SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________________ to _______________
Commission file number - 1-7525
THE GOLDFIELD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 88-0031580
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 Rialto Place, Suite 500, Melbourne, Florida 32901
(Address of principal executive offices) (Zip Code)
(407) 724-1700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
There were 26,854,748 shares of common stock, par value $.10 per
share, of The Goldfield Corporation outstanding as of April 30,
1996.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1996 1995
ASSETS
Current assets
Cash and cash equivalents $ 4,070,392 $ 4,447,810
Accounts receivable and accrued billings 1,248,614 1,538,039
Current portion of notes receivable (Note 2) 172,343 191,438
Inventories (Note 3) 195,499 165,608
Costs and estimated earnings in excess of
billings on uncompleted contracts 958,999 639,186
Prepaid expenses and other current assets 185,680 162,470
Total current assets 6,831,527 7,144,551
Properties, net 4,798,387 4,355,900
Notes receivable, less current portion (Note 2) 830,000 810,000
Deferred charges and other assets
Deferred income taxes (Note 4) 860,000 860,000
Repurchased royalties at cost, net 154,291 160,810
Cash surrender value of life insurance 520,200 515,499
Total deferred charges and other assets 1,534,491 1,536,309
Total assets $13,994,405 $13,846,760
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 825,532 $ 819,847
Billings in excess of costs and estimated
earnings on uncompleted contracts 36,859 35,151
Current portion of long-term obligation (Note 5) 20,000 --
Current portion of deferred gain 44,660 48,720
Total current liabilities 927,051 903,718
Long-term obligation, less current portion
(Note 5) 280,000 --
Deferred gain on installment sale, less
current portion (Note 2) 138,040 138,040
Total liabilities 1,345,091 1,041,758
Stockholders' equity
Preferred stock, $1 par value per share,
5,000,000 shares authorized; issued
and outstanding 339,407 shares of
Series A 7% voting cumulative
convertible stock 339,407 339,407
Common stock, $.10 par value per share,
40,000,000 shares authorized; issued
26,872,106 shares 2,687,211 2,687,211
Capital surplus 18,369,860 18,369,860
Retained earnings (deficit) (8,728,444) (8,572,756)
Total 12,668,034 12,823,722
Less common stock in treasury, 17,358 shares,
at cost 18,720 18,720
Total stockholders' equity 12,649,314 12,805,002
Total liabilities and stockholders' equity $13,994,405 $13,846,760
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1996 1995
Revenue
Electrical construction $2,878,062 $1,604,989
Mining 347,986 467,335
Royalty income -- 34,067
Other income, net 99,770 116,105
Total revenue 3,325,818 2,222,496
Costs and expenses
Electrical construction 2,631,571 1,655,017
Mining 316,670 463,794
Depreciation 226,697 199,097
Amortization of repurchased royalties 6,519 6,519
General and administrative 294,110 267,431
Total costs and expenses 3,475,567 2,591,858
Loss from operations before income taxes (149,749) (369,362)
Income taxes (Note 4) -- 6,000
Net loss (149,749) (375,362)
Preferred stock dividends 5,939 5,939
Loss available to common
stockholders $ (155,688) $ (381,301)
Loss per share of common stock
(Note 6) $(0.01) $(0.01)
Weighted average number of shares
outstanding 26,854,748 26,854,748
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities
Net loss $(149,749) $(375,362)
Adjustments to reconcile net loss to net
cash provided from (used by) operating
activities
Depreciation and amortization 233,216 205,616
Deferred income taxes -- 6,000
Deferred gain on sale of subsidiary (4,060) (12,180)
Gain on sale of property and equipment (5,266) (150)
Decrease in accounts receivable
and accrued billings 289,425 420,827
Decrease (increase) in inventories (29,891) 22,968
Increase in costs and estimated
earnings in excess of billings on
uncompleted contracts (319,813) (315,579)
Decrease (increase) in prepaid expenses
and other current assets (23,210) 26,980
Increase in cash surrender
value of life insurance (4,701) (4,701)
Increase in accounts payable and
accrued liabilities 5,685 136,643
Increase (decrease) in billings in excess
of costs and estimated earnings
on uncompleted contracts 1,708 (83,628)
Total adjustments 143,093 402,796
Net cash provided from (used by)
operating activities (6,656) 27,434
Cash flows from investing activities
Proceeds from the disposal of fixed assets 6,308 150
Payments made to grant loans (20,000) --
Proceeds from notes receivable 19,095 47,961
Purchases of fixed assets (197,088) (274,141)
Payments made to acquire fixed assets
of Fiber Optic Services (173,138) --
Net cash used by investing activities (364,823) (226,030)
