$608 million in 1992. Decreased 1994 net operating cash flows were primarily due to the receipt in
1993 of @ refund on settiement on audit of federal income taxes paid in certain prior years.

Proceeds from the sale of a volumetric production payment, increased net operating revenues and a
decrease 'n provision for current taxes resulting from both increased tight gas sand federal income
tax credit utilization and the receipt of a refund on settiement on audit of federal income taxes paid
in certain prior years. in accordance with the requirements of SFAS No. 95 - “Statement of Cash
Flows, net proceeds from the sale of selected oll and gas reserves and related assets are not
included in the determination of net operating cash flows,

Sale of Selected Oil and Gas Reserves and Related Assets

During the first nine months of 1995, the Company received proceeds of $101 million from the
Sale of selected oll and gas reserves and related assets compared to $82 milion received in the first
nine months of 1994. Taxable gains from the first nine months of 1995 sales generated income
taxes of $24 million leaving, net proceeds of $77 million. During 1994, the Company received
Proceeds of $91 miltion from the sale of selected oll and gas reserves and retated assets compared
to $42 million received in 1993. While the quantity of equivalent reserves sold in 1994 was
less than 1993, higher average proceeds received per equivalent unit of reserves sold in 1994 as
compared to 1993 resulted in significantly higher 1994 proceeds. Taxable gains resulting trom the
1994 sales generated income taxes of $20 million, leaving net proceeds of $71 million, Taxable gains
resulting from such sales in 1993 generated federal income taxes of $8 milion, leaving net proceeds
of $34 million.

Sale of Volumetric Production Payment
in September 1992, the Company sold a volumetric production payment for $326.8 million to a
limited partnership. Under the terms of the production agreements, the Company conveyed

approximately one-half of the original schedule, The revised schedule will total approximately 89.1
Scfe (97.8 TBtu) versus approximately 87.9 Bcfe (96.4 TBtu) remaining to be delivered under the
Original agreement. Daily quantities of hydrocarbons no longer required to be delivered under the
revised schedule during the period from October 1, 1993 through June 30, 1996 are available for
sale by the Company. The Company retains responsibility for its working interest share of the cost
of operations. In accordance with generally accepted accounting principles, the Company
Sccounted for the proceeds received in the transaction as deferred revenue which Is being amor-
tized into revenue and income as natural gas and other hydrocarbons are produced and delivered to
the purchaser during the term, as revised, of the volumetric production payment thereby matching
those revenues with the depreciation of asset values which remained on the balance sheet following
the sale and the operating expenses incurred for which the Company retained responsibility. The
Company expects the above transaction, as amended, to have minimal direct impact on future
earnings. However, cash made available by the sale of the volumetric production payment has
Provided considerable financial flexibility for the pursuit of investment alternatives.

28

00900000000231


Scolinos, Tasia

From: Holahan, Betsy

Sent: Wednesday, December 05, 2001 5:28 PM

To: Lee, Sharon; Fratto, Tony; Bradshaw, Tara; Scolinos, Tasia; Strickler, Marie; Alvarado,
Carmen

Ce: Davis, Michele; Nichols, Robert

Subject: RE: Good Night

GN

Washington Post is doing a story on predatory lending and wanted to find out what Sheila has been saying on it, | referred
tho sapater i har scent spnachen the web a, ar chats opepton of best prouains Wail St. Journal writing
Enron/Gerivatives story 5

Original Message-——-

Lee,
1, December 05, 2001 5:16 PM

Fratto, Tony; Bradshaw, Tara; Scolnes, Tasia; Holahan, Betsy; Suicker, Marie; Alvarado, Carmen

dans sen Ones eee ome

pu

{(P)(5) However, please let me know when you get a chance. Also, please remember to update
ichele of any important press items,

00800000000828


Sincerely,

Lawrence H. Summers

ce: The Honorable Charles E. Grassley
The Honorable Robert Torricelli

01767

01200000000423


IN THE NEWS: 1/15/02 Page 27 of 36

Musser said the volunteers aren't trained to tackle difficult or complicated returns.

"T've always told people, 'We do simple returns for simple people,” Musser said.

The Internal Revenue Service will offer free help for more complicated returns, with tax credits such as Child
Tax Credit, Eamed Income Tax Credit and Additional Child Tax Credit,

The IRS Taxpayer Assistance Center is open during regular office hours. Hours are 8 a.m. to 4:30 p.m.
Mondays, Tuesdays, Thursdays and Fridays and 8:30 a.m, to 4:30 p.m. Wednesdays,

IRS personnel will help working parents figure three tax credits - all of which can reduce the federal income
taxes of working parents, said IRS spokesman David Stell.

"Some parents may be eligible to claim these credits for the first time,” said Stell, "Especially if there were
changes in the family such as a new child, divorce or decrease in earnings during the past year."

Susan Snowden, IRS revenue officer, said all tax forms and valuable information are available via the Internet
at_www.irs.gov <http://www.irs.gov>. Tax forms can be downloaded from the site.

The site allows users to enter camings information for help on selecting a form, and it provides frequently asked
questions and answers,

Snowden said a number of local sites provide the public with access to free tax forms, but many of those sites
run out of forms and don't have the opportunity to regularly restock.

The IRS office, 301 W. Maine, regularly restocks all forms.
20. City to help residents get income tax credit * Indianapolis Star

Indianapolis Star
January 14, 2002

City to help residents get income tax credit
‘The community effort will help low-income and Hispanic families claim the money they're entitled to.
By J.K. Wall

Indianapolis aims to get an extra $5 million from Washington this year,
Not for the city government, but for lower-income residents who can claim the federal Earmed Income Tax
Credit.

The mayor's office has joined with the Internal Revenue Service, the Annie E. Casey Foundation, local banks,
community groups, financial counselors and Hispanic groups to encourage applications for the tax credit. The
coalition wants to spread the word about the credit, provide free tax preparation and connect credit recipients
with financial education and new bank accounts.

The IRS estimates that 15 percent of residents who are eligible for the tax credit don't claim it. That means
about $22 million is there for the taking.

But the local effort, known as the Earned Income Tax Credit Outreach Initiative, has smaller dreams. It would
like to process 3,000 additional tax credit claims this year, which the IRS estimates would bring nearly $5
million to Indianapolis.

Individual families can receive up to $4,008, depending on their income and number of dependents, The IRS
said the average refund in Indianapolis last year was $1,576.

01/17/2002

00800000001160


From: Geoffrey Gottlieb

To: Dom13.DOPO8(stewartek, walshh), KUHLOWM
Date: 3/100 6:51pm

‘Subject: ‘State on Enron, etc. meeting? -Reply

{(b)(5)]

>>> Margaret Kuhlow 03/01/00 06:21pm >>>
{(b)(5)]

Thanks, mit
cc: Domt3. DOPOB(eichenderger|, gelperna),

o0o0s500000000886


Ellis, Dina
ee

Subject: Jeff Skilling, President & CEO, Enron Corp, -- Energy Crisis, Stee!
Start; Thu 04/05/2001 5:00 PM

End: Thu 04/05/2001 5:30 PM

Show Time As: Tentative

Recurrence: (none)

Meeting Status: Not yet responded

Required Attendees: O'Neill, Paul H.; Aufhauser, David; Schmalzbach, Kenneth: Gathers, Shirley; Ellis, Dina;
Valentic, Marsha; Harvey, Reavie; Flanagan, Rosemary; Stewart, Lawranne

THIS E-MAIL IS FOR NOTIFICATION PURPOSES ONLY, AND MAY NOT BE AN INVITATION TO ATTEND MEETING.

01200000001624


IN THE NEWS: 1/14/02 Page 21 of 36

Look at this example: Several years ago, you purchased your house for $ 150,000 and obtained a $ 120,000
mortgage. Over the years, you've paid down the mortgage, so your indebtedness is just $ 100,000, but your
house is worth $ 300,000.

Because rates were low last year, you refinanced and were able to get a new mortgage of $ 190,000. Your
acquisition indebtedness is $ 100,000. The additional $ 90,000 that you took out of your equity does not qualify
as acquisition indebtedness, but since it is under $ 100,000, it qualifies as a home-equity loan. (Several years
ago, the IRS ruled that a borrower does not have to take out a separate home-equity loan to qualify for this tax
deduction.)

However, if you had borrowed $ 225,000, you would be able to deduct interest only on $ 200,000 of your
foan: the $ 100,000 acquisition indebtedness, plus the $ 100,000 home equity. The remaining interest would be
treated as personal interest and is not deductible.

15. Save Less, Spend More — You Do the Math * THE WALL STREET JOURNAL

THE WALL STREET JOURNAL

January 13, 2002

The Wall Street Journal Sunday
Save Less, Spend More - You Do the Math

By KELLY GREENE
Staff Reporter of THE WALL STREET JOURNAL

It’s time to fatten up the piggy bank: A new report shows that
people are saving less while on the job -- but spending more when
they retire,

Georgia State University in Atlanta and Aon Corp., Chicago, together
have looked at retirement-income trends in five surveys since 1988. Using
data from the Bureau of Labor Statistics’ consumer-expenditure survey,
which includes thousands of workers’ and retirees’ actual expenses, they
have crunched what they call an "income-replacement ratio,” or the
percentage of pre-retirement income you need to continue living in
retirement the same way you did when you had a regular paycheck.

Their most recent analysis, presented at an employee-benefits conference
in Washington, D.C., last month, found that workers -- particularly those
with houschold income of $50,000 or less -- are saving smaller chunks of
their paychecks than they did at the time of the last study, in 1997. Back
then, a couple making $50,000 a year saved 6.5% of their pre-retirement
income on average. Those savings fell to 4.6% last year, The drop was
even more dramatic for workers making $20,000: Their savings fell to
1.6% of their pay from 5.2%.

Meanwhile, the percentage of their pre-retirement income that retirees

needed to continue their lifestyle rose in most income levels by four to cight
percentage points, says Bruce Palmer, the Georgia State professor who

01/17/2002
00800000001191


IN THE NEWS: 1/14/02 Page 17 of 36

the United States, The 14th Amendment stipulates that anyone born or naturalized in the United States is a U.S.
citizen.

Income is not taxable because there is no taxable gain when exchanging labor for money. Federal law states,
however, that gross income includes compensation for services.

The IRS is focusing its tax compliance resources on such tax avoidance schemes, Commissioner Charles
Rossotti says.

“It may take us a while, but ... the people who are abusing the system, they're going to be sorry.”
13. DON'T BE MISLED BY TAX SCAMS; CONTRARY TO CON ARTISTS' HYPE, AN ATTEMPT
TO DODGE THE IRS CAN COST YOU DEARLY * The Charlotte Observer

The Charlotte Observer

January 13, 2002 Sunday ONE-THREE EDITION
SECTION: BUSINESS; MICHELLE SINGLETARY - COLOR OF MONEY; Pg. 2E
LENGTH: 736 words

HEADLINE: DON'T BE MISLED BY TAX SCAMS; CONTRARY TO CON ARTISTS' HYPE, AN
ATTEMPT TO DODGE THE IRS CAN COST YOU DEARLY

BYLINE: MICHELLE SINGLETARY

BODY:
Like most Americans, paying taxes is not something I do joyfully. But I don't loathe paying them so much
that I make myself vulncrable to con artists.

Unfortunately, thousands of individuals and small-business owners each year are so desperate to reduce their
tax bills that they make it easy for criminals to take their money, While many of us wait for our W-2 forms
listing 2001 wages and withholdings, also coming in the mail, e-mail or on late-night cable TV infomercials
will be pitches to "protect" you from the tax man. Be leery of such claims. You can get bumed either of two
ways. First, you can pay for advice that is phony. Or, you can pay a crook for the fraudulent tax-savings advice,
follow it and the Internal Revenue Service catches you. Worse yet, you could go to jail for tax evasion.

This past summer the IRS published a 25-page summary addressing most of the arguments about the legality
of not paying taxes or not filing a return. "The Truth About Frivolous Tax Arguments” is available on the
Internet at www.irs.gov under the section titled "Tax Info For You.”

For example, some con artists have gotten people to pay $100 to $200 for help in applying for a refund of
Social Security taxes paid over their lifetimes. According to Dale Hart, deputy commissioner of the IRS' small-
business and self-employed division, there is no provision in the tax code that allows for a refund of Social
Security contributions.

The IRS says most arguments against paying taxes fall into these categories:

Filing a return and paying taxes are voluntary. Numerous courts have debunked this notion. Although IRS
booklets do use the word "voluntary," it merely means taxpayers are allowed to calculate their own taxes and
prepare their returns rather than have the government do it, Still, some con artists will charge $50 or more to tell
you just the opposite. Wages, tips and other compensation received for personal services are not income. This
01/17/2002

00800000001186


Testimony of Jeanne Shaheen, Governor of New Hampshire
Before the Energy and Power Subcommittee of the House Commerce Committee
September 24, 1997

Thank you, Mr. Chairman. | appreciate this opportunity to appear before you. | also want
to thank you for devoting so much time to the issue before us today. Few other issues can rival
the restructuring of the electric industry in terms of its scope and the enormous benefits it could
bring to the lives of ordinary Americans.

Today | ain bere to testify as the governor of New Hampshire about the difficulties statics
like New Hampshire face as we try to pry open the window of clectric power competition that
has been sommed shut by the nation's powerful -'ectnc industry

1 want ty stress that this is not a partisas. issue, | >i. before you as the Democratic
governor of a very Republican state where this issue is a top priority for the vast mayority of
businesses and families. In New Hampshire. we pay the highest average retail rates in the
country. Before being elected governor, | worked closely as a Democratic state senator with a
bipartisan group of hepistators to lead the fight to enact legislation te restructure the electric
industry in New Hampshire because | believed competition was the best way to lower clectric
rates.

However, the implementation of competition and customer choice in the clectric industry
in New Hampstire is now at a standstill because of a lawsuit brought by our state's largest utility
= in federal court, based in part on federal statutory claims,

This is immensely frustrating. because we know from experience that competition in the
electric industry will work. In 1995, my colleagues in the New Hampshire legislature and |
worked to pass a bill 0 create a two-year pilot program so Uiat we could test how competition
would work und incorporate what we learned from that pilot in our state plan for electric
restrecturing

That pilot program began in May 1996. It is the first program of its kind in the country
It is open to all customer classes. serving large commercial and industrial customers. hospitals.
schools. small business owners and ordinary residential customers. Customers participating in

the pilot program are experiencing savings on their electric bills in the range of twenty percent

00100000000081


IN THE NEWS: 1/15/02 Page 23 of 36

dying. But you can leave an estate of $1 million, up from $675,000 last year, without your heirs facing estate
taxes. That exemption is set to rise steadily over the next eight years.

“This will take many families out of a taxable-estate situation,” said Wyss.

And if you want to share the wealth while you're alive, you can give more to your heirs every year without
worrying about gift taxes -- $11,000 this year, up from $10,000.

16. Tax time process clarified * Dallas Morning News

Dallas Morning News (Dallas, Texas)

January 14, 2002

Tax time process clarified

IRS offers guidance in navigating yearly income claims ritual
By PAMELA YIP

Most of us wish we didn’t have to file a federal income tax retum, but no such luck, It's an annual ritual - like it
or not,

If you're a U.S. citizen or resident, the law requires you to file a tax retum.
But there are some people who don't have to meet that requirement.
Whether you must file a retum depends on your gross income, filing status and age.

Generally, if you're under 65, once your gross income hits the following amounts, the law requires you to file a
tax return:

* $7,450 for single taxpayers.
* $9,550 for head of household.
* $13,400 for married, filing jointly.

Gross income includes all income you receive in the form of money, goods, property and services not exempt
from tax.

In addition, some people believe that the elderly don't have to file a return. But that's not always true.
If you're 65 and older, you must file a return once your gross income hits the following amounts:

* $8,550 if you're filing single.

* $15,200 for married filing jointly.

* $10,650 for head of household.

If you tumed 65 on Jan. 1, the government considers you to have been age 65 at the end of 2001.

"The law requires you to file a retum if your income is above a certain level, so each taxpayer will pay their

proper amount of tax,” says Venus Birmingham, a tax resolution representative at the Intemal Revenue Service
in Farmers Branch.

If you're self-employed, generally you must file a tax return if your net earnings for the year exceed $400.
01/17/2002

00800000001156


RE; [IN THE NEWS: 1/15/02 Page 9 of 37

on its use of the strategy, Which became hugely popular with banks,
insurance companies and utilities, among others. One advantage is that
such arrangements often allow interest payments to be deferred for five
years.

But the deals initially raised red flags among regulators. The Clinton
administration asked Congress in 1996 and again in 1997 to limit the
strategy’s use in many situations. Securities firms and businesses lobbied
intensely to defeat the proposal. The Internal Revenue Service challenged
Enron's use of it with two subsidiaries: Enron Capital LLC, a Turks and
Caicos entity, and Enron Capital Resources LP, a Delaware limited
partnership. In both cases, the IRS didn't allow Enron to take the interest
deductions.

Enron responded in April 1998, filing a petition in the U.S. Tax Court to
overturn the IRS's decision. The litigation became the test case for the
investments and briefly roiled the financial and accounting industries.

"The case will be closely watched because the MIPS structure has been
used by taxpayers to raise billions of dollars in capital that is meant to be
treated as debt for tax purposes but not entirely as debt by ratings agencies
such as Moody's and Standard & Poors,” accounting firm Emst & Young
LLP wrote to its clients in June 1998. A number of | observers predicted
the IRS would fail in its challenge. The IRS eventually conceded the key
issues in the Enron case and issued technical advice to taxpayers allowing
use of trust-preferred transactions to justify deductions in many
circumstances, The ruling was "likely an outgrowth of the favorable
settlement in Enron v, Commissioner,” Ernst & Young wrote.

Energy price swings and the company’s use of off-balance-sheet
partnerships appear to have contributed substantially to Enron's problems.
But government officials also are interested in Enron's use of
trust-preferred products. They said that at least $900 million or so shows
up in the company’s latest annual report, Ed Kleinbard, a lawyer in New
York who assisted the Securities Industry Association in responding to

IRS audits of companies that used the trust-preferred vehicle, said that in
the current regulatory environment, use of the trust-preferred strategies is
legitimate. "I don't think of this as an example of the system gone awry," he
said.

_- Michael Schroeder contributed to this article,

5. Pensions: GRASSLEY EXPLORING PROTECTIONS FOR RETIREMENT PLAN
PARTICIPANTS * BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report
January 15, 2002, Tuesday
10 DTR G-2 (2002)
LENGTH: 600 words
01/17/2002

00800000001105


MANAGEMENT

The current directors and executive officers of the Company and their names and ages are as
follows:

Meme Age Position

Forrest E. Hoglund.............. 62 Chairman of the Board, President and
Chief Executive Officer; Director

Fred C. Ackman .............., 64 Director

Richard 0. Kinder.......... 51 Director

Kenneth L. Lay........ 53° Director

Edward Randall, I... .. 68 Director

Joe Michael McKinney . . 55 President-International Operations

Mat G. Papa....... 49 President-North American Operations

53

Senior Vice President and Chief Financial
Officer

54 Vice President and Controller
41 Vice President and General Counsel

Forrest €. Hogiund joined the Company as Chairman of the Board, Chief Executive Officer and
Director in September 1987. Since May 1990, he has also served as President of the Company.
Mr. Hoglund was & director of USX Corporation from February 1986 until September 1987. He joined
Texas Oil & Gas Corp. ("TX") in 1977 as president, was named Chie! Operating Officer in 1979,
Chief Executive Officer in 1982, and served TXO in those capacities until September 1987.
Mr. Hoglund is also an advisory director of Texas Commerce Bank National Association.

Fred C. Ackman Is the former Chairman, President and Chief Executive Officer of The Superior
Oil Company. For over five years Mr, Ackman has been a consultant to the oil and gas industry and
has interests in ranching and investments.

Richard 0. Kinder has been President and Chiet Operating Officer of Enron Corp. since October
1990. From December 1988 until October 1990, he served Enron Corp. as Vice Chairman of the
Board. For over five years prior to his election as Vice Chairman, Mr. Kinder served in various
management and legal positions with Enron Corp. and its affiliates. Mr. Kinder is also a director of
Enron Corp.. Enron Global Power & Pipelines L.L.C., EOTT Energy Corp. (the general partner of
EOTT Energy Partners, L.P.), Enron Liquids Pipeline Company (the general partner of Enron Liquids
Pipeline, LP.) Sonat Offshore Drilling Inc. and Baker Hughes Incorporated.

Kenneth L. Lay has been Chairman of the Board and Chief Executive Officer of Enron Corp. for
over five years. From February 1969 until October 1990, he also served as President of Enron Corp.
Mr. Lay is also @ director of Eli Lilly and Company, Compaq Computer Corporation, Trust Company
of the West, EOTT Energy Corp. (the general partner of EQTT Energy Partners, L.P.), and Enron
Corp.

Edward Randall, Ill is principally involved in investments. Mr. Randall is also a director of KN
Energy, Inc. and PaineWebber Group Inc.

Joe Michael McKinney has been President-international Operations since February 1994 with
responsibilities for all exploration, drilling, production and engineering activities for the Company's
international ventures outside North America. Mr. McKinney joined Enron Oll & Gas international,
Inc., a wholly-owned subsidiary of the Company, in December 1991 as Senior Vice President of
Operations and was elected President and Chief Operating Otficer of Enron Oil & Gas International,
Inc. in April 1993, @ capacity in which he continues to serve. Prior to joining the Company,
Mr. McKinney held operations management positions with Union Texas Petroleum Company, The
Superior Oil Company and Exxon Company, USA,

00900000000236


IN THE NEWS: 1/14/02 Page 19 of 36
BODY:

Second in a series of articles

At tax time, two of the most important money-saving deductions available to homeowners are those for points
and mortgage interest.

Points are often called by different names, such as loan discounts or origination fees. No matter their name,
they represent money that you, the borrower, must pay to get a mortgage. And the payment is usually upfront,
in cash, since it generally is not included in the loan amount.

One point is equal to 1 percent of the mortgage loan amount. Thus, one point on a loan of $ 225,000 will cost
you $ 2,250. Lenders can charge as many points as they want, but at some level, the loan becomes usurious,
potentially illegal and may represent what is commonly known as "loan sharking.” Lenders take risks. They
give money to a stranger, who may or may not be able to repay the loan in full. To secure repayment of the
loan,

the lender requires the borrower to sign a deed of trust (the mortgage document) whereby the house is put up
as collateral (security) to guarantee payment of the loan,

But houses can decrease in value, which makes the lender's security potentially more risky. The higher the
risk, the higher the mortgage interest will be; the higher the risk, the more points a lender will want to charge.
it

But many consumers do not shop around to get the best mortgage deal. They take the lender's statements
about credit status on blind faith. It is often possible to get a better interest rate -- or fewer points — from
another lender.

Tax treatment of points is an important issue for homeowners. Points paid to obtain a new mortgage are fully
deductible in the year they are paid by the borrower, It used to be that the Internal Revenue Service required
that the borrower write a separate check to the lender for these points; in recent years, the IRS seems to have
backed off this position.

It still makes sense, however, to cither write a separate check at closing, or at least have the settlement
statement clearly reflect the number and amount of points you are paying.

The settlement sheet, also known as a HUD-I form, is perhaps the most important document you receive at
settlement, and you should keep it forever. This will be your best proof if you are ever challenged by the IRS.

If you pay points to obtain a refinance loan, in most circumstances those points are not deductible in full for
the year they are paid. Rather, the IRS requires that you allocate the points by the number of years of your
mortgage loan.

For example, you refinance and obtain a loan in the amount of $ 225,000. To get this new loan, you are
required to pay two points, or $ 4,500. If your loan is for 30 years, you can only deduct one-thirtieth of the
points each year, or $ 150.

However, if you pay off this loan carly -- in five years, for example, either by selling your house or
refinancing again -- the balance of the unallocated (nondeducted) points can then be deducted on your income
tax retum for that year.

Talk to your potential lenders about trading interest rates for points. Generally speaking, cach point that you
pay is the equivalent of one-eighth of a percentage point in interest. Thus, you may be able to get a loan at 678
percent with no points, but a 6 6/8 (i,¢., 6.75 percent) interest rate with one point. Another tax-related subject

01/17/2002
00800000001189


RE; IN THE NEWS: 1/15/02 Page 20 of 37

because of the sweeping tax law changes that took effect Jan. 1. Most of the major new benefits from the
Tax Relief Act of 2001 start to phase in this year. Here are some strategies to help make the most of the
new law benefits and otherwise save on taxes in 2002 and beyond.

Keep close tabs on your income levels; The key to qualifying for many of the new law's breaks is to find
ways to hold down your "adjusted gross income." Most of the new or expanded benefits are phased out
for individuals with adjusted gross incomes above certain levels,

Included are the child tax credit, retirement savings credit, the new college tax deduction, Coverdell
Education Savings Account, adoption credit, student loan deduction, IRAs and the earned income credit.

Careful timing of investment sales may prove critical if you're bordering on the income limits for a
valuable benefit you hope to claim. In some cases, you'll want to try to avoid realizing large investment
gains in years in which you expect to reap substantial benefit from some income-contingent breaks,

Employees can reduce their adjusted gross income by taking advantage of their employer's 401(k) plans
and "flexible spending arrangements” for health-care and dependent-care expenses,

Shelter more: The new law gives most individuals the opportunity to shelter much more of their income
in retirement and education savings accounts, where your money can grow and compound faster than if
part of the earnings were taxed away each year. The contribution limits for IRAs, self-employed
retirement accounts, employer-sponsored plans and education savings accounts have been sharply
increased, "

Defer income: Deferring income through the use of retirement accounts and deferred-compensation plans
will not only postpone the tax liability for years but also may make the income eligible to be taxed at a
lower rate in the future, Tax rates above the 15 percent tax bracket are scheduled to drop in 2004 and
again in 2006.

Think taxes in daily financial life; Whenever you make a financial move, consider the tax aspects. In
some cases, how you arrange the financial transaction can greatly affect your tax bill.

Charitable contributions are a prime example. How much of a tax benefit you'll receive for your
charitable donation will depend not only on the amount of your contribution, but also on the type of gift
you make, While cash may be the most common form of charitable gift, you'll save more in taxes if you
donate stocks or other investments that have increased in value. So long as you've owned the shares more
than one year, you'll be eligible to claim a charitable deduction for the current market value of your
donated shares. In addition, you'll escape capital gains tax on the appreciation.

Securities sales: If you plan to sell off part of your holding in a particular stock or mutual fund, the form
of your “sell order” can have a significant impact on your tax bill. If you acquired the shares at different
times and prices, you may be able to minimize the capital gains tax bite by designating in your sell order
which specific shares to sell, For instance, you could minimize your taxable gain by instructing your
broker or mutual fund to sell the shares you acquired at the highest prices. If you don't identify which
specific shares are to be sold when you place your sell order, the IRS will make you use on your tax
retum a much less favorable method for determining which shares were deemed sold.

Consider larger tax implications: Before making any tax move, be sure to consider all the ramifications.
Not every tax benefit is worth pursuing. For example, parents who plan to take advantage of the expanded
education savings account to save for their child's college education need to consider the potential impact
on their child’s eligibility for financial aid in college. Middle-income families could lose more in financial
aid than they'd save in taxes from setting up an education savings account in their child's name. In

determining how much a family can afford to contribute to the cost of college, financial aid formulas
01/17/2002
00800000001116


Hunt, Betty Ann

From: Gathers, Shirley

Sent: Friday, January 11, 2002 8:22 AM

To: Authauser, David; Kupfer, Jeffrey; Curry, Paul; Bair, Sheila; Fisher, Peter; Smith, Chris; Mejia,
Annabella; Matera, Cheryl; Glasgow, Launa: Johnson, Linda; Davis, Michele

Cc; Strickler, Marie. Pringle, Veronica, Vannoy, Elizabeth, Hunt, Betty Ann; Ridgway, Diana; Hart,

Anna, Woodard, Genevieve
Subject: Briefing

Please plan on attending a briefing w/David Aufheuser and Tim Adams re: Enron as follows;

Date: Friday, Jan. 11
Time: 10:30am - 10:45am
Location: Room 3408
Thanks,

01200000000956


Sutton, Gary

From: Carleton, Norman
Sent: Wednesday, August 29, 2001 11:15 AM
To: Fisher, Peter, Roseboro, Brian; Bair, Sheila; Nickoloff, Peter, Schultheiss,

DeMarco, Edward; Hughes, Gerry, Gross, Jared; Smith, Amy, Sutton, Gary, Ellett, ‘Martha;
Gabitondo, Jose; Mcinerney, Roberta, Lori Sanatamorena (E-mail)
Subject: Status of Retail Swap Study and the Enron Issue

((b)(5)]

00200000000104


Exploration and Development Expenditures
The table below sets out components of actual exploration and development expenditures for
the years ended Oecember 31, 1992, 1993 and 1994, along with those estimated for the year 1995
and actual components of exploration and development expenditures for the nine-month periods
ended September 30, 1994 and 1995.

Mine Months
Ended
198219831084
(in

$260 $331 $342 $257 $225
23 29 52 32 7
65 9 34 4 114
4 —% 6 1 868
362 383 442 43 365
44 8 _59 _41 _ 40
$406 $438 $501 $354 $405
—- = SS we
Exploration and development expenditures for the first nine months of 1995 increased $51

Properties to complement existing United States producing areas.

Exploration and development expenditures increased $63 million, or 14%, in 1994 compared
1983. The increase primarity reflects the acquisitions of selected properties to compliment
North America producing areas and the addition of new international activities in india. See
“Business ~ Exploration and Production” for additional information detailing the specific geographic
locations of the Company's drilling programs and '- Outlook” below for a discussion related to
future exploration and development expenditure plans.

million compared to the same period in 1994, and primarily reflect the acquisitions of selected
to

|

Hedging Transactions

With the objective of enhancing the certainty of future revenues, the Company has, as of
October 23, 1995, entered into hedging transactions for approximately 400 BBtu per day (approxi-
mately 381 MMcf per day) and 529 BBtu per day (approximately 504 MMct per day) of Its North
Amoriéa natural gas volumes for the last three months of 1995 and the year 1996, respectively. A
significant portion of the 1995 and substantially all of the 1996 hedge transactions involve NYMEX-
based commodity price swap agreements totaling 260 BBtu per day at an average price of $1.98 per
MMBtu and 447 BBtu per day at an average price of $2.00 per MMBtu for the last three months of
1995 and the year 1996, respectively. The remaining hedge transactions of 140 BBtu per day and 82
Btu per day for the last three months of 1995 and the year 1996, respectively, include notional and
physical transactions that involve fixed price sales contracts and volumetric production payment and
exchange agreements. Included in the 1996 hedge transactions are commodity price swap agree-
ments totaling 200 BBtu per day of notional volumes at a weighted average NYMEX-based price of
$1.97 per MMbtu which include one-time options exercisable by the counterparty on or betore
December 17, 1996 totaling 200 BBtu per day of notional volumes in 1997 and 1998 at the same
weighted average NYMEX-based price of $1.97 per MMBtu. The Company has also, as of
October 16, 1995, hedged approximately 10,100 BbI per day and 9,600 Bbi per day of its North

00900000000232


{(b)(5)]

01200000000966


Norman,

{(b)(5)]

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001" was reported out of
the House Judiciary Committee on Wednesday, February 14, 2001, During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass. Voting occurred largely
along party lines, The only amendment that passed was a technical amendment offered by Chairman
Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen other
amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions and
netting requirements.

01200000001045


Concerning the Trustee

Harris Trust and Savings Bank Is the Trustee under the Indenture. Such bank also acts as a
depository of funds for, makes loans to, and performs other services for, Enron in the normal course
of business, including acting as trustee under other indentures of Enron.

The Indenture contains the provisions required by the Trust Indenture Act of 1939 with
reference to the disqualification of the Trustee if it shall have or acquire any “conflicting interest”, as
therein defined. The Indenture also contains certain limitations on the right of the Trustee, as a
creditor of Enron, to obtain payment of claims in certain cases, or to realize on Certain property
received by it in respect of any such claims, as security or otherwise.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain U.S. federal income tax consequences that may be
relevant to a citizen or resident of the United States, a corporation, partnership or other entity
created or organized under the laws of the United States, or an estate or trust the income of which is
subject to U.S. federal income taxation regardiess of its source (any of the foregoing, a “U.S.
Person") who Is the beneficial owner of Exchangeable Notes (a "U.S. Holder"). All references to
“holders” (including U.S. Holders) are to beneficial owners of the Exchangeable Notes. This
summary is based on current U.S. federal income tax law and is for general information only.

This summary deais only with holders who are initial holders of the Exchangeable Notes and
who will hold the Exchangeable Notes as capital assets. It does not address tax considerations
applicable to investors that may be subject to special U.S. federal income tax treatment, such as
dealers in securities or persons holding the Exchangeable Notes a8 & position in a “straddie” for
U.S. federal income tax purposes or #s part of a “synthetic security” or other integrated investment,
and does not address the consequences under state, local or foreign law.

No statutory, judicial or administrative authority directly addresses the characterization of the
Exchangeable Notes or instruments similar to the Exchangeable Notes for U.S. federal income tax
purposes. AS a result, significant aspects of the U.S. federal income tax consequences of an
investment in the Exchangeable Notes are not certain. No ruling Is being requested from the Internal
Revenue Service (the IRS") with respect to the Exchangeable Notes and no assurance can be
given that the IRS will agree with the characterization and tax treatment of the Exchangeable Notes
described herein. ACCORDINGLY, A PROSPECTIVE INVESTOR (INCLUDING A TAX-EXEMPT

EXCHANGEABLE NOTES In

Pursuant to the terms of the Indenture, Enron and all holders of the Exchangeable Notes will
agree to treat an Exchangeable Note as 8 unit (the “Unit") consisting of (1) an exchange note
("Exchange Note") which is a debt obligation with @ fixed principal amount unconditionally payable
at Maturity equal to the principal amount of the Exchangeable Note, bearing interest at the stated
interest rate on the Exchangeable Note, and (ii) a forward purchase contract (the “Purchase
Contract") pursuant to which the holder agrees to use the principal payment due on the Exchange

the EOG Common Stock which the holder is entitled to receive at that
in fou of EOG Common Stock). The Indenture will
require thet a U.S. Holder include currently In income payments denominated as interest that ere
made with respect to the Exchangeable Notes, in accordance with such holder's method of
accounting, and the amount of OID, if any, attributable to the Exchangesble Notes.

Pursuant to the agreement to treat the Exchangeable Notes as @ Unit, a hoider will be required
to allocate the purchase price of the Exchangeable Note between the two components of the Unit
(the Exchange Note and the Purchase Contract) on the basis of their relative fair market values. The
purchase price 80 allocated will generally constitute the tax basis for each component. Pursuant to
the terms of the Indenture, Enron and the holders agree to allocate the entire purchase price of an
Exchangeable Note to the Exchange Noto uniess the stated interest on the Exchangeable Note

24

i
i
JE
i!
i
1

00900000000199


DeMarco, Edward

From: DeMarco, Edward
Sent: Wednesday, October 31, 2001 10:00 AM
To: Hughes, Gerry; Green, Matthew
Subject: FW: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS
Wanted to be sure you guys saw this traffic.
——Onginal Message
From: Elis, Dina
Sents Wednesday, October 31, 2001 9:42 AM
‘or

Subject:

{(b)(5)]

i
i

Carleton, Norman; Bitsberger, Timothy; Bair, Sheila; DeMarco, Edward; Ellett, Martha; Gatilondo, Jose; Gross, Jared;

Original

From:

Sent: Womenday, October 31, 2001 9:20 ae
To:

Subject:

{(b)(5)]

= Original Message----

From: — Ells, Cina

Sent: Tuesday, October 30, 2001 3:02 PM

To: Saag society Bh agers engine rn atelgroe tomers beg pve sor tong being

devez Schutess, Radia; sma bt ‘sey; Sutton, Gary; Teshuk, Brian
Subject: RE: Netting Letter to be Sigred by PING and FDIC, OCC, and OTS

| have spoken to 2 variety of people on possible movernent of the bankruptcy bill. There is a slight chance that
there will be a conference meeting next week but | don't see fast movement on the bill,

To: Bisberger, Timothy, Bair, Shete; Constarkine, Beni; DeMarco, Béwerd; Bhett, Martha; Ess, Dina; Gabliondo, Jose; Gross, Jared;
Prete ches nr het haeogindl by Roberta; Nickoloff, Peter; Rosedoro, Brian; Salladin,

Anne; Schulthelss, Heidilynne; Smith, Amy; Sutton, Gary; Tishuk, Brian
Subject: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

<< File: Netting letter.doc >>

Attached is the proposed netting letter from the Federal Reserve, (It has merge mail features that
you will have to delete in order to read it. Alternatively, you can use the quick view program to
access the document.) It is awaiting approval from SEC Chairman Pitt. Below is an article | sent
around earlier today indicating that some are trying to revive the Bankruptcy bill.

{(b)(5)]

01200000001226


IN THE NEWS: 1/15/02 Page 32 of 36

‘The financial tangle also has cost money as the auditing fees mount. "Some months the auditor's bill is $1,400
and some months it's $2,500," Chambers said.

“If they were doing just our bookkeeping from month to month, the bill should run about $600 a month if
everything was in proper order,” he said. “It's a small city, and there's not much to do. But when you start
calling back and forth and play phone tag with the IRS, the price tag goes up."

Chambers said officials had tried to carry on after the books had been found after Butt's death but that without
knowing balances in the accounts, the tangle deepened.

"Things got messed up more," he said. "They were already messed up, but we didn’t know it. After several
months with bills coming in and sitting around with no one knowing what to do, they got messed up even
more.”

He estimated Beverly Hills was about $20,000 in arrears on its bills and is struggling to catch up. He said the
amount was significant for a small municipality such as Beverly Hills.

"As money comes in, we kind of catch up and then we go behind, then we catch up and go behind again,” he
said.

On another matter, the board approved a $1 hike in the city’s trash collection fee and adopted guidelines for its
lateral-sewer program, which sets a $1,000 cap on the amount the municipality will pay on a sewer replacement.

26. Federal workers are among those who owe back taxes * The Free-Lance Star

The Free-Lance Star (Fredericksburg VA)

January 13, 2002
Federal workers are among those who owe back taxes

BY NOW, most of you have received your New Year's greetings from the federal government in the shape of a
2001 Form 1040 and instruction book. It truly amazes me that the Internal Revenue Service always beats the
Christmas bills to my mailbox.

As the nation's premier tax collector, IRS collects about $2 trillion annually, Though most citizens comply with
our tax laws by filing retums and paying taxes, some do not.

At the end of fiscal 2001, the IRS reported an estimated $240 billion in unpaid assessments, of which only $22
billion was estimated to be collectible. The total reflects all types of taxes—payroll, corporate, and individual.

At the request of the U.S. House Government Reform Committee, the General Accounting Office last year
reviewed IRS records to determine the number of federal workers and annuitants who owe taxes, how much
they owe and how they compare with nonfederal taxpayers.

Using IRS data, GAO reported that in October 2000, some 340,000 federal workers and annuitants owed
cumulative unpaid federal taxes of about $2.5 billion. Of this amount, about 54 percent was owed by federal
annuitants and 46 percent by federal workers. GAO found an additional 85,000 federal workers and annuitants
who had not filed tax returns.

According to GAO, the taxes owed by federal workers and annuitants were almost always unpaid income taxes.
Over one-third owed taxes for more than one year, with 56 percent going back to before 1995.

01/17/2002

00800000001165


DeMarco, Edward

From: Young, JT

Sent: Wednesday, January 16, 2002 9:45 AM

To: Sweetnam, Bill Jr, Weinberger, Mark; Reeder, W Thomas; Olson, Pam; Walker, Deborah;
Bradshaw, Tara; Bair, Sheila; McCall, Neal; DeMarco, Edward

Subject: RE: Senate Hearing on Enron-Related Pension Issues

i have also heard kennedy is doing something. i have also heard that finance is notal this time

--—-Onginal Message——

From: Sweetnam, Bi Jr

Sent ‘Tuesday, January 15, 2002 8-20 4

To: Weinberger, Mark; Reeder, W Thomas; Olson, Pam; Walker, Deborah; Young, JT; Bradshaw, Tara; Bair, Shes; McCal, Neal;
DeMarco, Edward

Subject: ‘Senate Hearing on Enron-Related Pension Issues

J have heard, second hand, that Sen. Kennedy will schedule a hearing on February 7 to discuss the pension issues
Surrounding Enron. He will have a government panel and will ask for testimony from DOL and Office of Tax Policy.
He will also have a victims pane! and a panel of academic experts.

William F. Sweetnam, Jr,
Benefits Tax Counsel
Office of Tax Policy

Department
1500 Pannsytvania Avenue NW
Washington DC 20220

Phone: 202-622-0170
Fax: 202-622-0646

01200000001211


IN THE NEWS: 1/14/02 Page 2 of 36

problems (7 DTR G-9, 1/10/02), TEI said "[a}ithough we recognize that the IRS has experienced some
problems with its inventory management, we believe the agency has made substantial progress. ... [T]hese
concems, while important, should not impede the IRS's effort to deal with its broader mission.”

Texts of the TEI and NAS letters are in BNA TaxCore.
2. Supreme Court Will Review Case On Taxation of Restaurant Tips * THE WALL STREET
JOURNAL

THE WALL STREET JOURNAL

January 14, 2002
Law
Supreme Court Will Review Case On Taxation of Restaurant Tips

By ROBERT S. GREENBERGER
Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- The Supreme Court said it would review how the
Internal Revenue Service estimates income from tips, a case that
restaurants and their employees are watching closely.

Using an aggregate estimating method, the IRS determined that Fior
D'ltalia, a San Francisco restaurant, underpaid taxes by about $12,000 in
both 1991 and 1992, The restaurant challenged the ruling and prevailed in
federal court and in the appeals court, The courts said the IRS must make
individual audits before determining how much tax income is unreported,

Under IRS rules, tips received by an employee totaling more than $20 a
month are considered reportable wages and subject to Federal Insurance
Contribution Act taxes, payable by both the worker and employer, The
Supreme Court's decision could affect any worker who eams substantial
tips.

The restaurant showed that employees reported tips of $247,181 for 1991
and $220,845 for 1992. But that didn’t go down well with the IRS, which
noted that tips reported on credit-card slips alone totaled $364,786 in
1991 and $338,161 for 1992. The IRS increased the tax bite, using the
then-7.65% FICA tax rate, according to filings to the court, to determine
the additional taxes owed.

In upholding the lower court, the U.S, Court of Appeals for the Ninth
Circuit, in San Francisco, ruled that the IRS assessment was invalid
because "it rests on an estimate in circumstances where Congress has not
authorized the IRS to use estimation as an assessment method.”

In asking the high court to review the case, the
US, solicitor general said, "This case presents
a frequently recurring question of significant
importance on which the courts of appeals are
in sharp conflict.”

01/17/2002
00800000001171


From: Tom McGivern

To: CARLETONN, SHELTONA, CARTERJ, NICKOLOFFP, DOPOS.To...
Date: 6/16/99 3:54pm
Subject: Conference Call with Cacwalader/Enron -Reply -Reply -Reply

The conference call with Enron/Cadwalader will be Friday morning at 10-30. They will initiate the call, so if we could
be in one room here at Treasury that would make it slightly easier for thorn. The GC and Leg- Affairs conference
rooms are booked, so maybe we should aim for someone's office. Norman?

("i contact the other agencies to give them the time of the call and get the phone numbers to Cadwalader.

They plan to send us some additonal explanatory material (probably what they're using to market this on the Mill,
eic.). twill send that around as soon as it arrives. They would like to have a discussion and to find out if the
agencies are opposed or supportive of their proposals. | committed only to listening, but said there likely would be
some questions.

>>> Nomman Carleton 06/16/99 03:12pm >>>
There's a steering group meeting tomorrow moming, so maybe Friday is better,

01761

01200000000417


equal value. Accordingly, Holders of the Exchangeable Notes will not necessarily receive an amount
equal to the principal amount thereof. The “Exchange Rate” is equal to, subject to adjustment as a
result of certain dilution events (see “Dilution Adjustments” below), (a) if the Maturity Price (as
Gatined below) of EOG Common Stock is greater than or equal to $ per share of EOG Common
Stock (the “Threshold Appreciation Price”), shares of EOG Common Stock per Exctiungeable
Note, (b) if the Maturity Price is less than the Threshold Appreciation Price but is greater than the
Initial Price, a fractional share of EOG Common Stock per Exchangeable Note so that the value
thereof (determined at the Maturity Price) is equal to the Initial Price and (c) if the Maturity Price is
less than or equal to the Initial Price, one share of EOG Common Stock per Exchangeable Note. No
fractional shares of EOG Common Stock will be issued at Maturity as provided under “Fractional
Shares"' below. Notwithstanding the foregoing, Enron may, at its option, defiver cash at Maturity in
eu of delivering shares of EOG Common Stock, in an amount equal to the value of such number of
of EOG Common Stock at the Maturity Price. Such option, if exercised, must be exercised
with respect to all of the outstanding Exchangeable Notes. If Enron elects to deliver cash in lieu of
shares of EOG Common Stock upon the mandatory exchange of the Exchangeable Notes, on or
prior to seven Business Days preceding the Stated Maturity, Enron will so notity the Trustee and
publish a notice to that effect in a dally newspaper of national circulation. If Enron elects to deliver
shares of EOG Common Stock, Holders of the Exchangeable Notes will be responsible for the
payment of any and all brokerage costs upon the Holder's subsequent sale of such stock.

The “Maturity Price" is defined as the average Closing Price per share of EOG Common Stock
for the 20 Trading Days immediately prior to (but not including) Maturity. The “Closing Price” of any
security on any date of determination means the closing sale price (or, if no closing price is reported,
the last reported sale price) of such security on the NYSE on such date or, if such security is not
listed for trading on the NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which such security is so listed, or it such security Is
Not $0 listed on a United States national or regional securities exchange, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System, or, if such security is not so
reported, the last quoted bid price for such security in the over-the-counter market as reported by
the Nationa! Quotation Bureau or similar organization, or, if such bid price is not available, the
market value of such security on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by Enron. A “Trading Day" is defined as a
Business Day on which the security the Closing Price of which Is being determined (A) Is not
suspended from trading on any national of regional securities exchange or association or over-the-
counter market at the close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that Is the primary market for tho
trading of such security. "Business Day” means any day that is not a Saturday or Sunday or a day
on which the NYSE, banking institutions or trust companies in The City of New York are authorized
OF obligated by law or executive order to close.

“The indenture pursuant to which the Exchangeable Notes are issued contains a covenant by
Enron to the effect that should Enron exercise its option to pay all outstanding Exchangeable Notes
in cash, such cash must be provided by the proceeds from a sale by Enron of its common stock.
Such sale of common stock by Enron must have occurred not more than 540 days prior to the notice
by Enron to Holders of Exchangeable Notes of its election to deliver cash in lieu of EOG Common
Stock. °

16

00900000000191


Gross, Jared

—

From: Gross, Jared

Sent: Thursday, April 05, 2001 1:29 PM

To: Squitieri, Ray

Subject; RE: memo to Secretary on follow-up questions:

The typo comments are fine (I assume that you have already made them). | haven't found anything to provide the type of
analysis Rachel suggests... do you know of anything? As | recall from the President's Working Group study on OTC
derivatives industry, there is very little data on the OTC markets broadly.

{(b)(5)]

Orgad Message——

From: Squitiert, Ray

‘Sent: Thursday, Aoeil 05, 2001 1:16 PM
To: Gross, Jared

‘Subject: FW: memo to Secretary on follow-up questions

Here are several comments by Rachel. Would you read them, decide whether any changes are necessary to your
section, and if so send me a new version? Thanks,

one Message
From: Conon, Ractvel

‘Sent: ‘Tuesday, Apeil 03, 2001 9:55 AM

Tor ‘Squiten, Ray

Subject: ‘memo to Secretary on follow-up questions:
Ray,

| found a couple of typos on the second page of energy derivatives memo. | hadn't seen this one before [(b)(5)]

<< File. NEP ONeill 3 follow up Qs 0330.doc >>

01200000001585


RISK FACTORS RELATING TO EXCHANGEABLE NOTES

AS Gescribed in more detail below, the trading price of the Exchangeable Notes may v
considerably prior to Maturity due to, among other things, fluctuations in the price of EOG Common
Stock and other events that are difficult to predict and beyond Enron's control.

Comparison to Other Debt Securities; Relationship to EOG Common Stock

The terms of the Exchangeable Notes differ trom those of ordinary debt securities in that the
amount that a holder of the Exchangeable Notes will receive upon mandatory exchange at Maturity
ts not fixed, but is based on the price of the EOG Common Stock as specified in the Exchange Rate.
There can be no assurance that the amount received by such holder upon exchange at Maturity
(whether Jp stock or cash) will be equal to or greater than the principal amount of an
Note because the price of the EOG Common Stock is subject to market fluctuations, and the value of
the EOG Common Stock (or, at the option of Enron, the amount of cash) received by a holder of an
Exchangeable Note upon exchange at Maturity, determined as described herein, may be more or
less than the prinicpal amount of the Exchangeable Note. For example, if the Maturity Price of the
EOG Common Stock is less than the Initial Price, the amount received upon exchange will be less
than the principal amount paid for the Exchangeable Note, in which case an investment in
Exchangeable Notes will result in a loss.

In addition, the opportunity for equity appreciation afforded by an investment in the Exchange-
able Notes is less than the opportunity for equity appreciation afforded by an investment in the EOG
Common Stock because the amount received by a holder of an Exchangeable Note upon exchange
at Maturity will only exceed the principal amount of such Exchangeable Note if the Maturity Price
exceeds the Threshold Appreciation Price (which represents an appreciation of % over the Initial
Price). Holders of the Exchangeable Notes wilt only be entitied to receive upon exchange at Maturity

‘°% of any appreciation of the value of EOG Common Stock in excess of the Threshold Apprecia-
ion Price.

{t Is impossible to predict whether the price of EOG Common Stock will rise or fall. Trading
prices of EOG Common Stock will be influenced by EOG’s operational results and by complex and
interrelated political, economic, financial and other factors that can affect natural gas and crude oil
commodity markets generally. See the prospectus relating to EOG and to EOG Common Stock
attached hereto as Appendix A and included as part of this Prospectus.

In addition, In the event Enron does not exercise its option to deliver cash, hoklers of the
Exchangeable Notes will not be entitled to any rights with respect to the EOG Common Stock
(including, without limitation, voting rights and rights to receive any dividends or other distributions in
respect thereof) until such time as Enron shall have exchanged shares of EOG Common Stock for
Exchangeable Notes at Maturity thereof and unless the applicable record date, if any, for the
exercise of such rights occurs after such exchange.

Dilution of EOG Common Stock

The amount that holders of the Exchangeable Notes are entitled to receive upon the mandatory
exchange at Maturity is subject to adjustment for certain events arising from stock splits and
combinations, stock dividends and certain other actions of EOG that modify its capital structure. See
“Description of the Exchangeable Notes ~ Dilution Adjustments.” The amount to be received by
holders of Exchangeable Notes upon mandatory exchange at Maturity may not be adjusted for other
events, such as offerings of EOG Common Stock for cash or in connection with acquisitions, that
may adversely affect the price of the EOG Common Stock and, because of the relationship of such
amount to be received upon exchange to the price of EOG Common Stock, such other events may
adversely affect the trading price of the Exchangeable Notes. There can be no assurance that EOG
will not make offerings of EOG Common Stock or take other action in the future.

00900000000180 _


RE: IN THE NEWS: 1/15/02 Page 15 of 37
Sanctions
The WTO is expected to rule around the end of March on the final level of sanctions that the EU could
apply. The EU has argued that $4.04 billion is the size of the tax law's application to U.S. companies’
global exports, not just to the share that go to Europe.

Richard Mills, spokesman for U.S. Trade Representative Robert Zoellick, declined to make an
immediate comment, saying the Bush administration will put out a statement “soon.”

US. officials have said that they would oppose any sanctions award of that size, Zoellick last year said
the penalties would be like a "nuclear bomb" on the U.S, trade relationship with the EU.

A WTO dispute panel found last August that even after an overhaul, a U.S. law that allows companies
to shield income from taxes on a range of sales is an illegal export subsidy to hundreds of companies.

Several U.S. lawmakers, including California Republican Bill Thomas, who chairs the tax-wniting
House Ways and Means Committee, have said they would prefer to move to a “territorial” system such as
Europe's. That would mean that only domestic eamings are
subject to tax, although certain foreign profits are taxed.

Global Taxes
AIIU.S. taxpayers ~- including foreign and domestic companies -- are eligible for tax breaks under the

revised law, allowing them to protect much of their income eamed outside the country from U.S. tax, as
long as they have paid tax overseas on

their earnings.

Currently, the U.S. employs a “global” tax system, in theory subjecting company earnings all over the
world to tax. U.S. law then excludes some categories of earnings, & policy the WTO said was illegal,

The new law, known as the Extraterritorial Income Act, was passed in November 2000 after the U.S.
missed an earlier deadline. It replaces the original Foreign Sales Corporation law.

Kenneth Dam, U.S. deputy Treasury secretary, said in November the ruling sets a standard for taxing
corporate income earned abroad that calls into question the tax systems of many countries, including
those in the EU.

9, IRS Tax-Shelter Victory Won't Be Overturned by U.S. High Court * BLOOMBERG

BLOOMBERG
January 14, 2002
IRS Tax-Shelter Victory Won't Be Overturned by U.S, High Court

Washington, Jan. 14 (Bloomberg) -- The U.S. Supreme Court stayed out of a battle over corporate tax
shelters, rejecting an appeal by a real estate company accused of trying to dodge the Internal Revenue
Service by diverting loan payments overseas.

The high court action is a boost to the IRS, which suffered courtroom setbacks recently on its claims

01/17/2002
00800000001111


From: Tom McGivern

To: CARLETONN, YETTERJ, DOPOS.TooheyF

Date: O00 6:36pm

Subject: Financial Netting provisions of H.R. 833 - bankruptcy bill

Attached for your review and edits is a dratt letter from the Secretary ‘on behalf of the Notes One ere oe

would prteeplal tei with pobepdnporneid Working nL, their review that would be great, (ov)

On the Enron proposals Norman received:

((b)(5)}

ce: DORSEYK, CARROR

01765

01200000000421


Fisher, Peter

From: Davis, Michele

Sent: Wednesday, November 28, 2001 3:21 PM
To: Fisher, Peter

Ce: Holahan, Betsy

Subject: Enron question

The WSJ (Jake) wants a Treasury response to the question: do we see any systematic risk developing from Enron's
melidown?

{(b)(5)]

01200000001458


Ellis, Dina

From: Hammond, Donald
Sent: Thursday, February 15, 2001 10:25 AM
To: Carleton, Norman; DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta;

Constantine, Eleni; Hughes, Gerry; Stewart, Lawranne

Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickoloff, Peter; Schultheiss, Heidilynne; Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Norman,
[(b)(5)]
Don
Original ser SPO
From:
‘Sent: fru, ry 15, 2001 oe vy
Ce: Magar nua Levey es Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom; Nickoloff, Peter; Schuithelss, Meidilmine;
Subject: RE: Redrceders ey Mark-up Hearing
Don,

{(b)(5)}

01200000001616


Tene
fp Anse. a/ezies ?

INITIAL OBSERVATIONS

Draft Power Purchase Agreement of 17 October 1999 fur Electric
Generating Facilities in Lagos, Nigeria between Earon Nigeria Power
Holdings Ltd. (“Enron”) and Lagos State Government, National Electric
Power Authority of Nigeria and Federal Republic of Nigeria (“PPA”).

{(b)(5)}

0500000000909


€SS0ts) resulted in a reduction of 8pproximately 40 MMctf per day in delivered volumes for the first
nine months of 1995 as compared to the first nine months of 1994. The Company refocused its 1995
Grilling activity away from natural 945 Geliverability and toward natural gas reserve enhancement
2Nd crude oil exploitation in the United States in response to the significant deciine in United States
Natural gas prices in recent periods. Wellhead crude oil and condensate average prices increased
10% adding approximately $8 mittion to net operating revenues compared to the first ning months of
1994. Crude oil and condensate wellhead volumes increased 55% adding approximately $27 million
1 ret cherating revenues compared to the same period a year ago primarity reflecting new
Production on stream offshore India, and higher volumes offshore Trinidad and in North America,

Other marketing activities associated with sales and purchases of natural gas, natural gas price
Sunp trarfsactons. other commodity price hedging of natural gas and crude oli and condensate
Prices utilizing NYMEX-related commodity market transactions, and volumetric production payment
related margins added approximately $91 million to net operating revenues during the first nine
months of 1995, an increase of approximately $67 million from the same period in 1994. This

Gains on sales of reserves and related assets during the first nine montis of 1995 Increased
$10 milion to $63 mition when compared to the same period in 1994 which Increase was attributable
to the Company's continuing efforts in optimizing the use of its assets.

1994 compared to 1993. During 1994, net operating revenues increased to $626 million, up
$45 million as compared to 1993.

Average wellhead natural gas volumes increased approximately 6% compared to 1993 primarily
ratlecting the effects of development activities offshore Trinidad and in Canada partially offset by
voluntary curtaliments of production in the United States in 1994. The volume reductions in the
United States as a result of voluntary curtailments were more than oftset by the new natural gas

from

increase in wellhead natural gas volumes added $28 milion to net operating revenues. Average
wellhead natural gas prices were down significantly from 1993 reducing net operating revenues by

23

00900000000226


IN THE NEWS: 1/15/02 Page 7 of 36

government and local authorities, are working day in and day out to prevent any other kind of attack, confidence
will retum,” he said.

The president turned his eye unabashedly toward 2004 as he opened a two-day trip, meeting with lowa
political leaders and stopping in several swing states, Bush's appearances now feature campaign-style banners
saying "Working for America,”

The trip was designed partly to reassure farmers who were dismayed by the administration's decision last year
to stick with its free enterprise principles and oppose a farm bill that would have continued hefty subsidies,
Bush said he will support a bill that is "generous and affordable.”

Bush found a way to make his call for open markets palatable here in the Farm Belt, Referring to the Russian
president, he said, "We've got to get my friend [Vladimir] Putin to be buying John Deere products.”

4. Enron Tax Strategy Opposed by Clinton Draws Attention of Government Officials * THE WALL
STREET JOURNAL

THE WALL STREET JOURNAL
January 15, 2002
Politics & Policy
Enron Tax Strategy Opposed by Clinton Draws Attention of Government Officials

By JOHN D. MCKINNON
Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- Government officials are examining whether Enron
Corp.'s extensive use of a controversial tax strategy, once opposed by the
Clinton administration, contributed to its financial problems.

The tax strategy drew fire in 1996 and 1997 as a potentially improper way
to reduce taxes while masking company debt. Initially, it promised a kind
of accounting alchemy, It allowed a company to borrow money from a
subsidiary and treat the transaction as debt that generates intcrest
deductions for tax purposes -- but as equity for its shareholders.

But the Clinton administration failed to get Congress to block it, and the
Internal Revenue Service dropped a legal challenge to Enron's use of the
strategy, known generically as "trust-preferred securities." The strategy has
been widely marketed and used: Goldman Sachs Group Inc. pioneered the
product with an investment known as MIPS, or Monthly Income Preferred
Shares or Securities. Other firms quickly followed with similar products,
with different names and slightly different forms.

A spokeswoman for Goldman said the company underwrote an carly
Enron MIPS deal but, in general, has had little involvement with the
company. As the strategy was initially marketed during the 1990s, a
corporation typically formed a subsidiary that issued preferred shares
paying a fixed, regular amount to investors. The subsidiary then lent the
proceeds to the corporation.

01/17/2002
00800000001140


Davis, Michele

From: Bair, Sheila

Sent: Monday, January 14, 2002 4:35 PM

To: Davis, Michele

Subject: RE: for Secretary's speech TOMORROW

I'm sorry | didn't get back to you. I've been in meetings all afternoon. In any event, you obviously didn’? neec me, Thes is
great

I would slightly rework the second para as follows:

[(6)(5)]

—rignal Message—-

From: Daves, Michete

Sent: Monday, January 14, 2002 1:41 PM
To: Bair, Sheva

Subject: for Secretary's speech TOMORROW

[(b)(5)}

00800000000244


From: Tom McGevern

To: SHELTONA, CARTERJ
Date: 6/15/99 5:32pm
‘Subject: bankruptcy legislation -Forwarded -Reply

Norman's description of the status of the bankruptcy legislation Is correct, It's not certain when the bankruptcy bill
will come up on the Senate floor, and although if could be as carly as next week, it also may slip.

Enron and its outside counsel, Cadwalader, have proposed some changes to the Working Group's proposed
financial netting legistation. [()(5)]

>>> Norman Carleton 06/15/99 04:48pm >>>
Alison,

{(b)(5)]

Tom and Lucy: Do you know anything more about this? Alison's question is attached.
ce: NICKOLOFFP, Dom13.00PO7,HUFFMANL, CARLETONN, DOPOS...

01759

01200000000415


[(b)(5)]

01200000001231


From:
To:
Date:
‘Subject:

((b)(5)]

ce:

Norman Carteton

GENSLERG, Sachs, MCGIVERNT

6/1/99 5:36pm

Working Group Comments on Enron/Cadwalader Proposals -Reply

Dom13.00P07.MCCLELLANM, DOPOS.TooheyF, CARTER, MC...

01755

01200000000411


IN THE NEWS: 1/14/02 Page 31 of 36

Collins said she is not in any financial trouble and her depression will not
keep her from being a productive council member.

"First of all, I don't consider myself having problems. I think that any
citizen of America who works or pays taxes is likely to have a tax disagreement
or two," she said. "If it tums out that I owe more than $8,000, then I'll make
arrangements with them to pay it.”
22. Ex-Officer Tipped Off Drug Suspect; Courts: Task force member sought money before major bust *
Los Angeles Times

Los Angeles Times

January 12, 2002

Ex-Officer Tipped Off Drug Suspect; Courts: Task force member sought money before major bust.
BYLINE: DAVID ROSENZWEIG, TIMES STAFF WRITER

A former Ontario police officer assigned to a federal drug task force pleaded
guilty last July to tipping off a suspect in a narcotics investigation that
resulted in more than 100 arrests nationwide, the U.S. attomey’s office
disclosed Friday.

The case against Douglas John Bos, 34, was filed under seal so as not to
further damage the investigation, which ended Thursday with the arrests of
suspects in 12 cities, including Los Angeles, Riverside and Fresno, authorities
said,
The suspects are accused of smuggling tons of pseudoephedrine, used to make methamphetamine, from
Canada to California.

Among those apprehended in the three-year probe was the man Bos was accused of tipping off, Nidal
Hamayel, 45, of Moreno Valley.

According to a court document unsealed late Thursday, Bos was part of a
six-member law enforcement team that was using a confidential informant to buy pseudoephedrine from
Hamayel.

The informant, fitted with a concealed transmitter, was to meet with Hamayel
on Oct, 28, 2000, the document said. On the morning before the mecting, Bos
allegedly telephoned Hamayel, wamed him about the informant and asked for

money.

Assistant U.S. Atty. Rebecca S. Lonergan said that Hamayel met the government informant anyway and
confronted him, saying his cover had been blown by a drug agent assigned to the case.

The Drug Enforcement Administration launched an investigation, aided by the FBI, the IRS and the
Ontario Police Department, which Bos joined in 1993,

Bos, who lives in Canyon Lake, admitted in a plea agreement that he
telephoned Hamayel on three dates before the Oct. 28 meeting.

01/17/2002
00800000001201


Original Message-—

From: Mammend, Donald
‘Sent: Thursday, February 15, 2001 8:26 AM
To: DeMarco, Edward; Elis, Dina; Hutfman, Lucy; Carleton, Norman; McInerney, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
ca Tishuk, Brian; Robins, Enc
Subject: RE; Bankruptcy Reform Mark-up Hearing
Ea,
[(b)(5)]
Don
ee Qnginal Message —
From:

DeMarco, Edward
Sent: Thursday, February 15, 2001 6:22 AM
To: Hammond, Donald; Bilis, Dina; Huffman, Lucy; Carleton, Norman; Mclnemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

Ce: Tishuk, Bran; Robbins, Eric
‘Subject: FW: Bankruptcy Reform Mark-up Hearing

FYI

Original Message—-—
From: Robbins, Erie
Sent: Wedhesday, February 14, 2001 5:45 PM
To: DeMarco, Edward
ca ‘Tishuk, Brian
‘Subject: Bankruptcy Reform Mark-up Hearing

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001” was reported out of
the House Judiciary Committee on Wednesday, February 14, 2001, During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass. Voting occurred largely
along party lines. The only amendment that passed was a technical amendment offered by Chairman
Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen other
amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with
Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions and

netting requirements,
Tracking: Recipient Read
Groen, Mathew Read: 02/15/2001 12:38 PM

01200000001213


RE: IN THE NEWS: 1/15/02 Page 5 of 37
budget surpluses.
"Repeal’ of Tax Cut Criticized.

The tax cuts enacted under Pub, L. No. 107-16, the tax relief package passed last year, would terminate
after 2010, Current estimates on the size and length of the returning federal budget deficit by the Office of
Management and Budget and others reflect assumptions that the tax cuts will not be renewed after that
date.

However, a proposal by the White House to extend those tax cuts after that time would likely increase
deficit projections. The White House already has indicated that the budget blueprint that Bush sends to
Congress for FY 2003 will reflect a new deficit.

In his comments in Illinois and in Missouri later in the day, Bush did not address the difficulty the
administration will face if it pushes to make the tax cuts permanent. But the president suggested his
bottom fine in the upcoming debate will be to maintain the tax relief package enacted to date.

Bush reiterated his view that recession and war both justify deficit spending.

"The worst thing to do is, in the face of this recession, is to not let people have their tax break,” Bush
said, “It doesn’t make any economic sense. And that's why we're not going to let them ... repeal this tax
cut.”

In terms of the economic stimulus plan, the president told farmers in Aurora, Mo., that he will work
with Democrats and Republicans to provide assistance for the unemployed, But he said he will also
continue to push for provisions to accelerate depreciation for equipment, give tax relief to low-income
workers, and otherwise speed up tax relief.

Lindsey: Stimulus an ‘Insurance Policy."

With many economists expressing doubt about how stimulative the president's plan actually will be,
White House officials now are characterizing the proposal as an insurance plan for the U.S. economy.

Lawrence Lindsey, director of the National Economic Council, said in comments Jan, 12 that he now
believes the preconditions for an expansion are in place but the stimulus package is still needed,

“We have very lean inventories -- that is usually the key to the beginning of an economic expansion --
but ... what is needed is that we have an insurance policy,” Lindsey said on CNN's Novak, Hunt &
Shields, "And the insurance policy, quite frankly, is what the president suggested pass, the one that
passed the House twice, that was stalled in the Senate, because we shouldn't take any chances here. This
is the opportunity for the economy to be revived. The preconditions are there. Let's not have another
year of slow growth,”

Lindsey, who accompanied Bush on his trip to Illinois and Missoun, downplayed a recent analysis of
the House-passed stimulus by the Congressional Budget Office that said key provisions such as ending
the corporate alternative minimum tax ‘would have only a small impact at best on the economy (5 DIRG-
2, 1/8/02), Lindsey said he does not believe any changes in the stimulus package should be undertaken.

"Almost every private-sector forecast ... [has] estimated what the president proposed as being exactly
what the economy needs, as was the first tax cut,” Lindsey said, “It is retail sales that have held this
economy together. Retail sales, I think, were the result of the tax cut that the president proposed. What
we're proposing now to do is to extend that into the investment side, because it is investment that is

lagving right now.”
01/17/2002

00800000001101


From: ‘Tom McGivern

Tor DOM3 . DOPOS (CARLETONN, NICKOLOPFP), YETTERT
Date: 3/17/00 3:25pm
Subject: Financial Netting Provisions of H.R, 833 - bankruptey bill “Reply -Reply -Reply

Reply -Reply -Rep
T'll forward to them.

>>> John Yetter 03/17/00 03:20pm >>>
No, I don't know,

>>> Peter Nickoloff 03/17/00 03:17pm >>>

T have no comments or edits on the letters except to ask if they've yet been circulated to the
other WG agencies. Norman has been out of the office since 3/10 (and isn't scheduled to return
until 3/27), so I can't say whether he had a chance to forward the letters on before he left.
John, would you know?

>»> John Yetter 03/17/00 02:50pm >>>
{(b)(6)] Tt have attached your original
@-mail and copied Norman‘s staff to see if they have any comments.

>>> Tom McGivern 03/17/00 02:46pm >>>
Norman, do you have comments/edits?

