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

• Enron's liquidity was fine. Its debt to total capital ratio was about 50%. With the
announced asset sales Enron expected the debt ratio to be close to 409% by yearend
02. Enron was very comfortable with its current liquidity position.
• Enron had $5.7 billion of goodwill concentrated in 3 major areas, Portland
General, Wessex Water and Electro. Enron estimated, based upon this recent
review, that up to $200 million in goodwill adjustments may be necessary and will
be recorded in the first quarter of 02.
• Enron expected no credit downgrades.
• Enron's 3rdQ recurring operating results were outstanding and its business
fundamentals remained very strong.
367. When questioned as to whether or not Enron would be taking additional large charge-
offs, Lay denied it would. Bloomberg News reported on 10/16/01:
ENRON HAS THIRD-QUARTER LOSS AFTER EXPANSION FAILS
* * *
Enron might take a first-quarter "adjustment' of less than $200 million
because of accounting changes related to good will, Lay said in an interview. "If
we thought there were any other significant concerns, we would have taken care
of them today," Lay said.
368. On 10/16/01, Lay appeared on CNNfn, was asked about Enron's write-offs and stated:
LAY: ... [A]s to the charges, they related primarily to the Azurix's water
business, our broadband business, and the new power company where
we have investments and assets and those businesses. And we try to
clean all those up in this quarter since they seemed to be providing
quite a bit of distraction to the real quality and strong growth of our
core businesses.
CNNfn: And let's talk about the core businesses going forward .... What's key
now? what's most important? what's driving future growth?
LAY: Well, primarily our wholesale business, which is growing very
strong .... Our earnings were up about 35 percent. Strong growth in
our retail business we're - in fact, we're the only company providing
nationwide energy services. And again, that had a strong quarter also,
adding about 12,000 new customers.... But I think the main thing is
just to continue to grow these very solid, core businesses which in the
third quarter this year provided about 35 percent increase in net
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