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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 December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
TXU THRIFT PLAN
Commission File No. 1-12833
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TXU Corp.
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)
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TABLE OF CONTENTS
PAGE
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FINANCIAL STATEMENTS
The following statements are furnished for the Plan:
Statements of Net Assets Available for Benefits,
December 31, 2002 and 2001.............................................................. 1
Statements of Changes in Net Assets Available for Benefits,
Years Ended December 31, 2002 and 2001.................................................. 2
Notes to Financial Statements............................................................... 3
Supplemental Schedules:
Form 5500, Schedule H, Part IV, Line 4i
Schedule of Assets (Held at End of Year),
December 31, 2002................................................................... 11
Form 5500, Schedule H, Part IV, Line 4j
Schedule of Reportable Transactions
For the Year Ended December 31, 2002................................................ 14
INDEPENDENT AUDITORS' REPORT 15
SIGNATURE............................................................................................ 16
EXHIBITS
The following exhibits are filed herewith:
Exhibit 23(a) Independent Auditors' Consent
Exhibit 99(a) Section 906 Certificate *
Exhibit 99(b) Section 906 Certificate *
* 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.
TXU THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
---------------------------
2002 2001
---- ----
ASSETS
Investments - at fair value....................................... $681,053,407 $1,067,353,326
Pending sales of securities....................................... 303,143 --
Cash.............................................................. 781,774 471,317
Contributions receivable from Employer-corporations............... 10,101,226 3,895,944
Dividends receivable.............................................. 2,046,247 12,233,327
Interest receivable............................................... 345,921 1,263
Investment in participant loans receivable........................ 35,191,583 32,282,799
------------ --------------
Total assets.................................................. 729,823,301 1,116,237,976
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LIABILITIES
Note payable...................................................... 240,504,000 244,413,000
Accrued interest payable.......................................... 5,133,540 5,533,926
Pending purchases of securities................................... 1,096,291 --
------------ --------------
Total liabilities............................................. 246,733,831 249,946,926
------------ --------------
NET ASSETS AVAILABLE FOR BENEFITS...................................... $483,089,470 $ 866,291,050
============ ==============
See Notes to Financial Statements.
1
TXU THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31,
------------------------
2002 2001
---- ----
Additions (deductions):
Net investment income:
Dividends............................................................ $ 30,499,624 $ 36,302,218
Interest............................................................. 7,491,328 6,807,156
------------ ------------
Net investment income........................................... 37,990,952 43,109,374
Change in net appreciation (depreciation) in fair value of investments. (438,586,046) (6,160,642)
Transfer from TXU EN$AVE Plan.......................................... -- 69,841,791
------------ ------------
Contributions:
Participating employees' savings..................................... 56,461,630 48,398,765
Employer-corporations................................................ 39,724,962 19,900,301
------------ ------------
Total contributions............................................. 96,186,592 68,299,066
Total additions (deductions).................................... (304,408,502) 175,089,589
------------ ------------
Distributions and expenses:
Distributions to withdrawing participants.............................. 55,298,058 31,953,257
Interest expense and other fees........................................ 23,495,020 24,498,686
------------ ------------
Total distributions and expenses................................ 78,793,078 56,451,943
------------ ------------
Net additions (deductions).................................. (383,201,580) 118,637,646
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year...................................................... 866,291,050 747,653,404
------------ ------------
End of year............................................................ $483,089,470 $866,291,050
============ ============
See Notes to Financial Statements.
2
TXU THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
The following description is provided for general information purposes
only. Reference should be made to the Plan document for more complete
information.
