balance october 31 1959 add net income 9,134,687 after provision for federal income taxes 1,060,945 of which is applicable to income of affiliates earnings of affiliates realized by dividends or sale of investment after provision for federal income taxes of 183,201 deduct — dividends : cash stock 40,025 shares of capital stock valued at 48.50 per share paid as a 2 stock dividend balance october 31 1960 16,456,829 of earned surplus restricted under parent company bank loan agreement . . equity in earning of 29,104,179 10,041,894 $ 4,406,917 $ 4,727,770 1,561,568 1,561,568 $ 5,968,485 $ 3,166,202 $ 2,496,702 $ — $ 4,465,664 $ — 30,607,000 13,208,096 the accompanying notes n integral part of these statements notes to consolidated financial statements october 31 1960 the consolidated 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 reflect utah's equity in the earnings of affiliated companies in which utah does not have a majority interest estimated income taxes payable on such earnings when distributed have been provided in the accompanying financial state ments the equity in the earnings of these affiliates has been computed based upon the reports submitted by the respective companies some of which are unaudited the composition of utah's investment in affiliated con shown below : equity in undistributed earnings of affiliated con before allowance of 3,032,057 for taxes on distribution non-current advances ''.'.'.'.'.'.'. tober 31 i960 i 1,532,278 total in i on february 1 1960 lucky me uranium corporation previously a 60%-owned sub sidiary company was merged into utah prior to the merger date the remaining 40 interest was acquired through the issuance of 242,533 shares of utah's stock to lucky me minority shareholders on a one-for-ten basis this merger was considered a pooling of interests in which the company carried forward the net assets of lucky me at their book value after certain intercompany eliminations the statement of consolidated income for the years ended oc tober 31 1959 and 1960 includes the operations of lucky me for the respective periods prior to the merger date and the consolidated balance sheet at october 31 1959 has been restated to give retroactive effect to the merger transaction the increase in capital surplus in 1960 resulted from the capitalization of the excess of the value assigned to 40,025 shares of capital stock s48.5o per share over the par value 2.00 per share paid as a 2 stock dividend in the construction industry major contracts may extend over aperiod ofyears accordingly the company reports income from its construction contracts on a percentage-of completion basis reflecting in each accounting period the applicable portion of the total estimated profit on each contract the company's share of profits and losses from joint-venture construction contracts is reported in the same manner based upon reports submitted by the respective joint ventures some of which are unaudited revenues from claims against owners arising out of construction contracts are recorded in the year such claims are resolved the company was contingently liable at october 31 1960 for obligations of certain affiliated companies totaling approximately 52,000,000 in 1958 the company entered into a long-term lease agreement for equipment requiring payments of approximately 420,000 annually for a now remaining period of 1 3 years the provision for federal income taxes in 1959 was reduced by 700,000 as a result of joint-venture losses recorded in prior years but not reported for tax purposes until 1959 the accompanying statement of consolidated income includes the following charges for depreciation and depletion 196o 1959 4,549,513 included in depleti development costs as incurred while c tax payments has during the period n is 378,386 in in its federal in pitalizing them i een credited to 1960 and s436,779 in 1959 for amortization of mineral ome tax returns the company has deducted such costs i its accounts the resulting reduction in federal income eferred taxes and is being applied against taxes payable tamamk&jft