utah construction & mining co and subsidiaries statement of consolidated income lor ihe years ended october 31 1964 and 1963 income gross revenues from operations note 4 59,890,248 costs and expenses 50,569,194 gross profit from operations $ 9,321,054 equity in net income of — affiliates note 1 ) 4,327,538 joint ventures proportionate share of gross revenue was approximately 42,000,000 for 1964 and 35,000,000 for 1963 note 4 1,555,303 gain loss on sale of property 1 57,347 interest '. 404,802 other income expense 376,162 15,389,882 expenses general and administrative $ 3,741,101 employees retirement plan provision 604,000 interest 2,152,819 net income before income taxes $ 8,891,962 provision for income taxes 1,600,000 net income $ 7,291,962 statement of consolidated earned surplus for the years ended october 31 , 1964 and 1963 balance beginning of year add net income deduct cash dividends 95 per share in 1964 and 90 per share in 1963 balance end of year including equity in undistributed earnings of affiliates notes i and 3 the accompanying notes are an integral part of these statements 77,755,638 70,887,378 $ 6,868,260 4,266,699 2,729,010 610,153 520,024 257,945 14,736,201 $ 3,867,913 385,000 2,321,388 $ 6,497,920 $ 6,574,301 " ~ $ 8,161,900 1,077,000 $ 7,084,900 55,010,571 51,798,979 7,291,962 7,084,900 62,302,533 58,883,879 4,085,366 3,873,308 58,217,167 55,010,571 notes to consolidated financial statements october 31 1964 1 the consolidated financial statements include the accounts of utah construction & mining co and all subsidiary companies after elimination of significant intercompany items and transactions in addition the statements reflect utah's equity in the net earnings of affiliated companies in which utah does not have a majority interest estimated income taxes payable on such earnings when distributed have been provided in the accompanying financial statements the composition of utah's investment in affiliated companies is shown below : 1964 1963 equity in undistributed earnings of affiliates — included in earned surplus 24,950,888 21,833,596 included in liability for deferred income taxes payable upon distribution of earnings 5,819,438 5,190,469 cost of investments noncurrent advances 30,770,326 27,024,065 . 2,722,454 1,760,405 200,500 374,100 33,693,280 29,158,570 2 the company and its consolidated subsidiaries have entered into various agreements for the acquisition of land to be developed and sold among other things these agreements generally provide that the related obligations will mature only as the company chooses to develop individual units or parcels further such obligations amount ing to 5,246,243 at october 31 1964 and 6,764,108 at october 31 1963 are secured only by the related land and do not represent claims against other corporate assets 3 the company's long-term loan agreements contain certain restrictive provisions including a limitation on the payment of cash dividends and on the purchase or redemption of its outstanding capital stock consolidated earned surplus in the amount of 10,281,936 was free of such restriction at october 31 1964 4 major construction contracts may extend over a period of years accordingly the company reports income from its conslruction con tracts on a percentage-of-completion basis the company's share of income from joint venture construction contracts is reported in the same manner based upon reports submitted by the respective joint ventures proceeds from claims against owners or price adjustments arising out of construction contracts are recorded in the year such claims are resolved no significant items of this nature were recorded in 1964 or 1963 5 contingent liabilities include the usual liability of contractors for performance and completion of both company and joint venture contracts in addition the company was contingently liable at october 31 1964 for obligations of an affiliated company in the amount of 750,000 and for the guarantee of notes receivable of 415,000 sold to a bank the company has entered into a long-term lease agreement for equipment requiring payments of approximately 420,000 annu ally for a remaining period of 9 years 6 the accompanying statement of income includes provisions for depreciation and depletion of 6,060,582 in 1964 and 6,938,445 in 1963 7 the company is defendant to certain pending litigation arising out of the 1960 merger with lucky me uranium corporation manage ment and counsel are of the opinion that the company's position is correct and sound and the action is being vigorously defended accordingly no provision for such litigation has been made in the accompanying financial statements