Message-ID: <11711417.1075841136992.JavaMail.evans@thyme> Date: Wed, 2 Jan 2002 08:59:55 -0800 (PST) From: sarah.palmer@enron.com To: sarah.palmer@enron.com Subject: Enron Mentions -- 01/02/02-12/31/01 Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Palmer, Sarah X-To: Palmer, Sarah X-cc: X-bcc: X-Folder: \ExMerge - Martin, Thomas A.\Deleted Items X-Origin: MARTIN-T X-FileName: tom martin 6-25-02.PST Documents Track Enron's Partnerships --- Top Officers Viewed Deals As Integ= ral to Ensuring Growth in Recent Years The Wall Street Journal, 01/02/2002 Humbled Enron tries to save core business --- Accounting practices thrust i= nto spotlight Associated Press, 01/02/2002 Shell Game; How Enron concealed losses, inflated earnings -- and hid secret= deals. Are criminal charges next? Forbes Magazine, 01/07/2002 Follow-Through Forbes Magazine, 01/07/2002 The Disease! It's Spreading!; Enron Fortune Magazine, 01/07/2002 When 401(k)s are KO'd Fortune Magazine, 01/07/2002 The Boardroom Follies: In which we meet the non-stockholders, non- attender= s, and nonagenarians still among America's corporate directors. Fortune Magazine, 01/07/2002 One Plus One Makes What?; The accounting profession had a credibility probl= em before Enron. Now it has a crisis. Fortune Magazine, 01/07/2002 VOICE OF THE PEOPLE (letter) Enron's woes Chicago Tribune, 01/02/2002 VOICE OF THE PEOPLE (letter) Executive actions Chicago Tribune, 01/02/2002 You Mean, We Won Something? (Mumia Abu-Jamal, Enron)(Brief Article) The Nation, 01/07/2002 CFA Largest Ch 11 Bankruptcy Filings Week Ended 12/28 Dow Jones Corporate Filings Alert, 01/02/2002 TXU CEO Ready As New Year Rings In Retail Deregulation Dow Jones News Service, 01/02/2002 USA: Finance - Small steps seen improving financial health. Reuters English News Service, 01/02/2002 LME Base Metals Called To Open Dn On Comex Losses, Stocks Dow Jones Commodities Service, 01/02/2002 US energy cos hoping to sell assets to reduce debts - report AFX News, 01/02/2002 Master short seller raised flag on Enron: Roberts tags Kodak, Safeway as st= ocks to avoid Barron's, 01/02/2002 SPANISH PRESS: Spanish Regulator Suspends Enron's License Dow Jones International News, 01/02/2002 Enron's Dabhol Power draws suitors: Parent seeks US$1B Bloomberg, 01/02/2002 GAS AUTHORITY OF INDIA TO BID FOR ENRON'S DABHOL POWER PROJECT Asia Pulse, 01/02/2002 U.S. set to target earnings deception --- Test case thought likely this mon= th The Toronto Star, 01/02/2002 J.P. Morgan Chase Sues Nine Insurers In Enron-Bond Case --- Institution See= ks to Quash Demands for Information The Wall Street Journal Europe, 01/02/2002 J.P. MORGAN CHASE: Objects to insurers seeing Enron details Chicago Tribune, 01/01/2002 Roll Over, Shakespeare, the Future of Jargon Is Here The New York Times, 01/02/2002 Commentary: Enron Is a Cancer on the Presidency Los Angeles Times, 01/02/2002 Career Journal: The Jungle The Wall Street Journal, 01/02/2002 Dynegy's Reasons for Terminating Merger Were "Mere Pretexts," Says Enron Securities Litigation & Regulation Reporter, 01/02/2002 Shareholders Claim Enron Directors Made $434 Million in Insider Trading Securities Litigation & Regulation Reporter, 01/02/2002 American Electric Power buys Enron wind project The Milwaukee Journal Sentinel, 01/01/2002 Enron hid behind smoke and mirrors South China Morning Post, 01/01/2002 Letters To The Editor ENRON PROBLEMS WON'T HOLD NEW POWER DOWN The Columbus Dispatch, 01/01/2002 The POWER of CHOICE / It is the dawning of deregulation in Texas, allowing = consumers to choose their electricity provider - and get a rate reduction a= s well. Houston Chronicle, 01/01/2002 Enron: The Lessons For Investors ; Hindsight, shmindsight. There's much to = learn when a stock loses $67 billion in value. Money Magazine, 01/01/2002 Edison Mission/Mirant -2: Deal Included Enron Bloomberg, 12/31/01 __________________________________ Documents Track Enron's Partnerships --- Top Officers Viewed Deals As Integ= ral to Ensuring Growth in Recent Years By John R. Emshwiller Staff Reporter of The Wall Street Journal 01/02/2002 The Wall Street Journal A3 (Copyright (c) 2002, Dow Jones & Company, Inc.) As some current and former Enron Corp. officials try to distance themselves= from controversial partnerships that played a role in the company's demise= , internal Enron documents show top management and directors viewed the par= tnerships as integral to maintaining the energy-trading giant's rapid growt= h in recent years.=20 The documents also reinforce the notion that top Enron officials, including= Chairman Kenneth Lay and former President Jeffrey Skilling, were directly = involved in the creation and oversight of the partnerships, which were run = by former Chief Financial Officer Andrew Fastow. Questions about the partne= rships in recent months contributed to a collapse in investor confidence in= the Houston-based company, which just a year ago had a market capitalizati= on of over $60 billion. Enron filed last month for Chapter 11 bankruptcy-co= urt protection, which shields the company from creditors while it seeks to = reorganize. An Enron spokeswoman said the company didn't have any comment on the docume= nts. Among these are an internal memorandum from an Enron attorney to Mr. S= killing regarding procedures for monitoring transactions with the partnersh= ips. The documents also include excerpts of minutes from meetings of Enron'= s board and the board's finance committee.=20 Enron and Mr. Lay have consistently said that the company's dealings with t= he partnerships, which involved joint investments as well as asset sales, w= ere aimed at helping the company, were carefully reviewed to prevent confli= cts of interest and were adequately disclosed. The partnership dealings are= the subject of a Securities and Exchange Commission probe and are being lo= oked into by Congress.=20 The Enron documents indicate that in mid-1999 the company began using the p= artnerships to confront changing business conditions.=20 A document excerpting a June 1999 board meeting cited Mr. Skilling as sayin= g that because of changing accounting rules affecting off-balance-sheet tra= nsactions, Enron had been analyzing new types of financing vehicles. Though= the document doesn't provide further explanation, the statement would appe= ar to be a reference to a concern at Enron about trying to keep as much deb= t as possible off the company's balance sheet. Too much debt lowers a compa= ny's credit rating, which was a particular worry for Enron, whose vast ener= gy-trading operations relied heavily on its credit standing.=20 In the June 1999 document, Messrs. Lay and Skilling were identified as bein= g designated by Enron's board to help ensure that the company received fair= consideration in one of the early partnership deals.=20 A draft version of minutes from an October 2000 meeting of the Enron board = finance committee cites Mr. Fastow speaking of the need for outside private= partnerships to help manage the company's finances so that Enron could "co= ntinue to grow." Enron planned to continue making "significant capital inve= stments. . . . some of which would not generate cash flow or earnings for a= number of years," the document said.=20 Out of such needs were born in 1999 the so-called LJM partnerships, which w= ere run by Mr. Fastow. The Enron documents show that an early transaction i= nvolved the hedging of the value of an Enron investment in Rhythms NetConne= ctions Inc., a data-communications company. According to one document, Mr. = Fastow discussed how Enron could protect the value of that holding through = a complicated swap arrangement that also involved Enron stock and a $50 mil= lion LJM payment.=20 In a filing last November with the SEC, Enron said that it had incorrectly = accounted for the Rhythms/LJM transaction. As a result, Enron retroactively= reduced its reported net income for 1999 and 2000 by about $100 million, o= r around 5%.=20 The internal documents show that the board and top management were aware of= the possible conflicts of interests in having Enron's chief financial offi= cer running partnerships that eventually did hundreds of millions of dollar= s of business with the company. One document, labeled as part of a June 199= 9 presentation to Enron's board, also laid out the huge profit potential in= Mr. Fastow's partnership compensation formula, under which he stood to rea= p as much as half of partnership profits in addition to management fees. En= ron has estimated that Mr. Fastow made over $30 million from his partnershi= p activities.=20 To avoid potential conflicts of interests on Mr. Fastow's part, Enron set u= p a review procedure for any Enron deals with the partnerships. Among other= things, all transactions had to be approved by Mr. Skilling and two other = senior Enron officials, according to one of the company documents.=20 In interviews with several media organizations last month, Mr. Skilling, wh= o resigned as Enron's president and chief executive officer in August, indi= cated that he wasn't fully aware of all the LJM-related dealings and was al= so surprised by the size of Mr. Fastow's partnership remuneration. Yesterda= y, a spokeswoman for Mr. Skilling said that while he was familiar with the = structure of the LJM partnerships, "he wasn't aware of or intimately involv= ed with details" of particular transactions. Those matters were "handled at= a lower level" of the company, she added.=20 Mr. Fastow couldn't be reached for comment. But a Fastow attorney has previ= ously pointed to Enron statements that all the LJM transactions were proper= and approved by the board and top management. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Humbled Enron tries to save core business --- Accounting practices thrust i= nto spotlight Kristen Hays, Associated Press 01/02/2002 A humbled Enron Corp. will enter 2002 with hopes of emerging from bankruptc= y with a viable trading business, once the source of 90 per cent of its rev= enues.=20 The once-mighty energy titan came crashing down with dizzying speed in 2001= after investors lost confidence in the accounting behind its core operatio= ns. The company is under investigation by the Securities and Exchange Commissio= n, the House or Representatives energy and commerce committee and the justi= ce department.=20 On Jan. 10, an auction will be held of 51 per cent of Enron's wholesale ene= rgy trading operation. Some Wall Street insiders say bids could be as high = as $1 billion (U.S.) for the joint venture Enron has been trying to put tog= ether, enabling it to revive its oil, natural gas and electricity trading b= usiness.=20 Enron was born in 1985 when Houston Natural Gas merged with InterNorth, a n= atural gas company based in Omaha, Neb. In 1989, Enron started trading natu= ral gas commodities and eventually became the world's largest buyer and sel= ler of natural gas.=20 Later it gained fame by pioneering trading markets in such commodities as w= eather derivatives, telecommunications transmission capacity, pulp, paper a= nd plastics. But some of these units and overseas investments consistently = lost money.=20 The company buried those losses in its profitable trading business and turn= ed to off-balance-sheet financing vehicles to keep burgeoning debt off its = books.=20 But eventually, the debt and bad investments couldn't be hidden.=20 On Oct. 16, Enron acknowledged $618 million (U.S.) in third-quarter losses,= took a $1 billion charge for losses on bad investments and cut $1.2 billio= n in shareholders' equity.=20 Enron filed for bankruptcy in New York Dec. 2 to keep creditors and lawsuit= s at bay so the company could try to preserve its trading operation. Money-= losing assets went up for sale.=20 Credit rating agencies have promised closer scrutiny of off-balance-sheet f= inancing.=20 "Enron is an animal all its own," said Credit Lyonnais analyst Gordon Howal= d. "A lot of companies have not handled their finances as aggressively as E= nron has. But one of the fallouts of Enron is that companies are going to h= ave to disclose a lot more than they have in the past." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Company of the Year Shell Game; How Enron concealed losses, inflated earnings--and hid secret d= eals. Are criminal charges next? Daniel Fisher 01/07/2002 Forbes Magazine 52 Copyright 2002 Forbes Inc. How Enron concealed losses, inflated earnings--and hid secret deals from th= e authorities. Are criminal charges next?=20 Enron Corp.'s spectacular collapse may have shocked employees and investors= , who lost tens of billions of dollars. Could it have been a surprise to it= s top executives or its auditors, Arthur Andersen? The complex side bets an= d partnerships Enron used left it extremely vulnerable to a drop in its sto= ck price, its bond rating or the value of fiber-optic lines. The plunge of = all three doomed the company. This much is apparent from some internal company documents leaked to FORBES= : As early as March 2001 the elaborate network of external partnerships Enr= on used to hedge against declining values of its assets was starting to mel= t down. Even as former chief executive Jeffrey Skilling and Chairman Kennet= h Lay were selling millions of dollars' worth of shares last spring, an arm= y of lawyers and accountants was shuttling money among partnerships to fore= stall disaster. They couldn't. Finally, in November, Lay admitted Enron had= taken $710 million in losses to unwind the partnerships.=20 Enron refuses to discuss the workings of these partnerships, beyond the sca= nty disclosures in the recent 10-Q filed with the Securities & Exchange Com= mission. But documents laying out how some of the partnerships worked show = an ingenious structure designed by Enron's former chief financial officer, = Andrew Fastow. The idea was to use the value of Enron's rising stock price = to finance a welter of corporations that magically turned balance-sheet los= ses into gains on Enron's income statement. One round of partnerships forme= d last year hedged nearly $2 billion in Enron assets.=20 The partnerships were originally designed to comply with regulation 140 of = the Financial Accounting Standards Board. The rule lets companies move fina= ncial assets off their balance sheets if they are put into entities that ar= e completely out of the control of the parent company. But Enron skirted th= e law by having the partnerships issue put options--obligations to buy some= thing in the future at a specified price--on assets that were still on Enro= n's books.=20 "It's like somebody sat down with the rules and said, 'How can we get aroun= d them?'" says Douglas Carmichael, an accounting professor at Baruch Colleg= e in Manhattan. "They structured these things to comply with the letter of = the law but totally violated the spirit."=20 Only Enron knows how many such partnerships exist. Carol Coale, an analyst = with Prudential Securities in Houston, has identified over 3,000 subsidiari= es and partnerships, many of them off-balance-sheet entities. Several were = designed to "monetize" assets--sell them to a party unlikely to question th= e value Enron put on them. Some deals require a complete suspension of disb= elief.=20 In June 2000, for example, Enron sold $100 million worth of "dark fiber," o= r fiber-optic cables without the electronic gear necessary to transmit digi= tized information. The "buyer" was a partnership run by Fastow called LJM2 = (the acronym reportedly comes from the initials of his wife and children), = set up in 1999 to trade assets with Enron. On that deal, Enron booked a $67= million profit, a significant piece of the $318 million gross profit the c= ompany reported for the broadband business in 2000. LJM2 later sold $40 mil= lion of the dark fiber to what Enron refers to as "industry participants," = and the remainder to another Enron-related partnership for $113 million in = December. What's curious is that the value of the fiber ostensibly increase= d 53% between June and December--during the same time that, in open markets= at least, the value of dark fiber plunged by 67%. LJM2 reaped a $2.4 milli= on profit from the fiber trade, contributing to the $30 million of undisclo= sed gains the LJM partnerships delivered to Fastow, according to Enron.=20 Shouldn't Enron's top management or its auditors have sought the identity o= f the buyers who so overpaid for the fiber asset? One wonders. And where, b= y the way, was all this fiber? That $100 million, say a fiber broker and an= industry analyst, would have bought at least 33,000 miles of single-strand= dark fiber in June 2000--enough to string up three nationwide networks--an= d considerably more by December. Enron's entire network, presumably consist= ing of multiple strands, was 18,000 miles at the time, with much of that fi= ber leased.=20 The deal went undisclosed at a time when Skilling and Lay were talking up t= he great prospects for Enron's broadband business. There's something else t= hey neglected to mention. Enron provided what its current 10-Q calls "credi= t support" to the ultimate buyer, guaranteeing the debt. But if the partner= ship defaulted, Enron was on the hook for $61 million of the $67 million it= booked as profits. Former employees say Enron's broadband business consist= ed largely of such questionable deals. To win a $20 million broadband servi= ces contract from Rice University in Houston, for example, Enron donated $5= million to the school, and Ken Lay's personal foundation kicked in another= $3 million. Unreported was the fact that Rice dropped the contract soon af= ter.