>>> John Yetter 03/10/00 10:18am >>>
T agree with all of Tom's commenta on the Enron proposals and don't have any comments on the
letter.
>>> Tom McGivern 03/09/00 06:36pm >>>
{(b)(5)]
{(b)(6)]

if you would send a version with your edits to other Working
Group staff for their review that would be great. [(b)(5)]

Sn the fmron proposals Norman received:

[(b)(5)]

Thanks.

ce: DOM3 , DOPOS (TooheyP) , DOM3 .DOPOS (schultheissh) ,

01226

01200000000582


AVAILABLE INFORMATION

can be inspected

Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the following Regional
Offices of the Commission: Midwest Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and Northeast Regional Office, n World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
listed on the New York Stock Exchange, Inc, ("NYSE"), and reports, proxy statements ‘and other information
concerning the Company can be inspected and copied ‘at the offices of the New York Exchange at 20 Broad
Street, New York, New York 10005.

This Prospectus constitutes a part of a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the “Securities Act"), with respect to the shares of Common Stock otfered
hereby. This Prospectus does not contain ‘all of the information

i
i
3
;
Hy
4H
i
i
i
i

Statement
Commission or Incorporated by reference herein are not necessarily complete, and in each instance reference
is made to the copy of such document so filed for a more complete description of the matter Involved. Each

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
‘The Company's Annual Report on Form 10-K for the ended December 31, 1994, Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1995, June . 1995 and September 30, 1995 and the description
of ihe Common Stock contained in the Registration Statement on Form &-A dectared ettective on October 3,

Each document filed by the Company pursuant to Section 13a), 134c), 14 or 15{d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the offering of the shares of Common
Stock pursuant hereto shall be deemed to be incorporated herein by reference and to be a part hereot from the

‘on the request of any such person, a copy of any or ail of the incorporated herein by
reference, other than exhibits ‘such documents (unless such ‘are specifically incorporated by
reterance into the documents that this Prospectus should be directed to Secretary

0900000000205 ,


DeMarco, Edward

From: Hammond, Donald
Sent: Thursday, February 15, 2001 10:25 AM
To: Carteton, Norman; DeMarco, Edward; Ellis, Dina, Huffman, Lucy; Mcinerney, Roberta;
Constantine, Eleni; Hughes, Gerry; Stewart, Lewranne
Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michael, Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickolotf, Peter, Schultheiss, Heidilynne; Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Norman,
{(b)(5)]
Don
Ong Message--—--
From: Carteton, Norman
Sent: ‘Thursday, February 15, 2001 10:07 AM
To: Hammond, Donald; DeMarco, Edward; Elis, Dina; Huffman, Lucy; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michaet; Sutton, Gary; Huffman, Lucy; McGivern, Tom; Nickoloff, Peter; Schulthelss,
Hecihnine; Gross, Jared
Subject: RE: Bankruptey Reform Mark-up Hearing
Don,

{((b)(5))

01200000001216


TN THE NEWS: 1/14/02 Page 16 of 36
E. D. , Erie, Pa.

A: This is one of many tax ideas that died recently when Congress couldn't
agree on an economic-stimulus package. While the idea of raising the
capital-loss threshold enjoys widespread support, Congress is so sharply
divided that it's unlikely there will be any major tax-law changes this year.
Thus, if your capital losses exceeded your capital gains for 2001, you can
deduct as much as $3,000 of your net losses ($1,500 if you're married
filing separately) from your wages and other ordinary income. Additional
losses can be carried over into future years.

Q: Several readers have asked me to cite the source for my report
that the gift-tax exclusion rose for 2002.

A: See IRS Revenue Procedure 2001-59, Look on page 627 of the
Internal Revenue Bulletin, available on the IRS Web site (www. irs.gov)
under the heading "Tax Regs in English.” The gist: You can give away as
much as $11,000 this year, tax-free, to anyone you want, or to as many
people as you wish, That's up from $10,000 last year. The giver doesn't
have to pay gift taxes, and recipients don't owe income taxes. The IRS
says this is the first change in the dollar amount in 20 years.

12. Taxing consequences * Star-Telegram

Star-Telegram

Fort Worth, TX

January 11, 2002

Taxing consequences

Actor and comedian Steve Martin has a routine in which the punch line for explaining to the Internal Revenue
Service why you didn't pay your taxes is "two little words - I forgot."

Unfortunately, forgetting doesn't cut it with the IRS. Neither does knowingly refusing to pay.
As the tax season begins, the IRS has issued a 25-page legal summary that refutes many of the most common

legal arguments individuals and groups make against paying taxes or filing returns. Some of the schemes are
marketed by promoters for a fee, but taxpayers who sign up could be bumed.

The IRS cautions taxpayers against following anti-tax pied pipers, reminding them that the federal courts can
impose a penalty of up to $25,000 if a taxpayer's argument is deemed frivolous.

The summary, “The Truth About Frivolous Tax Arguments," is available on the IRS Web site, WWW. irs. gov.
Some arguments and counterpoints:

Because paying taxes and filing a return is "voluntary," taxpayers can refuse to do so. The use of voluntary in
this case means that taxpayers determine their own tax burdens and fill out IRS forms.

The income tax is a “taking” of property by the government without due process of law. The 16th Amendment
to the Constitution, which instituted the income tax, was properly ratified by the states.

Because those born in the United States are bom in specific states, they are citizens of sovereign states, not of
01/17/2002

00800000001185


~ = Fobe26-00 03:2éen  FrosAF/¥ peeeaTaass T5186 FP 0R/De Feta

[(b)(5)]
\

sece .e.0T aner.c?-A84

00500000000922


RE: IN THE NEWS: 1/15/02 Page 8 of 37

4. Enron Tax Strategy Opposed by Clinton Draws Attention of Goverament Officials * THE
WALL STREET JOURNAL

THE WALL STREET JOURNAL

January 15, 2002
Politics & Policy
Enron Tax Strategy Opposed by Clinton Draws Attention of Government Officials

By JOHN D, MCKINNON
Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- Government officials are examining whether Enron
Corp.'s extensive use of a controversial tax strategy, once opposed by the
Clinton administration, contributed to its financial problems,

The tax strategy drew fire in 1996 and 1997 as a potentially improper way
to reduce taxes while masking company debt, Initially, it promised a kind
of accounting alchemy. It allowed a company to borrow money from a
subsidiary and treat the transaction as debt that generates interest
deductions for tax purposes -- but as equity for its shareholders.

But the Clinton administration failed to get Congress to block it, and the
Internal Revenue Service dropped a legal challenge to Enron's use of the
strategy, known generically as "trust-preferred securities.” The strategy has
been widely marketed and used: Goldman Sachs Group Inc. pioneered the
product with an investment known as MIPS, or Monthly Income Preferred

Shares or Securities. Other firms quickly followed with similar products,
with different names and slightly different forms.

A spokeswoman for Goldman said the company underwrote an early
Enron MIPS deal but, in general, has had little involvement with the
company. As the strategy was initially marketed during the 1990s, a
corporation typically formed a subsidiary that issued preferred shares
paying a fixed, regular amount to investors. The subsidiary then lent the
proceeds to the corporation.

For tax purposes, the corporation could

deduct interest paid on the debt, arguing that

the preferred shareholders owned the
subsidiary. But for financial-accounting purposes, the corporation could
argue that it controlled the subsidiary; hence, it could treat the loan more

like an asset.

Defenders of the strategy said that in recent years, tighter accounting rules
have required clearer disclosure of the debt on a company's books,
although certain aspects of the strategy still carry advantages over
conventional loans for purposes of ratings agencies.

The Houston energy-trading firm didn’t respond to requests for comment
01/17/2002

00800000001104


For illustrative purposes only, the following chart shows the number of shares of EOG Common
Stock or the amount of casn that a Holder of Exchangeable Notes would receive for each
Exchangeable Note at various Maturity Prices. The table assumes that there will be no adjustments
to the Exchange Rate described under "'~ Dilution Adjustments” below. There can be no assurance
that the Maturity Price will be within the range set forth below, Given the Initial Price of $ per
Exchangeable Note and the Threshold Appreciation Price of $ + @ Holder of an Exchangeable
Note would receive at Maturity the following number of shares of EOG Common Stock or amount of
Cash (if Enron elects to pay the Exchangeable Notes in cash):

or Pog sharea of 800
Common Stock Common Stock Amount of Cash

Interest on the Exchangeable Notes will be payable, and delivery of EOG Common Stock (or, at
the option of Enron, its cash equivalent) in exchange for the Exchangeable Notes at Maturity will be

and
The Exchangeable Notes will be transferable on the books of Enron at any time and from time to
time. No service charge will be made to the Holder for any such transfer except for any tax or
governmental charge incidental thereto,

Common Stock. As & result, there can be no assurance that Enron will elect at Maturity to deliver
EOG Common Stock or, if it so elects, that it will use all or a portion of its current holdings of EOG
Common Stock to make such delivery. Holders of the Exchangeable Notes will not be entitied to any
rights with respect to the EOG Common Stock (including without limitation voting rights and rights to

Stock into a smaller number of shares, (iv) issue by reciassification of shares of EOG Common
Stock any shares of common stock of EOG, (v) issue rights or warrants to all holders of EOG
Common Stock entitling them to subscribe for or purchase shares of EOG Common Stock at a price

17

00900000000192



DeMarco, Edward Sie. t bles _

From: DeMarco, Edward Nev co - May o|

Sent: Thursday, February 15, 2001 12:38 PM

To: Green, Matthew

Subject: FW: Bankruptcy Reform Mark-up Hearing

[(b)(5)]

Sent: ‘Thursday, February 15, 2001 10:07 AM

To: Hammond, Donald; DeMarco, Edward: Ells, Dina; Huffman, Lucy; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
Lawranne

cc

Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom; Nickolicff, Peter; Schulthess,
Heidilynne; Gross, Jared
RE: Bankruptcy Reform Markup Hearing

Don,

{((b)(5)]

01200000001212


Enron by the Trustee, or to Enron and the Trustee by the holders of at least 25% in principal amount
of all outstanding Indenture Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of Default under the Indenture;
OF (0) cartain events involving Enron in bankruptcy, receivership or other insolvency Proceedings or
an assignment for the benefit of creditors.

It an Event of Default described in clause (a) or (b) in the foregoing paragraph has occurred and
1S Continuing with respect to Indenture Securities of any series, the Indenture provides that the
Trustee or the holders of not less than 25% in principal amount of the outstanding indenture
Securities of that series may declare the principal amount of all of the Indenture Securities of that
series to be due and payable immediately, and upon any such declaration such principal amount
shall become immediately due and payable. if an Event of Default described in clause (c) or (d) of the
foregoing paragraph occurs and is continuing, the Trustee or the holders of not less than 25% in
principal amount of all of the Indenture Securities then outstanding may declare the principal amount
of all of theindenture Securities to be due and payable immediately, and upon any such declaration
such principal amount shall become immediately due and payable.

A default under other indebtedness of Enron is not an Event of Default under the Indenture, and
an Event of Default under one series of Indenture Securities will not necessarily be an Event of
Default under another series.

At any time after such a declaration of acceleration with respect to Indenture Securities of any
Series (or of all series, as the case may be) has been made and before judgment or decree for
Payment of the money due has been obtained by the Trustee, the holders of a majority in principal
amount of the outstanding Indenture Securities of that series (or of all series, as the case may be)
may rescind and annul such declaration and its consequences, if, subject to certain conditions, all

any
Series at the time outstanding are empowered under the terms of the Indenture, subject to certain

limitations, to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the Trustee.

’

The Indenture further provides that no holder of an Indenture Security of any series may enforce
the Indenture except in the case of failure by the Trustee to act for 60 days after notice of a
continuing Event of Default with respect to the Indenture Securities of that series and after request
by the holders of not less than 25% in principal amount of the outstanding Indenture Securities of
such series and the offer to the Trustee of reasonable indemnity, but this provision will not prevent a
holder of any Indenture Security trom enforcing the payment of the principal of, and interest on, such
holder's indenture Security.

The Indenture requires that Enron deliver to the Trustee, within 120 days after the end of each
fiscal year, an Officer's Certificate, stating whether to the best knowledge of the signers thereof,
Enron is in default in the performance and observance of certain of the terms of the Indenture and, if
$0, specitying each such default and the nature and status thereot of which the signers may have
knowledge.

00900000000198


DeMarco, Edward

ee"

From: Carleton, Norman
Sent: Monday, September 10, 2001 11:34 AM
To: Bair, Shes; DeMarco, Edward; Eichner, Matthew; Ellett, Martha; Fisher, Peter; Gabiiondo,

Jose; Gross, Jared; Hammer, Viva; Hughes, Gerry; Nickoloff, Peter, Novey, Michael;
Rosaboro, Brian; Schultheiss, Heidilynne; Smith, Amy; Sutton, Gary
Subject: Retail Swaps - Telephone Call from Elizabeth Fox

{(b)(5)]

01200000001228


IN THE NEWS: 1/15/02 Page 8 of 36

For tax purposes, the corporation could

deduct interest paid on the debt, arguing that

the preferred shareholders owned the
subsidiary. But for financial-accounting purposes, the corporation could
argue that it controlled the subsidiary; hence, it could treat the loan more
like an asset.

Defenders of the strategy said that in recent years, tighter accounting rules
have required clearer disclosure of the debt on a company’s books,
although certain aspects of the strategy still carry advantages over
conventional loans for purposes of ratings agencies.

The Houston energy-trading firm didn't respond to requests for comment
on its use of the strategy, which became hugely popular with banks,
insurance companies and utilities, among others. One advantage is that
such arrangements often allow interest payments to be deferred for five
years.

But the deals initially raised red flags among regulators. The Clinton
administration asked Congress in 1996 and again in 1997 to limit the
strategy’s use in many situations. Securities firms and businesses lobbied
intensely to defeat the proposal. The Intemal Revenue Service challenged
Enron's use of it with two subsidiaries: Enron Capital LLC, a Turks and
Caicos entity, and Enron Capital Resources LP, a Delaware limited
partnership. In both cases, the IRS didn’t allow Enron to take the interest
deductions.

Enron responded in April 1998, filing a petition in the U.S. Tax Court to
overtum the IRS's decision. The litigation became the test case for the
investments and briefly roiled the financial and accounting industries.

"The case will be closely watched because the MIPS structure has been
used by taxpayers to raise billions of dollars in capital that is meant to be
treated as debt for tax purposes but not entirely as debt by ratings agencies
such as Moody’s and Standard & Poors," accounting firm Emst & Young
LLP wrote to its clients in June 1998. A number of observers predicted
the IRS would fail in its challenge. The IRS eventually conceded the key
issues in the Enron case and issued technical advice to taxpayers allowing
use of trust-preferred transactions to justify deductions in many
circumstances. The ruling was "likely an outgrowth of the favorable
settlement in Enron v. Commissioner,” Emst & Young wrote.

Energy price swings and the company’s use of off-balance-sheet
partnerships appear to have contributed substantially to Enron's problems.
But government officials also are interested in Enron's use of
trust-preferred products. They said that at least $900 million or so shows
up in the company’s latest annual report. Ed Kleinbard, a lawyer in New
York who assisted the Securities Industry Association in responding to

IRS audits of companies that used the trust-preferred vehicle, said that in
the current regulatory environment, use of the trust-preferred strategies is
legitimate, “I don't think of this as an example of the system gone awry,” he
said.

01/17/2002

00800000001141


IN THE NEWS: 1/14/02 Page 34 of 36
Employees.

"But that doesn't excuse them from doing their homework," he added. "They should understand how long-
term care insurance works, what it covers and what it doesn't. They should compare benefits and premiums in
the federal plan to other policies on the private market, and they should decide if they can afford paying the
premiums and if it is otherwise appropriate for their individual circumstances.”

OPM hopes to release information in the next month or two listing what benefits will be available and what
premiums will cost. The agency will then schedule an early enrollment period, probably from late March
through mid-May, for employees and retirees who understand long-term care options and want to buy the
insurance as soon as possible.

Most employees and retirees, OPM thinks, will wait to see the educational materials being prepared for the
regular enrollment period, tentatively scheduled from late June or early July through October.

Regardless of whether you apply for early or regular cnrollment, there are dozens of questions to think
through. Among them:

* Will your long-term care needs be met in your home, in adult day care, in an assisted-living facility or in a
nursing home?

* Have you checked out assisted-living care and nursing homes in your area to determine whether you would
be comfortable with them and to find out what they cost?

* Have you estimated how much of the long-term care expenses you will be able to pay on your own?

To help people sort out such questions, OPM has published information on many aspects of long-term care at
its Web site (www.opm.gov/insure/Itc). The federal insurance carriers, LTC Partners, has set up an Internet site
(www. ltcfeds.com) and a toll-free telephone line (1-800-582-3337) so that employees and retirees can register
to receive information about the program as it develops,

In making your decisions, you'll want to keep a few points in mind:

* Enrollees will pay the full cost of the premiums, which will be based on the options chosen and the
individual's age at enrollment.

* Early enrollees may have more limited benefit choices than will be available to those who wait until the
formal open season. In most cases, they will be able to change their coverage during the open season, but
additional questions about health status may be required.

* Early enrollees will not be able to have the premiums withheld directly from their salaries or annuities as
will those who wait until the open season. Early enrollees will be able to switch to withholding during the open
season.

Arthur Stein, a financial planner with Cassady & Co. in McLean, said employees should calculate how high a
daily benefit they will need and how long they want the benefit to run, and know the length of any waiting
periods when they have to cover costs out of pocket.

Stein said he regularly recommends that clients purchase a long-term care option known as the "compound
inflation adjustment.” With it, the benefit automatically increases by a given percentage every year, typically 5
percent, while premiums remain level.

"Everyone needs to customize it to their personal financial situation, and that is not particularly easy to do,”
01/17/2002

00800000001204


IN THE NEWS: 1/15/02 Page 30 of 36

Working parents with incomes under $32,121 can claim the EITC with tax breaks up to $2,428 for one child
and up to $4,008 for two or more children. The primary requirements include: The taxpayer must file a federal
income tax return; must have eamings from wages or self-employment; and must provide a valid Social
Security number for each child listed on camed income credit schedule.

The centers also assist with general tax-related issues,

Centers in Manhattan are at 290 Broadway, 110 W. 44th and 55 W. 125th streets; in Rego Park at 1 Lefrak
City Plaza, 59-17 Junction Blvd.; in Garden City at 107 Charles Lindbergh Blvd.; in Massapequa in the Sunrise
Mall; in Inwood at Our Lady of Good Counsel, 68 Wanser Ave.; in Hauppauge at 1180 Veterans Hwy., and in
Riverhead at 518 E, Main St.

- Tami Luhby
23. Taxman cometh offering credits * New Haven Register

New Haven Register

January 13, 2002

Taxman cometh offering credits

HARTFORD - The Intemal Revenue Service is advising Connecticut residents to take note of three tax credits
with the potential to reduce a parent's tax burden by as much as $600 per child.

The Child Tax Credit bill, the refundable Eamed Income Tax Credit and the Additional Child Tax Credit are
"too valuable to overlook,” said IRS spokeswoman Dianne Besunder.

Those interested in leaming more about how the credits work who can claim them are available on the IRS Web
site at www.irs.gov shttpy/www. irs. gov/>.

Parents also have the option of going to the state's seven Connecticut IRS Taxpayer Assistance Centers during
Eamed Income Tax Credit Awareness Days this month. The first of those is next Wednesday, from 8:30 a.m. to
4:30 p.m. Another awareness day is scheduled for Jan, 23.

Taxpayer Assistance Centers are located in Bridgeport, Danbury, Hartford, New Haven, Norwalk, New London

and Waterbury.
24. In Brief * The Washington Post

The Washington Post
January 15, 2002, Tuesday, Final Edition
SECTION: METRO; Pg. B03
LENGTH: 1031 words
HEADLINE: METRO; In Brief
BODY:

VIRGINIA
01/17/2002

00800000001163


From: Jana Carter

To: DOM3.DOPO6(SHELTONA), MCGIVERNT
Date: BI1G/99 10:35am
Subject: bankruptcy legislation -Forwarded -Reply -Reply

| visited with Lee about the Enron proposal and a meeting with Cadwalader, He said that he was fine with a subset
of the working group hearing what these folks have to say. Lee was not planning on attending and thought that Tom,
you and Norman (and whoever else wants to) could meat with them on behalf of Treasury. It is up to the other
working group members as to whom they would have attend,

thanks—Jana
>>> Tom MoGivern 06/15/99 05:32pm >>>

{(b)(5)]

Enron and its outside counsel, Cadwalader, have proposed some changes to the Working Group's proposed
financial natting legistation. [(b)(5)]

>>> Norman Carleton 06/15/99 04:48pm >>>
Alison,

{(b)(5)}

Tom and Lucy: Do you know anything more about this? Alison's question is attached.
cc: Dom 13.D0PO7(HUFFMANL), DOM3.DOPO5(TooheyF), OOM3.0...

01760

01200000000416


Nichols, Robert

ET

Sent Trey. Jou 10, 2002 6:46 PM

: ¥ , 2002 5:

To: Davis, Michele *
another ENRON callFW.

Reb Nichols

Deputy Assistant Secretary for Public Affairs
Department of the Treasury
(202) 622-2910

accen( Original Message-~----

From: Fleck, Carole [mailto:CFleck@aarp.org)
Sent: Thursday, January 10, 2002 4:05 Py
To: ‘robert.nichols@do.treas.gov"

Subject:

Ki Robert,

I'm a reporter for the AARP Bulletin, working for Suzy Crowley. Could you
call me ploase, 202/434-3346, about today's Bush announcerent that Treasury
will be looking into pension rules in light of Enron? If I could talk to you
today, that'd be great -~ I'm outa here at 5. If not today, will you please
call me tomoro at home, {(b)(6)}

Thanks,
Carole Fleck

00800000000474

|


RE: IN THE NEWS: 1/15/02 Page 28 of 37

It’s time to tally up taxes for another year, and those who need free help have alternatives.

AARP will offer its 10-week tax assistance program starting Feb. 1.

Two or three trained volunteers will help prepare taxes 9 a.m. to 1 p.m. on Saturdays Feb. 2 through Apnil
13, at Public Library of Enid and Garfield County, and 10 a.m. to 2 p.m. Mondays, Wednesdays and
Fridays Feb. | through April 12 at Oakwood Bow!.

Vi Musser, AARP tax assistance coordinator, said the free services aren't just for seniors.

"It’s geared primarily for seniors, but it is for anybody from low to moderate income,” Musser said,
Musser said the volunteers aren't trained to tackle difficult or complicated returns.

"I've always told people, ‘We do simple retums for simple people," Musser said.

The Internal Revenue Service will offer free help for more complicated retums, with tax credits such as
Child Tax Credit, Earned Income Tax Credit and Additional Child Tax Credit.

The IRS Taxpayer Assistance Center is open during regular office hours. Hours are 8 a.m. to 4:30 p.m.
Mondays, Tuesdays, Thursdays and Fridays and 8:30 a.m. to 4:30 p.m. Wednesdays,

IRS personne! will help working parents figure three tax credits - all of which can reduce the federal
income taxes of working parents, said IRS spokesman David Stell.

"Some parents may be eligible to claim these credits for the first time,” said Stell. "Especially if there
were changes in the family such as a new child, divorce or decrease in earnings during the past year.”

Susan Snowden, IRS revenue officer, said all tax forms and valuable information are available via the

Internet at. www. irs. gov <http:/www.irs.gov>. Tax forms can be downloaded from the site.

The site allows users to enter earnings information for help on selecting a form, and it provides frequently
asked questions and answers.

Snowden said a number of local sites provide the public with access to free tax forms, but many of those
sites run out of forms and don't have the opportunity to regularly restock.

The IRS office, 301 W. Maine, regularly restocks all forms.
20. City to help residents get income tax credit * Indianapolis Star

Indianapolis Star

January 14, 2002

City to help residents get income tax credit

The community effort will help low-income and Hispanic families claim the money they're entitled to.
By J.K. Wall

Indianapolis aims to get an extra $5 million from Washington this year.

Not for the city government, but for lower-income residents who can claim the federal Earned Income
Tax Credit.

‘The mayor's office has joined with the Internal Revenue Service, the Annie E. Casey Foundation, local
banks, community groups, financial counselors and Hispanic groups to encourage applications for the tax
credit, The coalition wants to spread the word about the credit, provide free tax preparation and connect
credit recipients with financial education and new bank accounts.

The IRS estimates that 15 percent of residents who are eligible for the tax credit don’t claim it. That

01/17/2002

00800000001124


Sutton, Gary

From: Carleton, Norman
Sent: Monday, September 10, 2001 11:34 AM
To: Bair, Sheila; DeMarco, Edward; Eichner, Matthew; Ellett, Martha; Fisher, Peter; Gabliondo,

Jose; Gross, Jared; Hammer, Vive, Hughes, Gerry; Nickoloff, Peter; Novey, Michael;
Roseboro, Brian; Schultheiss, Heidilyane; Smith, Amy, Sutton, Gary
Subject: Retail Swaps - Telephone Call from Elizabeth Fox

{(b)(5)]

00200000000097


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

Senet

October 26, 1999
ACTION
MEMORANDUM FOR SECRETARY SUMMERS
FROM: Neal S. WolinAPu
Acting General Counsel
SUBJECT: Response to Letter from Kenneth L. Lay, Chairman and Chief
Executive Officer of Enron Corp.

ACTION-FORCING EVENT
{(b)(5)]

RECOMMENDATION
{(b)(5)}

BACKGROUND
((b)(5)]

01200000001425


The only reason New Hampshire citizens might not be able to shop for the best bargain
in cicctricity is that our largest utility is using a federal court te stop them. | urge you to act te
remove any tedera! obstacles that are blocking states like mine from implementing full
competition in the elvetric industry

Thank you again for the opportunity to speak here today

00100000000084


[OUTSIDE SCOPE]

01777

01200000000433


IN THE NEWS: 1/14/02 Page 17 of 36

the United States. The 14th Amendment stipulates that anyone born or naturalized in the United States is a U.S.
citizen.

Income is not taxable because there is no taxable gain when exchanging labor for moncy. Federal law states,
however, that gross income includes compensation for services.

The IRS is focusing its tax compliance resources on such tax avoidance schemes, Commissioner Charles
Rossotti says.

PC aR ab Re Sy oc Sees
"It may take usa while, but .., the péople who are abusing the system, they're’ goifg to be sorry.”
13. DON'T BE MISLED BY TAX SCAMS; CONTRARY TO CON ARTISTS' HYPE, AN ATTEMPT
TO DODGE THE IRS CAN COST YOU DEARLY * The Charlotte Observer

The Charlotte Observer

January 13, 2002 Sunday ONE-THREE EDITION
SECTION: BUSINESS; MICHELLE SINGLETARY - COLOR OF MONEY; Pg. 2E
LENGTH: 736 words

HEADLINE: DON'T BE MISLED BY TAX SCAMS; CONTRARY TO CON ARTISTS' HYPE, AN
ATTEMPT TO DODGE THE IRS CAN COST YOU DEARLY

BYLINE: MICHELLE SINGLETARY

BODY:
Like most Americans, paying taxes is not something I do joyfully, But I don't loathe paying them so much
that I make myself vulnerable to con artists.

Unfortunately, thousands of individuals and small-business owners each year are so desperate to reduce their
tax bills that they make it easy for criminals to take their money. While many of us wait for our W-2 forms
listing 2001 wages and withholdings, also coming in the mail, e-mail or on late-night cable TV infomercials
will be pitches to “protect” you from the tax man, Be leery of such claims. You can get bumed either of two
ways. First, you can pay for advice that is phony. Or, you can pay a crook for the fraudulent tax-savings advice,
follow it and the Internal Revenue Service catches you. Worse yet, you could go to jail for tax evasion,

This past summer the IRS published a 25-page summary addressing most of the arguments about the legality
of not paying taxes or not filing a return. "The Truth About Frivolous Tax Arguments" is available on the
Internet at www.irs.gov under the section titled "Tax Info For You.”

For example, some con artists have gotten people to pay $100 to $200 for help in applying for a refund of
Social Security taxes paid over their lifetimes. According to Dale Hart, deputy commissioner of the IRS' small-
business and self-employed division, there is no provision in the tax code that allows for a refund of Social
Security contributions.

The IRS says most arguments against paying taxes fall into these categories:

Filing a return and paying taxes are voluntary. Numerous courts have debunked this notion. Although IRS
booklets do use the word "voluntary,” it merely means taxpayers are allowed to calculate their own taxes and
prepare their returns rather than have the government do it. Still, some con artists will charge $50 or more to tell
you just the opposite. Wages, tips and other compensation received for personal services are not income. This

O1/17/2002

0800000001187


Tishuk, Brian

From: Carleton, Norman

Sent: Thursday, February 15, 2001 10:07 AM
To: Hammond, Donald; DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta;
Constantine, Eleni; Hughes, Gerry; Stewart, Lawranne
Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickoloff, Peter, Schultheiss, Heidilynne: Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Don,
((b)(5)]
Norman
Original Messagen--
From: Hammond, Donald
Sent: ‘Thursday, February 15, 2001 6:25 AM

P
g

DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Carleton, Norman; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
lawrarne

ce: ‘Tishuik, Brian; Robbins, Eric

Subject: RE: Bankruptcy Reform Mark-up Hezeing
Ed,

((b)(5)}

01200000001044


Nichols, Robert

From: Quinn, Kate

Sont: Tuesday. J 08, 2002 2:54 PM
To: Nichols, Robert. Davis, Michele
Subject: enron

Michele and Rob,

Do you happen to know what entity within Treasury would be responsible for examining Enron. | know the Secretary made
some comment to the press about 3 reveiw of the regulations involved in that case.

The question has come up because | received a call from PS!, the Permanent Subcommittee on Investigations. They have
launched a major congressional investigations into this matter and are interested in Treasury's role.

Any direction you can provide would be appreciated

Kate Quinn
Deputy Assistant Secretary
(Enforcement)

)
Office of Legislative Affairs
‘of the Treasury
(202) 622-0725
katie. quinn@do treas.gov

|

0800000000426


IN THE NEWS: 1/14/02 Page 28 of 36

The case is U.S. v. Fior D'ltalia, No. 01-463. A ruling is expected by July.

19, IRS says tax forms were falsified * The Flint Journal
The Flint Journal

January 11, 2001
IRS says tax forms were falsified

By Ken Palmer
JOURNAL STAFF WRITER

A Flint tax preparer was arraigned Thursday on charges he prepared federal tax returns listing false expenses to
gain larger tax returns for his clients.

Amos Lampley, 58, who operated Quadruple A Income Tax Service, was indicted last month on 31 counts of
helping prepare false income tax returns in 1996 and 1997.

The government said Lampley prepared forms containing fictitious job expenses, charitable gifts and gambling
and business losses, among other inflated deductions.

If convicted, he could face up to 3 years in prison and a $250,000 fine on each count.

a
Lampley is among at least four Flint-area tax preparers who have been charged with defrauding the IRS over
the past few years. The agency hints that Michigan is a hotbed for shady tax preparers.

“We know it's a recurring problem in Michigan," said Stephen Moore, a special agent in the IRS criminal
investigation unit.

"In Michigan, we are very aggressive in that area and have been very successful in identifying these return-
preparers.

"We seem to identify more cases in the Michigan area, including the Flint area, We're going to see more,
perhaps, throughout the year and in the years ahead."

Moore said at least 10 such cases were adjudicated across the state over the past year - a disproportionately

large number. Nationally, 61 tax preparers were indicted or charged in fiscal year 2000, according to the IRS
Web site.

The Flint cases include:

Kelvin O, Towner of Flushing was sentenced to 2 years in prison in October 2000 after admitting he inflated the
amount of charitable contributions and employee expenses for a client.

The government said Towner, who was indicted on 68 counts of helping prepare false tax returns, handled
similar returns for 25 other clients who underpaid a total of nearly $150,000.

Marlene Powell, a tax preparer who previously owned or operated businesses, was indicted on 17 counts of
filing false income tax returns and failing to pay withholding taxes,

She pleaded guilty to two of the counts and was sentenced to 10 months of community confinement, Last year,
Powell was sentenced to 9 months of home confinement for failing to notify clients that she had been convicted
of a felony tax offense,

01/17/2002
00800000001198


RE: IN THE NEWS: 1/15/02 Page 14 of 37

USS. companies have much at stake, particularly General Electric Corp.
and Boeing Corp., the biggest beneficiaries of the tax-break program. The
Clinton administration sought to revise the so-called foreign sales
corporations program in 2000, after the WTO made a preliminary ruling
that the program violates rules that outlaw export subsidies and distorts
world markets. But lobbying in Congress produced a Jaw that handed even
bigger breaks to U.S. exporters.

Meanwhile, the European Commission, the EU's executive arm, has staked
its credibility on the case and has received support from some European
companies, especially Airbus, which argues that the tax breaks help its
archrival Boeing.

But many European companies are ambivalent about the US. tax breaks
becatise they have subsidiaries in the U.S. that benefit from them.
European consumers will protest any trade sanctions that make goods
there more expensive. The EU also wants to avoid a spat that could make
it hard to cooperate closely with the U.S. in completing the new round of
world trade talks that was launched last year.

Some EU member governments, such as Belgium and Spain, are also
reluctant to press too hard on the issue because the U.S. is threatening to
take action against tax breaks for their companies, which the U.S. says are
also in breach of world trade mules.
8. EU Says WTO Rejects U.S, Tax Law, Permitting Sanctions Claim * Bloomberg

BLOOMBERG

January 14, 2002
EU Says WTO Rejects U.S, Tax Law, Permitting Sanctions Claim

Geneva, Jan. 14 (Bloomberg) -- The European Union said it won World Trade Organization clearance
to impose trade sanctions against U.S. companies after the WTO ruled that a U.S. tax break violates
global export-subsidy rules.

The 15-nation EU must now decide whether to press for as much as $4 billion in damages, which
would be the highest in the WTO's seven-year history. The case affects hundreds of exporters including
Boeing Co., Microsoft Corp., Eastman Kodak Co., ‘Archer Daniels Midland Co. and General Electric Co.

“Going down the road of retaliation is in no-one's interests,” says John Weekes, former Canadian
ambassador to the WTO who now chairs the trade practice of APCO, a public affairs company, ‘It's
incumbent on them both to find a solution.”

‘The threat of European sanctions adds to trade tensions at a time when the economy on both sides of
the Atlantic is slowing. The EU is also seeking to head off U.S. quotas and tariffs on steel imports, while
the U.S. is considering a WTO complaint against European restrictions on genetically modified foods.

“We have made a point of handling this dispute in a very reasonable manner,” EU Trade

Commissioner Pascal Lamy said in a faxed statement. “Now it is up to the U.S. to comply with the
WTO's findings.”

01/17/2002

00800000001110


RE: IN THE NEWS: 1/15/02 Page 23 of 37

Tax breaks for college, retirement
By KATHLEEN LYNN
Staff Writer

Families often face two big financial challenges at the same time: saving for college tuition and saving for
retirement. The tax bill President Bush signed last summer offers help on both, with expanded tax breaks
that went into effect Jan. 1.

“T've got clients who had children later in life," said accountant Tony Wyss of Closter. "Their children are
not starting college til] the parents are near retirement age. So it's a question of saving for college vs.
saving for retirement.”

All taxpayers will benefit from lower tax rates that went into effect this year, and you don't have to take
any action to get them. But to make the most of the other tax breaks, you've got to ratchet up your
savings. Considering the high cost of college and retirement, that might be a good idea anyway.

Among the most useful changes:
You can protect more of your retirement savings from taxes.

Under the new rules, the yearly maximum contribution for an IRA or Roth IRA rose this year, from
$2,000 to $3,000 -- $3,500 for those who are at least 50 and who may need to catch up on their retirement
savings. ”

“With this country’s savings rate being so low, that is a great incentive for people to save for retirement,”
said Peter Traphagen Sr., a certified public accountant in Oradell,

The maximum contribution for an employer-sponsored savings plan, such as a 401(k), 403(b), or 457,
rose from $10,500 to $11,000 -- $12,000 for the over-50 crowd.

You can get more tax breaks on saving for college. Families can now contribute $2,000 a year -- up from
$500 a year -- to Education Savings Accounts, formerly called Education IRAs. These accounts, available
through mutual funds, banks, and brokerages, allow the money to grow tax-free if used for education
expenses,

And Section 529 college-savings plans, sponsored by the states, also became more attractive. Formerly,
the earnings on these accounts would be taxed at the student's tax rate when taken out for college costs,
Now they're completely free of federal taxes. You can generally invest in any state's plan, no matter
where you live or where your child ends up attending college. For more information on Section 529
plans, check www.savingforcollege.com.

“With the incredible cost of college today, I think more and more families are beginning to save carlier,”
Wyss said.

For students who borrow to pay for college, the new tax law expands tax breaks for repaying student
loans. Previously, the taxpayer could deduct interest on student loans for only 60 months; now there's no
limit. And the deduction is now available to taxpayers at higher incomes, beginning to phase out at
$50,000 for single taxpayers and to $100,000 on joint retums.

Other tax breaks that affect families include:

You can take a higher tax credit for your children -- $600 a child, up from $500. But the credit begins to
phase out for families with adjusted gross incomes above $110,000 (joint return) and above $75,000

01/17/2002

00800000001119


1997-SE-010344
2 CONFIDENTIAL

Testimony of Jeanne Shaheen, Governor of New Hampshire
Before the Energy and Power Subcommittee of the House Commerce Committce
September 24, 1997
Summary of Testimony

* New Hampshire families and businesses pay the highest average retail electric rates in the
country, We believe those rates can be lowered through competition,

© We know from experience that competition in the electric industry will work. In May 1996,
New Hampshire implemented a two-year pilot program so that we could test how
competition would work. The pilot program is providing msight into how customer choice
can be successfully implemented

« The implementation of full statewide competition and customer choice in the electric
industry m Now Hampshire is now at a standstill because of a lawsuit brought by our state's
largest utility - in federal court, based in part on federal statutory claims, The utility claims
that New Hampshire is preempted from introducing competition by the Federal Power Act.
the Public Utility Holding Company Act of 1935, and the Public Uutity Regulatory Policies
Act of 1978

© Congress can play 8 role in opening up competition in the electric industry by freeing my
state and the other states from federal laws that are blocking competition, Don’t tell us how
to do it~ each state is different and will no doubt want to fashion competition to mect cach
state's own needs Ip particular, do aot tell states how to uduress the so-called sicanded costs
of electric utilities, Congress should pass legislation that helps states to advanee their own
efforts at restructuring the electric industry, e.g. federal levistation that makes it clear that

states can implement customer choice and competition under the Federal Power Act,

00100000000080


IN THE NEWS: 1/15/02
THE WALL STREET JOURNAL

January 15, 2002

Business and Finance - Europe

WTO Rules Against U.S. Tax Breaks, Opening the Way for EU Retaliation

By GEOFF WINESTOCK and NEIL KING JR.
Staff Reporters of THE WALL STREET JOURNAL

WASHINGTON -- The World Trade Organization ruled against a U.S.
law that gives big tax breaks to American exporters, a decision that could
open the way for the European Union to impose billions of dollars in
retaliatory duties.

An appeals panel of the Geneva-based WTO ordered the U.S. to repeal

$4 billion of tax breaks for American exporters who operate through
offshore subsidiaries, or face possible sanction. If the U.S. fails to comply,
the matter goes to an arbitration panel, which would set the level of
penalties the Europeans can impose. U.S, trade officials said April is the
earliest that the new duties could be imposed.

So far, the Bush administration has shown little desire to amend the law to
ease European concems.

The EU faces the difficult decision of how to exploit its victory. Few
expect swift retaliation no matter what the arbitration board decides.

Analysts say the EU is likely to use the decision as leverage to make the
U.S. moderate its policies in other areas, especially a possible move by
President Bush to impose protective tariffs on foreign steel imports.

"There is no reason for the Europeans to rush
for retaliation,” Gary Hufbauer, a trade
specialist at the Institute for Intemational
Economics in Washington, said. “This is an
important bargaining chip, but for now the EU
is likely to hold it in reserve.”

Ifthe U.S. imposes a new set of steel tariffs, a
decision Mr. Bush must make by early March, the EU could respond with
duties on selected U.S, goods from steel-producing states such as
Pennsylvania or Indiana, Mr. Hufbauer said,

US. Trade Representative Robert Zoellick said the administration was
“disappointed,” but not surprised by the ruling.

"This is an especially sensitive dispute that, at its core, raises questions of a

level playing field with regard to tax policy,” Mr. Zoellick said in a written
statement.

01/17/2002

Page 12 of 36

00800000001145


Company is pursuing two courses of action. First, pursuant to Dabhol Power Company's remedies
in the agreements with the State government, arbitration has commenced in London against the
State government for the actions it has taken to terminate the Project. Dabho! Power Company
seeks 10 recover all of its construction and other expenses, in addition to lost profits. The arbitration
tribunal has been appointed and one arbitration hearing has occurred in London with a subsequent
hearing screduled for late November 1995, Second, Dabhol Power Company has both orally and in
writing communicated to the Maharashtra State government its desire to go forward with construc-
tion of the Project and its willingness to resolve any outstanding issues, and discussions to resolve
Outstanding issues have begun. Although the outcome of neither the arbitration nor the renegoti-
ation process can be predicted with certainty, based on currently available information, Enron
believes that the ultimate outcome of the Project will not have a materially adverse effect on its
financial position.

In Margh 1993, Enron entered into long-term gas contracts with Phillips Petroleum Company
United Ki Limited, British Gas Exploration and Production Limited and Agip (U.K.) Limited to
Purchase all of the future gas production from the J-Block field which is located in the North Sea
offshore the United Kingdom (the "'J-Block Contracts"). Such agreements provide for Enron to take
or pay for the gas at a fixed price (with possible escalations throughout the contract period). Gas
paid for, but not taken, may be recovered in later contract years. The J-Block Contracts provide for a
first delivery date of not later than October 1, 1996. The contract price for such natural gas is in
excess of current spot market prices in the United Kingdom. in September 1995, Enron announced
that, in accordance with its contractual rights, it had notified the J-Block sellers that Enron's
nominations for gas from the J-Block field were estimated to be zero from the first delivery date
through September 30, 1997, In addition, in accordance with its contractual rights, Enron has made
no estimated nominations for J-Block gas to date under the J-Block Contracts for the contract year
ending September 30, 1998. Enron continues its good faith efforts to develop mutually beneficial
solutions regarding pricing terms so that production from J-Block can begin as soon as possible.
Enron believes that there are many commercial reasons for the parties to resolve any contract
issues, but efforts have not been successful to date. Enron has advised the J-Block sellers that it
intends to assert all legal rights, exercise all available commercial flexibility and pursue all available
commercial and legal remedies under the J-Block Contracts, and stands ready and able to perform
all legal obligations under the J-Block Contracts, including potential prepayments for gas to be taken
in later years. The long-term market demand for J-Block gas supply remains favorable and Enron
anticipates being able to meet all of its various short- and long-term market commitments. Although
no assurances can be given, based upon the foregoing and other information currently available,
Enron does not at this time anticipate that the J-Block Contracts will have a materially adverse etfect
‘on Enron's financial position.

00900000000184


IN THE NEWS: 1/15/02 Page 35 of 36
The Washington Post
January 15, 2002, Tuesday, Final Edition

SECTION: METRO; Pg. B02; FEDERAL DIARY STEPHEN BARR

LENGTH: 658 words

HEADLINE: Legislation Would Make a Deferred Annuity a Better Deal

BYLINE: Stephen Barr

BODY:

Legislation has been introduced in the House to increase the valuc of deferred retirement payments in the
pension systems for federal employees.

Today, employees who leave their federal jobs before retirement age are eligible for a deferred annuity,
payable at 62, if they have worked for the government at least five years. The amount they receive is based on
retirement contributions and is not indexed to inflation, In other words, the government pays no interest on
those accounts. Rather than leave their money in the pension system and at the mercy of inflation, many
employees choose to take their retirement contributions with them when they leave government service,

The recently introduced House bill seeks to enhance deferred annuities and provide an incentive for departing
employees to leave their retirement moncy with the government.

The bill, sponsored by Rep. Nydia M. Velazquez (D-N.Y.), would increase the value of deferred annuities
from the time an employee left the government until the date retirement payments begin. The increased value of
the deferred annuity would be based on the average increase in General Schedule salaries during that period.

‘The proposed change has been endorsed by the National Association of Retired Federal Employees, which
noted that the civil service trust fund invests employce contributions but does not pass along any added value to
people with deferred annuities.

The Velazquez bill also would provide a new survivor benefit to spouses of former employees who are
eligible for a deferred annuity under the Civil Service Retirement System.

Today, when CSRS deferred annuitants die, their survivors get only what the employee contributed to the
retirement fund. But survivors of employees covered by the newer Federal Employees Retirement System also
receive the government's contribution toward the employees' retirement -- as do survivors of members of
Congress covered by cither CSRS or FERS.

Dan Adcock, NARFE's assistant legislative director, called it "a little quirk in the law” that treats CSRS
survivors differently from FERS survivors and members of Congress on the issue of deferred annuities.

NARFE got involved in the issue at the urging of Jim Cowie, who once taught computer systems management
in the Navy. When he quit his job to move abroad, Cowie left about $ 6,000 in his retirement account and was
surprised, a decade later, to learn the government did not pay interest on such accounts,

"Fairness is really the issue,” Cowie said, "I will be forever refreshed in my belief in democracy if this docs
work out."

01/17/2002

00800000001168


IN THE NEWS: 1/14/02 Page 26 of 36

must report to the government (on Form 8027) their gross sales, charged tips, and the tip amounts reported by
employees.

Average Tip Rate.

In 1991 and 1992, Fior D'Italia reported aggregate tips that were significantly less than the tips that appeared
on its credit card charge slips. IRS assessed Fior D'Italia for additional FICA taxes on what it deemed was
unreported tip income for those years. To determine what Fior D'ltalia owed, IRS used a simple calculation: For
each year, it divided total tips charged on credit cards by total credit card receipts, yielding an average tip rate of
14.49 percent and 14.29 percent for 1991 and 1992, respectively. It then applied this “tip rate” to the restaurant's
gross receipts to get a presumed tip total for the year.

IRS assessed Fior D'ltalia additional FICA taxes based on the difference between its presumed total and the
amount of tips Fior’s employees had reported. IRS did not readjust the FICA or income tax liability of the
various employees who may have understated tip income on their 4070 forms. Fior D'Ttalia challenged the
assessment method in district court, arguing that it exceeded IRS's authority. The district court agreed, and the
government appealed.

In an opinion dated March 7, 2001, the Ninth Circuit affirmed, The IRS assessment suffered from a
fundamental flaw in that it rested on an estimate in circumstances where Congress had not authorized IRS to use
estimation as an assessment method, the Ninth Circuit said.

According to the Ninth Circuit, IRS could not rely on Section 446 of the tax code as authority for its
assessment method because the section does not apply to the collection of FICA taxes.

Neither could IRS rely on code Section 3121(q), the appeals court said. That section merely says that, where
employees have not provided accurate tip information to the employer, and IRS finds some other means of
determining how much the employer owes, the employer must pay its share, the appeals court pointed out.
Nothing in the text of Section 3121(q) speaks to the method IRS may use in making its assessment, the appeals
court said.

Employee-by-Employee Determination.

The Ninth Circuit concluded that IRS cannot dispense with auditing employees’ records or otherwise
determining the amount each employee eamed in tips. There is no way to determine the employer's FICA tax
liability without making an employee-by-employee determination of the taxable tips each has earned, the Ninth
Circuit said.

While auditing individual employees is much more cumbersome than slapping the employer with assessments
based on aggregate estimates, the fact remains that Congress authorized IRS to use estimates in collecting
income taxes but withheld such authority in collecting FICA taxes, the Ninth Circuit noted. By using an
estimate -- and particularly one that ignores the statutory provisions that exclude remuneration (salary plus tips)
in excess of the Social Security wage base and that also exclude all cash tips amounting to less than $ 20 per
month per employee -- and putting on the employer an impossible burden in rebutting the estimated amount,
IRS has effectively increased the tax payable by the employer above that provided in the Internal Revenue
Code, the Ninth Circuit ruled,

If auditing individual employees proves too burdensome, IRS can seck to have Congress extend its tax code
Section 446 authority to the collection of FICA taxes, the Ninth Circuit said, Alternatively, IRS may proceed by
regulation, which would entail the procedural requirements of notice-and-comment rulemaking, the Ninth
Circuit said,

The court's decision in this case will resolve a conflict between the Ninth Circuit, on one hand, and the
01/17/2002
00800000001196


Don’t tell us how to implement competition - each state is different and will ne doubt
want to fashion competition to meet each state's individual needs, If federal legislation is
enacted, it should reflect an appropriate degrec of deference to state policymakers. To du
otherwise would risk impesing a cookie-cutter approach on problems that warrant individual
examination, discussion, and debate at the state level.

in particular, do not tell states how to address the so-called stranded costs of electric
utilities. My state believes that stranded costs should be fairly and equitably shared between
ratepayers and utility shareholders. | know that there are a number of bills on electric
festructuring pending in the House as well as in the United States Senate, and some would tell
Slates how to adress retail stranded costs, Mr. Chairman, | am aware that the legislation you are
Sponsoring preserves the authority of the states to deal with wranded costs as appropriate, That ix
the right way to go. and | thank you for recogn
should te addressed by state policymakers and nut through fedcral legistation.

Rather, if Congress decides to act, it should pass legislation that helps states to advance
their own efforts at restructuring the electric industry. For example, federal legislation should
make it clear both that the Federal Power Act docs not prohibit states from implementing
customer choice and cumpetition and that states have exclusive jurisdiction over the rates, terms

¢ that. The issue of retail stranded costs

and condition of retail transmission, distribution and electric power sales, Congress should also
make it clear that states have the authority to impose non-bypassable wires charges to support the
recovery of sirunded costs, as well as state-sponsored energy efficiency, renewable energy.
environmental protection, and universal service programs, including low-income assistance

programs

Congress alse should act to toster the development of model national disclosure
standards so that customers can have the accurate and verifiable information needed to make
meaningful power supply choices, while permitting regional initiatives to move forward, such as
that underway in New England,

We know trom the expervence with our pilot program that competition can work. Once
all of our consumers arc tree to choose, the marketplace will respand with better service. better
products. and heiter rates. There is no technical reason why consumers should not be able to
choose the elevtrical service that serves them best. Open competition will not require any change
im how etectrcity is made. transmitted, or delivered. No new construction is needed. Nu wires

heed to be laid. No digging ts required.

00100000000083


per sha: + less than the market price of the EOG Common Stock (other than rights to purchase EOG
Commo: Stock pursuant to a plan for the reinvestment of dividends or interest); or (vi) pay &
dividend or make a distribution to all holders of EOG Common Stock of evidences of indebtedness
‘or other assets (excluding any dividends or distributons referred to in clause (i) above or any cash
dividends other than any Extraordinary Cash Dividends (as defined below) or issue to all holders of
EOG Common Stock rights or warrants to subscribe for or purchase any of its securities (other than
those referred to in clause (v) above). In the case of the events referred to in clauses (i), (i), (ill) and
(iv) above, the Exchange Rate in effect immediately prior to such event shail be adjusted so that the
holder of any Exchangeable Note shall thereafter be entitied to receive, upon mandatory exchange
of the principall amount of the Exchangeable Note at Maturity, the number of shares of EOG
Common Stock that such holder would have owned or been entitled to receive immediately following
anygvent described above had such Exchangeable Note been exchanged immediately prior to such
event on any record date with respect thereto. In the case of the event referred to in clause
(v) above, the Exchange Rate shall be adjusted by multiplying the Exchange Rate in ettect immedi-

warrants applicable to one share of EOG Common Stock. An “Extraordinary Cash
means, with respect to any 365-day period, all cash dividends on the EOG Common Stock during
such period to the extent such dividends exceed on a per share basis 10% of the average Closing
Price of the EOG Common Stock over such period (less any such dividends for which a prior

percent therein: provided, however, that any adjustments which by reason of the foregoing aro not
required to be made shail be carried forward and taken into account in any subsequent adjustment.

In the event of (i) any consolidation or mercer of EOG, or any surviving entity or subsequent
surviving entity of EOG (an “EOG Successor’), with or into another entity (other than a merger or
consolidation in which EOG is the continuing corporation and in which the EOG Common Stock
Outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or

00900000000193 q


USE OF PROCEEDS

The shares of Common Stock of the Company being offered hereby and the Exchangeable
Notes are being sold by Enron Corp. Accordingly, the Company will not receive any of the proceeds

from the Stock Olferings or the sale of the Exchangeable Notes or delivery of shares of Common
Stock pursuant thereto.

PRICE RANGE OF COMMON STOCK AND CASH DIVIDENDS

The following table sets forth, for the periods indicated, the high and low sale prices per share
tor the Common Stock, as reported on the New York Stock Exchange Composite Tape, and the
amount of cash dividends paid per share. The 1993 and First and Second Quarter 1994 sales prices

and @ash dividends per share have been restated to reflect the two-for-one stock spilt on May 31,
1994,

4
i
8 Bees if

B88 BBB

See the cover page of this Prospectus for the last reported sale price of the Common Stock on
the NYSE as of a recent date.

As of November 1, 1995, there were approximately 270 record holders of the Company's
Common Stock, including individual participants in security position listings. There are an estimated
5,100 beneficial owners of the Company's Common Stock, including shares held in street name.

; Following the initial public offering and sale of its Common Stock in October 1989, the Company
paid quarterly dividends of $0.025 per share beginning with an initial dividend paid in January 1990
with respect to the fourth quarter of 1989, Beginning in January 1993 with respect to the fourth
quarter of 1992, the Company has paid quarterly dividends of $0.03 per share. The Company
currently intends to continue to pay quarterly cash dividends on Its outstanding shares of Common
Stock. However, the determination of the amount of future cash dividends, If any, to be declared and
Paid will depend upon, among other things, the financial condition, funds from operations, level of
exploration and development expenditure opportunities and future business prospects of the
Company.

10

00900000000213


IN THE NEWS: 1/15/02 Page 13 of 36

The decision, however was welcomed by European Trade Commissioner
Pascal Lamy, who called on the U.S. to comply rapidly with the WTO's
findings.

All signs pointed to continued discussions on the issue between
Washington and Brussels, though the atmosphere could get chilly very
quickly if Mr. Bush moves to protect the U.S. steel industry.

U.S. companies have much at stake, particularly General Electric Corp.
and Bocing Corp., the biggest beneficiaries of the tax-break program. The
Clinton administration sought to revise the so-called foreign sales
corporations program in 2000, after the WTO made a preliminary ruling
that the program violates rules that outlaw export subsidies and distorts
world markets. But lobbying in Congress produced a law that handed even
bigger breaks to U.S. exporters.

Meanwhile, the European Commission, the EU's executive arm, has staked
its credibility on the case and has received support from some European
companies, especially Airbus, which argues that the tax breaks help its
archrival Boeing,

But many European companies are ambivalent about the U.S. tax breaks
because they have subsidiaries in the U.S. that benefit from them.
European consumers will protest any trade sanctions that make goods
there more expensive. The EU also wants to avoid a spat that could make
it hard to: cooperate closely with the U.S. in completing the new round of
world trade talks that was launched last year.

Some EU member governments, such as Belgium and Spain, are also
reluctant to press too hard on the issue because the U.S. is threatening to
take action against tax breaks for their companies, which the U.S. says are
also in breach of world trade rules.
8. EU Says WTO Rejects U.S. Tax Law, Permitting Sanctions Claim * Bloomberg

BLOOMBERG

January 14, 2002
EU Says WTO Rejects U.S. Tax Law, Permitting Sanctions Claim

Geneva, Jan. 14 (Bloomberg) -- The European Union said it won World Trade Organization clearance to
impose trade sanctions against U.S. companies after the WTO ruled that a U.S. tax break violates global export-
subsidy rules.

The 15-nation EU must now decide whether to press for as much as $4 billion in damages, which would be
the highest in the WTO's seven-year history. The case affects hundreds of exporters including Boeing Co.,
Microsoft Corp., Eastman Kodak Co., Archer Daniels Midland Co. and General Electric Co.

“Going down the road of retaliation is in no-one’s interests,” says John Weekes, former Canadian

ambassador to the WTO who now chairs the trade practice of APCO, a public affairs company. ‘“It's incumbent
on them both to find a solution.”

01/17/2002
00800000001146


From: Mary Beasley

To: BARBERE, BudingtonM, CROWEB, GREWEM, KUHLOWM, LEEN..,
Date: 2/29/00 4:20pm

Subject: An NWT dispute in Nigeria Reply

You need to speak to Eliz Stewart on this. She is our procurement expert.

>>> Geoffrey Gottie’ 2/29/00 03:13pm >>>
((b)(5)]

BE;

exmail"eweisman@IMF org”, StewartEK

0500000000907


During the fourth quarter of 1995, the Company anticipates recording as proved undeveloped
reserves approximately 1,100 Bcf of methane contained, along with high concentrations of carbon
dioxide and nitrogen as well as small amounts of other gaseous substances, in the deep Wyoming
Paleozoic formation located under acreage leased by the Company and held by production in the
Big Piney area. The Company is actively pursuing the consummation of a market or markets from
several different potential sources to facilitate realizing the value of these reserves.

South Texas Area. The Company's activities in South Texas are focused in the Wilcox,
Expanded Wilcox, Frio and Lobo producing horizons. The principal area of activity is in the Lobo
Trend which occurs primarily in Webb and Zapata counties.

The Company operates approximately 470 wells in the South Texas area. Production is
primarily from the Lobo sand of the Wilcox formation at depths ranging from 7,000 to 11,000 feet.
The Gempany has approximately 250,000 net acres under lease in this area. Natural gas deliveries
net to the Company averaged 181 MMct per day in 1994. At September 30, 1995, natural gas
deliverability from this area net to the Company was approximately 150 MMct per day which was
impacted during 1995 by the sale of selected properties. The Company drilled 56 wells in the South
Texas area in 1994 and anticipates an active drilling program will continue for several years.

East Texas Area. The Company's activities in the East Texas area are primarily in the
Carthage field, located in Panola County, and the North Milton field, located i northern Harris
County.

The Carthage field Is the Company's newest area of concentration. This field is one of the most
prolific fields in east Texas with production primarily from the Cotton Valley, Travis Peak and Pettit
formations. In 1995, properties were acquired that doubled the Company's acreage position to
17,000 acres. An active drilling program is planned for the remainder of 1995 and for several years.
The Company has an average 71% working interest in its holdings. The Company has continued its
activity in the North Milton field where It now operates 19 wells and holds a 100% working interest in
the acreage. Further drilling is planned for 1996. At September 30, 1995, deliverability from the East
Texas area was approximately 35 MMcf per day of natural gas with almost 1.0 MBbI per day of
condensate, both net to the Company. rt

Offshore Gulf of Mexico Area. At September 30, 1995, the Company held an interest in 191
blocks in the Offshore Gulf of Mexico area totaling 561,000 net acres. Of the 191 blocks, 133 are
operated by the Company. These interests are located predominantly in-tederal waters offshore
Texas and Louisiana. During 1995, the Company acquired a 50% interest in operations previously
owned by Santa Fe Minerals complementing previously owned Interests end adding significantly to
the Company's offshore operations. Natural gas deliveries from this area averaged 83 MMct! per day
during 1994 and 118 MMct per day during the first nine months of 1995, both net to the Company. A
substantial portion of such deliveries was from interests In the Matagorda trend with significant
volumes also coming from the Mustang Island area. Deliverability from this area at September 30,
1995 was 160 MMct per day net to the Company sourced principally as noted above. The Company
has-maintained an active drilling program in this area during 1994 and 1995 and anticipates a similar
Program to continue for several years. P

Trend Area. The Company's activities in this area have been concentrated in
Crockett, Sutton, Terrell and Val Verde Counties, Texas where the Company drilied 331 natural gas
wells during the period 1992 through 1994. The Company holds approximately 91,800 net acres and
now operates approximately 500 natural gas welts in this area in which it owns @ 97% average
working interest. Production is from the Canyon sands and Strawn limestone at depths from 5.500
to 11,500-feet. In 1994, natural gas deliveries from this area net to the Company averaged 65 MMct
per day. At September 30, 1995, natural gas deliverability from this area net to the Company was
approximately 54 MMct per day. The Company has maintained an active drifing program in the
Canyon Trend area during 1995 and expects @ similar program to continue for several years.

Pitchfork Ranch Field. The Pitchfork Ranch field located in Lea County, New Mexico,
produces primarily from the Bone Spring, Atoka and Morrow formations. in 1994, deliveries net to
the Company from this area averaged 36 MMcf per day of natural gas and approximately 2 MBbI per

12

00900000000215


RE; IN THE NEWS: 1/15/02 Page 30 of 37
INCOME TAXES MADE NEARLY PAINLESS

Need a tax form? Have a question about changes to tax law? Want to find the nearest IRS taxpayer
assistance center?

If you have a personal computer and Intemet access, you can point and click your way to trouble-free tax
filing at. www.irs. gov <bitp//www.irs. gow/>,

The IRS website offers a wealth of resources for making tax time less taxing, A user-friendly format
allows even novice Web surfers to quickly find the information they need. With the help of the site's
interactive features, you can calculate proper withholding amounts, learn if the interest you pay is fully
deductible or determine whether you're eligible to claim the child and dependent care credit.

The site also provides instructions for obtaining copies of prior-year tax returns and has a handy tax event
calendar. You can even get help with a particular tax question.

Millions of taxpayers visited the IRS site in 2001, downloading nearly 300 million forms, publications
and a variety of topic-oriented tax information. You can obtain:

Tax forms, instructions and publications.

The latest tax information and tax law changes.
Tax tables and rate schedules.

Publication 17, Your Federal Income Tax.

All TeleTax topics.

Answers to the most frequently asked tax questions,
A library of tax regulations.

The weekly /nternal Revenue Bulletin, which contains all the latest revenue rulings, revenue procedures,
notices, announcements, proposed regulations and final regulations.

In addition, the IRS website offers information on the many benefits of electronic filing. More than 40
million taxpayers filed their retums electronically in 2001. It's accurate, convenient and cuts the waiting
time for refunds.

22. IRS Hosts Tax Credit * Newsday

Newsday
(New York, NY)

January 15, 2002 Tuesday NASSAU AND SUFFOLK EDITION
SECTION: BUSINESS & TECHNOLOGY, Pg. A51
LENGTH; 631 words

HEADLINE: LONG ISLAND INC.;
01/17/2002

00800000001126


Payment differed from the projected amount of that payment, the difference would generally
increase or reduce taxable interest income. or create a loss. Because of their prospective effective
date, the Proposed Regulations, if finalized in their current form, would not apply to the Exchange-
able Notes.

Even in the ebsence of regulations applicable to the Exchangeable Notas, the Exchangeable
Notes may be characterized under current law in a manner that results in tax consequences
different from those reflected in the agreement pursuant to the Indenture and as described above.
Under alternative characterizations of the Exchangeable Notes, it is possible, for example, that (i) a

Exchange Note may be treated as nontaxable, increasing the gain (or decreasing the loss) at
Maturity or upon disposition of the Exchangeable Note (or disposition of the EOG Common Stock) or
(iv) If the stated interest rate exceeds Enron's Mid-Term Borrowing Rate, the Exchange Notes could
be considered as issued at a premium which, if amortized, would reduce the amount of interest
income currently inctudible in income by @ holder and increase the taxable gain (or decrease the
loss) realized at Maturity or upon disposition of the Exchangeable Notes (or disposition of the EOG
Common Stock).

|
i
:
;

present in the United States for 183 days or more in the taxable year of the sale or other disposition
and either such individual does not have a “tax home" in the United States or the gain is not
attributable to a fixed place of business maintained by such individual in. the United States.

Backup Withholding and Information Reporting
A holder of the Exchangeable Notes may be subject to information reporting requirements and

otherwise complies with applicable requirements of the backup withhoiding rules.

00900000000201


RE: IN THE NEWS: 1/15/02 Page 25 of 37
Revenue Service in Farmers Branch,
If you're self-employed, generally you must file a tax return if your net earnings for the year exceed $400,

It's very important to file a return if you have to. The government considers it a grave violation if you
don't and assesses tough failure-to-file penalties.

The penalty is usually 5 percent for each month or part of a month that a retum is late, but not more than
25 percent.

The penalty is based on the tax not paid by the duc date without regard to extensions.

If you file your return more than 60 days after the due date or extended due date, the minimum penalty is
the smaller of $100 or 100 percent of the unpaid tax.

You won't have to pay the penalty if you can prove that you failed to file on time because of “a
reasonable cause and not because of willful neglect,” the IRS says.

Even if you're not required to file a return, it may be to your advantage to do so,

More than 70 percent of those who file a return are due a tax refund, and you must file a return in order to
get your refund,

If you're eligible for the Eamed Income Credit, you must file a return to claim it.

The credit is refundable, which means the IRS will send you a refund for any amount in excess of your
tax liability.

If you qualify for the Earned Income Credit, you may be eligible for a credit of up to $2,428 for a
taxpayer with one child and $4,008 for taxpayers with two or more children.

If you need more time to file your return, you may get an automatic four-month extension by completing
IRS Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.

The extension will give you until Aug. 15 to file your return.
You must request the automatic extension by April 15.

Remember this crucial point: An extension of time to file your return doesn't give you more time to pay
the tax you owe.

You will be charged interest on any tax owed but not paid by April 15th.

You may also be charged a late payment penalty. The failure-to-pay penalty is 0.50 percent of your
unpaid taxes for cach month, or part of a month, after the due date that the tax isn't paid.

If you need an extension of time to file, you may be able to avoid paying interest and penalties by
estimating how much tax, if any, you'll owe, and including that payment with your Form 4868.

17. IRS wisdom: The early filer gets to sit back, be smug * The Commercial Appeal

The Commercial Appeal (Memphis, TN)
Jan. 13, 2002

01/17/2002
00800000001121


Sutton, Gary

From: Carleton, Norman
Sent: Wescnesday, August 29, 2001 2:41 PM
To: Fisher, Peter, Roseboro, Brian, Bair, Sheila; Nickoloff, Peter; Schultheiss, Heidilynne;

DeMarco, Edward; Hughes, Gerry, Gross, Jared; Smith, Amy; Sutton, Gary; Ellett, Martha;
Gabilondo, Jose; Mcinerney, Roberta; Lori Sanatamorena (E-mail); Novey, Michael; Eichner,
Matthew, Hammer, Viva

Subject: More on the Enron issue

((b)(5)]

Thoughts?

“00200000000101


has increased production in each of the last four years with @ compound annual growth rate of
13.1%, while increasing proved reserves approximately 32%, both on a ‘Natural gas equivalent basis.
For 1994, net equivalent production reached a new high of 307 Befe, an increase of 9% cver 1993.
Natural gas production in 1994 averaged approximately 749 MMcf Per day, which represents an
increase of 6% over 1993. Crude oil and condensate production averaged 12.6 MBb! per day in 1994
which represents an increase of 42% over 1993. Natural gas production for the first nine months of
1995 averaged 719 MMct per day. down 24 MMct per day from the first nine months of 1994. Lower
volumes in 1995 reflect the voluntary curtailment by the Company of United States production at a
higher rate than in 1994 because United States natural gas prices were down by 26% period to
Pee ete creck Ot the sale of reserves and related assets and the etfect of the reduction and
redirecti of natural gas drilling activities early in 1995. Crude olf and condensate volumes for the
first ning months of 1995 averaged 18.6 MBbI per day, an increase of 55% over the first nine months
of 1994.

Achieving and maintaining the lowest possible cost structure are also important goals in the
Implementation of the Company's strategy. Over the last five years, the Company has reduced total
cash operating expenses, including lease and well, general and administrative, taxes other than
income, and interest expenses from $.95/Mcfe in 1989 to $.49/Mccfe in 1994, » reduction of 48%. At
the same time non-cash expenses (depreciation, depletion and amortization) have been reduced
from $.93/Mcte in 1989 to $.80/Mcfe in 1994, @ reduction of 14%. For the first nine months of 1995,
cash operating expenses averaged $.56/Mcfe compared to $.50/Mcte for the first nine months of
1994 and non-cash expenses averaged $.69/Mcte and $.81/Mcte for the two periods, respectively.

Consistent with the Company's desire to optimize the use”of Its assets, the Company also
maintains @ strategy of selling select oll and gas properties that for various reasons no longer fit into
future operating plans, or which are not assessed to have sufficient future growth potential and
when the economic value to be obtained by selling the properties and reserves in the ground is
evaluated to be greater than what would be obtained by holding the properties and producing the
reserves over time. As a result, the Company typically receives each year a varying but substantial
level of proceeds related to such sales which proceeds are available for general corporate use.
Proceeds trom property sales in 1994 were $91 million ($71 million after tax) and in the first nine
Months of 1995 were $101 million ($77 million after tax).

