My concern about Laboratory personnel was sadly confirmed. Chief Facilities Officer Art Brings called to tell me that two of his veteran employees had sons missing. Joey Ellis' son Mark was a New York City Transit Authority police officer who had rushed to the scene to take part in the rescue effort. Lou Jagoda's son Jake worked for the ill-fated bond house, Cantor Fitzgerald. Such loss is tragic beyond description and our hearts go out to Joey, Lou, and their families. A long-time friend and supporter of the Laboratory also lost his life at the Trade Center. Lindsay Herkness, an executive at Morgan Stanley Dean Witter, was a familiar and popular figure at Symposium lectures and dinner parties. He will be sorely missed by the Laboratory community, his family, and his wide network of loving friends in New York City and Long Island.

On a brighter note, the science at the Laboratory gets more exciting by the moment. Having the complete human genome sequenced allows our investigators to use novel techniques to compare diseased and normal tissue and to identify genes associated with cancer and other diseases. The good news for the nonscientists among us is that the progress of the research is getting us closer to the clinic. It is becoming easier to make the connection between the basic research being done in our laboratories and practical and promising therapeutics being developed for human disease. The heretofore challenging job of answering the familiar question What is it that goes on at Cold Spring Harbor Laboratory? has become easier to handle. Our Director of Public Affairs, Jeff Picarello, has done a commendable job communicating the Laboratory's work and mission. Articles on the Laboratory itself and on the field of molecular biology were more prevalent during the past year witness cover stories in national publications such as Time, Newsweek, and Forbes.

Our graduate program, The Watson School of Biological Sciences, continues to thrive under the leadership of Dean Winship Herr. The third class of Ph. D. students arrived in the fall. The student body now totaling 20 Watson School students, 50 SUNY Stony Brook students, and 140 postdoctoral fellows provides an academically charged and stimulating atmosphere characteristic of an elite university. The campus is more alive than ever before, and the students add a welcome dimension of vitality to the daily life of the Laboratory.

Two substantial projects were completed over the course of the year, the most challenging being the renovation and expansion of the Genome Research Center at Woodbury. The process of redesigning, gutting, and rebuilding this 65,000-square-foot building was complex to say the least. This is a very high-tech facility, housing not only the offices of the Cold Spring Harbor Laboratory Press and the Laboratory Purchasing Department, but also state-of-the-art laboratories with robotics and other sophisticated scientific equipment to facilitate genome sequencing, cancer gene discovery, and plant biology. The Center is already home to 120 employees, and our Food Services Department, led by Jim Hope, has opened an attractive new dining facility on site. This research facility is the Laboratory's first away from the main campus, and concerted effort has been made to make employees there still feel part of a cohesive and integrated community. Much credit for the success of this project goes to our own Facilities Department for their planning, execution, and oversight and to Centerbrook Architects and Fortunato Sons, Inc. for their work on the project.

The other successful project completed was the renovation and addition to the Dolan DNA Learning Center. Thanks to the generosity of the Dolan family and others, this innovative educational facility has undergone a complete facelift and has virtually doubled in size. The new BioMedia addition includes a state-of-the-art computer laboratory for the students, new exhibit space, additional wet labs, a student lunchroom, and much-needed office space for staff. The innovative high school and middle school programs continue to attract thousands of eager students and teachers each year. Visits to the award-winning educational Web Sites developed by the Center's talented team are increasing rapidly. In June, the opening of the building was celebrated at a well-attended dedication featuring remarks by both Charles and Helen Dolan and followed by an operatic performance.

The library at the Laboratory is becoming an increasingly dynamic place. Mila Pollock, Director of Library Services, and her colleagues have undertaken an effort to create a state-of-the- art digital library to meet the growing requirements of our research scientists and students. Also in 2001, Jim Watson formally donated his book and reprint collection to the Laboratory Archives. With the help of a generous grant from Lewis Lehrmann, archivists are in the process of organizing the vast and valuable collection of Dr. Watson's manuscripts, letters, and other materials for the eventual benefit of scholars from around the world.

As always, we are indebted to our Cold Spring Harbor Laboratory Association Directors and other volunteers who do so much to draw positive attention to the Laboratory. The third Jazz at the Lab concert in April, organized by Joe Donohue, Susan Hollo, Cathy Soref, and Gil Ott, was a huge success from every perspective. Staffers Charlie Prizzi and Annette Gangitano both did superb jobs in working with the committee and managing the logistics of the event. Thanks are also due to the Corporate Advisory Board of the Dolan DNA Learning Center, led by Ed Chernoff, which organized another successful golf tournament at Piping Rock in June.

It has become evident that the field of biomedical research is at a turning point and that advances against human disease are likely to change our lives during the next few decades. This revolution, and Cold Spring Harbor Laboratory's central role in it, has been the catalyst for a new push in strategic planning. Over the course of the year, a great deal of effort was expended on the development of a long-term "master plan" for the Laboratory's future. This initiative was led by Drs. Stillman and Watson, who have both articulated a compelling vision. The process entailed mapping the future direction of the research and educational programs and then creating and developing an infrastructure plan to accommodate the growth. A team, including Trustees Helen Dolan and Mary Lindsay, was formed to work with Centerbrook Architects. We are pleased with the resulting plan for a new research and academic cluster at the west end of our main campus. Great care was taken to preserve the lawns and open spaces at the eastern end of the property and to design buildings with the traditional "whaling village" character of the campus. The plan is well within the stringent zoning guidelines set out by the Village of Laurel Hollow in 1995 and has the enthusiastic support of our Board of Trustees. Needless to say, this project requires a large and comprehensive fundraising campaign that must be well under way before any work begins. To that end, two new appointments have been made. As Vice President of Institutional Advancement, Rod Miller who joined us from Brooklyn Polytechnic will oversee the planning and execution of the campaign. Diane Fagiola, a Locust Valley native, has succeeded Rick Cosnotti as Director of Development. Again, we express our appreciation to the Dolan family for their generous grant enabling the groundwork for the master plan and for the campaign plan development.

