<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-11442
________________
TEXAS UTILITIES ELECTRIC COMPANY
A Texas I.R.S. Employer Identification No.
Corporation 75-1837355
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
(214) 812-4600
________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No_____
-----
Common stock outstanding at April 30, 1995: 156,800,000 shares, without par
value.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
OPERATING REVENUES..................................................... $1,233,772 $1,290,615 $5,556,331 $5,557,586
---------- ---------- ---------- ----------
OPERATING EXPENSES
Fuel and purchased power............................................ 406,702 433,543 1,771,652 1,941,842
Operation........................................................... 187,532 200,158 800,431 779,011
Maintenance......................................................... 67,378 70,931 292,205 345,279
Depreciation and amortization....................................... 136,557 134,305 542,787 457,855
Federal income taxes (Note 5)....................................... 47,444 48,858 337,052 355,350
Taxes other than income 132,768 140,702 526,495 502,401
---------- ---------- ---------- ----------
Total operating expenses.......................................... 978,381 1,028,497 4,270,622 4,381,738
---------- ---------- ---------- ----------
OPERATING INCOME....................................................... 255,391 262,118 1,285,709 1,175,848
---------- ---------- ---------- ----------
OTHER INCOME (LOSS)
Allowance for equity funds used during construction................. (58) 2,883 7,802 96,283
Regulatory disallowances............................................ -- -- -- (359,556)
Other income and deductions -- net.................................. 2,362 2,786 9,736 8,797
Federal income taxes (Note 5)....................................... (784) (945) (4,060) 101,773
---------- ---------- ---------- ----------
Total other income (loss)......................................... 1,520 4,724 13,478 (152,703)
---------- ---------- ---------- ----------
TOTAL INCOME........................................................... 256,911 266,842 1,299,187 1,023,145
---------- ---------- ---------- ----------
INTEREST CHARGES
Interest on mortgage bonds.......................................... 136,942 148,646 555,659 608,267
Interest on other long-term debt.................................... 8,599 8,083 32,699 41,483
Other interest...................................................... 14,780 13,824 63,587 33,945
Allowance for borrowed funds used during construction (5,168) (2,472) (13,947) (72,845)
---------- ---------- ---------- ----------
Total interest charges............................................ 155,153 168,081 637,998 610,850
---------- ---------- ---------- ----------
NET INCOME............................................................. 101,758 98,761 661,189 412,295
PREFERRED STOCK DIVIDENDS.............................................. 23,546 28,083 97,346 113,327
---------- ---------- ---------- ----------
NET INCOME AFTER PREFERRED STOCK DIVIDENDS............................. $ 78,212 $ 70,678 $ 563,843 $ 298,968
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
2
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ----------------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................................................... $ 101,758 $ 98,761 $ 661,189 $ 412,295
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization................................. 170,450 168,834 675,564 563,257
Deferred federal income taxes -- net.......................... 15,827 17,782 279,016 108,410
Federal investment tax credits -- net......................... (5,365) (5,379) (23,684) (19,996)
Allowance for equity funds used during construction........... 58 (2,883) (7,802) (96,283)
Regulatory disallowances...................................... -- -- -- 359,556
Changes in assets and liabilities:
Receivables.................................................. 53,553 46,223 18,155 (64,426)
Inventories.................................................. 2,609 1,605 6,781 17,837
Accounts payable............................................. 13,470 (26,536) (126) (39,557)
Interest and taxes accrued................................... (52,936) (93,013) (20,560) 55,874
Other working capital........................................ (25,065) (16,513) (148,762) 145,522
Over/(under)-recovered fuel revenue -- net of deferred taxes. 72,090 (522) 186,304 (69,546)
Other -- net................................................. 4,461 25,398 35,347 38,435
--------- --------- --------- ---------
Cash provided by operating activities...................... 350,910 213,757 1,661,422 1,411,378
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds........................................... -- -- 378,340 1,948,465
Other long-term debt........................................... 300,000 -- 300,000 --
Preferred stock................................................ -- -- -- 610,701
Common stock................................................... -- 249,600 -- 249,600
Retirement of long-term debt and preferred stock................ (136,140) (361,115) (858,331) (2,634,923)
Change in notes payable -- parent............................... -- (29,727) (58,707) 53,407
Change in notes payable -- other................................ (208,904) 225,000 (98,613) (28,000)
Preferred stock dividends paid.................................. (23,629) (27,674) (101,526) (114,813)
Common stock dividends paid..................................... (180,320) (174,800) (721,280) (708,320)
Debt premium, discount, financing and reacquisition expenses.... (2,862) (2,148) (22,522) (127,516)
--------- --------- --------- ---------
Cash used in financing activities.......................... (251,855) (120,864) (1,182,639) (751,399)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures....................................... (84,239) (93,024) (406,505) (719,565)
Allowance for equity funds used during construction (excluding
amount for nuclear fuel)........................................ (58) 1,249 3,463 87,467
Change in construction receivables/payables -- net.............. 1,097 63 2,500 19,722
--------- --------- --------- ---------
Cash construction expenditures............................. (83,200) (91,712) (400,542) (612,376)
Non-utility property -- net..................................... 16 -- 12 (6)
Nuclear fuel (excluding allowance for equity funds used
during construction)............................................ (15,663) (9,094) (69,224) (23,091)
Other investments............................................... (5,383) (6,609) (20,912) (16,955)
--------- --------- --------- ---------
Cash used in investing activities.......................... (104,230) (107,415) (490,666) (652,428)
--------- --------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS............................. (5,175) (14,522) (11,883) 7,551
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE...................... 6,699 27,929 13,407 5,856
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE......................... $ 1,524 $ 13,407 $ 1,524 $ 13,407
========= ========= ========= =========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
3
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
(UNAUDITED)
----------- ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
ELECTRIC PLANT
In service:
Production........................................................... $15,577,488 $15,553,422
Transmission......................................................... 1,571,102 1,567,617
Distribution......................................................... 4,050,991 3,997,061
General.............................................................. 416,555 425,973
----------- -----------
Total.............................................................. 21,616,136 21,544,073
Less accumulated depreciation.......................................... 4,674,156 4,560,054
----------- -----------
Electric plant in service less accumulated depreciation............ 16,941,980 16,984,019
Construction work in progress.......................................... 232,970 971,429
Nuclear fuel (net of accumulated amortization: 1995 -- $228,111,000;
1994 -- $205,420,000)................................................ 291,936 298,964
Held for future use.................................................... 771,809 43,550
----------- -----------
Electric plant less accumulated depreciation and amortization...... 18,238,695 18,297,962
Less reserve for regulatory disallowances (Note 6)..................... 1,308,460 1,308,460
----------- -----------
Net electric plant................................................. 16,930,235 16,989,502
----------- -----------
INVESTMENTS.............................................................. 76,451 71,085
----------- -----------
CURRENT ASSETS
Cash in banks.......................................................... 1,524 6,699
Special deposits....................................................... 527 527
Notes receivable - affiliates.......................................... 5,613 28,594
Accounts receivable:
Customers............................................................ 142,015 196,507
Other................................................................ 26,294 26,869
Allowance for uncollectible accounts................................. (3,512) (5,026)
Inventories -- at average cost:
Materials and supplies............................................... 175,316 178,977
Fuel stock........................................................... 84,577 83,525
Prepaid taxes.......................................................... 40,102 21,614
Deferred federal income taxes.......................................... 32,603 37,202
Other current assets 11,846 16,379
----------- -----------
Total current assets 516,905 591,867
----------- -----------
DEFERRED DEBITS
Unamortized regulatory assets:
Debt reacquisition costs............................................. 278,393 281,023
Cancelled lignite unit costs......................................... 17,368 18,049
Rate case costs...................................................... 64,120 64,862
Litigation and settlement costs...................................... 72,685 72,685
Voluntary retirement/severance program............................... 150,458 156,397
Recoverable deferred federal income taxes -- net..................... 1,198,944 1,208,833
Other regulatory assets.............................................. 12,424 12,654
Under-recovered fuel revenue........................................... -- 29,860
Other deferred debits.................................................. 17,395 22,866
----------- -----------
Total deferred debits.............................................. 1,811,787 1,867,229
Less reserve for regulatory disallowances (note 6)..................... 72,685 72,685
----------- -----------
Net deferred debits................................................ 1,739,102 1,794,544
----------- -----------
Total........................................................ $19,262,693 $19,446,998
=========== ===========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
4
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
(UNAUDITED)
----------- ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
CAPITALIZATION
Common stock without par value:
Authorized shares -- 180,000,000
Outstanding shares: 1995 -- 156,800,000; 1994 -- 156,800,000....... $ 5,166,125 $ 5,166,125
Retained earnings.................................................... 845,211 948,136
----------- -----------
Total common stock equity..................................... 6,011,336 6,114,261
Preferred stock:
Not subject to mandatory redemption................................ 855,869 870,190
Subject to mandatory redemption.................................... 312,891 387,482
Long-term debt, less amounts due currently........................... 7,491,023 7,220,641
----------- -----------
Total capitalization.......................................... 14,671,119 14,592,574
----------- -----------
CURRENT LIABILITIES
Notes payable--commercial paper...................................... 132,000 363,886
Long-term debt due currently......................................... 40,167 56,037
Accounts payable:
Affiliates......................................................... 116,355 97,443
Other.............................................................. 108,799 113,144
Dividends declared................................................... 23,424 23,600
Customers' deposits.................................................. 59,080 55,726
Taxes accrued........................................................ 173,588 234,840
Interest accrued..................................................... 168,110 159,794
Over-recovered fuel revenue.......................................... 39,023 --
Other current liabilities............................................ 57,485 71,950
----------- -----------
Total current liabilities..................................... 918,031 1,176,420
----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes............................ 2,768,057 2,761,772
Unamortized federal investment tax credits........................... 658,844 664,209
Other deferred credits and noncurrent liabilities.................... 246,642 252,023
----------- -----------
Total deferred credits and other noncurrent liabilities....... 3,673,543 3,678,004
COMMITMENTS AND CONTINGENCIES (Note 7) ----------- -----------
Total......................................................... $19,262,693 $19,446,998
=========== ===========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
5
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
Basis of Presentation -- The condensed financial statements included herein
have been prepared by Texas Utilities Electric Company (Company) on the same
basis as those in the 1994 Annual Report on Form 10-K and, in the opinion of the
Company, all adjustments (constituting only normal recurring accruals) necessary
to a fair statement of the results of operation have been included therein. The
statements are presented pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. The Company believes that the disclosures are adequate to make the
information presented not misleading.
The unaudited financial information included herein has been reviewed by
Deloitte & Touche LLP, independent certified public accountants, whose report
with respect thereto is filed herewith in Part I of this report. The condensed
financial statements should be considered in conjunction with the financial
statements, and the notes thereto, of the Company included in the 1994 Annual
Report on Form 10-K and the information under Management's Discussion and
Analysis of Financial Condition and Results of Operation herein.
Reclassification -- Certain financial statement items for 1994 have been
reclassified to conform to the 1995 presentation.
Allowance for Funds Used During Construction (AFUDC) -- The Company is
capitalizing AFUDC monthly, on expenditures for ongoing construction work in
progress (CWIP) and nuclear fuel in process not otherwise allowed in rate base
by regulatory authorities. Effective January 1, 1995, the Company began using a
gross rate of 6.75% for AFUDC for all construction. For 1994 and 1993, the
gross rates were 8.6% and 10.4%, respectively.
2. SHORT-TERM FINANCING
At March 31, 1995, the Company and Texas Utilities Company (Texas Utilities)
had joint lines of credit aggregating $1,000,000,000 under credit facility
agreements with a group of commercial banks. On April 28, 1995, the Company and
Texas Utilities renegotiated these credit facility agreements and entered into
amendments that continued the terms of such credit facility agreements (Amended
Agreements). The Amended Agreements have two facilities, for each of which
Texas Utilities pays a fee. Facility A provides for borrowings up to
$300,000,000 and terminates April 28, 1996. Facility B provides for borrowings
up to $700,000,000 and terminates April 28,2000. Borrowings under the Amended
Agreements will be used for working capital and other corporate purposes,
including commercial paper backup.
6
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS --(CONTINUED)
(Unaudited)
3. CAPITALIZATION
PREFERRED STOCK
At March 31, 1995 and December 31, 1994, the Company had 17,000,000 shares of
preferred stock authorized by its articles of incorporation of which 11,889,553
and 12,787,228 shares were issued and outstanding, respectively.
The Company redeemed or purchased 897,675 shares of preferred stock with
annual dividend rates ranging from $7.22 to $10.375 during the three months
ended March 31, 1995.
On May 1, 1995, the Company redeemed 125,000 shares of $9.64 Cumulative
Preferred Stock which fulfills its mandatory redemption requirement until
November 1, 1995.
LONG-TERM DEBT
During the three months ended March 31, 1995, the Company borrowed
$300,000,000 pursuant to a term credit agreement (Credit Agreement), which
matures on February 28, 1997. The Credit Agreement permits the Company to
select between two methods of calculating a variable interest rate. At March
31, 1995 the rate was 6.55% for a one-month period.
The Company purchased and retired $25,100,000 aggregate principal amount of
9-7/8% First Mortgage and Collateral Trust Bonds due November 1, 2019 during the
three months ended March 31, 1995, and redeemed the remaining $86,050,000 of
such series in April 1995.
