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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, 2003
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 75201-3411
(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 STATEMENTS
The following statements are furnished for the Plan:
Statements of Net Assets Available for Benefits,
December 31, 2003 and 2002.............................................................. 1
Statements of Changes in Net Assets Available for Benefits,
Years Ended December 31, 2003 and 2002.................................................. 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, 2003................................................................... 10
Form 5500, Schedule H, Part IV, Line 4i
Schedule of Assets (Acquired and Disposed of Within the Plan Year),
For the Year Ended December 31, 2003................................................ 14
Form 5500, Schedule H, Part IV, Line 4j
Schedule of Reportable Transactions
For the Year Ended December 31, 2003................................................ 15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.............................................. 16
SIGNATURE............................................................................................ 17
EXHIBITS
The following exhibits are filed herewith:
Exhibit 23(a) Consent of Independent Registered Public Accounting Firm
(i)
TXU THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
--------------------------
2003 2002
------ ------
ASSETS
Investments - at fair value.......................................... $ 894,151,187 $ 681,053,407
Investment in participant loans receivable........................... 35,316,800 35,191,583
Pending sales of securities.......................................... 1,360,507 303,143
Cash................................................................. 117,118 781,774
Contributions receivable............................................. 10,045,217 10,101,226
Dividends receivable................................................. 2,114,532 2,046,247
Interest receivable.................................................. 331,884 345,921
-------------- --------------
Total assets..................................................... 943,437,245 729,823,301
LIABILITIES
Note payable......................................................... 235,309,000 240,504,000
Accrued interest payable............................................. 5,051,918 5,133,540
Pending purchases of securities...................................... 1,926,454 1,096,291
-------------- --------------
Total liabilities................................................ 242,287,372 246,733,831
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS......................................... $ 701,149,873 $ 483,089,470
============== ==============
See Notes to Financial Statements.
1
TXU THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31,
----------------------------
2003 2002
------ ------
Additions (deductions):
Net investment income:
Dividends.......................................................... $ 16,457,933 $ 30,499,624
Interest........................................................... 6,744,087 7,491,328
-------------- -------------
Net investment income........................................... 23,202,020 37,990,952
Net appreciation (depreciation) in fair value of investments........... 159,632,029 (438,586,046)
Contributions:
Participating employees' savings................................... 53,631,151 56,461,630
Employer-corporations.............................................. 50,166,290 39,724,962
-------------- -------------
Total contributions............................................. 103,797,441 96,186,592
-------------- -------------
Total additions (deductions).................................... 286,631,490 (304,408,502)
Distributions and expenses:
Distributions to withdrawing participants.............................. 45,007,782 55,298,058
Interest expense and other fees........................................ 23,563,305 23,495,020
-------------- -------------
Total distributions and expenses................................ 68,571,087 78,793,078
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Net additions (deductions).................................. 218,060,403 (383,201,580)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year...................................................... 483,089,470 866,291,050
-------------- -------------
End of year............................................................ $ 701,149,873 $ 483,089,470
============== =============
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. (the Company) 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 Human Resources and
Investor 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
3). 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 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 previously 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 is entirely voluntary.
As of January 1, 2003, the Plan included nine participant-directed
investment options, or funds:
o Common Stock of the Company - invests exclusively in Common Stock of
TXU Corp.;
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 - purchased 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 - purchased units in the MSIF Trust U.S.
Small Cap Value 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:
o Active Bond Fund - purchases units in the PIMCO Total Return
Fund
o Mid Cap Value Equity Fund - purchases units in the Hotchkis &
Wiley Mid Cap Value Fund, I Class
o Mid and Small Cap Equity - purchases units in the Vanguard
Extended Market Index Fund, Admiral Shares
o Mid Cap Growth Equity Fund - purchases units in the Artisan
Mid Cap Fund
o Small Cap Growth Equity Fund - purchases units in the Vanguard
Explorer Fund, Admiral Shares
o International Equity Index Fund - purchases units in the
Fidelity Spartan International Index Fund
o 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 U.S. Small Cap Value
Portfolio for units in the American AAdvantage 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.
Additionally, on or about December 15, 2003, any Newfield common stock
holdings in participants' accounts was automatically liquidated and reinvested
in the Interest Income Fund.
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.
Effective January 1, 2002, participants electing the maximum Basic Employee
Savings (6%) may contribute Supplemental Employee Savings of an additional 1% to
14% if the participant 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
($12,000 in 2003). 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 $2,000. 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.
4
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.
Employer Matching Contributions - 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
became 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
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, 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.
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).
5
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 $5,000 are required to receive a
distribution after termination. To avoid taxation, a withdrawal made upon
termination may be rolled into an IRA or a qualified retirement plan sponsored
by another employer, provided that the other qualified retirement plan accepts
rollovers.