North American Operations, The Company's seven principal United States producing areas
are the Big Piney area of Wyoming, South Texas area, East Texas area, Offshore Gulf of Mexico
area, Canyon Trend area of West Texas, Pitchfork Ranch area of New Mexico and Vernal area of
Utah. Properties in these areas comprised approximately 76% of the Company's United States
reserves (on a natural gas equivalent basis) and 85% of the Company's United States net natural
gas deliverability as of December 31, 1994 and are substantially all operated by the Company. The
Company's other United States natural gas and crude oll producing properties are located primarily
in other areas of Texas, Utah, New Mexico and in Oklahoma.

At December 31, 1994, 93% of the Company's proved United States reserves (on a natural gas
equivalent basis) was natural gas and 7% was crude oil, condensate and natural gas liquids.
A substantial portion of the Company's United States natural gas reserves is in long-lived fields with
well-established production histories. The Company believes that opportunities exist to increase
Production in many of these fields through continued infill and other development drilling.

The Company also has natural gas and crude oll producing properties located in Western
Canada, primarily in the provinces of Aiberta, Saskatchewan and Manitoba. The Company produces
Natural gas from seven major areas and crude oll from three major areas. The Sandhills area in

00900000000207


Strickler, Marie

From:
Sent:
To:
Subject:

110 776-9464

1i:t4 861-4032
[OUTSIDE SCOPE]

12:20 434-0980
12:43 201-346-5825

12:55 628-9029

[OUTSIDE SCOPE]

Strickler, Marie

Tuesday, January 15, 2002 1:17 PM
Davis, Michele

#2 - Phone Calls

Pete Yost - would like to talk with you about getting copies of Congressional

correspondence to Treasury and the responses re Enron
Jeff Birnbaum, Fortune Mag, REF; ENRON

Pete Spiegel, FT - Please call re Enron

Andrew Conti, CNBC - would like to request interview w/Secretary on Enron

Darren Gersh - would like interview w/the Secretary today or tomorrow or when

convenient on Enron

00800000000600


Fisher, Peter

ee

From: Fisher, Peter

Sent: Wednesday, November 28, 2001 6:05 PM
To: Bair, Shea

Subject: RE: Enron

thanks,

please copy jared when you send other stuff along

wn Onginal Message-—--
From: Bair, Shela
Sent: Wednesday, November 28, 2001 5:49 PM
To: Fisher, Peter; Adams, Tim
Subject: Enron
Importance: High

{(b)(5)}

01200000001461


November 20, 1995
November 30, 1995

December 6, 1995

November 9, 1995 -
November 14, 1995

November 14, 1995

December 7, 1995

November 5, 1995

November 20, 1995 -
December 7, 1995

December 1, 1995

December-7, 1995

Proceedings with the NYSE

Enron delivered to the NYSE a preliminary listing application and
applicable supporting documents with respect to the Notes.

The Underwriters delivered to the NYSE certain undertakings with
respect to the offering and sale of the Notes.

Enron received a letter from the NYSE advising it that the listing of

the Notes under the symbol "EXG" on the NYSE was approved,
subject to official notice of issuance.

Blue Sky Matters

Filings were made in all states where required so that the Notes
could be sold in all 50 states,

A Preliminary Blue Sky Letter and Preliminary Blue Sky Survey
relating to the Notes was prepared.
A final Blue Sky Memorandum was prepared.

Marketing Activities

The Underwriters mailed to prospective purchasers copies of the
Meetings with potential investors were held at locations

selected by the Underwriters. Indications of interest from
prospective purchasers were noted. Over 70 meetings were held.

Enron and Harris Trust and Savings Bank, as Trustee, negotiated
and executed a First Supplemental Indenture relating to the Notes.
Form of Note finalized.

All "comfort letters" and opinions of counsel to be delivered in
connection with the closing of the transaction were negotiated prior
to execution of the Underwriting Agreement.

2

00900000000173 —


((b)(5)]

Norman
on Original Message
From: —Harenond, Donald
Sent: Thursday, February 15, 2001 6:26 AM
To: DeMarco, Edward; Ells, Dina; Huffman, Lucy; Carieton, Norman; Mcinemey, Roberta; Constantine, Elen; Hughes, Gerry; Stewart,

Ce: Tishuk, Brian; Rebtins, Eric
Subject: RE: Bankruptcy Reform Mark-up Hearing

Ed,
((b)(5))

Ecward
February 15, 2001 6:22 AM
Ding; Huffman, Lucy; Carleton, Norman; Melnerney, Roberta; Constantine, Blent; Hughes, Gerry; Stewart,

(Cc; Tishuk, Bran; Robbins, Eric
‘Subject: FW: Bankruptcy Reform Mark-up Hearing

Ht

FY!
orignal Message—---

From: Robbins, Eric

Sent: Wednesday, February 14, 2003 5:45 PM
To: DeMarco, Edward
(Ce: Titik, Bran
‘Subject: Baricruptcy Reform Mark-up Hearing

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001” was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to . Voting occurred
largely along party lines. The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with
R ive Oxley from the Financial Services Committee on commercial bankruptcy provisions
and netting requirements,

Tracking: Recipient Read

DeMarco, Edward Road: 02/15/2001 12:52 PM

01200000001048


RE: IN THE NEWS: 1/15/02 Page 37 of 37

which noted that the civil service trust fund invests employee contributions but docs not pass along any
added value to people with deferred annuities.

‘The Velazquez bill also would provide a new survivor benefit to spouses of former employees who are
eligible for a deferred annuity under the Civil Service Retirement System,

Today, when CSRS deferred annuitants die, their survivors get only what the employee contributed to
the retirement fund. But survivors of employees covered by the newer Federal Employees Retirement
System also receive the government's contribution toward the employees’ retirement -- as do survivors of
members of Congress covered by either CSRS or FERS.

Dan Adcock, NARFE's assistant legislative director, called it "a little quirk in the law" that treats CSRS
survivors differently from FERS survivors and members of Congress on the issue of deferred annuities.

NARFE got involved in the issue at the urging of Jim Cowie, who once taught computer systems
management in the Navy. When he quit his job to move abroad, Cowic left about $ 6,000 in his
retirement account and was surprised, a decade later, to learn the government did not pay interest on such
accounts,

"Faimess is really the issue," Cowie said. "I will be forever refreshed in my belief in democracy if this
does work out."

Adcock said NARFE will work to “drum up support" for the Velazquez bill when Congress returns Jan,
23.

Last week, President Bush dismissed all seven Clinton appointees on the Federal Service Impasses
Panel and named four replacements, including Heritage Foundation Vice President Becky Norton Dunlop
as the panel's new chairman.

The panel often serves as a court of last resort in labor disputes between unions and agencies, and last
week's mass firing prompted expressions of surprise and concern from some federal unions,

Yesterday, Colleen M. Kelley, president of the National Treasury Employees Union, said she looked
forward "to the panel being fully staffed so that its work can continue. As far as I can tell, [Dunlop]
doesn't have any experience in labor relations, and I'm concerned about that, but I'm looking forward to
working with her to get that panel up and running.”

Rep. Thomas M. Davis III (R-Va.) invites parents and students to free workshops Saturday on paying
for college.

Learn about grants, loans, scholarships and the financial aid process at 9:30 a.m, at Gar-Field High

School in Woodbridge and at 12:30 p.m. at Fairfax High School in Fairfax City. For more information,
call this toll-free number: 877-840-8224.

01/17/2002
00800000001133


Retirement Security insert ‘ li 5 lo 2

((b)(5)}

01200000001208


RELATIONSHIP BETWEEN ENRON AND EOG

Ownership of Common Stock

Through its ability to elect all directors of EOG, Enron has the ability to contro! all matters
relating to the management of EOG, including any determination with respect to
disposition of EOG assets, future issuance of Common Stock or other securities of EOG and any
dividends payable on the Common Stock. Enron also has the ability to control EOG's i
development, acquisition and operating expenditure plans. The sale by Enron of EOG Common
Stock pursuant to the Stock Offerings will cause Enron's ownership interest in EOG to fall below
80% with the result that (|) EOG will cease to be included in the consolidated federal income tax
return filed by Enron and (ii) the Tax Allocation Agreement between EOG and Enron described below
will terminate, There is no agreement between Enron and EOG that would prevent Enron from
acquiring additional shares of Common Stock of EOG.

ai
Ht
388
ge32
i
it
a
HH
i
id

discussed below, even if such benefits could not have been used by EOG or the

separately Med tax return. EOG entered into an agreement with Enron providing for EOG to be paid
for all realizable benefits associated with tight gas sand federal income tax credits concurrent with
tax reporting and settlement for the periods in which they were generated, The Tax Allocation

12

00900000000187


From: John Yottor

To: DOM3.DOPO6(CARLETONN). MCGIVERNT
Date: 17100 2:50pm
Subject: Financial Netting provisions of H.R, 833 - bankruptcy bill -Reply -Reply -Reply

{(b)(6)] have attached your original e-mail and copied
Norman's staff to see if they have any comments.

>>> Tom McGivem 03/17/00 02:46pm >>>
Norman, do you have commentsiedits?

>>> John Yettar 03/10/00 10:18am >>>
(()(5)]

>>> Tom McGivern 03/09/00 06:36pm >>>
{(b)(5)

On the Enron proposals Norman received:

{((b)(5)]

|

DOM3.DOPOS{TooheyF), nickoloffp, schulthelssh

01 764

01200000000420


From: Peter Nickolott

To: Carleton
Date: 6/11/99 4:49pm
Subject: The week's (non-jevents

[OUTSIDE SCOPE , (b)(5)]

~ Enron hankruptcy proposal: Nada.
{(b)(6)]

01775

01200000000431


ENRON CORP.

6 V4% Exchangeable Notes due December 13, 1998
Chronology of Events

Date Event
Enron Authorization

October 26, 1995 Enron Board of Directors approved concept and authorized Special
Committee to take all action necessary to complete the transaction.

November 7, 1995 Special Committee of Enron Board of Directors approved
parameters of Notes and scope of related documentation.

Filings with SEC

November 8, 1995 Enron filed Registration Statement on Form S-3 with SEC
(registering the sale of the Notes under the 1933 Act).

November __, 1995 Enron filed Form 8-A with the SEC (registering the Notes under the
1934 Act).

December 7, 1995 Enron files Amendment No. 1 to Registration Statement on Form
$-3 with SEC.

National Association of Security Dealers Matters

November 9, 1995 Registration Statement, Form of Underwriting Agreement, related
documents and a filing fee were filed with NASD.

November 29, 1995 NASD advised that they had no objections to the fairness and
reasonableness of the underwriting terms and arrangements and
confirmed that advice by letter dated November 30, 1995.

~ 0900000000172


treated as effectively connected with the conduct of a trade or business within the United States
because the Company is or has been a “United States real property holding corporation’ for United
States federal income tax purposes (in which case, withholding of such tax may also apply). The
Company believes that it is currently, and is likely to remain, a United States real property holding
corporation. The preceding sentence notwithstanding, under currently effective United States fed-
oral income tax laws, gain recognized by a Non-United States Holder will not be treated as
effectively connected with the conduct of a trade or business within the United States (or subject to
withholding) unless such Non-United States Holder held, directly or indirectly, at any time during the
five-year period ending on the date of disposition, more than five percent of the Common Stock.
Non-United States Holders should consult applicable tax treaties, which may provide for different
rules (including possibly the exemption of certain capital gains from tax).

ni aes Wi Sills ie ee i aa a a
Common Stock as a capital asset generally will be subject to tax or any gain recognized on the
disposition of such stock if such individual is present in the United States for 183 days or more in the
taxable year of disposition and either (a) has a “tax home” in the United States (as specifically
defined under the United States federal income tax laws) or (b) maintains an office or other fixed
place of business in the United States to which the gain from the sale of the stock is attributable.
Certain individual Non-United States Holders may also be subject to tax pursuant to provisions of
United States federal income tax law applicable to United States expatriates.

Federal Estate Tax

Common Stock owned or treated as owned by an individual Non-United States Holder at the
pcre par hen a as De aaa tr ack Na ah I
treaty provides otherwise.

Information Reporting and Backup Withholding

The Company or its designated pay ying agent (the “payor") must report annually to the United
qunbetsiones Rasvace Gootos ody eaten Uitagl sees
to and the tax, if any, withheld with respect to such holder.
available to the tax authorities of the country in which the Non-United States Holder resides.

United States information reporting requirements (other than the reporting of dividend pay-
ments described in the preceding paragraph) and United States backup withholding (imposed at &
31% rate) generally will not apply to dividends paid to a Non-United States Holder at an address
outside the United States, unless the payor has knowledge that the payee is a United States person.
Otherwise, information reporting and backup withholding may apply to dividends paid on the
Common Stock to a Non-United States Holder who fails to furnish certain information, including a
‘tax identification number, in the manner required by United States law and applicable regulations.

Puvpiars Of Gis procends, ot 2 Genceton Of Comes) SOeh O  ee eee one be
broker fs subject to backup withholding and information reporting, unless the holder certifies to the
broker under penalties of perjury as to its name, address and status a$ a Non-United States Holder
or the holder otherwise establishes an exemption. Neither backup withholding nor information
reporting generally will apply to a payment of the proceeds of a disposition of Common Stock by a
foreign office of a foreign broker that is not a United States Related Person (as defined below).
Information reporting requirements (but not backup withholding) will apply to a payment of the
proceeds of a disposition of Common Stock by a foreign office of a broker that is a United States
person or a United States Related Person, unless the broker has documentary evidence in its
records that the holder is a Non-United States Related Person and certain other conditions are met.
or the holder otherwise establishes an exemption. For this purpose, a “United States Related
Person” is (a) a foreign broker, 50% or more of whose gross income for certain periods is effectively
connected with the conduct of a trade or business in the United States or (b) @ foreign broker that is
8 “controlled foreign corporation” for United States federal income tax purposes.

40

ih
a
i
ii

00900000000243


[(b)(5)]

ATTACHMENTS

01200000001426


RE: IN THE NEWS: 1/15/02 Page 16 of 37

that Compag Computer Corp., United Parcel Service Inc, and American Home Products Corp. used
illegal tax shelters, The agency says such shelters are a multibillion-dollar problem.

‘The justices left intact a $1.2 million assessment against Del Commercial Properties Inc., a Canadian
company that manages U.S. real estate. The Bush administration urged the court not to hear the

company's appeal.

Courts “have had no problem disposing of taxpayer claims in cases such as the present one, in which
there is # transparent lack of nontax business purpose,” the government argued.

A federal appeals court in Washington upheld the assessment. That ruling ‘*may cripple tax
planning,” Del Commercial contended in its unsuccessful appeal.

“A basic premise of modem corporate finance is the use of numerous steps and/or intermediaries in a
transaction with an underlying commercial purpose in order to reduce or eliminate tax liability,” said the
company, which hired Harvard law professor Laurence Tribe to make its case at the high court.

The fight centered on $14 million in loans made by Royal Bank of Canada to one of Del Commercial's
Canadian parent companies in 1990. The IRS says that money was immediately passed through four
affiliates before landing in Del Commercial's accounts.

Del Commercial repaid much of the money, plus interest, to the Dutch affiliate that was the last to
touch the loan moncy.

The IRS says that was a ruse designed to avoid the duty of U.S. taxpayers to withhold taxes owed by
their foreign lenders. A treaty in effect at the time exempted lenders based in the Netherlands from those
taxes.

The case is Del Commercial Properties v. Commissioner of

Internal Revenue, 01-681.
10. THIRD-PARTY DESIGNEE BOX ON NEW FORM 1040 AVAILABLE * Tax Notes Today

Tax Notes Today

JANUARY 15, 2002 TUESDAY
DEPARTMENT: Official Announcements, Notices, and News Releases; IRS News Releases
CITE: 2002 TNT 10-13
LENGTH: 298 words

HEADLINE; #13 2002 TNT 10-13 THIRD-PARTY DESIGNEE BOX ON NEW FORM 1040
AVAILABLE. (IR-2002-04) (Release Date: JANUARY 14, 2002) (Doc 2002-1096 (1 original page))

The IRS has announced (IR-2002-04) that taxpayers can enable the IRS to talk directly with a third party
to correct mistakes, such as simple math errors and data omissions, during the processing of the
taxpayers’ returns by selecting the third-party designee box on the new Form 1040. The third party will
also be able to discuss the status of a refund, payment, or other notice with the IRS. The designation,
however, does not eliminate the need for a Power of Attomey for issues dealing with examinations, under
reported income, appeals, and collection notices.

01/17/2002
00800000001112


The Company has been included in the consolidated federal income tax return filed by Enron
Corp. as the common parent for itself and its subsidiaries and affiliated companies, excluding any
foreign subsidiaries. Consistent therewith and pursuant to a Tax Allocation Agreement between the
Company, the Company's subsidiaries and Enron Corp., either Enron Corp. has paid to the
Company and each subsidiary an amount equal to the tax benefit realized in the Enron Corp.
Consolidzted federal income tax return resulting frora the utilization of the Company's or the
subsidiary’s net operating losses and/or tax credits, or the Company and each subsidiary has paid
to Enron Corp. an amount equal to the federal income tax computed on its separate taxable income
less the tax benefits associated with any net operating losses and/or tax credits generated by the
Company or the subsidiary which were utilized in the Enron Corp. consolidated return. Enron Corp.
has paid the Company and each subsidiary for the tax benefits associated with their net operating
losses and tax credits utilized in the Enron Corp. consolidated return, provided that a tax benefit was.
realized except as discussed below, even if such benefits could not have been used by the

the subsidiary on a separately filed tax return. The Company entered into an agreement
with Enron Corp. providing for the Company to be paid for all realizable benefits associated with
light gas sand federal income tax credits concurrent with tax reporting and settlement for the
periods in which they were generated. The Tax Allocation Agreement applies to the Company and
each of its subsidiaries for all years in which the Company or any of its subsidiaries are or were
included in the Enron Corp. consolidated return. To the extent a state or other taxing jurisdiction
requires or permits a consolidated, combined, of unitary tax return to be filed and such return
includes the Company or any of its subsidiaries, the principles expressed with respect to consoll-
dated federal income tax allocation shall apply. The Tax Allocation Agreement will cease to be
effective from the time at which deconsolidation occurs for future periods, but will remain in effect
with regard to periods prior to deconsolidation. For issues not addressed in the original agreement,
the Company has entered into a supplemental agreement with Enron Corp. clarifying future potential
adjustments associated with the final settlement on audit of taxes for periods prior to the decon-
solidation. The Company does not believe that the cessation of consolidated tax reporting with
Enron Corp. and effectiveness of the Tax Allocation Agreement concurrently with deconsolidation
will have a material adverse effect on its financial condition or results of operations.

For a discussion of transactions between the Company and Enron Corp. and Its affiliates, see
the Company's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated
herein by reference. See “Incorporation of Certain Documents by References.”

Conflicts of Interest

The nature of the respective busiriesses of the Company and Enron Corp. and its affiliates is
such as to potentially give rise to conflicts of interest between the two companies. Conflicts could
arise, for example, with respect to transactions involving purchases, sales and transportation of
natural gas and other business dealings between the Company arid Enron Corp. and its affiliates,
potential acquisitions of businesses or oll and gas properties, the issuance of additional shares of
voting sécurities, the election of directors or the payment of dividends by the Company.

Circumstances may also arise that would cause Enron Corp. to engage in the exploration for
and/or development and production of natural gas and crude oil in competition with the Company.
For example, opportunities might arise which would require financial resources greater than those
available to the Company, which are located in areas or countries in which the Company does not
intend to operate or which involve properties that the Company would be unwilling to acquire. Also,
Enron Corp. might acquire a competing oil and gas business as part of a larger acquisition. In
addition, as part of Enron Corp.'s strategy of securing supplies of natural gas or capital, Enron Corp.
may from time to time acquire producing properties or interests in entities owning producing
properties, and thereafter engage in exploration, development and production activities with respect
to such properties or indirectly engage in such activities through such companies. Enron Corp. may
also acquire interests in oll and gas properties or companies in connection with its financing

00900000000239


United States Canad Trinidad india ‘Total

Additional disclosures:

Volumes attributable to volumetric
production payment .............. 709 = - _-= 70.9
Net proved reserves at December 31
1994, including volumes attr'butab!
volumetric production payment... . 1,378.3 296.6 206.2 3 1,910.4
Liquids (MBbIK1)

Net proved reserves at December 31, 1993 13,172 5471 2.218 - 20,861
Revisions of previous estimates... 2,179 (177) 455 - 2,457
Purchases in place................. 358 - - 7,617 7,975

5,332 2,848 2.687 - 10,867
(257) = es be (287)
{2.997} _(905) (931) (32) (4,865)
Net proved reserves at December 31, 1994 17,787 7,237 4,429 7,585 37,038
United States Canada Trinkied india Tots!
Net proved developed reserves at
Natural Gas (Bcf)
1,079.8 250.6 714 - 1,401.8
1,128.2 288.3 206.2 1,622.7
. see 19,165 5409 1,591 ~ 18,165
December 31, 1994 ... 16,770 7,073 4,429 7,585 35,857
- United States Censda Trinidad india Total
Net proved reserves, |
st ase
payment at

Natural Gas (Bcf) 7
December 31, 1993 1,167.3 250.6 714 - 1,489.3
December 31, 1994 .. 1,199.1 2883 206.2 ~ 1,693.6

Uquids (MBOIX1)

December 31, 1993 .. 11,165 5,409 1,691 ~ 18,165
December 31, 1994 .. 16,770 ° 7,073 4429 7.585 35,857

(1) Includes crude oil, condensate and natural gas liquids.

Estimates of proved and proved developed reserves at December 31, 1993 and 1994 were
based on studies performed by the Company's engineering staff for reserves in the United States,
Canada, Trinidad and India. Opinions by DeGolyer and MacNaughton, independent petroleum

consultants, for the years ended December 31, 1993 and 1994 covering
65% and 59%, respectively, of proved reserves of the Company on a

Nnet-equivalent-cubic-feet-of-

00900000000220


= 5 peeeerwe varceperrommarye 2OrseTeeeS TSI POMOd FONE
[(6)(5)}

NN

sees 12.0t ROOFER

00500000000923


emphasis is on businesses in which natural gas or its components play a significant role. Develop-
ment projects are focused on power plants, gas processing and terminalling facilities. and gas
pipelines, while marketing activities center on fuels used by or transported through such facilities.
Enron's international activities include management of direct and indirect Ownership interests in and
operation of power plants in England, Germany, Guatemala and the Phillippines; a pipeline system in
southern Argentina; retail gas and propane sales in the Caribbean basin; Processing of natural gas
liquids at Teesside, England; and marketing of natura! gas liquids worldwide, Enron is also involved

In power and pipeline projects in varying stages of development in China, the Dominican Republic,
Colombia, Turkey, Bolivia and Brazil, indonesia and elsewhere.

Enron Global Power & Pipelines LL.C., a Delaware limited liability company ("EPP"), was
formed in November 1994 by Enron to own and manage Enron's operating power plant and natural
988 pipeline business conducted outside the United States, Canada and Western Europe, and to
expand such business through acquisitions. EPP’s initial assets consist of interests contributed by
Enron in two power plants in the Phitippines (with 226 megawatts of aggregate net generating
capacity), a power plant in Guatemala (with 110 megawatts of net generating capacity) and a 6,548
kilometer (4,069 mile) natural gas pipeline system in Argentina. The public ottering of common
shares of EPP was completed in November 1994, Enron owns approximately 52% of the common
shares of EPP. Enron formed EPP to attract public equity capital to emerging market intrastructure
Projects, to enable public investors to better evaluate and participate directly in the growth of
Enron's operating power plant and natural gas pipeline activities in emerging markets and to
generate additional capital for Enron to reinvest in future development efforts and for other
corporate purposes.

Exploration and Production. Substantialty all of Enron's natural gas and crude ofl exploration
8nd production operations are conducted by its subsidiary EOG. EOG is engaged in the exploration
for, and development, production and marketing of, natural gas and crude oll primarily in major
Producing basins in the United States, as weil as in Canada, Trinidad, India and to a lesser extent,
selected other international areas. At December 31, 1994, EOG had estimated net proved natural
gas reserves of 1,910 billion cubic feet and estimated net proved crude oil, condensate and natural
985 liquids reserves of 37 million barrels, and at such date, approximately 70% of EOG's reserves
(on a natural gas equivalent basis) was located in the United States, 16% in Canada, 11% in Trinidad
and 3% in India. A limited partnership in which ECT owns a 50% general partner interest has entered
nto an agreement to acquire a controlling interest in Coda Energy, inc. (“Coda”). Coda is engaged
In the exploration for, and the development, production and marketing of, natural gas and crude o”
Primarily in North Texas and Oklahoma, Crude oil accounts for approximately 86% of Coda's proved
reserves. At December 31, 1994, Coda reported estimated proved natural gas reserves of 39,808
million cubic feet ("MMct") and estimated proved crude oil, condensate and natural gas liquids
reserves of 39,207 thousand barreis ("MBbis"). See “Relationship Between Enron and EOG -
Conflicts of Interest."

RECENT EVENTS

In connection with a Power Purchase Agreement dated December 8, 1993, as amended,
between Dabho! Power Company, Enron's 80%-owned subsidiary, and the Maharashtra State
Electricity Board (the “MSEB"), Dabhol Power Company has been developing Phase | (approxi-
mately 695 megawatts) of a 2,015 megawatt electricity generating power plant south of Bombay,
State of Maharashtra, India (the “Project”). Financial closing occurred and Project construction
began on March 1, 1995. After construction had begun, and following elections to the Maharashtra
Legistative Assembly, a new coalition government took office in the State of Maharashtra. The new
Coaiition government appointed a review committee to study the Project, and on August 3, 1995,
announced the State government's intention to terminate the Project. Work on the Project was
Ordered stopped by the MSEB, and construction ceased on August 8, 1995. Enron believes that
Such actions were in clear violation of the contract and in response to these actions, Dabhol Power

0900000000183


Drilling and Acquisition Activities
During the years ended December 31, 1992, 1993 and 1994 and the nine months ended
September 30, 1995 the Company spent approximately $396, $430, $494 and $401 million, respec-
tively. for exploratory and development drilling and acquisition of leases and producing properties.
The Company drifted, participated in the drilling of or acquired wells as set out in the table below for
the periods indicated:

ba
Yoar Ended December 31, September 30,
2 1 t«<C:i‘éN _ 1s

Gross Net Gross Net Gross, Nei Grows Nel
484 399.06 352 279.00 308 24423 99 77.78
19 1080 45 1901 34 2957 36 3206
84 56.12 59 4683 41 3215 38 3080
567 465.98 456 34484 383 30595 173 140.64
2 2.00 227 190.10 250 19030 116 107.66
13° (11.70 4 350° 611 $10 13 8.21
_5 405 11 760 13 1150 11 6.38
20 17.75 242 201.20 274 206.90 140 124.25
587 483.73 698 546.04 657 512.85 313 264.89
"W 872 14 1003 13 9.80 4 2.52

1 40 3 2.50 3 257 3 263
16 1342 32 2208 23 1817 6 447
28 «2254 «49 «83461 39 3054 13 9.62
7 575 14 11.40 9 7.90 2 1.24

4 3.69 2 90 1 50 2 2.00
_4 285 10 735 14 1250 5 3.70
15 1229 26 1965 24 2090 9 6.94
43 3483 75 5426 63 5144 22 16.56
630 518.56 773 60030 720 564.29 335 281.45
82 60.75 82 61.09 45 28.79 53 38.72
712 579.31 855 661.39 765 593.08 388 320.17
me SSS SO SS
641 597.29" 44 2644" 41 40.90" 271 97.37"
28 2580" - 12.80" 60 3899" 5 93°
669 623.09 44 39.24 101 79.89 276 96.30
= S| SS SSS mei SS

* Includes the acquisition of additional interests in certain wells in which the Company previously
held an interest,

All of the Company's drilling activities are conducted on a contract basis with independent
Grilling contractors. The Company owns no drilling equipment.

00900000000222


ROB NICHOLS
DEPUTY ASSISTANT SECRETARY (PA)
TELEPHONE LOG ~ NOVEMBER 2001

1:08 PM
Ww wv, November 28, 2001 1
[OUTSIDE SCOPE]
3:23 393-6883 David Invanovich, Houston Chronicle, REF: ENRON going
bankrupt
[OUTSIDE SCOPE]

00800000000530



IN THE NEWS: 1/15/02 Page 21 of 36

* The end of the Maximum Exclusion Allowance. Some teachers may still need to do some rudimentary
calculations, Perry says. But most will be able to rely on the $ 11,000 limit and forget about the MEA, she says.

* More portability. In the past, the law barred teachers who switched to the private sector from transferring
money from their 403(b) plans into a new employer's 401(k). Likewise, workers who left private-sector jobs to

teach couldn't roll their 401(k) money into their 403(b) plans. As of Jan. 1, those prohibitions are gone, making
it easier for workers to consolidate their savings in one plan.

However, not all plans allow such transfers, so check with your employer.
Better returns

The reforms don't directly address one of the biggest problems surrounding 403(b) plans; a lack of good, low-
cost investment choices.

Private employers that offer 401(k) plans typically arrange for a mutual fund group or plan provider to handle
their workers’ 401(k) savings. The 401(k) provider offers participants a menu of investment options, usually
ranging from aggressive to conservative. Because savers are part of a large group, they often get a break on
fees.

Public school systems, by contrast, have stayed out of the investment business. While they'll arrange for
payroll deduction into a worker's 403(b), many don't want to select a plan provider. Instead, they allow sales
representatives from financial firms, usually insurance companies, to solicit business from their employees.

As a result, a lot of 403(b) money has been invested in annuities, which tend to carry much higher expenses
than no-load mutual funds. Annual fees often run as high as 2% of the amount invested.

The money is frequently invested in conservative products, which lowers the risk but also leads to lower
returns.

Many contracts contain surrender and back-end fees that penalize dissatisfied workers who want to switch
plans.

Advocates for 403(b) reform say the situation is improving. Low-cost providers, such as TIAA-CREF, are
negotiating with some school districts to manage their 403(b) plans. More providers may be willing to set up
403(b) plans now that the onerous MEA rules are gone, because it’s simpler to administer the plans.

Still, some school districts need a push, If you're a teacher and are unhappy with your 403(b) choices, talk to
your administrator about adding some low-cost options.

But before you approach your school district, do your homework. A good place to start is
www.403bwise.com, which was founded by two educators who were frustrated with the lack of information
about teachers’ retirement plans. The site offers a 403(b) Bill of Rights, calculators and updates on the rules
governing the plans. Morningstar, the mutual fund information source, offers a good primer on the plans at its
Intemet site, _www,momingstar.com.

15. Tax breaks for college, retirement * The Bergen Record

The Bergen Record

January 13, 2002

01/17/2002

00800000001154


Strickler, Marie

eee _ _— —

From: Strickler, Mane

Sent: Tuesday, January 15, 2002 6:23 PM

To: Davis, Michele

Subject: #3 - Phone Calls

2:05 703-683-9733 Christine Hall, cnsnews.com = would like to speak with someone in the GC's

office re standards of conduct for government employees (political & career) who
receive calls such as the Enron calls

[OUTSIDE SCOPE]

00800000000541


PROSPECTUS SUMMARY

The following is a summary of certain information contained in this Prospectus, tt is not
intended to be compiete and is qualified in its entirety by the more detailed information contained
elsewhere in this Prospectus. Certain terms are defined in this Summary under “Certain Defini-
tions.” Capitalized terms which are not defined in this summary are used as defined elsewhere in
this Prospectus.

The Company

Enron Dil & Gas Company (together with its subsidiaries, “the Company"') is one of the largest
indopensdle (ennngrated ot Sed gue compenoe toes anes ae ne, tergea
Proved reserves. It is engaged, directly and through its subsidiaries, in the exploration for, and the
development. production and marketing of, natural gas and crude oil primarily in major producing
basins in the United States, as well as in Canada, Trinidad and India and to a lesser extent, selected
other international areas. At December 31, 1994, the Company's estimated net proved natura! gas
reserves were 1.910 Bcf and estimated net proved crude oil, condensate and natural gas liquids
reserves were 37 MMBbI, a net increase of 8% and 78%, respectively, over year end 1993. The
Company has increased its reserves for six consecutive years. At December 31, 1994, approxi-
mately 70% of the Company's reserves (on a natural gas equivalent basis) was located in the United
States, 16% in Canada, 11% in Trinidad and 3% in India. At such date, approximately 90% of the
Company's total proved reserves was classified as developed.

While year ond reserve evaluations will not be available for some time, based on the resutts of
the Company's drilling program for the first nine months of 1996, it is expected that extensions,
Giscoveries and other additions to reserves for the year will exceed production for both North
America and Trinidad, as well as in total, Additionally, reserves acquired are expected to substan-
tially exceed those sold, with the resulting replacement of production from all sources expected to

Business Strategy. The Company's strategy is to maximize the rate of return on investment of
Capital by controlling both operating and capital costs and enhancing the certainty of future
revenues through the use of various marketing mechanisms. This strategy enhances the generation
of both income and cash flow from each unit of production and allaws for the growth of production
on a cost-effective basis by optimizing the reinvestment of cash flow, Through this strategy, the
Company has increased its net income in each of the last five years, despite the volatile natural gas
Price environment, and achieved a return on equity ranging trom 8% in 1990 to 15% in 1994. For the
first nine months of 1995, net income increased 5% compared to the same period for 1994.

The Company refocused its 1995 driling activity away from natural gas deliverabltty and toward

The Company implements its strategy by emphasizing the drilling of internally generated
Prospects in order to find and develop low cost reserves. By following this strategy, the Company

3

00900000000206


IN THE NEWS; 1/14/02 Page 6 of 36

Exempting small businesses from the fee, which can run from $ 125 to $ 1,250, is meant to encourage small
companies to start retirement plans, The exemption is available anytime during the first five years of the plan's
operation.

The Small Business Administration said recently that it will extend the application deadline for its Physical
Loss Disaster Loans to March 11, The previous deadline had been last Thursday. It also is extending the
National Economic Injury Disaster Loan application deadline to April 22.

The Physical Loss Disaster Loan program is designed to help small businesses recover from physical damage
caused by a catastrophe within a federally declared disaster zone, such as New York. In October, the SBA
broadened its Economic Injury Disaster Loan (EIDL) program to qualified small businesses affected by the
terrorist attacks nationwide, creating the National Economic Injury Disaster Loan (NEIDL) program. The
NEIDL. had an original deadline of Jan. 10. The deadline for the regular EIDL, just for the declared New York
and Virginia disaster zones, remains June 11,

"Small businesses, which we depend on for our recovery and rejuvenation, are still hurting,” said Rep. Nydia
M. Velazquez (D-N.Y,), ranking minority member of the House Small Business Committee, "Many of them are
just now discovering how badly they have suffered over the past three months. It is important to keep these
resources open to them."

The Bush administration last month revoked a year-old regulation that small businesses claimed effectively
blacklisted them from government contracts if they did not follow union rules on projects. . . . The IRS ruled
this month that operators of tavems and restaurants can expense "smallwares," a term that covers myriad small
items including salt shakers, bar glasses, cruets and potholders, rather than capitalizing them.

5, BusinessWeek: IRS Launches Investigation Into ... * BUSINESS WIRE

BUSINESS WIRE
Jan 11, 2002
BusinessWeek: IRS Launches Investigation Into ...

NEW YORK, Jan 11, 2002 (BUSINESS WIRE) — The Internal Revenue Service has
opened its own investigation of Enron Corp., the beleaguered and bankrupt

energy trader, according to senior government investigators, BusinessWeek

Online has learned.

The tax service could bring civil or criminal charges if it found that
Enron's accounting snafus were reflected in its tax returns.

The IRS probe pushes to an even dozen the count of government inquiries into
the accounting, securities, and pension practices of the failed Houston-based
giant, The Securities & Exchange Commission is investigating whether errors
on Enron's financial statements constituted securities fraud -- a question
which is also subject to an investigation by a nationwide task force of the
Justice Dept.

Meanwhile, the Labor Dept. is investigating Enron's pension plans, which
barred employees from selling their Enron stock as the company melted down
last fall. And President George W. Bush has ordered two Cabinet-level task
forces to look into issues surrounding Enron's pensions and energy trading,
01/17/2002

00800000001175


DeMarco, Edward

From: Carleton, Norman
Sent: Wednesday, August 29, 2001 2:41 PM
To: Fisher, Peter; Roseboro, Brian; Bair, Sheila; Nickoloff, Peter; Schultheiss, Heiditynne;

DeMarco, Edward; Hughes, Gerry; Gross, Jared; Smith, Amy; Sutton, Gary; Ellett, Martha;
Gabilondo, Jose; Mcinerney, Roberta; Lori Sanatamorena (E-mail); Novey, Michael; Eichner,
Matthew, Hammer, Viva

Subject: More on the Enron Issue

((b)(5)]

Thoughts?

01200000001232


ROB NICHOLS
DEPUTY ASSISTANT SECRETARY (PA)
TELEPHONE LOG - JANUARY 2002
1:05 PM

Friday, January 11, 2002, pg 2

[OUTSIDE SCOPE]

1:35 $13-2267

[OUTSIDE SCOPE]

Pam Fessler Natl Pub Radio, called again, REF: wants to confirm
what's on the wires statement today on ENRON & Peter Fisher;
also wanted to know if there are any press releases (also on Rob's
call list)

00800000000533



1995; all associated natural gas was being flared. The Company intends to continue development of
the accumulations and to expand processing capacity to allow crude oil production at full deliver-
ability as well as to permit natural gas sales.

Other Intemational. The Company continues to evaluate other selected conventional natural
gas and crude oil opportunities outside North America. The Company is pursuing cther exploitation
opportunities in countries where indigenous natural gas reserves have been identified, particularly
where synergies in natural gas transportation, processing and power Cogeneration can be optimized
with other Enron Corp. affiliated companies. In early 1995, the Company and the Qatar General
Petroleum Corporation signed a nonbinding letter of intent concerning the possible development of
a liquefied natural gas project for natural gas to be produced from the North Dome Field. The
Company and Enron Corp. may jointly hold up to a 40% working interest in the joint venture and drill
and develop to-be-agreed-upon reserves. In addition, the Company signed letters of intent in early
1995 wil{f the National Oil Corporation of Uzbekistan, and Gazprom, the Russian natural gas
company, to pursue the feasibility of joint venture development and marketing of previously dis-
covered conventional hydrocarbon reserves in Uzbekistan. The Company is also in discussions
concerning the potential for conventional of and gas development opportunities in China,
Mozambique and Qatar. The Company holds nonoperating working interests in two conventional oil
and gas exploration prospects in the U.K. North Sea.

The Company continues evaluation and assessment of its international opportunity portfolio in

Wellhead Marketing ‘
The Company's North America wellhead natural gas production is currently being sold on
spot market and under long-term natural gas contracts at market responsive prices. In many
instances, the long-term contract prices closely approximate the prices received for natural gas
being sold on the spot market. Wellhead natural gas volumes from Trinidad are sold at prices that
are based on a fixed price schedule with annual escalations. Natural gas volumes in India will be
‘sold to the Gas Authority of India, Ltd. under a take-or-pay contract at a price linked to a basket of
world market fuel oll quotations with floor and ceiling limits. Approximately 45% of the Company's
wellhead natural gas production is currently being sold to pipeline and marketing subsidiaries of
Enron Corp, The Company believes that the terms of its transactions and agreements with Enron
Corp. andor its affillates are and intends that future such transactions and agreements will be at

least as favorable to the Company as could be obtained from third parties.
Substantially all of the Company's wellhead crude oll and condensate is sold under short-term
contracts at market responsive prices. +

Ol! & Gas Marketing, Inc. ("EOGM") is a wholly-owned subsidiary of the Company
engaged in various marketing activities. Both the Company and EOGM contract to provide, under

4

00900000000217


[(b(5)}

From:
Sent: Thursday, February 15, 2001 6:26 AM
fo: DeMarco, Edward; Elis, Dina; Huffman, Lucy; Carleton, Norman; Mclnemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

{(b)(5)]

g

Original Message--—~

From: DeMarco, Edward

Sent: Thursday, February 15, 2001 6:22 AM

Donald; Ellis, Dina; Huffman, Lucy; Carteton, Norman; Mcinerey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
(Cc: Tishuk, Brian; Robbins, Eric

‘Subject: PW: Bankruptcy Reform Mark-up Hearing

|

To:

——Original Message=--
From: Robbins, Eric
Sent: Wednesday, Febrvary 14, 2001 5:45 PM

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001" was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass. Voting occurred
largely along party lines. The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions
and netting requirements.

01200000001215


Summary Oi! and Gas Reserve Information
The following table sets forth summary information with respect to the Company's estimates of
its net proved natural gas, crude oil, condensate and natural gas liquids reserves at December 31,
1894. For additional information relating to reserves, see “Business - Oil and Gas Exploration and
Production Properties and Reserves.”

= __equtvalonta (Be
Ges vetonte (Bete) _
(Bet) cdot) Developed Undeveloped
Net proved reserves at December 31, 1994:
United States 1,307 17,787 1,229 185
Canada . 297 7.237 x0 10
Trinidad 206 4,429 233 -
India. . a] 1585 ee
Total 1,839 37,038 1,838 224

Reserve amounts set out above have been revised to exclude volumes attributable to a
volumetric production payment from owned reserves,

The Company's estimates of its net proved natural gas, crude oll; condensate and natural gas
liquids reserves at December 31, 1994, including amounts attributable to a volumetric production
payment, are shown below. This disclosure is presented as additional information and is not
Intended to represent required disclosure pursuant to Statement of Financial Accounting Standards
("SFAS") No. 69 - “Disclosures about Oil and Gas Producing Activities.”

Ss a as

Net proved reserves at December 31, 1994,
amounts attributable to volumetric

1,373 17,787 1,300 185
a 7,237 330 10
206 4,429 233 *

29 7,585 46 2

1,910 37,038 1,909 224

i) ] Includes crude oll, condensate and natural gas liquids.

00900000000211


Ridgway, Diana

From: Vannoy, Elizabeth on behalf of Aufhauser, David
Sent: Thursday, November 01, 2001 1:39 PM

To: Fisher, Peter

Ce: Hart, Anna; Pringle, Veronica; Ridgway, Diana
Subject: Enron

1 have a young lawyer doing some background work on Enron should it become active, | am meeting with him tomorrow at
4:00 and wonder whether you want to attend,

David D, Auphauser

Gerwrul Counsel

US. Department of the Treasury

1500 Perinsylerriaa Avenue, NW, Room 3000
Wastungton, D.C, 20220

Phone: 202/622-0283 FAX: 202/622-2882

01200000001599


Wellhead Volumes and Prices, and Lease and Well Expenses

The following table sets forth certain information regarding the Company's wellhead volumes of
and average prices for natural gas per Mcf, crude oll and condensate, and natural gas liquids per
Bb, and average lease and well expenses per Mcte delivered during each of the three years in the
Period ended December 31, 1994 and the nine-month periods ended September 30, 1994 and 1995.

‘Mine Monthe

Year Ended December 31, fnoe
i ree ae ee
504641460953
3 6882
- 2 6 6 10
564 _ 703 749 743 710
63 66 8.0 75 9.1
22 22 20 19 24
- “A 2 26 3
- - aA - 23
65 89 12.6 12.0 18.6
—85 _ 39 120 186
a2 .2@.3 2
4 A 4 5 3
7 6 ae 7 15
aE: SE SE AE
$197 $1.71 $179 $133
su 142 1.51 5
89 3 3 37
1.92 1.62 1.69 1,23
$16.96 $16.06 $15.64 $17.20
1463 14.05 13.72 1631
14.36 1550 15.20 16.16

- 15.70 = 16,

82
16.37 15.62 18.24 16.77

Includes erage equlvalent wellhead value
ror per Mel 994 and $1.32 per Mcf and $.
September 30, 1994 and

15

00900000000218


RE: IN THE NEWS; 1/15/02 Page 19 of 37
percent of those with three or more children did so.

The GAO could not explain the differences in participation rates, saying they
may be a result of data collection problems

in the sample examined or may be

real.

Rep. William Coyne, D-Pa., the top Democrat on the Ways and Means oversight
subcommittee, who requested the report, plans to ask GAO for further
research.

"We are very troubled by it," said Matt Dinkel, Coyne’s spokesman.

There are a variety of reasons why people who are eligible for the tax credit
do not claim it, said John Wancheck, who runs an outreach campaign on this
tax credit for the Center on Budget and Policy Priorities.

Among them, he said, are that families aren't aware of it, sometimes because
they eam too little to be required to file a federal tax return. There also

are foster parents and grandparents who may not realize that they may claim
the children they care for when calculating eligibility for the credit.

The EITC, created by Congress in 1975, is refundable, meaning that even if a
taxpayer owed no income tax they can get a government check by claiming the
credit, About 86 percent of claims represent this form of direct cash help.

But the credit is difficult to compute and always has been plagued by errors.
In 1997, the IRS found that 25.6 percent of more than $30 billion in claims
"should not have been paid” due to mistakes or fraud. About 20 million
taxpayers made EITC claims that year.

13. Sweeping new law might make 2002 a good year for finances * Houston Chronicle Publishing
Company

The Houston Chronicle

January 14, 2002, Monday 2 STAR EDITION

SECTION: BUSINESS; Pg. 3

LENGTH: 853 words

HEADLINE: Sweeping new law might make 2002 a good year for finances

SOURCE; Tribune Media Services

BYLINE: GARY KLOTT

BODY:

NOW that 2002 is well under way, it's an opportune time to consider what you might do for the rest of the

year to improve your financial life.

Early planning is always essential to achieve sizable tax savings. But it's especially important this year
01/17/2002

00800000001115


DeMarco, Edward

From: Carleton, Norman
Sent: Thursday, February 15, 2001 10:07 AM
To: Hammond, Donaid; DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta;
Constantine, Eleni; Hughes, Gerry; Stewart, Lawranne
Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickoloff, Peter, Schultheiss, Hekitynne; Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Don,
((b)(S)]
Norman
——Original Message——-
From: Hammond, Donald
Sent: Thursday, February 15, 2001 6:26 AM
To: Oettarco, Edward; Ellis, Dina; Huffman, Lucy; Carleton, Norman; Mclnemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
Ce: Tishuk, Brian; Robbins, Eric
Subject: RE: Bankruptcy Reform Mark-up Hearing
Ed,

01200000001218


RE: IN THE NEWS; 1/15/02 Page 29 of 37

means about $22 million is there for the taking.

But the local effort, known as the Earned Income Tax Credit Outreach Initiative, has smaller dreams. It
would like to process 3,000 additional tax credit claims this year, which the IRS estimates would bring
nearly $5 million to Indianapolis.

Individual families can receive up to $4,008, depending on their income and number of dependents. The
IRS said the average refund in Indianapolis last year was $1,576.

Experience has shown that people who take the credit don't use the refund money on luxuries or frivolous
purchases. ;

“Folks who get the credit help boost the economy in the city, because they don't . . . use it to go to the
Bahamas,” said Lena Hackett, a local coordinator for the Casey Foundation, a Baltimore-based nonprofit
group that seeks to improve families and neighborhoods.

An initiative in Chicago found that credit recipients primarily used the money to pay off bills, then to buy
needed items.

Indianapolis’ initiative will prepare tax forms starting Feb. 1 at five sites: the Hispanic Education Center,
580 Stevens St.; Southeast Community Service, 901 Shelby St.; the Hawthome Community Center, 2440
W. Ohio St.; the Brightwood Branch Library, 2500 N. Sherman Drive; and El Centro Hispano, 617 E.
North St. "

The locations were sites for the IRS’ volunteer tax preparation program in past years. But the initiative
seeks to beef up the IRS’ efforts by promoting it and adding volunteers.

"We're out just beating the bushes right now,” said Ellen Quigley, assistant deputy mayor for policy.
Mayor Bart Peterson encouraged members of the Indiana CPA Society to volunteer. And neighborhood
groups talked about it at their meetings.

In late January, the Casey Foundation will lead neighborhood groups in distributing fliers door-to-door in
the targeted neighborhoods.

Flizabeth M. Gore, chairwoman of Martindale-Brightwood Community Development Corp., said the tax
credit initiative would help in a tight economy,

"This is just extra money that you didn’t count on that, during a time like this, would be very helpful,”
Gore said. "It would provide a surge to this community."

And Ivan Schumann, executive director of the Indianapolis Hispanic Chamber of Commerce, lauds the
effort to find bilingual volunteers to help Spanish-speaking residents claim the credit and to counsel credit
recipients and work with banks to open accounts.

"Instead of putting the $5,000 under the mattress,” Schumann said, “it will be used in the retail economy

here.”
21. Miami Herald Action Line * INCOME TAXES MADE NEARLY PAINLESS

Miami Herald Action Line

January 14, 2002

01/17/2002

00800000001125


Nichols, Robert

From: Fratto, Tony

Sent: Wednesday, November 28, 2001 3:38 PM
To: Nichols, Robert, Holahan, Betsy

Ce: Davis, Michele

Subject: ENRON questions

Importance: High

‘situabon
Michele has cleared a quote to use in response to reporter inquiries;
“We are monitoring the credit markets, as we do every day.”
In response to follow-up questions about evidence of risk in the markets or unusual activity:
“The markets always fluctuate. We haven't seen anything extraordinary.”
Further questions about energy and Enron should be referred to FERC or CFTC

Asi took @ question regarding Enron today and referred questions to Treasury and said that Treasury is monitoring the |
|
|
|

0080000000467


IN THE NEWS: 1/15/02 Page 33 of 36

While this rate of noncompliance was fairly consistent, GAO reported that annuitants owed proportionately
more in taxes than current federal workers, Much to the relief of IRS management, GAO discovered that the
rate of noncompliance by IRS employees was lower than the rest of the federal population--about 3 percent.

When comparing tax compliance by federal workers and annuitants with the general taxpaying population in
2000, IRS records showed about 5 percent noncompliance for current or retired federal workers as compared to
about 7 percent for their private-sector counterparts,

I was disturbed by GAO's conclusion that a significant portion, 59 percent, of the amounts owed by federal
workers and annuitants were potentially uncollectible. Some didn't have the financial resources to pay or had
died. But in other cases, the IRS said it was unable to locate the taxpayers--despite the fact that they are
receiving federal salary or benefit payments.

To those federal workers and annuitants who owe outstanding tax obligations, I have a word of caution:
Treasury's Financial Management Service is looking for you. It has the power to apply a continuous levy of up
to 15 percent against your federal salary and pension payments and wants to expand its collection cfforts over
the next year.

27. Tax returns coming soon to North Ogden center * The Ogden Standard Examiner

The Ogden Standard Examiner

Jan 13, 2002

Tax returns coming soon to North Ogden center
By DAVID TROESTER
Standard-Examiner staff

NORTH OGDEN -- Millions of tax returns will find a new path this year through a state-of-the-art mail-
processing facility in North Ogden.

The Internal Revenue Service plans to open the facility by the end of the month, just in time to handle the busy
tax-return season. It will be located in a former Autoliv plant at 1973 Rulon White Blvd, in Weber Industrial
Park.

Autoliv closed the 100,000-square-foot plant in August. The company sold it Dec, 31 for $3.9 million to ARKA
Properties Group of Beverly Hills, Calif. ARKA, in turn, leased the facility to the U.S. General Services
Administration for use by the IRS.

The facility will be equipped with modem air-handling ventilation systems to ensure safety for employees in the
wake of recent anthrax scares.

"Should there be any issue that occurs when somebody opens up an envelope, for example, you can
immediately shut down the ventilating systems in that area so that it limits any exposure," said Bob Wenzel,
IRS deputy commissioner in Washington, D.C, Wenzel served as director of the Ogden IRS service center from
1986 to 1992,

During peak months from February through mid-June, the new mail facility will employ 1,200. No new jobs
will be added. Positions will be transferred from the main IRS center off 12th Street.

The number of IRS sites in Northern Utah is now 10, including eight in Ogden and one in Syracuse. An 11th
site will be added in late summer or early fall when a 120,000-square-foot complex opens off Wall Avenue in

01/17/2002
00800000001166


IN THE NEWS: 1/15/02 Page 17 of 36

Of course, the simplest and more humane solution would have been to
abolish the estate tax, which is scheduled for extinction anyway, though not
before 2010 and then for one year. That's precisely what Washington
Representative Jennifer Dunn proposed in her Widows of the World

Equity Act.

But that would have required more compassion than politicians can muster
at one sitting. In fact, Congress seemed ready to consider any kind of
relicf, including making all of the dead U.S. citizens, rather than repeal the
estate tax. And before we praise the Members of Congress too much, no
doubt the fear of special publicity that would have focused on the
September 11 widows was part of their motivation,

Then there is the twisted moral logic of carving out just this estate-tax
exception. A British woman living in America whose husband was killed in
the World Trade Center attacks can now collect whatever was left behind
without fear of the IRS. But a British woman whose husband is killed by,
say, a drunk driver or heart attack still faces an estate tax on her assets
starting at as little as $60,000 (foreigners don't get the U.S, minimum
exemption of $1 million) with confiscatory rates of up to 55%. The IRS
philosophy here is that it's all their money, and that a foreign spouse might
up and leave the country before the IRS gets its share.

The case of the September 11 widows illuminates that the real objection to
the estate tax is moral. It is a political grab for assets on which taxes have
already been paid once, if not twice. The spouses of September 11 may
be catching a deserved break, but the real solution is to abolish the estate
tax for everyone forever.

12. Tax Credit Misses Some Eligible * Associated Press

Associated Press

01/14/2002

Tax Credit Misses Some Eligible

By LAURA MECKLER

Associated Press Writer

WASHINGTON (AP) -- About 4.3 million taxpayers who were eligible for a tax
credit aimed at the working poor did not claim it in 1999, congressional
auditors reported,

That adds up to a 75 percent participation rate in the eamed income tax
credit program, better than programs such as food stamps and Medicaid that
are available to many of the same people,

The cared income tax credit, expected to cost $30 billion this year, is one
of the federal government's largest programs aimed at helping low-income

Americans. Available only to the working poor, the credit enjoys bipartisan
support and has been expanded several times in recent years,

01/17/2002

00800000001150


Hunt, Betty Ann

From: Hunt, Betty Ann

Sent: Wednesday, January 09, 2002 6:09 PM
To: Bair, Sheta

‘Subject: RE:

w

Beton « Enron soe

-~--Onginal Message--—
From: ‘Bair, Sheita
Sent: Wednesday, January 09, 2002 4:06 PM
To: Hunt, Betty Ann
Subject:
<< File: Enron3.doc >>
Tracking:

Bair, Sheila

Read
Read, /902 6:09 PM

01200000000964


IN THE NEWS: 1/15/02 Page 26 of 36

You may download forms and publications from this site or order them by calling toll free (800) TAX-FORM
(1-800-829-3676).

18. Low- to middle-income investors get tax credit * Star-Telegram

Star-Telegram (Fort Worth, Texas)
January 13, 2002
Low- to middle-income investors get tax credit

There is a new federal income tax credit called the Saver’s Credit, which is directed to low- and middle-income
people who invest in the government's tax-deferred investment plans.

They include individual retirement account, Roth IRA, 401(k), 403(b), and 457 plans. The objective is to
encourage people to put more moncy in those investments to expand their retirement savings.

That can be difficult for people who are barely making ends meet, The government's incentive is to offer a tax
credit of as much as 50 percent of contributions up to $2,000 a taxpayer makes to a retirement plan each year.
Essentially, the Saver’s Credit is like a matching grant that helps pay for the first $2,000 that you invest.

Who's eligible for the Saver's Credit:

Single people with an adjusted gross income, or AGI, of $25,000 or less,

Heads of households with an AGI of $35,700 or less.

Couples with an AGI of $50,000 or less.

For married taxpayers filing jointly, each spouse is eligible for his or her own annual contribution up to
$2,000.

eoeee

You qualify for the credit if you are 18 or over, are not a full-time student and are not claimed as a dependent on
someone else's tax return.

19. IRS, AARP offer residents free tax assistance * The Enid News and Eagle

The Enid News and Eagle (Enid, ox)

January 12, 2001

IRS, AARP offer residents free tax assistance

By: Tippi Rasp, Staff Writer

AARP: 'We do simple retums for simple people.’

It's time to tally up taxes for another year, and those who need free help have alternatives.

AARP will offer its 10-week tax assistance program starting Feb. 1.

Two or three trained volunteers will help prepare taxes 9 a.m. to 1 p.m. on Saturdays Feb. 2 through April 13, at
Public Library of Enid and Garfield County, and 10 a.m. to 2 p.m, Mondays, Wednesdays and Fridays Feb. 1
through April 12 at Oakwood Bowl.

Vi Musser, AARP tax assistance coordinator, said the free services aren't just for seniors,
"It's geared primarily for seniors, but it is for anybody from low to moderate income," Musser said.

01/17/2002
00800000001159


Certain Definitions

Uniess otherwise indicated in this Prospectus, natural gas volumes are stated at the legal
pressure 0256 of the state, area or country in which the reserves are located and at 60° Fahrenheit.
Natural gas equivalents are determined using the ratio of 6.0 Mct of natural gas {o 1.0 barrel of
crude oil, condensate or natural gas liquids.

As used herein, the following terms have the specitic meanings set out: "Mcf" means thousand
cubic feet, “MMcf" means million cubic feet, “Bct means billion cubic feet, “Bbi" means barrel,
“MBbI" means thousand barrels, “MMBbI"" means million barrels, “Mcfe" means thousand cubic
feet equivalent, "MMcfe” means million cubic feet equivalent, Bcfe” means billion cubic feet
equivalent, “MMBtu" means million British thermal units, “BBtu" means billion British thermal units
and “TBYu" means trillion British thermal units.

With respect to information on the Company's working Interest in wells or acreage, “net” oll and
gas wells or acreage are determined by multiplying “gross” olf and gas wells or acreage by the
Company's working interest in the wells or acreage,

“Exploration and development expenditures” include costs associated with exploratory and
development drilling (including exploratory dry holes), leasehold acquisitions, seismic data acquis!-
tions, geological and land related overhead expenditures, delay rentals, producing property acquisi-
tions, capitalized interest and other miscellaneous capital expenditures. “Total finding costs” is the
ratio of total exploration and development expenditures to reserves added as a result of the drilling
and acquisition program. Reserves added include the total net natural gas equivalent volume of all
natural gas, crude oil, condensate and natural gas liquids added from extensions, discoveries and
other additions, purchases in place and revisions of previous estimates.

“Infill drilling” means drilling for the development and production of net proved undeveloped
reserves.

00900000000212


IN THE NEWS: 1/15/02 Page 31 of 36

Virginia taxpayers, take note:

Federal tax returns, which Virginians have mailed to Philadelphia for the past decade or so, should now be
sent to Memphis. The IRS began notifying taxpayers of the switch last week. The new address: IRS Service
Center, Memphis, Tenn. 37501.

People who file electronically -- as more than 4 million Virginians did last year -- face no change. Taxpayers

can visit the IRS Web site, www.irs.gov, to download forms and publications and leam about changes in the tax
laws that might affect their 2001 return.

25. BEVERLY HILLS’ LATE TREASURER MAY HAVE LEFT SUBSTANTIAL DEBT TO IRS ;
OFFICIALS STILL TRYING TO UNTANGLE RECORDS
* St. Louis Post-Dispatch

St. Louis Post-Dispatch

January 14, 2002 Monday Five Star Lift Edition
SECTION: NORTH POST; Pg. 4

LENGTH: 542 words

HEADLINE: BEVERLY HILLS' LATE TREASURER MAY HAVE LEFT SUBSTANTIAL DEBT TO
IRS ; OFFICIALS STILL TRYING TO UNTANGLE RECORDS

BYLINE: Kathie Sutin Special To The Post-Dispatch

BODY:

When Beverly Hills’ treasurer died unexpectedly last year, his death left officials scrambling to find the
municipality's financial records. Now officials are reeling with the news that payments he made to the Intemmal
Revenue Service often were late, and Beverly Hills might owe the federal government thousands of dollars in
back taxes and penalties.

Pervais Butt, the treasurer, had the books in his possession at the time of his death, but no one at City Hall knew
where they were. In fact, no official was aware of the true financial situation. A year later, officials still are
waiting to learn the exact shape of the finances. Although an auditing company has been working on
straightening out the records for several months, City Clerk Langston Chambers reported to the Board of
Aldermen last week that they had not yet been successful in untangling the mess.

City Atiomey Richard Bresnahan said no money was missing. He said he did not know how much Beverly Hills
owed the IRS or how much it had been a ssessed in penalties.

Chief of Police and City Manager Joe Collins said Butt’s late payments to the IRS probably were the result of
the lagging cash flow, which often left it short of moncy to meet expenses, a problem officials still have.

In an interview, Chambers said the municipality had paid the IRS about $18,900 a few months ago but added
that he did not know how much more was owed. "That was the bulk of it,” said Chambers, adding that
Hochschild, Bloom & Co., the auditor, had worked to have some of the penalties reduced.

Chambers said the amount was significant because of penalties "from years past that didn't get paid." He added
that over the years, the insurance premiums sometimes were not paid and other times were paid late. "It was all
kind of messed up,” he said. "It was before I was hired. I'm kind of winging it.”

01/17/2002

00800000001164


fenicration, development and acquisition activites primarily {rom avaliable internally generated cash

exploration and development expenditure plans as circumstances warrant. While the Company has
Certain continuing commitments associated with expenditure plans related to operations in india,
they ar not anticipated to be material when considered in relation to the total financial capacity of
the Company.

Other
The cast of environmental compliance has not been material to the Company.
In March 1995, the Financial Accounting Standards Board issued SFAS No, 121 - “

for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (the
“Standard”). The Standard requires, among other things, that long-lived assets ar: “ortain identifi-

Company has not finalized its evaluation of the effect of adoption of the Standard, its evaluation to
Gate indicates that application of the Standard to its current portfolio of assets could result in
Impairment charges ranging trom $5 million to $60 million before federal income taxes ($3 million to
$39 million after federal income taxes). However, such impairment charges would be non-cash.

00900000000235


Ended
‘September 30,
1904 ioe 199s
Operating Osta:
Wethead Yoivmes and Prices
Natural Gas Volumes (MMe! per Gay)
United States{7) a7 466 534 649 613 609 54
Canada 16 ) se 73 " %
Trinidac - - i ny | 8 410
TotaKr) : 455 aat S64 709 749 743 79
Average Natural Gas Prices (SMech
United States... $151 $138 $197 sim $179 sin
teeee 134 142 151 %
r 93 9 a
192 162 169 123
68 80 75 or
22 20 9 24
1 2s 26 468
cs eee | re 23
89 128 120 198
S16.96 $16.08 $15.64
14.63 14.05 13.72
1436 15.50 1520
- 15.70 -
1637 15.62 18.24

wan

“ae

aoe
e

$10.79 $1186 $13.85
- 1248 10.05 946
10.59 1164 10.68 W402

(4) Inctudes $12 milion Denett associated with the successtué rosciution on audit of federal income taxes for certain prioe years

(5) In May 1994. the Board of Directors deciared a two-lor-one split of the Company's Common Stock to be elfected as a non-taxatie
Gviderd of one share for each share Shares issued on June 15, 1994 to of record as of ‘31, 1904.
ty Jt. Outstanding = were a ral, sharehokders: es of May

tn August 1992, thw Company completed the sale of an additional 8.2 million shares Common, Stock resuting in net
TM presse 1 7 Tose Si ngs ee ern Sa apes 8 Capers

term debt and for other general corporate purposes. ad Se oe ae .

Includes 28 MMict in 1982, 81 MMet in 1999 and 48 MMcf in 1994 and in the nine-month enced
1?) Seprombor 90, 190% und 100s dervored unde Sa Sane ote react ett 100 tnd nth iracmonih pwiods onde

2

00900000000224


IN THE NEWS: 1/14/02 Page 18 of 36

argument asserts that personal-service compensation is not income because there is no taxable gain when a
person exchanges labor for money. Don't believe it. If you are paid by check or cash you are supposed to
declare that payment as part of your gross income. If you get property or some other economic benefit for your
services, that counts too.

The Constitution, including the 16th Amendment, does not allow a federal income tax. The 16th Amendment
says, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived,
without apportionment among the several states, and without regard to any census or enumeration.” Numerous
people claim to have done research that proves the 16th Amendment was not properly ratified by the states.
Don't believe the hype.

The IRS and tax forms are invalid. Some contend that Congress did not properly create the IRS. Others argue
that Form 1040 does not comply with laws regarding federal paperwork.

These arguments could land you in Tax Court or result in civil penalties. And if you file what the court
considers a frivolous tax retum, you could be fined $500.

Bogus trusts. Promoters of these schemes offer to teach individuals how to set up certain trusts to avoid
paying income taxes. "One marketing technique these promoters usc is to tell people that the wealthy have been
taking advantage of these types of opportunities for years, and now they are offering it to you,” Hart said. Don't
go for it,

"When we go to court and prosecute, we do not lose,” Hart said. "These are absolutely slam-dunk cases."

If you have questions or think someone is peddling an unscrupulous scheme, report it to the IRS at (800) 829-
0433.

If you are bold enough to refuse to pay taxes as a protest against the federal tax code, be prepared to get slam-
dunked.

However, if you're just looking for ways to reduce your taxes, there are more legitimate and less-risky ways,
such as contributing to a tax-deferred retirement plan, putting money in a 529 college savings plan in which the
camings are now tax-free, or contributing to a charity.

As the 7th U.S. Circuit Court of Appeals noted in United States vs. Sloan, 1991, "Like moths to a flame, some
people find themselves irresistibly drawn to the tax protestor movement's illusory claim that there is no legal
requirement to pay federal income tax. And, like moths, these people sometimes get burned.”

14. Tax Treatment of Points, Mortgage Interest Are Key Issues for Homeowners * The Washington Post
The Washington Post
January 12, 2002, Saturday, Final Edition

SECTION; REAL ESTATE; Pg. H03; HOUSING COUNSEL BENNY L, KASS

LENGTH: 1365 words
HEADLINE: Tax Treatment of Points, Mortgage Interest Are Key Issues for Homeowners

BYLINE: Benny L. Kass

01/17/2002
00800000001188


IN THE NEWS: 1/14/02

led the research. The only expenses that continued to drop significantly in
retirement were taxes und savings; retirees continued spending for the most
part at the same rate as when they were working, the study found.

For example, spending dropped by only $603 a year after retirement for a
one-income family previously making $50,000 a year, in which the worker
is 65 and the spouse is 62. That means the family would need 74% of its
pre-retirement income to maintain the status quo -- up from 69% in 1997,
Dr. Palmer's conclusion: "People are probably not saving nearly enough.”

Heading back to school? A little-known perk called the "lifetime leaming
credit" may pick up part of the tab.

Whether you're honing new skills for the cutthroat job market or dabbling
in a course for pleasure, this tax credit may help offset your expenses.
Created several years ago, it provides as much as $1,000 off your tax bill
for undergraduate or graduate courses taken at any accredited public or
private college, university or vocational school, It doesn't matter whether
you're enrolled full time or part time, or whether you're pursuing a degree.
Even if you're taking only one course at a community college, you may still
be eligible for a partial credit. And there's no limit on the number of years
you can claim it.

There are two big caveats: First, you cannot claim the credit if you're
already deducting the same higher-education expenses on your tax retum
using what's called a Schedule A or Schedule C. “There's no double
benefit,” says Tim Hanns, a spokesman for the Internal Revenue
Service. Second, to qualify, your income can be no more than $50,000,
or $100,000 for couples filing their taxes jointly.

If you're planning ahead, here's something to think about: Through this
year, you can claim 20% of your first $5,000 in expenses for tuition and
other fees, or as much as $1,000. In 2003, that amount doubles to 20% of
your first $10,000 in expenses, or up to $2,000. So, if you're taking
classes for fun, you could save twice as much by waiting until next year,

Compared with the paperwork involved in getting many tax deductions,
claiming the lifetime learning credit is relatively simple: Colleges and
universities mail a receipt, called a Form 1098-T, to those who have paid
qualified tuition and expenses. You're supposed to get it by Jan. 31 of the
following year. Next, you use the information from that form to fill out
another workshect, Form 8863, to figure out the size of your credit.
Finally, you enter that amount on your tax retum (the worksheet tells you
what line to use, depending on the type of return you file), and subtract it
from your taxes, You can get the forms at www.irs.gov.

Scientists have put a price tag on families’ caring for elders with dementia;
$18 billion a year,

Using data from the University of Michigan Health and Retirement Study
for 7,500 people who were 70 or older, the group of researchers, based
for the most part at Michigan, added up the additional caregiving those
people received from family and friends when their minds started to fail.