=20 The fiber deal finally came to light more than a year after it closed--in E= nron's 10-Q for the third quarter of 2001. Some of the most exotic deals re= main hidden in the files at Enron and its co-investors, files that disclose= a welter of Delaware partnerships that Fastow formed in 2000 among Enron, = LJM2 and the so-called Raptor partnerships, which included trusts, limited = liability corporations and other entities through which cash, stock and der= ivatives cascaded.=20 Code-named after Southwestern animals, these "special-purpose entities" wer= e curious beasts indeed. One of them, Bobcat, was capitalized with 6.3 mill= ion shares of Enron stock whose value was protected by a six-month put opti= on, expiring in mid-March of 2001, which Bobcat bought from Enron. The put = obligated Enron to buy its shares back at $68 each. Bobcat in turn sold put= s back to Enron, protecting it from declines in the value of various assets= .=20 One of the weirdest aspects of these fancy derivatives: When an asset decli= ned in value, Enron was sometimes able to avoid booking the paper loss on t= he asset at the same time that it immediately counted the payout on the pro= tective put as income. Pure alchemy: Bad investments become profits on the = income statement.=20 When Enron was trading at $80, Bobcat and its cubmates worked like magic. A= ny losses on derivatives sold to Enron were offset by an increase in the va= lue of their Enron stock. But as Enron shares fell below $68 in mid-March 2= 001, Raptor deals started to fall apart. While Enron declines to comment on= what happened next, present and former employees describe a mad scramble a= s the company tried to keep the elaborate structure Fastow created. Solvent= partnerships had to prop up failing ones, while Enron executives continued= to bail out of their employer's stock. Enron ultimately was forced to admi= t that Fastow's safety net had failed. The $532 million in hedging gains ge= nerated by the Raptors was wiped out by $710 million in losses created by t= heir collapse.=20 At what point did Enron's top executives realize Fastow's edifice was crumb= ling? SEC attorneys are surely trying to find out.=20 Pleading ignorance, as Andersen did before Congress, may not work. Market d= ata about falling values for international power plants and dark fiber was = readily available throughout the period Enron executives were reporting inf= lated values and selling some $1 billion in stock. That type of information= can be used to establish that insiders sold stock knowing it was overvalue= d, says Jacob Frenkel, a defense lawyer with Smith, Gambrell & Russell in W= ashington, D.C. and a former SEC enforcement attorney. "If you intentionall= y choose to be ignorant," he says, "that can satisfy the question of crimin= al intent."=20 With additional reporting by Lynn Cook and Rob Wherry.=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Departments Follow-Through Rob Wherry, Seth Lubove, & Carleen Hawn 01/07/2002 Forbes Magazine 48 Copyright 2002 Forbes Inc. January 22, 2001-- Enron Fallout=20 When we wrote about Calpine Corp. a year ago, the San Jose-based power prod= ucer's stock was trading at $47 despite the California energy crisis. But i= t hasn't been able to withstand the collateral damage resulting from the En= ron collapse in November. Investors are taking a second look at Calpine's a= mbitious plan to build and buy new plants. After a New York Times report co= mparing the company's "opaque" financial statements with Enron's and a Morg= an Stanley analyst's downgrading of Calpine's stock to neutral from strong = buy, Calpine shares have fallen to a recent $16. The road ahead for Calpine= could be rough. Over the next 18 months it will need $3.9 billion to finis= h construction projects, refinance debt and support its trading business. C= alpine may have to dip into cash reserves to fund $1.8 billion of that amou= nt or, in a worst case scenario, leverage its gas reserves. It may also hav= e to renegotiate a lucrative long-term contract with the inept government o= f California, which in desperation last spring paid too much. Peter Cartwri= ght, Calpine founder and chief executive, has called the comparison with En= ron "ridiculous," and Robert Kelly, president of Calpine's financial subsid= iary, insists liquidity is not a problem. --Rob Wherry May 3, 1999Sinking Ship=20 In our spotlight on how the federal government subsidized construction of l= uxury cruise liners, we explained that the Maritime Administration was guar= anteeing up to $1.1 billion in loans to American Classic Voyages. Controlle= d by billionaire Sam Zell, the company used the loans to build two huge shi= ps. In October the floating pork barrel finally sank. Zell's company filed = for bankruptcy, blaming the falloff in business after Sept. 11, though it h= ad been bleeding red ink long before the terrorist attacks. Among its liabi= lities: $211 million owed to the government. --Seth Lubove=20 December 10, 2001Disconnect=20 Two issues ago we explored a theory that AT&T drove At Home, a broadband In= ternet provider it controlled, to bankruptcy as a way to get assets on the = cheap. Bondholders pointed to the lowball bid, $307 million, that AT&T had = submitted to the bankruptcy court to buy At Home's subsidiary, ExciteAtHome= . But in early December AT&T withdrew its bid. It appears it was scared awa= y by threats from At Home creditors to cut off service to more than half of= AT&T's 1.4 million cable customers. --Carleen Hawn Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 First The Disease! It's Spreading!; Enron Bethany McLean 01/07/2002 Fortune Magazine Time Inc. 24 (Copyright 2002) This isn't how it was supposed to work. After Enron declared bankruptcy in = early December, the other "energy merchants"--Wall Street's name for compan= ies like Dynegy, Calpine, and Mirant that are engaged in new businesses suc= h as trading power and building unregulated plants--disclaimed any sort of = Enronesque behavior. They also downplayed the aftershocks, reiterating prom= ises of big earnings growth and at times discussing how Enron's downfall wo= uld actually benefit them.=20 Benefit? Not quite. Some of the "not-Enrons" have suffered huge stock price= declines, with Mirant, the worst performer, losing 43% since late November= . And many have had to revamp their balance sheets. First came El Paso, whi= ch on Dec. 12 announced plans to sell more than $2 billion of assets, raise= money in the equity market, and cut capital expenditures. A few days later= Dynegy followed suit. Then came Williams, and finally, on Dec. 19, Mirant = joined the better- balance-sheet movement. Unfortunately this newfound reli= gion hasn't always satisfied the suddenly suspicious credit rating agencies= . Most notably, Moody's downgraded Mirant's debt to junk status. Though none have proven themselves to be Enrons yet, the energy merchants d= o deserve some of this bad rap. They all have huge piles of debt, and like = Enron (and the dot-coms before that), they need the continued cooperation o= f the capital markets to fund their business plans. Last year widespread fe= ars of an energy shortage caused people to throw money at new power plants.= And the spiking prices and massive volatility caused in large part by the = California crisis created big profit opportunities for traders. Now people = are concerned about an energy glut, and prices have fallen sharply. The eff= ects of all that (plus perhaps tougher accounting rules) on profits remain = unclear.=20 Believers in the energy merchants insist that a healthier--albeit slower-gr= owth--industry will emerge from this. "Long-term prospects appear excellent= ," wrote Goldman analyst David Fleischer in a recent note about Dynegy and = Williams. "Disarming the shorts!" said UBS Warburg's Ron Barone about El Pa= so's restructuring plans. (Note that Fleischer and Barone remained big Enro= n supporters until almost the last gasp.)=20 This Wall Street babble won't amount to much; in the end these companies' p= rospects depend on the enthusiasm of the markets and flawless execution of = the restructuring plans. And since those plans rely in large part on asset = sales, it's worth asking: If everyone is selling, who's buying? COLOR ILLUSTRATION: MARTIN KOZLOWSKI=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 FORTUNE Advisor/Investing/Backlash When 401(k)s are KO'd Jeremy Kahn 01/07/2002 Fortune Magazine Time Inc. 104 (Copyright 2002) Marie Thibaut spent 15 years as an administrative assistant at Enron in Hou= ston. During that time, she dutifully put 15% of her salary into a 401(k) p= lan, investing the entire amount in the company's rapidly climbing stock. E= nron then matched that investment with yet more shares. By the winter of 20= 00, she had amassed close to $500,000 in stock and options, enough for the = 61-year-old divorcee to begin contemplating early retirement. "My children = told me I should diversify," Thibaut says. "But all the mutual funds were g= oing down, and I just kept going up." She's not going up any longer. Today,= Enron is bankrupt and Thibaut is out of work, a victim of one of the worst= corporate collapses in history. Her 401(k) is worth just $22,000.=20 That sorry tale has been repeated thousands of times at Enron, Lucent, Nort= el, and other companies whose stocks have cratered. But despite the punishi= ng market and calls for diversification, workers continue to pour a huge po= rtion of their retirement money into their employer's shares. Benefits cons= ulting firm Hewitt Associates estimates that as of Oct. 31, almost 30% of t= he $71 billion in assets in some 1.5 million 401(k) plans were invested in = the stock of the sponsoring company. At some places the proportion is even = higher. Microsoft employees keep 46% of their 401(k) funds in company stock= . At Enron, the figure was 62%. To make matters worse, many of these plans,= like Enron's, restrict the sale of stock purchased with matching contribut= ions until employees are close to retirement. Now legislators and pension-reform advocates are saying enough is enough. S= enators Barbara Boxer (D-California) and Jon Corzine (D-New Jersey) are spo= nsoring a bill that would force diversification by prohibiting any one stoc= k from making up more than 20% of a 401(k), reducing the tax breaks for com= panies that match 401(k) contributions with stock, and limiting to 90 days = the period a company can force employees to hold matching stock. Senator Je= ff Bingaman (D-New Mexico) also wants to allow companies to provide employe= es with investment advice without penalty. (Current law makes a company lia= ble for employees' investment decisions if it offers advice, and as a resul= t, few do.)=20 The legislation won't necessarily pass without a fight. When Senator Boxer = attempted to pass a similar bill in 1996, lobbyists-- particularly those fr= om option-reliant Silicon Valley--succeeded in watering her proposal down t= o the point where it simply barred companies from forcing employees to inve= st more than 10% of their own contributions in company stock. There's also = the issue of companies matching 401(k) contributions with stock. Andrew Lia= zos, an attorney with McDermott Will & Emery, says if this practice is rest= ricted, many companies may simply provide no match at all. Plus, he asks, i= sn't telling employees what to do with their retirement funds a bit paterna= listic?=20 Pension-reform advocates say a little paternalism is just what is needed. "= It's unrealistic to think that without a new law employees will limit the a= mount of company stock they buy," says Eli Gottesdiener, a lawyer who is su= ing Enron and its accountants on behalf of its 401(k) participants. Given w= hat's happened at Enron, it'll be hard to counter that argument this time a= round.=20 --Jeremy Kahn COLOR PHOTO: DAVID J. PHILLIP--AP When Enron collapsed, so did many a nest = egg.=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 First; Value Driven The Boardroom Follies: In which we meet the non-stockholders, non- attender= s, and nonagenarians still among America's corporate directors. Geoffrey Colvin 01/07/2002 Fortune Magazine Time Inc. 32 (Copyright 2002) The corporate disaster count seems to be going up, and it's worth asking wh= y. Not that we can tally these things precisely, but think of just the past= few months: Enron, the biggest bankruptcy in history, with over $50 billio= n of shareholder wealth vaporized; Warnaco, another former highflier, with = shares that now cost less than a Snickers bar; the U.S. steel industry, whi= ch has finally thrown in the towel and admitted it can't survive on its own= . Among slightly longer-running disasters, Lucent and Nortel have actually = destroyed far more shareholder wealth than Enron, and Xerox isn't far behin= d--but they've been pushed out of the headlines.=20 What went wrong? These are all man-made disasters, and when you search for = the people to blame, you end up quickly at the board of directors. Somewher= e around the last recession (1990-91) it dawned on America's shareholders t= hat when something goes hugely wrong at a company, the buck stops at the bo= ard. Thus began a great campaign, still going strong, to improve corporate = governance. Its cause is noble, and it has won a lot of victories. And yet the corporate-governance follies carry on with a surprising amount = of vim. To see just how much, stop by a terrific Website at www.thecorporat= elibrary.com. For our purposes you'll have to bypass the section that gives= you the full text of the employment contracts of hundreds of major CEOs, t= hough I recommend that you check that out later. Right now we're concerned = with the state of America's boards, and so we arrive at the site's director= screening tool, which answers all kinds of interesting questions about the= directors of 1,500 companies.=20 One of the major problems with directors of public companies is that they s= ometimes don't own much of the company's stock. Odds are strong they'd try = a lot harder if a significant amount of their own money were at stake. So I= asked how many directors owned no stock at all in the companies they direc= ted. Answer: 963--and the director screening tool gives you all their names= . For example, did you know that Apple Computer CEO Steve Jobs owns no shar= es of Gap, though he's on the board?=20 Another problem: too many inside directors. Virtually every board will incl= ude the CEO, which makes sense, and maybe the COO if that person is in line= to run the show. More insiders than that can give the CEO too much power o= ver a group that is supposedly the shareholders' independent guardian. So I= asked how many inside directors are on those 1,500 boards. Answer: 4,218, = or about three per board. Not bad, but what's interesting is the details. T= he major company with the most inside directors seems to be American Intern= ational Group, the world's most valuable insurance conglomerate, with nine.= You can find plenty of others with seven or eight.=20 Directors who don't go to board meetings aren't worth much, so I asked how = many directors missed at least 25% of the meetings in the past year. The an= swer is 271, including many big-deal CEOs who gave short shrift to their ou= tside boards, such as American Express' Ken Chenault, PepsiCo's Roger Enric= o, Oracle's Larry Ellison, and News Corp.'s Rupert Murdoch.=20 Just for fun, I asked if there were any triple-threat directors: insiders w= ho owned no shares and had attendance problems, even though the board meeti= ngs were presumably just down the hall. There were three. You've never hear= d of them, believe me.=20 I couldn't resist asking one other question: How many directors are over 90= ? Answer: nine. America's oldest director appears to be George E. Kane, 96,= who was just reelected to a three-year term at Panera Bread, which operate= s bakery cafes around the U.S. This Strom Thurmond of corporate America ser= ves on the board's audit and nominating committees, and was on the compensa= tion committee until this year. Unlike Strom, he has not promised he won't = run again.=20 I'd love to tell you things were getting better in the boardroom. By certai= n gross measures they clearly are. Investors are far more interested in dir= ectors than they used to be. Many companies are adopting excellent new poli= cies on important matters such as mandatory levels of stock ownership and m= andatory retirement ages for directors. Fed-up investors are flexing their = muscles far more effectively than before, forcing companies to abandon clas= sified boards--on which only a fraction of the directors are up for electio= n in any given year--and other devices that entrench management at the expe= nse of shareholders.That's all terrific news.=20 But the more important question is, Are boards getting better as fast as th= e world is getting tougher? Just barely. We should all support the good-gov= ernance campaign of the past decade. What matters most about corporate gove= rnance, though, is not whether it's good, but whether it's good enough. Unt= il the disaster count starts coming down, it isn't. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Features/Accounting In Crisis One Plus One Makes What? ; The accounting profession had a credibility prob= lem before Enron. Now it has a crisis. Jeremy Kahn 01/07/2002 Fortune Time Inc. 88 Copyright (c) 2002 ProQuest Information and Learning. All rights reserved. Where were the auditors? People ask that question after every corporate col= lapse, and lately they've been asking it with disturbing frequency. At Wast= e Management, Sunbeam, Rite Aid, Xerox, and Lucent, major accounting firms = either missed or ignored serious problems. The number of public companies t= hat have corrected or restated earnings since 1998 has doubled to 233, acco= rding to a study by Big Five accounting firm Arthur Andersen. Now, followin= g the stunning bankruptcy of Andersen's own client Enron, that question--wh= ere were the auditors?