basis of consolidation — the consolidated financial statements include the accounts of utah international inc and all subsidiary companies utah after elimination of significant inter company items and transactions the statements are appropriately restated to reflect the effect of mergers accounted for as poolings of interests in addition the statements include utah's equity in the earnings of affiliated companies in which utah does not have a majority interest the basis of recording the equity in these earnings is the affiliates most recent audited financial statements and their subsequent unaudited interim reports mining exploration and development costs — mining exploration costs are expensed until it is determined that the development of a mineral deposit is likely to be economically feasible after this determination is made all costs related to further development are capitalized and amortized over the lesser of ten years or the productive life of the property capitalized de velopment costs include financing costs of identifiable new borrowings associated with the development of new mining projects foreign currency translation — the accounts in foreign currencies are translated to u.s dollars based on appropriate rates of exchange assets and liabilities are translated at the exchange rates in effect at the respective year-ends except that property plant and equip ment and related depreciation depletion and amortization are translated at rates prevailing at the time of acquisition stockholders equity income and expense accounts other than de preciation depletion and amortization are translated at the exchange rates in effect when the transactions occurred exchange adjustments related to foreign borrowings used to finance the development of certain mining properties are deferred and amortized over the estimated lives of such mining operations other exchange adjustments are charged or credited to in come as realized income taxes — deferred income taxes are provided for timing differences in the reporting of certain income and expense items for financial statement and tax purposes no provision is made for permanent differences between financial statement and taxable income which are caused by deductions allowable for income tax purposes arising from oil and gas activities such as intangible drilling and development costs and statutory depletion utah defers the in vestment credit and amortizes it over the average lives of the related assets the investment credit had no significant effect upon the statement of consolidated income mining properties — mining properties are carried at cost and include expenditures which substantially increase the useful lives of existing assets on disposition of an asset its cost and related depreciation depletion or amortization are removed from the accounts and any gain or loss is recorded in income maintenance and repairs on major equipment and facilities are provided for principally over the useful lives of the assets minor maintenance and repairs and minor replacements are charged to operating costs and expenses as incurred mainte nance and repairs associated with the development of new mining projects are capitalized the cost of mining properties is depreciated depleted or amortized over the useful lives of the related assets by use of the unit-of-production straight-line or declining-balance methods oil and gas properties — oil and gas properties are accounted for by use of the full cost method under this method all costs associated with the acquisition exploration and devel opment of oil and gas properties both developed and undeveloped are capitalized not to exceed the fair value of the oil and gas reserves such capitalized costs all of which enter into the full cost pool as incurred are depleted by use of the unit-of-production method by applying the ratio of gross revenues from oil and gas properties in each period to estimated future gross revenues from proven reserves of all oil and gas properties estimated future gross revenues are adjusted periodically whenever significant changes occur in oil and gas prices or in proven reserves such revised future gross revenues are then used to calculate depletion for the current quarter and for future periods 1 poolings of interests on november 30 1973 march 29 1974 and october 31 1974 utah acquired ladd petroleum corporation ladd clarcan petroleum corporation clarcan and lvo corporation lvo respectively in mergers which were accounted for as poolings of interests and which resulted in the conversion of all of ladd's clarcan's and lvo's common stock into approximately 1,211,000 115,000 and 1,203,000 shares respectively of utah's common stock accordingly the accompanying consolidated financial statements have been restated to include the ac counts of ladd clarcan and lvo i the following is a reconciliation of gross revenues from operations net income and earn ings per share as previously reported for the year ended october 31 1973 with such items as restated : 1973 inthoi ept per share gross revenues net earnings income pershare as previously reported . ladd clarcan lvo as restated 315,645 5,895 1,223 9,596 332,359 52,050 1,729 724 2,381 55,436 1.81 02 03 01 1.77 the gross revenues from operations and net income of ladd clarcan and lvo from the be ginning of fiscal 1974 to the dates of the respective mergers had no significant effect on the statement of consolidated income for the year ended october 31 1974 lvo reported discontinued operations which were considered to be immaterial when con solidated with utah's operations accordingly all revenues and costs of such discontinued operations have been reclassified to other net in the statement of consolidated income 2 revenue a substantial portion of utah's gross revenues from operations results from sales of iron ore coal and copper concentrate to japanese and european companies under long-term sales 1974 sales to japanese and european companies amounted to about 67 coal and copper concentrate to japanese and european companies under long-term agreements in 1974 sales to japanese and european companies amounted to abou and 11 of gross revenues respectively at october 31 1974 approximately 91 of utah's mineral sales backlog totaling 4.85 billion was under long-term sales agreements which contain escalation clauses affording pro tection against future cost increases 3 affiliated companies the composition of utah's investment in affiliated companies at october 31 1974 was as follows in thousands equity in undistributed earnings of affiliates — according to marcona 1974 sales to japanese and european companies amounted to about 72 and 18 of its gross revenues respectively at october 31 1974 approximately 42 of the stockholders equity in marcona was represented by net assets located in peru in 1974 marcona mining company a wholly owned subsidiary of marcona experienced losses from its peruvian mining operations