Appendix Tables Table A1: Description of special items Q4 06 and Q4
05; $ millions and $ per share after tax Special Item Income
Statement Q4 06 Q4 06 Line Q4 06 Q4 06 Cash Non-Cash(8) Q4 05 Q4 05
TXU Energy Holdings segment: Customer appreciation one-time bonus
Revenues 107 0.23 27 80 - - Cash flow hedge ineffectiveness
(gain)/loss Revenues 43 0.09 - 43 13 0.03 Positions marked to
market (gain)/loss Revenues (68) (0.14) - (68) - - Texas margin tax
Income tax 2 - - 2 - - TXU Electric Delivery segment: Transition
costs Other deductions 2 - 2 - - - Corporate and other: Texas
margin tax Income tax 1 - - 1 - - Total 87 0.18 29 58 13 0.03 Table
A2: Description of special items YTD 06 and YTD 05; $ millions and
$ per share after tax Special Item Income Statement YTD YTD YTD 06
YTD 06 YTD YTD Line 06 06 Cash Non-Cash(11) 05 05 TXU Energy
Holdings segment: "Day one" loss on hedges Revenues 71 0.15 - 71 -
- Customer appreciation one-time bonus Revenues 107 0.23 27 80 - -
Cash flow hedge ineffectiveness (gain)/loss Revenues (133) (0.28) -
(133) 13 0.03 Positions marked to market (gain)/loss Revenues (88)
(0.19) - (88) - - Gas plants Other impairment(9) deductions 131
0.28 - 131 Outsourcing/ transition Other costs deductions - - - - 6
0.01 Texas margin tax Income tax 44 0.09 - 44 - - TXU Electric
Delivery segment: Transition Other costs deductions 5 0.01 5 - 1 -
Corporate and other: Litigation settlement benefit Other income
(10) (0.02) (10) (23) (0.05) Professional fees SG&A expense - -
- - 3 0.01 Outsourcing/ transition Other costs deductions - - - - 1
- Income tax benefit Income tax - - - - (138) (0.28) Total 127 0.27
22 105 (137) (0.28) Appendix Table B: TXU Energy Holdings Segment
-- operating revenues Q4 06 vs. Q4 05 and YTD 06 vs. YTD 05; $
millions and mixed measures Operating Revenue Q4 06 Q4 05 % Change
YTD 06 YTD 05 % Change Component Retail electricity revenues:
Native market: Residential 718 762 (5.8) 3,804 3,444 10.5 Small
business 230 254 (9.4) 1,153 1,086 6.2 Total native market 948
1,016 (6.7) 4,957 4,530 9.4 Other markets: Residential 117 95 23.2
559 405 38.0 Small business 19 15 26.7 80 65 23.1 Total other
markets 136 110 23.6 639 470 36.0 Large business 326 324 0.6 1,357
1,330 2.0 Total retail electricity revenues 1,410 1,450 (2.8) 6,953
6,330 9.8 Wholesale electricity revenues(10) 618 941 (34.3) 2,247
3,032 (25.9) Risk management and trading activities:(11) Net
realized gains (losses) on settled positions 34 (111) - (119) (146)
- Reversal of prior net unrealized (gains)/losses 12 - - 32 (12) -
Other net unrealized gains 46 69 - 240 (6) - Net risk management
and trading activities 92 (42) - 153 (164) - Other revenues(12)
(78) 112 - 196 354 (44.6) Total operating revenues 2,042 2,461
(17.0) 9,549 9,552 - Average revenue ($/MWh): Residential 143.29
130.34 9.9 147.43 117.86 25.1 Small business 146.16 133.41 9.6
146.39 118.90 23.1 Large business 97.90 98.21 (0.3) 96.67 83.96
15.1 Average wires charge ($/MWh) 26.10 25.68 1.6 25.71 24.20 6.2
Appendix Table C: TXU Energy Holdings Segment -- retail and
wholesale sales Q4 06 vs. Q4 05 and YTD 06 vs. YTD 05; Mixed
measures Volume Component Q4 06 Q4 05 % Change YTD 06 YTD 05 %
Change Retail electricity sales volumes (GWh): Native market:
Residential 5,036 5,858 (14.0) 25,932 29,239 (11.3) Small business
1,550 1,880 (17.6) 7,753 9,004 (13.9) Total native market 6,586
7,738 (14.9) 33,685 38,243 (11.9) Other markets: Residential 789
715 10.3 3,663 3,416 7.2 Small business 157 137 14.6 671 674 (0.4)
Total other markets 946 852 11.0 4,334 4,090 6.0 Large business
