<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
EMPLOYEES' THRIFT PLAN OF THE
TEXAS UTILITIES COMPANY SYSTEM
Commission File No. 1-3591
------------------
TEXAS UTILITIES COMPANY
Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FINANCIAL STATEMENTS
The following statements are furnished for the Plan:
Statement of Net Assets Available for Benefits,
December 31, 1996........................................................................ 1
Statement of Net Assets Available for Benefits,
December 31, 1995........................................................................ 2
Statement of Changes in Net Assets Available for Benefits,
for the Year Ended December 31, 1996..................................................... 3
Statement of Changes in Net Assets Available for Benefits,
for the Year Ended December 31, 1995..................................................... 4
Notes to Financial Statements.............................................................. 5
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes,
December 31, 1996..................................................................... 12
Schedule of Reportable Transactions for the Year
Ended December 31, 1996............................................................... 15
INDEPENDENT AUDITORS' REPORT........................................................................ 16
EXHIBITS
The following exhibit is filed herewith:
Independent Auditors' Consent.............................................................. 18
</TABLE>
<PAGE> 3
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
==========================================================================================================================
SUPPLEMENTAL INFORMATION
---------------------------------------------------------
Bond Interest Equity
Common Index Income Income
Total Stock Fund Fund Fund
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4):
Common Stock of Texas Utilities Company.... $ 501,493,060 $ 501,493,060 $ -- $ -- $ --
Mutual funds .............................. 158,405,182 -- 9,980,632 -- 51,986,402
Guaranteed contracts ...................... 39,854,969 -- -- 39,854,969 --
Money market funds ........................ 8,330,033 416,912 -- 7,913,121 --
FNMA/FHLMC* ............................... 13,732,651 -- -- 13,732,651 --
Participant loans receivable .............. 14,108,629 -- -- -- --
-------------- -------------- ------------ ------------ ------------
Total investments ....................... 735,924,524 501,909,972. 9,980,632 61,500,741 51,986,402
Cash ........................................ 23,172 22,697 475 -- --
Contributions receivable from Employer-
corporations .............................. 3,486,710 1,541,935 104,242 253,017 445,333
Dividends receivable ........................ 9,827,440 9,827,440 -- -- --
Interest receivable ......................... 97,729 9,338. -- 88,391 --
-------------- -------------- ------------ ------------ ------------
Total assets ............................ 749,359,575 513,311,382 10,085,349 61,842,149 52,431,735
-------------- -------------- ------------ ------------ ------------
LIABILITIES
Note payable (Note 3) ....................... 250,000,000 250,000,000. -- -- --
Accrued interest payable .................... 5,654,375 5,654,375 -- -- --
-------------- -------------- ------------ ------------ ------------
Total liabilities ....................... 255,654,375 255,654,375 -- -- --
-------------- -------------- ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS ............ $ 493,705,200 $ 257,657,007 $ 10,085,349 $ 61,842,149 $ 52,431,735
============== ============== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================================
SUPPLEMENTAL INFORMATION
-------------------------------------------------------
Equity Equity
Index Balanced Growth Loan
Fund Fund Fund Fund
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4):
Common Stock of Texas Utilities Company.... $ -- $ -- $ -- $ --
Mutual funds .............................. 23,774,632 20,287,448 52,376,068 --
Guaranteed contracts ...................... -- -- -- --
Money market funds ........................ -- -- -- --
FNMA/FHLMC* ............................... -- -- -- --
Participant loans receivable .............. -- -- -- 14,108,629
------------ ------------ ------------ ------------
Total investments ....................... 23,774,632 20,287,448 52,376,068 14,108,629
Cash ........................................ -- -- -- --
Contributions receivable from Employer-
corporations .............................. 272,619 237,778 631,786 --
Dividends receivable ........................ -- -- -- --
Interest receivable ......................... -- -- -- --
------------ ------------ ------------ ------------
Total assets ............................ 24,047,251 20,525,226 53,007,854 14,108,629
------------ ------------ ------------ ------------
LIABILITIES
Note payable (Note 3) ....................... -- -- -- --
Accrued interest payable .................... -- -- -- --
------------ ------------ ------------ ------------
Total liabilities ....................... -- -- -- --
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS ............ $ 24,047,251 $ 20,525,226 $ 53,007,854 $ 14,108,629
============ ============ ============ ============
</TABLE>
- ---------
* Federal National Mortgage Association/Federal Home Loan Mortgage Corporation
See accompanying Notes to Financial Statements.
