OCR Text |
Show accounting policies and notes to consolidated financial statements accounting policies basis of consolidation the consolidated financial statements include the accounts of utah inter national inc and all subsidiary companies utah after elimination of significant inter-company items and transactions in addition the statements include utah's equity in the net income of affili ated 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 exploration and development costs 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 capitalized development costs in clude financing costs of identifiable new borrowings associated with the development of new mining projects currency translation the accounts in foreign currencies have been translated to u.s dollars at the exchange rates in effect at the respective year ends except for a equipment and facilities accounts which have been translated at the exchange rates in effect at the dates of acquisition and b stockholders equity income and expense accounts which have been translated at the exchange rates in effect when transactions occurred fluctuations in these exchange rates had no significant effect upon the accompanying consolidated financial statements income taxes deferred income taxes are provided for timing differences in the reporting of cer tain income and expense items for financial statement and tax purposes the primary causes of timing differences are development costs deferred and amortized in the financial statements — deducted currently for tax purposes and the earnings of affiliates reflected in the financial state ments by use of the equity method — reported for tax purposes when earnings distributions are received utah defers the investment 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 depreciation and amortization methods equipment and facilities costs are depreciated depleted or amortized over the estimated useful lives of the related assets by use of the unit-of-p reduction straight-line or declining-balance methods notes to consolidated financial statements 1 affiliated companies below is a summary of the unaudited financial statements of marcona corporation marcona and pima mining company pima utah's most signifcant affiliates and of all affiliates combined as of october 31 1972 in thousands current assets other assets current liabilities long-term liabilities stockholders equity revenue net income utah's recorded share of — stockholders equity net income for year after an exclusion for estimated taxes payable by marcona upon distribution of earnings by cer tain of its subsidiaries for which no reserve has been provided by marcona approximately 45 of the stockholders equity in marcona is represented by net assets located in peru in 1972 about 20 of marcona's net income was derived from its peruvian mining operations the composition of utah's investment in affiliated companies at october 31 1972 is as follows in thousands equity in undistributed earnings of affiliates — included in retained earnings $ 78,383 included in liability for deferred income taxes payable upon distribution of earnings . 7,239 $ 85,622 15,208 100,830 cost of investments 2 joint ventures and partnerships in 1 972 certain land and land improvement costs and related liabilities were transferred to harbor bay isle associates a general partnership the effect of this transaction upon the consolidated balance sheet was in thousands reduction of investment in real estate held for development and sale 27,336 reduction in related assessment liens 23,134 increase in investment in joint ventures and partnerships $ 4,202 utah has a 50 interest in the profit of this partnership according to the partnership agreement utah is entitled to receive a distribution of 5 miilion for its net contribution of land before any profit is distributed below is a summary of the unaudited balance sheets of harbor bay isle associates and of all joint ventures and partnerships combined as of october 31 1972 in thousands harbor bay total joint isle associates ventures and 50 owned partnerships current assets other assets $ 134 28,920 $ 9,665 30,214 current liabilities . . . long-term liabilities net worth 3 long-term liabilities long-term liabilities at october 31 1972 and 1971 thousands unsecured — notes payable to banks 7.0 weighted average due in varying installments to 1979 a notes payable to insurance company 7.6 due in varying installments from 1974 to 1988 8 guaranteed sinking fund debentures due march 15 1987 b 7v2 guaranteed notes due march 15 1979 c 5 subordinated guaranteed debentures due september 15 1983 d assessment liens purchase money obligations and notes payable on land purchases due in varying installments to 1987 e 4,463 216,569 2,162 218,731 182,483 23,977 206,460 fa interest rates on most notes change with eurodollar interbank rates or domestic prime rates and range from 1/t % to 1 % above such rates b subject to redemption through a sinking fund to which payments must be made beginning in 1977 debentures in addition to those redeemable through the sinking fund may be redeemed by payment of a premium beginning in 1979 c may be redeemed at the principal amount beginning in 1977 |