struction represents less than 10% of our total assets, in contrast to some 93% in 1949. Profits from construction were the highest in the company's history in 1966, and almost as high in 1967. We anticipate that our construction activities will be profitable this year, but down rather sharply from the high levels of the last two years. We began this year with a construction backlog of $122 million, up 6. 4% over the prior year, and with 85% of the work under cost-protected types of contracts. This is not as good as it appears on the surface, for the backlog contains some large contracts which will be performed over several years. The volume of work to be put in place this year is not sufficient to sustain our construction earnings at the levels of the last two years. We need additional work and need it now, and new work may not be so easy to come by in the face of the federal deficit and a slowdown in private capital spending. We are endeavoring to be selective in our bidding and, while our results have been very satisfactory in construction for the past three years, we anticipate that construction profits will continue to fluctuate widely in the future as they have in the past. However, this volatility no longer has the same relevance to our picture that it once did because of the smaller portion of total earnings that construction represents. As we see it now, we anticipate that our company will be able to record improved profits in 1968, but I do not anticipate that the rate of increase will match the 26% recorded in the prior year. If this comes as a disappointment to those of you who are looking for the quick swing, believe me, that it was said deliberately, for our interest is not in acquir- -16-