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 September 30, 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 October 31,
1996.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
ASSETS 1996 1995
Current assets
Cash and cash equivalents $ 3,891,350 $ 4,447,810
Accounts receivable and accrued billings 2,890,839 1,538,039
Current portion of notes receivable (Note 2) 213,266 191,438
Inventories (Note 3) 219,526 165,608
Costs and estimated earnings in excess of
billings on uncompleted contracts 420,257 639,186
Prepaid expenses and other current assets 45,434 162,470
Total current assets 7,680,672 7,144,551
Properties, net 4,602,588 4,355,900
Notes receivable, less current portion (Note 2) 652,500 810,000
Deferred charges and other assets
Deferred income taxes (Note 4) 860,000 860,000
Repurchased royalties at cost, net 141,252 160,810
Cash surrender value of life insurance 550,277 515,499
Total deferred charges and other assets 1,551,529 1,536,309
Total assets $14,487,289 $13,846,760
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 1,444,200 $ 819,847
Billings in excess of costs and estimated
earnings on uncompleted contracts 188,146 35,151
Current portion of long-term obligation (Note 5) 20,000 --
Current portion of deferred gain (Note 2) 48,720 48,720
Total current liabilities 1,701,066 903,718
Long-term obligation, less current
portion (Note 5) 280,000 --
Deferred gain on installment sale, less
current portion (Note 2) 113,680 138,040
Total liabilities 2,094,746 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) (8,985,215) (8,572,756)
Total 12,411,263 12,823,722
Less common stock in treasury,
17,358 shares, at cost 18,720 18,720
Total stockholders' equity 12,392,543 12,805,002
Total liabilities and stockholders' equity $14,487,289 $13,846,760
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenue
Electrical construction $3,695,739 $3,398,695 $8,745,285 $7,751,370
Mining 437,882 501,663 1,174,214 1,403,550
Royalty income -- 39,501 -- 113,580
Other income, net 114,792 160,685 302,978 435,308
Total revenue 4,248,413 4,100,544 10,222,477 9,703,808
Costs and expenses
Electrical construction 3,062,825 3,552,692 8,047,964 7,613,880
Mining 392,457 419,105 1,063,970 1,269,798
Depreciation 235,810 228,405 685,480 623,993
Amortization of repurchased
royalties 6,519 6,519 19,558 19,558
General and administrative 227,180 245,043 800,145 794,701
Total costs and expenses 3,924,791 4,451,764 10,617,117 10,321,930
Income (loss) from operations
before income taxes 323,622 (351,220) (394,640) (618,122)
Income taxes (Note 4) -- 18,000 -- 62,000
Net income (loss) 323,622 (369,220) (394,640) (680,122)
Preferred stock dividends 5,940 5,940 17,819 17,819
Earnings (loss) available
to common stockholders $317,682 $(375,160) $(412,459) $(697,941)
Earnings (loss) per share
of common stock (Note 6) $ 0.01 $(0.01) $(0.02) $(0.03)
Weighted average number
of shares outstanding 26,854,748 26,854,748 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 Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Cash flows from operating
activities
Net income (loss) $ 323,622 $(369,220) $(394,640) $(680,122)
Adjustments to reconcile net
income (loss) to net cash
provided from (used by)
operating activities
Depreciation and amortization 242,329 234,924 705,038 643,551
Deferred income taxes -- 18,000 -- 62,000
Deferred gain on sale of
subsidiary (10,150) (12,180) (24,360) (36,540)
Loss (gain) on sale of property
and equipment (23,923) (35,059) (26,614) (70,640)
Decrease (increase) in accounts
receivable and accrued
billings (1,452,139) 414,007 (1,352,800) (49,114)
Decrease (increase) in inventories (11,457) 43,208 (53,918) (8,385)
Decrease (increase) in costs and
estimated earnings in excess of
billings on uncompleted contracts 492,346 140,732 218,929 (56,487)
Decrease (increase) in prepaid
expenses and other current assets 65,959 (80,709) 117,036 (5,854)
Increase in cash surrender value
of life insurance (30,077) (44,431) (34,778) (44,853)
Increase (decrease) in accounts
payable and accrued liabilities 693,486 (233,823) 624,353 532,049
Increase in billings in excess of
costs and estimated earnings on
