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Enron Mail |
Thanks Bob. I feel a lot better, particulary since the year end documents
won't have to have all the detail. DF From: Bob Chandler 12/11/2000 11:48 AM To: Drew Fossum/ET&S/Enron@ENRON cc: Rod Hayslett/FGT/Enron@ENRON, Dave Neubauer/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@Enron, Mary Kay Miller/ET&S/Enron@ENRON, James Saunders/FGT/Enron@Enron, Dan Fancler/ET&S/Enron@Enron, Harry Walters/ET&S/Enron@Enron Subject: Re: Quarterly Noteholder Reports Thanks for your comments below. We consulted our AA folks in drafting the disclosures. It wasn't a big deal for Enron's 10Q because the positions between NNG and TW are eliminated in the consolidated statements. As for the Form 2 and the Brown Covers, there are specific GAAP disclosure requirements that we have to include on a stand-alone basis. Since most of these positions will be gone by year end, it won't look nearly as massive as it was at the end of the third quarter. In fact, if Roger Willard had given us his final word about the transactions in time, we would have booked the ultimate net transactions in September and we wouldn't have had all these gross positions. I don't feel quite as bad about not getting it right in the unaudited third quarter financials as I otherwise would, since we did review the transactions and the noteholders disclosures with AA before the 3rd quarter was released and before the noteholders reports were distributed. As always, Legal and Regulatory will have ample opportunity to comment on Brown Cover and Form 2 disclosures before they are finalized. From: Drew Fossum 12/11/2000 10:59 AM To: Bob Chandler/ET&S/Enron@ENRON cc: Rod Hayslett/FGT/Enron@ENRON, Dave Neubauer/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@Enron, Mary Kay Miller/ET&S/Enron@ENRON Subject: Quarterly Noteholder Reports I've reviewed the draft NN and TW quarterly reports to noteholders. I haven't had a chance to compare these to prior quarterly filings, but I have three questions/concerns. First, the discussions of "Price Risk Management Activities" seem overly detailed and cumbersome given the true commercial impact of the deals involved. For example, we disclose the total notional amount of gas involved in the Transcanada deal, the "fair value" of the trades, and a variety of other details, even the total economic impact of the deal to us is pretty small (about a million dollars if I remember right). The base gas deal, by comparison, was discussed in one sentence. Can we avoid making the thing look bigger than it really is by disclosing something more meaningful like VAR (which I assume would be a much smaller number)? Second, disclosing TW and NN trading activity separately makes the Transcanada deal look like a bigger thing than it really was, since the TW and NN portions offset one another. I know we need to disclose deals separately for each operating company, but is there a way things like notional value and "fair value" (or VAR) can be aggregated to more accurately reflect the total impact of the deal--currently it looks like both TW and NN were out doing huge commodity deals. Third, I have never been that concerned about overly broad disclosures in the noteholder reports because of the limited distribution. However, if these disclosures will be Arthur Anderson's template for the Enron Corp. 10Q or the FERC Form 2s, I have a real problem. Please let me know if I can be of help in talking through these issues. DF
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