1
<PAGE> 4
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
===========================================================================================================================
SUPPLEMENTAL INFORMATION
----------------------------------------------------------
Bond Interest Equity
Common Index Income Income
Total Stock Fund Fund Fund
-------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4):
Common Stock of Texas Utilities Company ... $ 499,188,126 $ 499,188,126 $ -- $ -- $ --
Mutual funds .............................. 112,611,238 -- 9,265,513 39,313,479
Guaranteed contracts ...................... 40,785,338 -- -- 40,785,338 --
Money market funds ........................ 3,423,868 779,144 -- 2,644,724 --
FNMA/FHLMC* ............................... 13,626,349 -- -- 13,626,349 --
Participant loans receivable .............. 7,747,105 -- -- -- --
-------------- -------------- ------------ ------------ ------------
Total investments ....................... 677,382,024 499,967,270 9,265,513 57,056,411 39,313,479
Cash ........................................ 1,721,274 -- 1,554,273 46,102 36,199
Contributions receivable from Employer-
corporations .............................. 3,271,461 1,349,647 116,403 438,692 381,647
Dividends receivable ........................ 9,473,842 9,473,842 -- -- --
Interest receivable ......................... 91,445 8,988 -- 82,457 --
-------------- -------------- ------------ ------------ ------------
Total assets ............................ 691,940,046 510,799,747 9,381,916 59,131,833 39,741,228
-------------- -------------- ------------ ------------ ------------
LIABILITIES
Note payable (Note 3) ....................... 250,000,000 250,000,000 -- -- --
Accrued interest payable .................... 5,654,375 5,654,375 -- -- --
-------------- -------------- ------------ ------------ ------------
Total liabilities ....................... 255,654,375 255,654,375 -- -- --
-------------- -------------- ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS ............ $ 436,285,671 $ 255,145,372 $ 9,381,916 $ 59,131,833 $ 39,741,228
============== ============== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================================
SUPPLEMENTAL INFORMATION
--------------------------------------------------------
Equity Equity
Index Balanced Growth Loan
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Investments - at fair value (Notes 3 and 4):
Common Stock of Texas Utilities Company ... $ -- $ -- $ -- $ --
Mutual funds .............................. 13,926,893 15,936,106 34,169,247 --
Guaranteed contracts ...................... -- -- -- --
Money market funds ........................ -- -- -- --
FNMA/FHLMC* ............................... -- -- -- --
Participant loans receivable .............. -- -- -- 7,747,105
------------ ------------ ------------ ------------
Total investments ....................... 13,926,893 15,936,106 34,169,247 7,747,105
Cash ........................................ -- 84,700 --
Contributions receivable from Employer-
corporations .............................. 236,311 176,114 572,647 --
Dividends receivable ........................ -- -- -- --
Interest receivable ......................... -- -- -- --
------------ ------------ ------------ ------------
Total assets ............................ 14,199,403 16,112,220 34,826,594 7,747,105
------------ ------------ ------------ ------------
LIABILITIES
Note payable (Note 3) ....................... -- -- -- --
Accrued interest payable .................... -- -- -- --
------------ ------------ ------------ ------------
Total liabilities ....................... -- -- -- --
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS ............ $ 14,199,403 $ 16,112,220 $ 34,826,594 $ 7,747,105
============ ============ ============ ============
</TABLE>
- ---------
* Federal National Mortgage Association/Federal Home Loan Mortgage Corporation
See accompanying Notes to Financial Statements.
2
<PAGE> 5
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
============================================================================================================================
SUPPLEMENTAL INFORMATION
---------------------------------------------------------
Bond Interest Equity
Common Index Income Income
Total Stock Fund Fund Fund
-------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR ........................... $ 436,285,671 $ 255,145,372 $ 9,381,916 $ 59,131,833 $ 39,741,228
-------------- --------------- ------------- ------------- -------------
ADDITIONS
Income:
Dividends ................................. 32,741,442 24,774,042 617,486 -- 3,208,064
Interest:
Investments ............................. 4,218,975 60,423 -- 4,158,552 --
Loans ................................... 1,034,094 -- -- -- --
-------------- --------------- ------------- ------------- -------------
Total income .......................... 37,994,511 24,834,465 617,486 4,158,552 3,208,064
-------------- --------------- ------------- ------------- -------------
Contributions:
Participating employees' savings .......... 38,209,981 11,876,022 1,384,975 5,214,578 5,380,553
Employer-corporations* .................... 15,492,474 15,492,474 -- -- --
-------------- --------------- ------------- ------------- -------------
Total contributions ................... 53,702,455 27,368,496 1,384,975 5,214,578 5,380,553
-------------- --------------- ------------- ------------- -------------
Net appreciation (depreciation) on fair
value of investments ...................... 9,614,596 (3,660,026) (373,024) -- 3,807,187
-------------- --------------- ------------- ------------- -------------
Total additions ....................... 101,311,562 48,542,935 1,629,437 9,373,130 12,395,804
-------------- --------------- ------------- ------------- -------------
DEDUCTIONS
Distributions to withdrawing participants ... 18,886,884 11,278,509 330,831 3,658,383 1,965,341
Interest expense and other fees (Note 3) .... 25,005,149 24,935,072 -- 70,077 --
-------------- --------------- ------------- ------------- -------------
Total deductions ..................... 43,892,033 36,213,581 330,831 3,728,460 1,965,341
-------------- --------------- ------------- ------------- -------------
TRANSFERS BETWEEN FUNDS -- Net 0 (9,817,719) (595,173) (2,934,354) 2,260,044
-------------- --------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR ................................ $ 493,705,200 $ 257,657,007 $ 10,085,349 $ 61,842,149 $ 52,431,735
============== =============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
============================================================================================================================
SUPPLEMENTAL INFORMATION
----------------------------------------------------------
