
open market transactions with funds provided by loans (Loans) from the Company.
The ESOP Trustee completed the purchases of shares of the Company's common stock
in December 1991 after purchasing 9,381,092 shares at a cost of approximately
$350 million. At December 31, 1994 and 1993, the balance of the Loans was
approximately $313 million and $332 million, respectively. The Loans bear
interest at a fixed rate of 9.783%. The Loans are expected to be repaid over a
period of up to twenty years. Although prepayments of principal are permitted,
no principal repayments are required until 1997.
The Company makes periodic cash contributions to the unallocated ESOP (ESOP
Contributions). The ESOP Contributions, together with the earnings received by
the ESOP Trustee, are used to pay principal and interest on the Loans. As debt
service payments on the Loans are made, the Company releases shares of common
stock from the pledge securing the Loans and such shares are allocated to
Participants' accounts as Employer Contributions. No allocated shares serve as
collateral for the Loans. In addition to the ESOP Contributions, the Company may
elect to make Employer Contributions to the Allocated ESOP (as hereinafter
defined) in the form of cash which may be used to purchase shares of the
Company's common stock in the open market.
11
<PAGE>
That portion of the ESOP which has been allocated to Participants (Allocated
ESOP) as Employer Contributions and that portion of the ESOP which has not been
allocated to Participants (Unallocated ESOP) are presented separately in the
financial statements.
Funding
- -------
Contributions to the Plan are made by Participants and by the Company and
each subsidiary of the Company that has adopted the Plan (Employers). Each
Participant may contribute to the Plan annually an amount equal to any whole
percentage, up to and including 6% of his total compensation. In 1994 and 1993,
this amount, referred to as the Participant's "Basic Contributions", could be
made up of Pre-tax and After-tax Contributions (as hereinafter defined),
provided that the total amount contributed was less than or equal to 6% of the
Participant's compensation. Participants who are employed by KBLCOM Incorporated
(KBLCOM) or one of its subsidiaries (KBLCOM Participants) are not permitted to
make After-tax Contributions. Employer Contributions are in an amount equal to
70% of Participants' Basic Contributions, except in 1993, KBLCOM Participants
received Employer Contributions equal to 50% of Partcipant's Basic
Contributions.
In 1994 and 1993, each Participant, except KBLCOM Participants, could make
excess contributions annually to the Plan in an amount equal to any whole
percentage up to and including 10% of his total compensation. This amount,
referred to as the Participant's "Excess Contributions", could be made up of
Pre-tax and After-tax Contributions, provided that the total amount
contributed was less than or equal to 10% of the Participant's
compensation. KBLCOM Participants' excess contributions must be Pre-tax
Contributions and are limited to an amount equal to any whole percentage up to
and including 4% of his total compensation. Employers do not match excess
contributions.
In 1994 and 1993, Participants could make their contributions to the Plan
through (i) payroll deductions (After-tax Contributions), (ii) salary deferral
(Pre-tax Contributions) or (iii) a combination of After-Tax and Pre-tax
Contributions. KBLCOM Participants must make their contributions through Pre-tax
Contributions.
Pre-tax Contributions made to the Plan by salary deferral decrease a
Participant's income for federal income tax purposes by the amount of the
Participant's Pre-tax Contributions. Pre-tax Contributions are, however, subject
to Federal Insurance Contributions Act withholding tax.
The maximum amount that a taxpayer may elect to defer as a Pre-tax
Contribution for any taxable year under all cash or deferred arrangements (such
as the Plan) in which the taxpayer participates was limited to $9,240 in 1994
and $8,994 in 1993. The maximum limit for 1995 is $9,240, to be adjusted
annually thereafter for inflation. If the total amount of Pre-tax Contributions
exceeds the maximum limit during any calendar year, such excess will be included
in the taxpayer's gross income for the year to which the deferrals relate, and
will be returned to the Participant, plus any income or minus any loss allocable
thereto, by April 15 of the following year.
Participation
- -------------
Any eligible employee of an Employer may participate in the Plan beginning on
any January 1, April 1, July 1 or October 1 (Entry Dates). Prior to October 1,
1994, any eligible employee of an Employer could participate in the Plan
beginning on any January 1 if he was employed by an Employer on or before the
immediately preceding October 1. Ineligible employees include persons not
regularly and principally employed by an Employer and leased
12
<PAGE>
employees. Former Participants who are reemployed by an Employer may recommence
participation in the Plan immediately, their vesting service will be reinstated,
and any portion of their interest in the Employer Contributions that was
forfeited will be reinstated in accordance with the terms of the Plan.
Distributions and Forfeitures
- -----------------------------
A terminated Participant or the beneficiary of a deceased Participant is
entitled to a distribution of the value of the Participant's entire account in
case of disability, retirement at or after the later of the Participant's
attainment of age 65 or the fifth anniversary of the Participant's commencement
of participation in the Plan, or death. In case of termination of service for
other reasons, a Participant is entitled to a distribution of the entire value
of his contribution account plus the vested portion of his Employer Contribution
account. Vesting is determined by vesting service years in accordance with the
following schedule:
<TABLE>
<CAPTION>
Vesting Service Vested
Years* Percentage
--------------- ----------
<S> <C>
Less than two............. 0
Two but less than three... 20
Three but less than four.. 40
Four but less than five... 60
Five but less than six.... 80
Six or more............... 100
--------
</TABLE>
*Generally, a vesting service year is each
Plan year during which an employee completed
at least 1,000 hours of service.
