U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 6, 1998
(Date of earliest event reported)
ENSERCH Corporation
(Exact name of Registrant as specified in its charter)
Texas 1-3183 75-0399066
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1601 Bryan Street, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 214-812-4600
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Item 7. Financial Statements and Schedules
(b) Pro Forma Financial Information
The following unaudited pro forma statements of income gives effect to:
(1) the August 1997 distribution by ENSERCH Corporation (ENSERCH) to its
common shareholders of its interest in its subsidiaries Enserch Exploration,
Inc. (EEX) and Lone Star Energy Plant Operations, Inc. (LSEPO) prior to
the merger of ENSERCH with Texas Utilities Company (TUC) on August 5, 1997
(the Distribution); and, (2) push down accounting of purchase accounting
adjustments, including amortization of goodwill, from TUC as a result of
the merger being accounted for as a purchase (Purchase Adjustments). The
unaudited pro forma statements of income for the nine months ended
September 30, 1997 and the year ended December 31, 1996 assume the
Distribution and Purchase Adjustments occurred at the beginning of each period
presented.
The unaudited pro forma statements of income are not necessarily indicative
of the financial results that would have been realized had the Distribution
and Purchase Adjustments occurred on the indicated dates, nor are they
necessarily indicative of future financial results.
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<CAPTION>
ENSERCH CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF TEXAS UTILITIES COMPANY)
UNAUDITED PRO FORMA STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
Period From January 1, 1997 to Acquisition Date Period From Pro Forma
-------------------------------------------------------------- Acquisition Nine Months
Remove Business Date to Ended
As Discontinued Merged Pro Forma Sept. 30 Sept. 30
Reported Operations With TUC Adjustments Pro Forma 1997 1997
------------ ----------- ----------- ----------- ---------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $1,437,704 $(159,547) $1,278,157 $ $1,278,157 $276,651 $1,554,808
Operating Expenses
Gas purchase 914,249 27,377 941,626 (6,694)(a) 934,932 203,754 1,138,686
Operating expenses 263,886 (57,699) 206,187 (3,858)(b) 202,329 58,878 261,207
Depreciation and amortization 526,087 (492,394) 33,693 11,686 (c) 45,379 12,594 57,973
Taxes other than income 58,585 (12,227) 46,358 46,358 8,354 54,712
---------- --------- ---------- -------- ---------- --------- ----------
Total operating expenses 1,762,807 (534,943) 1,227,864 1,134 1,228,998 283,580 1,512,578
---------- --------- ---------- -------- ---------- --------- ----------
Operating Income (Loss) (325,103) 375,396 50,293 (1,134) 49,159 (6,929) 42,230
Merger Related Expenses (25,135) (25,135) 25,135 (d)
Other Income and (Deductions) - Net (708) 98 (610) (2,663)(e) (3,273) 11 (3,262)
Interest Charges (59,346) 14,809 (44,537) 223 (f) (44,314) (13,058) (57,372)
---------- --------- ---------- -------- ---------- -------- ----------
Income (Loss) Before Income Taxes
and Minority Interest (410,292) 390,303 (19,989) 21,561 1,572 (19,976) (18,404)
Income Taxes (Benefit) (141,841) 137,229 (4,612) 6,790 (g) 2,178 (6,198) (4,020)
Minority Interest (38,142) 38,142
---------- --------- ---------- -------- ---------- -------- ----------
Income (Loss) From Continuing
Operations (230,309) 214,932 (15,377) 14,771 (606) (13,778) (14,384)
Income (Loss) From Discontinued
Operations (9,759) 9,759
---------- --------- ---------- -------- ---------- -------- ----------
Consolidated Net Income (Loss) (240,068) 224,691 (15,377) 14,771 (606) (13,778) (14,384)
Preferred Stock Dividends 6,725 6,725 6,725 1,878 8,603
---------- --------- ---------- -------- ---------- -------- ----------
Consolidated Net Income (Loss)
Available for Common Stock $ (246,793) $ 224,691 $ (22,102) $ 14,771 $ (7,331) $(15,656) $ (22,987)
========== ========= ========== ======== ========== ======== ==========
<FN>
See Notes to Unaudited Pro Forma Statements of Income.
</FN>
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<CAPTION>
ENSERCH CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF TEXAS UTILITIES COMPANY)
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
Year Ended December 31, 1996
-------------------------------------------------------------------
Remove Business
As Discontinued Merged Pro Forma
Reported Operations With TUC Adjustments Pro Forma
---------- ------------ ----------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Operating Revenues $2,142,625 $(248,365) $1,894,260 $ (5,286)(e) $1,888,974
Operating Expenses
Gas purchase 1,227,916 88,218 1,316,134 2,246 (a) 1,318,380
Operating expenses 465,078 (125,627) 339,451 (9,335)(b) 330,116
Merger related expenses 4,235 4,235 (4,235)(d)
Depreciation and amortization 204,845 (151,044) 53,801 19,647 (c) 73,448
Taxes other than income 94,231 (23,834) 70,397 70,397
---------- --------- ---------- -------- ----------
Total operating expenses 1,996,305 (212,287) 1,784,018 8,323 1,792,341
---------- --------- ---------- -------- ----------
Operating Income (Loss) 146,320 (36,078) 110,242 (13,609) 96,633
Merger Related Expenses (6,790) (6,790) 6,790 (d)
Other Income and (Deductions) - Net (4,432) (2,292) (6,724) 927 (e) (5,797)
Interest Charges (94,870) 18,170 (76,700) 383 (f) (76,317)
---------- --------- ---------- -------- ----------
Income (Loss) Before Income Taxes
and Minority Interest 40,228 (20,200) 20,028 (5,509) 14,519
Income Taxes (Benefit) 15,738 (5,461) 10,277 2,847 (g) 13,124
Minority Interest 1,792 (1,792)
---------- --------- ---------- -------- ----------
Income (Loss) From Continuing
Operations 22,698 (12,947) 9,751 (8,356) 1,395
Income (Loss) From Discontinued
Operations (1,560) 1,560
Extraordinary Loss on Extinguishment
of Debt (2,096) (2,096) 2,096 (d)
---------- --------- ---------- -------- ----------
Consolidated Net Income (Loss) 19,042 (11,387) 7,655 (6,260) 1,395
Preferred Stock Dividends 11,339 11,339 11,339
---------- --------- ---------- -------- ----------
Consolidated Net Income (Loss) Available
for Common Stock $ 7,703 $(11,387) $ (3,684) $ (6,260) $ (9,944)
========== ========= ========= ======== ==========
<FN>
See Notes to Unaudited Pro Forma Statements of Income.
</FN>
</TABLE>
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ENSERCH CORPORATION
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF INCOME
The pro forma adjustments reflect the estimated effects resulting from
purchase accounting adjustments to record assets acquired and liabilities
assumed at fair value as of August 5, 1997, the date of the merger with
Texas Utilities Company (TUC). Pro Forma adjustments were made to perform
the following:
(a) Record gas marketing activities on mark-to-market accounting method.
(b) Reduce pension and other post retirement benefit costs and other expenses
for which liabilities were provided at the acquisition date.
(c) Record amortization of goodwill.
(d) Eliminate costs associated with the merger with TUC and the Distribution
of EEX and LSEPO.
(e) Record adjustments to reflect sales of interests in and fair value of
cogeneration partnerships.
(f) Record amortization of the adjustment to long-term debt.
(g) Provide taxes on taxable pro forma adjustments at the statutory tax rate.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENSERCH Corporation
Date: January 6, 1998 By: /s/ Jerry W. Pinkerton
-----------------------------
Jerry W. Pinkerton
Vice President and Controller
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