From 1995 through 2001 was a marvelous time for both LEOS and the IEEE. For LEOS, membership growth was very strong, revenues from our publications were growing, our conferences, especially OFC, were booming, and capital gains on our reserves were strong. The result was an extraordinary amount of income that allowed us to direct about $1M into new member services such as the Digital Library, the LEOS Portal, the Photonics Field Award, special member grants, higher chapter subsidies, greater executive office support for publications and conferences, continuation of the paper membership directory, the free CD-ROM in spite of rising costs, and the new DVD-ROM. It also allowed us to build up our "rainy day" reserves to more than $5M. At the same time, the annual capital gains from IEEE corporate reserves were growing, allowing the IEEE to create a large infrastructure to support the societies and the IEEE membership. The infrastructure included the development of all the IEEE information technology structure that handles the IEEE/IEE Electronic Library (IEL), member Web accounts and other electronic services. This growth also included an increase in the indirect infrastructure including executive, legal, facilities, meeting-planning services, corporate communications, research, financial services, awards, corporate activities and portions of the information technology department, and marketing. It was a great time of growth and excitement for both LEOS and IEEE!
When the economy started to sputter in 2000, it was clear that the annual capital gains from the IEEE corporate reserves would no longer cover the infrastructure costs of the IEEE. Although there have been huge efforts to reduce the infrastructure expenses, IEEE still has an ongoing annual bill that costs the Societies about $20M annually, of which LEOS pays about 5 percent. During the first two years of this downturn, 2000 and 2001, the corporate reserves were depleted in paying for the infrastructure costs; the result of this choice is that even if the market recovers, there will be no income from the corporate reserves to cover the infrastructure costs of the future. The decision was then made that the cost of IEEE infrastructure will need to be paid by the IEEE societies (~80 percent) and the other IEEE operational units (~20 percent). At this time, access to the society's reserves was frozen; we were no longer allowed to use the "rainy day" reserves we saved for this type of situation! The infrastructure tax that LEOS has been required to pay since 2000 averages close to $1M/year.

Unfortunately, these taxes began at the same time the "telecom bubble" burst, affecting OFC, our journals and other conferences. Membership started to fall on hard times as well. The coincidence of these events is shown in the figure (created by Paul Shumate), which plots an important AMEX telecom stock index (XTC), the revenue from OFC, and a slow, possible recovery for OFC based on the pre-bubble trend and results of the two latest conferences. The result of these financial constraints will lead to temporarily reduced LEOS-membership benefits, higher publication prices (we still lose money on member subscriptions to our journals) and dues, reduced levels of award subsidies, possibly less editorial and conference group support, etc.
Although I expect this to be a difficult year, I am excited about the future of LEOS. The conferences appear to be turning around in both attendance and income, and our journals are still among the most respected in their technical fields (we will even be co-sponsoring a new journal on Display Technology). We are one of the strongest societies in the IEEE and I am confident we will only get stronger as time goes on!
* Special thanks to Paul Shumate and Gordon Day for their help in providing key information and reviewing this article.