04-HP-876_newMDA.qxd 12/15/04 3:04 PM Page 38 COMPARISON OF THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003 Operating profit in the Company’s R eal Estate division fell 35.4 percent from 2003 to 2004, but performance of its core operations actually improved. The reduction in operating profit was due primarily to a decline in the profits recorded for the sale of raw land in 2004 versus 2003. While the sale of raw land has not been an ongoing component of income in the Real Estate division, the Company recorded gains on sales of land totaling $1.0 million and $2.7 million in 2004 and 2003,  respectively. Direct operating expenses increased as compared to 2003 due to demolition costs in 2004 of over $.8 million relating to the razing of the Company’s former headquarters building, and an increase in  advertising expense. 2004 2003 % Change REAL ESTATE (in thousands) Revenues 9,842 $ 10,893 (9.6)% Direct operating expenses 3,347 1,789 87.1 Depreciation 2,253 2,535 (11.1) Operating profit 4,242 $ 6,569 (35.4) 39