Equity Equity
Index Balanced Growth Loan
Fund Fund Fund Fund
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR ........................... $ 14,199,403 $ 16,112,220 $ 34,826,594 $ 7,747,105
------------- ------------- ------------ ------------
ADDITIONS
Income:
Dividends ................................. 543,710 1,585,519 2,012,621 --
Interest:
Investments ............................. -- -- -- --
Loans ................................... -- -- -- 1,034,094
------------- ------------- ------------ ------------
Total income .......................... 543,710 1,585,519 2,012,621 1,034,094
------------- ------------- ------------ ------------
Contributions:
Participating employees' savings .......... 3,478,445 2,971,069 7,904,339 --
Employer-corporations* .................... -- -- -- --
------------- ------------- ------------ ------------
Total contributions ................... 3,478,445 2,971,069 7,904,339 --
------------- ------------- ------------ ------------
Net appreciation (depreciation) on fair
value of investments ...................... 2,942,853 44,857 6,852,749 --
------------- ------------- ------------ ------------
Total additions ....................... 6,965,008 4,601,445 16,769,709 1,034,094
------------- ------------- ------------ ------------
DEDUCTIONS
Distributions to withdrawing participants ... 548,841 288,308 816,671 --
Interest expense and other fees (Note 3) .... -- -- -- --
------------- ------------- ------------ ------------
Total deductions ..................... 548,841 288,308 816,671 --
------------- ------------- ------------ ------------
TRANSFERS BETWEEN FUNDS -- Net 3,431,681 99,869 2,228,222 5,327,430
------------- ------------- ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR ................................ $ 24,047,251 $ 20,525,226 $ 53,007,854 $ 14,108,629
============= ============= ============ ============
</TABLE>
* Reduced for forfeitures of $24,209.
See accompanying Notes to Financial Statements.
3
<PAGE> 6
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
============================================================================================================================
SUPPLEMENTAL INFORMATION
----------------------------------------------------------
Bond Interest Equity
Common Index Income Income
Total Stock Fund Fund Fund
-------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR .......................... $ 263,343,327 $ 133,494,959 $ 7,646,832 $ 53,303,901 $ 25,653,033
-------------- --------------- ------------- ------------- -------------
ADDITIONS
Income:
Dividends ................................. 39,556,096 33,850,912 562,969 -- 2,127,587
Interest:
Investments ............................. 4,331,231 85,034 -- 4,246,197 --
Loans .................................. 475,198 -- -- -- --
-------------- --------------- ------------- ------------- -------------
Total income .......................... 44,362,525 33,935,946 562,969 4,246,197 2,127,587
-------------- --------------- ------------- ------------- -------------
Contributions:
Participating employees' savings .......... 35,876,233 12,094,795 1,488,302 5,735,565 4,416,107
Employer-corporations ..................... 11,779,163 11,779,163 -- -- --
-------------- --------------- ------------- ------------- -------------
Total contributions ................... 47,655,396 23,873,958 1,488,302 5,735,565 4,416,107
-------------- --------------- ------------- ------------- -------------
Net appreciation on fair value
of investments ............................ 125,299,122 107,014,981 739,765 -- 7,360,769
-------------- --------------- ------------- ------------- -------------
Total additions ..................... 217,317,043 164,824,885 2,791,036 9,981,762 13,904,463
-------------- --------------- ------------- ------------- -------------
DEDUCTIONS
Distributions to withdrawing participants.... 19,414,635 11,352,113 338,354 4,808,494 1,333,178
Interest expense and other fees (Note 3)..... 24,960,064 24,867,339 -- 92,725 --
-------------- --------------- ------------- ------------- -------------
Total deductions ................... 44,374,699 36,219,452 338,354 4,901,219 1,333,178
-------------- --------------- ------------- ------------- -------------
TRANSFERS BETWEEN FUNDS -- Net ............... -- (6,955,020) (717,598) 747,389 1,516,910
-------------- --------------- ------------- ------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR ................................ $ 436,285,671 $ 255,145,372 $ 9,381,916 $ 59,131,833 $ 39,741,228
============== =============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
============================================================================================================================
SUPPLEMENTAL INFORMATION
--------------------------------------------------------
Equity Equity
Index Balanced Growth Loan
Fund Fund Fund Fund
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR .......................... $ 7,286,983 $ 11,688,685 $ 20,624,258 $ 3,644,676
------------- ------------- ------------ ------------
ADDITIONS
Income:
Dividends ................................. 296,750 1,265,389 1,452,489 --
Interest:
Investments ............................. -- -- -- --
Loans .................................. -- -- -- 475,198
------------- ------------- ------------ ------------
Total income .......................... 296,750 1,265,389 1,452,489 475,198
------------- ------------- ------------ ------------
Contributions:
Participating employees' savings .......... 2,511,093 2,928,709 6,701,662 --
Employer-corporations ..................... -- -- -- --
------------- ------------- ------------ ------------
Total contributions ................... 2,511,093 2,928,709 6,701,662 --
------------- ------------- ------------ ------------
Net appreciation on fair value
of investments ............................ 2,776,470 1,356,448 6,050,689 --
------------- ------------- ------------ ------------
Total additions ..................... 5,584,313 5,550,546 14,204,840 475,198
------------- ------------- ------------ ------------
DEDUCTIONS
Distributions to withdrawing participants.... 245,038 408,029 929,429 --
Interest expense and other fees (Note 3)..... -- -- -- --
------------- ------------- ------------ ------------
Total deductions ................... 245,038 408,029 929,429 --
------------- ------------- ------------ ------------
TRANSFERS BETWEEN FUNDS -- Net ............... 1,573,145 (718,982) 926,925 3,627,231
------------- ------------- ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR ................................ $ 14,199,403 $ 16,112,220 $ 34,826,594 $ 7,747,105
============= ============= ============ ============
</TABLE>
* Reduced for forfeitures of $84,265.