3,329 3,303 0.8 14,031 15,843 (11.4) Total retail electricity sales
volumes 10,861 11,893 (8.7) 52,050 58,176 (10.5) Wholesale
electricity sales(13) 10,667 16,284 (34.5) 37,805 56,788 (33.4)
Total electricity sales volumes 21,528 28,177 (23.6) 89,855 114,964
(21.8) Average KWh/ customer:(14) Residential 3,086 3,295 (6.3)
15,359 15,825 (2.9) Small business 6,319 6,956 (9.2) 30,360 32,078
(5.4) Large business 73,121 60,347 21.2 285,277 243,538 17.1
Weather - percent of normal:(15) Cooling degree days 104.5 146.1
(28.5) 117.6 107.0 9.9 Heating degree days 90.9 91.3 (0.4) 79.2
90.0 (12.0) Appendix Table D: TXU Energy Holdings Segment -- retail
customer counts Q4 06 vs. Q3 06 and Q4 06 vs. Q4 05; End of period,
thousands, # of meters 3 Month 12 Month Customer Component Q4 06 Q3
06 % Change Q4 05 % Change Retail electricity customers: Native
market: Residential 1,624 1,670 (2.8) 1,769 (8.2) Small business
258 265 (2.6) 281 (8.2) Total native market 1,882 1,935 (2.7) 2,050
(8.2) Other markets: Residential 247 234 5.6 213 16.0 Small
business 9 8 12.5 7 28.6 Total other markets 256 242 5.8 220 16.4
Large business 44 47 (6.4) 55 (20.0) Total retail electricity
customers 2,182 2,224 (1.9) 2,325 (6.2) Estimated share of
market(16)(%): Native market: Residential 65 67 (3.0) 72 (9.7)
Small business 64 67 (4.5) 71 (9.9) Total ERCOT: Residential 37 37
- 39 (5.1) Small business 26 27 (3.7) 29 (10.3) Large business 14
16 (12.5) 20 (30.0) Appendix Table E: TXU Energy Holdings Segment
-- fuel, purchased power costs and delivery fees Q4 06 vs. Q4 05
and YTD 06 vs. YTD 05; $ millions Cost Component Q4 06 Q4 05 %
Change YTD 06 YTD 05 % Change Nuclear fuel 20 18 11.1 85 78 9.0
Lignite/coal 122 121 0.8 475 475 - Total baseload fuel 142 139 2.2
560 553 1.3 Gas/oil fuel and purchased power costs 358 839 (57.3)
1,787 3,285 (45.6) Other costs 60 84 (28.6) 228 281 (18.9) Fuel and
purchased power costs 560 1,062 (47.3) 2,575 4,119 (37.5) Delivery
fees 287 310 (7.4) 1,353 1,426 (5.1) Fuel, purchased power costs
and delivery fees 847 1,372 (38.3) 3,928 5,545 (29.2) Appendix
Table F: TXU Energy Holdings Segment -- generation and supply
statistics Q4 06 vs. Q4 05 and YTD 06 vs. YTD 05; Mixed measures
Generation and Supply Statistic Q4 06 Q4 05 % Change YTD 06 YTD 05
% Change Production and purchased power (GWh): Nuclear (baseload)
4,502 4,225 6.6 19,795 18,371 7.8 Lignite/coal (baseload) 11,033
11,283 (2.2) 43,837 44,005 (0.4) Total baseload generation 15,535
15,508 0.2 63,632 62,376 2.0 Gas/oil generation 502 557 (9.9) 3,989
3,504 13.8 Purchased power(18) 6,123 12,523 (51.1) 24,380 50,920
(52.1) Total energy supply 22,160 28,588 (22.5) 92,001 116,800
(21.2) Less line loss and power imbalances 632 411 53.8 2,146 1,836
16.9 Net energy supply volumes 21,528 28,177 (23.6) 89,855 114,964
(21.8) Baseload capacity factors (%): Nuclear 89.2 83.7 6.6 98.8
91.5 8.0 Lignite/coal 87.9 91.2 (3.6) 89.1 89.8 (0.8) Total
baseload 88.2 89.1 (1.0) 91.8 90.3 1.7 Adjusted baseload capacity
factors(19) (%): Nuclear 100.2 102.1 (1.9) 101.5 101.1 0.4
Lignite/coal 94.1 96.5 (2.5) 96.2 95.9 0.3 Total baseload 95.8 98.1
(2.3) 97.7 97.4 0.3 Appendix Table G: TXU Energy Holdings Segment
-- maturity dates of unrealized net commodity contract assets
(liabilities) 12/31/06; $ millions unless otherwise noted Source of
Less Than More Than Fair Value 1 Year 1-3 Years 4-5 Years 5 Years
Total Prices actively quoted (24) 6 33 4 19 Prices provided by
other external sources 57 8 (64) 59 60 Prices based on models (7)