01/17/2002

Page 22 of 36

00800000001192


Ridgway, Diana

From; Gathers, Shirley

Sent: Friday, January 11, 2002 8:22 AM

To: Aufhauser, David; Kupfer, Jeffrey; Curry, Paul; Bair, Sheila; Fisher, Peter; Smith, Chris; Mejia,
Annabella; Matera, Cheryt; Glasgow, Launa; Johnson, Linda, Davis, Michele

Cc: Strickler, Marie; Pringle, Veronica; Vannoy, Elizabeth; Hunt, Betty Ann; Ridgway, Diana; Hart,
Anna; Woodard, Genevieve

‘Subject: Briefing

Please plan on attending a briefing w/David Aufhauser and Tim Adams re: Enron as follows:
Date: Friday, Jan. 11

Time: 10:30am - 10:45am

Location: Room 3408

Thanks

01200000001604


I know trom my travels around the state that peuple in the pilot program have enjoyed
the lower rates and want full competition and customer choice. Contrary to the scare tactics that
have been used by some utilities. the lights have stayed on for every single customer In fact. now
one customer has expericnced any degradation in reliabitity or service quality. Asa result of the
pilot, we're gaining firsthand experience as we develop policies for full statewide
implementation

In 1996, the New Hampshire legislature passed watershed state restructuring bill that
| helped craft. Under that legislation full competition and customer choice was scheduled to
begin in the first six months of 1998, Our Public Utilities Commission was given wide latitude to
craft a statewide restructuring plan for open competition, Afler a lengthy hearings process, our
state Public Utilities Commission issued its restructuring plaa this past February 28th.

The very next business day, our state's largest utelity, Public Service Company of New
Hampshire. and its parent company, the Connecti *ut-bised Northeast Utilities. rat straight to the
federal courthouse to block competition from going forward. The fate of New Hampshire's state
plan for competition in the electric industry is now in the hands of a federal district court judge
in Rhode Istand, who has stopped our state plan from going forward by granting a temporary
restraining order, which is still in place today.

These utilities are relying in significant part on federal laws to stop our state plan from
going forward Indeed. the first count in their federal complaint is entitled: “Federal Preemption
of Jurisdiction Over Retail Wheeling.” Their secot d count is entitled: “Federal Preemption of the
Authority to Order PSNH Vo File a Tariff with FERC.” Their third count is entitled: “Federal
Preemption of State Regulation Inconsistent with FERC-approved Rates,” And their fourth count
ts entitled: “Preemption by the Public Utilities Regulatory Policwes Act of 1978."

Now, Pint no lawyer, but Lam the governor of one of our fifty sovereign states. and
something is wrong when a powerful utility from another state can use federal laws ina federal
court to stop my state tron implementing competition. The will of an entire state ~ of the
legislature, of the yovemor, of the state public utilities commission. of the people -- has been
thwarted on this issue ny a federal court.

So. 1 think there ts a role for Congress to play in opeaing up competition in the clectric
industry - Congress can Iree my State of New Hampshire and the other states from federal laws

that can be used by uncooperative utilities to block competion

~ 00100000000082 —


From: Noman Carleton

To: SHELTONA, Dom13.00P07, HUFFMANL, MCGIVERNT

Date: 6/15/99 4:52pm

Subject: More on Bankruptcy - Enron

| forgot to mention that Enron has been lobbying for expansion of the netting provisions with the help of the
Cadwallader taw firm. {(b)(5)]

ce: NICKOLOFFP

01758

01200000000414


From: Norman Carleton

To: GENSLERG, Sachs.

Date: 6/18/99 4:52pm

Subject: Conference Call with Enron and Cadwalader -- Netting Legistaton

This moming, Selmer John Yetter, and | participated in a conference call with Enron and the Cadwalader law
firm conceming their contract netting proposals. Also participating in the call were staff from the Federal
Reserve Board, PRON, rEDIG. ond CHIC

{((b)(5))

if you want a more detailed explanation, please let us know,
ce: MCGIVERNT, YETTERJ, NICKOLOFFP, DOPOS.ToohoyF, SHE...

01762

01200000000418


Tishuk, Brian

From: Carleton, Norman
Sent: Wednesday, December 19, 2001 3:43 PM
To: Wiedman, Mark: Bair, Sheila; Bieger, Peter, Bitsberger, Timothy; DeMarco, Edward; Dorsey,

Karen; Elfett, Martha; Ells, Dina; Gabélondo, Jose; Gross, Jared; Huffman, Lucy; Hughes,
Gerry; McGivem, Tom; Mcinemey, Roberta; Nickoloff, Peter; Roseboro, Brian; Saliadin,
Anne; Schulthess, Heidilynne; Smith, Amy; Sutton, Gary; Tishuk, Brian

Subject: Converation with Frank Hampton and AB! Website: House Leaders Continue to Push
Netting Provisions

According to Frank Hampton of TBMA, Dick Armey is also pushing the netting legislation. However,
Sensenbrenner hopes to acheive a compromise on the larger bankruptcy legislation by February and is opposed
to passing the netting legislation separately. In the Senate, Grassley is also opposed to a separate netting bill and
is reportedly avoiding a meeting with Greenspan to discuss this.

Norman Carleton

ABI Website news

December 19, 2001

House Leaders Continue to Push Netting Provisions

House leaders are trying to nudge forward legislation that seeks to prevent systemic financial crises by allowing
creditors to “net out” their derivatives losses with major counter parties that have filed for bankruptcy, The
American Banker reported. It is still unclear, however, whether even they will be successful in overcoming the
political obstacles that have stalled it for more than a year - especially considering that Congress is expected to
adjourn for the year as early as this week. Majority Whip Tom DeLay (R-Texas) “believes that it’s important to
get the netting provisions done, either within the context of bankruptcy reform or elsewhere,” a spokesman said

Such highly technical bills rarely attract the attention of top House or Senate leaders, but the recent collapse of
Enron Inc. has given the netting legislation newfound relevance, Federal Reserve Board Chairman Alan
Greenspan and Treasury Secretary Paul O'Neill say markets are at risk until a law is enacted that allows
contracts to be quickly and easily netted out without the approval of slow-moving bankruptcy courts. Holding it
up, however, is House Judiciary Committee Chairman James Sensenbrenner (R-Wis.), who heads the House-
Senate bankruptcy legislation conference committee. The netting legislation is a part of the bankruptcy reform
legislation. Sensenbrenner and some Senate Judiciary Committee members, including bill sponsor Charles
Grassley (R-lowa), oppose passing the netting authority separately because they still hope that the relatively
uncontroversial provisions will propel the bankruptcy package

Though industry sources said they have received commitments from House leaders that netting will be enacted
by year-end or soon thereafter, they are not expected to force a vote without the support of Sensenbrenner.
Even after a meeting last week with Greenspan, Sensenbrenner maintained that he was “going to try to keep it in
the bankruptcy package,” his spokesman said_

01200000001037


IN THE NEWS: 1/14/02 Page 13 of 36

attorney's fees. The court granted injunctive relief requiring H&R Block to stop advertising loan products as
refunds and requiring it not to refer to a loan product as an “advance,” “refund amount,” or a check in the
“amount of your refund,” and not to use its "rapid refund" mark with loan products.

H&R Block sought clarification; the court clarified that Block was only restricted in the use of its Rapid
Refund mark in advertising. JTH Tax Inc., et al. v. H&R Block Eastern Tax Services Inc., et al., No. 2:00cv51
(E.D. Va. Feb, 23, 2001) (For a summary, see Tax Notes, Mar. 12, 2001, p. 1493; for the full text, see Doc
2001-6123 (49 original pages), 2001 TNT 42-13, or H&D, Mar. 2, 2001, p. 2859.)

The Fourth Circuit dismissed Block's challenge to the finding that it acted with malice. Following the district
court's reasoning, the court held that in view of Block's history of representing in consent decrees that it would
refrain from advertising RAL products in a misleading manner; the public nature of the provisions in
Publication 1345, requiring Block to do the same; the identical character of the RAL and NACRAL products;
and the nature of the advertising campaign, the court had little trouble finding that Block acted maliciously,
deliberately, and in bad faith. Thus, the circuit affirmed the district court's conclusion on the issue. The court
also dismissed Block's challenges to the district court's finding of materiality -- that the advertisements at issue
‘were material in that they were likely to influence purchasing decisions. The court concluded that the expert
offered probative evidence that supported the conclusion that Block misrepresented the NACRALs, and that the
misrepresentation was material to the consumers’ purchasing decisions.

‘The court vacated and remanded the loss profits award, for recalculation in accordance with the Lanham Act.
The court concluded that the district court didn't consider any evidence of Block's costs, and it also failed to
reduce the future profits to present value. Thus, the court concluded that the district court abused discretion in
awarding the profits. The court affirmed the award of attorncy’s fees and costs. Finally, the court agreed that
the injunctive relief was overbroad in enjoining the use of Block's Rapid Refund mark, and it reversed that
portion of the court's order. The court concluded that the injunctive relief prohibiting Block from advertising in
violation of Publication 1345 and from using certain phrases was sufficient and that the prohibition of the rapid
refund mark was overbroad. .

10. E-filing tax returns gets more costly * Star-Telegram

Star-Telegram
Fort Worth, Texas

January 10, 2002

E-filing tax returns gets more costly
Todd Mason - COMMENTARY

Players in the electronic filling business are cutting back on incentives this year, figuring that speed and
convenience will sell the service. Here's a sure sign that electronic tax filing is hitting stride. E-file players are
raising prices and scaling back promotional freebies, counting on the service's speed and convenience to sell
itself.

Some professional preparers are roping the anthrax scare into their sales pitches by claiming - inaccurately - that
safety precautions by the IRS will slow paper retums to a crawl.

Not true, says IRS spokesman Phil Beasley, who says that the Austin processing facility is ready to rip
envelopes,

"You don't e-file because of anthrax," said Beasley, who fields questions at the IRS regional office in Dallas.
"You e-file because it's fast, accurate and easy."

01/17/2002

00800000001182


IN THE NEWS: 1/15/02 Page 10 of 36

++ Black-Outs. A black-out or lockdown occurs when a plan is shut down for a period of time to allow, for
example, change to another plan administrator. Enron had such a black-out, although the length of time is
disputed, Grassley said. The senator said he wants to get the facts on this because it may coincide with the
decline in the company’s stock value.

-- Mandated Diversification of Stocks in Retirement Plans. Some legislation has been introduced to mandate
that employees hold no more than a certain percentage of stock in their 401(k) plan. Diversification in one part
of the plan should indicate that all investments should be mandated, Grassley said. He added that he has an open
mind, but thinks mandates are not desirable nor particularly feasible.

Grassley said he is pursuing these ideas with experts from outside groups and agencies such as the Treasury
Department, the Labor Department, and the Pension Benefit Guaranty Corporation.

"The tax code smiles on retirement plans, for good reason," Grassley said. "Tax breaks encourage employers
to set up retirement plans and employees to take part in those plans. If employers find it easy to break the rules,
then Congress has to rewrite the rule book. Otherwise, employees counting on a secure retirement might be left
out in cold.”

In addition to the retirement plan track, Grassley said he is part of an effort to look into whether Enron used
certain tax vehicles that might have masked the company’s financial condition.

Text of Grassley's news release is in BNA TaxCore.
6. U.S. Loses Trade Case to Europeans on Offshore Tax Havens * The New York Times

The New York Times
January 15, 2002, Tuesday, Late Edition - Final

SECTION: Section C; Page 1; Column 2; Business/Financial Desk

LENGTH: 690 words

HEADLINE: U.S. Loses Trade Case to Europeans on Offshore Tax Havens

BYLINE: By DAVID E. ROSENBAUM with ELIZABETH OLSON

DATELINE: WASHINGTON, Jan. 14

BODY:

The United States lost its final appeal today in a dispute with Europe over tax policies. The ruling is
considered all but certain to renew trans-Atlantic trade tensions and could cost American companies billions of
dollars in higher taxes.

Affirming earlier rulings, an appeals panel of the World Trade Organization, the Geneva-based group that
regulates trade, held that the offshore tax havens allowed by United States tax law amounted to an illegal trade
subsidy and must be scrapped. The dispute between the United States and the European Union over tax havens
has been going on for years, but negotiations were suspended while the case was before the appeals board.

Robert B. Zoellick, the United States trade representative, said that today’s ruling was not unexpected but that
he was "disappointed by the outcome.”

01/17/2002
00800000001143


DeMarco, Edward

Cee ee

From: Bair, Sheila

Sent: Wednesday, January 16, 2002 2:41 PM

To: Davis, Michele; Weinberger, Mark; Sweetnam, Bill Jr, DeMarco, Edward: Holahan, Betsy
Subject: FW: Retirement Security insert for PON’s Savings Bond speech

Importance: High

| made a few edits to reflect more balance in our policy approach and to reflect where | understand the Secretary s coming
from. | hope we got this to you in time to be usable.

Sheila

(Edits are contained in the forwarded document below.)
Original Message--~

From: DeMarco, Edward

Sent: Wednesday, January 16, 2002 1:20 PM

To: Davis, Michele

Ce: Bair, Shela; Holahan, Betsy; Sweetnam, Bi Jr; McCall, Neal

Subject: Retirement Security insert for POIN's Savings Bond speech
Importance: High

Michelle,

Attached is a draft insert on retirement security for the Secretary's savings bond speech, Sheila Bair asked us to draft the
insert but Sheila has not had the opportunity to review the text because of the extremely short turn-around time,

J understand from Shela that you will be working this text into the larger speech. Sheila and Bill Sweetnam may have
comments they want to send fo you this afternoon, recognizing that the Secretary is giving the speech tomorrow,

Please let mo know if | can provide any additional information or explanation.
Ed DeMarco (2-2792)

©)

PON Sevnge Dons
oe

01200000001198


ant Tharediy,Fervary 15,2001 1248 PM
‘o:
Subject: RE: Per Borkraaies Reform Mart-up Hearing
{(b)(5)]
~—Onginal Message--—-
fom DeMarco, Edward
Sent: Thursday, February 15, 2001 12:38 PM
To: Green, Matthew
Subject: FW: Bankruptcy Reform Mark-up Hearing
{(b)(5)]
From: Carieton, Norman
Sent: nemo fe 2001 10:07 AM
To: Hammond, Donald; DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
Tis aay, Reinga Fe, Sutton, Gary; Huffman, Lucy; MeGivern, Tom; Nickoloff, Peter; Schulthelss,
RE: Barknecy Refer Marup Hearing
Bon,
{(b)(5)}

01200000001047


RE: IN THE NEWS: 1/15/02 Page 7 of 37

"But I've made up

my mind. The tax relief plan we passed, which you're now beginning to feel the effects of, is going to
be permanent.”

In fact, the entire tax cut package is scheduled to expire in 10 years, although many analysts predict that
‘a future Congress and president will extend its main components.

Bush's reference to a coming debate was a shot at Kennedy, who plans to give a speech Wednesday at
the National Press Club in which he will call for postponing tax cuts scheduled to take effect in 2004 and
beyond. A congressional source said today that Kennedy will argue those parts of the tax cut package
“overwhelmingly benefit the wealthy.”

Kennedy estimates that his proposal would save the government $ 350 billion over the 10-year period.
The senator will propose that the savings go to increased funding for education, a prescription drug
benefit for Medicare and protection of Social Security.

Bush, however, told farmers at a feed mill here that a crucial way to stimulate growth during a recession
is to let people keep more of their own money. “That's Economics 101 -- except, it sounds like some of
them hadn't taken the course in Washington,” he said.

Still, Bush lavished praise on Kennedy, crediting him with helping win passage of the education bill
signed last week. "Never did I dream that I would say good things about him," Bush said today, drawing
laughter, "Never did he dream that T would say good things about him."

Bush, expressing concern for workers who have lost their jobs or fear they will, announced a five-point
plan that highlights the economic aspect of all his other domestic priorities: homeland security, education,

trade, energy and an economic stimulus package that includes a speeding up of tax cuts scheduled to take
effect over the next decade.

Alluding to the war on terrorism, he said: “At this moment in history, the best thing I can do, along with
my administration, in order to build the confidence of the American people, is to prevent the evil ones
from hitting us again,”

At the earlier stop in Illinois, Bush said there is “no question the attacks on America on 9-11 have
affected our confidence.”

“But the more the American citizen realizes that our federal government, in combination with state
government and local authorities, are working day in and day out to prevent any other kind of attack,
confidence will return,” he said,

The president turned his eye unabashedly toward 2004 as he opened a two-day trip, meeting with lowa
political leaders and stopping in several swing states. Bush's appearances now feature campaign-style
banners saying "Working for America.”

The trip was designed partly to reassure farmers who were dismayed by the administration's decision
last year to stick with its free enterprise principles and oppose a farm bill that would have continued hefty
subsidies, Bush said he will support a bill that is "generous and affordable.”

Bush found a way to make his call for open markets palatable here in the Farm Belt. Referring to the
Russian president, he said, "We've got to get my friend [Vladimir] Putin to be buying John Deere
products.”

01/17/2002

00800000001103


Strickler, Marie

From:

Sent:

To:

Subject:

[OUTSIDE SCOPE]
11:14 861-4032
[OUTSIDE SCOPE]

12:20 434-0980
12:43 201-346-5825

12:55 628-9029

[OUTSIDE SCOPE]

Strickler, Marie

Tuesday, January 15, 2002 1:17 PM
Davis, Michele

#2 - Phone Calls

Jeff Birnbaum, Fortune Mag, REF: ENRON

Pete Spiegel, FT - Please call re Enron

Andrew Conti, CNBC - would like to request interview w/Secretary on Enron

Darren Gersh - would like interview w/the Secretary today or tomorrow or when

convenient on Enron

00800000000539


Tishuk, Brian

From: Hart, Susan
Sent: Monday, January 14, 2002 5:33 PM
To: Tishuk, Brian
Subject: Draft 10/25
1-18-02 WHT 600

Ive added in something on Bennett - but | also mentioned the House bill because | don't know where
we are on the issue. You need to edit what I've done. | also added in something on EU privacy. And | will tomorrow add
in info from Ed on the retirement policy (Enron fallout) task force.

01200000001033


Instruments issued pursuant to a registration statement under the 1933 Act first becoming effective
December 7, 1995, which were priced on December 7, 1995 and which were actively marketed prior
thereto pursuant to a preliminary prospectus dated November 14, 1995 will not be subject to these

Proposals.

00900000000175


IN THE NEWS: 1/15/02 Page 5 of 36

"We have very lean inventories -- that is usually the key to the beginning of an economic expansion -- but ...
what is needed is that we have an insurance policy,” Lindsey said on CNN's Novak, Hunt & Shields. "And the
insurance policy, quite frankly, is what the president suggested pass, the one that passed the House twice, that
was stalled in the Senate, because we shouldn't take any chances here. This is the opportunity for the economy
to be revived. The preconditions are there, Let's not have another year of slow growth,”

Lindsey, who accompanied Bush on his trip to Illinois and Missouri, downplayed a recent analysis of the
House-passed stimulus by the Congressional Budget Office that said key provisions such as ending the
corporate alternative minimum tax would have only a small impact at best on the economy (5 DTR G-2,
1/8/02). Lindsey said he does not believe any changes in the stimulus package should be undertaken.

"Almost every private-sector forecast ... [has] estimated what the president proposed as being exactly what the
economy needs, as was the first tax cut,” Lindsey said. "It is retail sales that have held this economy together,
Retail sales, I think, were the result of the tax cut that the president proposed, What we're proposing now to do
is to extend that into the investment side, because it is investment that is lagging right now."

Lindsey said “there's nothing in particular” wrong with Daschle's alternate proposals for stimulating the
economy, which include tax breaks for businesses that expand and add workers. However, he said "one-shot"
remedics usually are not effective.

“The first thing we know is that one-time, short deals don't work,” Lindsey said in addressing Daschle's plan.
"You need long-term incentives. And what we're proposing is bringing those rates down as part of a long-term
incentive. A three-year incentiye to invest -- that's 2 long-term incentive. Back in the '70s we tried a lot of these
one-shot, one-year deals, The economic evidence is clear. They don't work.”

Lindsey also suggested that the extra spending that Daschle is proposing for homeland security, health and
science research, and more will not be as carefully targeted as the extra spending the president will propose for
many of the same categories in his budget.

Lindsey said OMB has subjected the spending proposals for homeland security and other areas to a cost-
benefit test. And even if the extra spending in the FY 2003 budget will contribute to the deficit, he said the
longer term budget outlook should be good.

“We're spending money cost-effectively,” Lindsey said. "We are going to be returning to budget surplus in the
not-too-distant future.”

3. Bush Pledges to Restore Confidence in Economy; President Says Success Tied to War on Terror * The
Washington Post

The Washington Post

January 15, 2002, Tuesday, Final Edition
SECTION: A SECTION; Pg. A04
LENGTH: 688 words

HEADLINE: Bush Pledges to Restore Confidence in Economy; President Says Success Tied to War on
Terror

BYLINE: Mike Allen, Washington Post Staff Writer

01/17/2002

00800000001138


3/9/2000 draft letter to bankruptcy conferees

{(b)(5))

01768

01200000000424


From: Ed Barber

To: Dom13.DOPO8(BEASLEYM, BudingtonM, CROWEB, GREWEM, .
Date: 2/29/00 7:49pm

Subject: An NWT dispute in Nigena -Reply -Reply -Reply -Reply

[(b)(5)]

>>> Geoffrey Gottlieb 02/29/00 08:23pm >>>

{(b)(5)]

Goott

>>> Maureen Grewe 02/28/00 06:05pm >>>
Elizabeth and Helen — can you get us your views on this?

{(b)(5)]

>>> Mary Beasley 02/2200 04:20pm >>>
‘You need to speak to Eliz Stewart on this. She is our procurement expert.

>>> Geotrey Gottlieb 02/29/00 03:13pm >>>
[(b)(5)]

Thanks.
Geoff
co: Dom13.DOPO8(StewartEK), ex.mailCeweisman@|MF org”...

0500000000887


income Taxes

Income tax provision increased $13 million for first nine months of 1995 as compared to the
Same Period in 1994 primarity resulting from higher income before income taxes and lower benefits
associated with tight gas sand federal income tax credits utilized in the first nine months of 1995 as
Compared to the same period in 1994 partially offset by a $12 million benefit associated with the
Successtul resolution on audit of federal income taxes for certain prior years.

Income tax provision in 1994 includes a benefit of pproximately $36 million associated with
tight gas sand federal income tax credit utilization, a benefit of approximately $8 million related to
reduced estimated state income taxes and a portion of certain franchise taxes which is treated as
income tax under SFAS No, 109, and a $5 million benefit from the reduction of the Company's
Geterred federal income tax liability resulting from a reevaluation of deferred tax requiraments.

ingome tax benefit in 1993 includes a benefit of approximately $65 million associated with tight
gas sand federal income tax credit utilization, an approximate $7 million predominantly one-time
non-cash charge recorded in the third quarter of 1993 primarily to adjust the Company's accumu-
lated deferred federal income tax liability for the increase in the corporate federal income tax rate
from 34% to 35% and 8 $12 million benefit trom the reduction of the Company's deferred federal
income tax liability resulting from a reevaluation of deferred tax requirements.

Capital Resources and Liquidity

Cash Fiow

The primary sources of cash for the Company during the nine-month period ended
September 30, 1995 and for each of the years in the three-year period ended December 31, 1994
included funds generated from operations, the sale of Common Stock, the sale of a volumetric
Production payment, proceeds from the sale of selected oil and gas reserves and related assets and
the issuance of debt. Primary cash outflows during these periods included funds used In operations,
exploration and development expenditures, dividends and the repayment of debt.

Discretionary cash flow, a frequently used measure of performance for exploration and produc-
ton companies, Is generally derived by adjusting net income to eliminate the etfects of depreciation,

except for amortization of deferred revenue, and exploration and dry hole expenses. However,
based on the continuing practice of the Company of selling selected oll and gas reserves and related
assets in furtherance of its strategy of fully utilizing its assets in optimizing profitability, cash flow
conelgered oo avaletle ee csteves that net proceeds from these transactions should also be
considered as available discretionary cash ‘and accordingly is presenting those vaiues for all
Periods shown. The Company generated discretionary cash flow of $387 million during the first nine
months of 1995, a 3% decrease from the $401 million generated for the same period in 1994,
Primarily reflecting lower net operating revenues, higher cash expenses and a decrease in benefits
Sssociated with tight gas sand federal income tax credits. The Company generated discretionary
cash flow of approximately $514 million in 1994, $521 million in 1993 and $346 million in 1992. The
1993 amount includes $50 million associated with a federal income tax refund resulting from the
Settlement on audit of federal income taxes paid in certain prior years.

Net operating cash flows for the first nine months of 1995 and for each of the years in the three-
year period ended December 31, 1994 have been revised to refiect proceeds from the sale of a
volumetric ‘production payment during 1992 and the elimination of the related amortization of
Geferred revenues as net operating cash flows rather than as investing cash flows as previously
reported. Net operating cash flows of $229 million for the first nine months of 1995 decreased
approximately $72 million as compared to the same period in 1994 primarily reflecting the same
factors addressed above with regard to discretionary cash flow and higher working capital require-
ments. Net operating cash flows were approximately $383 million in 1994, $406 million in 1993, and

27

00900000000230


RELATIONSHIP BETWEEN THE COMPANY AND ENRON CORP.
Ownership of Common Stock

Through its ability to elect all of the directors of the Company, Enron Corp. has the ability to
Control all matters relating to the management of the Company. including any determination with
F@SPEct to acquisition oF disposition of Company assets, future issuance of Common Stock or other
Securities of the Company and any dividends payable on the Common Stock. Enron Corp. also has
the ability to control the Company's exploration, development, acquisition and operating expendi-
ture plans. There is no agreement between Enron Corp. and the Company that would prevent Enron
Corp. from acquiring additional shares of Common Stock of the Company.

The sale by Enron Corp. of the shares of Common Stock of the Company will cause Enron
Corp.'s ownership interest in the Company to fall below 80% with the result that (i) the Company will
cease t6"be included in the consolidated federal income tax return filed by Enron Corp. and (ii) the
Tax Allocation Agreement between the Company and Enron Corp. described below will cease to be
effective from the time at which deconsolidation occurs for future periods, but will remain in effect
with regard to periods prior to deconsolidation. The Company has entered into a supplemental
agreement with Enron Corp. clarifying future potential adjustments associated with the final settie-
ment on audit of taxes for periods prior to the deconsolidation for issues not addressed in the
Original agreement. The Company does not believe that the cessation of consolidated tax reporting
with Enron Corp. and effectiveness of the Tax Allocation Agreement concurrent with deconsolide-
tion will have @ material adverse effect on Its financial condition or results of operations.

Contractual Arrangements

The Company entered into a Services Agreement (the "Services Agreement’) with Enron Corp.
effective January 1994, pursuant to which Enron Corp. provides various services, such as mainte-

agreed to @ fixed rate for the rental of office space and to reimburse Enron Corp. for all other direct
Costs incurred in rendering services to the Company under the contract and to pay Enron Corp. for
allocated indirect costs incurred in rendering such services up to a maximum of $6.7 million for
1994, such cap to be increased in subsequent years for inflation and certain changes in the
Company's allocation bases with any increase not to exceed 7.5% per year. Approximately $6.6 mil-
lion was paid under the Services Agreement by the Company to Enron Corp. in 1994. The Services
Agreement is for an initial term of five years through December 1998 and will continue thereafter
until terminated by either party.

transactions, the Company has been relieved of all obligations associated with the
Cogen Contracts. The will realize net operating revenues and receive
Payments of approximately $91 million during the period December 31, 1999

approximately $81 million at the date the Swap Agreements were received. The net of this series of
transactions will result in increases in net operating revenues and cash receipts for the Company

during 1995 and 1996 of approximately $13 million and $7 million, respectively, with offsetting
decreases in 1998 and 1999 versus that anticipated under the Cogen Contracts.

3

00900000000238 —


From: Geoffrey Gottied

To: EICHENBERGERJ, StewartEK
Date: 31/00 7:46pm
Subject: Enron and Ass.Sec of Energy Trip

ACTION: On a conference call Friday nightm the Assistant Secretary of
next week as a follow-up to Sec. Richardson's trip two weeks ago. [(b)(5)]

We need to provide guidance to his office no later than 1:00pm Monday.

((b)(5)]

Please call me if you have further questions.
ce; Radelets, budingtorm

notified us that he will be visiting Nigeria

00500000000871


IN THE NEWS: 1/15/02 Page 9 of 36

++ Michael Schroeder contributed to this article.
5. Pensions: GRASSLEY EXPLORING PROTECTIONS FOR RETIREMENT PLAN
PARTICIPANTS * BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report

January 15, 2002, Tuesday
10 DTR G-2 (2002)
LENGTH: 600 words
SECTION: TAX, BUDGET & ACCOUNTING

TITLE: Pensions: GRASSLEY EXPLORING PROTECTIONS FOR RETIREMENT PLAN
PARTICIPANTS

TEXT:

Sen. Charles Grassley (R-Iowa), ranking member of the Finance Committee, said Jan. 14 he is pursuing
whether Congress should tighten up protections for retirement plan participants in light of Enron Corp.'s
collapse, "

Millions of taxpayers have hundreds of billions of dollars invested in employer-sponsored retirement plans
that receive favored treatment under the federal tax code, Grassley noted in a news release.

The Committee on Finance has the primary responsibility, under its jurisdiction, for making sure retirement
plans comply with the tax code and other laws,” he said. "Our committee also has the responsibility to fix any
weaknesses that might leave retirement plan participants in trouble if their employer goes under.”

While all the details of the Enron retirement plans are not yet known, Grassley said, some areas already are
emerging as targets for scrutiny.

Five Areas Targeted.
Specific areas Grassley is looking into are:

-- Company Stock. Under current rules, a company can restrict a retirement plan participant from selling the
match received in company stock through an employee stock ownership plan. Enron employees’ company stock
matches were restricted, Grassley noted. The senator said he is researching whether employees should be able to
change this investment choice prior to an arbitrary age.

-- Mandated Purchases of Company Stock. Current law allows a plan sponsor to compel employees to
purchase up to 10 percent of employer stock as a condition of participating in a 401(k) plan. Grassley said he
thinks this rule should be climinated,

-- Fiduciary Rules. These rules ensure that companies properly invest and handle retirement plan moncy,
including spending the money for the exclusive benefit of their employees. Grassley said he wants to learn
whether Enron officials violated their fiduciary duties and, in gencral, whether Congress should change the
existing rules.

01/17/2002

00800000001 142


IN THE NEWS: 1/14/02 Page 29 of 36

Melvin C. Bell, a Flint man who had since moved to Ypsilanti, pleaded guilty in 1999 to a count of preparing
false income tax retums.

Federal officials said Bell helped friends and family fill out three tax retums and did not have a tax-preparation
business.

Taxpayers who file false retums can be ordered to pay back taxes and penalties, the IRS said.

"It looks nice up front, but somewhere down the line you've got to pay your fair share,” Moore said. "The
bottom line is that when a taxpayer signs a retum, they are ultimately responsible for that return.”

Moore said people should avoid preparers who claim they get a larger refund than other preparers, as well as
those who base their fee on a percentage of the refund.

20. IRS warns you to know your tax preparer * Abcl2.com

Abcel2.com

January 10, 2001

IRS warns you to know your tax preparer
A Flint businessman has beef! arraigned in federal court on 31 counts of tax fraud. Amos Lampley is
accused of preparing false income tax returns for several clients

By Randy Conat <http://abclocal. go.com/wjrt/aboutus/052301_BO_conat.html>
Flint -

ABC12's Randy Conat reports the IRS is tuming up the heat on dishonest tax preparers. IRS special agent
Stephen Moore told ABC12 News, "Even though somebody else prepares your taxes, you are ultimately
responsible for the return and the accuracy.”

That's the word from the IRS, which has stepped up its prosecution of less-than-honest tax preparers. "You
probably don’t want to go to someone who offers you a larger refund or bases his fee on a percentage of what he
gets back for you," Moore added.

Rob Selley, a Grand Blanc Township CPA, says word is getting out on crackdown, "They've hired more people
There will be more audits in the future. And also, remember technology has cnabled the IRS to keep track of a
lot of income and expenses through electronic means that they've never been able to do before.

58-year-old Amos Lampley of Quadruple-A Income Tax Service in Flint allegedly inflated job expenses and
gifts to charities on behalf of his clients in 1996 and 97. Preparing a false federal tax retum is a three-year
felony. Fines can be as high as 250-thousand dollars per case.

Plus...Moore warns, "The tax payer is stuck paying the additional taxes, in some cases paying penalties and
criminal investigation.”

So you'd be better off finding an honest tax preparer in the first place. "You can ask your friends, family
members who they use. Are they happy with them,” Rob Selley suggests.

Special Agent Moore says several other tax preparers in the Flint area are under investigation. The IRS has set
up a hotline to report suspicious tax preparers. Call 800-829-0433, Or follow the link to the IRS website on the
upper right side of this page.

01/17/2002
00800000001199


DeMarco, Edward

From: Carleton, Norman:
Sent: Saturday, September 08, 2001 1:10 PM
To: Bair, Sheila; DeMarco, Edward; Eichner, Matthew, Elfett, Martha; Fisher, Pater; Gabilondo,

Jose; Gross, Jared; Hammer, Viva; Hughes, Gerry; Nickolof, Peter; Novey, Michael,
Roseboro, Brian; Schultheiss, Heidi#ynne; Smith, Amy; Sutton, Gary
Subject: Discussion with Ken Raisler about Enron Product

On Friday, September 7, I discussed the retail energy swap issue with Ken Raisler. He is a partner at
Sullivan & Cromwell who represents Enron. In the mid 1980s, he was the general counsel of the CFTC.

1 asked Ken if Enron opposed state regulation of retail energy derivatives if the CFTC were to grant an
exemption for this product. The first answer to this question was yes, but that answer was modified as we
further discussed the issue,

Lasked Ken if he thought that there was a preemption argument that could be made because of CFTC
exclusive jurisdiction. He said he thought there was. He said Enron would not make such a legal argument
because it is regulated in some states as a utility company, but that others might make such an argument.

I told Ken that the Treasury had not come to a conclusion about the retail energy swap issue but that we
were unlikely to support a result that would mean no federal regulation and would not allow state governments
to regulate this product if they chose to do so, He asked me what regulatory issues might be of concern. 1
answered that such issues as advertising, pricing, and assurances that the company offering the product had the
financial ability to meet its obligations might be subjects that governments would be concerned about. Ken said
he thought that this was a reasonable position.

lasked Ken whether he thought that the CFTC could exempt retail energy swaps from the exclusive
jurisdiction provision of the CEA, thus precluding any arguments about state jurisdiction. He said be thought
that might be possible.

At the end of the conversation, Ken indicated he would talk to his client about the issues I had raised.

[(b)(5)}

01200000001229


IN THE NEWS: 1/14/02 Page 32 of 36

Bos faces up to 10 years in prison and a $250,000 fine when he is sentenced
Jan. 28 in Los Angeles.

Bos’ defense lawyer, Edward Robinson, said his client made the solicitation
at a time "when he was going through a dreadful emotional crisis." He declined
to elaborate.

Bos remains free on $50,000 bond,
23. WOMAN'S TESTIMONY EARNS HER PROBATION * Pittsburgh Post-Gazette

Pittsburgh Post-Gazette

January 12, 2002

WOMAN'S TESTIMONY EARNS HER PROBATION
BYLINE: TORSTEN OVE, POST-GAZETTE STAFF WRITER

She laundered $3.3 million in stolen moncy from automated teller machines
between 1996 and 1998 in one of the largest ATM frauds in the United States.

But Janette Frattaroli-Reilly also helped criminal investigators from the
Internal Revenue Service put away ringleader Barry Chesla of Ligonier, the
former head of an armored car company who stole millions from banks,

Chesla is in prison.

And because of her willingness to turn over records and testify against him,
Frattaroli-Reilly, 53, of Sicklerville, N.J., walked out of federal court
yesterday with a sentence of five years’ probation instead of prison.

Federal prosecutors had asked U.S. District Court Judge Robert Cindrich for
leniency because of the extensive cooperation, and federal public defender Penn Hackney
requested probation so she could continue working.

"She was the one who moved all that money, but she did it at the direction
of Mr. Chesla,” said Hackney. "She was an automaton.”

Cindrich agreed, saying she was a functionary and not an instigator in the
scheme. In addition to the probation, he sentenced her to six months of home
detention and ordered her to pay the remaining balance of a $52,000 civil
forfeiture debt she owes to the government.

Chesla, former principal stockholder in Tri-State Armored Services of
Hammonton, N.J., pleaded guilty in September to tax evasion and money
laundering.

Operating out of a branch office in Ligonier, he and his co-conspirators are
believed to have stolen at least $20 million.

Frattaroli-Reilly pleaded guilty in May to laundering his money through two
storefront shops in New Jersey, one of them a bridal store she owned.

01/17/2002
00800000001202


IN THE NEWS: 1/14/02 Page 36 of 36

sponsoring a Senate version of the bill.

"Family members of federally employed reservists are already starting to feel the pinch of service as their
loved ones have left,” Mikulski said, "These families are forced to sit and wait at home, with no guarantee when
their loved ones will return and little means to pay for their college funds, mortgages and car loans. | fail to see
why these dedicated Americans should be forced to leave their families financially vulnerable at a time when
they have so many other things to worry about."

Congress last year left it to the Transportation Department to determine the pay, benefits and job rights of
newly hired airport security screeners. Federal unions, naturally, are urging the department -- which should be
announcing a decision soon -- to extend collective bargaining rights and civil service benefits to this new class
of federal workers, In a letter to Transportation Secretary Norman Y. Mineta last week, Colleen M. Kelley, the
president of the National Treasury Employees Union, urged him to give screeners the same basic benefits and
rights provided to the civil service.

"The American public is well aware of the dangers of hiring airport security personnel on the cheap,” Kelley
wrote, adding that "It is in the sound interest of the government and the flying public that these workers have
the same rights to health and life insurance, retirement benefits, whistleblower protection, equal employment
opportunity, representational rights and job promotion as any other civil servant.”

In a late Friday announcement, President Bush said he intends to appoint Becky Norton Dunlop, of Arlington,
chairman of the Federal Service Impasse Panel.
"

Bush roiled federal unions last week when he dismissed the panel's seven members without indicating his
plans for replacing them. All seven were Clinton administration appointees.

Dunlop, who served in the Reagan administration, is a vice president at the Heritage Foundation, a
conservative think tank.

Bush's announcement also said he is naming Richard B, Ainsworth, of Cleveland, Andrea Fischer Newman,
of Ann Arbor, Mich., and Joseph C. Whitaker, of Shreveport, La., to the impasse panel, which resolves disputes
between federal agencies and unions.

01/17/2002
00800000001206


ne
DEPARTMENT OF THE TREASURY
OFFICE OF AFRICAN NATIONS
FAX: (202) 622-1432

DATE:

PAGES INCLUDING COVER SHEET was
-— —_—,
TO: E| A 2 ove FAX NO. 2 250 >

OFFICE/PHONE:

FROM:
EDWIN L. BARBER Ill, DIRECTOR
ETHEL R. McKOY, DEPUTY DIRECTOR
GRACE Y. SONE - 622-0332

ee GEOFFREY GOTTLIEB - 622-0455

— ELIZABETH URBANAS - 622-0182

an BONNIE M. BARNES, SECRETARY

IF YOU HAVE ANY QUESTIONS, PLEASE CALL ON (202) 622-1730
MESSAGE:

Thre ts the dnt euble trenfioned — He first “wo Pes
- the orm ot, i ace

00500000000921


AVAILABLE INFORMATION
Enron, a Delaware corporation, is subject to the informational requirements of it
Act of 1934, as amended (the “Exchange Act”), and in accordance therewith files eee ee
and other information with the Securities and Exchange Commission (the " "). Such reports, proxy
Statements and other information can be inspected and copied at the public reference facilities mairitained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C, 20549; and at the following Regional
Offices of the Commission: Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,

Stock Exchanges, and Enron's Common Stock is also listed on the Pacific Stock Exchange. Reports, prox
statements other information concerning Enron can be inspected and copied at the respective offices of
these e: at 20 Broad Street, New York, New York 10005; 120 South LaSalle Street, Chicago, Illinois
60603; and 301 Pine Streat, San Francisco, California 94014.

This Prospectus constitutes a part of a Registration Statement on Form S-3 (tona:her with all amendments
and exhibits thereto, the “Registration Statement”) filed with the Commission unde; * Securities Act of 1933,
83 amended (the “Securities Act"), with respect to the Exchangeable Notes. This actus does not contain
ail of the information set forth in such Registration Statement, certain parts of whict. 4 omitted in accordance

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Enron (File No. 1-3423) pursuant to Section 13(a) of
the Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1994;
(>) Quarterly Report on Form 10-0 for the quarter ended March 31, 1995;
{c) Quarterly Report on Form 10-Q for the quarter ended June 30, 1995; and
(d) Quarterly Report on Form 10- for the quarter ended September 30, 1995
quent to to dae of We Proapect eel par © be tertmnaes ch Wa Otte ie Caan
subsequent to date is and to the Exchangeable
Notes pursuant hereto shail be deemed to be incorporated herein by reference and to be a part hereof from the
‘statement contained herein or in a document alll or @ portion of which is

documents
other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into the
Gocuments that this Prospectus incorporates). Requests should be directed to Secretary Division, Enron
Corp., at its principal executive offices, 1400 Smith Street, Houston, Texas 77002 (telephone: 713-853-6161).

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANS-
ACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE EXCHANGEABLE NOTES OR THE
EOG COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN

00900000000177


Hunt, Betty Ann ee

From: Hunt, Betty Ann
Sont: Tuesday, January 08, 2002 11-57 AM
To: Bair, Sheila
Subject: Please call Mary Schapiro on [(b)(6)] She returned your call regarding Enron
Tracking: Recipient Read
Baw, Sheto
Hurt, Betty Ane Read: 1/6/02 12:20 Pi

01200000000969


America crude oll and condensate volumes using commodity price swap agreements at NYMEX-
based West Texas Intermediate Crude Oil ("WTI") prices averaging $18.77 per BbI and $18.90 per
BDI for the last three months of 1995 and the year 1996, respectively. included in the 1995 and 1996
hedge transactions are commodity price swap agreements totaling up to 3,000 BbI per day at WT!
Prices ranging between $18.70 and $18.80 per Bbi each of which includes a one-time option
exercisable by the counterparty at various times up to and including December 31, 1996 and for
various periods some of which extend through December 31, 2000 at the same respective NYMEX-
based prices as are applicable in the individual agreements for the 1995 and 1996 Periods. The
Company continues to evaluate the potential for entering into and may enter into, additional hedging
transactions related to certain of the remaining months in 1995, and in future years. In addition, the
Company also may close out any portion of the existing or yet to be entered into hedges as
determined appropriate by management of the Company.
iad
Trading Transactions
Subsequent to September 30, 1995, the Company sold call options with a notional volume of 50

BBtu per day at an average price of $2.10 per MMBtu for the period Jenuary through December,
1996.

Financing

The Company's long-term debt-to-total-capital ratio was 19%, 15% and 14% as of
September 30, 1995 and December 31, 1994 and 1993, respectively. The Company has entered into
8n agreement with Enron Corp. pursuant to which the Company may borrow funds from Enron

surplus to the Company to Enron Corp. for investment balances of
funds advanced to Enron Corp. under the note averaged $200,000 during the first nine months of
1995 and $69 million during 1994 with no balance at December 31, 1994 or September

Uncertainty continues to exist as to the direction of future North America natural gas price
trends and there Is a wide divergence in the opinions held by some in the industry. However, recent
history would tend to support, and It seems there is emerging among a larger number of industry
representatives somewhat of a consensus, that natural gas prices will remain below parity with
crude oil, condensate and natural gas liquids for some time. This situation Is being impacted by
improvements in the technology used In drilling and completing oll and gas wells that are tending to
mitigate the impacts of fewer ol! and gas wells being drilled, the deregulation of the natural gas
market under Federal Energy Reguistory Commission Order 636 and subsequent related orders,
and improvements being realized in the availability and utilization of natural gas storage capacity.
However, the continually increasing recognition of natural gas as a more environmentally friendly
source of energy along with the availability of significant domestically sourced supplies should result

3

00900000000233


IN THE NEWS; 1/15/02 Page 19 of 36

BODY:
NOW that 2002 is well under way, it's an opportune time to consider what you might do for the rest of the year
to improve your financial life,

Early planning is always essential to achieve sizable tax savings. But it's especially important this year because
of the sweeping tax law changes that took effect Jan. 1. Most of the major new benefits from the Tax Relief Act
of 2001 start to phase in this year. Here are some strategies to help make the most of the new law benefits and
otherwise save on taxes in 2002 and beyond.

Keep close tabs on your income levels: The key to qualifying for many of the new law's breaks is to find ways
to hold down your "adjusted gross income." Most of the new or expanded benefits are phased out for
individuals with adjusted gross incomes above certain levels.

Included are the child tax credit, retirement savings credit, the new college tax deduction, Coverdell Education
Savings Account, adoption credit, student loan deduction, IRAs and the earned income credit.

Careful timing of investment sales may prove critical if you're bordering on the income limits for a valuable
benefit you hope to claim. In some cases, you'll want to try to avoid realizing large investment gains in years in
which you expect to reap substantial benefit from some income-contingent breaks.

Employees can reduce their adjusted gross income by taking advantage of their employer's 401(k) plans and
"flexible spending arrangements” for health-care and dependent-care expenses.

Shelter more: The new law gives most individuals the opportunity to shelter much more of their income in
retirement and education savings accounts, where your money can grow and compound faster than if part of the
earnings were taxed away each year. The contribution limits for IRAs, self-employed retirement accounts,
employer-sponsored plans and education savings accounts have been sharply increased.

Defer income: Deferring income through the use of retirement accounts and deferred-compensation plans will
not only postpone the tax liability for years but also may make the income eligible to be taxed at a lower rate in
the future, Tax rates above the 15 percent tax bracket are scheduled to drop in 2004 and again in 2006.

Think taxes in daily financial life: Whenever you make a financial move, consider the tax aspects. In some
cases, how you arrange the financial transaction can greatly affect your tax bill.

Charitable contributions are a prime example. How much of a tax benefit you'll receive for your charitable
donation will depend not only on the amount of your contribution, but also on the type of gift you make. While
cash may be the most common form of charitable gift, you'll save more in taxes if you donate stocks or other
investments that have increased in value. So long as you've owned the shares more than one year, you'll be
eligible to claim a charitable deduction for the current market value of your donated shares. In addition, you'll
escape capital gains tax on the appreciation.

Securities sales: If you plan to sell off part of your holding in a particular stock or mutual fund, the form of your
"sell order” can have a significant impact on your tax bill. If you acquired the shares at different times and
prices, you may be able to minimize the capital gains tax bite by designating in your sell order which specific
shares to sell, For instance, you could minimize your taxable gain by instructing your broker or mutual fund to
sell the shares you acquired at the highest prices. If you don't identify which specific shares are to be sold when
you place your sell order, the IRS will make you use on your tax return a much less favorable method for
determining which shares were deemed sold.

Consider larger tax implications: Before making any tax move, be sure to consider all the ramifications, Not
every tax benefit is worth pursuing. For example, parents who plan to take advantage of the expanded education
savings account to save for their child's college education need to consider the potential impact on their child's

O4/17/2002

00800000001152


[OUTSIDE SCOPE}

01778

01200000000434


upon the happening of some contingency unless such contingency shall have occurred) of which
shail be owned by Enron or by one or more Subsidiaries or by Enron and one or more Subsidiaries.
The term “Principal Property" ‘s defined to mean any oil or gas pipeline, gas processing plant or
chemical plant located in the United States, except any such Property, pipeline or plant that in the
opinion of the Board of Directors of Enron is not of material importance to the total business
conducted by Enron and its Subsidiaries. "Principal Property” does not include any oil or gas
Property or the production or any proceeds of production from an oil of gas producing property or
the production or any proceeds of production of gas Processing plants or oil or gas or petroleum
Products in any pipeline.

The term “indebtedness”, as applied to Enron or any Subsidiary, is defined to mean bonds,
Gebentures, Notes and other instruments representing obligations created or assumed by any such
corporation for the repayment of money borrowed (other than unamortized debt discount or
Premium All indebtedness secured by a lien upon property owned by Enron or any Subsidiary and
upon which indebtedness any such corporation customarily pays interest, even though such

's for any purpose deemed indebtedness of such corporation. indebtedness of Enron or any
Subsidiary does not include (i) amounts which are payable only out of all or a portion of the oil, gas,
natural gas, helium, coal, metals, minerals, steam, timber or other natural resources produced,
Gerived or extracted from properties owned of developed by such corporation; {il) any amount
representing capitalized lease obligations; (iil) any Indebtedness incurred to finance oil, gas, natural
gas, helium, coal, metals, minerals, steam, timber, hydrocarbons or geothermal or other natural
Fesources of synthetic fuel exploration or development, payable, with respect to principal and
interest, solely out of the proceeds of oil, gas, natural gas, helium, coal, metals, minerals, steam,
timber, hydrocarbons or geothermal or other natural resources or synthetic fuel to be produced,

obligations in connection with the indebtedness of others, including agreements, contingent or
otherwise, with such other persons or with third persons with respect to, or to permit or ensure the
Payment of, obligations of such other persons, including without limitation, agreements to purchase
OF repurchase obligations of such other persons, agreements to advance or supply funds to or to
invest in such other persons or agreements to pay for property, products or services of such other
Persons (whether or not conferred, delivered oF rendered) and any demand charge, throughput,
take-or-pay, keep-well, make-whole, cash deficiency, maintenance of working capital or earnings or
similar agreements; and (v) any guarantees with respect to lease or other similar periodic payments
to be made by other persons.

The term “Funded Debt” @s applied to any corporation means all indebtedness Incurred,
Created, assumed or guaranteed by such corporation, or upon which it customarily pays interest
charges, which matures, or is renewable by such corporation to a date, more than one year after the
ate as of which Funded Debt is being determined; provided, however, that the term “Funded Debt’
Shall not include (I) indebtedness incurred in the ordinary course of business representing borrow-
ings, regardiess of when payable, of such corporation from time to time against, but not in excess of
the face amount of, its installment accounts receivable for the sale of appliances and equipment sold
in the regular course of business or (li) advances for construction and security deposits received by
‘such corporation in the ordinary course of business.

The foregoing limitations on mortgages, pledges and liens are intended to limit other creditors
of Enron from obtaining preference or priority over holders of the Indenture Securities issued under
the indenture, but are not intended to prevent other creditors from sharing equally and ratably and
without preference ("pari passu"’) over the holders of such Indenture Securities. While such
limitations on mortgages and liens do provide protection to the holders of the Indenture Securities,
{here are a number of exceptions to such restrictions which could result in certain assets of Enron

2

00900000000196


From: Davis, Michele

Sent: . January 10, 2002 1:51 PM
To: Frener Boies vary

Ce: Hart, Anna

Subject: Enron

Follow Up Flag: Follow

Flag ‘Status: Flagged”

please call me when you get a minute, $0 | can update you on what I'm saying and see if there's anything else | need to

say
Also, do you keep phone logs? If'so, can you guys go ahead and search them for Enron calls in Oct or Nov? No one has
asked yet, but better to be prepared for incoming questions.

01200000001612


[OUTSIDE SCOPE]

01776

01200000000432


3/9/2000 draft letter to bankruptcy conferees

((b)(5)]

01766

01200000000422


MEMORANDUM FOR JOSHUA BOLTON
DEPUTY CHIEF OF STAFF
WHITE HOURSE

FROM: Sheila C. Bair
Assistant Secretary for Financial Institutions

SUBJECT: Policy Issues Presented by the Enron Bankruptcy

Per your request, below arc some of my preliminary personal thoughts on the important policy
issues presented by the Enron bankruptcy [(b)(5)]

[(b)(5)]

01200000000965


approximately $83 million. This 16% reduction in average welthead natural gas prices reflects the
Overall decline in the United States natural gas markets during the last half of 1994 and increased
volumes offshore Trinidad sold under a long-term contract at a price considerably below North
America spot market Prices. A 42% increase in wellhead crude oil and condensate volumes over
1993 added $22 miltion to net operating revenues primarily reflecting development activities offshore
Trinidad and increased production in the United States. A 5% decrease in wellhead crude oil ang
condensate average prices decreased net operating revenues by approximately $3 milion.

Other marketing activities associated with sales and purchases of natural gas, natural gas and
Crude oil price swap transactions, other commodity price hedging of natural gas and crude oil prices
utilizing NYMEX-related commodity market transactions, and margins relating to the volumetric
Production payment added $50 million to net operating revenues during 1994, This increase of $41
million trom the same period in 1993 primarily results from a gain of $11 million on natural gas

Price hedging activities utilizing NYMEX-related commodity market transactions in 1994
versus an $18 million loss during 1993 and increased margins associated with other natural gas

Gains on sales of selected oll and gas reserves and related assets were $54 million in 1994 as
compared to $13 million in 1993. While the quantity of equivalent reserves sold in 1994 was
less than 1993, higher average proceeds received per equivalent unit in 1994 as compared to 1993
Primarily contributed to the Increased gain recognition. In continuing its strategy of fully utilizing its
assets In optimizing profitability, cash flow and return on investments, the Company expects to
continue the sale of similar properties from time to time. ‘

1993 compared to 1992. During 1993, net operating revenues increased to $581 million, up
$122 million as compared to 1992.

natural gas volumes in 1993 added $83 million to net operating revenues compared to 1992.
Average wellhead crude oll and condensate prices in 1993 were down 9% compared to 1992,
reducing net operating revenues by $5 million. Increases in wellhead crude oll and condensate
volumes in 1993 added approximately $2 million to net operating revenues compared to 1992.

Other marketing activities associated with sales and purchases of natural gas, natural gas price
Swap transactions, other commodity price hedging of natural gas and crude oll and condensate
Prices utilizing NYMEX-related commodity market transactions, and margins relating to the
volumetric production payment added $8 million to net operating revenues during 1993. This
decrease of $54 million from 1992 primarily results from shrinking margins associated with sales
under long-term fixed price contracts and amortization of volumetric production payment deferred
revenue dye to increeses in market responsive natural gas prices associated with volumes supply-

‘ate, average welthead value, transportation costs and exchange differentials, increased $.33 per
Mot. Related other natural gas marketing volumes increased 15%.

24

ol

00900000000227


TN THE NEWS: 1/14/02 Page 4 of 36

“We are aware that auditing individual employees is much more cumbersome than
slapping the employer with assessments based on aggregate estimates,” Appeals
Judge Alex Kozinski wrote in that decision.

The government also lost in a lower court, Other courts around the country,
however, have sided with the IRS in similar fights.

The Supreme Court said in 1973 that the IRS can make an educated guess about
employees’ tip taxes when records are inadequate. Kozinski said that in this

situation, restaurants cannot be blamed for problems with their employees’
records.

At issue is the employer's share of FICA taxes. Fior d'Italia Inc. is
challenging taxes from 1991 and 1992. Using credit card receipts, the IRS had
estimated that staff received tips of about 14 percent on meals.

The restaurant had paid taxes based on what employees said they received,
which was less than 14 percent. The restaurant's attorney said that if the

IRS suspected underreporting by employees, it should have audited them. The
restaurant then could revise its own records if there were problems.

Olson said Congress recognized tip tax problems and passed a law in 1998 that
lets restaurants enter agreements with the IRS.

Restaurants promise to educate employees about tip reporting and set up
procedures to get accurate information. In return, the IRS agrees to collect
taxes only on reported tips or unreported tips discovered during an audit of
an employee.

IRS records show that employees are doing a better job, The amount of
reported tips in the restaurant business increased from $8.5 billion in 1994
to $14.3 billion in 1999, according to the IRS.

The case is United States v. Fior d'Ttalia Inc., 01-463.
4. New Number, Fewer Answers at IRS * The Washington Post

The Washington Post

January 14, 2002, Monday, Final Edition
SECTION: FINANCIAL; Pg. E03
LENGTH: 910 words
HEADLINE: New Number, Fewer Answers at IRS
BYLINE: Albert B, Crenshaw, Washington Post Staff Writer
BODY:

For the past month or so, budding entrepreneurs report that it has been all but impossible to reach the Internal
Revenue Service to obtain an employer identification number (EIN), without which it's impossible to open a

01/17/2002
00800000001173


amount thereof, The Exchangeable Notes are

able for EOG Common Stock at the opton of the ney
Enron bars A exercise its option to pay outstanding Ex.
change Notes in cash from the

Enron comrion stock. See “Description of the Exchange.
able Notes - General.”

No Redemption or Sinking Fund .. The Exchangeable Notes are not subject

00900000000179


DeMarco, Edward

———

From: DeMarco, Edward

Sent: Wednesday, January 16, 2002 1:20 PM

To: Davis, Michele

Ce: Bair, Sheila; Holahan, Betsy; Sweetnam, Bill Jr; McCall, Neal
Subject: Retirement Security insert for PON’s Savings Bond speech
Importance: High

Michelle,

Attached is a draft insert on retirement security for the

‘Savings bond speech. Sheils Bair asked us to draft the

Secretary's
insert but Sheila has not had the opportunity to review the text because of the extremely short turn-around time.

| understand from Sheila that you wil be working this text into the larger speech. Sheila and Bill Sweetnam may have
comments they want to send to you this afternoon, recognizing that the Secretary is giving the speech tomorrow.

Ptease let me know if | can provide any additional information of explanation.

Ed DeMarco (2-2792)

v)

FON Sevngs Band
sone ra
Tracking: Recipient
Davis, Michele
Bair, Sheta
Holahan, Betsy
‘Sweetram, Bil Jr
McCall, Neal

Read

Read: 01/16/2002 2:41 PM
Road: 01/16/2002 2:19 PM
Read: 01/16/2002 2:06 PM
Read: 01/16/2002 4:15 PM
Read; 01/16/2002 1:20 PM

01200000001195


Hart, Anna
From: Hart, Anna

Sent: Wednesday, Jani 09, 2002 4:00 PM
To: Bair, Sheila; Weinberger, Mark

Ce: Hunt, Betty Ann; Baker, Ros

Subject: Secy’s Post Enron Iniative (Update)

Sorry, wrong time. Meeting is now scheduled for 8.00 a.m. not 5:00.

The above meeting has been scheduled for Friday, Jani 11 at 5:00 in Room 3312.
Recipient wd! Delivery

Tracking:
ne Bair, Sheva Delivered: 01/06/2002 4.00 PM
Weinberger, Mark Delivered: 01/09/2002 4:00 PM
Hunt, Batty Ann Detvered: 01/0972002 4:00 PM
Baker, Ros Delivered: 01/0R2002 4:00 PM

01200000001611


Scolinos, Tasia

From: Popkin, Jim (NBC) (Jim. Popkin@nbc.com]
Sent: Friday, January 11, 2002 2:21 PM

To: 'Tasia,Scolinos@do.treas gov’

Subject: RE: enron

She just called, so many thanks.
--dim

seses Original Message~----

From: Tagia.Scolinosedo.treas.gov .[mailto:Tasia.Scolinosedo.treas.gov}
Sent: Priday, January 11, 2002 2:12 PM

To: jim.popkin@nbc.com

Subject: enron

Jim -

Michele is taking all of the calls on Enron, I just sent her an email
asking her to call you about this issue. If you need to reach her you can
get her at 622-2910.

Tasia

Because e-mail can be altered electronically,
the integrity of this communication cannot be guaranteed.

00800000000827


IN THE NEWS: 1/15/02 Page 16 of 36

The IRS has announced (IR-2002-04) that taxpayers can enable the IRS to talk directly with a third party to
correct mistakes, such as simple math errors and data omissions, during the processing of the taxpayers’ returns
by selecting the third-party designee box on the new Form 1040. The third party will also be able to discuss the
status of a refund, payment, or other notice with the IRS. The designation, however, does not eliminate the need
for a Power of Attomey for issues dealing with examinations, under reported income, appeals, and collection
notices.

11. The Widows Triumph * THE WALL STREET JOURNAL

THE WALL STREET JOURNAL

January 15, 2002
Review & Outlook
The Widows Triumph

Ever have one of those days where you roll out of bed, gulp your black
coffee and pump yourself up for the big fight you know is coming? Well,
with the Intemal Revenue Service preparing to pursue the taxable estates
of foreigners who lost their spouses on September 11, we were ready to
rumble.

And then Congress surprised us, and probably even itself, and did the right
thing.

The surprise is the Victims of Terrorism Tax Relief Act, and actually it
wasn't totally the right thing. But we'll get back to that below. As these
columns first reported when we wrote about the case of Lucy Thompson
on October 12, U.S. estate-tax law lacks a spousal exemption for
foreigners. This made widows and orphans juicy targets for the IRS to
pounce on whatever cash and assets the victims of September 11 had left
them. If the numbers add up the way we've been told, Congress has now
granted them a reprieve.

Congress did this by extending to those who were killed on September 11
the same special tax treatment granted to soldicrs who fall in the line of
duty. Though not designed with the foreign widows and widowers in mind,
these people have nonetheless received a huge assist, That's because the
new law grants the special tax status to the estate of the deceased, so the
spousal exemption doesn't really matter.

The math is extremely complicated, and involves tax treaties with different
countries. But we're told it works out to shielding the first $8.5 million from
federal tax in the absolute best cases (for those foreigners living here) to
$600,000 in the worst (those nonresident). Even in the worst case, that is

10 times the protection they would have received otherwise, with much
lower tax rates. As such it brings a special measure of mercy for the
hundreds of foreign families who lost loved ones on September 11,
including 53 British, 24 Japanese, 17 Mexicans, 18 Koreans and many
dozens of others who still have mortgages and college tuitions to pay as
they try to keep their families together,

01/17/2002

00800000001149


RE: IN THE NEWS; 1/15/02 Page 17 of 37
11. The Widows Triumph * THE WALL STREET JOURNAL

THE WALL STREET JOURNAL

January 15, 2002
Review & Outlook
The Widows Triumph

Ever have one of those days where you roll out of bed, gulp your black
coffee and pump yourself up for the big fight you know is coming? Well,
with the Internal Revenue Service preparing to pursue the taxable estates
of foreigners who lost their spouses on September 11, we were ready to
rumble.

And then Congress surprised us, and probably even itself, and did the right
thing.

The surprise is the Victims of Terrorism Tax Relief Act, and actually it
wasn't totally the right thing. But we'll get back to that below. As these
columns first reported when we wrote about the case of Lucy Thompson
on October 12, U.S. estate-tax law lacks a spousal exemption for
foreigners. This made widows and orphans juicy targets for the IRS to
pounce on whatever cash and assets the victims of September 11 had left
them. If the numbers add up the way we've been told, Congress has now
granted them a reprieve.

Congress did this by extending to those who were killed on September 11
the same special tax treatment granted to soldiers who fall in the line of
duty. Though not designed with the forcign widows and widowers in mind,
these people have nonetheless received a huge assist. That's because the
new law grants the special tax status to the estate of the deceased, so the
spousal exemption doesn't really matter,

The math is extremely complicated, and involves tax treaties with different
countries. But we're told it works out to shielding the first $8.5 million from
federal tax in the absolute best cases (for those foreigners living here) to
$600,000 in the worst (those nonresident). Even in the worst case, that is

10 times the protection they would have received otherwise, with much
lower tax rates. As such it brings a special measure of mercy for the
hundreds of foreign families who lost loved ones on September 11,
including 53 British, 24 Japanese, 17 Mexicans, 18 Koreans and many
dozens of others who still have mortgages and college tuitions to pay as
they try to keep their families together.

Of course, the simplest and more humane solution would have been to
abolish the estate tax, which is scheduled for extinction anyway, though not
before 2010 and then for one year. That's precisely what Washington
Representative Jennifer Dunn proposed in her Widows of the World

Equity Act.

01/17/2002
00800000001113


DeMarco, Edward

From: Carleton, Norman
Sent: Wednesday, August 29, 2001 11:15 AM
To: Fisher, Peter; Roseboro, Brian; Bair, Sheila; Nickoloff, Peter; Schultheiss, Heidilynne;

DeMarco, Edward; Hughes, Gerry; Gross, Jared; Smith, Amy; Sutton, Gary; Ellett, Martha;
Gabilondo, Jose; Mcinerney, Roberta; Lori Sanatamnorena (E-mail)
Subject: Status of Retail Swap Study and the Enron Issue

[(b)(5)}

Any thoughts or recommendations? | will send around a separate note discussing the Enron issue in more detail,

01200000001233


From: Helen Waish

To: (Dom13.DOPO8(BARBERE, BEASLEYM, BudingtonM, CROWES...
Date: 2/29/00 6:41pm

Subject: An NWT dispute in Nigeria Reply -Reply -Reply -Reply

[(b)(5)]

>>> Geoffrey Gottlied 02/29/00 06:23pm >>>

{(b)(5)]

Geoff

>>> Maureen Grewe 02/29/00 06:05pm >>>
Elizabeth and Helen - can you get us your views on this?

{(b)(5)]

>>> Mary Beasley 02/29/00 04:20pm >>>
‘You need to speak to Eliz Stewart on this. She is our procurement expert.

>>> Geoffrey Gottlieb 02/29/00 03:13pm >>>
{(b)(5))

aa

Dom13.00P06(StewartEX), ex. mali(‘ewetsman@IMF org”...

0500000000905


Hart, Anna

eT

From: Hart, Anna
Sent: Wednesday, January 16, 2002 12:38 PM
To: Johnson, Alana
Subject: Piease call me re Enron FOIA
This is Diana Ridgway on Anna's computer. 622-1703.
Tracking: Rocipient Detivery
Johnson, Alana Delivered: 01/16/2002 12:38 PM

01200000001613


RE: IN THE NEWS: 1/15/02 Page 35 of 37

Autoliv closed the 100,000-square-foot plant in August. The company sold it Dec. 31 for $3.9 million to
ARKA Properties Group of Beverly Hills, Calif. ARKA, in turn, leased the facility to the U.S. General
Services Administration for use by the IRS.

The facility will be equipped with modem air-handling ventilation systems to ensure safety for employees
in the wake of recent anthrax scares.

"Should there be any issue that occurs when somebody opens up an envelope, for example, you can
immediately shut down the ventilating systems in that area so that it limits any exposure,” said Bob
Wenzel, IRS deputy commissioner in Washington, D.C. Wenzel served as director of the Ogden IRS
service center from 1986 to 1992.

During peak months from February through mid-June, the new mail facility will employ 1,200, No new
jobs will be added. Positions will be transferred from the main IRS center off 12th Street.

The number of IRS sites in Northern Utah is now 10, including eight in Ogden and one in Syracuse. An
11th site will be added in late summer or early fall when a 120,000-square-foot complex opens off Wall
Avenue in Ogden. The complex will house IRS accounts management,

The IRS employs a total of 6,900 at its Norther Utah sites, Ogden has benefited in recent years from a
work restructuring at the 10 IRS service centers nationwide. The Ogden center and one in Cincinnati,
Ohio gained all business-tax processing nationwide.

is
“The future is very bright for the Ogden location because there will be continued growth in business tax
returns being filed throughout the whole country and Ogden will receive at least half of those," Wenzel
said.
28. PAST FREQUENT FLYER ABUSE WON'T GO AWAY * FederalNewsRadio.com

FederalNewsRadio.com

January 15, 2002
PAST FREQUENT FLYER ABUSE WON'T GO AWAY

ALTHOUGH IT'S NOW LEGAL for feds and military personnel to use
frequent flyer miles earned on official business, workers who used them
BEFORE the law was changed may still be punished.

The irony is that feds can now use mileage points they earned in the past
{if they have the proper records and proof). But, if they have already donc
that---that is, use the mileage awards before the new law was signed on
December 31st---they could be in a heap of trouble!

Over the past decade, hundreds of government workers, many of them in

important agency positions, have gotten into trouble for using mileage

points or awards camed on business trips for personal pleasure.

Nobody knows how many employees used official miles for personal

travel---cither by accident or design-—and weren't caught or punished.
01/17/2002

00800000001131


Sutton, Gary

From: Carleton, Norman
Sent: Saturday, September 08, 2001 1:10 PM
To: Bair, Sheila; DeMarco, Edward; Eichner, Matthew, Ellett, Martha, Fisher, Peter, Gabilondo,

Jose, Gross, Jared; Hammer, Viva; Hughes, Gerry, Nickoloff, Peter, Novey, Michaet;
Roseboro, Brian; Schultheiss, Heid@tynne; Smith, Amy, Sutton, Gary
Subject: Discussion with Ken Raiser about Enron Product

On Friday, September 7, | discussed the retail energy swap issue with Ken Raisler. He is a partner at
Sullivan & Cromwell who represents Enron. In the mid 1980s, he was the general counsel of the CFTC.

