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, 1998
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,
1998.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1998 1997
ASSETS
Current assets
Cash and cash equivalents $ 3,125,416 $ 4,397,281
Accounts receivable and accrued billings 1,837,590 1,829,644
Current portion of notes receivable 128,121 78,946
Inventories (Note 2) 214,008 218,502
Costs and estimated earnings in excess of
billings on uncompleted contracts 480,634 791,360
Prepaid expenses and other current assets 182,536 74,368
Total current assets 5,968,305 7,390,101
Property, buildings and equipment, net 4,619,545 4,510,158
Notes receivable, less current portion 311,670 672,576
Deferred charges and other assets
Deferred income taxes (Note 3) 548,000 548,000
Land held for sale 52,448 --
Repurchased royalty at cost, net of accumulated
amortization of $210,793 in 1997 (Note 4) -- 108,657
Cash surrender value of life insurance 741,750 737,050
Total deferred charges and other assets 1,342,198 1,393,707
Total assets $12,241,718 $13,966,542
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 561,146 $ 917,279
Billings in excess of costs and estimated
earnings on uncompleted contracts 11,422 73,048
Current portion of deferred gain on installment
sales 17,487 --
Income taxes payable (Note 3) -- 28,731
Total current liabilities 590,055 1,019,058
Deferred gain on installment sales, less current
portion 66,083 113,865
Total liabilities 656,138 1,132,923
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
Accumulated deficit (9,792,178) (8,544,139)
Total 11,604,300 12,852,339
Less common stock in treasury, 17,358
shares, at cost 18,720 18,720
Total stockholders' equity 11,585,580 12,833,619
Total liabilities and stockholders' equity $12,241,718 $13,966,542
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,
1998 1997 1998 1997
Revenue
Electrical construction $ 1,955,420 $ 3,442,203 $8,967,863 $9,734,891
Mining 579,275 395,286 1,499,868 1,425,223
Other income, net 40,282 173,287 241,374 353,851
Total revenue 2,574,977 4,010,776 10,709,105 11,513,965
Costs and expenses
Electrical construction 2,009,117 2,911,685 8,241,276 7,820,628
Mining 622,215 354,643 1,518,384 1,190,369
Depreciation and amortization 270,077 265,251 797,932 746,781
Impairment losses (Note 4) 258,538 -- 354,156 --
General and administrative 264,064 277,054 1,027,577 898,525
Total costs and expenses 3,424,011 3,808,633 11,939,325 10,656,303
Income (loss) from operations
before income taxes (849,034) 202,143 (1,230,220) 857,662
Income taxes (Note 3) -- 86,500 -- 349,500
Net income (loss) (849,034) 115,643 (1,230,220) 508,162
Preferred stock dividends 5,940 5,940 17,819 17,819
Income (loss) available to
common stockholders $ (854,974) $ 109,703 $(1,248,039) $ 490,343
Basic earnings (loss) per share
of common stock (Note 5) $ (0.03) $ 0.00 $ (0.05) $ 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 STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Cash flows from operating
activities
Net (loss) income $ (849,034) $ 115,643 $(1,230,220) $ 508,162
Adjustments to reconcile net
(loss) income to net
cash provided from (used
by) operating activities
Depreciation and
amortization 270,077 265,251 797,932 746,781
Impairment losses 258,538 -- 354,156 --
Deferred income taxes -- 60,000 -- 292,000
Loss (gain) on sale of property
and equipment 45,030 (2,191) 35,627 (40,435)
Cash provided by (used for)
changes in
Accounts receivable and
accrued billings (29,764) 525,338 (7,946) (492,260)
Inventories 74,483 (2,249) 4,494 3,839
Costs and estimated
earnings in excess
of billings on
uncompleted contracts 78,824 (369,812) 310,726 (139,653)
Prepaid expenses and
other current assets 55,670 13,894 (108,168) (201,825)
Land held for sale 22,478 -- (52,448) --
Cash surrender value of
life insurance -- (29,800) (4,700) (34,500)
Accounts payable and
accrued liabilities (156,443) 48,024 (355,758) 102,200
Billings in excess of
costs and estimated
earnings on uncompleted
contracts (12,306) 126,089 (61,626) 65,167
Deferred gain on
installment sales (6,368) (62,300) 65,792 (62,414)
Income taxes payable -- 26,500 (28,731) 57,500
Net cash (used by)
provided from
operating
activities (248,815) 714,387 (280,870) 804,562
Cash flows from investing activities
Proceeds from the disposal
of property and equipment 68,446 19,426 155,293 96,063
Loans granted (1,981) (85,000) (243,308) (118,566)
Collections from notes