uncompleted contracts 186,157 192,086 152,995 168,552
Total adjustments 152,531 636,755 325,881 1,134,279
Net cash provided from
(used by) operating
activities 476,153 267,535 (68,759) 454,157
Cash flows from investing activities
Proceeds from the disposal of
fixed assets 35,093 46,077 43,101 82,070
Payments made to grant loans (30,000) -- (60,726) (300,000)
Collections from notes receivable 42,475 67,140 196,398 168,102
Purchases of fixed assets (185,013) (445,468) (475,517) (900,796)
Payments made to acquire fixed
assets of Fiber Optic Services -- -- (173,138) --
Net cash used by
investing activities (137,445) (332,251) (469,882) (950,624)
Cash flows from financing activities
Payments of preferred
stock dividends (5,940) (5,940) (17,819) (17,819)
Net cash used by financing
activities (5,940) (5,940) (17,819) (17,819)
Net increase (decrease) in
cash and cash equivalents 332,768 (70,656) (556,460) (514,286)
Cash and cash equivalents at
beginning of period 3,558,582 5,431,908 4,447,810 5,875,538
Cash and cash equivalents
at end of period $3,891,350 $5,361,252 $3,891,350 $5,361,252
Interest paid $-- $-- $-- $--
Taxes paid -- -- -- --
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 September 30,
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 nine months ended September 30, 1996 and 1995, $24,360 and
$36,540, 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:
September 30, December 31,
1996 1995
Materials and supplies $131,878 $111,856
Industrial mineral products 61,979 46,838
Ores in process 25,669 6,914
Total inventories $219,526 $165,608
Note 4 - Income Taxes
The income tax provision (benefit) consists of the following:
Three Months Three Months
Ended September 30, Ended September 30,
1996 1995
Current
Federal $ -- $ --
State -- --
-- --
Deferred
Federal -- 15,000
State -- 3,000
Total $ -- $18,000
Nine Months Nine Months
Ended September 30, Ended September 30,
1996 1995
Current
Federal $ -- $ --
State -- --
-- --
Deferred
Federal -- 52,000
State -- 10,000
Total $ -- $62,000
The deferred income tax benefit as of September 30, 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 September 30, 1996 and
December 31, 1995 are as follows:
September 30, December 31,
1996 1995
Deferred tax assets
Depletion, mineral rights
and deferred development
and exploration cost $ 324,000 $ 325,000
Accrued workers' compensation
costs 66,000 99,000
Accrued vacation and bonus 27,000 15,000
Property and equipment,
principally due to differences
in depreciation and valuation
write-downs 363,000 389,000
Net operating loss carryforwards 2,870,000 2,685,000
Investment tax credit
carryforwards 264,000 295,000
Alternative minimum tax
credit carryforwards 256,000 256,000
4,170,000 4,064,000
Valuation allowance (3,310,000) (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
$106,000 and $235,000 for the nine months ended September 30, 1996
and 1995, respectively.
At September 30, 1996, the Company had tax net operating loss
carryforwards of approximately $7,500,000 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 were allocated to
the fixed assets acquired based upon their estimated fair market
values. Proforma effects of this acquisition for the nine months
ended September 30, 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 $17,819 in each of
the nine month periods ended September 30, 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 nine month periods ended September 30, 1996 and
1995. The 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 - Nine Months Ended September 30, 1996
Compared to Nine Months Ended September 30, 1995.
Net Income (Loss)
The Company incurred a net loss of $394,640 for the nine months
ended September 30, 1996, compared to a net loss of $680,122 for the
nine months ended September 30, 1995. The smaller net loss in the 1996
period primarily resulted from generally improved profit margins on
electrical construction.
Revenues
Total revenues for the nine months ended September 30, 1996 were
$10,222,477, compared to $9,703,808 in the like 1995 period. The
increase in revenues was attributable to electrical construction
operations.
