Financial Performance

The improvement in most of our financial metrics over the past two years is at or near the top quartile in the industry, with outstanding free cash flow, operational earnings that have more than tripled, and substantial improvements in financial flexibility. In a capital-intensive industry like ours, capital productivity is key. Our return on invested capital is top decile, more than doubling from 6.5 to 15.4 percent, or a 137 percent improvement. We can't find any competitor that approaches this improvement level. This progress reflects a combination of strong operational performance and strict capital discipline, with each operating division doing its part. In just two years, we have also achieved substantial efficiency gains, allowing us to reduce our workforce by over 40 percent and deliver even greater value to our customers. Overall, these improvements have boosted TXU from the bottom quartile to the top. Grade: A-

¹ Based on actual 2003 financial results including subsequently discontinued operations.
² See Regulation G financial definitions and reconciliations.