(3) - - (10) Total 26 11 (31) 63 69 Percentage of total fair value
38 16 (45) 91 100 Appendix Table H: TXU Energy Holdings Segment --
changes in commodity contract assets and liabilities YTD 06; $
millions Change Component Impact Net commodity contract liability -
beginning of period (56) Settlements of positions included in the
opening balance(20) 11 Unrealized mark-to-market valuations of
positions held -- end of period(21) 22 Other activity(22) - Net
commodity contract liability -- end of period (23) Appendix Table
I: TXU Electric Delivery Segment -- operating revenues Q4 06 vs. Q4
05 and YTD 06 vs. YTD 05; $ millions Revenue Component Q4 06 Q4 05
% Change YTD 06 YTD 05 % Change Electricity transmission and
distribution: Affiliated (TXU Energy Holdings) 244 279 (12.5) 1,139
1,278 (10.9) Nonaffiliated 331 296 11.8 1,310 1,116 17.4 Total 575
575 - 2,449 2,394 2.3 Appendix Table J: TXU Electric Delivery
Segment -- operating statistics Q4 06 vs. Q4 05; Mixed measures
Operating Statistic Q4 06 Q4 05 % Change Volumes - Electricity
distribution (GWh) 23,618 23,845 (1.0) Electricity distribution
points of delivery - number of meters (in thousands)(23) 3,056
3,013 1.4 System Average Interruption Duration Index (SAIDI)
(non-storm)(24) 79.09 76.79 3.0 System Average Interruption
Frequency Index (SAIFI) (non-storm) (24) 1.17 1.17 - Customer
Average Interruption Duration Index (CAIDI) (non-storm) (24) 67.54
65.60 3.0 Appendix Table K: TXU Electric Delivery Segment --
operating statistics YTD 06 vs. YTD 05; Mixed measure Operating
Statistic YTD 06 YTD 05 % Change Volumes - Electricity distribution
(GWh) 107,098 106,780 0.3 Appendix Table L: Details of discontinued
operations Q4 06, Q4 05, YTD 06 and YTD 05; $ millions and $ per
share after tax Discontinued Operation Q4 06 Q4 06 Q4 05 Q4 05 YTD
06 YTD 06 YTD 05 YTD 05 TXU Energy Holdings segment - - (2) - - -
(8) (0.02) TXU Australia - - 5 0.01 - - 10 0.02 TXU Gas - - (4)
(0.01) 60 0.13 3 0.01 TXU Corporate 6 0.01 1 - 27 0.06 - - Total
income (loss) 6 0.01 - - 87 0.19 5 0.01 Attachment 1: Financial
Definitions Cash Interest Expense (non-GAAP): Interest expense and
related charges less amortization of discount and reacquired debt
expense plus capitalized interest. Cash interest expense is a
measure used by TXU to assess credit quality. Contribution Margin:
Operating revenues (GAAP) less fuel and purchased power costs and
delivery fees (GAAP). Debt/EBITDA (non-GAAP): Total debt less
transition bonds and debt-related restricted cash divided by
EBITDA. Transition, or securitization, bonds are serviced by a
regulatory transition charge on wires rates and are therefore
excluded from debt in credit reviews. Debt-related restricted cash
is treated as net debt in credit reviews. Debt/EBITDA is a measure
used by TXU to assess credit quality. EBIT (non-GAAP): Income from
continuing operations before interest income, interest expense and
related charges, and income tax and special items. EBIT is a
measure used by TXU to assess performance. EBITDA (non-GAAP):
Income from continuing operations before interest income, interest
expense and related charges, and income tax plus depreciation and
amortization and special items. EBITDA is a measure used by TXU to
assess performance. EBITDA/Interest (non-GAAP): EBITDA divided by
cash interest expense is a measure used by TXU to assess credit
quality. Free Cash Flow (non-GAAP): Cash provided by operating
activities less capital expenditures and nuclear fuel. Used by TXU
predominantly as a forecasting tool to estimate cash available for
