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, 1997
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 15,
1997.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
ASSETS
Current assets
Cash and cash equivalents $ 3,979,104 $ 4,610,198
Accounts receivable and accrued billings 1,993,022 1,420,270
Current portion of notes receivable 45,491 39,771
Inventories (Note 2) 205,675 228,049
Costs and estimated earnings in excess
of billings on uncompleted contracts 880,549 600,302
Prepaid expenses and other current assets 210,671 63,794
Total current assets 7,314,512 6,962,384
Properties, net 4,059,094 4,187,288
Notes receivable, less current portion
(Note 3) 874,963 875,100
Deferred charges and other assets
Deferred income taxes (Note 4) 836,000 860,000
Repurchased royalty at cost, less
accumulated amortization of $191,237
in 1997 and $184,718 in 1996 128,213 134,732
Cash surrender value of life insurance 637,439 632,739
Total deferred charges and other assets 1,601,652 1,627,471
Total assets $13,850,221 $13,652,243
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 1,094,607 $ 954,366
Billings in excess of costs and estimated
earnings on uncompleted contracts 59,801 74,071
Total current liabilities 1,154,408 1,028,437
Deferred gain on installment sale, less
current portion (Note 3) 180,342 180,400
Total liabilities 1,334,750 1,208,837
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) (8,862,287) (8,934,352)
Total 12,534,191 12,462,126
Less common stock in treasury, 17,358
shares, at cost 18,720 18,720
Total stockholders' equity 12,515,471 12,443,406
Total liabilities and stockholders' equity $13,850,221 $13,652,243
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1997 1996
Revenue
Electrical construction $ 2,733,526 $ 2,878,062
Mining 515,570 347,986
Other income, net 95,975 99,770
Total revenue 3,345,071 3,325,818
Costs and expenses
Electrical construction 2,295,278 2,631,571
Mining 410,635 316,670
Depreciation and amortization 235,023 233,216
General and administrative 302,131 294,110
Total costs and expenses 3,243,067 3,475,567
Income (loss) from operations before
income taxes 102,004 (149,749)
Income taxes (Note 4) 24,000 --
Net income (loss) 78,004 (149,749)
Preferred stock dividends 5,939 5,939
Income (loss) available to common
stockholders $ 72,065 $ (155,688)
Income (loss) per share of common
stock (Note 6) $ 0.00 $ (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,
1997 1996
Cash flows from operating activities
Net income (loss) $ 78,004 $ (149,749)
Adjustments to reconcile net income (loss) to net
cash provided from (used by) operating activities
Depreciation and amortization 235,023 233,216
Deferred income taxes 24,000 --
Deferred gain on installment sales (58) (4,060)
Gain on sale of property and equipment (28,637) (5,266)
(Increase) decrease in:
Accounts receivable and accrued billings (572,752) 289,425
Inventories 22,374 (29,891)
Costs and estimated earnings in excess of
billings on uncompleted contracts (280,247) (319,813)
Prepaid expenses and other current assets (146,877) (23,210)
Cash surrender value of life insurance (4,700) (4,701)
Increase (decrease) in:
Accounts payable and accrued liabilities 140,241 5,685
Billings in excess of costs and estimated
earnings on uncompleted contracts (14,270) 1,708
Total adjustments (625,903) 143,093
Net cash provided from (used by)
operating activities (547,899) (6,656)
Cash flows from investing activities
Proceeds from the disposal of fixed assets 66,137 6,308
Loans granted (9,998) (20,000)
Collections from notes receivable 4,415 19,095
Purchases of fixed assets (137,810) (197,088)
Payments made to acquire fixed assets of
Fiber Optic Services -- (173,138)
Net cash used by investing activities (77,256) (364,823)
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 (631,094) (377,418)
Cash and cash equivalents at beginning of period 4,610,198 4,447,810
Cash and cash equivalents at end of period $3,979,104 $4,070,392
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
Note 1 - Basis of Presentation
In the opinion of the 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, 1996, 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, 1996. 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 - Inventories
Inventories are summarized as follows:
March 31, December 31,
1997 1996
Materials and supplies $101,255 $106,672
Industrial mineral products 43,337 62,983
Ores in process 61,083 58,394
Total inventories $205,675 $228,049
Note 3 - 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% (9.50% at March 31, 1997) 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. Effective February 18, 1997, the
agreement was amended to provide for the debtor to reduce $150,000 of
principal and interest with the transfer of equipment with an estimated
fair value when received of $150,000. This equipment would be used in
the Company's mining operations. The debtor has the right to repurchase
this equipment for $150,000 through June 30, 1997. The Company has
classified this note receivable as noncurrent as of December 31, 1996.