--has become a deafening refrain. "I believe that the= re is a crisis of confidence in my profession," Andersen CEO Joseph Berardi= no told a congressional committee investigating Enron's collapse in mid-Dec= ember. "Real change will be required to regain the public trust."=20 The full story of the Enron debacle--and what Andersen did or did not do in= its audit--will take months to emerge. In the meantime, no one disagrees w= ith Berardino's diagnosis that there's a crisis in accounting--even if his = sudden emphasis on industrywide reform springs from a desire to deflect att= ention from Andersen's own culpability. But the kind of "real change" requi= red is a matter of substantial debate. The government gave the franchise of= auditing public companies' financial statements to the accounting industry= after the 1929 stock market crash. In the decades since, the accountants h= ave adroitly avoided significant government regulation by arguing that they= can police themselves. Now, post-Enron, they're doing it again. The Big Fi= ve CEOs issued a rare joint statement outlining how they intend to strength= en financial reporting and auditing standards. "Self-regulation is right fo= r investors, the profession, and the financial markets," the release conclu= des. But is it? Accounting's main self-regulatory body, the Public Oversight Boa= rd, is a monument to the profession's failures. The POB was created in the = late 1970s, when Congress held hearings on a string of audit failures at pu= blic companies that had--much like the recent rash--shaken confidence in th= e major auditing firms. The POB, which has no enforcement power, investigat= es alleged audit failures and oversees a triennial review process in which = the major accounting firms examine one another's procedures. And yet proble= ms persist; arguably, they have grown more acute. "Is accounting self-regul= ation working? On the face of it, it is not," says Representative John Ding= ell, the powerful Michigan Democrat who has long sparred with the accountin= g profession.=20 In their defense, the auditors note that current accounting methods, many o= f which were designed 70 years ago, are difficult to apply to today's compl= ex financial transactions. And there is no way, they insist, to prevent sop= histicated fraud. The American Institute of Certified Public Accountants (A= ICPA), the industry's professional association, points out that accountants= examine the books of more than 15,000 public companies every year; they ar= e accused of errors in just 0.1% of those audits. But oh, the price of thos= e few failures. Lynn Turner, former chief accountant of the Securities and = Exchange Commission, estimates that investors have lost more than $100 bill= ion because of financial fraud and the accompanying earnings restatements s= ince 1995.=20 Perhaps the most glaring example of self-regulation's deficiency has been a= ccountants' unwillingness to deal with conflicts of interest. Over the year= s, the major auditing firms have transformed themselves into "professional = services" companies that derive an increasing portion of revenues and profi= ts from consulting: selling computer systems, advising clients on tax shelt= ers, and evaluating their business strategies (see chart). In 1999, accordi= ng to the SEC, half of the Big Five's revenues came from consulting fees, v= s. 13% in 1981.=20 Auditing, meanwhile, has become a commodity. Firms have even been accused o= f using it as a loss leader, a way of getting in the door at a company to s= ell more-profitable consulting contracts. "Audit work is a marvelous market= ing tool," says Lou Lowenstein, a professor emeritus of finance and law at = Columbia University. "You are already there doing the audit. You say their = internal controls are no good. Well, who are they going to call to fix it?"= But this requires a firm to work for the public (auditing) and management = (consulting). "You cannot serve them both," says former SEC commissioner Be= vis Longstreth.=20 This conflict may have played a role at Enron. Andersen received $25 millio= n in auditing fees from Enron last year. That's money Andersen was paid bot= h as Enron's outside auditor, certifying its financial statements, and as i= ts internal auditor, making sure Enron had the right systems to keep its bo= oks and working to detect fraud and irregularities. This double duty alone = raised a serious potential for conflict. Besides $25 million in accounting = fees, Andersen was paid $23 million for consulting services. "If you are au= diting your own creations, it is very difficult to criticize them," says Ro= bert Willens, a Lehman Brothers tax expert who disapproves of the accountin= g profession's recent move into selling aggressive tax shelters. Andersen h= as not revealed the details of its work on Enron's highly controversial off= -balance-sheet transactions, but the accounting firms have never believed c= onsulting fees compromise their objectivity. "They have militantly refused = to ever acknowledge the possibility of a problem," Longstreth says.=20 The major accounting firms say they would not risk their reputations by loo= king the other way on an audit. And they emphasize that no one has ever pro= ved that consulting caused a bad audit. Then again, the Big Five are very g= ood at getting court records sealed and settling lawsuits before trial with= out admitting wrongdoing. And what has been established during several high= -profile cases against the Big Five is that auditors' compensation is direc= tly linked to their ability to sell consulting services. "I think we had lo= ts of smoking guns," says former SEC chairman Arthur Levitt. Two years ago = the accounting industry waged a bitter battle with Levitt over the issue of= auditor independence. He had considered asking firms to curtail consulting= , but backed off after encountering stiff resistance from the accountants a= nd their friends in Congress. In the end, he settled for a rule forcing pub= lic companies to disclose how much they pay their accountants for auditing = and consulting. Levitt regrets not doing more. "If I could do it over again= , I would insist that corporate audit committees approve in advance any con= sulting contract," he says.=20 One might assume that Enron's collapse would finally give the SEC the polit= ical cover it needs to impose strict rules segregating auditing and consult= ing. One might even go so far as to think the accounting profession was in = jeopardy of losing its right to self- regulation, and that the SEC should s= tep into the breach. After all, how many chances should one industry get? B= ut there are no signs that either of those things is about to happen. Harve= y Pitt, the new SEC chairman, was Andersen's lawyer until taking office in = August and, big surprise, he's sympathetic to the accountants' arguments. H= e has given no indication that he plans to relaunch Levitt's anticonsulting= crusade, and he has voiced support for self-regulation.=20 Pitt does want some reform. He has called for clearer language in financial= statements and prompt disclosure of material information. He has instructe= d auditors to identify the three to five subjective accounting decisions th= at are most important to a company's financial status. The accountants shou= ld then "clearly and concisely" explain those decisions to investors and de= tail what the effect would be if they used a different accounting treatment= . And he would like to speed up the process by which the private-sector Fin= ancial Accounting Standards Board (FASB) creates new accounting rules. Worr= ied that Levitt's SEC was too adversarial, Pitt is encouraging companies an= d auditors to consult with the SEC staff if they have accounting questions.= "I'm exceedingly tough on improper behavior," he says. "But I am intereste= d in finding solutions to problems, not just pointing fingers." Pitt says h= e supports an "effective and transparent" self-regulatory system for accoun= tants that is subject to "rigorous" SEC oversight. But whether that means a= nother incremental increase in the POB's power or the creation of a new sel= f- regulatory organization, he hasn't said.=20 At the POB, Chairman Charles Bowsher is eager to prove his organization is = up to the job of policing the industry. A former U.S. Comptroller General a= nd head of the General Accounting Office, Bowsher is armed with a new chart= er that gives the POB authority over auditing standards, as well as uncondi= tional funding from the AICPA. (The professional association previously thr= eatened to withhold money when the POB began studying auditor independence = violations. The AICPA now says that was a misunderstanding.) Bowsher has ex= panded Deloitte & Touche's triennial peer review of Andersen to specificall= y look at issues raised by Enron. But the POB still doesn't have power to e= nforce recommendations or to discipline firms when they violate guidelines.= =20 None of these changes will make any difference if accountants continue to d= ownplay their job as guardians of the public trust. Many seem embarrassed b= y their watchdog role and have treated their public responsibility as thoug= h it were a burden. Auditing isn't sexy, the accountants whine; it doesn't = make them rich. So they've focused on consulting and tried to branch out in= to corporate finance and even law (heaven help us!). "The industry, from my= point of view, has rarely focused on the public interest, only its own par= ochial business concerns," Levitt says.=20 It wasn't always so. Once, the industry was led by professionals like Leona= rd Spacek. Spacek, who died in 2000 at 92, was Arthur Andersen's CEO from 1= 947 to 1963 and the profession's elder statesman for long after that. He wa= sn't afraid to rankle the big accounting firms or Big Business. Throughout = his career, he pushed to standardize accounting rules so that different com= panies' financial statements could be fairly compared. He worked to strengt= hen audit procedures. And although Andersen's forays into consulting began = on his watch, he spoke often and eloquently about the auditor's role as a p= rotector of the public interest. "There aren't any Leonard Spaceks in the i= ndustry anymore," Levitt laments.=20 Perhaps Enron's collapse will chasten the profession enough for it to retur= n to bedrock principles. And perhaps another Spacek will emerge to lead it.= Maybe then that anguished question--where were the auditors?--will reverbe= rate less often.=20 FEEDBACK: jkahn@fortunemail.com COLOR PHOTO: PHOTOGRAPH BY DOUGLAS GRAHAM--CORBIS SYGMA Andersen CEO Berard= ino: "Real change will be required to regain the public trust." COLOR CHART= : FORTUNE CHART/PUBLIC ACCOUNTING REPORT Auditing isn't sexy--or lucrative = Share of Big Five revenues by service Consulting Accounting and auditing Ta= x=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Commentary VOICE OF THE PEOPLE (letter) Enron's woes Dan McGuire 01/02/2002 Chicago Tribune North Sports Final ; N 14 (Copyright 2002 by the Chicago Tribune) If the executive shenanigans that brought Enron to its knees are not crimin= al acts, they should be.=20 On Nov. 8, Enron was forced to restate its earnings for the past 4 1/2 year= s, admitting to a near $600 million reduction due to suspect financial repo= rting. A major factor involves so-called off-balance- sheet deals run by co= mpany executives. Enron stock has plunged from $80 to less than a dollar, a= nd the company has since filed for Chapter 11 bankruptcy protection. Investors, trusting and awed by the company's posted earnings, learned too = late of Enron's departure from "generally accepted accounting principles." = Many have suffered significant losses. A civil suit charges that employees = were encouraged to invest more heavily in Enron stock just before it tanked= .=20 In spite of numerous civil suits and an impending congressional investigati= on, some experts say that a much higher standard of proof may preclude crim= inal charges. If so, justice will once again be thwarted. Clearly, somebody= --maybe several somebodies--deserves to spend some time in jail. But don't = count on it. An old adage says: "If you're going to steal, steal big." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Commentary VOICE OF THE PEOPLE (letter) Executive actions Bill Marquardt 01/02/2002 Chicago Tribune North Sports Final ; N 14 (Copyright 2002 by the Chicago Tribune) I am deeply concerned about the impact management's behavior can have on yo= ung people's perceptions. It is clear that certain actions of Enron's senio= r executives can only be termed disgusting and immoral--maybe illegal, whic= h is yet to be determined. While management has prospered, it has brought f= inancial hardship and anguish to thousands of investors and employees. No w= onder there is often so much cynicism about big business in this country. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 You Mean, We Won Something?(Mumia Abu-Jamal, Enron)(Brief Article) ALEXANDER COCKBURN 01/07/2002 The Nation 8 Copyright 2002 Gale Group Inc. All rights reserved. COPYRIGHT 2002 The Nati= on Company L.P. It scarcely seems possible, but two of the staple items on the conversation= al menu of the left these past years might well be on the edge of disappear= ance, or at least a change in content. Mumia Abu-Jamal is no longer on deat= h row. Pacifica's wars are amid final settlement. In both instances, it's a= good advertisement for pertinacity. Had it not been for those tireless and= oft-ridiculed Mumiacs, I doubt US District Judge William Yohn Jr. would ha= ve detected those improper jury instructions. Two years ago the Pacifica Na= tional Board thought it had the situation under control, and it was only a = matter of time before the ultras were cleaned out of their caves in the mou= ntains of Berkeley. But the much-derided left kept at it.=20 One good feature of Judge Yohn's ruling is that it takes the emphasis off i= nnocence or guilt, which surrenders the basic moral axiom of the anti-death= penalty cause, namely, that capital punishment is wrong.=20 As for Pacifica, the heat is now on those who fought the national board to = exhaustion and defeat. Can they produce decent programming and hike Pacific= a's dismally low audience figures?=20 Enron and the Green Seal=20 The fall of Enron sounds the death knell for one of the great rackets of th= e past decade: green seals of approval, whereby some outfit like the Natura= l Resources Defense Council or the Environmental Defense Fund would issue t= estimonials to the enviro-conscience and selfless devotion to the public we= al of corporations like Enron. These green seals of approval were part of t= he neoliberal pitch, that fuddy-duddy regulation should yield to modern, "m= arket-oriented solutions" to environmental problems. Indeed, NRDC and EDF w= ere always the prime salesfolk of neoliberal remedies for environmental pro= blems. NRDC was socked into the Enron lobby machine so deep you couldn't se= e the soles of its feet. Here's what happened.=20 In 1997 high-flying Enron found itself in a pitched battle in Oregon, where= it planned to acquire Portland General Electric, Oregon's largest public u= tility. Warning that Enron's motives were of a highly predatory nature, the= staff of the state's Public Utility Commission (PUC) opposed the merger. T= hey warned that an Enron takeover would mean less ability to protect the en= vironment, increased insecurity for PGE's workers and, in all likelihood, s= oaring prices.=20 Other critics argued that Enron's actual plan was to cannibalize PGE, in pa= rticular its hydropower, which Enron would sell into California's energy ma= rket.=20 But at the very moment when such protests threatened to balk Enron of its p= rize, into town rode NRDC's top energy commissar, Ralph Cavanagh, Heinz env= ironmental genius award pinned to his armor and flaunting ties to the Energ= y Foundation, a San Francisco-based outfit providing financial wattage for = many citizen and environmental groups that work on utility and enviro issue= s.=20 Cavanagh lost no time whipping the refractory Oregon greens into line. In c= oncert with Enron, the NRDC man put together a memo of understanding, pledg= ing that the company would lend financial support to some of these groups' = pet projects. But Cavanagh still had some arduous politicking ahead. An OK = for the merger had to come from the PUC, whose staff was adamantly opposed.= So, on Valentine's Day, 1997, Cavanagh showed up at a hearing in Salem, Or= egon, to plead Enron's case.=20 Addressing the three PUC commissioners, he averred that this was "the first= time I've ever spoken in support of a utility merger." If so, it was the q= uickest transition from virginity to seasoned service in the history of int= ellectual prostitution. Cavanagh reveled in the delights of an Enron embrac= e: "What we've put before you with this company is, we believe, a robust as= sortment of public benefits for the citizens of Oregon which would not emer= ge, Mr. Chairman, without the merger." With a warble in his throat, Cavanag= h moved into rhetorical high gear: "The Oregonian asks the question, 'Can y= ou trust Enron?' On stewardship issues and public benefit issues I've dealt= with this company for a decade, often in the most contentious circumstance= s, and the answer is, yes."