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, 1999
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 March 31,
1999.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1999 1998
Unaudited Audited
ASSETS
Current assets
Cash and cash equivalents $ 2,247,591 $ 2,616,465
Accounts receivable and accrued billings 3,659,808 3,133,855
Current portion of notes receivable 117,984 123,393
Inventories (Note 2) 300,998 346,799
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,401,604 1,793,119
Prepaid expenses and other current assets 242,241 83,428
Total current assets 7,970,226 8,097,059
Property, buildings and equipment, net 4,607,145 4,450,256
Notes receivable, less current portion 251,965 293,956
Deferred charges and other assets
Deferred income taxes (Note 3) 548,000 548,000
Land held for sale 44,956 52,448
Cash surrender value of life insurance 771,930 771,430
Total deferred charges and other assets 1,364,886 1,371,878
Total assets $14,194,222 $14,213,149
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 1,269,857 $ 1,905,457
Billings in excess of costs and estimated
earnings on uncompleted contracts 237,567 13,769
Current portion of deferred gain on
installment sales 10,315 10,774
Income taxes payable (Note 3) 32,902 23,322
Total current liabilities 1,550,641 1,953,322
Deferred gain on installment sales,
less current portion 54,173 59,596
Total liabilities 1,604,814 2,012,918
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 and
outstanding 26,872,106 shares 2,687,211 2,687,211
Capital surplus 18,369,860 18,369,860
Accumulated deficit (8,788,350) (9,177,527)
Total 12,608,128 12,218,951
Less common stock in treasury, 17,358
shares, at cost 18,720 18,720
Total stockholders' equity 12,589,408 12,200,231
Total liabilities and stockholders' equity $14,194,222 $14,213,149
See accompanying notes to consolidated financial statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1999 1998
Revenue
Electrical construction $ 5,578,184 $ 3,868,215
Mining 381,075 346,661
Other income, net 67,241 80,954
Total revenue 6,026,500 4,295,830
Costs and expenses
Electrical construction 4,599,212 3,473,529
Mining 376,540 341,495
Depreciation and amortization 254,591 259,481
General and administrative 366,511 366,959
Total costs and expenses 5,596,854 4,441,464
Income (loss) from operations
before income taxes 429,646 (145,634)
Income taxes (Note 3) 34,530 --
Net income (loss) 395,116 (145,634)
Preferred stock dividends 5,939 5,939
Income (loss) available to
common stockholders $ 389,177 $ (151,573)
Basic and diluted earnings (loss) per
share of common stock (Note 5) $ 0.01 $ (0.01)
Weighted average number of
common 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,
1999 1998
Cash flows from operating activities
Net income (loss) $ 395,116 $ (145,634)
Adjustments to reconcile net income (loss) to net
cash (used by) provided from operating activities
Depreciation and amortization 254,591 259,481
Gain on sale of property and equipment (10,796) (3,211)
Gain on disposition of land held for sale (10,389) (13,515)
Deferral of gain arising from installment
land sales 4,507 14,689
Cash provided from (used by) changes in
Accounts receivable and accrued billings (525,953) 222,553
Inventories 45,801 (86,323)
Costs and estimated earnings in excess
of billings on uncompleted contracts 391,515 (43,935)
Prepaid expenses and other current assets (158,813) (168,977)
Accounts payable and accrued liabilities (635,600) (99,020)
Billings in excess of costs and estimated
earnings on uncompleted contracts 223,798 (46,956)
Income taxes payable 9,580 (28,731)
Net cash used by operating activities (16,643) (139,579)
Cash flows from investing activities
Proceeds from the disposal of
property and equipment 56,791 74,073
Issuance of notes receivable (1,692) (52,839)
Proceeds from notes receivable 49,092 164,262
Purchases of property and equipment (457,475) (460,814)
Net sale (acquisition) from (of)
land held for sale 7,492 (254,749)
Cash surrender value of life insurance (500) (4,700)
Net cash used by investing activities (346,292) (534,767)
Cash flows from financing activities
Payments of preferred stock dividends (5,939) (5,939)
Net decrease in cash and cash equivalents (368,874) (680,285)
Cash and cash equivalents at beginning of period 2,616,465 4,397,281
Cash and cash equivalents at end of period $2,247,591 $3,716,996
