We also had to overcome a poor previous years performance in Veletech, our information systems department.  In 1998 we experienced the same adverse conditions as in BST’s hardware division.  As in the hardware division these unfortunate economic conditions led to a net profit of -$362,000.  We understood we needed to make a turn around in our Veletech division similar to that of our hardware division.

    Many things were done well in Veletech in 1998.  At the end of the year we were a faster, more competitive company, with an improved product and services offering greater ability to deliver solutions and a more focused organizational structure.  However, we are definitely disappointed that earnings declined in 1998.  Many factors contributed to this outcome.  Among them were unacceptably high expenses and competitive pricing pressures in personal computers in the first half of the year, and a weak macroeconomic environment in the second half.

        In 1999 we enacted several strategies to increase profitability at Veletech.  Mainly we tried to bolster our level of innovation and technology to make Veletech the avant garde and leading information systems leader.  In the first half of the year, revenue was strong but expense growth exceeded revenue and hurt earnings.  We cut back on expenses dramatically in the second half, when revenue growth also slowed.

        We were able to greatly increase net profits in 1999.  Net profits rose by $498,000 to $136,000.  As in our hardware division, this was the largest jump in net profits in the industry.  We consider these upward trends a positive indicator for the future of BST.  The positive turn around in Veletech can mainly be attributed to the improved management of expenses.  We did a superb job of handling operating expense in the second half of the year after a poor first half.  We are very proud of how quickly Veletech’s employees were able to react to a urgent need to slow spending. We took short-term steps to slow spending such as a cutback on marketing and travel budgets.  We began a better expense structure in 1999 and we will continue to work hard to keep expense growth moderate.

    Given our strong market position and market strategy we hope to continue to grow at Veletech well into the future.  We promise to keep on top of our industry and make innovations that will keep thrust us to the pinnacle  of our industry.