receivable 27,364 237,505 200,039 254,236
Purchases of property
and equipment (188,057) (482,890) (1,085,200) (968,636)
Net cash used by
investing
activities (94,228) (310,959) (973,176) (736,903)
Cash flows from financing activities
Payments of preferred
stock dividends (5,940) (5,940) (17,819) (17,819)
Net (decrease) increase
in cash and cash
equivalents (348,983) 397,488 (1,271,865) 49,840
Cash and cash equivalents
at beginning of period 3,474,399 4,262,550 4,397,281 4,610,198
Cash and cash equivalents
at end of period $3,125,416 $4,660,038 $3,125,416 $4,660,038
Income taxes paid $ -- $ -- $ 28,731 $ --
See accompanying notes to consolidated financial statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
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, 1997, 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, 1997. 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 consisted of:
September 30, December 31,
1998 1997
Materials and supplies $135,976 $110,399
Industrial mineral products 61,047 45,169
Ores in process 16,985 62,934
Total inventories $214,008 $218,502
Note 3 - Income Taxes
The income tax provision consisted of:
Three Months Ended Three Months Ended
September 30, September 30,
1998 1997
Current
Federal $ -- $ 14,000
State -- 12,500
-- 26,500
Deferred
Federal -- 47,000
State -- 13,000
-- 60,000
Total $ -- $ 86,500
Nine Months Ended Nine Months Ended
September 30, September 30,
1998 1997
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 consisted of:
September 30, December 31,
1998 1997
Deferred tax assets
Depletion, mineral rights and deferred
development and exploration costs $ 357,000 $ 324,000
Accrued workers' compensation costs 17,000 28,000
Accrued vacation and bonus 53,000 14,000
Property and equipment, principally
due to differences in depreciation
and valuation write-downs 336,000 358,000
Contingent salary payments recorded
as goodwill for tax purposes 7,000 7,000
Net operating loss carryforwards 3,042,000 2,644,000
Investment tax credit carryforwards 9,000 209,000
Alternative minimum tax credit
carryforwards 262,000 262,000
4,083,000 3,846,000
Valuation allowance (3,535,000) (3,298,000)
Total net deferred tax assets 548,000 548,000
Deferred tax liabilities -- --
Net deferred tax assets $ 548,000 $ 548,000
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 increased the valuation allowance for net
deferred tax assets by $237,000 for the nine months ended September
30, 1998 and increased the valuation allowance $313,000 for the
three months ended September 30, 1998.
At September 30, 1998, the Company had tax net operating loss
carryforwards of approximately $8,000,000 available to offset future
regular taxable income, which if unused, will expire from 2000
through 2018.
Additionally, the Company at September 30, 1998 had investment tax
credit carryforwards of approximately $9,000 available to reduce
future Federal income taxes, which if unused, will expire in 2000.
In addition, the Company has alternative minimum tax credit
carryforwards of approximately $262,000, which are available to
reduce future Federal income taxes over an indefinite period.
Note 4 Impairment Losses
In connection with a coal mining property in Harlan, Kentucky,
formerly owned by the Company, the Company retains a coal royalty
which provides for a royalty between 1 1/2% to 3% per year,
originally to be paid until 2002. 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 was
extended beyond 2002 to the extent necessary to permit payments of
the $150,000 per year minimum royalties. Since February 1996, Great
Western Coal, Inc. ("Great Western"), has generally failed to make
the required royalty payments. On July 1, 1998, the Company filed
suit against Great Western for breach of contract. Under the
circumstances, management has determined the royalty interest to be
an impaired asset. The fair value of the Harlan coal royalty has
been determined by management to be zero as there is no open market
for the sale of this royalty and future discounted cash flows have
been estimated by management to be zero. The impairment loss of
$95,618 has been separately identified as a component of continuing
operations. The loss, which was recognized in the second quarter of
1998, has been included in the Company's operating results from
mining.
In April 1993, the capital stock of The San Pedro Mining Corporation
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 plus interest through October 1999.
