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Enron Broadband Services

2001 Plan

Enron Network

EXH009-00615



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Enron Broadband Services

2001 Plan

Table of Contents

  Page
Highlights 1

Gross Margin 2

Commercial Expenses 3

Cross Market Functions 4

Staff Functions/Corporate Charges/Depreciation 5

Funds Flow/Capital Expenditures

6

EXH009-00616


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Enron Broadband Services
2001 Plan
Highlights
($millions except %)

  Revenues

  Gross Margin

  2000 2000 2001 % Highlights
Plan Forecast Plan Change Operating
  • EIN Fully lit or facilitated by Q4 2001
330 435 925 113

225 342 629 84

Commercial Expenses	(35)	(78)	(228)	194
Cross Market Functions	(91)	(112)	(138)	23
Staff Costs	(48)	(45)	(70)	56
Corporate Charges/Other	(16)	(64)	(75)	16
Depreciation and Impairments	(64)	(84)	(184)	120
				
EBIT	(30)	(40)	(65)	62

  Funds Flow (303) (252) (100) (60)

I CAPEX 425 400 700 75

• TCV - $300 million in 2001, up 88%

• 15,000 DS-3 months in bandwidth business, up 188%

• 1 Billion MB delivered in Content, up from 10 million MB in 2000
• Headcount increased from 1,079 to 1,569, up 45%

• 40 POPs, up 90%

Business Development
  • Creating liquidity in circuits, IP and streams

  • International expansion into Europe, Asia and India

• New origination in Media Services (advertising)
• Continued margin from merchant investing

• Continued global expansion of connectivity, using switching platform

Financial
• Mark to Market available for Circuits, IP and Stream Layers

• Monetizations where appropriate (Blockbuster and other VOD deals)

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EXH009-00617


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Enron Broadband Services
2001 Plan
Key Components of EBIT
Gross Margin

  Origination
Media & Entertainment
Wholesale

  Enterprise
Media Services
Latin America

  Remote Offices
Europe
Asia

  Trading/Risk Management
Ventures

  Corporate Development
Total

						2001	
2000	2000	2001	Change	Current	2001	Margin per	
Plan	Forecast	Plan	to 2000	Commercial	Commercial	Headcount	
($millions)	($millions)	($millions)	Forecast	Headcount	Headcount	($millions)	Highlights
							
23
1	9
5	90
0	847	44	66	1.4	Blockbuster marked or monetized; create new VOD deals;
.	.	.					some IP\Origination
146
3	148
6	165
0	11	30	43	3.8	$ 134 million Dark Fiber margin 2000; 2001 shifts to
.	.	.					colo/IP/Circuits
16.0	12.4	40.0	223	18	28	1.4	2001 shift to Large Deals - Bundled deal profile (IBM, EDS)
-	-	20.0	NM	3	19	1.1	Structured transactions with advertisers
-	5.1	10.1	98	6	8	1.3	Fiber sales in Puerto Rico and structured deals
-	(1.2)	103.4	NM	53	142	0.7	Wholesale fiber sales, structured IP, Commodity trading
-	-	77
6	NM	7	48	1.6	Selldown of fiber optic concessions, collocation , and
		.					internet provider
2
0	10
5	60.0	471	36	102	0.6	Liquid commodity markets to be created in circuits, IP and
.	.						streams
							Earnings from existing or pending portfolio (50%); remainder
37.1	157.1	60.0	(62)	4	8	7.5	from future opportunities; overall portfolio is sized about
							$120 million
-	-	3.0	NM	3	4	0.8	Web hosting services
224.5	342.0	629.1	84	204	468	1.3	

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EXH009-00618


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Enron Broadband Services
2001 Plan
  Components of EBIT
Commercial Expenses

	2000
Forecast
($millions)	2001
Plan
($millions)	
%
Change	
Current
Headcount	

Headcount	

Highlights
Origination						
						' First full year of operations in Europe,
Media & Entertainment	13.2	17.8	35	62	77	Latin America, Asia
Wholesale	9.0	15.2	69	34	47	
						4 Shift in work force from sales to
Enterprise	13.1	13.2	1	26	38	originations
Media Services	0.8	8.7	NM	4	22	
						' Commercial expenses increased 15%
Latin America	2.1	3.9	86	9	9	excluding international expansion
Remote Offices						
Europe	17.5	45.2	158	68	162	
Asia	2.5	77.7	NM	10	65	
Trading/Risk Management	10.1	33.4	231	80	132	
Ventures	1.7	5.0	194	6	10	
Corporate Development	2.2	2.5	14	5	5	
Office of the Chairman	5.4	5.6	3	8	8	
Total	77.6	228.2	194	312	575	

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EXH009-00619


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Enron Broadband Services

NetworkCo
Front Office
Mid Office
Switching Services

Structuring and Sales Engineers
Strategic Development

2001 Plan			
Components of EBIT			
Cross Market Functions		
2000 2001			
Forecast Plan	%	Current	2001
($millions) ($millions)	Change	Headcount	Headcount
			
40.1 65.3	63	233	320
38.9 23.8	(39)	219	275
4.6 9.1	98	43	51
11.2 15.9	42	48	68
12.2 17.5	43	51	64
4.7 6.1	30	6	17

  Total 111.7 137.7 23 600
* After 2001 Capitalized Costs - NetworkCo (12.4); Front Office (31.1); Mid-Office (1.0); Switching Services (8.0)

795

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EXH009-00620


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Enron Broadband Services
2001 Plan
  Components of EBIT
Staff Functions/Corp Charges/Depreciation

Legal
Back Office/Transaction Support
IT - Net Works

Finance
Human Resources

Marketing, Communications, PR
Business Controls & Security
Total Staff

Corp Charges/Other
Depreciation/impairments

  2000 2001
Forecast Plan %
($millions) ($millions) Change

  6.9 13.6 98
12.7 21.2 68

4.0
5.6
14.3

  1.5

3.8
4.1
5.5
19.4

2.4

NM

2
(2)
35
58

  Current 2001
Headcount Headcount

16

51
0

17
29
47
7

45.0	70.0	56 167
		
64.2	74.6	16
83.5	183.6	120

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28
59
0
20
31
48
13

EXH009-00621


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Enron Broadband Services
2001 Plan
Funds Flow/Capital Expenditures

Funds Flow

Capital Expenditures
Fiber
  Fiber Lighting
  Real Estate & Construction
Routers
  Switches
Servers
Set-top Boxes
  Non-Network Equipment & Other
Software/Development
India
  Reduction in Capital
Total

  2000 2000 2001
Plan Forecast Plan
($millions) ($millions) ($millions) Change

  (303.4) (252.0) (100.0) (60)

159.7	241.0	51
83.7	126.0	51
44.2	99.1	124
19.8	21.0	6
4.9	84.0	NM
24.7	20.4	(17)
-	6.0	NM
63.0	46.5	(26)
-	6.0	NM
-	100.0	NM
-	(50.0)	NM
425.0 400.0	700.0	75

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EXH009-00622