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, 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 September
30, 1997.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1997 1996
ASSETS
Current assets
Cash and cash equivalents $ 4,660,038 $ 4,610,198
Accounts receivable and accrued billings 1,912,530 1,420,270
Current portion of notes receivable 92,412 39,771
Inventories (Note 3) 224,210 228,049
Costs and estimated earnings in excess of
billings on uncompleted contracts 739,955 600,302
Prepaid expenses and other current assets 265,619 63,794
Total current assets 7,894,764 6,962,384
Properties, net 4,373,073 4,187,288
Notes receivable, less current portion 686,789 875,100
Deferred charges and other assets
Deferred income taxes (Note 2) 568,000 860,000
Repurchased royalty at cost, less accumulated
amortization of $204,276 in 1997 and
$184,718 in 1996 115,174 134,732
Cash surrender value of life insurance 667,239 632,739
Total deferred charges and other assets 1,350,413 1,627,471
Total assets $14,305,039 $13,652,243
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 1,056,566 $ 954,366
Billings in excess of costs and estimated
earnings on uncompleted contracts 139,238 74,071
Income taxes payable (Note 2) 57,500 --
Total current liabilities 1,253,304 1,028,437
Deferred gain on installment sales 117,986 180,400
Total liabilities 1,371,290 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) (8,444,009) (8,934,352)
Total 12,952,469 12,462,126
Less common stock in treasury, 17,358 shares
at cost 18,720 18,720
Total stockholders' equity 12,933,749 12,443,406
Total liabilities and stockholders' equity $14,305,039 $13,652,243
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,
1997 1996 1997 1996
Revenue
Electrical construction $3,442,203 $3,695,739 $9,734,891 $8,745,285
Mining 395,286 437,882 1,425,223 1,174,214
Royalty income 5,000 -- 10,000 --
Other income, net 168,287 114,792 343,851 302,978
Total revenue 4,010,776 4,248,413 11,513,965 10,222,477
Costs and expenses
Electrical construction 2,911,685 3,062,825 7,820,628 8,047,964
Mining 354,643 392,457 1,190,369 1,063,970
Depreciation and amortization 265,251 242,329 746,781 705,038
General and administrative 277,054 227,180 898,525 800,145
Total costs and expenses 3,808,633 3,924,791 10,656,303 10,617,117
Income (loss) from operations
before income taxes 202,143 323,622 857,662 (394,640)
Income taxes (Note 2) 86,500 -- 349,500 --
Net income (loss) 115,643 323,622 508,162 (394,640)
Preferred stock dividends 5,940 5,940 17,819 17,819
Income (loss) available to
common stockholders $ 109,703 $ 317,682 $ 490,343 $ (412,459)
Income (loss) per share of
common stock (Note 4) $ 0.00 $ 0.01 $ 0.02 $ (0.02)
Weighted average number of
common 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 STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Cash flows from operating activities
Net income (loss) $ 115,643 $ 323,622 $ 508,162 $ (394,640)
Adjustments to reconcile net
income (loss) to net cash
provided from (used by) operating
activities
Depreciation and amortization 265,251 242,329 746,781 705,038
Deferred income taxes 60,000 -- 292,000 --
Deferred gain on installment sales (62,300) (10,150) (62,414) (24,360)
Gain on sale of property and
equipment (2,191) (23,923) (40,435) (26,614)
Decrease (increase) in:
Accounts receivable and
accrued billings 525,338 (1,452,139) (492,260) (1,352,800)
Inventories (2,249) (11,457) 3,839 (53,918)
Costs and estimated earnings
in excess of billings on
uncompleted contracts (369,812) 492,346 (139,653) 218,929
Prepaid expenses and other
current assets 13,894 65,959 (201,825) 117,036
Cash surrender value of
life insurance (29,800) (30,077) (34,500) (34,778)
Increase (decrease) in:
Accounts payable and accrued
liabilities 48,024 693,486 102,200 624,353
Billings in excess of costs
and estimated earnings on
uncompleted contracts 126,089 186,157 65,167 152,995
Income taxes payable 26,500 -- 57,500 --
Total adjustments 598,744 152,531 296,400 325,881
Net cash provided from
(used by) operating
activities 714,387 476,153 804,562 (68,759)
Cash flows from investing activities
Proceeds from the disposal
of fixed assets 19,426 35,093 96,063 43,101
Loans granted (85,000) (30,000) (118,566) (60,726)
Collections from notes
receivable 237,505 42,475 254,236 196,398
Purchases of fixed assets (482,890) (185,013) (968,636) (475,517)
Payments made to acquire
fixed assets of Fiber Optic
Services -- -- -- (173,138)
Net cash used by
investing activities (310,959) (137,445) (736,903) (469,882)
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 397,488 332,768 49,840 (556,460)
Cash and cash equivalents
at beginning of period 4,262,550 3,558,582 4,610,198 4,447,810
Cash and cash equivalents
at end of period $4,660,038 $3,891,350 $4,660,038 $3,891,350
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 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 - Income Taxes
The income tax provision consists of the following:
Three Months Three Months
Ended September 30, Ended September 30,
1997 1996
Current
Federal $ 14,000 $ --
State 12,500 --
26,500 --
Deferred