In April 1995, the Brazos River Authority and the Sabine River Authority of
Texas issued $66,670,000 aggregate principal amount of Pollution Control Revenue
Bonds collateralized by an equal amount of the Company's First Mortgage and
Collateral Trust Bonds. Such bonds are currently in a flexible mode and
secured by an irrevocable letter of credit. Also in April 1995, an aggregate
principal amount of $9,000,000 of the Brazos River Authority Pollution Control
Revenue Bonds, Taxable Series 1991 was defeased.
4. RETAINED EARNINGS
The articles of incorporation and the mortgage, as supplemented, of the
Company contain provisions which, under certain conditions, restrict
distributions on or acquisitions of its common stock. At March 31, 1995,
$139,278,000 of retained earnings were thus restricted as a result of such
provisions.
The articles of incorporation restriction provides, in effect, that the
Company shall not pay any common dividend which would reduce retained earnings
to less than one and one-half times annual preferred dividend requirements. The
mortgage restriction provides that the Company shall not pay any common
dividend, other than dividends payable solely in shares of its common stock, out
of reserved and restricted retained earnings of the Company and shall not make
any such declaration or payment when the Company is insolvent, or when the
payment thereof would render the Company insolvent.
7
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(Unaudited)
5. FEDERAL INCOME TAXES
The details of federal income taxes are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
------------------ --------------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Charged (credited) to operating expenses:
Current......................................................... $42,766 $47,200 $177,674 $161,935
Deferred -- net................................................. 10,043 7,037 183,062 213,411
Investment tax credits -- net................................... (5,365) (5,379) (23,684) (19,996)
------- ------- -------- --------
Total to operating expenses................................... 47,444 48,858 337,052 355,350
------- ------- -------- --------
Charged (credited) to other income:
Current......................................................... (8,207) (10,081) (33,601) (35,714)
Deferred -- net................................................. 8,991 11,026 37,661 (66,059)
------- ------- -------- --------
Total to other income......................................... 784 945 4,060 (101,773)
------- ------- -------- --------
Total federal income taxes................................. $48,228 $49,803 $341,112 $253,577
======= ======= ======== ========
</TABLE>
6. RATE PROCEEDINGS
DOCKET 11735
In July 1994, the Company filed a petition in the 200th Judicial District
Court of Travis County, Texas to seek judicial review of the final order of the
Public Utility Commission of Texas (PUC) granting a $449 million, or 9.0% rate
increase in connection with the Company's January 1993 rate increase request of
$760 million, or 15.3% (Docket 11735). Other parties to the PUC proceedings
also filed appeals with respect to various portions of the order. The Company
is unable to predict the outcome of such appeals.
DOCKET 9300
The PUC's final order (Order) in connection with the Company's January 1990
rate increase request (Docket 9300) has been reviewed by the 250th Judicial
District Court of Travis County, Texas (District Court) and thereafter was
appealed to the Court of Appeals for the Third District of Texas (Court of
Appeals). In June 1994, the Court of Appeals affirmed a prudence disallowance
of $472 million provided for in the Order with respect to Comanche Peak nuclear
generating station (Comanche Peak), reversed and remanded the portion of the
District Court's judgment that had affirmed a disallowance of $25 million
relating to the Company's reacquisitions of the minority owner interests in
Comanche Peak nuclear fuel, and affirmed the District Court's remand of the
remainder of the disallowance of $884 million relating to the reacquisitions of
such minority owner interests. Therefore, the Court of Appeals remanded an
aggregate of $909 million of disallowances with respect to the Company's
reacquisitions of minority owner interests in Comanche Peak to the PUC for
reconsideration and ordered that such reconsideration be on the basis of a
prudent investment standard.
8
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(Unaudited)
6. RATE PROCEEDINGS -- (CONTINUED)
In addition, the Court of Appeals reversed the District Court's finding that
the PUC erred in ordering a refund of $2.5 million with respect to certain fuel
gas costs. Also, the Court of Appeals specified that, on remand, the PUC will
be required to re-evaluate the appropriate level of the Company's CWIP included
in rate base in light of its financial condition at the time of the initial
hearing and to reconsider whether the $442 million revenue increase provided for
in the PUC's final order remains the benchmark in light of this re-examination.
The Court of Appeals also ruled in the appeal of the Company's Docket 9300
rate case that prior court rulings required that the tax benefits generated by
costs, including capital costs, not allowed in rates, must be used to reduce
rates charged to customers, reversing the District Court's decision. The
Company believes that such ruling is erroneous and not consistent with the Texas
Public Utility Regulatory Act (PURA). The Company contended that, according to
a Private Letter Ruling issued to the Company by the Internal Revenue Service
(IRS) with respect to investment tax credits, such ratemaking treatment, to the
extent related to property classified for tax purposes as public utility
property, would result in a violation of the normalization rules under the
Internal Revenue Code of 1986, as amended. Violation of the normalization rules
would result in a significant adverse effect on the Company's results of
operation and liquidity. If there are normalization violations, the Company
will forfeit its investment tax credits which remain unamortized as of the date
of the violation, and will also forfeit the ability to take advantage of
accelerated tax depreciation in years to which the violative order relates.
This could result in payments to the IRS of up to $1.3 billion. The Company
disagrees with certain portions of the decision of the Court of Appeals,
including specifically its decision with respect to federal income taxes, and
has filed an appeal to the Supreme Court of Texas. Other parties have also
filed appeals of this decision to the Supreme Court of Texas. The Company
cannot predict whether such appeals will be accepted by the Supreme Court of
Texas and cannot predict the outcome of any such appeals or any resulting
reconsideration of these issues on remand by the PUC.
On April 13, 1995 in an appeal of a rate case involving another utility, the
Supreme Court of Texas held that the PUC has considerable discretion in
determining the fair share of consolidated tax savings to be allocated to a
utility and, accordingly, is not required to include losses of unregulated
affiliates in determining such fair share. The Supreme Court also held that the
PUC could not use the tax benefits generated by disallowed expenses to reduce
rates.
FUEL COST RECOVERY RULE
In August 1994, the Company petitioned the PUC for a recovery of
approximately $93 million, including interest, in under-collected fuel costs for
the period July 1993 through June 1994. The PUC approved the recovery of this
amount over a six-month period beginning in January 1995. The PUC's approval of
this surcharge and a previously approved $147.5 million surcharge for fuel cost
recovery for a prior period have been appealed by certain intervenors to the
district courts of Travis County, Texas. In those appeals, those parties are
contending that the PUC is without authority to allow a fuel cost surcharge
without a hearing and findings that the costs are reasonable and necessary and
that the prices charged to the Company by affiliated suppliers are no higher
than the prices charged by those affiliates to others for the same items or
class of items. The Company will vigorously defend its position in these appeals
but is unable to predict their outcome.
9
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
6. RATE PROCEEDINGS -- (CONCLUDED)
FLEXIBLE RATE INITIATIVES
In June 1994, the Company filed with the PUC and municipalities with original
regulatory jurisdiction a package of four proposed flexible rates. Two of the
proposed rates would allow for negotiated competitive pricing through reductions
in demand charges to retain existing non-residential retail and wholesale
customers who have viable alternative sources of supply and would otherwise
leave the system. The remaining two rates are an economic development rider and
an environmental technology service rider. The economic development rider
would provide an incentive to attract new businesses and jobs and to encourage
existing customers to expand their facilities within the Company's service area.
The environmental technology service rider would provide an incentive for
qualifying customers to convert to advanced technologies that conserve total
energy or improve the environment. These new rates have been approved and
implemented in over 160 municipalities with original regulatory jurisdiction,
including the cities of Dallas and Fort Worth, within the Company's service
territory. Following hearings on the proposed rates, however, the PUC issued an
interim order on the rate package which either rejected or significantly
weakened the proposed flexible rates, rendering them ineffective. In January
1995, the Company withdrew its package of proposed rates from consideration by
the PUC. This action does not affect the over 160 municipalities where the
flexible rates are already in effect. The Sunset Review of PURA by the Texas
legislature in 1995 is expected to include several of the key issues involved in
this case. Through its involvement at the legislature and the PUC, the Company
will continue to pursue the possibility of offering flexible rates.
INTEGRATED RESOURCE PLAN
In October 1994, the Company filed an application for approval by the PUC of
its Integrated Resource Plan (IRP) for the ten-year period 1995-2004. The IRP
includes initiatives that address demand-side management resources, purchased
power, and future generating capacity that includes renewable energy sources.
The Company's IRP includes 288 megawatts (MW) of simple-cycle combustion
turbines, 1,514 MW of combined-cycle combustion turbines and 300 MW of wind or
other renewable resources. Assuming these units are financed by the Company
using traditional methods, approximately $200 million would be added to capital
expenditures in 1997. The Company's IRP also includes one lignite-fueled 750 MW
unit at Twin Oak. The second lignite-fueled Twin Oak unit has been delayed
beyond the ten-year period. Hearings on this application were concluded in
March 1995. The PUC's decision on the IRP is expected in mid-1995.
7. COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES
Construction expenditures for utility related activities, excluding AFUDC and
expenditures relating to new generating units, are presently estimated at $372
million for each of the years 1995, 1996 and 1997. Expenditures for nuclear fuel
and non-utility property are presently estimated at $46 million for 1995, $53
million for 1996, and $80 million for 1997. Active construction and the accrual
of AFUDC on Twin Oak, suspended in 1987 due to forecast changes in load growth,
would need to resume in 1999 in order to meet the current schedule. Due to the
delay, and the possibility of further delays resulting from forecast changes, in
the schedule of Twin Oak, as well as the lignite-fueled Forest Grove facility
which is not included in the ten-year resource plan, the Company is
contemplating alternative uses for its investment in these projects, which might
include construction as exempt
10
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
wholesale generators, construction at different locations, or sale of the
facilities. While the Company currently believes that its investment in these
assets can be recovered if held and ultimately developed according to existing
plans, other alternative uses might contribute more to the Company's long-term
strategy of maximizing shareholder value, and might include disposition for
amounts which may be less than current book value with respect to these assets.
Management has no specific plans for alternative uses. In March 1995, such
investment of approximately $729 million was transferred from CWIP to Electric
Plant Held for Future Use.
The re-evaluation of growth expectations, the effects of inflation,
additional regulatory requirements and the availability of fuel, labor,
materials and capital may result in changes in estimated construction costs and
dates of completion. Commitments in connection with the construction program are
generally revocable subject to reimbursement to manufacturers for expenditures
incurred or other cancellation penalties.
The Company plans to seek new investment opportunities from time to time when
it concludes that such investments are consistent with its business strategies
and will likely enhance the long-term returns to its shareholders. The timing
and amounts of any specific new business investment opportunities are presently
undetermined.
CLEAN AIR ACT
The Company's capital requirements have not been significantly affected by
the requirements of the federal Clean Air Act, as amended (Clean Air Act).
Although the Company is unable to fully determine the cost of compliance with
the Clean Air Act, it is not expected to have a significant impact on the
Company. During 1994, installation of continuous emissions monitoring systems
was completed at a total cost of approximately $38 million. Any additional
capital costs, as well as any increased operating costs, associated with these
new requirements or compliance measures, are expected to be recoverable through
rates, as similar costs have been recovered in the past. The Company's
environmental expenditures for 1995 are estimated to be $58 million.
COOLING WATER CONTRACTS
The Company has entered into contracts with public agencies to purchase
cooling water for use in the generation of electric energy. In connection with
certain contracts, the Company has agreed, in effect, to guarantee the
principal, $36,650,000 at March 31, 1995, and interest on bonds issued to
finance the reservoirs from which the water is supplied. The bonds mature at
various dates through 2011 and have interest rates ranging from 5-1/2% to 7%.
The Company is required to make periodic payments equal to such principal and
interest including amounts assumed by a third party and reimbursed to the
Company. In addition, the Company is obligated to pay certain variable costs of
operating and maintaining the reservoirs. The Company has assigned to a
municipality all contract rights and obligations of the Company in connection
with $84,610,000 remaining principal amount of bonds at March 31, 1995, issued
for similar purposes which had previously been guaranteed by the Company. The
Company is, however, contingently liable in the unlikely event of default by the
municipality.
11
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
NUCLEAR INSURANCE
With regard to liability coverage, the Price-Anderson Act (Act) provides
financial protection for the public in the event of a significant nuclear power
plant incident. The Act sets the statutory limit of public liability for a
single nuclear incident currently at $8.9 billion and requires nuclear power
plant operators to provide financial protection for this amount. As required,
the Company provides this financial protection for a nuclear incident at
Comanche Peak resulting in public bodily injury and property damage through a
combination of private insurance and industry-wide retrospective payment plans.
As the first layer of financial protection, the Company has purchased $200
million of liability insurance from American Nuclear Insurers (ANI), which
provides such insurance on behalf of two major stock and mutual insurance pools,
Nuclear Energy Liability Insurance Association and Mutual Atomic Energy
Liability Underwriters. The second layer of financial protection is provided
under an industry-wide retrospective payment program called Secondary Financial
Protection (SFP). Under the SFP, each operating licensed reactor in the United
States is subject to an assessment of up to $79.275 million, subject to
increases for inflation every five years, in the event of a nuclear incident at
any nuclear plant in the United States. Assessments are limited to $10 million
per operating licensed reactor per year per incident. All assessments under the
SFP are subject to a 3% insurance premium tax which is not included in the
amounts above.
