development expenses. Turning from mining to construction, I am pleased to report that our construction operations produced the highest profit in the 67-year history of the company and were a major factor in carrying our overall earnings to the new high reported. During the year we operated in the United States and 8 foreign countries, located in Africa, Asia, South America, Australia and New Zealand. The type of work performed included dams, tunnels, powerhouses, missile bases, military airfields, industrial plants, mining installations, railroad construction, waterfront work and hydraulic dredging. Firm price contracts accounted for about one-half of the volume of work performed and about 70% of the gross profit with negotiated work of the cost-plus type accounting for the balance. Not all of our contracts were profitable but the year was free from any contract causing large losses which have depressed our construction performance in some earlier years. Land development was the only major phase of our company's activities which reported lower profits in 1966. This division has been consistently profitable and recorded its peak earnings in 1965. Earnings were well maintained in the first half of 1966, but thereafter tight money, coupled with the decline in our inventory of property ready for sale, caused our profits from land to drop sharply. Our land development activities are largely concentrated in California and are of two major types - residential, commercial, and industrial land acquired and developed for resale, representing about two-thirds of our investment, with the balance being in land or improved real estate being held for investment. -6-