============= Page 1 of 79 ============= Finance Cona, August 13, 2001 Committee Members 1 Mr. Herbert S. Winokur, Jr., Chairman Mr. Robert A. Belfer Mr. Norman P. Blake, Jr. Mr. Ronnie C. Chan Mr. Paulo V. Ferraz Pereira Mr. Frank Savage CONFIDENTIAL EXH004-00043 E0004404209 Endless Dossibilities.TM ============= Page 2 of 79 ============= m p Agenda ! f r , p qk vi, CD l di ~ r .. l Fdlrf E .( d~t i' ~• I, f EXH004-00044 ============= Page 3 of 79 ============= Herbert S. Winokur, Jr., Chairman Robert A. Belfer Norman P. Blake, Jr. Ronnie C. Chan Paulo V. Ferraz Pereira Frank Savage AGENDA Meeting of the Finance Committee of the Board of Directors of Enron Corp. 5:00 p.m. (CDT), August 13, 2001 50th Floor Boardroom, Enron Building Houston, Texas 1. Approval of April 30, 2001 Finance Committee Minutes Mr. Winokur 2. Chief Financial Officer Report Mr. Fastow 3. Treasurer Report Mr. Glisan 4. Chief Risk Officer Report Mr. Buy Quarterly Risk Update - Enron's Assets - Trade Credit Update - Investment Portfolio - Enron Energy Services - Market Risk Update 5. Projects and Amendments A) Brokerage Account Authorization - Approve for Recommendation to the Board 6. Other Business 7. Adjourn ... Mr. Glisan Page 1-1 2-1 3-1 4-1 4-2 4-3 4-13 4-17 4-21 5-1 5A-1 6-1 7-1 E0004404211 See Addendum for Deal Approval Sheets approved between, Board meetings =XH004-00045 ============= Page 4 of 79 ============= N r-- N d- O O 0 U W Agenda Item I ° ` 4 1 + a f EXH004-00046 ============= Page 5 of 79 ============= 57.e,13 MIT. Enron Corp. Finance Committee Minutes from April 30, 2001 meeting E0004404213 1-1 EXH004-00047 ============= Page 6 of 79 ============= DRAFT MINUTES MEETING OF THE FINANCE COMMITTEE OF THE BOARD OF DIRECTORS ENRON CORP. APRIL 30, 2001 Minutes of a meeting of the Finance Committee ("Committee") of the Board of Directors of Enron Corp. ("Company"), noticed to begin at 4:00 p.m. C.D.T., but actually begun at 4:25 p.m., C.D.T., at the Enron Building in Houston, Texas. The following Committee members were present, either in person or by telephone conference connection, where each member could hear the comments of the other participants and join in the discussion, constituting a quorum: Mr. Herbert S. Winokur, Jr., Chairman Mr. Norman P. Blake, Jr. Mr. Robert A. Belfer a Mr. Ronnie C. Chan Mr. Paulo V. Ferraz Pereira Mr. Frank Savage, joined in progress as noted below Mr. John A. Urquhart Committee member Mr. Jerome J. Meyer was absent from the meeting. Directors John H. Duncan, Ken L.'Harrison, Kenneth L. Lay, and Jeffrey K. Skilling, Messrs. William S. Bradford, Richard B. Buy, Christopher F. Calger, Richard A. Causey, Timothy A. DeSpain, Andrew S. Fastow, Ben F. Glisan, Jr., David G. Gorte, Steven M. Harris, Roderick J. Hayslett, Mark E. Koenig, Theodore R. Murphy, and Peter E. Weidler, and Mesdames Rebecca C. Carter, Louise J. Kitchen, and Rebecca A. McDonald, all of the Company or affiliates thereof, and Mr. Richard N. Foster, of McKinsey & Company, Inc., also attended the meeting. The Chairman, Mr. Winokur, presided at the meeting, and the Secretary, Ms. Carter, recorded the proceedings. Mr. Winokur called the meeting to order, noted that a draft of the minutes of the meeting of the Committee held on February 12, 2001 had been distributed to the Committee members, and called for any corrections EC 004404214 ============= Page 7 of 79 ============= or additions. There being none, upon motion duly made by Mr. Blake, seconded by Mr. Ferraz Pereira, and carried, the minutes of the meeting of the Committee held on February 12, 2001 were approved as distributed. Mr. Winokur called upon Mr. Fastow to present the Chief Financial Officer's report, a copy of which is filed with the records of the meeting. Mr. Fastow reviewed certain finance issues or exposures currently impacting the Company and discussed recent treasury stock purchase activity. He presented a chart depicting the Company's interest rate exposure in different areas and noted the dollar amounts at fixed and at floating interest rates. He then discussed certain steps being taken by the Company to increase the average life of the long-term debt maturities and commented on certain financings previously done by the Company that had imbedded stock price risk and could potentially require future equity issuances. Mr. Savage joined the meeting. Mr. Fastow then began a discussion of finance related asset sales by the business units and certain prepay transactions that were underway. He noted that the Company was diversifying its funding sources and compared the,; percentage of funding the Company had received from banks, U.S. capital markets, and non-U.S. capital markets over the last three years. He noted that in 1998 banks had accounted for 86% of the total funds raised while in 2000 the percentage was only 73%. He then commented on the Company's liquidity and net margin activity and called upon Mr. Glisan to discuss certain workouts that were underway. Mr. Glisan discussed the individual workouts; underway and the potential impact on the Company's liquidity. He then reviewed the aggregate exposure the Company was subject to related to the Dabhol,, Cuiaba, and Trakya projects and Azurix. Mr. Fastow then noted that the Company was proposing adding two Deputy Treasurers, Mr. Paul Chivers and Ms. Anne Edgley. He, commented ontheir backgrounds and, following a discussion, upon motion duly made by Mr. Blake, seconded by Mr. Ferraz Pereira, and carried, the proposed officer elections were approved for recommendation to the Board. Mr. Winokur called upon Mr. Glisan to present the Treasurer Report, a copy of which is filed with the records of the meeting. Mr. Glisan reviewed the liquidity report as of April 18, 2001 and noted that the Company's total liquidity was currently over $7.4 billion. He then reviewed E0004404215 FXH004-00049 ============= Page 8 of 79 ============= the Company's active letters of credit and discussed the changes since year end. He presented the Company's guarantee portfolio as of March 30, 2001 and noted that guarantees continued to be higher than normal due to the significant increase in the volumes transacted by the Company. He reviewed key financial ratios and noted that the Company's original 2001 Plan had assumed that a large percentage of international assets would be sold early in the year. He stated that since this had not occurred the Company was closely monitoring the key financial ratios to ensure that they remained within the acceptable ranges absent any infusion of cash proceeds related to asset sales. Mr. Glisan then discussed two methodologies that had been utilized to determine the Company's cost of capital.. He noted that the first methodology, a 5-year annualized return, estimated a weighted average cost of capital ("WACC") of 19.3% while the second methodology, an equity analyst forecasted stock price, suggested a WACC of 14.1%. He then discussed the health of the equity markets by presenting charts depicting mutual funds flow for investment grade corporate debt, emerging markets debt, all equity, and international and global debt and noted that a significant amount of money had moved out of the equity markets and into the debt markets. He then compared the sector spreads of the Company and four of its peers for three, five, and ten-year yields and commented on the monthly change in sector spreads. He then discussed the Company's estimated new issue cost for three, five, and ten-year U.S. dollar-based fixed debt. He commented on the Company's financing activities that had already been completed in 2001 and transactions that were currently underway. He discussed certain notable issuances that had recently been completed by other companies and reviewed the Company's funding sources and the fees paid to the top five "fee-earning firms during 2000. Mr. Winokur called upon Mr. Buy to present the Chief Risk Officer's report, a copy of which is filed with the records of the meeting. Mr. Buy began by presenting a chart depicting the Company's balance sheet segmented by trade credit, investments, and all other assets. He then discussed the trade credit portfolio and stated that it had declined by almost three billion dollars since the end of the year. He reviewed the net credit