Any portion of the value of Employer Contributions not vested will be
forfeited. The amount forfeited by a Participant is applied so as to reduce the
respective Employer's subsequent contribution to the Plan. Plan forfeitures in
1994 and 1993 were approximately $97,500 and $161,000, respectively. KBLCOM Plan
forfeitures in 1993 were approximately $79,400.
A terminated Participant receives a final distribution from the Plan upon
written request no later than the end of the year in which the terminated
Participant attains the age of 65, or if no request is received, an automatic
distribution will be made to the terminated Participant and mailed to his last
known address at such time. Lump sum distributions are made for accounts which
do not exceed $3,500.
Withdrawals and Loans
- ---------------------
A Participant may make in-service withdrawals from amounts attributable to
his After-tax Contributions. A KBLCOM Participant who has After-tax
Contributions attributable to service before becoming a KBLCOM Participant may
make an in-service withdrawal from such After-tax Contributions. Effective
January 1, 1994, a Participant with less than five years of service who
13
<PAGE>
withdraws Basic After-tax Contributions will be suspended from Plan
participation for six months.
A Participant may borrow against amounts attributable to his Pre-tax
Contributions. The maximum amount that a Participant may borrow from his Pre-tax
Contribution account is the lesser of (i) $50,000, reduced by the excess, if
any, of the highest outstanding balance of loans to the Participant from all
plans maintained by the Company or an affiliated entity during the one-year
period ending on the day before the date on which such loan is made over the
outstanding balance of loans from the Plan on the date on which such loan is
made, (ii) 50% of the value of the Participant's vested account balance under
the Plan or (iii) 100% of the value of the Participant's Pre-tax Contribution
account. The loans are to be secured by the pledge of a portion of the
Participant's right, title and value of the Participant's vested account balance
under the Plan as determined immediately after the loan is made. Loans may be
repaid over a period of up to five years, except loans made before January 1,
1994 had to be repaid over a period of up to four years. No loan will be made
for a sum less than $500.
Diversification of Investments
- ------------------------------
A Participant who is 55 years or older and who has participated in the Plan
for at least ten years has the option to diversify the investments in his ESOP
account and his Employer Contribution account by transferring up to 25% of the
sum of the balances of those accounts (less any amount previously transferred)
to any of the other three Funds. After five years of eligibility to make such
transfers, the maximum percentage increases to 50% (less any amount previously
transferred). A qualified Participant may make this election annually, and
elections must be made in the first 90 days of a year. Second or subsequent
elections will cause transfers only to the extent the permissible election
exceeds amounts previously transferred.
Termination of the Plan
- -----------------------
The Company may terminate the Plan at any time and must give written notice
to the Trustee. In the event of termination of the Plan, the assets held by the
Trustee under the Plan will be valued and each Participant will become fully
vested and entitled to distributions respecting his account.
3. FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the financial
statements of the Plan. The Internal Revenue Service (IRS) determined and
informed the Company by a letter dated December 3, 1994 that the Plan is
qualified and the trust fund (Trust) established under the Plan is tax-exempt
under the appropriate sections of the Internal Revenue Code of 1986, as amended
(Code). The IRS had determined that the KBLCOM Plan was qualified by letter
dated July 18, 1990. Although the KBLCOM Plan was amended subsequent to that
date; the Committee and the Company's counsel believe that the KBLCOM Plan was
designed and operated in compliance with the requirements of the Code. As a
result, the Participant's Pre-tax Contributions, up to a specified maximum
amount each calendar year, and the Employer Contributions to the Trust on behalf
of a Participant are not currently taxable to a Participant when made, and
income from any source accruing to a Participant's account is not taxable when
realized by the Trust. The After-tax Contributions made by a Participant will
not be deductible by the Participant. The continued status of the Trust as
a tax-exempt trust and the Plan as a qualified plan are contingent upon the
14
<PAGE>
continuing operation of the Trust and the Plan in accordance with applicable
provisions of the Code.
