<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 JUNE 30, 1995
-- OR --
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------
TEXAS UTILITIES COMPANY
A Texas Corporation I.R.S. Employer Identification
Commission File Number 1-3591 No. 75-0705930
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
(214) 812-4600
TEXAS UTILITIES ELECTRIC COMPANY
A Texas Corporation I.R.S. Employer Identification
Commission File Number 0-11442 No. 75-1837355
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
(214) 812-4600
-----------------------------------------
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes X No
--------- ---------
COMMON STOCK OUTSTANDING AT JULY 31, 1995:
Texas Utilities Company: 225,841,037 shares, without par value.
Texas Utilities Electric Company: 156,800,000 shares, without par value.
THIS COMBINED FORM 10-Q IS FILED SEPARATELY BY TEXAS UTILITIES COMPANY AND TEXAS
UTILITIES ELECTRIC COMPANY. INFORMATION CONTAINED HEREIN RELATING TO AN
INDIVIDUAL REGISTRANT IS FILED BY THAT REGISTRANT ON ITS OWN BEHALF EXCEPT THAT
THE INFORMATION WITH RESPECT TO TEXAS UTILITIES ELECTRIC COMPANY, OTHER THAN THE
FINANCIAL STATEMENTS OF TEXAS UTILITIES ELECTRIC COMPANY, IS FILED BY EACH OF
TEXAS UTILITIES ELECTRIC COMPANY AND TEXAS UTILITIES COMPANY. NEITHER TEXAS
UTILITIES ELECTRIC COMPANY NOR TEXAS UTILITIES COMPANY MAKES ANY REPRESENTATIONS
AS TO INFORMATION FILED BY THE OTHER REGISTRANT.
===============================================================================
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
Condensed Statements of Consolidated Income
Three, Six and Twelve Months Ended June 30, 1995 and 1994.... 3
Condensed Statements of Consolidated Cash Flows
Six Months Ended June 30, 1995 and 1994...................... 4
Condensed Consolidated Balance Sheets
June 30, 1995 and December 31, 1994.......................... 5
TEXAS UTILITIES ELECTRIC COMPANY
Condensed Statements of Income
Three, Six and Twelve Months Ended June 30, 1995 and 1994.... 7
Condensed Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994...................... 8
Condensed Balance Sheets
June 30, 1995 and December 31, 1994.......................... 9
NOTES TO CONDENSED FINANCIAL STATEMENTS........................ 11
INDEPENDENT ACCOUNTANTS' REPORTS............................... 18
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation................................. 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................ 24
Item 4. Submission of Matters to a Vote of Security Holders...... 24
Item 5. Other Information........................................ 25
Item 6. Exhibits and Reports on Form 8-K......................... 25
SIGNATURES................................................................. 26
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
----------------------- --------------------- ----------------------
1995 1994 1995 1994 1995 1994
------- -------- ------- ------- ------- -------
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES......... $1,353,998 $1,436,738 $2,598,263 $2,740,836 $5,520,970 $5,776,902
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Fuel and purchased power. 392,277 434,303 782,869 851,589 1,660,372 1,856,420
Operation................ 203,862 210,301 399,478 427,332 844,417 865,716
Maintenance.............. 65,970 82,942 134,801 155,321 284,421 357,636
Depreciation and
amortization............ 139,245 137,100 278,159 273,698 554,001 497,602
Federal income taxes..... 81,861 81,565 124,634 124,796 316,905 357,390
Taxes other than income.. 130,339 144,972 269,307 292,634 535,744 557,023
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 1,013,554 1,091,183 1,989,248 2,125,370 4,195,860 4,491,787
---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME........... 340,444 345,555 609,015 615,466 1,325,110 1,285,115
---------- ---------- ---------- ---------- ---------- ----------
OTHER INCOME (LOSS)
Allowance for equity
funds used during
construction............ 6 3,092 (48) 5,981 4,746 41,574
Regulatory disallowances. -- -- -- -- -- (359,556)
Other income and
deductions -- net....... 4,388 6,912 9,124 16,238 20,490 33,119
Federal income taxes..... (2,717) (1,413) (5,662) (4,649) (10,657) 90,671
---------- ---------- ---------- ---------- ---------- ----------
Total other income (loss) 1,677 8,591 3,414 17,570 14,579 (194,192)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL INCOME............... 342,121 354,146 612,429 633,036 1,339,689 1,090,923
---------- ---------- ---------- ---------- ---------- ----------
INTEREST CHARGES
Interest on mortgage bonds 135,241 141,603 272,228 290,294 549,477 596,323
Interest on other
long-term debt........... 27,276 23,542 50,405 47,320 95,609 100,582
Other interest............ 14,580 19,431 30,985 33,498 64,295 49,744
Allowance for borrowed
funds used during
construction............. (4,643) (2,647) (9,813) (5,121) (15,953) (31,935)
---------- ---------- ---------- ---------- ---------- ----------
Total interest charges. 172,454 181,929 343,805 365,991 693,428 714,714
PREFERRED STOCK DIVIDENDS
OF SUBSIDIARY............. 21,235 25,990 44,781 54,072 92,592 110,359
---------- ---------- ---------- ---------- ---------- ----------
CONSOLIDATED NET INCOME.... $ 148,432 $ 146,227 $ 223,843 $ 212,973 $ 553,669 $ 265,850
========== ========== ========== ========== ========== ==========
Average shares of common
stock outstanding
(thousands)............... 225,841 225,841 225,841 225,826 225,841 224,719
Earnings and dividends
per share of common stock:
Earnings (on average
shares outstanding).... $ 0.66 $ 0.65 $ 0.99 $ 0.94 $ 2.45 $ 1.18
Dividends declared per
share of common stock.. $ 0.77 $ 0.77 $ 1.54 $ 1.54 $ 3.08 $ 3.08
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
3
<PAGE>
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1995 1994
-------- --------
THOUSANDS OF DOLLARS
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income....................... $223,843 $212,973
Adjustments to reconcile consolidated net
income to cash provided by operating
activities:
Depreciation and amortization
(including amounts charged to fuel)........ 352,533 350,237
Deferred federal income taxes -- net........ 98,176 60,877
Federal investment tax credits -- net....... (11,518) (14,410)
Allowance for equity funds used during
construction............................... 48 (5,981)
Changes in operating assets and liabilities:
Receivables............................... (65,329) (70,725)
Inventories............................... 4,810 17,003
Accounts payable.......................... 45,426 (18,605)
Interest and taxes accrued................ (48,393) (79,173)
Other working capital..................... (40,923) 30,128
Over/(under)-recovered fuel
revenue -- net of deferred taxes......... 85,388 (21,991)
Other -- net.............................. (9,911) 48,471
-------- --------
Cash provided by operating activities... 634,150 508,804
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds........................ 317,176 378,340
Other long-term debt........................ 300,000 --
Common stock................................ -- 62,102
Retirement of long-term debt and
preferred stock.............................. (501,251) (851,406)
Change in notes payable....................... (64,781) 320,335
Common stock dividends paid................... (347,861) (347,795)
Debt premium, discount, financing and
reacquisition expenses....................... (44,672) (11,013)
-------- --------
Cash used in financing activities....... (341,389) (449,437)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures..................... (199,428) (200,949)
Allowance for equity funds used during
construction (excluding amount for
nuclear fuel)................................ (48) 2,485
Change in construction
receivables/payables -- net.................. 1,328 (390)
-------- --------
Cash construction expenditures.......... (198,148) (198,854)
Non-utility property -- net................... (63,039) (15,655)
Nuclear fuel (excluding allowance for equity
funds used during construction).............. (18,552) (27,911)
Other investments............................. (13,185) (9,159)
-------- --------
Cash used in investing activities....... (292,924) (251,579)
NET CHANGE IN CASH AND CASH EQUIVALENTS....... (163) (192,212)
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE 7,426 212,584
-------- --------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE... $ 7,263 $ 20,372
======== ========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
4
<PAGE>
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
(UNAUDITED)
----------- ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
UTILITY PLANT
In service:
Production............................................................ $16,520,207 $16,516,326
Transmission.......................................................... 1,588,824 1,573,634
Distribution.......................................................... 4,145,969 4,048,867
General............................................................... 446,173 456,212
----------- -----------
Total............................................................. 22,701,173 22,595,039
Less accumulated depreciation........................................... 5,232,948 5,023,003
----------- -----------
Utility plant in service less accumulated depreciation............ 17,468,225 17,572,036
Construction work in progress........................................... 271,833 1,060,731
Nuclear fuel (net of accumulated amortization: 1995 -- $246,944,000;
1994 -- $205,420,000).................................................. 275,991 298,964
Held for future use (Note 6)............................................ 853,074 46,197
----------- -----------
Utility plant less accumulated depreciation and amortization...... 18,869,123 18,977,928
Less reserve for regulatory disallowances (Note 5)...................... 1,308,460 1,308,460
----------- -----------
Net utility plant................................................. 17,560,663 17,669,468
----------- -----------
INVESTMENTS
Non-utility property.................................................... 632,376 569,337
Other investments....................................................... 135,746 122,906
----------- -----------
Total investments................................................. 768,122 692,243
----------- -----------
CURRENT ASSETS
Cash in banks........................................................... 7,263 7,426
Special deposits........................................................ 1,006 1,002
Accounts receivable:
Customers.............................................................. 269,647 201,687
Other.................................................................. 35,327 38,712
Allowance for uncollectible accounts................................... (4,341) (5,095)
Inventories -- at average cost:
Materials and supplies................................................. 195,277 194,271
Fuel stock............................................................. 139,846 145,662
Prepaid taxes........................................................... 42,010 21,629
Other prepayments....................................................... 39,034 41,871
Deferred federal income taxes........................................... 37,355 37,113
Other current assets.................................................... 12,666 11,216
----------- -----------
Total current assets.............................................. 775,090 695,494
----------- -----------
DEFERRED DEBITS
Unamortized regulatory assets:
Debt reacquisition costs.............................................. 321,187 284,563
Cancelled lignite unit costs.......................................... 16,677 18,049
Rate case costs....................................................... 63,517 64,862
Litigation and settlement costs....................................... 72,685 72,685
Voluntary retirement/severance program................................ 170,339 184,340
Recoverable deferred federal income taxes -- net...................... 1,181,980 1,201,688
Other regulatory assets............................................... 15,178 15,939
Under-recovered fuel revenue........................................... -- 29,860
Other deferred debits.................................................. 70,692 36,902
----------- -----------
Total deferred debits............................................. 1,912,255 1,908,888
Less reserve for regulatory disallowances (Note 5)..................... 72,685 72,685
----------- -----------
Net deferred debits............................................... 1,839,570 1,836,203
----------- -----------
Total..................................................... $20,943,445 $20,893,408
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
5
<PAGE>
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
(UNAUDITED)
------------ ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
CAPITALIZATION
Common stock without par value -- net:
Authorized shares -- 500,000,000
Outstanding shares: 1995 -- 225,841,037; 1994 -- 225,841,037................ $ 4,802,844 $ 4,798,797
Retained earnings................................................................. 1,569,738 1,691,250
----------- -----------
Total common stock equity........................................... 6,372,582 6,490,047
Preferred stock:
Not subject to mandatory redemption......................................... 855,869 870,190
Subject to mandatory redemption............................................. 300,457 387,482
Long-term debt, less amounts due currently........................................ 8,130,245 7,888,413
----------- -----------
Total capitalization................................................ 15,659,153 15,636,132
----------- -----------
CURRENT LIABILITIES
Notes payable -- commercial paper................................................. 299,105 363,886
Long-term debt due currently...................................................... 58,126 74,610
Accounts payable.................................................................. 266,415 219,661
Dividends declared................................................................ 194,978 197,564
Customers' deposits............................................................... 61,287 56,391
Taxes accrued..................................................................... 207,198 243,753
Interest accrued.................................................................. 171,707 183,545
Over-recovered fuel revenue....................................................... 101,850 --
Other current liabilities......................................................... 71,029 95,329
----------- -----------
Total current liabilities........................................... 1,431,695 1,434,739
----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes......................................... 2,888,243 2,852,462
Unamortized federal investment tax credits........................................ 667,586 679,104
Other deferred credits and noncurrent liabilities................................. 296,768 290,971
----------- -----------
Total deferred credits and other noncurrent liabilities............. 3,852,597 3,822,537
COMMITMENTS AND CONTINGENCIES (Note 6)
----------- -----------
Total............................................................... $20,943,445 $20,893,408
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
6
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
------------------------- ------------------------- ------------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES.................. $1,341,245 $1,423,644 $2,575,017 $2,716,979 $5,471,212 $5,728,293
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Fuel and purchased power.......... 410,127 452,981 816,829 886,524 1,728,798 1,930,781
Operation......................... 189,939 194,610 377,471 397,488 793,040 804,988
Maintenance....................... 63,853 80,405 131,231 151,337 275,653 347,115
Depreciation and amortization..... 136,871 134,816 273,428 269,121 544,842 487,814
Federal income taxes.............. 87,580 86,061 135,024 134,918 338,570 377,323
Taxes other than income........... 124,254 139,188 257,022 279,891 511,561 533,448
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses..... 1,012,624 1,088,061 1,991,005 2,119,279 4,192,464 4,481,469
---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME.................... 328,621 335,583 584,012 597,700 1,278,748 1,246,824
---------- ---------- ---------- ---------- ---------- ----------
OTHER INCOME (LOSS)
Allowance for equity funds used
during construction.............. -- 3,085 (58) 5,968 4,717 41,552
Regulatory disallowances.......... -- -- -- -- -- (359,556)
Other income and deductions
-- net........................... 2,680 1,848 5,042 4,635 10,567 7,786
Federal income taxes.............. (808) (1,134) (1,592) (2,080) (3,734) 101,310
---------- ---------- ---------- ---------- ---------- ----------
Total other income (loss).... 1,872 3,799 3,392 8,523 11,550 (208,908)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL INCOME........................ 330,493 339,382 587,404 606,223 1,290,298 1,037,916
---------- ---------- ---------- ---------- ---------- ----------
INTEREST CHARGES
Interest on mortgage bonds........ 135,205 141,557 272,147 290,203 549,306 596,141
Interest on other long-term
debt............................. 12,823 8,058 21,422 16,141 37,464 37,755
Other interest.................... 12,887 18,060 27,667 31,884 58,414 46,365
Allowance for borrowed funds used
during construction.............. (4,641) (2,645) (9,809) (5,117) (15,943) (31,929)
---------- ---------- ---------- ---------- ---------- ----------
Total interest charges....... 156,274 165,030 311,427 333,111 629,241 648,332
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME.......................... 174,219 174,352 275,977 273,112 661,057 389,584
PREFERRED STOCK DIVIDENDS........... 21,235 25,990 44,781 54,072 92,592 110,359
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME AFTER PREFERRED
STOCK DIVIDENDS................... $ 152,984 $ 148,362 $ 231,196 $ 219,040 $ 568,465 $ 279,225
========== ========== ========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
7
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1995 1994
--------- ---------
THOUSANDS OF DOLLARS
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................................................. $275,977 $273,112
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization........................................................ 337,374 332,572
Deferred federal income taxes -- net................................................. 105,474 80,058
Federal investment tax credits -- net................................................ (10,730) (13,044)
Allowance for equity funds used during construction.................................. 58 (5,968)
Changes in operating assets and liabilities:
Receivables...................................................................... (59,401) (72,243)
Inventories...................................................................... (3,309) 4,846
Accounts payable................................................................. 16,439 (2,608)
Interest and taxes accrued....................................................... (48,370) (63,499)
Other working capital............................................................ (33,066) 26,713
Over/(under)-recovered fuel revenue -- net of deferred taxes..................... 85,388 (21,991)
Other -- net..................................................................... (18,692) 35,956
-------- --------
Cash provided by operating activities.................................... 647,142 573,904
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds................................................................. 317,176 378,340
Other long-term debt................................................................. 300,000 --
Common stock......................................................................... -- 249,600
Retirement of long-term debt and preferred stock........................................ (496,976) (773,440)
Change in notes receivable -- affiliates................................................ (30,614) (6,808)
Change in notes payable -- parent....................................................... -- (88,434)
Change in notes payable -- other........................................................ (64,781) 295,335
Preferred stock dividends paid.......................................................... (47,141) (55,804)
Common stock dividends paid............................................................. (360,640) (355,120)
Debt premium, discount, financing and reacquisition expenses............................ (44,672) (11,334)
-------- --------
Cash used in financing activities........................................ (427,648) (367,665)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures............................................................... (190,942) (190,557)
Allowance for equity funds used during construction (excluding amount for nuclear fuel). (58) 2,472
Change in construction receivables/payables -- net...................................... 1,328 449
-------- --------
Cash construction expenditures........................................... (189,672) (187,636)
Non-utility property -- net............................................................. 16 --
Nuclear fuel (excluding allowance for equity funds used during construction)............ (18,552) (27,911)
Other investments....................................................................... (11,423) (10,411)
-------- --------
Cash used in investing activities........................................ (219,631) (225,958)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS.................................................. (137) (19,719)
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE........................................... 6,699 27,929
-------- --------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE.............................................. $ 6,562 $ 8,210
======== ========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
8
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
(UNAUDITED)
------------- ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
ELECTRIC PLANT
In service:
Production............................................................. $15,560,887 $15,553,422
Transmission........................................................... 1,582,795 1,567,617
Distribution........................................................... 4,092,240 3,997,061
General................................................................ 414,501 425,973
----------- -----------
Total............................................................. 21,650,423 21,544,073
Less accumulated depreciation.......................................... 4,763,942 4,560,054
----------- -----------
Electric plant in service less accumulated depreciation........... 16,886,481 16,984,019
Construction work in progress........................................... 257,656 971,429
Nuclear fuel (net of accumulated amortization: 1995 -- $246,944,000;
1994 -- $205,420,000).................................................. 275,991 298,964
Held for future use (Note 6)............................................ 772,333 43,550
----------- -----------
Electric plant less accumulated depreciation and amortization..... 18,192,461 18,297,962
Less reserve for regulatory disallowances (Note 5)...................... 1,308,460 1,308,460
----------- -----------
Net electric plant................................................ 16,884,001 16,989,502
----------- -----------
INVESTMENTS............................................................... 82,492 71,085
----------- -----------
CURRENT ASSETS
Cash in banks.......................................................... 6,562 6,699
Special deposits....................................................... 552 527
Notes receivable - affiliates.......................................... 59,208 28,594
Accounts receivable:
Customers............................................................. 263,522 196,507
Other................................................................. 18,500 26,869
Allowance for uncollectible accounts.................................. (4,271) (5,026)
Inventories -- at average cost:
Materials and supplies................................................ 181,080 178,977
Fuel stock............................................................ 84,731 83,525
Prepaid taxes.......................................................... 41,856 21,614
Deferred federal income taxes.......................................... 37,444 37,202
Other current assets................................................... 15,306 16,379
----------- -----------
Total current assets.............................................. 704,490 591,867
----------- -----------
DEFERRED DEBITS
Unamortized regulatory assets:
Debt reacquisition costs............................................... 318,533 281,023
Cancelled lignite unit costs........................................... 16,677 18,049
Rate case costs........................................................ 63,517 64,862
Litigation and settlement costs........................................ 72,685 72,685
Voluntary retirement/severance program................................. 144,519 156,397
Recoverable deferred federal income taxes -- net....................... 1,188,599 1,208,833
Other regulatory assets................................................ 12,194 12,654
Under-recovered fuel revenue............................................. -- 29,860
Other deferred debits.................................................... 55,456 22,866
----------- -----------
Total deferred debits............................................. 1,872,180 1,867,229
Less reserve for regulatory disallowances (Note 5)....................... 72,685 72,685
----------- -----------
Net deferred debits............................................... 1,799,495 1,794,544
----------- -----------
Total..................................................... $19,470,478 $19,446,998
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
9
<PAGE>
TEXAS UTILITIES ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, 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............................................... 817,876 948,136
----------- -----------
Total common stock equity................................. 5,984,001 6,114,261
Preferred stock:
Not subject to mandatory redemption........................... 855,869 870,190
Subject to mandatory redemption............................... 300,457 387,482
Long-term debt, less amounts due currently...................... 7,465,841 7,220,641
----------- -----------
Total capitalization...................................... 14,606,168 14,592,574
----------- -----------
CURRENT LIABILITIES
Notes payable -- commercial paper................................ 299,105 363,886
Long-term debt due currently..................................... 40,263 56,037
Accounts payable:
Affiliates..................................................... 115,522 97,443
Other.......................................................... 112,832 113,144
Dividends declared............................................... 21,080 23,600
Customers' deposits.............................................. 60,640 55,726
Taxes accrued.................................................... 198,066 234,840
Interest accrued................................................. 148,198 159,794
Over-recovered fuel revenue...................................... 101,850 --
Other current liabilities........................................ 53,163 71,950
----------- -----------
Total current liabilities.................................. 1,150,719 1,176,420
----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes........................ 2,804,324 2,761,772
Unamortized federal investment tax credits....................... 653,479 664,209
Other deferred credits and noncurrent liabilities................ 255,788 252,023
----------- -----------
Total deferred credits and other noncurrent liabilities.... 3,713,591 3,678,004
COMMITMENTS AND CONTINGENCIES (Note 6)
----------- -----------
Total.............................................. $19,470,478 $19,446,998
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
10
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. GENERAL
Basis of Presentation -- The condensed financial statements of Texas
Utilities Company and Subsidiaries (Company) and Texas Utilities Electric
Company (TU Electric) have been prepared on the same basis as those in the
respective 1994 Annual Report on Form 10-K of such company and, in the opinion
of the Company or TU Electric, as the case may be, 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 and TU
Electric each believes that its respective disclosures are adequate to make the
information presented not misleading.