=20 Cavanagh won the day for the Houston-based energy giant. The PUC approved t= he merger, and it wasn't long before the darkest suspicions of Enron's plan= s were vindicated. The company raised rates, tried to soak the ratepayers w= ith the cost of its failed Trojan nuclear reactor and moved to put some of = PGE's most valuable assets on the block. Enron's motive had indeed been to = get access to the hydropower of the Northwest, the cheapest in the country,= and sell it into the California market, the priciest and--in part because = of Cavanagh's campaigning for deregulation--a ripe energy prize awaiting ex= ploitation.=20 Then, after two years, the company Cavanagh had hailed as being "engaged an= d motivated" put PGE up on the auction block. Pending sale of PGE, Enron ha= s been using it as collateral for loans approved by a federal bankruptcy ju= dge.=20 Enron is best known as George W. Bush's prime financial backer in his presi= dential quest. But it was a bipartisan purveyor of patronage: to its right,= conservative Texas Senator Phil Gramm; to its left, liberal Texas Democrat= Sheila Jackson-Lee (who had Enron's CEO Ken Lay as her finance chairman in= a Democratic primary fight preluding her first successful Congressional bi= d; her Democratic opponent was Craig Washington, an anti-NAFTA maverick Dem= ocrat the Houston establishment didn't care for). Today some House Republic= ans want to treat the Enron collapse as a criminal matter, while Democrats = have been talking in vaguer terms about cleaning up accounting rules and pl= ugging holes in the regulatory system. The inability of Enron's employees t= o sell company stock from their 401(k)s while high-ups absconded with milli= ons may doom Bush's promised onslaught on Social Security. There are many m= orals in Enron's collapse, and the role of that green seal of approval shou= ld not be forgotten. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 CFA Largest Ch 11 Bankruptcy Filings Week Ended 12/28 01/02/2002 Dow Jones Corporate Filings Alert (Copyright (c) 2002, Dow Jones & Company, Inc.) DJ CFA SOURCE:Bankruptcy=20 ISSUER: DOW JONES CORPORATE FILINGS ALERT=20 SYMBOL: X.FFI=20 WASHINGTON -(Dow Jones)- The following is a list of some of the=20 largest Chapter 11 bankruptcy filings for the week ended Dec. 28.=20 Company Court Location Contact=20 ----------- ------------ ----------- ----------=20 Brake Depot California, San Diego Not available=20 Systems Inc. San Diego=20 Cornerstone Internet Manhattan West Caldwell, NJ Schuyler Carroll=20 Solutions Co. 212-451-2313=20 Enron Broadband Manhattan Houston Brian S. Rosen=20 Services L.P. 212-310-8602=20 Greate Bay Wilmington Delaware Steven Kortanek=20 Casino Corp 302-552-5503=20 Heick Die Chicago Chicago Scott R. Clar=20 Casting Corp. 312-641-6777=20 Istinhealth Inc. New Jersey, Hasbrouck Mr. Washington=20 Newark Heights, NJ 201-227-9100=20 Life Quality Systems Chicago Chicago Robert Benjamin=20 312-444-1996=20 Nature's Farm California, Hayward, CA Not available=20 Products Inc. Northern=20 Nu Van Technology Texas Northern Mansfield, TX Not available=20 Presidio Valley Texas Western Presidio, TX Ronald Sommers=20 Farms Inc. 713-659-3222=20 Propoganda Films Inc. California, Los Angeles James Donovan=20 Los Angeles 213-629-4861=20 Red and Blue Inc. California, San Diego Not available=20 San Diego=20 Tradewell Inc. Manhattan New York Mark Thomas Power=20 212-736-1000=20 Swan Transportation Wilmington Tyler, TX Not available=20 (a non-operating=20 subsidiary of Tyler=20 Technologies Inc.)=20 09:00 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 TXU CEO Ready As New Year Rings In Retail Deregulation By Christina Cheddar 01/02/2002 Dow Jones News Service (Copyright (c) 2002, Dow Jones & Company, Inc.) Of DOW JONES NEWSWIRES=20 (This story was originally published Monday.)=20 NEW YORK -(Dow Jones)- As the clock strikes midnight in the Lone Star State= , ringing in the New Year, it is unlikely many will gather to toast their n= ewly-gained right to pick a supplier of electricity. However, 2002 kicks off an important chapter in history of Texas electricit= y deregulation, and TXU Corp. (TXU), the state's largest electricity suppli= er, appears excited about the opportunities retail competition will bring i= t.=20 With the transition in Texas, about 75% of TXU's earnings will come from pr= oviding energy to customers in a deregulated environment, TXU Chairman and = Chief Executive Erle Nye said in an interview with Dow Jones Newswires. The= Dallas company has 11 million customers worldwide, with about 2.7 million = of those in the Dallas-Fort Worth area and in northern Texas.=20 Nye said he has been a proponent of retail competition for many years becau= se he feels a deregulated market drives innovation, allocates capital most = effectively, and punishes poor performance. Most importantly, costs drop, h= e said.=20 According to Nye, on average, TXU customers will see a 14% reduction in the= ir electricity bills compared with last year. Although part of the decrease= is due to the effect of lower natural gas prices in the state, the company= had promised a minimum of a 6% price reduction, he said.=20 Under the state's 1999 restructuring law, customers of the incumbent utilit= ies who don't switch energy providers will be assigned to the retail electr= ic provider operated by the utility company. Those customers will pay a set= rate for at least three years, or until at least 40% of the utility's cust= omers switch to another electricity provider. Meanwhile, the new electricit= y providers, may change the prices they charge up to twice year if there ar= e changes in natural gas or power costs.=20 "Outside our area, we are trying to pick up some customers," Nye said. "We = know we will lose some of our current customers. We are hoping there is at = least a balance." He declined to more specific about the company's expectat= ions.=20 As for its earnings outlook, TXU expects it will be able to maintain its 9%= to 11% growth rate in the competitive market, Nye said.=20 For the fourth quarter, Nye said he would be "shocked" if the company was u= nable to meet the current Wall Street consensus of 67 cents a share reporte= d by Thomson Financial/First Call.=20 A year ago, TXU earned 61 cents a share.=20 "We are very comfortable with the consensus," he said.=20 Despite the imminent start of retail competition in Texas, efforts to persu= ade consumers to switch electricity providers have been muted so far.=20 TXU's Nye admits his company hasn't spent much on advertising to consumers,= but expects the company to step up its marketing efforts as the year progr= esses.=20 TXU is in the process of establishing offices in parts of Texas outside its= traditional operating area, and is making an effort to establish "personal= contact" in those communities.=20 TXU also is directly contacting medium-to-small industrial customers that m= ight consider switching electricity providers.=20 According to Nye, early efforts to get the internal data processing and cle= arance systems that would allow for a smooth transition to competition oper= ating properly had preoccupied the company during the six-month pilot progr= am.=20 During the pilot, 5% of Texas residential customers were allowed to try new= providers. Despite a slowed start brought on by computer glitches at the s= tate's power grid operator, the Electric Reliability Council of Texas, or E= RCOT, the system is said to be ready to begin as planned.=20 Tony Spare, portfolio manager of Spare Value First and a TXU investor, said= the company has been "chomping on the bit for the new business opportuniti= es" presented by deregulation. According to Spare, TXU is an "effective mar= keter" and its nuclear assets will help the company's price competitiveness= .=20 Spare's view of TXU hasn't changed despite a recent bumpy ride in the utili= ty sector brought on by Enron Corp.'s (ENE) stunning and rapid financial co= llapse.=20 In the aftermath of Enron's collapse, TXU's comparatively conservative stra= tegy may be coming into back into vogue.=20 According to Nye, TXU has always used energy trading as a way to obtain mar= ket information.=20 "We trade around resources," he said, adding that the company's trading act= ivities are limited to its core areas: electricity, gas and telecommunicati= ons.=20 That behavior distinguishes TXU from Enron, Nye said. He cited Enron's aggr= essive trading practices, its accounting practices, and in inability to tak= e the proper reserves as factors that contributed to Enron's need to file f= or Chapter 11 bankruptcy protection in early December.=20 Still, there is no doubt that Enron's troubles have caused credit rating ag= encies to take a tougher stance toward companies in the sector, and TXU is = among those companies receiving more closer scrutiny.=20 Recently, the two largest credit rating agencies, Moody's Investors Service= and Standard & Poor's, affirmed TXU's investment grade status. However, in= its review, S&P said TXU must continue its current efforts to reduce its h= igh leverage in the coming year.=20 Nye declined to say what the company's ideal debt-to-capital ratio is, but = he said the company would continue to reduce its debt level. He added, it i= s essential to have a "strong credit rating ... one to two levels above the= investment grade level."=20 Despite the need to reduce debt, Nye doesn't dismiss the possibility for fu= ture acquisitions at the right price.=20 "We're excited about our prospects for the company," Nye said. As several r= ival energy merchants begin to shed assets to raise money to reduce debt, T= XU will be watching closely to see which assets come up for sale.=20 "I had said a long time ago that there will be a secondary market (for ener= gy assets). That expectation has come to pass," Nye said. "We're interested= in the fact that so many are looking to sell assets."=20 In addition to Texas, TXU has been active in the Northeast and the Midwest.= =20 In Europe, the company has a presence in the Nordic region, and has been bu= ilding positions in Germany and the Iberian peninsula.=20 -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar= @dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Finance - Small steps seen improving financial health. By Linda Stern 01/02/2002 Reuters English News Service (C) Reuters Limited 2002. WASHINGTON, Jan 2 (Reuters) - After a bad year, the financial markets are s= ignaling "Recovery, ho!" But many people don't feel so "recovered" personal= ly.=20 They may be looking at diminished stock portfolios, flat 401(k)s and stacks= of holiday bills. They may be lacking the enthusiasm for yet another New Y= ear's "get-my-finances-fixed" resolution after last year's list turned out = so badly. No matter! It's not the sweeping pronouncements or big market moves that ma= ke or break a financial life. It's the little actions that add up to financ= ial stability.=20 So skip the resolutions and get straight to a simple to-do list that will m= ake you richer by this time next year.=20 Here it is:=20 - Get a better credit card. If you pay off your balances every month, you c= an't do any better than a straight-up cash rebate card. There aren't many o= ut there, but three that have no annual fees and offer cash back on every p= urchase are the Fleet Titanium Cash Rebate Card (http://www.fleet.com); the= National City Cash Builder Platinum Visa (http://www.nationalcity.com) and= the American Express Platinum Cash Rebate Card (http://www.americanexpress= .com). All three credit various amounts of cash (up to 2 percent of purchas= es) to your account once a year. If you're a big convenience user, you can = accumulate enough cash back on any of these plans to buy your own airline t= icket once a year.=20 - Dump some company stock. If your retirement plan has more than 10 percent= of its assets invested in shares of the company you work for, sell the ext= ra and buy something else. You don't want to be overly dependent on one fir= m for your livelihood and your savings, and if you're confused about this a= dvice, just remember one word: Enron.=20 - Buy some other stocks, or stock funds. Sure, most investors took a whippi= ng in 2001. But over the long term, stocks still rule and in 10 years you'l= l be glad you bought now.=20 - Start a no-brainer IRA. If you make under $53,000 a year joint ($33,000 s= ingle), or you work for a company that doesn't offer a retirement plan, you= 're eligible for a deductible IRA. If you make more than that, you can open= a Roth IRA. Either one will allow you to take tax breaks for building mone= y on your own. Establish this account in a low-fee index fund, such as Vang= uard's Total Market Index Fund (http://www.vanguard.com) or the Fidelity Sp= artan Total Market Index (http://www.fidelity.com). For 2002, you're allowe= d to contribute $3,000, as long as you earn that much in salary. Divide tha= t by 12 for a monthly contribution of $250. When you set up your account, a= uthorize the fund company to deduct that $250 every month from your checkin= g account. That's it, you're done. Readjust again in 2005, when the limits = go up to $4,000. Look forward to accumulating $20,518 in five years, $63,34= 4 in ten years and more and more as you continue.=20 - Refinance and shorten your mortgage. You've already missed the bottom in = home loan rates but there are deals to be had. You can get a 15 year fixed = rate loan for under 7 percent. If you're currently carrying an 8.5 percent = 30 year loan, it will raise your monthly payment by about $80 to downsize t= o a 15 year loan at today's rates. But you'll be burning that paper 15 year= s early and you'll save close to $120,000 in interest over the life of the = loan.=20 - Restructure your debt, like a corporation. The rates on second mortgages = are way better than the rates on credit cards and most car loans, and the i= nterest on them is typically tax deductible. If you're carrying credit card= and car debt, consider getting a home loan that will consolidate it and le= t you pay it off in a hurry. Ignore this advice if you don't trust yourself= to really pay it off in a hurry and keep those other balances at zero. If = you don't have that kind of discipline (or cash), at least pay extra amount= s toward your credit card with the highest rate until you knock that down t= o zero.=20 - Rebalance your portfolio. Chances are that over the last year, the bond p= ortion of your portfolio grew relative to the stock portion. With interest = rates near their lows, and probably headed higher (assuming that 2002 recov= ery), it's a good time to sell off some of those bonds before they head in = the opposite direction. Put the money back in stocks until the asset alloca= tion you get back to your original asset allocation.=20 - Build a bond or CD ladder.zz~ the bond portion of your money on autopilot= . Divide the amount of money you have invested in bonds into five chunks. P= ut the first chunk into a one-year bond, the second into a two-year bond, t= he third into three-year maturities and so on. Then every year, as your bon= d comes due, roll it over into a five year bond or certificate of deposit. = In five years, you'll have everything invested in five year maturities, ear= ning higher rates than you would with shorter maturities. But you'll get so= me money back to reinvest every year, reducing the likelihood that all of y= our money will be tied up long term when rates rise. Once you've built this= ladder, you can practically go to sleep.=20 - Buy some inflation-indexed bonds before there's inflation. The Treasury s= ells inflation protected securities (TIPS) and I-bonds. They both guarantee= a real rate of return above inflation of about 3 percent. Currently, the T= IPS (available through www.treasurydirect.gov) are paying 3.5 percent. "Tha= t is an extraordinary rate of return," says William Tedford, director of fi= xed income strategy for Stephens Capital Management in Little Rock. "That's= probably as good as they are going to get."=20 These bonds do hit investors with a heavier than usual tax bill, though, si= nce a portion of the income is taxed annually but not paid out until the bo= nd matures. To avoid that problem consider buying a TIP fund, such as PIMCO= Real Return Bond fund or Vanguard Inflation-Protected Securities fund with= in a tax-deferred account.=20 (Linda Stern is a freelance writer who covers personal finance issues for R= euters. Any opinions in the column are solely those of Ms. Stern. You can e= -mail her at lindastern(at)aol.com). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 LME Base Metals Called To Open Dn On Comex Losses, Stocks 01/02/2002 Dow Jones Commodities Service (Copyright (c) 2002, Dow Jones & Company, Inc.) LONDON (Oster Dow Jones) LME base metals are called to open lower Wednesday= , pressured by sharp losses for Comex copper Monday and another round of st= ock builds.=20 The selling began during Asian trade early Wednesday and picked up pace aft= er the LME daily stock report showed hefty stock builds for aluminum, tin a= nd copper which have once again been attributed to liquidation of troubled = company Enron's inventory. However, the selling is likely to be limited ahead of the U.S. Institute of= Supply Management Manufacturing index, formerly known as the U.S. National= Association of Purchasing Managers Index, due 1500 GMT as dealers search f= or further indicators of the health of the U.S. economy.=20 Analysts expect the index to rise to 46 for December from 44.5 in November.= =20 Nickel has eased lower with the rest of the complex but has found strong su= pport from increased short term supply tightness as illustrated by the ball= ooning of the cash-to-three-month spread from around $70/ton Friday to $270= /ton Wednesday.