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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, 2004
-- OR --
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
Commission File Number 1-12833
TXU Corp.
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201-3411
(214) 812-4600
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
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TABLE OF CONTENTS
Page
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FINANCIAL INFORMATION
The following financial statements are furnished for the Plan:
Statements of Financial Condition at March 31, 2004 and 2003................................ 1
Statements of Income (Loss) and Changes in Plan Equity for the
periods ended March 31, 2004 and 2003 and June 30, 2002................................. 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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.............................................. 7
PLAN ADMINISTRATOR'S SIGNATURE....................................................................... 8
EXHIBITS
The following exhibits are filed herewith:
Exhibit 23 Consent of Independent Registered Public Accounting Firm
* Pursuant to Item 601 (b) (32) (ii) of Regulation S-K, this certificate is
not being "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934.
(i)
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
STATEMENTS OF FINANCIAL CONDITION
March 31, March 31,
2004 2003
--------- ---------
Investment in securities of participating employer--
Common stock of TXU Corp., at fair value as determined by quoted market prices
(historical cost: 2004-- $28,610,157; 2003-- $32,465,632) (Note 3).................. $ 25,470,348 $ 14,620,637
Dividends receivable.................................................................... 111,088 103,959
Interest receivable..................................................................... 62 84
Cash and cash equivalents............................................................... 78,005 77,383
------------ ------------
Total assets and Plan equity............................................. $ 25,659,503 $ 14,802,063
============ ===========
See Notes to Financial Statements.
1
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
STATEMENTS OF INCOME (LOSS) AND CHANGES IN PLAN EQUITY
For the Plan Year For the Period From For the Plan Year
Ended July 1, 2002 through Ended
March 31, 2004 March 31, 2003 June 30, 2002
----------------- ------------------- ---------------
Additions (deductions):
Net investment income:
Dividends on common stock of TXU Corp.................................. $ 469,842 $ 698,650 $ 2,161,341
Interest .............................................................. 3,398 3,080 21,748
------------ ------------ ------------
Net investment income............................................ 473,240 701,730 2,183,089
Gain (loss) realized on sale of investments.............................. (4,388,356) 1,254,869 257,890
Change in unrealized appreciation (depreciation) of investments (Note 3). 14,705,186 (29,665,356) 2,296,652
Contributions and deposits (Note 4):
Participating employees' salary deferrals.............................. 2,076,825 156,267 4,633,730
Employer matching and incentive awards................................. 3,935,464 234,401 10,693,045
------------ ------------ ------------
Total contributions and deposits................................. 6,012,289 390,668 15,326,775
------------ ------------ ------------
Total additions (deductions).................................. 16,802,359 (27,318,089) 20,064,406
------------ ------------ ------------
Distributions and forfeitures:
Distributions to participants (Note 5)................................... 4,260,883 9,277,468 7,338,013
Distributions to the TXU Salary Deferral Program (Note 1)................ 1,453,094 -- --
Fees to Plan sponsor..................................................... -- 10 3,288
Forfeitures.............................................................. 230,942 284,026 840,211
------------ ------------ ------------
Total distributions and forfeitures.............................. 5,944,919 9,561,504 8,181,512
------------ ------------ ------------
Net additions (deductions).................................................. 10,857,440 (36,879,593) 11,882,894
Plan equity, beginning of period............................................ 14,802,063 51,681,656 39,798,762
------------ ------------ ------------
Plan equity, end of period ................................................. $ 25,659,503 $14,802,063 $ 51,681,656
============ =========== ============
See Notes to Financial Statements.
