Significant changes to Enron’s corporate structure, includingthe sale of Enron Oil & Gas and planned divestiture of PortlandGeneral Electric, made the headlines in 1999, but its traditionaloperations more than carried the company flag. Enron posted awhopping 37% increase in net income to $957 million and an 18% risein earnings per share to $1.18 for the year. Its revenues rose 28%to $40 billion and its marketed volumes jumped 19% to 32 trillionBtue/d. North American gas sales volumes reached 13 Bcf/d up from10.6 Bcf/d while U.S. power sales fell slightly to 380.5 millionMWh from 401.8 million MWh in 1998.

It was a more active than average year for the company as itunloaded its capital intensive exploration and production unit,Enron Oil & Gas, and prepared to part company with PortlandGeneral Electric through a $2.1 billion sale to Sierra PacificResources. The company also gained a foothold in the broadbandservices business.

Enron’s retail energy arm made its first annual profit. Thecompany more than doubled the number of retail energy servicescontracts to $8.5 billion. It now manages energy for 16,500facilities worldwide.

“Our strong results in both the fourth quarter and the full year1999 reflect excellent performance in all of our operatingbusinesses. Our wholesale business again registered strongprofitability and growth in the rapidly expanding, deregulatingenergy industry worldwide. Our retail business is now profitable.This business has reached critical mass in contracting activity andservice capabilities, and profitability is expected to acceleraterapidly,” said CEO Kenneth L. Lay. “In addition, Enron continues todevelop innovative, high-growth new businesses that capitalize onour core skills, as demonstrated by the early success of our newbroadband services business. Overall, a great year — one in whichour shareholders received a total return of 58%.” Enron alsoannounced fourth quarter earnings of $0.31 per diluted share, anincrease of 29% from $0.24 a year ago.

Strong earnings in Enron’s commodity sales and services divisionwere reflected in a 53% increase in IBIT to $628 million for 1999.Its energy assets and investments unit reported a 20% increase inIBIT to $850 million. In 1999, Enron began commercial operations of11wholesale power plants totaling over 4,300 MW of capacity.Transportation and distribution, which includes Enron’s gaspipeline group and Portland General Electric, generated $685million 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% toover 9 Bcf/d. During the year, Northern Natural Gas settled a majorrate case, which extends firm contracts with a majority of itscustomers. Florida Gas Transmission experienced record deliverieson its system and is processing two large expansions, which willadd new capacity of 600 MMcf/d and will bring total capacity to 2.1Bcf/d.

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

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

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