The financial statements and notes should be considered in conjunction with
the financial statements, and the notes thereto, of the Company and TU Electric
included in their respective 1994 Annual Reports on Form 10-K, and the
information under Management's Discussion and Analysis of Financial Condition
and Results of Operation herein.
Certain financial statement items for 1994 have been reclassified to
conform to the 1995 presentation.
THE COMPANY
- -----------
Consolidation -- The consolidated financial statements include the Company
and all of its subsidiaries (System Companies):
TU Electric Texas Utilities Services Inc. (TU Services)
Southwestern Electric Service Texas Utilities Properties Inc.
Company (SESCO) (TU Properties)
Texas Utilities Fuel Company Texas Utilities Communications Inc.
(Fuel Company) (TU Communications)
Texas Utilities Mining Company Basic Resources Inc. (Basic)
(Mining Company)
Chaco Energy Company (Chaco)
In March 1995, TU Communications, a new wholly-owned subsidiary of the
Company, was incorporated under the laws of the State of Delaware. TU
Communications was organized to provide access to advanced telecommunications
technology, primarily for the System Companies' expected expanding energy
services business.
All significant intercompany items and transactions have been eliminated in
consolidation.
TU ELECTRIC
- -----------
Allowance for Funds Used During Construction (AFUDC) -- TU Electric 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, TU Electric 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
THE COMPANY AND TU ELECTRIC
- ---------------------------
At June 30, 1995, the Company and TU Electric had joint lines of
credit aggregating $1,000,000,000 under credit facility agreements (Agreements)
with a group of commercial banks. The Agreements have two facilities. The
Company pays a fee for each facility. 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. The Company's borrowings
under the Agreements are limited to $400,000,000. Borrowings under the
Agreements will be used for working capital and other corporate purposes,
including commercial paper backup.
11
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
3. CAPITALIZATION
COMMON STOCK
THE COMPANY
- -----------
In 1990, the Company's Employee Thrift Plan (Thrift Plan) borrowed
$250,000,000 in the form of a note payable from an outside lender and purchased
7,142,857 shares of common stock (LESOP Shares) from the Company in connection
with the leveraged employee stock ownership provision of the Thrift Plan. LESOP
Shares are held by the trustee until allocated to Thrift Plan participants when
required to meet the System Companies' obligations under the terms of the Thrift
Plan. The Company has purchased the note from the outside lender, which has been
recorded as a reduction to common stock equity. The Thrift Plan uses dividends
on the LESOP Shares purchased and contributions from the System Companies, if
required, to repay interest and principal on the note. Common stock equity
increases at such time as LESOP Shares are allocated to participants' accounts
even though shares of common stock outstanding include unallocated LESOP Shares
held by the trustee. Allocations to participants' accounts during the six months
ended June 30, 1995, increased common stock equity by $4,046,525.
PREFERRED STOCK
TU ELECTRIC
- -----------
At June 30, 1995 and December 31, 1994, TU Electric had 17,000,000 shares
of preferred stock authorized by its articles of incorporation of which
11,764,553 and 12,787,228 shares were issued and outstanding, respectively.
During the six months ended June 30, 1995, TU Electric redeemed or
purchased 897,675 shares of preferred stock with annual dividend rates ranging
from $7.22 to $10.375, and redeemed 125,000 shares of $9.64 Cumulative Preferred
Stock which fulfills its mandatory redemption requirement until November 1,
1995.
LONG-TERM DEBT
TU ELECTRIC
- -----------
TU Electric issued the following long-term debt during the six months ended
June 30, 1995:
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT INTEREST RATE MATURITY
----------- --------- ------------- --------
<S> <C> <C> <C>
Term credit agreement....................................................... $300,000,000 (a) 1997
Pollution control revenue bonds............................................. 317,176,000 (b) 2030
-----------
Total.................................................................... $617,176,000
============
</TABLE>
_____________________
(a) At June 30, 1995, borrowings under the term credit agreement carried annual
interest rates of 6.4875% for the six-month period ending in November and
6.425% for the six-month period ending in December.
(b) All of such bonds currently bear interest in a daily mode and are secured
by an irrevocable letter of credit. Interest rates have ranged from 1.80%
to 5.25% per annum.
TU Electric redeemed or reacquired the following long-term debt during the
six months ended June 30, 1995:
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT INTEREST RATE MATURITY
----------- -------- ------------- --------
<S> <C> <C> <C>
First mortgage bonds....................................................... $111,150,000 9-7/8% 2019
Taxable pollution control revenue bonds.................................... 9,000,000 8.85%* 2021
Pollution control revenue bonds............................................ 252,235,000 7-3/4% to 9-7/8% 2007-2018
------------
Total................................................................ $372,385,000
============
</TABLE>
- ------------------------------------
* The remaining $91,000,000 of Taxable Series 1991 was remarketed on June 1,
1995, in a flexible mode for rate periods up to 180 days and is secured by an
irrevocable letter of credit.
12
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
3. CAPITALIZATION -- (CONCLUDED)
In July 1995, TU Electric reacquired $7,000,000 of 10-5/8% First Mortgage
and Collateral Trust Bonds due September 1, 2020.
4. RETAINED EARNINGS
THE COMPANY
- -----------
The articles of incorporation and the mortgages, as supplemented, of TU
Electric and SESCO contain provisions which, under certain conditions, restrict
distributions on or acquisitions of their common stock. At June 30, 1995,
$139,057,000 of the Company's retained earnings was thus restricted as a result
of such provisions. Retained earnings at such date also included $431,243,000,
representing the Company's equity in undistributed earnings since acquisition
included in transfers by TU Electric from its retained earnings to stated value
of common stock. The total of such restricted retained earnings at June 30,
1995 is $570,300,000.
5. RATE PROCEEDINGS
TU ELECTRIC
- -----------
DOCKET 11735
In July 1994, TU Electric 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 TU Electric'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. TU Electric is unable to predict the outcome of such appeals.
DOCKET 9300
The PUC's final order (Order) in connection with TU Electric'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 TU Electric'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 TU Electric'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 TU Electric'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 TU Electric'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. TU Electric
believes that such ruling is erroneous and not consistent with the Texas Public
Utility Regulatory Act (PURA). TU Electric contended that, according to a
13
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
5. RATE PROCEEDINGS -- (CONTINUED)
Private Letter Ruling issued to TU Electric 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 TU Electric's results of
operation and liquidity. If there are normalization violations, TU Electric will
forfeit its investment tax credits that 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. TU Electric 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. TU Electric 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.
In April 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 June 1995, TU Electric petitioned the PUC for approval of a fuel
refund to customers of approximately $89 million, including interest, in over-
collected fuel costs for the period June 1994 through May 1995. Such over-
collection was primarily due to lower natural gas prices than previously
anticipated. PUC approval is expected in August 1995 with the refund to be
included in September 1995 billings. In August 1994, TU Electric 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 through a surcharge to customers 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 resultant findings that the costs are reasonable and
necessary and that the prices charged to TU Electric by affiliated suppliers are
no higher than the prices charged by those affiliates to others for the same
items or class of items. TU Electric is vigorously defending its position in
these appeals but is unable to predict their outcome.
FLEXIBLE RATE INITIATIVES
In June 1994, TU Electric 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 TU Electric'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 TU
Electric'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, TU Electric 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. As
14
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
5. RATE PROCEEDINGS -- (CONCLUDED)
a result of recent legislation, flexible retail and wholesale pricing at levels
lower than the utility's approved rates and higher than the utility's marginal
cost may be approved by the PUC. Through its involvement at the legislature and
the PUC, TU Electric will continue to pursue the possibility of offering
flexible rates.
INTEGRATED RESOURCE PLAN
In October 1994, TU Electric 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. TU
Electric'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. TU Electric's IRP also includes one lignite-fueled 750 MW
unit at the Twin Oak facility (Twin Oak). A second planned lignite-fueled unit
at Twin Oak 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 later in August 1995.
6. COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES
THE COMPANY
- -----------
The Company's construction expenditures for utility related activities,
excluding AFUDC and expenditures relating to new generating units, are presently
estimated at $400 million for each of the years 1995, 1996 and 1997.
Expenditures for nuclear fuel and non-utility property are presently estimated
at $110 million for 1995, $78 million for 1996, and $106 million for 1997.
TU ELECTRIC
- -----------
TU Electric's 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.
THE COMPANY AND TU ELECTRIC
- ---------------------------
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 (Forest Grove) which is not included in
the ten-year resource plan, TU Electric is contemplating alternative uses for
its investment in these projects, which might include construction as exempt
wholesale generators, construction at different locations, or sale of the
facilities. While the Company and TU Electric currently believe their investment
in these assets can be recovered if held and developed according to existing
plans, other alternative uses might contribute more to their 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, the Company's and TU
Electric's respective investments of approximately $807 million and $729
million, for Twin Oak and Forest Grove, were transferred from CWIP to Utility
Plant Held for Future Use.
15
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
6. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
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 and TU Electric each 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 shareholders. The timing and amounts of any specific new business
investment opportunities are presently undetermined.
CLEAN AIR ACT
TU ELECTRIC
- -----------
TU Electric's capital requirements have not been significantly affected by
the requirements of the federal Clean Air Act (Clean Air Act). Although TU
Electric is unable to fully determine the cost of compliance with the Clean Air
Act, it is not expected to have a significant impact on either 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. TU Electric's environmental expenditures
for 1995 are estimated to be $58 million.
THE COMPANY
- -----------
The Company's capital requirements have not been significantly affected by
the requirements of the Clean Air Act.
COOLING WATER CONTRACTS
TU ELECTRIC
- -----------
TU Electric has entered into contracts with public agencies to purchase
cooling water for use in the generation of electric energy. In connection with
certain contracts, TU Electric has agreed, in effect, to guarantee the
principal, $36,650,000 at June 30, 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%. TU
Electric is required to make periodic payments equal to such principal and
interest, including amounts assumed by a third party and reimbursed to TU
Electric. In addition, TU Electric is obligated to pay certain variable costs of
operating and maintaining the reservoirs. TU Electric has assigned to a
municipality all contract rights and obligations of TU Electric in connection
with $84,610,000 remaining principal amount of bonds at June 30, 1995, issued
for similar purposes which had previously been guaranteed by TU Electric. TU
Electric is, however, contingently liable in the unlikely event of default by
the municipality.
CHACO COAL PROPERTIES
THE COMPANY
- -----------
Chaco has a coal lease agreement for the rights to certain surface mineable
coal reserves located in New Mexico. The agreement provides for minimum advance
royalty payments of approximately $16 million per year through 2017, covering
approximately 228 million tons of coal. The Company has entered into a surety
agreement to assure performance by Chaco with respect to this agreement. At June
30, 1995 and December 31, 1994, $515,926,000 and $499,890,000, respectively, of
minimum advance royalties paid by Chaco are included in non-utility property. In
addition, Chaco has under lease with the federal government certain coal
reserves with a carrying value of approximately
16
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)
6. COMMITMENTS AND CONTINGENCIES -- (CONCLUDED)
$44 million as of June 30, 1995. A provision in this lease requires that
substantial mining be completed by September 1997. Chaco is currently reviewing
its options with regard to this provision. Because of the present ample
availability of western coal at favorable prices from other mines, Chaco has
delayed plans to commence mining operations, and accordingly, is reassessing its
alternatives with respect to its coal properties, including seeking purchasers
thereof.
GAS PURCHASE CONTRACTS
THE COMPANY
- -----------
Fuel Company buys gas under long-term intrastate contracts in order to
assure reliable supply to its customers. Many of these contracts require minimum
purchases ("take-or-pay") of gas. Based on Fuel Company's estimated gas demand,
which assumes normal weather conditions, requisite gas purchases are expected to
substantially satisfy purchase obligations for the year 1995 and thereafter.
NUCLEAR DECOMMISSIONING AND DISPOSAL OF SPENT FUEL
TU ELECTRIC
- -----------
TU Electric has established a reserve, charged to depreciation expense
and included in 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 June 30, 1995, such reserve totaled $65,636,000 which
includes an accrual of $9,089,000 and $18,179,000 for the six and twelve months
ended June 30, 1995, respectively. As of June 30, 1995, the market value of
deposits in the external trust for decommissioning of Comanche Peak was
$71,527,000. 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. TU Electric is recovering such costs based upon
the 1992 study through its rates placed in effect under Docket 11735. (See
Note 5.)
TU Electric 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
THE COMPANY
- -----------
In addition to the above, the Company and its subsidiaries are 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.
7. ACCOUNTING CHANGE
THE COMPANY AND TU ELECTRIC
- ---------------------------
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 and TU
Electric will be subject to a more formal standard for assessing asset
impairment in the future.