exposure by the Company's e-rating methodology and presented the total net exposure related to the Company's major relationships, which made up 46% of the Company's total net exposure. He stated that some of the exposures were being reduced as the Company was receiving additional collateral and other set-offs. He then reviewed the collateral position and discussed total incoming and outgoing cash, letters of credit, and surety bonds. He discussed the Company's top five country net credit E0004404216 Nt FXH004-00050 ============= Page 9 of 79 ============= exposures and noted that as of March 31, 2001 70% of the exposure was in the U.S., 13% was in the U.K., and 12% was in Canada. Mr. Buy then began a discussion of the Company's investment portfolio, noted that at March 31, 2001 79% of the portfolio was invested in private equity, and commented on activity in the portfolio during the first quarter. He presented charts depicting the portfolio by industry, business unit investment, and performance category. He then discussed the performance category in more detail by classifying the investments into four categories, exceeding expectations, meeting expectations, falling below expectations, and troubled. He then discussed initiatives by the Risk Assessment and Control ("RAC") group, including expanding the investment portfolio to include all former Enron International assets, revaluing all of the major assets quarterly, reporting the investment rate of returns to the Board on a quarterly basis, and monitoring off-balance sheet vehicles. Mr. Buy then began a discussion of the RAC group's efforts relating to Enron Energy Services, LLC ("EES") and commented on the recent transfer of the wholesale and tariff positions as well as other risk management functions to the Enron Wholesale Services ("Wholesale") group. He discussed the major challenges facing EES and the Wholesale group, including operational risk and tariff, credit, and demand side management/operations and maintenance exposures. He then updated the Committee on the progress of the task force, made up of individuals from the RAC group, the Wholesale group, and EES, and presented a timeline depicting estimated completion dates of individual projects underway. He then reviewed the RAG group's analysis of EES's energy asset projects and stated that EES's progress had been slower than anticipated during the first quarter due in part to the volatility in the California marketplace. Mr. Skilling then joined him for a lengthy discussion of the situation in the gas and power markets in California. Mr. Buy then began the market risk update by discussing the profit or loss that each commodity group had earned during the first quarters of 2000 and 2001 compared to the average Value at Risk ("VAR") it had taken. He then presented the same information by business unit and specific commodity. He reviewed the VAR limit utilization by commodity for the last four quarters and gave an overview of the VAR backtesting for the twelve months ended March 31, 2001. He then presented seven stress scenarios that had been analyzed by the RAC group and commented on the potential impact of each scenario on the Company's earnings. He then discussed the Company's foreign exchange exposure E0004404217 tn V_ EXH004-00051 ============= Page 10 of 79 ============= by currency and commented on the amounts that would be recorded in the Company's currency translation account and income statement. He then began a discussion of the proposed changes to the Enron Corp. Risk Management Policy ("Policy") and noted that there was no change to the aggregate VAR limit. He then stated that the changes to the Policy related to the following areas: 1) increases to the net open position limit, maturity /gap limit,. and/or VAR for certain existing commodity groups, 2) establishing permanent net open position limits, maturity/gap limits, and/or VAR limits for certain commodities currently under the interim limit section of the Policy, 3) extending the interim limits for a certain commodity, and 4) modifying the reporting requirements to the Office of the Chairman. Following a discussion, upon motion duly. made by Mr. Blake, seconded by Mr. Ferraz Pereira, and carried, the proposed changes to the Policy as discussed . at. the meeting were approved for recommendation to the Board. Mr. Winokur then called upon Mr. Buy to discuss the proposed changes to the Transaction Approval Process ("TAP"). Mr. Buy stated that management was proposing certain changes to the TAP to: 1) reduce required Board approval of revisions due solely to personnel or organizational changes, 2) add approval authority for certain business unit `~ Chief Operating Officers, and 3) provide further clarification of the TAP. He reviewed how each of the proposed changes would impact the process and, following a discussion, upon motion duly made by Mr. Belfer, seconded by Mr. Blake, and carried, the proposed changes to the TAP as presented at the meeting were approved for recommendation to the Board. Mr. Winokur then called upon Mr. Causey to discuss a proposed Minority Financing Vehicle, and Ms. Carter distributed a handout, filed with the records of the meeting, related to the matter. Mr. Causey stated that management was proposing the Minority Financing Vehicle to optimize the capital structure of the Company. He then discussed the specifics of the financing vehicle and answered questions from the Committee. Following a discussion, upon motion duly made by Mr. Ferraz Pereira, seconded by Mr. Savage, and carried, the proposed Minority Financing Vehicle presented at the meeting was approved for recommendation to the Board. Mr. Winokur then called upon Mr. Calger to begin the Las Vegas Cogen II presentation. Mr. Calger presented an overview of the existing power plant located in Las Vegas and a proposed expansion, Las Vegas Cogen II ("LVCII"). He stated that the Company had acquired the existing facility in 1999 and had made improvements to the plant to reduce the heat E0004404218 EXH004-00052 ============= Page 11 of 79 ============= rate and increase capacity. He stated that there was continued strong demand for merchant generation projects in the Western Region and that management was proposing LVCII, which included 222 megawatts of additional gas-fired generation utilizing four turbines from the Company's existing turbine portfolio. He noted that the Company would enter into a 15-year, fixed price tolling agreement with Allegheny Energy Supply for the output of LVCII. He stated that it was. management's intention to finalize development, commence construction, and divest of the facility prior to commercial operations. He then reviewed the status of the development of the project to date, including the source and use of funds. He noted that the expansion project, combined with the existing facility, would be an attractive acquisition for generation companies since the facility had proven, reliable technology, a purchaser would receive a 100% controlling interest, the location of the facility was in a fast-growing region, and there would be a tolling agreement already in place. He commented on companies, which had already expressed an interest in purchasing the facility and the anticipated gain that would be realized. He stated that management was recommending approval of $199.1 million to finance construction of the LVCII expansion subject to completion of the following: 1) execution of a definitive tolling agreement, 2) receipt of the Electrical Transmission Agreement Confirmation, and 3) execution of the Southwest Gas Interconnection, Water/Wastewater, and Nevada Power Interconnection Agreements. Following. a discussion, upon motion duly made by Mr. Belfer, seconded by Mr. Blake, and carried, the proposed Las Vegas Cogen II -project as presented at the meeting was approved for recommendation to the Board. Mr. Winokur then called upon Ms. McDonald to begin the Cuiaba Integrated Energy ("Cuiaba") project presentation. Ms. McDonald reviewed the history of approvals related to the Cuiaba project and stated that the project was currently 99% complete. She discussed the items remaining for completion and noted that the plant was currently operating on diesel. She then discussed reasons that the