-----Original Message-----
From: 	Landry, Chad  
Sent:	Thursday, November 08, 2001 2:01 PM
To:	Lenhart, Matthew
Subject:	FW: Dynegy Inc.: IN THE MONEY: Enron Transparency Not Transparent Enough



 -----Original Message-----
From: 	djcustomclips@djinteractive.com@ENRON  
Sent:	Thursday, November 08, 2001 12:57 PM
To:	5193@WCTOPICS.djnr.com
Subject:	Dynegy Inc.: IN THE MONEY: Enron Transparency Not Transparent Enough

IN THE MONEY: Enron Transparency Not Transparent Enough
By Michael Rapoport

11/08/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

   A Dow Jones Newswires Column


  NEW YORK -(Dow Jones)- So Enron Corp. (ENE) says it wants to be more
transparent - to make its impenetrable financial results and corporate
structure easier for investors and analysts to understand.
  Based on its announcements Thursday, however, it still has a heck of a
long way to go.

  With Enron's restatement Thursday of nearly five years' worth of
earnings and additional information about the maze of off-balance-sheet
deals related to it, we now have a lot more information about the mess
at Enron than we had 24 hours ago. But we're not much closer to
understanding just what HAPPENED to leave Enron in such a mess - and
that's because the company's explanations of all this continue to be
dense, confusing and next to impossible to grasp.

  Try this tidbit, from the Form 8-K Enron filed about the restatements
Thursday with the Securities and Exchange Commission:

  "In addition, Enron's net income is reduced for specific JEDI revenues
previously allocated to Chewco, relating to the appreciation in value of
Enron stock, which eliminate upon consolidation. This, in effect,
reduces Enron's share of JEDI's earnings."

  Huh? And no, it doesn't help you to know that "Chewco" is an entity
that wasn't included in Enron's financial results but which Enron now
admits should have been. Or that "JEDI" isn't a "Star Wars" reference
but a limited partnership in which both Enron and Chewco had invested.
It's still impenetrable.

  Then there are the times when Enron just plain doesn't give enough
information. The company says its decision that Chewco should be
included in its results after all "is based on current information that
Chewco did not meet the accounting criteria to qualify as ...
unconsolidated..." Uh - okay. WHY didn't it meet the criteria, and why
did Enron previously believe that it did? Enron doesn't say.

  Finally, Enron makes some assertions that just make you scratch your
head. The company says part of the restatement of its earnings stems
from unspecified "prior-year proposed audit adjustments and
reclassifications which were determined to be immaterial in the year
originally proposed."

  Hmmm. Beyond the fact that Enron doesn't elaborate on the nature of
these "audit adjustments and reclassifications," or why they were
originally considered immaterial, consider that according to Enron's own
figures in the 8-K, they add up to a negative earnings impact of $87
million since 1997. That amount doesn't sound like any definition of
"immaterial" I've ever heard.

  An Enron spokesman couldn't immediately be reached for comment.

  In fairness, this lack of clarity may be all but inevitable given
Enron's Byzantine structure, which involves dealings with outside but
related entities that also have third parties involved, which in one
case have a subsidiary that allowed Enron to hedge the risks of an
investment, and in another case is selling assets purchased from Enron
to OTHER entities in order to finish paying Enron for the original
transaction, and ... you get the idea. It's next to impossible to make
clear because Enron's structure is just too baroque to understand in the
first place.

  The market is plenty puzzled by all this, even in the wake of Enron's
attempt to clarify things. Take a look at the company's drunken-sailor
stock chart from Thursday. After news of the restatements hit, Enron
stock first jumped higher, going as high as $10 a share, then soon
dropped back, to as low as $8.40, as investors started to digest the
details of the news. Then up again to about $9.25, then down again to
its current level of around $8.50.

  There's no reason investors should be confused like this. There is
absolutely no reason that a reasonably intelligent layman, with an
elementary working knowledge of corporate finance, should be unable to
understand the regulatory filings, structure, earnings and balance sheet
of any public company.

  If that's happens, it's the company's fault, not the investor's -
either because the company hasn't explained things well enough or
because its structure is needlessly complicated to begin with. If Enron
wants to get back the market's confidence, fixing that problem, one way
or the other, would be a good place to start.

  -By Michael Rapoport, Dow Jones Newswires; 201-938-5976;
michael.rapoport@dowjones.com



Folder Name: Dynegy Inc.
Relevance Score on Scale of 100: 100

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