See accompanying Notes to Financial Statements.
4
<PAGE> 7
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. DESCRIPTION OF THE PLAN
The following description of the Employees' Thrift Plan of the Texas
Utilities Company System (Plan) is provided for general information purposes
only. Reference should be made to the Plan document for more complete
information.
General -- The Plan is a defined contribution plan established in 1968
by Texas Utilities Company and its subsidiaries (Employer-corporations). The
Employees' Thrift Plan Committee manages the operation and administration of
the Plan. Mellon Bank, N.A. serves as trustee (Trustee) and manages the assets
of the Plan. In 1990, the Plan was amended to establish a leveraged employee
stock ownership provision. (See Note 3.) The Plan was again amended effective
as of January 1, 1993. Such amendments to the Plan, among other things,
established a pre-tax deferral feature in accordance with Section 401(k) of the
Internal Revenue Code of 1986, as amended (Code). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
The plan is intended to be a participant directed "individual account
plan" under ERISA Section 404(c). As such, the fiduciaries of the Plan are not
liable for any losses that are the direct and necessary result of participant
investment decisions. Participation in the Plan by employees of the
Employer-corporations who meet certain eligibility requirements is entirely
voluntary.
The Plan includes seven investment options, or funds:
o Common Stock of Texas Utilities Company (Common Stock) -- invests
exclusively in Common Stock of Texas Utilities Company (Company);
o Investment Grade Bond Index Fund (Bond Index Fund) -- purchases
units in the Vanguard Bond Index Fund -- Total Bond Market
Portfolio;
o Interest Income Fund -- invests in fixed-rate contracts with
insurance companies and other financial institutions;
o Equity Income Fund -- purchases units in the Fidelity Equity-Income
Fund, which consists primarily of income-producing equity
securities;
o Equity Index Fund -- purchases units in the Fidelity U. S. Equity
Index Portfolio*, which consists primarily of common stocks
included in the Standard & Poor's 500 Index;
o Balanced Fund -- purchases units in the Hotchkis and Wiley
o Balanced Income Fund, which consists primarily of investments in
equity securities, fixed income securities and money market
obligations; and
o Equity Growth Fund -- purchases units in the American Express
IDS New Dimensions Fund (Class Y), which invests primarily in
common stocks of companies showing potential for significant
growth, and also invests in foreign securities and futures
transactions.
*The Fidelity U. S. Equity Index Portfolio changed its fund name to Fidelity
Spartan U. S. Equity Index Fund in May 1997.
Eligibility, Participation and Employee Savings -- Any regular employee
of an Employer-corporation is eligible to participate in the Plan after
completion of at least six months of service prior to the date the employee's
participation is to be effective. An eligible employee has completed six months
of service after completing at least 500 hours of service during any six-month
period.
Under the Plan, except as limited by law, a participating employee may
invest, through pre-tax salary deferrals (Elective Deferrals) or after tax
payroll deductions (Payroll Deductions) each payroll period, a specified amount
ranging from 1% to 6% of regular salary or wages (Basic Employee Savings).
Participants electing the maximum Basic Employee Savings investment may also
invest, through Elective Deferrals or Payroll Deductions each payroll period,
an additional 1% to 10% of regular salary or wages (Supplemental Employee
Savings).
5
<PAGE> 8
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
===============================================================================
Employer Matching Contributions -- Matching contributions to
participant accounts by the Employer-corporations are made based on the
participants' Basic Employee Savings and years of service as follows:
<TABLE>
<S> <C>
Less than 10 years............................................40%
10 years but less than 25 years...............................50%
25 years or more..............................................60%
</TABLE>
No employer contributions are made with respect to Supplemental
Employee Savings.
Investment of Funds -- All employer matching contributions, except as
provided below, are invested in Common Stock of the Company; however, each
participant has the following expanded options with respect to the investment
of Basic and Supplemental Employee Savings:
100% in Common Stock;
100% in Bond Index Fund;
100% in Interest Income Fund;
100% in Equity Income Fund;
100% in Equity Index Fund;
100% in Balanced Fund;
100% in Equity Growth Fund; and
Multiples (in 10% increments) of the investment options listed above.
A participant may change selected investment options for Employee
Savings as often as once a quarter by liquidating the investments attributable
to Basic and Supplemental Employee Savings and reinvesting such amounts in
other investment options as may be permitted under the Plan.
