to our shareholders in 1973 utah international inc achieved record earnings declared a 100 stock dividend raised its cash dividend and ended the year with shareholders equity and the mineral sales backlog at all time highs new sales agreements were entered into that could add significantly to the level of future earnings 1973 earnings record 1973 marked the tenth consecutive year of improved profitability for the company 1973 net income of 52,050,000 was 30.6 above the 39,842,000 earned in the prior year and more than seven times the 7,085,000 recorded in 1963 in each of the last nine years net income has achieved a new historical high on a fully diluted basis 1973 earnings were 1.80 a share compared with 1.38 a share realized in 1972 the earnings results reported for 1973 include a charge of approximately 7 million which was added to the general reserve for future costs this provision was deemed prudent as a protection against the possibility of a decline in the value of certain real estate investments whose potential profitability has been affected by difficulties in obtaining realistic zoning and other necessary approvals dividends during the year the stock was split two for one in the form of a 100 stock dividend cash dividends of 451/2 cents a share were paid on the increased number of shares outstanding this was the maximum amount that the company was permitted to pay under government guidelines and compares with 44 cents a share paid in 1972 dividend payments have increased every year for the past 23 years performance of individual profit centers although earnings for the year were up sharply over the prior year the contribu tion by individual profit centers varied higher earnings resulted primarily from major gains from coking coal and copper while lower profitability was reported by uranium real estate activities and peruvian iron ore results from australian and domestic iron ore steam coal and ocean shipping were not significantly changed in australia increased production and higher price realizations for coking coal caused utah development company's profits to move sharply upward in 1973 although not yet at full capacity the peak downs coking coal mine completed its first full year of operations and this additional production supplemented in creased shipments from both the black water and goonyella mines in addition to the normal price adjustments provided for under the escalation provisions of the coking coal contracts prices for deliveries to japanese buyers under existing long term contracts were raised in july 1973 providing approximately 10 million of additional revenue annually a second round of similar price adjustments became effective january 1 1974 and will provide a further revenue increment of approxi mately 6 million per year copper earnings were also up sharply as a result of increased production and higher price realizations pima mining company's contribution to utah's profits was greater primarily because of higher prices and earnings would have been higher were it not for controls on domestic metal prices shipments of copper con centrates from the island copper project in british columbia climbed sharply as the mine and mil achieved design capacity complementing this higher out put london metal exchange copper quotations which serve as the basis for pricing island copper deliveries rose dramatically during the second and third quarters and remained at high levels for the balance of the year despite higher iron ore shipments from its operations in western australia the earnings of mount goldsworthy were not changed significantly as a price adjustment on japanese sales negotiated in recognition of the decline in the value of the u.s dollar did not become effective until the last half of the year uranium production at the lucky me and shirley basin mines in wyoming was relatively unchanged from a year earlier however rescheduling of substantial shipments into 1974 and 1975 will defer profit realization on the unshipped portion of the production until these later years this circumstance in combination with higher operating costs at both mines par ticularly at shirley basin where physical production problems persist caused the profit contribution from uranium to decline considerably marcona's contribution to utah's 1973 profits also declined during the year higher shipping costs labor disturbances and unreasonable wage settlements imposed by the peruvian government caused iron ore operations in peru to be conducted at a loss marcona's earnings from ocean shipping were depressed early in the year because of the low level of charter rates prevailing in 1972 and early 1973 the charter market strengthened during the year and marcona's shipping profits gained momentum in later months real estate activities were conducted at a loss in 1973 primarily because the company has been frustrated in its efforts to develop its major real estate investment as originally planned an initiative mea sure passed by the electorate of the city of alameda has required extensive modi fication of our plans for harbor bay isle a real estate development in the san francisco area further we have not yet been able to obtain approval for revised zoning on a satisfactory basis as the proposed development is caught between governmental agencies with conflicting views and contrary objectives the eco nomic impact of actions yet to be taken in response to these circumstances can not be reasonably estimated and it is for this reason that utah elected to estab lish a reserve in 1973 as a contingency against potential declines in the value of real estate assets future mineral sales at the close of the year the mineral sales backlog was recorded at 3.32 billion reflecting the undelivered portion of sales made under long-term mineral sales contracts this figure does not include utah's share of the mineral sales backlog of either marcona or pima nor does it include sales that may be made under two new long-term coal agreements entered into during 1973 in february 1973 utah signed an 875 million contract to provide the coal necessary to operate a coal gasification plant to be owned and operated by sub sidiaries of pacific lighting corporation and texas eastern transmission corpora tion the plant will be located in northwest new mexico and will be supplied with coal provided by utah's navajo mine under a 25-year contract with escalation protection against future cost increases utah hopes to provide coal and water to supply four such plants and the agreement with the buyers gives them the right to acquire coal and water for the four plants if certain conditions are met although we expect this project to proceed we will not include the contract in our backlog figures until we are confident that the necessary negotiations for a plant site lease can be satisfactorily concluded and that approval by the necessary govern ment authorities is forthcoming 1964m965 i960 m 967 ' 1968 1969 1970 i 1971 1 1972 1 1973 sl sales backlog — 53,322 million ore — 190 m illon -— u.o tiflg million