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Enron Has Banner Year; 37% Net Income Hike

January 24, 2000
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Enron Has Banner Year; 37% Net Income Hike

Significant strategic changes at Enron, including the sale of Enron Oil & Gas and planned divestiture of Portland General Electric, made the headlines in 1999, but its traditional operations more than carried the company flag.

Enron posted a whopping 37% increase in net income to $957 million and an 18% rise in earnings per share to $1.18 for the year. Its revenues rose 28% to $40 billion and its marketed volumes jumped 19% to 32 trillion Btue/d. North American gas sales volumes reached 13 Bcf/d up from 10.6 Bcf/d while U.S. power sales fell slightly to 380.5 million MWh from 401.8 million MWh in 1998.

It was a more active than average year for the company as it unloaded its capital intensive exploration and production unit, Enron Oil & Gas, and prepared to part company with Portland General Electric through a $2.1 billion sale to Sierra Pacific Resources. The company also gained a foothold in the broadband Internet services business and took a big step forward last week with new agreement with Sun Microsystems. Its retail energy arm made its first annual profit. The company more than doubled the number of retail energy services contracts to $8.5 billion. It now manages energy for 16,500 facilities worldwide. And its wholesale operations continued to grow significantly.

"Our strong results in both the fourth quarter and the full year 1999 reflect excellent performance in all of our operating businesses. Our wholesale business again registered strong profitability and growth in the rapidly expanding, deregulating energy industry worldwide. Our retail business is now profitable. This business has reached critical mass in contracting activity and service capabilities, and profitability is expected to accelerate rapidly," said CEO Kenneth L. Lay. "In addition, Enron continues to develop innovative, high-growth new businesses that capitalize on our core skills, as demonstrated by the early success of our new broadband services business. Overall, a great year - one in which our shareholders received a total return of 58%." Enron also announced fourth quarter earnings of $0.31 per diluted share, an increase of 29% from $0.24 a year ago.

Strong earnings in Enron's commodity sales and services division were reflected in a 53% increase in IBIT to $628 million for 1999. Its energy assets and investments unit reported a 20% increase in IBIT to $850 million. In 1999, Enron began commercial operations of 11wholesale power plants totaling over 4,300 MW of capacity. Transportation and distribution, which includes Enron's gas pipeline group and Portland General Electric, generated $685 million of IBIT versus $637 million last year.

The pipeline group reported IBIT of $380 million, compared to $351 million in 1998. Total volumes transported increased by 4% to over 9 Bcf/d. During the year, Northern Natural Gas settled a major rate case, which extends firm contracts with a majority of its customers. Florida Gas Transmission experienced record deliveries on its system and is processing two large expansions, which will add new capacity of 600 MMcf/d and will bring total capacity to 2.1 Bcf/d.

During the fourth quarter, Enron entered into an agreement to sell Portland General Electric to Sierra Pacific Resources for $2.1 billion. The transaction is expected to close in late 2000.

Net results for the year also included after-tax income of $345 million, or $0.45 per diluted share, from the sale of its ownership in Enron Oil & Gas Co. After-tax charges for the year included $278 million and $131 million, or $0.36 and $0.17 per diluted share, related to Enron's MTBE asset and the cumulative effect of accounting changes, respectively.

Rocco Canonica

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ISSN © 2577-9877 | ISSN © 1532-1266
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