UTAH INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. Common Stock At October 31, 1975, 191,550 shares of common stock (182,980 at July 31, 1976) were reserved for future issuance to officers and key employees as restricted stock bonuses over an indefinite number of years. At such dates, no stock option plans, warrants or other claims for Utah stock were outstanding. The earnings and cash dividend per share amounts presented in the consolidated financial statements reflect the two-for-one stock split effected in the form of a stock dividend on May 7, 1973. 14. Foreign Operations and Mineral Sales Backlog A substantial portion of Utah's business is represented by operations located outside of the United States, as summarized below (in thousands): Year Ended Nine Months Ended _October 31, 1975_ _July 31, 1976_ Gross Revenues Gross Revenues from Total from Total Operations Assets Operations Assets United States................................. $107,086 $ 424,050(c) $ 95,006 $ 439,829(c) Canada.......................................... 82,220(a) 107,873 56,451(a) 114,686 Australia........................................ 496,952(b) 512,907 517,787(b) 574,764 Other............................................. - 806 - 1,546 - ---- $686,258 $1,045,636 $669,244 $1,130,825 (a) 98% at October 31, 1975 and 97% at July 31, 1976 to Japanese customers under long-term sales agreements. (b) 76% to Japanese and 23% to European customers under long-term sales agreements at October 31, 1975 (77% and 21%, respectively, at July 31, 1976). (c) Includes $81 million of Utah's investment in affiliates as of October 31, 1975 and $74 million as of July 31, 1976a substantial portion of the affiliates' assets are either located within the United States or are vessels not permanently situated in any one country. At October 31, 1975, approximately 94% of Utah's mineral sales backlog totaling $6.45 billion was under long-term sales agreements which contain escalation clauses affording protection against future cost increases (approximately 96% of $6.27 billion at July 31, 1976). 15. Profit Sharing and Pension Plans Utah's retirement program for salaried employees consists of the Profit Sharing Plan, the Stock Investment Plan and the Retirement Plan. The Retirement Plan is a pension program in which Utah is required to contribute sufficient funds each year to fully fund the liabilities of the plan. Annual contributions to the Profit Sharing Plan and the Stock Investment Plan are based upon a profit sharing formula. There are no unamortized past service costs with respect to the Retirement Plan. Certain domestic operations provide pension plans resulting from collective bargaining agreements, and two subsidiaries operating in foreign countries have established separate retirement plans. Fund assets of these plans at October 31, 1975 and at July 31, 1976 approximated vested benefits at such dates. The Employee Retirement Income Security Act of 1974 has not had a significant effect on Utah's retirement programs. F-42 UTAH INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. Bonus Plan Utah has adopted a cash bonus program and a restricted stock bonus plan as incentive compensation to its officers and key employees. Utah provides as an expense in the statement of consolidated income during each fiscal year the estimated amount to be paid in cash or restricted stock (based upon the fair market value at date of grant of the restricted stock to be issued) as bonuses. These provisions amounted to $863,000 for 1971, $1,100,000 for 1972, $1,354,000 for 1973, $1,848,000 for 1974, $2,116,000 for 1975 and $1,730,000 for the nine months ended July 31, 1976. For tax purposes, Utah is entitled to a deduction when the shares vest with the recipients at the fair market value at the date of vesting. Beginning with the fiscal year 1973, in compliance with APB Opinion No. 25, any additional tax benefit to Utah resulting from an increase in the value of the stock at the date vested when compared with the value at the date granted is recorded in paid-in capital. 17. Supplementary Income Statement Information Presented below is supplementary income statement information for the five years ended October 31, 1975 and the nine months ended July 31, 1976 (in thousands): Nine Months Year Ended October 31_ Ended July 31 1971 1972 1973 1974 1975 1975 1976 Repairs and maintenance................................... $ 8,924 $20,897 $36,773 $44,625 $64,438 $48,328 $73,227 Depreciation, depletion and amortization of property, plant and equipment....................... 14,115 28,998 36,097 37,876 48,687 35,170 46,913 Export duty.......................................................... 13,860 74,125 Taxes, other than income taxes........................... 4,306 5,871 6,853 7,730 11,363 8,522 12,600 Royalties.............................................................. 2,592 3,257 7,097 13,900 23,837 17,872 19,947 18. Proposed Merger with General Electric On December 15, 1975, Utah announced that the Boards of Directors of General Electric Company and Utah International Inc. had authorized the negotiation of a definitive merger agreement. The proposed merger is to be accomplished through a tax-free exchange of 1.3 shares of General Electric common stock for each share of Utah common stock outstanding. Consummation of the merger is subject to the negotiation of a mutually satisfactory merger agreement and to the approval by the Boards of Directors and stockholders of both companies. The merger is also subject to requisite governmental approvals. Since December 15, 1975, the merger has been approved by the Boards of Directors and a definitive agreement to merge the companies has been executed. See Note 19. 19. Subsequent Events In July 1976, as a major step in the development of the Norwich Park coking coal project, an 89.2%-owned subsidiary of Utah reached agreement in principle with its joint venture partner and two Australian companies to increase Australian participation by the sale of an interest in certain Queensland coal projects. If consummated, after considering the effect of minority interests in both the subsidiary and the joint venture, Utah's equity in such projects would decrease from about 76% to 68%. The implementation of the program is contingent upon a final decision to proceed with the Norwich Park project and the completion of necessary documentation. In June 1976, as an incentive to the development of the Norwich Park project, the State of Queensland Cabinet agreed to raise the export limitation on exports of coal from the areas leased by the joint venture. F-43