With respect to nuclear decontamination and property damage insurance,
Nuclear Regulatory Commission (NRC) regulations require that nuclear plant
license-holders maintain not less than $1.06 billion of such insurance and
require the proceeds thereof to be used to place a plant in a safe and stable
condition, to decontaminate it pursuant to a plan submitted to and approved by
the NRC before the proceeds can be used for plant repair or restoration or to
provide for premature decommissioning. The Company maintains nuclear
decontamination and property damage insurance for Comanche Peak in the amount of
$3.6 billion, above which the Company is self-insured. The primary layer of
coverage of $500 million is provided by ANI. The remaining coverage includes
premature decommissioning coverage and is provided by ANI in the amount of $850
million and Nuclear Electric Insurance Limited (NEIL), a nuclear electric
utility industry mutual insurance company, in the amount of $2.25 billion. The
Company is subject to a maximum annual assessment from NEIL of $30 million in
the event NEIL's losses under this type of insurance for major incidents at
nuclear plants participating in this program exceed its accumulated funds and
reinsurance.
The Company maintains Extra Expense Insurance through NEIL to cover the
additional costs of obtaining replacement power from another source if one or
both of the units at Comanche Peak are out of service for more than twenty-one
weeks as a result of covered direct physical damage. The coverage provides for
weekly payments of $3.5 million for the first and $2.8 million for the second
and third fifty-two week periods of each outage, respectively, after the initial
twenty-one week period. The total maximum coverage is $473 million per unit.
The coverage amounts applicable to each unit will be reduced to 80% if both
units are out of service at the same time as a result of the same accident.
Under this coverage, the Company is subject to a maximum assessment of $10
million per year.
12
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONCLUDED)
(UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES -- (CONCLUDED)
NUCLEAR DECOMMISSIONING AND DISPOSAL OF SPENT FUEL
The Company has established a reserve, charged to depreciation expense and
accumulated depreciation, for the decommissioning of Comanche Peak, whereby
decommissioning costs are being recovered from customers over the life of the
plant and deposited in external trust funds (included in other investments). At
March 31, 1995, such reserve totaled $60,646,000 which includes an accrual of
$4,545,000 and $18,179,000 for the three and twelve months ended March 31, 1995,
respectively. As of March 31, 1995, the market value of deposits in the external
trust for decommissioning of Comanche Peak was $62,698,000. Realized earnings on
funds deposited in the external trust are recognized in the reserve. Based on a
site-specific study during 1992 using the prompt dismantlement method and then-
current dollars, decommissioning costs for Comanche Peak Unit 1, and Unit 2 and
common facilities were estimated to be $255,000,000 and $344,000,000,
respectively. Decommissioning activities are projected to begin in 2030 and 2032
for Comanche Peak Unit 1, and Unit 2 and common facilities, respectively. The
Company is recovering such costs based upon the 1992 study through its rates
placed in effect under Docket 11735. (See Note 6.)
The Company has a contract with the United States Department of Energy for
the future disposal of spent nuclear fuel at a cost of one mill per kilowatt-
hour of Comanche Peak net generation. The disposal fee is included in nuclear
fuel expense.
GENERAL
In addition to the above, the Company is involved in various legal and
administrative proceedings which, in the opinion of the Company, should not have
a material effect upon its financial position or results of operation.
8. ACCOUNTING CHANGE
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (Statement 121) was issued. Statement 121 is effective for
financial statements for fiscal years beginning after December 15, 1995 and
prescribes a methodology for assessing and measuring impairments in the carrying
value of certain assets. As a result of such standard, the Company will be
subject to a more formal standard for assessing asset impairment in the future.
13
<PAGE>
[DELOITTE & TOUCHE LLP LETTERHEAD APPEARS HERE]
INDEPENDENT ACCOUNTANTS' REPORT
Texas Utilities Electric Company:
We have reviewed the accompanying condensed balance sheet of Texas Utilities
Electric Company as of March 31, 1995, and the related condensed statements of
income and of cash flows for the three-month and twelve-month periods ended
March 31, 1995 and 1994. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Texas Utilities Electric Company as of December
31, 1994, and the related statements of income, retained earnings and cash flows
for the year then ended (not presented herein); and in our report dated March 1,
1995, we expressed an unqualified opinion on those financial statements, which
opinion included an explanatory paragraph concerning the Company's changes in
accounting for income taxes, postretirement benefits other than pensions and in
accounting for base rate revenue sold but not billed. In our opinion, the
information set forth in the accompanying condensed balance sheet as of December
31, 1994, is fairly stated in all material respects in relation to the balance
sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Dallas, Texas
May 10, 1995
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
For information concerning liquidity and capital resources, see Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operation in the Texas Utilities Electric Company (Company) Form 10-K for the
year 1994. No significant changes or events which might affect the financial
condition of the Company have occurred subsequent to year-end other than as
disclosed in this report.
External funds of a permanent or long-term nature are obtained through sales
of common stock to Texas Utilities Company (Texas Utilities), and of preferred
stock and long-term debt. The capitalization ratios of the Company at March 31,
1995 consisted of approximately 51% long-term debt, 8% preferred stock and 41%
common stock equity.
The Company had financings totaling $366,670,000 to date in 1995. Proceeds
from such financings were used primarily for the early redemption or
reacquisition of debt and preferred stock. Financings to date in 1995 by the
Company consisted of:
<TABLE>
<CAPTION>
PRINCIPAL CURRENT
DESCRIPTION AMOUNT INTEREST RATE MATURITY
----------- ----------- --------------- --------
<S> <C> <C> <C>
LONG-TERM DEBT:
Term credit agreement................................... $300,000,000 6.55% 1997
Pollution control revenue bonds......................... 66,670,000 4.35% to 5.25% 2030
------------
Total............................................... $366,670,000
============
</TABLE>
To date in 1995, the Company redeemed, purchased and retired, defeased or
made principal payments of $242,841,000 on long-term debt and preferred stock.
Early redemptions of long-term debt and preferred stock may occur from time to
time in amounts presently undetermined.
The Company expects to sell additional debt and equity securities as needed
including (i) the possible future sale by the Company of up to $650,000,000 of
First Mortgage Bonds currently registered with the Securities and Exchange
Commission for offering pursuant to Rule 415 under the Securities Act of 1933
and (ii) the possible future sale by the Company of 250,000 shares of Cumulative
Preferred Stock ($100 liquidation value) similarly registered.
On April 28, 1995, the Company and Texas Utilities renegotiated their credit
facility agreements and entered into amendments that extended the terms of such
credit facility agreements (Amended Agreements). The Amended Agreements have
two facilities, for each of which Texas Utilities pays a fee. Facility A
provides for borrowings up to $300,000,000 and terminates April 28, 1996.
Facility B provides for borrowings up to $700,000,000 and terminates April 28,
2000. Borrowings under the Amended Agreements will be used for working capital
and other corporate purposes, including commercial paper backup.
In order to remain competitive, the Company is aggressively managing its
operating costs and capital expenditures through streamlined business processes
and is developing and implementing strategies to address an increasingly
competitive environment. These strategies include initiatives to improve the
Company's return on corporate assets and to maximize shareholder value through
new marketing programs, creative rate design, and new business opportunities.
Additional initiatives under consideration include the potential disposition or
alternative utilization of existing assets and the restructuring of strategic
business units. Some of the Company's
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION -- (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
assets, including approximately $729 million invested in partially completed
generating facilities on which construction is temporarily suspended, are not
contributing to earnings and, as a result, the Company is considering possible
alternatives to the scheduled development, operation and recovery of such assets
through traditional means. While the Company currently believes that its
investment in these assets can be recovered if held and ultimately developed
according to existing plans, other alternatives might contribute more to the
Company's long-term strategy for maximizing shareholder value and might include
disposition for amounts which may be less than current book value with respect
to these assets. It is not possible at this time to predict the effect any of
these possible initiatives might have on the carrying value of the Company's
assets or its results of operation.
In July 1994, the Company filed a petition in the 200th Judicial District
Court of Travis County, Texas to seek judicial review of the final order of the
Public Utility Commission of Texas (PUC) granting a $449 million, or 9.0%, rate
increase in connection with the Company's January 1993 rate increase request of
$760 million, or 15.3% (Docket 11735). Other parties to the PUC proceedings
also filed appeals with respect to various portions of the order. The Company
is unable to predict the outcome of such appeals.
The PUC's final order (Order) in connection with the Company's January 1990
rate increase request (Docket 9300) has been reviewed by the 250th Judicial
District Court of Travis County, Texas (District Court) and thereafter was
appealed to the Court of Appeals for the Third District of Texas (Court of
Appeals). In June 1994, the Court of Appeals affirmed a prudence disallowance
of $472 million provided for in the Order with respect to its Comanche Peak
nuclear generating station (Comanche Peak), reversed and remanded the portion of
the District Court's judgment that had affirmed a disallowance of $25 million
relating to the Company's reacquisitions of the minority owner interests in
Comanche Peak nuclear fuel, and affirmed the District Court's remand of the
remainder of the disallowance of $884 million relating to the reacquisitions of
such minority owner interests. Therefore, the Court of Appeals remanded an
aggregate of $909 million of disallowances with respect to the Company's
reacquisitions of minority owner interests in Comanche Peak to the PUC for
reconsideration and ordered that such reconsideration be on the basis of a
prudent investment standard.
In addition, the Court of Appeals reversed the District Court's finding that
the PUC erred in ordering a refund of $2.5 million with respect to certain fuel
gas costs. Also, the Court of Appeals specified that, on remand, the PUC will
be required to re-evaluate the appropriate level of the Company's construction
work in progress included in rate base in light of its financial condition at
the time of the initial hearing and to reconsider whether the $442 million
revenue increase provided for in the PUC's final order remains the benchmark in
light of this re-examination.
The Court of Appeals also ruled in the appeal of the Company's Docket 9300
rate case that prior court rulings required that the tax benefits generated by
costs, including capital costs, not allowed in rates, must be used to reduce
rates charged to customers, reversing the District Court's decision. The
Company believes that such ruling is erroneous and not consistent with the Texas
Public Utility Regulatory Act (PURA). The Company contended that, according to
a Private Letter Ruling issued to the Company by the Internal Revenue Service
(IRS) with respect to investment tax credits, such ratemaking treatment, to the
extent related to property classified for tax purposes as public utility
property, would result in a violation of the normalization rules under the
Internal Revenue Code of 1986, as amended. Violation of the normalization rules
would result in a significant adverse effect on the Company's results of
operation and liquidity. If there are normalization violations, the Company
will forfeit its investment tax credits which remain unamortized as of the date
of the violation, and will also forfeit the ability to take advantage of
accelerated tax depreciation in years to which the violative order relates.
This could result in payments to the IRS of up to $1.3 billion. The Company
disagrees with certain portions of the decision of the Court of Appeals,
including specifically its decision with respect to federal income taxes, and
has filed an appeal to the Supreme Court of Texas. Other parties have also
filed appeals of this decision to the Supreme Court of Texas. The
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION -- (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
Company cannot predict whether such appeals will be accepted by the Supreme
Court of Texas and cannot predict the outcome of any such appeals or any
resulting reconsideration of these issues on remand by the PUC.
On April 13, 1995 in an appeal of a rate case involving another utility, the
Supreme Court of Texas held that the PUC has considerable discretion in
determining the fair share of consolidated tax savings to be allocated to a
utility and, accordingly, is not required to include losses of unregulated
affiliates in determining such fair share. The Supreme Court also held that the
PUC could not use the tax benefits generated by disallowed expenses to reduce
rates.
In August 1994, the Company petitioned the PUC for a recovery of
approximately $93 million, including interest, in under-collected fuel costs for
the period July 1993 through June 1994. The PUC approved the recovery of this
amount over a six-month period beginning in January 1995. The PUC's approval of
this surcharge and a previously approved $147.5 million surcharge for fuel cost
recovery for a prior period have been appealed by certain intervenors to the
district courts of Travis County, Texas. In those appeals, those parties are
contending that the PUC is without authority to allow a fuel cost surcharge
without a hearing and findings that the costs are reasonable and necessary and
that the prices charged to the Company by affiliated suppliers are no higher
than the prices charged by those affiliates to others for the same item or class
of items. The Company will vigorously defend its position in these appeals but
is unable to predict their outcome.
In June 1994, the Company filed with the PUC and its municipalities with
original regulatory jurisdiction a package of four proposed flexible rates. Two
of the proposed rates would allow for negotiated competitive pricing through
reductions in demand charges to retain existing non-residential retail and
wholesale customers who have viable alternative sources of supply and would
otherwise leave the system. The remaining two rates are an economic development
rider and an environmental technology service rider. The economic development
rider would provide an incentive to attract new businesses and jobs and to
encourage existing customers to expand their facilities within the Company's
service area. The environmental technology service rider would provide an
incentive for qualifying customers to convert to advanced technologies that
conserve total energy or improve the environment. These new rates have been
approved and implemented in over 160 municipalities with original regulatory
jurisdiction, including the cities of Dallas and Ft. Worth, within the Company's
service territory. Following hearings on the proposed rates, however, the PUC
issued an interim order on the rate package which either rejected or
significantly weakened the proposed flexible rates, rendering them ineffective.