17
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Texas Utilities Company:
We have reviewed the accompanying condensed consolidated balance sheet of Texas
Utilities Company and subsidiaries as of June 30, 1995, and the related
condensed statements of consolidated income for the three-month, six-month and
twelve-month periods ended June 30, 1995 and 1994, and of consolidated cash
flows for the six-month periods ended June 30, 1995 and 1994. These financial
statements are the responsibility of Texas Utilities 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 consolidated 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 consolidated balance sheet of Texas Utilities Company and
subsidiaries as of December 31, 1994, and the related consolidated 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 consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1994, is fairly stated in all material respects in relation
to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Dallas, Texas
August 8, 1995
18
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Texas Utilities Electric Company:
We have reviewed the accompanying condensed balance sheet of Texas Utilities
Electric Company as of June 30, 1995, and the related condensed statements of
income for the three-month, six-month and twelve-month periods ended June 30,
1995 and 1994, and of cash flows for the six-month periods ended June 30, 1995
and 1994. These financial statements are the responsibility of Texas Utilities
Electric 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. 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
August 8, 1995
19
<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 Company (Company) and Texas Utilities Electric
Company (TU Electric) Annual Reports on Form 10-K for the year 1994. No
significant changes or events which might affect the financial condition of the
Company and its subsidiaries (System Companies) have occurred subsequent to
year-end other than as disclosed in this report.
THE COMPANY
- -----------
External funds of a permanent or long-term nature are obtained through
sales of common stock, preferred stock and long-term debt by the System
Companies. The capitalization ratios of the Company and its subsidiaries at
June 30, 1995 consisted of approximately 52% long-term debt, 7% preferred stock
and 41% common stock equity.
TU ELECTRIC
- -----------
The capitalization ratios of TU Electric at June 30, 1995 consisted of
approximately 51% long-term debt, 8% of preferred stock and 41% common stock
equity.
TU Electric had financings totaling $617,176,000 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 TU
Electric consisted of:
<TABLE>
<CAPTION>
LONG-TERM DEBT:
PRINCIPAL CURRENT
DESCRIPTION AMOUNT INTEREST RATES MATURITY
----------- --------- -------------- --------
<S> <C> <C> <C>
Term credit agreement................................. $300,000,000 6.425% and 6.4875% 1997
Pollution control revenue bonds....................... 317,176,000 1.80% to 5.25% 2030
------------
Total............................................... $617,176,000
============
</TABLE>
THE COMPANY
- -----------
To date in 1995, the System Companies redeemed, reacquired or made
principal payments of $507,402,000 (including $503,127,000 for TU Electric) 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 System Companies expect to sell additional debt and equity securities
as needed including (i) the possible future sale by TU Electric 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 TU Electric of 250,000 shares
of Cumulative Preferred Stock ($100 liquidation value) similarly registered.
THE COMPANY AND TU ELECTRIC
- ---------------------------
The Company and TU Electric have joint lines of credit aggregating
$1,000,000,000 under credit facility agreements (Agreements). The Agreements
have two facilities. The Company pays a fee for each facility. 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. The Company's borrowings under the Agreements are limited to
$400,000,000. Borrowings under the Agreements will be used for working capital
and other corporate purposes, including commercial paper backup.
20
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION -- (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
In order to remain competitive, the Company and TU Electric are
aggressively managing their operating costs and capital expenditures through
streamlined business processes and are developing and implementing strategies to
address an increasingly competitive environment. These strategies include
initiatives to improve their 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 assets,
including approximately $807 million invested in partially completed generating
facilities on which construction is temporarily suspended (including investment
by TU Electric of approximately $729 million) and related mining facilities and
approximately $579 million invested in coal properties of Chaco Energy Company,
are not contributing to earnings and, as a result, the Company and TU Electric
are considering possible alternatives to the scheduled development, operation
and recovery of such assets through traditional means. While the Company and TU
Electric currently believe that their investment in these assets can be
recovered if held and ultimately developed according to existing plans, other
alternative uses might contribute more to their 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. 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 and TU Electric's assets or their results of
operation.
THE COMPANY
- -----------
In May 1995, Texas Utilities Communications Inc. (TU Communications), a new
wholly-owned subsidiary of the Company, entered into a partnership agreement
with PCS PrimeCo, L.P. (PrimeCo), a partnership among four large
telecommunications companies, to become a 20% partner in PrimeCo's personal
communications services business in three Federal Communications Commission-
defined Major Trading Areas (MTAs). The Dallas/Ft. Worth, Houston and San
Antonio MTAs cover almost the entire State of Texas, as well as portions of
adjoining states. This partnership provides TU Communications with access to
advanced telecommunications technology which is expected to be a significant
part of the System Companies' expanding energy services business. As of June 30,
1995, the Company's investment in TU Communications was approximately $47
million.
The Company's capital requirements have not been significantly affected by
the requirements of the federal Clean Air Act (Clean Air Act).
TU ELECTRIC
- -----------
TU Electric's capital requirements have not been significantly affected by
the requirements of the Clean Air Act. Although TU Electric is unable to fully
determine the cost of compliance with the Clean Air Act, it is not expected to
have a significant impact on either 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. TU Electric's environmental expenditures for 1995
are estimated to be $58 million.
For information regarding Rate Proceedings, see Note 5 to Condensed
Financial Statements.
THE COMPANY AND TU ELECTRIC
- ---------------------------
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 Public Utility
Regulatory Act, as amended and effective September 1, 1995, requires the Public
Utility Commission of Texas (PUC) to have rules in place within 180 days
governing comparable wholesale open access transmission services. To meet this
requirement, the PUC has initiated a generic rule making proceeding to address
wholesale transmission issues within Texas. In addition, the Texas legislature
recently enacted a provision for the sale of electric energy by exempt wholesale
generators and power marketers at the wholesale level. Although TU Electric and
Southwestern Electric Service Company (SESCO) are unable to predict the ultimate
impact of the Energy Act and any related regulations or any state
21
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION -- (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONCLUDED)
legislation or PUC regulation on their operations, they believe that such
actions are consistent with the trend toward increased competition in the energy
industry.
While TU Electric and SESCO have experienced competitive pressures in the
wholesale market resulting in approximately 354 MW loss of load for TU Electric
since the beginning of 1993 and notifications of the possible termination of
approximately 600 MW through 1999, wholesale sales represented a relatively low
percentage of total consolidated operating revenues in 1994. TU Electric and
SESCO are 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 their operations.
RESULTS OF OPERATIONS
THE COMPANY
- -----------
For the three-, six- and twelve-month periods, consolidated net income
increased approximately 2%, 5% and 108%, respectively. For the Company and TU
Electric, from which most of consolidated earnings is derived, the major factors
affecting earnings for the three-, six- and twelve-month periods were continuing
cost reduction efforts partially offset by mild weather conditions. For the
twelve-month periods, earnings were affected by the recording of the regulatory
disallowance in the prior period, implementation of the Docket 11735 rate
increase, the discontinuation of AFUDC on Comanche Peak nuclear generating
station (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.
TU ELECTRIC
- -----------
Operating revenues decreased approximately 6% for the three-month period,
5% for the six-month period and 4% for the twelve-month period ended June 30,
1995. The following table details the factors contributing to these changes:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
------------------------------------------------------------
FACTORS THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
------- ------------------ ---------------- -------------------
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Base rate revenue (billed).......... $ 10,044 $ (11,875) $ 100,390
Fuel revenue........................ (39,597) (59,681) (176,234)
Power cost recovery factor revenue.. (1,440) (4,962) (22,958)
Unbilled revenue and other.......... (51,406) (65,444) (158,279)
-------- --------- ---------
Total.............................. $(82,399) $(141,962) $(257,081)
======== ========= =========
</TABLE>
Base rate revenue for TU Electric increased for the three- and twelve-month
periods and decreased for the six-month period. Total energy sales (including
unbilled energy sales) decreased less than 1%, and approximately 2% and 1% for
the three-, six- and twelve-month periods, respectively. The effect on billed
energy sales and base rate revenue for all 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 all periods was
primarily due to continued reduction in gas prices and also, for the twelve-
month period, increased nuclear generation as compared to the prior period. The
decrease in unbilled energy sales and unbilled revenue and other in all periods
resulted from milder weather conditions than in the prior period and an increase
in the number of billing days.
Fuel and purchased power expense decreased approximately 10%, 8% and 10%
for the three-, six- and twelve-month periods, respectively, primarily due to a
reduction in gas prices and purchased power commitments and, for the twelve-
month period, increased utilization of nuclear fuel.
22
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION -- (CONCLUDED)
RESULTS OF OPERATION -- (CONCLUDED)
Total operating expenses, excluding fuel and purchased power, decreased
approximately 4% for the three- and six-month periods and 3% for the twelve-
month period. Operation and maintenance expense decreased for all periods due
primarily to a decrease in employee benefit expenses, uncollectible accounts
expense and material and supplies expense. For the twelve-month period, the
decrease was due also to inventory adjustments taken in the prior period
partially offset by the effect of the commencement of commercial operation of
Unit 2 of Comanche Peak. Taxes other than income decreased for all periods due
primarily to a reduction in franchise, state gross receipts and estimated ad
valorem taxes partially offset by an increase in local gross receipts taxes.
Allowance for funds used during construction (AFUDC) decreased
approximately 19%, 12% and 72% for the three-, six- and twelve-month periods,
respectively. For the three- and six-month periods, the decrease was primarily
due to a reduction in the gross rate used for capitalizing AFUDC. 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 4% for the
three-month period and decreased 5% for the six- 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 was affected in all periods due primarily
to borrowings on the term credit agreement offset by the continuing retirement
of debt incurred on the purchases of the minority ownership interests in
Comanche Peak. Other interest expense was affected by increased average short-
term borrowings and increased amortization of debt issuance expenses and
redemption premiums and, for the three- and six-month periods, offset in part by
decreased interest on bonded rates from the prior period.
Preferred stock dividends decreased approximately 18%, 17% and 16% for
the three-, six- and twelve-month periods, respectively, due to the redemption
of certain series.
23
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In May 1990, Nancy F. King and Rodney B. Shields, allegedly as shareholders
of the Company, filed suit in the United Stated District Court for the Northern
District of Texas derivatively on behalf of the Company against the Company as a
nominal defendant and certain directors and former directors of the Company. In
November 1991, Sheree Anne Meyer, as custodian for Adam Joseph Davenport,
allegedly as a shareholder of the Company, filed suit in the same Court
derivatively on behalf of the Company and TU Electric against the Company and TU
Electric as nominal defendants and certain officers and directors and former
officers and directors of the Company and TU Electric. Reference is made to Item
3. Legal Proceedings in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 for a more complete description of these proceedings,
which were consolidated in December 1992. On May 17, 1995 the Court approved the
settlement of the consolidated suit.
On July 17, 1995 the United States District Court for the Northern District
of Texas (Dallas Division) approved a consent decree among the United States,
the State of Texas, certain federal and state agencies and 73 of the defendants
in an action styled United States v. Wallace, et.al. The consent decree
-------------------------------
apportioned liability among the defendants for remedial actions taken at the
waste treatment and disposal facility operated in Grand Prairie, Texas from 1972
to 1978 by Bio-Ecology Systems, Inc. TU Electric was among the defendants in
this proceeding and agreed as part of the consent decree to payment of a portion
of the clean up costs to the United States and the State of Texas in the
aggregate amount of $323,757.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's annual meeting of shareholders was held on May 19, 1995.
(b) The following items were presented to the shareholders with the following
results:
<TABLE>
<CAPTION>
VOTES WITHHELD OR
VOTES FOR AGAINST ABSTENTIONS
--------- ----------------- -----------
<S> <C> <C> <C>
Election of Directors
Jack W. Evans 183,126,167 2,706,852 --
J. S. Farrington 183,368,320 2,464,699 --
Bayard H. Friedman 183,390,082 2,442,937 --
William M. Griffin 183,370,347 2,462,672 --
Kerney Laday 183,216,235 2,616,784 --
Margaret N. Maxey 183,405,941 2,427,078 --
James A. Middleton 183,498,804 2,334,215 --
Erle Nye 183,368,917 2,464,102 --
Charles R. Perry 183,302,407 2,530,612 --
Herbert H. Richardson 183,418,081 2,414,938 --
Selection of Deloitte & 183,294,558 1,203,806 1,334,655
Touche as Auditors
Approval of Annual 165,229,193 16,569,410 4,034,416
Incentive Plan/(1)/
</TABLE>
/(1)/ The purpose of the Annual Incentive Plan (AIP) is to provide performance-
based annual incentive compensation opportunities to officers who
contribute significantly to the success of the Company.
24
<PAGE>
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
RATE PROCEEDINGS
TU ELECTRIC
- -----------
Reference is made herein to Note 5 to TU Electric's Condensed Financial
Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as a part of Part II are:
10(a) - Deferred and Incentive Compensation Plan of the Texas Utilities
Company System, as amended as of January 1, 1995
10(b) - Deferred Compensation Plan for Outside Directors of Texas Utilities
Company, effective as of January 1, 1995
10(c) - Restated Supplemental Retirement Plan for Employees of the Texas
Utilities Company System, as restated effective January 1, 1995
10(d) - Annual Incentive Plan of the Texas Utilities Company System, dated
as of May 19, 1995
10(e) - Management Transition Agreement, dated as of May 18, 1995, between
Texas Utilities Company and J.S. Farrington
10(f) - Salary Deferral Program of the Texas Utilities Company System, as
amended as of January 1, 1995
15 - Letters from Deloitte & Touche LLP as to unaudited interim financial
information
15(a) Texas Utilities Company
15(b) Texas Utilities Electric Company
27 - Financial Data Schedules
27(a) Texas Utilities Company
27(b) Texas Utilities Electric Company
99 - Fifty-third Supplemental Indenture, dated as of June 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 March 31, 1995 are as follows:
THE COMPANY
-----------
Date of Report Item Reported
-------------- -------------
May 19, 1995 Item 5. OTHER EVENTS
TU ELECTRIC
-----------
None
25
<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 COMPANY
By /s/ H. Dan Farell
----------------------------------
H. Dan Farell
Controller and
Principal Accounting Officer
Date: August 10, 1995
- -------------------------------------------------------------------------------
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: August 10, 1995
26
<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION OF EXHIBIT PAGE
- --------------------------------------------------------------------------------
10(a) - Deferred and Incentive Compensation Plan of the Texas
Utilities Company System, as amended as of January 1, 1995
10(b) - Deferred Compensation Plan for Outside Directors of
Texas Utilities Company, effective as of July 1, 1995
10(c) - Restated Supplemental Retirement Plan for Employees of
the Texas Utilities Company System, as restated effective
January 1, 1995
10(d) - Annual Incentive Plan of the Texas Utilities Company System,
dated as of May 19, 1995
10(e) - Management Transition Agreement, dated as of May 18, 1995,
between Texas Utilities Company and J.S. Farrington
10(f) - Salary Deferral Program of the Texas Utilities Company
System, as amended as of January 1, 1995
15 - Letters from Deloitte & Touche LLP as to unaudited interim
financial information
15(a) Texas Utilities Company
15(b) Texas Utilities Electric Company
27 - Financial Data Schedules
27(a) Texas Utilities Company
27(b) Texas Utilities Electric Company
99 - Fifty-third Supplemental Indenture, dated as of June 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.
27
<PAGE>
EXHIBIT 10(a)
DEFERRED AND INCENTIVE COMPENSATION PLAN
OF THE
TEXAS UTILITIES COMPANY SYSTEM
(AS RESTATED EFFECTIVE JANUARY 1, 1995)
Section 1. Purpose
- -------------------
1.1 Purpose. The Deferred and Incentive Compensation Plan of the Texas
-------
Utilities Company System (the Plan) is established, effective July 1, 1987, for
the purpose of focusing the attention of Eligible Employees on the long-term
performance of Texas Utilities' consolidated operations by relating rewards to
the Company's long-range success, and to tie Eligible Employees' rewards to
stock performance. The Plan also is designed to retain and motivate employees
and to recognize the contributions of such employees to the Company. The Plan
is designed as an unfunded arrangement maintained "primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees" as determined under the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). ERISA Section 201(2).
Section 2. Definitions
- -----------------------
2.1 Definitions. Whenever used hereinafter, the following terms shall
-----------
have the meanings set forth below:
(a) "Applicable Employee Remuneration" means applicable employee
remuneration as that term is defined in Section 162(m), or any
successor provision, of the Internal Revenue Code.
(b) "Beneficiary" means the person or persons named by the
Participant as the recipient(s) of any distribution remaining to
be paid to the Participant under the Plan upon the Participant's
death.
(c) "Board of Directors" means the Board of Directors of Texas
Utilities Company.
(d) "Chief Executive" means the Chief Executive Officer of Texas
Utilities Company.
(e) "Committee" means the Organization and Compensation Committee of
the Board of Directors.
(f) "Company" means Texas Utilities Company and its subsidiaries.
<PAGE>
(g) "Eligible Employee" means an officer of the Company with a title
of vice president or above.
(h) "Participant" means an Eligible Employee who elects to
participate in the Plan and whose account(s) has not been
completely distributed.
(i) "Performance Unit" means a measure of participation under the
Plan having a value equal to the value of a share of common stock
of the Company, as determined by the value of such stock in the
Trust.
(j) "Plan Administrator" means the person appointed to assist the
Committee in carrying out the operations of the Plan.
(k) "Plan Year" means the twelve-month period beginning July 1 and
ending June 30.
(l) "Retirement" shall have the meaning given it under the Retirement
Plan for Employees of the Texas Utilities Company System.
(m) "Salary" means the annual base salary rate in effect on the first
day of June immediately preceding the applicable Plan Year,
without reduction for any Salary deferred in the prior Plan Year.