1 asked Ken if Enron opposed state regulation of retail energy derivatives if the CFTC were to grant an
exemption for this product. The first answer to this question was yes, but that answer was modified as we
further discussed the issue.

1 asked Ken if he thought that there was a preemption argument that could be made because of CFTC
exclusive jurisdiction. He said he thought there was. He said Enron would not make such a legal argument
because it is regulated in some states as a utility company, but that others might make such an argument,

I told Ken that the Treasury had not come to a conclusion about the retail encrgy swap issue but that we
were unlikely to support a result that would mean no federal regulation and would not allow state governments
to regulate this product if they chose to do so. He asked me what regulatory issues might be of concem, |
answered that such issues as advertising, pricing, and assurances that the company offering the product had the
financial ability to meet its obligations might be subjects that governments would be concemed about. Ken said
he thought that this was a reasonable position.

J asked Ken whether he thought that the CFTC could exempt retail energy swaps from the exclusive
jurisdiction provision of the CEA, thus precluding any arguments about state jurisdiction. He said he thought
that might be possible.

At the end of the conversation, Ken indicated he would talk to his client about the issues I had raised.
{(b)(5)]

Please call me if you want more details on this.

00200000000098


PE: IN THE NEWS: 1/15/02 Page 18 of 37

But that would have required more compassion than politicians can muster
at one sitting. In fact, Congress seemed ready to consider any kind of
relief, including making all of the dead U.S. citizens, rather than repeal the
estate tax. And before we praise the Members of Congress too much, no
doubt the fear of special publicity that would have focused on the
September 11 widows was part of their motivation.

Then there is the twisted moral logic of carving out just this estate-tax
exception. A British woman living in America whose husband was killed in
the World Trade Center attacks can now collect whatever was lefi behind
without fear of the IRS. But a British woman whose husband is killed by,
say, a drunk driver or heart attack still faces an estate tax on her assets
starting at as little as $60,000 (foreigners don't get the U.S. minimum
exemption of $1 million) with confiscatory rates of up to 55%. The IRS
philosophy here is that it's all their money, and that a foreign spouse might
up and leave the country before the IRS gets its share.

The case of the September 11 widows illuminates that the real objection to
the estate tax is moral. It is a political grab for assets on which taxes have
already been paid once, if not twice. The spouses of September 11 may

be catching a deserved break, but the real solution is to abolish the estate

tax for everyone forever.
12. Tax Credit Misses Some Eligible * Associated Press

Associated Press

01/14/2002

Tax Credit Misses Some Eligible

By LAURA MECKLER

Associated Press Writer

WASHINGTON (AP) -- About 4.3 million taxpayers who were eligible for a tax
credit aimed at the working poor did not claim it in 1999, congressional
auditors reported.

‘That adds up to a 75 percent participation rate in the eamed income tax
credit program, better than programs such as food stamps and Medicaid that
are available to many of the same people.

The eamed income tax credit, expected to cost $30 billion this year, is one

of the federal government's largest programs aimed at helping low-income
Americans. Available only to the working poor, the credit enjoys bipartisan
support and has been expanded several times in recent years.

The new report by the General Accounting Office found that parents with once
or two children were most likely to claim the credit, with more than 90
percent taking advantage of it.

Only 45 percent of adults without children claimed the credit, and only 63

1/17/2002
00800000001114


RE: IN THE NEWS: 1/15/02 Page 24 of 37
(single).
You can leave more to your heirs. Okay, it's hard to get excited about a tax break that you can get only by
dying. But you can leave an estate of $1 million, up from $675,000 last year, without your heirs facing
estate taxes. That exemption is set to rise steadily over the next eight years.

"This will take many families out of a taxable-estate situation,” said Wyss.

And if you want to share the wealth while you're alive, you can give more to your heirs every year
without worrying about gift taxes -- $11,000 this year, up from $10,000,

16. Tax time process clarified * Dallas Morning News

Dallas Morning News (Dallas, Texas)

January 14, 2002

Tax time process clarified

IRS offers guidance in navigating yearly income claims ritual
By PAMELA YIP

Most of us wish we didn't have to file a federal income tax return, but no such luck. It's an annual ritual -
like it or not.

If you're a U.S. citizen or resident, the law requires you to file a tax return.
But there are some people who don't have to meet that requirement.
Whether you must file a return depends on your gross income, filing status and age.

Generally, if you're under 65, once your gross income hits the following amounts, the law requires you to
file a tax return:

* $7,450 for single taxpayers.
* $9,550 for head of household.
* $13,400 for married, filing jointly.

Gross income includes all income you receive in the form of money, goods, property and services not
exempt from tax.

In addition, some people believe that the elderly don't have to file a return. But that’s not always true,
If you're 65 and older, you must file a retum once your gross income hits the following amounts:

* $8,550 if you're filing single.

* $15,200 for married filing jointly.

* $10,650 for head of household.

If you turned 65 on Jan. 1, the government considers you to have been age 65 at the end of 2001.

“The law requires you to file a return if your income is above a certain level, so each taxpayer will pay
their proper amount of tax," says Venus Birmingham, a tax resolution representative at the Internal

01/17/2002
00800000001120


Total per unit operating costs for lease and well expense, DD&A, general and administrative
Sxpense, interest expense, and taxes other than income decreased $.14 per Mcte, averaging $1.29
per Mcfe during 1994 compared to $1.43 per Mcfe for 1993. The decrease was primarily due to per
unit reductions in DD&A and taxes other than income as discussed above,

1993 compared to 1992. During 1993, total operating expenses of $465 million were $112 mil-
lion higher than the $353 million incurred in 1992. Lease and well expenses increased approximately
$10 million primarily due to expanded domestic and international operations. Exploration expenses
increased approximately $4 million primarily due to increased exploration activities in North
America. An unsuccessful Gulf of Mexico well added nearly $4 million to dry hole expenses and a

Total per unit operating costs for lease and well expense, DDBA, general and administrative
expense, interest expense, and taxes other than income increased $.03 per Mcfe, averaging $1.43
Per Mcfe during 1993 compared to $1.40 per Mcle for 1992. The total increase was associated with
DD&A expense which was up $.10 per Mcfe as noted above being partially offset by a reduction of
$.07 Mcie in all other costs.

Other Income

Other income for 1993 inctudes $4 million in interest income associated with the investment of
funds temporarily surplus to the Company and $4 million associated with settlements related to the
termination of certain long-term natural gas contracts. .

interest Expense
Net interest expense for the first nine months of 1995 was up $3 million as compared to the
Same period in 1994 retiecting primarily a higher level of debt outstanding during the 1995 period.

Net interest expense in 1994 decreased approximately $1 million to $8 million as compared to
1983 primarily due to favorable interest rates on new financing acquired by a subsidiary of the
Company for operations offshore Trinidad and the retirement of higher interest rate debt. The
estimated fair value of outstanding interest rate swap agreements at December 31, 1994 was a
Negative $0.5 million besed on termination values obtained from third parties.

ang tae erwonas decrnsned #12 rion. oF 69%, to 910 salon i 1989 as compared to 1982
reflecting the repayment of a substantial portion of the Company's long-term debt in 1
Proceeds from the sale of common stock in August 1992 and the sale of a volumetric production
Payment in September 1992. The estimated fair value of outstanding interest rate swap agreements
‘at December 31, 1993 was a negative $3.3 million based upon termination values obtained from third
Parties.

00900000000229


Ellis, Dina

From: Carleton, Norman
Sent: Thursday, February 15,2001 10:07 AM
To: Hammond, Donald: DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta;
Constantine, Eleni: Hughes, Gerry; Stewart, Lawranne
Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickoloff, Peter; Schultheiss, Heidilynne; Gross, Jared
‘Subject: RE; Bankruptcy Reform Mark-up Hearing
Don,
{(6)(5)]
Norman
-----Original Message---+
From: Donald
Sent: Thursday, February 15, 2001 8:26 AM
To: DeMarco, Edward; ils, Dina; Huffman, Lucy; Carleton, Norman; Meinemey, Roberta; Constantine, Exeni; Hughes, Gerry; Stewart,
cc Tistwk, Brian; Robbins, Eric
Subject: RE: Bankruptcy Reform Mark-up Mearing
Ed,
{(b)(5)]

01200000001618


formulated, his spokesman did not rule out the prospect. “It's definitely a possibility,” he said.

Moreover, members of the House Financial Services Committee are trying to move a provision
of the bankruptcy legislation pertaining to financial netting-perhaps as part of the economic
stimulus package-in the event the underlying bill remains stalled.

That provision is designed to strengthen and update current statutory protections for netting
financial market contracts if a party defaults. The netting language of the bill was one of the
few consensus items included in the bankruptcy legislation. The economic downtum and the
widening number of commercial bankruptcies could help create even stronger impetus for the
provision to move separately, sources said.

House Financial Services Committee ranking member John LaFalce (D-N.Y.) urged shortly
after the Sept. 11 terrorist attacks that the netting language be moved “expeditiously.” In
response, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan
agreed “whether as part of comprehensive bankruptcy reform legislation or as a stand-alone
bill, Congress should not fail to enact netting legislation this year.” The Financial Services
Committee had considered placing netting legislation on the schedule for markup this
Wednesday, when it takes up a host of other bills. Committee leaders decided against such
action, however, A spokeswoman for House Financial Services Committee Chairman Michael
Oxley (R-Ohio) said he remained hopeful that the underlying bankruptcy bill could move intact.

01200000001311


Mcinerney, Roberta

From: Carleton, Norman
Sent: Wednesday, August 29, 2001 11:15 AM
To: Fisher, Peter, Roseboro, Brian; Bair, Shella; Nickoloff, Peter; Schultheiss, Heiditynne;

DeMarco, Edward; Hughes, Gerry; Gross, Jared; Smith, Amy, Sutton, Gary, Elett, Martha;
Gabilondo, Jose; Mcinemey, Roberta; Lori Sanatamorena (E-mail)
Subject: Status of Retail Swap Study and the Enron Issue

{(b)(5)]

00200000000005


Hughes, Gerry

From: Carleton, Norman
Sent: Monday, September 10, 2001 11:34 AM
To:

Bair, Sheila; DeMarco, Edward; Eichner, Matthew; Ellett, Martha; Fisher, Peter; Gabilondo,
Jose; Gross, Jared; Hammer, Viva; Hughes, Gerry, Nickoloff, Peter; Novey, Michael:
Roseboro, Brian; Schultheiss, Heidilynne; Smith, Amy; Sutton, Gary

‘Subject: Retail Swaps - Telephone Call from Elizabeth Fox

{(b)(5)}

01200000001312


IN THE NEWS: 1/15/02 Page 15 of 36
IRS Tax-Shelter Victory Won't Be Overturned by U.S. High Court

Washington, Jan. 14 (Bloomberg) -- The U.S, Supreme Court stayed out of a battle over corporate tax
shelters, rejecting an appeal by a real estate company accused of trying to dodge the Internal Revenue Service
by diverting loan payments overseas.

The high court action is a boost to the IRS, which suffered courtroom setbacks recently on its claims that

Compaq Computer Corp., United Parcel Service Inc. and American Home Products Corp. used illegal tax
shelters. The agency says such shelters are a multibillion-dollar problem.

The justices left intact a $1.2 million assessment against Del Commercial Properties Inc., a Canadian
company that manages U.S. real estate. The Bush administration urged the court not to hear the company's

appeal.

Courts ““have had no problem disposing of taxpayer claims in cases such as the present one, in which there is
a transparent lack of nontax business purpose,” the government argued.

A federal appeals court in Washington upheld the assessment. That ruling ‘may cripple tax planning," Del
Commercial contended in its unsuccessful appeal.

**A basic premise of modem corporate finance is the use of numerous steps and/or intermediaries in a
transaction with an underlying commercial purpose in order to reduce or climinate tax liability," said the
company, which hired Harvard law professor Laurence Tribe to make its case at the high court.

The fight centered on $14 million in loans made by Royal Bank of Canada to one of Del Commercial's
Canadian parent companies in 1990. The IRS says that money was immediately passed through four affiliates
before landing in Del Commercial’s accounts.

Del Commercial repaid much of the money, plus interest, to the Dutch affiliate that was the last to touch the
loan money.

The IRS says that was a ruse designed to avoid the duty of U.S. taxpayers to withhold taxes owed by their
forcign lenders, A treaty in effect at the time exempted lenders based in the Netherlands from those taxes,

The case is Del Commercial Properties v. Commissioner of

Internal Revenue, 01-681.
10. THIRD-PARTY DESIGNEE BOX ON NEW FORM 1040 AVAILABLE * Tax Notes Today

Tax Notes Today

JANUARY 15, 2002 TUESDAY
DEPARTMENT: Official Announcements, Notices, and News Releases; IRS News Releases
CITE: 2002 TNT 10-13
LENGTH: 298 words

HEADLINE: #13 2002 TNT 10-13 THIRD-PARTY DESIGNEE BOX ON NEW FORM 1040
AVAILABLE. (IR-2002-04) (Release Date: JANUARY 14, 2002) (Doc 2002-1096 (1 original page))

01/17/2002
00800000001148


((b)(5)]

Norman

Original Message-—~
Donaid
/, February 15, 2001 8:26 AM
Edward; Elis, Dina; Huffman, Lucy; Carleton, Norman; McInerney, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
‘Brian; Robbins, Eric
: Bankruptcy Reform Maric

i

up Mesring

g f 7
i

{(b)(5))

Don

-—Original Message-——

From: DeMarco, Edward

Sent: Thursday, Februmy 15, 2001 8:22 AM

To: Hammond, Donald; Elis, Dina; Huffman, Lucy; Carleton, Norman; Mcinerney, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

Ce: Tishuk, Brian; Robbins, Eric
PW: Bankruptcy Reform Mark~up Hearing

FYI

Original Message=—--

From: Robbins, Eric

‘Sent: Wednesday, February 14, 2003 5:45 PM
To: DeMarco, Eoward

(Ce: Tishuk, Brian

Subject: Banivuptcy Reform Markup Hearing

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001" was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
eighteen amendments were offered with all but onc amendment failing to pass. Voting occurred
largely along party lines, The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner, Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financia! Services Committee on commercial bankruptcy provisions
and netting requirements.

01200000001617


RE: IN THE NEWS: 1/15/02 Page 22 of 37
the MEA, she says.

* More portability. In the past, the law barred teachers who switched to the private sector from
transferring money from their 403(b) plans into a new employer's 401(k), Likewise, workers who left
private-sector jobs to teach couldn't roll their 401(k) moncy into their 403(b) plans. As of Jan. 1, those
prohibitions are gone, making it easier for workers to consolidate their savings in one plan.

However, not all plans allow such transfers, so check with your employer.
Better returns

The reforms don't directly address one of the biggest problems surrounding 403(b) plans: a lack of
good, low-cost investment choices.

Private employers that offer 401(k) plans typically arrange for a mutual fund group or plan provider to
handle their workers’ 401(k) savings. The 401(k) provider offers participants a menu of investment
options, usually ranging from aggressive to conservative. Because savers are part of a large group, they
often get a break on fees.

Public school systems, by contrast, have stayed out of the investment business. While they'll arrange for
payroll deduction into a worker's 403(b), many don't want to select a plan provider. Instead, they allow
sales representatives from financial firms, usually insurance companies, to solicit business from their
employees. ”

As a result, a lot of 403(b) money has been invested in annuities, which tend to carry much higher
expenses than no-load mutual funds. Annual fees often run as high as 2% of the amount invested.

The money is frequently invested in conservative products, which lowers the risk but also leads to
lower retums,

Many contracts contain surrender and back-end fees that penalize dissatisfied workers who want to
switch plans,

Advocates for 403(b) reform say the situation is improving. Low-cost providers, such as TIAA-CREF,
are negotiating with some school districts to manage their 403(b) plans. More providers may be willing to
set up 403(b) plans now that the onerous MEA rules are gone, because it's simpler to administer the plans.

Still, some school districts need a push. If you're a teacher and are unhappy with your 403(b) choices,
talk to your administrator about adding some low-cost options.

But before you approach your school district, do your homework. A good place to start is
www.403bwise.com, which was founded by two educators who were frustrated with the lack of
information about teachers’ retirement plans. The site offers a 403(b) Bill of Rights, calculators and
updates on the rules governing the plans. Morningstar, the mutual fund information source, offers a good
primer on the plans at its Internet site, _www,morningstar.com.

15. Tax breaks for college, retirement * The Bergen Record

The Bergen Record

January 13, 2002

01/17/2002
00800000001118


As of November 1, 1995, there were approximately 270 record holders of EOG's Common
Stock, including individual participants in security position listings. There are an estimated 5,100
beneficial owners of EOG's Common Stock, including shares held in street name.

Following the initial public offering and sale of its Common Stock in October 1989, EOG paid
Quarterly dividends of $0.025 per share beginning with an initial dividend paid in January 1990 with
respect to the fourth quarter of 1989. Beginning in January 1993 with fespect to the fourth quarter of
1992, EOG has paid quarterly dividends of $0.03 per share. The determination of the amount of
future cash dividends, if any, to be declared and paid will depend upon, among other things, the
financial condition, funds from operations, level of exploration and development expenditure oppor-
tunities and future business prospects of EOG.

Enron makes no representation as to the amount of dividends, if any, that EOG will Pay in the
future. In any event, holders of the Exchangeable Notes will not be entitled to receive any dividends
that may bg*payable on the EOG Common Stock until such time as Enron, if it so elects, delivers
EOG Common Stock at Maturity of the Exchangeable Notes and the record date for such dividend
occurs after such exchange. See "Description of the Exchangeable Notes.”

DESCRIPTION OF THE EXCHANGEABLE NOTES

The Exchangeable Notes are one series of debt securities to be issued under an Indenture
dated as of November 1, 1985, between Enron and Harris Trust and Savings Bank, as trustee, as
supplemented by a First Supplemental Indenture dated as of . 1995, between Enron
and Harris Trust and Savings Bank, as trustee (the “Trustee'’) (the Indenture dated as of
November 1, 1985, as supplemented from time to time, the “Indenture"). All references herein to
“Indenture Securities” shall refer to debt securities Issued under the Indenture. The following
‘summary of certain provisions of the Indenture does not purport to be complete and is qualified in its
entirety by reference to the indenture, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. All capitalized terms have the meanings specified in
the Indenture.

General

The Exchangeable Notes will be unsecured and will rank on a parity with all other unsecured
8nd unsubordinated indebtedness of Enron. The aggregate number of Exchangeable Notes to be
issued will be 10,000,000, plus such additional number of Exchangeable Notes as may be issued
Pursuant to the over-allotment option granted by Enron to the Underwriters (seo “Underwriting’’).
The Stated Maturity of the Exchangeable Notes is » 1998. The Indenture does not
limit the amount of Indenture Securities which may be issued thereunder.

Each Exchangeable Note, which will be issued with a principal amount of $ . will bear
interest at the rate of % of the principal amount per annum (or $ per annum) from

. oF from the most recent Interest Payment Date (as defined below) to which interest
has been paid or provided for until the principal amount thereof is exchanged at Maturity pursuant to
the terms of the Exchangeable Notes. Interest on the Exchangeable Notes will be payable quarterly
in artears'on . . and . commencing
. 1996, (each, an “Interest Payment Date'’), to the persons in whose names the Exchange-
able Notes are registered at the close of business on the . '

.and immediately preceding such Interest Payment Date; provided
that interest payable at Maturity is payable to the person to whom the principal is payable. interest
on the Exchangeable Notes will be computed on the basis of a 360-day year of twelve 30-day
months, If an Interest Payment Date falls on a day that is not a Business Day (as defined below) the
interest payment to be made on such Interest Payment Date will be made on the next succeeding
Business Day with the same force and effect as if made on such Interest Payment Date, and no
additional interest will accrue as a result of such delayed payment.

At Maturity, the principal amount of each Exchangeable Note will be mandatorily exchanged by
Enron into a number of shares of EOG Common Stock at the Exchange Rate (as defined below) or,
at Enron's option with respect to alll, but not less than all, of the Exchangeable Notes, cash with an

00900000000190


IN THE NEWS: 1/15/02 Page 11 of 36

“We will be consulting closely with Congress and affected U.S. interests regarding next steps," he added,

The next step is for a W.T.O. arbitration panel to determine the level of trade sanctions the Europeans will be
allowed to impose. That will probably occur in April.

Under American law, exporters can avoid paying taxes on some overseas sales by channeling profits through
subsidiaries in places like Guam and the Virgin Islands. This saves American companies -- including giants like
General Electric, General Motors, Microsoft and Boeing -- more than $4 billion a year in taxes.

In dollar terms, that makes this the largest trade case in history.

‘The European Union contends that the tax breaks give American exporters an unfair edge in international
commerce. The United States holds that the tax advantage is no greater than comparable tax breaks in Europe.
European companies, for example, do not have to pay value-added taxes on exported goods, There is no
difference between the Clinton and Bush administrations’ positions on the issue.

Many academic tax experts have argued for years that it was bad policy to lower companies’ taxes simply
because they have subsidiaries overseas, But lawmakers have accepted the argument that tax havens are
necessary to allow American companies to compete in international trade, and the law has strong support in
both parties in Congress.

Companies will continue to receive the breaks unless the law is changed,

United States trade authorities say they think that the European Union brought this case primarily out of
bitterness against Washington for using the W.T.O. to pry open European markets for bananas and hormone-
treated beef. But European officials say that is not the case, and they point in particular to the advantage the tax
break gives Boeing in its competition with the European consortium Airbus Industrie for global aircraft sales.

The W.T.O. first ruled against the United States in February 2000. In response, Congress tinkered with the
Jaw that fall. But the European Union said the new law was no better than the old one, and last August, the
World Trade Organization agreed. Today's ruling came on an appeal of the decision last August.

“Now it is up to the U.S, to comply with the W.T.O.'s findings to settle this matter once and for all," said
Pascal Lamy, trade commissioner of the European Union.

The Europeans have threatened to impose tariffs as high as 100 percent on a broad list of American goods
including iron, steel and aircraft. If that were to happen, the United States would surely retaliate with stiff
sanctions of its own.

But few people who follow trade matters expect an all-out trade war. "Trans-Atlantic trade is so vast and so
beneficial that neither side can afford a breakdown,” an American trade official said today,

The issue, therefore, is what concessions Washington will have to make to mollify the Europeans and comply
with world trade rules.

“The United States respects its W.T.O. obligations, which serve America's interests," Mr. Zoellick said, "and
we intend to continue to cooperate with the E.U. in order to manage and resolve this dispute. This is an
especially sensitive dispute that, at its core, raises questions of a level playing field with regard to tax policy.”

7. WTO Rules Against U.S. Tax Breaks, Opening the Way for EU Retaliation * THE WALL STREET
JOURNAL

01/17/2002

0080000001144


RE: IN THE NEWS; 1/15/02 Page 33 of 37
Beverly Hills owed the IRS or how much it had been a ssessed in penalties.

Chief of Police and City Manager Joe Collins said Butt's late payments to the IRS probably were the
result of the lagging cash flow, which often left it short of money to meet expenses, a problem officials
still have.

In an interview, Chambers said the municipality had paid the IRS about $18,900 a few months ago but
added that he did not know how much more was owed. "That was the bulk of it,” said Chambers, adding
that Hochschild, Bloom & Co., the auditor, had worked to have some of the penalties reduced.

Chambers said the amount was significant because of penalties "from years past that didn't get paid." He
added that over the years, the insurance premiums sometimes were not paid and other times were paid
late, "It was all kind of messed up,” he said. “It was before I was hired. I'm kind of winging it.”

The financial tangle also has cost money as the auditing fees mount. "Some months the auditor's bill is
$1,400 and some months it's $2,500," Chambers said.

"If they were doing just our bookkeeping from month to month, the bill should run about $600 a month if
everything was in proper order,” he said, "It’s a small city, and there's not much to do, But when you start
calling back and forth and play phone tag with the IRS, the price tag goes up.”

Chambers said officials had tried to carry on after the books had been found after Butt's death but that
without knowing balances in the accounts, the tangle deepened.

"Things got messed up more,” he said. "They were already messed up, but we didn't know it. After
several months with bills coming in and sitting around with no one knowing what to do, they got messed
up even more.”

He estimated Beverly Hills was about $20,000 in arrears on its bills and is struggling to catch up. He said
the amount was significant for a small municipality such as Beverly Hills.

"As money comes in, we kind of catch up and then we go behind, then we catch up and go behind again,”
he said,

On another matter, the board approved a $1 hike in the city’s trash collection fee and adopted guidelines
for its lateral-sewer program, which sets a $1,000 cap on the amount the municipality will pay on a sewer
replacement.

26. Federal workers are among those who owe back taxes * The Free-Lance Star

The Free-Lance Star (Fredericksburg VA)

January 13, 2002
Federal workers are among those who owe back taxes

BY NOW, most of you have received your New Year's greetings from the federal government in the
shape of a 2001 Form 1040 and instruction book. It truly amazes me that the Intemal Revenue Service
always beats the Christmas bills to my mailbox.

As the nation's premier tax collector, IRS collects about $2 trillion annually. Though most citizens
comply with our tax laws by filing returns and paying taxes, some do not.
01/17/2002

00800000001129


approximately 44,000 miles of natural gas pipelines; the exploration for and development and
production of natural gas and crude olf in the United States and internationally; the production,
Purchase, transportation and worldwide marketing of natural gas liquids and refined petroleum
Products; the independent (i.¢.. non-utility) development, promotion, construction and operation of
power plants, natural gas liquids facilities and pipelines in the United States and imernationally; and
the non-price regulated purchasing and marketing of energy related commitments.

Transportation and Operation. Enron's operations include the interstate and intrastate trans-
mission of natural gas, construction, management and operation of natural gas and natural gas
‘liquids pipelines, liquids plants, clean fuel plants and power facilities, Enron and its subsidiaries
operate domestic interstate pipelines extending from Texas to the Canadian border and across the
southern United States trom Florida to California. Included in Enron’s domestic interstate natural
98S pipgiine operations are Northern Natural Gas Company ("Northern"), Transwestern Pipeline
Company (''Transwestern"), and Florida Gas Transmission Company ("Florida Gas”) (indirectly
50% owned by Enron), and all such pipelines are Subject to the regulatory jurisdiction of the Federal
Energy Regulatory Commission. Each pipeline serves customers in a Specific geographical area:
Northern, the upper Midwest; Florida Gas, the State of Florida; and Transwestern, principally the
California market. In addition, Enron holds a 13% interest in Northern Border Partners, L.P., which
owns a 70% interest in the Northern Border Pipeline system. An Enron subsidiary operates the
Northern Border Pipeline system, which transports gas from western Canada to delivery points in
the midwestern United States. Also, Enron has an approximate 15% interest in Enron Liquids
Pipeline, L.P., which is engaged in pipeline transportation of natural gas liquids, refined petroleum
products and carbon dioxide, operates coal terminalling, gas processing and natural gas liquids
fractionation facilities, and is operated by a wholly owned subsidiary of Enron.

Domestic Gas and Power Services. Enron Capital & Trade Resources Corp. and its affiliated
companies ("ECT") purchase natural gas, natural gas liquids and power through a variety of
contractual arrangements, Including both short- and long-term contracts, the arrangement of pro-
Suction payment and other financing transactions, and other contractual arrangements. ECT

connection with natural gas, gas liquids and power transactions through both physical delivery and
financial arrangements.

ECT offers @ broad range of non-price reguiated natural gas merchant services by tailoring a
variety of supply and marketing options to its customers’ specific needs. ECT's strategy is to
Provide predictable pricing, reliable delivery and low cost capital to its customers. ECT provides
these services through a variety of instruments, including forward contracts, swap agreements and
other contractual commitments.

Certain Enron subsidiaries are engaged domestically in the extraction of natural gas liquids
(ethane, propane, normal butane, isobutane and natural gasoline), which are typically extracted from
Natural gas in liquid form under low temperature and high pressure conditions. Ethane, propane,
normal butane, isobutane and natural gasoline are used as feedstocks for petrochemical plants in
the production of plastics, Synthetic rubber and other products. Normal butane and natural gasoline
are used by refineries in the blending of motor gasoline. Isobutane is used in the alkylation process
fo enhance the octane content of motor gasoline and is also used in the production of MTBE, which
's used to produce cleaner burning motor gasoline. Propane is used as fuel for home heating and
cooking, crop drying and industrial facitities and as an engine fuel for vehicles, and ethane is used as
8 feedstock for synthetic tuets production,

International Gas and Power Services. Enron's international activities principally involve the
independent (non-utility) development, acquisition, promotion and Operation of natural gas and
Power projects and the marketing of natural gas liquids. As Is the case in the United States, Enron's

7

00900000000182


SELECTED FINANCIAL DATA OF ENRON

The financial information set forth below has been derived from the audited and unaudited
Consolidated financial statements of Enron. The information should be read in connection with, and
ts qualified in its entirety by reference to, Enron's financial statements and notes thereto
Incorporated by reference herein. See “Incorporation of Certain Documents by Reference. The
interim data refiects all adjustments which, in the opinion of the management of Enron, are
necessary to present fairly such information for the interim periods, The results of operations for the
nine-month periods are not necessarily indicative of the results expected for a full year or any other
interim period,

Ning Montiee
. Year Ended December 31, September 30.
” eo 1981 «10821903 1904 “toua io0s
(te mitions)
Income Statement Deta:
MONON iss cnasctinacddistcadanseebeeaGhtevans $5,400 $5,096 $0,415 $7,005 $0,964 $6,307 $e.600

3528 3.646 4,222 S587 6517 4631 4,728
661 aM oe (1057) 1,033 m4 7

102 125 vor ” 65 w

+ $9849 $10,070 $10,312 $11,504 $11,900 $13,029
2983 3109 2450 (2.061 «2,805 3.425

- = - au a7 396

Ld 101 179 we mm 6

1538 61,901 2518 26232880 3107

ended December 31, 1993 inciudes » primarily non-cash charge of $54 milion to adjust for the
Increase tn Ore comporsas tadares tasting Gs then heen St peo eae ne:

00900000000185


RE: IN THE NEWS: 1/15/02 Page 1 of 37
Bradshaw, Tara

From: Allen Maureen C [Maureen.C Allen@irs.gov}
Sont: Wednesday, January 16, 2002 9:37 AM
To: Washington Linda J; Walas Carolyn; Charies A. Lacjan (E-mail); Charles L. Kolbe (E-mail); Goss Denise L

TIGTA; Desler Anne C; George E. Farr (E-mail); Hart Dale F; Rosenker Heather 8; Joelle Jordan (E-mail);
Karen Hastie Williams (E-mail); Bassette Loretia J; Levitan {E-mail}; Loor Marlene; Steve Nickles (E-mail);
Tara Bradshaw (E-mail); Taytor Gloria L

Cc: Heschel Jerald H; Grant Caryl S; Dixon Teri J; ‘Rothbacher Ruth A’; Boykin Lina D; Lemons Terry L;
Olson Nina E

Subject: RE: IN THE NEWS: 1/15/02
Importance: High

Could we follow up with Tom Herman?

This is terrific coverage of the Taxpayer Advocate Service, yet I can't help recalling a discussion
several months ago in which I learned that the Taxpayer Advocate Service criteria for accepting a
case beyond its insolubility over time - and rightly so; they would be inundated!

The article doesn't indicate that Tom knows that taxpayers with long-standing problems have
another alternative. Everyday Tax Solutions, a face/face appointment between an IRS decision-
maker and the taxpayer or his/her representative, is available at every taxpayer assistance center in
America...at the taxpayer's convenience.

The Field Assistance organization has replaced the old "Problem
Solving Day” with Everyday Tax Solutions, and it is a perfect complement to the work of the
Advocate,

——Crginat Message
From: Wnshingion Linds J
Sent: Tuesday. Jawwary 15, 2002 220 PM

To: Catolyn Walas (E-maik Charles A Lacijan (f-mak); Cranes L Kote (E-nal), Denise (. Goss (E-mai Dosier, Anne; Gecege & Farr (E-maiy,
Hart, Dale; Heather B Rosenkar (E-mai, Joele Jordan (Ema: Karen Hasse Witams (E-mail); Lorntta J. Bassetio (E-mail), Lnevitan (E-mail); Masene
Loor (E-mad); Maureen C. Atlen (E-mae}: Steve Nicniag (E-mal); Tara Bragsnaw (E-mail) Tayler, Gloria

Subject! INTHENEWS: 1/1502

Today's Contents

12S

1, Tom Herman on Taxes * THE WALL STREET JOURNAI \\ew ¢ > .
THE WALL STREET JOURNAL CA OS

January 15, 2002

Tom Herman on Taxes

01/17/2002

00800000001097


From: Holahan, Betsy

Sent: Thursday, January 10, 2002 5:10 PM.

To: Lee, Sharon; Fratto, Tony; Bradshaw, Tare; Scolinos, Tasia; Strickler, Marie; Alvarado,
Carmen

Ce: Davis, Michele, Nichols, Robert

Subject; RE: Good Night

GN

Greg Ip of WSJ doing something short on proposed changes to rules regarding the collection of race
and gender data by lenders (talking to Sheila on background)

CNBC called to say they booked someone else for their Enron piece

Gotten calls en pension rules review - wires, TX papers

Got @ few calis on Sheila's new DAS for Financial Institutions and GSE Policy (Rep.

von Original Message--~

From: Lee, Sharon

Sent: ‘Thursday, Jenuary 10, 2002 5:00 PM

To: Fratto, Tony; Gradshaw, Tara; Scolinos, Tasia; Hotuhan, Betsy; Strekler, Marie; Alvarado, Carmen

Subject: Good Night

Please let me know when you get a chance. Also, please remember to update Michele of any important press items.

0080000000625


DEPARTMENT OF THE TREASURY
WASHINGTON, D.C, 20220

ACTION

MEMORANDUM FOR DEPUTY ASSISTANT SECRETARY SCHUERCH
FROM: Joseph B, Eichenberger, be

Office of Multilateral Development Banks
SUBJECT: Proposed EBRD Investment in Golden Telecom

ACTION FORCING EVENT:

EBRD Management will seek approval at the upcoming Board meeting on September 7, 1999 to
invest up to $35 million in the IPO of Golden Telecom on the NASDAQ.

RECOMMENDATION:

‘That we instruct the USED at the EBRD to vote “no” on the proposed investment as we do not
believe a company listed on a developed country stock exchange requires IFI support.

Agree \ } Disagree Let's Discuss
AUG 31 1888
DISCUSSION:

EBRD proposes to invest up to $35 million in Golden Telecom as part of a $150-$200 million IPO
and then list the shares on the NASDAQ. Golden Telecom is a wholly owned subsidiary of
Global TeleSystems, GTS, a pan-European telecommunications group listed on the NASDAQ and
EASDAQ markets, as well as the Frankfurt Stock Exchange with a market capitalization of
approximately $6 billion. GTS would retain a majority share in Golden Telecom and sell a
minority stake in its CIS telecom group, which in the past accounted for the majority of GTS"
financials, through the proposed IPO.

We recommend opposing the proposed investment. [(b)(5)]

00500000000523


Mark G. Papa has been President-North American Operations since February 1994. From May
1986 through January 1994, Mr. Papa served as Senior Vice President-Operations. Mr. Papa joined
Belco Petroleum Corporation, a predecessor of the Company, in 1981 as Division Proguction
Coordinator and served as Senior Vice President-Drilling and Production, BelNorth Petroleum
Corporation from May 1984 until May 1986.

Waiter C. Wilson has been Senior Vice President and Chief Financial Officer since May 1991,
Mr, Wilson joined the Company in November 1987 as Vice President and Controller and was named
Senior Vice President-Finance in October 1988. Prior to joining the Company Mr. Wilson held
financial management positions with Exxon Company, USA for 16 years and The Superior Oil
Company for four years.

Ben 8. Boyd has been Vice President and Controlier since March 1991. Mr. Boyd joined the
Company iMarch 1989 as Director of Accounting and was named Controller in May 1990. Prior to
Joining the Company, Mr. Boyd held financial management positions with DeNovo Oil & Gas, inc.,
Scurlock Oil Company and Coopers & Lybrand.

Dennis M. Ulak has been Vice President and General Counsel since March 1992. Mr. Ulak
Joined the Company in March 1987 as Senior Counsel and was named Assistant General Counsel in

August 1990. Prior to joining the Company, Mr. Ulak held various legal positions with Enron Corp,
and Northern Natural Gas Company,

THE SELLING STOCKHOLDER
Before Stock Orterage gneree to Alter Bock Offeringe( 1)¢2)
Seting Stockholder © _Shares_ Percentage _be Seidii)_ Shares ‘Percentage:
Enron Corp. 128,000,000 80% = 27,000,000 101,000,000 63%
(1) Assumes that the Underwriters’ over-allotment options in the Stock are not exercised. if such
options are exercised in full, Enron will se 31,050,000 shares of ‘Stock in the Stock

Offerings and will beneficially 96,950,000 shares of Common Stock (approximately 61% of the
outstanding shares) aher the Stock Offerings.

(2) Concurrently with the Stock Enron Corp.

commissions and certain legal fees and expenses.

ue

00900000000237


Nichols, Robert

From: Nichols, Robert
Sent: Tuesday, January 08, 2002 2:54 PM
To: Quinn, Kati
RE: enron

not sure
will attempt to find out
Rob Nichots
Deputy Assistant Secretary for Public Affairs
ts] it of the Treasury
(202) 622-2910

~-u Original Message-—

From: Quinn, Katte

‘Sent: Tuesday, January 08, 2002 2:54 PM

To: tichots, Robert: Davis, Michele

Subject: enron

Michele and Rob,

Do you happen to know what entity within Trea: ‘would be responsible for examining Enron. | know the Secretary
ae eee ari tis pesee arial w cevabe cl Cie micos nowved in tral cave.

(The question hs come up because | revolved 8 call orn , the Permanent Subcommittee on Investigations. They
have launched a major congressional investigations into this matter and are interested in Treasury's role.

Any direction you can provide would be appreciated.

(202) 622-0725
katie quinn@do treas.gov

3

00800000000480



_— OE
Sone Thr oruery 10, ante 35 AM

To: Thorson McCardell, 0:

Subject:

‘See you at 1:45 pm

Original Message-—-
From: Lakritz, Robb
Sent: Wednesday, Jarsary 09, 2002 6:44 PM
To: Hurt, Betty Ann; McCardell, Dan
Subject: RE:

1:45 p.m. works for me. We will come down and see h

Thanks.

Robb Lakritz

Original Message--->

From: Hunt, Betty Ans

Sent: Wednesday, January 09, 2002 6:59 PM
McCardell, Ban

e

To: Laksitz, Rob);
Subject: RE:
Right now Sheila ts available at 1:45 (45 min) of 4:30 pm (1 hour). Please let me know what works for you.
+--—-Oniginal Message———
From: Bar, Sheta
Sent: Wednesday, January 09, 2002 6:56 PM
To: Lakritz, Robo; =n
Subject:
yep— | will try to make time. Tomorrow is tough. Betty -- please try to work in
~—-Original Mezsage-——
From: Lakntz, Robe
Sent: Tuesday, January 08, 2002 2:45 PM
To: Bair, Sheita
Ce: McCardell, Dan; Adams, Tim; Oa, Ken; Grows, Jared; Kupter, Jeffrey
Subject:
Shetla,

Do you have time tomorrow to meet +

internal policy roundtable we are
Enron situation and ancillary d

ping

Thanks.
Robb LaKritz

Tracking: Recipient
‘Laknitz. Robb
MeCardes, Dan

prents

th Dan McCardell and me to discuss an

t together on issues related to the

Read
Read: 1/1002 646 AM
Read: 1/1002 6:50 AM

01200000000962


Hughes, Gerry

From: McGivern, Tom

Sent: Wednesday, October 31, 2001 9:20 AM

To: Elits, Dina; Carleton, Norman; Bitsberger, Timothy; Bair, Sheila; DeMarco, Edward: Ellett,
Martha; Gabilondo, Jose; Gross, Jared: Huffman, Lucy; Hughes, Gerry; Mcinermey, Roberta;
Nickoloff, Peter; Roseboro, Brian; Salladin, Anne; Schulthess, Heidilynne; Smith, Amy;
Sutton, Gary; Tishuk, Brian; Duncan, John; Sanders, Traci; Dorsey, Karen

Subject: RE; Netting Letter to be Signed by PWG and FDIC, OCC, and OTS
{(b)(5)]
~-—-Oniginal Message—-—-
From: Elis, Dina
Sent: Tuesday, October 30, 2001 3:02 PM
To: Carleton, Norman; Bitsberger, Timathy; Bait, Shells; Constantine, Eleni; DeMarco, Edward; Ellett, Martha; Gabllondo, Jose: Gross,
g \, Lucy; a Ie Peter; Roseboro, Brian; Saliadin, Anne;

| have spoken to a variety of people on possible movement of the bankruptcy bill There is a slight chance that there
will be a conference meeting next week but | don’t see fasat movement on the bill.

;
i
if
if
i
H
z
i
}
i
g
;

F fom; Mcinemey, Roberta; Nickoloff, Peter; Roseboro, nan; Salladin, Anne;
‘Schuithelss, Heiditynne; Amy; Sutton, Gary; Tishuk, Brian
‘Subject: Netting Letter to be Signed by PWG and FDIC, and

<< File: Netting letter.doc >>

Attached is the proposed netting letter from the Federal Reserve. (it has merge mail features that you
will have to delete in order to read it, Alternatively, you can use the quick view program to access the
document.) It is awaiting approval from SEC Chairman Pitt. Below is an article | sent around earlier
today indicating that some are trying to revive the Bankruptcy bill,

((b)(5)]

Norman Carleton

Bankruptcy Conference May Resume As Netting Bill Considered

The House Judiciary Committee will be turning its attention to other matters in the weeks
remaining before adjournment - possibly including a conference on bankruptcy, CongressDaily
reported. Further work on the legislation had been postponed after the Sept. 11 attacks
occurred. The House and Senate conferees had been poised to meet Sept. 12. A spokesman
for the committee yesterday said that no new conference date has been set, but staff members
in recent weeks have continued to work on technical aspects of the bankruptcy measure.
Judiciary Committee Chairman James Sensenbrenner (R-Wis,), who is chairing the
conference committee, is determined to make a go of it before members leave town for the
year, according to sources. While noting that the committee's agenda had not yet been

1

01200000001310


Strickler, Marie

a

From: Strickler, Marie

Sent; Tuesday, January 15, 2002 11:20 AM

To: Davis, Michele

Subject PHONE CALLS

[OUTSIDE SCOPE]

11,06 393-4340 Bob Novack- Pls call re the Secy's connection with Mr, Wirth & Mr. Lay in the
Kyoto Treaty

tis4 861-4032 Jeff Birnbaum, Fortune Mag, REF: ENRON

00800000000538 |


From:
To:
Date:
Subject:

Tom--

Potor Nickotott
MCGIVERNT

6/10/99 2:35pm
Enron Proposal

| work for Norman Carleton, who is out this week. Although it's not an issue | usually caver, Norman asked me to
keep tabs on events/actions relating to Enron's proposed changes to the Bankruptcy Code. Has anything happend

this week, or is anything pending, that might be of interest?

Thanks,
Poter Nickolot
622-1692

01774

01200000000430


RE: IN THE NEWS: 1/15/02 Page 21 of 37

count assets held in a child’s name much more heavily than assets in the parent's name.

Alternative minimum income: Higher-income individuals should pay close attention to their vulnerability
to the alternative minimum tax, or AMT, which inflates the tax bills of people who are able to make use
of various tax breaks to slash their regular tax liability below certain levels. The number of taxpayers
affected by the AMT is projected to double this year and continue to grow at a rapid rate in the years
ahead, partly because of the new law's reduction in the top tax rates,

Knowing whether you're likely to be hit by the AMT is important because strategies to minimize or avoid
the AMT are much different than you'd normally employ.

14, Changes to 403(b) plans help teachers save for retirement * USA TODAY

USA TODAY
January 15, 2002, Tuesday, FIRST EDITION
SECTION: MONEY; Pg. 3B
LENGTH: 790 words
HEADLINE: Changes .to 403(b) plans help teachers save for retirement
BYLINE: Sandra Block

BODY:

Much has been said about the misplaced priorities of a society that rewards mediocre baseball pitchers
with multimillion-dollar contracts while public school teachers cam less than $ 50,000 a year. Less has
been said about the raw deal teachers get when it comes to saving for retirement.

Like private-sector workers with access to a 401(k) plan, teachers can arrange to have a portion of their
salaries deposited in a retirement savings plan, known as a 403(b). Money contributed to a 403(b) isn't
taxed until it is withdrawn, usually when the plan owner retires. But 403(b) plans, which are offered to
teachers and other non-profit workers, have been dogged by high expenses and C-minus performance.
And even teachers with doctorates have been baffled by the Maximum Exclusion Allowance, a
complicated set of rules that governed how much they could contribute every year.

Fortunately, the Economic Growth and Tax Relief Reconciliation Act contained some big changes in
403(b) rules, effective Jan, 1. Among the major reforms:

* Higher contribution limits. Like savers in 401(k) plans, most teachers will be able to contribute up to
$ 11,000 to their 403(b) plans in 2002. Teachers who are age 50 or older will be able to contribute up to $
12,000 in 2002, under a "catch-up" provision designed to encourage older workers to save,

Some educators will be able to save much more, Many state and local governments offer 457(b) plans,
another type of tax-deferred savings program, to government employees, including teachers, But in the
past, teachers who participated in a 403(b) plan couldn't participate. Starting this year, teachers who are

eligible for a 403(b) and a 457(b) plan can contribute the maximum to both — up to $ 22,000 in tax-
deferred savings a year, says Barbara Perry, vice president, public retirement plans for TIAA-CREF.

* The end of the Maximum Exclusion Allowance. Some teachers may still need to do some
rudimentary calculations, Perry says. But most will be able to rely on the $ 11,000 limit and forget about

01/17/2002
00800000001117


{(b)(5)]

Norman
Message———

From: Hammond, Donald
Sent: Thursday, February 15, 2001 8:26 AM
To: Data Ever Em, a; Hunan, Lacy; Carel, oman; Maem, Rare; Coraannn et em Gory: Saver

Cc: Testwk, Brian; Robbins, Eric
Subject: RE: Bankruptcy Reform Mark-up Hearing

((b)(5)]
Don
—--Onginal Message-——
From: Oemarco, Edward
Sent: ‘Thursday, February 15, 2001 8:22 AM

To: Hammond, Donald; Els, Dina; Huffman, Lucy; Carleton, Norman; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

Lawranne
(Cc: Teshuk, Brian; Robbins, Eric
‘Subject: FW: Bankruptcy Reform Mark-up Hearing

FYI

Original Message—

From: Robbins, Enc

Sent: Wednesday, February 14, 2001 5:45 PH
To: DeMarco, Edward
Cer Tishuk, Brian
Subject: Barkruptcy Reform Mark-up Hearing

HLR. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001" was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass, Voting occurred
largely along party lines, The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions
and netting requirements.

01200000001217


Bankruptcy Conference May Resume As Netting Bill Considered

The House Judiciary Committee will be turning its attention to other matters in the weeks
remaining before adjournment - possibly including a conference on bankruptcy,
CongressDaily reported. Further work on the legislation had been postponed after the
Sept. 11 attacks occurred, The House and Senate conterees had been poised to meet
Sept. 12. A spokesman for the committee yesterday said that no new conference date has
been set, but staff members in recent weeks have continued to work on technical aspects
of the bankruptcy measure. Judiciary Committee Chairman James Sensenbrenner (R-
Wis.), who is chairing the conference committee, is determined to make a go of it before
members leave town for the year, according to sources. While noting that the committee's
agenda had not yet been formulated, his spokesman did not rule out the prospect. “It's
definitely a possibility,” he said.

Moreover, members of the House Financial Services Committee are trying to move a
provision of the bankruptcy legislation pertaining to financial netting-perhaps as part of the
economic stimulus package-in the event the underlying bill remains stalled.

That provision is designed to strengthen and update current statutory protections for netting
financial market contracts if a party defaults. The netting language of the bill was one of
the few consensus items included in the bankruptcy legislation. The economic downturn
and the widening number of commercial bankruptcies could help create even stronger
impetus for the provision to move separately, sources said.

House Financial Services Committee ranking member John LaFalce (D-N.Y.) urged shortly
after the Sept. 11 terrorist attacks that the netting language be moved “expeditiously.” In
response, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan
agreed “whether as part of comprehensive bankruptcy reform legislation or as a stand-
alone bill, Congress should not fail to enact netting legislation this year." The Financial
Services Committee had considered placing netting legislation on the schedule for markup
this Wednesday, when it takes up a host of other bills. Committee leaders decided against
such action, however. A spokeswoman for House Financial Services Committee
Chairman Michael Oxley (R-Ohio) said he remained hopeful that the underlying bankruptcy
bill could move intact.

01200000001307


IN THE NEWS: 1/14/02

Meanwhile, the attomey for Jeffrey Skilling, Enron's former chief executive,
said that Mr. Skilling answered all questions. Enron Chairman Kenneth
Lay hasn't yet been interviewed by the SEC.

Despite SEC Chairman Harvey Pitt's push for “real-time enforcement" to
speed resolution of securities-fraud cases, the complex facts surrounding
the investigation of Enron and Arthur Andersen will prevent the agency
from finishing its probe before year end, these people say.

Arthur Andersen's role in the Enron probe suggests a clear-cut reason for
Mr. Pitt to recuse himself from action on the matter. Mr. Pitt's former
law-firm clients include Arthur Andersen and the other Big Five accounting
firms.

The SEC's Ms. Harlan declined to comment on whether Mr. Pitt will
recuse himself from the Enron probe. Mr. Pitt has said he wouldn't take
part in decisions by the commission related to his former law-firm clients
for a year, she said.

But ethics rules would allow Mr. Pitt to act on a possible Enron case after
August when he completes his first year as chairman.

"It's not the general practice af public officials to announce each time they
decided not to participate in a matter," said David Becker, the SEC's
general counsel.

He added that "there are many circumstances in which it's unwise to
announce a recusal. It might involve information that's not public or it might
allow people to game the system and cause people to be recused.”

Attorney General John Ashcroft, who received Enron contributions when
he was a US, senator, recused himself from the criminal probe last week,
as did the whole U.S. Attomey’s office in Houston, where Enron has its
headquarters,

-- John McKinnon contributed to this article,
7. A Proposal to Reduce Estate-Tax Paperwork * The New York Times

The New York Times

January 13, 2002, Sunday, Late Edition - Final

SECTION: Section 3; Page 8; Column 1; Money and Business/Financial Desk

LENGTH: 375 words

Page 10 of 36

HEADLINE: PERSONAL BUSINESS: DIARY; A Proposal to Reduce Estate-Tax Paperwork

BYLINE: By David Cay Johnston

BODY:

When death ends a marriage, the surviving spouse inherits everything free of tax. Yet the federal government

01/17/2002

00800000001179


IN THE NEWS: 1/14/02 Page 3 of 36
3. Supreme Court To Hear Tip Tax Case * Associated Press

Associated Press

Jan, 12, 2002

Supreme Court To Hear Tip Tax Case
By GINA HOLLAND

WASHINGTON (AP) -- The Supreme Court agreed Friday to hear Bush
administration arguments that restaurants have been given too much leeway on
their taxes.

Justices will decide how much flexibility the IRS has in calculating taxes
that businesses owe from employees’ tips.

Determining taxes from tips has long been a troublesome task because often
the tips are cash and workers handle their own paperwork.

The Supreme Court sided with the IRS nearly 30 years ago in a case involving
employees accused of underreporting tips. This dispute deals with audits of
restaurants.

The court is being asked to affirm the practice of estimating the amount of
tips that should have been given to employees, then using that amount to
determine whether correct taxes were collected from their employer,

An appeals court has ruled that the practice is improper,

Solicitor General Theodore Olson said in court filings that without accurate
or complete records “the IRS has no plausible alternative but to rely on an
indirect method to estimate the tips."

The lawyer for San Francisco restaurant Fior d'Italia sces it differently.

“It would appear (the government) seeks the authority to unleash thousands of
untrained IRS agents, wholly unfamiliar with the nuances of vastly varying
restaurant operations and tipping practices and procedures, on the hundreds

of thousands of restaurants across the country,” Tracy J. Power told the
court.

Power said the IRS did not take into account cheap tippers, takeout meals or
tip-sharing among hostesses and other staff.

Justices agreed to consider reversing an earlier court victory for Fior
d'Italia, an Italian restaurant which dates back to the 1880s.

A panel of the 9th U.S, Circuit Court of Appeals said the IRS had "some

serious flaws” in its calculation for taxes and restaurants could end up
paying too much.

01/17/2002

00800000001172


Sutton, Gary

From: Ellett, Martha
Sent: Wednesday, August 29, 2001 11:59 AM
To: Carleton, Norman
Cc; Gabilondo, Jose; Sutton, Gary
Subject: RE: Status of Retail Swap Study and the Enron Issue
[(b)(5)]
Martha
Original Message

From: Carleton, Norman

Sent: Wednesday, August 29, 2001 11:15 AM

To: Fisher, Peter; Roseboro, Brian; Baw, Sheila; Nickolof!, Peter; Schulthess, Heid@ynre; DeMarco, Edward; Hughes, Gerry: Gross,

Jared; Smith, Amy; Sutton, Gary; Elett, Martha; Gadlondo, Jose; Melnerney, Roberta; Lom Sanatamorena (E-mal)
‘Subject; ‘Status of Reta Swap Study and the Enron Issue

((b)(5)}

00200000000102


The House Judiciary Committee will be turning its attention to other matters in the weeks
remaining before adjournment - possibly including a conference on bankruptcy,
CongressDaily reported. Further work on the legislation had been postponed after the
Sept. 11 attacks occurred, The House and Senate conferees had been poised to meet
Sept. 12. A spokesman for the committee yesterday said that no new conference date has
been set, but staff members in recent weeks have continued to work on technical aspects
of the bankruptcy measure. Judiciary Committee Chairman James Sensenbrenner (R-
Wis.), who is chairing the conference committee, is determined to make a go of it before
members leave town for the year, according to sources. While noting that the committee's
agenda had not yet been formulated, his spokesman did not rule out the prospect. “It's
definitely a possibility,” he said

Moreover, members of the House Financial Services Committee are trying to move a
provision of the bankruptcy legislation pertaining to financial netting-perhaps as part of the
economic stimulus package-in the event the underlying bill remains stalled.

That provision is designed to strengthen and update current statutory protections for
netting financial market contracts if a party defaults. The netting language of the bill was
one of the few consensus items included in the bankruptcy legislation. The economic
downturn and the widening number of commercial bankruptcies could help create even
stronger impetus for the provision to move separately, sources said.

House Financia! Services Committee ranking member John LaFalce (D-N.Y.) urged shortly
after the Sept. 11 terrorist attacks that the netting language be moved “expeditiously.” In
response, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan
Greenspan agreed “whether as part of comprehensive bankruptcy reform legislation or as
a stand-alone bill, Congress should not fail to enact netting legislation this year.” The
Financial Services Committee had considered placing netting legislation on the schedule
for markup this Wednesday, when it takes up a host of other bills. Committee leaders
decided against such action, however. A spokeswoman for House Financial Services
Committee Chairman Michael Oxley (R-Ohio) said he remained hopeful that the underlying
bankruptcy bill could move intact.

01200000001039


IN THE NEWS: 1/14/02 Page 5 of 36

business bank account, get health insurance, or even deposit or pay taxes properly.

Minna Kahn, a certified public accountant in Bethesda, said she began calling Dec, 24, trying to get EINs for
clients, and got nothing but busy signals or a recorded message saying please call back later. She called at 7 in
the moming, all during the day and into the evening -- always with the same result, she said.

The agency is not responding for some other requests, either. One of Kahn's clients wanted to make an
election to be treated as a Subchapter S corporation, a form often used by small businesses because it allows
profits and losses to be passed through to owners for tax purposes, But there is a deadline for doing this, and her
client saw it looming. Kahn could not get through by fax, so she mailed the application, but as of last week she

had gotten no response.

"It is just so frustrating. They want you to comply with the requirements, then you are at a total loss,” she said.

Likewise Susan B. Levine, just starting a company in the District, hit the same EIN wall.

She and her attomncy, Julian Spirer, started trying Dec. 18, expecting to get the number in a couple of days.

No such luck. “We've been in phone-recording hell," she said last week.

The IRS says that (a) it is sorry, and (b) it is working to get things fixed.

The explanation, IRS spokesman Tim Harms said, is that the agency had to shut down its system to do year-
end processing, and on Jan. | it converted to a new single national phone number for these requests. The
backlog from the December shutdown, combined with more new requests than expected, overwhelmed the new
phone system. And the situation was made worse by taxpayers calling to try to find out what had happened to
fax and mail requests.

“We've redirected personnel to make sure calls are answered timely,” and “there should be significant

improvement by Jan. 18," Harms said, adding that the agency is also tackling that backlog. But “it will probably
take us about three wecks to catch up,” he said.

There is hope -- of sorts. By the end of last week, both Kahn and Levine, displaying small-business initiative
and tenacity, said they had gotten their numbers. Kahn just kept calling, and all of a sudden she got through.

Levine took her problems to the office of the National Taxpayer Advocate, where an IRS worker promised to
help and assigned her a case number, though not an employer number. Then on Thursday, she said, "the
taxpayer advocate came through for me, I have an EIN. I spoke to the most delightful person, She was most
helpful . . ., so it's a nice happy ending."

Meanwhile, the IRS hopes people who do not absolutely have to will hold off on calling. The more calls it
gets, the harder it is to catch up.

Small businesses contemplating starting an employee retirement plan - or that have a relatively new one —
get a break this month.

Under the tax-cut bill passed last year, the customary “user fee” assessed by the IRS for a favorable
determination letter on the tax-qualified status of a retirement plan is waived for employers with 100 or fewer
employees.

These determination letters allow an employer to show the IRS the plan, and the agency can determine if it
passes all the tests for favorable tax treatment,

01/17/2002
00800000001174


Strickler, Marie

From: Sharer, James

Sent: Tuesday, January 15, 2002 4:43 PM

To: _DL_Market Group, Andrew D. Sacher, David Griffiths; Eric H. Otto: Jay Hoffman; Lundsager,
Meg, Philippa Malmgren; reidjp, Shevlin, Thomas, walang. wayneea

Subject: Financial Markets Night Report 1/15/02

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00900000000176


represents @ yield that is lower than Enron's normal cost of issuing debt with a similar term to the
Exchangeable Note (Enron's Mid-Term Borrowing Rate"), If the stated interest on the Exchange-
able Note represents a yield that is lower than Enron’s Mid-Term Borrowing Rate of
percent, Enron and the holders agree to allocate to the Exchange Note an amount, less than the
Principal amount of the Exchange Note, calculated by discounting the cash flows relating to the
Exchange Note at a rate equal to Enron's Mid-Term Borrowing Rate, and to allocate to the Purchase
Contract the remainder of the purchase price of the Exchangeable Note,

If the amount allocated to the Exchange Note (its deemed issue price) is less than the stated
Principal amount of the Exchangeable Note, the Exchange Note will be treated as having OID. In that
event, a U.S. Holder will be required to include in income OID as it accrues, in accordance with a
constant-yield method, in an aggregate amount equal to the difference between the stated principal
amount of the Exchangeable Note and the deemed issue price of the Exchange Note. However, if
the amount of OID relating to an Exchange Note is less than three-fourths of one percent of the
stated priptipal amount of the Exchangeable Note, no amount of OID will be deemed to exist with
respect to the Exchange Note. A U.S. Holder's tax basis in the Exchange Note will increase over its
term by the amount of OID included in such holder's income with respect to the Exchangeable Note

Upon the sale or other disposition of an Exchangeable Note, a U.S. Holder generally will be
required to allocate the amount realized between the two components of the Exchangeble Note on
the basis of their then relative fair market values. A U.S. Holder will recognize gain or loss with
respect to each component equal to the difference between the amount realized on the sale or other
disposition for each such component and the U.S. Holder's tax basis in such component. Such gain
OF loss generally will be long-term capital gain or loss if the U.S. Holder has held the Exchangeable
Note for more than a year at the time of disposition.

At Maturity, pursuant to the agreement to treat the Exchangeable Note as a Unit, on the
repayment of the Exchange Note a U.S. Holder will recognize capital gain or loss which will be long-
term capital gain or loss unless Maturity occurs within one year of issuance of the Exchangeable
Note (as @ result of acceleration or otherwise) equal to any difference beween its tax basis and the
principal amount of the Exchange Note. If Enron delivers EOG Common Stock at Maturity, a U.S.
Holder will recognize no additional gain or loss on the exchange, pursuant to the Purchase Contract,
of the principal payment due on the Exchange Note for the EOG Common Stock. However, a U.S.
Holder will recognize additional capital gain or loss, which should be short-term capital gain or loss,
equal to the difference between the cash received in lieu of fractional shares and the portion of the
Principal amount of the Exchange Note allocable to fractional shares. A U.S. Holder will have a tax
basis in such shares of EOG Common Stock equal to the principal amount of the Exchange Note
‘ess the amount of the portion of the principal amount of the Exchange Note allocable to any
fractional shares. The U.S. Holder will have a holding period for the EOG Common Stock that begins
On the day after the Maturity date, and will realize short- or long-term capital gain or loss upon the
subsequent sale or disposition of such stock. Alternatively, at Maturity, if Enron pays the Exchange-
able Note in cash, a U.S. Holder will have additional gain or loss (which might be ordinary income or
joss rather than capital gain or loss) equal to the difference between the principal amount of the
Exchangeable Note and the amount of cash received from Enron.

Ouse to the absence of authority as to the proper characterization of the Exchangeable Note, no
assurance can be given that the IRS will accept or that a court will uphold the characterization
greed to in the Indenture or the tax treatment described above. Proposed Treasury regulations with

60 days or more after their publication as final regulations. Under the Proposed Regulations, the
amount of interest included in a holder's taxable income tor any year would generally be determined
by projecting the amounts of contingent payments (which might include the value of the EOG
Common Stock to be delivered at Maturity) and the yield on the instrument. Taxable interest income
would be measured with reference to the projected yield, which might be less than or greater than
the stated interest rate under the instrument. in the event that the amount of an actual contingent

25

00900000000200


SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The following table sets forth a summary of selected consolidated financial and rating information for
the Company for each of the five years in the period ended December 31, 1994 and the nine-month neriocs
ended September 30, 1994 and 1995, This information should be read in conjunction with the consolidated
financial statements of the Company and related notes thereto incorporated by reference herein (s¢e “Incorpo-
tation of Certain Documents by Reference”) and “Management's Discussion and Analysis of Financial
Condition and Results of Operations” included elsewhere in this Prospectus. Financial information for each of

Nine Months
Year Ended December 31 pete
1990 1997 1992 1903 a 1

» $ 301.845 $ 321,603 $ 388,008 $ 505,162 § 400.893 $ 365654 § s22.915
66,165 ens Sa927 55,684 e338 52.632 90.342
‘31,802 14,983 6037 13,318 S404 52,212 62.546

3106 $074 708 ssp 32 7.439
402.588 459.008 581,020 25823 avaga0 apa sed
49072 40,408 50.3440. “aye 52.918
HATO Sze 36921 “ian mer 31,590

10,764 16,355 Ala 10,803 6586
16,138 20,467 48 17,364 20.453
179,899 249,704 242,182 181.645 187,875
48 46.274 51.418 38.050 41,106
26.348 35,396 20254 22,010 25,606
353.417 465,481 466.182 344,301 e204
105,609 115,580 150.641 ~ 11.039 154.128
(3.476) 6636 2783 22 (1,143)
22.209 S921 8480 CALL 6.810
79,844 112.273 153,038 126.166 144,175
{2.247) __ (17.736) __ (25.7822) S837) 20,728 «a3 aaa
s 57,580 $138,025 147.998 $ 105438 $ 110,731
s 5 $ mes so $ 6 $ 69

2
154533 159.006 58S 159.828 __ 159.951

$1468.01) 81.546.045 $1,004,011 $1,637,782 $1,843,150
‘1.731.012 1,811,162 1,881,887, 1,055,819 = 2.100.971

~46) - 25,000 25,000 16,320
150.0006) 153,000 185,337 158,862 247,552
301,395 «227,528 184,183 195,109 224,005
826,90606) 933073 1.063419 = 1,019,712 1,140,295

(Continued on next page)

00900000000223


IN THE NEWS: 1/14/02 Page 30 of 36

21. Detroit councilwoman understated income, IRS says * The Associated Press

The Associated Press

January 12, 2002

Detroit councilwoman understated income, IRS says

DATELINE: DETROIT

City Councilwoman Barbara-Rose Collins owes the federal government more than $111,000 for understating
her taxable income and for filing returns late,

according to an Internal Revenue Service document,

Collins blamed her failure to file and dispute with the IRS on depression
that she has suffered since shortly after leaving Congress in 1996. She said she is taking medication for the
depression.

An IRS audit of Collins’ tax returns from 1996 through 1998 found that she
claimed improper deductions for items including charitable contributions,
personal exemptions and housing costs, the Detroit Free Press reported Saturday.

In 1998, Collins failed to declare more than $114,000 that should have been taxed, the IRS said, including
$55,445 she received from the sale of property.

Most of the unreported income in 1997 - $50,779 - was from pension pay.

The IRS said in its documents that many of the former congresswoman's
deductions lacked proper documentation. IRS officials declined to comment.

"I don't know why they're doing this," Collins said of the IRS. "I haven't
been employed for five years.”

She said her accountant prepared her tax returns, all of which were filed
late in June 2000.

Collins disputed the amount she owes, saying it is closer to $8,000. She
appealed the findings Dec. 4 in U.S. Tax Court in Washington and said she plans to meet and negotiate with
IRS examiners.

The IRS questioned $37,000 in charitable contributions Collins claimed as
deductions over the three-year period, saying she did not substantiate the gifts
were made, according to the documents filed in Tax Court.

Before her tax troubles, Collins came under scrutiny for her spending of
public and campaign money.
When she lost her congressional seat in 1996 to Carolyn Cheeks Kilpatrick,

Collins was under an ethics investigation that alleged she had misappropriated congressional and campaign
funds. A grand jury in Detroit investigated her, but she was never charged with a crime.

01/17/2002
00800000001200


RE: IN THE NEWS: 1/15/02 Page 13 of 37
WTO Rules Against U.S. Tax Breaks, Opening the Way for EU Retaliation

By GEOFF WINESTOCK and NEIL KING JR.
Staff Reporters of THE WALL STREET JOURNAL

WASHINGTON -- The World Trade Organization niled against a U.S.
law that gives big tax breaks to American exporters, a decision that could
open the way for the European Union to impose billions of dollars in
retaliatory duties,

An appeals panel of the Geneva-based WTO ordered the U.S. to repeal

$4 billion of tax breaks for American exporters who operate through
offshore subsidiaries, or face possible sanction. If the U.S. fails to comply,
the matter goes to an arbitration panel, which would set the level of
penalties the Europeans can impose. U.S, trade officials said April is the
¢arliest that the new duties could be imposed.

So far, the Bush administration has shown little desire to amend the law to
ease European concems.

The EU faces the difficult decision of how to exploit its victory. Few
expect swift retaliation no matter what the arbitration board decides.

Analysts say the EU is likely to use the decision as leverage to make the
USS. moderate its policies in other areas, especially a possible move by
President Bush to impose protective tariffs on foreign steel imports.

"There is no reason for the Europeans to rush
for retaliation,” Gary Hufbauer, a trade
specialist at the Institute for International
Economics in Washington, said. "This is an
important bargaining chip, but for now the EU
is likely to hold it in reserve."

If the U.S. imposes a new set of steel tariffs, a
decision Mr. Bush must make by early March, the EU could respond with
dutics on selected U.S. goods from steel-producing states such as
Pennsylvania or Indiana, Mr. Hufbauer said.

USS. Trade Representative Robert Zoellick said the administration was
“disappointed,” but not surprised by the ruling.

“This is an especially sensitive dispute that, at its core, raises questions of a
level playing field with regard to tax policy,” Mr. Zoellick said in a written
statement.

The decision, however was welcomed by European Trade Commissioner
Pascal Lamy, who called on the U.S, to comply rapidly with the WTO's
findings.

Alll signs pointed to continued discussions on the issue between
Washington and Brussels, though the atmosphere could get chilly very
quickly if Mr. Bush moves to protect the U.S. steel industry.

01/17/2002

00800000001109


From: Ed Barber

To: Dom13.DOPO8(BEASLEYM, budingtoam, CROWEB, GREWEM, ...
Date: 2/29/00 3:52pm

‘Subject: An NWT dispute in Nigeria -Reply

{(b)(5)]

>>> Geoffrey Gottlieb 02/28/00 03:13pm >>>

((b)(5)]

et]

ex. mal(eweisman@'MF org’), radelets

00500000000904


RE: IN THE NEWS; 1/15/02 Page 11 of 37

Grassley said he is pursuing these ideas with experts from outside groups and agencies such as the
Treasury Department, the Labor Department, and the Pension Benefit Guaranty Corporation.

