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LESSONS FROM ENRON: A TIMELINE

February 12, 2001: Jeff Skilling Named CEO

April 17, 2001: 1st Quarter Earnings Report

"Enron's wholesale business continues to generate outstanding results. Transaction and volume growth are translating into increased profitability," said Jeff Skilling, Enron's president and CEO. "In addition, our retail energy services and broadband intermediation activities are rapidly accelerating."
May 15, 2001: Files 1st Quarter 2001 10-Q with SEC
Describes acquisition of limited partnership interests in Joint Energy Development Investments LP
Related Transactions Discussion
  • During the first quarter of 2001, Enron entered into transactions with limited partnerships (the Related Party), whose general partner is a senior officer of Enron. The limited partners of the Related Party are unrelated to Enron. All transactions with the Related Party are approved by Enron's senior risk officers as well as reviewed annually by the Board of Directors. Management believes that the terms of the transactions with the Related Party were reasonable compared to those which could have been negotiated with unrelated third parties.
  • Enron entered into transactions with the Related Party to hedge certain merchant investments and other assets.
July 12, 2001: 2nd Quarter Earnings Report
"Enron completed another quarter of exceptional performance. Our wholesale and retail energy businesses continue to dramatically expand business activity and increase profitability. In addition, Enron is distinct in developing a leading role in the European energy markets and in other high potential wholesale markets," said Jeff Skilling, Enron president and CEO.
August 14, 2001: Jeff Skilling Resigns
"I am resigning for personal reasons. I want to thank Ken Lay for his understanding of this purely personal decision, and I want to thank the board and all of my colleagues at Enron," said Skilling.
"We regret Jeff's decision to resign, as he has been a big part of our success for over eleven years," said Lay. "But, we have the strongest and deepest talent we have ever had in the organization, our business is extremely strong, and our growth prospects have never been better."
August 14, 2001: Files 2nd Quarter 2001 10-Q with SEC
During the second quarter of 2001, Enron did not recognize any material revenues or income from transactions with the limited partnerships discussed below. Additionally, the senior officer, who previously was the general partner of these partnerships, sold all of his financial interests as of July 31, 2001, and no longer has any management responsibilities for these entities. Accordingly, such partnerships are no longer related parties to Enron.
All transactions with these partnerships (the Partnerships) have been approved by Enron's senior risk officers as well as reviewed annually by the Board of Directors. Management believes that the terms of the transactions were reasonable compared to those which could have been negotiated with unrelated third parties.
In the first quarter of 2001, Enron entered into transactions with the Partnerships, now unrelated, to hedge certain merchant investments and other assets.
August 15, 2001: Sherron Watkins sends her letter to Ken Lay

October 16 2001: 3rd Quarter Earnings Report

Enron reports recurring third quarter earnings of $0.43 per diluted share; reports non-recurring charges of $1.01 billion after-tax; reaffirms recurring earnings estimates of $1.80 for 2001 and $2.15 for 2002; and expands financial reporting
"Our 26 percent increase in recurring earnings per diluted share shows the very strong results of our core wholesale and retail energy businesses and our natural gas pipelines," said Kenneth L. Lay, Enron chairman and CEO. "The continued excellent prospects in these businesses and Enron's leading market position make us very confident in our strong earnings outlook."
$544 million related to losses associated with certain investments, principally Enron's interest in The New Power Company, broadband and technology investments, and early termination during the third quarter of certain structured finance arrangements with a previously disclosed entity.
October 24, 2001: Andrew Fastow, Enron CFO, placed on leave

November 8, 2001: 8-K Filing with SEC

Chewco, JEDI, LJM
A required restatement of prior period financial statements to reflect the previously disclosed $1.2 billion reduction to shareholders' equity, as well as various income statement and balance sheet adjustments required as the result of a determination by Enron and its auditors, based on current information, that certain off-balance sheet entities should have been included in Enron's consolidated financial statements pursuant to generally accepted accounting principles;
The restatement of its financial statements for 1997 through 2000 and the first two quarters of 2001. As a result, financial statements for these periods and the audit reports relating to the year-end financial statements for 1997 through 2000 should not be relied upon;
November 19, 2001: Files 3rd Quarter 2001 10-Q with SEC
Extensive follow-on discussion to November 8 8-K regarding LJM transactions
December 2, 2001: Enron files for Chapter 11

December 12, 2001: Berardino testifies in Congress

"If there is one thing you take away from my testimony, I hope it is this: Andersen will not hide from its responsibilities. That's why I'm here today. The public's confidence is of paramount importance. If my firm has made errors of judgment, we will acknowledge them. We will make the changes needed to restore confidence."
January 10, 2002: Arthur Andersen announces "significant but undetermined number of Enron-related documents were disposed of"

January 15, 2002: Arthur Andersen fires David Duncan, partner in charge of Enron

February 1, 2002: Powers Committee releases report

March 14, 2002: US government indicts Arthur Andersen on one count of obstruction of justice



2002 University of Chicago