8-K 1 form8k.txt FORM8KJUNE2003 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported) - June 30, 2003 TXU Corp. (Exact name of registrant as specified in its charter) TEXAS 1-12833 75-2669310 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification No.) incorporation) Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201-3411 (Address of principal executive offices, including zip code) Registrant's telephone number, including Area Code - 214-812-4600 TXU US Holdings Company (Exact name of registrant as specified in its charter) TEXAS 1-11668 75-1837355 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification No.) incorporation) Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201-3411 (Address of principal executive offices, including zip code) Registrant's telephone number, including Area Code - 214-812-4600 =============================================================================== All of the information contained in this Form 8-K is being filed by TXU Corp. Certain of the information contained in this Form 8-K relates to TXU US Holdings Company (US Holdings), a wholly owned subsidiary of TXU Corp. Such information as its relates to US Holdings is being filed separately by such registrant. ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE. For a discussion of legislation requiring the restructuring of the electric utility industry in Texas (1999 Restructuring Legislation) and the settlement plan related to US Holdings' transition to competition pursuant to the 1999 Restructuring Legislation (Settlement Plan), reference is made to the following: (i) Items 1. and 2. BUSINESS and PROPERTIES -- "Electric Restructuring -- Restructuring Legislation" and --"Regulatory Settlement Plan" and Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- Note 15 to Financial Statements in TXU Corp.'s Annual Report on Form 10-K for the year ended December 31, 2002; (ii) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- "Regulation and Rates -- Regulatory Settlement Plan" in TXU Corp.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003; (iii) Items 1. and 2. BUSINESS and PROPERTIES -- "Electric Restructuring -- Restructuring Legislation" and --"Regulatory Settlement Plan" and Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- Note 14 to Financial Statements in US Holdings' Annual Report on Form 10-K for the year ended December 31, 2002; and (iv) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- "Regulation and Rates -- Regulatory Settlement Plan" in US Holdings' Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003. Transmission and distribution (T&D) utilities in Texas are required to file a progress report with the Public Utility Commission of Texas (PUCT) when over 35% of the residential or small commercial price-to-beat customer load that existed in the T&D utility's service territory prior to the January 1, 2002 onset of customer choice is being served by retail electric providers (REPs) other than the T&D utility's affiliated REP. Accordingly, on June 30, 2003, Oncor Electric Delivery Company (Oncor), the T&D utility that is a wholly owned subsidiary of TXU Corp. and US Holdings, will report to the PUCT that, as of May 31, 2003, approximately 37%, or 9,992 gigawatt hours (gWh), of the total historical small commercial customer load, as adjusted pursuant to PUCT rules, in its service territory was being served by REPs other than TXU Energy Company LLC (TXU Energy), a wholly owned subsidiary of TXU Corp. and US Holdings. For purposes of these reports, computations of load are calculated in accordance with PUCT rules. In the case of Oncor, these rules adjust the total historical load (32,736 gWh) to remove load for small commercial customers who now exceed the 1,000 kW peak demand for the category (538 gWh) or who now are aggregated with other customers under common ownership with aggregate peak demand in excess of 1,000 kW and who have contracted with Oncor's affiliated REP, TXU Energy (5,514 gWh), resulting in an adjusted total load of approximately 26,683 gWh. The calculations used in the PUCT report do not take into account the small commercial load that TXU Energy has gained outside of the Oncor service territory. Also the report filed by Oncor does not address the residential category where a significantly smaller percentage of the load is served by REPs other than TXU Energy. In the event that the small commercial load in Oncor's service territory served by REPs other than TXU Energy were to exceed 40%, TXU Energy would be permitted to begin to offer all of the small commercial customers in Oncor's service territory competitive rates in addition to the price-to-beat rate. Achievement of this 40% threshold would be subject to concurrence by the PUCT. If this threshold were achieved, TXU Energy would not be obligated to make retail clawback payments to Oncor with respect to this customer category. At such time as the 40% threshold is met, TXU Energy would reassess and adjust accordingly the estimated $185 million accrual it previously recorded, which included amounts related to this customer category, that it expected to pay pursuant to the retail clawback provisions of the 1999 Restructuring Legislation and the Settlement Plan. 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. TXU CORP. By: /s/ H. Dan Farell ------------------------------------------ Name: H. Dan Farell Title: Executive Vice President and Chief Financial Officer Date: June 30, 2003 TXU US HOLDINGS COMPANY By: /s/ H. Dan Farell ---------------------------------------- Name: H. Dan Farell Title: Executive Vice President and Principal Financial Officer Date: June 30, 2003 2