"The tax code smiles on retirement plans, for good reason,” Grassley said, "Tax breaks encourage
employers to set up retirement plans and employees to take part in those plans. If employers find it easy

to break the rules, then Congress has to rewrite the nile book. Otherwise, employees counting on a secure
retirement might be left out in cold."

In addition to the retirement plan track, Grassley said he is part of an effort to look into whether Enron
used certain tax vehicles that might have masked the company's financial condition.

Text of Grassley’s news release is in BNA TaxCore.
6. U.S. Loses Trade Case to Europeans on Offshore Tax Havens * The New York Times

The New York Times

January 15, 2002, Tuesday, Late Edition - Final
SECTION: Section C; Page 1; Column 2; Business/Financial Desk
LENGTH; 690 words
HEADLINE: U.S. Loses Trade Case to Europeans on Offshore Tax Havens
BYLINE: By DAVID E. ROSENBAUM with ELIZABETH OLSON
DATELINE: WASHINGTON, Jan. 14

BODY:

The United States lost its final appeal today in a dispute with Europe over tax policies. The ruling is
considered all but certain to renew trans-Atlantic trade tensions and could cost American companies
billions of dollars in higher taxes.

Affirming earlier rulings, an appeals panel of the World Trade Organization, the Geneva-based group
that regulates trade, held that the offshore tax havens allowed by United States tax law amounted to an
illegal trade subsidy and must be scrapped. The dispute between the United States and the European
Union over tax havens has been going on for years, but negotiations were suspended while the case was
before the appeals board,

Robert B, Zoellick, the United States trade representative, said that today's ruling was not unexpected
but that he was "disappointed by the outcome.”

“We will be consulting closely with Congress and affected U.S. interests regarding next steps,” he
added.

‘The next step is for a W.T.O. arbitration panel to determine the level of trade sanctions the Europeans
will be allowed to impose. That will probably occur in April.

Under American law, exporters can avoid paying taxes on some overseas sales by channeling profits
through subsidiaries in places like Guam and the Virgin Islands. This saves American companies --

including giants like General Electric, General Motors, Microsoft and Boeing -- more than $4 billion a
year in taxes.

01/17/2002

00800000001107


IN THE NEWS: 1/14/02 Page 14 of 36

But more expensive this year in its most popular form, Industry-leading Quicken TurboTax for the Web - the
online version of the tax preparation software - will cost $19.95 when it goes live Wednesday for this filing
season, up $5 from last year. Intuit, TurboTax's publisher, bumps the price to $24.95 on April | for the final
push.

Meanwhile, Fidelity Investments will offer TurboTax at half-price this year on its Web site. It was free last year
from the mutual fund company, Filers are not required to be Fidelity customers to usc it, although they must
register at Fidelity.com.

As in past years, Quicken will offer free ¢-filing to folks who report $25,000 or less in adjusted gross income.
Look for the service at Quicken.com, or point your browser to www.irs.gov and click on the e-file icon for lists
of c-filing rivals and matching low-income freebies.

‘The best deal outlined on the IRS site yesterday: Free preparation at TaxACTOnline.com, available online or
through downloaded software, with optional e-filing for $7.95,

How does e-filing work? The software walks you through the math, in some cases suggesting places to look for
tax savings. When you're done, you transmit the return to the e-filing service, which transmits it to the IRS.
Providers ask you to check back in a day or so to make sure the IRS accepted the return.

Sorry, there's no way to skip the middleman. For some reason, the IRS frowns on direct public access to its
computer system.

E-filing is completely paperless. By answering a specific question about their 2000 returns, filers can obtain a
personal identification number that serves as an electronic signature.

Folks who are due a refund can authorize the Treasury to transmit it directly to their checking account. Folks
who owe money can authorize the IRS to draft their checking account for the amount automatically on, say,
April 15.

In a new wrinkle, taxpayers can sign up for a permanent PIN that formalizes the automatic draft arrangement.
Self-employed folks could use it to make quarterly estimated tax payments by Internet, www.efips.gov, or by
telephone (800) 355-3453, in addition to annual tax payments.

The Federal Tax Payment System is run by commercial banks under contract to the government. Payments
arranged directly with the system are free.

What are the advantages of c-filing? Greater reliability is the big one. The IRS screens electronic returns for
common mistakes. If the service finds a bum Social Security number, for example, it kicks back the return in a
matter of hours, for the e-filer to try again. E-filers can also print out confirmation that they've filed and paid on
time.

Speed follows. E-filers should have their refunds in two weeks compared with four weeks or more for paper
filers.

As for convenience, suffice it to say that tax pros traded their No. 2 pencils for a keyboard long ago.
11, Gift-Tax Exclusions, Deducting Loan Interest Worry Readers * THE WALL STREET JOURNAL

THE WALL STREET JOURNAL

January 13, 2002

01/17/2002
00800000001183


RE: IN THE NEWS: 1/15/02 Page 4 of 37
(ftp.fedworld.gov/pub/irs-pdf/p1546 pat.

To bring a case to the attention of the Taxpayer Advocate Service,

you'll be asked to fill out Form 911, "Application for Taxpayer

Assistance OrderTM (fip.fedworld.gow/pub/irs-pdi/f911 .pdf). If you

iry it, I'd be interested in your reactions, as I'm sure I'll be writing

about this topic again.
2. Tax Policy: BUSH URGES TAX CUTS BE MADE PERMANENT AFTER PLANNED
EXPIRATION OF TAX RELIEF LAW* BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report

January 15, 2002, Tuesday
10 DTR G-1 (2002)
LENGTH: 1121 words
SECTION: TAX, BUDGET & ACCOUNTING

TITLE: Tax Policy: BUSH URGES TAX CUTS BE MADE PERMANENT AFTER PLANNED
EXPIRATION OF TAX RELIEF LAW

AUTHOR: By Nancy Ognanovich

TEXT:

President Bush Jan. 14 officially called for making last year’s package of tax cuts permanent, saying in
a speech that he wants the provisions of the $ 1.35 trillion tax relief package to be extended indefinitely
after that law expires at the end of 2010.

While Democrats are calling for scaling back the tax relief package, Bush said in an address on his
economic proposals that he has decided to argue over the next several months that the tax cuts should be

permanent.

“There's going to be a debate when we go back to Washington about tax relief,” Bush said during the
start of a two-day, three-state trip to build support for his legislative agenda. "But I've made up my mind,
the tax relief plan we passed -- which you're beginning to feel the effects of -- is going to be permanent,”

Bush said he still plans to reintroduce his economic stimulus plan with provisions to extend
unemployment benefits for displaced workers and to help the unemployed maintain health insurance.
However, the president suggested the stimulus -- which is expected to be included in the FY 2003 budget
sent to Congress carly next month -- also will include language to make last year’s tax cuts permanent.

"Americans don't want an unemployment check,” Bush said during an address to the employees of the
John Deere Harvester Works in Moline, Ill. "Americans want a permanent paycheck, and that’s got to be
the mission of any good stimulus package.”

Bush's comments came amid reports that Sen, Edward Kennedy (D-Mass.), the president's ally on
recently enacted education reform legislation, may call for scaling back the tax relief package during an
address planned for Jan. 16. They also followed comments from Senate Majority Leader Thomas Daschle
(D-S.D,) rising concems about the impact tax cuts have had on the disappearance of anticipated federal

OL/17/2002

00800000001100


Gross, Jared

ee

From: Hammond, Donald

Sent: Thursday, February 15, 2001 10:25 AM

To: Carleton, Norman, DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinerney, Roberta:
Constantine, Eleni, Hughes, Gerry, Stewart, Lawranne

Ce: Tishuk, Brian: Robbins, Eric, Paulus, Michael; Sutton, Gary; Huffman, Lucy, McGivern, Tom;
Nickoloff, Peter, Schultheiss, Heidilynne; Gross, Jared

Subject; RE: Bankruptcy Reform Mark-up Hearing

Norman,

Thanks. | believe that the netting provisions will be a major agenda item at next week's Working Group meeting | think it
is very useful to have that discussion before meeting with the Hilt staff.

Don

Original Message----*

From: Carleton,

Sent: Thursday, February 15, 2001 10:07 AM

To: Hammond, Donald; DeMarco, Edward; Bilis, Dina; Huffman, Lucy; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
lawranre

Ce: Tishuk, Brian; Robbins, Eric; Pauis, Michael; Sutton, Gary; Huffman, Lucy; MeGivern, Tom; Nickoloff, Peter; Schultheiss,
Heidaynne; Gross, Jared

Subject: RE: Bankruptcy Reform Mark-up Hearing

Don,

{(b)(5)]

01200000001587


»

Proposed EBRD Investment in Golden Telecom IPO, Sept 7, 1999

Drafted by:
JCetina qe

oe 4/foz

00500000000525


Fobe28-00 O8:0Sen Fron Tole POI FOI
~ if a “| ST ee

fo AS AHO

[(b)(5)]

— net OOP P-AS4

00500000000924


IN THE NEWS: 1/14/02 Page 24 of 36

FICA trcats tips in excess of $20 a month as wages, and both the employee and
employer are required to pay FICA taxes on them.

Usually, employees such as waitresses make monthly reports to their employers
on the tips they receive so that FICA contributions can be calculated,
Restaurants with 10 or more employees are required to make annual reports to
the Intemal Revenue Service of the tips reported by employees.

Usually, employees such as waitresses make monthly reports to their employers
on the tips they receive so that FICA contributions can be calculated.
Restaurants with 10 or more employees are required to make annual reports to
the IRS of the tips reported by employees.

Fior D'ltalia filed forms showing that employees reported tips to supervisors
of $247,181 for 1991 and $220,845 for 1992. However, the forms also showed
that the total amount of tips reported on customer credit card receipts alone

at the restaurant far exceeded both those figures -- $364,796 in 1991 and
$338,161 in 1992.

Nevertheless, the restaurant calculated its share of the FICA tax on the
lower figures.

The IRS pounced, conducting #compliance check of the restaurant. Looking at
the credit slip information, the IRS deduced that there was a 14.49 percent
tip rate for 1991 and a 14,29 percent tip rate for the following year.

Multiplying those tip rates by the restaurant's gross receipts for those two
years, and then subtracting the total tips actually reported on the
restaurant's forms, the IRS determined that unreported tip income was more
than $156,000 in 1991 and more than $147,000 in 1992.

Let's see, the IRS told Fior D'ltalia: That means you owe us $11,976 for 1991
and $11,286 for 1992 in employer's FICA taxes, Pay up.

‘The restaurant, however, only paid a portion of the tax, and then filed suit
against the IRS.

Fior D'ltalia didn't dispute the IRS calculations. It just said the IRS
lacked the authority to assess taxes on employers by using an aggregate
estimate of tip income.

Instead, the restaurant argued, under the law the IRS must first conduct
individual audits of employees, then base any assessment of employer FICA
taxes on the total indicated by the audits,

A federal judge agreed with the restaurant. A federal appeals court panel, by
a vote of 2-1, agreed with the judge. The IRS, acting through the Justice
Department, then asked the Supreme Court for review.

The appeals court "did not point to any language in the Internal Revenue Code
as support for its conclusion, and there is none,” the department said in a

brief to the high court. Citing the dissenting judge's opinion on the panel,

the department said the appeals court decision "invites employers and

01/17/2002
00800000001194


Wiedman, Mark

—
Moora Gross, Jered sa amnsenk pia
mt: veeeeny january 9,
To: Wiedman, Mark
Subject: RE early version of ACL outline
{(b)(5)]
Original Message

From: Wiedman, Mark

Sent: Wednesday, January 09, 2002 1:26 PM

To: Fesher, Peter

Ce: Gross, Jared; Raseboro, Brian

Subject: early version of ACLI outline

Here is an interim outline. We're still rolling forward (including Jared's marvelous discovery of the 1994 Fisher report
on the BIS website), but would welcome guidance at any time.

<< File: outline to acii speech 1.9 1pm.doc >>

00773

01200000000118


Alvarado, Carmen

From: Davis, Michele

Sent: Monday, January 14, 2002 9:40 AM
To: , Carmen
Subject: STatements from Friday

Here is the statement that Al Hunt's office was looking for ~ please send this to her -- it is everything that | said on Friday.

Statement by Michele Davis, Assistant Secretary of the Treasury (Public Affairs):

Following Ken Lay’s call to the Secretary, the president of Enron called Undersecretary Fisher. Undersecretary
Fisher spoke with president of Enron 6 to 8 times in late October and early November.

The calls were informational, The Undersecretary’s job is to monitor the effect of any major development on
the capital markets. In that role, he is in contact with people in the markets everyday to be aware of their
concems.

As Enron’s negotiations with its bankers for an extension of credit neared a decision point, the president of

Enron asked Undersecretary Fisher to call its banks. Undersecretary Fisher inferred that he was being asked to
encourage the banks to extend credit. He made no such calls,

LATER STATEMENT

Robert Rubin of Citigroup called Peter Fisher on November 8 and asked Fisher what he thought of the idea of
Fisher placing a call to rating agencies to encourage them to work with Enron's bankers to see if there is an
alternative to an immediate downgrade,

Fisher responded that he didn’t think it advisable to make such a call.

Rubin said he thought that was a reasonable position.

Fisher made no such call.

00800000000778


From: Broderick, Paul

To: “olsone@state gov’

Date: 1173000 5:23pm

Subject: Enron Corp recommendation

Erica,
[(b)(4) , (b)(5))

Thanks,
ow Paul

05030

01000000000101


From: —s_—sGeofiray Gottfieb

To: Dom13, DOPO8(BARBERE, EICHENBERGER), KUHLOWM
Date: ‘2/00 2:05pm
Subject: Closure on Enron

{(b)(5)]

>>> Margaret Kuhlow 03/02/00 01:41pm >>>
Thanks all for handling this quickly and looks lie positively. mik

>>> Ed Barber 0302100 01:22pm >>>
Joe — Thanks. | thought your fixes were right on, and Geoff has forwarded them to State. - Ed

>>> Joe Eichenberger 03/02/00 09:58am >>>
{(b)(5)]

cc: Dom13.DOPO8(gelperna, StewartEK),

00500000000876


IN THE NEWS; 1/14/02 Page 12 of 36

Oversight Subcommittee, GAO estimated that 12.9 million of 17.2 million eligible households claimed the
credit in 1999, a participation rate of 75 percent.

For the 9.7 households with one or two children, the estimated participation rate rose to 95 percent, GAO said.
The lowest rate of participation was 45 percent for the 4.7 million eligible households with no qualifying
children.

GAO said it did not have sufficient information to explain the different participation rates. The study was
based on samples of the Census Bureau's 1999 Current Population Survey (CPS) and Internal Revenue Service
estimates of taxpayers claiming the credit for 1999, GAO said. The CPS data docs not contain all the
information needed to determine eligibility, GAO said.

Text of the GAO letter, Earned Income Tax Credit Eligibility and Participation (GAO-02-290R) is available
on the World Wide Web at_hitp://www,gao.gov.

9. TAX PREPARER ADVERTISING MISLEADING; DAMAGES REMANDED FOR
RECALCULATION * Tax Notes Today

Tax Notes Today

JANUARY 14, 2002 MONDAY
DEPARTMENT: Court Doctiments; Court Opinions
CITE: 2002 TNT 9-6
LENGTH: 6613 words

HEADLINE: #6 2002 TNT 9-6 TAX PREPARER ADVERTISING MISLEADING; DAMAGES
REMANDED FOR RECALCULATION. (JHT Tax Inc,, et al. v. H & R Block Eastern Tax Services Inc., et
al.) (No. 01-1353) (United States Court of Appeals for the Fourth Circuit ) (Section 601 1(e) -- Electronic Filing)
(Release Date: JANUARY 10, 2002) (Doc 2002-959 (19 original pages))

The Fourth Circuit, in an unpublished per curiam opinion affirming in part a district court, has held that a tax
preparation company's advertising of loan products violated the Lanham Act, and it granted the plaintiff
attorney's fees, but limited the injunctive relief and remanded the calculation of the lost profits award,

JTH Tax Inc., d/b/a Liberty Tax Service, provides tax preparation services. In 2000 Liberty opened offices in
the Hampton Roads area. H&R Block Eastem Tax Services Inc. and H&R Block Tax Services Inc. also provide
income tax preparation services and have offices in the Hampton Roads arca. Block offered a no-additional-
charge refund anticipation loan(NACRALS). NACRALs, unlike refund anticipation loans (RAL), have no
interest or fees, Block advertised it as a refund, refund amount, and a check in the amount of your refund. Block
increased its client base where the advertising appeared, Block signed a consent order to refrain from
advertising RALs as a refund, refund amount, or amount of your refund, but continued advertising. Liberty
secks recovery under the Lanham Act, 15 U.S.C. section 1125(a)(1994), alleging that Block used misleading
advertisements,

AUS. district court, reviewing the Lanham Act, noted that the advertising was partly true, but misleading.
Liberty proved that the advertising was likely to influence purchasing decisions based on Block's bad-faith
conduct. The court dismissed the jurisdiction argument, concluding that it had subject-matter jurisdiction over

the false advertising claims, Finally, the court made an award to Liberty from the defendants’ profits and for

01/17/2002

00800000001181


RE: IN THE NEWS: 1/15/02 Page 31 of 37
Newsday Seeks Savings Through Staff Buyouts
BYLINE: Tami Luhby; Katia Hetter
IRS Hosts Tax Credit
Awareness Days

To help parents qualifying for the camed income tax credit, the Internal Revenue Service is hosting
EITC Awareness Days at its area Taxpayer Assistance Centers tomorrow, Jan. 23 and Saturdays in
February.

Working parents with incomes under $32,121 can claim the EITC with tax breaks up to $2,428 for one
child and up to $4,008 for two or more children, The primary requirements include: The taxpayer must

file a federal income tax return; must have earnings from wages or self-employment, and must provide a
valid Social Security number for each child listed on earned income credit schedule.

The centers also assist with general tax-related issues.
Centers in Manhattan are at 290 Broadway, 110 W. 44th and $5 W. 125th streets; in Rego Park at |
Lefrak City Plaza, $9-17 Junction Blvd.; in Garden City at 107 Charles Lindbergh Blvd.; in Massapequa

in the Sunrise Mall; in Inwood at Our Lady of Good Counsel, 68 Wanser Ave.; in Hauppauge at 1180
Veterans Hwy., and in Riverhead at 518 E. Main St,

- Tami Luhby
23. Taxman cometh offering credits * New Haven Register

New Haven Register

January 13, 2002

Taxman cometh offering credits

HARTFORD - The Intemal Revenue Service is advising Connecticut residents to take note of three tax
credits with the potential to reduce a parent's tax burden by as much as $600 per child.

The Child Tax Credit bill, the refundable Eamed Income Tax Credit and the Additional Child Tax Credit
are "too valuable to overlook," said IRS spokeswoman Dianne Besunder.

Those interested in learning more about how the credits work who can claim them are available on the
IRS Web site at_ www, irs. gov <http/www.irs.gow/>,

Parents also have the option of going to the state's seven Connecticut IRS Taxpayer Assistance Centers
during Earned Income Tax Credit Awareness Days this month. The first of those is next Wednesday,
from 8:30 a.m. to 4:30 p.m. Another awareness day is scheduled for Jan. 23.

Taxpayer Assistance Centers are located in Bridgeport, Danbury, Hartford, New Haven, Norwalk, New

London and Waterbury.
24, In Brief * The Washington Post

The Washington Post
01/17/2002

00800000001127


A)

From: Carleton, Norman
Sent: Saturday, September 08, 2001 1:10 PM
To: Bair, Shella; DeMarco, Edward; Eichner, Matthew; Ellett, Martha; Fisher, Peter; Gabilondo,

Jose; Gross, Jared; Hammer, Viva; Hughes, Gerry; Nickoloff, Peter; Novey, Michael,
Roseboro, Brian; Schultheiss, Heidilynne; Smith, Amy; Sutton, Gary
Subject: Discussion with Ken Raisler about Enron Product

On Friday, September 7, I discussed the retail energy swap issue with Ken Raisler. He is a partner at
Sullivan & Cromwell who represents Enron. In the mid 1980s, he was the general counsel of the CFTC.

T asked Ken if Enron opposed state regulation of retail energy derivatives if the CFTC were to grant an
exemption for this product. The first answer to this question was yes, but that answer was modified as we
further discussed the issue.

T asked Ken if he thought that there was a preemption argument that could be made because of CFTC
exclusive jurisdiction. He said he thought there was. He said Enron would not make such a legal argument
because it is regulated in some states as a utility company, but that others might make such an argument,

[told Ken that the Treasury had not come to a conclusion about the retail energy swap issue but that we
were unlikely to support a result that would mean no federal regulation and would not allow state governments
to regulate this product if they chose to do so, He asked me what regulatory issues might be of concem, I
answered that such issues as advertising, pricing, and assurances that the company offering the product had the
financial ability to meet its obligations might be subjects that governments would be concerned about, Ken said
he thought that this was a reasonable position.

1 asked Ken whether he thought that the CFTC could exempt retail energy swaps from the exclusive
jurisdiction provision of the CEA, thus precluding any arguments about state jurisdiction. He said he thought
that might be possible.

At the end of the conversation, Ken indicated he would talk to his client about the issues I had raised.

{((b)(5)]

01200000001313


Tishuk, Brian

eh al ai TU ENNInE NEE

From: Hammond, Donald
Sent: Thursday, February 15, 2001 10:25 AM
To: Carleton, Norman; DeMarco, Edward; Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta;
Constantine, Eleni; Hughes, Gerry; Stewart, Lawranne
Cc: Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickoloff, Peter; Schultheiss, Heidilynne; Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Norman
{(b)(S))
Don
ooo Orignad Message-——
From: Carleton, Norman
Sent: ‘Thursday, February 15, 2001 10:07 AM
To: Hamerond, Donald; DeMarco, Edward; Ellis, Ona; Huffman, Lucy; MeInemey, Roberta; Constantine, Bieri; Hughes, Gerry; Stewart,
Lawrenne
ce: Tistuh, Brian; Robbins, Enc; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom; Nickoloft, Peter; Schultheiss, Heidilynne;
Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Don,
[(b)(5)]

01200000001042


Registration Statement declared effective, Notes priced and
Underwriting Agreement signed.

December 13, 1995 Notes are issued and sold.

00900000000174


Nichols, Robert

ee

From: Nichols, Robert
sae Friday, January 11, 2002 7:32 AM
oO: ‘Katt
Subject: RE: THE RETARY ON A TV NEAR YOU. TUNE IN!
font

Reb Nichols

Ceputy Assistant Secretary for Public Affairs
Department of the Treasury

(202) 622-2910

Original Message-----

From: Kathleen Day [mailto:dayk@washpost.com]

Sent: Thursday, January 10, 2002 6:48 PM

To: Robert .Nichols@do.tzreas.gov

Subject: Re: THE SECRETARY ON A TV NEAR YOU...TUNE IN!

thanks. fyl i'm also now doing enron stuff

— \

~ 00800000000471


RE: IN THE NEWS: 1/15/02 Page 26 of 37

IRS wisdom: The early filer gets to sit back, be smug

Following are tax tips from the IRS.

Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start
on tax preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.

There are seven easy ways to get a good jump on your taxes long before the April 15 deadline rolls
around:

1. Gather your records in advance, including W-2s and 1099s, Remember to save a copy for your files,
2. Get the right forms. They're available around the clock on the IRS Web site, www.irs.goy, in the
“Forms & Pubs" section.

3. Take your time. Don't forget to leave room for a coffee break when filling out your tax return. Rushing
can mean making a mistake - and that can be expensive!

4, Double-check your math and Social Security number, These are among the most common errors on tax
retums. Taking care on these numbers reduces your chances of hearing from the IRS.

5. Get the fastest refund, When you file early, you get your refund faster. Using E-filing with direct
deposit might get you a refund in as little as 10 to 15 days.

6, Eefiling is easy. E-filing catches math problems, provides confirmation your return has been received
and gives you a faster refund.

7. Don't panic. If you have a problem or a question, remember the IRS is there to help around the clock.
‘Try the Web site www. irs.gov. Or call the toll-free customer service number, (800) 829-1040, between 7
a.m, and 10 p.m. weekdays, 9 a.m. to $ p.m. Saturdays until April 13.

Your filing status on your federal tax return identifies you based on your marital and family situation,
according to the IRS. It is an important factor in determining whether you must file a return, the amount
of your standard deduction and your correct amount of tax. If more than one filing status applies to you,
you may choose the one that gives you the lowest tax obligation.

There are five possible filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of
Household and Qualifying Widow(er) with Dependent Child, Your marital status on the last day of the
year determines your status for the entire year.

Generally, if you are unmarried, divorced or legally separated according to your state law, your filing
status is Single.

If you are married, you and your spouse may file either a joint return or separate returns. If your spouse
died during the year and you have not remarried, you may still file a joint retum for the year of death.

Generally, to qualify for Head of Household status, you must be unmarried and have provided more than
half the cost of keeping up a home that was the main home for yourself and a qualifying relative for more
than half the year. You may also qualify if you are married but did not live with your spouse at any time
during the last six months of the tax year and you provided more than half the cost of keeping up a home
for you and your dependent child for more than half the year.

If your spouse died during 1999 or 2000, you may be able to file as a Qualifying Widow or Widower. To
do this, you must meet all four of the following tests:

1, You were entitled to file a joint retum with your spouse in the year of death,
2. You did not remarry before the end of 2001,

01/17/2002

00800000001122


From: Norman Carleton

To: Sachsl, MCGIVERNT, GREENEMI, STEWARTLAW, NICKOLOFF..,
Date: 9/15/99 11:18am

Subject: Enron's Bankruptcy Proposals

Representatives of Enron have given their proposed amendments to the bankruptcy netting provisions to sta“f of the
Senate Agriculture Committee. They hope that it will be included in a managers’ amendment.

{(b)(5)]

Comments, suggestions?

01763

01200000000419


Bitsberger, Timothy

From: Bitsberger, Timothy

Sent: Wednesday, December 19, 2001 9:29 AM
To: Bair, Sheila

Cc: Roseboro, Bran

Subject: speeches, Peter, and more speeches

Brian and | were in Peter's office yesterday and he listed four or five speeches he would like to make. He wants to hit
Jan 1 running. Most pertain to debt management but in no particular order they are

[OUTSIDE SCOPE]

4, Enron[(b)(5)]
[OUTSIDE SCOPE]

We would love your help on #'s 4 and 5 Maybe your staff could even take the lead on one of those if their time permits.
There is nothing to do right now-I just wanted to let you know what was up.

Tim

01200000001357


{((b)(5))

Norman

a--Original Message—--

From: Hammond, Donald

Sent: Thursday, February 15, 2001 6:26 AM

To: DeMarco, Edward; Ellis, Dina; Muffman, Lucy; Carleton, Norman; McInerney, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
Lawranne

Ce: ‘Teshuk, Brian; Robbins, Eric
Subject: RE: Bankruptcy Reform Mark-up Hearing

Ea,
((b)(5)]

Don

-—~-Ongnal Message

DeMarco, Edward
‘Thursday, February 15, 2001 8:22 AM
To: Hammond, Donald; Eilts, Dina; Huffman, Lucy; Carieton, Norman; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

Tishulk, Brian; Robbins, Eric
‘Subject: PW: Bankruptcy Reform Mark-up Heanng

£

Original Message———
Robbins, Eric
Wednesday, February 14, 2001 5:45 PM

Subject: Bacikruptcy Reform Mark-up Heanng

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001” was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001, During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass. Voting occurred
largely along party lines. The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions
and netting requirements.

01200000001043


PROSPECTUS SUMMARY
The following is 2 summary of certain information contained in this Prospectus. it is not
intended to be complete and is qualified in its entirety by the more detailed information contained
elsewhere in this Prospectus. Capitalized terms which are not defined in this summary are used as
delined elsewhere in this Prospectus.

Enron Corp.

Enron, organized in 1930, is an integrated natural gas company with headquarters in Houston,
Texas. Essentially all of Enron's operations are conducted through its subsidiaries and affiliates
which are principally engaged in the gathering, transportation and wholesale marketing of natural
gas to markets throughout the United States and internationally through approximately 44,000 miles

Enron Oil & Gas Company
EOG, together with its subsidiaries, is one of the independent rated) off and
gas Companies in the United States in terms of domestic proved reserves. It is engaged. directly and
through its subsidiaries, in the exploration for, and the development, and marketing of,

Production .
natural gas and crude oil primarily in major producing basins in the United States, as well as in
Canada, Trinidad and India, and to a lesser extent, selected other international areas.

The Exchangeable Notes Offering
10,000,000 Exchangeable Notes

per Exchangeable Note.
. 1998.

00900000000178


General

The Company. 3 Delaware corporation organized in 1985, is engaged, either directly or through
@ marketing subsidiary with regard to domestic operations or through various subsidiaries with
regard to international operations, in the exploration for, and the development, production and
marketing of, natural gas and crude oil primarily in major Producing basins in the United States, as
well as in Canada, Trinidad and India and to a lesser extent, selected other international areas. At
December 31, 1994, the Company's estimated net proved natural 985 reserves were 1,910 Bct and
estimated net proved crude oll, condensate and natural gas liquids reserves were 37 MMBbI. At
such date, approximately 70% of the Company's reserves (on a natural gas equivalent basis) was
located in the United States, 16% in Canada, 11% in Trinigad and 3% in India.

Tne gor Pany Pursues its oll and gas exploration and development operations primarily by the
acquisi . through various means including but not limited to leasing, Purchasing and farming-in of

Exploration and Production
North American Operations :

The Company's seven principal United States producing areas are the Big Piney area, South
Texas area, East Texas area, Offshore Gulf of Mexico area, Canyon Trend area, Pitchfork Ranch
Sra and Vernal area. Properties in these areas comprised approximately 78% of
United States reserves (on a natural gas equivalent basis) and 85% of the Company's United State:
Net natural gas deliverability as of December 31, 1994 and are substantially all operated
Company. At September 30, 1995, properties in these areas comprised approximately 87%
Company's United States net natural gas deliverability. The Company's other United States natural
988 and crude oll producing properties are located primarily in other sreas of Texas, Utah, New
Mexico and in Oklahoma.

Substantial portion of the Company's United States natural gas reserves is in long-lived fields with
blished histories. The Company believes that opportunities exist to increase
Production in many of these fields through continued infill and other development drilling.
The Company also has natural gas and crude oi! producing properties located in Western
Canada, primarily in the provinces of Alberta, Saskatchewan and Manitoba,

Wyoming.
Productive acreage base in this area, with approximately 219,000 net acres under lease directly
within field limits. The Company operates approximately 650 natural gas wells in this area in which it
owns @ 91% average working interest. Deliveries from the area net to the Company averaged
124 MMct per day of natural gas and 1.5 MBbi per day of crude oll, condensate, and natural gas
liquids in 1994, At September 30, 1995, natural gas deliverability net to the Company was approxi-
mately 138 MMcf per day.

The current principal producing intervals are the Frontier and Mesaverde formations. The
Frontier formation, which occurs at 6,500-10,000 feet, contains approximately 66% of the Com-
Pany's current Big Piney reserves. The Company drilled 67 wells in the Big Piney area in 1994.
Although natural gas drilling has been curtailed in this
conditions, numerous drilling opportunities will be avaital

Hi}
Z

00900000000214


xt

y Sale ot these securihes
iheS AWS Of any such State.

i) to these securities ts be
ora pair fo the time the re,

SobGiHation of an otter to

Not shail there be ary

jaificabon under the secut i

eqistrahon Statement cetatn
ty Olfers to buy be ai
$0 registraton or qui

hol be sold nor may
ler to sell or the

Sobertapon or sale would be unkawtul prior

) LOMpleHON Of amenument A 1

Saf These secunbes may
5 Shue not consttule an

SUBJECT TO COMPLETION, DATED NOVEMBER 14, 1995
APPENDIX A

Enron Oil & Gas Company

Common Stock
(par value $.01 per share)

.
.

This Prospectus relates to up to 11,000,000 shares of common stock, par value $.01 per share
(the “Common Stock"), of Enron Oil & Gas Company (the Company”), which may be delivered by
Enron Corp. upon mandatory exchange of the % Exchangeable Notes due » 1998 (the
“Exchangeable Notes”) of Enron Corp,, subject to Enron Corp.'s right to deliver cash in lieu of such
shares, This Prospectus is Appendix A to a prospectus of Enron Corp. covering the sale of the
Exchangeable Notes (the “Exchangeable Notes Prospectus"). The Company will not receive any of
the proceeds from the sale of the Exchangeable Notes or the delivery of shares of Common Stock
upon mandatory exchange of the Exchangeable Notes at maturity,

Enron Corp. has granted the underwriters of the Exchangeable Notes @ 30-day option to
purchase up to an additional 1,000,000 Exchangeable Notes at the initial offering price per
Exchangeable Note, less the underwriting discount, which may be exchangeable at their maturity for
additional shares of Common Stock. Such option has been granted solely to cover over-allotments,
it any.

On November 13, 1995, the last reported sale price of Common Stock on the New York Stock
Exchange Composite Tape was $20% per share. See “Price Range of Common Stock and Cash

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES

COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is » 1995.

00900000000204



RE: IN THE NEWS: 1/15/02 Page 3 of 37

penalties, erroneous notices and other miscellancous snafus that
bureaucrats seem uninterested in fixing.

In some cases, it may even be able to issue a formal order blocking the
IRS from seizing your pay or property. “In certain situations, enforcement
action may be suspended while your case is being reviewed,” the IRS
says. "The Taxpayer Advocate resolves the majority of cases
administratively. Even when hardship is not a factor, the Advocate is often
able to help resolve the taxpayer's problem.”

While the Taxpayer Advocate Service isn’t new, Congress gave it more
power in 1998, Last year, the service handled more than 270,000 cases --
coming mostly from taxpayers, tax “practitioners,” and as referrals from
IRS operating divisions and congressional offices. About 40% of those
cases arose from four IRS program areas: earned income tax credit audits,
processing of claims or amended retums, processing of refunds, and initial
processing of original paper or electronic individual returns.

No paper tiger, the Taxpayer Advocate has been @ vocal critic of the IRS

in the past. In her most recent report to Congress, Ms. Olson writes: "Only
14% of our inventory is composed of hardship cases. A small percentage
of taxpayers contact us because they either don't like the way the tax law
has been applied to their situation, or because they feel that their side of the
issue did not get a fair hearing. Most taxpayers contact us because the

IRS does not offer timely or appropriate taxpayer assistance."

Before coming to the IRS in March of last year, Ms. Olson was a lawyer
specializing in representing taxpayers in tax disputes. She also founded and
served as executive director of the Community Tax Law project, a
low-income taxpayer clinic in Richmond, Va.

The IRS describes Ms. Olson's post as “an independent voice inside the
IRS.” Some readers may wonder about her independence and her
relationships within the IRS. In her recent report to Congress, Ms. Olson
writes: "Some may believe an advocate for the taxpayer must inevitably be
the adversary of others throughout the IRS. This is not the case. The
Taxpayer Advocate Service and its views were and are represented on a
wide range of IRS teams and task forces, covering matters such as

disaster relicf, due process in collections and innocent spouse cases."

Take Action

If you've been battling the IRS for years and want to reach Ms.
Olson, visit the Taxpayer Advocate Service Web site at

(www. irs.gov/ind_info/advocate. html), or write to her at IRS
National Taxpayer Advocate, Internal Revenue Service, 1111
Constitution Ave., N.W,, Room 3031, Washington, DC 20224.

‘The Taxpayer Advocate Web site also offers several ways to phone
the Taxpayer Advocate Service, including a toll-free phone line,
(877) 777-4778, You also can call, write or visit the nearest office
for your state -- see Publication 1546, “The Taxpayer Advocate
Service of the IRS" for a list of local offices

01/17/2002
00800000001099


((b)(5)]

Secretary O'Neill
Peter Fisher
Dave Authauser
Mark Weinberger
John Duncan

01200000000968


RE: IN THE NEWS: 1/15/02 Page 27 of 37
3. You have a child, stepchild, adopted child or foster child who qualifies as your dependent for the year,
and
4. You paid more than half the cost of keeping up your home, which was the main home of that child, for
the whole year.

You can find detailed information on each filing status in Publication 501, "Exemptions, Standard
Deduction, and Filing Information,” or by using the interactive "Tax Trails" feature on the IRS Web site
at www,irs.gov. You may download forms and publications from this site or order them by calling toll
free (800) TAX-FORM (1-800-829-3676).

18. Low- to middle-income investors get tax credit * Star-Telegram

Star-Telegram (Fort Worth, Texas)
January 13, 2002
Low- to middle-income investors get tax credit

There is a new federal income tax credit called the Saver's Credit, which is directed to low- and middle-
income people who invest in the government's tax-deferred investment plans.

They include individual retirement account, Roth IRA, 401(k), 403(b), and 457 plans. The objective is to
encourage people to put more money in those investments to expand their retirement savings.

‘That can be difficult for people who are barely making ends meet, The government's incentive is to offer
a tax credit of as much as $0 percent of contributions up to $2,000 a taxpayer makes to a retirement plan
each year. Essentially, the Saver’s Credit is like a matching grant that helps pay for the first $2,000 that
you invest.
Who's cligible for the Saver's Credit:

© Single people with an adjusted gross income, or AGI, of $25,000 or less.

© Heads of households with an AGI of $35,700 or less.

© Couples with an AGI of $50,000 or less.

o For married taxpayers filing jointly, each spouse is eligible for his or her own annual contribution

up to $2,000.

You qualify for the credit if you are 18 or over, are not a full-time student and are not claimed as a
dependent on someone else's tax retum.

19. IRS, AARP offer residents free tax assistance * The Enid News and Eagle
The Enid News and Eagle (Enid, ox)

January 12, 2001

IRS, AARP offer residents free tax assistance
By: Tippi Rasp, Staff Writer

AARP: ‘We do simple returns for simple people.’

s«  OL/17/2002

00800000001123


[(b)(5)]

01200000001196


WREASURY CLEARANCE SHEET Paka
ite ir

MEMORANDUM FOR: X SECRETARY (© DEPUTY SECRETARY 0 EXECUTIVE SECRETARY
X ACTION (BRIEFING © INFORMATION 0 LEGISLATION

OPRESS RELEASE OPUBLICATION OREGULATION () SPEECH
OOTESTIMONY OCOTHER

OF cual
CAN? ROM: Neal S. Wola, Acting General Counsel

pe" THROUGH:
V - TO: Secretary Summers
¢ SUBJECT: Respénse to Letter from Kenneth L. Lay, Chairman and
Chief Executive Officer of Enron Corp.
REVIEW OFFICES
X Under Secretary for Finance O Enforcement O Policy Management
O Domestic Finance Oatr O Scheduling
CO Economic Poticy O Customs © Public Affairs/Liaison
O Fiscal OFLetc O Tax Policy
Orms O Secret Service O Treasurer
O Public Debt O General Counsel DEap
O Inspector General © Mint
0 Under Secretary for Int'l Affairs OURS O Savings Bonds
O International Affairs CO Legislative Affairs
© Management OC Other
Goce
oe ae Se — ——__—__.,
NAME (Please Type) INITIAL DATE OFFICESROOM NO. TEL NO.
INITIATORIS)
. ”
Neal Wolin me General Counse! x2-0283
t lela Room 3000
REVIEWERS =i
7
Lee Sachs HI r | | Assistant Secretary 2-2245
it / nl (Financial Martets)
we f '
Gory Corde Be Under Secretary 21703
(Domestc Finance)
— a _ a
NOTE.
OC Rersew Otter Dem O Executive Secretary Date

01200000001424


IN THE NEWS: 1/15/02 Page 25 of 36

There are seven easy ways to get a good jump on your taxes long before the April 15 deadline rolls around:
1. Gather your records in advance, including W-2s and 1099s. Remember to save a copy for your files.

2. Get the right forms, They're available around the clock on the IRS Web site, www. irs.gov, in the "Forms &
Pubs" section,

3. Take your time. Don't forget to leave room for a coffee break when filling out your tax return. Rushing can
mean making a mistake - and that can be expensive!

4. Double-check your math and Social Security number. These are among the most common errors on tax
returns, Taking care on these numbers reduces your chances of hearing from the IRS.

5. Get the fastest refund. When you file early, you get your refund faster. Using E-filing with direct deposit
might get you a refund in as little as 10 to 15 days.

6. E-filing is easy. E-filing catches math problems, provides confirmation your retum has been received and
gives you a faster refund.

7, Don't panic. If you have a problem or a question, remember the IRS is there to help around the clock. Try the
Web site www.irs.gov. Or call the toll-free customer service number, (800) 829-1040, between 7 a.m. and 10
p.m. weekdays, 9 a.m. to $ p.m. Saturdays until April 13.

Your filing status on your federal tax return identifies you based on your marital and family situation, according
to the IRS. It is an important faetor in determining whether you must file a return, the amount of your standard
deduction and your correct amount of tax. If more than one filing status applies to you, you may choose the one
that gives you the lowest tax obligation.

‘There are five possible filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of
Household and Qualifying Widow(er) with Dependent Child. Your marital status on the last day of the year
determines your status for the entire year.

Generally, if you are unmarried, divorced or legally separated according to your state law, your filing status is
Single.

If you are married, you and your spouse may file either a joint return or separate returns, If your spouse died
during the year and you have not remarried, you may still file a joint return for the year of death.

Generally, to qualify for Head of Household status, you must be unmarried and have provided more than half
the cost of keeping up a home that was the main home for yourself and a qualifying relative for more than half
the year. You may also qualify if you are married but did not live with your spouse at any time during the last
six months of the tax year and you provided more than half the cost of keeping up a home for you and your
dependent child for more than half the year.

If your spouse died during 1999 or 2000, you may be able to file as a Qualifying Widow or Widower. To do
this, you must meet all four of the following tests:

1, You were entitled to file a joint retum with your spouse in the year of death,

2. You did not remarry before the end of 2001,

3. You have a child, stepchild, adopted child or foster child who qualifies as your dependent for the year, and
4. You paid more than half the cost of keeping up your home, which was the main home of that child, for the
whole year.

You can find detailed information on each filing status in Publication 501, "Exemptions, Standard Deduction,
and Filing Information,” or by using the interactive "Tax Trails” feature on the IRS Web site at_www.irs.gov.

01/17/2002

00800000001158


ang its Subsidiaries being encumbered without equally and ratably securing the Indenture Securities
issued under the Indenture. Specifically, the restrictions apply only to pledges, Mortgages or liens
upon “Principal Property” (as defined in the indenture and herein) to secure any "indebtedness" (as
defined in the Indenture and herein), unless effective provision is made whereby Outstanding
Securities will be equally and ratably secured with any such indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. There are certain exceptions to the
Gofinition of “indebtedness,” which are enumerated in the Indenture and herein. In addition, the
restrictions Go not apply to prevent the creation or existence of Mortgages, pledges, liens or
encumbrances on certain types of properties or pursuant to certain types of transactions, all as
enumerated in the Indenture and above. Also, up to 10% of Consolidated Net Tangible Assets (as
Gefined in the Indenture and herein) is not subject to the morigage and len imitations contained in

Modification of the Indenture

With certain exceptions, the Indenture provides that, with the consent of the holders of not less
than 50°% In principal amount of all outstanding indenture Securities (including, where applicable, the
Exchangeable Notes) affected thereby, Enron and the Trustee may enter into a supplemental
indenture for the purpose of adding to, changing or eliminating any of the provisions of the Indenture
OF Of modtiving Ih are roanner the rights of the holders of Incentice Gecurtiee under Ge nderdire,
Notwithstanding the }. the consent of the holder of each Indenture Security
atfected thereby will be required to: (a) change the Stated Maturity (as defined in the indenture) of
the principal of, or any installment of principal of or interest on, any Indenture Security, or reduce the
Principal amount thereof or the rate of interest thereon or any premium payable upon the redemp-
tion thereof, or change any Place of Payment (as defined in the Indenture) where, or change the coin

‘oF currency in which, any Indenture Security or any premium or the interest thereon is payable, or
impair the right to institute sult for the enforcement of any such payment on or after the Stated
Maturity thereof (or, ep dheca dish taershtgetthy liana herve geben a8 defined in the

any
the percentage in principal smount of the outstending indenture Securties of any sores, the
consent of whose holders is required for any supplemental indenture or for any waiver provided for
in the Indenture; or (c) with certain exceptions, modify any of the provisions of the sections of the
Indenture which concern waivers of past defaults, waivers of certain covenants or consent to
supplemental indentures, except to increase the percentage of principal amount of Indenture
Securities of any series, the holders of which are required to effect such waiver or consent, or to
Provide that certain other provisions of the Indenture cannot be modified or waived without the
consent of the holder of each outstanding Indenture Security affected thereby. The indenture
provides that a supplemental indenture which changes or eliminates any covenant or other provision
of the Indenture which has expressly been included solely for the benefit of one or more particular
series of indenture Securities, or which modifies the rights of the holders of Indenture Securities of
such series with respect to such covenant or othér provision, shall be deemed not to affect the
rights under the Indenture of the holders of Indenture Securities of any other series.

Events of Default and Rights Upon Default

Under the Indenture, the term “Event of Default’ with respect to any series of Indenture
Securities, means any one of the following events which shall have occurred and is continuing:
(a) default in the payment of any interest upon any indenture Security of that series when it becomes
due and payable or default in the payment of any mandatory sinking fund payment provided for by
the terms of any series of Indenture Securities, and continuance of such default for a period of 30
Gays; (b) defauit in the payment of the principal of (or premium, if any, on) any Indenture Security of
that series at its maturity; (c) default in the performance, or breach, of any convenant or warranty of
Enron in the Indenture (other than a covenant or warranty 8 default in the performance of which or
the breach of which is otherwise specifically dealt with in the Indenture or which has been expressly
included in the Indenture solely for the benefit of one or more series of Indenture Securities other
than that series), and continuance of such default or breach for 60 days after there has been given to

22

00900000000197


IN THE NEWS: 1/15/02 Page 28 of 36

Experience has shown that people who take the credit don't use the refund money on luxuries or frivolous
purchases.

"Folks who get the credit help boost the economy in the city, because they don't . . . use it to go to the
Bahamas,” said Lena Hackett, a local coordinator for the Casey Foundation, a Baltimore-based nonprofit group
that seeks to improve families and neighborhoods,

An initiative in Chicago found that credit recipients primarily used the money to pay off bills, then to buy
needed items.

Indianapolis’ initiative will prepare tax forms starting Feb, | at five sites: the Hispanic Education Center, 580
Stevens St.; Southeast Community Service, 901 Shelby St.; the Hawthorne Community Center, 2440 W. Ohio
St.; the Brightwood Branch Library, 2500 N. Sherman Drive; and El Centro Hispano, 617 E. North St.

The locations were sites for the IRS' volunteer tax preparation program in past years. But the initiative seeks to
beef up the IRS’ efforts by promoting it and adding volunteers.

“We're out just beating the bushes right now," said Ellen Quigley, assistant deputy mayor for policy. Mayor
Bart Peterson encouraged members of the Indiana CPA Society to volunteer. And neighborhood groups talked
about it at their meetings.

In late January, the Casey Foundation will lead neighborhood groups in distributing fliers door-to-door in the
targeted neighborhoods. r

Elizabeth M. Gore, chairwoman of Martindale-Brightwood Community Development Corp., said the tax credit
initiative would help in a tight economy.

"This is just extra money that you didn't count on that, during a time like this, would be very helpful," Gore
said. "It would provide a surge to this community.”

And Ivan Schumann, executive director of the Indianapolis Hispanic Chamber of Commerce, lauds the effort to
find bilingual volunteers to help Spanish-speaking residents claim the credit and to counsel credit recipients and
work with banks to open accounts.

"Instead of putting the $5,000 under the mattress," Schumann said, "it will be used in the retail cconomy here."
21. Miami Herald Action Line * INCOME TAXES MADE NEARLY PAINLESS

Miami Herald Action Line

January 14, 2002
INCOME TAXES MADE NEARLY PAINLESS

Need a tax form? Have a question about changes to tax law? Want to find the nearest IRS taxpayer assistance
center?

If you have a personal computer and Internet access, you can point and click your way to trouble-free tax filing
at www. irs. gov <http://www irs.gow/>,

The IRS website offers a wealth of resources for making tax time less taxing. A user-friendly format allows
even novice Web surfers to quickly find the information they need. With the help of the site's interactive
features, you can calculate proper withholding amounts, learn if the interest you pay is fully deductible or
01/17/2002

00800000001161


5 Tense
f Anse. afesieo 3

INITIAL OBSERVATIONS

Draft Power Purchase Agreement of 17 October 1999 for Electric
Generating Facilities in Lagos, Nigeria between Eoron Nigeria Power
Holdings Ltd. (“Enron”) and Lagos State Government, National Electric
Power Authority of Nigeria and Federal Republic of Nigeria (“PPA”).

{(b)(5))

FF AETANAANTH nA/CHETT HO seH STE AA Te fnzul Wane

00500000000908


Ridgway, Diana

From: Ridgway, Diana

Sent: Friday, October 26, 2001 4:35 PM
To: Fisher, Peter

Subject: Tim Adams said Enron will call you

You do not have to call him.

Tracking: Recipient Delivery Read
Fisher, Poter Dekvered: 10/26/2001 4:35 PM
Har, Anna Read: 10/26/2001 4:44 PM

01200000001598


IN THE NEWS: 1/14/02

The scientists found that the typical person in that age group with no
cognitive impairment received 4.6 hours of help cach week from the family
with activities of daily living -- things like bathing and cating. People with
mild dementia got 8.5 hours of help on top of that. And those with
moderate and severe dementia received an extra 17.4 hours and 41,5

hours, respectively.

At $8.20 an hour, the average wage of a home-health aide, such care is
worth more than $18 billion, says Kenneth M. Langa, the study's lead
author, That figure doesn't even take into account the additional time that
many caregivers spend with dementia patients "just sort of being there to
make sure that people are safe," or the lost promotions and leaves of
absence from work that people may take to be with their spouses or
parents, he adds. "It's a conservative number, but it is pretty staggering."

The study is among the first to use a large, nationally representative sample
of older Americans to estimate the costs of providing informal care to
those with dementia, The scientists hope "to make sure that policy makers
realize that this is a real cost to families and society,” says Dr. Langa.

There are two new sources of help for such caregivers: The federal
Administration on Aging has added an online version of its Eldercare
Locator service at the Web site www.eldercare.gov. You also can get a
new guide for family caregivers of people with Alzheimer’s disease by
calling the Alzheimer’s Disease Education and Referral Center at
800-438-4380, or by going to www.alzheimers.org/pubs/careguide.htm
for information.

-- Ms. Greene is a reporter at The Wall Street Joumal and for Encore,

the Journal's guide to life after 55.
16. Court takes on tips and taxes * United Press International

United Press International

Jan 11, 2002

Court takes on tips and taxes

WASHINGTON, Jan 11, 2002 (United Press International via COMTEX) -- In a case

sure to be closely watched by restaurants, hotels and beauty salons all over
the United States, the Supreme Court has agreed to decide how tips are
audited for Social Security taxes.

The case involves the self-described "America’s oldest Italian restaurant,"
San Francisco's Ristorante Fior D'ltalia.

At issue is whether the Federal Insurance Contribution Act tax on employee
tip income must be determined by looking at the totals of individual audits
-- for example, audits of every waiter or waitress in an establishment -- or
may instead be based on a "reasonable estimate of the aggregate amount of
tips received by all employees.”

01/17/2002

Page 23 of 36

00800000001193


Possible Wliquidity of the Secondary Market

It is not possible to predict how the Exchangeable Notes will trade in the secondary market or
whether such market will be liquid or ilfiquid. Exchangeable Notes are novel securities and there is
currently no secondary market for the Exchangeable Notes. The Underwriters currently intand, but
are not obligated, to make a market in the Exchangeable Notes. There can be no assurance that a
secondary market will develop or. if 8 secondary market does develop, that it will provide the holders
of the Exchangeable Notes with liquidity of investment or that it will continue for the life of the
Exchangeable Notes.

Enron has applied for listing of the Exchangeable Notes on the NYSE. However, there can be no
assurance that the Exchangeable Notes will not later be delisted or that trading in the
Notes on the NYSE will not be suspended. If the Exchangeable Notes are not listed or traded on any
securiths exchange or trading market, or if trading of the Exchangeable Notes is suspended, pricing
information for the Exchangeable Notes may be more difficult to obtain, and the liquidity of the
Exchangeable Notes may be adversely affected.

No Obligation on the Part of EOG with Respect to the Exchangeable K. .5

EOG has no obligations with respect to the Exchangeable Notes or amounts to be paid to
holders thereof, including any obligation to take the needs of holders of the Exchangeable Notes
into consideration for any reason. EOG will not receive any of the proceeds of the offering of the
Exchangeable Notes made hereby and is not responsible for the determination of the timing of,
prices for or quantities of the Exchangeable Notes to be issued or the determination or calculation of
the amount to be paid upon mandatory exchange at Maturity.

Tex Uncertainties

The Indenture (as defined herein) requires that any holder subject to U.S. federal income tax
include currently in income, for U.S. federal income tax purposes, payments denominated as
interest that are made with respect to the Exchangeable Notes, in accordance with such holder's
method of accounting, and the amount of original issue discount ("OID"), if any, attributable to the
Exchangeable Notes as it accrues. The Indenture also requires holders to treat the Exchangeable
Notes as a unit consisting of (i) an exchange note, which is a debt obligation with a fixed principal
amount unconditionally payable at Maturity equal to the principal amount of the Exchangeable
Notes, and (li) @ forward purchase contract pursuant to which the holder agrees to use the principal
Payment due on the Exchangeable Notes to purchase at Maturity the EOG Common Stock that the
holder is entitled to receive at that time (subject to Enron's right to deliver cash In lieu of the EOG
Common Stock). It is contemplated that, upon a holder's sale or other disposition of the Exchange-
able Notes prior to Maturity, the amount realized will be allocated between these two components of
the Exchangeable Notes on the basis of their then relative fair market values. Because of an
absence of authority as to the proper characterization of the Exchangeable Notes for tax purposes,
these tax characterizations and results are uncertain. This uncertainty extends to characterization of
any gain or loss recognized with respect to the Exchangeable Notes at Maturity as capital gain or
loss or ordinary income or loss and, in the event Enron delivers EOG Common Stock at Maturity, as
to whether any gain or loss can be deferred until a sale or disposition of such stock. As a result of
these uncertainties, Enron has not received an opinion of counsel with respect to the specific tax
consequences of owning or disposing of the Exchangeable Notes. See “Certain United States
Federal Income Tax Considerations.”

ENRON CORP.

Enron, 8 Delaware corporation organized in 1930, is an integrated natural gas company with
headquarters in Houston, Texas. Essentially all of Enron's operations are conducted through its
subsidiaries and affiliates which are principally engaged in the gathering, transportation and whole-
sale marketing of natural gas to markets throughout the United States and internationally through

00900000000181


Mcinerney, Roberta SS
From: Gabilondo, Jose

Sent: Tuesday, October 30, 2001 12:38 PM
To: Aufnauser, David

Ce: McInerney, Roberta; Bieger, Peter
Subject: Preliminary thoughts on Enron

{(b)(5)}

00200000000007


Southern Saskatchewan is the largest single Producing area, contributing 51% of Canadian deliver-
ability at September 30, 1995. Canadian natural gas Goliverability net to the Company at September
30, 1995 was approximately 70 MMct per day and the Company held Approximately 350,000 net
undeveloped acres in Canada.

Outside North America Operations. The Company has operations offshore Trinidad and India
and is conducting exploration in selected other international areas, Properties offshore Trinidad and
India comprise 100% of the Company's current reserves and Production outside of North America.
The Company's reserves at December 31, 1994 included 236 Bcf of natural gas and 12 MMBbI of
liquids in these two areas, The Company's net production from offshore Trinidad was approximately
100 MMcf day of natural gas and 6.2 MBbI per day of crude oll and condensate at September 30,
1995. The ‘ompany's not production from offshore India was approximately 3.5 MBbi per day of
crude oil net to the Company at September 30, 1995. In addition, the Company is pursuing other
exploitation opportunities in countries, including China, Mozambique and Qatar, where
Ratural gas reserves have been identified, particularty where synergies in natural gas transportation,
Processing and power cogeneration can be optimized with other Enron Corp. affiliated companies.

Relationship Between the Company and Enron Corp.

All of the shares of Common Stock offered hereby and in the Stock Offerings are being sold by
Enron Corp., and the Company will receive no proceeds from such sales. Concurrently with the
offering of the Exchangeable Notes, Enron Corp. Is offering for sale 27,000,000 shares of Common

Gevelops in the Exchangeable Notes Is likely to influence, and be influenced by, the market for the
Common Stock. For example, the price of the Common Stock could become more volatile and could
be Gepressed by possible sales of Common Stock by investors who view the Exchangeable Notes
a5 @ more attractive means of equity participation in the Company and by hedging and arbitrage
activity that may develop involving the Exchangeable Notes and the Common Stock.

Neither the Stock Offerings nor the delivery of shares of Common Stock pursuant to the terms
of the Exchangeable Notes will affect the existing agreements between the Company and Enron

the outstanding shares of Common Stock) for future periods, but will remain In effect with regard to
Periods prior to deconsolidation. For issues not addressed in the original agreement, the Company
has entered into @ supplemental agreement with Enron Corp. clarifying future potential adjustments
associated with the final settiement on audit of taxes for periods prior to the deconsolidation, The

5

00900000000208


IN THE NEWS: 1/14/02 Page 7 of 36

while at least six committees in Congress have announced probes or hearings.

Contacted by Business Week Online, the IRS would neither confirm or deny any
investigation, citing Enron's privacy rights as a taxpayer. Enron had no
immediate comment. And Enron's outside counsel, Washington attorney Robert
Bennett, could not be reached for comment for this story.

Details of the IRS probe were not available. But according to attorneys
familiar with tax law, the agency could be looking into whether the original
accounting treatment, which separated the partnerships’ profits and losses
from Enron's, misstated the giant company’s tax liability. In particular, the
probe could look at whether Enron claimed interest deductions for $1.2
billion in debt which it carried on its books as shareholders’ equity.

The complete text of the article appears on BusinessWeek Online at

http://www. businessweek com!

6. Congressional Panel Probes Enron Audit; Andersen Memo Is at Center of Inquiry * THE WALL
STREET JOURNAL

THE WALL STREET JOURNAL
January 14, 2002
Major Business News
Congressional Panel Probes Enron Audit; Andersen Memo Is at Center of Inquiry

By MICHAEL SCHROEDER and TOM HAMBURGER
Staff Reporters of THE WALL STREET JOURNAL

WASHINGTON -- A House committee is secking information about an
Oct. 12 memo from Arthur Andersen LLP management, which committee
aides believe advised the firm's Enron Corp. audit team to abide by an
Andersen policy to destroy electronic and paper documents relating to
audits.

The memo was issued days before Enron reported a $618 million loss for
the third quarter last year. Last week, Arthur Andersen confirmed the
destruction of documents and said it is investigating further.

"We acknowledge that there were intemal communications that raise
questions. Until we know more, it would be inappropriate to comment
further,” said David Tabolt, a spokesman at Arthur Andersen. He wouldn't
confirm the existence of the memo, which was reported by Time magazine
on its Web site Sunday.

‘The congressional inquiry is also looking into possible tax violations by
Enron, Capitol Hill aides said.

Enron filed for Chapter 11 bankruptcy-court protection on Dec. 2, the

largest ever, following a series of recent financial setbacks, including a

restatement of financial results dating back to 1997. The collapse of the
01/17/2002

00800000001176


{(b)(5))

01200000001199


IN THE NEWS: 1/14/02 Page 15 of 36
Ask Dow Jones

Gift-Tax Exclusions, Deducting Loan Interest Worry Readers

By TOM HERMAN
Staff Reporter of THE WALL STREET JOURNAL

Q: Do you have to itemize deductions in order to deduct
student-loan interest payments? If I had interest in 2000 and didn't
deduct it then, can I add it to my 2001 interest?

J. W. , Houston

A: The answer to your first question is no: You needn't itemize in order to
deduct your student-loan interest. You may deduct these interest payments
even if you take the "standard" deduction, as long as you pass all the other
tests,

The answer to your second question also is no: You can't deduct
student-loan interest paid in 2000 on your return for 2001. But here's the
good news: you can file an amended return for 2000.

You might be interested in two major changes, in a law enacted June 7.
Those changes will greatly increase the number of people who qualify for
the deduction for 2002, says Jim Seidel of RIA, a New York-based
publisher of tax information and software, First, the income phase-out
range increases significantly, he says. As the IRS puts it: "This deduction is
now available to taxpayers with incomes up to $65,000, with the

deduction amount phasing out as income increases above $50,000. For
married couples filing jointly, these figures are doubled. Previously, the
phase-out range was $40,000-S55,000 of income ($60,000 -$75,000,

joint returns).”

Another big change in the new law is the elimination of the heavily criticized
“60-month nule," also effective for the year 2002, That provision limited

you to deducting only those interest payments made within the first 60
months of the required repayment term. "Therefore, those who are paying
off student loans over, say 10 years or 15 years, may claim the deduction
each year as long as they don't exceed the income limits,” says Mr. Seidel.

Just remember that elimination of the 60-month rule and the introduction of
higher income phase-out ranges are effective for 2002. These changes
don't apply to retums filed during 2002 for the 2001 tax year,

Two provisions that won't change this year: The maximum amount you can
deduct for 2002 is $2,500, the same limit that applied for 2001. And you
can't claim the deduction if you are married filing separately.

Q: You reported last year that the House Ways and Means
Committee approved raising the capital-loss threshold to $4,000 for

2002 and $5,000 for 2003. The IRS tax package I received in the
mail over the holidays had no mention of this. What happened?

01/17/2002

00800000001184


{(b)(5)]

ce:

Norman Carleton

GENSLERG, SachsL, MCGIVERNT

27/99 4:32pm

Working Group Comments on Enron/Cadwatader Proposals -Reply

Dom13.D0P07.MCCLELLANM, DOPOS,TooheyF, CARTERJ, MC...

01754

01200000000410


DeMarco, Edward

ee

From: McCall, Neal
Sent: Thursday, January 17, 2002 10:20 AM
To: DeMarco, Edward
Ed,
Just a few items.

1) Do 1 need to be briefed on what transpired in yesterday's pension security meeting?
[OUTSIDE SCOPE , (b)(5)]

{(b)(5)]

Neal

01200000001239


IN THE NEWS: 1/14/02 Page 20 of 36
that is relevant to many home buyers is that of seller-paid points.

Everything in real estate is negotiable. Often, a potential buyer presents a sales contract to a seller and asks the
seller to make certain financial concessions to make the sale go through.

Such concessions include the seller paying some or all of the buyer's closing costs, the seller giving a cash
credit at settlement, or the seller paying some or all of the buyer's points.

For many years, the IRS disallowed seller-paid points from being deducted by the purchaser, In an about-face,
however, in 1994 the IRS ruled that these points could be deducted by the purchaser.

The IRS announced that for principal residences purchased after Dec. 31, 1990, purchasers could deduct,
under certain circumstances, points required by mortgage lenders, even if those points were paid by the seller,

Let us look at an example. Say that you will pay $ 250,000 for your new house and obtain a loan of S
200,000. The lender can give you a fixed 30-year conventional loan for 7 percent with no points, or 6.75 percent
loan with two points, or $ 4,000.

If you can persuade your seller to pay this $ 4,000 -- and have your sales contract reflect that the seller is
paying this money as points -- you should be able to fully deduct this $ 4,000 from the income tax that you file
for this year. The settlement sheet should also reflect this agreement.

There is one hitch to this new'IRS requirement. The amount of the points paid by the seller will be used to
reduce the purchaser's basis price if the purchaser now deducts those seller-paid points.

In our example, if the purchaser paid $ 250,000 for the property, and now deducts the $ 4,000 of seller-paid
points, the cost basis of the purchaser is reduced by the amount of the points deducted. So, the basis will now be
$ 246,000 (S$ 250,000 minus $ 4,000).

But the main function of the basis price is to determine how much capital gains tax you owe following the
eventual sale of a house, And under current tax law, taxpayers can fully exclude from taxable income up to $
250,000 of gain ($ 500,000 for married couples filing a joint return) on the sale of their principal residence,
provided they have lived there an aggregate of two of the five years previous to the sale,

‘Thus, under the new law, the taxpayer's tax basis of his principal residence is relatively unimportant -- unless
the profit from the sale exceeds the statutory amounts of $ 250,000 or $ 500,000.

In our example, if you sell your house several years later for $ 400,000, your gain of $ 154,000 -- even taking
into consideration the $ 4,000 reduction in basis -- will still be less than $ 250,000 ($ 400,000 less $ 246,000
equals $ 154,000). Thus, if you have lived in this home for at least two years, all of your profit is tax-free.

For many people, the biggest tax break of homeownership is that for mortgage interest payments.

Interest on mortgage loans on a first or second home is fully deductible, as long as the loan is an acquisition
loan up to $ 1 million or a home-equity loan up to $ 100,000, If you are married, but file separately, the limits
are split in half.

You must understand the concept of an acquisition loan. To qualify for such a loan, you must buy, construct
or substantially improve your home.

If you refinance for more than the outstanding indebtedness, the excess amount does not qualify as an
acquisition loan unless you use all of the excess to improve your home.

01/17/2002

00800000001190


Fisher, Peter

From: Fisher, Peter

Sent: Wednesday, November 28, 2001 6:05 PM
To: Gross, Jared
Subject: FW: Enron
importance: High

fyi

~—-Original Message——-

From: Bair, Sheite

Sent: Wednesday, November 28, 2001 5:49 PM
To: Fisher, Peter; Adams, Tim

Subject: Enron

Importance: High

{((bX5)]

01200000001460


Nichols, Robert

From: Nichols, Robert

Sent: Tuesday, January 08, 2002 3:26 PM
To: Quinn, ie

Subject: RE: enron

sec has the lead

oo Ly a Secretary for Public Affai
fs

Depa: of the Treasury

(202) 622-2810

we Onginal Message-~

From: Quinn, Katie

Sent: Tuesday, Janusey 08, 2002 2:54 PM

To: Nechols, Robert; Davis, Michele

Subject: ereon,

Michele and Rob,

Do you happen to know what entity within Treasury would be responsible for examining Enron. | know the Secretar
Sear gr wo ta press about a teverw of Ove utations involved in that case. 4

The question has come up because | received a call from PSI, the Permanent Subcommittee on Investigations, They
have launched a major congressional investigations into this matter and are interested in Treasury's role.

Any direction you can provide would be appreciated.

Kate Quinn
Deputy Assistant Secretary
Eorcenand
egistative Affairs
Department of the Treasury
(202) 622-0725
katie.quinn@do.treas.gov

12

00800000000479



From: Norman Carleton

To: GENSLERG, SachsL, MCGIVERNT

Date: 6/2/99 9:52am

Subject: Working Group Comments on Enron/Cadwalader Proposals -Reply

Attached are Eric Foster's comments on the Enron proposals. | sent a message about this yesterday,
ce: Dom13.D0PO7.MCCLELLANM, DOPOS.TooheyF, CARTERJ, MC...