In January 1995, the Company withdrew its package of proposed rates from
consideration by the PUC. This action does not affect the over 160
municipalities where the flexible rates are already in effect. The Sunset Review
of PURA by the Texas legislature in 1995 is expected to include several of the
key issues involved in this case. Through its involvement at the legislature and
the PUC, the Company will continue to pursue the possibility of offering
flexible rates.
In October 1994, the Company filed an application for approval by the PUC of
its Integrated Resource Plan (IRP) for the ten year period 1995-2004. The IRP
includes initiatives that address demand-side management resources, purchased
power, and future generating capacity that includes renewable energy sources.
The Company's IRP includes 288 megawatts (MW) of simple-cycle combustion
turbines, 1,514 MW of combined-cycle combustion turbines and 300 MW of wind or
other renewable resources. Assuming these units are financed by TU Electric
using traditional methods, approximately $200 million would be added to capital
expenditures in 1997. The Company's IRP also includes one lignite-fueled 750 MW
unit at Twin Oak. The second lignite-fueled Twin Oak unit has been deferred
beyond the ten-year planning period. Hearings on this application were concluded
in March 1995. The PUC's decision on the IRP is expected in mid-1995.
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION -- (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONCLUDED)
The Company's capital requirements have not been significantly affected by
the requirements of the federal Clean Air Act, as amended (Clean Air Act).
Although the Company is unable to fully determine the cost of compliance with
the Clean Air Act, it is not expected to have a significant impact on the
Company. During 1994, installation of continuous emissions monitoring systems
was completed at a total cost of approximately $38 million. Any additional
required capital costs, as well as any increased operating costs, associated
with these new requirements or compliance measures are expected to be
recoverable through rates, as similar costs have been recovered in the past. The
Company's environmental expenditures for 1995 are estimated to be $58 million.
The National Energy Policy Act of 1992 (Energy Act) addresses a wide range of
energy issues and is intended to increase competition in electric generation and
broaden access to electric transmission systems. The PUC has initiated a
generic rule making proceeding to address transmission issues within Texas. In
addition, legislation is currently being considered by the Texas legislature
which, if enacted, could impact the structure of the PUC and its regulatory
practices and could lead to increased competition in some aspects of the
electric utility industry. Although the Company is unable to predict the
ultimate impact of the Energy Act and any related regulations or any potential
state legislation or PUC regulation on its operations, it believes that such
actions are consistent with the trend toward increased competition in the energy
industry.
While the Company has experienced competitive pressures in the wholesale
market resulting in approximately 379 MW loss of load since the beginning of
1993, wholesale sales represented a relatively low percentage of total operating
revenues in 1994. The Company is unable to predict the extent of future
competitive developments in either the wholesale or retail markets or what
impact, if any, such developments may have on its operations.
RESULTS OF OPERATION
The following compares operating results for the three- and twelve-month
periods ended March 31, 1995 with the same periods ended March 31, 1994.
Operating revenues decreased approximately 4% and less than 1% for
the three- and twelve-month periods ended March 31, 1995, respectively. The
following table details the factors contributing to these changes:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
-------------------
FACTORS THREE MONTHS ENDED TWELVE MONTHS ENDED
------- ------------------ -------------------
THOUSANDS OF DOLLARS
<S> <C> <C>
Base rate revenue (billed).......................... $(21,919) $ 220,625
Fuel revenue........................................ (20,084) (142,002)
Power cost recovery factor revenue.................. (3,522) (34,244)
Unbilled revenue and other.......................... (11,318) (45,634)
-------- ---------
Total $(56,843) $ (1,255)
======== =========
</TABLE>
Base rate revenue decreased for the three-month period and increased for the
twelve-month period. Energy sales decreased approximately 2% and increased
approximately 1% for the three- and twelve-month periods, respectively. The
effect on energy sales and base rate revenue for both periods was primarily a
result of mild weather conditions and loss of wholesale power sales, partially
offset by an increase in customers and billing cycle days. For the twelve-month
period, the rate increase placed in effect in August 1993 increased base rate
revenues over the prior period. The decrease in fuel revenue for both periods
was primarily due to a reduction in gas prices and, for the twelve-month period,
increased nuclear generation as compared to the prior period. The decrease in
unbilled revenue and other in both periods resulted from milder weather
conditions than the prior period and an increase in the number of billing days.
18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)
RESULTS OF OPERATION -- (CONCLUDED)
Fuel and purchased power expense decreased approximately 6% and 9% for the
three-and twelve-month periods, respectively,primarily due to a reduction in gas
prices, purchased power commitments and, for the twelve-month period, increased
utilization of nuclear fuel.
Total operating expenses, excluding fuel and purchased power, decreased
approximately 4% and increased approximately 2% for the three- and twelve-month
periods, respectively. Combined operation and maintenance expense decreased for
both periods due primarily to a decrease in employee benefit expenses and, for
the twelve-month period, a reduction in inventory adjustments taken in the prior
period. For the twelve-month period, such decrease was partially offset by the
effect of the commencement of commercial operation of Unit 2 of Comanche Peak
and the amortization of voluntary retirement/severance costs. Taxes other than
income decreased for the three-month period due primarily to a reduction in
franchise, state gross receipts and estimated ad valorem taxes. The increase in
the twelve-month period was due to increased local gross receipts taxes
resulting from higher tax rates and increased gross receipts revenues partially
offset by a reduction in estimated ad valorem taxes.
Allowance for funds used during construction (AFUDC) decreased 5% and 87% for
the three- and twelve-month periods, respectively. The decrease in the twelve-
month period was primarily due to the discontinuation of the accrual of AFUDC on
Unit 2 of Comanche Peak when such unit achieved commercial operation in August
1993.
The regulatory disallowance in the prior twelve-month period reflects charges
resulting from a settlement agreement among the parties in Docket 11735.
Federal income taxes -- other income increased for the twelve-month period
primarily due to the effect from the prior period of recording the taxes
associated with the regulatory disallowances on Unit 2 of Comanche Peak.
Total interest charges, excluding AFUDC, decreased approximately 6% and 5%
for the three- and twelve-month periods, respectively. Interest on mortgage
bonds decreased over the prior periods as a result of reduced interest
requirements due to the Company's refinancing efforts, partially offset by
increased interest requirements for new issues sold. Interest on other long-term
debt reflects the continuing retirement of debt incurred on the purchases of the
minority ownership interests in Comanche Peak. Other interest expense increased
in both periods due to increased average short-term borrowings and increased
amortization of debt issuance expenses and redemption premiums.
The major factors affecting net income for the twelve-month period were the
implementation of the rate increase offset by the discontinuation of AFUDC on
Comanche Peak Unit 2 and the commencement of depreciation on approximately $668
million of investment in Comanche Peak Unit 2 incurred after the end of the
Docket 11735 test year which is not being recovered currently in rates. The
major factors affecting net income for the three-month period were continuing
cost reduction efforts partially offset by mild weather conditions. Net income
before preferred dividends increased approximately 3% and 60% for the three- and
twelve-month periods, respectively.
Preferred stock dividends decreased approximately 16% and 14% for the three-
and twelve-month periods, respectively, primarily due to the redemption of
certain series with higher dividend rates.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONCLUDED)
ACCOUNTING CHANGE
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (Statement 121) was issued. Statement 121 is effective for
financial statements for fiscal years beginning after December 15, 1995 and
prescribes a methodology for assessing and measuring impairments in the carrying
value of certain assets. As a result of such standard, the Company will be
subject to a more formal standard for assessing asset impairment in the future.
20
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
RATE PROCEEDINGS
Reference is made herein to Note 6 to Condensed Financial Statements and Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operation contained in Part I of this Report regarding Rate Proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Filed as a part of Part II are:
15 -- Letter from Deloitte & Touche LLP as to unaudited interim
financial information.
27 -- Financial Data Schedule.
99(a) -- Amendment, dated as of April 28, 1995, to the Competitive
Advance and Revolving Credit Facility Agreement, Facility A,
dated as of April 29, 1994, among the Company, Texas
Utilities, certain banks and Chemical Bank and Texas Commerce
Bank National Association, as Agents.
99(b) -- Amendment, dated as of April 28, 1995 to the Competitive
Advance and Revolving Credit Facility Agreement, Facility B,
dated as of April 29, 1994, among the Company, Texas
Utilities, certain banks and Chemical Bank and Texas Commerce
Bank National Association, as Agents.
99(c) -- Fifty-second Supplemental Indenture, dated as of April 1,
1995, to the Texas Utilities Electric Company Mortgage and
Deed of Trust, dated as of December 1, 1983, between Texas
Utilities Electric Company and Irving Trust Company (now The
Bank of New York), Trustee.
(b) Reports on Form 8-K filed since December 31, 1994 are as follows:
None
21
<PAGE>
SIGNATURE
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.
TEXAS UTILITIES ELECTRIC COMPANY
By /s/ Marc D. Moseley
----------------------------
Marc D. Moseley
Controller and
Principal Accounting Officer
Date: May 10, 1995
22
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION OF EXHIBIT PAGE
- - ------- ---------------------- ------------
<S> <C>
15 -- Letter from Deloitte & Touche LLP as to
unaudited interim financial information.
27 -- Financial Data Schedule.
99(a) -- Amendment, dated as of April 28, 1995, to the
Competitive Advance and Revolving Credit
Facility Agreement, Facility A, dated as of
April 29, 1994, among the Company, Texas
Utilities, certain banks and Chemical Bank and
Texas Commerce Bank National Association, as
Agents.
99(b) -- Amendment, dated as of April 28, 1995, to the
Competitive Advance and Revolving Credit
Facility Agreement, Facility B, dated as of
April 29, 1994, among the Company, Texas
Utilities, certain banks and Chemical Bank and
Texas Commerce Bank National Association, as
Agents.
99(c) -- Fifty-second Supplemental Indenture, dated as
of April 1, 1995, to the Texas Utilities
Electric Company Mortgage and Deed of Trust,
dated as of December 1, 1983, between Texas
Utilities Electric Company and Irving Trust
Company (now The Bank of New York), Trustee.
</TABLE>
23
<PAGE>
[DELOITTE & TOUCHE LLP LETTERHEAD APPEARS HERE]
Texas Utilities Electric Company:
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited condensed interim
financial information of Texas Utilities Electric Company for the periods ended
March 31, 1995 and 1994, as indicated in our report dated May 10, 1995; because
we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, is
incorporated by reference in Registration Statements No. 33-68100, 33-69554 and
33-83976 on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Dallas, Texas
May 10, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF INCOME, CONDENSED STATEMENTS OF CASH FLOWS, AND
CONDENSED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,930,235
<OTHER-PROPERTY-AND-INVEST> 76,451
<TOTAL-CURRENT-ASSETS> 516,905
<TOTAL-DEFERRED-CHARGES> 1,811,787
<OTHER-ASSETS> (72,685)
<TOTAL-ASSETS> 19,262,693
<COMMON> 5,166,125
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 845,211
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,011,336
312,891
855,869
<LONG-TERM-DEBT-NET> 7,491,023
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 132,000
<LONG-TERM-DEBT-CURRENT-PORT> 40,167
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,419,407
<TOT-CAPITALIZATION-AND-LIAB> 19,262,693
<GROSS-OPERATING-REVENUE> 1,233,772
<INCOME-TAX-EXPENSE> 47,444
<OTHER-OPERATING-EXPENSES> 930,937
<TOTAL-OPERATING-EXPENSES> 978,381
<OPERATING-INCOME-LOSS> 255,391
<OTHER-INCOME-NET> 1,520
<INCOME-BEFORE-INTEREST-EXPEN> 256,911
<TOTAL-INTEREST-EXPENSE> 155,153
<NET-INCOME> 101,758
23,546
<EARNINGS-AVAILABLE-FOR-COMM> 78,212
<COMMON-STOCK-DIVIDENDS> 180,320
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 350,910
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99(a)
AMENDMENT dated as of April 28, 1995 (this "Amendment") to
the Competitive Advance and Revolving Credit Facility Agreement
"Facility A" (the "Agreement"), dated as of April 29, 1994, among
TEXAS UTILITIES COMPANY, a Texas corporation ("TU"); TEXAS
UTILITIES ELECTRIC COMPANY, a Texas corporation and a wholly
owned subsidiary of TU ("TU Electric" and, together with TU, the
"Borrowers"); the lenders listed in Schedule 2.01 to the
Agreement (the "Lenders"); CHEMICAL BANK, a New York banking
corporation ("Chemical"), as Competitive Advance Facility Agent
(in such capacity, the "CAF Agent"); and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association ("TCB"), as
administrative agent for the Lenders (in such capacity, the
"Administrative Agent"; and, together with the CAF Agent, the
"Agents").
A. The Borrowers have requested that the Lenders agree to extend the
maturity of the Agreement, and in connection therewith to amend certain
provisions of the Agreement.
B. The Lenders are willing, on the terms, subject to the conditions
and to the extent set forth below, to extend the maturity of the Agreement and
to agree to such amendments.
In consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto hereby agree, on the terms and
subject to the conditions set forth herein, as follows:
SECTION 1. Amendments. (a) Section 1.01 of the Agreement is hereby
-----------
amended by deleting therefrom the definitions of "Applicable Margin", "Borrowing
Percentage", "Facility Fee Percentage" and "Maturity Date" and replacing each
with the following respective definitions:
"Applicable Margin" shall mean .325% per annum.
-----------------
"Borrowing Percentage" shall mean (a) in the case of TU, 40%, and in
--------------------
the case of TU Electric, 100%.
"Facility Fee Percentage" shall mean .125% per annum.
-----------------------
"Maturity Date" shall mean the date that is 364 days after the
-------------
Amendment Effective Date or if such date
<PAGE>
2
is not a Business Day, the Business Day immediately preceding such date.
(b) Section 1.01 of the Agreement is hereby amended by adding thereto
after the definition of "Alternate Base Rate" the following definition:
"Amendment Effective Date" shall mean the date on which each condition
------------------------
to effectiveness set forth in Section 3 of the Amendment to this Agreement,
dated as of April 28, 1995, has been satisfied.
(c) Section 2.05(b) of the Agreement is hereby deleted and replaced
with the following phrase: "(b) [Intentionally omitted.]"
(d) Each reference to the "Utilization Fee" contained in the
Agreement is hereby deleted.
(e) Each reference in Section 3.05 to "December 31, 1993", is hereby
replaced with a reference to "December 31, 1994", and the reference in Section
3.05(a) to "TU's 1993 Form 10-K" is hereby replaced with a reference to "TU's
1994 Annual Report on Form 10-K".
(f) The reference in Section 3.06 to "Schedule 3.06" is hereby
replaced with a reference to "Schedule 3.06 to the Amendment to this Agreement,
dated as of April 28, 1995,".
SECTION 2. Representations and Warranties. Each Borrower represents
-------------------------------
and warrants as of the Amendment Effective Date to each of the Lenders and the
Agents that:
(a) Before and after giving effect to this Amendment, the
representations and warranties set forth in Section 3 of the Agreement, as
amended hereby, are true and correct in all material respects with the same
effect as if made on the Amendment Effective Date, except to the extent
such representations and warranties expressly relate to an earlier date.
(b) Before and after giving effect to this Amendment, no Event of
Default or Default has occurred and is continuing.
SECTION 3. Conditions to Effectiveness. This Amendment shall become
----------------------------
effective as of the Amendment Effective Date when (a) the Administrative Agent
shall have received counterparts of this Amendment that, when taken together,
bear the signatures of the Borrowers, all the
<PAGE>
3
Lenders and the Agents and (b) the conditions set forth in paragraphs (a)
through (d) of Section 4.02 of the Agreement in respect of the Effective Date
for the Agreement shall have been satisfied mutatis mutandis in respect of this
------- --------
Amendment as of the Amendment Effective Date, provided the Amendment Effective
--------
Date shall not occur after April 28, 1995.
SECTION 4. Agreement. Except as specifically stated herein, the
----------
provisions of the Agreement are and shall remain in full force and effect. As
used therein, the terms "Agreement", "herein", "hereunder", "hereinafter",
"hereto", "hereof" and words of similar import shall, unless the context
otherwise requires, refer to the Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
---------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment may be executed in two or
-------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
SECTION 7. Expenses. The Borrower agrees to reimburse the Agents for
---------
all out-of-pocket expenses incurred by them in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Agents.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
TEXAS UTILITIES COMPANY,
as Borrower,
by /s/ Cathryn Hulen
------------------------
Name: Cathryn Hulen
Title: Treasurer
<PAGE>
4
TEXAS UTILITIES ELECTRIC COMPANY,
as Borrower,
by /s/ Cathryn Hulen
------------------------
Name: Cathryn Hulen
Title: Treasurer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and
as Administrative Agent,
by /s/ Allen K. King
------------------------
Name: Allen K. King
Title: Vice President
CHEMICAL BANK, individually
and as CAF Agent,
by /s/ Ronald Potter
------------------------
Name: Ronald Potter
Title: Managing Director
BANK OF AMERICA NT & SA,
by /s/ Robert Eaton
------------------------
Name: Robert Eaton
Title: Vice President
THE BANK OF NEW YORK,
by /s/ Nathan S. Howard
------------------------
Name: Nathan S. Howard
Title: Vice President
THE BANK OF TOKYO, LTD.,
by /s/ John M. Mearns
------------------------
Name: John M. Mearns
Title: Vice President &
Manager
<PAGE>
5
THE CHASE MANHATTAN BANK, N.A.,
by /s/ Marc D. Galligan
--------------------------
Name: Marc D. Galligan
Title: Vice President
CIBC INC.,
by /s/ Robert S. Lyle
--------------------------
Name: Robert S. Lyle
Title: Vice President
CITIBANK, N.A.,
by /s/ Anita J. Brickell
--------------------------
Name: Anita J. Brickell
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Robert Ivosevich
----------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE FIRST NATIONAL BANK OF
CHICAGO,
by /s/ T. Thomas Cheng
----------------------------
Name: T. Thomas Cheng
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY,
by /s/ Robert W. Ramage, Jr.
----------------------------
Name: Robert W. Ramage, Jr.
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
by /s/ John J. Sullivan
----------------------------
Name: John J. Sullivan
Title: Joint General Manager
<PAGE>
6
MELLON BANK, N.A.,
by /s/ A. J. Sabatelle
--------------------------
Name: A. J. Sabatelle
Title: Vice President
THE MITSUBISHI BANK, LTD.,
HOUSTON AGENCY,
by /s/ Shoji Honda
--------------------------
Name: Shoji Honda
Title: General Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by /s/ Shigeki Sakanoue
--------------------------
Name: Shigeki Sakanoue
Title: Vice President &
Manager
NATIONSBANK OF TEXAS, N.A.,
by /s/ Bryan L. Diers
--------------------------
Name: Bryan L. Diers
Title: Senior Vice
President
THE SANWA BANK, LIMITED,
DALLAS AGENCY,
by /s/ Robert S. Smith
--------------------------
Name: Robert S. Smith
Title: Asst Vice
President
SOCIETE GENERALE, SOUTHWEST
AGENCY,
by /s/ Christopher J.Speltz
--------------------------
Name: Christopher J. Speltz
Title: Vice President
<PAGE>
7
THE SUMITOMO BANK, LIMITED,
by /s/ Tatsuo Ueda
--------------------------
Name: Tatsuo Ueda
Title: General Manager
THE TOKAI BANK, LIMITED,
by /s/ Masaharu Muto
--------------------------
Name: Masaharu Muto
Title: Deputy General
Manager
UNION BANK OF SWITZERLAND,
by /s/ Alfred W. Imholz
--------------------------
Name: Alfred W. Imholz
Title: Managing Director
by /s/ Jan Buettgen
--------------------------
Name: Jan Buettgen
Title: Corporate Banking
<PAGE>
SCHEDULE 3.06
TO AMENDMENT
DATED AS OF APRIL 28, 1995
Litigation
----------
None.
<PAGE>
AMENDMENT dated as of April 28, 1995 (this "Amendment") to
the Competitive Advance and Revolving Credit Facility Agreement
"Facility B" (the "Agreement"), dated as of April 29, 1994, among
TEXAS UTILITIES COMPANY, a Texas corporation ("TU"); TEXAS
UTILITIES ELECTRIC COMPANY, a Texas corporation and a wholly
owned subsidiary of TU ("TU Electric" and, together with TU, the
"Borrowers"); the lenders listed in Schedule 2.01 to the
Agreement (the "Lenders"); CHEMICAL BANK, a New York banking
corporation ("Chemical"), as Competitive Advance Facility Agent
(in such capacity, the "CAF Agent"); and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association ("TCB"), as
administrative agent for the Lenders (in such capacity, the
"Administrative Agent"; and, together with the CAF Agent, the
"Agents").
A. The Borrowers have requested that the Lenders agree to extend the
maturity of the Agreement, and in connection therewith to amend certain
provisions of the Agreement.
B. The Lenders are willing, on the terms, subject to the conditions
and to the extent set forth below, to extend the maturity of the Agreement and
to agree to such amendments.
In consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto hereby agree, on the terms and
subject to the conditions set forth herein, as follows:
SECTION 1. Amendments. (a) Section 1.01 of the Agreement is hereby
-----------
amended by:
(i) Deleting therefrom the definitions of "Borrowing Percentage" and
"Maturity Date" and replacing each with the following respective
definitions:
"Borrowing Percentage" shall mean (a) in the case of TU, 40%, and
--------------------
in the case of TU Electric, 100%.
"Maturity Date" shall mean the fifth anniversary of the Amendment
-------------
Effective Date or if such anniversary does not occur on a Business
Day,
<PAGE>
the Business Day immediately preceding such anniversary.
(ii) Deleting from the chart contained in the definition of
"Applicable Margin" the references to the Category 1 Applicable Margin of
.2500% and the Category 2 Applicable Margin of .2750% and replacing them
with .2250% and .2500%, respectively.
(iii) Deleting from the chart contained in the definition of
"Facility Fee Percentage" the references to the Category 1 Facility Fee
Percentage of .1750% and the Category 2 Facility Fee Percentage of .2250%
and replacing them with .1500% and .2000%, respectively.
(b) Section 1.01 of the Agreement is hereby amended by adding thereto
after the definition of "Alternate Base Rate" the following definition:
"Amendment Effective Date" shall mean the date on which each condition
------------------------
to effectiveness set forth in Section 3 of the Amendment to this Agreement,
dated as of April 28, 1995, has been satisfied.
(c) Section 2.05(b) of the Agreement is hereby deleted and replaced
with the following phrase: "(b) [Intentionally omitted.]"
(d) Each reference to the "Utilization Fee" contained in the
Agreement is hereby deleted.
(e) Each reference in Section 3.05 to "December 31, 1993", is hereby
replaced with a reference to "December 31, 1994", and the reference in Section
3.05(a) to "TU's 1993 Form 10-K" is hereby replaced with a reference to "TU's
1994 Annual Report on Form 10-K".
(f) The reference in Section 3.06 to "Schedule 3.06" is hereby
replaced with a reference to "Schedule 3.06 to the Amendment to this Agreement,
dated as of April 28, 1995,".
SECTION 2. Representations and Warranties. Each Borrower represents
-------------------------------
and warrants as of the Amendment Effective Date to each of the Lenders and the
Agents that:
(a) Before and after giving effect to this Amendment, the
representations and warranties set forth in Section 3 of the Agreement, as
amended hereby, are true and correct in all material respects with the same
effect as if made on the Amendment Effective Date,
<PAGE>
except to the extent such representations and warranties expressly relate
to an earlier date.
(b) Before and after giving effect to this Amendment, no Event of
Default or Default has occurred and is continuing.
SECTION 3. Conditions to Effectiveness. This Amendment shall become
----------------------------
effective as of the Amendment Effective Date when (a) the Administrative Agent
shall have received counterparts of this Amendment that, when taken together,
bear the signatures of the Borrowers, all the Lenders and the Agents and (b) the
conditions set forth in paragraphs (a) through (d) of Section 4.02 of the
Agreement in respect of the Effective Date for the Agreement shall have been
satisfied mutatis mutandis in respect of this Amendment as of the Amendment
------- --------
Effective Date, provided the Amendment Effective Date shall not occur after
--------
April 28, 1995.
SECTION 4. Agreement. Except as specifically stated herein, the
----------
provisions of the Agreement are and shall remain in full force and effect. As
used therein, the terms "Agreement", "herein", "hereunder", "hereinafter",
"hereto", "hereof" and words of similar import shall, unless the context
otherwise requires, refer to the Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
---------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment may be executed in two or
-------------
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
SECTION 7. Expenses. The Borrower agrees to reimburse the Agents for
---------
all out-of-pocket expenses incurred by them in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Agents.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first written above.
TEXAS UTILITIES COMPANY,
as Borrower,
by /s/ Cathryn Hulen
--------------------------
Name: Cathryn Hulen
Title: Treasurer
TEXAS UTILITIES ELECTRIC COMPANY,
as Borrower,
by /s/ H. Dan Farell
--------------------------
Name: H. Dan Farell
Title: Senior Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and
as Administrative Agent,
by /s/ Allen K. King
--------------------------
Name: Allen K. King
Title: Vice President
CHEMICAL BANK, individually
and as CAF Agent,
by /s/ Ronald Potter
--------------------------
Name: Ronald Potter
Title: Managing Director
BANK OF AMERICA NT & SA,
by /s/ Robert Eaton
--------------------------
Name: Robert Eaton
Title: Vice President
<PAGE>
THE BANK OF NEW YORK,
by /s/ Nathan S. Howard
--------------------------
Name: Nathan S. Howard
Title: Vice President
THE BANK OF TOKYO, LTD.,
by /s/ John M. Mearns
--------------------------
Name: John M. Mearns
Title: Vice President &
Manager
THE CHASE MANHATTAN BANK, N.A.,
by /s/ Marc D. Galligan
__________________________
Name: Marc D. Galligan
Title: Vice President
CIBC INC.,
by /s/ Robert S. Lyle
--------------------------
Name: Robert S. Lyle
Title: Vice President
CITIBANK, N.A.,
by /s/ Anita J. Brickell
--------------------------
Name: Anita J. Brickell
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Robert Ivosevich
--------------------------
Name: Robert Ivosevich
Title: Sr. Vice President
THE FIRST NATIONAL BANK OF
CHICAGO,
by /s/ T. Thomas Cheng
--------------------------
Name: T. Thomas Cheng
Title: Vice President
<PAGE>
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY,
by /s/ Robert W. Ramage, Jr.
