LAND DEVELOPMENT AND REAL ESTATE INVESTMENT $25 million in land and real estate was carried on our books at the close of the last fiscal year. Equities in land accounted for about half of this total. The other half represented the depreciated value of improved real estate held for investment purposes Basically our land program involves the acquisition of well-located raw acreage which we develop, subdivide and sell at a profit as industrial and residential sites We have fairly extensive holdings of land located in fast-growing California, While some of the acreage is slow-moving, we are on the whole well satisfied with our land inventory We feel that its acquisition cost will allow it to produce profits in the future as it has in the past In improved real estate we own directly or indirectly various interests in two telephone buildings, a shopping center and several commercial properties These regularly contribute to our earnings We are satisfied that their market values exceed the depreciated figures at which we carry them on our books, and by the sale of some of these investments in future years we would expect to make important additions to our profits. Earnings from our land development activities have fluctuated from year to year. Some land projects have reported losses in their early phases when interest charges and development costs were high But as distinguished from construction, where on particular jobs substantial losses have offset -5-