Supplemental disclosure of cash flow information
Income taxes paid $ 1,628 $ 28,731
See accompanying notes to consolidated financial statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
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, 1998, 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, 1998. 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:
March 31, December 31,
1999 1998
Materials and supplies $197,731 $257,788
Industrial mineral products 62,074 72,212
Ores in process 41,193 16,799
Total inventories $300,998 $346,799
Note 3 - Income Taxes
The income tax provisions consisted of:
Three Months Three Months
Ended March 31, Ended March 31,
1999 1998
Current
Federal $ 6,000 $ --
State 28,530 --
34,530 --
Deferred
Federal -- --
State -- --
-- --
Total $34,530 $ --
The effective income tax rate was 8% and 0% for the three months ended
March 31, 1999 and 1998, respectively, primarily due to the application
of a net operating loss carryforward. At March 31, 1999, the Company
had tax net operating loss carryforwards of approximately $6,500,000
available to offset future regular taxable income, which if unused,
will expire from 2000 through 2019.
The Company decreased the valuation allowance for deferred tax assets
by $186,000 for the three months ended March 31, 1999 and decreased
the valuation allowance by $157,000 for the three months ended
March 31, 1998.
Note 4 - The Goldfield Corporation 1998 Executive
Long-Term Incentive Plan
In 1998 the stockholders of the Company approved the 1998 Executive
Long-Term Incentive Plan (the "Plan"), which permits the granting of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance
Units, Performance Share and other awards to all officers and key
employees of the Company and its subsidiaries. Shares granted pursuant
to the Plan may be authorized but unissued shares of Common Stock,
Treasury shares or shares purchased on the open market. The exercise
price under such grants will be based on the fair market value of the
Common Stock at the date of grant. The maximum number of shares available
for grant under the Plan shall be 1,300,000.
On March 9, 1999, the Board of Directors of the Company approved the
distribution of 985,000 shares of Common Stock under the Plan.
Management expects to grant these options as designated by the Stock
Option Committee in the near future.
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 7% voting cumulative convertible
Preferred Stock ("Series A Stock") of $5,939 in each of the three month
periods ended March 31, 1999 and 1998 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, 1999 and 1998.
Common shares issuable on conversion of Series A Stock are not
considered in the basic earnings (loss) calculation because the effect
would be anti-dilutive.
Note 6 - Business Segment
The Company adopted SFAS No. 131, Disclosure About Segments of an
Enterprise and Related Information, in 1998. The adoption of this
statement did not have any effect on either the current or prior
years' presentation of reportable segments. The Company is primarily
involved in two lines of business, mining and electrical construction.
There were no material amounts of sales or transfers between lines of
business and no material amounts of export sales. Any intersegment
sales have been eliminated. The following table sets forth certain
segment information for the periods indicated:
Three Months Ended Three Months Ended
March 31, March 31,
1999 1998
Sales from operations to
unaffiliated customers
Electrical construction $5,578,184 $3,868,215
Mining 381,075 346,661
Total $5,959,259 $4,214,876
Gross profit
Electrical construction $816,042 $ 252,178
Mining (69,126) (100,807)
Total gross profit 746,916 151,371
Interest and other income, net 67,241 80,954
General corporate expenses (384,511) (377,959)
Income (loss) from operations
before income taxes $429,646 $(145,634)
The following table sets forth
certain segment information March 31, March 31,
as of the date indicated: 1999 1998
Identifiable assets
Electrical construction $ 9,232,604 $ 7,374,415
Mining 2,408,752 2,807,683
Corporate 2,552,866 3,459,338
Total $14,194,222 $13,641,436
Note 7 - Reclassifications
Certain amounts in 1998 have been reclassified to conform to the
1999 presentation.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations - Three Months Ended March 31, 1999 Compared
to Three Months Ended March 31, 1998.