Participants may make partial or total withdrawals from their rollover
and after-tax contribution accounts at any time and for any reason. Participants
may make withdrawals from pre-tax contribution accounts upon termination of
employment or attainment of age 59 1/2. Additionally, participants who meet
certain qualifications defined by the IRS may make hardship withdrawals.
Participants who received a hardship withdrawal prior to June 1, 2002 may not
contribute to the Plan for a period of 12 months following the withdrawal. For
hardship withdrawals on or after June 1, 2002, this 12-month suspension was
reduced to six months.
Participants making withdrawals may choose from the following optional
forms of payment: (a) shares of Common Stock of the Company and/or publicly
traded fund units (to the extent permitted by the fund) credited to a
participant's account; (b) single lump sum cash payment; or (c) a combination of
(a) and (b).
Unclaimed Terminated Participants' Accounts - As a result of the merger
of the TXU EN$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, 2003 and 2002 was $728,247 and $663,120, respectively, of TRASOP
unclaimed terminated participants' benefits, of which $470,716 and $410,049,
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.
(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.
6
(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%. Distribution of dividends are not eligible for rollover and
are not subject to 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. 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 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:
7
2003 2002
------ ------
Contract value of assets as of December 31..................................... $87,805,638 $76,106,870
Fair value of assets as of December 31......................................... $90,727,486 $81,730,032
Average yield of assets on December 31......................................... 4.52% 5.49%
Return on assets for 12 months ended December 31............................... 4.83% 5.78%
Expenses - All costs and expenses of the Plan and its administration,
except expenses incurred in the generation and administration of participant
loans, the acquisition or disposition of investments and the cash distributions
of dividends on Company stock, are paid by the Employer-corporations.
3. 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, 2003 and 2002, 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 fair value of the note payable at
December 31, 2003 was $279,252,445, calculated using the discounted cash flow
method. The note payable is collateralized by 3,868,756 unallocated shares of
Common Stock of the Company held by the Trustee and included in the Plan's net
assets at December 31, 2003.
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 2003 and 2002 Plan years, 269,802 and 261,871 LESOP shares,
respectively, were released for allocation to participant accounts.
4. INVESTMENTS
Investments representing 5% or more of the Plan's net assets are as
follows:
December 31,
--------------------------
2003 2002
------ ------
TXU Corp. common stock (2003-- 16,859,027 shares;
2002-- 16,521,752 shares)*.................................... $ 399,896,120 $ 308,626,327
American Express AXP New Dimensions Y-Class Fund................. 101,884,130 85,966,163
Fidelity Equity - Income Fund.................................... 91,050,380 69,295,540
Vanguard Institutional Index Fund................................ 79,733,562 61,107,643
Vanguard Total Bond Market Index Fund............................ 34,236,820 32,836,565
Monumental Manager Trust......................................... 27,118,064 25,675,156
*Nonparticipant-directed
During 2003 and 2002, 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:
Year Ended December 31,
---------------------------
2003 2002
------ ------
Common stock of TXU.............................................. $ 85,958,745 $ (361,880,588)
Mutual funds..................................................... 73,546,608 (77,053,707)
Other............................................................ 126,676 348,249
--------------- ----------------
Total......................................................... $ 159,632,029 $ (438,586,046)
=============== ================
8
5. 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,
-------------------------
2003 2002
------ ------
Investments -- TXU Corp. common stock................................ $ 399,896,120 $ 308,626,327
Note payable......................................................... (235,309,000) (240,504,000)
Other................................................................ 6,510,818 6,348,622
--------------- ---------------
Net assets available for benefits................................. $ 171,097,938 $ 74,470,949
=============== ===============
Year Ended December 31,
-------------------------
2003 2002
------ ------
Changes in net assets
Additions (deductions):
Dividends and interest......................................... $ 8,434,973 $ 25,340,789
Contributions.................................................. 63,038,572 51,891,127
Net appreciation (depreciation) in fair value.................. 85,958,745 (361,880,588)
Transfers for reinvestments -- net............................. (10,096,079) 36,787,611
Other transfers................................................ (9,443,366) (9,150,587)
--------------- ---------------
Total additions (deductions)............................... 137,892,845 (257,011,648)
Distributions and expenses:
Distributions to participants.................................. 17,638,399 31,230,154
Interest expense and other fees................................ 23,627,457 24,080,755
--------------- ---------------
Total distributions and expenses........................... 41,265,856 55,310,909
--------------- ---------------
Net increase (decrease) in net assets................................ $ 96,626,989 $ (312,322,557)
=============== ===============
6. 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 2003 the interest rate was between 6.00% and 6.25%.