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, $4,060 of such deferred gain was recognized as
revenue. No deferred gain was recognized in the three months ended March
31, 1997. The installment method recognizes proportionate amounts of the
gain associated with the transaction as payments are 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 4 - Income Taxes
The income tax provision (benefit) for the three months ended March 31,
1997 and 1996 consist of the following:
1997 1996
Current $ -- $ --
Federal -- --
State -- --
Deferred
Federal 20,000 --
State 4,000 --
Total $24,000 $ --
The deferred income tax benefit as of March 31, 1997 and 1996 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, 1997 and December 31, 1996 are as
follows:
March 31, December 31,
1997 1996
Deferred tax assets
Depletion, mineral rights and deferred
development and exploration costs $ 324,000 $ 325,000
Accrued workers' compensation costs 58,000 62,000
Accrued vacation and bonus 14,000 11,000
Property and equipment, principally due
to differences in depreciation and
valuation write-downs 331,000 340,000
Net operating loss carryforwards 2,845,000 2,881,000
Investment tax credit carryforwards 239,000 264,000
Alternative minimum tax credit
carryforwards 256,000 256,000
4,067,000 4,139,000
Valuation allowance (3,231,000) (3,279,000)
Total net deferred tax assets 836,000 860,000
Deferred tax liabilities -- --
Net deferred tax assets $ 836,000 $ 860,000
The Company has recorded a valuation allowance 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 decreased the
valuation allowance for net deferred tax assets by approximately $48,000
for the quarter ended March 31, 1997 and increased the valuation
allowance $16,000 for the quarter ended March 31, 1996.
At March 31, 1997, 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 2000 through 2011.
Additionally, the Company has investment tax credit carryforwards of
approximately $239,000 available to reduce future Federal income taxes,
which if unused, will expire from 1998 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. This acquisition was accounted for as a purchase.
Accordingly, the initial payments were allocated to the fixed assets
acquired based upon their estimated fair market values.
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 Series A Stock of $5,939 in each of the three month
periods ended March 31, 1997 and 1996 respectively, were based on the
weighted average number of shares of Common Stock outstanding, excluding
17,358 shares of Treasury stock for each of the periods ended March 31,
1997 and 1996. The inclusion of Common Stock issuable upon conversion
of Series A 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, 1997 Compared to
Three Months Ended March 31, 1996.
Net Income (Loss)
The Company earned net income of $78,004 for the three months ended March
31, 1997, compared to a net loss of $149,749 for the three months ended
March 31, 1996.
Revenues
Total revenues for the three months ended March 31, 1997 were $3,345,071,
compared to $3,325,818 in the like 1996 period.
Electrical construction revenue decreased by 5% in the three months ended
March 31, 1997 to $2,733,526 from $2,878,062 for the three months ended
March 31, 1996. Electrical construction revenue includes the results
of the subsidiary acquired January 1, 1996, Fiber Optic Services, which
had revenue of $234,449 for the three month period ended March 31, 1997,
compared to $115,917 for the three months ended March 31, 1996.
Revenue from mining operations for the three months ended March 31, 1997
increased by 48% to $515,570 from $347,986 for the first quarter for
1996. The increase in revenue from mining for 1997 was primarily a
result of a single land restoration project completed in the first
quarter.
Operating Results
Electrical construction operations had operating profit of $295,741
during the three months ended March 31, 1997, compared to an operating
profit of $103,751 for the three months ended March 31, 1996. The
increase in operating results was due to generally improved profit
margins and decreased workers' compensation expense. 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, 1997, the approximate value of uncompleted contracts was
$6,350,000, compared to $ 4,000,000 at February 14, 1997 and $2,780,000
at March 31, 1996.
During the three months ended March 31, 1997, the operating profit from
mining operations was $23,419, compared to an operating loss of $49,560
during the three months ended March 31, 1996. Operating profit(loss)
includes royalty income (if any) and depreciation expense. The increase
in operating results from mining operations in the first quarter of 1997
was primarily the result of the land restoration project. There was no
royalty income recognized for either the first quarter of 1997 or 1996.