Net Income (Loss)
The Company had net income of $395,116 for the three months ended
March 31, 1999, compared to a net loss of $145,634 for the three
months ended March 31, 1998. Net income for the three months ended
March 31, 1999 included income tax expense of $34,530.
Revenues
Total revenues for the three months ended March 31, 1999 were
$6,026,500, compared to $4,295,830 in the like 1998 period, an
increase of 40%. The increase in revenues was primarily attributable
to a higher level of activity in electrical construction operations.
Electrical construction revenue increased by 44% in the three months
ended March, 31, 1999 to $5,578,184 from $3,868,215 for the three
months ended March 31, 1998.
Revenue from mining operations increased by 10% to $381,075 for the
three months ended March 31, 1999 from $346,661 for the three months
ended March 31, 1998.
Operating Results
Electrical construction operations had an operating profit of
$816,042 during the three months ended March 31, 1999, compared to
an operating profit of $252,178 during the three months ended March
31, 1998. The increase in operating results in 1999 was primarily
due to an increase in the level of operations and 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 March 31, 1999, the approximate value
of uncompleted contracts was $5,800,000, compared to $1,450,000 at
March 31, 1998.
During the three months ended March 31, 1999, the operating loss from
mining operations was $69,126, compared to an operating loss of $100,807
during the three months ended March 31, 1998.
St. Cloud Mining Company, a wholly-owned subsidiary of the Company
("St. Cloud"), sold 4,024 tons of natural zeolite during the three months
ended March 31, 1999, compared to 3,375 tons during the three months
ended March 31, 1998.
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 March 31, 1999, The Lordsburg Mining
Company, a wholly-owned subsidiary of the Company ("Lordsburg"), sold
7,179 tons of construction aggregate material, compared to 9,076 tons
sold during the three months ended March 31, 1998.
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 the three months ended March 31, 1999 was $67,241,
compared to $80,954 for the three months ended March 31, 1998. The
decrease in other income for 1998 was primarily a result of lower
interest income.
Costs and Expenses
Total costs and expenses, and the components thereof, increased to
$5,596,854 for the three months ended March 31, 1999 from $4,441,464 for
the like period in 1998, primarily as a result of increased electrical
construction costs.
Electrical construction costs were $4,599,212, and $3,473,529 in the
three months ended March 31, 1999 and 1998, respectively. The increase
in costs for 1999 was attributable to a higher level of operations.
Mining costs were $376,540 for the three months ended March 31, 1999,
compared to $341,495 in the like 1998 period.
Depreciation and amortization was $254,591 in the three months ended
March 31, 1999, compared to $259,481 in the three months ended March 31,
1998.
General corporate expenses of the Company increased to $384,511 in the
three months ended March 31, 1999, compared to $377,959 in the three
months ended March 31, 1998.
Liquidity and Capital Resources
Cash and cash equivalents at March 31, 1999 were $2,247,591 as
compared to $2,616,465 as of December 31, 1998. Working capital at
March 31, 1999 was $6,419,585, compared to $5,956,603 at March 31,
1998. The Company's ratio of current assets to current liabilities
increased to 5.1 to 1 at March 31, 1999, from 4.1 to 1 at December
31, 1998 primarily due to the lower level of accounts payable and
accrued liabilities at March 31, 1999.
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, 1999 and 1998.
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 the Company's
subsidiary, Southeast Power Corporation, 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 June 29, 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 three months ended March 31, 1999 and 1998. 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 three months ended March 31,
1999 decreased to $457,475 from $460,814 for the three months ended
March 31, 1998.
Year 2000 Compliance
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 July 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 March 31, 1999.
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 14, 1999 /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