to our shareholders your company's fiscal year 1964 was marked by an im provement in the combined earnings of its operating divisions and affiliated companies in spite of the conclusion of the largest single contract loss it has yet sustained consolidated net income for the 1964 fiscal year was 7,291,962 or 1.70 a share com pared with 7,084,900 or 1.65 a share last year dividends of 20 quarterly and a year-end extra of 15 were paid amounting to 95 a share compared to 90 in 1963 consolidated net worth now totals 69,640,203 an increase of 3,160,321 from last year and book value per share stands at 16.20 at year-end working capital totaled 1 1,969,907 in 1964 utah recorded improved earnings in its land and mining operations however a major loss on the round buttc hydroelectric project near madras oregon in addition to the loss sustained in 1963 reversed the results of an otherwise profit able year in construction adding to the loss on construction activities was an unprcdictably tight labor situation in new zea land which has seriously impeded progress at the manapouri tunnel project and may have a costly effect on this work until completion the impact of these projects has been softened by the profits from a number of successful jobs among these were the norad underground command headquarters facility near colorado springs colorado our dredging activities in california and ja pan and several hundred minuteman missile launching sites in stalled by our joint venture in wyoming utah's participating interest in the san luis unit of california's central valley recla mation project has also been rewarding the highlight of the company's overseas projects has been the success to date of the island bend stage of australia's snowy mountain scheme to divert the waters of the snowy river under the mountains into the murray river in southern new south wales we have re cently added to our schedule of new work the mt coffee hydro electric project a liberian venture in which utah is a major participant and a major expansion of marcona mining com pany's ore pcllctizing facilities at san nicolas peru california's growing population and mounting pressures for additional residential commercial and industrial space continued to benefit our land program and sales from the company's in ventory of real property made a substantial contribution to the year's earnings in addition to the liquidation of a large parcel of utah's bay farm island near alameda and the microwave facility in palo alto sales were made at our industrial parks and residential and commercial land holdings utah's land operations have now been expanded to administer an extensive program to meet the needs of retired citizens in a new senior citizens housing joint venture we have acquired property completed design and started construction on two retirement communities in california and are initiating similar programs in other u.s cities during 1964 the company's mining operations continued to generate the major part of our earnings and promise to pro duce even greater profits in future years the record pace of steel making both at home and abroad has been reflected in increased iron ore shipments from utah's domestic properties and from the peruvian mine of utah's affiliate marcona mining company this has resulted in an earnings gain for our domestic operations at cedar city utah where we supply ore to u.s steel at provo utah and also in an increased tonnage mined under contract for colorado fuel and iron corporation over the past years the increased demand for iron ore by foreign steel producers has also given rise to the development of new sources of ore supplies and thus to greater competition among the world's independent ore producers marcona however has enjoyed a continuing de mand for its ore and bencficiated products from its new pelletizing and processing facilities during the twelve months ended octo ber 3 1 , 1964 marcona produced 5,279,000 tons of iron ore prod ucts which were transported to steelmakers in japan europe and the united states by our sales and shipping affiliate cia san juan s.a pellet shipments comprised 12 of marcona's total output and the capacity of the present plant is largely committed under long-term sales contracts utah's share of marcona's earn ings after distribution taxes amounted to 1,555,9 10 a nominal gain over 1963 the company's 1,261,955 share of the consolidated earn ings of cia san juan s.a for the fiscal year after allowance for distribution taxes from marketing and shipping operations was slightly lower than the prior year we hope that the company's iron ore earnings will eventually be augmented by utah's share of interests in western australia's mount goldsworthy deposit and another developed property near dayton nevada the installation of mining and transportation facilities at each of these sites awaits the outcome of sales negotia tions which have been initiated with steel producers this year the company's contract to deliver uranium to the atomic energy commission was formally modified to enable it to participate in the aec's stretch-out program the new agreement calls for a reduction of deliveries through 1966 and caused a slight decrease in this year's uranium earnings but is advantageous in that it has assured utah of substantially in creased sales through 1970 at that future date your company will possess uranium reserves far in excess of the total amount utilized in its deliveries to the aec and will own one of the country's most efficient completely amortized processing mills benefiting from increased production and strengthened cop per prices the earnings of pima mining company increased 31 and utah's share after provision for income taxes was 702,233 the importance of your company's steam coal mine at the leasehold on the navajo reservation in new mexico was under scored this year not only by an increase in its annual production requirements but also by the completion of independent studies which indicate that coal will play a primary role as a fuel source for the near-term additional power requirements of the southwest with its 1965 production schedule at approximately 2l/i million tons this mine is already the country's eighth largest coal pro ducer however our contract with arizona public service com pany calls for the commitment of only about a third of our navajo coal reserves and if other utilities are attracted to this source of energy this operation should provide progressively larger earn ings for utah for many years into the future moreover our experience to date at navajo has given us good reason to be optimistic about the prospects for substantial coal reserves which the company controls in colorado and utah the growing significance of mining to utah is made apparent by the fact that the company's volume of forward sales of min erals is now expanded to nearly three times the size of our existing backlog of construction contracts utah's backlog of earning power has thus grown in dependability as well as size since our long-term contracts for the delivery of coal and iron ore arc covered by escalation clauses which provide some protection against costs beyond our control moreover the composition of the stream of earnings from utah's mining operations is also im proving because income from uranium sales contracts to the atomic energy commission and iron ore to heavy industry is now augmented by longer term forward coal sales contracts to the public utility industry we anticipate that the company's relationship with the public utility industry will grow in relative importance not only through the expansion of steam coal sales but also by the sales of uranium for nuclear power production in the years ahead to assure continued growth in the sources of utah's mining earnings utah's mineral development and geology crews have been actively engaged in field investigations and the development of mineral deposits in the western united states alaska canada australia and other foreign countries utah continues to be watchful for opportunities for growth in other areas where the company's skills can be put to use in related activities or interests in november 1963 the company acquired a 34 interest in development and resources corpora tion a new york firm providing consulting services on an inter national basis to assist nations with the development and utiliza tion of their natural resources in october 1964 the company suffered the loss of one of its most respected directors and long-time employees mr lester s corey who was associated with utah for 63 years and was presi dent of the company from 1940 until his retirement in 1954 mr corey was held in high esteem not only by those of us privileged to be associated with him in the company but by his many friends throughout the construction industry in his passing the company has lost a true friend and valued associate in december 1963 mr william e chamberlain was elected a vice president of the company he is executive assistant to the general manager of the company's construction division looking ahead we believe that the diversified operations which sustained the company's earning power during 1964 augur well for its future not only are we working toward an expansion of our stream of earnings from mining and a continuation of profitable operations from our real estate activities but we also have every reason to anticipate an earnings improvement in con struction these programs administered by an organization of experienced competent people give us pride in our accomplish ments to date and optimism for the prospects of the new year sincerely chairman of the board nd general manager