A participant who has completed at least ten years of Plan
participation and attained age 55 may annually instruct the Trustee to
diversify up to 25% of such participant's employer contributions account
(reduced by amounts previously so diversified) in the same proportion as the
participant may diversify such Basic and Supplemental Employee Savings. At age
60 and thereafter, a participant may annually diversify up to 50% of such
employer contributions account (reduced by amounts previously so diversified).
Unit Values -- Participants do not have beneficial ownership in specific
securities or other assets in the various funds other than Common Stock, but
have an interest therein represented by units valued as of the close of each
business day. Generally, contributions to and withdrawal payments from each
fund are converted to units by dividing the amounts of such transactions by the
unit value as last determined, and the appropriate account is charged or
credited with the number of units properly attributable to the participant.
Voting of Common Stock -- Each participant may give the Trustee
confidential written instructions with respect to the voting, at any meeting of
shareholders, of the Common Stock allocated to the participant's account.
Effective January 1, 1993, the unallocated Common Stock held pursuant to the
leveraged employee stock ownership component of the Plan may be voted by the
Trustee in its discretion unless otherwise directed pursuant to a voting
procedure agreement.
6
<PAGE> 9
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
===============================================================================
Withdrawal from the Plan -- A participant may withdraw a portion of
after-tax Basic and Supplemental Employee Savings without necessitating a total
withdrawal from the Plan and may exercise the limited privilege of an after-tax
partial withdrawal at any time after twelve months of participation in the
Plan. Partial withdrawal may be in any amount up to 90% of the current value of
the participant's Basic and Supplemental Employee Savings, or 90% of market
value, whichever is less. A further partial withdrawal by a participant may not
be made until after the expiration of twelve months following the last previous
partial withdrawal.
In the event of an after-tax partial withdrawal, such amount will be
paid to the participant in cash or in shares of Common Stock to the extent such
stock is held in the participant's account for after-tax Basic and Supplemental
Employee Savings, at the option of the participant. No partial withdrawal may
be made of Elective Deferrals, Rollover Contributions, Employer matching
contributions, or income from such deferrals or contributions. A participant
may repay to the Trustee the amounts of any after-tax partial withdrawal made
after January 1, 1976, at any time. An after-tax Partial withdrawal by a
participant does not terminate participation in the Plan.
A participant may withdraw entirely from the Plan at any time even
though the participant continues in the employ of an Employer-corporation,
except that Elective Deferrals and Rollover contributions, Employer matching
contributions, or income from such deferrals or contributions cannot be
withdrawn until the attainment of age 59-1/2. Following total withdrawal from
the after-tax and/or pretax account(s), an employee will be ineligible to
contribute to the applicable segment(s) of the Plan for a period of twelve
months. Total withdrawal is also available upon termination of employment. In
the event of total withdrawal, that portion of the participant's account which
was derived from Basic and Supplemental Employee Savings will be distributed in
full to the participant or, in case of death, to the participant's beneficiary.
However, if a participant, upon termination of employment, does not consent to
a distribution of all accounts, and the aggregate value of such accounts
exceeds $3,500, such accounts shall remain invested in the Plan until
distribution.
In the event of total withdrawal due to participant's retirement or due
to permanent and total disability or death of the participant, that portion of
the participant's account which was derived from employer matching
contributions will also be distributed in full to the participant or, in case
of death, to the participant's beneficiary.
In the event of total withdrawal by a participant who continues in the
employ of an Employer-corporation and has a vested interest of less than 50% of
employer matching contributions, or terminates employment due to reasons other
than those discussed above, that portion of the participant's account which was
derived from employer matching contributions shall be distributed to the
participant only to the extent shown in the following Vesting Schedule which is
dependent upon the participant's years of service:
<TABLE>
<CAPTION>
Years of Percentage of Total
Service Employer Contributions
------- ----------------------
<S> <C>
Under 3 ................................ None
3 ................................ 30%
4 ................................ 40%
5 ................................ 60%
6 ................................ 80%
7 ................................ 100%
</TABLE>
7
<PAGE> 10
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
===============================================================================
Participants making withdrawals, other than partial withdrawals, may
choose from the following optional forms of payment: (a) shares of Common Stock
and/or publicly traded Fund units (to the extent permitted by the Fund)
credited to a participant's account; (b) single lump sum cash payment; or (c) a
combination of (a) and (b).
After a distribution in accordance with the above Vesting Schedule, any
remainder of employer matching contributions in the participant's account is
forfeited and used by the Employer-corporation to reduce the amount of future
employer contributions.
In the event of a total withdrawal made after January 1, 1976, by a
participant who is not 100% vested, the participant may repay to the Plan the
amount of such distribution at any time prior to the close of the Plan Year in
which the participant has completed five consecutive Break-in-Service years and
any amounts previously forfeited will be restored to the participant's account.
In addition, participants may, after meeting certain qualifications as
defined by the Internal Revenue Service (IRS), withdraw a portion of their
vested 401(k) account balance based on a hardship qualification.
