Exhibit 99.2
News
Release TXU LOGO
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1601 Bryan Street
Dallas, Texas 75201-3411
FOR IMMEDIATE RELEASE
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TXU Corp. Agrees To Settle Shareholder Class Action Litigation
DALLAS (January 21, 2005) - TXU Corp. (NYSE: TXU) announced today that it
reached a comprehensive settlement regarding the consolidated amended securities
class action lawsuit initially filed against the company in October 2002. The
agreement, in which TXU Corp. denies any liability, includes a one-time payment
of $150 million to the class members, which are purchasers of TXU Corp.
securities between April 26, 2001 and October 11, 2002, and, subject to Board of
Directors approval, the adoption of certain corporate governance initiatives.
TXU Corp. has reached agreement with certain of its directors' and officers'
insurance carriers for the payment of $66 million of the settlement amount and
expects to recover additional amounts from other carriers. The remaining $84
million is less than the amount previously reserved for the settlement of
litigation cases. As a result, the expense accrual of $100 million ($65 million
after tax) recorded in the second quarter will be reduced by $16 million ($10
million after tax) in the fourth quarter of 2004. As with the second quarter
2004 expense, the benefit resulting from the reduction in the accrual will not
affect the company's operational earnings1 expectations. The accrual could be
reduced further if additional amounts are received under insurance policies as
expected. The payment is expected to be placed in trust within 60 days and will
be sourced from the insurance carriers and from TXU Corp. cash on hand and
available credit facility capacity.
Table 1 provides a recap of the settlement amounts before any additional
insurance recoveries.
Table 1: Recap of Settlement Payment and Expense Calculations
$millions
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Description Before Tax After Tax
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Settlement amount 150
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Less: minimum to be paid by insurance carriers 66
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Maximum to be paid by TXU Corp. 84 55
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Litigation resolution expense accrued in Q2 04 100 65
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Less: actual settlement expense (subject to reduction for added insurance recovery) 84 55
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Benefit (reduced expense) to be recorded in Q4 04 16 10
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1 Operational earnings is a non-GAAP measure defined as per share (diluted)
income from continuing operations, excluding special items and net of preference
share dividends. TXU believes that operational earnings is a useful measure of
underlying results because of the magnitude and scope of TXU Corp.'s performance
improvement program and the significant effect of the special items on reported
results. TXU relies on operational earnings for evaluation of performance and
believes that analysis of the business by external users is enhanced by
visibility to both reported GAAP earnings and operational earnings. Special
items are unusual charges related to the implementation of the performance
improvement program and other charges, credits or gains that are unusual or
nonrecurring.
1
Table 2 provides a recap of the estimated sources of funds and uses of funds in
the settlement.
Table 2: Recap of Estimated Sources and Uses of Settlement Funds
$millions
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Description Amount
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Minimum to be paid by insurance carriers 66
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Maximum to be paid by TXU Corp. 84
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Total sources 150
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Estimated plaintiff attorney fees2 30
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Estimated total distribution to class members (shareholders) 120
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Total uses 150
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As part of the settlement, TXU Corp.'s Board of Directors will consider for
adoption several new corporate governance initiatives, consistent with the
Company's ongoing commitment to governance excellence. The governance
initiatives to be considered by TXU Corp.'s Board of Directors as part of the
settlement include:
.. Criteria for determining director independence that are more stringent than
the current NYSE criteria previously adopted by the Company;
.. Annual review of director compensation by TXU Corp.'s Organization and
Compensation Committee;
.. A policy requiring majority shareholder approval prior to the adoption of
any stock option plan; and
.. Establishment of stock ownership guidelines for directors.
Additionally, consistent with TXU Corp.'s ongoing governance initiatives, the
TXU Corp. Board of Directors will replace at least two directors no later than
May 2006 with candidates who meet pre-defined independence criteria.
C. John Wilder, TXU Corp.'s Chief Executive Officer, stated, "Settling this
litigation now removes the distractions, expense and uncertainty that accompany
such litigation and enables us to look ahead and focus on delivering on our
restructuring plan and improving the performance and competitiveness of our core
businesses. Shareholders will also benefit from governance initiatives that are
adopted as part of this settlement. These initiatives will complement TXU's
ongoing commitment to governance excellence."
The parties are finalizing the settlement agreement before submitting it to the
Court. The settlement agreement is subject to various conditions, including
preliminary approval by the Court, notice to the class, and final approval and
judgment by the Court. TXU Corp. denies any liability or violation of law but
has agreed to settle to avoid the burden, distractions, costs and uncertainties
of such litigation. Terms of the settlement and the procedures which class
members may follow will be set forth in a notice to be sent to the class by
their attorneys.
TXU Corp., a Dallas-based energy company, manages a portfolio of competitive and
regulated energy businesses in North America, primarily in Texas. In TXU Corp.'s
unregulated business, TXU Energy Retail provides electricity and related
services to more than 2.5 million competitive electricity customers in Texas,
more customers than any other retail electric provider in the state. TXU Power
has over 18,300 megawatts of generation in Texas, including 2,300 MW of
nuclear-fired and 5,837 MW of lignite/coal-fired generation capacity. TXU Corp.
is also the largest purchaser of wind-generated electricity in Texas and among
the top five purchasers in North America. TXU Corp.'s regulated electric
distribution and transmission business, TXU Electric Delivery Company,
complements the competitive operations, using asset management skills developed
over more than one hundred years, to provide reliable electricity delivery to
consumers. TXU Electric Delivery operates the largest distribution and
transmission system in Texas, providing power to 2.9 million electric delivery
points over more than 98,000 miles of distribution and 14,000 miles of
transmission lines. Visit www.txucorp.com for more information about TXU Corp.
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2 Plaintiff attorney fees estimated at 20 percent of settlement
amount. Actual amount will be set by the Court.
2
This release contains forward-looking statements, which are subject to various
risks and uncertainties. Discussion of risks and uncertainties that could cause
actual results to differ materially from management's current projections,
forecasts, estimates and expectations is contained in TXU Corp.'s SEC filings on
Forms 10-K and 10-Q. In addition to the risks and uncertainties set forth in the
company's SEC filings, the forward-looking statements in this release could be
affected by the parties of the settlement to achieve the various conditions of
the settlement, including, but not limited to, attaining approval and judgment
for the settlement from the Court.
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For more information, contact:
Media Investor Relations
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Chris Schein Kimberly Morgan Tim Hogan Bill Huber
214-875-8329 214-875-8016 214-875-9275 214-875-8301
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