project costs have increased, including complications with the construction in the ridges and the inclusion of contested change orders. . She then presented a chart depicting the original project' costs and the additional funding previously approved by the Board and commented on the sources and uses of funds. She stated that management was recommending that the Committee approve additional funding for the project in the amount of $45.6 million related to.the Company's contribution and an additional amount of $82.8 million in the event that Shell, . one of the project's partners, does not participate irk the increased cost. Following a discussion, upon motion duly made by Mr. Blake, seconded- by Mr. Ferraz Pereira, and carried, the EO004404219 FyNnna_nnnnn ============= Page 12 of 79 ============= proposed additional investments, as presented at the meeting, and an -additional $10 million in discretionary funds to be allocated by Mr. Skilling were approved for recommendation to the Board. Mr. Winokur called upon Mr. Skilling to begin the presentation on the proposed divestiture of the CEG/CEG Rio ("CEG-Rio") gas local distribution companies ("LDCs"). Mr. Skilling noted that the Company had acquired its interest in CEG-Rio in July 1997 through participation in a consortium. He stated. that the consortium was the winning bidder in the privatization of the gas distribution companies for the state of Rio de Janeiro, Brazil and he discussed the total cash investment. He noted that the Company had held an open auction process for the CEG-Rio and Gaspart LDCs in November of 2000 and that eight multinational energy companies had participated in the auction. He noted that Petrobras was the only company to offer an expression of interest for CEG-Rio and that the Company had negotiated a purchase and sale agreement with Petrobras to sell the Company's interest for $241 million plus relinquishment of Petrobras' right of first refusal with respect to the Company's shares in the Gaspart LDCs. He then discussed the financial impact and the major issues of the proposed sale. He noted that there were minor issues that remained to be resolved and noted that management was recommending that the Office of the Chairman be given the authority to ratify the transaction once the issues were resolved. Following a discussion, upon motion duly made by Mr. Belfer, seconded by Mr. Blake, and carried, the proposed CEG Rio divestiture as presented at the meeting was approved for recommendation to the Board. Mr. Winokur called upon Mr. Hayslett to begin the Red Rock presentation. Mr. Hayslett stated that the California market was currently short on pipeline capacity and that Transwestern Pipeline Company ("Transwestern") was proposing a 150,000 MMBtu per day expansion at a cost of $95 million. He stated that the expansion would be from various input points to markets in California or near the California border and would be accomplished by adding four compressors to the existing pipeline. He stated that this would increase Transwestern's west capacity to 1,240,000 MMBtus per day and he commented on the anticipated timeline for completing the proposed expansion. He reviewed the results of the open season that was conducted by Transwestern in. November of 2000 and the contract negotiations that were currently underway. He -stated that management was recommending that authority be granted to Mr. Skilling to approve the Red Rock expansion subject to the successful completion of contract negotiations relating to the sale of capacity. Following a discussion, upon motion duly made by Mr. Ferraz Pereira, E0004404220 Guunna_nnn5d ============= Page 13 of 79 ============= seconded by Mr. Belfer, and carried, the proposed delegation of authority to Mr. Skilling to approve the Red Rock expansion was approved for recommendation to the Board. There being no further business to come before the Committee, the meeting was adjourned at 5:45 p.m. C.D.T. Secretary APPROVED: Chairman O:1Ecm\PortMan\Board Meeting\BOD 08-2001\Planning\Minutes.doc va i E0004404221 FXHnn4-nnn55 ============= Page 14 of 79 ============= ~! Agenda Item 2 N s`' N ?` N EXH004-00056 I ============= Page 15 of 79 ============= 2-1 FXHnnd_nnnri7 ============= Page 16 of 79 ============= Stock Activity • Interest Rate Exposure • Finance Related Asset Sales Outstanding Financings and Debt Liquidity - Margin Activity • Asset Divestitures Workout Updates Ec004404224 2-2 EXH004-00058 ============= Page 17 of 79 ============= Enron Stock Activity, (S y ,... ,~ Jt7 (000) except Share Price j Stock Trading Activity - MTM Description Shares (000) Avg Price Amount Opening Balance - - - Sold Puts-Strike @ 18.73 13,646 - - Total Return Swap - June 1,672 $50.08 $83,729 Total Return Swap - July 2,067 $45.12 $93,255 Ending Balance 17,385 EGF Equity Position Limits V@R Notional open Limit ($MV $10.00 $300.00 Current position ($MlV $5.79 $172.87 -Position limits exclude ENA position which is reiflected in ENA equity book position report -Includes 60% of JEDI if an open position Stock Purchase Activity (Treasu Description Shares (000) Avg Price Amount Opening Balance 577 Repurchases 4,199 $78.95 $331,520 Other Activity (3,675) Ending Balance 1,101 Authorization, Subject to Jim Derrick's approval 20,000,000 Activity 4,199,000 EC004404225 t 2-3 EXH004-00059 ============= Page 18 of 79 ============= Interest Rate Exposure 40,000,000 $36,368,327 605,231 7,272,563 2,937,215 35,000,000 - 7,434,208 30,000,000 - - - 161,645 e j 25,000,000 665,915 521,202 500,000 D i 8,547,707 OFloating - 21 20,000,000 - -- - - ®Fixed - 79% 1,533,000 j - 6,175,000 15,000,000 _ 29,085,764 28,924,119 510,000 10,000,000 - 5,030,807 5,000,000 - - 9,332,250 0 Projects Prepays 125s LTD-Off CP STD LTD-B/S Leases ENE Hedges Total Notes: B/S Other Liabilities 1. Current CP Balance of $666 MM represents 15% of floating rate debt. 2. EGF goal of 80/20 fix/flt composition. \x 2-4 E0004404226 EXH004-00060 ============= Page 19 of 79 ============= Finance Related Asset Sales Prepays and 125 Sales ($MM) EXH004-00061 12/31/1998 6/30/1999 12/31/1999 6/30/2000 12/31/2000 6/30/2001 Prepays $ 1,258 $ 2,239 $ 2,489 $ 2,962 $ 4,016 $ 5,031 Fasb 125 $ 573 $ 683 $ 1,316 $ 772 $ 1,521 $ 1,533 $ 1,831 $ 2,922 $ 3,805 $ 3,734 $ 5,537 $ 6,564 $7,000 $6,000 E $5,000 E $4,000 m $3,000 L a $2,000 $1,000 $- E0004404227 12/31/1998 6/30/1999 12/31/1999 6/30/2000 12/31/2000 6/30/2001 ============= Page 20 of 79 ============= Outstanding Financings and Debt ($MM) 40,000 35,000 30,000 25,000 - 20,000 15,000 10,000 5,000 1998 1999 2000 2Q '01 1998 1999 2000 2Q'01 Year End % of Year End % of Year End % of Quarter End % of Outstanding Total Outstanding Total Outstanding Total Outstanding Total Bank 10,885 59% 13,807 54% 17,933 52% 17,954 50% Cap Mkt - US 71674 41% 10,870 42% 12,897 38% 14,302 39% Cap Mkt - Non US - 0% 1,037 4% 3,549 10% 4,102 11% Total $ 18,559 100% $. 25,714 100% $ 34,379 100% $ 36,358 100% a FxHnna_nnnR? 2-6 E0004404228 I Capital Mkts - Non-US Capital Mkts US o Bank ============= Page 21 of 79 ============= FxHnn4-nnn63 Liquidity - Margin ' Activity 12 Month Margin Activity Statistics (000) Net Margin Activity for Largest Largest Daily Month Daily Net In Net Out August '00 814 576 (97) September'00 (389) 77 (237) October'00 131 131 (225) November'00 2,733 186 (139) December '00 856 432 (403) January '01 370 273 (275) February '01 (400) 219 (227) March '01 (453) 138 (365) April '01 (344) 216 (155) May '01 (428) 97 (358) June '01 (996) 93 (172)_ July '01 (126) 90 (128) * YTD Margin Activity $1.768 billion Net out thru 7/26. Current Liquidity (000) CP Lines 2,750,000 ST Lines 484,000 PRM Asset 300,000 Net AR/AP 1,500,000 Total 5,034,000 } Monthly Daily Max Margin Out (995,650) (403,472) Multiiple of Max 4 4 (3,982,600) (1,613,888) 2-7 E0004404229 ;i ============= Page 22 of 79 ============= Summary Asset Disposition Status ($ in millions) $ Number of Book`V,ae Book Value Disposition Status , ; Assets U~i/S Off B/S Sold 27 $142 $109 Sale Pending (, 9 6.26"_ 410 2001 Active Negotiation I 12 1,335 481 2001 High Priority 23 1,007 437 2001 Medium Priority 2 39 0 2002 Active Negotiation - PGE 1 3,266 0 2002 High Priority - Elektro 1 1,998 462 2002 High Priority -All others 20 689 269 Total 95 $10,702 $2,168 yl