Electrical construction revenue increased by 13% in the nine months
ended September 30, 1996 to $8,745,285 from $7,751,370 for the nine
months ended September 30, 1995. The increase in electrical
construction revenue was primarily due to revenue from the newly
acquired subsidiary, Fiber Optic Services, which was $633,460 for
the nine months ended September 30, 1996.
Revenue from mining operations for the nine months ended September
30, 1996 decreased by 16% to $1,174,214 from $1,403,550 for the like
period in 1995. Mining revenue decreased primarily as a result of
the change in the needs of one customer which accounted for
approximately 56% of zeolite sales for the nine months ended
September 30, 1995, as compared to only 5% to the same customer for
the nine months ended September 30, 1996. During 1996, the Company
succeeded in establishing relations with new customers replacing a
significant portion of these lost sales.
Operating Results
Electrical construction operations had an operating profit of
$253,791 during the nine months ended September 30, 1996, compared
to an operating loss of $246,158 for the nine months ended September
30, 1995. Improvement in operating results for the 1996 period was
due to generally improved profit margins which more than offset the
loss incurred on a single construction project completed in July
1996. The varying magnitude and duration of electrical
construction projects may result in substantial fluctuation in the
Company's backlog from time to time. At September 30, 1996, the
approximate value of uncompleted contracts was $800,000, compared
to $3,480,000 at February 14, 1996 and $3,240,000 at September 30,
1995.
During the nine months ended September 30, 1996, the operating loss
from mining operations was $120,764, compared to an operating profit
of $25,679 during the nine months ended September 30, 1995.
Operating profit(loss) includes royalty income and depreciation
expense. The decrease in operating results from mining operations
in the nine months ended September 30, 1996 was primarily due to the
decrease in royalty income. There was no royalty income recognized
during the nine months ended September 30, 1996, compared to
$113,580 during the nine months ended September 30, 1995. During
1995, the lessee suspended mining operations at Harlan Fuel Company
and the Company is, therefore, currently entitled to receive only
the annual minimum royalties of $150,000. Such annual minimum
royalties are payable January 31st of the year following and will be
recognized when realization of the income is assured.
The St. Cloud Mining Company, a wholly-owned subsidiary of the
Company ("St. Cloud"), sold 11,014 tons of natural zeolite during
the nine months ended September 30, 1996, compared to 16,222 tons
during the nine months ended September 30, 1995.
In the nine months ended September 30, 1996, St. Cloud sold 2,026
tons of construction aggregate, compared to 12,353 tons sold during
the nine months ended September 30, 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 nine months ended September 30, 1996, The Lordsburg
Mining Company, a wholly-owned subsidiary of the Company
("Lordsburg"), sold 15,190 tons of barren, siliceous flux to copper
smelters, compared to 12,187 tons sold during the nine months ended
September 30, 1995. Lordsburg also sold 13,685 tons of construction
aggregate material during the nine months ended September 30, 1996,
compared to 11,873 tons sold during the nine months ended September
30, 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 nine months ended September 30, 1996 was
$302,978, compared to $435,308 for the nine months ended September
30, 1995. The decrease was primarily attributable to decreased
interest income.
Costs and Expenses
Electrical construction costs were $8,047,964 and $7,613,880 for the
nine months ended September 30, 1996 and September 30, 1995,
respectively. The increase in cost was attributable to the higher
level of operations.
Depreciation and amortization was $705,038 in the nine months ended
September 30, 1996, compared to $643,551 in the nine months ended
September 30, 1995.
General corporate expenses of the Company were $830,645 in the nine
months ended September 30, 1996, compared to $832,951 in the nine
months ended September 30, 1995.
Results of Operations - Three Months Ended September 30, 1996
Compared to Three Months Ended September 30, 1995.
Net Income (Loss)
The Company earned a net income of $323,622 for the three months
ended September 30, 1996, compared to a net loss of $369,220 for the
three months ended September 30, 1995. The improvement in the 1996
period primarily resulted from increased profit margins in
electrical construction.
