Footnote 8

327. Before the Bacchus transaction closed, Citigroup had analyzed exactly how it wouldimpact Enron’s financial statements:The $200 million represents 16.3% and 22.4% of operating cash flow and netincome, respectively, for the 12 months ended December 31, 1999. Bacchusrepresents 22.2% and 11.6% of cash EBITDA for nine months ended 9/30/00and twelve months ended 12/31/00, respectively.CITI-B 00284053-055 (quoted in Exam. III, App. D at 121).328. With respect to the Sundance Industrial transaction, Citigroup/Salomon Holding wasaware that the Insiders intended to move the debt associated with the pulp and paper business offEnron’s balance sheet. Citigroup documents state that “Enron owns certain pulp and paper assets. . . which have been purchased by Enron in a manner that the assets are off-balance sheet for GAAPaccounting purposes.” CITI-B 00296661 (quoted in Exam. III, App. D at 130).329. Citigroup overcame its concerns over the accounting abuses it knew arose fromBacchus and Sundance Industrial both because of the Insiders’ promised future revenue fromtransactions with Enron and because Citigroup knew its exposure would quickly be eliminated.Citigroup knew the $200 million it loaned to Bacchus would be repaid within a matter of monthswhen Sundance closed. That in fact happened. Citigroup also knew it could exercise rights in theSundance Industrial partnership agreements to demand that Enron buy out its interest. OnNovember 30, 2001, two days before Enron declared bankruptcy, Citigroup exercised those rightsand the Insiders caused Enron, through the wholly-owned subsidiary EIM, to pay off SalomonHolding’s $28.5 million contribution.330. The Bacchus and Sundance Industrial transactions materially impacted Enron’sfinancial statements for year-end 2000 and the second quarter of 2001. The $112 million in incomeBacchus “created” represented 11% of Enron’s reported net pre-tax income for 2000. Bacchus’contribution to cash flow from operations of $200 million constituted over 4% of Enron’s operating604041v1/007457-107-