01756

01200000000412


Summary Financial and Operating Information

‘The following table sets forth a summary of selected consolidated financial and operating data
for the Company for each of the five years in the period ended December 31, 1994 and for the nine.
month periods ended September 30, 1994 and 1995. This information should be read in conjunction
with the consolidated financial statements of the Company and related notes thereto incorporated
by reference herein (see “incorporation of Certain Documents by Reference’) and Management's
Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in
this Prospectus. Financial information for each of the five years in the period ended December 31,

Nine Monthe
Your Ended December 31, Ended September 30,
1990 i991 1902 1983 1 io 1996

(in Thousands, Except Per Share Amounts and Operating Dela)

Statement of income Date:
Net operating reverves(t)... $ 403,137 $ 402,588 $ 459,028 $ 581,020 $ 625.023 $ 474340 $ 492,342
income before income taxes Me 45,669 79,844 112.273 153,935 128,168 144,175
Net inCOMe ae 45.468 47916 97500 138025147998 105.438 110.731
Earnings per share of
Comsnon a ec $30 $22 $03 ce) $08 $00
snares) 151,800 151.800 154,533 189,988. 150,845 189.428 150,951
(at pertod end:
Net of and gas propertion .. $1,305,196 $1,399,668 $1.468.011 $1,546,045 $1,684,811 $1,637,782 $1,843,150

Tota! assets . : wee 1,455,008 «(1,731,012 1,811,162 1,861,867 1,855,819 2.109.971

132,636 3 - 25.000 25,000 16.320
289,556 = 150,00043) 153,000 168,397 188,062 247,552

~ 301995 227528 184,183 195.109 224,085
643.185 826,96673) 993.073 1,043,419 1,019,712 1,140,295,

a0 oo 708 0 m3 m9
ua $188 $1.92 $1.82 $160 $1.23
a2 6s as we 20 ee

$078 $17.90 $16.37 $15.62 $15.24 $16.77

'» Common Stock to be effected as a
. Al share and per share amounts

mition ha
Pa ‘$112 mition used po repay cong-term debt. in ihe
completed payment, fe net proceeds of approximately $327 milion
SSS ree me mee moa aaa er
(4) Inctudes 28 Mit in 1 81 MMct per in 1993 and 48 MMct per dary In 1994 and in the nine-month
i
Ser septa S019 wa 1505 comared nd th wns ot wos oaston saya sect

Inchides an aver eayivaiont wathend valve of $1.70 per Mct in 1982, $1.57 Met in 1983, $1.27 per Mct in 1994 and
© Se ae por Meraeas por Mc! in the nine-month penods ended September 30, 1984 and 1895, rempectvon ior we
volumes Gescribed in note (4), net of transportation costs.

of the
on May 31, 1

00900000000210


The impact of the other marketing activities, a substantial portion of which serve as hedges of
commodity price risks for a portion of wellhead deliveries for the respective periods, were more than
offset by reductions in revenues associated with market responsive prices for wellhead deliveries
during those periods

Operating Expenses

Nine months 1995 compared to nine months 1994. During the first nine months of 1995,
operating expenses of $338 million were $6 million lower than the $344 million incurred in the same
Period in 1994. Lease and well expenses increased approximately $8 million to $53 million Primarity
due to expanded international operations including the initiation of operations in india in late
December 1994 partially offset by reductions in United States lease and well expenses. Exploration
expenses increased $2 million to $32 miftion due to increased exploration activities. Impairment of
unproved oil and gas properties for the first nine months of 1995 increased $3 million from the
comparable period @ year ago primarily due to impairments associated with certain offshore Gulf of
Mexico leases. Depreciation, deptetion and amortization ("D&A") expense decreased $24 milion
to $158 million reflecting a decrease in the average DOA rate from $.81 per Mcte in the first nine
months of 1994 to $.69 per Mcfe in the first nine months of 1995. The DDAA rate decrease is
Primarily attributable to increased production from international operations with lower average
DDBA rates than incurred for North America operations. General and administrative expenses
increased approximately $3 million to $41 million due to expanded international activities and overall
higher costs associated with certain employee related expenses. Taxes other than income were $4
miltion higher in the first nine months of 1995 compared to the same period In 1994 primarily due to @
reduction Included In 1994 associated with state franchise taxes and higher production related taxes
associated with new production in India in the first nine months of 1995 partially offset by decreases
in state severance taxes due to lower taxable North America wellhead volumes and average prices
in 1995.

The Company reduced its total per unit operating costs for lease and well expense, OD&A,
General and administrative expense, interest expense, and taxes other than income by $.06 per
Mcte, averaging $1.25 per Mctle during the first nine months of 1995 compared to $1.31 per Mcfe
during the same period in 1994. This decrease is primarily attributable to the reduction In the
average ODSA rate as noted above partially offset by Increases in per unit lease and well, general
and administrative expenses, and taxes other than income.

1994 compared to 1993, Ouring 1994, total operating expenses of $466 million were approxi-
mately $1 milion higher than the $465 million incurred in 1993. Lease and well expenses of $60
million were approximately $1 million higher than 1993 primarily due to increased expenses related

from 1993 primarily due to impairments associated with certain offshore Gulf of Mexico leases.
DDEA expense decreased from $250 million in 1993 to $242 million in 1994 reflecting a $.09 por
Mcte decrease in the average DDSA rate to $.80 per Mcle. The rate decrease is primarily due to
increased production from offshore Trinidad at an average DDAA rate significantly less than the
North America operations DDSA rate and 2 $.03 per Mcfe reduction in the North America operations
ODEA rate. General and administrative expenses increased $6 million to $51 million primarily due to
overall highér costs associated with expanded international and domestic operations, Taxes other
than income decreased approximately $7 million from 1993 primarily due to lower taxable United
States wellhead volumes and prices and reductions included in 1994 related to revisions of certain
prior year production taxes. Included In 1994 and 1993 are benetits associated with reductions in
state franchise taxes of $4 million and $3 million, respectively. The Company continues to benefit
from certain state severance tax exemptions allowed on high cost natural gas volumes,

25

wal

00900000000228


Mcinerney, Roberta

From: Carleton, Norman
Sent: Wednesday, August 29, 2001 2:41 PM
To: Fisher, Peter; Roseboro, Brian; Bair, Sheila; Nickolo“f, Peter, Sctultheiss, Heidilynne;

DeMarco, Edward; Hughes, Gerry; Gross, Jared; Smith, Amy; Sutton, Gary; Elett, Martha;
Gabilondo, Jose; Mcinemey, Roberta; Lori Sanatamorena (E-mail); Novey, Michael; Eichner,
Matthew; Hammer, Viva

Subject: More on the Enron issue

{(b)(5)]

Thoughts?

00200000000006


CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS OF COMMON STOCK

The following is @ summary of certain United States federal income tax consequences of the
acquisition, ownership and disposition of Common Stock by a holder that, for United States federal
income and estate tax purposes, is a Non-United States Holder. For purposes of this discussion, a
“Non-United States Holder” means a corporation, individual or partnership that is, as to the United
States, a foreign corporation, a non-resident alien individual or a foreign partnership, or a trust or
state other than one the income of which is subject to United States federal income tax regardless
of its source. This summary does not address all aspects of United States federal income and estate
taxation and does not deal with foreign, state and local tax consequences that may be relevant to
Non-United States Holders in light of their specific circumstances. Furthermore, this summary is
based on the provisions of the United States internal Revenue Code of 1986, as amended, and the
regulatidfs, rulings and judicial decisions thereunder, all of which are subject to change. PROSPEC-
TIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE UNITED STATES TAX CONSEQUENCES TO THEM OF ACQUIRING, HOLDING AND DISPOS-
ING OF COMMON STOCK AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER
THE LAWS OF ANY FOREIGN, STATE, LOCAL OR OTHER TAXING JURISDICTION,

Dividends

Dividends paid to a Non-United States Holder generally will be subject to withholding of United
States federal income tax at a rate of 30% (or a lower rate prescribed by an applicable tax treaty). If
the dividends are effectively connected with the conduct of a trade or business within the United
States by the Non-United States Holder, the dividends will be subject to the ordinary United States
federal income tax on net income that applies to United States persons and will not be subject to

ling if the Non-United States Holder files a United States Internal Revenue Service
Form 4224 with the Company or its dividend paying agent. In the case of corporate holders, such
Gividends might also be subject to the United States branch profits tax at a rate of 30% (or a lower
rate prescribed by an applicable tax treaty). A Non-United States Holder may be required to satisfy
Certain certification requirements in order to obtain any reduction of or exemption from withholding
under the foregoing rules and may obtain a refund of any excess amounts currently withheld by filing
an appropriate refund claim with the United States Internal Revenue Service.

Distributions in excess of the Company's current and accumulated eamings and profits, as
determined for United States federal income tax purposes, will be treated first as a return of capital
to the extent of the Non-United States Holder's tax basis in the Common Stock (and will be appiied
against and reduce such holder's tax basis in the Common Stock) and thereafter as gain from the
sale of Common Stock. The portion treated as a return of capital will not be subject to United States
federal income tax and the portion, if any, teated as gain will be subject to the rules described under
" =Gain on Disposition” below. Because the Company will not be able to determine whether a
distribution should property be treated as a dividend or as a return of capital at the time of payment,
it Is required to treat all distributions as dividends for United States withholding tax purposes. Non-
United States Holders will be eligible to claim a refund to the extent that a distribution represents a
return of capital and may in certain circumstances be eligible to claim a refund to the extent that a
Gistribution is treated as gain. Non-United States Holders should consult their own tax advisors with
respect to distributions in excess of current and accumulated earnings and profits.

Gain on Disposition
General Rule
‘Subject to special rules for individuals described below, a Non-United States Holder generally
will not be subject to United States federal income tax on gain recognized on a sale or other
disposition of Common Stock unless (a) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder (in which case the United
States branch profits tax described above may also apply to corporate holders) or (b) the gain is

00900000000242


Nichols, Robert

From: Adams, Tim

Sent: earag January 14, 2002 6:05 PM
To: Davis, Michele

Ce: Nichols, Robert

‘Subject: Congressional Hearings on Enron

Michele — to prepare tor the onslaught of document requests and hearings, David Auffuaser and John Duncan are setting
upa sponse team. We need help. Can you assign someone {or multiple somones) from your office to help us
pull arts , bulk timelines. monitor the press, etc? Thanks

a

00800000000372


Fisher, Peter

———_—_-

From: Bair, Sheila

Sent: Wednesday, November 28, 2001 5:49 PM
To: Fisher, Peter; Adams, Tim

Subject: Enron

Importance: High

[(b)(5)]

01200000001459


IN THE NEWS: 1/15/02 Page 24 of 36

It’s very important to file a retum if you have to. The government considers it a grave violation if you don't and
assesses tough failure-to-file penalties.

‘The penalty is usually $ percent for each month or part of a month that a return is late, but not more than 25
percent.

The penalty is based on the tax not paid by the due date without regard to extensions.

If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the
smaller of $100 or 100 percent of the unpaid tax,

‘You won't have to pay the penalty if you can prove that you failed to file on time because of “a reasonable cause
and not because of willful neglect,” the IRS says.

Even if you're not required to file a return, it may be to your advantage to do so.
More than 70 percent of those who file a return are due a tax refund, and you must file a return in order to get
your refund.

If you're eligible for the Earned Income Credit, you must file a retum to claim it.
The credit is refundable, which means the IRS will send you a refund for any amount in excess of your tax
liability.

If you qualify for the Eamed Income Credit, you may be eligible for a credit of up to $2,428 for a taxpayer with
one child and $4,008 for taxpayers with two or more children,

If you need more time to file your return, you may get an automatic four-month extension by completing IRS
Form 4868, Application for Automatic Extension of Time To File U.S, Individual Income Tax Return.

The extension will give you until Aug. 15 to file your return.
You must request the automatic extension by April 15.

Remember this crucial point: An extension of time to file your retum doesn't give you more time to pay the tax
you owe.

You will be charged interest on any tax owed but not paid by April 15th.

You may also be charged a late payment penalty. The failure-to-pay penalty is 0.50 percent of your unpaid taxes
for each month, or part of a month, after the due date that the tax isn't paid.

If you nced an extension of time to file, you may be able to avoid paying interest and penalties by estimating
how much tax, if any, you'll owe, and including that payment with your Form 4868.

17. IRS wisdom: The early filer gets to sit back, be smug * The Commercial Appeal

The Commercial Appeal (Memphis, TN)
Jan. 13, 2002

IRS wisdom: The early filer gets to sit back, be smug

Following are tax tips from the IRS.

Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax
preparation. Not only do you avoid the last-minute rush, early filers also get a faster refund.

01/17/2002

00800000001157


day of crude oil, condensate and natural gas liquids. At September 30, 1995, deliverability from this
area net to the Company was approximately 32 MMct per day of natural gas and 3.6 MBbi per day of
Crude oil, condensate and natural gas liquids. The Company holds approximately 27,900 net acres
and expects to maintain an active drilling program in this field for several years.

Vernal Area. \n the Vernal ares, located primarily in Uintah County, Utah, the Company
Operates approximately 195 producing wells and presently controls approximately 79,000 net acres.
For the first nine months of 1995, natural gas deliveries net to the Company from the Vernal area
averaged 24 MMcf per day which represents deliverability. Production is from the Green River and
Wasatch formations located at depths between 4,500-8,000 feet. The Company has an average
working interest of approximately 60%. The Company dried 20 wells in the Vernal area in 1994 and
has maintained a comparable drilling program during 1995.

Cageda. The Company is engaged in the exploration for and the development, production and
marketing of natural gas and crude oil and the operation of natural gas processing plants in western
Canada, principally in the provinces of Alberta, Saskatchewan, and Manitoba. The Company
conducts operations from offices in Calgary. The Company produces natural gas from seven major
areas and crude oil from three major areas. The Sandhills area in Southern Saskatchewan is the
largest single producing area where 160 wells were drilled in 1994 resulting in deliverability net to
the Company from the field of approximately 38 MMcf per day at December 31, 1994. Canadian
natural gas deliverability net to the Company at September 30, 1995 was approximately 70 MMct
Per day and the Company held approximately 350,000 net undeveloped acres in Canada. The
Company expects to maintain an active drilling program in Canada for several years.

Outside North America Operations +
The Company has operations offshore Trinidad and India and is conducting exploration in

selected other international areas. Properties offshore Trinidad and India comprised 100% of the

Company's proved reserves and production outside of North America at year end 1994.

Trinidad. \n November 1992, the Company was awarded a 95% working Interest concession
in the South East Coast Consortium ("SECC") block offshore Trinidad, encompassing three
undeveloped fields, previously held by three government-owned energy companies. The Kiskadee
field has been developed, the Ibis field is under development and the Oil Bird field is anticipated to
be developed over the next three to five years. Existing surplus processing and transportation
capacity at the Pelican field facilities owned and operated by Trinidad and Tobago government-
owned companies is being used to process and transport the production, Natural gas is being sold
into the local market under a take-or-pay agreement with the National Gas Company of Trinidad and
Tobago. In 1994, deliveries net to the Company averaged 63 MMcf per day of natural gas and
2.6 MBbI per day of crude oil and condensate. At September 30, 1995, deliverability net to the
Company was approximately 166 MMct per day of natural gas and 8.0 MBbis per day of crude oif
and condensate. The Company's net production from offshore Trinidad was approximately
100 MMct per day of natural gas and 6.2 MBb! per day of crude oll and condensate at September 30,
1995, The Company held approximately 71,000 net undeveloped acres in Trinidad.

The Company recently has been awarded the right to develop the U(a) block adjacent to the
SECC block and is presently negotiating the terms of a production sharing contract with the
Government of Trinidad and Tobago.

India. 'n December 1994, the Company signed agreements covering profit sharing, joint
operations and product sales, and was granted a 30% working interest in, the Tapti, Panna and
Mukta blocks located offshore Bombay, india. The Company Is designated operator of all three
areas. The blocks wore previously operated by the indian national oll company, Oil & Natural Gas
Corporation Limited, which retained a 40% working interest. The 363,000 acre Tapti Block contains
two major proved gas accumulations delineated by 22 expendable exploration wells that have been
Plugged. The Company has initiated a development plan for the Tapti Block accumulations. The
106,000 acre Panna Block and the 192,000 acre Mukta Block are partially developed with 30 wells
Producing from five producing platforms located in the Panna and Mukta fields. The fields were
Producing approximately 3.5 MBbI per day of crude oil net to the Company as of September 30,

00900000000216


((b)(5)]

BACKGROUND:
{(b)(5)]

OUSED VIEWS:
{(b)(5)]

Cec: Jan Piercy, U.S. Director, IFC

00500000000524


Norman,

((b)(5))
Don

Origin Message—-

From: DeMarco, Edward

Sent: Thursday, February 15, 2001 8:22 AM

To: Hammond, Donald; Ets, Ding; Huffman, Lucy; Carleton, Norman; McInerney, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

ce Tishuk, Brian; Robbins, Eric
‘Subject: FW: Bankruptcy Reform Mark-up Hearing

Fy

—Original Message—-

From: Robbins, Eric

Sent: Wednesday, February 14, 2001 5:45 PM
To: DeMarco, Edward

Ce: Tistwh, Brian

‘Subject: Bankruptcy Reform Mark-up Hearing

H.R. 333, the “Bankruptey Abuse Prevention and Consumer Protection Act 2001" was reported out of
the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass. Voting occurred largely
along party lines. The only amendment that passed was a technical amendment offered by Chairman

Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen other
amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions and
netting requirements.

01200000001619


{(b)(5)}

Any thoughts or recommendations? | will send around a separate note discussing the Enron issue in more detat,

00200000000103


Mcinerney, Roberta

From: Hammond, Donald
Sent: Tesecay, February 15, 2001 10:25 AM
To: Carleton, Norman; DeMarco, Edward, Ellis, Dina; Huffman, Lucy; Mcinemey, Roberta;
Constantine, Eleni: Hughes, Gerry; Stewart, Lawranne
Ce: Tishuk, Brian; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGivern, Tom;
Nickoloff, Peter, Schultheiss, Heidilynne; Gross, Jared
Subject: RE: Bankruptcy Reform Mark-up Hearing
Norman,
{(b)(5)]
Don
Original Message---
From: Garteton, Norman
Sent: ‘Thursday, February 15, 2001 10:07 AM
To: Hemet, Donets: Ceriarca, Rotors El, Dina: retina, Lng: cine, Roberta; Constantine, Blew; Mughes, Gerry; Stewart,
Ce: Ta rr et, Pad, Mc Stn, iy Han ny Meer, Tm; Me, Peter Slt
Subject: RE: euvncey elon ona Hearing
Don,
{(b)(5)}

00200000000001


IN THE NEWS: 1/15/02 Page 36 of 36
Adcock said NARFE will work to "drum up support” for the Velazquez bill when Congress returns Jan. 23,

Last week, President Bush dismissed all seven Clinton appointees on the Federal Service Impasses Panel and
named four replacements, including Heritage Foundation Vice President Becky Norton Dunlop as the panel's
new chairman.

‘The panel often serves as a court of last resort in labor disputes between unions and agencies, and last week's
mass firing prompted expressions of surprise and concern from some federal unions.

Yesterday, Colleen M. Kelley, president of the National Treasury Employees Union, said she looked forward
"to the panel being fully staffed so that its work can continue. As far as I can tell, [Dunlop] doesn't have any
experience in labor relations, and I'm concerned about that, but I'm looking forward to working with her to get
that panel up and running.”

Rep. Thomas M. Davis III (R-Va.) invites parents and students to free workshops Saturday on paying for
college.

Leam about grants, loans, scholarships and the financial aid process at 9:30 a.m. at Gar-Field High School in

Woodbridge and at 12:30 p.m. at Fairfax High School in Fairfax City. For more information, call this toll-free
number: 877-840-8224.

01/17/2002

00800000001169


((b)(5)]

Norman
on Original Message
From: — Harrmond, Donakt
Sent: Thursday, February 15, 2001 6:26 AM
To: DeMarco, Edward; Elks, Dina; Huffman, Lucy; Carteton, Norman; Mclnemey, Roberta; Constantine, Bleni; Hughes, Gerry; Stewart,

Ce: Teshuk, Bran; Robbins, Eric
Subject: RE: Bankruptcy Reform Mark-up Hearing

Ed,
[(b)(5)]

Don

~~ -Onginal Message-——

From: DeMarco, Edward

Sent: ‘Thursday, February 15, 2001 8:22 AM

To: Hammond, Donald; Elis, Dina; Huffman, Lucy; Carleton, Norman; McInerney, Roberta; Constantine, Beni; Hughes, Gerry; Stewart,
Lawranne

(Ce: Tishuk, Brian; Robbins, Eric

‘Subject: FW: Bankruptcy Reform Mark-up Hearing

FYi

—-Onginal Message—-—

From: Robins, Ene

Sent: Wednesday, February 14, 2001 5:45 PM
To: DeMarco, Edward

Ce: Tistuk, Brian

‘Subject: Barkruptcy Reform Mark-up Hearing

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001” was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001, During the mark-up hearing,
eighteen amendments were offered with all but one amendment failing to pass. Voting occurred
largely along party lines. The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions
and netting requirements.

01200000001588


{(b)(5))

01200000001200


IN THE NEWS: 1/15/02 Page 14 of 36

The threat of European sanctions adds to trade tensions at a time when the economy on both sides of the
Atlantic is slowing. The EU is also seeking to head off U.S. quotas and tariffs on steel imports, while the U.S.
is considering a WTO complaint against European restrictions on genetically modified foods.

*"We have made a point of handling this dispute in a very reasonable manner,” EU Trade Commissioner
Pascal Lamy said in a faxed statement. **Now it is up to the U.S. to comply with the WTO's findings."

Sanctions

The WTO is expected to rule around the end of March on the final level of sanctions that the EU could
apply. The EU has argued that $4.04 billion is the size of the tax law's application to U.S. companies’ global
exports, not just to the share that go to Europe.

Richard Mills, spokesman for U.S. Trade Representative Robert Zoellick, declined to make an immediate
comment, saying the Bush administration will put out a statement “‘soon.”

U.S. officials have said that they would oppose any sanctions award of that size. Zoellick last year said the
penalties would be like a ‘nuclear bomb” on the U.S. trade relationship with the EU.

A WTO dispute panel found last August that even after an overhaul, 2 U.S. law that allows companies to
shield income from taxes on a range of sales is an illegal export subsidy to hundreds of companies.

Several U.S. lawmakers, including California Republican Bill Thomas, who chairs the tax-writing House
Ways and Means Committee, have said they would prefer to move to a ““territorial" system such as Europe's.
That would mean that only domestic earnings are
subject to tax, although certain foreign profits are taxed,

Global Taxes

All U.S. taxpayers -- including foreign and domestic companies ~ are cligible for tax breaks under the
revised law, allowing them to protect much of their income eared outside the country from U.S. tax, as long as
they have paid tax overseas on

their earnings.

Currently, the U.S. employs a **global” tax system, in theory subjecting company earings all over the world
to tax. U.S. law then excludes some categories of eamings, a policy the WTO said was illegal.

The new law, known as the Extraterritorial Income Act, was passed in November 2000 after the U.S. missed
an carlier deadline. It replaces the original Foreign Sales Corporation law.

Kenneth Dam, U.S. deputy Treasury secretary, said in November the ruling sets a standard for taxing
corporate income ¢amed abroad that calls into question the tax systems of many countries, including those in
the EU.

9, IRS Tax-Shelter Victory Won't Be Overturned by U.S. High Court * BLOOMBERG

BLOOMBERG

January 14, 2002

01/17/2002
00800000001147


RE: IN THE NEWS: 1/15/02 Page 10 of 37
SECTION: TAX, BUDGET & ACCOUNTING

TITLE: Pensions: GRASSLEY EXPLORING PROTECTIONS FOR RETIREMENT PLAN
PARTICIPANTS

TEXT:
Sen. Charles Grassley (R-lowa), ranking member of the Finance Committee, said Jan, 14 he is

pursuing whether Congress should tighten up protections for retirement plan participants in light of Enron
Corp.'s collapse.

Millions of taxpayers have hundreds of billions of dollars invested in employer-sponsored retirement
plans that receive favored treatment under the federal tax code, Grassley noted in a news release.

“The Committee on Finance has the primary responsibility, under its jurisdiction, for making sure
retirement plans comply with the tax code and other laws," he said. "Our committee also has the
responsibility to fix any weaknesses that might leave retirement plan participants in trouble if their
employer goes under."

While all the details of the Enron retirement plans are not yet known, Grassley said, some areas already
are emerging as targets for scrutiny.

Five Areas Targeted,
Specific areas Grassley is looking into are:

-- Company Stock. Under current miles, a company can restrict a retirement plan participant from
selling the match received in company stock through an employee stock ownership plan. Enron
employees’ company stock matches were restricted, Grassley noted. The senator said he is researching
whether employees should be able to change this investment choice prior to an arbitrary age.

_- Mandated Purchases of Company Stock. Current law allows a plan sponsor to compel employees to
purchase up to 10 percent of employer stock as a condition of participating in a 401(k) plan. Grassley said
he thinks this rule should be eliminated.

-- Fiduciary Rules, These rules ensure that companies properly invest and handle retirement plan
money, including spending the money for the exclusive benefit of their employees. Grassley said he
wants to learn whether Enron officials violated their fiduciary duties and, in general, whether Congress
should change the existing rules.

.- Black-Outs. A black-out or lockdown occurs when a plan is shut down for a period of time to allow,
for example, change to another plan administrator. Enron had such a black-out, although the length of
time is disputed, Grassley said. The senator said he wants to get the facts on this because it may coincide
with the decline in the company’s stock value.

_» Mandated Diversification of Stocks in Retirement Plans. Some legislation has been introduced to
mandate that employees hold no more than a certain percentage of stock in their 401(k) plan.
Diversification in one part of the plan should indicate that all investments should be mandated, Grassley
said, He added that he has an open mind, but thinks mandates are not desirable nor particularly feasible,

01/17/2002

00800000001106


Company does not believe that the cessation of consolidated tax reporting with Enron Corp. and
ettactiveness of the Tax Allocation Agreement concurrent with deconsolidation will have e material
adverse effect on its financial condition or results of operations. See “Relationship Between the
Company and Enron Corp.”

The nature of the respective businesses of the Company and Enron Corp. and its affiliates is
such as to potentially give rise to conflicts of interest between the two companies. The Company's
operations account for substantially all of Enron Corp.'s natural gas and crude ol exploration and
production operations. An affiliate of Enron Corp. has entered into an agreement to acquire a
controlling interest in Coda Energy, Inc. ("Coda"), 8 company engaged in domestic oil and gas
explogation, development and production. Crude oll accounts for approximately 86% of Coda’s
proved reserves. At December 31, 1994, Coda reported estimated proved natura! gas reserves of
39,808 MMct and estimated proved crude oll, condensate and natural gas liquids reserves of 39.207
MBbis. If the transaction is consummated, conflicts of interest could arise between the Company
and Coda. See "Relationship Between the Company and Enron Corp. - Conflicts of Interest.”

00900000000209


From: Joe Eichenberger

To: GottliebG
Date: ‘32/00 9:58am
Subject: Nigeria Cable
{(b)(5)}

ce:

00500000000877


IN THE NEWS: 1/14/02 Page 11 of 36

still requires an estate tax retum for those situations.

Now two tax law professors, after analyzing returns, say there is no reason for these forms -- about 43,000
annually -- to be filed. Congress, they say, could easily eliminate them. The estate tax form is 44 pages long and
includes 21 schedules. Preparing it, including appraisals of the family home and other property, can cost
$15,000, said one of the professors, Jay A. Soled of the Rutgers University business school.

"Executors and surviving spouses who endure the expense" of such returns “have a right to be annoyed if and
when it becomes clear that these returns serve virtually no purpose," he wrote with Prof. Richard Schmalbeck of
the Duke University Law School in a paper to be published tomorrow in the journal Tax Notes.

"Members of Congress can climinate the source of this annoyance easily and at little cost, and we strongly
urge them to do so,” they wrote.

This year, an individual may leave $1 million untaxed to people other than a spouse. Professor Soled says that
for a couple to pass $2 million untaxed when the second spouse dies requires the creation of a trust, whose
existence matters to the Intemal Revenue Service only after the second spouse dies.

An LR:S. spokesman said the very few estate retums audited when no tax was due were checked primarily to
ensure that the deceased person's will indeed bequeathed all assets to the surviving spouse or to charity.

Professor Schmalbeck said that only about 7,000 of the so-called first-to-die cstate tax retums showed a tax
due, and usually because of bequests to grown children from an carlier marriage.

These estate tax retums were important before 1981, when the law imposed what was commonly known as
the widow's tax. At the time, the law said that when the first spouse died, the surviving spouse could inherit no
more than $175,000 free of tax, the equivalent of $340,400 today. The rule created a burden for many family-
owned businesses, prompting Congress to change the law so that the surviving spouse could inherit unlimited
amounts tax-free,

8. Tax Credits: MOST ELIGIBLE TAXPAYERS CLAIMING EARNED INCOME TAX CREDIT,
GAO SAYS * BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report

January 14, 2002, Monday
09 DTR G-5 (2002)
LENGTH: 197 words
SECTION: TAX, BUDGET & ACCOUNTING

TITLE: Tax Credits; MOST ELIGIBLE TAXPAYERS CLAIMING EARNED INCOME TAX
CREDIT, GAO SAYS

TEXT;
Most cligible taxpayers are claiming the eamned income tax credit, the General Accounting Office concluded
in a letter released Jan. 11.

Ina Dec, 14 letter to Rep. William J. Coyne (D-Pa.), ranking Democrat on the House Ways and Means
01/17/2002

00800000001180


DESCRIPTION OF COMMON STOCK

Authorized and Outstanding Capital Stock

The authorized capital stock of the Company consists of 160,000,000 shares of Common Stock,
$.01 par value, of which 159.799.955 shares were outstanding on October 31, 1995. The following
summary description of the capital stock of the Company is qualified in its entirety by reference to
the Restated Certificate of Incorporation of the Company, as amended, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.

The Common Stock possesses ordinary voting rights for the election of directors and in respect
to other corporate matters, 6ach share being entitled to one vote. There are no cumulative voting
rights, meaning that the holders of a majority of the shares voting for the election of directors can
elect all the directors if they choose to do so. The Common Stock carries no preemptive rights and is
hot convemible, redeemable or assessable, or entitled to the benefits of any sinking fund. The
holders of Common Stock are entitled to dividends in such amounts and at such times as may be
Geciared by the Board of Directors out of funds legally avallable therefor.

Upon liquidation or dissolution, holders of Common Stock are entitled to share ratably in all net
assets available for distribution to stockholders after payment of any corporate debts. All oulstand-
ing shares of Common Stock are duly authorized, validly issued, fully paid and nonassessabie.

The transfer agent and registrar of the Common Stock Is First Chicago Trust Company of New
York, Jersey City, New Jersey. -

Umitation on Directors’ Liability

” Delaware corporation law authorizes corporations to limit or eliminate the personal liability of
Girectors to corporations and ‘thelr stockholders for monetary damages for breach of directors”
fiduciary duty of care. The duty of care requires that, when acting ort behalf of the corporation,
Girectors must exercise an informed business judgment based on all material information reason-
ably available to them. Absent the limitations authorized by such laws, directors are accountable to
corporations and their stockholders for monetary damages for conduct constituting gross negli-
gence in the exercise of their duty of care, The Delaware laws enable corporations to limit available
relief to equitable remedies such as injunction or rescission. The Restated Certificate of Incorpora-
tion, as amended, of the Company limits the lability of directors of the Company to the Company or
its stockholders (in their capacity as directors but not in their capacity as officers) to the fullest
extent permitted by the Delaware law. Specifically, directors of the Company will not be personally
liable tor monetary damages for breach of a director's fiduciary duty as 8 director, except for liability
(i) for any breach of the director's duty of loyalty to the Company or its stockholders, (li) for acts or
omissions not In good faith or which involve intentional misconduct or a knowing violation of law,
(ill) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in
Section 174 of the Delaware General Corporation Law, or (Iv) for any transaction from which the
Girecior derived an improper personal benefit.

This provision in the Restated Certificate of Incorporation may have the effect of reducing the
likelihood of derivative litigation against directors, and may discourage or deter stockholders or
management from bringing @ lawsuit against directors for breach of their duty of care, even though
such an action, If successful, might otherwise have benefited the Company and its stockholders.

00900000000241


Sutton, Gary

From: Carleton, Norman
Sent: Saturday, September 08, 2001 1:07 PM
To: Bair, Sheila, DeMarco, Edward; Eichner, Mattnew, Ellett, Martha; Fisher, Peter, Gabllondo,

Jose; Gross, Jared; Hammer, Viva; Hughes, Gerry; Nickoloff, Peter; Novey, Michael;
Roseboro, Brian; Schultheiss, Heidilynne; Smith, Amy; Sutton, Gary
Subject: Retail Swaps Stucy Group Meeting -- September 6

{(b)(5)}

00200000000099


IN THE NEWS: 1/14/02 Page 9 of 36

SEC spokeswoman Christi Harlan said the agency doesn't comment on
investigations.

Also last week, the Justice Department confirmed that it has set up a task
force of U.S, Attorneys offices to investigate Enron's collapse. The criminal
probe has been under way since early December.

As a result, the SEC, which had assigned a team to conduct a rapid
investigation, may now be taking a back seat to the Justice Department's
probe, The SEC is hunkering down for a long-term probe that has been
slowed by a parallel criminal investigation, according to people with
knowledge of the matter.

The SEC and criminal authorities are looking at whether Enron officials
intended to deceive investors through improper accounting and by failing to
properly disclose transactions between Enron and partnerships affiliated
with Enron executives.

Meanwhile, congressional aides said tax issues are increasingly surfacing as
a focus in the various Enron investigations. Aides said, for instance, that
Enron might have excluded some of its hefty debt from its shareholder
books but counted it as debt for tax purposes, in order to take interest
deductions. That might or might not be appropriate, the aides said.

Officials also are interested in other complex investment vehicles that
accomplished much the same thing for Enron -- treating investments as
equity for accounting purposes but as debt for tax purposes,

The location of some of the company’s numerous accounts in the Cayman
Islands — a Caribbean tax haven — also is generating interest. It is likely
that the Internal Revenue Service will become active in the various
investigations, tax experts said. An IRS spokesman declined to comment.

Regarding the SEC probe, the agency wouldn't file a case until afler

criminal authorities have completed their probe, regardless of when the

SEC might prepare a civil enforcement action. Criminal cases take
precedence because defendants face possible jail time and restitution,

while the SEC imposes less onerous civil fines and sanctions, The facts of
both civil and criminal securities-fraud allegations are similar, but the Justice
Department has a higher threshold of proof that can cause criminal
investigations to take longer. Prosecutors must prove allegations "beyond a
reasonable doubt.” The SEC must produce a "preponderance" of evidence
of wrongdoing.

While the SEC has interviewed numerous Enron officials at various levels
and has received hundreds of thousands of documents, the existence of the
criminal probe has begun to affect the SEC. Witnesses who are being
criminally investigated are often reluctant to answer SEC questions,
claiming the Fifth Amendment right against self-incrimination.

Andrew Fastow, Enron's former chief financial officer, invoked the Fifth
Amendment in his interview with the SEC in late December, according to
people with knowledge of the matter, Mr. Fastow's lawyer couldn't be
reached.

01/17/2002

00800000001178


Hart, Anna

From:
ror Pray. Be pacamnber 4 2001 3:29 PM
‘0:
Romnier 9 ‘Call Roseboro and Bitsberger on Monday re Enron Speech
Tracking: Recipeent Delivery

Fisher, Peter Dowered 12/14/2001 3:29 PM

01200000001610


From: Vannoy, Elizabeth on behalf of Aufhauser, David
Sent: Thureday, November OF, 2001 1:39 PM
To: Fisher, Peter

Hart, Anna; Pringle, Veronica; Ri , Diana
Pring Riggway,

Ihave a young lai doing some back! ind work on Enron should it become active. | am meeting with him tomorrow at
sree aj/ouner whether jou want wo abend 7"

01200000001609


Page | of |
Cave, Pat

From: Butler, John

Sent: Thursday, January 17, 2002 12:09 PM
To: pat.cave@do.treas gov
Subject: GSEs

Pat, I'm glad to hear you are getting settled. | imagine Enron is occupying people's minds there. [(b)(5)}

Thanks, John

1/22/2002

01200000001658


CAPITALIZATION

The following table sets forth the capitalization of Enron and its consolidated subsidiaries as of
September 30, 1995, and as adjusted to give effect to the issuance on October 11, 1995 of $100
million aggregate principal amount of 674% Notes due 2007, and the issuance of the Exchangeable
Notes offered hereby and, in each case, the use of the proceeds therefrom,

—Actel_ As Adjae'
(in thousands)
Short-term debt
Notes payable....... STEERS aaa $ —
Current maturities of long-term debt sede ecereenseesrveceses = _
Total short-term debt......... seseeee CAPE Bee ET aes — ~~
Long-term gebt
Enron:

Amount reclassified from short-term debt .......-...--e. ses 587,032
Notes due 1996-2023 (6%% to 10.75%) .. . 1,753,139 1,753,139
Exchangeable Notes due 1996 ( %)

Notes due 2007 (6'4%) - 100,000
Subsidiary companies:

Notes due 1998-2005 (4.52% to 9.2%)... 636,000 636,000

Notes due 1998-1999 (floating rates) 55,000 55,000

53,674 53,674

Senior subordinated debentures due 2005-2012 (6.75%-8.25%) 360,000 350,000
Unamortized debt discount and premium . .

Total long-term debt ..

315.621

395,750

138,605

26,373

1,792,544

gs 1,574,335
Cumulative foreign currency translation eopstment

Common stock held in treasury
Other, including Flexible Equity Trust .

3,107,491

"W

00900000000186


Gross, Jared

From: Fisher, Peter
Sent: Wednesday, November 28, 2001 6:05 PM
To: Gross, Jared
Subject: FW: Enron
Importance: High
fyi

—-Origind Message-~--
From: ‘Bair, Sheila
Sent: Wednesday, November 28, 2001 5:49 PM
To: Fisher, Peter; Adams, Tim
Subject: Enron
Importance: High
{(b)(5)]

01200000001582


From: Mary Beasley

To: BARBERE, BudingtonM, CROWEB, GREWEM, KUHKLOWM, LEEN..,
Date: 229/00 4:20pm

Subject: An NWT dispute in Nigeria -Reply

You need to speak to Eliz Stewart on this. She is our procurement expert.

>>> Geoftrey Gottiieb 02/29/00 03:13pm >>>
{(b)(5)]

Pit

ex.mail. “ewelsman@IMF.org”, StewantEK

2-645S5

f'

00500000000906


IN THE NEWS: 1/14/02 Page 33 of 36

Chesla started out as a guard for the former National Westminster Bancorp in Atlantic City in 1988 and rose
to become head of its ATM program. He later

worked for Executive Cash Services, an outfit that replenished ATMs, and in 1996 returned to Ligonier to
manage one of the company’s branch offices.

The company came under suspicion in 1997 when CoreStates Bank filed a claim for an unexplained loss of
$2.3 million.

In October that year, Chesla and his partners incorporated Tri-State and
bought the armored transport portion of Executive Cash. The company supplied
cash for 3,000 ATMs.

Chesta pilfered cash from Tri-State’s vault, but he tripped himself up by
making large deposits by ATM into his account at Laurel Bank of Johnstown. Any deposit of more than
$10,000 requires filing a currency transaction report.

When Chesla was informed about the requirement, he tried to cover his tracks by depositing hundreds of
money orders in smaller amounts, most purchased by Frattaroli-Reilly.

24. FEDERAL DIARY: Many Options to Consider When Deciding on Long-Term Care Insurance *
The Washington Post

The Washington Post
January 13, 2002, Sunday, Final Edition
SECTION: METRO; Pg. C02; FEDERAL DIARY STEPHEN BARR
LENGTH: 733 words
HEADLINE: Many Options to Consider When Deciding on Long-Term Care Insurance
BYLINE: Stephen Barr
BODY:

If you're a government employee or retiree interested in long-term care insurance, it may be time to do some
homework.

The Office of Personne! Management recently announced that LTC Partners, formed by the Mctropolitan Life
and John Hancock insurance companies, has been selected to provide coverage to federal employces, military
personnel, retirees, survivors, spouses and certain other family members.

The long-term care program could become one of the government's largest benefit programs. About 20
million people are eligible to apply for coverage, OPM estimates. The program, approved last year with
bipartisan support in Congress, is intended to help government employees and retirees obtain insurance to cover
such costly services as nursing home care, assisted-living care, adult day care, home health care and other long-
term care.

"Most federal employees and annuitants will find that insurance being sold through the new program will be a
pretty good deal,” said Dan Adcock, assistant legislative director at the National Association of Retired Federal

01/17/2002
00800000001203


{(b)(5)]

w

01200000000967


Agreement applies to EOG and each of its subsidiaries for all years in which EOG or any of its
subsidiaries are or were included in the Enron consolidated raturn, To the extent a state or other
taxing jurisdiction Fequires or permits a consolidated, combined, or unitary tax return to to be filed
and such Feturn includes EOG or any of its subsidiaries, the principles expressed with respect to
consolidated federal income tax allocation shall apply. The Tax Allocation Agreement will cease to
be effective from the time at which deconsolidation occurs for future Periods, but will remain in effect
with regard to periods prior to deconsolidation. EOG has entered into a supplemental agreement
with Enron clarifying future potential Adjustments associated with the final settlement on audit of
taxes for periods prior to the deconsolidation for issues not addressed in the original agreement,
Enron and EOG do not believe that the cessation of consolidated tax reporting and effectiveness of
the Tax Allocation Agreement concurrently with deconsolidation will have a material adverse effect
on the financial condition or results of operations of either Enron or EOG,

Conflicts of Interest

Tho*fature of the respective businesses of EOG and Enron and its affiliates is such as to
Potentially give rise to conflicts of interest between the two companies. Conflicts could arise, for
example, with respect to transactions involving purchases, sales and transportation of natural gas
and other business dealings between EOG and Enron and its affiliates, potential acquisitions of
businesses or oll and gas properties, the Issuance of additional shares of voting securities, the
election of directors or the payment of dividends by EOG.

Circumstances may also arise that would cause Enron to engage in the exploration for and/or
evelopment and production of natural gas and crude oa in competition with EOG. For example,
Opportunities might arise which would require financial resources greater than those available to
EOG, which are located in areas or countries in which EOG does not intend to operate or which
involve properties that EOG would be unwilling to acquire. Also, Enron might acquire a competing oll
and gas business as part of a larger acquisition. In addition, as part of Enron's strategy of securing

ance that Enron will not engage directly or indirectly through entities other than EOG, in the natural
gas and crude oil exploration, development and production business in competition with EOG.
Joint Energy Development investments Limited Partnership ("JEDI"), a limited partnership in
which ECT owns a 50% general partner interest, has entered into an agreement to acquire a
Controlling interest in Coda. Coda is engaged in the exploration for, and the development, produc-

investors in Coda and JEDI and its fiduciary duties to EOG. ECT has entered into an agreement with
JEDI and other investors in Coda designed to minimize certain conflicts of interest that may arise

and providing, among other things, that EOG has no obligation to offer any business opportunities to
Coda.

E0G and Enron and its affitiates have in the past entered into significant intercompany transac-
tions and agreements incident to their respective businesses, and EOG and Enron and its affiliates

13

00900000000188


formulated, his spokesman did not rule out the prospect. “It's definitely a possibility," he said.

Moreover, members of the House Financial Services Committee are trying to move a provision
of the bankruptcy legislation pertaining to financial netting-perhaps as part of the economic
stimulus package-in the event the underlying bill remains stalled.

That provision is designed to strengthen and update current statutory protections for netting
financial market contracts if a party defaults. The netting language of the bill was one of the
few consensus items included in the bankruptcy legislation. The economic downturn and the
widening number of commercial bankruptcies could help create even stronger impetus for the
provision to move separately, sources said.

House Financial Services Committee ranking member John LaFalce (D-N.Y.) urged shortly
after the Sept. 11 terrorist attacks that the netting language be moved “expeditiously.” In
response, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan
agreed “whether as part of comprehensive bankruptcy reform legislation or as a stand-alone
bill, Congress should not fail to enact netting legislation this year.” The Financial Services
Committee had considered placing netting legislation on the schedule for markup this
Wednesday, when it takes up a host of other bills. Committee leaders decided against such
action, however. A spokeswoman for House Financial Services Committee Chairman Michael
Oxley (R-Ohio) said he remained hopeful that the underlying bankruptcy bill could move intact.

01200000001626


Hunt, Betty Ann

Sent Wedr esdey, sowary 09, nace 6:59 PI

4 in a M
To: LaKritz, Robb; McCardell, D:

Subject; RE

Right now Sheila is available at 1:45 (45 min) or 4:30 pm (1 hour). Please let me know what works for you.

Original Message--——

From: Bair, Sneta

Sent: Wednesday, January 09, 2002 6:56 PM

To: Lakritz, Robb; Hunt, Betty Ann

‘Subject: RE:

yep-- I will try to make time. Tomorrow is tough. Betty -- please try to work in
—~-Original Message-—-

From: —Lakntz, Robb:

a i Phyl January 08, 2002 2:45 PM
0:

Ce: Hccaral, Dan; Adams, Tin; Dam, Ker; Gross, Jared: Kupfer, Jeffrey
Subject:

Sheila,

Do you have time tomorrow to x
policy roundtable we are hopir

et with Dan McCardell and me to discuss an internal
ut together on issues related to the Enron

situation and ancl y developments?
Thanks.
Robb Lakritz
Tracking: Recipient Read
Lakritz, Robb Read: 902 6:43 PM
McCardell, Dan Road: 1/1002 7:45 AM

01200000000963


{(b)(5)]

01437

01200000000793


IN THE NEWS; 1/15/02

a “qualifying child"; 3) difficulty in determining

earned-income tax-credit eligibility; 4)

inaccurate answers to queries made on IRS

customer service toll-free lines, or differing

answers to the same question; and 5) difficulty

in documenting carned-income tax credit
eligibility.

For a copy of her report, as well as reports from previous years, go to
www.irs.gow/ind_info/2001_tas.pdf.

‘The Taxpayer Advocate Service has two general goals. One is to help
taxpayers clear up disputes that haven't been resolved through the usual
processes. The other is to recommend "systemic solutions to make the tax
process easier for everyone.”

Relying on the Taxpayer Advocate Service won't work for everyone with
complaints about the IRS. For example, it can't help represent you in
court. The IRS Web site underscores the point that this "is not a substitute
for established IRS procedures or the formal appeals process," and that
this unit "cannot reverse legal or technical tax determinations." But it may
be able to help with such common problems as lost refunds, mistaken
penalties, erroneous notices and other miscellancous snafus that
bureaucrats scem uninterested in fixing.

In some cases, it may even be able to issue a formal order blocking the
IRS from seizing your pay or property. “In certain situations, enforcement
action may be suspended while your case is being reviewed,” the IRS
says. "The Taxpayer Advocate resolves the majority of cases
administratively. Even when hardship is not a factor, the Advocate is often
able to help resolve the taxpayer's problem."

While the Taxpayer Advocate Service isn't new, Congress gave it more
power in 1998. Last year, the service handled more than 270,000 cases --
coming mostly from taxpayers, tax "practitioners," and as referrals from
IRS operating divisions and congressional offices. About 40% of those
cases arose from four IRS program areas: eamed income tax credit audits,
processing of claims or amended retums, processing of refunds, and initial
processing of original paper or electronic individual retums.

No paper tiger, the Taxpayer Advocate has been a vocal critic of the IRS

in the past. In her most recent report to Congress, Ms. Olson writes: "Only
14% of our inventory is composed of hardship cases. A small percentage
of taxpayers contact us because they either don't like the way the tax law
has been applied to their situation, or because they feel that their side of the
issue did not get a fair hearing. Most taxpayers contact us because the

IRS does not offer timely or appropriate taxpayer assistance.”

Before coming to the IRS in March of last year, Ms. Olson was a lawyer
specializing in representing taxpayers in tax disputes. She also founded and
served as executive director of the Community Tax Law project, a
low-income taxpayer clinic in Richmond, Va.

01/17/2002

Page 2 of 36

0800000001135


IN THE NEWS: 1/14/02 Page 8 of 36

Houston energy-trading company is being investigated by the Securities
and Exchange Commission and the Justice Department, as well as by
various congressional committees.

On Friday, Rep. Billy Tauzin (Rep., La.}, chairman of the House Energy
and Commerce Committee, wrote Arthur Andersen's chief executive,

Joseph Berardino, for documents and information concerning the destruction
of Enron documents,

He asked for a copy of the Oct. 12 memo and subsequent
correspondence from Arthur Andersen's professional-standards group at
the firm's Chicago headquarters. In addition, the committee has requested
information about whether the Enron auditors continued to destroy
documents after the SEC issued a subpoena Nov. 8 related to its formal
investigation of Enron,

In another development, the Senate Governmental Affairs Committee sent
out 51 subpoenas Friday to Enron and Andersen. Each Enron board
member received a subpoena, including Wendy Gramm, former chair of
the Commodities Futures Trading Commission and wife of Texas Sen. Phil
Gramm.

Sen, Carl Levin, Michigan Democrat and chairman of the investigations
subcommitee, said on ABC's "This Week" that the panel is "focusing on ...
the failures of this corporation, the deceptive practices of this corporation
and the failure of its auditors and board.”

The SEC launched a formal investigation into potential accounting fraud at
Enron on Oct. 31 and later expanded its inquiry to include Arthur
Andersen's audit work. Last week, Arthur Andersen disclosed that it had
destroyed documents related to its Enron audit work after investigators
from the House committee raised questions about missing documents.

The existence of missing documents was tumed up by Davis Polk &
Wardwell, an outside law firm hired by Arthur Andersen to assist in the
SEC investigation. The accounting firm informed the law firm that it
couldn't comply with part of the SEC's request for documents because
many had been destroyed, according to people with knowledge of the
probe.

As a result, Arthur Andersen informed the SEC before last week that it
was missing some of the documents requested by the agency, including
¢-mails and audit partners’ paper files that were shredded, these people
say. None of Arthur Andersen's audit-work papers, which are most critical
to the investigation, were destroyed. After learning about the document
destruction, the SEC subpoenaed Arthur Andersen's computer hard drives

and tapes, these people say.

Davis Polk now has the tapes and hard drives and has hired outside
computer technical people to recover the e-mails, these people say. The
SEC is particularly interested in recovering ¢-mail correspondence among
audit partners to determine whether there was an internal debate at Arthur
Andersen about the propriety of Enron's accounting, they say.

61/17/2002
00800000001177


{(b)(5)]

01200000001197


RE: IN THE NEWS: 1/15/02 Page 32 of 37
January 15, 2002, Tuesday, Final Edition

SECTION: METRO; Pg. B03

LENGTH: 1031 words

HEADLINE: METRO; In Brief

BODY:

VIRGINIA

Virginia taxpayers, take note:

Federal tax retums, which Virginians have mailed to Philadelphia for the past decade or so, should now
be sent to Memphis. The IRS began notifying taxpayers of the switch last week. The new address: IRS
Service Center, Memphis, Tenn. 37501.

People who file electronically — as more than a million Virginians did last year —- face no change.
Taxpayers can visit the IRS Web site, www irs.gov, to download forms and publications and learn about
changes in the tax laws that might affect their 2001 return.

25. BEVERLY HILLS' LATE TREASURER MAY HAVE LEFT SUBSTANTIAL DEBT TO

IRS ; OFFICIALS STILL TRYING TO UNTANGLE RECORDS
* St. Louis Post-Dispatch

St. Louis Post-Dispatch

January 14, 2002 Monday Five Star Lift Edition
SECTION: NORTH POST; Pg. 4

LENGTH: $42 words

HEADLINE; BEVERLY HILLS' LATE TREASURER MAY HAVE LEFT SUBSTANTIAL DEBT .
TO IRS ; OFFICIALS STILL TRYING TO UNTANGLE RECORDS

BYLINE: Kathie Sutin Special To The Post-Dispatch

BODY:

When Beverly Hills’ treasurer died unexpectedly last year, his death left officials scrambling to find the
municipality's financial records. Now officials are reeling with the news that payments he made to the
Intemal Revenue Service often were late, and Beverly Hills might owe the federal government thousands
of dollars in back taxes and penalties.

Pervais Butt, the treasurer, had the books in his possession at the time of his death, but no one at City Hall
knew where they were, In fact, no official was aware of the true financial situation. A year later, officials
still are waiting to learn the exact shape of the finances. Although an auditing company has been working
on straightening out the records for several months, City Clerk Langston Chambers reported to the Board
of Aldermen last week that they had not yet been successful in untangling the mess.

City Attorney Richard Bresnahan said no money was missing. He said he did not know how much
01/47/2002

00800000001128


Hughes, Gerry

From: DeMarco, Edward

Sent: Wednesday, October 31, 2001 10:00 AM

To: Hughes, Gerry, Green, Matthew

Subject: FW: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

‘Wanted to be sure you guys saw this traffic.

Falla
es, Ora
Sent Wednesday, October 31, 2001 9:42 AM
To: McGivern, Tom; Carleton, Norman; Bitsherger, Timothy; Bair, Shella; DeMarco, Edward; Eliett, Martha; Gablondo, Jose; Gross,
Jared; Huffman, Lucy; Hughes, Gerry; McInemey, Roberta; Nickolcff, Peter; Roseboro, Brian; Salladin, Anne; Schulthetss,
Hescilynne; Smith, Amy; Sutton, Gary; Tishuk, Bran; Duncan, John; Sanders, Trac; Dorsey, Karen
‘Subject: RE: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS
((b)(5)]
—---Onginal Message---—~
From: McGee, Tom
‘Sent: Wednesday, October 31, 2008 9:20 AM

To:

iis, Dina; Carteton, Norman; Basberger, Timothy; Bak, Sheta; DeMarco, Edward; Ellett, Marthe; Gabllondo, Jose; Gross, Jared;
Huttman, Lucy; Hughes, Gerry; McInerney, Roberta; Nickoloff, Peter; Roseboro, Brian; Salladin, Anne; Schulthetss, Heidiynne;
‘Senth, Amy; Sutton, Gary; Tishuk, Brian; Duncan, John; Sanders, Tract; Dorsey, Karen

Subject: RE; Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

{(b)(5)]

Subject: RE: Netting Ltr tobe Signed by PWG and FDIC, OCC, and OTS
{(b)(5)]

woeOniginal Message--—
From:

Carleton, Norman
Sent: Tuesday, October 30, 2001 2:46 PM
To: mae TE Bair, Shella; Constantine, Beni; DeMarco, E¢ward; Elett, Martha; Elis, Dina; Gabliondo, Jose; Gross, Jared;
Huffman, Lucy; Hiaghes, Gerry; McGovern, Tom; Mclnemey, Roberta; Nickolof, Peter; Roseboro, Brian; Saladin,
‘Anne; Scwithelss, Heldilynne; Smith, Amy; Sutton, Gary; Tishuk, Brian
Subject: etig Leer to be Signed by PWG snd FDIC, OCC, and OTS

<< File: Netting letter.doc >>

Attached is the proposed netting letter from the Federal Reserve. (It has merge mail features that
you will have to delete in order to read it. Altematively, you can use the quick view program to
access the document.) It is awaiting approval from SEC Chairman Pitt. Below is an article | sent
around earlier today indicating that some are trying to revive the Bankruptcy bill.

{(b)(5))

Norman Carleton

01200000001306


Natural gas and liquids, including crude oll, condensate and natural yas liquids, that cannot be
measured in an exact manner, The accuracy of any reserve estimate is @ function of the amount and
Quality of available data and of engineering and geological interpretation and judgment. As a result,
estimates of different engineers normally vary. in addition, results of drilling, testing and production
subsequent to the date of an estimate may justify revision of such estimate, Accordingly, reserve
estimates are often different from the quantities ultimately recovered. The meaningfulness of such
estimates is highly dependent upon the accuracy of the assumptions upon which they were based.

In general, the volume of production from oll and gas properties owned by the Company
declines as reserves are depleted. Except to the extent the Company acquires additional properties
containing proved reserves or conducts successful exploration and development activities, or both,
the proved reserves of the Company will decline as reserves are produced. Volumes generated from
future activities of the Company are therefore highly dependent upon the level of success in

or finding additional reserves and the costs incurred In doing 30.

‘ The following tables summarize the Company's developed and undeveloped acreage at
December 31, 1994 and September 30, 1995. Excluded is acreage in which the Company's interest
Is limited to owned royalty, overriding royalty and other similar interests.

Undeveloped Total
Grose Net Grose Wat Grows Net

At December 31, 1994:

1,952,656 1,705,716 2,931,083 2,343,586
437,523 383,550 $39,512 661,546
602,207 = 180,662 662,207 +=: 198,662
74,851 71,108 79,051 75,098

13,913,600 11,756,800 13,913,600 11,756,800

Total. ccesene 1 16 _ 967,858 16,980,837 14,067,836 18,525,453 15,035,692

1,854,024 661,647 2,321,727 1,775,151 3,875,751 2,436,798
659,534 335,559 424,302 349,503 = 983,836 += 685,062
80,000 18,000 602,207 = 180,662 662,207 = s_«1198 662

4200 3990 74851 71,108 79,051 —75,098
- = 13,422,400 11,773,100 13,422,400 11,773,100
Total ....... +» 2ATT75B 1,019,196 16,845,487 14,149,524 19,023,245 15.168.720

16

00900000000221


Indebtedness (a3 defined in the indenture), unless effective provision is made whereby outstanding
Indenture Securities (including the Exchangeable Notes) will be equally and Fatably secured with any
and all such indebtedness and with any other indebtedness similarly entitied to be equally and
ratably secured, This restriction does not apply to prevent the creation or existence of:
{a) mortgages, pledges, liens or encumbrances on any property held or used by Enron or a
Subsidiary in connection with the exploration for, development of or production of, oil, gas, natural
gas (including liquified gas and storage gas), other hydrocarbons, helium, coal, metals, minerals,
steam, timber, geothermal or other natural resources or Synthetic fuels, such properties to include,
but not be limited to, Enron's or a Subsidiary’s interest in any mineral toe interests, oll, gas or other
mineral leases, royalty, overriding royalty or net profits interests, production payments and other
similar interests, wellhead production equipment, tanks, field gathering lines, leasehold or field

the foregoing, Enron or a Subsidiary may issue, assume or guarantee indebt-
edness secured by a mortgage which would otherwise be subject to the foregoing restrictions in an
aggregate amount which, together with all other indebtedness of Enron or a Subsidiary secured by a
mortgage which (if originally issued, assumed or guaranteed at such time) would otherwise be
Subject to the foregoing restrictions (not including secured indebtedness permitted under the

foregoi exceptions), does not at the time exceed 10% of the Consolidated Net Tangible Assets
(ot! assots leas (a) total current labia, excluding indebtscnese due witn 12 morte, and)

The holders of at least 50% in principal amount of the outstanding Indenture Securities under
the Indenture (including the Exchangeable Notes) may waive compliance by Enron with the covenant
Gescribed above (and certain other covenants of Enron).

The Indenture defines the term "Subsidiary" to mean a corporation ail of the voting shares (that
is, shares entitied to vote for the election of directors, but excluding shares entitied so to vote only

20

00900000000195


{(b)(5)]

00200000000100


IN THE NEWS: 1/15/02
Bradshaw, Tara

Page | of 36

From: Washington Linda J [Linda.J. Washington@irs.gov}
Sent: Tuesday, January 15, 2002 2:20 PM

To: Carolyn Walas (E-mail); Charles A, Lacijen (E-mail); Charles L. Kolbe (E-mail), Denise L. Goss (E-mail);
Desler, Anne; George E. Farr (E-mail); Hart, Dale; Heather B. Rosenker (E-mail); Joelle Jordan (E-mail); Karen
Hastie Williams (E-mail); Loretta J. Bassette (E-mail); Lelevitan (E-mail), Marlene Loor (E-mail), Maureen C.

Allen (E-mail); Steve Nickles (E-mail); Tara Bradshaw (E-mail), Taylor, Gloria

Subject: IN THE NEWS: 1/15/02
Today's Contents

1. Tom Herman on Taxes * THE WALL STREET JOURNAL

THE WALL STREET JOURNAL
January 15, 2002

Tom Herman on Taxes

Consider Taking a New Route When Dealing With the IRS

By TOM HERMAN
Staff Reporter of THE WALL STREET JOURNAL

Welcome to Tom Herman on Taxes, a weekly column available
exclusively in The Wall Street Journal Online. Mr. Herman, the
Journal's tax expert, answers questions from our readers on personal
taxes and how taxes impact financial planning.

If you've been trying to resolve a long-running dispute with the Internal
Revenue Service and have been getting nowhere by going through normal
channels, consider another route.

A little-known unit of the IRS, the Taxpayer Advocate Service, headed by
Nina E, Olson, sometimes can be surprisingly helpful in lifting struggling
taxpayers out of bureaucratic quicksand.

Asking the IRS for help with the IRS may sound like a waste of time, at
best. But accountants, lawyers and other tax advisers generally praise it.

What prompted me to write about this subject was a recent reader
question about how to reach Ms. Olson, the IRS's National Taxpayer
Advocate, whom I mentioned in a recent column about a report she sent
Congress listing the 23 most serious problems facing taxpayers.

In her report, Ms, Olson says the top five

most serious problems taxpayers have with the
IRS are: 1) trouble with accessing the
agency's customer service toll-free telephone
service; 2) the tax law's multiple definitions of

01/17/2002

00800000001134


may be expected to enter into material transactions and agreements from time to time in the future.
Such transactions and agreements have related to, among other things, the purchase and sale of
natural gas and crude oll, the fi of exploration and development efforts by EOG, and the
provision of certain corporate services, Enron believes that Its existing transactions and agreements
witn EOG have been at least as favorable to Enron as could be obtained from third parties, and
Enron intends that the terms of any future transactions and agreements between Enron and EOG
and its affiliates will be at least as favorable to Enron as could be obtained from third parties.

USE OF PROCEEDS
The net proceeds from the sale of the Exchangeable Notes will be added to Enron's general
funds and are expected to be used to retire existing indebtedness and for general corporate
purposes. At , 1895 the weighted average Interest rate on such indebtedness was
approximately %.
RATIO OF ENRON'S EARNINGS TO FIXED CHARGES
Year Ended December 31. ay ~~ yd
a een _Septoeniber, 1995 _

Charges ..... 02s errr eeees 1.58 1.66 174 1 2.40 2.87

PRICE RANGE OF EOG COMMON STOCK AND CASH DIVIDENDS

‘The following table sets forth, for the periods indicated, the high and tow salle prices per share
for the EOG Common Stock, as reported on the New York Stock Exchange Composite Tape, and

the amount of cash dividends paid.per share. The 1993 and First and Second Quarter 1994 ssies
prices and cash dividends per share have been restated to refiect the two-for-one stock split on
May 31, 1994.
Price Cash
1993 ae
First Quarter... .... cece cece ee eate ees eeesenernresceens $20.31 $13.38 $.03
Second Quarter He 4 03
Third Quarter. 19. 03
Fourth Quarter. . 17.06 3
1904 rst $133) $.03
Third Quarter . 18 ry
1995,
First Quarter $.03
Second ° .03
Third Quarter 03
Fourth Quarter (through November 13, 1995)
last reported 3, 1995 as reported on

i
F7
g
i

14

4

0900000000189 _


IN THE NEWS: 1/15/02 Page 6 of 36
DATELINE: AURORA, Mo., Jan. 14

BODY:

Unveiling his second-year economic agenda in stops at farm towns along the Mississippi River, President
Bush promised today to restore Americans’ confidence in the listless economy. He acknowledged, however, that
a full recovery depends on making people feel safer from terrorism.

Bush said a comerstone of his plan is to preserve the tax cuts that are scheduled to be phased in between now
and Dec. 31, 2010, even as Sen, Edward M. Kennedy (D-Mass.) plans to launch a drive on Wednesday to roll
them back,

Several elements of Bush's $ 1.35 trillion tax cut are not scheduled to take effect until the final year, including
the estate tax repeal and the full $ 1,000 child tax credit. Bush has said he considers any postponement of the
later phases to be a tax increase. "Now, there's going to be a debate when we go back to Washington about tax
relief,” Bush said this morning at a John Deere tractor factory in East Moline, Ill. "But I've made up

my mind. The tax relief plan we passed, which you're now beginning to feel the effects of, is going to be
permanent.”

In fact, the entire tax cut package is scheduled to expire in 10 years, although many analysts predict that a
future Congress and president will extend its main components.

Bush's reference to a coming debate was a shot at Kennedy, who plans to give a speech Wednesday at the
National Press Club in which he will call for postponing tax cuts scheduled to take effect in 2004 and beyond. A
congressional source said today that Kennedy will argue those parts of the tax cut package "overwhelmingly
benefit the wealthy.”

Kennedy estimates that his proposal would save the government $ 350 billion over the 10-year period. The
senator will propose that the savings go to increased funding for education, a prescription drug benefit for
Medicare and protection of Social Security.

Bush, however, told farmers at a feed mill here that a crucial way to stimulate growth during a recession is to
let people keep more of their own money. "That's Economics 101 == except, it sounds like some of them hadn't
taken the course in Washington,” he said.

Still, Bush lavished praise on Kennedy, crediting him with helping win passage of the education bill signed
last week. "Never did I dream that I would say good things about him,” Bush said today, drawing laughter,
"Never did he dream that I would say good things about him."

Bush, expressing concern for workers who have lost their jobs or fear they will, announced a five-point plan
that highlights the economic aspect of all his other domestic priorities: homeland security, education, trade,
energy and an economic stimulus package that includes a speeding up of tax cuts scheduled to take effect over
the next decade.

Alluding to the war on terrorism, he said: "At this moment in history, the best thing I can do, along with my
administration, in order to build the confidence of the American people, is to prevent the evil ones from hitting
us again.”

At the earlier stop in Illinois, Bush said there is "no question the attacks on America on 9-11 have affected our
confidence.”

“But the more the American citizen realizes that our federal government, in combination with state
01/17/2002

00800000001139


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following review of operations for each of the three years in the period ended December 31,
1994 and for the nine-month periods ended September 30, 1994 and 1995 should be read in
conjunction with the consolidated financial statements of the Company and notes thereto and other
financial data incorporated by reference herein. See “incorporation of Certain Documents by
Reterence.”

Results of Operations
Net Operating Revenues
Welihead volume and price statistics for the specified periods were as follows:
¥ ing Months:
Ended
Year Ended December 31,
7002 1983 1984 a

Natural Ges Volumes (MMcf per day)

707 686 BBO G09
2 6 63110
709 749743719

ee Se A a PA

$ 192 $ 168 $1.76 $1.28
93 33 7
1.92 1.62 169 «6123

10.0 94 11.5
25 26 48
a - _ 23

126 120 18.6

$ 15.65 $15.25 $17.01
15.50 15.20 16.16
15.70 - 16.82
15.62 1524 16.77

int in 1994 and
(1) frokurion 26 MNEs Dee ee te be ore 9H are 09 ont 8 deere une he co

Includes an ai equivalent wellhead value of $1.70 per Mct in 1992, $1.57 per Mcf in 1993,
© S27 por Metin Tobe and $13 per hcl and $76 per ht in in the nine-month ended
September 30, 1994 and 1995, respectively, for the volumes detailed In note (1), net of

Nine months 1995 compared to nine months 1994. During the first nine months of 1995, net
operating revenues increased $18 million to $492 million as compared to the same period in 1994.

Average wellhead natural gas prices for the first nine months of 1995 were down approximately
27% from the same period in 1994 reducing net operating revenues by approximately $90 militon. In
addition, a decrease of 3% in wellhead natural gas volumes from the first nine months of 1994
reduced net operating revenues by approximately $11 million. Ashes Doomed eran

United States wellhead natural gas delivered volumes by an average of approximately 140 MMctf per
day during the first nine months of 1995 compared to approximately 110 MMct per day during the
22

00900000000225


DeMarco, Edward

From:
Sent:
To:

Subject:
{(b)(5)]

Carleton, Norman
Saturday, September 08, 2001 1:07 PM
Bair, Sheila; DeMarco, Edward; Eichner, Matthew; Eliett,

Fisher, Peter, Gabilondo,

Jose; Gross, Jared; Hammer, Viva; Hughes, Gerry; Nickoloff, Peter, Novey, Michael;

Roseboro, Brian; Schultheiss, Heidilynne; Smith, Amy; Sutton,
Retail Swaps Study Group Meeting -- September 6

01200000001230


DeMarco, Edward

From: Green, Matthew

Sent: Thursday, February 15, 2001 12:48 PM
To: jeMarco, Edward
Subject: RE: Bankruptcy Reform Mark-up Hearing
{(b)(5)]
sag OO
From:
Sent: Troradoy, February 15, 2001 12:38 PM
To: Green, Matthew
Subject: FW; Bankruptcy Reform Mark-up Hearing
{(b)(5)]
Po lar ano
Sone Thursday, Feorscy 1S, 2001 10:07 AM
To: Hammond, Donald; DeMarco, Edward; Elis, Ding; Huffman, Lucy; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,
Ce: Teshuk, Brtan; Robbins, Eric; Paulus, Michael; Sutton, Gary; Huffman, Lucy; McGiern, Tom; Nickcloft, Peter; Schulthess,

Subject: RE: Bankruptcy Reform Mark-up Hearing
Don,

((b(5)}

01200000001214


VALIDITY OF THE EXCHANGEABLE NOTES

The validity of the Exchangeable Notes will be passed upon for Enron by James V. Derrick, N
Senior Vice President and General Counsel of Enron. Mr. Derrick owns substantially less than 15 of

EXPERTS

The consolidated financial statements and schedules included In Enron's Annual Report on
Form 10-K for the year ended December 31, 1994, incorporated by reference in this Prospectus,
have,been audited by Arthur Andersen LLP, independent public accountants, as indicated in their

Of said firm as experts in accounting and auditing in giving said reports.