4. RELATED PARTY TRANSACTIONS
The Plan:
- ---------
During 1994, the Trustee and the ESOP Trustee purchased in the open market
shares of the Company's common stock for Fund A and the Allocated ESOP. The
number of shares of the Company's common stock purchased and the related cost
are shown below:
<TABLE>
<CAPTION>
Fund A Allocated ESOP
-------------------- ------------------
Shares Cost Shares Cost
------- ----------- ------ ----------
<S> <C> <C> <C> <C>
Open Market Purchases 859,185 $29,982,939 50,152 $1,799,868
</TABLE>
During 1993, the Trustee and the ESOP Trustee purchased shares of the
Company's common stock directly from the Company for Fund A and the Allocated
ESOP at prices equal to the closing price on the New York Stock Exchange on the
dates the Trustee and the ESOP Trustee delivered to the Company written
acceptance of the Company's offers to sell. The Company withdrew such offers
effective January 1, 1994. The ESOP Trustee used cash from earnings and Employer
Contributions held in the Allocated ESOP to purchase shares of the Company's
common stock in the open market for the Allocated ESOP; see Note 2. The number
of shares of the Company's common stock purchased and the related cost are shown
below:
<TABLE>
<CAPTION>
Fund A Allocated ESOP
-------------------- ------------------
Shares Cost Shares Cost
------- ----------- ------ ----------
<S> <C> <C> <C> <C>
Direct Sales by Company
to Trust 484,200 $22,673,275 22,600 $1,055,550
Open Market Purchases -0- -0- 16,759 764,884
</TABLE>
During 1993, the ESOP Trustee sold in the open market 2,134 shares of the
Company's common stock valued at $98,588 (cost, $79,757).
During 1994 and 1993, the Trustee and the ESOP Trustee distributed 45,330
shares of the Company's common stock (valued at $1,840,131) and 35,667 shares of
the Company's common stock (valued at $1,642,820), respectively.
As of December 31, 1994, an aggregate of 17,028,262 shares of the Company's
common stock was held by the Plan, consisting of 7,550,125 shares held by the
Trustee and 9,478,137 shares held by the ESOP Trustee, including shares held in
the Unallocated ESOP. As of December 31, 1993, an aggregate of 16,064,005 shares
of the Company's common stock was held by the Plan, consisting of 6,632,665
shares held by the Trustee and 9,431,340 shares held by the ESOP Trustee,
including shares held in the Unallocated ESOP. These shares represented 5.75%
and 7.22%, respectively, of the Company's common stock outstanding at December
31, 1994 and 5.08% and 7.22%, respectively, of the Company's common stock
outstanding at December 31, 1993.
During 1994 and 1993, the Plan and the ESOP purchased and sold units of
short-term investment funds managed by the Trustee and the ESOP Trustee as
temporary investments, as shown below:
15
<PAGE>
<TABLE>
<CAPTION>
1994 1993
------------------------- -------------------------
Plan ESOP Plan ESOP
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Purchases $135,278,761 $30,339,845 $167,686,249 $30,324,545
Sales 131,499,044 34,117,570 156,371,604 28,315,358
</TABLE>
KBLCOM Plan:
- ------------
During 1993, the Trustee purchased common stock directly from the Company for
Fund A at a price equal to the closing price on the New York Stock Exchange on
the date the Trustee delivered to the Company the KBLCOM Plan's written
acceptance of the Company's offer to sell. During 1993, 32,100 shares of the
Company's common stock were purchased at a cost of $1,488,975. The Trustee also
purchased 4,364 shares of the Company's common stock at a cost of $199,959 in
the open market.
At December 31, 1993, the KBLCOM Plan held 100,250 shares of the Company's
common stock, which represented 0.08% of the Company's outstanding common stock.
During 1993, the KBLCOM Plan purchased $10,173,194 principal amount and sold
$10,173,194 principal amount of short-term investment funds managed by the
Trustee as temporary investments. During 1993, the KBLCOM Plan purchased 660
units (cost $226,834) of a fixed-income fund managed by the Trustee as an
investment for Fund C.
5. BENEFITS PAYABLE
As of December 31, 1994 and 1993, the Plan's net assets available for
benefits included benefits of $3,523,683 and $3,219,798, respectively, due to
Participants who had withdrawn from participation in the Plan. As of December
31, 1993, the KBLCOM Plan's net assets available for benefits included benefits
of $56,690 due to KBLCOM Participants who had withdrawn from the KBLCOM Plan.
6. SUBSEQUENT EVENTS
Fourth Amendment
- ----------------
The Plan has been amended by the Fourth Amendment to provide that, effective
May 1, 1995, The Northern Trust Company (Northern Trust) replaced the Trustee
and the ESOP Trustee as the trustee for the Plan. The assets of the Trust and
the ESOP Trust were transferred to Northern Trust on May 1, 1995.
Amendment and Restatement of Plan
- ---------------------------------
In April 1995, the Plan was amended and restated effective July 1, 1995 to
provide for (1) the consolidation and merger of the Trust and the ESOP Trust
into one trust, (2) daily valuations of Participants' accounts, (3) to provide
for the addition of new investment funds and (4) certain other changes.
The following changes to Plan provisions will become effective July 1, 1995:
- employees of an Employer will be eligible to participate in the
Plan as soon as is practicable after employment commences;
- Participants' accounts will be valued daily;
- the number of Funds available for Participant contributions
will increase from four to seven;
- Participants will be able to change their contribution
percentages and investment options daily;
16
<PAGE>
- Participants will be able to transfer amounts attributable to past
contributions among the Funds daily, except transfers involving
the Company stock fund which will be allowed once every 30 days;
- distributions will be processed weekly, except final distributions
which will be processed twice a month;
- loans will be processed weekly and a $25.00 loan origination fee
will be deducted from the loan check;
- Participants must wait 30 days after paying off a loan before
requesting a new loan; and
- Participants may withdraw amounts attributable to After-tax
Contributions as often as desired, subject to a $500 minimum, (the six
month suspension described in Note 2 is still in effect).