TABLE OF CONTENTS ---------------------------------------------------------------------------------------------------------------- PAGE ---- Item 5. OTHER EVENTS AND REGULATION FD DISCLOSURE................................................ 1 TXU ENERGY COMPANY LLC FINANCIAL INFORMATION Condensed Statements of Consolidated Income and Comprehensive Income - Three Months and Nine Months Ended September 30, 2002 and 2001............................ 2 Condensed Statements of Consolidated Cash Flows - Nine Months Ended September 30, 2002 and 2001............................................. 3 Condensed Consolidated Balance Sheets - September 30, 2002 and December 31, 2001.......... 4 Notes to Financial Statements............................................................. 5 Management's Discussion and Analysis of Financial Condition and Results of Operations..... 16 Controls and Procedures .................................................................. 30 Item 7. FINANCIAL STATEMENTS AND EXHIBITS......................................................... 31 SIGNATURE......................................................................................... 32 CERTIFICATIONS.................................................................................... 33

Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2002 2001 2002 2001 ---- ---- ---- ---- Millions of Dollars Operating revenues (Note 2).................................. $2,418 $1,747 $6,233 $4,647 ------ ------ ------ ------ Operating expenses Energy purchased for resale, fuel consumed and delivery fees (Note 2)................................................. 1,541 932 3,681 2,589 Operation and maintenance................................. 357 247 1,081 680 Depreciation and amortization............................. 111 96 328 296 Taxes other than income................................... 51 29 154 84 ------ ----- ----- ----- Total operating expenses................................ 2,060 1,304 5,244 3,649 ------ ----- ----- ----- Operating income............................................. 358 443 989 998 Other income................................................. 20 3 34 5 Other deductions............................................. 5 25 10 33 Interest income.............................................. -- 12 8 33 Interest expense............................................. 45 55 150 178 ------ ----- ---- ----- Income before income taxes................................... 328 378 871 825 Income tax expense........................................... 101 101 274 238 ------ ----- ----- ----- Net income................................................... $ 227 $ 277 $ 597 $ 587 ====== ===== ===== =====

Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2002 2001 2002 2001 ---- ---- ---- ---- Millions of Dollars Net income.................................................. $ 227 $ 277 $ 597 $ 587 Other comprehensive income (loss) - Net change during period, net of tax effect: Cash flow hedges: Net change in fair value of derivatives (net of tax benefit of $19, $-, $69, and $-)...................... (35) - (128) (1) Amounts realized in earnings during period (net of tax benefit of $6, $-, $4 and $-)........................ (12) - (8) - ----- ----- ----- ----- Total................................................ (47) - (136) (1) ----- ----- ----- ----- Comprehensive income....................................... $ 180 $ 277 $ 461 $ 586 ===== ===== ===== =====

Nine Months Ended September 30, -------------------- 2002 2001 ----- ---- Millions of Dollars Cash flows - operating activities Net income......................................................... $ 597 $ 587 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization.................................... 384 371 Deferred income taxes and investment tax credits - net........... 46 (95) Gain from sales of assets........................................ (30) - Net effect of unrealized mark-to-market valuation losses/(gains). 4 (188) Other............................................................ (7) 148 Changes in operating assets and liabilities........................ (97) 329 ------- ----- Cash provided by operating activities....................... 897 1,152 ------ ----- Cash flows - financing activities Issuances of long-term debt........................................ 61 121 Retirements/repurchases of long-term debt.......................... (1,683) (126) Distribution paid to parent........................................ (577) - Repurchase of member interests..................................... - (390) Net issuances of commercial paper.................................. 979 - Net change in advances from affiliates............................. 226 (468) Debt premium, discount, financing and reacquisition expense........ (7) (9) ------ ----- Cash used in financing activities............................ (1,001) (872) ------ ----- Cash flows - investing activities Capital expenditures............................................... (203) (230) Acquisition of a business.......................................... (36) - Proceeds from sale of assets....................................... 443 - Nuclear fuel....................................................... (51) (12) Other.............................................................. (25) (33) ------ ----- Cash provided by (used in) investing activities.............. 128 (275) ------ ----- Net change in cash and cash equivalents............................... 24 5 Cash and cash equivalents - beginning balance......................... 20 19 ------ ----- Cash and cash equivalents - ending balance............................ $ 44 $ 24 ====== =====

