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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2003
-- OR --
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
Commission File Number 1-12833
TXU Corp.
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201-3411
(214) 812-4600
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
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TABLE OF CONTENTS
Page
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FINANCIAL INFORMATION
The following financial statements are furnished for the Plan:
Statements of Financial Condition at March 31, 2003 and June 30, 2002....................... 1
Statements of Operations and Changes in Plan Equity for the
periods ended March 31, 2003, June 30, 2002 and 2001.................................... 2
Notes to Financial Statements............................................................... 3
Schedules I, II and III have been omitted because the required
information is shown in the financial statements or notes, or the
information is not applicable to this Plan.
INDEPENDENT AUDITORS' REPORT......................................................................... 7
PLAN ADMINISTRATOR'S SIGNATURE....................................................................... 8
EXHIBITS
The following exhibits are filed herewith:
Exhibit 23 Independent Auditors' Consent
Exhibit 99(a) Section 906 Certificate of Secretary & Assistant
Treasurer, Plan Administrator, Organization and
Compensation Committee
Exhibit 99(b) Section 906 Certificate of Assistant Secretary
* Pursuant to Item 601 (b) (32) (ii) of Regulation S-K, this certificate is not
being "filed" for purposes of Section 18 of the Securities Exchange Act of
1934.
(i)
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
STATEMENTS OF FINANCIAL CONDITION
March 31, June 30,
2003 2002
---------- --------
Investment in securities of participating employer--
Common stock of TXU Corp., at fair value as determined by quoted market prices
(historical cost: 2003-- $32,465,632; 2002-- $39,193,332) (Note 3).................. $ 14,620,637 $ 51,013,693
Dividends receivable.................................................................... 103,959 593,758
Interest receivable..................................................................... 84 103
Cash and cash equivalents............................................................... 77,383 74,102
------------ ------------
Total assets and Plan equity............................................. $ 14,802,063 $ 51,681,656
============ ============
See Notes to Financial Statements.
1
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
STATEMENTS OF OPERATIONS AND CHANGES IN PLAN EQUITY
For the Period
From For the Plan Years
July 1, 2002 to Ended June 30,
March 31, 2003 2002 2001
-------------- ---------- --------
Additions (deductions):
Net investment income:
Dividends on common stock of TXU Corp.................................. $ 698,650 $ 2,161,341 $ 1,922,050
Interest .............................................................. 3,080 21,748 20,287
------------ ------------ ------------
Net investment income............................................ 701,730 2,183,089 1,942,337
Gain (loss) realized on sale of investments.............................. 1,254,869 257,890 (9,257)
Change in unrealized appreciation (depreciation) of investments (Note 3). (29,665,356) 2,296,652 14,677,656
Contributions and deposits (Note 4):
Participating employees' salary deferrals.............................. 156,267 4,633,730 1,936,800
Employer matching and incentive awards................................. 234,401 10,693,045 6,025,200
------------ ------------ ------------
Total contributions and deposits................................. 390,668 15,326,775 7,962,000
------------ ------------ ------------
Total additions (deductions).................................. (27,318,089) 20,064,406 24,572,736
------------ ------------ ------------
Distributions and reversions:
Distributions to participants (Note 5)................................... 9,277,468 7,338,013 4,980,514
Fees to Plan sponsor..................................................... 10 3,288 7,674
Reversions .............................................................. 284,026 840,211 383,913
------------ ------------ ------------
Total distributions and reversions............................... 9,561,504 8,181,512 5,372,101
------------ ------------ ------------
Net additions (deductions).................................................. (36,879,593) 11,882,894 19,200,635
Plan equity, beginning of period............................................ 51,681,656 39,798,762 20,598,127
------------ ------------ ------------
Plan equity, end of period ................................................. $ 14,802,063 $ 51,681,656 $ 39,798,762
============ ============ ============
See Notes to Financial Statements.