Federal Income Taxes -- The Company has been advised by the IRS that the
Plan meets the requirements of Section 401(a) of the Code, as to form; that the
Trust established thereunder is exempt from federal income taxes under Section
501(a) of the Code; and that employer contributions paid to the Trust under the
Plan are allowable federal income tax deductions to the Employer-corporations
subject to the conditions and limitations of Section 404 of the Code.
Based on the Code and regulations issued pursuant thereto:
(a) Employer contributions under the Plan, and dividends, interest and
other income from Trust Assets are not taxable to the participant
when received by the Trustee and credited to the participant's
account.
(b) Basic and Supplemental Employee Savings made by Payroll Deduction
are not deductible on the participant's federal income tax return.
(c) Basic and Supplemental Employee Savings which are Employee Elective
Deferrals reduce a participant's gross compensation as reported on
Form W-2 and are not taxable to the participant when received by
the Trustee and credited to the participant's account.
(d) Partial withdrawal of employee savings which were contributed to the
Plan through Payroll Deductions prior to January 1, 1987, represent
a return of employee savings and are not taxable to the participant
when withdrawn. Partial withdrawals of employee savings which were
contributed to the Plan through Payroll Deductions after December
31, 1986, are considered to include, for income tax purposes, an
amount of taxable income.
(e) A total withdrawal generally results in taxable income to the
participant equal to the gross distribution less Basic and
Supplemental Employee Savings made by Payroll Deduction. However, if
the total withdrawal meets the lump sum distribution requirements of
the Code, (i) any net unrealized appreciation in the value of
distributable Common Stock from the time of distribution will be tax
deferred; (ii) any additional appreciation in the value of Common
Stock from the time of distribution to the time of stock sale or
disposition will be treated as short-term or long-term capital gain
depending on the period the participant holds such stock; and (iii)
the taxable amount may be eligible for the special forward averaging
provisions of the Code.
8
<PAGE> 11
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
===============================================================================
(f) The taxable amount of a total or partial withdrawal may
generally be rolled over to an Individual Retirement Account (IRA)
or other qualified plan and payment of taxes may thereby be deferred,
subject to automatic income tax withholding of twenty percent (20%)
on amounts not distributed in Common Stock.
(g) The taxable amount of an account, subject to total and partial
withdrawal provisions, can be transferred directly to an IRA or
other qualified plan and payment of taxes may thereby be deferred.
Participants are encouraged to determine the effect on their federal
income tax liability of receiving distributions from the Plan.
Amendment, Modification, Suspension and Termination -- It is the
intention the Company to continue the Plan indefinitely; however, the Company,
by of its Board of Directors, may amend, modify or suspend the Plan at any
time, or from time to time, and may terminate the Plan at any time; and any
Employer-corporation may withdraw from participation in the Plan at any time
upon thirty days notice.
In the event of termination of the Plan in whole or in part or
termination of participation of any Employer-corporation, each participant in
the Plan affected by such termination shall receive a distribution of the
entire balance in the participant's account, whether derived from Basic and
Supplemental Employee Savings or employer contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting -- The financial statements of the Plan are prepared
under the accrual method of accounting.
Valuation of Investment Securities -- Participant investments in all
funds except for the Interest Income Fund are accounted for as units and stated
at fair value based upon closing sales prices on recognized securities
exchanges on the last business day of the fiscal year. The Interest Income Fund
insurance contracts and the financial institution investment contracts are
valued at contract value. Contract value represents contributions made by
participants, plus interest at the contract rates, less withdrawals or
transfers by participants. Fair value is estimated using discounted cash flows.
Following is additional information reported in the aggregate for the Interest
Income Fund:
<TABLE>
<S> <C>
Contract Value of assets: $61,500,741
Fair Value of assets: $61,960,111
Average Yield of assets on 12/31/96: 6.84%
Return on assets for 12 months ending 12/31/96: 7.23%
</TABLE>
The average yield of assets on 12/31/95 was 7.50%. The return on assets
for 12 months ending 12/31/95 was 7.84%.
Expenses -- All costs and expenses of the Plan and its administration,
except expenses incurred in the generation and administration of participant
loans and in the acquisition or disposition of investments, are paid by the
Employer-corporations.
Reclassification -- Certain previously reported amounts have been
reclassified to conform to current classifications.
3. LEVERAGED EMPLOYEE STOCK OWNERSHIP PROVISION
In 1990, the Trustee, on behalf of the Plan, borrowed $250,000,000 in
the form of a note payable from an
9
<PAGE> 12
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
===============================================================================
outside lender and purchased 7,142,857 shares of Common Stock of the Company in
connection with the leveraged employee stock ownership provision (LESOP) of the
Plan. The note was purchased from the lender by the Company later in 1990. The
note payable requires repayment of principal over 17 years beginning in 1998.
At December 31, 1996 and 1995, the note payable bore interest at a fixed rate
of 9.81% following its conversion in January 1992 from a variable rate to a
fixed rate. The note payable is collateralized by 5,607,022 unallocated shares
held by the Trustee at December 31, 1996.