Two other managerial changes of note took place at the end of the year. Cheryl Sinclair, Director of Human Resources, retired after 12 years of loyal service. During her tenure, the employee population grew from 463 to 850. Cheryl met the many challenges presented by this growth with grace and professionalism. We wish her well in her retirement. Katie Raftery was recruited from the Ericsson Corp. as our new Director of Human Resources. Katie is an experienced manager who has transitioned into the job with great energy and enthusiasm. Jerry Latter, our Director of Information Technology, was recruited to Rockefeller University in October. We were fortunate, in this case, to draw on existing talent and to promote Mark Kilarjian to the Director position.

As we face new challenges, the leadership and support of our Board of Trustees become increasingly important. In identifying potential Board members, we look for bright, prominent, and influential individuals who will take an active interest in the Laboratory. We welcome and look forward to working with newly elected Trustees Tom Quick and Eduardo Mestre. We also express our gratitude to two Board members whose terms expired at the end of the year. Both Bill Murray and Whitney Pidot served with great distinction, and their contributions will long be felt at Cold Spring Harbor Laboratory.

The Laboratory had a satisfactory year financially. There were concerns as we began the year that it would be a difficult one in which to achieve break-even results with our operating budget. I am pleased to report that results were better than forecasted and we were able to break even after $4.6 million in depreciation expense. Having said that, there was no operating surplus as in past years, and it was necessary to utilize $800,000 of an existing $2.3 million reserve account to achieve these results. Revenues grew 10% to $76,691,000, and $3.8 million in positive cash flow from operations was available for capital expenditures. A number of factors contributed to the better-than-expected performance. The Cold Spring Harbor Laboratory Press had an excellent year due in part to strong sales of the third edition of its popular laboratory manual Molecular Cloning. Royalty and licensing income also exceeded expectations, thanks to the hard work of John Maroney and the Technology Transfer Department. Good cost control by a number of administrative departments also contributed to the upside. These positives were enough to outweigh effects directly and indirectly related to the events of September 11. Two of our largest scientific meetings following 9/ 11 had to be postponed. Meetings and Courses Director David Stewart did an admirable job in rescheduling and conducting the meetings, but attendance was understandably down. We believe that our Annual Fund was also negatively impacted. The number of gifts was down substantially, and only as a result of a generous and concerted effort by our Board of Trustees were we able to avoid a commensurate decline in the total dollars raised. Finally, we were most disappointed to cancel a gala fundraising concert featuring Luciano Pavarotti. This event had been generously arranged and supported by Laboratory Trustee Doug Morris, CEO of Universal Music.

The Laboratory's endowment funds suffered this year, reflecting the poor performance of the public equity markets. At year end 2001, the endowment totaled $212 million, down from $227 million at the previous year end. The asset allocation of our managed funds is approximately 53%/ 47% equities to fixed income investments. Total return on these funds was a negative 4.8%, comparable to benchmark indices of similarly allocated funds. Most equity managers had a difficult year and ours were no exception. Our "growth" strategy equity managers, Vanguard Primecap and Essex Management, both underperformed the Standard & Poor's 500. "Value" manager U. S. Trust was able to outperform the Standard & Poor, but it was still down for the year. On the other hand, our fixed income manager, Miller Anderson, achieved excellent results and outpaced market indices. The Laboratory continues its relatively conservative policy of drawing down 4% per annum from the endowment based on the 3-year moving average of year-end market value. We rely on these funds to supplement government support of cutting edge research and to ensure a secure financial future for the Laboratory. Over time, the Laboratory has managed the endowment prudently and successfully and has achieved outstanding growth. The Finance and Investment Committee, chaired by Trustee Lola Grace, meets regularly to evaluate, review, and determine investment policy and guidelines. This responsibility is undertaken with diligence, especially in times of poor markets.

We face another year of financial challenges as we look ahead to 2002. The markets and the economy remain murky in the short term. At the Laboratory, the opening of the Genome Research Center, while exciting, carries with it substantial increases in operating costs and depreciation expense, not all of which is yet supported by new grant income. We are anticipating a difficult year and are taking measures to conserve cash. These measures include an administrative hiring freeze and a 2.5% cap on administrative salary increases, as well as a salary freeze for senior management. In addition, we are planning to spend $800,000 less than the budgeted depreciation expense on capital expenditures. The Laboratory is a healthy institution financially because it has been managed prudently and diligently. It is our intention to maintain this practice. I am indebted to Chief Financial Officer Morgan Browne and Comptroller Lari Russo for their counsel, wisdom, and leadership in this ongoing effort.

In the midst of this challenging environment, we have developed an ambitious plan that will require a capital-raising effort of unprecedented scope for the Laboratory. From a fundraising perspective, the timing may not be perfect. From a scientific standpoint, the time is clearly now. Our research and education programs are of the very highest caliber because we have the best people and the best minds in the business. It is imperative that we provide them with the best facilities and the resources necessary to achieve their objectives. Cold Spring Harbor Laboratory did not gain the prominence it enjoys today without bold vision. In 1968, Jim Watson assumed the leadership of an institution with no endowment and an uncertain future. An opportunity was seized. Today, we face another turning point and yet another opportunity. Onward and upward!