financial summary in considering the operations of utah construction company shareholders should be mindful of three sources from which economic benefits are derived fust is the net profit earned by the parent company arising from its own operations or from investment income received from other companies in which it holds an interest second is the company's share of the undistributed earnings of subsidiary and affiliated companies third is the change in value of the company's assets as compared to the carrying cost on the company's books the first two factors are covered specifically in the letter to the stockholders but the third factor has become increasingly important and deserves special explanatory comment among its assets utah construction company holds certain lands for resale and development mining lands and leases and construction equip ment we believe that the value of these assets is conservatively stated but it is not practical to attempt to appraise their present value the company also owns the securities of other companies the indicated value of which is substantially in excess of the cost to the company of these securities only the stock of permanente cement company is readily salable in the open market and the market value of the 169,369 shares of permanente cement stock held by the company at the end of 1956 was s3,722,00o in excess of our cost if our other security holdings were valued at our share of the net worth of these companies the value would be approximately 7,778,000 above the carrying cost of 3,194,541 on the books of utah construction company oh the basis set forth above the total indicated value of all of our securities is 11,500,000 above our carrying cost at the end of 1956 jim istruction company has a term loan agreement dated july 18 1955 with its banks whereby aline of credit of 11,000,000 was made available to the company of this amount 6,000,000 is in the form of a term loan with annual payments of 750,000 at the end of the second third fourth years and the balance of 3,750,000 at the end of the fifth year the remaining 5,000,000 is made available in the form of a revolving credit which can be borrowed and repaid from time to time until july 18 1960 as of october 31 1956 all of the term loan was in use and 2,925,000 had been borrowed under the revolving credit in addition to this long term indebtedness to its banks the company was also obligated on installment notes issued in payment of land purchased in alameda in the amount of 1,413,500 payable in installments through january 1965 as of october 3 1 , 1 956 the net worth of utah construction company was 21,108,555 or equivalent to 24.05 a share this compares with the net worth at the close of the preceding year of 18,763,1 13or 21.38 a share depreciation and amortization charges for the year 1956 amounted to 2,153,939 compared to 1,070,176 during the preceding year in com puting depreciation on construction equipment purchased since january 1 1954 utah construction company utilized the declining balance method which results in heavier depreciation charges in the earlier years nf e t lated useful life of the equipment the amount of depreciation charged against earnings in excess of that which would have been produced under the straight line method amounted to 786,029 in 1956 compared with 127,168 in 1955 an increase of 658,861 utah construction compj summaries of income and retained earnin^c^^i jl employee relations utah construction company enjoyed generally harmonious relations with its employees in 1 956 the only work stoppages arose either from jurisdictional disputes between unions or from area-wide collectivi the company has long followed the policy of ma permanent employees certain benefits designed to provide better protection against personal misfortune and to give the employees further incentive to serve the company's interest to the fullest possible extent in addition to salaries and cash bonuses the company provides without cost to the em ployee a group hospital and insurance plan and a retirement plan based on profit sharing during 1956 513 permanent employees and their families were cov ered under the group insurance plan which affords coverage for hospital surgical medical polio and accident benefits the face amount of life in surance in force under the plan rose to 3,726,000 on individual policies ranging from 2,000 to 20,000 five hundred twenty-seven claims for hospital and medical benefits were filed during the year affecting 75 em ployees and their families the total premium paid by the company for this program in 1956 was 96,945 or 189 for each employee covered from the profits of 1 956 operations the company contributed 300,684 to the employees retirement plan based on profit sharing operations were again sufficiently successful to permit the maximum contribution allowable under the contribution formula which is 1 5 per cent of the annual wages of plan members and an additional amount of 244,000 was set up as a re serve for future contributions to the retirement plan at the close of the year 295 employees were members of the plan a net increase of 38 persons from the previous year during the year benefits of 29,608 were paid to retiring or terminating employees utah construction company summaries of income and retained earnings for the year ended october 31 1956 summary of income have examined the balance sheet of utah construction company a utah corporation as of october 31 1956 ana the related i summaries of income and retained earnings for the year then ended | our examination was made in accordance with generally accepted audit ting standards and accordingly included such tests of the accounting * records and such other auditing procedures as we considered necessary in the circumstances in our opinion the accompanying balance sheet ana au»arle i of income and retained earnings present fairly the financial posit k t pan t be i 95 d 1 yarth nd d ana p par i 1 pt d mit p ' lpl ppl1 t ft p ing y & income gross profit from construction and mining operations dividends gain on sale or liquidation of land and investments gain on sale of property and equipment . other expenses general and administrative expense interest net income before provision for federal income taxes . . provision for federal income taxes net income for the year .' . . . . the above summary of income includes provisions for depreciation and depletion aggregating 2,153,939 $ 3,107,021 1,503,804 1,036,214 . 2,618,083 . 595,515 summary of retained earnings balance october 31 1955 add-net income for the year deduct dividends on capital stock paid in securities at cost market value 1,259,266 , balance october 31 1956 13,244,925 restricted under bank loan agreement 17,008,038 2,422,472