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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
TXU DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES
Commission File No. 1-12833
TXU Corp.
ENERGY PLAZA, 1601 BRYAN, DALLAS, TEXAS 75201-3411
(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
FINANCIAL INFORMATION PAGE
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The following financial statements are furnished for the Plan:
Statements of Financial Condition at March 31, 2003 and 2002................................. 1
Statements of Operations and Changes in Plan Equity for the Three
Years Ended March 31, 2003, 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...................................................................... 6
PLAN ADMINISTRATOR'S SIGNATURE.................................................................... 7
EXHIBITS
The following exhibits are filed herewith:
Exhibit 23 - Independent Auditors' Consent
Exhibit 99(a) - Section 906 Certificate of Secretary and Assistant
Treasurer and Plan Administrator*
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 COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES
STATEMENTS OF FINANCIAL CONDITION
March 31,
----------------------
2003 2002
----- ----
Investment in securities of participating employers-
Common stock of TXU Corp., at fair value as determined by
quoted market prices (historical cost: 2003 - $657,771;
2002 - $513,346) (Note 3)................................... $288,581 $729,887
Dividends receivable............................................ 2,022 8,035
Cash and cash equivalents....................................... 662 558
-------- --------
Total assets and Plan equity................................ $291,265 $738,480
======== ========
See Notes to Financial Statements.
1
TXU DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES
STATEMENTS OF OPERATIONS AND CHANGES IN PLAN EQUITY
For the Years Ended
March 31,
-----------------------------------
2003 2002 2001
--------- ------ -----
Additions (deductions):
Net investment income:
Dividends on common stock of TXU Corp....................... $22,917 $31,744 $23,346
Interest.................................................... 61 145 151
--------- --------- ---------
Net investment income.................................... 22,978 31,889 23,497
Change in appreciation (depreciation) of investments (including
realized gains or losses) (Note 3)............................ (585,701) 172,550 108,636
Contributions and deposits (Note 4):
Participating directors' compensation deferrals.......... 128,000 132,000 116,000
--------- --------- ---------
Total additions (deductions)........................ (434,723) 336,439 248,133
Distributions:
Distributions to withdrawing participants................... 12,492 15,308 -
--------- --------- ---------
Net additions (deductions)....................................... (447,215) 321,131 248,133
Plan equity, beginning of year................................... 738,480 417,349 169,216
--------- --------- ---------
Plan equity, end of year......................................... $291,265 $738,480 $417,349
========= ======== -========
See Notes to Financial Statements.
2
TXU DEFERRED COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. Plan Description -- The TXU Deferred Compensation Plan for Directors of
Subsidiaries (Plan) is sponsored by TXU Corp. (Company) and is
administered by the Organization and Compensation Committee of the
Company's Board of Directors. Members of the boards of directors and/or
advisory boards of directors of participating subsidiaries of the
Company who are not current or former officers or employees of the
Company or any of its subsidiaries (Outside Directors) are eligible to
participate in the Plan. The Plan allows Outside Directors to defer a
percentage of their annual retainer exclusive of any attendance fee or
other compensation in 25% increments up to 100%.
A participant's benefits under the Plan are provided through an
irrevocable grantor trust established by the Company as agent for the
participating subsidiaries. The trust assets contributed by a
participating subsidiary are subject to the claims of the general
creditors of the participating subsidiary. At the beginning of the Plan
year, each participating subsidiary provides the trust with funds equal
to the annual deferrals of the participating subsidiary's participants.
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 deferrals 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 the
deferral 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 Common Stock with the dividend amounts received by the trust.
On the expiration of the applicable maturity period elected by a
participant (not fewer than 3 years and not more than 10 years), the
value of the participant's account at maturity is paid in whole shares
of Common Stock or in cash at the participant's election. In the event a
participant's service is terminated because of death or disability,
amounts in the participant's account shall mature upon such termination.