EXH004-00064 ============= Page 23 of 79 ============= Workout Updates Dabhol Cuiaba Azurix Trakya . Other 2-9 EC004404231 EXH004-00065 ============= Page 24 of 79 ============= ASF -Detail on Outstanding Fu.ndings 1998 1999 2000 2Q '01 Bank 10,885 13,807 17,933 17,954 Corp 760 1,334 1,393 895 Unconsolidated Equity Affil - 100% 7,176 7,841 9,717 8,622 Prepay 1,163 2,490 4,016 5,031 125/M onetization 573 1,415 1,539 1,533 Nighthawk 485 - - - Rawhide 728 728 718 718 Zephyrus - - 500 500 Valhalla - - 50 50 Leases - - - 605 Capital Mkts - US 7,674 10,870 12,897 14,302 On Balance Sheet 5,790 6,294 7,881 9,801 NBPL & FPL 446 646 1,221 1,221 Osprey - 1,400 2,150 2,150 Marlin 1,024 830 830 315 Firefly 415 415 - - Yosemite 1 800 800 800 Nahanni - 485 15 15 Capital Mkts - Non-US - 1,037 3,549 4,102 On Balance Sheet - 530 955 1,193 Osprey Euros = 315 Euros - - 297 297 M argaux - 95 95 Wessex Water Bond - 507 507 507 Marlin 315 Azurix Bond - - 590 590 Yosemite II - - 359 359 Yosemite III - GBP - - 747 747 Total 18,559 25,714 34,379 36,358 2-10 E0004404 232 e EXH004-00066 ============= Page 25 of 79 ============= ASF - Detail on 125 Transactions B/U Deal Name Origination Date Maturity Date Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 ENA Bammel Looper 12/31/1998 12/30/2013 88 86 82 81 - ENA Mid Texas 12/31/1998 6/30/2013 79 76 75 74 - ENA American Coal 12/30/1998 10/16/2000 45 118 107 - ENA Powder River 12/30/1998 6/30/2000 43 41 - _ ENA Wind River 12/30/1998 6/30/2000 27 26 ENA Iguana 12/20/1999 6/20/2000 - 202 - _ _ ENA Discovery 12/29/1999 8/30/2000 - 120 120 - ENA Bachus - - - 200 ENA Catalytica 60 - ENA Hanover 6/28/2001 3/28/2002 70 ENA Hawaii 125-0 Series McGarret K (CGAS) 3/29/2001 12/28/2001 - - - - 31 EBS/ECI Ghost 12/17/1999 6/30/2001 - 255 255 - - EBS Avici 6/1/2002 - - - 35 35 EBS Hawaii 125-0 Series McGarret H (Braveheart) - - - 57 - EBS Hawaii 125-0 Series McGarret I (EBSCS) 3/29/2001 11/20/2002 115 EEL Hawaii 125-0 Series McGarret,J (Eli Lilly) 6/14/2001 11/20/2002 38 EES Alchemy 12/28/1999 6/27/2000 11 EES Blackbird 12/27/1999 4/14/2000 - 74 - - EES Hawaii 125-0 Series McGarret C 11/20/2002 - - - 30 30 EES Hawaii 125-0 Series McGarret D 11/20/2002 - - 30 91 91 EES Hawaii 125-0 Danno B (Alchemy) _ _ 24 11 - EES Hawaii 125-0 Series McGarret G 9/14/2001 - - - 47 47 EES Hawaii 125-0 Series McGarret L (Tahiti) 11/20/2002 30 EES Tahiti 2 6/22/2001 3/22/2002 20 Corp Cerberus 5/1/2002 517 517 Europe Riverside 3/6 1/15/1999 1/15/2002 78 80 75 74 70 Europe Riverside 9/EEP5 & ECTRL 9/28/1999 12/17/2013 100 3 3 3 3 Europe Riverside 10 9/28/1999 3/31/2000 Europe ETOL 240 228 Europe Hawaii 125-0 Series McGarret F (Riva) 12/7/2000 11/20/2002 - - - - 52 Europe Riverside 6 Institutional Invest 6/1/2008 156 Caribbean Churchill (Puerto Rico) 6/25/1998 1/5/2000 200 200 Asia/Africa Piti Power Guam 3/30/1999 3/28/2000 23 23 - - - 683 1,316 772 1,521 1,533 2-11 EC004404233 EXH004-00067 ============= Page 26 of 79 ============= ASF - Detail on Prepays Prepay Term Inflows Dec-98 Jun-99 Dec-99 Jun-00 Gas: Chase II Sep 95 - Oct 00 224,440 3,706 2,647 413 - Gas: Chase li Dec 96 - Jan 00 225,021 (184,851) (107,536) (40,984) (13,872) Gas: Chase IV Dec 97 - Dec 01 299,992 (252,755) (210,151) (171,146) (129,995) Gas: Chase V Jun 98 - Jul 02 250,000 (240,721) (205,192) (173,603) (140,448) Gas: Energy America Jun 98 - May 08 38,443 (40,482) (37,577) (35,359) (34,291) Gas: Chase VII (APEA) Apr 99 - Apr 11 287,611 - (271,687) (263,745) (256,654) Gas: Chase VIII Jun 99 - Jun 04 500,000 - (507,324) (486,471) (435,179) Gas: Cage Sep 99 - Sep 00 (250) - - 418 529 Gas: Chase IX Jun 00 - Jun 05 648,374 - - - (661,938) Gas: Chase X Dec 00 - Nov 05 328,258 - - - Gas:Citibank I Jun 01 - Dec 01 250,000 Power: CRRA Mar 01 - May 12 Crude: Chase IV Dec 98 - Dec 02 Crude: Delta Dec 98 - Nov 99 Crude: Truman Jun 99 - Sep 99 Crude: Jethro Sep 99 - Nov 99 Crude: Yosemite I Dec 99 - Dec 04 Crude: Yosemite II Feb 00 - Jan 07 Crude: Yosemite III Aug 00 - July 05 Crude: Chase II Dec 00 - Dec 01 Crude: Yosemite II Bridge Crude: Citibank-Mahll Ended 12/99 Crude: Chase III Ended 11/99 Crude: Citibank FX Hedge May 01 - Apr 06 Crude: Citibank USD May 01 - Apr 06 Crude: Citibank GBP May 01 - Apr 06 Crude: Citibank EUR May 01 - Apr 06 Total 220,180 249,994 (254,387) (242,756) (193,753) 190,000 (189,917) (121,407) 500, 000 0 (488, 809) 675,000 0 800,000 0 - (797,744) 324,000 0 - - 472,000 0 - - 315,000 - - 315,000 (327, 298) (172, 332) Dec-00 - Jun-01 9 (9) (88,390) (45,605) (107,499) (74,027) (35,046) (34,439) (263,192) (258,729) (393,457) (350,083) (658,136) (604, 936) (340,279) (332,242) (250, 592) (227,421) (139,846) (133,051) (795,157) (832, 326) (760,194) (322,982) (332,814) (319,751) - ($506,056) (523, 597) - ($319,288) (304,546) (46, 973) (23,111) - $0 - (51, 999) (26,116) - $0 - (12, 075) 474,781 (489, 973) 156,732 (158,434) 149,956 (151,103) $7,894,532 $(1,258,379) $(2,239,019) $(2,489,272) $(2,962,319) $(4,016,320) $(5,030,807) 2-12 ECO04404234 EXH004-00068 ============= Page 27 of 79 ============= h tt7~ e~ "°'7 Agenda Item 3 tt ~ m o 0 .p p 0 N W Ui EXH004-00069 ============= Page 28 of 79 ============= _ Enron Corp Treasurer Report August 13, 2001 EO004404236 3-1 FHnn4-nnn7n ============= Page 29 of 79 ============= Enron Corp. Active Letters of Credit by Category ($000) 06/30/01 12/31100 12131/99 Bids $ 6,368 $ 6,321 $ 5,968 Debt 19,925 24,241 52,946 EOTT 144,744 102,089 150,310 Leases 12,573 12,750 15,604 Other 18,261 280,179 80,071 Other Third-Party 10,218 6,605 24,078 Performance 632,184 425,210 522,006 Trade 616,708 634,300 76,269 Grand To tal $ 1,460,981 $ 1,491,695 $ 927,252 FXH004-00071 3-2 E0004404237 ============= Page 30 of 79 ============= EnronCorp.. y Guarantee Portfolio (000's) Trade (Payment & Performance) EOTT Trade Swap Agreements ) .,\, 06/30/01 12/31 /00 12/31/99 $21,641,942 $21,197,904 $17,316,817 5449744 5445744 440,375 (Master & Individual) 12,474,024 Projects (Non-Debt) 5,724,732 Debt 3,338,969 Grand Total $43,724,411 %878,431 7,148, 443 4,632,739 4,756,470 3,422, 444 2,493,049 $40,676,262 $32,155,154 E0004404238 3-3 ~ 1~ FXH004-00072 ============= Page 31 of 79 ============= Enron Corp Liquidity Forecast & Sensitivities As of July 27, 2001 ($000) Sources Available: Overnight 2-5 Days 5-30 days Total Commercial Paper (Backed by committed Bank Revolver) 1 2,750,000 2,750,000 Uncommitted Bank Lines & Loan Sales Lines 2 484,000 484,000 Letter of Credit Facilities 3 917,798 917,798 Net Accounts Receivable/Accounts Payable 4 1,500,000 1,500,000 Net PRMA 300,000 300,000 Shelf Registration for Public Debt Issuance 1,000,000 1,000,000 Shelf Registration for Public Equity Issuance 5 750,000 750,000 Whitewing Vehicle Capacity 30,140 30,140 Merchant Portfolio Available for Monetization 518,488 518,488 Scheduled Asset Monetizations 240,000 240,000 Total Sources Available $3,234,000 $1,947,938 $3,308,488 $8,490,426, Notes: Size of A2/P2 CP market: Current $82B, Nov'00 $140B. Size of Bank Loan Sales/Participation market: Current $10B. 1 CP Program Capacity is $3,350 million 2 Loan Sales Capacity is $550 million 3 L/C Lines Capacity total $2,125 million 4 A/R Sale Proceeds comprise less than 10% of Trade Receivables Available ($11.1 B) 5 15 million shares at $50 per share E0004404239 3-4 1 EXH004-00073 ============= Page 32 of 79 ============= r. Enron Corp Liquidity Forecast & Sensitivities As of July 27, 2001 ($000) Forecasted Outflows: ON - 10 Days 11-90 days Total General & Administrative Expenses 160,000 160,000 Marlin Refinancing 915,000 915,000 Debt Maturities 937,000 937,000 Total Forecasted Outflows $0 $2,012,000 $2,012,000 Contingencies: O/N - 10 Days 11-90 days Total Margin Postings 1 1,057,000 1,057,000 Deposits To Be Returned 2 _ _ Total Contingencies $1,057,000 $0 $1,057,000 Forecasted Inflows: ON - 10 Days 11-90 days Total 10 Year Benchmark 750,000 750,000 5 Year Exchange 250,000 250,000 Receivable Monetization 750,000 750,000 Contract Monetization 1,000,000 1,000,000 Total Forecasted Outflows $0 $2,750,000 $2,750,000 Represents 99% confinence interval on 10 day V@R based on historical margin. 