instruction & mining statements of income for the years ended october 31 1959 and 1958 gross revenue from operations . cost of gross revenue gross profit from operations dividends from subsidiaries and affiliates note 1 ) gains on sale or liquidation of investments . gains on sale of property and equipment other expenses : general and administrative expense . employees retirement plan provision interest net income before provision for federal income taxes provision for federal income taxes note 3 net income including in 1959 a reduction of 700,000 in federal income taxes provisions for depreciation and amortization included above total 2,008,183 for 1959 and 2,215,355 for 1958 statement of earned surplus for the year ended october 31 1959 balance october 31 1958 add — net income as described above deduct — cash dividends on capital stock — 1.25 per share balance october 31 1959 19,574,100 restricted under bank loan iment .... mying notes are an integral part of these statements 21,342,325 4,337,969 25,680,294 2,229,951 23,450,343 notes to financial statements 1 the company's equity in the undistributed earn ings of subsidiary and affiliated companies based on reports submitted by the companies some of which are unaudited ) amounted to approximately 2,850,000 for the fiscal year 1959 after allowance for estimated income taxes payable on such earnings when distrib uted the company's equity in the market value or underlying book value at october 31 1959 of its investments in subsidiary and affiliated companies was approximately 31,800,000 included in this amount was 16,829,209 representing the approxi mate market value of the company's investment in lucky me uranium corporation computed at 4,625 per share 2 the company was contingently liable at october 31 1959 for obligations of certain affiliated companies totaling approximately 4,534,000 the company has entered into a long-term lease agreement for equip ment requiring payments of approximately 420,000 annually for a remaining period of 14 years 3 federal income taxes in 1959 have been reduced by 700,000 as a result of joint venture losses recorded in prior years but not reported for tax purposes until the current year federal income taxes in future years may be reduced as a result of other joint venture losses recorded on the books prior to october 31 1959 but deductible for income tax purposes in subsequent years 4 certain amounts for the year 1958 have been re classified for purposes of comparison accountants report to the board of directors utah construction & mining co : we have examined the balance sheet of utah con struction & mining co a delaware corporation as of october 31 1959 and the related statements of income and earned surplus for the year then ended our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the account ing records and such other auditing procedures as we consid ered necessary in the circumstances in our opinion the accompanying balance sheet and state ments of income and earned surplus present fairly the finan cial position of utah construction & mining co as of october 31 1959 and the results of its operations for the year then ended and were prepared in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year san francisco california december 15 1959