(n) "Stock" means common stock of Texas Utilities Company.
(o) "Trust" means the irrevocable grantor trust established by Texas
Utilities Company to purchase, hold, and sell shares of Stock so
as to establish the number and value of Performance Units
allocable to Participants' Accounts and from which benefits under
the Plan will be paid.
Section 3. Deferral Participation and Percentage
- -------------------------------------------------
3.1 Participation. All Eligible Employees may elect to defer a percentage
-------------
of Salary (in 1 percent increments) not to exceed the maximum percentage
determined by the Committee for a Plan Year.
3.2 Percentage. The Committee will determine, in its sole discretion, the
----------
maximum percentage of Salary, if any, which may be deferred by a Participant in
any Plan Year. Such percentage may not exceed 15 percent of Salary.
-2-
<PAGE>
Section 4. Election to Defer
- -----------------------------
4.1 Deferral Election. An Eligible Employee may elect irrevocably, by
-----------------
written notice to the Plan Administrator in the manner prescribed by the Plan
Administrator to defer a percentage of Salary during such Plan Year.
4.2 Salary Reductions. Salary deferred under the Plan will be ratably
-----------------
deducted in each pay period in the Plan Year.
Section 5. Company Matching and Incentive Awards
- -------------------------------------------------
5.1 Matching Award. A Matching Award shall be credited to each
--------------
Participant's account by the Company in an amount equal to 150 percent of the
amount deferred by the Participant. Such Matching Award shall be deemed to
occur on the first day of the Plan Year.
5.2 Incentive Award. Under the terms of the Annual Incentive Plan
---------------
("AIP"), an Eligible Employee may receive an Incentive Award ("Incentive Award")
which shall be treated as an Incentive Award under this Plan. The effective
date of contribution for any such Incentive Award shall be the first day of the
Plan Year.
5.3 Maturity Periods. Salary deferrals and Matching Awards, subject to
----------------
the Extended Maturity Period Provision below, shall have a Maturity Period of
five years. Incentive Awards, subject to the Extended Maturity Period and
Transition Provisions below, shall have a Maturity Period of three years. The
Maturity Period shall begin on the first day of the Plan Year in which the
Salary deferral, Matching Award, or Incentive Award is made. Notwithstanding the
foregoing, any Maturity Period shall end on the date of death, total and
permanent disability, or termination of employment for reasons other than
Retirement. Anything contained herein to the contrary notwithstanding, deferred
amounts and Matching Awards as of July 1, 1987, shall mature on June 30, 1990.
Anything contained herein to the contrary notwithstanding, the Maturity Period
for the deferred amounts and Matching Awards for the Plan Year July 1, 1989,
through June 30, 1990, and the Plan Year July 1, 1991, through June 30, 1992,
shall end on November 30, 1992.
Extended Maturity Period Provision. To the extent that the amounts
----------------------------------
otherwise maturing under the Plan combined with the Eligible Employee's
other remuneration exceeds the Applicable Employee Remuneration for such
year, the Maturity Period for such excess amount shall end on Retirement
date or such earlier date as of which such amounts, or any part thereof,
combined with other remuneration does not exceed the Applicable Employee
Remuneration for such year.
Transition Provision. Notwithstanding any other provisions contained
--------------------
herein, the Maturity Period for amounts subject to
-3-
<PAGE>
an Election made for periods prior to July 1, 1995, shall be the Maturity
Period applicable at the time of the Election.
Section 6. Participant Accounts
- --------------------------------
6.1 Separate Accounts. The Plan Administrator shall establish and
-----------------
maintain an individual account for Salary deferrals elected by each Participant
and the Matching Awards for each Plan Year. The account shall be credited as of
the first day of the Plan Year with the amount of Salary to be deferred during
the Plan Year and the related Matching Award. An Incentive Award, if any, shall
be credited to a separate account for the Participant as of the first day of the
Plan Year.
6.2 Performance Units. Any and all amounts credited to a Participant's
-----------------
account shall be converted into Performance Units as of the applicable date.
After notification of the number of shares acquired by the Trust with the
aggregate credits to Participants, as provided in Subsection 7.2, the Plan
Administrator will allocate an equal number of Performance Units, including
fractional units, to individual accounts based on the percentage relationship of
each Participant's credits to the total of such credits for all Participants.
6.3 Dividend Equivalent Credits. Additional Performance Units shall be
---------------------------
credited to a Participant's account as Dividend Equivalent Credits. Such amount
shall be determined by multiplying the Performance Units recorded in a
Participant's account by the amount of any regular or special cash dividend
declared on each share of the Stock and dividing the product by the amount paid
by the Trust for a share of Stock with the dividend amounts.
6.4 Date of Credit. Dividend Equivalent Credits shall be credited to a
--------------
Participant's account as of the same date as the cash dividend on the Stock is
paid to shareholders. No such credit shall be made with respect to any dividend
paid after a Participant's Termination Date or after any date of termination of
the Plan, even though the record date is prior thereto.
6.5 Unsecured Interest. All Performance Units credited to the account of
------------------
each Participant shall be for record purposes only. No Participant or
Beneficiary shall have any security interest whatsoever in any assets of the
Company. To the extent that any person acquires a right to receive payments
under the Plan, such right shall not be secured or represented by any issued
Stock or common stock to be issued.
Section 7. Investment and Funding
- ----------------------------------
7.1 Grantor Trust. The benefits to be derived by Participants in the Plan
-------------
will be funded through the Trust; provided, however, any Stock, cash, or other
property held in the
-4-
<PAGE>
Trust that was contributed by the Company shall at all times be subject to the
claims of general creditors of the Company.
7.2 Funding of Trust. Upon determination of the total credits to
----------------
Participants' accounts for a Plan Year, the Company shall promptly provide the
Trust with resources in the aggregate of such amounts. The Trustee will, within
ten (10) business days, invest such aggregate amounts in shares of Stock and
promptly notify the Plan Administrator of the number of shares so acquired. The
Trustee will use any cash dividends received on Stock held in the Trust to buy
additional shares of the Stock and promptly notify the Plan Administrator of the
number of shares so acquired.
7.3 Distributions from Trust. The Trustee, upon notification from the
------------------------
Plan Administrator, will make the distributions of matured benefits to
Participants or their Beneficiaries as provided in the Plan. If Trust assets
are insufficient to pay the amount of a matured benefit, the Company will pay
such deficiency directly to the Participant or Beneficiary. Any assets held in
the Trust which the Trustee determines to be in excess of those required to pay
the benefits when due to Participants may be returned to the Company.
7.4 Voting of Stock Held in Trust. Stock held in the Trust shall be voted
-----------------------------
by the Trustee in its discretion.
Section 8. Distribution of Account Values
- ------------------------------------------
8.1 Value of a Participant's Account. The value of a Participant's
--------------------------------
account will equal the net proceeds received by the Trust from the sale of
shares equal in number to the number of Performance Units representing the
Participant's deferred amount and Matching Award, or Incentive Award applicable
to the designated Maturity Period, together with all Dividend Equivalent Credits
earned thereon. In no event shall the Participant's account be deemed to have a
cash value which is less than the sum of the Participant's deferred amount
together with a 6 percent per annum (compounded annually) interest equivalent
thereon.
8.2 Form and Timing of Distribution. The value of a Participant's account
-------------------------------
at maturity shall be determined as provided in Subsection 8.1. The value of the
Participant's account at maturity shall be paid in cash. Payment shall be made
as soon as practicable, but in no event later than thirty (30) days, following
maturity of the Participant's account. No interest shall accrue or be paid from
date of maturity to date of payment on such amounts.
Section 9. Termination of Employment
- -------------------------------------
9.1 Termination of Employment Due to Death or Disability. In the event a
----------------------------------------------------
Participant's employment is terminated by reason of death or permanent and total
disability, all amounts credited to his account, except as provided in
Subsection 9.4, shall mature upon such termination. The Participant or his
Beneficiary shall
-5-
<PAGE>
then receive, as soon as practicable after the date of death or disability, a
distribution of the Participant's account based on the value of his account as
provided in Subsection 8.1.
9.2 Termination of Employment Due to Retirement. In the event a
-------------------------------------------
Participant's employment is terminated by reason of Retirement, the Participant
shall receive a distribution of his account, except as provided in Subsections
5.3 and 9.4, at the end of the applicable Maturity Period.
9.3 Termination of Employment for Reasons Other Than Death, Disability, or
----------------------------------------------------------------------
Retirement. Except as provided in Subsection 9.6, in the event a Participant's
- ----------
employment is terminated for any reason other than death, permanent and total
disability, or Retirement, all rights whatsoever to any Performance Units for
Maturity Periods not yet completed and any Dividend Equivalent Credits thereon
shall be forfeited; provided, however, that the Participant shall be fully
vested in any amounts deferred by him, together with a 6 percent per annum
(compounded annually) interest equivalent thereon, and entitled to receive a
distribution in such amount as soon as practicable, but in no event later than
thirty (30) days following termination of employment. No interest shall be paid
on such amounts for any period after the date of termination. The Committee
shall be the sole judge with respect to such reasons for termination.
9.4 Termination of Employment Prior to the End of the Plan Year. In the
-----------------------------------------------------------
event a Participant terminates employment prior to the end of the Plan Year, the
deferred amount, Matching Award, and Dividend Equivalent Credits will be
recomputed as of the date of termination of employment. The value of the
recomputed account shall be an amount equal to the product of the value of the
Performance Units at the date of termination credited to the Participant's
account multiplied by a fraction, the numerator of which is the actual Salary
reduction for the portion of the Plan Year preceding termination, and the
denominator of which is the total Salary reduction elected for the entire Plan
Year. This Subsection will not apply if such termination is by reason of
Retirement and the Participant elected to accelerate the balance of Salary
reductions in such an event on the notice required by Subsection 4.1.
9.5 Retirement Under 1992 Voluntary Separation Plan. Notwithstanding any
-----------------------------------------------
provision herein to the contrary, a Participant who elects a retirement date of
October 1, 1992, or November 1, 1992, notifies the Company of such election
between July 1, 1992, and September 1, 1992, inclusive, and retires on October
1, 1992, or November 1, 1992 (unless the Company requests and the Participant
agrees to extend such retirement date from month to month thereafter for a
period ending on or before November 1, 1993) shall, in addition to any other
benefits to which the Participant may be entitled under this Plan (including the
distribution of his account under the provisions of Subsection 9.2 hereof), be
entitled
-6-
<PAGE>
to receive a lump sum payment in an amount (the "Additional Matching Amount")
equal to 50% of the present value of the Matching Award for such Participant
over a ten (10) year period calculated on the basis of a deferral percentage
equal to 12% and the Salary in effect for such Participant on the last day of
the month immediately preceding such Participant's retirement; provided, that in
no event may the Additional Matching Amount for any Participant exceed $85,000.
9.6 Voluntary Termination of Employment Under 1992 Voluntary Separation
-------------------------------------------------------------------
Plan. Notwithstanding any provision herein to the contrary, a Participant who
- ----
does not meet the eligibility requirements for electing one of the early
retirement options provided for in Section 7.8 of the Retirement Plan for
Employees of the Texas Utilities Company System, as amended effective as of May
31, 1992, and who terminates employment with the Company as of October 1, 1992,
or November 1, 1992 (unless the Participant requests and the Company agrees to
an earlier termination date), shall be entitled to: (i) have all amounts
credited to his account under this Plan matured such that the forfeitures
provided for in Subsection 9.3 above shall not apply and the full amount
credited to such Participant's account shall be payable to him as soon as
practicable after his termination; and (ii) receive a lump sum payment in an
amount equal to the Additional Matching Amount; provided, that in no event may
the Additional Matching Amount for any Participant exceed $85,000.
Section 10. Nontransferability
- -------------------------------
10.1 Nontransferability. In no event shall the Company make any
------------------
distribution or payment under this Plan to any assignee or creditor of a
Participant or a Beneficiary. Prior to the time of a distribution or payment
hereunder, a Participant or a Beneficiary shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
this Plan.
Section 11. Designation of Beneficiaries
- -----------------------------------------
11.1 Specified Beneficiary. A Participant shall designate a Beneficiary or
---------------------
Beneficiaries who, upon the Participant's death, are to receive the amounts that
otherwise would have been paid to the Participant. All Beneficiary designations
shall be in writing and signed by the Participant, and shall be effective only
if and when delivered to the Plan Administrator during the lifetime of the
Participant. A Participant may, from time to time during his lifetime, change
his Beneficiary or Beneficiaries by a signed, written instrument delivered to
the Plan Administrator. The payment of amounts shall be in accordance with the
last unrevoked written designation of the Beneficiary that has been signed and
so delivered.
11.2 Estate as Beneficiary. If a Participant designates a Beneficiary
---------------------
without providing in the designation that the
-7-
<PAGE>
Beneficiary must be living at the time of each distribution, the designation
shall vest in the Beneficiary all of the distributions whether payable before or
after the Beneficiary's death, and any distributions remaining upon the
Beneficiary's death shall be made to the Beneficiary's estate. In the event a
Participant shall not designate a Beneficiary or Beneficiaries, or if for any
reason such designation shall be ineffective, in whole or in part, as determined
solely in the discretion of the Plan Administrator, the distribution that
otherwise would have been paid to such Participant shall be paid to the
Participant's estate and in such event the term "Beneficiary" shall include the
Participant's estate.
Section 12. Rights of Participants
- -----------------------------------
12.1 Employment. All Participants understand that they are employees at
----------
will. Therefore, nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate, for any reason, any Participant's
employment at any time, nor confer upon a Participant any right to continue in
the employ of the Company.
Section 13. Administration
- ---------------------------
13.1 Administration. The Committee shall be responsible for the
--------------
administration of the Plan. The Committee is authorized to interpret the Plan,
to prescribe, amend, and rescind rules and regulations relating to the Plan,
provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Company, and to make all other determinations necessary or
advisable for the administration of the Plan. The determination of the
Committee, interpretation or other action made or taken pursuant to the
provisions of the Plan, shall be final, binding and conclusive for all purposes
and upon all persons whomsoever. The Committee shall appoint a Plan
Administrator to assist in carrying out the operations of the Plan.
13.2 Annual Reports. The Plan Administrator shall render annually a
--------------
written report to each Participant, which shall set forth, at a minimum, the
Participant's Account balances as of the end of the most recent Plan Year.
13.3 Costs. Participants shall bear costs equal to the costs incurred by
-----
the Trust related to the purchase and sale of stock by the Trust. The Company
shall pay all other costs of the Plan and the Trust.
Section 14. Amendment or Termination of the Plan
- -------------------------------------------------
14.1 Amendment or Termination of the Plan. The Board of Directors may
------------------------------------
amend, terminate, or suspend the Plan at any time. Any such amendment,
termination, or suspension of the Plan shall be effective on such date as the
Board of Directors may determine. An
-8-
<PAGE>
amendment or modification of the Plan may affect Participants at the time
thereof as well as future Participants, but no amendment or modification of the
Plan for any reason may diminish any Participant's account as of the effective
date thereof. Upon Plan termination, all amounts credited to a Participant's
account shall be deemed to have matured, except that Subsection 9.4 shall apply
as if the Plan termination date were the termination of employment date.
Section 15. Corporate Changes
- ------------------------------
15.1 Dissolution or Liquidation. Notwithstanding any provision herein to
--------------------------
the contrary, upon the dissolution or liquidation of Texas Utilities Company,
the Performance Units credited to a Participant's account shall be converted to
a cash equivalent as of the day preceding the date of dissolution or
liquidation, using the method set forth in Subsection 8.1. The Company shall
cause such amount to be paid in cash in a lump sum to the Participant, or his
Beneficiary, as soon as practicable, but in no event later than thirty (30)
days, following the date of dissolution or liquidation.
15.2 Merger, Consolidation, and Sale of Assets. Notwithstanding anything
-----------------------------------------
herein to the contrary, in the event that Texas Utilities Company consolidates
with, merges into, or transfers all or substantially all of its assets to
another unrelated corporation, all Performance Units recorded in a Participant's
account hereunder immediately shall be deemed to have matured. All
Participants' accounts shall become payable pursuant to Subsection 8.2 except
that the determination of Participants' account values under Subsection 8.1
shall be made as of the effective date of such event.
Section 16. Requirements of Law
- --------------------------------
16.1 GOVERNING LAW. THE PLAN, AND ALL AGREEMENTS HEREUNDER, SHALL BE
-------------
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
Section 17. Withholding Taxes
- ------------------------------
17.1 Withholding Taxes. The Company shall have the right to deduct from
-----------------
all cash payments under the Plan or from a Participant's compensation an amount
necessary to satisfy any Federal, state, or local withholding tax requirements.
EXECUTED the 8th day of June , 1995.
------- ---------------
TEXAS UTILITIES COMPANY
By: /s/ Peter B. Tinkham
----------------------------
Peter B. Tinkham, Secretary
-9-
<PAGE>
EXHIBIT 10(b)
DEFERRED COMPENSATION PLAN
FOR
OUTSIDE DIRECTORS OF
TEXAS UTILITIES COMPANY
(EFFECTIVE JULY 1, 1995)
Section 1. Purpose
- -------------------
1.1 Purpose. The Deferred Compensation Plan for Outside Directors of
-------
Texas Utilities Company (the "Plan") is established, effective July 1, 1995, for
the purpose of providing deferred compensation to Outside Directors which is
directly related to the performance of common stock of Texas Utilities Company
("Company"). The Plan is designed as an unfunded arrangement under the
provisions of the Employee Retirement Income Security Act of 1974 and of the
Internal Revenue Code.