Effective December 23, 1997, terms of the note and mortgage were
modified to defer principal payments to November 1998. The
purchaser failed to make the October 1998 scheduled interest payment
and on-going discussions with the debtor indicate that collection of
the principal balance is doubtful. Under the circumstances,
management has determined the note receivable to be an impaired
asset and has written off the unpaid balance of the note. Future
discounted cash flows have been estimated by management to be zero.
The impairment loss of $258,538 has been separately identified as a
component of continuing operations. The loss, which was recognized
in the third quarter of 1998, has been included in the Company's
operating results from mining.
Note 5 Basic Earnings (Loss) Per Share of Common Stock
Basic 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, 1998 and 1997, 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, 1998 and 1997. 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, 1998
Compared to Nine Months Ended September 30, 1997.
Net Income (Loss)
The Company incurred a net loss of $1,230,220 for the nine months
ended September 30, 1998, compared to net income of $508,162 for the
nine months ended September 30, 1997. The net loss for the nine
months ended September 30, 1998 included a charge of $354,156 for
impairment losses related to the Harlan coal royalty and the San
Pedro mine note receivable as discussed in Note 4. Net income for
the nine months ended September 30, 1997 included an income tax
expense of $349,500.
Revenues
Total revenues for the nine months ended September 30, 1998 were
$10,709,105, compared to $11,513,965 in the like 1997 period, a
decrease of 7%.
Electrical construction revenue decreased by 8% in the nine months
ended September 30, 1998 to $8,967,863 from $9,734,891 for the nine
months ended September 30, 1997. Electrical construction revenue
includes the results of the subsidiary acquired in January 1996,
Fiber Optic Services, which had revenue of $529,558 for the nine
months ended September 30, 1998, compared to $947,792 for the nine
months ended September 30, 1997.
Revenue from mining operations for the nine months ended September
30, 1998 was $1,499,868, compared to $1,425,223 for the nine months
ended September 30, 1997, an increase of 5%.
Operating Results
Electrical construction operations had an operating profit of
$218,934 during the nine months ended September 30, 1998, compared
to an operating profit of $1,460,972 during the nine months ended
September 30, 1997. The decrease in operating results was primarily
due to a decrease in the level of operations and profit margins of
Fiber Optic Services and to losses from a single, long-term unit
price contract. 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, 1998, the
approximate value of uncompleted contracts was $7,425,000, compared
to $3,800,000 at September 30, 1997.
During the nine months ended September 30, 1998, the operating loss
from mining operations was $610,451, compared to an operating loss
of $7,636 during the nine months ended September 30, 1997. The
decrease in operating results from mining operations in 1998 was due
to the charge of $354,156 for impairment losses relating to the
Harlan coal royalty and the San Pedro mine note receivable and to
losses relating to an off-site mining construction contract.
Operating profit (loss) includes royalty income and depreciation
expense.
During the nine months ended September 30, 1998, the cost of mining
exceeded the related mining revenue by $18,516, compared to mining
revenue exceeding the related cost of mining by $234,854 during the
nine months ended September 30, 1997. During the three months ended
September 30, 1998, the cost of mining exceeded the related mining
revenue by $42,940, compared to mining revenue exceeding the related
cost of mining by $40,643 during the three months ended September
30, 1997. The losses for the 1998 periods were primarily a result
of an off-site mining construction contract that is expected to be
completed by the first quarter of 1999.
St. Cloud Mining Company, a wholly-owned subsidiary of the Company
("St. Cloud"), sold 10,846 tons of natural zeolite during the nine
months ended September 30, 1998, compared to 11,863 tons during the
nine months ended September 30, 1997.
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, 1998, The Lordsburg
Mining Company, a wholly-owned subsidiary of the Company
("Lordsburg"), sold 16,314 tons of construction aggregate material,
compared to 19,848 tons sold 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 at Lordsburg, a final decision with respect
to the future operations at Lordsburg has not been reached.
Other Income
Other income for nine months ended September 30, 1998 was $241,374,
compared to $353,851 for the three months ended September 30, 1997.
The decrease was primarily due to the results of the sale of
property and equipment in the electrical construction operations.
Costs and Expenses
Total costs and expenses and the components thereof increased to
$11,939,325 for the nine months ended September 30, 1998 from
$10,656,303 for the like period in 1997 as a result of increased
electrical construction costs, increased off-site mining
construction costs and the charge for impairment losses as mentioned
above.