=20 The three-month contract has so far failed to breach resistance at $5,600/t= on but if this can be broken, prices should rally sharply to $6,000/ton.=20 Aluminum has found light support above $1,330/ton but may have to fall to $= 1,320/ton before significant buying interest emerges while copper has solid= support at $1,440/ton.=20 Prices for three-month metal in dollars/ton: Wednesday Pre-market (1018 GMT= ) Change from Thursday PM Kerb Copper 1,445.00-1,447.00 -37.00=20 Lead 498.00-500.00 -1.50=20 Aluminum 1,336.00-1,337.00 -18.00=20 Nickel 5,590.00-5,625.00 -22.50=20 Zinc 784.00-787.00 -3.00=20 Tin 3,910.00-3,935.00 -27.50=20 Currencies at 1021 GMT: Stlg/US dlr: 1.4529=20 US dlr/yen: 131.41=20 Euro/US dlr: 0.8993=20 -By David Elliott, Oster Dow Jones; +44 20 7842 9353; david.elliott@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 US energy cos hoping to sell assets to reduce debts - report 01/02/2002 AFX News (c) 2002 by AFP-Extel News Ltd NEW YORK (AFX) - US energy companies are now looking to sell off assets to = lighten their debt-heavy balance sheets, the Wall Street Journal reported.= =20 Prices for electricity and natural gas in the US have plummeted, while inve= stors are fleeing and debt holders are worried about credit exposure caused= by Enron Corp's collapse, the WSJ added. Houston-based Enron, until recently the biggest electricity and natural gas= trader, filed last month for protection under Chapter 11 of the federal Ba= nkruptcy Code while it seeks to reorganize.=20 El Paso Energy Corp said it will sell natural gas fields in the shallow wat= ers in the Gulf of Mexico, as well as gas assets in Oklahoma, Arkansas and = Kansas.=20 It is also putting a 150,000-barrel-per-day New Jersey oil refinery and som= e coal mines up for sale, according to the WSJ. The company says it wants 5= 00 mln usd for both the refinery and the coal mines.=20 Valero Energy Corp, an independent refining and marketing company based in = San Antonio, said it "would take a look" at the plant. Meanwhile, Valero is= closing a 4 bln usd acquisition of Ultramar Diamond Shamrock Corp.=20 In addition, Atlanta-based Mirant said it intends to sell electricity plant= s in Massachusetts acquired a few years ago. But "almost anything would be = considered for sale, for the right price," says spokesman Chuck Griffin.=20 TXU Corp is also divesting itself of plants in its home state, to stay belo= w market-concentration limits that are part of a state electricity deregula= tion plan. TXU is using proceeds to retire debt and pick up assets elsewher= e, the WSJ said.=20 The WSJ added that European companies will be looking to buy individual ele= ctricity plants that can make good profits in the deregulated markets of Ne= w York, New England, the Mid-Atlantic and California.=20 Among the likely European buyers are E.ON AG and RWE AG, which recently acq= uired American Water Works, which owns regulated water utilities throughout= the US; Tractebel North America Inc, the energy arm of Paris-based Suez th= at already is building power plants in Washington and Texas; and the UK's P= owergen PLC, which bought LG&E Energy Corp last year.=20 Among the US companies that could pick up assets are two Houston-based comp= anies -- Anadarko Petroleum Corp and Apache Corp, as well as others includi= ng American Electric Power, TXU, Duke Energy Corp, Dominion Resources Inc a= nd Entergy Corp.=20 bam/cmr Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Post Investing Master short seller raised flag on Enron: Roberts tags Kodak, Safeway as st= ocks to avoid Bill Alpert Barron's 01/02/2002 National Post National FP10 / Front (c) National Post 2002. All Rights Reserved. With the righteous anger of hindsight, U.S. senators and journalists have d= emanded why no one foresaw the failure of Enron Corp. In fact, someone did.= And it's in writing. Last May, when Enron shares traded at US$59, Off Wall= Street Consulting Group issued a 27-page report debunking the profits clai= med by Enron, the Houston energy-trading firm now notorious in any living r= oom that has a TV set.=20 "We pretty much put our finger on all the problems Enron had," says Mark Ro= berts, who runs Off Wall Street's research team in an office on a side stre= et of Cambridge, Mass. Enron awarded itself profits, noted Off Wall Street'= s researchers, by marking its trading positions to "market" prices when no = real market existed for the stuff that Enron traded. Related-party dealings= with private partnerships also seemed designed by Enron to boost its publi= cly reported earnings. Mr. Roberts' prescience wasn't perfect. He never expected Enron to collapse= into bankruptcy. When Enron shares slid below Mr. Roberts' downside price = target of US$30 -- to US$26 in September -- Off Wall Street recommended tha= t clients close short positions. And when the shares rallied briefly to US$= 36, Roberts wiped his brow in relief. The shares have since collapsed to ju= st pennies, but clients who followed Off Wall Street's recommendations made= handsome profits.=20 In addition to Enron, Roberts' research boutique supplied 20 other short-sa= le ideas in 2001 to a clientele of money managers. Over the 12 months ended= September, Off Wall Street's recommendations gained 94%.=20 (Gains on short sales are computed by using the current price as the purcha= se price; as such, a stock that falls 50% would produce a 100% gain.) In co= ntrast, shorting the Standard & Poor's 500, which fell 22% over the same pe= riod, would have produced a 44% return.=20 The market has since rebounded. But Off Wall Street still seems poised to c= lose the year with a 50%-plus paper return on its research, which Mr. Rober= ts, who doesn't manage money, sells to clients for a hefty price.=20 Since 1995, Mr. Roberts' recommendations have outpaced an S&P index short b= y an average of 31% a year. That's why clients pay heed to his warnings abo= ut Eastman Kodak and Safeway Inc.=20 The Off Wall Street process starts with computer screens, looking for an in= tersection of a high stock price with a business whose operating numbers bo= de ill. Such a path often leads right into Wall Street's latest fad.=20 At the height of the Internet bubble, Off Wall Street's portfolio of short = ideas consisted of about two-thirds tech stocks. In the past year, tech nam= es yielded to medical stocks and alternative energy.=20 Since September, Mr. Roberts has been encouraging investors to steer clear = of Kodak. The shares (EK/NYSE) had been holding steady around US$45, as inv= estors took solace that the photography giant could maintain its 4% dividen= d yield by wringing more cash flow from operations.=20 But the U.S. consumer market for film, which underlies half of Kodak's sale= s and operating profits, has been declining at an 11% annual rate as digita= l photography grows. Kodak is faring even worse, with 19% declines in film = volume as it scraps for a shrinking market against Fuji and the private-lab= el offerings of Wal-Mart Stores.=20 Kodak spokesman Paul Allen told Barron's the company does not comment on an= alyst research.=20 In October, Kodak guided down December quarter earnings expectations from a= bout US46 cents a share, to US15 cents. Its shares have fallen to around US= $31, but Mr. Roberts believes Kodak could fall to US$22. "We expect the [US= $1.80] dividend to get cut," he says, "and the dividend is one of the main = props of the stock."=20 Another of Mr. Roberts' current short recommendations is Safeway (SWY/NYSE)= , the 1,750- store supermarket chain based in Pleasanton, Calif. He first r= ecommended sale of the stock in April, when it was trading at US$53. Curren= t price: US$45.=20 In recent years Safeway has justly earned investors' admiration, with sales= growth and profit margins that exceeded those of such rivals as Kroger and= Albertson's. But Wall Street has been valuing Safeway at 86% of its US$32-= billion in year 2000 sales, while valuing Kroger at just 38% of sales.=20 Looking at Safeway's year 2000 earnings of US$1-billion, or US$2.13 a share= , Mr. Roberts noted that 10% came from sales of real estate and investment = gains in the supermarket's pension fund. Back out those non-grocery profits= , and Safeway's earnings grew just 13% in 2000. In prior years, earnings gr= owth had averaged better than 25%.=20 Sales have slowed in 2001, based on identical-store sales growth. The likel= y cause, says Mr. Roberts, has been the arrival of deep discounters Wal-Mar= t and Costco on Safeway's turf.=20 Ultimately, Mr. Roberts believes Safeway could fall as low as US$35.=20 "We strongly disagree with what he [Mr. Roberts] has written," says Safeway= spokesperson Melissa Plaisance.=20 She acknowledges that earnings gains from investing and real estate in 2000= led to tough comparisons in the current year. But those comparisons are no= w behind Safeway, and it will give investors updated guidance in a conferen= ce call Jan. 24. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 SPANISH PRESS: Spanish Regulator Suspends Enron's License 01/02/2002 Dow Jones International News (Copyright (c) 2002, Dow Jones & Company, Inc.) MADRID -(Dow Jones)- Spain's electricity market operator has suspended Enro= n's (ENE) license to operate in the Spanish market, jeopardizing future inv= estments Enron wanted to make in Spain, Cinco Dias reports.=20 Newspaper Web site: http://www.cincodias.es -Madrid Bureau, Dow Jones Newswires; 34 91 395 8120 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Post: News Enron's Dabhol Power draws suitors: Parent seeks US$1B Ravil Shirodkar Bloomberg 01/02/2002 National Post National FP3 (c) National Post 2002. All Rights Reserved. MUMBAI - Gas Authority of India Ltd., the country's biggest gas supplier, s= aid it plans to bid for the US$3-billion Indian power plant of U.S.-based E= nron Corp., which last month made the largest-ever filing for bankruptcy.= =20 Gas Authority will bid for Dabhol Power Co., Enron's local unit, with a so-= called "strategic partner," the state-run company said in a statement. It d= idn't name the partner. Dabhol was Enron's biggest investment outside the U.S. as the company sough= t to expand overseas. Enron put the plant up for sale before it filed for b= ankruptcy because of a payment dispute with a state electricity board, its = sole customer.=20 Enron wants US$1-billion for its 65% stake. Tata Power Ltd. and BSES Ltd., = the two bidders for the stake, have said the price is too high and are nego= tiating with local lenders who have loaned the project US$1.4-billion.=20 Gas Authority needs Dabhol's liquefied natural gas facility to feed more ga= s through its 4,594-km network of pipelines across the country. It gets its= supplies from Oil & Natural Gas Ltd., a state-run oil explorer that hasn't= made any big discoveries since 1975.=20 That's forced Gas Authority to look for other sources of gas. It has partne= red Indian Oil Corp. and Oil & Natural Gas Corp. to build a five-million-to= n-a-year gas plant in India's western province of Gujarat.=20 Dabhol Power's 5.5-million-ton gas facility was part of a US$2-billion plan= to boost the utility's capacity to 2,184 megawatts from 740. Contractors h= alted work on the plant, saying they hadn't been paid since April last year= , leaving the expansion 97% complete. The power plant burned naphtha, a che= mical refined from crude oil, and was to switch to gas once the expansion w= as complete.=20 The plant was shut in May after Enron gave notice it would cancel a supply = contract with the Maharashtra State Electricity Board because it was owed U= S$64-million in overdue bills. The board stopped paying for Dabhol's power,= saying it was too expensive.=20 Enron last month fired 300 workers in India because of the overdue bills. D= abhol isn't listed among Enron's 17 units that have sought court protection= from creditors owed US$31-billion. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 GAS AUTHORITY OF INDIA TO BID FOR ENRON'S DABHOL POWER PROJECT 01/02/2002 Asia Pulse (c) Copyright 2002 Asia Pulse PTE Ltd. NEW DELHI, Jan 2 Asia Pulse - State-owned Gas Authority of India Ltd (GAIL)= on Tuesday announced its bid for the beleaguered Dabhol Power Project of E= nron.=20 Joining the race with Tatas and BSES, where Reliance are the single largest= stake-holder, GAIL has communicated its 'expression of interest' to the co= mpany as well as Maharashtra State Electricity Board (MSEB) and Industrial = Development Bank of India, the principal financier for the project. GAIL is understood to be keen on DPC's LNG line and may shortly start talks= with other power companies for joining its bid to manage the power project= .=20 GAIL communicated its decision to join the race for acquiring stake in DPC = only after securing clearance from the Ministry of Petroleum, a GAIL statem= ent said, adding that the corporation has been mandated to enter the power = sector as part of its proposed integration into energy related areas.=20 GAIL will shortly sign confidentiality agreements with the concerned partie= s -- IDBI, DPC and MSEB -- for conducting due diligence study of the projec= t.=20 The estimated time frame for completion of DPC (Phase-II) with ancillary fa= cilities is about 18 months from the time the project was handed over to th= e new management, GAIL said.=20 GAIL intends to adopt a broad-based approach while undertaking the due dili= gence as it has already made an entry into the power sector through equity = participation in a gas-based power project in Gujarat.=20 Meanwhile, the consortium of Indian financial institutions led by IDBI has = asked the Centre to announce a package of incentives and concessions to exp= edite the process of selling stake in DPC where the operations had come to = a standstill last year after payment problems with MSEB.=20 (PTI) 02-01 1659 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business U.S. set to target earnings deception --- Test case thought likely this mon= th Kevin Drawbaugh reuters news agency 01/02/2002 The Toronto Star Ontario E07 Copyright (c) 2002 The Toronto Star The U.S. Securities and Exchange Commission was expected to bring its first= enforcement actions soon in two areas - "pro forma" financial results repo= rting and Regulation FD, or fair disclosure, sources say.=20 The pro forma case was to have been brought before the holidays, but was de= layed. Sources said Monday it will now likely be brought in January. The co= mpany being targeted was unknown. "The SEC absolutely needs to clamp down on pro forma earnings .... There ha= ve been some real abuses out there," Lynn Turner, former SEC chief accounta= nt and now a professor at Colorado State University, said in an interview w= ith Reuters.=20 If the commission were to act soon and forcefully on pro forma reporting an= d Regulation FD, it would help to answer critics suggesting that SEC chairm= an Harvey Pitt is "going soft" on enforcement, which securities lawyers sai= d is a "bum rap."=20 Pressure for the SEC to get tough on corporate reporting has increased in r= ecent weeks since the stunning collapse of former energy trading giant Enro= n Corp., which cost thousands of people their jobs and much of their saving= s.=20 Pitt said earlier this month that pro forma numbers making a loss look like= a profit, without explaining clearly how, were likely to be viewed as frau= dulent.=20 In mid-November, he said the SEC was sizing up possible pro forma enforceme= nt actions.=20 Pro forma results skate around accounting conventions - codified in the Gen= erally Accepted Accounting Principles - either to highlight good results ob= scured by outmoded conventions or, more often, to hide poor results.=20 They are sometimes labelled as "core," "normalized" or "adjusted" results. = Often they exclude costs related to mergers, stock options, unusual events = or other items.=20 The most frequent users of the pro forma style are technology companies. Am= ong recent issuers of such reports are Computer Associates International In= c., Amazon.com Inc. and Cisco Systems Inc. Reuters research showed 62 compa= nies on the Merrill Lynch technology 100 index reported pro forma results i= n press releases for the third quarter of 2001.=20 Pro forma numbers are most often found in reports and press releases intend= ed for consumption by the media and the general public.=20 Sources said the SEC's New York regional office had been probing four pro f= orma cases, but records were lost in the Sept. 11 attacks that destroyed so= me SEC offices. As a result, the case soon to be brought may be new, source= s said.=20 A technology company is widely thought to be the target, although sources s= aid Walt Disney Co. and other major non-tech companies have recently issued= pro forma results.=20 The Regulation FD case expected to be brought soon was not moving as rapidl= y as the pro forma case, sources said.=20 Regulation FD - was adopted a year ago. It requires corporations to disclos= e key information to the public and the financial community at the same tim= e.=20 It was drafted in response to widespread complaints from small investors th= at Wall Street insiders were being tipped off on big news hours or sometime= s days before everyone else. The law is a regular target of scorn in the fi= nancial community.=20 Pitt has called "unassailable" the law's underlying principle - "that nobod= y should have an unfair advantage."=20 No enforcement action has yet been brought by the SEC on the disclosure rul= e.=20 "There's been talk that they're going to bring an FD case .... There were s= ome violations," Chuck Hill, director of research at First Call, a market r= esearch unit of financial services group Thomson Financial, said in an inte= rview. