utah construction & mining co and subsidiaries notes to consolidated financial statements october 31 1966 1 the consoljd&ted 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 include utah's equity in the net earnings of affiliated companies in which utah does not have a majority interest the equity in these earnings is recorded based upon the affiliates audited financial statements as of their most recent fiscal year-end and upon subsequent interim reports submitted by the respective companies 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 at october 3 1 1966 and 1965 is as follows total equity in undistributed earnings of affiliates less estimated income taxes payable upon distributio included in earned surplus cost of investments 1966 36,789,740 3,028,799 33,760,941 7,817,890 1965 31,838,387 2,599,109 29,239,278 3,224,322 on november 12 1965 marcona corporation was formed to hold all the outstanding capital slock of two affiliates marcona mining company and cia san juan s.a utah transferred its ownership in the capital stock of the latter two companies to marcona corporation in exchange for the same percentage of the capital stock of that company because of the reorganization certain taxes which will be payable upon distribution of the earn ings of marcona mining company and cia san juan s.a previously provided for by utah will now be paid by marcona corporation rather than utah certain classifications have been made in the statement of consolidated income for 1965 to reflect this change as a result the equity in net income of affiliates previously reported for 1965 has been reduced by 615,000 with a corresponding decrease of a like amount in the 1965 provision for income taxes these changes had no effect on net income for the year the accounts of foreign subsidiaries and affiliates have been translated to u s dollars at the exchange rates in effect as of october 31 1966 fluc tuations in these exchange rates during the year had no significant effect upon the accompanying consolidated financial statements 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 certain of these agreements generally provide that the related obligations will mature only as the company chooses to develop individ ual units or parcels further such obligations amounting to 3,698,394 at october 31 1966 and 3,437,407 at october 31 1965 are secured only by the related land in which the company has an investment of 2,914,712 and do not represent claims against other corporate assets 3 the company's long-term loan agreement contains restrictive provisi purchase or redemption of its outstanding capital stock and on advances amount of 9 1 00,000 was free of such restrictions at october 31,1 966 includin in limitations on the payment of cash dividends on the affiliated companies consolidated earned surplus in the 4 major construction contracts may extend c percentage-of-completion basis the company's share of it a period of years accordingly the company reports e fro g solved no significant items of this nature construction contracts on a ported in the same manner based upon ners or price adjustments arising out of conslruction contracts are ith respect to contracts completed in a prior ye ecorded i if both company and joint venture contracts ision and operating activities as of october agreement varies frc ent requiring pay met recorded in the year such clai 1966 or 1965 5 contingent liabilities include the usual liability of contractors for the performance and complet in addition the company plans to invest funds in certain mining ventures in connection with their ¦ 31 1966 the anticipated expenditures of this kind approximate 30 million the company has a lease agreement expiring in 1980 for the rental of its home office the annual base rental under this 190,000 for 1967 to 210,000 for the last five years of the lease the company also has a long-term lease agreement for equipi of approximately 420,000 annually for a remaining period of 7 years 6 u s and peruvian income tax deficiencies have been proposed against certain of the company's affiliates for the taxable years 1953 through 1962 the deficiencies are being contested by these affiliates and counsel has advised that there are substantial defenses against such deficiencies in the company's opinion any resulting tax liability of the affiliates would not have a material effect on the accompanying financial statements and no provision therefor has been made in connection with its review of the company's income tax returns for the fiscal years 1955 to 1963 inclusive the u s internal revenue service has proposed certain deficiencies in taxes counsel for the company has advised it that there are substantial defenses against the proposed deficiencies and they are presently being contested in the opinion of the company the ultimate liability for the deficiencies if any will not exceed the amounts reserved therefor the company is defendant to certain pending litigation arising out of the 1960 merger with lucky me uranium corporation management 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 30 utah construction & mining co and subsidiaries 10 year comparison consolidated years ended october 31 s and number of sharehol gross revenue net income before income taxes after income taxes per share after income taxes dividends paid cash stock of other companies . market value capital stock per share shares outstanding net of treasury shares number of shareholders . . total assets less applicable reserves working capita long-term debt stockholders equity net worth net worth per share 1961 1960 1959 1958 1957 $ 81,091 $ 69,179 $ 75,072 $ 62,081 $ 55,520 $ 12,651 $ 9,774 $ 2.27 $ 10,609 $ 9,135 $ 2.12 $ 10,416 ! $ 9,943 $ 10,456 $ 8,362 $ 1.94 $ 9,233 $ 30,440 $ 44,748 $ 10.40 $ 6,285 $ 4,758 $ 1.11 $ 6,879 $ 5,422 $ 1.26 100 $ 37 2,023 439 $ 81,401 $ 9,455 $ 26,854 $ 38,336 $ 8.93 2,023 438 $ 73,089 $ 10,517 $ 22,548 i shares outstanding in 1957 1958 and 1959 have been adjusted to give effect to 242,533 shares issued on february 1 1960 as a consequence of merger with lucky me uranium corporation per share amounts for all years have been calculated based upon shares outstanding on october 31 1966 giving effect to stock dividends of 2 paid in 1960 1961 and 1962 and 100 in 1957 and 1963 amounts for the years 1957 and 1958 are unaudited the amounts shown as net income before income taxes for the years 1957 through 1965 have been adjusted to give effect to the reorganization in 1966 of an affiliate as a result of the reorganization certain taxes payable upon distribution of the affiliate's earnings previously provided for by the company will now be paid by the affiliate this adjustment had no effect upon the net income after income taxes as reported 31