Section 2. Definitions
- -----------------------
2.1 Definitions. Whenever used hereinafter, the following terms shall
-----------
have the meanings set forth below:
(a) "Beneficiary" means the person or persons named by the
Participant as the recipient(s) of any distribution remaining to
be paid to the Participant under the Plan upon the Participant's
death.
(b) "Board of Directors" means the Board of Directors of Texas
Utilities Company.
(c) "Committee" means the Organization and Compensation Committee of
the Board of Directors.
(d) "Company" means Texas Utilities Company and any successors or
assigns of Texas Utilities Company.
(e) "Compensation" means the annual retainer payable to Directors.
(f) "Director" means a member of the Board of Directors of the
Company.
(g) "Outside Director" means a Director who is not a current or
former officer or employee of the Company or any of its
subsidiaries.
(h) "Participant" means an Outside Director who elects to participate
in the Plan and whose account(s) has not been completely
distributed.
<PAGE>
(i) "Performance Unit" means a measure of participation under the
Plan having a value equal to the value of a share of Stock, as
determined by the value of such Stock in the Trust.
(j) "Plan Administrator" means the person appointed to assist the
Committee in carrying out the operations of the Plan.
(k) "Plan Year" means the twelve-month period beginning July 1 and
ending June 30.
(l) "Retirement" means the first day of the month following the later
of (i) attaining age sixty-five or (ii) termination of service on
the Board for any reason other than death or disability.
(m) "Stock" means common stock of Texas Utilities Company.
(n) "Trust" means the irrevocable grantor trust established by Texas
Utilities Company to purchase, hold, and sell shares of Stock so
as to establish the number and value of Performance Units
allocable to Participants' accounts and from which benefits under
the Plan will be paid.
Section 3. Deferral Participation and Election
- -----------------------------------------------
3.1 Participation. Each Outside Director may elect to defer a percentage
-------------
of Compensation (in 25 percent increments up to 100 percent) by filing with the
Plan Administrator, prior to the applicable Plan Year, an irrevocable written
election to defer such amount and to elect the Maturity Period for such
deferral.
3.2 Compensation Reductions. Compensation deferred under the Plan will be
-----------------------
ratably deducted in each quarter of the Plan Year.
Section 4. Company Matching Award
- ----------------------------------
4.1 Matching Award. A Matching Award shall be credited to each
--------------
Participant's account by the Company in an amount equal to 100 percent of the
amount deferred by the Participant. Such Matching Award shall be deemed to
occur on the first day of the Plan Year.
4.2 Maturity Periods. Compensation deferrals and Matching Awards shall
----------------
have a Maturity Period of not fewer than three nor more than ten years as
indicated in the written election. The Maturity Period shall begin on the first
day of the Plan Year in which the Compensation deferral and Matching Award is
made.
2
<PAGE>
Section 5. Participant Accounts
- --------------------------------
5.1 Separate Accounts. The Plan Administrator shall establish and
-----------------
maintain an individual account for Compensation deferrals elected by each
Participant and the Matching Awards for each Plan Year. The account shall be
credited as of the first day of the Plan Year with the amount of Compensation to
be deferred during the Plan Year and the related Matching Award.
5.2 Performance Units. Any and all amounts credited to a Participant's
-----------------
account shall be converted into Performance Units as of the applicable date.
After notification of the number of shares acquired by the Trust with the
aggregate credits to Participants, as provided in Subsection 6.2, the Plan
Administrator will allocate an equal number of Performance Units, including
fractional units, to individual accounts based on the percentage relationship of
each Participant's credits to the total of such credits for all Participants.
5.3 Dividend Equivalent Credits. Additional Performance Units shall be
---------------------------
credited to a Participant's account as Dividend Equivalent Credits. Such amount
shall be determined by multiplying the Performance Units recorded in a
Participant's account by the amount of any regular or special cash dividend
declared on each share of the Stock and dividing the product by the amount paid
by the Trust for a share of Stock with the dividend amounts.
5.4 Date of Credit. Dividend Equivalent Credits shall be credited to a
--------------
Participant's account as of the same date as the cash dividend on the Stock is
paid to shareholders.
5.5 Unsecured Interest. All Performance Units credited to the account of
------------------
each Participant shall be for record purposes only. No Participant or
Beneficiary shall have any security interest whatsoever in any assets of the
Company. To the extent that any person acquires a right to receive payments
under the Plan, such right shall not be secured or represented by any issued
Stock or common stock to be issued.
Section 6. Investment and Funding
- ----------------------------------
6.1 Grantor Trust. The benefits to be derived by Participants in the Plan
-------------
will be funded through the Trust; provided, however, that any Stock, cash, or
other property held by the Trust that was contributed by the Company shall at
all times be subject to the claims of general creditors of the Company.
6.2 Funding of Trust. Upon determination of the total credits to
----------------
Participants' accounts for a Plan Year, the Company shall promptly provide the
Trust with resources in the aggregate of such amounts. The Trustee will invest
such aggregate amounts in shares of the Stock and promptly notify the Plan
Administrator of the number of shares so acquired. The Trustee will use any
cash dividends received on Stock held in the Trust to buy additional shares of
Stock and promptly notify the Plan Administrator of the number of shares so
acquired.
3
<PAGE>
6.3 Distributions from Trust. The Trustee, upon notification from the
------------------------
Plan Administrator, will make the distributions of matured benefits to
Participants or their Beneficiaries as provided in the Plan. If Trust assets
are insufficient to pay the amount of a matured benefit, the Company will pay
such deficiency directly to the Participant or Beneficiary. Any assets held in
the Trust which the Trustee determines to be in excess of those required to pay
the benefits when due to Participants may be returned to the Company.
6.4 Voting of Stock Held in Trust. Stock held in the Trust shall be voted
-----------------------------
by the Trustee in its discretion.
Section 7. Distribution of Account Values
- ------------------------------------------
7.1 Value of a Participant's Account. The value of a Participant's
--------------------------------
account will equal the net proceeds received by the Trust from the sale of
shares equal in number to the number of Performance Units representing the
Participant's deferred amount and Matching Award applicable to the designated
Maturity Period, together with all Dividend Equivalent Credits earned thereon.
7.2 Form and Timing of Distribution. The value of a Participant's account
-------------------------------
at maturity shall be determined as provided in Subsection 7.1. The value of the
Participant's account at maturity shall be paid in cash. Payment shall be made
as soon as practicable, but in no event later than thirty (30) days, following
maturity of the Participant's account. No interest shall accrue or be paid from
date of maturity to date of payment on such amounts.
Section 8. Termination of Service
- ----------------------------------
8.1 Termination of Service Due to Death or Disability. In the event a
-------------------------------------------------
Participant's service is terminated by reason of death or disability, all
amounts credited to the account shall mature upon such termination. The
Participant or the Participant's Beneficiary shall then receive, as soon as
practicable after the date of such termination, a distribution of the
Participant's account based on the value of the account as provided in
Subsection 7.1.
8.2 Termination of Service Prior to the End of the Plan Year. In the
--------------------------------------------------------
event a Participant terminates service prior to the end of the Plan Year, the
deferred amount, Matching Award, and Dividend Equivalent Credits for such Plan
Year will be recomputed as of the date of termination. The value of the
recomputed account shall be an amount equal to the product of the value of the
Performance Units at the date of termination credited to the Participant's
account multiplied by a fraction, the numerator of which is the actual
Compensation reduction for the portion of the Plan Year preceding termination,
and the denominator of which is the Compensation reduction elected for the
entire Plan Year.
4
<PAGE>
Section 9. Nontransferability
- ------------------------------
9.1 Nontransferability. In no event shall the Company make any
------------------
distribution or payment under this Plan to any assignee or creditor of a
Participant or a Beneficiary. Prior to the time of a distribution or payment
hereunder, a Participant or a Beneficiary shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
this Plan.
Section 10. Designation of Beneficiaries
- -----------------------------------------
10.1 Specified Beneficiary. A Participant shall designate a Beneficiary or
---------------------
Beneficiaries who, upon the Participant's death, are to receive the amounts
which otherwise would have been paid to the Participant. All Beneficiary
designations shall be in writing and signed by the Participant, and shall be
effective only if and when delivered to the Plan Administrator during the
lifetime of the Participant. A Participant may, from time to time during the
Participant's lifetime, change the Beneficiary or Beneficiaries by a signed,
written instrument delivered to the Plan Administrator. The payment of amounts
shall be in accordance with the last unrevoked written designation of the
Beneficiary that has been signed and so delivered.
10.2 Estate as Beneficiary. If a Participant designates a Beneficiary
---------------------
without providing in the designation that the Beneficiary must be living at the
time of each distribution, the designation shall vest in the Beneficiary all of
the distributions whether payable before or after the Beneficiary's death, and
any distributions remaining upon the Beneficiary's death shall be made to the
Beneficiary's estate. In the event a Participant shall not designate a
Beneficiary or Beneficiaries, or if for any reason such designation shall be
ineffective, in whole or in part, as determined solely in the discretion of the
Plan Administrator, the distribution that otherwise would have been paid to such
Participant shall be paid to the Participant's estate and in such event the term
"Beneficiary" shall include the Participant's estate.
Section 11. Rights of Participants
- -----------------------------------
11.1 Board Membership. All Participants understand that they are elected
----------------
by the shareholders; therefore, nothing in the Plan shall interfere with or
limit in any way the manner in which a Director is elected and serves in such
capacity nor confer upon a Participant any additional right to continue to serve
as a Director.
Section 12. Administration
- ---------------------------
12.1 Administration. The Committee, in accordance with administrative
--------------
guidelines, shall be responsible for the administration of the Plan. The
Committee is authorized to interpret the Plan, to prescribe, amend, and rescind
rules and regulations relating to the Plan, provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for the
administration of the Plan or to delegate such duties to the Plan Administrator.
The determination of the Committee, interpretation or other action
5
<PAGE>
made or taken pursuant to the provisions of the Plan, shall be final, binding
and conclusive for all purposes and upon all persons whomsoever. The Committee
shall appoint a Plan Administrator to assist in carrying out the operations of
the Plan.
12.2 Annual Reports. The Plan Administrator shall render annually a
--------------
written report to each Participant which shall set forth, at a minimum, the
Participant's account balances as of the end of the most recent Plan Year.
12.3 Costs. Participants shall bear costs equal to the costs incurred by
-----
the Trust related to the purchase and sale of Stock by the Trust. The Company
shall pay all other costs of the Plan and the Trust.
Section 13. Amendment or Termination of the Plan
- -------------------------------------------------
13.1 Amendment or Termination of the Plan. The Board of Directors may
------------------------------------
amend, terminate, or suspend the Plan at any time. Any such amendment,
termination, or suspension of the Plan shall be effective on such date as the
Board of Directors may determine. An amendment or modification of the Plan may
effect Participants at the time thereof as well as future Participants, but no
amendment or modification of the Plan for any reason may diminish any
Participant's account as of the effective date thereof. Upon Plan termination,
Subsection 8.2 shall apply as if the Plan termination date were the termination
of service date.
Section 14. Requirements of Law
- --------------------------------
14.1 Governing Law. The Plan, and all agreements hereunder, shall be
-------------
construed in accordance with and governed by the laws of the State of Texas.
Section 15. Withholding Taxes
- ------------------------------
15.1 Withholding Taxes. The Company shall have the right to deduct from
-----------------
all cash payments under the Plan or from a Participant's compensation an amount
necessary to satisfy any Federal, state, or local withholding tax requirements.
6
<PAGE>
EXHIBIT 10(C)
RESTATED
--------
SUPPLEMENTAL RETIREMENT PLAN
----------------------------
FOR EMPLOYEES OF THE TEXAS UTILITIES COMPANY SYSTEM
---------------------------------------------------
(As restated effective January 1, 1995)
ARTICLE ONE
Purposes of the Program
-----------------------
1.1 The Supplemental Retirement Plan for Employees of the Texas
Utilities Company System (the "Plan") was initially established, effective
January 1, 1983, and is hereby restated effective January 1, 1995, for the
purpose of providing benefits for Participants in excess of the limitations on
contributions and benefits imposed by relevant provisions of the Internal
Revenue Code on qualified defined benefit plans.
1.2 The Plan is established for the benefit of Participants as an
unfunded compensation arrangement; provided, however, Supplemental Retirement
Benefits for Eligible Participants shall be provided, in whole or in part, under
the Trust Agreement. Any Supplemental Retirement Benefits not payable under the
Trust shall be paid under the provisions of the Plan.
1.3 The Plan does not give Participants any rights not expressly granted
them in the Plan.
ARTICLE TWO
Definitions
-----------
The following definitions apply to the Plan unless the context clearly
indicates otherwise:
<PAGE>
2.1 "Adjusted Retirement Benefit" shall mean the Retirement Income
Allowance which would have been payable under the provisions of Section 7 of the
Retirement Plan without regard to Section 8 of the Retirement Plan and without
excluding from Earnings: (i) amounts awarded under the Annual Incentive Plan of
the Texas Utilities Company System or deferred under non-qualified executive
compensation plans and arrangements adopted from time to time by Employer-
corporations; and (ii) amounts in excess of the dollar maximum imposed on
Earnings, as defined in the Retirement Plan.
2.2 "Board of Directors" shall mean the Board of Directors of Texas
Utilities Company.
2.3 "Committee" shall mean the Retirement Committee for the Retirement
Plan for Employees of the Texas Utilities Company System.
2.4 "Company" shall mean Texas Utilities Company.
2.5 "Eligible Participant" shall mean a Participant eligible to receive
benefits under the Trust Agreement, as set forth in the Trust Agreement.
2.6 "Employer-corporation" shall mean the Company or any company, more
than 50% of the voting stock of which is owned directly or indirectly by the
Company, which has been approved for participation in, and which has adopted,
the Plan. "Employer-corporations" shall be used to refer to such companies
jointly or severally.
2.7 "Participant" shall mean each person who is entitled to receive a
benefit on or after January 1, 1983, under the Retirement
2
<PAGE>
Plan and whose Retirement Benefit is less than his Adjusted Retirement Benefit.
2.8 "Plan" shall mean the Supplemental Retirement Plan for Employees of
the Texas Utilities Company System as amended from time to time.
2.9 "Plan Administrator" shall mean the person or persons appointed by
the Board of Directors of Texas Utilities Company to assist in carrying out the
operation of the Plan and/or Trust Agreement.
2.10 "Plan Year" shall be the calendar year.
2.11 "Retirement Benefit" shall be the Retirement Income Allowance
payable to a Participant under the Retirement Plan.
2.12 "Retirement Plan" shall be the Retirement Plan for Employees of the
Texas Utilities Company System.
2.13 "Supplemental Retirement Benefit" shall be the monthly benefit
equal in amount to the difference between the installment of his Adjusted
Retirement Benefit and the installment of his Retirement Benefit, payable under
the same terms applicable to the payment of the Retirement Benefit.
2.14 "Trust Agreement" shall mean the trust agreement which establishes
the secular trust ("Trust") to provide benefits under the Plan for Eligible
Participants.
3
<PAGE>
ARTICLE THREE
Allocation of Costs
-------------------
3.1 The cost of providing the benefits payable under the Plan shall be
allocated to the Employer-corporation which is the employer of the Participant.
3.2 If a Participant has service with more than one of the Employer-
corporations which is relevant to benefits provided thereunder, the costs of
providing that portion of such benefits payable to such Participant shall be
borne on the basis of the accrued Supplemental Retirement Benefit as of date of
transfer of the employee from such Employer-corporation or shall be borne by the
Employer-corporation in the proportion which the salary paid by the Employer-
corporation bears to the aggregate salaries paid by all joint employers during
such joint employment.
3.3 The Company, as agent for the Employer-corporations, will pay all
Benefits provided hereunder and administer all transactions relating to the
Plan, except Benefits payable under the Trust shall be paid by the Trustee.
ARTICLE FOUR
Benefits
--------
4.1 A Participant shall be entitled to receive a Supplemental Retirement
Benefit, pursuant to the provisions of the Plan or the Trust; provided, however,
Benefits payable to Eligible Participants under the Trust shall be subject to
additional provisions set forth in the Trust Agreement, which provisions shall
4
<PAGE>
be controlling. To the extent that Benefits are paid out of the Trust, separate
accounts shall be maintained for each covered Participant.
4.2 Any Benefit payable hereunder, other than a Benefit payable under
the Trust Agreement, shall constitute a general unsecured obligation of Texas
Utilities Company.
ARTICLE FIVE
Miscellaneous
-------------
5.1 The Board of Directors shall be vested with full power and authority
to amend the Plan or to terminate the Plan at any time. If the Plan is
terminated, all payments under the Plan, except those payable under the Trust,
shall cease unless the Board of Directors shall otherwise provide.
5.2 In the event of complete or partial termination of the Plan, or if
it is determined that amounts advanced to Texas Utilities Company by Employer-
corporations are in excess because of variances from actuarial computations,
except as provided in the Trust Agreement with respect to Benefits payable under
the Trust, applicable amounts shall be returned to each Employer-corporation as
its interest shall be determined.