September 30, December 31, 2002 2001 ----------- ---------- Millions of Dollars ASSETS Current assets: Cash and cash equivalents........................................................ $ 44 $ 20 Accounts receivable.............................................................. 1,700 808 Inventories - at average cost.................................................... 284 259 Commodity contract assets........................................................ 1,044 848 Other current assets............................................................. 155 120 ------- ------ Total current assets.......................................................... 3,227 2,055 Goodwill............................................................................ 533 65 Investments........................................................................ 669 692 Property, plant and equipment - net................................................. 10,186 10,354 Commodity contract assets........................................................... 431 389 Cash flow hedges and other derivative assets........................................ 12 31 Deferred debits and other assets.................................................... 84 71 ------- ------ Total assets..................................................................... $15,142 $13,657 ======= ======= LIABILITIES AND MEMBER INTERESTS Current liabilities: Notes payable - commercial paper................................................. $ 979 $ - Long-term debt due currently..................................................... 73 123 Advances from affiliates......................................................... 515 250 Due to Oncor Electric Delivery Company........................................... 197 170 Accounts payable: Affiliates.................................................................... 325 25 Trade......................................................................... 964 612 Commodity contract liabilities................................................... 842 630 Taxes accrued.................................................................... 236 155 Other current liabilities........................................................ 483 138 ------- ------ Total current liabilities..................................................... 4,614 2,103 Accumulated deferred income taxes................................................... 2,070 2,125 Investment tax credits............................................................. 381 397 Commodity contract liabilities...................................................... 241 236 Cash flow hedges and other derivative liabilities................................... 230 2 Other deferred credits and noncurrent liabilities................................... 678 511 Due to Oncor Electric Delivery Company.............................................. 457 617 Long-term debt, less amounts due currently.......................................... 1,892 3,454 Commitments and contingencies (Note 6) Member interests (Note 4)........................................................... 4,579 4,212 ------- ------ Total liabilities and member interests........................................... $15,142 $13,657 ======= =======

Three Months Ended Nine Months Ended September 30, September 30, ----------------- ----------------- 2002 2001 2002 2001 ---- ---- ---- ---- Millions of Dollars Operating revenues before reclassification................... $5,442 $2,728 $12,487 $8,901 Less: Energy purchased for resale, fuel consumed and delivery fees netted with revenues................... 3,024 981 6,254 4,254 ------ ------ ------ ------ Operating revenues after reclassification.................... $2,418 $1,747 $6,233 $4,647 ====== ====== ====== ====== Energy purchased for resale, fuel consumed and delivery fees before reclassification.............................. 4,565 1,913 9,935 6,843 Less: Energy purchased for resale, fuel consumed and delivery fees netted with revenues................... 3,024 981 6,254 4,254 ------ ------ ------ ------ Energy purchased for resale, fuel consumed and delivery fees after reclassification............................... $1,541 $ 932 $3,681 $2,589 ====== ====== ====== ======