7. COMMITMENTS AND CONTINGENCIES
In November 2002 and February and March 2003, three lawsuits were filed
in the United States District Court for the Northern District of Texas asserting
claims under ERISA on behalf of a putative class of participants in and
beneficiaries of various employee benefit plans of the Company. These ERISA
lawsuits have been consolidated, and a consolidated complaint was filed in
February 2004 against the Company and certain individuals, including certain
directors and members of the TXU Thrift Plan Committee. On February 10, 2004,
the plaintiffs filed its motion for and memorandum in support of class
certification. Discovery is ongoing. The plaintiffs seek to represent a class of
participants in such employee benefit plans during the period between April 22,
2001 and October 11, 2002. While the Company believes the claims are without
merit and intends to vigorously defend the lawsuit, it is unable to estimate any
possible loss or predict the outcome of this consolidated action.
8. SUBSEQUENT EVENTS
In April and May 2004, the Company announced transactions that will
result in a reduction in the workforce. As a result, distributions to
participants withdrawing from the Plan will likely increase. Although it is
anticipated that net assets available for benefits will decrease due to the
number of participants expected to withdraw from the Plan, management cannot
determine what impact, if any, the event will have on the Plan and the
remaining participants.
9
TXU THRIFT PLAN - SUPPLEMENTAL INFORMATION
FORM 5500, SCHEDULE H, PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR),
DECEMBER 31, 2003
Description of Investment, Including
Identity of Issue, Borrower, Collateral, Rate of Interest, Maturity
Lessor, or Similar Party Date, Shares, Units, Par or Maturity Value Cost Current Value 1
------------------------------ ------------------------------------------ ----------- ---------------
COMMON STOCK FUND 2
Common Stock
- ------------
TXU 3 16,859,027 shares, no par value $ 536,845,833 $ 399,896,120
Money Market Funds
- ------------------
Mellon Bank, N.A. 3 Cash management fund - 1,368,468 units 1,368,468
--------------
TOTAL COMMON STOCK FUND 401,264,588
INTEREST INCOME FUND
Value of Interest in General Accounts
- -------------------------------------
The Hartford Life
Insurance Company Contract No. GA 10521, 5.92%, due 2005 2,979,947
New York Life
Insurance Company Contract No. GA 30839, 6.02%, due 2005 1,405,173
New York Life
Insurance Company Contract No. GA 31774, 2.83%, due 2007 2,007,114
Travelers
Insurance Company Contract No. GR 18039, 5.75%, due 2006 1,805,558
Travelers
Insurance Company Contract No. GR 18541, 3.71%, due 2008 1,542,355
John Hancock
Insurance Company Contract No. 15039, 4.24%, due 2005 1,404,946
Security Life Denver Insurance
Company Contract No. SA 0323, 4.20%, due 2006 991,482
Security Life Denver Insurance
Company Contract No. SA 0485, 3.93%, due 2008 2,031,721
Ohio National Life
Insurance Company Contract No. GP 5397, 3.83%, due 2008 1,543,560
GE Capital
Assurance Company Contract No. GS 3830, 3.22%, due 2008 2,565,977
--------------
Total Value of Interest in General Accounts 18,277,833
10
Description of Investment, Including
Identity of Issue, Borrower, Collateral, Rate of Interest, Maturity
Lessor, or Similar Party Date, Shares, Units, Par or Maturity Value Cost Current Value 1
------------------------------ ------------------------------------------ ----------- ---------------
Money Market Funds
- ------------------
Boston Safe Deposit and Trust Cash management fund 2,920,350 units 2,920,350
Dreyfus-Standish
Stable Value Fund Series Z fund 1,738,120 units 1,738,120
--------------
Total Money Market Funds 4,658,470
United States Government Obligations
- ------------------------------------
FNMA 12,771,854
Corporate Debt
- --------------
Bank of America Contract No. WR 03067, 5.51%, due 2008 6,437,809
UBS AG Contract No. 6002, 3.87%, due 2008 4,434,480
--------------
Total Corporate Debt 10,872,289
Other
- -----
Monumental Manager
Trust Contract No. BDA 284, 5.21%, due 2005 27,118,064
Rabobank Nederland Contract No. 060201, 4.125%, due 2010 9,992,827
Westdeutsche Landesbank Contract No. WLB 3033, 3.62%, due 2010 4,114,301
--------------
Total Other 41,225,192
--------------
TOTAL INTEREST INCOME FUND 87,805,638
BOND INDEX FUND
Vanguard Total Bond Market
Index Fund 3,320,739 Institutional shares 34,236,820
BALANCED FUND
Dodge and Cox
Balanced Fund 454,195 units 33,174,389
EQUITY INCOME FUND
Fidelity Equity -