Cash flows from financing activities
Payments of preferred stock dividends (5,939) (5,939)
Net cash used by financing activities (5,939) (5,939)
Net increase (decrease) in cash and
cash equivalents (377,418) (204,535)
Cash and cash equivalents at beginning of period 4,447,810 5,875,538
Cash and cash equivalents at end of year $4,070,392 $5,671,003
Interest paid $-- $--
Taxes paid -- --
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Note 1 - Basis of Presentation
In the opinion of management, the accompanying unaudited interim
consolidated financial statements include all adjustments necessary
to present fairly the financial position of the Company, the results
of its operations and changes in cash flows for the interim periods
reported. These adjustments are of a normal recurring nature. All
financial statements presented herein are unaudited. However, the
balance sheet as of December 31, 1995, was derived from the audited
consolidated balance sheet. These statements should be read in
conjunction with the financial statements included in the Company's
annual report on Form 10-K for the year ended December 31, 1995.
The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected for
the fiscal year.
Note 2 - Sale of Mining Subsidiary
In April 1993, the capital stock of The San Pedro Mining Corporation
("San Pedro"), a then wholly-owned subsidiary of the Company was
sold for $1,220,000 of which $50,000 in cash was paid at closing
with the balance of the purchase price represented by a promissory
note payable to the Company in equal monthly principal installments
of $15,000 through January 2000, with the exception of six
installments being reduced to $7,500 payable February 1996 through
July 1996 as a result of an amendment dated April 3, 1996. The note
bears interest at the rate of prime plus 1% (9.25% at March 31,
1996) payable monthly and is secured by a first real estate mortgage
and personal property security agreement upon substantially all of
the assets of and a pledge of all of the outstanding capital stock
of San Pedro.
Since the purchaser's initial investment in the property amounted to
less than 20% of the sale price, the installment method of profit
recognition was used resulting in a deferred gain of $330,214. In
the three months ended March 31, 1996 and 1995, $4,060 and $12,180,
respectively, of such deferred gain was recognized as revenue. The
installment method recognizes proportionate amounts of the gain
associated with the transaction as cash is received.
The primary assets of San Pedro were represented by mining
properties with a net book value of $889,786 at the date of sale.
Note 3 - Inventories
Inventories are summarized as follows:
March 31, December 31,
1996 1995
Materials and supplies $111,479 $111,856
Industrial mineral products 52,977 46,838
Ores in process 31,043 6,914
Total inventories $195,499 $165,608
Note 4 - Income Taxes
The income tax provision (benefit) for the three months ended
March 31, 1996 and 1995 consists of the following:
1996 1995
Current
Federal $ -- $ --
State -- --
-- --
Deferred
Federal -- 5,000
State -- 1,000
Total $ -- $6,000
The deferred income tax benefit as of March 31, 1996 and 1995
represents the portion of deferred tax assets that the Company
estimates will ultimately be realized.
Temporary differences and carryforwards which give rise to
deferred tax assets and liabilities as of March 31, 1996 and
December 31, 1995 are as follows:
March 31, December 31,
1996 1995
Deferred tax assets
Depletion, mineral rights
and deferred development
and exploration cost $ 325,000 $ 325,000
Accrued workers' compensation
costs 92,000 99,000
Accrued vacation and bonus 22,000 15,000
Property and equipment,
principally due to differences
in depreciation and valuation
write-downs 381,000 389,000
Net operating loss carryforwards 2,740,000 2,685,000
Investment tax credit
carryforwards 264,000 295,000
Alternative minimum tax
credit carryforwards 256,000 256,000
4,080,000 4,064,000
Valuation allowance (3,220,000) (3,204,000)
Total net deferred tax assets 860,000 860,000
Deferred tax liabilities -- --
Net deferred tax assets $ 860,000 $ 860,000
The Company has recorded a valuation allowance in accordance with
the provisions of SFAS 109 to reflect the estimated amount of
deferred tax assets which may not be realized. In assessing the
realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary
differences become deductible. Management considers the projected
future taxable income and tax planning strategies in making this
assessment. The Company increased the valuation allowance for net
deferred tax assets by approximately $16,000 and $142,000 for the
quarters ended March 31, 1996 and 1995, respectively.