5.3 The Committee shall have the same powers, duties and
responsibilities with respect to the administration of the Plan as provided in
Section 12 of the Retirement Plan; provided, however, the Board of Directors may
appoint a person or persons as Plan Administrator to assist in carrying out the
operation of the Plan
5
<PAGE>
and/or Trust Agreement. The powers, duties and responsibilities of the
Committee shall include specifically, but not by way of limitation, the
authority to carry out the policy of the Company that applicable remuneration
for a taxable year beginning after December 31, 1993, with respect to an
Eligible Participant, shall not exceed the level of deductibility provided for
in Section 162(m) of the Internal Revenue Code or any successor provision.
5.4 Any Employer-corporation, as defined herein, may participate under
this Plan upon approval of the Board of Directors and approval of the board of
directors of such Employer-corporation. Any Employer-corporation may, by action
of its board of directors, withdraw from participation in the Plan upon thirty
days prior notice to Texas Utilities Company.
5.5 THE PLAN SHALL BE CONSTRUED UNDER THE LAWS OF TEXAS.
Executed the 8th day of June , 1995.
------- -------------------
TEXAS UTILITIES COMPANY
By: /s/ Peter B. Tinkham
-----------------------
Peter B. Tinkham
Plan Administrator
6
<PAGE>
EXHIBIT 10(d)
- --------------------------------------------------------------------------------
ANNUAL INCENTIVE PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
MAY 19, 1995
------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Description Section
- ----------- -------
<S> <C>
Purpose of the Plan I
Definitions II
Administration of the Plan III
Eligibility IV
Designation of Tier Groups V
Target and Maximum EPS Levels VI
Award Level Opportunities Based Upon EPS VII
Performance Measurement Process VIII
Supplemental Awards Fund IX
Form and Timing of Awards X
Termination of Employment XI
Miscellaneous XII
</TABLE>
<PAGE>
1
ANNUAL INCENTIVE PLAN OF THE
----------------------------
TEXAS UTILITIES COMPANY SYSTEM
------------------------------
I. Purpose of the Plan
-------------------
The purpose of the Annual Incentive Plan of the Texas Utilities Company System
(hereinafter the "Plan") is to provide annual incentive compensation
opportunities to the officers who contribute significantly to the growth and
success of the Company; to attract and retain individuals of outstanding
ability; to comply with Section 162(m) of the Internal Revenue Code such that
the deduction for federal income tax purposes, of the payment of annual
incentive awards to officers will not be limited by such section; and to further
align the interests of those who hold positions of major responsibility in the
Company with the interests of Company shareholders.
II. Definitions
-----------
When used in the Plan, the following terms shall have the following meanings:
(a) "Base Salary" means the annual base salary rate in effect as of the last
day of the Plan Year.
(b) "Board of Directors" means the Board of Directors of Texas Utilities
Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(d) "Company" means Texas Utilities Company, its successors and assigns, and
each of its subsidiaries and affiliates.
(e) "Committee" means the Organization and Compensation Committee of the Board
of Directors.
(f) "Deferred and Incentive Compensation Plan", or "DICP", means the Deferred
and Incentive Compensation Plan of the Texas Utilities Company System.
(g) "Earnings Per Share", or "EPS", means the Company's net income after taxes,
exclusive of extraordinary items, divided by average common shares
outstanding, appropriately adjusted by the Committee to reflect
recapitalizations, stock dividends, and the like.
<PAGE>
2
(h) "Maximum Award Level" means the maximum level of annual incentive
compensation which a Participant may earn for any Plan Year, expressed as a
percentage of a Participant's Base Salary, or, if less, the dollar amount
set forth in Section VII.
(i) "Maximum EPS" means the EPS Level as established by the Committee the
attainment of which will allow the payment of up to the Maximum Award
Level.
(j) "Participant" means an officer of the Company eligible to participate in
the Plan.
(k) "Plan" means the Annual Incentive Plan of the Texas Utilities Company
System described herein.
(l) "Plan Year" means the period commencing January 1 and ending December 31.
(m) "Target Award Level" means the target level of annual incentive
compensation which a Participant may earn for any Plan Year, expressed as a
percentage of a Participant's Base Salary.
(n) "Target EPS" means the EPS Level established by the Committee, the
attainment of which will allow the payment of up to the Target Award Level.
III. Administration of the Plan
--------------------------
The Plan will be administered by the Committee. The Committee will be comprised
of two (2) or more outside directors, as defined in Code Section 162(m), and
will include only directors who serve on the Board who are not currently, or
have not been, full-time employees of the Company. Directors who do not satisfy
the definition of an outside director, as contained in Code Section 162(m), will
not serve on the Committee.
IV. Eligibility
-----------
Eligibility for participation in the Plan will be limited to officers of the
Company with a title of Vice President or above. Individuals who served as
eligible officers during a Plan Year but who were serving in such capacity at
the end of the PlanYear may be eligible for an Award (full, prorated or some
other amount) under the Plan at the Committee's discretion. Individuals who
were serving as
<PAGE>
3
eligible officers at the end of a Plan Year but who did not serve in such
capacity during the entire Plan Year may be eligible for an Award (full,
prorated or some other amount) under the Plan at the Committee's discretion.
V. Designation of Tier Groups
--------------------------
Participants in the Plan shall be assigned to Tier Groups, with Tier Groups
designated by the position responsibilities and reporting levels within the
organization. The following guidelines shall be applied to the designation of
Tier Groups:
<TABLE>
<CAPTION>
Tier Group Positions
---------- ---------
<S> <C>
I Chairman of the Board, Chief Executive,
President
II Executive Management
III Function Management (Vice President
and above)
</TABLE>
The designation of Tier Groups shall be made by management subject to approve by
the Committee.
VI. Target and Maximum EPS Levels
-----------------------------
Within the first ninety (90) days of the Plan Year, the Committee shall
establish the Target EPS and Maximum EPS Levels for the Plan Year. Such level
or levels shall determine the maximum potential awards (either Target Award
Level or Maximum Award Level as described in Section VII) available under the
Plan. The Target EPS and Maximum EPS Levels shall be communicated to the
Participants in writing. At the conclusion of the Plan Year, the Committee will
certify whether the Target EPS or Maximum EPS Levels were achieved. If the
Target EPS or Maximum EPS Levels
<PAGE>
4
were achieved, the Committee may exercise its discretion in determining how much
of the Target Award Level or Maximum Award Level may be earned by the
Participants using the performance measurement process described in Section VIII
hereof.
VII. Award Level Opportunities Based Upon EPS
----------------------------------------
Awards under the Plan will be available based upon the achievement of either the
Target EPS or the Maximum EPS Levels of earnings. The Target EPS Level of
earnings will allow maximum awards equal to the Participant's Target Award
Level. The Maximum EPS Level of earnings will allow maximum awards equal to the
Participant's Maximum Award Level. Upon completion of the Plan Year, the
Committee will determine whether either EPS Level has been achieved and whether
the Participant's maximum award potential, if any, is the Target Award Level or
the Maximum Award Level. If the Target EPS Level is achieved, the award
determined under the performance evaluation process in Section VIII of the Plan
will be earned. Also, if the Target EPS Level is achieved, the Committee may
exercise its discretion in determining an additional portion of the Target Award
Level to be awarded by utilizing the performance measurement process described
in Section VIII of the Plan and by considering the availability of the
Supplemental Awards Fund as provided in Section IX of the Plan. Additionally,
if the Maximum EPS Level is achieved, the Committee may exercise its discretion
in making an award in excess of the Target Award Level up to the Maximum Award
Level by utilizing the performance measurement process described in Section VIII
of the Plan and by considering the availability of the Supplemental Awards Fund
as provided in Section IX of the Plan.
Participants in the Plan will have a Target Award Level which is based upon
their assigned Tier Group. The Target Award Level will be expressed as a
percentage of the Participant's Base Salary, as set forth in the schedule below:
<PAGE>
5
<TABLE>
<CAPTION>
Tier Group Target Award Level
---------- ------------------
<S> <C>
I 50 Percent X Base Salary
II 40 Percent X Base Salary
III 35 Percent X Base Salary
</TABLE>
In addition, all Participants will have a Maximum Award Level in any Plan Year
of 100 percent times Base Salary, but, in no event, may such amount exceed
$1,000,000.
VIII. Performance Measurement Process
-------------------------------
If the Company achieves one of the EPS levels and potential awards under the
Plan are available at either the Target Award Level or the Maximum Award Level,
then the actual award determination for each Participant will be subject to
further performance measurement by the Committee. The size of a Participant's
award cannot exceed the level at which the potential award is set, either the
Target Award Level or the Maximum Award Level, as provided in Section VII. The
actual award for each participant will be based upon an assessment of both
Company performance and individual performance. The Committee will evaluate the
Company's performance based on a number of criteria, such as those set forth on
Exhibit A, and determine whether such performance met, exceeded, or was below
the expected level of performance. In addition, each Participant's individual
performance will be evaluated as to whether his or her performance met,
exceeded, or was below the expected level of performance. Based upon the
foregoing evaluations, both the Company and individual Participant will be
graded under the following schedule:
Grade Awarded at Each Performance Level
---------------------------------------
<TABLE>
<CAPTION>
Assessment Company Individual
of Performance Performance Performance
- --------------------------------------------------------------------------------
<S> <C> <C>
Exceeds Expectations 1 1
Meets Expectations 2 2
Below Expectations 3 3
</TABLE>
<PAGE>
6
This performance evaluation process will result in a grade of either 1, 2, or 3
for the Company, and a grade of 1, 2, or 3 for the individual. These two grades
will be applied in the following schedule which will determine the award to be
provided to the Participant as a percentage of the Target Award Level:
<TABLE>
<CAPTION>
Percent of
Company Individual Target Award
Performance Performance Level
----------- ----------- ------------
<S> <C> <C>
1 1 100%
1 2 90%
1 3 50%
2 1 80%
2 2 60%
2 3 30%
3 1 50%
3 2 25%
3 3 0%
</TABLE>
If the Target EPS Level was achieved, and if amounts are available from the
Supplemental Awards Fund as described in Section IX, the Committee may provide
additional awards to Participants in amounts which, when added to his or her
award determined above, may increase his or her total award up to the Target
Award Level. Such additional awards will be based upon individual performance
and competitive compensation levels, as determined by the Committee.
If the Maximum EPS Level was achieved, and if amounts are available from the
Supplemental Awards Fund as described in Section IX, the Committee may provide
additional awards to Participants in amounts which, when added to his or her
award determined above, may increase his or her total award up to the Maximum
Award Level. Such additional awards will be based upon individual performance
and competitive compensation levels, as determined by the Committee.
<PAGE>
7
IX. Supplemental Awards Fund
------------------------
If the Company is considered by the Committee to be the top performing electric
utility among the ten largest electric utility companies in the U.S., a
Supplemental Awards Fund will be established which will be equal to thirty
percent (30%) of the aggregate of Participants' Base Salaries. If the Company
is rated by the Committee as "Exceeds Expectations" and, thus, receives a grade
of "1", as set forth in Section VII, such Supplemental Awards Fund will be equal
to twenty percent (20%) of the aggregate of the Participants' Base Salaries. If
the Company is rated by the Committee as "Meets Expectations" and, thus,
receives a grade of "2", as set forth in Section VII, the Supplemental Awards
Fund will be equal to ten percent (10%) of the aggregate of the Participants
Base Salaries. The Committee will have full discretion to make awards from this
Supplemental Awards Fund to any Participant to such extent as it may desire to
recognize their contributions to the success of the Company. All or any part of
the fund may be awarded in any Plan Year by the Committee; and any portion of
the Supplemental Awards Fund which is not awarded by the Committee for any Plan
Year will not be carried over to any future Plan Year.
X. Form and Timing of Awards
-------------------------
Fifty percent (50%) of the incentive award earned will be paid in cash. Such
amounts will be paid within the six-month period immediately following the
completion of the Plan Year. Amounts paid in cash shall be subject to the
normal rules and regulations regarding the withholding for taxes and other
deductions, if any, as may be in effect at the time of payment.
The remaining fifty percent (50%) of the incentive award earned shall be
deferred as an incentive award under the Company's Deferred and Incentive
Compensation Plan. Such amounts shall be provided to the Trustee of the
Deferred and Incentive Compensation Plan for investment and subsequent
distribution under the provisions of such plan.
<PAGE>
8
XI. Termination of Employment
-------------------------
In the event of death, disability or retirement, Participants may be entitled to
receive prorated awards based upon the number of months in which they have
participated in the Plan for the applicable Plan Year. Decisions regarding
prorated awards will be made by the Committee. However, in the event of
termination for reason of misconduct, fraud, or other act adverse to the Company
to any substantial extent, as determined by the Committee in its discretion, the
Participant will not be entitled to any award, whether prorated or not, for the
Plan Year.
XII. Miscellaneous
-------------
Participants will have no right to anticipate, alienate, sell, transfer, assign,
pledge or encumber any right to receive any award made under the Plan nor will
any Participant have any lien on any assets of the Company by reason of any
award made under the Plan.
Nothing in the Plan, including an employee's eligibility for participation in
the Plan, will confer any right of employment on such employee.
The adoption of the Plan or any amendment or suspension hereof does not imply
any commitment to continue to maintain the same plan, or any modification
thereof, or any other plan for incentive compensation for any succeeding year.
The Board of Directors, subject to approval by the shareholders of the Company
in the event of any amendment to the Plan which changes the material terms of
the performance goals, increases the maximum amount payable under the Plan or is
otherwise required by the provisions of Code Section 162(m), may amend, suspend
or terminate the Plan at any time, provided no such amendment, suspension or
termination shall adversely affect the right to receive any amount to which
Participants have become entitled prior to such amendment, suspension or
termination.
<PAGE>
9
THE PLAN SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS.
Executed on this 19th day of May , 1995.
----------- --------------
TEXAS UTILITIES COMPANY
By /s/ Peter B. Tinkham
-------------------------------------
<PAGE>
EXHIBIT A
COMPANY PERFORMANCE CRITERIA
1. Total Return to Shareholders
2. Return on Invested Capital
3. Customer Satisfaction
4. Revenue/KWH
5. Employee Safety
<PAGE>
EXHIBIT 10(e)
MANAGEMENT TRANSITION AGREEMENT
This Management Transition Agreement by and between TEXAS UTILITIES
COMPANY, a Texas corporation ("Company"), and JERRY S. FARRINGTON ("Executive")
dated and effective as of the 18th day of May, 1995.
W I T N E S S E T H :
The Executive and the Board of Directors of the Company ("Board") have
determined that it is in the best interest of the Company and its shareholders
to assure that the Company achieves an orderly transition of the executive
management of the Company and to provide for the continuity of management during
such transition period. The Board also desires to retain the talents and
capabilities of Executive as a Consultant to the Company following his
retirement as an officer of the Company. Therefore, in order to accomplish
these purposes, the Board of Directors, through resolution adopted on this date,
has caused the Company to enter into this agreement.
NOW, THEREFORE, IT IS HEREBY AGREED:
1. At the regular meeting of the Board on the 19th day of May, 1995,
Executive shall be elected Chairman of the Company's Board and will relinquish
the position of Chief Executive of the Company. It is understood that Erle A.
Nye shall thereupon be elected as President and Chief Executive of the Company.
2. Executive shall, upon election as a Director of the Company by the
Shareholders, be elected to serve as Chairman of the Company until the regular
meeting of the Board to be held in
<PAGE>
May of 1997, at which time Executive shall relinquish the position of Chairman
and will be named to the honorary position of Chairman Emeritus by the Board.
3. It is agreed that Executive's base salary shall not be changed until
the regular meeting of the Board to be held in May, 1996, at which time his base
compensation shall be reduced by fifteen percent (15%). Executive's base salary
shall be reduced by an additional fifteen percent (15%) at the regular meeting
of the Board to be held in May, 1997. Executive shall continue to be eligible,
in accordance with their respective terms, under all employee benefit plans,
including executive compensation plans sponsored by the Company, until his
retirement as an officer and employee of the Company. All other privileges,
responsibilities, rights, obligations, conditions, and emoluments of officer
pertaining to Executive, unless specifically in conflict with the provisions of
this agreement, shall remain in full force and effect until such retirement.
Executive's Supplemental Retirement, to the extent not funded, shall be fully
funded at the time of his retirement as an officer and employee of the Company.
4. Executive shall retire as an officer and employee of the Company at the
regular meeting of the Board to be held in May, 1998. Upon such retirement, the
Company agrees to retain Executive and Executive agrees to serve thereafter for
a period of two years as a Consultant to the Company and be compensated therefor
at the rate of $200,000 per year payable through equal monthly payments. The
Company shall furnish Executive an office and secretary, and provide an expense
account for reasonable business expenses incurred by Executive in carrying out
his responsibilities as Consultant. Executive's relationship to the Company
shall be that of independent contractor and not employee and he shall not be
entitled to participate in any salary or other compensation plans during the
performance of his services as a Consultant to the Company. As a
2
<PAGE>
Consultant, Executive shall be available to the Chief Executive of the Company
to assist the Chief Executive on matters of corporate policy and industry,
community, and government relations, and to provide such other counsel and
advice as the Chief Executive may reasonably determine. Executive, in his
capacity as Consultant to the Company, shall devote essentially his full time
and attention as Consultant and agrees not to undertake other employment without
the prior consent of the Chief Executive of the Company.
5. This agreement shall not survive, and shall terminate upon, the death
or disability of Executive.