Revenues
Total revenues for the three months ended September 30, 1996 were
$4,248,413, compared to $4,100,544 in the like 1995 period. The
increase in revenues was attributable to electrical construction
operations.
Electrical construction revenue increased by 9% in the three months
ended September 30, 1996 to $3,695,739 from $3,398,695 for the three
months ended September 30, 1995. Revenue from the newly acquired
subsidiary, Fiber Optic Services, was $263,951 for the three months
ended September 30, 1996.
Revenue from mining operations for the three months ended September
30, 1996 decreased by 13% to $437,882 from $501,663 for the third
quarter of 1995. Mining revenue decreased as a result of the change
in the needs of one customer which accounted for approximately 49%
of zeolite sales for the quarter ended September 30, 1995, compared
to no sales to this customer in the quarter ended September 30,
1996.
Operating Results
Electrical construction operations had an operating profit of
$476,775 during the three months ended September 30, 1996, compared
to an operating loss of $302,081 for the three months ended
September 30, 1995. The improvement in the 1996 period primarily
resulted from increased profit margins in electrical construction.
During the three months ended September 30, 1996, the operating loss
from mining operations was $29,465, compared to an operating profit
of $47,969 during the three months ended September 30, 1995.
Operating profit(loss) includes royalty income and depreciation
expense. The decrease in operating results from mining operations
in the third quarter of 1996 was primarily due to the decrease in
royalty income and aggregate material sales. There was no royalty
income recognized during the third quarter of 1996 compared to
$39,501 in the third quarter of 1995.
St. Cloud sold 3,815 tons of natural zeolite in the third quarter of
1996, compared to 4,843 tons in the third quarter of 1995.
In the three months ended September 30, 1996, St. Cloud sold 26 tons
of construction aggregate, compared to 12,353 tons of construction
aggregate sold in the three months ended September 30, 1995.
During the three months ended September 30, 1996 Lordsburg sold
8,095 tons of barren, siliceous flux to copper smelters, compared to
7,477 tons sold during the three months ended September 30, 1995.
Lordsburg also sold 3,426 tons of construction aggregate material
during the three months ended September 30, 1996, compared to 44
tons sold during the three months ended September 30, 1995.
Other Income
Other income for the three months ended September 30, 1996 was
$114,792, compared to $160,685 for the three months ended September
30, 1995. The decrease was primarily due to a decrease in interest
income.
Costs and Expenses
Electrical construction costs were $3,062,825 and $3,552,692 for the
three months ended September 30, 1996 and September 30, 1995,
respectively.
Depreciation and amortization was $242,329 in the three months ended
September 30, 1996, compared to $234,924 in the three months ended
September 30, 1995.
General corporate expenses of the Company were $238,480 in the three
months ended September 30, 1996, compared to $257,793 in the three
months ended September 30, 1995.
Liquidity and Capital Resources
Cash and cash equivalents as of September 30, 1996 were $3,891,350
compared to $4,447,810 as of December 31, 1995 and $5,361,252 at
September 30, 1995. Working capital at September 30, 1996 was
$5,979,606, compared to $6,240,833 at December 31, 1995 and
$6,382,881 at September 30, 1995. The Company's ratio of current
assets to current liabilities was 4.5 to 1 at September 30, 1996,
compared to 7.9 to 1 at December 31, 1995 and 5.4 to 1 at September
30, 1995.
The Company paid cash dividends on its Series A Preferred Stock in
the amount of $17,819 in each of the nine months ended September 30,
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 nine months ended September 30, 1996 and 1995.
The Company's capital expenditures for the nine months ended
September 30, 1996 were $948,655, compared to $900,796 for the nine
months ended September 30, 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 third
quarter ended September 30, 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: November 7, 1996 /s/ John H. Sottile
(John H. Sottile)
President and Chief
Executive Officer
Date: November 7, 1996 /s/ Stephen R. Wherry
(Stephen R. Wherry, C.P.A.)
Vice President, Treasurer
and Chief Financial Officer