General - The TXU Thrift Plan (Plan) is a defined contribution plan
established in 1968 by TXU Corp. and its participating subsidiaries
(Employer-corporations). The TXU Thrift Plan Committee manages the operation and
administration of the Plan. Mellon Bank, N.A. serves as trustee (Trustee) and is
custodian of the assets of the Plan. Mellon HR Solutions (formerly called
Dreyfus Retirement Services), a subsidiary of the Trustee, serves as
record-keeper for the Plan. In 1990, the Plan was amended to establish a
leveraged employee stock ownership provision (see Note 4). The Plan was later
amended to establish a pretax deferral feature in accordance with Section 401(k)
of the Internal Revenue Code of 1986, as amended (Code). Effective December 31,
2001, the TXU EN$AVE Plan was merged into the Plan. Effective January 1, 2002,
the Plan was amended to incorporate certain discretionary amendments to the
Plan, including an increase in the Employer matching contribution, increased
flexibility for participants in effecting Plan withdrawals and diversification,
and the designation of all Plan assets invested in the Common Stock of the
Company as an employee stock ownership plan in addition to the leveraged stock
ownership component of the Plan; and to reflect the relevant provisions (not
currently included in the Plan) of The General Agreement on Tariffs and Trade
portion of The Uruguay Round Agreements Act, The Uniformed Services Employment
and Reemployment Rights Act of 1994, The Small Business Job Protection Act of
1996, The Taxpayer Relief Act of 1997, the Internal Revenue Service
Restructuring and Reform Act of 1998, and The Community Renewal Tax Relief Act
of 2000; and to incorporate certain provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001. 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 nine participant-directed investment options, or funds:
o Common Stock of TXU Corp. (Common Stock of the Company) - invests
exclusively in Common Stock of TXU Corp. (Company);
o Interest Income Fund - invests in contracts with insurance companies
and other financial institutions;
o Bond Index Fund - purchases units in the Vanguard Total Bond Market
Index Fund, Institutional shares, which focuses on intermediate-term
bonds;
o Balanced Fund - purchases units in the Dreyfus Premier Balanced Fund,
R Class, which consists primarily of investments in equity securities,
fixed income securities and money market obligations;
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 Vanguard Institutional
Index Fund, which consists primarily of common stocks included in the
Standard & Poor's 500 Index;
o Equity Growth Fund - purchases units in the American Express AXP New
Dimensions Fund, Y Class, which invests primarily in common stocks of
companies showing potential for significant growth, and also invests
in foreign securities;
o Equity International Fund - purchases units in the American AAdvantage
International Equity Fund, Institutional Class, which invests primarily
in equity securities of foreign issuers; and
o Equity Small Company Fund - purchases units in the MSIF Trust U.S.
Small Cap Core Portfolio, which invests primarily in equity securities
issued by companies with market capitalization within the range of
securities in the Frank Russell 2000 Index.
3
Effective July 1, 2003, the following changes were implemented with
respect to the investment options available under the Plan:
o Seven new participant-directed investment options were introduced:
- Active Bond Fund - purchases units in the PIMCO Total Return Fund
- Mid Cap Value Equity Fund - purchases units in the Hotchkis & Wiley
Mid Cap Value Fund, I Class
- Mid & Small Cap Equity - purchases units in the Vanguard
Extended Market Index Fund, Admiral Shares
- Mid Cap Growth Equity Fund - purchases units in the Artisan Mid
Cap Fund
- Small Cap Growth Equity Fund - purchases units in the Vanguard
Explorer Fund, Admiral Shares
- International Equity Index Fund - purchases units in the Fidelity
Spartan International Index Fund
- International Growth Equity Fund - purchases units in the Fidelity
International Growth and Income Fund
o The Balanced Fund exchanged units in the Dreyfus Premier Balance
Fund, R Class, for units in the Dodge and Cox Balanced Fund which
invests in the same type of securities.
o The Equity Small Company Fund became the Small Cap Value Equity
Fund and exchanged units in the MSIF Trust Small Cap Core
Portfolio for units in the American Advantage Small Cap Value
Fund, Institutional Class.
o The manager of the Interest Income Fund, Certus Asset Advisors,
adopted a new name, Standish Mellon Asset Management.
Eligibility, Participation and Employee Savings - Effective January 1,
2002, all employees of a participating Employer-corporation are eligible to
participate in the Plan upon employment except nonresident alien employees who
receive no earned United States sourced income, leased employees, or any
individuals who are treated by or characterized in the internal records of an
Employer-corporation as independent contractors, loaned employees, staff
augmentation personnel, scope of work contractors, or seconded employees, or
those who perform services for an Employer-corporation under a special contract
for services arrangement, regardless of any determination by the Internal
Revenue Service (IRS), other governmental agency, or a court or other tribunal,
that any such individual is, or was, a common law employee of an
Employer-corporation for any other purpose or for any period of time.