2
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description-- The TXU Deferred and Incentive Compensation Plan
(Plan) allows elected officers of TXU Corp. (TXU or the Company) or a
participating subsidiary of the Company (Employer-Companies) with the
title of Vice President or above to defer a percentage of their base
salary not to exceed a maximum percentage determined by the
Organization and Compensation Committee of the Board of Directors of
the Company (the Committee) for each Plan year and, in any event, not
to exceed 15% of the participant's base salary. The Employer-Companies
make matching awards equal to 150% of the deferred compensation. In
addition, for Plan years beginning on or before July 1, 2001,
50% of any awards made to participants under the TXU Annual Incentive
Plan were automatically deferred under the Plan as incentive awards.
Effective April 1, 2002, the Plan year was changed to the twelve-month
period beginning April 1 and ending March 31 of the following year.
Previously, the Plan year was the twelve-month period beginning July 1
and ending June 30 of the following year. A special transition rule
applied to the Plan year beginning July 1, 2001, which is reported
herein, whereby it continued for the full twelve-month period ended
June 30, 2002 (2002 Plan year), running concurrently with the Plan year
beginning April 1, 2002 and ending March 31, 2003 (2003 Plan year) for
the overlapping period. Therefore, the period ended March 31, 2003,
included in this report, contains activity for the nine-month period
from July 1, 2002 to March 31, 2003. Participants were given the
opportunity on April 1, 2002 to participate in the 2003 Plan year
beginning April 1, 2002 and ending March 31, 2003, running concurrently
for the three-month overlapping period with the 2002 Plan year, or
defer participation in the 2003 Plan year until July 1, 2002.
A participant's benefits under the Plan are provided through an
irrevocable grantor trust, the assets of which are subject to the claims
of the Company's general creditors. A participant's Employer-Company
provides the trust with funds equal to the amount credited to the
participant's account, and the trustee invests such funds in shares of
common stock of the Company (Common Stock). The trustee uses any cash
dividends received on Common Stock held in the trust to buy additional
shares of Common Stock.
A participant's deferred compensation, matching award and incentive
award amounts are credited to the participant's account under the Plan
and are converted into performance units on the basis of the number of
shares of Common Stock that can be purchased with such amounts as of the
applicable date. Additional performance units are credited to a
participant's account, determined by multiplying the number of
performance units in the participant's account by the amount of any
regular or special cash dividend declared on each share of Common Stock
and dividing the product by the amount paid by the trust for a share of
such Common Stock with the dividend amounts received by the trust.
On the expiration of the applicable maturity period (three years for
incentive awards and five years for deferrals and matching awards,
beginning on the first day of the Plan year in which the contributions
are made) the value of the participant's account is paid to the
participant in cash. In no event will a participant's account be deemed
to have a cash value less than the sum of the participant's maturing
salary deferrals and 6% per annum interest on such amounts. To the
extent that the amounts maturing under the Plan combined with the
participant's other remuneration for such year exceed $1,000,000, the
maturity period shall be extended. In the event a participant's
employment is terminated because of death or permanent and total
disability, all amounts in the participant's account shall mature
immediately, provided that, if such termination occurs prior to the end
of a Plan year, the deferred amount and Company match for the year of
such termination will be recomputed as of the termination date. In the
event a participant's employment is terminated by retirement, the
participant will receive a distribution of his account at the end of the
applicable maturity period. If the participant terminates employment by
retirement prior to the end of a Plan year, the deferred amount and
company match for the year of retirement will be recomputed unless the
participant has previously elected to accelerate the balance of salary
deferrals. In the event a participant's employment is terminated because
of reasons other than death, permanent and total disability or
retirement, all rights to amounts for maturity periods not yet completed
3
shall be forfeited and revert to the Company (as Plan sponsor), except
for participant deferrals and 6% per annum interest on those amounts.
