Now Enron's going to "restate" earnings since 1997?!
Among other interesting tidbits outlined below, there's the small matter of, <....billions of dollars in other debt that has been kept off the beleaguered company's balance sheet and has been a significant contributor to its current problems>
AND not surprisingly, heads continue to roll as the 2 more members of the mgt team got the heave ho, today!
They ought to call this one "The Never Ending Story". Of course being under the gun of an SEC investigation has nothing to do with it<lol>
What a circus!
Isopatch
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<ENRON TO RESTATE EARNINGS AMID SEC PROBE, By BRAD FOSS, Associated Press
NEW YORK (November 8, 2001 11:14 a.m. EST) - Beleaguered Enron Corp.,
whose stock price has fallen roughly 80 percent in the past three weeks,
announced Thursday it would restate its earnings going back to 1997. The
move came in part to reflect a controversial $1.2 billion reduction in
shareholder equity that has sparked a Securities and Exchange Commission
investigation.
Enron also said it was holding talks with Dynegy Inc. relating to some form
of business transaction. The New York Times reported that Dynegy was
considering buying Enron, its larger hometown rival for $8 billion.
In a filing with the SEC, Enron said financial statements from 1997 through
the first half of 2001 "should not be relied upon" and that partnerships run
by Enron officials during that period should have been consolidated into the
financial results of the Houston-based energy trading giant.
These partnerships are Chewco Investments L.P., Joint Energy
Development Investments L.P., and a wholly owned unit of LJM Cayman
L.P.
"We believe that the information we have made available addresses a
number of the concerns that have been raised by our shareholders and the
SEC about these matters," said Kenneth Lay, Enron's chairman and chief
executive.
"We will continue our efforts to respond to investor requests for
information about our operational and financial condition so they can
evaluate, appreciate and appropriately value the strength of our core
businesses."
By its own assessment, Enron's restatement reduces previously reported
net income by roughly $586 million and increases its debt by $2.59 billion.
The change reflects the financial impact of retroactively consolidating the
partnerships.
The company also fired two executives on Thursday: Ben Glisan, its
treasurer, and Kristina Mordaunt, general counsel for one of its divisions.
Previously, Enron had ousted chief financial officer Andrew Fastow, who
was in charge of some of the partnerships.
Shares of Enron were off 10 cents to $8.95 in heavy trading on the New
York Stock Exchange.
Enron said it believes the restatement will include a reduction to net
income of about $96 million in 1997, $113 million in 1998, $250 million in
1999 and $132 million in 2000, increases of $17 million for the first quarter
of 2001 and $5 million for the second quarter and a reduction of $17 million
for the third quarter of 2001.
Enron, the nation's top buyer and seller of natural gas and the top
wholesale marketer in the United States, had become one of the nation's
10 largest companies, recording revenue of $100.8 billion in 2000.
But the company has been beset by huge investment losses and questions
about its financial stability. In particular, its stock has plunged since Oct.
16, when the company posted a $618 million third quarter loss and
revealed that its shareholder equity had been reduced.
Despite the company's decision to terminate Fastow, Enron continued to
come under pressure after the SEC began an inquiry, which was upgraded
to a formal investigation, of the partnerships and possible conflicts of
interest resulting from them.
Jeff Skilling, Enron's former chief executive who left in August, has been
called to testify before the SEC, although it remains unclear when that will
occur, said Denis Calabrese, a spokesman for Skilling.
Enron's woes have prompted considerable speculation about a possible
takeover of the company.
Besides Dynegy, companies mentioned as possible suitors included General
Electric's GE Capital unit and Royal Dutch/Shell Group.
On Thursday, both Dynegy and Enron released statements confirming they
were in talks, but declined to provide any details.
The New York Times reported earlier that Dynegy is considering paying
about $8 billion in stock, or roughly $10 per share.
Under the terms of the deal, Enron would receive an immediate $1.5 billion
cash infusion from oil giant Chevron Texaco, which holds a 27 percent
stake in Dynegy, the Times said, citing executives close to the
discusssion.
Chevron Texaco would provide an additional $1 billion injection at a later
date, the Times reported, while Dynegy would assume $12.8 billion in Enron
debt, plus billions of dollars in other debt that has been kept off the
beleaguered company's balance sheet and has been a significant
contributor to its current problems.
Enron's Kenneth Lay would not be given any formal management position in
the combined company, although he would have a seat on its board, The
Wall Street Journal reported, citing people familiar with the matter. >
nandotimes.com |