2 As of July 17, Enron was in a net depositor position E0004404240 3-5 EXH004-00074 ============= Page 33 of 79 ============= 21 T1 Key Financial Ratios Focus 5 Remaining 2001 Transactions to Meet Plan 4.07 4.16 4.08 Prepays $1,000 4 3.52 3.69 --* Contract Monetization $1,000 A/R Sale $750 3 Inventory Sale $225 3 .08 3.13 2.62 Merchant Asset Monetizations $125 2.54 2 2.18 Other 2001 Finance Activity 1 Ten Year Benchmark $1,000 1998 1999 2000 2Q'01 2001 P Five Year Exchange $1,000 ** * Refinances' $975MM Floater Due 9/10 Funds Flow Interest Coverage Interest Coverage ** $ 250MM New Proceeds E0004404241 3-6 . EXH004-00075 ============= Page 34 of 79 ============= Rating Summary Rating Agency Long Term Commercial Paper Outlook Comments Standard & Poors BBB+ A2 Stable Our most solid rating agency relationship. Has expressed a willingness to improve our rating profile if assurances by Enron Senior Management are made to improve key financial ratios. Had difficult time approving extension of Marlin structure. Moody's Baal P2 Stable Very focused on market risk. A detailed V@R and market discussion was held June 27 which addressed their primary concerns. Fitch 1BCA BBB+ F-2 Stable Analyst is very positive on Enron core businesses and believes negative outcomes from India, California and Broadband will not have a material adverse' impact. R and I (Japan) A- n/a Stable Supports recent Yen financings. E0004404242 EXH004-00076 3-7 ============= Page 35 of 79 ============= Cost of Capital 5 year annualized return 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Mar-98 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Eauitv Analyst Forecasted Stock Prices 12 Month Firm Recommendation Target Price A.G. Edwards Accumulate 55 CIBC Oppenheimer Buy 80 CSFB Strong Buy 84 Goldman Sachs Buy 68 Howard Weil Accumulate 76 Merrill Lynch Buy 75 Morgan Stanley Outperform 85 Prudential Buy 55 Simmons Buy 55 Average 70.3 Closing Implied Enron Stock Price Date Price' Equity Return 6/30/2001 49.100 .43.2% % of Capital Cost of Capital Cost Structure After Tax Debt 4.8% 42% 2.0% Equity 19.3% 58% 11.2% WACC 13.2% EXH004-00077 % of Capital Cost of Capital Cost Structure After Tax Debt 4.8% 42% 2.0% Equity 43.2% 58% 25.1% WACC 27.1% E0004404243 3-8 r ============= Page 36 of 79 ============= Interest Rates 30 Day A2/P2 CP 3 Yr Treasury 5 Yr Treasury 10 Yr Treasury Libor (3M) Equities Dow Industrials S&P Index NASDAQ Commodities Natural Gas (Henry Hub) Crude (NYMEX) 3 Year Sovereign Spreads Argentina (B-/Caal/B-) Brazil (BB-/B1/BB-) EXH004-00078 YTD Max YTD Min. YTD Change 12/31/2000 7/2612001 6.45% 3.64% -2.71% 6.40% 3.69% 5.14% 4.15% -0.93% 5.13% 4.20% 5.05% 4.45% -0.35% 4.98% 4.63% 5.52% 4.76% 0.02% 5.11% 5.13% 6.40% 3.70% -2.69% 6.40% 3,71% 11,338 9,389 (331) 10,787 10,456 1,374 1,103 (117) 1,320 1,203 2,859 1,639, (448) 2,471 2,023 10.50 2.94 (7.24) 10.50 3.26 32.19 24.70 (0.07) 26.80 26.73 YTD Max YTD Min YTD Change 12/31/2000 7/26/2001 26.10% 4.96% 13.33% 7.00% 20.33% 8.55% 4.41% 2.17% 5.02% 7.19% 3-9 E0004404244 Z ============= Page 37 of 79 ============= Market Structure Sector Spreads 9 HISTORICAL 3-YEAR YIELD HISTORICAL 6-YEAR YIELD HISTORICAL 10-YEAR YIELD -Treasury -Treasury 9 -Treasury 8 Enron 8 Enron 8 Enron e 7 Duke Dynegy 7 Duke -Dynegy 7 Duke Dyne9Y o ~ fY~ ^ El Paso El Paso d El Paso 6 ...~ J -Mirant 6 Mirant ' 8 Mirant 5 Reliant 5 _ v Reliant r~ \~\ Reliant ----William s Williams Williams 4 ~- 4 4 - -T p\pp h\ON \\p^ p\p~ h\p^ h\O~ \p L l 1 1 p\pp \p. \pN `V ' ' p h\p h\p 1\p~ `p\ ` p\pp h\p \p \p h\p~ h\p. 1\~. p\ b\ a\ t~\ L\ L \ L \ j\ L p\L 1\ L 1\ \l \y \1 \l \R \1 \1 h b h o N . Historical 3-Year Treasury Spread (bps ) _f Historical 5-Year Treasu Spread b s Historical 10-Year Treasur y Spread b s 7/20/01 6/22/01 3/31/01 12/31/00 7/20/01 6/22/01 3/31/01 12/31/00 7/20/01 6/22/01 3/31/01 12/31/00 Enron 148 148 139 138 Enron 158 160 161 154 Enron 167 168 173 168 (BBB+/Baal) (BBB+/Baal) (BBB+/Baai) Duke Capital 132 135 143 139 Duke Capital 114 104 104 113 Duke Energy 132 136 168 158 (AM) (A/A3) (A1 /A+) Dynegy Holdings 202 193 205 179 Dynegy 163 163 186 169 Dynegy Holdings 182 178 208 186 (BBB+/Baa2) , (BBB+/Baa2) (BBB+/Baa2) El Paso (Coastal) 168 155 160 128 El Paso (Coastal) 183 175 172 171 El Paso (Coastal) 222 203 186 193 (BBB/Baa2) (BBB/Baa2) (BBB/Baa2) Mirant (Sthn Energy) 252 249 290 N/A Mirant Americas 241 242 N/A N/A Mirant Americas 273 284 N/A N/A (BBB-/Baa2) (BBB-/Baa3) (BBB-/Baa3) Reliant Energy 237 263 240 N/A Reliant Energy(Arkla) 218 220 221 239 Reliant Energy 237 263 268 N/A (BBB+/Baa2) (BBB+/Baa2) (BBB+/Baa2) Williams 182 179 160 122 Williams 188 182 176 176 Williams 217 198 198 210 BBB-/Baa2 BBB-/Baa2 (BBB-/Baa2) E0004404245 3-10 EXH004-00079 ============= Page 38 of 79 ============= Energy Sector Update • Over the past two years, strong industry fundamentals have caused the energy sector to out perform the Investment Grade Credit Index and other industry sectors. Strong commodity prices Consumer demand driven by the strong economy Supply sufficiently restricted by a disciplined OPEC • Bond Market Technicals also favored the energy sector Lack of Supply - Energy companies have had little need to issue new debt as record earnings have left them flush with cash. In fact, many companies are actively reducing debt levels. As a result, Investment Grade Energy Issuance was down over 40% in 2000 .- Increased Demand - "Credit Blowups" in other sectors drove investors to the relative safe haven of the energy sector, where earnings and credit fundamentals have been strong U, O. N F Gf N M N X W 200- 190- 7180 .0 170- 0 160- M y 150 N 140 130 120 110 100 Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 _ Invst. Grade Credit-- Energy -Integrated 3-11 EOO04404246 EXH004-00080 Jan-00 Mar-00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 Invst. Grade Credit-°`M- Energy -- Integrated -Source: Lehman Brothers ============= Page 39 of 79 ============= Energy Sector Update Recently, industry fundamentals have deteriorated and are beginning to lead to an investor perception of increasing risk within the sector - Increased supply of non-OPEC oil and natural gas Current price level is very fragile The California energy crisis has focused investors on potential for reregulation / slowed deregulation in the wholesale sector. • The Relative Value of the energy sector is becoming less compelling due to the deteriorating industry fundamentals - Energy bond spreads are currently at historically tight levels, despite a recent 7% drop in the Standard & Poor's Energy Index - Investors may soon decide that other industry sectors provide a more compelling value -Source: Lehman Brothers 3-12 E0004404247 EXH004-00081 ============= Page 40 of 79 ============= y~ r Energy Sector Update Technical Analysis - Growing Correlation between Equity and Debt Performance • As stock prices underperform spreads tend to widen as both debt and equity investors are responding to similar concerns in amid the slowing economy. • This pattern has been particularly noticeable in the telecom sector, which has been among the hardest- hit sectors in both markets. • As the Enron stock price has declined from a six-month high of $82 on January 26, 2001 to its closing price of $49.10 on July 11, 2001, the spread on Enron's outstanding debt securities in the Lehman Brothers Corporate Index has widened from 149 to 175 bps. 275 250- CL 225 N M T 200- U) 175 150 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 -Telecom Index Spreads - Telecom Index Price -Source: Lehman Brothers EXH004-00082 $80.00 a 175 U N Y 150 $50.00 a a U) 125 $80.00 0 00 0 $60.00 U $20.00 100-'-T~_ - ~~ $40.00 May-00 Jul-00 Sep-00 Nov-00 Jan-01 Mar-01 May-01 -Enron Debt Spread -- Enron Stock Price 3-13 E0004404248 $100.00 o/ ============= Page 41 of 79 ============= Current Treasury Rates Within a Historical Context TREASURY YIELD CURVE 9 WEEKLY DATA: JANUARY 01, 1995 THROUGH JULY 16, 2001 6 8 7 r 7 m 0 6 0 6 0 3i m 5 5 4 4 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1996. 