NOTE FROM THE CHAIRMAN

Since our first Annual Report for 1982, our annual letter has been signed by Dennis and me as Co-Founders. The truth is that in the early years I wrote it; in the middle years it was more of a joint effort; and now it has become entirely his. Even though I love the partnership evidenced by a joint letter, it seems less than honest to continue the practice. So this year we have two letters, one short and introductory from me, and one from Dennis that is more like our traditional tome.
          In the course of this extraordinary year, two reflections have kept coming at me. The first is that the positive assumptions we make about people-that they are responsible, caring, creative and want to make a difference-are turning out to be just as accurate about the majority of people in Pakistan, Brazil, or any of the other 22 countries we are in as they are, about the majority of people in the United States. Our annual survey yields this conclusion, but more influential to me are my personal experiences while visiting our people throughout the world. Dennis shares additional thoughts on this in his letter, but to me the universal applicability of our assumptions is the most exciting discovery yet to come out of our ever-expanding global experience. It is hard to say whether such unusual views about people would help in other more political situations, but it might be worth a try.
         The second reflection is a bit more paradoxical. As we have freed up people to make more decisions, they have sought more advice and become more consultative. Said another way, the more AES people feel responsible for Company decisions, the less likely they are to go off and do something completely on their own. So eliminating layers of approval has turned out to create more input and advice than if we had followed the typical hierarchical process. And it completely eliminates the old excuse that "the Board turned it down." I think all of us have had the experience of preparing a proposal for Board approval-at AES this is equal to preparing an analysis for your own decision.
          There is little doubt that we are evolving. I 'just looked at a few of our Annual Reports from years ago, and to say the obvious, was startled at how different we are today from what we thought we would be. Sometimes it's tempting to be a little revisionist-to make up some story that confirms how visionary we were. But it's not so If we can take any credit, it is that we have kept our minds open, prepared ourselves to respond to unexpected opportunities and given our people the chance to make a difference.
          This is a fun place to be.

                                                          
                                                                                                                                       kevin cook (left),
                                                                                                                                       Jim Erdman (right);
                                                                                                                                       AES Warrior Run

                                           
                                                                   ROGER W. SANT