Credit Facilities ---------------------------------------------------- At September 30, 2002 At November 5, 2002(a) ---------------------- -------------------------- Authorized Facility Letters of Cash Letters of Cash Facility Expiration Date Borrowers Limit Credit Borrowings Credit Borrowings -------- --------------- ---------- -------- --------- ---------- --------- ---------- (Millions of Dollars) 364-Day Revolving Credit Facility. April 2003 US Holdings, TXU Energy,Oncor $ 1,000 $ 81 $ - $ 88 $ 912 Five -Year Revolving Credit February 2005 US Holdings Facility(b)...................... 1,400 462 - 461 939 Three-Year Revolving Credit Facility May 2005 TXU Corp. 500 -- 350 - 500 Standby Liquidity Facility........ November 2002 US Holdings 400 - - - 400 Standby Liquidity Facility........ November 2002 US Holdings, TXU Energy, Oncor 400 - - - 400 ------- ----- ------- ----- ------ Total (c)................... $ 3,700 $ 543 $ 350 $ 549 $3,151 ======= ===== ====== ===== ======

4. MEMBER INTERESTS September 30, December 31, 2002 2001 ----------- ----------- Capital account........................................................ $4,699 $4,196 Accumulated other comprehensive income (loss).......................... (120) 16 ----- ----- Total member interests............................................ $4,579 $4,212 ====== ======

Three Months Ended Nine Months Ended September 30, September 30, ----------------- ----------------- 2002 2001 2002 2001 -------- -------- -------- -------- Operating revenues Regulated........................................... $ -- $ 1,669 $ -- $ 4,449 Unregulated......................................... 2,418 78 6,233 198 ------ ------- ------- ------- Total operating revenues....................... 2,418 1,747 6,233 4,647 ------ ------- ------- ------- Operating expenses Energy purchased for resale - regulated............. -- 419 -- 980 Energy purchased for resale - unregulated........... 1,054 9 2,549 16 Fuel consumed - regulated........................... -- 504 -- 1,593 Fuel consumed - unregulated......................... 487 -- 1,132 -- Operation and maintenance - regulated............... -- 163 -- 479 Operation and maintenance - unregulated............. 357 84 1,081 201 Depreciation and amortization....................... 111 96 328 296 Taxes other than income............................. 51 29 154 84 ------ ------- ------- ------- Total operating expenses....................... 2,060 1,304 5,244 3,649 ------ ------- ------- ------- Operating income........................................ $ 358 $ 443 $ 989 $ 998 ====== ======= ======= =======

Three Months Ended Nine Months Ended September 30, September 30, ----------------- ----------------- 2002 2001 2002 2001 -------- -------- -------- -------- Other income Gain on sale of properties.......................... $ 18 $ - $ 30 $ - Other............................................... 2 3 4 5 ------ ------- ------- ------- Total other income............................. $ 20 $ 3 $ 34 $ 5 ====== ======= ======= ======= Other deductions Loss on sale of properties.......................... $ - $ 1 $ - $ 1 Regulatory asset write-off.......................... - 21 - 21 Other............................................... 5 3 10 11 ------ ------- ------- ------- Total other deductions................ $ 5 $ 25 $ 10 $ 33 ====== ======= ======= =======

September 30, December 31, 2002 2001 ---------- ---------- Materials and supplies......................................................... $ 161 $ 148 Fuel stock................................................................... 61 62 Gas stored underground......................................................... 62 49 ------- ------ Total inventories........................................................... $ 284 $ 259 ======= ======

September 30, December 31, 2002 2001 ------------ ------------ Electric production............................................................ $16,475 $16,627 Other ......................................................................... 470 242 ------- ------ Total....................................................................... 16,945 16,869 Less accumulated depreciation.................................................. 6,341 6,186 ------- ------ Net of accumulated deprecation.............................................. 10,604 10,683 Construction work in progress.................................................. 270 361 Nuclear fuel (net of accumulated amortization: 2002- $836 - 2001-$787)......... 148 146 Reserve for regulatory disallowances........................................... (836) (836) ------- ------ Net property, plant and equipment.......................................... $10,186 $10,354 ======= =======

Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2002 2001 2002 2001 ---- ---- ---- ---- Operating statistics - Retail electric sales volumes (GWh).............................. 27,394 30,461 72,551 78,064 Wholesale electric sales volumes (non-trading physically settled)(GWh).................................................. 9,260 2,444 22,447 5,178 Customers (end of period & in thousands) Electric....................................................... 2,763 2,727 Gas ........................................................... 2 3 Total customers............................................ 2,765 2,730 Physical and financial wholesale trading and risk management volumes: Electric (GWh)................................................. 232,613 89,344 1,277,526 222,940 Gas (Bcf)...................................................... 5,581 3,998 15,354 7,699

Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2002 2001 2002 2001 ---- ---- ---- ---- Operating revenues (millions of dollars): Retail electric.................................................. $1,491 $1,653 $4,034 $4,312 Electric delivery fees........................................... 441 - 1,255 - ------ ------ ------ ------ Total................................................... 1,932 1,653 5,289 4,312 ------ ------ ------ ------ Wholesale electric revenues (non-trading physically settled)...... 327 25 645 77 Wholesale energy revenues - trading and risk management activities......................................................... 123 52 237 106 Other revenues..................................................... 36 17 62 152 ------ ------ ------ ------ Total operating revenues................................. $2,418 $1,747 $6,233 $4,647 ====== ====== ====== ====== Weather(average for service area)** Percent of normal Cooling degree days................................... 99.8% 99.1% 102.1% 101.6% Heating degree days................................... - - 98.6% 104.3%

Balance of net commodity contract assets/(liabilities) at December 31, 2001 $ 378 Settlements of positions included in the opening balance (1) ......... (177) Unrealized mark-to-market valuations of positions held at end of period (2) 173 Other activity (3).................................................... 18 ----- Balance of net commodity contract assets/(liabilities) at September 30, 2002 ................................................................. $ 392 =====

Maturity dates of unrealized net mark-to-market balances at September 30, 2002 ------------------------------------------------------------------------------ Maturity Maturity in less than Maturity of Maturity of Excess of Source of fair value 1 year 1-3 years 4-5 years 5 years Total -------------------- --------- ----------- ------------ ---------- ----- Prices actively quoted.. $ (6) $ 1 $ - $ - $ (5) Prices provided by other external sources...... 200 121 27 6 354 Prices based on models.. 29 13 8 6 56 ---- ---- ---- ---- ---- Total................... $223 $135 $ 35 $ 12 $405 ==== ==== ==== ==== ==== Percentage of total .... 55% 33% 9% 3% 100%

Credit Facilities ---------------------------------------------------- At September 30, 2002 At November 5, 2002(a) ---------------------- -------------------------- Authorized Facility Letters of Cash Letters of Cash Facility Expiration Date Borrowers Limit Credit Borrowings Credit Borrowings -------- --------------- ---------- -------- --------- ---------- --------- ---------- (Millions of Dollars) 364-Day Revolving Credit Facility. April 2003 US Holdings, TXU Energy, Oncor $ 1,000 $ 81 $ - $ 88 $ 912 Five -Year Revolving Credit February 2005 US Holdings Facility(b)....................... 1,400 462 - 461 939 Three-Year Revolving Credit Facility May 2005 TXU Corp. 500 -- 350 - 500 Standby Liquidity Facility........ November 2002 US Holdings 400 - - - 400 Standby Liquidity Facility........ November 2002 US Holdings, TXU Energy, Oncor 400 - - - 400 ------- ----- ------- ----- ----- Total(c).................... $ 3,700 $ 543 $ 350 $ 549 $3,151 ======= ===== ====== ===== ======

TXU Corp. US Holdings Oncor TXU Energy -------------- -------------- ---------- ------------- (Senior (Senior (Secured) (Senior Unsecured) Unsecured) Unsecured) S&P........... BBB- BBB- BBB BBB Moody's....... Baa3 Baa3 A3 Baa2 Fitch......... BBB BBB+ A- BBB+

Expected Maturity Date ---------------------------------------------- September 30, (Millions of Dollars, Except Percentages) 2002 ----- There- Fair 2002 2003 2004 2005 2006 2007 After Total Value ---- ---- ---- ---- ---- ---- ----- ----- ----- Long-term debt (including current maturities) Fixed rate -- $ 80 -- $ 30 -- -- $1,413 $1,523 $1,404 Average interest rate -- 7.16% -- 6.88% -- -- 5.10% 5.24% -- Variable rate -- -- -- -- -- -- $ 432 $ 432 $ 432 Average interest rate -- -- -- -- -- -- 1.75% 1.75% --

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