At the recomendation of our good friends and clients, Mr. Clyde Bacon, and his son, Bruce, we started looking in Idaho for diversification of our activities in farm land and agricultural related activities. As a result after several months of investigation, in September, we finalized the purchase of one of the largest operating dairies in Idaho, in the Twin Falls/Jerome area. Holstein Farm Associates was formed to own the dairy which currently is milking 485 cows. The terms of the purchase require that the facilities be increased to accomodate a milking herd of 1,000 cows. A new milking parlor is under construction and is scheduled for completion in February of 1977. We are pleased with this acquisition and look forward to expanding our operations in that area. In November, Aurora purchased a 915 acre farm in Burley, Idaho. Burley Farm Associates was formed to own this farm, 700 acres of which is irrigated land that will be seeded in Alfalfa to supply the hay for the Holstein Farm dairy. In addition, 215 acres of pasture land will be used to raise the future milking herd for the dairy. The Texas Apartment operations for which Texas Asset Management Company is responsible was increased to 622 units with the addition of Linda Vista Apartments in Arlington, Texas. During the year the occupancy has been increased and at year end occupancy at the various locations in Ft. Worth is over 98%, and only slightly lower than that percentage in Irving, Texas. Our activity in second and All Inclusive Deeds of Trust was increased to provide high yields for those of you who place funds with Aurora to produce current income. With the increased activities and additional responsibilities we have increased our personnel and realined the officers of Aurora Capital Corporation. At the October board meeting changes were approved, and the officers and additional employees are as follows: Lawrence M. Smith Chairman of the Board and Treasurer Marcus B. Peperzak President Sidney M. Frank Vice President and Secretary D. Grant Osterhout Manager Idaho Operations Velda Mullan Manager Texas Operations Lise Inge Nelson Controller D. Grant Osterhout came to us as the result of our purchasing the Dairy. Grant is a native of Idaho and was previously associated with Reliance Corporation for 26 years and was responsible for the construction and operation of the dairy. We are pleased to have him aboard as a member of Aurora's team. Mrs. Velda Mullan has successfully improved the performance of the assets managed by the Texas Asset Management Company, and we are pleased with the direction she has provided that entity. -2-