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Global Finance J.P. Morgan Chase Sues Nine Insurers In Enron-Bond Case --- Institution See= ks to Quash Demands for Information By Carol S. Remond Dow Jones Newswires 01/02/2002 The Wall Street Journal Europe 22 (Copyright (c) 2002, Dow Jones & Company, Inc.) NEW YORK -- One would think that J.P. Morgan Chase & Co., as one of Enron C= orp.'s largest creditors, would want to find as much information as possibl= e about the finances of the now-bankrupt energy trader.=20 Not so. In fact, as a sure sign that the interests of various Enron credito= rs have begun to collide, J.P. Morgan Chase filed a motion over the weekend= to quash demands for information related to some $2 billion (2.24 billion = euros) in Enron-related surety bonds made by nine insurance companies. J.P. Morgan filed the suit against the insurers after they said that they w= ouldn't honor about $1.1 billion of the bonds, including $965 million owed = to J.P. Morgan earlier this month. J.P. Morgan is now seeking to prevent th= e insurers from using the U.S. Bankruptcy Court for the Southern District o= f New York to gather information about whether Enron and J.P. Morgan Chase = misrepresented the facts to secure the surety bonds.=20 Enron filed a similar motion opposing the insurers' demands for further inf= ormation, claiming like J.P. Morgan Chase that the court should turn down t= he insurers because they are going on a "fishing expedition."=20 The insurers are questioning whether forward-sales contracts that they bond= ed for Enron ever existed. According to court documents, Citigroup Inc.'s T= ravelers insurance unit and eight other insurers wrote to J.P. Morgan Chase= in early December, essentially telling the investment bank that they neede= d more proof of the forward-sales contracts' legitimacy before they would h= onor their surety-bond payments.=20 The other insurers include: Kemper Insurance Co.'s Lumbermens Mutual Casual= ty Co.; Allianz AG's Fireman's Fund Insurance Co.; Chubb Corp.'s Federal In= surance Co.; St. Paul Cos.'s Fire and Marine Insurance; CNA Surety Corp.'s = Continental Casualty Co.; Safeco Corp's Safeco Insurance Co.; Hartford Fina= ncial Services Group Inc.; and Liberty Mutual Insurance Co.=20 All the insurers, with the exception of Citigroup's Travelers, have since f= iled answers and counterclaims in court, essentially demanding that Judge A= rthur J. Gonzalez declares the surety bonds void because Enron and Chase mi= srepresented the facts surrounding their issuance.=20 Citigroup's reluctance to stand against J.P. Morgan Chase may be at least p= artly explained by the fact that both institutions are lead bankers for Enr= on. Together, they are seeking to set up a $1.5 billion financing package t= o help Enron back on its feet.=20 In their separate motions, J.P. Morgan Chase and Enron claim that the insur= ers' demands for information would impede the court's bankruptcy proceeding= s. The insurance companies "unabashingly seek to invoke Rule 2004 to furthe= r their own interests," J.P. Morgan Chase said in its motion. J.P. Morgan a= lso claimed that the insurers' moves are designed to use the bankruptcy pro= ceedings to further information-gathering efforts in a pending civil litiga= tion.=20 The J.P. Morgan Chase suit was first filed in New York State Court and then= moved to U.S. District Court for the Southern District of New York.=20 The forward-sales contracts in dispute were made between Enron and two offs= hore companies, Mahonia Ltd. and Mahonia Natural Gas Ltd., both based in th= e Channel Islands. Under the contracts, Mahonia was supposed to prepay for = the delivery of oil and natural gas from Enron, which would then procure th= e fuel from an array of producers for delivery to various end-users. The en= d-users, in turn, were supposed to pay Mahonia for the oil and gas.=20 The nine insurers bonded Enron's obligation to deliver the oil and gas, but= balked when J.P. Morgan Chase asked them on Dec. 7 to honor that commitmen= t, five days after Enron had filed for bankruptcy. The insurers told J.P. M= organ in a letter that day that they have "received credible information th= at, in fact, there may never have been any producer contracts or end-user c= ontracts. In addition, Enron may never have delivered any oil or natural ga= s under the forward sales contracts to Mahonia or any other party," accordi= ng to the letters to J.P. Morgan Chase.=20 In addition to requesting documentation for the forward-sales contracts, th= e insurers also asked for an explanation of the corporate relationship betw= een J.P. Morgan Chase and Mahonia. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business THE TICKER J.P. MORGAN CHASE: Objects to insurers seeing Enron details Associated Press 01/01/2002 Chicago Tribune North Final ; N 2 (Copyright 2002 by the Chicago Tribune) After demanding payment from insurance companies that backed more than $1 b= illion worth of oil and gas contracts signed by Enron Corp., J.P. Morgan Ch= ase is trying to prevent the insurers from getting details about the transa= ctions.=20 The investment bank on Sunday filed an objection to a request made by the i= nsurers, who are refusing to honor $1.1 billion in surety bonds and are ask= ing for access to Enron financial records to determine if energy contracts = actually existed. The request was filed in November in U.S. Bankruptcy Cour= t in New York. J.P. Morgan sought payment of the surety bonds after the collapse of Enron,= the Houston-based energy trader that sought protection from creditors unde= r Chapter 11 of the federal bankruptcy code Dec. 2.=20 J.P. Morgan, one of Enron's largest creditors, said the insurers' request w= as "a fishing expedition" and would only slow down the bankruptcy court pro= ceedings. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Outlook; Section C Markets & Investing Roll Over, Shakespeare, the Future of Jargon Is Here By HUBERT B. HERRING 01/02/2002 The New York Times Page 16, Column 3 c. 2002 New York Times Company FAITH POPCORN has seen the future, and it's a real mouthful.=20 Take a deep breath and listen in for a moment. There you are, surfing Cyberia, when some karaoke manager from the bachelor= herd barges in (no supreme C.E.O. he, no master of Genghis capitalism). Th= is guy needs an ego audit, you mutter, but you hit the boss key anyway. You= 're no flexecutive, after all, just a lowly permalance. Your prebuttals fal= l flat, and he orders you on to a data fast, tosses a message slip on your = inflatable, and leaves.=20 You look at the slip. The woman you had the fight chat with. Definitely cos= metic underclass. Not remotely Pilotable. You toss a lunch lob, and call ho= me to check on your baboon wife and the free-range children.=20 Whew! Had enough?=20 And now, in a just world, you'd get a translation. Forget it. (Basically, i= t would take much too long.) No, you'll just have to read ''Dictionary of t= he Future,'' by Ms. Popcorn and Adam Hanft (Hyperion, $22.95), for yourself= .=20 (Oh, all right, here are a couple, since they are sort of fun: Bachelor her= ds are the young men left mateless when older ones grab trophy wives, and b= aboons are baby boomers with no savings.)=20 What, exactly, is a dictionary of the future? Apparently, the old model jus= t can't keep up -- with those stuffy, tweedy souls content ''to track the e= bb and flow of language'' and open the ivied dictionary gates only to words= that have stood the test of time.=20 Too slow! the authors cry. This is a split-second, rat-a-tat world. We can'= t wait around to see what words stick. We'll tell you where the language is= headed. We're ''linguistic prospectors,'' ''anticipators.''=20 For this dictionary, dawdlers need not apply. To enter here, words must be = white-hot, mere moments from the authors' fiery imaginations. ''Downsizing'= '? Doesn't make the cut. ''Not new enough.''=20 This ''joyride through the culture'' does make a nod to what could be serio= us, lasting phenomena -- like hybrid cars and wind farms. But for the most = part it's a breathless effort to be up-to-the-nanosecond fresh.=20 Between cup and lip, though -- between idea and bound book -- the world eco= nomy slipped, making the boom-time ''employer of choice'' and ''pleading ec= onomy'' entries decidedly dated.=20 Then again, ''stock therapy'' and getting ''401-K'd'' are frighteningly tim= ely; think of Enron shareholders. But ''language extinction'' -- that one's= too painfully close to home to contemplate.=20 But wait. Are the authors just kidding around? You might think so, with all= those wordplays -- hyber-nation and scarevoyants.=20 But there's an undeniable earnestness here, a solemnity. (There is a sugges= tion to read the book ''in a nonlinear sort of fashion.'') And they do put = themselves in some heady company, at one point even invoking Shakespeare --= that ''unrepentant serial coiner'' -- to bless their mission of invention.= =20 What fools these mortals be. Photo=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 California Commentary: Enron Is a Cancer on the Presidency ROBERT SCHEER Robert Scheer writes a syndicated column. 01/02/2002 Los Angeles Times Home Edition B-11 Copyright 2002 / The Times Mirror Company Finally, a reporter had the temerity to question Bush on Friday regarding t= he ignominious collapse of Enron Corp. run by Kenneth L. Lay, a Bush family= intimate and top campaign contributor. Bush expressed concern "for the cit= izens of Houston who worked for Enron who lost life savings" and added: "It= 's very important for us to fully understand the 'whys' of Enron."=20 Sure is, but did Bush never ask "Kenny Boy"--his nickname for Enron's chair= man--what was going on? After all, not only was Kenny Boy one of Bush's major contributors, but it = was Lay and Enron that Bush turned to for critical advice on how to further= exploit U.S. natural resources.=20 The media, which had hounded Bill Clinton on his Whitewater connections, ha= ve allowed Bush to maintain the fiction that his--and his father's--adminis= tration had nothing to do with the debacle that is Enron.=20 Given the intense interest in the list of those who slept over in the Clint= on White House, it's odd that no attention has been paid to Kenny Boy's sle= epover in the early years of the senior Bush's White House.=20 Those early Bush years were crucial for Enron, beginning with the passage o= f the 1992 Energy Policy Act, which forced the established utility companie= s to carry Enron's electricity sales on their wires.=20 At the same time, Wendy Gramm, who served under the elder Bush as chair of = the Commodity Futures Trading Commission, allowed for an exemption in the t= rading of energy derivatives, which, as the Washington Post reported, "late= r became Enron's most lucrative business."=20 Once that was accomplished, Gramm, wife of Texas GOP Sen. Phil Gramm, resig= ned from her government post to take a position on the Enron board. As one = of the members of the board's audit committee, she now is expected to be a = key figure in the lawsuits and federal investigation revolving around Enron= 's collapse. Recently, the chief executive of Arthur Andersen, Enron's outs= ide auditor, told a congressional committee that the accounting firm had wa= rned the Enron audit committee of what he termed "possible illegal acts wit= hin the company."=20 Wendy Gramm is also mentioned in a bank lawsuit alleging insider trading as= having sold $276,912 in Enron stock in November 1998. Her response is that= she sold the stock to avoid the appearance of a conflict of interest, give= n that her husband was chairman of the Senate Banking Committee.=20 Yet she was still very much on the Enron board and being rewarded with futu= re stock options when her husband last year pushed through legislation that= exempted key elements of Enron's energy business from oversight by the fed= eral government. Phil Gramm had obtained $97,350 in political contributions= from Enron over the years, so perhaps he was acting on his own instincts a= nd not his wife's urgings. The exemption was passed over the objection of t= he Clinton administration.=20 Wendy Gramm also directs the regulatory studies program at George Mason Uni= versity, which has received $50,000 from Enron since 1996. Her academic ins= titute is highly influential in arguing for deregulation, conveniently join= ing her corporate and academic interests.=20 Unfortunately for true-believer deregulators, the Enron collapse shreds the= ir panacea. Surely no one, least of all Wendy Gramm, who has said she was k= ept unaware of the company's chicanery in hiding debt and conducting secret= private deals to the detriment of stockholders, could argue today with a s= traight face that Enron was in need of less government oversight.=20 The fact is that there would be no Enron as we know it were it not for Repu= blican-engineered changes in government regulation that permitted Enron its= meteoric growth.=20 It's true that the corporation had its allies among the Democrats; campaign= finance corruption and influence peddling are generally a cover-all-your-b= ets bipartisan activity. But in this case, the amounts given to Democrats w= ere puny and late, and there's no doubt that Enron rode to power primarily = on the strength of Lay's influence with the Bush family. This fact is not m= itigated by Enron now hiring Clinton's former lawyer and various top Democr= atic lobbying groups, except to note that these hired guns have no shame.= =20 The Bush family ties to Kenny Boy Lay are just too intimate and lucrative t= o ignore.=20 There also are at least four Enron consultants and executives who hold high= positions within the Bush White House, and some of them may be drawn into = the investigations that cannot be avoided, despite the distractions of the = war on terror.=20 As John Dean once famously said of the Nixon administration, there is a can= cer growing on the presidency, but in this case it's name is Enron, and it = won't go away by being ignored. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Career Journal: The Jungle By Kemba Dunham 01/02/2002 The Wall Street Journal A13 (Copyright (c) 2002, Dow Jones & Company, Inc.) [Focus on Retirement, Pay and Getting Ahead]=20 Tough Sell? Is it tough for struggling companies to recruit new board members?=20 Lucent Technologies Inc. didn't bother to fill Paul O'Neill's seat when he = became U.S. Treasury secretary last year. The Murray Hill, N.J., telecom-ge= ar maker figured it would be a challenge to recruit someone during the heig= ht of its troubles, according to an individual close to the situation. Luce= nt has been hit hard by the continuing slowdown throughout the telecommunic= ations industry.=20 The company is just trying to keep the board intact until it names a chief = executive, a Lucent spokesman says.=20 But Enron Corp., the collapsed Houston energy giant, named two new outside = directors after its travails became public. "I don't know if I could assign= any degree of difficulty," says Mark Palmer, an Enron spokesman. "We were = just looking for people who have had experience with these matters and we f= ound two perfect candidates."=20 Though Enron subsequently filed for bankruptcy protection, its new board me= mbers don't have to worry about liability for shareholder suits, says Melan= ie Cohen, a bankruptcy attorney at Altheimer Gray, a Chicago law firm. "The= y can't be liable for something that occurred before they got there."=20 One new Enron director, University of Texas Law School Dean William Powers,= says it took him only "two or three days" to decide to join its board. The= delay was "more of an issue of time and making sure it was compatible with= my duties here" rather than doubts about serving on the company's board, h= e adds.=20 Raymond Troubh, a New York financial consultant and Enron's other board new= comer, says he is looking forward to his directorship because "board servic= e of troubled companies is quite fascinating."=20 Deeper Connection=20 One woman wants to take networking to a whole new level.=20 Melissa Giovagnoli, president of Networlding, a Chicago consulting firm, ha= s developed an unusual concept called "networlding." She helps people make = "targeted connections" with others who have similar personal values so they= can build a safety net that will last longer than a job-transition period.= =20 "Traditional networking becomes ineffective because you keep running throug= h people," she says. "But if you form a connection with someone based on co= mplimentary values, the exchange can be much more dynamic."=20 Since March, Ms. Giovagnoli has started 25 networlding "circles" in Chicago= , with 10 people in each circle. She plans to start others soon in Washingt= on, Indianapolis and California's Silicon Valley. Circle members pay $125 a= piece for a year of participation. The fee enables participants to connect = with members of other circles both in person and through e-mail.=20 Ms. Giovagnoli also intends to create formal networlding circles within com= panies, including Motorola Inc. The Schaumburg, Ill., technology-and-equipm= ent giant has hired her to teach staffers how to network. She intends to im= plement a circle there this month. An informal Motorola circle already has = brought together employees who wouldn't otherwise know each other, says Ves= na Arsic, a corporate-marketing-strategy director.=20 Ms. Arsic says this circle has helped her. "Motorola is in a precarious fin= ancial state, but I have less anxiety because I know there are lots of peop= le I can call if I have to," she says.