----------------------------
Name: Robert W. Ramage, Jr.
Title: Sr. Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
by /s/ John J. Sullivan
----------------------------
Name: John J. Sullivan
Title: Joint General Manager
MELLON BANK, N.A.,
by /s/ A. J. Sabatelle
----------------------------
Name: A. J. Sabatelle
Title: Vice President
THE MITSUBISHI BANK, LTD.,
HOUSTON AGENCY,
by /s/ Shoji Honda
----------------------------
Name: Shoji Honda
Title: General Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by /s/ Shigeki Sakanoue
----------------------------
Name: Shigeki Sakanoue
Title: First V.P. & Manager
NATIONSBANK OF TEXAS, N.A.,
by /s/ Bryan L. Diers
----------------------------
Name: Bryan L. Diers
Title: Sr. Vice President
<PAGE>
THE SANWA BANK, LIMITED,
DALLAS AGENCY,
by /s/ Robert S. Smith
-----------------------------
Name: Robert S. Smith
Title: Asst. Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY,
by /s/ Christopher J. Speltz
-----------------------------
Name: Christopher J. Speltz
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by /s/ Tatsuo Ueda
-----------------------------
Name: Tatsuo Ueda
Title: General Manager
THE TOKAI BANK, LIMITED,
by /s/ Masaharu Muto
-----------------------------
Name: Masaharu Muto
Title: Deputy General Manager
UNION BANK OF SWITZERLAND,
by /s/ Alfred W. Imholz
-----------------------------
Name: Alfred W. Imholz
Title: Managing Director
by /s/ Jan Buettgen
-----------------------------
Name: Jan Buettgen
Title: Vice President
Corporate Banking
<PAGE>
SCHEDULE 3.06
TO AMENDMENT
DATED AS OF APRIL 28, 1995
Litigation
----------
None.
<PAGE>
================================================================================
TEXAS UTILITIES ELECTRIC COMPANY
--------------------------------
TO
THE BANK OF NEW YORK,
(FORMERLY IRVING TRUST COMPANY)
TRUSTEE UNDER THE TEXAS UTILITIES
ELECTRIC COMPANY MORTGAGE AND
DEED OF TRUST, DATED AS OF
DECEMBER 1, 1983
__________________
FIFTY-SECOND SUPPLEMENTAL INDENTURE
PROVIDING AMONG OTHER THINGS FOR
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES S DUE APRIL 1, 2030
AND
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES T DUE APRIL 1, 2030
__________________
DATED AS OF APRIL 1, 1995
================================================================================
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
<PAGE>
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
FIFTY-SECOND SUPPLEMENTAL INDENTURE
_________________________________
INDENTURE, dated as of April 1, 1995, between TEXAS UTILITIES ELECTRIC
COMPANY, a corporation of the State of Texas, whose address is Energy Plaza,
1601 Bryan Street, Dallas, Texas 75201 (hereinafter sometimes called the
Company), and THE BANK OF NEW YORK (formerly Irving Trust Company), a
corporation of the State of New York, whose address is 101 Barclay Street, New
York, New York 10286 (hereinafter sometimes called the Trustee), Trustee under
the Mortgage and Deed of Trust, dated as of December 1, 1983 (hereinafter called
the Original Indenture, the Original Indenture and any and all indentures and
instruments supplemental thereto being hereinafter sometimes collectively called
the Mortgage), which Original Indenture was executed and delivered by the
Company to secure the payment of bonds issued or to be issued under and in
accordance with the provisions of the Mortgage, reference to which Mortgage is
made, this Indenture (hereinafter called the Fifty-second Supplemental
Indenture) being supplemental thereto;
WHEREAS, said Original Indenture was recorded or filed as required in the
State of Texas; and
WHEREAS, the Company executed and delivered to the Trustee the following
supplemental indentures:
<TABLE>
<CAPTION>
DESIGNATION DATED AS OF
----------- -----------
<S> <C>
First Supplemental Indenture................................. April 1, 1984
Second Supplemental Indenture................................ September 1, 1984
Third Supplemental Indenture................................. April 1, 1985
Fourth Supplemental Indenture................................ August 1, 1985
Fifth Supplemental Indenture................................. September 1, 1985
Sixth Supplemental Indenture................................. December 1, 1985
Seventh Supplemental Indenture............................... March 1, 1986
Eighth Supplemental Indenture................................ May 1, 1986
Ninth Supplemental Indenture................................. October 1, 1986
Tenth Supplemental Indenture................................. December 1, 1986
Eleventh Supplemental Indenture.............................. December 1, 1986
Twelfth Supplemental Indenture............................... February 1, 1987
Thirteenth Supplemental Indenture............................ March 1, 1987
Fourteenth Supplemental Indenture............................ April 1, 1987
Fifteenth Supplemental Indenture............................. July 1, 1987
Sixteenth Supplemental Indenture............................. September 1, 1987
Seventeenth Supplemental Indenture........................... October 1, 1987
Eighteenth Supplemental Indenture............................ March 1, 1988
Nineteenth Supplemental Indenture............................ May 1, 1988
</TABLE>
<PAGE>
2
<TABLE>
DESIGNATION DATED AS OF
----------- -----------
<S> <C>
Twentieth Supplemental Indenture........................... September 1, 1988
Twenty-first Supplemental Indenture........................ November 1, 1988
Twenty-second Supplemental Indenture....................... January 1, 1989
Twenty-third Supplemental Indenture........................ August 1, 1989
Twenty-fourth Supplemental Indenture....................... November 1, 1989
Twenty-fifth Supplemental Indenture........................ December 1, 1989
Twenty-sixth Supplemental Indenture........................ February 1, 1990
Twenty-seventh Supplemental Indenture...................... September 1, 1990
Twenty-eighth Supplemental Indenture....................... October 1, 1990
Twenty-ninth Supplemental Indenture........................ October 1, 1990
Thirtieth Supplemental Indenture........................... March 1, 1991
Thirty-first Supplemental Indenture........................ May 1, 1991
Thirty-second Supplemental Indenture....................... July 1, 1991
Thirty-third Supplemental Indenture........................ February 1, 1992
Thirty-fourth Supplemental Indenture....................... April 1, 1992
Thirty-fifth Supplemental Indenture........................ April 1, 1992
Thirty-sixth Supplemental Indenture........................ June 1, 1992
Thirty-seventh Supplemental Indenture...................... June 1, 1992
Thirty-eighth Supplemental Indenture....................... August 1, 1992
Thirty-ninth Supplemental Indenture........................ October 1, 1992
Fortieth Supplemental Indenture............................ November 1, 1992
Forty-first Supplemental Indenture......................... December 1, 1992
Forty-second Supplemental Indenture........................ March 1, 1993
Forty-third Supplemental Indenture......................... April 1, 1993
Forty-fourth Supplemental Indenture........................ April 1, 1993
Forty-fifth Supplemental Indenture......................... May 1, 1993
Forty-sixth Supplemental Indenture......................... July 1, 1993
Forty-seventh Supplemental Indenture....................... October 1, 1993
Forty-eighth Supplemental Indenture........................ November 1, 1993
Forty-ninth Supplemental Indenture......................... May 1, 1994
Fiftieth Supplemental Indenture............................ May 1, 1994
Fifty-first Supplemental Indenture......................... August 1, 1994
</TABLE>
which supplemental indentures were or are to be recorded or filed as required in
the State of Texas; and
WHEREAS, by the Original Indenture, the Company covenanted that it would
execute and deliver such supplemental indenture or indentures and such further
instruments and do such further acts as may be necessary or proper to carry out
more effectually the purposes of the Mortgage and to make subject to the Lien of
the Mortgage any property thereafter acquired and intended to be subject to the
Lien thereof; and
WHEREAS, in addition to the property described in the Original Indenture,
the Company has acquired certain other property, rights and interests in
property; and
WHEREAS, the Company has heretofore issued as of March 31, 1995, in
accordance with the provisions of the Original Indenture, as heretofore
supplemented, the following series of First Mortgage and Collateral Trust Bonds:
<PAGE>
3
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
Series Issued Outstanding
------ ---------------- -----------
<S> <C> <C>
12% Series due March 1, 1985.......................... $ 1,000,000 $ None
13 5/8% Series due April 1, 2014...................... 100,000,000 None
13 1/2% Series due September 1, 2014.................. 150,000,000 None
12 7/8% Series due April 1, 2015...................... 150,000,000 None
12% Series due August 1, 2015......................... 100,000,000 None
12% Series due September 1, 2015...................... 75,000,000 None
11 1/8% Series due December 1, 2015................... 150,000,000 None
9 3/8% Series due March 1, 2016....................... 200,000,000 None
9 3/4% Series due May 1, 2016......................... 200,000,000 None
7 3/4% Pollution Control Series C..................... 70,000,000 70,000,000
8 1/4% Pollution Control Series D..................... 200,000,000 200,000,000
9 1/2% Series due December 1, 2016.................... 300,000,000 None
9 1/4% Series due February 1, 2017.................... 250,000,000 None
7 7/8% Pollution Control Series E..................... 100,000,000 100,000,000
10 1/2% Series due April 1, 2017...................... 250,000,000 None
9 1/2% Series due July 1, 1997........................ 150,000,000 None
10 1/2% Series due July 1, 2017....................... 150,000,000 None
9% Pollution Control Series F......................... 55,000,000 55,000,000
9% Pollution Control Series G......................... 12,000,000 12,000,000
9 7/8% Pollution Control Series H..................... 112,000,000 112,000,000
9 1/4% Pollution Control Series I..................... 100,000,000 100,000,000
10 3/8% Series due May 1, 1998........................ 150,000,000 None
11 3/8% Series due May 1, 2018........................ 150,000,000 None
Secured Medium-Term Notes, Series A................... 300,000,000 30,000,000
10.44% Series due November 1, 2008.................... 150,000,000 150,000,000
8 1/4% Pollution Control Series J..................... 100,000,000 100,000,000
9 1/2% Series due August 1, 1999...................... 200,000,000 200,000,000
10% Series due August 1, 2019......................... 100,000,000 None
9 7/8% Series due November 1, 2019.................... 150,000,000 86,050,000
Secured Medium-Term Notes, Series B................... 150,000,000 130,000,000
8 1/8% Pollution Control Series K..................... 50,000,000 50,000,000
8 1/8% Pollution Control Series L..................... 40,000,000 40,000,000
10 5/8% Series due September 1, 2020.................. 250,000,000 250,000,000
Secured Medium-Term Notes, Series C................... 150,000,000 125,000,000
8 1/4% Pollution Control Series due October 1, 2020... 11,000,000 11,000,000
7 7/8% Pollution Control Series due March 1, 2021..... 100,000,000 100,000,000
9 3/4% Series due May 1, 2021......................... 300,000,000 300,000,000
0% Pollution Control Series M due June 1, 2021........ 86,250,000 None
0% Pollution Control Series N due June 1, 2021........ 57,500,000 None
0% Pollution Control Series O due June 1, 2021........ 57,500,000 None
0% Pollution Control Series P due June 1, 2021........ 115,000,000 115,000,000
8 1/8% Series due February 1, 2002.................... 150,000,000 150,000,000
8 7/8% Series due February 1, 2022.................... 175,000,000 175,000,000
8 1/4% Series due April 1, 2004....................... 100,000,000 100,000,000
9% Series due April 1, 2022........................... 100,000,000 100,000,000
6 3/4% Pollution Control Series due April 1, 2022..... 50,000,000 50,000,000
7 1/8% Series due June 1, 1997........................ 150,000,000 150,000,000
</TABLE>
<PAGE>
4
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
Series Issued Outstanding
------ ------------ -----------
<S> <C> <C>
8% Series due June 1, 2002............................ $147,000,000 $147,000,000
6 5/8% Pollution Control Series due June 1, 2022...... 33,000,000 33,000,000
6 3/8% Series due August 1, 1997...................... 175,000,000 175,000,000
7 3/8% Series due August 1, 2001...................... 150,000,000 150,000,000
8 1/2% Series due August 1, 2024...................... 175,000,000 175,000,000
6.70% Pollution Control Series due October 1, 2022.... 16,935,000 16,935,000
6.55% Pollution Control Series due October 1, 2022.... 40,000,000 40,000,000
7 3/8% Series due November 1, 1999.................... 100,000,000 100,000,000
8 3/4% Series due November 1, 2023.................... 200,000,000 200,000,000
6 1/2% Pollution Control Series due December 1, 2027.. 46,660,000 46,660,000
6 3/4% Series due March 1, 2003....................... 200,000,000 200,000,000
7 7/8% Series due March 1, 2023....................... 300,000,000 300,000,000
6.05% Pollution Control Series due April 1, 2025...... 90,000,000 90,000,000
6.10% Pollution Control Series due April 1, 2028...... 50,000,000 50,000,000
5 7/8% Series due April 1, 1998....................... 175,000,000 175,000,000
6 3/4% Series due April 1, 2003....................... 100,000,000 100,000,000
7 7/8% Series due April 1, 2024....................... 225,000,000 225,000,000
0% Pollution Control Series due June 1, 2023.......... 115,000,000 115,000,000
5 3/4% Series due July 1, 1998........................ 150,000,000 150,000,000
6 3/4% Series due July 1, 2005........................ 100,000,000 100,000,000
7 5/8% Series due July 1, 2025........................ 250,000,000 250,000,000
5 1/2% Series due October 1, 1998..................... 125,000,000 125,000,000
6 1/4% Series due October 1, 2004..................... 125,000,000 125,000,000
7 3/8% Series due October 1, 2025..................... 300,000,000 300,000,000
5 1/2% Pollution Control Series due May 1,2022........ 50,000,000 50,000,000
5.55% Pollution Control Series due May 1, 2022........ 75,000,000 75,000,000
5.85% Pollution Control Series due May 1, 2022........ 33,465,000 33,465,000
Floating Rate Series due May 1, 1999.................. 300,000,000 300,000,000
Pollution Control Series Q due May 1, 2029............ 45,045,500 45,045,500
Pollution Control Series R due May 1, 2029............ 45,045,500 45,045,500
0% Series due 1994.................................... 1,013,831,000 None
</TABLE>