Under the Plan, except as limited by law, a participating employee may
invest a specified percentage of salary or wages each payroll period, either
through pre-tax salary deferral or after-tax payroll deduction. The first 6% of
regular salary or wages that a participant saves is known as Basic Employee
Savings. Savings above 6% are known as Supplemental Employee Savings. The total
of Basic and Supplemental Employee Savings is known as Employee Savings. Through
December 31, 2001, participants electing the maximum Basic Employee Savings (6%)
could contribute Supplemental Employee Savings of an additional 1% to 10%. On
January 1, 2002, the Supplemental Employee Savings limit was increased to 14%
for those employees who earned less than the threshold compensation limit used
by the IRS to determine highly compensated employees. On June 1, 2002, the limit
to Employee Savings for participants earning less than the IRS highly
compensated employee threshold was again increased, to the maximum amount
permitted by federal law, i.e., the lesser of $40,000 or 100% of eligible
compensation.
Federal law limits the amount a participant may save on a pre-tax basis
($11,000 in 2002). However, effective January 1, 2002, a participant who is
eligible to make pre-tax salary deferrals and will have attained age 50 before
the close of the Plan year may make an additional pre-tax catch-up contribution
of up to $1,000. This catch-up limit, for participants who will reach age 50
during the Plan year, will increase by $1,000 per year through 2006. The Plan
year begins January 1 and ends December 31.
Subject to certain conditions, a participant may transfer or rollover to
the Plan cash amounts distributed or distributable from an individual retirement
account (IRA) or an eligible retirement plan. Only taxable contributions may be
transferred or rolled over from an IRA, while taxable and nontaxable
contributions may be transferred or rolled over from an eligible retirement
plan.
4
Employer Matching Contributions - Through December 31, 2001, matching
contributions to participant accounts by the Employer-corporations were made
based on a percentage of the participants' Basic Employee Savings and years of
service as follows:
Less than 10 years......................................... 40%
10 years but less than 25 years............................ 50%
25 years or more........................................... 60%
Effective January 1, 2002, employer matching contributions are made in an
amount equal to 100% of Basic Employee Savings for those participants who are
covered under the cash balance formula of the TXU Retirement Plan, 75% of Basic
Employee Savings for employees who are covered under the traditional defined
benefit formula of the TXU Retirement Plan, and 40%, 50% or 60% for employees
covered under certain collective bargaining agreements. No employer
contributions are made with respect to Supplemental Employee Savings. As of May
12, 2003, all employees covered under collective bargaining agreements receiving
the 40%, 50% or 60% employer match had become eligible to receive either the 75%
or 100% employer match under the Plan, depending on the TXU Retirement Plan
formula in which they were participating.
Investment of Funds - All employer matching contributions are invested in
Common Stock of the Company and are subject to certain withdrawal and
diversification rights. Dividends paid on Common Stock of the Company allocated
to a participant's account are reinvested in Common Stock of the Company unless
the participant elects to receive the dividend in cash. Each participant may
invest, in 1% increments, in the various investment options with respect to the
investment of Employee Savings.
All assets of the Plan are held by the Trustee for the exclusive benefit
of participants and their beneficiaries. Separate account records for each
participant are maintained by the Trustee. The Trustee provides a summary of
financial performance by investment fund directly to Plan participants.
A participant may diversify investments of Employee Savings among the
available investment funds under the Plan at any time by liquidating the
investments attributable to such 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
the such participant's employer matching contributions account (reduced by
amounts previously so diversified). At age 60 and thereafter, a participant may
annually diversify up to 50% of such employer matching contributions account
(reduced by amounts previously so diversified). Additionally, effective January
1, 2002, participants may, at any time, make a total withdrawal of their
employer matching contributions account; however, participants cannot make a
partial withdrawal of their employer matching contributions account.
Unit Values - Participants do not have beneficial ownership in specific
securities or other assets in the various investment funds other than Common
Stock of the Company, 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 - Participants who hold Common Stock of the
Company in their account may give the Trustee confidential written instructions
with respect to the voting of those shares at any shareholders meeting. The
unallocated Common Stock of the Company held pursuant to the leveraged employee
stock ownership component of the Plan may be voted by the Trustee at its
discretion unless otherwise directed pursuant to a voting procedure agreement.
5
Withdrawal from the Plan - Withdrawals from the Plan are governed by
applicable IRS regulations and provisions of ERISA. Penalties may apply in
certain instances.
Participants are fully vested in all amounts in their accounts (i.e.,
pre-tax contributions, after-tax contributions, employer matching contributions,
rollover contributions and all earnings and dividends thereon).