1997 1998 1999 2000. - 2001 Years-to-Maturity - Treasury Yield Curve Based on the Close of: June 27, 2001 - Treasury Yield Curve Based on the Close of: December 31, 1986 - - - -- --- U.S. Government 2-Year Maturities --- - U.S. Government 5-Year Maturities - High 7.63% Summary Low 3.84% Statistics: Average 5.67% Latest 4.08% ----- Treasury Yield Curve Based on the Close of: December 29, 1989 ------- U.S. Government 10-Year Maturities 7.87% 4.02% 5.84% 4.76% Treasury Yield Curve Based on the Close of: December 29, 1995 - U.S. Government 30-Year Maturities 7.86% 4.29% 5.97% 5.24% ---°-- Treasury Yield Curve Based on the Close of: December 31, 1999 Percentage of Times Historical Treasury Rates Have Outperformed Curren Benchmark Treasury Current Rate as of 0 t Levels 7/11/01 % of Time 7.89% 4.85% 6.20% 5.63% 2yr 4,03% 10.1% 5yr 4-76% 12.0% 10yr 5.28% 18.3% 30yr 5.68% 20.4% -Source: Salomon Smith Barney EXH004-00083 E0004404249 3-14 ============= Page 42 of 79 ============= Estimated New Issue Cost Enron Estimated New Issue Cost 3y 5y 1Oy USD fixed 5.90% 6.51%0 7.09% USD Equivalent libor Funding Spreads USD 0.85% 1.04% 1.08% - Sterling 0.87% 1.04% 1.29% Euro 0.85% 0.96%' 1.16% Yen 1.00% 1.25% 1.35% Enron Activity 2001 Completed Deal Amount Rate Term Comment 0% Convertible Note $ 1,907 MM 0% 2/8/2021 2.125% Accretion TGS $ 150 MM Libor + 298 5 year CLN $ 825 MM 7.37% 5 year USD , GBP , EUR Marlin $ 920 MM 6.31% 2 year USD EUR Revolver $ 1,750 MM Libor + 55 1 year 51 Bank Participants LC Facility $ 500 MM Libor + 40/62.5 1 year 51 Bank Participants E0004404250 3-15 EXH004-00084 ============= Page 43 of 79 ============= . Compari of Funding son . Spreads 2001 BBB+/Baa1 USD Spreads EUR Spreads GBP Spreads 350 350 350 G:300 300 - 300 :;;250 - 250 - -c 250 - a, 200 200 n150 -- CL 150 50 ' c 100 100 •; - 100 - "- 0 050 50 - 0 ~, c 50 ~, 0 10.00 20-00 30 00 - 10.00 20.00 - 10.00 20.00 . Years Years Years • USD Spreads -ENE Spreads • EUR S reads ENE Spreads] GBP Spreads - ENE Sp reads] -The outlying points in the USD graph are -The outlying points in the EUR graph is the -The outlying points in the GBP graph is foreign companies issuing in USD. Dutch telco KPN NV. the Dutch telco KPN NV. -PSE&G has the 30 year outlier. Widest (10yr) Widest (5-7yr) Widest (5-7yr) HQI Transelec Chile SA 309 . Koninklijke KPN NV . 290 Koninklijke KPN NV 325 ERAC USA Finance 305 TPSA Euro Finance BV 213 Worldcom Inc 234 Allegheny Energy 291 Worldcom Inc 181 Tightest (10yr) Tightest (5-7yr) Tightest (5-7yr) Florida Power Corp_ 133 Koninklijke Ahold NV 120 BG Energy Capital. PLC 120 Exelon Corp 158 WPP Group PLC 122 Avon Energy Partners Holdings 168 Canada Natural Resurces Ltd. 160 NYA Birka Energi 135 -Source: Salomon Smith Barney E0004404251 3-16 EXH004-00085 ============= Page 44 of 79 ============= Comparison of Funding Sp reads Marketers and Producers 375.0 325.0 CL 275.0 .v _ CL 225.0 175.0 125 0 . 01/02/01 02/05/01 03/12/01 04/16/01 05/21/01 06/25/01 07/30/01 Mirant 8.300% due 05/01/11 NRG Energy 8.250% due 09/15/10 Calpine 8.500% due 02/15/11 _. Allegheny Energy 7.800% due 03/15/11 PSEG Pow er 7.750% due 04/01 /11 EI Paso 7.000% due 05/15/11 -Enron 6.75% due 08%01/09 The Williams Cos 6.750% due 01/15/06 3-17 E0004404252 EXH004-00086 ============= Page 45 of 79 ============= C) 0 .p 0 N W Agenda item 4 I 1P, EXH004-00087 ============= Page 46 of 79 ============= Enron Corp. _Chief Risk Officer Report =F~ August 13, 2001 s E0004404254 4-1 EXH004-00088 ============= Page 47 of 79 ============= Enron' s Assets TOTAL as of June 30, 2001 Part 1 • Trade Credit Update BALANCE SHEET , ASSETS T d f q ra e Credi q Part 20 Investment Portfolio $63 5 Bn $16 3 Bn . . $67.3 Bn $19 9 . Price risk management a ssets, Part 3 - Enron Energy Services net of credit reserves Accounts receivable Lk 1~ .44 Part 4 Market. Risk Update FF Investments $8.9 Bn -Wholesale Services (North America, Global Markets, Net. Works and -Enyon Global Assets & Services Principal Investments 0004404255 E Numbers in italics represent comparable amounts at March 31, 2001. 4-2 EXH004-00089 ============= Page 48 of 79 ============= Trade Credit Update E0004404256 4-3 EXH004-00090 ============= Page 49 of 79 ============= Trade,Credit Portfolio as of June 30, 2001 In $Bn's Investment Grade 8:21° Non-Investment Grade ($0.59) r 18% ($1.46) 21 % $0.16) ($0.25) ($0.33) ~~ ($0.16) tk ~'. r ICI 69%' 30% ~ ' ..31% , Gross Exposure Cash Collateral* Other Collateral* Net Exposure (including monetizations) $16.31 ($1.40) ($0.75) $14.16 $19.93 ($3.90) ($1.79) $14.24 * Only includes. collateral utilized. Numbers in italics represent comparable amounts at March 31, 2001. 4-4 E0004404257 EXH004-00091 ============= Page 50 of 79 ============= Net Credit Exp....... osu re by. E-Rating EC.:UU44U4Lt EXH004-00092 ============= Page 51 of 79 ============= Major Relationships. as of June 30, 2001 Total Net Exposure $14.16 En Gross Net Parent Exposure Collateral Exposure E-Rating Relationship In $MM's In $MM's In $MM's 4 TXU Corp. 1,857 (277)' 1,580 5 Sierra Pacific Resources 570 - 570 12, PG&E Corp. 505 505 1 Koch Industries, Inc. 404 404 ` 4 El Paso Corporation 384 384 All s Major 4 DynegyInc. 268 268 Others Relationships; 1 BP p.l.c. 3 C a 330 (92) 238 or l Energy Holding, L.P. 227 - 227 56% 44% 1 Government Of The United States 203 203 54;0 °" 46% 3 TransAlta Corporation 191 (1) 190 6 Calpine Corporation 164 164 11 Edison International 154 (5) 149 3 TransCanada Pipelines Limited 140 140 2 FPL Group Inc. 140 - 140 5 Avista Corporation 118 118- 4 Dominion Resources Inc. 110 110 2 Bonneville Power Administration 105 105 3 Public Utility District No. 1 of Snohomish County 98 - 98 CMS Energy Corporation 90 90 4 Tosco Corporation 86 86 5 Canadian Natural Resources Ltd. 86 86 3 American Electric Power Company Inc. 83 83 3 Westcoast Energy Inc. 82 - 82 3 Sempra Energy 177 (97) 80 4 Petro-Canada 79 - 79 2 Duke Energy Corporation 105 (66) 39 4 Reliant Energy Inc. 182 (149) 33 Major Relationships Total 6,938 (687) 6,251 Counterparties new to "Major Relationships" list II Non-Investment Grade Credit Exposures Numbers in italics represent comparable amounts at March 31, 2001. 4-g E0004404259 EXH004-00093 ============= Page 52 of 79 ============= Top 25 Net Credit Exposures for June 30, 2001 In $MM's E-Rating Counterparty Name (Legal Entity) March 31, 2001 June 30, 2001 , 4 TXU Europe Energy Trading Ltd. 1,435 1,554 12 Pacific Gas & Electric Company 474 474 5 Nevada Power Company 2 422 2 Koch Petroleum Group, L.P. 255 393 3 El Paso Merchant Energy, L,P.* - 214 4 Dynegy Power Marketing, Inc.* - 196 3 Coral Energy Holding, L.P. 96 193 1 United States Department of Energy* - 188 3 TransAlta Utilities Corporation 521 172 1 BP Energy Company 70 163 17 lCalpine Energy Services, L.P. 195 160 4 Coastal States Trading Inc. 96 154 5 Sierra Pacific Power Company 1 149 12 Southern California Edison Company 156 145 2 Florida Power & Light Company 106 134 2 Bonneville Power Administration 769 105 3 IBM Corporation* 102; 3 Public Utility District No. 1 of Snohomish County* 98 3 Virginia Electric and Power Company 11 87 4 Tosco Corporation 1 86 3 TransCanada Pipelines Limited 36 85 4 Canadian Natural Resources 132 82 4 Petro-Canada Oil and Gas 151 79 2 The Peoples Gas' Light & Coke Company* - 78 12 . Owens Corning 52 77 Top 25 Total 5,590 Other Net Credit Exposures 8,570 Total Net Credit Exposure 14,160 `Zero balances represent a net obligation for Enron as of reporting date Counterparties new to "Top 25" list 4-7 Non-Investment Grade Credit Exposures . E00044042 60 EXH004-00094 ============= Page 53 of 79 ============= Collateral* as of June 30, 2001 In $MM's Counterparty Amount Counterparty Amount CASH POSITIONS INCOMING LETTERS OF CREDIT The Chase Manhattan Bank (1) 586 Allegheny Energy.Supply Company, LLC 177 Reliant Energy Services, Inc. 135 TXU Energy Trading Company 115 Morgan Stanley Capital Group Inc. 120 Constellation Power Source, Inc. 75. BP Corporation North America Inc. 92 Axia Energy,LP 44 The New Power Company 70 Woodward Marketing, L.L.C. 26 Duke Energy Trading and Marketing, L, L. C. 66 The Premcor Refining Group, Inc. 20 PG&E Energy Trading - Power, L.P. 60 Reliant Energy Services Canada Ltd. 18 Sempra Energy Trading Corp. 42 Global Crossing Bandwidth, Inc. 18 Powerex Corp. 40 PanCanadian Energy Services Inc. 16 PanCanadian Energy Services Inc. 34 Sempra Energy Trading Corp. 13 PSEG Energy Resources & Trade LLC 32 Other 346 Total Incoming Letters of Credit 868 Other Cash - Incoming 121 Other Cash - Outgoing (170) Powerex Corp. (40) OUTGOING LETTERS OF CREDIT Merrill Lynch Capital Services, Inc. (49) California Power Exchange Corporation (107) Phibro Inc. (54) Pacific Gas & Electric Company (100) J. Aron &' Company (63) Powerex Corp., (89) Mirant Americas Energy Marketing, L.P. (101) Duke Energy` Marketing Limited Partnership (80) Aquila Risk Management Corporation (112) Louis Dreyfus Corporation (17) Reliant Energy Services, Inc. (124) LG&E Energy Marketing Inc. (4) Morgan Stanley Capital Group Inc. (142) Other (4) Duke Energy Trading and Marketing, L.L.C. (351) Total Outgoing Letters of Credit (401) Mahonia Ltd (442) Net Outgoing Cash (250) Total Incoming Cash 1,398 OUTGOING SURETY BONDS Total Outgoing Cash (1,648) Mahonia. Ltd (1,266) ISO New England Inc. (40) Total Outgoing Surety Bonds (1,306) OUTGOING SECURITIES Bank of Montreal (34) * Includes all collateral, including collateral not utilized. (1) Includes amount related to prepay structure with Mah onia Ltd. 4-8 E0004404261 EXH004-00095 ============= Page 54 of 79 ============= Change in Cash Collateral* In $MM's Incoming Cash 6,000 Outgoing, Cash 5,000 4,760 - Net 3,897 4,000 2,633 3,000 2,000 1,398 down vnpwp~ ` 1,000 347 1,709 1 1,720 , 0 (250 (1,000) (2,000} (1,286) (1,648) (3,000)- (2,177) (3,051) (4,000 09/30/2000 12/31/2000 03/31/2001 06/30/2001 * Includes all collateral, including collateral not utilized. 