Rather than the usual CEO's message about the status of the business, I want to discuss progress on our number one priority: serving you better.

In 1996, Battelle continued to focus on two areas to better meet your needs: relationship management and partnering (or, as we like to say, technology alliances).

We designated more Battelle relationship managers to work closely with you on a daily basis. You tell us this process is working well. And we refined our approach to technology alliances to make sure we deliver technology that meets your needs - and your strategic plans - whether you work in government or industry. I believe three major alliances demonstrate the power of forming strong technology relationships with Battelle.

For over 30 years, the Department of Energy and Battelle have been research partners at the Pacific Northwest National Laboratory, a multi-program national laboratory which Battelle operates for DOE. For several years, DOE and Battelle shared a vision: build a world-class environmental lab that demonstrates DOE's commitment to remediate wastes at Hanford - and also serves as a research center for solving environmental problems into the 21st century. On October 16, 1996, the vision was realized when the new William R. Wiley Environmental Molecular Sciences Laboratory was dedicated. In addition to environmental research, the $230 million facility provides research opportunities with medical, energy, national security, industrial, and agricultural applications. And the potential for commercialization of technology in the Pacific Northwest region is considerable.

A second alliance, between the Department of Defense and Battelle, has resulted in significant strides - both in research facilities and information analysis - in the crucial national security area of chemical and biological defense. In the 1980s, DoD and Battelle invested in chemical defense programs and facilities. As a result, the world-class Hazardous Materials Evaluation Laboratory and the Medical Research and Evaluation Facility are at work developing technologies to protect U.S. soldiers from chemical and biological weapons. This is Battelle's eleventh year of continuing operation of the Chemical and Biological Defense Information and Analysis Center. And the DoD-Battelle chemical defense alliance expanded globally - with Battelle experts serving as key members of a U.S. team that is working toward destruction of chemical weapons stockpiles in the former Soviet Union.

In the industrial arena, STERIS, a Cleveland medical equipment company, and Battelle formed a relationship and began discussing the formation of a "Virtual R&D" organization. Within this scenario, STERIS retained and strengthened core competencies in key scientific areas and leveraged Battelle resources to access other necessary technologies and expertise in rapid product development. Today, Battelle is helping STERIS develop leading-edge medical products for the marketplace. Integrated product teams promote optimal use of resources and provide smooth transitions to manufacturing and commercialization. As the relationship grows, Battelle is a participant in the development of STERIS' long-term business strategies - especially in strategic product, market, and technology planning. And we're linking emerging technologies within Battelle, including the Pacific Northwest National Laboratory, with new, market-driven product and business opportunities for STERIS.

As we approach the 21st century, top-line growth, competitive advantage, and technology advancements will not be accomplished by "going it alone." They're realized through strong business relationships and long-term alliances. That's why Battelle's focus is to build long-term relationships with our clients by anticipating their needs and delivering economically valuable science and technology.

Delivering this breakthrough value increasingly requires a greater leveraging of all Battelle's science and technology capabilities, constant interaction with the marketplace, outstanding and timely product delivery, and the aggressive invention, development, and deployment of economically valuable intellectual property. That's the way Battelle does business - we find ways to serve you better.

Give us a call.