to our shareholders we are pleased to report that your com pany's earnings this year were the second highest of its history this result was accomplished despite the decline in the domestic steel industry reducing ore sales the increased costs and competition af fecting peruvian iron ore operations and the costly effects of three unusual work consolidated net income was 9,321 322 or 4.33 a share this compares with 9,774,151 or 4.54 a share in 1961 based on the shares outstanding at the end of 1962 the major portion of earnings continued to come from mining activities although these results are slight ly lower than in 1961 earnings from construction operations were also behind those for 1961 however the tempo of land development sales increased mark edly and profits from land activities sub stantially exceeded those of last year dividends in 1962 consisted of 1.75 a share plus a 2 stock dividend four regular quarterly dividends of 35 were paid plus an extra dividend of 35 a share in the fourth quarter total divi dends during 1961 amounted to 1.60 plus 2 in stock your company's financial condition was strengthened by the addition of 5,568,015 to consolidated net worth resulting in an increase from 57,756,269 in 1961 to 63,324,284 in 1962 con sequently book value increased from 26.84 a share in 1961 to 29.42 at the close of this fiscal year also net work ing capital increased to 13,910,223 from 10,415,752 a year ago the total term loan debt outstanding at year-end was 25,000,000 no additional long term financing arrangements were neces sary as existing sources of funds proved to be adequate earnings from iron ore operations were below those of last year the de pressed state of the domestic steel indus try contributed to this decline three fac tors combined to effect a reduction in earnings from international iron ore oper ations this year for the first time in its history marcona experienced labor work stoppages one for a week was based on specific issues while the other a three-week sympathy walkout was not related to issues at marcona the pro duction thus lost required overtime work to meet sales commitments higher costs also resulted from start-up operations of the new beneficiation facility compo nents a third factor was the increased competitive pressure on prices in the in ternational markets however earnings from uranium operations and copper ex ceeded those of the prior year so that in general our mining activities pro duced satisfactory results san juan carriers ltd our shipping affiliate commissioned a new ore-oil car rier in october of 70,000 dead-weight tons capacity two more such ships are scheduled for delivery one in decem ber 1962 and the other in august of 1963 the less efficient ss san juan trader was sold during the year thus san juan carriers fleet still consists of six ships at year-end but the capacity was increased by 55,000 dead-weight tons bringing the total to 250,000 tons the company's two mining affiliates marcona in peru and pima in arizona are in the final stages of their expansion programs at marcona the 50,000,000 program for beneficiation pelletizing and new shiploading facilities will be substan tially complete in 1963 pima's 4,000 000 program to double milling capacity and to make possible utilization of lower grade ore will be completed during 1963 although construction activities were profitable performance was below the record level of last year a contributing factor was an industry work stoppage lasting nearly two months in northern california the company's construction backlog is believed to be sound and in total is about 10 larger than last year's chief among the 30 projects completed last year were : atlas missile sites near salina kansas oakland inter national airport and karnafuli dam in east pakistan your company was awarded the round butte dam in ore gon and the oued nebaana dam in tu nisia and a joint venture in which your company is a major participant was suc cessful in obtaining the huge minuteman missile base project near cheyenne wy oming work continues on many other projects such as the impressive snowy mountain tunnel scheme in australia where utah's wholly-owned australian subsidiary is sponsoring a joint venture now digging 1 8 miles of tunnels to per mit the flow of water from one side of a mountain to the other the company's dredges operated prof itably during the year and at year-end they were fully employed the dredge alameda is in japan operating under a five-year agreement also a dredge simi lar to the alameda has been built in japan under the dredge plans sale agree ment concluded last year with japan in dustrial land development co ltd utah will have a stock interest in this company it was formed by some of the largest companies in japan for the pur pose of reclaiming land around tokyo bay domestic land development opera tions produced record gross profits no significant new land ventures were un dertaken as our efforts were concen trated on existing projects rewarding results were obtained from the moraga el segundo and torrance projects sev eral large sales having been made in or der to obtain control over the entire pauma valley project and remove possi ble obstacles to its future development the stock of the corporation owning the golf course and facilities has been pur chased a joint venture in which your com pany has a one-third interest was the successful tenderer and was given the right to evaluate and develop the mt goldsworthy iron ore deposits in western australia drilling and studies performed so far have been encouraging also the long-range navajo coal project is under way as stripping of overburden has be gun at the four corners mine in new mexico the company will deliver its first coal to arizona public service com pany at its new plant near the mine site early in 1963 after over 41 years of loyal and dis tinguished service with the company mr j m horrigan secretary and con troller retired mr a l reeves senior vice president assumed the additional duties of secretary and mr w d leon ard was appointed controller mr w s byrne was elected a vice president in charge of overseas construction activi ties the company continues its program of developing and marketing its minerals under long-term contracts this cou pled with a sound and increased con struction portfolio employment of our dredges and an inventory of strategically located land provides a sound basis for the future in view of this we are confi dent that the company can continue to make progress in the future particularly with the support and cooperation of its shareholders employees and board of directors sincerely marriners eccles chairman of the board e w llttlefleld president and general manager