Sale of KBLCOM Incorporated
- ---------------------------
In January 1995, the Company agreed to sell KBLCOM to Time Warner Inc. (Time
Warner). The sale is expected to close in mid-1995. KBLCOM Participants will
continue their participation in the Plan until June 30, 1995. At such time the
Plan as it covers KBLCOM Participants shall be terminated and their accounts
shall become fully vested and nonforfeitable. Time Warner does not currently
have a qualified plan that accepts roll-over contributions. Consequently, the
accounts of the KBLCOM Participants will remain in the Plan and be distributed
pursuant to the provisions of the Plan as they relate to any terminated
Participant. At April 30, 1995, the accounts of KBLCOM Participants totalled
$12,595,000. Neither the Company nor KBLCOM nor the Committee is able to predict
when such benefits will be distributed to KBLCOM Participants.
17
<PAGE>
Item 27a - Schedule of Assets Held for Investment Purposes;
EIN: 74-1885573; PN: 015
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
============================================
SUPPLEMENTAL SCHEDULE OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
CURRENT
FUND A COST VALUE
- ------ ------------ ------------
<S> <C> <C>
Common Stock
- ------------
*Houston Industries (7,550,125 shares) $233,549,474 $268,973,203
------------ ------------
Cash Equivalents
- ----------------
*Texas Commerce Bank Short Term Investor Money Market
Group Fund ($2,749,029 par value) 2,749,029 2,749,029
------------ ------------
TOTAL FUND A INVESTMENTS 236,298,503 271,722,232
------------ ------------
ALLOCATED ESOP
- --------------
Common Stock
- ------------
*Houston Industries (1,707,824 shares) 64,069,351 60,841,230
------------ ------------
Cash Equivalents
- ----------------
*State Street Short Term Investment Fund
($692,593 par value) 692,593 692,593
*Texas Commerce Bank Short Term Investor Money Market
Group Fund ($5,428 par value) 5,428 5,428
------------ ------------
Total Cash Equivalents 698,021 698,021
------------ ------------
TOTAL ALLOCATED ESOP INVESTMENTS 64,767,372 61,539,251
------------ ------------
FUND B
- ------
Mutual Funds
- ------------
Acorn Fund (808,174 shares) 8,081,968 9,892,046
Fidelity Equity-Income Fund (323,073 shares) 9,065,551 9,918,339
Harbor International Fund (318,648 shares) 7,281,822 7,790,937
Lazard Funds International Equity Portfolio
(413,798 shares) 5,396,026 4,646,947
New York Venture Fund (1,281,019 shares) 15,986,016 14,296,177
Templeton Foreign Equity Series (654,454 shares) 7,677,454 8,416,278
Vanguard Windsor Fund (792,869 shares) 10,221,676 9,982,225
------------ ------------
Total Mutual Funds 63,710,513 64,942,949
------------ ------------
Common/Collective Trusts
- ------------------------
Accel Fund (665,365 units) 7,644,141 9,905,755
Beutel Trust (920,149 units) 10,330,749 13,235,554
Dietche & Field Investment Trust A (656,381 units) 7,132,664 12,772,511
Oechsle International Group Trust Fund-Core-Plus
Account (242,238 units) 6,359,067 7,808,334
Sarofim Equity Fund (7,685 units) 8,108,900 12,739,689
------------ ------------
Total Common/Collective Trusts 39,575,521 56,461,843
------------ ------------
</TABLE>
18
<PAGE>
Item 27a - Schedule of Assets Held for Investment Purposes;
EIN: 74-1885573; PN: 015
<TABLE>
<CAPTION>
CURRENT
COST VALUE
----------- -----------
<S> <C> <C>
Cash Equivalents
- ----------------
*Texas Commerce Bank Short Term Investor Money Market
Group Fund ($752,965 par value) 752,965 752,965
----------- -----------
TOTAL FUND B INVESTMENTS 104,038,999 122,157,757
----------- -----------
FUND C
- ------
U.S. Government Obligations
- ---------------------------
U.S. Treasury 4.625% note due 2/15/96
($590,000 par value) 572,623 572,206
U.S. Treasury 6.875% note due 3/31/97
($1,240,000 par value) 1,289,116 1,217,519
U.S. Treasury 6.25% note due 2/15/03
($3,250,000 par value) 2,996,094 2,939,202
----------- -----------
Total U.S. Government Obligations 4,857,833 4,728,927
----------- -----------
U.S. Government Agencies
- ------------------------
Federal Home Loan Mortgage Corp 6.50% multiclass
series 1580-A class A due 9/15/98
($505,000 par value) 362,403 337,746
Federal National Mortgage Assn 8.50% guaranteed
remic pass through certificate remic trust 1990-112
class 112-E due 7/25/19 ($500,000 par value) 300,239 284,774
Federal National Mortgage Assn 10.00% guaranteed
mortgage pass through certificate pool #129851
due 6/1/20 ($360,000 par value) 128,163 121,984
----------- -----------
Total U.S. Government Agencies 790,805 744,504
----------- -----------
Corporate Bonds and Notes
- -------------------------
Bellsouth Capital Funding 8.90% medium term note
due 3/1/98 ($100,000 par value) 114,573 101,854
British Telecom Finance 9.375% guaranteed note
due 2/15/99 ($500,000 par value) 542,790 519,730
Collateralized Mortgage Obligation Trust 66 8.00%