A participant who terminates employment and has an account balance
greater than $5,000 may retain the funds in the Plan or withdraw them at any
time; however, the participant must begin withdrawals no later than April 1st
following the later of the calendar year in which the participant attains age 70
1/2 or the calendar year in which the participant retires. Participants who
terminate with balances equal to or less than $5,000 are required to receive a
distribution after termination. To avoid taxation, a withdrawal made upon
termination may be rolled into an IRA or a qualified retirement plan sponsored
by another employer, provided that the other qualified retirement plan accepts
rollovers.
Participants may make partial or total withdrawals from their rollover
and after-tax contribution accounts at any time and for any reason. Participants
may make withdrawals from pre-tax contribution accounts upon termination of
employment or attainment of age 59 1/2. Additionally, participants who meet
certain qualifications defined by the IRS may make hardship withdrawals.
Participants who received a hardship withdrawal prior to June 1, 2002 may not
contribute to the Plan for a period of 12 months following the withdrawal. For
hardship withdrawals on or after June 1, 2002, this 12-month suspension was
reduced to six months.
Participants making withdrawals may choose from the following optional
forms of payment: (a) shares of Common Stock of the Company and/or publicly
traded fund units (to the extent permitted by the fund) credited to a
participant's account; (b) single lump sum cash payment; or (c) a combination of
(a) and (b).
In the event of a total withdrawal made after January 1, 1976 by a
participant who was not 100% vested under provisions of the Plan prior to
January 1, 1998, the participant may repay to the Plan the amount of such
distribution at any time prior to the close of the Plan Year in which the
participant has completed five consecutive Break-in-Service years and any
amounts previously forfeited will be restored to the participant's account.
Unclaimed Terminated Participants' Accounts - As a result of the merger
of the TXU EN$AVE Plan into the Plan effective December 31, 2001, the Plan has a
segregated account of amounts payable to terminated participants of the former
ENSERCH Corporation (ENSERCH) Tax Reduction Act Stock Ownership Plan ("TRASOP")
whom the Plan administrators have been unable to locate for more than one year
from the date of termination. Included in net assets available for benefits as
of December 31, 2002 and 2001 was $663,120 and $945,078, respectively, of TRASOP
unclaimed terminated participants' benefits. As of December 31, 2002 and 2001,
$410,049 and $386,771, respectively, was invested in the Mellon Bank Cash
Management Fund, representing unclaimed dividends payable to terminated
participants of the TRASOP. The Plan remains contingently liable to terminated
participants for unclaimed cash and shares.
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 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. The Plan received its
last favorable determination letter on November 29, 2002.
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) After-tax Employee Savings are not deductible on the participant's
federal income tax return.
(c) Pre-tax Employee Savings 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.
6
(d) Withdrawals of after-tax employee savings which were contributed
to the Plan prior to January 1, 1987 represent a return of
employee savings and are not taxable to the participant when
withdrawn. Withdrawals of after-tax employee savings contributed
to the Plan 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 after-tax
Employee Savings. However, if the total withdrawal meets the lump
sum distribution requirements of the Code: (i) any net unrealized
appreciation in the value of Common Stock of the Company
distributed by the Plan may 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.
(f) The taxable amount of a total or partial withdrawal may generally
be rolled over to an IRA or other eligible retirement plan and
payment of taxes may thereby be deferred. Taxable amounts not
rolled over may be subject to automatic income tax withholding of
20%. Effective January 1, 2002, nontaxable amounts also became
eligible for rollover. Hardship withdrawals are not eligible for
rollover.
Participants are encouraged to consult their individual tax and financial
advisors and to determine in advance the effect on their federal income tax
liability of receiving distributions from the Plan.
Amendment, Modification, Suspension and Termination - It is the intention
of the Company to continue the Plan indefinitely; however, the Company, by
action 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 prior 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 Employee Savings,
rollovers or employer contributions.
2. TRANSFER FROM TXU EN$AVE PLAN
Effective December 31, 2001 the TXU EN$AVE Plan was merged into the Plan.
The following net assets were transferred into the Plan from the TXU EN$AVE
Plan:
Cash.................................................... $ 382,830
Investments-- at fair value............................. 67,834,125
Contributions receivable from Employer-corporations..... 9,126
Dividends and interest receivable....................... 307,798
Investment in participant loans receivable.............. 1,307,912
------------
Net assets available for benefits................... $ 69,841,791
============
Included in the investments transferred at December 31, 2001, were
339,322 shares of common stock of Enserch Exploration, Inc. (EEX), with a fair
value of $624,352. EEX is a former oil and gas exploration and production
subsidiary of ENSERCH that was spun off immediately prior to the merger of
ENSERCH with TXU Corp. in 1997. Participants may not make any additional
investments in EEX Common Stock.