=20 Fewer Options=20 The average number of stock options awarded to chief executives plummeted 7= 6% in 2001. So concludes a new study of 50 Fortune 1000 companies whose fis= cal years ended during the second or third quarter of 2001. The study was c= onducted by Executive Compensation Advisory Services, a research firm in Al= exandria, Va.=20 CEOs' options awards dropped from an average of 1,396,006 in 2000 to 335,01= 3 options a year later, the study found. This plunge occurred despite the f= act that 25 companies increased the number of options granted their leader = compared with the prior year.=20 On average, the 50 companies awarded their CEOs 8.4% of all options given t= o employees during fiscal 2001. Among the 28 chief executives who had their= bonuses cut or got no bonus during the latest fiscal year, 16 got bigger s= tock-options awards.=20 ---=20 E-mail comments to Kemba.Dunham@wsj.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Case Summary Dynegy's Reasons for Terminating Merger Were "Mere Pretexts," Says Enron 01/02/2002 Securities Litigation & Regulation Reporter Copyright (c) 2002 Andrews Publications. All rights reserved. In adversary proceedings filed with the bankruptcy court, Enron Corp. accus= es Dynegy of pulling out of the merger between the energy trading giants so= it could ensure Enron's fall and slash competition in the industry. Enron = also says the alleged material adverse effects used to break the agreement = were "mere pretexts" used by Dynegy to gain control of a valuable pipeline.= In re Enron Corp. et al., No. 01-3626, complaint filed (S.D.N.Y., 02-DEC-0= 1).=20 According to the complaint, Dynegy agreed to the merger with its "eyes wide= open" and "with full knowledge of Enron's well-publicized financial crises= after conducting two weeks of extensive due diligence." Enron's ability to preserve its energy trading business and avoid bankruptc= y protection was dependent on the deal going through, it adds, and Dynegy a= llegedly understood that credit rating agencies - such as Moody's, Standard= & Poor's, and Fitch - only agreed to keep the ratings at above investment-= grade level based on Dynegy's assurances that the merger would be completed= .=20 Dynegy is claiming that Enron failed to disclose the acceleration of a debt= with respect to a $691 million note that was triggered by a ratings downgr= ade. Enron counters that the repayment obligation occurred after the merger= agreement was executed, and that the downgrade was specifically excluded a= s a material adverse event under the contract.=20 Due to Enron's liquidity problems, Dynegy invested $1.5 billion in equity w= hen the agreement was signed in the form of preferred stock in the Enron su= bsidiary that owns Northern Natural Gas Pipeline.=20 The preferred stock carries the right to acquire all of the ownership inter= ests under certain circumstances including if Dynegy rightfully terminated = the merger agreement. However, Enron says Dynegy had no right to pull out o= f the deal and that it is not entitled to purchase more stock in the compan= y that holds Northern Natural. Dynegy has also filed its own breach of cont= ract suit in Texas state court seeking to secure control over the entity.= =20 Enron's problems started when it released its financial results for the thi= rd quarter in October and announced a non-recurring charge totally $1.01 bi= llion (after taxes). In connection with the early termination of certain fi= nancial arrangement, the energy giant also told its shareholders that their= equity had been reduced by about $1.2 billion.=20 Shortly thereafter, the board formed a special audit committee to investiga= te the company's accounting and the Securities and Exchange Commission bega= n its investigation.=20 In early November, Enron announced that its financial statements for 1997 t= hrough 2000 and for the first and second quarters of 2001 would have to be = restated with an aggregate total reduction in net income of about $600 mill= ion.=20 The merger agreement was signed on Nov. 9, 2001, and valued Enron stock at = $10.41 per share. However, the share price continued to decline because Dyn= egy repeatedly told the press that it had a "due diligence out," says Enron= , contrary to the agreement and in bad faith, as Dynegy knew that the bad p= ublicity would only hurt Enron's already precarious financial state.=20 Dynegy undermined the safety net that the merger was supposed to provide fo= r Enron and should pay for the damages it caused, the plaintiff said. Enron= lost an enormous amount of credibility with the credit rating agencies due= to Dynegy's refusal to support that agreement and contributed to the downg= rade that caused the acceleration on the note, the now-bankrupt company say= s.=20 Enron is seeking no less than $10 billion in damages from Dynegy as well as= a declaration that it breached the merger agreement and has no right to ex= ercise an option to purchase interests in Northern Natural Gas Pipeline.=20 Enron is represented by Martin Bienenstock, Greg Danilow and Brian Rosen of= Weil, Gotshal & Manges in New York. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Case Summary Shareholders Claim Enron Directors Made $434 Million in Insider Trading 01/02/2002 Securities Litigation & Regulation Reporter Copyright (c) 2002 Andrews Publications. All rights reserved. Enron Corp.'s 10 most senior officers and directors conspired to inflate th= e energy and communications conglomerate's net worth and then took advantag= e of the false valuation to sell 7.3 million shares of their Enron stock fo= r proceeds of $434 million, according to a shareholders' suit filed in mid-= November, just weeks before the company filed for bankruptcy. Abrams et al.= v. Enron Corp. et al., No. H-01-3630 (S.D. Tex., 13-NOV-01).=20 Shareholders Seth Abrams and Steven Frank filed a class action suit in U.S.= District Court for the Southern District of Texas against the corporation,= the 10 officers and directors, and the Arthur Andersen international accou= nting and consulting firm. Arthur Andersen's Houston office received $25 mi= llion in auditing fees and $27 million in consulting work to cover up Enron= 's financial improprieties between 1997 and 2001, according to the to suit. The individual defendants, who are each accused of insider trading, are:=20 Kenneth L. Lay, chairman of Enron's board of directors and chief executive = officer from 1986 until February 2001, who allegedly sold 1.8 million share= s of his Enron stock for proceeds of $99.9 million and who also received $1= 4 million in bonuses for 1998, 1999 and 2000;=20 Jeffrey K. Skilling, the company's president and chief operating officer un= til February 2001 when he became chief executive officer, who sold 1.1 mill= ion shares of his Enron stock for proceeds of $68.2 million and who also re= ceived more than $10 million in bonuses for 1998 to 2000;=20 Andrew S. Fastow, chief financial officer of the company from 1998 until he= was fired in October 2001, who sold 561,000 shares of Enron stock for proc= eeds of $30.4 million;=20 Richard A. Causey, executive vice president and chief accounting officer of= the company, who sold 197,000 shares of Enron stock for proceeds of $13.3 = million;=20 James E. Derrick Jr., executive vice president and general counsel of the c= ompany since July 1999, who sold 230,000 shares of company stock for procee= ds of $12.6 million;=20 J. Clifford Baxter, vice chairman of the company since October 2000 and chi= ef strategy officer since June 2000, who sold 577,000 shares of Enron stock= for proceeds of $35.2 million;=20 Mark A. Frevert, chairman and chief executive officer of Enron Wholesale Se= rvices since June 2000 and chairman and chief executive officer of Enron Eu= rope from March 1997 to June 2000, who sold 830,000 shares of Enron stock f= or proceeds of $50.2 million and who also received bonus payments of $4.3 m= illion from 1998 to 2000;=20 Stanley C. Horton, chairman and chief executive officer of Enron Transporta= tion Services, who sold 738,000 shares of Enron stock for proceeds of $45.5= million and who also received $2.9 million in bonuses for 1998 to 2000;=20 Kenneth D. Rice, chairman and chief executive officer of Enron Broadband Se= rvices since June 2000, who sold 1.2 million shares of Enron stock for proc= eeds of $74.37 million and who also received bonus payments of $3.9 million= for 1998 to 2000; and=20 Richard G. Buy, executive vice president and chief risk officer of the comp= any since July 1999, who sold 54,874 shares of company stock for $4.32 mill= ion.=20 The complaint alleges that Causey, Lay, Skilling and Fastow signed false Fo= rm 10-Ks and Form 10-Qs required by the Securities and Exchange Commission = at various times during the class period of Oct. 19, 1998, to Nov. 7, 2001,= but that all 10 individual defendants conspired with guilty knowledge to c= onvey false and misleading information through public filings, press releas= es and other publications to inflate the company stock.=20 They all directly participated in the management of company, were directly = involved in its day-to-day operations at the highest levels and were privy = to confidential proprietary information concerning the company and its busi= ness operations, the complaint said. As a result of their actions, Enron's = stock price rose from $43.43 per share on Jan. 3, 2000, to $83.12 per share= by Dec. 29, 2000.=20 Financial analysts attributed the price rise to the growth and expectations= for Enron's Broadband Services Division but unbeknownst to investors, the = division was experiencing declining demand and financial losses.=20 The defendants knowingly falsified Enron's financial statements by eliminat= ing unprofitable and debt-ridden subsidiaries from the statements and they = also lied about the success of the broadband efforts, causing Enron's asset= s to be overstated in 2000 and 2001 by as much as $1 billion, the plaintiff= s assert.=20 In particular, the plaintiffs allege that the individual defendants, with t= he help of Arthur Andersen's accountants, kept the losses of its subsidiary= Joint Energy Development Investments off the books and improperly lent $13= 2 million to a second company, Chewco Investments, so it could purchase JED= I stock for $383 million. (The acronym JEDI is a play on the name of the kn= ights in the Star Wars movies while the name Chewco is a play on Chewbacca,= the name of one of the characters in those movies.)=20 Arthur Andersen falsely represented that Enron's financial statements for 1= 997, 1998, 1999 and 2000 were prepared and presented in accordance with gen= erally accepted auditing practices and that the accounting company also con= sented to the incorporation of its false statements in Enron's Form 10-Ks f= or those years and in Enron's prospectuses for several securities offerings= .=20 The financial house of cards came apart on Nov. 8, 2001, when the company a= nnounced that it was restating its revenues for 1997, 1998, 1999, 2000 and = the first two quarters of 2001 to correct for errors that inflated the comp= any's net income by $591 million. Following that announcement, the price of= Enron's common stock fell from a high of $90.75 during the class period to= a low of $8.20 before closing on Nov. 8 at $8.41.=20 The plaintiffs allege violations of Section 10(b) of the Securities Exchang= e Act and Rule 10b-5 for deceiving the investing public regarding Enron's b= usiness operations, management and value to sell more than $2 billion in co= mmon stock and other kinds of securities offered during the class period.= =20 The complaint also alleges violation of Section 20(a) of the Securities Exc= hange Act against defendants Lay, Skilling and Fastow because they had the = knowledge and ability to prevent the issuance of false statements or to cau= se the statements to be corrected but did not do so.=20 The plaintiffs are seeking class certification, compensatory damages for al= l class members and attorneys' fees and costs.=20 Because the company has filed for bankruptcy, that action triggers an autom= atic stay of this and all other litigation against it.=20 The complaint was filed by Thomas E. Bilek of Hoeffner & Bilek in Houston; = Steven G. Schulman and Samuel H. Rudman of Milberg, Weiss, Bershad, Hynes &= Lerach in New York; William S. Lerach and Darren J. Robbins in Milberg Wei= ss' San Diego office; Paul J. Geller of Cauley, Geller, Bowman & Coates in = Boca Raton, Fla.; Fred E. Stoops of Richardson, Stoops, Richardson & Ward i= n Tulsa, Okla.; and Deborah Gross of the Law Offices of Bernard M. Gross in= Philadelphia. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business American Electric Power buys Enron wind project From The Associated Press and Bloomberg News. 01/01/2002 The Milwaukee Journal Sentinel Final 01D Copyright 2002 Journal Sentinel Inc. (Note: This notice does not apply to t= hose news items already copyrighted and received through wire services or o= ther media) American Electric Power buys Enron wind project=20 From The Associated Press and Bloomberg News. Tuesday, January 1, 2002=20 American Electric Power acquired a 160-megawatt wind-power project in West = Texas from a subsidiary of bankrupt Enron Corp. for $175 million. Under ter= ms of the deal, announced Monday, Enron Wind Corp. will operate and maintai= n the wind-power project. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron hid behind smoke and mirrors 01/01/2002 South China Morning Post 18 (c) Copyright 2002 South China Morning Post Publishers. All Rights Reserved= . Four years ago, Asia was lectured by the West on the deficiencies of its co= rporate disclosure and accounting regimes.=20 Witnessing the US$60 billion bankruptcy of Enron last month, the region cou= ld be forgiven a moment of schadenfreude. Dubious accounting and disclosure practices were at the heart of Enron's de= mise. Evidently, Asia does not have a monopoly in this area.=20 Texas-based Enron used to be a power firm, pumping gas and electricity to c= ustomers in the United States and around the world. Then it transmogrified = into a wholly more stylish animal, befitting the spirit of the trendy dotco= m in the 1990s.=20 Real assets were no longer in vogue: the smartest companies, as the Interne= t revolution demonstrated, made money out of thin air, through the power of= their intellect and creativity.=20 Enron became a purveyor of "energy services", making markets in everything = from coal and lumber to bandwidth. The pipelines became incidental. The sto= ck market applauded, and Enron's shares surged from US$20 to US$90 between = 1997 and 2000.=20 As its stock rose, Enron's financial statements became more complex until, = it seemed, no one could work out how the company made money anymore.=20 Those seeking enlightenment were given short shrift by Enron's senior execu= tives. Anyone with the temerity to ask just didn't "get it".=20 Analysts may have been similarly in the dark, but were not about to stand i= n the way of a Wall Street darling that delivered the holy grail of smoothl= y increasing earnings.=20 Meanwhile, auditors Arthur Andersen continued to sign off on financial stat= ements that showed Enron to be a robust and fast-growing company - until it= s collapse.=20 There are lessons in the Enron debacle that reach beyond the US.=20 Asian investors swept up in the early 1990s by the story of the region's in= evitable ascendancy will recognise the mixture of hype and hubris that kept= observers from asking the difficult questions and Enron from answering the= m.=20 The Asian financial crisis exposed structural weaknesses that caused system= ic collapses. By contrast, the fallout from Enron's bankruptcy, while painf= ul to some (particularly employees who had their pensions invested in the c= ompany's stock), will be far more limited.=20 The most far-reaching impact is likely to be felt by the auditing professio= n. Faith in the integrity of financial statements has been shaken, as admit= ted by Andersen chief executive Joseph Berardino.=20 That phenomenon is global. Showing up the deficiencies of balance sheets in= Indonesia or Thailand is one thing. But when a giant multinational in supp= osedly the world's best-regulated market produces financial statements that= patently were not worth the paper they were written on, users are entitled= to ask: who can we trust?=20 Still, if the morals of the Enron case are heeded, it will have served a us= eful purpose.=20 First, if a company's accounts are too complex to understand, maybe that is= because the company has something to hide, rather than reflecting a defici= ency of intelligence on the part of investors.=20 Second, if senior executives treat requests for clarification with disdainf= ul arrogance, perhaps that is because they have something to hide, rather t= han the questions being foolish.=20 Third, no rules are perfect. While Andersen's role in Enron is the subject = of debate, a company determined to bend accounting rules in its favour will= always find a way to do so. But, as the collapse shows, the truth will out= eventually, which leads to Moral No 4: if something looks too good to be t= rue, it is. Investors believed in Enron's magic dust because they wanted to= .=20 Scepticism is invariably the first casualty of bull markets. Investors disc= ard it at their peril.=20 Jake van der Kamp is on leave Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 EDITORIAL & COMMENT Letters To The Editor ENRON PROBLEMS WON'T HOLD NEW POWER DOWN 01/01/2002 The Columbus Dispatch Home Final 06A (c) Copyright 2002 Columbus Dispatch. All Rights Reserved. The Dec. 11 Dispatch carried the article "Ohioans stick with electricity co= mpanies,'' which stated that "New Power, the only potential central Ohio co= mpetitor, is in trouble because Enron, a principal backer, is going bankrup= t.''