Federal 47,000 --
State 13,000 --
60,000 --
Total $ 86,500 $ --
Nine Months Nine Months
Ended September 30, Ended September 30,
1997 1996
Current
Federal $ 19,000 $ --
State 38,500 --
57,500 --
Deferred
Federal 242,000 --
State 50,000 --
292,000 --
Total $349,500 $ --
Temporary differences and carryforwards which give rise to
deferred tax assets and liabilities as of September 30, 1997 and
December 31, 1996 are as follows:
September 30, December 31,
1997 1996
Deferred tax assets
Depletion, mineral rights
and deferred development and
exploration costs $ 324,000 $ 325,000
Accrued workers' compensation costs 44,000 62,000
Accrued vacation and bonus 68,000 11,000
Property and equipment,
principally due to differences
in depreciation and valuation
write-downs 314,000 340,000
Contingent salary payments
recorded as goodwill for
tax purposes 10,000 --
Net operating loss carryforwards 2,518,000 2,881,000
Investment tax credit carryforwards 208,000 264,000
Alternative minimum tax credit
carryforwards 275,000 256,000
3,761,000 4,139,000
Valuation allowance (3,193,000) (3,279,000)
Total net deferred tax assets 568,000 860,000
Deferred tax liabilities -- --
Net deferred tax assets $ 568,000 $ 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 $86,000 for
the nine months ended September 30, 1997 and increased the
valuation allowance $108,000 for the quarter ended September 30,
1997.
At September 30, 1997, the Company had tax net operating loss
carryforwards of approximately $6,600,000 available to offset
future regular taxable income, which if unused, will expire from
2000 through 2011.
Additionally, the Company at September 30, 1997 had investment
tax credit carryforwards of approximately $208,000 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 $275,000 which
are available to reduce future Federal income taxes over an
indefinite period.
Note 3 - Inventories
Inventories are summarized as follows:
September 30, December 31,
1997 1996
Materials and supplies $ 107,564 $ 106,672
Industrial mineral products 42,475 62,983
Ores in process 74,171 58,394
Total inventories $ 224,210 $ 228,049
Note 4 - Earnings (Loss) Per Share of Common Stock
Earnings (loss) per common share, after deducting dividend
requirements on the Company's Series A Stock of $17,819 in each
of the nine month periods ended September 30, 1997 and 1996, 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 September 30, 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 - Nine Months Ended September 30, 1997
Compared to Nine Month Ended September 30, 1996.
Net Income (Loss)
The Company had pretax earnings of $857,662 and net income of
$508,162 for the nine months ended September 30, 1997, compared
to a net loss of $394,640 for the nine months ended September 30,
1996. Net income for the nine months ended September 30, 1997
includes an income tax expense of $349,500, substantially all of
which is not payable due to net operating loss carryforwards.
Revenues
Total revenues for the nine months ended September 30, 1997 were
$11,513,965, compared to $10,222,477 in the like 1996 period.
The increase in revenues was primarily attributable to a higher
level of activity in electrical construction operations.
Electrical construction revenue increased by 11% in the nine
months ended September 30, 1997 to $9,734,891 from $8,745,285 for
the nine months ended September 30, 1996. The increase in
electrical construction revenues was primarily due to a higher
level of activity.
Revenue from mining operations for the nine months ended
September 30, 1997 increased by 21% to $1,425,223 from $1,174,214
for the nine months ended September 30, 1996. The increase in
revenue from mining for 1997 was primarily a result of new
off-site construction contracts utilizing existing mining
personnel and equipment.
Operating Results
Electrical construction operations had operating profit of
$1,460,972 during the nine months ended September 30, 1997,
compared to an operating profit of $253,791 for the nine months
ended September 30, 1996. The increase in operating results was
due to a higher level of construction activity and generally
improved profit margins. 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, 1997, the approximate value of uncompleted
contracts was $3,800,000, compared to $4,000,000 at February 14,
1997 and $800,000 at September 30, 1996.
During the nine months ended September 30, 1997, operating loss
from mining operations was $7,636, compared to an operating loss
of $120,764 during the nine months ended September 30, 1996.
Operating profit(loss) includes royalty income and depreciation
expense. The improvement in operating results from mining
operations during the nine months ended September 30, 1997 was
primarily a result of new construction contracts. Royalty income
for the nine months ended September 30, 1997 was $10,000 as
compared to no royalty income for the like period in 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 11,863 tons of natural zeolite during
the nine months ended September 30, 1997, compared to 11,014 tons
during the nine months ended September 30, 1996.