On November 26, 2002, the shareholders of EEX approved the merger of EEX
with and into Newfield Exploration Company ("Newfield"). As a result of the
merger, substantially all shares of EEX common stock in Thrift Plan
participants' accounts were converted to shares of Newfield common stock on
November 26, 2002. As with the EEX common stock, participants may not make any
additional investments in Newfield common stock but may diversify their
investments in that stock into any of the other funds available for investment
under the Plan. Additionally, on or about December 15, 2003, any Newfield common
stock holdings in participants' accounts will be automatically liquidated and
reinvested in the Interest Income Fund. Investments in the Interest Income Fund
may be diversified at any time among the other funds available under the Plan.
7
3. 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. The Plan utilizes various investment
instruments. Investment securities, in general, are exposed to various risks,
such as interest rate, credit, and overall market volatility. Due to the level
of risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term
and that such changes could materially affect the amounts reported in the
statements of net assets available for plan benefits.
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's insurance
contracts and the financial institution investment contracts are stated 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:
Contract value of assets as of December 31, 2002: $76,106,870
Fair value of assets as of December 31, 2002: $81,730,032
Average yield of assets on December 31, 2002: 5.49%
Return on assets for 12 months ending December 31, 2002: 5.78%
The average yield of assets on December 31, 2001 was 5.92%. The return on
assets for 12 months ending December 31, 2001 was 6.15%.
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 presentations.
4. LEVERAGED EMPLOYEE STOCK OWNERSHIP PROVISION
In 1990, the Trustee, on behalf of the Plan, borrowed $250,000,000 from
an outside lender in the form of a note payable 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, 2002 and 2001, 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
4,138,558 unallocated shares of Common Stock of the Company held by the Trustee
at December 31, 2002.
The LESOP shares are held by the Trustee until released for allocation to
participants' accounts. The shares are released proportionally based on current
debt service payments, including interest, to the total for all 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 2002 and 2001 Plan years, 261,871 and 254,196 LESOP shares,
respectively, were released for allocation to participant accounts.
8
5. INVESTMENTS
Investments representing 5% or more of the Plan's net assets are as
follows:
December 31,
----------------------
2002 2001
---- ----
TXU Corp. common stock (2002-- 16,521,752 shares;
2001-- 13,214,032 shares)*.................................... $308,626,327 $ 623,041,609
Equity growth fund.............................................. 85,966,163 125,433,714
Guaranteed contracts............................................ 45,139,784 48,648,855
Equity income fund.............................................. 69,295,540 88,198,740
Equity index fund............................................... 61,107,643 82,263,303
Bond index fund................................................. 32,836,565 24,977,830
*Nonparticipant-directed
During 2002 and 2001, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
2002 2001
---- ----
Common stock of TXU............................................. $ (361,880,588) $ 35,876,887
Mutual funds.................................................... (77,053,707) (42,037,624)
Other........................................................... 348,249 95
-------------- -------------
$ (438,586,046) $ (6,160,642)
============== =============
6. NONPARTICIPANT-DIRECTED INVESTMENTS
All employer matching contributions are invested in Common Stock of the
Company and considered to be nonparticipant-directed investments. Changes in net
assets relating to nonparticipant-directed investments are as follows:
December 31,
------------------------
2002 2001
---- ----
Investments -- TXU Corp. common stock................. $ 308,626,327 $ 623,041,609
Note payable.......................................... (240,504,000) (244,413,000)
Other ................................................ 6,348,622 8,164,897
-------------- --------------
Net assets available for benefits.................. $ 74,470,949 $ 386,793,506
============== ==============
2002 2001
---- ----
Changes in net assets
Additions (deductions):
Dividends and interest......................... $ 25,340,789 $ 30,727,343
Contributions.................................. 51,891,127 28,804,630
Net appreciation (depreciation) in fair value.. (361,880,588) 35,876,885
Transfers for reinvestments -- net............. 36,787,611 (14,699,865)
Other transfers................................ (9,150,587) 24,853,619
------------- --------------
Total additions (deductions)............... (257,011,648) 105,562,612
Distributions and expenses:
Distributions to participants.................. 31,230,154 17,398,071
Interest expense and other fees................ 24,080,755 24,428,871
------------- --------------
Total distributions and expenses........... 55,310,909 41,826,942
------------- --------------
Net increase in net assets........................... $(312,322,557) $ 63,735,670
============= ==============
9
7. PARTICIPANT LOANS RECEIVABLE
The Plan includes a loan feature allowing participants to borrow up to
50% of their pre-tax employee savings, employer matching contributions and
rollover contributions and repay the loan with after-tax payroll deductions. A
participant may not have more than two outstanding loans at one time. The
minimum amount of a Plan loan is $1,000 and the maximum is $50,000 less the
highest outstanding loan balance in the preceding 12-months. Participants may
repay the loan back into their account(s) over a period of one to five 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 prime lending
rate published in the Wall Street Journal on the first business day of the month
plus 2.0%. During 2002 the interest rate was between 6.25% and 6.75%.