dividends, debt reduction, and other investments. Income from
Continuing Operations per Share (GAAP): Per share (diluted) income
from continuing operations before extraordinary gain and preference
stock dividends. Operational Earnings (non-GAAP): Net income
available to common shareholders adjusted for special items and
income or losses that are not reflective of continuing operations
(such as discontinued operations, extraordinary items and
cumulative effect of changes in accounting principles). Beginning
in the fourth quarter of 2006, TXU has adjusted operational
earnings for all periods to exclude all effects of recording
unrealized gains and losses from cash flow hedge ineffectiveness
and other mark-to-market valuations of positions in the long-term
hedging program because management believes such presentation will
more appropriately reflect the ongoing earnings of the business.
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. Operational Earnings Per Share (a non-GAAP
measure): Per share (diluted) operational earnings. TXU forecasts
earnings on such operational earnings basis and is unable to
reconcile forecasted operational earnings to a GAAP financial
measure because forecasts of special items and material non-
recurring items are not practical. TXU relies on operational
earnings per share 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.
Reported Earnings per Share (GAAP): Per share (diluted) net income
available to common shareholders. Return on Average Common Stock
Equity Based on Net Income (GAAP): Twelve months ended net income
available to common shareholders (GAAP) divided by the average of
the beginning and ending common stock equity (GAAP) for the period
calculated. Return on Average Common Stock Equity Based on
Operational Earnings (non- GAAP): Twelve months ended operational
earnings (non-GAAP) divided by the average of the beginning and
ending common stock equity (GAAP) for the period calculated. This
measure is used to evaluate operational performance and management
effectiveness. Return on Average Invested Capital Based on Adjusted
Net Income (non- GAAP): Twelve months ended net income (GAAP), plus
after-tax interest expense and related charges net of interest
income on restricted cash related to debt divided by the average of
the beginning and ending total capitalization, less debt-related
restricted cash for the period calculated. This measure is used to
evaluate operational performance and management effectiveness.
Return on Average Invested Capital Based on Adjusted Operational
Earnings (non-GAAP): Twelve months ended operational earnings
(non-GAAP), plus preference stock dividends, plus after-tax
interest expense and related charges net of interest income on debt
proceeds held as restricted cash, divided by the average of the
beginning and ending total capitalization, less debt-related
restricted cash for the period calculated. This measure is used to
evaluate operational performance and management effectiveness.
Special Items (non-GAAP): Unusual charges related to the
implementation of the performance improvement program, the effects
of unrealized gains and losses from cash flow hedge ineffectiveness
and other mark-to-market valuations of positions in the long-term
hedging program and other charges, credits or gains that are
unusual or nonrecurring. Special items are included in reported
GAAP earnings, but are excluded from operational earnings. Total
Capitalization (non-GAAP): Total debt plus common stock equity.