6. Contemporaneous with the execution of this agreement, Executive shall
be furnished a copy of a resolution of the Board of Directors authorizing the
execution and delivery of this agreement.
IN WITNESS WHEREOF, Executive and the Company, pursuant to the
authorization from its Board of Directors, have caused this agreement to be
executed, all as of the day and year first set forth above.
TEXAS UTILITIES COMPANY
By: /s/ Jack W. Evans
----------------------------------------
Acting Chairman, Organization and
Compensation Committee of the Board
EXECUTIVE
By: /s/ Jerry S. Farrington
----------------------------------------
Jerry S. Farrington
3
<PAGE>
EXHIBIT 10(F)
SALARY DEFERRAL PROGRAM
OF THE
TEXAS UTILITIES COMPANY SYSTEM
(AS RESTATED EFFECTIVE JANUARY 1, 1995)
SECTION 1. PURPOSE
1.1 Purpose. The Salary Deferral Program of the Texas Utilities
-------
Company System (the "Plan") is established, effective April 1, 1991, for the
purpose of motivating executive employees and recognizing the contributions of
such employees to the Company. The Plan is designed as an unfunded arrangement
maintained "primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees" as determined under
the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
ERISA Section 201(2).
SECTION 2. DEFINITIONS
2.1 Definitions. Whenever used hereinafter, the following terms shall
-----------
have the meanings set forth below:
(a) "Account" means the individual accounts maintained for recording
interests of each Participant in the Plan.
(b) "Actual Rate" means the actual earnings rate, as determined by the
Trustee, for assets held in Trust under the Seven-Year Option.
(c) "Alternative Rate" means the average earnings rate, as determined by
the Trustee, of interest rates payable on Treasury Notes of the United
States Government with a maturity period of ten years. Income credited
under the Alternative Rate shall be determined by multiplying the
Alternative Rate for the Plan Year within the Deferral Period times
the average balance in the Account for such Plan Year, including
income earned for prior periods. Income on all Accounts under the
Plan shall be deemed to have been earned on a consistent basis.
(d) "Beneficiary" means the person or persons named by the Participant as
the recipient(s) of any distribution remaining to be paid to the
Participant under the Plan upon the Participant's death.
(e) "Board of Directors" means the Board of Directors of Texas Utilities
Company.
<PAGE>
(f) "Committee" means the Salary Deferral Program Administrative
Committee, which shall be comprised, initially, of members who serve
on the Employees' Thrift Plan Committee. Subsequently, members of the
Committee shall be appointed by the Board of Directors.
(g) "Company" means Texas Utilities Company and its subsidiaries.
(h) "Deferral Period" means the period of deferral, beginning with the
first day of the applicable Plan Year, which shall be seven years for
the Seven Year Option and which shall be the period ending with
Retirement for the Retirement Option. Notwithstanding the foregoing,
the Deferral Period shall end on the date of death, total and
permanent disability, or termination of employment and, to the extent
that amounts otherwise eligible for distribution under this Plan
combined with the Participant's other remuneration exceeds the
Applicable Employee Remuneration for such year, and subject to the
subsequent Transition Provision, the Deferral Period for such excess
amount shall end with Retirement or such earlier date as of which such
amounts, or any part thereof, combined with other remuneration does
not exceed the Applicable Employee Remuneration. For purposes of this
definition, "Applicable Employee Remuneration" means applicable
employee remuneration as that term is defined in Section 162(m), or
any successor provision, of the Internal Revenue Code. Transition
Provision: Notwithstanding any other provisions contained herein, the
Deferral Period for amounts subject to an Election made for periods
prior to April 1, 1995, shall be the Deferral Period applicable at the
time of the Election.
(i) "Disability" means disability as determined under the provisions of
the Texas Utilities System Employee Long-Term Disability Income Plan.
(j) "Early Retirement" means Retirement at age fifty-five or later but
prior to Normal Retirement.
(k) "Election Form" means the form prescribed by the Plan Administrator
for participation in the Plan.
(l) "Eligible Employee" means an Employee whose Salary as of January 1,
1991, is $80,000 or more. For each year subsequent to 1991, an
Eligible Employee is an Employee whose Salary as of January 1 of such
2
<PAGE>
year is $80,000 or more, as indexed consistent with the Consumer Price
Index for such year.
(m) "Employee" means an employee of the Company.
(n) "Matching Award" means contribution made by the Company pursuant to
Section 5.1 herein.
(o) "Matching Account" means an Account maintained for Matching Awards.
(p) "Normal Retirement" means Retirement at age sixty-two or later.
(q) "Participant" means an Eligible Employee who elects to participate in
the Plan and whose Account(s) has not been completely distributed.
(r) "Plan Administrator" means the person or persons appointed by the
Committee to assist in carrying out the operation of the Plan.
(s) "Plan Year" means the twelve-month period beginning April 1 and ending
March 31.
(t) "Rate" means the earnings rate which shall be the greater of the
Actual Rate or the Alternative Rate for the Deferral Period.
(u) "Retirement" shall have the meaning given it under the Retirement Plan
for Employees of the Texas Utilities Company System.
(v) "Retirement Option" means the option to defer receipt of certain
amounts of Salary until Retirement as set forth in Section 4.3(b)
herein.
(w) "Salary" means the annualized rate of normal base pay earnings, prior
to any deferrals, of an Employee exclusive of overtime, bonuses or any
fringe benefits determined as of January 1 of each year prior to the
beginning of each Plan Year.
(x) "Salary Deferral Account" means an Account maintained for Salary
Deferrals.
(y) "Seven Year Option" means the option to defer receipt of certain
amounts of Salary for seven years as set forth in Section 4.3(a)
herein.
(z) "Trust" means the trust established by Texas Utilities Company to
assist it in meeting its obligations under the Plan.
3
<PAGE>
(aa) "Trustee" means the trustee appointed by the Committee to hold assets
of the Plan.
(bb) "Vesting Period" means the period beginning with the date of the
beginning of the Plan Year of deferral and ending with the end of the
seventh Plan Year.
SECTION 3. DEFERRAL ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. An Eligible Employee shall be eligible to participate
-----------
in the Plan as of the beginning of the Plan Year upon compliance with the
provisions of Section 4 herein.
3.2 Participation. All Eligible Employees may elect on the Election
-------------
Form to defer a percentage of Salary, in the Retirement Option, the Seven Year
Option, or a combination thereof, in one percent (1%) increments, ("Salary
Deferral") not to exceed a maximum of ten percent (10%).
SECTION 4. ELECTION TO DEFER
4.1 Deferral Election. An Eligible Employee may elect, irrevocably, by
-----------------
written notice to the Plan Administrator on an Election Form and in the manner
prescribed by the Plan Administrator, to defer a percentage of Salary during the
Plan Year.
4.2 Salary Deferrals. Salary deferred under the Plan will be ratably
----------------
deducted in each pay period in the Plan Year.
SECTION 5. COMPANY MATCHING AWARDS, VESTING, AND FORFEITURES.
5.1 Matching Awards. The Company shall contribute to each Participant's
---------------
Account, as a Matching Award, an amount equal to one hundred percent (100%) of
the amount of Salary deferred by the Participant. Such contribution shall be
credited at the time of the crediting of the Salary Deferral amount to be
matched.
5.2 Vesting. Subject to the forfeiture provisions of Section 5.3, a
-------
Participant shall be one hundred percent (100%) vested in contributions to his
Salary Deferral Account and, at the end of the Vesting Period, shall be one
hundred percent (100%) vested in his Matching Account, and on income earned for
such period. A Participant's Accounts become one hundred percent (100%) vested
upon the Participant's Normal Retirement, death, or Disability regardless of the
applicable Vesting Period.
5.3 Forfeitures. The following amounts shall be forfeited from an
-----------
Account as of the date upon which the forfeiture is created:
4
<PAGE>
(a) Seven Year Option Forfeitures.
-----------------------------
(1) Early Retirement. An amount equal to four percent (4%) of the
----------------
total Account balance for each full year Retirement occurs prior
to Normal Retirement shall be forfeited.
(2) Termination for other than Death, Disability or Retirement. If
----------------------------------------------------------
termination of service with the Company occurs for reasons other
than death, Disability, or Retirement, income on and
contributions to the Matching Account shall be forfeited and
income in excess of six percent (6%) per annum credited to Salary
Deferrals shall be forfeited.
(b) Retirement Option Forfeitures.
-----------------------------
(1) Early Retirement. An amount equal to four percent (4%) of the
----------------
total Account balance for all non-vested Plan Years for each full
year Retirement occurs prior to Normal Retirement shall be
forfeited.
(2) Termination for other than Death, Disability or Retirement. If
----------------------------------------------------------
termination of service with the Company occurs for reasons other
than death, Disability, or Retirement, income earned on and
contributions to the Matching Account, for Plan Years which are
nonvested, shall be forfeited and income in excess of six percent
(6%) per annum credited to Salary Deferrals shall be forfeited
for all nonvested Plan Years.
SECTION 6. INVESTMENTS, EARNINGS, AND VALUATION
6.1 Investments. The Trustee shall invest, as soon as administratively
-----------
feasible, all contributions received for Accounts held in Trust under the Seven
Year Option of the Plan in a fixed income fund of investment grade securities
under investment guidelines established by the Committee. Interest received on
the investments shall be reinvested in such fund. All other contributions shall
be invested pursuant to the Trust Agreement.
6.2 Earnings. At the time of distribution, the Participant will receive
--------
Account balances including income determined by applying the Rate.
6.3 Valuation. The total of all assets held by the Trustee for Accounts
---------
held in Trust will be deemed held in an unsegregated
5
<PAGE>
fund for valuation purposes. Each month the Trustee shall determine the value
of each unit by dividing the current value of the fund by the total number of
units held in all such Accounts. The value of Accounts held in Trust under the
Retirement Option of the Plan shall be determined in the same manner as amounts
deferred under the Seven Year Option of the Plan.
SECTION 7. PARTICIPANT ACCOUNTS
7.1 Separate Accounts. The Plan Administrator shall establish and
-----------------
maintain separate individual Accounts for each Participant for Salary Deferrals
and for Matching Awards for each Plan Year.
7.2 Unsecured Interest. No Participant or Beneficiary shall have any
------------------
security interest whatsoever in any assets of the Company. To the extent that
any person acquires a right to receive payments under the Plan, such right shall
not be secured or represented by any assets of the Company.
SECTION 8. DISTRIBUTION OF ACCOUNTS
8.1 Value of a Participant's Accounts. The cash value of a
---------------------------------
Participant's Accounts shall be determined as of the last day of the applicable
Deferral Period, or, if earlier, at termination of employment.
8.2 Form and Timing of Distribution. The value of the Participant's
-------------------------------
Accounts at distribution shall be paid in cash, as follows:
(a) Seven-Year Option - in a lump-sum distribution as soon as practicable
-----------------
after the end of the Deferral Period or, if earlier, termination of
employment, but in no event later than sixty days following such date.
In the event of a lump sum distribution, no interest shall accrue or
be paid for the period from such date until actual distribution.
(b) Retirement Option -
-----------------
(i) If Participant Retires - in twenty annual installments
----------------------
beginning twelve months after the date of such
Retirement; provided, however, such installments shall
be in an amount to amortize the value of the
Participant's Account at distribution over twenty
annual installments using, as a projected earnings rate
of return, the Rate as
6
<PAGE>
determined in Section 6.2 above; provided, however, in
the event of the death of a Participant or Beneficiary
during the distribution period, the Plan Administrator
may, upon application to the Plan Administrator and in
the sole discretion of the Plan Administrator, direct
that the remainder of the Account be distributed to the
estate of the Participant or Beneficiary in a lump-sum
distribution as soon as practicable after death occurs
but in no event later than thirty days following such
date.
(ii) If Participant Terminates - in a lump-sum distribution
-------------------------
as soon as practicable after termination occurs but in
no event later than sixty days following such date. In
the event of a lump sum distribution, no interest shall
accrue or be paid for the period from such date until
actual distribution.
8.3 Retirement or Voluntary Termination Under 1992 Voluntary
--------------------------------------------------------
Separation Plan. Notwithstanding any provision herein to the contrary, a
- ---------------
Participant under this Plan who elects a retirement or termination date of
October 1, 1992, or November 1, 1992, notifies the Company of such election
between July 1, 1992, and September 1, 1992, inclusive and retires or otherwise
terminates his employment on October 1, 1992, or November 1, 1992 (unless the
Company requests and the Participant agrees to extend such date from month to
month thereafter for a period ending on or before November 1, 1993), shall be
entitled to the following additional and adjusted benefits under this Plan:
(a) The forfeitures prescribed in Section 5.3 hereof shall not apply; and
(b) The value of the Participant's Account shall be distributed to the
Participant in a lump sum as soon as practicable after the Participant's
retirement or termination date.
Additionally, an Eligible Employee for the Plan Year beginning April 1,
1992, who elects a retirement or termination date of October 1, 1992, or
November 1, 1992, notifies the Company of such election between July 1, 1992,
and September 1, 1992, inclusive, and retires or otherwise terminates his
employment on October 1, 1992 or November 1, 1992 (unless the Company requests
and the Eligible Employee agrees to extend such date from month to month
thereafter for a period ending on or before November 1, 1993), shall, in
addition to the additional and adjusted benefits described hereinabove, be
entitled to receive an additional lump
7
<PAGE>
sum payment in an amount (the "Additional Matching Amount") equal to 50% of the
present value (calculated at a discount rate equal to 6 1/2 per annum) of the
Matching Awards for such Eligible Employee over a ten year period calculated on
the basis of a Salary Deferral equal to 10% and the Salary in effect for such
Eligible Employee on the last day of the month immediately preceding such
Eligible Employee's retirement or termination; provided that, in no event may
the Additional Matching Amount exceed $40,000.
SECTION 9. NONTRANSFERABILITY
9.1 Nontransferability. In no event shall the Company make any
------------------
distribution or payment under this Plan to any assignee or creditor of a
Participant or a Beneficiary. Prior to the time of a distribution or payment
hereunder, a Participant or a Beneficiary shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
this Plan.
SECTION 10. DESIGNATION OF BENEFICIARIES
10.1 Specified Beneficiary. A Participant shall designate a Beneficiary
---------------------
or Beneficiaries who, upon the Participant's death are to receive the amounts
that otherwise would have been paid to the Participant. All Beneficiary
designations shall be in writing and signed by the Participant, and shall be
effective only if and when delivered to the Plan Administrator during the
lifetime of the Participant. A Participant may, from time to time during his
lifetime, change his Beneficiary or Beneficiaries by a signed, written
instrument delivered to the Plan Administrator. The payment of amounts shall be
in accordance with the last unrevoked written designation of the Beneficiary
that has been signed and so delivered.
10.2 Estate as Beneficiary. If a Participant designates a Beneficiary
---------------------
without providing in the designation that the Beneficiary must be living at the
time of each distribution, the designation shall vest in the Beneficiary all of
the distributions whether payable before or after the Beneficiary's death, and
any distributions remaining upon the Beneficiary's death shall be made to the
Beneficiary's estate. In the event a Participant shall not designate a
Beneficiary or Beneficiaries, or if, for any reason, such designation shall be
ineffective, in whole or in part, as determined solely in the discretion of the
Plan Administrator, the distribution that otherwise would have been paid to such
Participant shall be paid to the Participant's estate.
SECTION 11. RIGHTS OF PARTICIPANTS
11.1 Employment. All Participants understand they are employees at will.
----------
Therefore, nothing in the Plan shall interfere
8
<PAGE>
with or limit in any way the right of the Company to terminate, for any or no
reason, any Participant's employment at any time, nor confer upon a Participant
any right to continue in the employ of the Company.
SECTION 12. ADMINISTRATION
12.1 Administration. The Committee shall be responsible for the
--------------
administration of the Plan. The Committee is authorized, in its sole
discretion, to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, provide for conditions and assurances deemed
necessary or advisable to protect the interests of the Company, and to make all
other determinations necessary or advisable for the administration of the Plan.
The determination of the Committee, interpretation or other action made or taken
pursuant to the provisions of the Plan, shall be final and shall be binding and
conclusive for all purposes and upon all persons whomsoever. The Committee
shall appoint a Plan Administrator to assist in carrying out the operations of
the Plan and a Trustee of the Trust to accompany the Plan.
12.2 Annual Reports. The Plan Administrator shall render annually a
--------------
written report to each Participant which shall set forth, at a minimum, the
Participant's Account balances as of the end of the most recent Plan Year.
SECTION 13. AMENDMENT OR TERMINATION OF THE PLAN
13.1 Amendment or Termination of the Plan. The Board of Directors may
------------------------------------
amend, terminate, or suspend the Plan at any time. Any such amendment,
termination, or suspension of the Plan shall be effective on such date as the
Board of Directors may determine. An amendment or modification of the Plan may
affect Participants at the time thereof as well as future Participants, but no
amendment or modification of the Plan for any reason may diminish any
Participant's Accounts as of the effective date thereof. Upon Plan termination,
all amounts credited to a Participant's Accounts shall be deemed to have vested.
Each Participant shall receive, as soon as practical after Plan termination, a
lump sum distribution of his Accounts based on the value of his Accounts as of
the date of Plan termination.