The letter report of DeGolyer and MacNaughton, independent petroleum consultants, included
83 an exhibit to Enron's Annual Report on Form 10-K for the year ended December 31, 1994, and
the estimates trom the reports of that firm appearing in such Annual Report, are incorporated by
reference herein on the authority of said firm as experts in petroleum engineering and in giving such
reports.

00900000000203


other property of EOG or another Person), (ii) any sale, transfer, lease or conveyance to another
Person of the property of EOG or any EOG Successor as an entiraty or substantially as an entirety,
(it) any statutory exchange of securities of EOG, or any EOG Successor with another Person (other
than in Connection with @ merger oF acquisition); oF (iv) any liquidation, dissolution or winding up of
EOG or any EOG Successor {any such event being a “Reorganization Event”), the Exchange Rate
Sed to determine the amount payable upon exchange at Maturity for each Exchangeable Note will
be adjusted to provide that each Holder of Exchangeable Notes will receive at Maturity cash in an
amount equal to (a) if the Transaction Value (as defined below) is greater than or equal to the

“Transaction Value" means (i) for any cash received in any such Reorganization Event, the amount
oon Te eved Per share of EOG Common Stock, (i) for any property other than cash or securities
received any such Reorganization Event, an amount equal to the market value at Maturity of such
Property received per share of EOG Common Stock as determined by a nationally recognized
independent investment banking firm retained for this purpose by Enron and (li) for any securities
Fecelved in any such Reorganization Event, an amount equal to the average Closing Price per share

No fractional shares of EOG Common Stock will be issued If Enron exchanges the Exchango-
able Notes for shares of EOG Common Stock. If more than one Exchangeable Note shall be
surrendered for exchange at one time by the same holder, the number of full shares of
Common Stock which shall be delivered upon exchange shall be computed on
aggregate number of Exchangeable Notes so surrendered at Maturity. In lieu of any fractional shai
otherwise issuable in respect of all Exchangeable Notes of any Holder which are
Maturity, such Holder shall be entitled to receive an amount in cash equal to the value of such
fractional share at the Maturity Price. we,

Redemption and Defeasance

The Exchangeable Notes are not subject to redemption or defeasance prior to Maturity and do
not contain any sinking fund or other mandatory redemption provisions.
Limitations on Mortgages and Liens

The Indenture provides that so long as any of the indenture Securities issued under the
ladanture (including the Exchangeable Notes) are outstanding, Enron will not, and will not permit any
ert, enceot In fover of te oe an eect Blodg, morgage oF hypemecat, or permit to
exist, except in favor Enron of any Subsidiary, any mortgage, pledge or other upon, any
Principal Property (as defined in the Indenture and herein) at any time owned by it, to secure any

19

00900000000194


IN THE NEWS: 1/15/02 Page 22 of 36

Tax breaks for college, retirement
By KATHLEEN LYNN
Staff Writer

Families often face two big financial challenges at the same time: saving for college tuition and saving for
retirement. The tax bill President Bush signed last summer offers help on both, with expanded tax breaks that
went into effect Jan. 1.

“T've got clients who had children later in life,” said accountant Tony Wyss of Closter. "Their children are not
starting college till the parents are near retirement age. So it's a question of saving for college vs. saving for
retirement."

All taxpayers will benefit from lower tax rates that went into effect this year, and you don't have to take any
action to get them. But to make the most of the other tax breaks, you've got to ratchet up your savings.
Considering the high cost of college and retirement, that might be a good idea anyway.

Among the most useful changes:
You can protect more of your retirement savings from taxes.

Under the new rules, the yearly maximum contribution for an IRA or Roth IRA rose this year, from $2,000 to
$3,000 -- $3,500 for those who are at least 50 and who may need to catch up on their retirement savings.

“With this country's savings rate being so low, that is a great incentive for people to save for retirement," said
Peter Traphagen Sr., a certified public accountant in Oradell.

The maximum contribution for an employer-sponsored savings plan, such as a 401(k), 403(b), or 457, rose from
$10,500 to $11,000 -- $12,000 for the over-50 crowd,

You can get more tax breaks on saving for college, Families can now contribute $2,000 a year -- up from $500 a
year -- to Education Savings Accounts, formerly called Education IRAs. These accounts, available through
mutual funds, banks, and brokerages, allow the money to grow tax-free if used for education expenses.

And Section 529 college-savings plans, sponsored by the states, also became more attractive, Formerly, the
earnings on these accounts would be taxed at the student's tax rate when taken out for college costs. Now they're
completely free of federal taxes. You can generally invest in any state’s plan, no matter where you live or where
your child ends up attending college. For more information on Section 529 plans, check
www.savingforcollege.com.

"With the incredible cost of college today, I think more and more families are beginning to save earlier,” Wyss
said,

For students who borrow to pay for college, the new tax law expands tax breaks for repaying student loans,
Previously, the taxpayer could deduct interest on student loans for only 60 months; now there's no limit. And
the deduction is now available to taxpayers at higher incomes, beginning to phase out at $50,000 for single
taxpayers and to $100,000 on joint returns.

Other tax breaks that affect families include:

You can take a higher tax credit for your children -- $600 a child, up from $500. But the credit begins to phase
out for families with adjusted gross incomes above $110,000 (joint return) and above $75,000 (single).

You can leave more to your heirs. Okay, it's hard to get excited about a tax break that you can get only by
01/17/2002

00800000001155


RE: IN THE NEWS: 1/15/02 Page 6 of 37
Lindsey said "there’s nothing in particular" wrong with Daschle’s altemate proposals for stimulating the

economy, which include tax breaks for businesses that expand and add workers. However, he said "one-
shot" remedies usually are not effective.

"The first thing we know is that one-time, short deals don't work,” Lindsey said in addressing Daschle's
plan. "You need long-term incentives. And what we're proposing is bringing those rates down as part of a
long-term incentive. A three-year incentive to invest -- that's a long-term incentive. Back in the '70s we
tried a lot of these one-shot, one-year deals. The economic evidence is clear. They don't work.”

Lindsey also suggested that the extra spending that Daschle is proposing for homeland security, health

and science research, and more will not be as carefully targeted as the extra spending the president will
propose for many of the same categories in his budget.

Lindsey said OMB has subjected the spending proposals for homeland security and other areas to a
cost-benefit test. And even if the extra spending in the FY 2003 budget will contribute to the deficit, he
said the longer term budget outlook should be good.

“We're spending money cost-effectively,” Lindsey said, "We are going to be returning to budget surplus
in the not-too-distant future.”

3. Bush Pledges to Restore Confidence in Economy; President Says Success Tied to War on Terror
* The Washington Post

The Washington Post

January 15, 2002, Tuesday, Final Edition
SECTION: A SECTION; Pg. A04
LENGTH: 688 words

HEADLINE: Bush Pledges to Restore Confidence in Economy; President Says Success Tied to
War on Terror

BYLINE: Mike Allen, Washington Post Staff Writer

DATELINE: AURORA, Mo., Jan. 14

BODY:

Unveiling his second-year economic agenda in stops at farm towns along the Mississippi River,
President Bush promised today to restore Americans’ confidence in the listless economy. He
acknowledged, however, that a full recovery depends on making people feel safer from terrorism.

Bush said a comerstone of his plan is to preserve the tax cuts that are scheduled to be phased in between
now and Dec. 31, 2010, even as Sen. Edward M. Kennedy (D-Mass.) plans to launch a drive on
Wednesday to roll them back.

Several elements of Bush's $ 1.35 trillion tax cut are not scheduled to take effect until the final year,
including the estate tax repeal and the full $ 1,000 child tax credit, Bush has said he considers any
postponement of the later phases to be a tax increase, "Now, there's going to be a debate when we go back
to Washington about tax relief," Bush said this morming at a John Deere tractor factory in East Moline, Ill.

OW/17/2002

00800000001102


Backup withholding is not an additional tax. Any amounts withheld under the backup
ing rules will be refunded or credited against the Non-United States Holder's United States federal
income tax liability, Provided that required information is furnished to the United States internal
Revenue Service.

PLAN OF DISTRIBUTION

This Prospectus relates to the 11,000,000 shares of Common Stock that may be delivered by
Enron Corp. pursuant to the Exchangeable Notes and is Appendix A to the Enron Corp. Exchange-
able Notes Prospectus. At maturity of the Exchangeable Notes, the principal amount of each such

VALIDITY OF COMMON STOCK

The validity of the shares of Common Stock deliverable upon exchange of the Exchangeable
Notes will be passed upon for the Company by Dennis M. Ulak, Esq., Vice President and General
Counsel of the Company, and for the Underwriters by Bracewell & Patterson, LLP. Certain matters
will be passed upon for Enron Corp. by Vinson & Elkins LLP. Mr. Ulsk owns substantially less than
1% of the outstanding shares of Common Stock of the Company or common stock of Enron Corp.
Bracewell & Patterson, L.L.P. provides services to Enron Corp. and certain of its subsidiaries
(inciuding the Company) and affiliates on matters unrelated to the offering of the Exchangeable
Notes, the delivery of the Common Stock upon exchange thereof and the Stock Otferings.

EXPERTS

The consolidated financial statements and schedule included in the Company's Annual Report

‘on Form 10-K for the year ended December 31, 1994, incorporated by reference in this Prospectus,

have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their
by

The letter report of DeGolyer and MacNaughton, independent petroleum consultants, included
85 aN exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
and the estimates from the reports of that firm appearing in such Annual Report, are incorporated by
reference herein on the authority of said firm as experts in petroleum engineering and in giving such
reports. .

0900000000244


RE: IN THE NEWS: 1/15/02 Page 12 of 37
In dollar terms, that makes this the largest trade case in history.

The European Union contends that the tax breaks give American exporters an unfair edge in
international commerce, The United States holds that the tax advantage is no greater than comparable tax
breaks in Europe. European companies, for example, do not have to pay value-added taxes on exported
goods. There is no difference between the Clinton and Bush administrations’ positions on the issue.

Many academic tax experts have argued for years that it was bad policy to lower companies’ taxes
simply because they have subsidiaries overseas. But lawmakers have accepted the argument that tax
havens are necessary to allow American companies to compete in international trade, and the law has
strong support in both parties in Congress.

Companies will continue to receive the breaks unless the law is changed.

United States trade authorities say they think that the European Union brought this case primarily out of
bitterness against Washington for using the W.T.O. to pry open European markets for bananas and
hormone-treated beef. But European officials say that is not the case, and they point in particular to the
advantage the tax break gives Boeing in its competition with the European consortium Airbus Industrie
for global aircraft sales.

The W.T.0. first ruled against the United States in February 2000. In response, Congress tinkered with
the law that fall, But the European Union said the new law was no better than the old one, and last
August, the World Trade Organization agreed. Today's ruling came on an appeal of the decision last
August.

“Now it is up to the U.S. to comply with the W.T.O’'s findings to settle this matter once and for all,”
said Pascal Lamy, trade commissioner of the European Union.

The Europeans have threatened to impose tariffs as high as 100 percent on a broad list of American
goods including iron, steel and aircraft, If that were to happen, the United States would surely retaliate
with stiff sanctions of its own.

But few people who follow trade matters expect an all-out trade war. "Trans-Atlantic trade is so vast
and so beneficial that neither side can afford a breakdown," an American trade official said today.

The issue, therefore, is what concessions Washington will have to make to mollify the Europeans and
comply with world trade rules.

“The United States respects its W.T.O. obligations, which serve America's interests,” Mr. Zoellick said,
“and we intend to continue to cooperate with the E.U. in order to manage and resolve this dispute. This is
an especially sensitive dispute that, at its core, raises questions of a level playing field with regard to tax
policy.”

7. WTO Rules Against U.S. Tax Breaks, Opening the Way for EU Retaliation * THE WALL
STREET JOURNAL

THE WALL STREET JOURNAL

January 15, 2002

Business and Finance - Europe

01/17/2002
00800000001108


UNDERWRITING
Subject to the terms and conditions of the Underwriting Agroement, Enron has agreed to sell to
Gaots GAanans Gea he ee ee, SaSICS ). Sas em
whom Iman, Sachs & Co, are acting as representatives, severally agreed to purchase from
Enron, the respective number of Exchangeable Notes set forth opposite its name below:

Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed
to take and pay for all of the Exchangeable Notes offered hereby, if any are taken.

the representatives.
Enron has granted the Underwriters an option exercisable for 30 days after the date of this
Prospectus to purchase up to 1,000,000 additional Exchangeable Notes solely to cover over-

substantially
without the prior written consent of Goldman, Sachs & Co., except for the shares of EOG Common
Stock offered in connection with the concurrent Stock Offering.

00900000000202


{((b)(5))

Peri, esa 11 8:22 AM
Pin Bone as Oe Huffman, Lucy; Carleton, Norman; Mcinemey, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

Sent! 200:

To:

ca Tisha, Brian; lone Robbins, Ec

‘Subject: FW: Bankruptcy Reform Mark-up Hearing
FYI

——Ongiral Message-—--

From: Robbins, Eric

Sent: Wednesday, February 14, 2001 5:45 PM
Fe va nen

Subjects Boraniptey Reform Markup Hearing

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001” was reported out of
the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
cighteen amendments were offered with all but one amendment failing to pass. Voting occurred largely
along party lines. The only amendment that passed was a technical amendment offered by Chairman
Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen other
amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with

Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions and
netting requirements,

01200000001219


Gross, Jared

ee ee

From: Paulus, Michael

Sent: Friday, March 16, 2001 1:55 PM
To: Stewart, Lawranne

Ce: Gross, Jared

Subject; FW: Enron Meeting Request

FY\ I spoke with Eleni and told her the only info we had was that they wanted to talk about California energy crisis. She
may be calling you to follow up further,

Original Message
From: Constanore, Eleni
Sent: Friday, March 16, 2001 1:48 PM
To: Paulus, Michael; Mcinemey, Roberta
Subject: RE: Enron Meeting Request
Michael, ((b)(5)]
Fm at 2-1934 if you want to just give me a call thx
-----Origanal Messages
From: Pauius, Michaet
Sent: ‘Thursday, March 15, 2001 6:02 PM
To: McInerney, Roberta; Constantine, Bien

‘Subject: PW: Enron Meeting Request

Please see below. Any thoughts?

on Original Message-—--

From: its, Dina

Sent: ‘Thursday, March 15, 2001 5:59 PM

To: Fisher, Peter; Paulus, Michael; Carleton, Norman
Ce: Gross, Jared

Subject: RE: Enron Meeting Request
seems ok to me... [(b)(5)]

oe Onginal Message
From: Fisher, Peter
Sent: Thursday, March 35, 2001 5:31 PM
To: Paulus, Mechael; Elis, Dina; Carleton, Norman
ce: Gross, Jared
Subject: RE: Enron Meeting Request

1 also see no reason to object

Paulas, Michael

Sent: ‘Thursday, March 15, 2001 5:27 PM

To: Elis, Dina; Fisher, Peter; Carieton, Norman

Ces Gross, Jared

Subject: Enron Meeting Request

Jett Skilling, President and CEO of Enron has requested a meeting with the Secretary for Apmil 5 to discuss the
West Coast energy crisis. | see no reason to object. Thoughts?

01200000001586


Gabilondo, Jose

From: Gabtondo, Jose

Sent: Tuesday, September 04, 2001 2:17 PM
To: McGinnies, Witiam

Subject: FW: FOIA:Boston Globe request

Bill -

Another energy FOLA as mentioned below...

Sous
‘Orginal Message:
From: Flanagan, Rosemary
Sent: Tuesday, September 04, 2001 1:16 PM
To: Gabilondo, Jose
‘Subject: RE- FOLA:Boston Globe request
{(b)(S))
“Onignal Message
From: Gatidondo, Jose
Sent: ‘Thurscay, August 30, 2003 11:29 AM
Tor Flanagan, Rosemary
Subject: FOIA: Boston Globe request
Rosemary,
{(b)(5)]
José

00200000000554


IN THE NEWS: 1/14/02 Page 27 of 36

Seventh, Eleventh, and Federal Circuits, on the other.

Separate and Distinct Obligation

In its petition, the government noted that the issue presented in the case is a “frequently recurring” one. “The
correct resolution of the question presented in this case affects the taxes owed by each of the tens of thousands
of businesses whose employees regularly receive tip income,” the government said.

In challenging the Ninth Circuit's holding, the government noted that "(t]he employer portion of the FICA tax
imposed by Section 3111 [of the tax code] is a separate and distinct obligation from the employee tax in Section
3101." According to the government, nothing conditions the determination of one on any determination of the
other.

The government also took issue with the Ninth Circuit's conclusion that LR.C. Section 446(b), the provision
dealing with methods of accounting, precludes IRS from basing FICA tax assessments on reasonable aggregate
estimates.

18, Tips* The Washington Post

The Washington Post

January 12, 2002, Saturday, Final Edition
SECTION: A SECTION; Pg. A04
LENGTH: 657 words

HEADLINE: Tips
BYLINE: Charles Lane, Washington Post Staff Writer

BODY:

Separately, the court also agreed yesterday to decide a case that could have major financial implications for both
business owners and employces in the nation’s restaurant industry, which has taken an economic hit from the
recession and the Sept. 11 terrorist attacks.

At issue are Internal Revenue Service rules under which the IRS collects millions of dollars in Social
Security taxes from employers each year to match taxes workers such as waiters and busboys themselves pay on
the tips from their customers.

In 199] and 1992, the owners of the Fior D'ltalia restaurant in San Francisco paid the IRS based on the
amount of tips its workers reported receiving.

However, the IRS, reviewing credit card receipts, estimated that the tip total was far higher and that Fior
D'ltalia would have to pay more than $ 23,000 in additional taxes.

Fior D'ltalia took the IRS to court, and a three-judge panel of the San Francisco-based U.S. Court of Appeals
for the 9th Circuit decided 2 to 1 last year that the government could not use estimates but would instead have
to audit individual employees’ tip eamings to determine how much income, if any, the workers had failed to
report,

The Bush administration appealed, noting that the 9th Circuit's ruling was at odds with those in other circuits.
01/17/2002
00800000001197


in further increases in demand and a supporting/strengthening of the overall natural gas market over
time. Being primarily a natural gas producer, the Company is more significantly impacted by
changes in natural gas prices than by changes in crude oll and condensate prices. Based on the
Portion of the Company's anticipated natural gas volumes for which prices have not, in effect, been
hedged using NYMEX-related commodity market transactions, fong-term marketing contracts and
the salé of a volumetric production payment, the Company's net income and cash flow sensitivity to
Changing natural gas prices is approximately $4.0 million for each $.10 per Mct change in average
welthead natural gas prices. Using various commodity price hedging mechanisms, the Company
has. in effect, locked In prices for an average of about 50% of its anticipated wellhead natural gas
volUM@S and about 30% of its anticipated wellhead crude oil and condensate volumes for the year
1995 and about 65% of its anticipated wellhead natural gas volumes and about 40% of its
anticipated wellhead crude oil and condensate volumes for the year 1996. The percentage of
volumes edged may change during the remainder of 1995 and will change in future years.

Other factors representing positive impacts that are more certain continue to hold good
Potential for the Company in future periods. While the drilling qualification period for the tight gas
Sand federal income tax credit expired on December 31, 1992, the Company has continued in 1995,
@nd should continue In the future, to realize significant benefits associated with production trom
walls drilled during the qualifying period as it will be eligible for the federal income tax credit through
the year 2002. However, all other factors remaining equal, the annual benefit, which was $36 million
in 1994 and is estimated to be approximately $21 million for 1995, is expected to continue to decline
in future periods 88 production from the qualified wells declines. The drilling qualification period for a
certain state severance tax exemption available on qualifying high-cost natural gas revenues
continues through August 1996 in its current form and in a modified and somewhat reduced form
from that point through August 2002. Consequently, new qualifying production will be added
Prospectively to that presently qualified. Other natural gas marketing activities are also expected to
Continue to contribute meaningfully to financial results. The Company completed a fairly significant
restructure of its other natural gas marketing portfolio during 1992 with the sale of a volumetric
Production payment of approximately 124 Bcfe (136 TBtu) for $326.8 million that was subsequently
revised in 1993 and elimination of most delivery obligations under four long-term fixed price
marketing contracts. The proceeds from the sale of the volumetric production payment added
Substantially to the financial flexibility of the Company supporting future development while the
combined effect of all elements of the restructuring on net income has not been, and will not in the
future be, significant. These factors are expected to contribute significantly to earings, cash flow,
and the ability of the Company to pursue the continuation of an active exploration, development and
selective acquisition program.

The Company plans to continue to focus a substantial portion of its development and certain
‘exploration expenditures in its major producing areas in North America. However, based on the
Continuing uncertainty associated with North America natural gas prices and the continuing weak-
Ness in'that market, and as a result of the recent success realized offshore Trinidad and opportuni-
ties available to the Company in conjunction with the recent signing of agreements in india, the
Company anticipates expending an increasing portion of its available funds in the further evelop-
ment of these opportunities. In addition, the Company expects to include limited but meaningful
exploratory exposure in other areas outside of North America in its expenditure plans and will
continue to evaluate the potential for involvement in other exploitation type opportunities. The
continuation of expenditures in other areas outside of North America in the near term is expected to
be primarity for the evaluation of conventional oll and gas exploration and exploitation opportunities
in the U.K. North Sea and China, respectively, and coalbed methane recovery prospects in Australia
and China. Other prospects in various locations will also attract the expenditure of some funds. (See
“Business ~ Exploration and Production" for additional information detailing the specific geographic
locations of the related drilling programs). The Company continues to pursue a strategy of funding

au

00900000000234


Ellis, Dina a

From: McGivern, Tom
Sent: Wednesday, October 31, 2001 9:20 AM
To: Ellis, Dina; Carleton, Norman; Bitsberger, Timothy; Bair, Sheila; DeMarco, Edward; Eltett,

Martha; Gabliondo, Jose; Gross, Jared; Huffman, Lucy; Hughes, Gerry; Mcinemey, Roberta;
Nickoloff, Peter; Roseboro, Brian: Saladin, Anne; Schultheiss, Heidilynne; Smith, Amy;
Sutton, Gary; Tishuk, Brian; Duncan, John; Sanders, Traci; Dorsey, Karen

Subject: RE: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

{(b)(5)]

» Edward; Blett, Martha; Gabiondo, Jose; Gross,
Nickolof, Peter; Roseboro, Brian; Salladin, Anne;

i
i
§
§
!
|
i

I have spoken to a variety of people on possible movement of the bankruptcy bill. There is a slight chance that there
will be a conference meeting next week but | don't see fasat movement on the bill.

From:
Sent: Tuesday,
To:

j
§
j
§
i
i
i
i
[
i
j
Hi

Schulthelss, Melditynine:; Senith, Amy; Sutton, Gary; Teshuk, Brian
Subject: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS
<< File: Netting letter.doc >>
Attached is the proposed netting letter from the Federal Reserve. (it has merge mail features that you
will have to delete in order to read it. Alternatively, you can use the quick view program to access the
document.) It is awaiting approval from SEC Chairman Pitt. Below is an article | sent around earlier
today indicating that some are trying to revive the Bankruptcy bill.

{(b)(5))

Norman Carleton

Bankruptcy Conference May Resume As Netting Bill Considered

The House Judiciary Committee will be turning its attention to other matters in the weeks
remaining before adjournment - possibly including a conference on bankruptcy, CongressDaily
reported. Further work on the legislation had been postponed after the Sept. 11 attacks
occurred. The House and Senate conferees had been poised to meet Sept. 12. A spokesman
for the committee yesterday said that no new conference date has been set, but staff members
in recent weeks have continued to work on technical aspects of the bankruptcy measure.
Judiciary Committee Chairman James Sensenbrenner (R-Wis.)}, who is chairing the
conference committee, is determined to make a go of it before members leave town for the
year, according to sources. While noting that the committee's agenda had not yet been

1

01200000001625


IN THE NEWS: 1/15/02 Page 3 of 36

The IRS describes Ms. Olson's post as “an independent voice inside the
IRS." Some readers may wonder about her independence and her
relationships within the IRS. In her recent report to Congress, Ms. Olson
writes: "Some may believe an advocate for the taxpayer must inevitably be
the adversary of others throughout the IRS. This is not the case. The
Taxpayer Advocate Service and its views were and are represented on a
wide range of IRS teams and task forces, covering matters such as

disaster relief, due process in collections and innocent spouse cases."

Take Action

If you've been battling the IRS for years and want to reach Ms.
Olson, visit the Taxpayer Advocate Service Web site at

(www. irs.gov/ind_info/advocate.html), or write to her at IRS
National Taxpayer Advocate, Internal Revenue Service, 1111
Constitution Ave., N.W,, Room 3031, Washington, DC 20224.

The Taxpayer Advocate Web site also offers several ways to phone
the Taxpayer Advocate Service, including a toll-free phone line,
(877) 777-4778. You also can call, write or visit the nearest office
for your state -- see Publication 1546, "The Taxpayer Advocate
Service of the IRS” for a list of local offices

(ftp.fedworld.gov/pub/irs-pdip1546.pdf).

To bring a case to the attention of the Taxpayer Advocate Service,

you'll be asked to fill out Form 911, "Application for Taxpayer

Assistance Order” (ftp.fedworld.gov/pub/irs-pdf/f9 11 .pdf). If you

try it, I'd be interested in your reactions, as I'm sure I'll be writing

about this topic again.
2. Tax Policy: BUSH URGES TAX CUTS BE MADE PERMANENT AFTER PLANNED
EXPIRATION OF TAX RELIEF LAW* BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report

January 15, 2002, Tuesday
10 DTR G-1 (2002)
LENGTH; 1121 words
SECTION: TAX, BUDGET & ACCOUNTING

TITLE: Tax Policy: BUSH URGES TAX CUTS BE MADE PERMANENT AFTER PLANNED
EXPIRATION OF TAX RELIEF LAW

AUTHOR: By Nancy Ognanovich
TEXT:
President Bush Jan. 14 officially called for making last year’s package of tax cuts permanent, saying in a

speech that he wants the provisions of the $ 1.35 trillion tax relief package to be extended indefinitely after that
Jaw expires at the end of 2010.

01/17/2002

00800000001136


From: ‘Steve Radelet

To: Dom13.DOPOS(EICHENBERGER,, StewantEK), GottliebG
Date: 3100 10:07pm.

‘Subject: Enron and Ass.Sec of Energy Trip -Reply

Geott: Good work, nice readout. Please call both the WB and IMF ED’s office on this first thing Monday morning. Try to talk
directly to relevant WB staffers if you can. | have been trying to get info from the IMF since Thursday wio luck. | will find out
during staff on Monday moming who else has an interest in this (0.9., MDB office, counsel) and we can discuss at around 11:00 or
50 after staff. Try to get info from WB and IMF by then. Thanks,

>>> Geofirey Gottieb 02/31/00 07:46pm >>>

ACTION: On a conference call Friday nightm the Assistant Secretary of Energy Goldwyn notified us that he will be visiting Nigeria
next week as a follow-up to Sec. Richardson's trip two weeks ago. {(b)(5)]

We need to provide guidance to his office no later than 1:00pm Monday.
{(b)(5)}

Please call me if you have further questions.
ce: Dom13.D0PO8(budingtonm),

00500000000870


Strickler, Marie

From:
Sent:
To:
Subject:

a)

CNBC TV Penang
064 Morey

Strickler, Marie
Tuesday, January 15, 2002 11:00 AM
Strickler, Marie
CN8C TV investing - MSN Money.htm

00800000000537


RE; [IN THE NEWS: 1/15/02 Page 36 of 37

But employees who got into trouble for ignoring---or not knowing
about---the frequent flyer ban---sometimes got into big trouble.
Punishments ranged from reprimands that now appear on their official
work record, to suspensions and in some cases criminal prosecution
and/or forced resignation.

Washington attomey Bill Bransford (Shaw, Bransford, Veilleux and
Roth) said some offenders were hit very hard. In some cases, they were
required to repay the government the full price of a ticket even though
airlines were offering reduced rates at the time of their travel.

This week's issue of FEDmanager warms that "employees who have been
subject to discipline or investigation of frequent flyer benefit misuse should
be aware that allegations of misuses prior to December 31, 2001 still
might be pursued as actionable...misconduct...however, the new law may
substantially reduce the significance of past violations."
29, FEDERAL DIARY: Legislation Would Make a Deferred Annuity a Better Deal * The
Washington Post

The Washington Post

January 15, 2002, Tuesday, Final Edition
SECTION: METRO; Pg. B02; FEDERAL DIARY STEPHEN BARR
LENGTH: 658 words
HEADLINE: Legislation Would Make a Deferred Annuity a Better Deal
BYLINE: Stephen Barr
BODY:

Legislation has been introduced in the House to increase the value of deferred retirement payments in
the pension systems for federal employees.

Today, employees who leave their federal jobs before retirement age are eligible for a deferred annuity,
payable at 62, if they have worked for the government at least five years, The amount they receive is
based on retirement contributions and is not indexed to inflation. In other words, the government pays no
interest on those accounts. Rather than leave their moncy in the pension system and at the mercy of
inflation, many employees choose to take their retirement contributions with them when they leave
government service.

The recently introduced House bill seeks to enhance deferred annuities and provide an incentive for
departing employees to leave their retirement money with the government.

The bill, sponsored by Rep. Nydia M. Velazquez (D-N.Y.), would increase the value of deferred
annuities from the time an employee left the government until the date retirement payments begin. The
increased value of the deferred annuity would be based on the average increase in General Schedule
salaries during that period,

The proposed change has been endorsed by the National Association of Retired Federal Employees,

01/17/2002

00800000001132


activities. For example, in its financing activities Enron Corp. or any entity in which it has an interest
may make loans secured by oll and gas properties or securities of oll and gas companies, may

natural gas and crude oil exploration, development and production business in competition with the

Joint Energy Development investments Limited Partnership ("JEDI"), a limited partnership in

reserves of 39,207 MBbis. Enron anticiptes that the transaction will be consummated in

The Company and Enron Corp. and its affiliates have in the past entered into material intercom-
pany transactions and agreements incident to their respective businesses, and the Company and
Enron Corp. and its affillates may be expected to enter into material transactions and agreements
from time to time In the future. Such transactions and agreements have related to, among other
things, the purchase and sale of natural gas and crude oil; the financing of exploration and

otforts by the Company, and the provision of certain corporate services. The Company
believes that its existing transactions and agreements with Enron Corp. and its affiliates have been
at least as favorable to the Company es could be obtained from third parties, and the Company
intends that the terms of any future transactions and agreements between the Company and Enron
Corp. and its affiliates will be at least as favorable to the Company as could be obtained from third
parties.

00900000000240


00500000000915


IN THE NEWS: 1/14/02 Page 35 of 36

Stein said.

25. FEDERAL DIARY: Bill Would Close Salary Gap for Federal Reservists * The Washington Post

The Washington Post

January 14, 2002, Monday, Final Edition
SECTION: METRO; Pg. B02; FEDERAL DIARY STEPHEN BARR
LENGTH: 756 words
HEADLINE: Bill Would Close Salary Gap for Federal Reservists
BYLINE: Stephen Barr
BODY:

Legislation has been introduced in the House to protect the pay of federal employees who serve in the
reserves and National Guard and have been called to active duty.

Reps. Robert Wexler (D-Fla.) and Bob Filner (D-Calif.) asked House Republican and Democratic leaders last
week to move the bill to the House floor under rules permitting quick approval of legislation that is not likely to
draw objections.

The Wexler-Filner bill would require federal agencies to make up the difference between a reservists federal
salary and military salary so the employee does not face a pay cut, The bill would apply to salaries paid on or
after Sept. 11.

Ina letter to House leaders, Wexler said American Express, Ford, Lockheed Martin, Northwest Airlines,
Sprint and other companies; the states of Illinois and Florida; and some city governments make up pay
shortfalls when their employees are called to active duty.

"The federal government should do the same for its civilian employees so their families can remain financially
secure during a mobilization," Wexler wrote,

More than 120,000 reservists are federal employees, and, of those, about 65,000 would be required to leave
their civil service jobs in a full mobilization, Wexler said.

"While many of these employees are at least being paid at a GS-11 level [$ 46,469 to $ 60,405 in the
Washington area], the majority serve as enlisted personnel rather than officers. As a result, many take a pay cut
when they get called up,” he said.

Ina letter to Wexler, the Congressional Budget Office estimated that the bill would cost about $ 3 million to
cover pay shortfalls for the 2,500 federal employees called to active duty between Sept. 11 and Oct. 1, 2001.

The proposal has won the support of the Reserve Officers Association, the Enlisted Association of the
National Guard, the National Air Traffic Controllers Association and the American Federation of Government
Employees, Wexler and Filner said.

In the House, the bill has 14 co-sponsors, including Reps. Steny H. Hoyer (D-Md.), Constance A. Morella (R-
Md.) and Albert R. Wynn (D-Md.). Sens. Richard J. Durbin (D-IL) and Barbara A. Mikulski (D-Md.) are

01/17/2002
00800000001205


IN THE NEWS: 1/14/02 Page 1 of 36

Bradshaw, Tara

From: Washington Linda J [Linda.J.Washington@irs.gov]
Sent: Monday, January 14, 2002 12:53 PM

To: Carolyn Walas (E-mail); Charles A. Lacijan (E-mail); Charles L. Kolbe (E-mail); Denise L. Goss (E-mail);
Dester, Anne; George E. Farr (E-mail); Hart, Dale; Heather B. Rosenker (E-mail); Joelle Jordan (E-mail); Karen
Hastie Williams (E-mail); Loretta J. Bassette (E-mail); Lrievitan (E-mail); Martene Loor (E-mail), Maureen C.
Allen (E-mail); Steve Nickles (E-mail); Tere Bradshaw (E-mail); Taylor, Gloria

Subject: IN THE NEWS: 1/14/02
Today's Contents

1, IRS: TAX GROUPS URGE TREASURY, OMB TO SUPPORT ADEQUATE FUNDING FOR IRS *
BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report
January 14,2002, Monday
09 DTR G-3 (2002)
LENGTH: 256 words
SECTION: TAX, BUDGET & ACCOUNTING

TITLE: IRS: TAX GROUPS URGE TREASURY, OMB TO SUPPORT ADEQUATE FUNDING FOR
TRS

AUTHOR: By Brant Goldwyn
TEXT:

The Tax Executives Institute and the National Society of Accountants wrote Jan. 11 to the Treasury
Department and the Office of Management and Budget to urge adequate funding in the Internal Revenue
Service's fiscal year 2003 budget.

TEI and NAS each wrote to ask Treasury Secretary Paul O'Neill and OMB Director Mitchell E. Daniels to
"resist pressure to reduce the [IRS] funding level” and to assure IRS that "the programs needed to implement its
mission will be fully and effectively funded.”

Adequate funding is necessary to enable IRS "to effectively administer this country’s tax laws" and "to
succeed in reinventing itself as a modern, customer-focused agency,” said Robert L. Ashby, TEI's international
president,

"Our organization ... encourages you to play a constructive role in providing the service with sufficient assets
to fulfill its new mission," NAS Executive Vice President John G, Ams said. "Full funding of critical IRS
initiatives is of utmost importance and to do less is to short change the American taxpayer."

Referring to concems expressed by Sen. Charles Grassley (R-lowa) about IRS inventory management
01/17/2002

00800000001170


Conley, Robert

From: Conley, Robert

Sent: Tuesday, September 25, 2001 3:13 PM

To: Tran, Luyen; Altheim, Stephen; Demopulos, Abigail

Ce: Crawford, Todd; Budington, Michele; Paulson, Sara; ‘cbrookins@worldbank.org’
Subject: Enron IFC energy project in Dominican Rep

Two senior reps of Enron met with Bill today on a project funded by IFC that involves a power purchase agreement that the
G of DR is not honoring. The project may default to lenders by 12/15 if agreement is not reached with the Gov't. The Enron
reps plan to meet with State and Carole Brookins on the project.

Bill asked to get information on the pipeline at the MDBs for the DR (WB, IFC, IDB, IIC). In particular, Bill wants to know
what (if any) projects are disbursing. Thanks.

00500000000418


Ed DeMaree [-N-02 | Netz

[(b)(5)]

01200000001207


RE: IN THE NEWS: 1/15/02 Page 2 of 37
Consider Taking a New Route When Dealing With the IRS

By TOM HERMAN
Staff Reporter of THE WALL STREET JOURNAL

Welcome to Tom Herman on Taxes, a weekly column available
exclusively in The Wall Street Journal Online. Mr. Herman, the
Journal's tax expert, answers questions from our readers on personal
taxes and how taxes impact financial planning.

If you've been trying to resolve a long-running dispute with the Internal
Revenue Service and have been getting nowhere by going through normal
channels, consider another route.

A little-known unit of the IRS, the Taxpayer Advocate Service, headed by
Nina E, Olson, sometimes can be surprisingly helpful in lifting struggling
taxpayers out of bureaucratic quicksand,

Asking the IRS for help with the IRS may sound like a waste of time, at
best. But accountants, lawyers and other tax advisers generally praise it.

What prompted me to write about this subject was a recent reader
question about how to reach Ms. Olson, the IRS's National Taxpayer
Advocate, whom | mentioned in a recent column about a report she sent
Congress listing the 23 most scrious problems facing taxpayers.

In her report, Ms, Olson says the top five
most serious problems taxpayers have with the
TRS are: 1) trouble with accessing the
agency's customer service toll-free telephone
service; 2) the tax law's multiple definitions of
a "qualifying child"; 3) difficulty in determining
earned-income tax-credit eligibility, 4)
inaccurate answers to queries made on IRS
customer service toll-free lines, or differing
answers to the same question; and 5) difficulty
in documenting eamned-income tax credit
eligibility.

For a copy of her report, as well as reports from previous years, go to
www.irs.gow/ind_info/2001_tas.pdf,

The Taxpayer Advocate Service has two general goals. One is to help
taxpayers clear up disputes that haven't been resolved through the usual
processes, The other is to recommend "systemic solutions to make the tax
process easier for everyone.”

Relying on the Taxpayer Advocate Service won't work for everyone with
complaints about the IRS. For example, it can't help represent you in
court. The IRS Web site underscores the point that this "is not a substitute
for established IRS procedures or the formal appeals process,” and that
this unit “cannot reverse legal or technical tax determinations.” But it may
be able to help with such common problems as lost refunds, mistaken

01/17/2002
00800000001098


‘Other Natural Gas Marketing Volumes and Prices

The following table sets forth certain information regarding the Company's volumes of natural
gas delivered under other marketing and volumetric production payment arrangements, and result-
ing average per unit gross revenue and per unit amortization of deferred revenues along with
associated costs during each of the three years in the period ended December 31, 1994 ard the
nine-month periods ended September 30, 1994 and 1995. mn

Your Ended December 31,

__September 30,
= = ine ies

324 327286
iS ae $ ar $238 $241 $ 1.67
206 213 1.49

ee: tas io2s Tos2 $02 F038

Volumes (MMct per day!) ........ 6... eee eee
Average Gross Revenue ($/Mcf{2) :
Rasceries Cone (eaten
Margin (6iMef). .

1) Includes 28 MMct per day in 1992, 81 MMc! per day in 1993 and 48 MMcf in 1994 and
" in he rine-month periods ended 50 1494 and 1996 delvered onder the

in the the terms of
volumetric production payment Meeeign coreatterita eltotee Getoer 1 1060 ae

(2) includes per per yok Soterred Fovenus wpocization for the solunes Geteted In note (1) 3 a
equivatent of 1 per Mct in 1992, $2.50 per Mct in 1993, $2.46 per Mct in 1994 $2.46
Ber Mct and $2.47 por Mo nthe nine-month periods ended September 30, 1994 and 1995,
average 37 Mef in 1992, $2.20 Met In 1993, $1.92 Mctf in

o peers mie 30 per Met in the rinw month parods ended Septerber 20

1964 a 1905, reapecoh ncng average eaulonwelead, ave Oy A
(4) Inctuding transportation and exchange differentials. ”
Ol and Gas Exploration and Production Properties and Reserves

eetmeted by the Company's engineering sistl. The sddscnal clecoeurse iat Include volumes
attributable to a volumetric production payment set forth in the following tables are
SBRned Lee atiion cad cau tot Whenidad to vacronbel feqpared cinecedrs pereaard 10 SEAS
No. 69 — “Disclosures about Oil and Gas Producing Activities.”

Untied States Canede Trinkded indie Total

Natural Gas (Bcf)
Net proved reserves at December 31,1993 1.3132 271.0 1005 ~ 1,684.7
Volumes attributable to volumetric
payment .... 6... cece ee 87.5 = = - 87.5
"1B cing oka bab
volumes attributable to
yoksnetie orekuction payment ecasceees 1,400.7 271.0 100.5 1,772.2

1.3132 271.0 1005
(17.1) (65) 15.0
8.8 2 -

eI.
a3e8 sell

eee
age
3B,
ie

Net proved reserves at December 31, 19947,

|
i
i

16

00900000000219


IN THE NEWS: 1/15/02 Page 34 of 36

Ogden. The complex will house IRS accounts management.

The IRS employs a total of 6,900 at its Norther Utah sites. Ogden has benefited in recent years from a work
restructuring at the 10 IRS service centers nationwide, The Ogden center and one in Cincinnati, Ohio gained all
business-tax processing nationwide,

"The future is very bright for the Ogden location because there will be continued growth in business tax returns
being filed throughout the whole country and Ogden will receive at least half of those," Wenzel said.

28. PAST FREQUENT FLYER ABUSE WON'T GO AWAY * FederalNewsRadio.com

FederalNewsRadio.com
January 15, 2002
PAST FREQUENT FLYER ABUSE WON'T GO AWAY

ALTHOUGH IT'S NOW LEGAL for feds and military personnel to use
frequent flyer miles earmed on official business, workers who used them
BEFORE the law was changed may still be punished.

The irony is that feds can now use mileage points they carned in the past
(if they have the proper records and proof). But, if they have already done
that---that is, use the mileage awards before the new law was signed on
December 3 st---they could be in a heap of trouble!

Over the past decade, hundreds of government workers, many of them in
important agency positions, have gotten into trouble for using mileage
points or awards eamed on business trips for personal pleasure.

Nobody knows how many employees used official miles for personal
travel---either by accident or design---and weren't caught or punished.

But employees who got into trouble for ignoring---or not knowing
about---the frequent flyer ban---sometimes got into big trouble,
Punishments ranged from reprimands that now appear on their official
work record, to suspensions and in some cases criminal prosecution
and/or forced resignation.

Washington attorney Bill Bransford (Shaw, Bransford, Veilleux and
Roth) said some offenders were hit very hard. In some cases, they were
required to repay the government the full price of a ticket even though
airlines were offering reduced rates at the time of their travel,

This week's issue of FEDmanager wars that "employees who have been

subject to discipline or investigation of frequent flyer benefit misuse should

be aware that allegations of misuses prior to December 31, 2001 still

might be pursued as actionable...misconduct...however, the new law may

substantially reduce the significance of past violations.”
29, FEDERAL DIARY: Legislation Would Make a Deferred Annuity a Better Deal * The Washington
Post

01/17/2002
00800000001167


IN THE NEWS: 1/15/02 Page 18 of 36

The new report by the General Accounting Office found that parents with one
or two children were most likely to claim the credit, with more than 90
percent taking advantage of it.

Only 45 percent of adults without children claimed the credit, and only 63
percent of those with three or more children did so.

The GAO could not explain the differences in participation rates, saying they
may be a result of data collection problems

in the sample examined or may be

real,

Rep. William Coyne, D-Pa., the top Democrat on the Ways and Means oversight
subcommittee, who requested the report, plans to ask GAO for further
research,

"We are very troubled by it," said Matt Dinkel, Coyne's spokesman.

There are a variety of reasons why people who are cligible for the tax credit
do not claim it, said John Wancheck, who runs an outreach campaign on this
tax credit for the Center on Budget and Policy Priorities.

Among them, he said, are that families aren't aware of it, sometimes because
they cam too little to be required to file a federal tax return. There also

are foster parents and grandparents who may not realize that they may claim
the children they care for when calculating cligibility for the credit.

The EITC, created by Congress in 1975, is refundable, meaning that even if a
taxpayer owed no income tax they can get a government check by claiming the
credit. About 86 percent of claims represent this form of direct cash help.

But the credit is difficult to compute and always has been plagued by errors.

In 1997, the IRS found that 25.6 percent of more than $30 billion in claims
“should not have been paid” due to mistakes or fraud. About 20 million
taxpayers made EITC claims that year.

13. Sweeping new law might make 2002 a good year for finances * Houston Chronicle Publishing
Company

The Houston Chronicle

January 14, 2002, Monday 2 STAR EDITION

SECTION: BUSINESS; Pg. 3

LENGTH: 853 words

HEADLINE: Sweeping new law might make 2002 a good year for finances
SOURCE: Tribune Media Services

BYLINE: GARY KLOTT

01/17/2002

00800000001151


Sincerely,
Lawrence H. Summers

ce; The Honorable George W. Gekas
The Honorable Jerrold Nadler

01769

01200000000425


Tishuk, Brian

a

From: McGivem, Tom
Sent: Wednesday, October 31, 2001 9:20 AM
To: Ellis, Dina; Carteton, Norman; Bitsberger, Timothy; Bair, Shella; DeMarco, Edward, Ellett,

Martha; Gabllondo, Jose: Gross, Jared; Huffman, Lucy; Hughes, Gerry; Mcinemey, Roberta;
Nickoloff, Peter; Roseboro, Brian; Salladin, Anne; Schultheiss, Heidilynne; Smith, Amy;
Sutton, Gary; Tishuk, Brian; Duncan, John; Sanders, Traci; Dorsey, Karen

Subject: RE: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS
{(b)(5)]
Original Message-=-~
From: Eiks, Ona
Sent: Tuesday, October 30, 2001 3:02 PM
Te: Carleton, Norman; Batiberger, Timethy; Bair, Sheila; Constantine, Beni; DeMarco, Edward; Ellett, Martha; Gatiiondo, Jose; Gross,

Jared; Huffman, Lucy; runny rowan ben arigontings Roberta; Nickolof, Peter; Roseboro, Brian; Salladin, Anne;
‘Schultheiss, Heiditynne; Sent, Amy; Sutton, Gary; Tishuk, Brian
Subject: RE: Netting Letter to be Signed by PWG and FDIC, OCC, anc OTS

| have spoken to a variety of people on possible movement of the bankruptcy bill, There is a slight chance that there
will be a conference meeting next week but | don’t see fasat movement on the bill

Original Message
Prem: Carleton, Norman

Huffman, Lucy; Hughes, Gerry; McGivern, Tom; Mcinemey, Roberta; NickoloMf, Peter; Roseboro, Brian; Sallacin, Anne;
Schulthe'ss, Heidiynee; Sent, Amy; Sutton, Gary, Tistas, Brian
Subject: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

<< File: Netting letter.doc >>

Attached is the proposed netting letter from the Federal Reserve. (It has merge mail features that you
will have to delete in order to read it, Alternatively, you can use the quick view program to access the
document.) It is awaiting approval from SEC Chairman Pitt. Below is an article | sent around earlier
today indicating that some are trying to revive the Bankruptcy bill

{(b)(5)]

Norman Carleton

Bankruptcy Conference May Resume As Netting Bill Considered

The House Judiciary Committee will be turning its attention to other matters in the weeks
remaining before adjournment - possibly including a conference on bankruptcy,
CongressDaily reported. Further work on the legislation had been postponed after the Sept
11 attacks occurred. The House and Senate conferees had been poised to meet Sept. 12. A
spokesman for the committee yesterday said that no new conference date has been set, but
staff members in recent weeks have continued to work on technical aspects of the bankruptcy
measure. Judiciary Committee Chairman James Sensenbrenner (R-Wis.), who is chairing the
conference committee, is determined to make a go of it before members leave town for the

1

01200000001040


IN THE NEWS: 1/15/02 Page 20 of 36

eligibility for financial aid in college. Middle-income families could lose more in financial aid than they'd save
in taxes from setting up an education savings account in their child's name. In determining how much a family
can afford to contribute to the cost of college, financial aid formulas count assets held in a child's name much
more heavily than assets in the parent's name.

Alternative minimum income: Higher-income individuals should pay close attention to their vulnerability to the
alternative minimum tax, or AMT, which inflates the tax bills of people who are able to make use of various tax
breaks to slash their regular tax liability below certain levels. The number of taxpayers affected by the AMT is
projected to double this year and continue to grow at a rapid rate in the years ahead, partly because of the new
law's reduction in the top tax rates.

Knowing whether you're likely to be hit by the AMT is important because strategies to minimize or avoid the
AMT are much different than you'd normally employ.

14. Changes to 403(b) plans help teachers save for retirement * USA TODAY

USA TODAY
January 15, 2002, Tuesday, FIRST EDITION
SECTION: MONEY; Pg. 3B
LENGTH: 790 words ~
HEADLINE: Changes to 403(b) plans help teachers save for retirement
BYLINE: Sandra Block

BODY:

Much has been said about the misplaced priorities of a society that rewards mediocre baseball pitchers with
multimillion-dollar contracts while public school teachers earn less than $ 50,000 a year. Less has been said
about the raw deal teachers get when it comes to saving for retirement.

Like private-sector workers with access to a 401(k) plan, teachers can arrange to have a portion of their
salaries deposited in a retirement savings plan, known as a 403(b), Money contributed to a 403(b) isn’t taxed
until it is withdrawn, usually when the plan owner retires. But 403(b) plans, which are offered to teachers and
other non-profit workers, have been dogged by high expenses and C-minus performance. And even teachers
with doctorates have been baffled by the Maximum Exclusion Allowance, 3 complicated set of rules that
governed how much they could contribute every year.

Fortunately, the Economic Growth and Tax Relief Reconciliation Act contained some big changes in 403(b)
tules, effective Jan. 1, Among the major reforms:

* Higher contribution limits. Like savers in 401(k) plans, most teachers will be able to contribute up to $
11,000 to their 403(b) plans in 2002. Teachers who are age 50 or older will be able to contribute up to $ 12,000
in 2002, under a “catch-up” provision designed to encourage older workers to save.

Some educators will be able to save much more. Many state and local governments offer 457(b) plans,
another type of tax-deferred savings program, to government employees, including teachers. But in the past,
teachers who participated in a 403(b) plan couldn't participate. Starting this year, teachers who are eligible for a
403(b) and a 457(b) plan can contribute the maximum to both -- up to $ 22,000 in tax-deferred savings a year,
says Barbara Perry, vice president, public retirement plans for TIAA-CREF.

01/17/2002
00800000001153


Tishuk, Brian

From: Ellis, Dina
Sent: Wednesday, October 31, 2001 9:42 AM
To: McGivern, Tom; Carleton, Norman; Bitsberger, Timothy; Bair, Sheila; DeMarco, Edward,
Ellett, Martha; Gabilondo, Jose; Gross, Jared; Huffman, Lucy; Hughes, Gerry; Mcinemey,
Roberta; Nickoloff, Peter; Roseboro, Brian; Salladin, Anne; Schultheiss, Heidilynne; Smith,
Amy; Sutton, Gary; Tishuk, Brian; Duncan, John; Sanders, Traci, Dorsey, Karen
Subject: RE: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS
{(b)(5)]
Original Message-——
From: MeGivern, Tom
Sent: Wednesday, October 31, 2001 9:20 AM

To:

Bis, Dina; Carleton, Norman; Bitsberger, Timothy; Bair, Sheila; DeMarco, Edward; Eliest, Martha; Gabilondo, Jose; Gross, Jared;
Huffman, Lucy; Mughes, Gerry; Meclnemey, Roberta; Nickolotf, Peter; Roseboro, Bran; Salladin, Anne; Schulthess, Hecilynee;
Smith, Amy; Sutton, Gary; Tisai, Brian; Duncan, John; Sanders, Trac; Dorsey, Karen

Subject: RE: Nething Letter to be Signed by PANG and FDIC, OCC, and OTS
{(b)(5)]

From: — Eth, Dina

Sent: Tuesday, October 30, 2001 3:02 PM

Te: Carleton, Norman; Basberger, Timothy; Bair, Sheila; Constantine, Eleni; DeMarco, Edward; Ellett, Martha; Gabilondo, Jose; Gross,
Jared; Huffman, Lucy; Hughes, Gerry; MeGivern, Tom; Mcinemey, Roberta; Nickolott, Peter; Roseboro, Brian; Sallaan,
Aree; Schuitheiss, Heidilynne; Smith, Amy; Sutton, Gary; Tistuk, Brian

‘Subject: RE: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

Ihave spoken to a variety of people on possible movement of the bankruptcy bill. There is a slight chance that
there will be a conference meeting next week but | don’ see fasat movement on the bill,

Original Message--—~
From: Carleton, Norman,
Sent: ‘Tuesday, October 30, 2001 2:46 PM

To: Bitsberger, Timothy; Bair, Shella; Constantine, Eleni; DeMarco, Edward; Eiett, Martha; Eilis, Dina; Gabilondo, Jose; Gross, Jared
Huffman, Lucy; Mughes, Gerry; McGivem, Tom; Mclnerney, Roberta; Nickoloft, Peter; Raseboro, Brian; Salladin, Anne;
Schutthetss, Helditynne; Smith, Amy; Sutton, Gary; Tishuk, Brian

Subject: Netting Letter to be Signed by PWG and FDIC, OCC, and OTS

<< File: Netting letter.doc >>
Attached is the proposed netting letter from the Federal Reserve. (It has merge mail features that
you will have to delete in order to read it. Alternatively, you can use the quick view program to
access the document.) It is awaiting approval from SEC Chairman Pitt. Below is an article | sent
around earlier today indicating that some are trying to revive the Bankruptcy bill.

{(b)(5)]

Norman Carleton

Bankruptcy Conference May Resume As Netting Bill Considered
1

01200000001038


Norm, having reviewed Enron's proposed changes to the pending bankruptcy bill, | have the folowing comments.

{(b)(5))

Norm, feel free to call me to discuss further any of these comments.

01757

01200000000413


Tracking:

Bankruptcy Conference May Resume As Netting Bill Considered

The House Judiciary Committee will be turning its attention to other matters in the weeks
remaining before adjournment - possibly including a conference on bankruptcy,
CongressDaily reported. Further work on the legislation had been postponed after the
Sept. 11 attacks occurred. The House and Senate conferees had been poised to meet
Sept. 12. A spokesman for the committee yesterday said that no new conference date has
been set, but staff members in recent weeks have continued to work on technical aspects
of the bankruptcy measure. Judiciary Committee Chairman James Sensenbrenner (R-
Wis.), who is chairing the conference committee, is determined to make a go of it before
members leave town for the year, according to sources, While noting that the committee's
agenda had not yet been formulated, his spokesman did not rule out the prospect. “It's
definitely a possibility,” he said.

Moreover, members of the House Financial Services Committee are trying to move a
provision of the bankruptcy legislation pertaining to financial netting-perhaps as part of the
economic stimulus package-in the event the underlying bill remains stalled.

That provision is designed to strengthen and update current statutory protections for
netting financial market contracts if a party defaults. The netting language of the bill was
one of the few consensus items included in the bankruptcy legislation. The economic
downturn and the widening number of commercial bankruptcies could help create even
stronger impetus for the provision to move separately, sources said.

House Financial Services Committee ranking member John LaFalce (D-N.Y.) urged shortly
after the Sept. 11 terrorist attacks that the netting language be moved “expeditiously.” In
response, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan
Greenspan agreed “whether as part of comprehensive bankruptcy reform legislation or as
a stand-alone bill, Congress should not fail to enact netting legislation this year.” The
Financial Services Committee had considered placing netting legislation on the schedule
for markup this Wednesday, when it takes up a host of other bills. Committee leaders
decided against such action, however, A spokeswoman for House Financial Services
Committee Chairman Michael Oxley (R-Ohio) said he remained hopeful that the underiying
bankruptcy bill could move intact.

Recipient Read
Hughes, Gory Reed: 10/31/2001 10:03 AM
Groen, Mathew Read: 10/31/2001 10:00 AM

01200000001227


{(b)(5)]

Original Message——-
From: DeMarco, Eoward

Sent: ‘Thursday, February 15, 2001 8:22 AM

To: Hammond, Donald; Giis, Diva; Huffman, Lucy; Carleton, Norman; McInerney, Roberta; Constantine, Eleni; Hughes, Gerry; Stewart,

Wednesday, February 14, 2001 5:45 PM
To: DeMarco, Edward
Ce; Tishuk, Brian
Subject: Bankruptcy Reform Mark-up Hearing

H.R. 333, the “Bankruptcy Abuse Prevention and Consumer Protection Act 2001" was reported out
of the House Judiciary Committee on Wednesday, February 14, 2001. During the mark-up hearing,
eighteen amendments were offered with al] but one amendment failing to pass. Voting occurred
largely along party lines. The only amendment that passed was a technical amendment offered by
Chairman Sensenbrenner. Only one Republican crossed party lines to vote for one of the seventeen
other amendments that failed.

Representative Bachus (R-AL) assured the committee that he was committed to working with
Representative Oxley from the Financial Services Committee on commercial bankruptcy provisions

and netting requirements.

00200000000002


RE: IN THE NEWS: 1/15/02 Page 34 of 37

At the end of fiscal 2001, the IRS reported an estimated $240 billion in unpaid assessments, of which
only $22 billion was estimated to be collectible. The total reflects all types of taxes--payroll, corporate,
and individual.

At the request of the U.S. House Government Reform Committee, the General Accounting Office last
year reviewed IRS records to determine the number of federal workers and annuitants who owe taxes,
how much they owe and how they compare with nonfederal taxpayers.

Using IRS data, GAO reported that in October 2000, some 340,000 federal workers and annuitants owed
cumulative unpaid federal taxes of about $2.5 billion. Of this amount, about 54 percent was owed by
federal annuitants and 46 percent by federal workers. GAO found an additional 85,000 federal workers
and annuitants who had not filed tax returns,

According to GAO, the taxes owed by federal workers and annuitants were almost always unpaid income
taxes. Over one-third owed taxes for more than one year, with 56 percent going back to before 1995.

While this rate of noncompliance was fairly consistent, GAO reported that annuitants owed
proportionately more in taxes than current federal workers. Much to the relief of IRS management, GAO
discovered that the rate of noncompliance by IRS employees was lower than the rest of the federal
population--about 3 percent.

When comparing tax compliance by federal workers and annuitants with the general taxpaying population
in 2000, IRS records showed about $ percent noncompliance for current or retired federal workers as
compared to about 7 percent for their private-sector counterparts.

I was disturbed by GAO's conclusion that a significant portion, 59 percent, of the amounts owed by
federal workers and annuitants were potentially uncollectible. Some didn't have the financial resources to
pay or had died. But in other cases, the IRS said it was unable to locate the taxpayers--despite the fact that
they are receiving federal salary or benefit payments.

To those federal workers and annuitants who owe outstanding tax obligations, I have a word of caution:
Treasury's Financial Management Service is looking for you. It has the power to apply a continuous levy
of up to 15 percent against your federal salary and pension payments and wants to expand its collection
efforts over the next year.

27. Tax returns coming soon to North Ogden center * The Ogden Standard Examiner

The Ogden Standard Examiner

Jan 13, 2002

Tax returns coming soon to North Ogden center
By DAVID TROESTER

Standard-Examiner staff

NORTH OGDEN -- Millions of tax retums will find a new path this year through a state-of-the-art mail-
processing facility in North Ogden.

The Internal Revenue Service plans to open the facility by the end of the month, just in time to handle the
busy tax-retum season. It will be located in a former Autoliv plant at 1973 Rulon White Blvd. in Weber
Industrial Park.

01/17/2002

00800000001130


Fab-25-00 O6:00pa = Free Tol? PeUeT Fold

INITIAL OBSERVATIONS
Draft Power Purchase Agreement of 17 October 1999 for Electric
Gencrating Facilities in Lagos, Nigeria between Enron Nigeria Power

Holdings Ltd. (“EnronTM) and Lagos State Government, National Electric
Power Authority of Nigeria and Federal Republic of Nigeria (“PPA”).

{(b)(5)]

2 a 6220900924 “on/ou: (1 As/122 11 00 St (18d) RO!
seit eorRt oone-62-834
00500000000925


IN THE NEWS: 1/14/02 Page 25 of 36

employees alike to evade their statutory tax obligations."
The Justice Department said it isn't talking about small potatoes.

Since the IRS began its FICA enforcement program in response to a 1984 study,
tips from the restaurant industry "increased ftom $8.52 billion in

1994 to $9.45 billion in 1995, to $10.19 billion in 1996, to $11.14 billion

in 1997, to $12.17 billion in 1998 and to $14.31 billion in 1999."

By MICHAEL KIRKLAND, UPI Legal Affairs Correspondent
17. Supreme Court: COURT TO RULE ON USE OF AGGREGATE ESTIMATES OF TIPS TO
ASSESS RESTAURANT'S FICA TAXES * BNA

The Bureau of National Affairs, Inc.,
Daily Tax Report

January 14, 2002, Monday
09 DTR G-4 (2002)
LENGTH: 1098 words

"

SECTION: TAX, BUDGET & ACCOUNTING

TITLE: Supreme Court: COURT TO RULE ON USE OF AGGREGATE ESTIMATES OF TIPS TO
ASSESS RESTAURANT'S FICA TAXES

AUTHOR: By Raul R. Cabrera
TEXT:

The U.S. Supreme Court Jan. 11 agreed to decide the propriety of the Internal Revenue Service's use of
aggregate estimates derived from credit card charges to determine a restaurant's liability for payroll taxes on its
employees’ tip income (United States v. Fior D'ltalia Inc., U.S., No. 01-463, cert. granted, 1/11/02).

The court will review a decision by the U.S. Court of Appeals for the Ninth Circuit holding that IRS, in
calculating a restaurant's employment tax liability for unreported tip income, lacks authority to use aggregate
estimates derived by applying a "tip rate” from meals charged to credit cards to the restaurant's gross receipts
but, instead, must conduct an employce-by-employee audit to determine taxable tips eamed by each employee
(46 DTR K-5, 3/8/01).

Like most restaurants, Fior D'Italia employs waiters, table bussers, bartenders, and others whose camings
come in part from tips left by customers. Although these tips are paid by customers directly to employees,
federal law deems them to have been paid by the employer for payroll tax purposes. Thus, for tax purposes,
employers are deemed to have paid large sums of money that they have never touched and whose exact amounts
they have no way of ascertaining. Yet employers need to know how much tip income employees receive in
order to calculate their own tax liability under the Federal Insurance Contributions Act (FICA) and withhold
appropriate amounts from the wage portion of the employees’ compensation, pursuant to Section 3102 of the
Internal Revenue Code.

To make this information known to employers, tipped employees are required to submit monthly statements
(usually on Form 4070) reporting all tip earings that qualify as wages under the statute, Employers, in tum,

01/17/2002
00800000001195


IN THE NEWS: 1/15/02 Page 29 of 36
determine whether you're eligible to claim the child and dependent care credit,

The site also provides instructions for obtaining copies of prior-year tax returns and has a handy tax event
calendar. You can even get help with a particular tax question.

Millions of taxpayers visited the IRS site in 2001, downloading nearly 300 million forms, publications and a
variety of topic-oriented tax information. You can obtain:

‘Tax forms, instructions and publications.

The latest tax information and tax law changes.

‘Tax tables and rate schedules.

Publication 17, Your Federal Income Tax.

All TeleTax topics.

Answers to the most frequently asked tax questions.
A library of tax regulations.

The weekly /nternal Revenue Bulletin, which contains all the latest revenue rulings, revenue procedures,
notices, announcements, proposed regulations and final regulations.

In addition, the IRS website offers information on the many benefits of electronic filing. More than 40 million
taxpayers filed their returns electronically in 2001, It's accurate, convenient and cuts the waiting time for
refunds.

22. IRS Hosts Tax Credit * Newsday

Newsday
(New York, NY)

January 15, 2002 Tuesday NASSAU AND SUFFOLK EDITION
SECTION: BUSINESS & TECHNOLOGY, Pg. AS1
LENGTH: 631 words

HEADLINE; LONG ISLAND INC;
Newsday Seeks Savings Through Staff Buyouts

BYLINE: Tami Luhby; Katia Hetter
IRS Hosts Tax Credit
Awareness Days

To help parents qualifying for the eamed income tax credit, the Internal Revenue Service is hosting EITC
Awareness Days at its area Taxpayer Assistance Centers tomorrow, Jan. 23 and Saturdays in February.

01/17/2002
00800000001162


year, according to sources. While noting that the committee's agenda had not yet been
formulated, his spokesman did not rule out the prospect. “It's definitely @ possibility,” he said

Moreover, members of the House Financial Services Committee are trying to move a provision
of the bankruptcy legislation pertaining to financial netting-perhaps as part of the economic
stimulus package-in the event the underlying bill remains stalled.

That provision is designed to strengthen and update current statutory protections for netting
financial market contracts if a party defaults. The netting language of the bill was one of the
few consensus items included in the bankruptcy legislation. The economic downturn and the
widening number of commercial bankruptcies could help create even stronger impetus for the
provision to move separately, sources said.

House Financial Services Committee ranking member John LaFalce (D-N.Y.) urged shortly
after the Sept, 11 terrorist attacks that the netting language be moved “expeditiously.” In
response, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan
agreed “whether as part of comprehensive bankruptcy reform legislation or as a stand-alone
bill, Congress should not fail to enact netting legislation this year.” The Financial Services
Committee had considered placing netting legislation on the schedule for markup this
Wednesday, when it takes up a host of other bills. Committee leaders decided against such
action, however. A spokeswoman for House Financial Services Committee Chairman
Michael Oxley (R-Ohio) said he remained hopeful that the underlying bankruptcy bill could
move intact.

01200000001041


IN THE NEWS: 1/15/02 Page 4 of 36

While Democrats are calling for scaling back the tax relief package, Bush said in an address on his economic
proposals that he has decided to argue over the next several months that the tax cuts should be permanent.

There's going to be a debate when we go back to Washington about tax relief," Bush said during the start of'a
two-day, three-state trip to build support for his legislative agenda. “But I've made up my mind, the tax relief

plan we passed -- which you're beginning to feel the effects of -- is going to be permanent."

Bush said he still plans to reintroduce his economic stimulus plan with provisions to extend unemployment
benefits for displaced workers and to help the unemployed maintain health insurance. However, the president
suggested the stimulus -- which is expected to be included in the FY 2003 budget sent to Congress early next
month -- also will include language to make last year’s tax cuts permanent.

"Americans don't want an unemployment check,” Bush said during an address to the employees of the John
Deere Harvester Works in Moline, Ili. "Americans want a permanent paycheck, and that's got to be the mission

of any good stimulus package.”

Bush's comments came amid reports that Sen. Edward Kennedy (D-Mass.), the president's ally on recently
enacted education reform legislation, may call for scaling back the tax relief package during an address planned
for Jan. 16. They also followed comments from Senate Majority Leader Thomas Daschle (D-S.D.) raising
concems about the impact tax cuts have had on the disappearance of anticipated federal budget surpluses,

‘Repeal’ of Tax Cut Criticized.

The tax cuts enacted under Pub. L. No. 107-16, the tax relief package passed last year, would terminate after
2010. Current estimates on the size and length of the returning federal budget deficit by the Office of
Management and Budget and others reflect assumptions that the tax cuts will not be renewed after that date,

However, a proposal by the White House to extend those tax cuts after that time would likely increase deficit
projections. The White House already has indicated that the budget blueprint that Bush sends to Congress for
FY 2003 will reflect a new deficit.

In his comments in Illinois and in Missouri later in the day, Bush did not address the difficulty the
administration will face if it pushes to make the tax cuts permanent. But the president suggested his bottom line
in the upcoming debate will be to maintain the tax relief package enacted to date.

Bush reiterated his view that recession and war both justify deficit spending.

"The worst thing to do is, in the face of this recession, is to not let people have their tax break,” Bush said, "It
doesn't make any economic sense, And that's why we're not going to let them ... repeal this tax cut.”

In terms of the economic stimulus plan, the president told farmers in Aurora, Mo., that he will work with

Democrats and Republicans to provide assistance for the unemployed. But he said he will also continue to push
for provisions to accelerate depreciation for equipment, give tax relief to low-income workers, and otherwise

speed up tax relief.
Lindsey: Stimulus an ‘Insurance Policy.’

With many economists expressing doubt about how stimulative the president's plan actually will be, White
House officials now are characterizing the proposal as an insurance plan for the U.S. economy.

Lawrence Lindsey, director of the National Economic Council, said in comments Jan. 12 that he now believes
the preconditions for an expansion are in place but the stimulus package is still needed.

01/17/2002

00800000001137


Nichols, Robert

From: Fleck, Carote (CFleck:
Sent: Thursday, January sO 5008 23 PM
To: ‘robert nichols@do,treas. gov’

rules

tis toncre st hone, [OMG

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00800000000422