At March 31, 1996, the Company had tax net operating loss
carryforwards of approximately $7,200,000 available to offset future
regular taxable income, which if unused, will expire from 1999
through 2011.
Additionally, the Company has investment tax credit carryforwards of
approximately $264,000 available to reduce future Federal income
taxes, which if unused, will expire from 1997 through 2000. In
addition, the Company has alternative minimum tax credit
carryforwards of approximately $256,000 which are available to
reduce future Federal income taxes over an indefinite period.
Note 5 - Acquisition of Fiber Optic Services
In January 1996, the Company acquired the fixed assets of Fiber
Optic Services for payments of $173,138 and future payments equal to
2 1/2 times their average pre-tax earnings for the five years ended
December 31, 2000. The future payments have been estimated to be
$300,000 and have been recorded on the balance sheet of the Company
as a long-term obligation. This acquisition was accounted for as a
purchase. Accordingly, the initial payments and estimated amount of
additional payments based on earnings was allocated to the fixed
assets acquired based upon their estimated fair market values.
Proforma effects of this acquisition for the three months ended
March 31, 1995 are considered immaterial.
Fiber Optic Services is engaged in the construction of fiber optic
communication systems throughout the United States primarily for
electric utilities and communication companies.
Note 6 - Earnings (Loss) Per Share of Common Stock
Earnings (loss) per common share, after deducting dividend
requirements on the Company's Preferred Stock of $5,939 in each of
the three month periods ended March 31, 1996 and 1995 were based on
the weighted average number of shares of Common Stock outstanding,
excluding average shares of Treasury stock, of 17,358 for each of
the three month periods ended March 31, 1996 and 1995. The
inclusion of Common Stock issuable upon conversion of Preferred
Stock has not been included in the per share calculations because
such inclusion would not have a material effect on the earnings
(loss) per common share.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations - Three Months Ended March 31, 1996 Compared to
Three Months Ended March 31, 1995.
Net Income (Loss)
The Company incurred a net loss of $149,749 for the three months
ended March 31, 1996, compared to a net loss of $375,362 for the
three months ended March 31, 1995.
Revenues
Total revenues for the three months ended March 31, 1996 were
$3,325,818, compared to $2,222,496 in the like 1995 period. The
increase in revenues was attributable to electrical construction
operations.
Electrical construction revenue increased by 79% in the three months
ended March 31, 1996 to $2,878,062 from $1,604,989 for the three
months ended March 31, 1995. The increase in electrical construction
revenue was primarily due to a single contract in Alabama which
commenced during the third quarter of 1995. Revenue from the newly
acquired subsidiary, Fiber Optic Services, was $115,917 for the three
months ended March 31, 1996.
Revenue from mining operations for the three months ended March 31,
1996 decreased by 26% to $347,986 from $467,335 for the first quarter
of 1995. Mining revenue decreased as a result of the change in the
needs of one customer which accounted for approximately 54% of
zeolite sales for the quarter ended March 31, 1995.
Operating Results
Electrical construction operations had an operating profit of
$103,751 during the three months ended March 31, 1996, compared to an
operating loss of $169,778 for the three months ended March 31, 1995.
The increase in operating results has been primarily due to increased
gross margins from contract work. The varying magnitude and duration
of electrical construction projects may result in substantial
fluctuation in the Company's backlog from time to time. At March 31,
1996, the approximate value of uncompleted contracts was $2,780,000,
compared to $3,480,000 at February 14, 1996 and $5,775,000 at March
31, 1995.