Electrical construction costs were $8,241,276 and $7,820,628 in the
nine months ended September 30, 1998 and 1997, respectively.
Mining costs were $1,518,384 for the nine months ended September 30,
1998 as compared to $1,190,369 for the nine months ended September
30, 1997.
Depreciation and amortization was $797,932 in the nine months ended
September 30, 1998, compared to $746,781 in the nine months ended
September 30, 1997.
General corporate expenses of the Company increased to $1,080,077 in
the nine months ended September 30, 1998, compared to $939,525 in
the nine months ended September 30, 1997. The 1998 period included
increases in various categories including consulting expenses
relating to the implementation of new computers and accounting
software and the expensing of previously deferred legal and
accounting fees relating to the start-up costs of a new mining
venture.
Results of Operations Three Months Ended September 30, 1998
Compared to Three Months Ended September 30, 1997.
Net Income (Loss)
The Company incurred a net loss of $849,034 for the three months
ended September 30, 1998, compared to net income of $115,643 for the
three months ended September 30, 1997. Net income for the three
months ended September 30, 1997 included an income tax expense of
$86,500.
Revenues
Total revenues for the three months ended September 30, 1998 were
$2,574,977, compared to $4,010,776 in the like 1997 period, a
decrease of 36%. The decrease in revenues was primarily attributable
to electrical construction operations.
Electrical construction revenue decreased by 43% in the three months
ended September 30, 1998 to $1,955,420 from $3,442,203 for the three
months ended September 30, 1997. The decrease in electrical
construction revenue was primarily due to a decreased level of
construction activity. Electrical construction revenue includes the
results of the subsidiary acquired in January 1996, Fiber Optic
Services, which had revenue of $90,556 for the three months ended
September 30, 1998, compared to $358,118 for the three months ended
September 30, 1997.
Revenue from mining operations for the three months ended September
30, 1998 was $579,275, compared to $395,286 for the three months
ended September 30, 1997. The increase in revenue from mining for
1998 was primarily a result of a single off-site construction
contract which is expected to be completed by the first quarter of
1999.
Operating Results
Electrical construction operations had an operating loss of $230,561
during the three months ended September 30, 1998, compared to an
operating profit of $369,096 during the three months ended September
30, 1997. The decrease in operating results was primarily due to a
decrease in the level of operations and profit margins of Fiber
Optic Services and to losses from a single, long-term unit price
contract.
During the three months ended September 30, 1998, the operating loss
from mining operations was $377,191, compared to an operating loss
of $40,186 during the three months ended September 30, 1997. The
decrease in operating results from mining operations in 1998 was due
to the charge of $258,538 for an impairment loss relating to the
Royalstar note receivable and to losses from an off-site
construction contract. Operating profit (loss) includes royalty
income and depreciation expense.
St. Cloud sold 4,026 tons of natural zeolite during the three months
ended September 30, 1998, compared to 3,922 tons during the three
months ended September 30, 1997.
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 three months ended September 30, 1998, Lordsburg sold
6,089 tons of construction aggregate material, compared to 3,879
tons sold during the three months ended September 30, 1997.
Other Income
Other income for three months ended September 30, 1998 was $40,282,
compared to $173,287 for the three months ended September 30, 1997.
The decrease was primarily a result of decreased deferred gain
recognized from the previous sale of the stock of The San Pedro
Mining Corporation and the loss on the sale of property and
equipment in the electrical construction operations.
Costs and Expenses
Total costs and expenses and the components thereof decreased to
$3,424,011 for the three months ended September 30, 1998 from
$3,808,633 for the like period in 1997 primarily as a result of
decreased electrical construction activity.
Electrical construction costs were $2,009,117 and $2,911,685 in the
three months ended September 30, 1998 and 1997, respectively. The
decrease in costs was attributable to a lower level of operations.
Mining costs were $622,215 for the three months ended September
30, 1998 as compared to $354,643 for the three months ended
September 30, 1997. This increase was primarily the result of an
off-site mining construction contract.
Depreciation and amortization was $270,077 in the three months ended
September 30, 1998, compared to $265,251 in the three months ended
September 30, 1997.
General corporate expenses of the Company decreased to $281,564 in
the three months ended September 30, 1998, compared to $295,054 in
the three months ended September 30, 1997.
