accounting policies and notes to consolidated financial statements accounting policies basis of consolidation the consolidated financial statements include the accounts of utah internationa 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 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 state ments 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 deter mination is made all costs related to further development are capitalized capitalized de velopment costs include financing costs of identifiable new borrowings associated with the development of new mining projects 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 equipment and facilities and related depre ciation depletion and amortization are translated at rates prevailing at the time of acquisition stockholders equity income and expense accounts other than depreciation depletion and amortization are translated at the exchange rates in effect when the transactions occurred fluctuations in these exchange rates had no significant effect upon the accompanying con solidated financial statements 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 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 statements by use of the equity method — reported for tax purposes when earn ings 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 equipment and facilities equipment and facilities 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 repairs and minor replacements are charged to operating costs and expenses as incurred except for maintenance and repairs associated with the development of new mining projects which are capitalized the cost of equipment and facilities 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 notes to consolidated financial statements 1 revenue a substantial portion of utah's gross revenue from operations results from sales of iron ore coal and copper concentrate to japanese and european companies under long-term sales agreements in 1973 sales to japanese and european companies amounted to about 72 and 11 of gross revenue respectively approximately 85 of utah's mineral sales backlog which totals 3.32 billion at october 31 1973 is under long-term sales agreements which contain escalation clauses affording protection against future cost increases 2 affiliated companies the composition of utah's investment in affiliated companies at octo ber 31 1973 is as follows in thousands equity in undistributed earnings of affiliates — included in retained earnings $ 78,886 included in deferred income taxes 7,279 cost of investments ¦ below is a summary of the unaudited financial statements of marcona corporation marcona and pima mining company pima utah's most significant affiliates and of all affiliates com bined as of october 31 1973 in thousands marcona pima total 46 owned 25 owned affiliates 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 . according to marcona sales to japanese and european companies amounted to about 62 and 7 of its gross revenue respectively approximately 50 of the stockholders equity in marcona is represented by net assets located in peru in 1973 marcona mining company a wholly owned subsidiary of marcona corporation experienced losses from its peruvian mining operations 3 joint ventures and partnerships 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 1973 in thousands harbor bay total joint isle associates ventures and 50 owned partnerships current assets other assets . . . current liabilities . long-term liabilities net worth 4 long-term liabilities long-term liabilities at october 31 thousands unsecured — notes payable to banks 8.8 weighted average due in varying installments to 1980 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 . 71/2 guaranteed notes due march 15 1979 c 5 subordinated guaranteed debentures due september 15 1983 d less — current portion notes payable secured by related real estate due to 1987 net of current portion of 147 in 1973 and 446 in 1972 1973 and 1972 consisted of in 1973 1972