During the three months ended March 31, 1996, the operating loss
from mining operations was $49,560, compared to an operating loss of
$35,508 during the three months ended March 31, 1995. Operating
profit(loss) includes royalty income and depreciation expense. The
decrease in operating results from mining operations in the first
quarter of 1996 were due to the decrease in royalty income. There was
no royalty income recognized during the first quarter of 1996
compared to $34,067 in the first quarter of 1995. During 1995, the
lessee suspended mining operations at Harlan Fuel Company and the
Company is, therefore, currently receiving only the annual minimum
royalties of $150,000.
The St. Cloud Mining Company, a wholly-owned subsidiary of the
Company ("St. Cloud"), sold 4,036 tons of natural zeolite in the
first quarter of 1996, compared to 6,272 tons in the first quarter of
1995.
Surface and underground mining of base and precious metals has been
halted at St. Cloud since the third quarter of 1991 and the first
quarter of 1992, respectively, due to declining prices and mine
grades. St. Cloud's viability is sensitive to the future price of
base and precious metals, particularly silver.
During the three months ended March 31, 1996, The Lordsburg Mining
Company, a wholly-owned subsidiary of the Company ("Lordsburg"),sold
2,116 tons of barren, siliceous flux to copper smelters, compared to
1,380 tons sold during the three months ended March 31, 1995.
Lordsburg also sold 3,229 tons of construction aggregate material
during the three months ended March 31, 1996, compared to 4,906 tons
sold during the three months ended March 31, 1995.
Production from underground mining at Lordsburg, which was suspended
in February 1994, had previously been intermittent due to low ore
grade and inconsistent smelter demand. The ore produced from the
mine was used by nearby copper smelters as precious metal bearing
siliceous flux. Future demand for underground ores cannot be
determined at this time.
Although the Company has continued limited production of construction
aggregates and siliceous flux at Lordsburg, a final decision with
respect to the future operations at Lordsburg has not been reached.
Other Income
Other income for the three months ended March 31, 1996 was $99,770,
compared to $116,105 for the three months ended March 31, 1995.
Costs and Expenses
Electrical construction costs were $2,631,571 and $1,655,017 for the
three months ended March 31, 1996 and March 31, 1995, respectively.
Depreciation and amortization was $233,216 in the three months ended
March 31, 1996, compared to $205,616 in the three months ended March
31, 1995.
General corporate expenses of the Company were $303,710 in the three
months ended March 31, 1996, compared to $280,181 in the three months
ended March 31, 1995.
Liquidity and Capital Resources
Cash and cash equivalents as of March 31, 1996 were $4,070,392
compared to $4,447,810 as of December 31, 1995. Working capital at
March 31, 1996 was $5,904,476, compared to $6,240,833 at December 31,
1995. The Company's ratio of current assets to current liabilities
was 7.4 to 1 at March 31, 1996, compared to 7.9 to 1 at December 31,
1995.
The Company paid cash dividends on its Series A Preferred Stock in
the amount of $5,939 in each of the three months ended March 31, 1996
and 1995. No cash dividends have been paid by the Company on its
Common Stock since 1933, and it is not expected that the Company will
pay any cash dividends on its Common Stock in the immediate future.
Pursuant to an unsecured line of credit agreement between Southeast
Power Corporation ("Southeast Power"), a wholly-owned subsidiary of
the Company, and SunTrust Bank, Central Florida, N.A. (guaranteed by
the Company), Southeast Power may borrow up to $1,000,000 at the
bank's prime rate of interest. This credit line expires April 30,
1997 at which time the Company expects to renew it for an additional
year. No borrowings were outstanding under this line of credit
during the three months ended March 31, 1996 and 1995.
The Company's capital expenditures for the three months ended March
31, 1996 were $670,226, compared to $274,141 for the three months
ended March 31, 1995. The capital expenditures for 1996 include the
acquisition of the fixed assets of Fiber Optic Services for $473,138
as described in Note 5 of Notes to Consolidated Financial Statements.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits in accordance with the provisions of Item 601 of
Regulation S-K
None.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed during the
quarter ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE GOLDFIELD CORPORATION
(Registrant)
Date: May 10, 1996 /s/ John H. Sottile
(John H. Sottile)
President and Chief
Executive Officer
Date: May 10, 1996 /s/ Stephen R. Wherry
(Stephen R. Wherry, C.P.A.)
Vice President, Treasurer
and Chief Financial Officer