8. OTHER ITEMS
During 1998, the IRS notified the Company that certain benefit plans,
including this Plan, would be under examination. The Plan years subject to
examination are the Plan years ending with or within the tax years ending
December 31, 1994, 1995, and 1996. Issues the IRS raised in its examination,
none of which apply to this Plan, have been communicated to the Company. The
Company and the IRS are currently in the process of finalizing a formal closing
of the audit.
9. COMMITMENTS AND CONTINGENCIES
Three separate lawsuits were filed on November 26, 2002, February 28,
2003, and March 18, 2003, respectively, in the United States District Court for
the Northern District of Texas, Dallas Division by individual representatives of
a putative class of participants and beneficiaries of the Plan during specified
periods. Each of these cases names the Company and certain individuals,
including certain directors and members of the TXU Thrift Plan Committee, as
defendants. Although they are not identical, each of the cases alleges that the
defendants breached various fiduciary duties under the Employee Retirement
Income Security Act of 1974. The cases are currently in preliminary procedural
stages, and the Company anticipates that they will be consolidated into a single
putative class action. The Company and the individual defendants believe that
the claims asserted in these cases are without merit, and intend to vigorously
defend them. However, it is not possible at this time to predict the outcome of
the cases.
10
TXU THRIFT PLAN - SUPPLEMENTAL INFORMATION
FORM 5500, SCHEDULE H, PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR),
DECEMBER 31, 2002
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
- ---------------- ---------------------------- ---- ---------------
COMMON STOCK
Common Stock 2
- ------------
TXU 3 16,521,752 shares, no par value $ 560,166,637 $ 308,626,327
EEX 98 shares, par value $1.00 per share 3,751 196
Newfield 17,545 shares 1,486,458 632,489
Money Market Funds
- ------------------
Mellon Bank, N.A. 3 Cash management fund -
919,618 units 919,618
---------------
TOTAL COMMON STOCK 310,178,630
---------------
BOND INDEX FUND
Vanguard Total Bond Market
Index Institutional Fund 3,163,446 units 32,836,565
---------------
INTEREST INCOME FUND
Value of Interest in General Accounts
- -------------------------------------
The Hartford Life
Insurance Company Contract No. GA-10521, 6.08%, due 2005 2,809,150
New York Life
Insurance Company Contract No. GA-30839, 6.19%, due 2005 1,323,394
Transamerica Occidental
Insurance Company Contract No. 51492, 6.33%, due 2003 1,259,707
John Hancock
Life Insurance Company Contract No. GAC-8897, 7.01%, due 2003 1,285,770
Principle Mutual Life Contract No. 4368431, 5.95%, due 2003 2,505,074
11
Description of Investment,
Identity of Issuer, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
or Similar Party Units, Par or Maturity Value Current Value 1
- -------------------- ---------------------------- ---------------
Travelers
Insurance Company Contract No. GR-18039, 5.90%, due 2006 1,805,275
John Hancock
Insurance Company Contract No. 15039, 6.99%, due 2005 1,404,919
Security Life Denver
Insurance Company Contract No. SA 323, 4.28%, due 2006 950,789
Rabobank Nederland Contract No. TXU 010201, 4.96%, due 2007 2,003,577
Rabobank Nederland Contract No. TXU 089901, 6.67%, due 2003 1,495,898
Bank of America, N.A. Contract No. 02-066, 5.37%, due 2008 2,685,302
Bank of America, N.A. Contract No. 01-107, 5.42%, due 2007 2,004,865
Bank of America, N.A. Contract No. 01-117, 5.84%, due 2008 2,003,146
---------------
Total Value of Interest in General Accounts 23,536,866
---------------
Money Market Funds
- ------------------
Boston Safe Deposit and
Trust Cash management fund -
5,486,221 units 5,486,221
---------------
United States Government Obligations
- ------------------------------------
FNMA/FHLMC 15,288,077
---------------
Other
- -----
Monumental Manager