In the event of such a change in control of the Company: (i) forfeiture
provisions and the provisions relating to recomputation upon termination
during the Plan year are eliminated; (ii) amounts maturing within twelve
months are to be paid within thirty days of the change in control; and
(iii) amounts maturing more than twelve months from the change in
control may, at the election of the participant, be paid on the first
anniversary of the change in control or when such amounts would
otherwise mature.
The number of participants (current and former employees) at March 31,
2003 and June 30, 2002 was 76 and 81, respectively.
2. Summary of Significant Accounting Policies:
Basis of Accounting -- The financial statements of the Plan are prepared
under the accrual method of accounting.
Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of net assets available for benefits
and changes therein. Actual results could differ from those estimates.
Distributions to Participants -- Distributions to participants are
recorded when paid.
Expenses -- All costs and expenses of the Plan and its administration,
except expenses incurred in the acquisition or liquidation of
investments, are paid by the Employer-Companies.
3. Plan Investments -- The historical cost, fair value and unrealized
appreciation (depreciation) of investments as of March 31, 2003, and
June 30, 2002 and 2001 were as follows:
Per Share Number of Historical Fair Appreciation
Value Shares Cost Value (Depreciation)
-------- ------ ---------- ----- --------------
Common stock of TXU Corp.
March 31, 2003....................... $ 17.85 819,083(a) $32,465,632 $14,620,637 $(17,844,995)
June 30, 2002........................ 51.55 989,596(b) 39,193,332 51,013,693 11,820,361
June 30, 2001........................ 48.19 814,652(c) 29,734,367 39,258,076 9,523,709
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(a)Represented 0.2543% of the outstanding shares of common stock of
TXU Corp.(322,155,194 at March 31, 2003).
(b)Represented 0.3557% of the outstanding shares of common stock of
TXU Corp.(278,238,854 at June 30, 2002).
(c)Represented 0.3165% of the outstanding shares of common stock of
TXU Corp.(257,384,322 at June 30, 2001).
The investment in Common Stock is stated at fair value based upon the
last reported sale price on recognized exchanges on the last business
day of the Plan year. The cost basis of Plan investments was changed
from average cost to first-in first-out during the 2003 Plan year. The
effect of the change was not material.
The Plan's investment in Common Stock is subject to various risks, such
as interest rate, credit and overall market volatility. Therefore, it is
reasonably possible that changes in the value of the Common Stock will
occur in the near term and that such changes could materially affect the
amounts reported in the statement of financial condition.
4
4. Plan Contributions -- Contributions by participating employees' salary
deferrals and employer matching and incentive awards for the periods
ended March 31, 2003, June 30, 2002 and 2001 were as follows:
Participating Contributions
Employees' by Employer- Total
Employer-Companies Salary Deferrals Companies Contributions
------------------ ---------------- ------------- -------------
2003:
TXU US Holdings Company...................... $ 53,209 $ 79,813 $ 133,022
TXU Business Services and others............. 103,058 154,588 257,646
----------- ----------- -----------
Total...................................... $ 156,267 $ 234,401 $ 390,668
=========== =========== ===========
2002:
TXU Corp..................................... $ 491,250 $ 1,374,375 $ 1,865,625
TXU US Holdings Company...................... 1,739,968 3,512,452 5,252,420
TXU Business Services and others............. 2,402,512 5,806,218 8,208,730
----------- ----------- -----------
Total...................................... $ 4,633,730 $10,693,045 $15,326,775
=========== =========== ===========
2001:
TXU Corp..................................... $ 240,000 $ 902,500 $ 1,142,500
TXU US Holdings Company...................... 567,000 1,665,000 2,232,000
TXU Business Services and others............. 1,129,800 3,457,700 4,587,500
----------- ----------- -----------
Total...................................... $ 1,936,800 $ 6,025,200 $ 7,962,000
=========== =========== ===========
Incentive awards included in contributions by Employer-Companies were
$3,742,450 and $3,120,000 for the Plan years ended June 30, 2002 and
2001, respectively. No incentive awards were included in contributions
by Employer-Companies for the period ended March 31, 2003.