class z due 9/20/21 ($980,000 par value) 1,305,379 1,142,932
Export Import Bank of Japan 8.00% insc #284734 euro
#17056 due 6/4/00 ($78,750 par value) 74,342 76,191
Exxon Capital 6.50% note due 8/15/97
($500,000 par value) 527,370 468,400
Ford Motor Credit 8.00% note due 10/1/96
($500,000 par value) 539,950 498,350
General Electric Capital 8.70% note due 2/15/03
($500,000 par value) 583,265 511,300
Premier Auto Trust 1993-4 4.65% asset backed note
class A-2 due 2/2/99 ($350,000 par value) 258,684 247,176
Republic New York 9.75% subordinated note due 12/1/00
($500,000 par value) 609,435 528,780
Sears Mortgage Security 9.50% guaranteed mortgage
pass through certificate series 86-E due 8/25/16
($880,000 par value) 50,454 48,301
Shawmut National 9.15% remic trust 1990-A home equity
loan pass through certificate class A due 11/15/05
($715,000 par value) 40,153 38,932
</TABLE>
19
<PAGE>
Item 27a - Schedule of Assets Held for Investment Purposes;
EIN: 74-1885573; PN: 015
<TABLE>
<CAPTION>
CURRENT
COST VALUE
------------ ------------
<S> <C> <C>
Spain (Kingdom) 9.125% due 8/1/00 ($500,000 par value) 583,730 517,775
------------ ------------
Total Corporate Bonds and Notes 5,230,125 4,699,721
------------ ------------
Common/Collective Trusts
- ------------------------
*Texas Commerce Bank Limited Term Bond Fund
(1,606 units) 510,153 540,934
------------ ------------
Cash Equivalents
- ----------------
*Texas Commerce Bank Short Term Investment Fund K
($3,771,954 par value) 3,771,954 3,771,954
------------ ------------
TOTAL FUND C INVESTMENTS 15,160,870 14,486,040
------------ ------------
FUND D
- ------
Cash Equivalents
- ----------------
*Texas Commerce Bank Short Term Investor Money Market
Group Fund ($15,666,542 par value) 15,666,542 15,666,542
------------ ------------
TOTAL FUND D INVESTMENTS 15,666,542 15,666,542
------------ ------------
TOTAL PARTICIPANT INVESTMENTS 435,932,286 485,571,822
------------ ------------
UNALLOCATED ESOP
- ----------------
Common Stock
- ------------
*Houston Industries (7,770,313 shares) 290,095,115 276,817,401
------------ ------------
Cash Equivalents
- ----------------
*State Street Short Term Investment Fund
($80,870 par value) 80,870 80,870
------------ ------------
TOTAL UNALLOCATED ESOP INVESTMENTS 290,175,985 276,898,271
------------ ------------
TOTAL SAVINGS PLAN INVESTMENTS $726,108,271 $762,470,093
============ ============
*PARTICIPANT LOANS, 7% to 11%,
maturing 1995 through 1999 $ 31,547,726 $ 31,547,726
============ ============
</TABLE>
*Party-in-Interest
20
<PAGE>
Item 27a - Schedule of Assets Held for Investment Purposes; EIN: 74-1885573;
PN: 015
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
AND
KBLCOM INCORPORATED SAVINGS PLAN
================================
SUPPLEMENTAL SCHEDULE OF ASSETS PURCHASED AND SOLD
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION SHARES/ SALES
PAR VALUE COST PROCEEDS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONE
</TABLE>
21
<PAGE>
Item 27d - Schedule of Reportable Transactions; EIN: 74-1885573; PN: 015
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
AND
KBLCOM INCORPORATED SAVINGS PLAN
================================
SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT VALUE
PURCHASE SELLING COST OF ON TRANSACTION EXPENSE
DESCRIPTION PRICE PRICE ASSET DATE INCURRED NET GAIN
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SINGLE TRANSACTIONS
- -------------------
None
SERIES OF TRANSACTIONS
- ----------------------
*Texas Commerce Bank:
Short Term Investor Money Market Group
Fund (Note 4)
(384 Purchases) $121,221,270 $121,221,270
(205 Sales) $119,182,841 $119,182,841 119,182,841
*State Street Bank & Trust Short Term
Investment Fund:
(41 Purchases) 30,339,845 30,339,845
(40 Sales) 34,117,570 34,117,570 34,117,570
- --------------------------------------
</TABLE>
*Party-in-Interest
22
<PAGE>
SIGNATURE
---------
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
By /s/ D. D. Sykora
---------------------------------
(D. D. Sykora, Chairman of the
Benefits Committee of
Houston Industries Incorporated,
Plan Administrator)
June 29, 1995
23
<PAGE>
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- ----------------------------------------------------------------------
<S> <C>
1 Independent Auditors' Consent
2 Houston Industries Incorporated Savings Plan, as Amended and Restated
Effective as of January 1, 1994 (incorporated by reference to Exhibit
4.5 to Post-Effective Amendment No. 1 to Form S-8 of the Company, File
No. 33-38344)
3 Houston Industries Incorporated Master Savings Trust, as Amended and
Restated Effective as of January 1, 1994, between the Company and
Texas Commerce Bank National Association (incorporated by reference to
Exhibit 10 to the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1994, File No. 1-7629)
4 First Amendment to Houston Industries Incorporated Savings Plan, as