4-9 E0004404262 FXH004-00096 ============= Page 55 of 79 ============= Top 5 Country Net Credit Exposures In $IVIIVI'S Sweden . 43 Switzerland _ 42 Australia 37, Netherlands 36 %of % of Mexico 33. E-Rating Country, March 31, 2001 Total June 30, 2001, Total Slovakia 30 Norway _ 27 1 USA 9,977 70% 10,246 72% Cayman Islands 27 1 United Kingdom 1,817 13% 1,833 13% China 26 1 Canada 1,755 12% 1,356 10% Italy 21 1 Germany 150 1 % 127 1 % Croatia 20 4 Czech Republic N/A 47 Colombia 17 Belgium 16 Top 5 Total 13,609 France 16 Other Net Credit Exposures 5511 South Korea 13 Total Net Credit Exposure 14,160 Japan 12 Finland 11 Bermuda 11 Counterparties new to "Top 5" list Slovenia 10 Brazil 10 United Hong Kong 9 ' Kingdom Austria 9 `2 Portugal 8 $1,833Spain 7 i r4. ; Argentina 5 Ireland 5 Bahamas 4 Panama 4 Canada ,.., Oman 4 Gibraltar 3 $1,356 r Germany, a , $1 755 $127 k< `~ Turkey 3 Indonesia 3 <~ Monaco 2 United Bahrain 2 States Saudi Arabia 2 to India 2 $10,246 Thailand 2 $9,977 South Africa 2 Chile 1 Singapore 1 Greece 1 Taiwan 1 Denmark 1 British Virgin Islands 1 Other 11 * Calculated based on country of incorporation. ` Total 551 Numbers in italics represent comparable amounts at March ' 1 20171 4-10 E0004404263 EXH004-00097 ============= Page 56 of 79 ============= California Update In $MM's Utility Exposure Net Exposure Trading Affiliates Net Exposure Pacific Gas & Electric Company 474 PG&E Energy Trading, Canada Corporation 25 PG&E Gas Transmission, Northwest Corporation 5 , PG&E Energy Trading-Gas Corporation 1 Total PG&E Affiliates 31 Southern California Edison Company 145 Edison Mission Marketing & Trading Inc. 2 Edison International 2 Total Edison Affiliates 4 Total Utility Exposure 619 Total Trading Affiliates 35 Pacific Gas & Electric Company filed bankruptcy on April 6, 2001. Enron is ,a member of PG&E's creditor committee. # Southern California Edison Company is in default on bank debt. No bankruptcy filing to date. e Lower spot power and gas prices, favorable filing by California Department of Water Resources, and current rate environment should improve ability for utilities to recoup past power cost. 4-11 E0004404264 EXH004-00098 ============= Page 57 of 79 ============= Credit Reserve Historical Comparison In $MM's 420 400 380 Actual 360 340-- '320 300 280 260 240 220 200 180 160 140 120 100 00 a) 00 00 00 0) 0) d) c rn 0rn 0) rn 0 0 o) 0) 0) 0) c) Q) 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ ` < 0 o U a :3 0 < o 0 a C 0) o 0 ~ < Required Reserve: Amount of reserve required for existing portfolio after simulating de faults and assuming 50% recovery. 4-12 ECO04404265 EXH004-00099 ============= Page 58 of 79 ============= Investment Portfolio E0004404266 4-13 EXH004-00100 ============= Page 59 of 79 ============= Investment Portfolio Summar v In $MM's 3/31/01 6/30/01 Net Portfolio Carry Value $8,622 Net Portfolio Carry Value $8,923 F Private Equity $6,808 F Private Equity 79% $7,303 Public Equity $997 12°0 L Real Property Structured Equity operty Structured Equ ity Debt $219 Debt $44 $598 2% 7% $656 1% Q2 2001 Activity 7% --- - ------ - -- Net Portfolio Net Portfolio Carry Value Net Net Change in Carry Value 3/31/01 Additions Disposals Syndications Valuation 6/30/01 $8,622 $758**_ ($238) ($201) ($18) $8,923 * Investment Portfolio excludes EES, Azurix, Dark Fiber Assets, Enron Wind Corp, Enron Transportation Services, Bridgeline, TNPC, etc. ** Includes $357MM related to Daishowa/Project Crane funded in Q2 2001 (approved in Q4 2000) and $105MM-related to Cuiaba. 4-14 E0004404267 EXH004-00101 ============= Page 60 of 79 ============= Summary of Investment Portfolio as of June 30, 2001 In $MM's Net Portfolio Carry Value $8,923 by Business Unit Global Assets North America f<= Europe 78 17% 2os _ Net by Industry X84 $18S 1% 0% by Performance Category 1% 0%' Regulated Industrial Global Below Utilities Markets Markets Ex etations $2,686 $494 _' $163 30% 5% 2% r roubled 24 Non-Regulated Eno 45% Power Generation Upstream $3,173 $859 36% 10% Paper 34% 12% $479 5E0004404268 Energ Services Other 5168 Expectation $227 2% 2% 3% 7% 3% 12% Numbers in italics represent comparable amounts at March 31, 2001. 4-15 FXH004-00102 ============= Page 61 of 79 ============= Portfolio Summary as of June 30, 2001 In $MM's Net Portfolio Carry Value $8,923 L Exceeds Expectations EcoElectrica, L.P.' Equity 197 Vengas 142 b Performance Cate or y g y Mariner .517 Below Transportadora De Gas Del Sur 451 Expectations > $1,943 Daishowa Forest Products 357 _ sa%° El Paso (East Coast Power Proceeds) .266 .. Below Expectations ,.,' Sarlux 350' r SK - Enron 298 Trakya 216 Gaspart 192 Promigas 159 COPEL 97 Exceeds Expectations - $574 7% 12% Elektro 2,031 Dabhol 849 Cuiaba 537 CEG 199 Transredes 144 Bahia Las Minas 109 Numbers in italics represent comparable amounts at March 31, 2001. 4-16 ECO04404269 FXHnn4-nn1n3 ============= Page 62 of 79 ============= A R, Enron Energy Services E0004404270 4-17 EXH004-00104 ============= Page 63 of 79 ============= EES Reorganization Management and legal groups have been completely revamped and task forces formed to address major challenges. RAG will continue to monitor progress and report to the Board. E0004404271 4-18 EXH004-00105 ============= Page 64 of 79 ============= Major Challenges Update Tariff Exposure Uncertainty surrounding Direct Access in California. Unfavorable legislative vote could require switching customers back to utility service resulting in losses and regulatory risks. Continued unfavorable changes of tariff components including generation, transmission and distribution charges and Competitive Transition Charges. Credit Exposure Credit exposure is not aggregated accurately due to deficiencies in deal capture, risk management and settlements. High working capital requirements continue due to contract structures and inadequate infrastructure in settlements. Operational Risk Existing deficiencies in the front, middle and back office processes result in an inability to mass market. Consumption Risk Inability to capture, quantify and manage changes in I Load Shape customers' overall consumption patterns and changes in load profiles. E0004404272 4-19 EXH004-00106 ============= Page 65 of 79 ============= EnergyAsset Projects Net Present Value as of July 27, 2001 $200 Step 1 - Enron Approval Plan / Actual $180 Step 2 - Customer Approval Plan / Actual Step 3 - Installed Plan / Actual $160 •-- Step 4 - Actual Savings Validated +":•. `4 C $140 f ,r . 0. $120 - 000 'Q $100 d !Q $80 - 1 00 N $60 1 w $40 r $20 1 1 j r mU ,~t o~ eQ ev ~c o~ ~` ) O ~` ) o'` o`~ ory oti AO e~ 2v a~ J~ eQ ec, ` ) O r 5 O 5 a O Actual vs. Forecast Project Performance • Project approval and installation are slightly behind plan 250% 200% • Project performance measurement is Cal 150% progressing, 40 projects have actual 50% R % --narinnO savings validated (out of 530 completed Z 0 e projects) - -50% 100% -150%0 4-20 Projects E0004404273 FXH004-00107 ============= Page 66 of 79 ============= Market Risk Update _ E00044042'74 4-21 EXH004-00108 ============= Page 67 of 79 ============= Risk Profile by Product Six Months Ended June 30,'2001 and 2000 ($MM) 1 710 665 Trading P&L it YTD 6/30101 P&L = $2.0 El~R . 