which bonds are also hereinafter sometimes called bonds of the First through
Seventy-eighth Series, respectively; and
WHEREAS, Section 2.01 of the Original Indenture provides that the form of
each series of bonds (other than the First Series) issued thereunder and of the
coupons to be attached to coupon bonds of such series shall be established by
Resolution of the Board of Directors of the Company, and that the form of such
series, as established by said Board of Directors, shall specify the descriptive
title of the bonds and various other terms thereof, and may also have such
omissions or modifications or contain such provisions not prohibited by the
provisions of the Mortgage as the Board of Directors may, in its discretion,
cause to be inserted therein expressing or referring to the terms and conditions
upon which such bonds are to be issued and/or secured under the Mortgage; and
<PAGE>
5
WHEREAS, Section 22.04 of the Original Indenture provides, among other
things, that any power, privilege or right expressly or impliedly reserved to or
in any way conferred upon the Company by any provision of the Mortgage, whether
such power, privilege or right is in any way restricted or is unrestricted, may
be in whole or in part waived or surrendered or subjected to any restriction if
at the time unrestricted, or to additional restriction if already restricted,
and the Company may enter into any further covenants, limitations, restrictions
or provisions for the benefit of any one or more series of bonds issued
thereunder, or the Company may cure any ambiguity contained therein, or in any
supplemental indenture, or may establish the terms and provisions of any series
of bonds other than the First Series, by an instrument in writing executed and
acknowledged by the Company in such manner as would be necessary to entitle a
conveyance of real estate to be recorded in all of the states in which any
property at the time subject to the Lien of the Mortgage shall be situated; and
WHEREAS, the Company now desires to create two new series of bonds and to
add to its covenants and agreements contained in the Mortgage certain other
covenants and agreements to be observed by it and to alter and amend in certain
respects the covenants and provisions contained in the Mortgage; and
WHEREAS, the execution and delivery by the Company of this Fifty-second
Supplemental Indenture, and the terms of the bonds of the Seventy-ninth and
Eightieth Series, hereinafter referred to, have been duly authorized by the
Board of Directors of the Company by appropriate resolutions of said Board of
Directors;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That the Company, in
consideration of the premises and of Ten Dollars to it duly paid by the Trustee
at or before the ensealing and delivery of these presents, the receipt whereof
is hereby acknowledged, and in order to secure the payment of both the principal
of and interest and premium, if any, on the bonds from time to time issued under
the Mortgage, according to their tenor and effect and the performance of all the
provisions of the Mortgage (including any instruments supplemental thereto and
any modification made as in the Mortgage provided) and of said bonds, hath
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
hypothecated, affected, pledged, set over and confirmed and granted a security
interest in and by these presents doth grant, bargain, sell, release, convey,
assign, transfer, mortgage, hypothecate, affect, pledge, set over and confirm
and grant a security interest in (subject, however, to Excepted Encumbrances as
defined in Section 1.06 of the Original Indenture) unto The Bank of New York,
Trustee under the Mortgage, and to its successor or successors in said trust,
and to said Trustee and its successors and assigns forever, all properties of
the Company, real, personal and mixed, of the kind or nature specifically
mentioned in the Original Indenture, as heretofore supplemented, or of any other
kind or nature acquired by the Company on or after the date of the execution and
delivery of the Original Indenture (except any herein or in the Original
Indenture expressly excepted), now owned or, subject to the provisions of
Section 18.03 of the Original Indenture, hereafter acquired by the Company (by
purchase, consolidation, merger, donation, construction, erection or in any
other way) and wheresoever situated, including (without in anywise limiting or
impairing by the enumeration of the same, the scope and intent of the foregoing
or of any
<PAGE>
6
general description contained in this Fifty-second Supplemental Indenture) all
real estate, lands, easements, servitudes, licenses, permits, franchises,
privileges, rights of way and other rights in or relating to real estate or the
occupancy of the same; all power sites, flowage rights, water rights, water
locations, water appropriations, ditches, flumes, reservoirs, reservoir sites,
canals, raceways, waterways, dams, dam sites, aqueducts, and all other rights or
means for appropriating, conveying, storing and supplying water; all rights of
way and roads; all plants for the generation of electricity by steam, water
and/or other power; all power houses, gas plants, street lighting systems,
standards and other equipment incidental thereto; all telephone, radio and
television systems, air-conditioning systems and equipment incidental thereto,
water wheels, water works, water systems, steam heat and hot water plants,
substations, lines, service and supply systems, bridges, culverts, tracks, ice
or refrigeration plants and equipment, offices, buildings and other structures
and the equipment thereof; all machinery, engines, boilers, dynamos, turbines,
electric, gas and other machines, prime movers, regulators, meters,
transformers, generators (including, but not limited to, engine driven
generators and turbo-generator units), motors, electrical, gas and mechanical
appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains
and pipes, service pipes, fittings, valves and connections, pole and
transmission lines, towers, overhead conductors and devices, underground
conduits, underground conductors and devices, wires, cables, tools, implements,
apparatus, storage battery equipment, and all other fixtures and personalty; all
municipal and other franchises, consents or permits; all lines for the
transmission and distribution of electric current, gas, steam heat or water for
any purpose including towers, poles, wires, cables, pipes, conduits, ducts and
all apparatus for use in connection therewith and (except as herein or in the
Original Indenture expressly excepted) all the right, title and interest of the
Company in and to all other property of any kind or nature appertaining to
and/or used and/or occupied and/or enjoyed in connection with any property
hereinbefore or in the Original Indenture described.
TOGETHER WITH all and singular the tenements, hereditaments, prescriptions,
servitudes and appurtenances belonging or in anywise appertaining to the
aforesaid property or any part thereof, with the reversion and reversions,
remainder and remainders and (subject to the provisions of Section 13.01 of the
Original Indenture) the tolls, rents, revenues, issues, earnings, income,
product and profits thereof, and all the estate, right, title and interest and
claim whatsoever, at law as well as in equity, which the Company now has or may
hereafter acquire in and to the aforesaid property and franchises and every part
and parcel thereof.
IT IS HEREBY AGREED by the Company that, subject to the provisions of
Section 18.03 of the Original Indenture, all the property, rights and franchises
acquired by the Company (by purchase, consolidation, merger, donation,
construction, erection or in any other way) after the date hereof, except any
herein or in the Original Indenture expressly excepted, shall be and are as
fully granted and conveyed hereby and as fully embraced within the Lien of the
Original Indenture and the Lien hereof as if such property, rights and
franchises were now owned by the Company and were specifically described herein
and conveyed hereby.
<PAGE>
7
PROVIDED that the following are not and are not intended to be now or
hereafter granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder, nor
is a security interest therein hereby or by the Original Indenture, as
heretofore supplemented, granted or intended to be granted, and the same are
hereby expressly excepted from the Lien and operation of the Original Indenture,
as heretofore supplemented, and from the Lien and operation of this Fifty-second
Supplemental Indenture, viz.: (1) cash, shares of stock, bonds, notes and other
obligations and other securities not hereinbefore or hereafter specifically
pledged, paid, deposited, delivered or held under the Mortgage or covenanted so
to be; (2) merchandise, equipment, apparatus, materials or supplies held for the
purpose of sale or other disposition in the usual course of business or for the
purpose of repairing or replacing (in whole or in part) any rolling stock,
buses, motor coaches, automobiles or other vehicles or aircraft or boats, ships,
or other vessels and any fuel, oil and similar materials and supplies consumable
in the operation of any of the properties of the Company; rolling stock, buses,
motor coaches, automobiles and other vehicles and all aircraft; boats, ships and
other vessels; all timber, minerals, mineral rights and royalties; (3) bills,
notes and other instruments and accounts receivable, judgments, demands, general
intangibles and choses in action, and all contracts, leases and operating
agreements not specifically pledged hereunder or under the Mortgage or
covenanted so to be; (4) the last day of the term of any lease or leasehold
which may hereafter become subject to the Lien of the Mortgage; (5) electric
energy, gas, water, steam, ice, and other materials or products generated,
manufactured, produced, or purchased by the Company for sale, distribution or
use in the ordinary course of its business; (6) any natural gas wells or natural
gas leases or natural gas transportation lines or other works or property used
primarily and principally in the production of natural gas or its
transportation, primarily for the purpose of sale to natural gas customers or to
a natural gas distribution or pipeline company, up to the point of connection
with any distribution system; and (7) the Company's franchise to be a
corporation; provided, however, that the property and rights expressly excepted
from the Lien and operation of the Original Indenture and this Fifty-second
Supplemental Indenture in the above subdivisions (2) and (3) shall (to the
extent permitted by law) cease to be so excepted in the event and as of the date
that the Trustee or a receiver or trustee shall enter upon and take possession
of the Mortgaged and Pledged Property in the manner provided in Article XV of
the Original Indenture by reason of the occurrence of a Default.
TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted,
bargained, sold, released, conveyed, assigned, transferred, mortgaged,
hypothecated, affected, pledged, set over or confirmed or in which a security
interest has been granted by the Company as aforesaid, or intended so to be
(subject, however, to Excepted Encumbrances as defined in Section 1.06 of the
Original Indenture), unto The Bank of New York, Trustee, and its successors and
assigns forever.
IN TRUST NEVERTHELESS, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants as
are set forth in the Original Indenture, as heretofore supplemented, this Fifty-
second Supplemental Indenture being supplemental to the Original Indenture.
<PAGE>
8
AND IT IS HEREBY COVENANTED by the Company that all the terms, conditions,
provisos, covenants and provisions contained in the Original Indenture, as
heretofore supplemented, shall affect and apply to the property hereinbefore
described and conveyed and to the estate, rights, obligations and duties of the
Company and the Trustee and the beneficiaries of the trust with respect to said
property, and to the Trustee and its successors as Trustee of said property, in
the same manner and with the same effect as if said property had been owned by
the Company at the time of the execution of the Original Indenture, and had been
specifically and at length described in and conveyed to said Trustee by the
Original Indenture as a part of the property therein stated to be conveyed.
The Company further covenants and agrees to and with the Trustee and its
successors in said trust under the Mortgage, as follows:
ARTICLE I
SEVENTY-NINTH SERIES OF BONDS
SECTION 1. There shall be a series of bonds designated "Pollution Control
Series S due April 1, 2030" (herein sometimes referred to as the "Seventy-ninth
Series"), each of which shall also bear the descriptive title "First Mortgage
Bond", and the form thereof, which shall be established by Resolution of the
Board of Directors of the Company, shall contain suitable provisions with
respect to the matters hereinafter in this Section specified. Bonds of the
Seventy-ninth Series shall mature on April 1, 2030, shall not bear interest and
shall be issued as fully registered bonds in denominations of Five Hundred
Dollars and, at the option of the Company, in any multiple or multiples thereof
(the exercise of such option to be evidenced by the execution and delivery
thereof); the principal of each said bond to be payable at the office or agency
of the Company in the Borough of Manhattan, The City of New York, New York, or
at the office or agency of the Company in the City of Dallas, Texas, as the
holder of any said bond may elect, in such coin or currency of the United States
of America as at the time of payment is legal tender for public and private
debts. Bonds of the Seventy-ninth Series shall be dated as in Section 2.03 of
the Original Indenture provided.
(I) The bonds of the Seventy-ninth Series shall be initially issued in the
aggregate principal amount of $58,270,500 to, and registered in the name of, the
trustee under the Trust Indenture, dated as of April 1, 1995 (hereinafter
sometimes called the "1995 Brazos Revenue Bond Indenture"), of the Brazos River
Authority (hereinafter sometimes called the "Brazos Authority"), under which its
Collateralized Pollution Control Revenue Bonds (Texas Utilities Electric Company
Project) Series 1995A (hereinafter sometimes called the "Series 1995A Brazos
Revenue Bonds") are to be issued, in order to provide the benefit of a lien to
secure the obligation of the Company to make the Installment Payments and
Purchase Price payments pursuant to, and as such terms are defined in, the
Installment Sale and Bond Amortization Agreement, dated as of April 1, 1995
(hereinafter sometimes called the "1995 Brazos Agreement"), between the Brazos
Authority and the Company.