Amended and Restated Effective January 1, 1994, effective as of April
6, 1994 (incorporated by reference to Exhibit 99(d) to the Quarterly
Report on Form 10-Q of the Company for the quarter ended March 31,
1994, File No. 1-7629)
5 Second Amendment to Houston Industries Incorporated Savings Plan, as
Amended and Restated Effective January 1, 1994, effective January 1,
1994 (incorporated by reference to Exhibit 99(f) to the Quarterly
Report on Form 10-Q of the Company for the quarter ended September 30,
1994, File No. 1-7629)
6 Third Amendment to Houston Industries Incorporated Savings Plan, as
Amended and Restated Effective January 1, 1994, effective January 1,
1994
7 Fourth Amendment to Houston Industries Incorporated Savings Plan, as
Amended and Restated Effective January 1, 1994, effective January 1,
1995 and May 1, 1995
8 Houston Industries Incorporated Savings Plan, as Amended and Restated
Effective as of July 1, 1995 (incorporated by reference to Exhibit
99(c) to the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1995, File No. 1-7629)
</TABLE>
24
<PAGE>
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We hereby consent to the incorporation by reference in the Registration
Statement of Houston Industries Incorporated on Form S-8 and the Post-Effective
Amendment No. 1 to Form S-8 (File No. 33-38344) of our report dated June 16,
1995 appearing in the Annual Report on Form 11-K of the Houston Industries
Incorporated Savings Plan for the year ended December 31, 1994.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Houston, Texas
June 29, 1995
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
(As Amended and Restated Effective January 1, 1994)
Third Amendment
---------------
Houston Industries Incorporated, a Texas corporation (the "Company"),
having established the Houston Industries Incorporated Savings Plan, as amended
and restated effective January 1, 1994 and thereafter amended (the "Plan"), and
having reserved the right to amend the Plan under Section 10.3 of the Plan, does
hereby amend the Plan, effective January 1, 1994 unless otherwise provided
herein, as follows:
1. Section 1.10 of the Plan is hereby amended by replacing the phrase
"constitute employer securities within the meaning of Section 409(l) of the
Code" with the phrase "is readily tradeable on an established securities
market".
2. Section 1.15 of the Plan is hereby amended to delete therefrom the
phrase "regularly and principally."
3. Section 1.26 of the Plan is hereby amended to read as follows:
"Section 1.26 Exempt Loan: Any loan or other extension of credit
made or guaranteed by a disqualified person as defined in Code Section
4975(e)(2) that is used to finance the purchase of Company Stock by the
Trustee and that meets the requirements of Section 5.6."
4. Section 1.29 of the Plan is hereby amended to read as follows:
"1.29 HII Participant: A Participant who is participating in this
Plan as an employee of Houston Industries Incorporated or as an employee of
any of its subsidiaries or affiliates other than KBLCOM Incorporated and
the subsidiaries of KBLCOM Incorporated."
<PAGE>
5. Section 1.32 of the Plan is hereby amended to read as follows:
"1.32 KLBCOM Participant: A Participant who is participating in this
Plan as an employee of KBLCOM Incorporated or as an employee of any of
KBLCOM Incorporated's subsidiaries."
6. Clause (ii) of Section 1.41 of the Plan is hereby amended to read
as follows:
"(ii) the fifth anniversary of the Participant's commencement of
participation in the Plan."
7. Section 3.8 of the Plan is hereby amended to delete the second
paragraph therefrom.
8. Section 3.9 of the Plan is hereby amended to read as follows:
"3.9 Participation and Vesting Upon Re-Employment: Participation in
the Plan shall cease at the close of the month during which termination of
Service occurs. Termination of Service may result from Retirement, death
or voluntary or involuntary termination of employment with the Employer and
its Affiliates, if any, unauthorized absence, or by failure to return to
active employment with the Employer by the date on which an Authorized
Absence expired. Upon the re-employment prior to or after a Break In
Service of any person who had previously been employed by the Employer, the
following rules shall apply in determining his Participation in the Plan
and his Vesting Service under Sections 3.1 and 3.6:
(a) Participation: If the re-employed Employee was not a
Participant in the Plan during his prior period of Service, he shall
commence participation in the Plan when he meets the requirements of
Section 3.1. If the re-employed Employee was a Participant in the
Plan during his prior period of Service, he shall recommence
participation in the Plan on the date of his re-employment, and any
forfeitures from his Employer Matching Account and ESOP Account shall
be reinstated to the extent provided in Section 6.9.
