All spending in excess of our projected income was placed before the Grand Lodge Executive Board which is required by the Constitution and Bylaws. While permission was granted for the necessary expenditures, it was done so only after long and arduous discussions, which reflects that the decisions were made only in the interest and for the betterment of the membership.

The Officers, Appointees and employes have continued to seek and execute cost cutting initiatives, however, as the years have progressed, the last of the large cost cutting initiatives have been executed, but still each day efforts are made to change the daily operation and reduce costs.

In accordance with Article VI, Section 8, of the Grand Lodge Constitution and Bylaws, I take pride in submitting the following Report reflecting the financial condition of the Brotherhood of Maintenance of Way Employes and the successes we have had while maintaining a sound fiscal condition over this year April 1, 1997 through March 31, 1998.

The total income for the fiscal year under review, April 1, 1997 through March 31, 1998, was $12,206,672.69, an increase of $513,831.54, or 4.39 percent from the previous fiscal year April 1, 1996 to March 31, 1997. The combined income from dues and initiation fees increased $513,135.50, or 5.56 percent from the preceding fiscal year. Income from investments decreased $50,481.43, or 2.5 percent.

The expenses for the fiscal year under review, April 1, 1997 through March 31, 1998, were $12,107,160.17 for an operating excess of $99,612.52. The expenses for the previous fiscal year from April 1, 1996 through March 31, 1997 were $13,069,220.02, resulting in an operating deficit of $1,376,378.87. Income over expense increased by $1,475,991.39 for the period covered by this Report compared to the previous fiscal year.

I have and will continue to meet the fiduciary responsibilities for which I have been elected and am dedicated to preserving the Brotherhood's sound financial position. With the continued assistance of President Fleming, the Grand Lodge Officers, staff and employes, the system divisions/federations, subordinate lodges and membership support, we will strive to maintain the Brotherhood's position as a leader among rail labor.

In conclusion, I wish to express my sincere appreciation to President M. A. Fleming for his continued assistance and guidance, to the Grand Lodge Officers, staff and employes in the President's Department for their cooperation and dedication.

I would also like to express a special appreciate to my Administrative Assistant John Pesta, my Secretary Linda Cassese, and the entire staff and employes of the Secretary-Treasurer's Department. Equally as well, I wish to thank all the system federation and division officers and subordinate lodge officers, who have maintained a devoted commitment to serving our members when time is of the essence, when funds fail to meet the needs of a progressive union and work is never ending.

COSTS ASSOCIATED WITH STRIKE ACTIVITIES

The following is a report of payments made from the Strike Fund Trust for the period April 1, 1997 through March 31, 1998. A total of $54,450.05 was paid from the Trust.

Strike benefit payments, investment management fees, accounting fees and bank service charges were the only payments made from the Strike Fund Trust. At the close of the fiscal year March 31, 1998, there was a balance of $16,857,234.76 in the Strike Fund.

Payments to members from the Strike Fund due to the Brotherhood's enjoined strike against Norfolk Southern Railroad totaled $420.00.

Payments to members from the Strike Fund honoring the International Union of Operating Engineers strike against the Soo Line Railroad Company at Bensenville, Illinois totaled $2,613.00.

Payments to a member from the Strike Fund honoring the United Steelworkers of America strike against the CF&I Steel Mill at Pueblo, Colorado totaled $1,132.00.

Investment management fees, accounting fees and bank service charges totaled $50,285.05.

Independent Auditor's Report

In our opinion, the financial statements shown below present fairly, in all material respects, the financial position of the Brotherhood of Maintenance of Way Employes as of March 31, 1998 and 1997 and the results of its operations for the years then ended in conformity with generally accepted accounting principles.

Landgren & Company, P.C.