=20 This statement is factually incorrect and did a disservice to both the New = Power Co. and our thousands of electricity and natural- gas customers in Oh= io. Categorically, NewPower Holdings is not in trouble; we are continuing to ag= gressively acquire new customers and have the liquidity and financial resou= rces to serve all of our customers. Enron Corp. is not our principal backer= and, in fact, has put zero dollars into our company. NewPower is a separat= ely held company with its own board of directors. While Enron used to be Ne= wPower's principal supplier of energy, NewPower has canceled all contracts = with Enron and is working with 14 other counterparts.=20 NewPower has publicly stated that we do not expect Enron's bankruptcy to ha= ve a material impact on our business or our ability to service our more tha= n 800,000 customers nationwide.=20 H. Eugene Lockhart=20 Chairman and chief executive officer=20 New Power Co.=20 Purchase, NY Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 NEWS The POWER of CHOICE / It is the dawning of deregulation in Texas, allowing = consumers to choose their electricity provider - and get a rate reduction a= s well. NELSON ANTOSH Staff 01/01/2002 Houston Chronicle 3 STAR 1 (Copyright 2002 Houston Chronicle) Starting today, deregulation of electricity officially arrives in Texas.=20 For the first time, consumers in much of the state can chose their electric= ity provider. And regardless of whether the customers switch or not, they w= ill get a rate reduction as of today. The combination of a 6 percent cut in the base rate for power - as required= by state law - plus the impact of lower fuel costs for generating will bri= ng the total reduction for residential customers in the Houston area to abo= ut 17 percent.=20 Deregulation of electricity is ready to move onto a mass scale after seven = years in the planning and seven months of testing, said Terri Waggoner, spo= keswoman for the Electric Reliability Council of Texas, also known as Ercot= .=20 "All systems are go," adds Brett Perlman, a commissioner on the Public Util= ity Commission of Texas.=20 But don't expect the promotion floodgates to open today, said Janee Briesem= eister, senior policy analyst for Consumers Union in Austin.=20 The telephone calls, mailers and television ads will build up gradually. Th= at's the way it happened in other states. Switching on a broad scale could = take as long as three years.=20 No customer is forced to do anything. "If all goes well, they shouldn't not= ice anything different with their service," Briesemeister said.=20 For instance, a customer of Reliant Energy HL&P who decides to do nothing w= ill automatically become a customer of a competitive supplier known as Reli= ant Energy Residential Services.=20 Since midsummer, a limited number of residential customers, about 115,000 i= n the state, have been part of a pilot program to shake out the bugs in the= system.=20 Now that deregulation is officially here, an estimated 4.7 million househol= ds in the state are eligible to participate. As of Dec. 17, nearly 20,000 h= ad signed up and were waiting for deregulation to arrive before they switch= over, according to officials.=20 A sizable chunk of Texas is outside the program. Municipal power sysems, su= ch as those in Austin and San Antonio, and rural electric cooperatives are = taking a wait-and-see attitude before deciding if they wll opt in to compet= ition.=20 The nearest parallel is deregulation of long-distance telephone service.=20 However there is one important difference - the rules are designed to avoid= one of the big annoyances of telephone competion, unauthorized switches, b= etter known as slamming, said Terry Hadley, public information officer for = the PUC.=20 You will get a postcard in the mail asking if you did, indeed, decide to sw= itch before anything is done.=20 In Houston, at least 10 companies will be making their sales pitches to res= idential customers. The number is even larger when you include companies ta= rgeting commercial and industrial users who use more power.=20 Although there will be a rate decrease for all customers involved in deregu= lation, it might not show up until the second bill of this year because of = meter reading cycles, Briesemeister said.=20 Similarly, the time it takes to switch from one company to another could be= as long as 45 days because of meter reading cycles.=20 One of the things to watch out for is late payment fees, of up to 5 percent= . Until now these charges were not permitted for investor- owned power comp= anies involving residential accounts.=20 Customers also need to be aware of cancellation fees that may be a part of = contracts, she said.=20 The state's job in this process is to inform electricity customers about su= ch things as electricity facts labels, which like the label on a can of bea= ns, allows an apples-to-apples comparison of costs between companies.=20 People already know quite a lot about deregulation, said the PUC's Perlman.= He routinely asks people in the grocery store, who say they are aware of d= eregulation and have placed it "on their list of things to do."=20 There were some glitches in the pilot program, but it was intended as a lea= rning experience, Perlman said.=20 The measure of success is lower costs, which means that deregulation is alr= eady working, said Ercot President and Chief Executive Tom Noel.=20 Cities ranging in size from Houston and Dallas to Corpus Christi will parti= cipate in electric deregulation.=20 There already have been some disappointments.=20 Shell, for instance, was an early player and one of the most aggressive but= decided it didn't want to be in the electric retail business. The number o= f customers involved in the pilot could have been larger by another 100,000= or so if Shell hadn't pulled out, Noel said.=20 Any fears about reliability of service are laid to rest by the state's deci= ding to keep the distribution system - the lines and poles - regulated, acc= ording to Hadley.=20 Texas planners say they will avoid the fiasco of California where the whole= sale electric sales was deregulated but retail prices were capped. When the= cost of power surged because there weren't enough electric plants to keep = up with demand, electric companies were not allowed to pass on all those co= st increases to consumers.=20 . . .=20 Dueling to deregulate=20 A number of companies are expected to try to lure residential customers loc= ally, but others are entering the market. Some of the competitors:=20 Reliant Energy Residential Services, a division of Houston-based Reliant Re= sources.=20 TXU Energy of Dallas, a part of the utility TXU.=20 Energy America, a part of Houston-based Republic Power, whose parent is Cen= trica of the United Kingdom.=20 New Power Co. of Purchase, N.Y., formed by Enron but then spun off as an in= dependent company.=20 Entergy Solutions of New Orleans, a unit of Entergy Corp.=20 GEXA Energy, a Houston company formed to compete in the deregulated market.= =20 ACN Energy in McLean, Va., a subsidiary of ACN which has been offering cust= omers a choice for natural gas and electricity since 1998.=20 Green Mountain Energy of Austin, which emphasizes wind-generated power.=20 First Choice Power of Fort Worth, affilliated with the Texas-New Mexico Pow= er Co.=20 Utility Choice Electric, headquartered in Houston, founded by seven energy = industry executives.=20 For more information see www.houstonchronicle.com/electricity. Graph: Dueling to deregulate (p. 16, text)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Investing/Word On The Street Enron: The Lessons For Investors; Hindsight, shmindsight. There's much to l= earn when a stock loses $67 billion in value. Lisa Gibbs, Jeff Nash and Nick Pachetti 01/01/2002 Money Magazine Time Inc. 30 (Copyright 2002) It seems hard to believe now, but Enron (ENE) used to be the envy of corpor= ate America. In less than a decade, the Houston company transformed itself = from stodgy gas-pipeline operation to natural gas and electricity trading p= owerhouse. Dazzled by sizzling earnings growth, giddy investors bid up Enro= n's shares 312% in two years to a high of $90.75 in 2000. Then someone turn= ed out the lights. Beset by marketplace woes and management mishaps, the st= ock already had tumbled 53% when chief executive Jeffrey Skilling stunned i= nvestors by resigning last August. After that, the bad news came at hypersp= eed: $1.2 billion in shareholder equity zapped by risky hedging deals, a Se= curities and Exchange Commission probe, a last- chance merger with rival Dy= negy called off and, finally, a bankruptcy filing. By the end of November, = the stock had plummeted to 26[cents], obliterating $67 billion in market ca= p--a shocking fall for a company that just last year occupied the No. 7 spo= t on the Fortune 500.=20 Perhaps most incredible, however, about the Enron debacle is how long inves= tors hung on to the belief that everything would turn out fine. As recently= as MONEY's October issue, our Ultimate Investment Club's Abby Joseph Cohen= of Goldman Sachs was calling Enron a "good value." If pros like Cohen got = it wrong, how could the average investor have discerned the disaster in tim= e? Sure, hindsight is marvelous. But along Enron's fast track to penny stoc= k, there were red flags for informed shareholders that all was not as it se= emed. Out-of-control valuation. In 2000, investors levitated Enron's stock to a l= ofty price/earnings ratio of 69 times that year's earnings on the belief th= at forays into sexy-sounding online energy trading and broadband businesses= could sustain supercharged earnings growth. Skilling was telling Wall Stre= et that Enron's broadband biz alone deserved $37 a share, and investors see= med to buy it, despite the fact that the unit was unproved and unprofitable= . His outlandish valuation of broadband drew an early "hold" rating from an= alyst Andre Meade of Commerzbank Securities in March 2000. "An energy compa= ny trading at the multiple Enron was," Meade explains today, "should have b= een cause for eyebrows to be raised."=20 The lesson? Pay attention to the P/E even after you buy a stock. Whenever t= he valuation starts to climb, you should stop and question whether the comp= any can sustain the sales and earnings growth expected of it.=20 Insider selling. In 2000, then CEO Kenneth Lay netted $66.3 million from ex= ercising stock options and selling the shares, while Skilling scored $60.7 = million, roughly double the amounts the year before. By the end of June 200= 1, 16 members of Enron's top management had sold $164 million in shares, re= ports Thomson Financial Network. While insider sales don't automatically sp= ell trouble for a company-- executives often have valid reasons for raising= cash--the selling at Enron was prolific. And the fact that selling persist= ed even as the stock fell throughout 2001 was a "screaming red flag," says = Thomson analyst Paul Elliott. If Skilling and Lay believed the stock was un= dervalued--as they repeatedly told investors--then why were they cashing in= ? Executive stock trades are easy for ordinary investors to follow: The Wal= l Street Journal regularly publishes insider trading tables, and websites s= uch as Yahoo Finance (finance.yahoo.com) list insider trades for each stock= .=20 Obfuscations. Enron's trading business is extremely complex, and analysts a= dmit they didn't always understand what Enron was doing. That said, the com= pany seemed to go out of its way to obfuscate. "I've never seen such compli= cated disclosures," says Michael Heim, an A.G. Edwards energy analyst. "It = was hard to follow the movement of money."=20 When pushed to reveal more, management was often tight-lipped and unprofess= ional. During one famous conference call last April, Skilling called an ana= lyst an "asshole" for complaining about the company's failure to provide a = balance sheet with its earnings announcement. Prudential Securities' Carol = Coale points to rumors in late September of an SEC investigation. "When I a= sked Enron about an investigation, they said there was no investigation," s= ays Coale. Once it was revealed that the SEC was conducting an inquiry, she= says Enron returned to her with a feeble excuse: "They said, 'Well, you di= dn't ask about an inquiry.'"=20 The typical investor isn't privy to such conversations, although more and m= ore company conference calls are in fact being opened to the general public= . But the larger point (famously stated by Warren Buffett) is this: If you = don't understand what a company does, don't invest in it. There's a corolla= ry to that too: If management refuses to fill in holes and keeps investors = in the dark, run.=20 Fishy filings. Investors who read Enron's quarterly SEC filing in the summe= r of 1999 would have noticed a new entry under the heading "Related Party T= ransactions." The item noted that Enron was doing business with a private p= artnership whose general partner was led by a "senior officer of Enron." A = proxy filed in May 2000 revealed that the senior officer was Enron CFO Andr= ew Fastow, and that not one but two partnerships existed.=20 Possible conflicts of interest--is the CFO looking out for Enron or himself= ?--should have turned heads. But even professional money managers like thos= e at Janus, enthralled by Enron's opportunities, overlooked the partnership= s as the funds built up their stakes. As late as Sept. 28, with Enron at $2= 7.25, Janus owned 41.3 million shares, which it has since dumped.=20 To be fair, Enron revealed little about the partnerships and their function= --to divert from Enron's balance sheet the debt from new acquisitions--as w= ell as the extent to which the companies were in bed together. Besides, bac= k then the stock was going gangbusters and earnings looked great; the partn= erships seemed like small potatoes. Even the stock's few critics weren't pa= ying much attention. Recalls Meade of Commerzbank: "It was difficult to see= that there were significant liabilities associated with this."=20 Attitudes began changing after Enron filed its first quarterly report of 20= 01, which said it was entering into complicated and risky derivatives trans= actions that involved an $827 million loan to one of the partnerships. Whoa= , some analysts said. "You started to see in the footnotes some pretty larg= e sums of money," says Tara Gately, energy analyst for Loomis Sayles funds.= "It raised questions, and there were really no good answers."=20 Yes, this is complicated stuff and, yes, there wasn't enough information, b= ut you don't have to be a big-deal financial analyst to know that the CFO i= n a side business is smelly stuff.=20 Executive departures. When the chief executive--someone who spent a decade = moving up the ladder and building the company's core energy- trading busine= ss--flees after just six months at the helm, you've got a problem. Skilling= , 47 at the time, called it a "purely personal" decision. "That was the wor= st excuse I've ever heard," scoffs John Hammerschmidt, a fund manager at Tu= rner Investments. If top management resigns for unclear reasons, consider s= elling. Hammerschmidt didn't even hesitate in this case: "As soon as I hear= d that, I dumped my shares."=20 One red flag does not necessarily a disaster make. More often it's a succes= sion of little somethings that ultimately tells you: It could get real ugly= here. The trick is to put aside your enthusiasm for a stock. That's probab= ly the hardest thing for any investor to do. But as Enron's meltdown shows,= the homework isn't over once you buy the stock.=20 --LISA GIBBS, JEFF NASH AND NICK PACHETTI=20 POWER FAILURE Enron's shockingly swift tumble from nearly $85 a share to 26= [cents] a share.=20 Troubles at Enron's unprofitable telecom units=20 CEO Jeffrey Skilling curses at an analyst who demands financial details.=20 CEO Skilling resigns after just six months on the job.=20 Enron writes off $1.2 billion invested in soured outside partnerships. With= in days, SEC launches probe and CFO departs.=20 Enron admits it overstated profits by nearly $600 million over five years. = Next Enron agrees to be acquired by Dynegy, a company one- fourth its size.= =20 Dynegy backs out of deal; Enron shares fall 85% in a day.=20 Notes: Weekly closes. Data as of Nov. 30. Sources: Baseline, MONEY research= .=20 The Numbers=20 Alliance Capital, Janus and Putnam were among Enron's top 10 shareholders a= t September's end.=20 According to Bloomberg, 17 out of 18 analysts still had buy recommendations= the day after CEO Skilling's exit.=20 Enron handled more than $336 billion in energy contracts in 2000.=20 Quote: For those with the energy, the signs were there: This stock was fray= ed and ready to short. COLOR PHOTO: NICHOLAS EVELEIGH=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Edison Mission/Mirant -2: Deal Included Enron Bloomberg 2001-12-31 17:55 (New York) IRVINE, Calif. (Dow Jones)--Edison Mission Energy said Mirant Corp. (MIR) s= eeks to terminate a plan to acquire a 50% stake in EcoElectrica LP from bot= h Enron Corp. (ENE) and Edison Mission. In a press release Monday, Edison Mission, a unit of Edison International (= EIX), said it doesn't agree that Mirant has the right to terminate the agre= ement. Edison Mission said it is reviewing its alternatives. EcoElectrica = is a power project in Penuelas, Puerto Rico. The acquisition agreement was = made in July and terms weren't disclosed. Representatives from Mirant and Enron weren't immediately available. -John Seward; Dow Jones Newswires; 201-938-5400=20 (END) DOW JONES NEWS 12-31-01 05:55 PM- - 05 55 PM EST 12-31-01 Sarah Palmer Internal Communications Manager Enron Public Relations (713) 853-9843