Income Fund 1,830,158 units 91,050,380
11
Description of Investment, Including
Identity of Issue, Borrower, Collateral, Rate of Interest, Maturity
Lessor, or Similar Party Date, Shares, Units, Par or Maturity Value Cost Current Value 1
------------------------------ ------------------------------------------ ----------- ---------------
EQUITY INDEX FUND
Vanguard Institutional
Index Fund 783,391 units 79,733,562
EQUITY GROWTH FUND
American Express AXP New
Dimensions Y-Class Fund 4,266,505 units 101,884,130
EQUITY INTERNATIONAL FUND
American AAdvantage International
Institutional Fund 883,426 units 14,620,692
SMALL CAP VALUE EQUITY FUND
American AAdvantage
Small Cap Value Fund 1,546,693 Institutional Class units 26,417,523
ACTIVE BOND FUND
PIMCO Total Return Fund 141,098 units 1,511,156
MID CAP VALUE EQUITY FUND
Hotchkis & Wiley Mid Cap Value
Fund 509,089 Class I shares 11,464,686
MID AND SMALL CAP EQUITY FUND
Vanguard Extended Market Index
Fund 97,680 Admiral Shares 2,604,152
MID CAP GROWTH EQUITY FUND
Artisan Mid Cap Fund 74,227 units 1,913,574
SMALL CAP GROWTH EQUITY FUND
Vanguard Explorer Fund 41,070 Admiral Shares 2,505,273
INTERNATIONAL EQUITY INDEX FUND
Fidelity Spartan International
Index Fund 29,886 units 814,704
12
Description of Investment, Including
Identity of Issue, Borrower, Collateral, Rate of Interest, Maturity
Lessor, or Similar Party Date, Shares, Units, Par or Maturity Value Cost Current Value 1
------------------------------ ------------------------------------------ ----------- ---------------
INTERNATIONAL GROWTH EQUITY FUND
Fidelity International Growth and
Income Fund 85,338 units 2,041,290
LOAN FUND
Participant Loans Receivable 4 35,316,800
MONEY MARKET FUND
Mellon Bank, N.A. 3
Cash management fund 1,108,630 units 1,108,630
--------------
TOTAL ALL FUNDS $ 929,467,987
==============
- -----------------------
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 2003, the rate of interest charged was between 6.00% and 6.25%.
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 4i
SCHEDULE OF ASSETS (ACQUIRED AND DISPOSED OF WITHIN THE PLAN YEAR),
FOR THE YEAR ENDED DECEMBER 31, 2003
Transactions involving assets bought and sold within the plan year:
Identity of issue borrower, Cost of Proceeds of
lessor or similar party Description of Asset Acquisitions Dispositions
- ----------------------------- ----------------------------------------------- ------------- --------------
Caisse des Depots et
Consiginations Contract No. WR 1296-04, 4.00%, due 2016 $ 1,985,194 $ 1,985,194
- --------
(1)Party-in-Interest
14
TXU THRIFT PLAN - SUPPLEMENTAL INFORMATION
FORM 5500, SCHEDULE H, PART IV, LINE 4j
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
Transactions involving an amount in excess of 5% of the fair value of beginning
plan assets:
Single Transactions:
None
Series of Transactions:
Current
Expense Value of
Incurred Asset on
Identity of Description Purchase Selling with Cost of Transaction
Party Involved of Asset Price Price Transaction Asset Date Net Loss
- -------------- ----------- -------------- ------------ ----------- ------------- ------------ --------
TXU Corp.
Various Stock $ 57,073,955 -- -- $ 57,073,955 $ 57,073,955 --
TXU Corp.
Various Stock -- $ 46,263,026 -- $ 72,260,229 $ 46,263,026 $25,997,203
Mellon Bank, Cash Mgmt.
N.A.1 Fund $107,424,087 -- -- $107,424,087 $107,424,087 --
Mellon Bank, Cash Mgmt.
N.A. 1 Fund -- $109,309,563 -- $109,309,563 $109,309,563 --
- --------
(1)Party-in-Interest
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the TXU Thrift Plan Committee
TXU Thrift Plan
We have audited the accompanying statements of net assets available for benefits
of the TXU Thrift Plan (the Plan) as of December 31, 2003 and 2002, 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 standards of the Public Company
Accounting Oversight Board (United States). 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, 2003
and 2002, 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, 2003, (2) assets (acquired
and disposed of within the plan year) for the year ended December 31, 2003 and
(3) reportable transaction for the year ended December 31, 2003 are presented
for the purpose of additional analysis and are not a required part of the basic
2003 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 2003
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic 2003 financial statements
taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
June 24, 2004
16
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
June 25, 2004
17