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

not even make a broadband connection between Portland and Seattle, and was using ISPs to carry
content that it represented to be transmitted by EIN's video-streaming.
E. False Statements Regarding EES
640. Enron's Offering Documents also incorporated by reference statements about EES
which were included in 10-Qs and 10-Ks. Enron's 1stQ 01 10-Q stated that EES, which included
commodity and energy-asset management and services contracts, had 1stQ 01 revenues of $693
million and income of $40 million, which was a dramatic improvement over 1stQ 00 revenue of
$314 million and income of $6 million. The 10-Q stated the increase in EES revenues was
"primarily ... a result of long-term energy contracts originated in 2001 and the growth of energy
services' European operations." These numbers were materially false and misleading because the
revenue and income for both 1stQ 00 and 1stQ 01 were overstated due to overvaluation of the EES
contracts and Enron's abuse of mark-to-market accounting as detailed herein.
641. Likewise, in Enron's 00 10-K, Enron reported income for EES of $165 million, which
was a huge increase over the reported $68 million loss in 99, and attributed 00 revenue and gross-
margin increases – $2.8 billion and $331 million, respectively, compared to 99 – primarily to long-
term contracts originated in 00 and the increase in value of the EES contract portfolio. Enron's 99
10-K stated that EES was a "nationwide provider of energy outsourcing products and services to
business customers," including energy management services directly to commercial and industrial
customers to reduce total energy costs, and reported EES total revenue of $1.8 billion. These
numbers were materially false and misleading due to Enron's failure to consolidate non-qualifying
SPEs as required by GAAP and other accounting manipulations, as described in 418-611.
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