Once considered the most complex solution, we are now driven by a strong belief that these same benefits are attainable through e-business transformation," said Rick Causey, chief executive officer for Enron. "It wasn't that long ago that many of our energy clients were derisively called low-tech, pulp and paper mills running on batch systems. Today, we are calling the same customers the high-tech equivalents of their former selves. Many former stand-alone, highly manual businesses have become highly automated and virtually paperless enterprises. The drivers of this change are the same in our markets - a profound shift in the way that customers demand flexibility, choice, lower costs, and greater control, all integrated with the seamless quality of e-business. This new approach creates a compelling model for the transformation of high-tech and other traditional industries." Back to the future - the end-user experience To fully reap the benefits of e-commerce, customers must be able to send and receive information across internal and external networks easily and securely. With the growth of e-business, the Internet is becoming an essential system of record, storing information about every transaction in the supply chain. This is why we believe that e-business holds the key to unlocking our corporate client's value chain. To ensure that e-business meets these business needs, Enron has developed an integrated global framework, based on our e-business strategy, to enable the exchange of business documents -- blueprints, models, and related information -- regardless of format, across organizational boundaries, both inside and outside Enron. It is our intent to support the proliferation of e-commerce by providing the right tools for the job and ensure technology simplicity. Our e-business model focuses on optimizing customer interaction and experiences across all channels, devices, media, and applications. It is a customer-centric approach that helps break down internal walls, facilitates knowledge sharing across the enterprise, and drives the vision, strategy, innovation, and growth of our company. The Enron Intelligent Network Enron's goal is to create a network of intelligent services. This network will give our business units the ability to offer customers the latest technology and to go to market with e-commerce solutions. The Enron Intelligent Network is based on an enterprise wide shared services center (ESSC) that enables us to manage many of the network aspects such as customer segmentation, application processing, data storage, physical infrastructure, network operations, delivery, and maintenance through contracts, dedicated professionals, and a powerful infrastructure infrastructure. The Impact of e-Business on EES and Enron as a whole e-Business represents an enormous opportunity for EES as well as Enron, and our first quarter was a landmark event for us. We went from practically no trading activity to over $336 million in wholesale and retail commodity-related transactions. We are well on our way to another trading record in Q2, thanks to the enormous opportunities in our energy outsourcing business and the remarkable level of interest in EES. It is clear that the market wants to go much faster than our initial vision of enabling customers to make the switch to new technologies by migrating the slowest processes first. However, we have tremendous momentum behind us, and we are working extremely hard to ensure that our development cycle for Internet-enabled applications and infrastructure does not create a lead time bias for our customers. The good news is that we believe we have more than a year to the introduction of the Enron Intelligent Network, and we are positioning ourselves to move very quickly when the opportunity arises. Financial Services We've established Enron Global Finance, a dedicated finance unit to provide outstanding financial services to Enron Corp. and its subsidiaries. We provide financial clout, expertise, and intellectual capital to the energy and telecommunications industries through financial advisory services, product development, technical evaluation, and other services. To provide these services, we leverage EES' market-leading position in energy outsourcing and worldwide broadband trading and origination, as well as our broad internal financial and energy management capabilities. Future Globalization Efforts in EES Our business model, in which we leverage off Enron's global network, technology, and market-making expertise to provide customers with the tools to manage and reduce energy usage, provides EES with tremendous opportunities. This market presents us with many challenges - managing price risk, managing multiple commodities, and ensuring the highest quality of customer service - but it offers the potential for profitable global business. We are actively working to seize these opportunities. To date, we have opened offices in Brazil, Canada, China, India, Mexico, and most recently in Japan, in addition to our presence in the U.S. and Europe. We have a extensive set of activities under way to build a truly global wholesale business for Enron. Conclusion - The Third Way We have worked for our customers for over 10 years to deliver them new e-business solutions and develop market-leading positions in the global e-commerce arena. From consulting to bundling and hosting, software to hardware, applications to communications, transaction processing to throughput, the Enron Intelligent Network, e-Commerce, and worldwide broadband network capability and services represent our commitment to our customers, our reputation for quality, and our vision for the future of the global economy. We believe that Enron can provide the foundation for an agile and dynamic e-business. This enables not just our customers but also the industry as a whole to rethink the fundamental way the business is conducted. Congratulations on the successful completion of your first quarter. We look forward to your further success and the pursuit of new opportunities for growth and value in 2001. Mark Frevert and Greg Whalley