Contract construction has not recorded satisfactory profits for the past several years. Perhaps this is a result of management preoccupation and pursuit in greener fields. Certainly it is in part the result of restricting construction activities from time to time to make funds available for mining and land development activities. In some measure the decline in earnings is in keeping with trends in the industry where even the most efficient companies have been faced with lower margins, lesser rates of return on net worth, and have been able to increase or maintain earnings only by doing a greater and greater volume of business. Meanwhile, our assets employed in contract construction have been reduced to about $12,000,000, excluding our dredging equipment. Construction earnings cannot be forecast with any great degree of accuracy. Our backlog of uncompleted construction work amounts to approximately $94 million, but its quality is not consistent with its quantity. It does not have an attractive profit potential because it is too highly weighted with cost-plus work and not well balanced with our available equipment, leaving us a burden of idle equipment costs to absorb. We do anticipate receiving additional income in the second half of this year from favorable action on claims for work performed in earlier years and we have made certain organizational changes and economies that should be helpful. However, we need additional attractive domestic heavy construction business before this branch of our activities can achieve satisfactory profits. Our foreign work has been consistently profitable in the past but, like domestic work, competition is becoming increasingly severe. However, construction remains a basic serv- 10 ice industry fundamental to the economy, and we have experienced both its feasts and its famines. If there are crumbs on the table today, we are hopeful that there may be cake tomorrow when some of the hungrier and more undernourished companies may have gone their way. THE APPLICATION OF CREATIVE KNOW-HOW If you study our record of growth, you will realize how fundamental a part construction know-how has played in enabling us to enter other fields. Mining for our own account was merely the application of technical knowledge and equipment acquired over the years as a contract miner to something we owned rather than merely hiring our services out to others. Our real estate ventures started with the recognition that the role of the entrepreneur, combined with construction skill, offered more profit potential than that of the building contractor who confined himself to fighting it out with his competitors at the bidding table for the right to build something for someone else who saw the opportunity and was smart enough to seize it. Even our entry into ocean shipping was stimulated by the contractor's simple approach to a materials handling problem and our recognition that the general cargo vessels then available were not the most efficient tools that could be designed to handle the relatively new traffic in imported bulk commodities that had sprung up after World War II. Frankly, we found ourselves frustrated by the fact that, like contractors everywhere, we were able to use our tools only at the time of someone else's choosing. We were impatient 11