2
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description-- The TXU Deferred and Incentive Compensation Plan
(Plan) allows elected officers of TXU Corp. (TXU or the Company) or a
participating subsidiary of the Company (Employer-Companies) with the
title of Vice President or above to defer a percentage of their base
salary not to exceed a maximum percentage determined by the Organization
and Compensation Committee of the Board of Directors of the Company
(the Committee) for each Plan year and, in any event, not to exceed 15%
of the participant's base salary. The Employer-Companies make matching
awards equal to 150% of the deferred compensation. In addition, for
Plan years beginning on or before July 1, 2001, 50% of any awards made
to participants under the TXU Annual Incentive Plan were automatically
deferred under the Plan as incentive awards. Effective April 1, 2002,
the Committee elected to change the Plan year-end from June 30 to
March 31. On April 1, 2002, participants of the Plan were given the
option to begin participation for the 2003 Plan year either as of
April 1, 2002 or to defer their participation until July 1, 2002. A
special transition rule applied to the Plan year beginning July 1, 2001,
which is reported herein, whereby it continued for the full twelve-month
period ended June 30, 2002 (2002 Plan year), running concurrently with
the Plan year beginning April 1, 2002 and ending March 31, 2003 (2003
Plan year) for the overlapping period. As a result of the change in the
Plan year-end, the period ended March 31, 2003, included in this report,
contains activity for the nine-month period from July 1, 2002 to
March 31, 2003.
A participant's benefits under the Plan are provided through an
irrevocable grantor trust, the assets of which are subject to the
claims of the Company's general creditors. A participant's Employer-
Company provides the trust with funds equal to the amount credited to
the participant's account, and the trustee invests such funds in shares
of common stock of the Company (Common Stock). The trustee uses any cash
dividends received on Common Stock held in the trust to buy additional
shares of Common Stock.
A participant's deferred compensation, matching award and incentive
award amounts are credited to the participant's account under the Plan
and are converted into performance units on the basis of the number of
shares of Common Stock that can be purchased with such amounts as of the
applicable date. Additional performance units are credited to a
participant's account, determined by multiplying the number of
performance units in the participant's account by the amount of any
regular or special cash dividend declared on each share of Common Stock
and dividing the product by the amount paid by the trust for a share of
such Common Stock with the dividend amounts received by the trust.
On the expiration of the applicable maturity period (three years for
incentive awards and five years for deferrals and matching awards,
beginning on the first day of the Plan year in which the contributions
are made) the value of the participant's account is paid to the
participant in cash. Effective August 17, 2001, the Plan was amended to
provide the option to defer amounts that would otherwise mature under
the Plan into, and subject to, the provisions of the TXU Salary Deferral
Program, provided that the deferral election is made at least twelve
months before the amounts would otherwise mature under the Plan. In no
event will a participant's account be deemed to have a cash value less
than the sum of the participant's maturing salary deferrals and 6% per
annum interest on such amounts. To the extent that the amounts maturing
under the Plan combined with the participant's other remuneration for
such year exceed $1,000,000, the maturity period shall be extended. In
the event a participant's employment is terminated because of death or
permanent and total disability, all amounts in the participant's account
shall mature immediately, provided that, if such termination occurs
prior to the end of a Plan year, the deferred amount and Company match
for the year of such termination will be recomputed as of the
termination date. In the event a participant's employment is terminated
by retirement, the participant will receive a distribution of his
account at the end of the applicable maturity period. If the participant
terminates employment by retirement prior to the end of a Plan year, the
deferred amount and company match for the year of retirement will be
recomputed unless the participant has previously elected to accelerate
3
the balance of salary deferrals. In the event a participant's employment
is terminated because of reasons other than death, permanent and total
disability or retirement, all rights to amounts for maturity periods not
yet completed shall be forfeited and revert to the Company (as Plan
sponsor), except for participant deferrals and 6% per annum interest on
those amounts. Such forfeited amounts are used to reduce the Company's
required contributions to the Plan in the quarter following the
termination event.
In the event of such a change in control of the Company: (i) forfeiture
provisions and the provisions relating to recomputation upon termination
during the Plan year are eliminated; (ii) amounts maturing within twelve
months are to be paid within thirty days of the change in control; and
(iii) amounts maturing more than twelve months from the change in
control may, at the election of the participant, be paid on the first
anniversary of the change in control or when such amounts would
otherwise mature.
The number of participants (current and former employees) for the Plan
years ended March 31, 2004 and 2003 and June 30, 2002 were 72, 76, and
81, respectively.