This measure is used to evaluate operational performance and
management effectiveness. Total Debt (GAAP): Long-term debt
(including current portion), plus bank loans and commercial paper,
plus long-term debt held by subsidiary trusts and preferred
securities of subsidiaries. Total Debt less Transition Bonds and
Debt-Related Restricted Cash (non- GAAP): TXU also uses a total
debt measure that excludes transition bonds and debt-related
restricted cash. Transition, or securitization, bonds are serviced
by a regulatory transition charge on wires rates and are therefore
excluded from debt in credit reviews. Debt-related restricted cash
is treated as net debt in credit reviews. TXU uses this measure to
evaluate its debt and capitalization levels. Exhibits: Regulation G
- Reconciliation of Non-GAAP Financial Measures to the Most
Directly Comparable GAAP Financial Measures Exhibit 1: Return on
average common stock equity calculation Twelve months ended
12/31/06 and 12/31/05; $ millions unless otherwise noted Component
12/31/06 12/31/05 Ref Net income available to common shareholders
2,552 1,712 A Income from continuing operations before
extraordinary gain and cumulative effect of changes in accounting
principles 2,465 1,775 Special items 127 (137) Preference stock
dividends - (10) Operational earnings 2,592 1,628 B Average common
equity 1,308 407 C Return on average common stock equity - based on
net income (A/C) (%) 195.1 420.6 Return on average common stock
equity - based on operational earnings (B/C) (%) 198.2 400.0
Exhibit 2: Return on average invested capital calculation Twelve
months ended 12/31/06 and 12/31/05; $ millions unless otherwise
noted Component 12/31/06 12/31/05 Ref Net income 2,552 1,722
After-tax interest expense and related charges net of interest
income (a) 510 490 Total return (based on net income) 3,062 2,212 A
Operational earnings 2,592 1,628 Preference stock dividends - 10
After-tax interest expense and related charges net of interest
income (a) 510 490 Total return (based on operational earnings)
3,102 2,128 B Average total capitalization 14,301 13,692 C Return
on average invested capital - based on adjusted net income (A/C)
(%) 21.4 16.2 Return on average invested capital - based on
adjusted operational earnings (B/C) (%) 21.7 15.5 (a) After-tax
interest expense and related charges net of interest income
Interest expense 830 802 Interest income (46) (48) Net 784 754 Tax
at 35% 274 264 Net of tax 510 490 Exhibit 3: Interest and debt
coverage ratios Twelve months ended 12/31/06 and 12/31/05; $
millions unless otherwise noted Component 12/31/06 12/31/05 Ref
Cash provided by operating activities 4,954 2,793 A Reconciling
adjustments from cash flow statement 2,489 1,018 B Income from
continuing operations before extraordinary gain and cumulative
effect of changes in accounting principles 2,465 1,775 Income tax
expense 1,263 632 Interest expense and related charges 830 802
Interest income (46) (48) Depreciation and amortization 830 776
EBITDA 5,342 3,937 Special items 127 2 EBITDA (excluding special
items) 5,469 3,939 C Interest expense and related charges 830 802
Amortization of discount and reacquired debt expense (16) (18)
Capitalized interest 47 17 Cash interest expense 861 801 D Total
debt 12,607 13,380 E Transition bonds (1,074) (1,167) Debt-related
restricted cash (241) - Total debt less transition bonds 11,292
12,213 F EBITDA/interest (C/D) 6.4 4.9 Debt/EBITDA (F/C) 2.1 3.1
Cash provided by operating activities+cash interest expense/cash
interest expense (A+D/D) 6.8 4.5 Total debt/cash provided by
operating activities - ratio (E/A) 2.5 4.8 Exhibit 4a: Consolidated
-- operational earnings reconciliation Q4 06; $ millions and $ per
share after tax Energy Energy Electric Electric Factor Holdings
Holdings Delivery Delivery Corp. Corp. Total Total Operational
earnings (loss) 568 1.23 64 0.14 (76) (0.17) 556 1.20 Special items
(84) (0.18) (2) - (1) - (87) (0.18) Discontinued operations - - - -
6 0.01 6 0.01 Rounding - (0.01) - (0.01) - 0.02 - - Net income