(b) Vesting: Any Vesting Service attributable to a re-employed
Employee's prior period of employment shall be reinstated as of the
date of his recommencement of participation in the Plan.
9. The last paragraph of Section 4.1 of the Plan is hereby amended by
changing "6.8" to "6.9" therein.
-2-
<PAGE>
10. Section 4.4 of the Plan is hereby amended to read as follows:
"4.4 Actual Deferral Percentage: The Actual Deferral Percentage for
a specified group of Employees for a Plan Year shall be the average of the
ratios (calculated separately for each Employee in such group) of:
(a) the amount of Pre-Tax Contributions (i) allocated to each such
Employee's Account under the Plan as of a date during the Plan Year,
without contingency on future participation in the Plan or performance of
future services, (ii) actually paid to the Plan on behalf of each such
Employee for such Plan Year no later than the end of the 12-month period
immediately following such Plan Year and (iii) that relate to Compensation
that either would have been received by the Employee in such Plan Year (but
for the deferral election) or are attributable to services performed by the
Employee in the Plan Year and would have been received by the Employee
within two and one-half (2 1/2) months after the close of the Plan Year
(but for the deferral election); over
(b) the Employee's Compensation (as defined in Section 5.5(d)(6)) for
such Plan Year. Notwithstanding any provision in this Plan to the
contrary, an Employer may, to the extent permitted by the Code and
applicable regulations, elect to include as Compensation pre-tax or after-
tax contributions made under this Plan or any other plan of the Employer.
An eligible Employee for the purpose of computing the Actual
Deferral Percentage is defined in Treasury Regulation Section 1.401(k)-
1(g)(4). The Actual Deferral Percentage of an eligible Employee who makes
no Pre-Tax Contributions is zero (0). The individual ratios and Actual
Deferral Percentages shall be calculated to the nearest one-hundredth
(1/100) of one percent (1%) of an Employee's Compensation."
11. Subsection C. of Section 4.9 of the Plan is hereby amended by
adding the words "and Section 4.8" immediately following "Section 4.6" therein.
12. Subsection (d)(iii) of Section 5.3 of the Plan is hereby amended
by changing "6.8" to "6.9" therein.
13. The last sentence of the second paragraph of Subsection (c) of
Section 5.4 of the Plan is hereby amended to read as follows:
"In the event that there are insufficient funds available to make payments
of principal or interest on Exempt Loans when due, the Committee may direct
(i) the Trustee to obtain a new Exempt Loan in an amount sufficient to make
such payments or (ii) the ESOP Trustee to sell any Financed Stock which has
not yet been allocated to ESOP Accounts provided such sale meets the
requirements of
-3-
<PAGE>
the following sentence. In directing any such sale of Financed Stock, the
Committee shall consider all of the facts and circumstances surrounding the
proposed transaction and the reasons therefor and shall act in the best
interest of Plan Participants in accordance with the applicable Treasury
Regulations and ERISA."
14. Subsection (i) of Section 5.6 of the Plan is hereby amended by
adding the phrase "subject to the requirements of the last sentence of the
second paragraph of Subsection (c) of Section 5.4 of the Plan" to the end of the
first sentence thereof.
15. The last paragraph of Section 6.1 of the Plan is hereby amended
to read as follows:
"If a Participant terminates Service and, at the time of termination,
the present value of the Participant's vested benefit is zero, the
Participant will be deemed to have then received a distribution of such
vested benefit. Any portion of the Employer Matching Account and ESOP
Account of a terminated Participant in excess of the vested portion
specified herein shall be forfeited to the extent provided in Section 6.9.
Payment of benefits due under this Section shall be made in accordance with
Section 6.6."
16. Subsection (b) of Section 6.6 of the Plan is hereby amended by
adding the following sentence immediately following the first sentence thereof:
"If Company Stock acquired with the proceeds of an Exempt Loan and
available for distribution consists of more than one class, a Participant
shall receive substantially the same proportion of each such class to the
extent the distribution is a distribution from the ESOP Fund."
17. Section 6.9 of the Plan is hereby amended in its entirety to read
as follows:
"6.9 Treatment of Nonvested Account Balances Upon Termination of
Service: This Section 6.9 does not apply to Participants who are fully
vested at the time of termination of Service.
If a Participant receives an actual or deemed distribution pursuant to
Section 6.1 prior to the close of the second Plan Year following the Plan
Year in which the Participant's Service terminates, the nonvested portion
of his Employer Matching Account and ESOP Account shall be forfeited and
shall become available for allocation as provided in Section 5.3(d)(iii).
If a Participant who has received an actual distribution as described in
this paragraph thereafter resumes Service under the Plan at any time, he
shall be entitled to have the forfeited amounts reinstated to such Accounts
upon his recommencement of participation
-4-
<PAGE>
in the Plan. If a Participant who has received a deemed distribution as
described in this paragraph thereafter resumes Service under the Plan
before incurring five consecutive one-year Breaks in Service, he shall be
entitled to have the forfeited amounts reinstated to such Accounts upon his
recommencement of participation in the Plan.