In the event a participant's service terminates for reasons other than
death or disability, amounts in the participant's account shall mature
at the end of the applicable maturity period. If the participant's
service terminates prior to the end of a Plan year, the deferred amount
and the dividend equivalent credits earned will be recomputed as of the
termination date. The deferred amount and dividend equivalent credits
that are unearned will be forfeited and revert back to the Company.
In the event of a change in control of the Company, forfeiture
provisions are eliminated; amounts maturing within 12 months are to be
paid within 30 days of the change in control; and amounts maturing more
than 12 months from the change in control may, at the election of the
Outside Director, be paid on the first anniversary of the change in
control or when they would otherwise mature.
The number of participants at March 31, 2003 and 2002 was 21 and 22,
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 Plan assets and changes therein.
Actual results could differ from those estimates.
3
Expenses -- All costs and expenses of the Plan and its administration
except expenses incurred in the acquisition or disposition of
investments are paid by the Company.
3. Plan Investments -- The historical cost, fair value and unrealized
appreciation (depreciation) of investments at March 31, and for the years
then ended, are as follows:
Number of Historical Market Appreciation/
Common stock of TXU Corp Shares Cost Value (Depreciation)
------------------------ ------ ---- ----- --------------
2003 16,167 (a) $657,771 $288,581 $(369,190)
2002 13,390 (b) $513,346 $729,887 $216,541
2001 9,946 (c) $365,619 $410,987 $ 45,368
- ------------------------------
(a) Represents 0.0050% of the outstanding shares of common stock of TXU
(322,155,194 at March 31, 2003).
(b) Represents 0.0050% of the outstanding shares of common stock of TXU
(266,124,117 at March 31, 2002).
(c) Represents 0.0039% of the outstanding shares of common stock of TXU
(258,138,897 at March 31, 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. Changes in the fair value are reflected as
unrealized appreciation (depreciation). 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.
During the 2003, 2002 and 2001 Plan years, realized gains and losses
(reflected in the change in appreciation (depreciation) of investments)
were immaterial. Distributions for maturing accounts are paid from new
contributions to the extent available, and the ownership of performance
units is effectively transferred from the maturing account to the new
participant's account. This minimizes realized gain or loss because the
Plan's investments are generally not sold and repurchased.
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 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. Plan Contributions -- Contributions by participating Outside Directors
for the Plan years ended March 31, 2003, 2002 and 2001 were $128,000,
$132,000 and $116,000, respectively.
5. Distributions Payable -- In accordance with Plan requirements, accounts
maturing at March 31, 2003 resulted in distributions totaling $44,605
paid in April 2003.
6. Federal Income Taxes -- The Plan does not, and is not intended to, meet
the requirements of a tax-qualified plan under Section 401(a) of the
Internal Revenue Code (Code). Therefore, the trust which the Company has
established under the Plan in order to provide Plan benefits is not
exempt from federal income taxes under Section 501 (a) of the Code.
Based on the Code and the regulations thereunder as currently in effect:
(a) A participant's elective deferrals under the Plan, 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 includable in the participant's income.
4
(c) Amounts distributed under the Plan will be taxable as ordinary
income to the participant in the year of such distribution.
7. Amendment or 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 termination of the Plan, the deferred amount and dividend equivalent
credits will be recomputed as of the date of termination.
5
INDEPENDENT AUDITORS' REPORT
Organization and Compensation Committee,
TXU Deferred Compensation Plan
for Directors of Subsidiaries:
We have audited the accompanying statements of financial condition of the TXU
Deferred Compensation Plan for Directors of Subsidiaries (The "Plan") as of
March 31, 2003 and 2002, and the related statements of operations and changes in
plan equity for the years ended March 31, 2003, 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, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan at March 31, 2003 and
2002, and the related operations and changes in plan equity for each of the
three years in the period ended March 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 30, 2003
6
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 COMPENSATION PLAN FOR DIRECTORS OF SUBSIDIARIES
By /s/ Peter B.Tinkham
---------------------------
Peter B. Tinkham
Plan Administrator,
Organization and Compensation
Committee
June 30, 2003
7