The LESOP shares are held by the Trustee until released and allocated
to participants' accounts proportionally based on current debt service payments
including interest to total debt service payments. Debt service payments are
made by the Plan from dividends received on the unallocated shares and, if
necessary, contributions from Employer-corporations. The market value of shares
released reduces the cash requirements of the Employer-corporations for their
funding obligation under the Plan. During the 1996 Plan year the number of
LESOP shares released and allocated to participant accounts was 232,499 and
during the 1995 Plan year the number of LESOP shares released and allocated to
participant accounts was 231,865.
4. PARTICIPANT LOANS
The Plan includes a loan feature allowing participants to borrow from
their pretax employee savings and rollover accounts and repay the loan with
after-tax payroll deductions. Participants are eligible to borrow up to 50% of
their vested pretax and rollover account balances, including Company matching
contributions, with the minimum amount of a loan being $1,000 and the maximum
being $50,000. Participants may repay the loan back into their account(s) over
a period from 1 to 5 years for a general purpose loan, and the shorter of 15
years or their remaining mortgage term for a primary home loan. The rate of
interest charged is the Trustee's current prime lending rate plus an additional
2%.
10
<PAGE> 13
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM
NOTES TO FINANCIAL STATEMENTS
===============================================================================
5. UNIT VALUES
Units in each fund at December 31, 1996 and 1995, and net asset value
per unit, are presented below. Net asset value per share for Common Stock
excludes amounts for the market value of unreleased LESOP shares and the
related note payable. All net asset values per share or unit exclude any
related participant loan receivables.
<TABLE>
<CAPTION>
1996 1995 **
---- -------
<S> <C> <C>
Common Stock:
Number of shares 6,707,876 6,342,039
Net asset value per share* $41.62 $41.90
Bond Index Fund:
Number of units 1,014,292 913,944
Net asset value per unit $9.94 $10.27
Interest Income Fund:
Number of units 11,751,031 12,031,137
Net asset value per unit $5.26 $4.91
Equity Income Fund:
Number of units 1,213,785 1,000,670
Net asset value per unit $43.20 $39.71
Equity Index Fund:
Number of units 882,176 612,080
Net asset value per unit $27.26 $23.20
Balanced Fund:
Number of units 1,106,729 893,780
Net asset value per unit $18.55 $18.03
Equity Growth Fund:
Number of units 2,529,085 1,978,528
Net asset value per unit $20.96 $17.60
</TABLE>
- ---------
* The calculation of net asset value per share for Common Stock includes the
value of the LESOP note net of the value of the unallocated LESOP shares.
** Restated to exclude participant loan receivables.
11
<PAGE> 14
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM SUPPLEMENTAL
SCHEDULES
ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Description of Investment,
Identity of Issue, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
Or Similar Party Units, Par Or Maturity Value Cost Current Value(1)
- ------------------ --------------------------------- ---- ----------------
(Dollars)
<S> <C> <C>
COMMON STOCK
Common Stock
Texas Utilities
Company(2) 12,306,578 shares $431,632,032 $501,493,060
Money Market Funds
Mellon Bank, N.A.(2) Cash management fund -
416,913 units 416,913 416,912
------------ ------------
TOTAL COMMON STOCK 432,048,945 501,909,972
------------ ------------
BOND INDEX FUND
Vanguard Bond Index
Fund -- Total Bond
Market Portfolio 1,014,292 units 9,974,907 9,980,632
------------ ------------
INTEREST INCOME FUND
Value of Interest in
General Accounts
Business Mens Assurance
Co. of America Contract No. 1207, 6.9%, due 2001 2,607,354 2,607,354
Safeco Life
Insurance Company Contract No. LP-1052795, 6.09%, due 2000 2,518,328 2,518,328
New York Life
Insurance Company Contract No. GA-30186, 8.04%, due 1998 2,694,410 2,694,410
Hartford Life
Insurance Company Contract No. GA-9190, 8.80%, due 1997 2,509,875 2,509,875
Hartford Life
Insurance Company Contract No. GA-9260, 7.92%, due 1999 1,485,140 1,485,140
Hartford Life
Insurance Company Contract No. GA-9283, 7.57%, due 1997 2,273,386 2,273,386
Jackson National Life
Insurance Company Contract No. G-1004-1, 5.81%, due 2001 2,108,030 2,108,030
</TABLE>
12
<PAGE> 15
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM SUPPLEMENTAL
SCHEDULES
ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Description of Investment,
Identity of Issuer, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
or Similar Party Units, Par or Maturity Value Cost Current Value(1)
- ------------------- -------------------------------- ---- ----------------
(Dollars)
<S> <C> <C> <C>
Metropolitan Life
Insurance Company Contract No. GAC-24686, 6.88%, due 2000 $2,579,467 $2,579,467
Metropolitan Life
Insurance Company Contract No. 18563-B, 6.60%, due 1998 2,319,821 2,319,821
Ohio National Life
Insurance Company Contract No. GA-5367, 8.12%, due 1997 3,684,050 3,684,050
Principal Mutual Life
Insurance Company Contract No. 4-1498, 6.50%, due 1997 1,409,439 1,409,439
Provident National
Assurance Company Contract No. 027-05094, 7.86%, due 1997 1,767,027 1,767,027
Provident National
Assurance Company Contract No. 027-05094-02A, 7.60%, due 1997 2,393,964 2,393,964
Travelers
Insurance Company Contract No. GR15815, 8.42%, due 1997 1,251,748 1,251,748