(loss) to common 484 1.04 62 0.13 (71) (0.14) 475 1.03 Average
shares - diluted 463 Exhibit 4b: Consolidated -- operational
earnings reconciliation Q4 05; $ millions and $ per share after tax
Energy Energy Electric Electric Factor Holdings Holdings Delivery
Delivery Corp. Corp. Total Total Operational earnings (loss) 436
0.90 49 0.10 (58) (0.12) 427 0.88 Special items (13) (0.03) - - - -
(13) (0.03) Discontinued operations (2) - - - 2 - - - Extraordinary
loss (50) (0.10) - - - - (50) (0.10) Cum. effect of accounting
change (8) (0.02) - - - - (8) (0.02) Rounding (1) - - - 1 0.01 -
0.01 Net income (loss) to common 362 0.75 49 0.10 (55) (0.11) 356
0.74 Average shares - diluted 485 Exhibit 4c: Consolidated --
operational earnings reconciliation YTD 06; $ millions and $ per
share after tax Energy Energy Electric Electric Factor Holdings
Holdings Delivery Delivery Corp. Corp. Total Total Operational
earnings (loss) 2,495 5.34 349 0.75 (252) (0.54) 2,592 5.55 Special
items (132) (0.28) (5) (0.01) 10 0.02 (127) (0.27) Discontinued
operations - - - - 87 0.19 87 0.19 Rounding - - - - - (0.01) -
(0.01) Net income (loss) to common 2,363 5.06 344 0.74 (155) (0.34)
2,552 5.46 Average shares - diluted 467 Exhibit 4d: Consolidated --
operational earnings reconciliation YTD 05; $ millions and $ per
share after tax Energy Energy Electric Electric Factor Holdings
Holdings Delivery Delivery Corp. Corp. Total Total Operational
earnings (loss) 1,448 2.98 352 0.72 (172) (0.35) 1,628 3.35 Special
items (19) (0.04) (1) - 157 0.32 137 0.28 Discontinued operations
(8) (0.02) - - 13 0.03 5 0.01 Extraordinary loss (50) (0.10) - - -
- (50) (0.10) Cum. effect of accounting change (8) (0.02) - - - -
(8) (0.02) Effect of share repurchase dilution - - - - - (1.02) -
(1.02) Net income (loss) to common 1,363 2.80 351 0.72 (2) (1.02)
1,712 2.50 Average shares - diluted 486 TXU CORP. DALLAS, TEXAS
SUMMARY OF CONSOLIDATED EARNINGS (Unaudited) THREE MONTHS ENDED
December 31 2006 2005 % Change Operating Revenues $2,375,000,000
$2,755,000,000 -13.8% Income from Continuing Operations (a)
$469,000,000 $414,000,000 13.3% Consolidated Net Income Available
for Common Stock (b) $475,000,000 $356,000,000 33.4% Average Number
of Shares of Common Stock Outstanding, Basic 458,000,000
474,000,000 -3.4% Average Number of Shares of Common Stock
Outstanding, Diluted 463,000,000 485,000,000 -4.5% Basic Earnings
Per Share $1.04 $0.75 38.7% Diluted Earnings Per Share $1.03 $0.74
39.2% TWELVE MONTHS ENDED December 31 2006 2005 % Change Operating
Revenues $10,856,000,000 $10,662,000,000 1.8% Income from
Continuing Operations (a) $2,465,000,000 $1,765,000,000 (c) 39.7%
Consolidated Net Income Available for Common Stock (b)
$2,552,000,000 $1,712,000,000 49.1% Average Number of Shares of
Common Stock Outstanding, Basic 460,000,000 476,000,000 -3.4%
Average Number of Shares of Common Stock Outstanding, Diluted
467,000,000 486,000,000 -3.9% Basic Earnings Per Share $5.55 $3.60
54.2% Diluted Earnings Per Share $5.46 $2.50 (d) - (a) Q4 06
includes special items of $87 million in net charges primarily
related to a charge for a one-time customer appreciation bonus net
of unrealized hedge ineffectiveness and mark-to-market net gains
associated with the company's long-term hedging program. Q4 05
includes special items of $13 million in net charges related to
unrealized hedge ineffectiveness and mark-to-market losses
associated with the company's long-term hedging program. TME 06
includes $127 million in net charges primarily related to a charge
for a one-time customer appreciation bonus, a charge for the
impairment of gas-fired generation plants, a "day one" loss related
to a series of commodity hedge transactions, and the net deferred
tax effect of a newly enacted state tax, partially offset by
unrealized hedge ineffectiveness and mark-to-market gains
associated with the company's long-term hedging program. TME 05
includes special items of $137 million in net income primarily
related to a tax benefit and insurance recoveries. (b) Includes
