marriner s eccles e w littlefield to our shareholders your company's consolidated net income for the fiscal year 1963 was 7,084,900 or 1.65 a share compared with 9,321,322 or 2.17 on a comparable number of shares in 1962 the decline was the result of decreased mining and construction in come combined with the current costs of several actions which the company has taken to produce greater long-term profits quarterly dividends of i7vi a share after giving effect to the 2 for 1 stock split declared on march 15 1963 were paid for the first two quarters the dividend was raised to 20 for the third and fourth quarters an extra 15 dividend was paid at year end bringing the year's total cash dividends to 90 a share compared with 87vi last year consolidated net worth increased by 3,155,598 to 66,479,882 from 63,324,284 in 1962 this produced a corresponding increase in book value from 14.71 to 15.45 a share at year end working capital was 12,690,890 in its wyoming uranium operations the company elected to defer the de livery of a portion of the uranium ore concentrate originally scheduled to be sold to the atomic energy commission during 1963 this was done in anticipation of extending its present contract through 1970 under the new aec raw materials procurement policy in exchange for de ferring production of some concentrate through 1966 the term of the present agreement the company would contract to sell concentrates for two additional years at the present price to be followed by two years of sales at a reduced price the effect of this action would be not only to assure four additional years of con tinuous operations at the lucky me mill but to enhance considerably the outlook for total uranium profits over the full term of the extended contract this year's earnings from the iron ore operations at cedar city utah were be low those of the prior year however a significant new development at cedar city was the signing of a new ore sales con tract with united states steel the re vised contract provides for the utilization of nearly all of cedar city's known re serves the company's mining affiliate mar cona mining company in peru marked its first ten years of operation and the near completion of a 50 million expan sion program with the first delivery of processed iron ore from its new pelletizing plant the new facilities will make possi ble the utilization of marcona's primary reserves and enable the affiliate to supply premium grade iron ore products to a competitive world market san juan carriers ltd increased its fleet this year with the delivery of the s.s san juan prospector and the s.s san juan pathfinder these ships with the s.s san juan pioneer delivered in 1962 are the three largest combination ore-oil carriers in the world the design of such specialized vessels enables low cost ocean shipping and their use is assured by long-term ore delivery con tracts with japanese steel mills the initiation of coal raining operations at the navajo mine which will supply coal to arizona public service company for the generation of power was prob ably the company's most significant single development during 1963 the first two generating units each rated to produce 175,000 kw in the ari zona utility's four corners power plant were officially dedicated in june and are presently delivering power to the phoenix area construction is now underway on a third unit of 225,000 kw scheduled to be put on line by midyear 1964 the navajo mine produced and sold approximately one million tons in 1963 and it is antici pated that this production will be doubled during the coming year the earnings from this operation are protected by a long-term contract and have the growth potential of the state of arizona utah's construction activities ham pered by adverse operating conditions on two major projects produced lower profits than last year heavy floods and resultant washouts seriously delayed the early stages of work on the oued nebaana dam in tunisia and changed conditions at round butte dam in oregon have been a strain on this year's overall construction earn ings moreover intense competition for both domestic and overseas work con tinues throughout the industry while there has been substantial growth in the volume of work available this has been accompanied by even greater growth in the size and number of contractors and their combined capacity at the close of the year the company's construction backlog was 10 per cent lower than last year work was completed on a number of projects including the taum sauk hydroelectric project in mis souri and most of the expanded process ing facilities at marcona and pima as a partner in joint ventures utah was awarded the wells hydroelectric project in washington the san luis dam and san luis canal projects in california and will sponsor the construction of the manapouri tunnel for the government of new zealand due largely to the ex cellent results to date on the snowy mountain island bend project the com pany's australian operations are making satisfactory progress dredging operations returned a favor able profit this year and have a sizable backlog of work with the alameda in japan on a long-term lease and the fran ciscan employed in long beach follow ing the completion of a channel clearance project on the sacramento river satisfactory profits from the com pany's land development activities were achieved sales of residential acreage to homebuilders at the alameda and tor rance properties and commercial and industrial land parcels at moraga and south san francisco contributed strongly to the year's successful results the company is actively participating in an investigation of the mt golds worthy iron ore deposit in western aus tralia also metallurgical studies have shown the feasibility of producing iron ore pellets from an ore deposit on com pany-controlled lands located near day ton nevada and marketing efforts are currently underway for the sale of these products to japanese steel mills in keep ing with a continuing effort to strengthen and diversify the company's earning power utah also has under study a wide range of other projects early in the year mr joseph k allen was elected a vice president in the land development division mr allen joined utah 15 years ago and has been responsi ble for the company's industrial real estate development program since its in ception in 1955 he has also played a leading role in a wide range of other land development and related real estate ac tivities and was closely associated with the company's early efforts in the acqui sition of mineral resource properties with deep regret we must report the un timely death in september of mr george w.vaughan,whohad served thiscompany with great distinction as vice president since 1960 mr vaughan's presence will be greatly missed by all of those privileged to be associated with him the excellent progress made at utah's navajo coal mine and the improved long range outlook at cedar city lucky me marcona and san juan carriers is most encouraging with dependable income from diversified investments in land and minerals your company is enabled to maintain construction operations in the face of an overly competitive industry when construction industry conditions improve utah has the experience the capital and the organization to increase construction earnings as well with these present programs the efforts of its em ployees and the continued backing from its shareholders and board of directors your company looks confidently to the future sincerely marriner s eccles chairman of the board 6ujuvo.jjt e w littlefield j president and genera manager