Trust Contract No. BDA-00284TR, 6.16%, due 2002 25,675,156
Rabobank Nederland Contract No. TXU 060201, 4.86%, due 2002 6,120,550
---------------
Total Other 31,795,706
---------------
TOTAL INTEREST INCOME FUND 76,106,870
---------------
12
Description of Investment,
Identity of Issuer, Including Collateral, Rate of
Borrower, Lessor, Interest, Maturity Date, Shares,
or Similar Party Units, Par or Maturity Value Current Value 1
- -------------------- ---------------------------- ---------------
EQUITY INCOME FUND
Fidelity Equity --
Income Fund 1,746,800 units 69,295,540
----------------
EQUITY INDEX FUND
Vanguard Institutional
Index Fund 759,573 units 61,107,643
----------------
EQUITY INTERNATIONAL FUND
American AAdvantage International
Institutional Fund 723,826 units 8,656,959
----------------
EQUITY SMALL COMPANY FUND
MAS Small Cap Value
Institutional Fund 924,076 units 13,759,499
----------------
BALANCED FUND
Dreyfus Premier Balanced
Fund 2,100,428 units 22,243,533
----------------
EQUITY GROWTH FUND
American Express AXP New
Dimensions Y-Class Fund 4,461,139 units 85,966,163
----------------
LOAN FUND
Participant Loans
Receivable 4 35,191,583
----------------
MONEY MARKET FUND
Mellon Bank, N.A. 3 Cash management fund -
902,005 units 902,005
----------------
TOTAL ALL FUNDS $ 716,244,990
================
- ---------
1 Current value for the Interest Income Fund is based on contract value.
2 Nonparticipant-directed
3 Party-in-Interest
4 The rate of interest charged is the Trustee's current prime lending rate plus
2.0%. During 2002, the rate of interest charged was between 6.25% and 6.75%.
Maturities range from one to five years for general purpose loans and up to
15 years for a primary home loan.
13
TXU THRIFT PLAN - SUPPLEMENTAL INFORMATION
FORM 5500, SCHEDULE H, PART IV, LINE 4j
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
Transactions involving an amount in excess of 5% of the fair value of beginning
plan assets:
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
- -----------------------------------------------------------------------------------------------------------------
Exceeding 5% of Plan Assets (in the Aggregate):
Series of
Transactions:
Various TXU Corp.
Stock $116,319,338 -- -- $116,319,338 $116,319,338 --
Various TXU Corp.
Stock -- $59,733,788 -- $ 57,423,267 $ 59,733,788 $2,310,521
Mellon Cash Mgmt.
Bank, N.A.1 Fund $133,053,650 -- -- $133,053,650 $133,053,650 --
Mellon Cash Mgmt.
Bank, N.A. 1 Fund -- $130,048,313 -- $130,048,313 $130,048,313 --
- ---------
(1)Party-in-Interest
14
INDEPENDENT AUDITORS' REPORT
TXU Thrift Plan Committee
TXU Thrift Plan:
We have audited the accompanying statements of net assets available for benefits
of the TXU Thrift Plan (Plan) as of December 31, 2002 and 2001, 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 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 net assets available for benefits of the Plan at December 31, 2002
and 2001, and the changes in net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) assets (held at end of year) at December 31, 2002 and (2) reportable
transactions for the year ended December 31, 2002 are presented for the purpose
of additional analysis and are not a required part of the basic 2002 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. These schedules are the responsibility
of the Plan's management. Such supplemental schedules have been subjected to the
auditing procedures applied in our audit of the basic 2002 financial statements
and, in our opinion, are fairly stated in all material respects when considered
in relation to the basic 2002 financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Dallas, Texas
July 8, 2003
15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the TXU
Thrift Plan Committee has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
TXU THRIFT PLAN
By /s/ Robert L. Turpin
----------------------------------------
Robert L. Turpin, Assistant Secretary
TXU Thrift Plan Committee
July 15, 2003
16