<PAGE>
9
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Seventy-ninth Series, whether at
maturity, upon redemption or otherwise, in an amount equal to 115% of the sum of
(a) the amount, if any, on deposit in the Debt Service Fund maintained under the
1995 Brazos Revenue Bond Indenture which reduces the corresponding Installment
Payment and (b) the amount, if any, paid by the Company pursuant to Section 5.04
of the 1995 Brazos Agreement in respect of the corresponding Installment
Payment.
The Trustee may conclusively presume that the obligation of the Company to
pay the principal of the bonds of the Seventy-ninth Series as the same shall
become due and payable shall have been fully satisfied and discharged unless and
until it shall have received a written notice from the trustee under the 1995
Brazos Revenue Bond Indenture, signed by its President, a Vice President, an
Assistant Vice President or a Trust Officer, stating that the corresponding
Installment Payment or Purchase Price payment has become due and payable and has
not been fully paid and specifying the amount of funds required to make such
payment.
(II) In the event that any Series 1995A Brazos Revenue Bonds outstanding
under the 1995 Brazos Revenue Bond Indenture shall become immediately due and
payable pursuant to Section 6.02 of the 1995 Brazos Revenue Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1995 Brazos
Revenue Bond Indenture, all bonds of the Seventy-ninth Series, then Outstanding,
shall be redeemed by the Company, on the date such Series 1995A Brazos Revenue
Bonds shall have become immediately due and payable, at the principal amount
thereof.
The Trustee may conclusively presume that no redemption of bonds of the
Seventy-ninth Series is required pursuant to the first paragraph of this
subsection (II) unless and until it shall have received a written notice from
the trustee under the 1995 Brazos Revenue Bond Indenture, signed by its
President, a Vice President, an Assistant Vice President or a Trust Officer,
stating that Series 1995A Brazos Revenue Bonds have become immediately due and
payable pursuant to Section 6.02 of the 1995 Brazos Revenue Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1995 Brazos
Revenue Bond Indenture and specifying the principal amount thereof. Said notice
shall also contain a waiver of notice of such redemption by the trustee under
the 1995 Brazos Revenue Bond Indenture, as the holder of all bonds of the
Seventy-ninth Series then Outstanding.
(III) The Company hereby waives its right to have any notice of redemption
pursuant to subsection (II) of this Section 1 state that such notice is subject
to the receipt of the redemption moneys by the Trustee on or before the date
fixed for redemption. Notwithstanding the provisions of Section 12.02 of the
Mortgage, any such notice under such subsection shall not be conditional.
(IV) At the option of the registered owner, any bonds of the Seventy-
ninth Series, upon surrender thereof for cancellation at the office or agency of
the Company in the Borough of Manhattan, The City of New York, New York, shall
be exchangeable
<PAGE>
10
for a like aggregate principal amount of bonds of the same series of other
authorized denominations.
Bonds of the Seventy-ninth Series shall not be transferrable except to any
successor trustee under the 1995 Brazos Revenue Bond Indenture, any such
transfer to be made at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York.
The Company hereby waives any right to make a charge for any exchange or
transfer of bonds of the Seventy-ninth Series.
ARTICLE II
EIGHTIETH SERIES OF BONDS
SECTION 2. There shall be a series of bonds designated "Pollution Control
Series T due April 1, 2030" (herein sometimes referred to as the "Eightieth
Series"), each of which shall also bear the descriptive title "First Mortgage
Bond", and the form thereof, which shall be established by Resolution of the
Board of Directors of the Company, shall contain suitable provisions with
respect to the matters hereinafter in this Section specified. Bonds of the
Eightieth Series shall mature on April 1, 2030, shall not bear interest and
shall be issued as fully registered bonds in denominations of Five Hundred
Dollars and, at the option of the Company, in any multiple or multiples thereof
(the exercise of such option to be evidenced by the execution and delivery
thereof); the principal of each said bond to be payable at the office or agency
of the Company in the Borough of Manhattan, The City of New York, New York, or
at the office or agency of the Company in the City of Dallas, Texas, as the
holder of any said bond may elect, in such coin or currency of the United States
of America as at the time of payment is legal tender for public and private
debts. Bonds of the Eightieth Series shall be dated as in Section 2.03 of the
Original Indenture provided.
(I) The bonds of the Eightieth Series shall be initially issued in the
aggregate principal amount of $18,400,000 to, and registered in the name of, the
trustee under the Trust Indenture, dated as of April 1, 1995 (hereinafter
sometimes called the "1995 Sabine Revenue Bond Indenture"), of the Sabine River
Authority of Texas (hereinafter sometimes called the "Sabine Authority"), under
which its Collateralized Pollution Control Revenue Bonds (Texas Utilities
Electric Company Project) Series 1995A (hereinafter sometimes called the "Series
1995A Sabine Revenue Bonds") are to be issued, in order to provide the benefit
of a lien to secure the obligation of the Company to make the Installment
Payments and Purchase Price payments pursuant to, and as such terms are defined
in, the Installment Sale and Bond Amortization Agreement, dated as of April 1,
1995 (hereinafter sometimes called the "1995 Sabine Agreement"), between the
Sabine Authority and the Company.
<PAGE>
11
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eightieth Series, whether at
maturity, upon redemption or otherwise, in an amount equal to 115% of the sum of
(a) the amount, if any, on deposit in the Debt Service Fund maintained under the
1995 Sabine Revenue Bond Indenture which reduces the corresponding Installment
Payment and (b) the amount, if any, paid by the Company pursuant to Section 5.04
of the 1995 Sabine Agreement in respect of the corresponding Installment
Payment.
The Trustee may conclusively presume that the obligation of the Company to
pay the principal of the bonds of the Eightieth Series as the same shall become
due and payable shall have been fully satisfied and discharged unless and until
it shall have received a written notice from the trustee under the 1995 Sabine
Revenue Bond Indenture, signed by its President, a Vice President, an Assistant
Vice President or a Trust Officer, stating that the corresponding Installment
Payment or Purchase Price payment has become due and payable and has not been
fully paid and specifying the amount of funds required to make such payment.
(II) In the event that any Series 1995A Sabine Revenue Bonds outstanding
under the 1995 Sabine Revenue Bond Indenture shall become immediately due and
payable pursuant to Section 6.02 of the 1995 Sabine Revenue Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1995 Sabine
Revenue Bond Indenture, all bonds of the Eightieth Series, then Outstanding,
shall be redeemed by the Company, on the date such Series 1995A Sabine Revenue
Bonds shall have become immediately due and payable, at the principal amount
thereof.
The Trustee may conclusively presume that no redemption of bonds of the
Eightieth Series is required pursuant to the first paragraph of this subsection
(II) unless and until it shall have received a written notice from the trustee
under the 1995 Sabine Revenue Bond Indenture, signed by its President, a Vice
President, an Assistant Vice President or a Trust Officer, stating that Series
1995A Sabine Revenue Bonds have become immediately due and payable pursuant to
Section 6.02 of the 1995 Sabine Revenue Bond Indenture, upon the occurrence of
an Event of Default under Section 6.01(a) of the 1995 Sabine Revenue Bond
Indenture and specifying the principal amount thereof. Said notice shall also
contain a waiver of notice of such redemption by the trustee under the 1995
Sabine Revenue Bond Indenture, as the holder of all bonds of the Eightieth
Series then Outstanding.
(III) The Company hereby waives its right to have any notice of redemption
pursuant to subsection (II) of this Section 2 state that such notice is subject
to the receipt of the redemption moneys by the Trustee on or before the date
fixed for redemption. Notwithstanding the provisions of Section 12.02 of the
Mortgage, any such notice under such subsection shall not be conditional.
(IV) At the option of the registered owner, any bonds of the Eightieth
Series, upon surrender thereof for cancellation at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York, shall be
exchangeable
<PAGE>
12
for a like aggregate principal amount of bonds of the same series of other
authorized denominations.
Bonds of the Eightieth Series shall not be transferrable except to any
successor trustee under the 1995 Sabine Revenue Bond Indenture, any such
transfer to be made at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York.
The Company hereby waives any right to make a charge for any exchange or
transfer of bonds of the Eightieth Series.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3. Subject to the amendments provided for in this Fifty-second
Supplemental Indenture, the terms defined in the Original Indenture, as
heretofore supplemented, shall for all purposes of this Fifty-second
Supplemental Indenture have the meanings specified in the Original Indenture, as
heretofore supplemented.
SECTION 4. The Trustee hereby accepts the trusts herein declared,
provided, created or supplemented and agrees to perform the same upon the terms
and conditions herein and in the Original Indenture, as heretofore supplemented,
set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Fifty-second Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made by the Company solely. In general, each and every term and
condition contained in Article XIX of the Original Indenture shall apply to and
form part of this Fifty-second Supplemental Indenture with the same force and
effect as if the same were herein set forth in full with such omissions,
variations and insertions, if any, as may be appropriate to make the same
conform to the provisions of this Fifty-second Supplemental Indenture.
SECTION 5. Whenever in this Fifty-second Supplemental Indenture either of
the parties hereto is named or referred to, this shall, subject to the
provisions of Articles XVIII and XIX of the Original Indenture, be deemed to
include the successors and assigns of such party, and all the covenants and
agreements in this Fifty-second Supplemental Indenture contained, by or on
behalf of the Company, or by or on behalf of the Trustee, shall, subject as
aforesaid, bind and inure to the respective benefits of the respective
successors and assigns of such parties, whether so expressed or not.
SECTION 6. Nothing in this Fifty-second Supplemental Indenture expressed
or implied, is intended, or shall be construed to confer upon, or to give to,
any person, firm or corporation, other than the parties hereto and the holders
of the bonds and coupons Outstanding under the Mortgage, any right, remedy or
claim under or by reason of this
<PAGE>
13
Fifty-second Supplemental Indenture or any covenant, condition, stipulation,
promise or agreement hereof, and all the covenants, conditions, stipulations,
promises and agreements in this Fifty-second Supplemental Indenture contained,
by or on behalf of the Company, shall be for the sole and exclusive benefit of
the parties hereto, and of the holders of the bonds and coupons Outstanding
under the Mortgage.
SECTION 7. This Fifty-second Supplemental Indenture shall be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
<PAGE>
14
IN WITNESS WHEREOF, TEXAS UTILITIES ELECTRIC COMPANY has caused its
corporate name to be hereunto affixed, and this instrument to be signed and
sealed by its Chairman of the Board and Chief Executive, President or one of its
Vice Presidents, and its corporate seal to be attested by its Secretary or one
of its Assistant Secretaries for and in its behalf, and THE BANK OF NEW YORK has
caused its corporate name to be hereunto affixed, and this instrument to be
signed and sealed by one of its Vice Presidents or Assistant Vice Presidents and
its corporate seal to be attested by one of its Assistant Vice Presidents,
Assistant Secretaries or Assistant Treasurers, all as of the day and year first
above written.
TEXAS UTILITIES ELECTRIC COMPANY
By /s/ H. Dan Farrell
------------------------------
H. DAN FARELL
Senior Vice President
Attest:
/s/ Glen H. Hibbs
- - -----------------------------------
GLEN H. HIBBS
Assistant Secretary
Executed, sealed and delivered by
TEXAS UTILITIES ELECTRIC COMPANY
in the presence of:
/s/ W.E Patterson
- - -----------------------------------
/s/ Donna Rakestraw
- - -----------------------------------
<PAGE>
15
THE BANK OF NEW YORK,
Trustee
By /s/ W.N Gitlin
-------------------------------
W. N. GITLIN
Vice President
Attest:
/s/ Robert F. McIntyre
- - ---------------------------------------
ROBERT F. MCINTYRE
Assistant Vice President
Executed, sealed and delivered by
THE BANK OF NEW YORK
in the presence of:
[ Signatures to come]
- - ---------------------------------------
[ Signatures to come]
- - ---------------------------------------
<PAGE>
16
STATE OF TEXAS )
) SS.:
COUNTY OF DALLAS )
Before me, a Notary Public in and for said State, on this day personally
appeared H. DAN FARELL, known to me to be the person whose name is subscribed to
the foregoing instrument and known to me to be a Senior Vice President of TEXAS
UTILITIES ELECTRIC COMPANY, a Texas corporation, and acknowledged to me that
said person executed said instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this 12th day of April, 1995.
/s/ Lenae B. Davis
---------------------------------------------
LENAE B. DAVIS
Notary Public, State of Texas
My Commission Expires June 23, 1996
[Stamp of Lenae B. Davis appears here]
<PAGE>
17
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said State, on this day personally
appeared W.N. GITLIN, known to me to be the person whose name is subscribed to
the foregoing instrument and known to me to be a Vice President of THE BANK OF
NEW YORK, a New York corporation, and acknowledged to me that said person
executed said instrument for the purposes and consideration therein expressed,
and as the act of said corporation.
Given under my hand and seal of office this 13th day of April, 1995.
/s/ William J. Cassels
------------------------------------
WILLIAM J. CASSELS
Notary Public, State of New York
No. 01CA5027729
Qualified in Bronx County
Certificate filed in New York County
Commission Expires May 16, 1996