In the nine months ended September 30, 1997, St. Cloud sold 1,470
tons of construction aggregate, compared to 2,026 tons sold
during the nine months ended September 30, 1996.
Surface and underground mining of base and precious metals have
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, 1997, The Lordsburg
Mining Company, a wholly-owned subsidiary of the Company
("Lordsburg"), sold 19,848 tons of construction aggregate
material, compared to 13,685 tons sold during the nine months
ended September 30, 1996. During the nine months ended
September 30, 1996, Lordsburg sold 15,190 tons of barren
siliceous flux to copper smelters. Lordsburg did not sell any
barren siliceous flux during the nine months ended September 30,
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 and siliceous flux at Lordsburg, a final
decision with respect to the future operations at Lordsburg has
not been reached.
Costs and Expenses
Total costs and expenses and the components thereof remained
relatively constant during the nine months ended September 30,
1997 as compared to the like period in 1996.
Electrical construction costs were $7,820,628 and $8,047,964 for
the nine months ended September 30, 1997 and September 30, 1996,
respectively.
Depreciation and amortization was $746,781 in the nine months
ended September 30, 1997, compared to $705,038 in the nine months
ended September 30, 1996.
General corporate expenses of the Company were $939,525 in the
nine months ended September 30, 1997, compared to $830,645 in the
nine months ended September 30, 1996.
Results of Operations - Three Months Ended September 30, 1997
Compared to Three Months Ended September 30, 1996
Net Income(Loss)
The Company had pretax earnings of $202,143 and net income of
$115,643 for the three months ended September 30, 1997, compared
to a pretax earnings and net income of $323,622 for the three
months ended September 30, 1996. Net income for the three months
ended September 30, 1997 includes an income tax expense of
$86,500.
Revenues
Total revenues for the three months ended September 30, 1997 were
$4,010,776, compared to $4,248,413 in the like 1996 period. The
decrease in revenues was primarily attributable to electrical
construction operations.
Electrical construction revenue decreased by 7% in the three
months ended September 30, 1997 to $3,442,203 from $3,695,739 for
the three months ended September 30, 1996. The decrease in
electrical construction revenues was primarily due to decreased
level of construction activity.
Revenue from mining operations for the three months ended
September 30, 1997 decreased by 10% to $395,286 from $437,882 for
the third quarter of 1996. The decrease in revenue from mining
for 1997 was primarily a result of the lack of barren siliceous
flux sales from Lordsburg.
Operating Results
Electrical construction operations had operating profit of
$369,096 during the three months ended September 30, 1997,
compared to $476,775 for the three months ended September 30,
1996. The decrease in operating results was due to a lower level
of activity and lower profit margins.
During the three months ended September 30, 1997, mining
operations had an operating loss of $40,186, compared to an
operating loss of $29,465 during the three months ended September
30, 1996. Operating profit(loss) includes royalty income and
depreciation expense.
St. Cloud sold 3,922 tons of natural zeolite during the three
months ended September 30, 1997, compared to 3,815 tons during
the three months ended September 30, 1996.
During the three months ended September 30, 1997, Lordsburg sold
3,879 tons of construction aggregate material, compared to 3,426
tons sold during the three months ended September 30, 1996. During
the three months ended September 30, 1996, Lordsburg sold 8,095
tons of barren siliceous flux to copper smelters. Lordsburg did
not sell any barren siliceous flux during the three months ended
September 30, 1997.
Costs and Expenses
Electrical construction costs were $2,911,685 and $3,062,825 for
the three months ended September 30, 1997 and September 30, 1996,
respectively. The decrease during the 1997 period resulted from
the lower level of activity.
Depreciation and amortization was $265,251 in the three months
ended September 30, 1997, compared to $242,329 in the three
months ended September 30, 1996.
General corporate expenses of the Company were $295,054 in the
three months ended September 30, 1997, compared to $238,480 in
the three months ended September 30, 1996.
Liquidity and Capital Resources
Cash and cash equivalents as of September 30, 1997 were
$4,660,038 compared to $4,610,198 as of December 31, 1996.
Working capital at September 30, 1997 was $6,641,460 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 September 30, 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 $17,819 in each of the nine month periods ended
September 30, 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
nine months ended September 30, 1997 and 1996. However,
beginning in 1996 $100,000 of this line of credit has been
reserved for a standby letter of credit.
The Company's capital expenditures for the nine months ended
September 30, 1997 were $968,636, compared to $648,655 for the
nine months ended September 30, 1996. The increase was
attributable to a higher level of capital expenditures in the
electrical construction segment. The capital expenditures for
1996 include the acquisition of the fixed assets of Fiber Optic
Services for $173,138.
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
September 30, 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: November 12, 1997 /s/ Stephen R. Wherry
(Stephen R. Wherry, C.P.A.)
Vice President, Treasurer
and Chief Financial Officer