income from discontinued operations of $6 million in Q4 06, $87
million in TME 06, and $5 million in TME 05. Includes an
extraordinary loss of $50 million and a loss from the cumulative
effect of changes in accounting principles of $8 million in both Q4
05 and TME 05. (c) After preference stock dividends. (d) TME 05
includes the dilution effect of $1.02 per share related to the
accounting treatment of the 2005 true-up for the November 2004
accelerated share repurchase program. (1) Per share earnings
amounts reflect diluted earnings per share. See calculations in
Tables 2a and 2b on page 5. (2) Operational earnings is a non-GAAP
measure that adjusts net income for special items and income or
losses that are not related to continuing operations. See
Attachment 1: Financial Definitions for a detailed definition of
operational earnings and other GAAP and non-GAAP financial measures
used in this release. (3) Beginning in the fourth quarter 2006, TXU
treats as a special item and excludes from operational earnings the
effects of unrealized gains and losses from cash flow hedge
ineffectiveness and other mark-to-market valuations of positions in
its long-term hedging program. Prior periods have been adjusted
accordingly. Management uses this view to evaluate results on an as
realized basis and believes it is a useful measure when combined
with the GAAP presentation. See Appendix Tables A1 and A2 for
details of special items. (4) See Appendix Table L for details of
discontinued operations. (5) For fourth quarter 2006, the dilution
calculation for reported and operational earnings reflects the
addition to net income available to common shareholders of interest
on convertible senior notes of $0.3 million (after tax), and the
addition to shares outstanding of 5.8 million shares related to the
effect of: 1) share-based compensation (4.3 million) and 2)
convertible senior notes (1.5 million). For fourth quarter 2005,
the dilution calculation for reported and operational earnings per
share reflects the addition to net income available to common
shareholders of interest on convertible senior notes of $0.3
million (after tax), and the addition to shares outstanding of 11.4
million shares related to the effect of: 1) share- based
compensation (7.2 million), 2) equity-linked securities (2.7
million) and 3) convertible senior notes (1.5 million). (6) For
year-to-date 2006, the dilution calculation for reported and
operational earnings reflects the addition to net income available
to common shareholders of interest on convertible senior notes of
$1.2 million (after tax), and the addition to shares outstanding of
7.6 million shares related to the effect of: 1) share-based
compensation (5.3 million), 2) convertible senior notes (1.5
million) and 3) equity-linked securities (0.8 million). For
year-to-date 2005, the dilution calculation for reported and
operational earnings per share reflects the addition to net income
available to common shareholders of interest on convertible senior
notes of $1 million (after tax), and the addition to shares
outstanding of 10.5 million shares related to the effect of: 1)
share-based compensation (6.6 million), 2) equity- linked
securities (2.4 million) and 3) convertible senior notes (1.5
million). The diluted earnings per share calculation for 2005
reported earnings also reflects a reduction to net income of $498
million ($1.02 per share) related to the May 2005 true-up of the
company's accelerated share repurchase program. (7) Prior to
January 1, 2006, all wholesale power purchases and sales scheduled
with ERCOT for delivery were reported gross in the income statement
and "booked-out" sales and purchases were reported net. Subsequent
to an internal reorganization of TXU Wholesale, contracts that are
now separately managed as a trading book and scheduled for physical
delivery are reported net upon settlement in accordance with
existing accounting rules. All transactions reported net, including
"booked-out" contracts, are reported as a component of revenues.