Liquidity and Capital Resources
Cash and cash equivalents at September 30, 1998 were $3,125,416 as
compared to $4,397,281 as of December 31, 1997. Working capital at
September 30, 1998 was $5,378,250, compared to $6,371,043 at
December 31, 1997. However, the Company's ratio of current assets
to current liabilities improved to 10.1 to 1 at September 30, 1998,
from 7.3 to 1 at December 31, 1997 because of the lower level of
accounts payable and accrued liabilities at September 30, 1998.
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, 1998 and 1997. 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, 1999, 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, 1998 and 1997. However, since 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, 1998 were $1,085,200, compared to $968,636 for the
nine months ended September 30, 1997.
Year 2000
Background
In the past, many computers, software programs, and other
information technology ("IT systems"), as well as other equipment
relying on microprocessors or similar circuitry ("non-IT systems"),
were written or designed using two digits, rather than four, to
define the applicable year. As a result, date-sensitive systems
(both IT systems and non-IT systems) may recognize a date identified
with "00" as the year 1900, rather than the year 2000. This is
generally described as the Year 2000 issue. If this situation
occurs, the potential exists for system failures or miscalculations,
which could impact business operations.
The Securities and Exchange Commission ("SEC") has asked public
companies to disclose four general types of information related to
Year 2000 preparedness: the Company's state of readiness, costs,
risks, and contingency plans. See SEC Release No. 33-7558 (July 29,
1998). Accordingly, the Company has included the following
discussion in this report, in addition to the Year 2000 disclosures
previously filed with the SEC.
State of Readiness
The Company believes that it has identified all significant IT
systems and non-IT systems that require modification in connection
with Year 2000 issues. Internal and external resources have been
used and are continuing to be used, to make the required
modifications and test Year 2000 readiness. The required
modifications are under way. The Company plans on completing the
modifications to and testing of all significant systems by the end
of fiscal 1999.
In addition, the Company has been communicating with customers,
suppliers, banks, vendors and others with whom it does significant
business (collectively, its "business partners") to determine their
Year 2000 readiness and the extent to which the Company is
vulnerable to any other organization's Year 2000 issues. Based on
these communications and related responses, the Company is
monitoring the Year 2000 preparations and state of readiness of its
business partners. Although the Company is not aware of any
significant Year 2000 problems with its business partners, there can
be no guarantee that the systems of other organizations on which the
Company's systems rely will be converted in a timely manner, or that
a failure to convert by another organization, or a conversion that
is incompatible with the Company's systems, would not have a
material adverse effect on the Company.
Costs
The total cost to the Company of Year 2000
activities has not been and is not anticipated
to be material to its financial position or
results of operations in any given year. The
total costs to the Company of addressing Year
2000 issues are estimated to be less than
$10,000. These total costs, as well as the date
on which the Company plans to complete the Year
2000 modification and testing processes, are
based on management's best estimates. However,
there can be no guarantee that these estimates
will be achieved, and actual results could
differ from those estimates.
Risks
The Company utilizes IT systems and non-IT
systems in various aspects of its business.
Year 2000 problems in some of the Company's
systems could possibly disrupt operations, but
the Company does not expect that any such
disruption would have a material adverse impact
on the Company's operating results.
The Company is also exposed to the risk that one
or more of its customers, suppliers or vendors
could experience Year 2000 problems that could
impact the ability of such customers to transact
business or such suppliers or vendors to provide
goods and services. Although this risk is
lessened by the availability of alternative
suppliers, the disruption of certain services,
such as utilities, could, depending upon the
extent of the disruption, potentially have a
material adverse impact on the Company's
operations.
Contingency Plans
The Company is in the process of developing
contingency plans for the Company's IT systems
and non-IT systems requiring Year 2000
modification. In addition, the Company is
developing contingency plans to deal with the
possibility that some suppliers or vendors might
fail to provide goods and services on a timely
basis as a result of Year 2000 problems. These
contingency plans will include the
identification, acquisition and/or preparation
of backup systems, suppliers and vendors.
PART II. OTHER INFORMATION
Item 5. Other Information
None.
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,
1998.
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 10, 1998 /s/ John H. Sottile
(John H. Sottile)
Chairman, President, and
Chief Executive Officer
/s/ Stephen R. Wherry
(Stephen R. Wherry)
Vice President, Treasurer and
Chief Financial Officer