TXU third quarter earnings lower

DALLAS, Oct. 30, 2002 — TXU on Wednesday announced that reported earnings for the third quarter ended September 30, 2002 were $0.73 per share of common stock versus $1.28 per share for the third quarter of 2001.

Excluding results from Europe, which are expected to be reflected as discontinued operations in the fourth quarter, and other unusual items, earnings for the current quarter were $0.92 per share compared to $1.27 per share for the prior year quarter.

The current quarter excludes the impairment of the company’s small natural gas distribution business in Monterrey, Mexico. The prior year quarter excludes the regulatory adjustment at North America Energy, as reported last year.

Year-to-date reported earnings were $2.40 per share of common stock compared to $2.83 per share for year-to-date 2001. Excluding European business results and unusual items, earnings for year-to-date September 30, 2002 were $2.64 per share compared to the prior year period earnings of $2.28 per share.

The unusual items excluded in the current period are the aforementioned impairment in the current quarter and early extinguishment of debt, primarily in the first quarter. The unusual item excluded in the prior year period was the aforementioned regulatory adjustment.

TXU also announced today that its wholly owned subsidiary, Oncor Electric Delivery Company, has obtained a $1 billion 364-day senior secured credit facility.

The facility may be used for the interim refinancing of maturing indebtedness of Oncor and for general corporate purposes at Oncor. Borrowings under the facility will be secured by First Mortgage Bonds of Oncor.

Summary of Third Quarter Results

Third quarter results reflect continued solid contributions from the North America Energy and Energy Delivery segments and from Australia. Comparisons to the prior year quarter were affected by the increase in number of shares of common stock as a result of the maturity of equity-linked securities in August 2001 and 2002 and the issuance of 11.8 million shares of common stock at the beginning of June 2002.

As stated last week, the company continues to pursue a prompt resolution of its business interests in Europe. For the quarter, the European business net loss was $37 million. This loss was greater than expected due to the continued difficult market conditions in the UK.

The company expects to record a charge in the fourth quarter associated with the wind-down of this European business. Europe’s net income in the prior year quarter was $21 million.

The North America Energy segment delivered $223 million of net income in the quarter. This segment contains the company’s generation, wholesale and retail operations primarily in Texas. The results reflect the successful transition to competition of the Texas operations. Increased margin was offset by higher operating expenses, including temporarily increased costs associated with the opening of the electricity market in Texas to customer choice this year.

The North America Energy Delivery segment provided $78 million of net income in the quarter. This segment includes the electric transmission and distribution assets as well as the company’s gas pipeline and distribution business. Segment results reflect strong customer growth in the North Texas area. Results benefited from decreased operating expenses and from improved results from the natural gas business.

Net income contribution from Australia decreased by $6 million, primarily due to lower wholesale margins and higher operating costs associated with increased retail infrastructure and marketing expenditures in conjunction with the full opening of the retail markets. These were partially offset by improved retail margins and the discontinuance of amortization of goodwill.

TXU provides electric and natural gas services, energy marketing, energy delivery, telecommunications, and other energy-related services. TXU serves more than five million customers and owns and operates more than 20,000 megawatts of competitive generation in North America and Australia. Visit www.txu.com for more information about TXU.

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