2. Summary of Significant Accounting Policies:
Basis of Accounting -- The financial statements of the Plan are prepared
under the accrual method of accounting.
Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of net assets available for benefits
and changes therein. Actual results could differ from those estimates.
Distributions to Participants -- Distributions to participants are
recorded when paid.
Expenses -- All costs and expenses of the Plan and its administration,
except expenses incurred in the acquisition or liquidation of
investments, are paid by the Employer-Companies.
3. Plan Investments -- The historical cost, fair value and unrealized
appreciation (depreciation) of investments as of March 31, 2004 and
2003, and June 30, 2002 were as follows:
Per Share Number of Historical Fair Appreciation
Value Shares Cost Value (Depreciation)
----- ------ ---- ----- --------------
Common stock of TXU Corp.
March 31, 2004....................... $28.66 888,707(a) $28,610,157 $25,470,348 $(3,139,809)
March 31, 2003....................... 17.85 819,083(b) 32,465,632 14,620,637 (17,844,995)
June 30, 2002........................ 51.55 989,596(c) 39,193,332 51,013,693 11,820,361
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(a) Represented 0.2743% of the outstanding shares of common stock of
TXU Corp. (324,001,906 at March 31, 2004).
(b) Represented 0.2543% of the outstanding shares of common stock of TXU
Corp. (322,155,194 at March 31, 2003).
(c) Represented 0.3557% of the outstanding shares of common stock of TXU
Corp. (278,238,854 at June 30, 2002).
The investment in Common Stock is stated at fair value based upon the
last reported sale price on recognized exchanges on the last business
day of the Plan year. The cost basis of Plan investments was changed
from average cost to first-in first-out during the 2003 Plan year. The
effect of the change was not material.
The Plan's investment in Common Stock is subject to various risks
related to, among other things, interest rates, credit and overall
market volatility. Therefore, it is reasonably possible that changes in
the value of the Common Stock will occur in the near term and that such
changes could materially affect the amounts reported in the statement of
financial condition.
4
During the Plan year ended March 31, 2004, 20,756 shares were sold to an
affiliated benefit plan of the Company for $449,516. The share price
used was determined based on the sales price for similar
shares sold by the Company during the same timeframe.
4. Plan Contributions -- Contributions by participating employees' salary
deferrals and employer matching and incentive awards for the periods
ended March 31, 2004 and 2003 and June 30, 2002 were as follows:
Participating Contributions
Employees' by Employer- Total
Employer-Companies Salary Deferrals Companies Contributions
------------------ ---------------- --------- -------------
2004:
TXU Corp..................................... $ 142,500 $ 437,682 $ 580,182
TXU US Holdings Company...................... 1,135,302 2,017,219 3,152,521
TXU Business Services and others............. 799,023 1,480,563 2,279,586
----------- ----------- -----------
Total...................................... $ 2,076,825 $ 3,935,464 $ 6,012,289
=========== =========== ===========
2003:
TXU US Holdings Company...................... $ 53,209 $ 79,813 $ 133,022
TXU Business Services and others............. 103,058 154,588 257,646
----------- ----------- -----------
Total...................................... $ 156,267 $ 234,401 $ 390,668
=========== =========== ===========
2002:
TXU Corp..................................... $ 491,250 $ 1,374,375 $ 1,865,625
TXU US Holdings Company...................... 1,739,968 3,512,452 5,252,420
TXU Business Services and others............. 2,402,512 5,806,218 8,208,730
----------- ----------- -----------
Total...................................... $ 4,633,730 $10,693,045 $15,326,775
=========== =========== ===========
Incentive awards included in contributions by Employer-Companies were
$3,742,450 for the Plan year ended June 30, 2002. No incentive awards
were included in contributions by Employer-Companies for the periods
ended March 31, 2003 and thereafter.
