Enron Corp. - University of California | Office of The President

(p) As a result of the foregoing, the revenue and EPS forecasts being made by and
for Enron going forward were also grossly false because historical earnings, upon which those
forecasts were based, were falsified and the result of improper accounting manipulation. In truth,
Enron's various business operations not only had huge concealed losses, which would have to be
recognized and would very adversely impact Enron's financial results, but those core business
operations simply did not have the strength or success necessary for them to generate anywhere near
the kind of revenue and profit growth being forecast for them.
156. On 7/13/99, Enron announced better-than-expected 2ndQ 99 results:
Enron Corp. announced today a 29 percent increase in earnings for the second
quarter of 1999 to $[0.27] per share .... Net income ... increased 53 percent to $222
million ....
* * *
"Enron's consistent earnings growth reflects the very strong market
positions in all of our businesses.... [W]e are positioned to be the leading player
in the largest and fastest growing markets in the world," said Kenneth L. Lay,
Enron chairman and chief executive officer. "The outlook for the company is
excellent ...."
157. On 7/13/99, Enron held a conference call for analysts and investors to discuss Enron's
2ndQ 99 results and its business. On 7/14-16/99, Enron executives Skilling, Sutton, Koenig and
Causey also appeared at Enron's 2ndQ analyst meetings in New York, Boston and Houston. In the
conference call and in follow-up conversations with analysts and in formal presentations and break-
out sessions at the analyst meetings, they stated:
• EPS in the 2ndQ increased 29% to $.27 per share compared to $.21 in the 2ndQ
of last year. Net income in the 2ndQ increased 53% to $222 million up from $145
million last year.
• Enron had a great quarter. Enron was hitting on all eight cylinders. Enron was
very pleased with these results for the quarter and very optimistic about the outlook
for the future. Enron was very optimistic about how the business was playing out.
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