Fourth quarter and year-to-date 2006 gross revenues from power
trading activities totaled approximately $312 million and $1,338
million, respectively. (8) While these items are reflected in
earnings for the current period, the cash impact, if any, will be
realized in future periods. These items are considered non-cash for
the current period. (9) Includes approximately $2 million related
to the write-off of natural gas-fueled generation plant
inventories. (10) Adjusted for the change in reporting of trading
activities in 2006 and ERCOT balancing transactions for 2005 and
2006. (11) Amounts in 2006 include unrealized net gains of $39
million in the fourth quarter and $340 million year-to-date from
cash flow hedge ineffectiveness and other mark-to-market valuations
of positions in the long-term hedging program. Year-to-date also
includes a $109 million unrealized "day one" loss recorded in the
second quarter of 2006 related to a series of positions in the
long-term hedging program entered into at below-market prices. The
fourth quarter and year-to-date 2005 impact of the long-term hedge
program was a loss of $20 million. (12) Other Revenues include the
one-time customer appreciation bonus of $165 million (pre-tax).
(13) Adjusted for the change in reporting of trading activities in
2006 and ERCOT balancing transactions for 2005 and 2006. Includes
volumes related to ERCOT balancing of 394 gigawatt-hours (GWh) of
net purchases in fourth quarter 2006, 865 GWh of net sales in
fourth quarter 2005, and 874 GWh and 4,787 GWh of net sales in
year-to-date 2006 and 2005, respectively. (14) Based upon the
average of the period beginning and ending customers. (15) Average
for service territory is based on a 50 percent - Dallas/Fort Worth,
25 percent - Mineral Wells and 25 percent Waco weighting. Weather
data is obtained from WeatherBank, Inc., an independent company
that collects and archives weather data from reporting stations of
the National Oceanic and Atmospheric Administration (a federal
agency under the U.S. Department of Commerce). (16) End of period.
Estimated market share is based on the estimated number of
customers (meters) in the native market and the estimated number of
customers (meters) in ERCOT that have choice. (17) Adjusted for the
change in reporting of trading activities in 2006 and ERCOT
balancing transactions for 2005 and 2006. (18) Adjusted for the
change in reporting of trading activities in 2006 and ERCOT
balancing transactions for 2005 and 2006. (19) Excludes planned
outages and economic back-down. (20) Represents reversals of
unrealized mark-to-market valuations of these positions recognized
in earnings prior to the beginning of the period, to offset
realized gains and losses upon settlement. (21) Includes a $109
million charge for a "day one" loss recorded in the second quarter
of 2006 related to a series of commodity price hedge transactions
entered into at below-market prices. (22) These amounts do not
arise from mark-to-market valuations. Includes initial values of
positions involving the receipt or payment of cash or other
consideration such as option premiums paid and received and related
amortization. Activity for the period includes $8 million of
natural gas received related to physical swap transactions offset
by $8 million of option premium payments. (23) Includes lighting
sites, principally guard lights, for which TXU Energy Retail is the
REP, which are not included in TXU Energy Retail's customer count.
Such sites totaled 82,337 and 86,495 at December 31, 2006 and 2005,
respectively. Adjusting for the guard lights, which have minimal
value, points of delivery increased 1.6 percent. (24) SAIDI is the
number of minutes in a year the average customer is out of electric
service. SAIFI is the number of times in a year the average
customer experiences an interruption to electric service. CAIDI is
the duration in minutes of the average interruption to electric
service for those customers experiencing an outage. DATASOURCE: TXU
Corp.
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