Total contributions of $15,326,775 for the Plan year ended June 30,
2002 included $5,985,013 ($2,394,005 in participating employees' salary
deferrals and $3,591,008 in contributions by Employer-Companies) for
the Plan year beginning April 1, 2002. Additionally, $9,341,762 in
contributions related to the special transition rule. (See Note 1 for
discussion of change in the Plan years and special transition rule for
the Plan year ended June 30, 2002.)
5. Plan Distributions -- Amounts contributed to the Plan (including
earnings thereon) during the July 1 through June 30 Plan years mature
on June 30 of the applicable maturity period. Amounts contributed to
the Plan (including earnings thereon) during the April 1 through March
31 Plan years mature on March 31 of the applicable maturity period.
During the plan year ended March 31, 2004, eleven participants
terminated from the Plan. Distributions were made to terminated
participants in the aggregate amount of $664,718, and the terminations
resulted in net forfeitures of $230,942. In July 2003, the trustee
distributed $5,280,201, composed of net proceeds in the amount of
$4,459,978 obtained upon sale of the associated assets (Common Stock)
of matured deferrals and awards and a Company contribution in the
amount of $820,223 required to meet the Plan's minimum distribution
requirements.
During the plan year ended March 31, 2003, six participants terminated
from the Plan. Distributions were made to terminated participants in
the aggregate amount of $302,127, and the terminations resulted in net
forfeitures of $284,026.
5
During the plan year ended June 30, 2002, two participants terminated
from the Plan. Distributions were made to the terminated participants
in the aggregate amount of $250,627, and the terminations resulted in
net forfeitures of $840,211. Maturing in June 2002 were employee salary
deferrals and matching awards for the Plan year ended June 30, 1998 and
the incentive awards made for the Plan year ended June 30, 2000. In
July 2002, the trustee distributed $8,975,341 of matured deferrals and
awards, representing the net proceeds obtained upon sale of the
associated assets (Common Stock).
6. Federal Income Taxes -- The Company intends and has been advised that
the Plan does not meet the requirements of a tax-qualified plan under
Section 401(a) of the Internal Revenue Code (Code); the trust
established thereunder is not exempt from federal income taxes under
Section 501(a) of the Code; and the Company will be provided a
corresponding federal income tax deduction for the amount of income
recognized by the participant by reason of distributions under the
Plan.
Based on the Code and regulations promulgated thereunder as currently
in effect:
(a) A participant's elective deferrals under the Plan, matching
awards, incentive awards, and any dividends, interest or other
income thereon will not be subject to federal income tax until
the year such amounts are paid or otherwise made available to the
participant.
(b) Elective deferrals under the Plan are not deductible by the
participant on his or her federal income tax return, since
elective deferrals are not included in the participant's income
until paid or otherwise made available to the participant.
(c) Amounts distributed under the Plan will be taxable as ordinary
income to the participant in the year of such distribution.
7. Plan Termination -- The Company's Board of Directors may amend,
terminate, or suspend the Plan at any time. An amendment or
modification of the Plan may affect active participants as well as
future participants, but no amendment or modification of the Plan for
any reason may diminish any participant's account as of the effective
date thereof. Upon Plan termination, all amounts credited to a
participant's account shall be deemed to have matured, as described in
the Plan document.
6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Organization and Compensation Committee
TXU Deferred and Incentive Compensation Plan
We have audited the accompanying statements of financial condition of the TXU
Deferred and Incentive Compensation Plan (the "Plan") as of March 31, 2004 and
2003, and the related statements of income (loss) and changes in plan equity for
the year ended March 31, 2004, the period from July 1 2002 through March 31,
2003, and the year ended June 30, 2002. 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 financial condition of the Plan at March 31, 2004 and 2003, and
the results of its operations and changes in plan equity for the year ended
March 31, 2004, the period from July 1, 2002 through March 31, 2003, and the
year ended June 30, 2002, in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
June 24, 2004
7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Organization and Compensation Committee of the Board of Directors of TXU Corp.
has duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
TXU DEFERRED AND INCENTIVE COMPENSATION PLAN
By /s/ Diane J. Kubin
-----------------------------------------
Plan Administrator
Organization and Compensation Committee
June 25, 2003
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