---------- ----------
Total Value of Interest in General Accounts 31,602,039 31,602,039
Money Market Funds
Mellon Bank, N.A.(2) Cash management fund -
7,913,121 units 7,913,121 7,913,121
---------- ----------
United States Government
Obligations
FNMA/FHLMC 14,000,000 units 13,732,651 13,732,651
---------- ----------
Other
Peoples Security Manager
Trust Contract No. BDA 00284TR, 6.19%:
ANB Multiple Asset Backed Securities
Bond Index Fund 2,084,824 2,084,824
ANB Multiple Intermediate Corporate
Bond Index Fund 2,097,871 2,097,871
</TABLE>
13
<PAGE> 16
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM SUPPLEMENTAL
SCHEDULES
ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Description of Investment,
Identity of Issuer, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
or Similar Party Units, Par or Maturity Value Cost Current Value(1)
- ------------------- -------------------------------- ---- ----------------
(Dollars)
<S> <C> <C> <C>
ANB Multiple Mortgage Backed
Securities Index Fund 1,256,788 1,256,788
Intermediate Government Bond Fund 2,813,447 2,813,447
------------ ------------
8,252,930 8,252,930
------------ ------------
TOTAL INTEREST INCOME FUND 61,500,741 61,500,741
------------ ------------
EQUITY INCOME FUND
Fidelity Equity -
Income Fund 1,213,785 units 37,254,988 51,986,402
------------ ------------
EQUITY INDEX FUND
Fidelity Spartan U. S.
Equity
Index Fund 882,176 units 17,988,155 23,774,632
------------ ------------
BALANCED FUND
Hotchkis and Wiley
Balanced Income Fund 1,106,729 units 19,894,060 20,287,448
------------ ------------
EQUITY GROWTH FUND
American Express IDS New
Dimensions 2,529,085 units 39,509,708 52,376,068
------------ ------------
LOAN FUND
Participant Loans
Receivable(3) 14,108,629 units 14,108,629 14,108,629
------------ ------------
TOTAL ALL FUNDS $632,280,133 $735,924,524
============ ============
</TABLE>
(1) Current value for the Interest Income Fund is based on contract value.
(2) Party-in-Interest
(3) The rate of interest charged is the Trustee's current prime lending rate
plus an additional 2%. During 1996, the rate of interest charged ranged
from 10.25% to 10.75 %. Maturities range from 1 to 5 years for general
purpose loans and up to 15 years for a primary home loan.
14
<PAGE> 17
EMPLOYEES' THRIFT PLAN OF THE TEXAS UTILITIES COMPANY SYSTEM SUPPLEMENTAL
SCHEDULES
ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, DECEMBER 31, 1996
- -------------------------------------------------------------------------------
================================================================================
Transactions involving an amount in excess of 5% of the fair value of beginning
plan assets.
<TABLE>
<CAPTION>
Current Value
Of Asset
Identity of Description Purchase Selling Expense Incurred Cost of on Transaction
Party Involved of Asset Price Price With Transaction Asset Date Net Gain
- -------------- -------- ----- ----- ---------------- ----- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Exceeding 5%
of Plan Assets (in
the Aggregate):
TU Company
Various Stock 25,449,417 -- -- 25,449,417 25,449,417 --
</TABLE>
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
Employees' Thrift Plan Committee
Employees' Thrift Plan of the
Texas Utilities Company System:
We have audited the accompanying statements of net assets available for
benefits of the Employees' Thrift Plan of the Texas Utilities Company System
(the "Plan") as of December 31, 1996 and 1995, and the related statements of
changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31,
1996 and 1995, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information by fund is
presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets
available for benefits and changes in net assets available for benefits of the
individual funds, and is not a required part of the basic financial statements.
The accompanying supplemental schedules of (1) assets held for investment
purposes at December 31, 1996 and(2) transactions in excess of five percent of
the current value of plan assets for the year ended December 31, 1996 are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements, but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
information by fund and supplemental schedules are the responsibility of the
Plan's management. Such supplemental information by fund and supplemental
schedules have been subjected to the auditing procedures applied in our audit
of the basic 1996 financial statements and, in our opinion, are fairly stated
in all material respects when considered in relation to the basic financial
statements taken as a whole.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 12, 1997
16
<PAGE> 19
-------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employees' Thrift Plan Committee has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
EMPLOYEES' THRIFT PLAN OF THE
TEXAS UTILITIES COMPANY SYSTEM
By /s/ Robert L. Turpin
-----------------------------
Robert L. Turpin, Assistant Secretary
Employees' Thrift Plan Committee
June 26, 1997
17
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
23 Independent Auditor's Consent
</TABLE>
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-59961 of Texas Utilities Company on Form S-8 of our report dated June 12,
1997, appearing in this Annual Report on Form 11-K of the Employees' Thrift
Plan of the Texas Utilities Company System for the year ended December 31,
1996.
DELOITTE & TOUCHE
Dallas, Texas
June 26, 1997