SECTION 14. CORPORATE CHANGES
14.1 Dissolution or Liquidation. Notwithstanding any provision herein
--------------------------
to the contrary, upon the dissolution or liquidation of the Company, the
Participant's Accounts shall vest as of the day preceding the date of
dissolution or liquidation. The Company shall cause such amount to be paid in
cash in a lump sum to the Participant, or his Beneficiary, as soon as is
9
<PAGE>
practicable, but in no event later than sixty days following the date of
dissolution or liquidation.
14.2 Merger, Consolidation, and Sale of Assets. Notwithstanding anything
-----------------------------------------
herein to the contrary, in the event that the Company consolidates with, merges
into, or transfer all or substantially all of its assets to another unaffiliated
corporation, all assets credited to a Participant's Accounts hereunder
immediately shall be deemed to be vested. All Participant's Accounts shall be
paid in cash in a lump sum to the Participant, or his Beneficiary, as soon as is
practicable, but in no event later than sixty days following the date of merger,
consolidation, or sale of assets.
SECTION 15. REQUIREMENTS OF LAW
15.1 GOVERNING LAW. THE PLAN, AND ALL AGREEMENTS HEREUNDER, SHALL BE
-------------
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
SECTION 16. WITHHOLDING TAXES
16.1 Withholding Taxes. The Company shall have the right to deduct from
-----------------
all cash payments under the Plan or from a Participant's compensation an amount
necessary to satisfy any federal, state, or local withholding tax requirements.
SECTION 17. INVESTMENT AND FUNDING
17.1 Trust. The benefits to be derived by Participants in the Plan will
-----
be funded through an irrevocable grantor trust ("Trust") provided, however, that
any assets held by the Trust shall at all times be subject to the claims of
judgment creditors of the Company.
17.2 Funding of Trust. After Salary Deferrals have been credited to
----------------
Accounts, the Company shall promptly provide the Trust with resources in amounts
to comply with the requirements set forth herein.
17.3 Distributions from Trust. If Trust assets allocated to any
------------------------
Participant's Accounts for a Plan Year are less than the amount
10
<PAGE>
required, the Company will pay such difference either through the Trust or
directly to the Participant.
EXECUTED this 8th day of June , 1995.
----------- ------------------
TEXAS UTILITIES COMPANY
By: /s/ Peter B. Tinkham
-------------------------------
Peter B. Tinkham, Secretary
11
<PAGE>
EXHIBIT 15A
Texas Utilities Company:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited condensed
consolidated interim financial information of Texas Utilities Company for the
periods ended June 30, 1995 and 1994, as indicated in our report dated August 8,
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 June 30, 1995, is
incorporated by reference in Registration Statement No. 33-55931 on Form S-3 and
Registration Statements No. 33-59575, 33-59759 and 33-59961 on Form S-8.
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
August 8, 1995
<PAGE>
EXHIBIT 15B
Texas Utilities Electric Company:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited condensed interim
financial information of Texas Utilities Electric Company for the periods ended
June 30, 1995 and 1994, as indicated in our report dated August 8, 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 June 30, 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
August 8, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF CONSOLIDATED INCOME, CONDENSED STATEMENTS OF
CONSOLIDATED CASH FLOWS, AND CONDENSED CONSOLIDATED BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000097561
<NAME> TEXAS UTILITIES CO.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,560,663
<OTHER-PROPERTY-AND-INVEST> 768,122
<TOTAL-CURRENT-ASSETS> 775,090
<TOTAL-DEFERRED-CHARGES> 1,912,255
<OTHER-ASSETS> (72,685)
<TOTAL-ASSETS> 20,943,445
<COMMON> 4,802,844
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,569,738
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,372,582
300,457
855,869
<LONG-TERM-DEBT-NET> 8,130,245
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 299,105
<LONG-TERM-DEBT-CURRENT-PORT> 58,126
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,927,061
<TOT-CAPITALIZATION-AND-LIAB> 20,943,445
<GROSS-OPERATING-REVENUE> 2,598,263
<INCOME-TAX-EXPENSE> 124,634
<OTHER-OPERATING-EXPENSES> 1,864,614
<TOTAL-OPERATING-EXPENSES> 1,989,248
<OPERATING-INCOME-LOSS> 609,015
<OTHER-INCOME-NET> 3,414
<INCOME-BEFORE-INTEREST-EXPEN> 612,429
<TOTAL-INTEREST-EXPENSE> 343,805
<NET-INCOME> 268,624
44,781
<EARNINGS-AVAILABLE-FOR-COMM> 223,843
<COMMON-STOCK-DIVIDENDS> 347,861
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 634,150
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
<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 CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000710182
<NAME> TEXAS UTILITIES ELECTRIC COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,884,001
<OTHER-PROPERTY-AND-INVEST> 82,492
<TOTAL-CURRENT-ASSETS> 704,490
<TOTAL-DEFERRED-CHARGES> 1,872,180
<OTHER-ASSETS> (72,685)
<TOTAL-ASSETS> 19,470,478
<COMMON> 5,166,125
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 817,876
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,984,001
300,457
855,869
<LONG-TERM-DEBT-NET> 7,465,841
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 299,105
<LONG-TERM-DEBT-CURRENT-PORT> 40,263
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,524,942
<TOT-CAPITALIZATION-AND-LIAB> 19,470,478
<GROSS-OPERATING-REVENUE> 2,575,017
<INCOME-TAX-EXPENSE> 135,024
<OTHER-OPERATING-EXPENSES> 1,855,981
<TOTAL-OPERATING-EXPENSES> 1,991,005
<OPERATING-INCOME-LOSS> 584,012
<OTHER-INCOME-NET> 3,392
<INCOME-BEFORE-INTEREST-EXPEN> 587,404
<TOTAL-INTEREST-EXPENSE> 311,427
<NET-INCOME> 275,977
44,781
<EARNINGS-AVAILABLE-FOR-COMM> 231,196
<COMMON-STOCK-DIVIDENDS> 360,640
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 647,142
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99
[CONFORMED COPY]
================================================================================
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-THIRD SUPPLEMENTAL INDENTURE
PROVIDING AMONG OTHER THINGS FOR
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES U,
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES V,
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES W
AND
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES X
__________________
DATED AS OF JUNE 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-THIRD SUPPLEMENTAL INDENTURE
__________________________________
INDENTURE, dated as of June 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-third 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>
<CAPTION>
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
Fifty-second Supplemental Indenture................ April 1, 1995
</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 May 31, 1995, in
accordance with the provisions of the Original Indenture, as heretofore
supplemented, the following series of First Mortgage and Collateral Trust Bonds
and First Mortgage 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 None
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.......... 115,000,000 104,650,000
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
Pollution Control Series S due April 1, 2030.......... 58,270,500 58,270,500
Pollution Control Series T due April 1, 2030.......... 18,400,000 18,400,000
</TABLE>
which bonds are also hereinafter sometimes called bonds of the First through
Eightieth 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
<PAGE>
5
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
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 four 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-third
Supplemental Indenture, and the terms of the bonds of the Eighty-first, Eighty-
second, Eighty-third and Eighty-fourth 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
<PAGE>
6
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 general description contained in this Fifty-third 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
<PAGE>
7
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.
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-third
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-third
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.
<PAGE>
8
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-
third Supplemental Indenture being supplemental to the Original Indenture.
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
EIGHTY-FIRST SERIES OF BONDS
SECTION 1. There shall be a series of bonds designated "Pollution Control
Series U" (herein sometimes referred to as the "Eighty-first 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 Eighty-first Series shall
mature on June 1, 2030, shall not bear interest and shall be issued as fully
registered bonds in denominations of Two Hundred Fifty 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
Eighty-first Series shall be dated as in Section 2.03 of the Original Indenture
provided.
(I) The bonds of the Eighty-first Series shall be initially issued in the
aggregate principal amount of $136,108,250 to, and registered in the name of,
the trustee under the Trust Indenture, dated as of June 1, 1995 (hereinafter
sometimes called the "1995 Brazos Bond Indenture"), of the Brazos River
Authority (hereinafter sometimes called the "Brazos Authority"), under which its
Collateralized Pollution Control Revenue Refunding Bonds (Texas Utilities
Electric Company Project) Series 1995B (hereinafter sometimes called the "Series
1995B Brazos Revenue Bonds") are to be issued, in order to provide the benefit
<PAGE>
9
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 Payment and Bond Amortization Agreement, dated as of June 1,
1995 (hereinafter sometimes called the "1995B Brazos Agreement"), between the
Brazos Authority and the Company.
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-first 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 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
1995B 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 Eighty-first 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 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 1995B Brazos Revenue Bonds outstanding
under the 1995 Brazos Bond Indenture shall become immediately due and payable
pursuant to Section 6.02 of the 1995 Brazos Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Brazos Bond Indenture,
all bonds of the Eighty-first Series, then Outstanding, shall be redeemed by the
Company, on the date such Series 1995B 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
Eighty-first 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 Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1995B Brazos Revenue Bonds have become immediately due and payable
pursuant to Section 6.02 of the 1995 Brazos Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Brazos 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 Bond
Indenture, as the holder of all bonds of the Eighty-first 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.
<PAGE>
10
(IV) At the option of the registered owner, any bonds of the Eighty-first
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 for a like aggregate principal amount of bonds of the same series
of other authorized denominations.
Bonds of the Eighty-first Series shall not be transferrable except to any
successor trustee under the 1995 Brazos 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 Eighty-first Series.
ARTICLE II
EIGHTY-SECOND SERIES OF BONDS
SECTION 2. There shall be a series of bonds designated "Pollution Control
Series V" (herein sometimes referred to as the "Eighty-second 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 Eighty-second Series shall
mature on June 1, 2030, shall not bear interest and shall be issued as fully
registered bonds in denominations of Two Hundred Fifty 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
Eighty-second Series shall be dated as in Section 2.03 of the Original Indenture
provided.
(I) The bonds of the Eighty-second Series shall be initially issued in the
aggregate principal amount of $136,108,250 to, and registered in the name of,
the trustee under the 1995 Brazos Bond Indenture, under which the Brazos
Authority's Collateralized Pollution Control Revenue Refunding Bonds (Texas
Utilities Electric Company Project) Series 1995C (hereinafter sometimes called
the "Series 1995C 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 Payment and Bond Amortization Agreement, dated
as of June 1, 1995 (hereinafter sometimes called the "1995C Brazos Agreement"),
between the Brazos 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 Eighty-second 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 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
1995C 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 Eighty-second 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 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 1995C Brazos Revenue Bonds outstanding
under the 1995 Brazos Bond Indenture shall become immediately due and payable
pursuant to Section 6.02 of the 1995 Brazos Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Brazos Bond Indenture,
all bonds of the Eighty-second Series, then Outstanding, shall be redeemed by
the Company, on the date such Series 1995C 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
Eighty-second 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 Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1995C Brazos Revenue Bonds have become immediately due and payable
pursuant to Section 6.02 of the 1995 Brazos Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Brazos 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 Bond
Indenture, as the holder of all bonds of the Eighty-second 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 Eighty-
second 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 for a
<PAGE>
12
like aggregate principal amount of bonds of the same series of other authorized
denominations.
Bonds of the Eighty-second Series shall not be transferrable except to any
successor trustee under the 1995 Brazos 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 Eighty-second Series.
ARTICLE III
EIGHTY-THIRD SERIES OF BONDS
SECTION 3. There shall be a series of bonds designated "Pollution Control
Series W" (herein sometimes referred to as the "Eighty-third 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 Eighty-third Series shall
mature on June 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 Eighty-third
Series shall be dated as in Section 2.03 of the Original Indenture provided.
(I) The bonds of the Eighty-third Series shall be initially issued in the
aggregate principal amount of $13,857,500 to, and registered in the name of, the
trustee under the Trust Indenture, dated as of June 1, 1995 (hereinafter
sometimes called the "1995 Sabine Bond Indenture"), of the Sabine River
Authority of Texas (hereinafter sometimes called the "Sabine Authority"), under
which its Collateralized Pollution Control Revenue Refunding Bonds (Texas
Utilities Electric Company Project) Series 1995B (hereinafter sometimes called
the "Series 1995B 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 Payment and Bond Amortization Agreement, dated
as of June 1, 1995 (hereinafter sometimes called the "1995B Sabine Agreement"),
between the Sabine Authority and the Company.
<PAGE>
13
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-third 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 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
1995B 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 Eighty-third 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 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 1995B Sabine Revenue Bonds outstanding
under the 1995 Sabine Bond Indenture shall become immediately due and payable
pursuant to Section 6.02 of the 1995 Sabine Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Sabine Bond Indenture,
all bonds of the Eighty-third Series, then Outstanding, shall be redeemed by the
Company, on the date such Series 1995B 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
Eighty-third 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 Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1995B Sabine Revenue Bonds have become immediately due and payable
pursuant to Section 6.02 of the 1995 Sabine Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Sabine 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 Bond
Indenture, as the holder of all bonds of the Eighty-third Series then
Outstanding.
(III) The Company hereby waives its right to have any notice of redemption
pursuant to subsection (II) of this Section 3 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 Eighty-third
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 for a
<PAGE>
14
like aggregate principal amount of bonds of the same series of other authorized
denominations.
Bonds of the Eighty-third Series shall not be transferrable except to any
successor trustee under the 1995 Sabine 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 Eighty-third Series.
ARTICLE IV
EIGHTY-FOURTH SERIES OF BONDS
SECTION 4. There shall be a series of bonds designated "Pollution Control
Series X" (herein sometimes referred to as the "Eighty-fourth 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 Eighty-fourth Series shall
mature on June 1, 2030, shall not bear interest and shall be issued as fully
registered bonds in denominations of Two Hundred Fifty 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
Eighty-fourth Series shall be dated as in Section 2.03 of the Original Indenture
provided.
(I) The bonds of the Eighty-fourth Series shall be initially issued in the
aggregate principal amount of $21,246,250 to, and registered in the name of, the
trustee under the 1995 Sabine Bond Indenture, under which the Sabine Authority's
Collateralized Pollution Control Revenue Bonds (Texas Utilities Electric Company
Project) Series 1995C (hereinafter sometimes called the "Series 1995C 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 June 1, 1995
(hereinafter sometimes called the "1995C Sabine Agreement"), between the Sabine
Authority and the Company.
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-fourth Series, whether at
maturity, upon
<PAGE>
15
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 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
1995C 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 Eighty-fourth 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 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 1995C Sabine Revenue Bonds outstanding
under the 1995 Sabine Bond Indenture shall become immediately due and payable
pursuant to Section 6.02 of the 1995 Sabine Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Sabine Bond Indenture,
all bonds of the Eighty-fourth Series, then Outstanding, shall be redeemed by
the Company, on the date such Series 1995C 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
Eighty-fourth 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 Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1995C Sabine Revenue Bonds have become immediately due and payable
pursuant to Section 6.02 of the 1995 Sabine Bond Indenture, upon the occurrence
of an Event of Default under Section 6.01(a) of the 1995 Sabine 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 Bond
Indenture, as the holder of all bonds of the Eighty-fourth Series then
Outstanding.
(III) The Company hereby waives its right to have any notice of redemption
pursuant to subsection (II) of this Section 4 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 Eighty-fourth
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 for a like aggregate principal amount of bonds of the same series
of other authorized denominations.
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16
Bonds of the Eighty-fourth Series shall not be transferrable except to any
successor trustee under the 1995 Sabine 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 Eighty-fourth Series.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5. Subject to the amendments provided for in this Fifty-third
Supplemental Indenture, the terms defined in the Original Indenture, as
heretofore supplemented, shall for all purposes of this Fifty-third Supplemental
Indenture have the meanings specified in the Original Indenture, as heretofore
supplemented.
SECTION 6. 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-third 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-third 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-third Supplemental Indenture.
SECTION 7. Whenever in this Fifty-third 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-third 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 8. Nothing in this Fifty-third 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 Fifty-third Supplemental Indenture or any covenant,
condition, stipulation, promise or
<PAGE>
17
agreement hereof, and all the covenants, conditions, stipulations, promises and
agreements in this Fifty-third 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 9. This Fifty-third 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>
18
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 FARELL
------------------------------
H. DAN FARELL
Senior Vice President
Attest:
/s/ GLEN H. HIBBS
- ------------------------------- [CORPORATE SEAL]
GLEN H. HIBBS
Assistant Secretary
Executed, sealed and delivered by
TEXAS UTILITIES ELECTRIC COMPANY
in the presence of:
/s/ WAYNE PATTERSON
- -------------------------------
/s/ DONNA RAKESTRAW
- -------------------------------
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19
THE BANK OF NEW YORK,
Trustee
By /s/ W. N. GITLIN
--------------------------------------
W. N. GITLIN
Vice President
Attest:
/s/ ROBERT F. MCINTYRE [CORPORATE SEAL]
- ------------------------------------
ROBERT F. MCINTYRE
Assistant Vice President
Executed, sealed and delivered by
THE BANK OF NEW YORK
in the presence of:
/s/ MARIE E. TRIMBOLI
- ------------------------------------
/s/ NANCY GILL
- ------------------------------------
<PAGE>
20
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 _____ day of June, 1995.
[NOTARIAL SEAL] /s/ LENAE B. DAVIS
-----------------------------------
LENAE B. DAVIS
Notary Public, State of Texas
My Commission Expires June 23, 1996
<PAGE>
21
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 _____ day of June, 1995.
[NOTARIAL SEAL] /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
<PAGE>
17
SUMMARY OF RECORDING DATA
Fifty-third Supplemental Indenture
Filed June 22, 1995
Office of the Secretary of the State of Texas,
Utility Security Instrument File No. 83-281286