Total contributions of $15,326,775 for the Plan year ended June 30,
2002 included $5,985,013 ($2,394,005 in participating employees' salary
deferrals and $3,591,008 in contributions by Employer-Companies) for
the Plan year beginning April 1, 2002. (See Note 1 for discussion of
change in the Plan years and special transition rule for the Plan year
ended June 30, 2002.)
5. Plan Distributions -- Amounts contributed to the Plan (including
earnings thereon) during the July 1 through June 30 Plan years mature
on June 30 of the applicable maturity period. Amounts contributed to
the Plan (including earnings thereon) during the April 1 through March
31 Plan years mature on March 31 of the applicable maturity period.
During the period ended March 31, 2003, six participants terminated
from the Plan. Distributions were made to terminated participants in
the aggregate amount of $302,127. Terminations from the Plan during the
period ended March 31, 2003 resulted in net reversions of $284,026.
During the year ended June 30, 2002, two participants terminated from
the Plan. Distributions were made to the terminated participants in the
aggregate amount of $250,627. Maturing in June 2002 were employee
salary deferrals and matching awards for the Plan year ended June 30,
1998 and the incentive awards made for the Plan year ended June 30,
2000. In July 2002, the trustee distributed $8,975,341 of matured
deferrals and awards, representing the net proceeds obtained upon sale
of the associated assets (Common Stock). Terminations from the Plan
during the year ended June 30, 2002 resulted in net reversions of
$840,211.
Maturing in June 2001 were employee salary deferrals and matching
awards for the Plan year ended June 30, 1997 and the incentive awards
made for the Plan year ended June 30, 1999. In July 2001, the trustee
distributed $7,087,386 of matured deferrals and awards, representing
the net proceeds obtained upon sale of the associated assets (Common
Stock). Terminations from the Plan during the year ended June 30, 2001
resulted in net reversions of $383,913.
5
6. Federal Income Taxes -- The Company intends and has been advised that
the Plan does not meet the requirements of a tax-qualified plan under
Section 401(a) of the Internal Revenue Code (Code); the trust
established thereunder is not exempt from federal income taxes under
Section 501(a) of the Code; and the Company will be provided a
corresponding federal income tax deduction for the amount of income
recognized by the participant by reason of distributions under the
Plan.
Based on the Code and regulations promulgated thereunder as currently
in effect:
(a) A participant's elective deferrals under the Plan, matching
awards, incentive awards, and any dividends, interest or other
income thereon will not be subject to federal income tax until
the year such amounts are paid or otherwise made available to the
participant.
(b) Elective deferrals under the Plan are not deductible by the
participant on his or her federal income tax return, since
elective deferrals are not included in the participant's income
until paid or otherwise made available to the participant.
(c) Amounts distributed under the Plan will be taxable as ordinary
income to the participant in the year of such distribution.
7. Plan Termination -- The Company's Board of Directors may amend,
terminate, or suspend the Plan at any time. An amendment or
modification of the Plan may affect active participants 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, as described in
the Plan document.
6
INDEPENDENT AUDITORS' REPORT
Organization and Compensation Committee,
TXU Deferred and Incentive Compensation Plan:
We have audited the statements of financial condition of the TXU Deferred and
Incentive Compensation Plan (the "Plan") as of March 31, 2003 and June 30, 2002,
and the related statements of operations and changes in plan equity for the
nine-month period ended March 31, 2003, and the years ended June 30, 2002 and
2001. 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 auditing standards generally accepted
in the United States of America. 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 financial condition of the Plan at March 31, 2003 and June 30,
2002, and the results of its operations and changes in plan equity for the
nine-month period ended March 31, 2003, and the years ended June 30, 2002 and
2001, in conformity with accounting principles generally accepted in the United
States of America.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
June 30, 2003
7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Organization and Compensation Committee of the Board of Directors of TXU Corp.
has duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
By /s/ Peter B. Tinkham
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Plan Administrator
Organization and Compensation Committee
June 30, 2003
8