During 1995, the lessee suspended mining operations at Harlan Fuel
Company. The original royalty agreement provided that the Company was
to receive annual minimum royalties in the amount of $150,000. During
the year ended December 31, 1996, the Company did not receive any 1996
minimum royalty payments. Effective February 14, 1997, the agreement was
amended to provide for a payment of $20,000 and monthly minimum payments
of $5,000 until all minimum royalties are collected. The expiration date
of the royalty agreement will be extended beyond 2002 to the extent
necessary to permit payments of the $150,000 per year minimum royalties.
Such annual minimum royalties will be recognized when realization of the
income is assured. The Company is continuing to amortize the royalty
interest on a straight line basis over the period ending January 2002.
The St. Cloud Mining Company, a wholly-owned subsidiary of the Company
("St. Cloud"), sold 4,000 tons of natural zeolite during the three months
ended March 31, 1997, compared to 4,036 tons during the three months
ended March 31, 1996.
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, 1997, The Lordsburg Mining
Company, a wholly-owned subsidiary of the Company ("Lordsburg"), sold
7,263 tons of construction aggregate material, compared to 3,229 tons
sold during the three months ended March 31, 1996. Lordsburg sold 2,116
tons of barren, siliceous flux to copper smelters during the three months
ended March 31, 1996. Lordsburg did not sell any barren, siliceous flux
during the three months ended March 31, 1997.
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 at Lordsburg, a final decision with respect to the future
operations at Lordsburg has not been reached.
Costs and Expenses
Electrical construction costs were decreased 13% to $2,295,278 in the
three months ended March 31, 1997 compared to $2,631,571 for the three
months ended March 31, 1996. This reduction was primarily due to
decreased workers' compensation expense.
Depreciation and amortization was $235,023 in the three months ended
March 31, 1997, compared to $233,216 in the three months ended March 31,
1996.
General corporate expenses of the Company were $313,131 in the three
months ended March 31, 1997, compared to $303,710 in the three months
ended March 31, 1996.
Liquidity and Capital Resources
Cash and cash equivalents as of March 31, 1997 were $3,979,104, compared
to $4,610,198 as of December 31, 1996. Working capital at March 31, 1997
was $6,160,104, compared to $5,933,947 at December 31, 1996. The
Company's ratio of current assets to current liabilities was 6.3 to 1 at
March 31, 1997, compared to 6.8 to 1 at December 31, 1996.
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, 1997 and
1996. 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
and SunTrust Bank of 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, 1998, 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, 1997 and 1996. However, beginning in 1996 $100,000 of this line of
credit was reserved for a standby letter of credit.
The Company's capital expenditures for the three months ended March 31,
1997 were $137,810. Capital expenditures in 1997 are expected to be
approximately $800,000, which the Company expects to finance through
existing credit facilities or cash reserves.
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
10-6(c) Amendment dated May 2, 1997 to Promissory Note dated
April 12, 1993 between The San Pedro Mining Corporation, Royalstar
Resources Ltd., and Royalstar Southwest.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed during the quarter ended
March 31, 1997.
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 7, 1997 /s/ John H. Sottile
(John H. Sottile)
President and Chief
Executive Officer
Date: May 7, 1997 /s/ Stephen R. Wherry
(Stephen R. Wherry, C.P.A.)
Vice President, Treasurer
and Chief Financial Officer
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 Commission File No. 1-7525
THE GOLDFIELD CORPORATION
EXHIBITS
May 7, 1997
FLORIDA TRANSPORT CORPORATION
100 Rialto Place, Suite 500
Melbourne, FL 32901-3082
Telephone: (407) 724-1700
Fax: (407) 724-1703
May 2, 1997
Mr. John Young, President
Royalstar Resources Ltd., Royalstar Washington, Inc. and
The San Pedro Mining Corporation
Suite 1400 Guiness Tower
1055 West Hastings
Vancouver, BC V6E2E9
RE: Agreement dated February 18, 1997 as partial
payment for the Promissory Note dated April 12,
1993 executed by The San Pedro Mining Corporation,
Royalstar Resources Ltd., and Royalstar Southwest
(now assumed by Royalstar Washington, Inc.) in
favor of Florida Transport Corporation in the
original amount of $1,170,000.00, secured by
Mortgage Security Agreement and Financing
Statement ("the Mortgage") dated April 12, 1993,
and Hypothecation Agreement dated April 12, 1993.
Dear John:
In accordance with our discussion yesterday, we have extended your
right of re-purchase on the above captioned agreement until Monday,
June 30, 1997 at 5 PM EDT.
Sincerely,
FLORIDA TRANSPORT CORPORATION
/ /
John H. Sottile
President
JHS/ps