DALLAS, Oct. 4, 2002 — TXU is adjusting its guidance for earnings for the third quarter ended September 30, 2002 to a range of $0.90 to $0.95 and fourth quarter to a range of $0.60 to $0.65 per share of common stock.
Management is also adjusting its guidance for the year 2002 to a range of $3.20 to $3.25 per share of common stock, and its guidance for the year 2003 to a range of $3.45 to $3.55 per share of common stock.
The adjustment to expectations is driven by the effect of pressures from continued low wholesale prices and aggressive retail competition in the United Kingdom.
Erle Nye, chairman and chief executive, said, “The depth and length of the depression of wholesale electricity prices in the UK power markets have resulted in intense retail competition that has continued to erode margins. We have put an aggressive plan in place to address this pressure. We will focus on enhancing retail margins, especially with our in-territory customers, ceasing development activities in Europe, restructuring the business and taking out costs accordingly, and restructuring purchase power contracts and physical generation positions.”
“Our Texas and Australia operations are performing well. We continue to compete effectively in the Australia and Texas markets and the implementation of the increase in retail electricity rates (known as Price to Beat) in our historic territory in Texas further improves margins that had been pressured by increased gas prices.”
“While I am very disappointed with these results, I am convinced that we have a superior strategy and business model that will deliver long-term value. TXU’s management team remains focused on enhancing shareholder value, continually improving the balance sheet, and maintaining a sound and attractive dividend.”
Mike McNally, chief financial officer, stated “Liquidity and cash flows remain strong with cash flows from operations targeted for 2002 at $2 billion and for 2003 at $2.3 billion. This will provide ample funding for the strong dividend, continued debt reduction, and capital expenditures. Currently, TXU has $6.4 billion of bank facilities that have over $2.6 billion of unused capacity.”
Analyst Meeting Scheduled for Monday, October 7, 2002
In addition to a conference call held earlier, a meeting with analysts regarding this announcement will be held at 8:30 a.m. (Eastern) on Monday, October 7, 2002 at the Essex House Hotel (located at 160 Central Park South, New York, NY). For analysts who wish to participate but cannot attend the meeting, the meeting will also be web cast live at www.txu.com for the benefit of any interested parties. If you are unable to attend the live web cast, a replay will be available on our web site later in the day.
TXU will release its third quarter earnings on Wednesday, October 30, 2002.
TXU provides electric and natural gas services, merchant energy trading, energy marketing, energy delivery, telecommunications, and energy-related services. With $41 billion in assets, TXU is one of the most influential energy companies in the world. TXU is a leading energy retailer in the US and one of the largest in the world. TXU owns or controls extensive competitive generation around the world, and is a portfolio manager and trader globally. TXU, which sells over 330 million megawatt hours of electricity and 2.8 trillion cubic feet of natural gas annually, serves over 11 million customers worldwide, primarily in the US, Europe and Australia. Visit www.txu.com for more information about TXU.