If a Participant does not receive a distribution of his vested benefit
by the close of the second Plan Year following the Plan Year in which his
Service terminates, but receives such a distribution before incurring five
consecutive one-year Breaks in Service, the nonvested balance in the
Participant's Employer Matching Account and ESOP Account shall be credited
to a suspense account at the time of distribution of the vested benefit.
If such a Participant is thereafter reemployed prior to incurring five
consecutive one-year Breaks in Service, the Participant's vested interest
in the suspense account, including any gains or losses thereon, at any
subsequent relevant time shall be an amount "X" determined by the following
formula: X = P(AB + D) - D. For purposes of applying this formula: P is
the vested percentage at such relevant time; AB is the account balance at
the relevant time; D is the amount of the prior distribution to the
Participant. If the Participant is not reemployed before he has incurred
five consecutive one-year Breaks in Service, his suspense account shall
then be forfeited and shall become available for allocation as described in
Section 5.3(d)(iii).
If a Participant does not receive a distribution of his vested benefit
before incurring five consecutive one-year Breaks in Service, the nonvested
balance in the Participant's Employer Matching Account and ESOP Account
shall then be forfeited and shall become available for allocation as
described in Section 5.3(d)(iii).
If more than one class of Company Stock acquired with an Exempt Loan
has been allocated to a Participant's ESOP Account and any amounts are
forfeited from such Account pursuant to this Section, the same proportion
shall be forfeited from each class."
18. Clause (ii) of the first sentence of Section 10.3 of the Plan is
hereby amended, effective September 7, 1994, to read as follows:
"(ii) the Committee shall have the right to amend or modify this Plan
and the Trust Agreement (with the consent of the Trustee, if required) to
modify the administrative provisions of the Plan, to change the Investment
Funds offered under the Plan and for any changes required by applicable law
or by the Internal Revenue Service to maintain the qualified status of the
Plan and related Trust at any time and from time to time to the extent that
it may deem advisable."
19. The first sentence of Section 10.5 of the Plan is hereby amended
by adding the following language to the end thereof:
-5-
<PAGE>
"provided that no Employer or Affiliate then establishes or maintains
another defined contribution plan (other than an employee stock ownership
plan within the meaning of Code Section 4975(e)(7) or Code Section 409 or a
simplified employee pension within the meaning of Code Section 408(k))".
IN WITNESS WHEREOF, Houston Industries Incorporated has caused these
presents to be executed by its duly authorized officers in a number of copies,
all of which shall constitute one and the same instrument, which may be
sufficiently evidenced by any executed copy hereof, on this 5th day of
January, 1995, but effective as of the dates specified herein.
HOUSTON INDUSTRIES INCORPORATED
/s/ D. D. Sykora
By______________________________________
D. D. Sykora
President and Chief Operating Officer
ATTEST:
/s/ R. B. Dauphin
______________________________
Assistant Corporate Secretary
-6-
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
(As Amended and Restated Effective January 1, 1994)
Fourth Amendment
----------------
The Benefits Committee of Houston Industries Incorporated, a Texas
corporation (the "Company"), having been delegated the right under Section 10.e
of the Houston Industries Incorporated Savings Plan, as amended and restated
effective January 1, 1994 and thereafter amended (the "Plan"), to amend the Plan
in certain respects, does hereby amend the Plan, effective as of the dates
provided herein, as follows:
1. The second sentence of Section 1.11 of the Plan is hereby amended,
effective January 1, 1995, to read as follows:
"Compensation specifically includes salaries, wages, commissions, overtime,
benefits paid under the Houston Industries Incorporated Executive Incentive
Compensation Plan (including annual and long-term awards), the KBLCOM
Incorporated Executive Incentive Compensation Plan and the Houston
Industries Energy, Inc. Annual Incentive Compensation Plan, and any other
payments of compensation which would be subject to tax under Code Section
3101(a), without the dollar limitations of Code Section 3121(a)(1)."
2. Section 1.25 of the Plan is hereby amended, effective May 1,
1995, to read as follows:
"1.25 ESOP Trustee: Prior to May 1, 1995, State Street Bank and
Trust Company, a Massachusetts trust company, and from and after May 1,
1995, The Northern Trust Company."
3. Section 1.42 of the Plan is hereby amended, effective May 1,
1995, to read as follows:
"1.42 Savings Trustee: Prior to May 1, 1995, Texas Commerce Bank
National Association, and from and after May 1, 1995, The Northern Trust
Company."
<PAGE>
IN WITNESS WHEREOF, the Benefits Committee of Houston Industries
Incorporated has caused these presents to be executed by its duly authorized
officers in a number of copies, all of which shall constitute one and the same
instrument, which may be sufficiently evidenced by any executed copy hereof, on
this 6th day of April, 1995, but effective as of the dates specified herein.
BENEFITS COMMITTEE OF
HOUSTON INDUSTRIES INCORPORATED
/s/ D. D. Sykora
By_________________________________
D. D. Sykora
Chairman
ATTEST:
/s/ E. P. Weylandt
_________________________________
Assistant Corporate Secretary
-2-