501 402 r , YTD 6/30/00 P&L = $1.3 B 1 247228 100 79 62 58 _ 51 50 43 42 29 27 26 24 11 7 18 12 10 12 10 ) 6 (2) (17) 2 (1) (1) (14 0 4t (50) NA Gas NA Power UK European Global Financial Coal Steel SA Power Continental Metals Weather Paper Other(1) SA Gas Nordic Power Gas Products Power Power ($MM) Average VaR ; llllll YTD 6/30/01 Avg VaR = $79 MM! YTD 6/30/00 Avg VaR $35 MM 0 toi ,Y . (d> ($D (59) (26) (37) (20) (15) (10) NA Gas NA Power UK European Global Financial Coal Steel SA Power Continental Metals Weather Paper Other(l) SA Gas _ Nordic Power Gas` Products Power Power Return on VaR - Six Months Ended June 30 Enron `` 2001 107% 161% 144% ' 132% 75% 179% 181% 626% 178% 118% 68% 127% 128% 9% (19%) (64%) 223% ' 2000 168% 175% 195% 32% 70% 140% 81% NA (114%) (122%) NA 50% 67% (9%) 368% 89% 313% ME 9mm (1) includes commodities with profit/loss less than $10 MM 4-22 E0004404275 Puunna_nn1 nQ ============= Page 68 of 79 ============= 10 01, Risk Profile by Market Concentration and Business Unit Six Months Ended June 30,.2001 and 2000 Market Concentration(1) Business Unit Comparison Trading P&L i 1111111111111111111111W D 6/30/01 P&L $2.0 B Trading P&L YTD Trading P&L $2.0 B ($MM) ($MM) YTD 6/30/00 P&L = $1.3 B 750 712 695 ..... ,..,_ . --------- 1,450 1,401 513 500 400 950 338 250 228 450 - 398 104 50 58 51 79 1g 158 36 (7) 0 (50) Americas Americas European Products Financials Emerging Gas Power Gas & Businesses ' Americas Europe Global Industrial EBS Power Markets Markets Average VaR IY iris YTD 6/30/01 Avg VaR = $79 MMm Average VaR , YTD Average VaR = $79 MM ($MM) YTD 6/30/00 Avg VaR $35 MM K ($MM)' a {14) (8) (5) (3)(3) (4) (3) () (1) (0.2) (20) (20) (16) (20) (17) (26) (40) (37) (40) X60) (59) ?~ (80) Americas Americas European Products Financials Emerging Gas Power Gas & Businesses (80) (7o) Americas Europe Global Industrial EBS Power Markets Markets Return on VaR - Six. Months Ended June 30 Enron ( Return on VaR -Six Months Ended June 30 Enron '' 2001 107% 169% 183% 121% 180% 182% 223% 2001 179% 211% 172% 333% (272%) 223% 2000 172% 174% 186% 82% 140% 73% I 313% l 2000 243% 188% 144% 65% nil 313% (1) Commodities aggregated per recommended Concentration Limit categories E0004404276 4-23 FXHnn4-nn1 10 ============= Page 69 of 79 ============= m n a 0 4- p 0 N N Agenda Item 5 . r f r EXH004-00111 ============= Page 70 of 79 ============= Enron Corp. - Projects and Amendments .x August 13, 2001 E0004404278 5-7 EXH004-00112 ============= Page 71 of 79 ============= m n 0 0 .p .p +r Agenda It m 5a e 7 1 dry f EXH004-00113 ============= Page 72 of 79 ============= AGENDA ITEM 5(a) (SUGGESTED FORM OF RESOLUTIONS) RESOLVED, that any two of the following officers of the Company are hereby authorized and empowered to open and maintain one or more accounts in the name of the Company with any securities brokerage firms (the "Brokers") which such officers, in their discretion, deem appropriate to use for the purpose of purchasing, investing in, or otherwise acquiring, possessing, selling, effecting transactions in, or dealing in, securities, including, but not limited to stocks, bonds, options, etc. (the "Securities"), all within the guidelines and limitations of the Company's Investment Policy (the "Investment Policy") as in effect from time to time: the Chairman of the Board, the President and Chief Executive Officer, the Executive Vice President and Chief Risk Officer, the Executive Vice President and Chief Financial Officer, the Managing Director, Finance and Treasurer and Timothy A. DeSpain, Deputy Treasurer (the "Authorized Officers"); RESOLVED FURTHER, that any of the Authorized Officers be, and they hereby; are, authorized and directed,-for and in the name and on behalf of the Company, to give written or oral instructions to any Brokers by telephone, facsimile transmission, or otherwise '_ with respect to any Securities transactions_ in connection with any such account; to pay cash or by checks and/or drafts drawn upon the funds of the Company, such sums as may be necessary in connection with any such account; to deliver Securities. to any Brokers or to any custodian account; to, order . the transfer or delivery or acceptance of Securities to or from any other person whatsoever, order and take any other action necessary to transfer the record of any Securities to any account selected` by such officers; to endorse any Securities in connection with any such account; to receive on behalf of the Company confirmations and periodic statements of account; and to take all action necessary or desirable in connection with any such account, all consistent with the Company's Investment Policy; RESOLVED FURTHER, that any two of the Authorized Officers of the Company be, and they, , hereby are, authorized and empowered,. on behalf of the Company, to designate in an Officers' Certificate from time to time (1) those employees E0004404280 EXH004-00114 ============= Page 73 of 79 ============= of the Company who shall have the authority to effect the transactions in Securities enumerated in these resolutions, within the limitations and conditions determined by such officers in their discretion and specified in such Officers' Certificate, such limitations and conditions to be not less restrictive than those imposed by the Company's Investment Policy and/or (2) certify in writing compliance with the guidelines and limitations of the Company's Investment Policy; RESOLVED FURTHER, that any Broker may rely upon an Officers' Certificate given in accordance with these resolutions as conclusive and it shall be effective for all transactions made in reliance upon it until after such Broker receives written notice of a change in or the rescission of authority; RESOLVED FURTHER, that any two of the Authorized Officers of the Company be, and they hereby are, authorized to give written notice of the termination or cancellation of authority to trade in such accounts; RESOLVED FURTHER, that all actions heretofore taken by any officer of the Company, in the name and on Q behalf of the Company, related to or in connection with the ~' transactions' contemplated' by these resolutions, including without limitation the execution and delivery of any instruments or other documents as any officer shall have deemed necessary, proper, or advisable, are hereby adopted, ratified, confirmed, and approved in all respects; and RESOLVED FURTHER, that the proper officers of the Company and its counsel be, and each of them hereby is, authorized, empowered, and directed (any one of them acting alone) to take any and all such further action, to amend, execute, and deliver all such further instruments and documents, for ` and ` in the name and on behalf of the Company, under its corporate seal or otherwise, and to pay all such expenses as in their.discretion appear-to' be necessary, proper, or advisable to carry into effect the purposes and intentions of this and each of the foregoing resolutions. E0004404281 FXH004-00115 ============= Page 74 of 79 ============= m 1 Agenda Item 6 -p 00 ' N f tf . ~ r EXH004-00116 ============= Page 75 of 79 ============= Other Business E0004404283 6-1 EXH004-00117 ============= Page 76 of 79 ============= Agenda Item 7 I NV N ~ .. ~ 00 -A EXH004-00118 ============= Page 77 of 79 ============= - Adjourn E0004404285 7-1 EXH004-00119 ============= Page 78 of 79 ============= 11 ~~ f' ~44y 1 r~l~r °f { {{ V}ly 4-. N 00 67 eds EXH004-00120 Agenda Y f i i ei ~ ' '% tit a P , iF e r d~ 1 } ============= Page 79 of 79 ============= Page 1. Approval of April 30, 2001 Finance Committee Minutes Mr. Winokur 1-1 2. Chief Financial Officer Report Mr. Fastow 2-1 3. Treasurer Report Mr. Glisan 3-1 4. Chief Risk Officer Report Mr. Buy 4-1 Quarterly Risk Update _- Enron's Assets 4-2 - Trade Credit Update 4-3 _ Investment Portfolio 4-13 - Enron Energy Services 4-17 - Market Risk Update 4-21 5. Projects and Amendments 5-1 A) Brokerage Account Authorization Mr. Glisan 5A-1 - Approve for Recommendation to the Board -6. Other Business 6-1 7. Adjourn 7-1 E0004404287 See Addendum for Deal Approval Sheets approved between Board meetings EXH004-00121 Finance Committee Meeti