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, 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 March 31, 1998.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 3,716,996 $ 4,397,281
Accounts receivable and accrued billings 1,607,091 1,829,644
Current portion of notes receivable 94,748 78,946
Inventories (Note 2) 304,825 218,502
Costs and estimated earnings in excess of
billings on uncompleted contracts 835,295 791,360
Prepaid expenses and other current assets 243,345 74,368
Total current assets 6,802,300 7,390,101
Property, buildings and equipment, net 4,647,148 4,510,158
Notes receivable, less current portion 545,351 672,576
Deferred charges and other assets
Deferred income taxes (Note 3) 548,000 548,000
Land held for sale 254,749 --
Repurchased royalty at cost, net of accumulated
amortization of $217,312 in 1998 and
$210,793 in 1997 102,138 108,657
Cash surrender value of life insurance 741,750 737,050
Total deferred charges and other assets 1,646,637 1,393,707
Total assets $13,641,436 $13,966,542
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 818,259 $ 917,279
Billings in excess of costs and estimated
earnings on uncompleted contracts 26,092 73,048
Current portion of deferred gain on
installment sales 1,346 --
Income taxes payable (Note 3) -- 28,731
Total current liabilities 845,697 1,019,058
Deferred gain on installment sales,
less current portion 113,693 113,865
Total liabilities 959,390 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 (8,695,712) (8,544,139)
Total 12,700,766 12,852,339
Less common stock in treasury, 17,358
shares, at cost 18,720 18,720
Total stockholders' equity 12,682,046 12,833,619
Total liabilities and stockholders' equity $13,641,436 $13,966,542
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Revenue
Electrical construction $ 3,868,215 $ 2,733,526
Mining 346,661 515,570
Other income, net 80,954 95,975
Total revenue 4,295,830 3,345,071
Costs and expenses
Electrical construction 3,473,529 2,295,278
Mining 341,495 410,635
Depreciation and amortization 259,481 235,023
General and administrative 366,959 302,131
Total costs and expenses 4,441,464 3,243,067
Income (loss) from operations
before income taxes (145,634) 102,004
Income taxes (Note 3) -- 24,000
Net income (loss) (145,634) 78,004
Preferred stock dividends 5,939 5,939
Income (loss) available to
common stockholders $ (151,573) $ 72,065
Basic earnings (loss) per share of
common stock $ (0.01) $ 0.00
Weighted average number of
common shares outstanding 26,854,748 26,854,748
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (145,634) $ 78,004
Adjustments to reconcile net income (loss) to net
cash provided from (used by) operating activities
Depreciation and amortization 259,481 235,023
Deferred income taxes -- 24,000
Gain on sale of property and equipment (3,211) (28,637)
Cash provided by (used for) changes in
Accounts receivable and accrued billings 222,553 (572,752)
Inventories (86,323) 22,374
Costs and estimated earnings in excess
of billings on uncompleted contracts (43,935) (280,247)
Prepaid expenses and other current assets (168,977) (146,877)
Land held for sale (254,749) --
Cash surrender value of life insurance (4,700) (4,700)
Accounts payable and accrued liabilities (99,020) 140,241
Billings in excess of costs and estimated
earnings on uncompleted contracts (46,956) (14,270)
Deferred gain on installment sales 1,174 (58)
Income taxes payable (28,731) --
Net cash provided from (used by)
operating activities (399,028) (547,899)
Cash flows from investing activities
Proceeds from the disposal of
property and equipment 74,073 66,137
Loans granted (52,839) (9,998)
Collections from notes receivable 164,262 4,415
Purchases of property and equipment (460,814) (137,810)
Net cash used by investing activities (275,318) (77,256)
Cash flows from financing activities
Payments of preferred stock dividends (5,939) (5,939)
Net increase (decrease) in cash and cash equivalents (680,285) (631,094)
Cash and cash equivalents at beginning of period 4,397,281 4,610,198
Cash and cash equivalents at end of period $3,716,996 $3,979,104
Income taxes paid $ 28,731 $ --
See accompanying notes to consolidated financial statements
</TABLE>
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
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, 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:
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March 31, December 31,
1998 1997
<S> <C> <C>
Materials and supplies $121,993 $110,399
Industrial mineral products 68,957 45,169
Ores in process 113,875 62,934
Total inventories $304,825 $218,502
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Note 3 - Income Taxes
The income tax provision consisted of:
<TABLE>
Three Months Three Months
Ended March 31, Ended March 31,
1998 1997
<S> <C> <C>
Current
Federal $ -- $ --
State -- --
-- --
Deferred
Federal -- 20,000
State -- 4,000
-- 24,000
Total $ -- $24,000
</TABLE>
Temporary differences and carryforwards which give rise to deferred
tax assets and liabilities consisted of:
<TABLE>
March 31, December 31,
1998 1997
<S> <C> <C>
Deferred tax assets
Depletion, mineral rights and deferred
development and exploration costs $ 323,000 $ 324,000
Accrued workers' compensation costs 24,000 28,000
Accrued vacation and bonus 38,000 14,000
Property and equipment, principally
due to differences in depreciation
and valuation write-downs 352,000 358,000
Contingent salary payments recorded
as goodwill for tax purposes 9,000 7,000
Net operating loss carryforwards 2,672,000 2,644,000
Investment tax credit carryforwards 9,000 209,000
Alternative minimum tax credit
carryforwards 262,000 262,000
3,689,000 3,846,000
Valuation allowance (3,141,000) (3,298,000)
Total net deferred tax assets 548,000 548,000
Deferred tax liabilities -- --
Net deferred tax assets $ 548,000 $ 548,000
</TABLE>
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 $157,000 for the three months ended March 31,
1998 and decreased the valuation allowance $48,000 for the three
months ended March 31, 1997.
At March 31, 1998, the Company had tax net operating loss
carryforwards of approximately $7,022,000 available to offset future
regular taxable income, which if unused, will expire from 2000
through 2013.
Additionally, the Company at March 31, 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 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 $5,939 in each of
the three month periods ended March 31, 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 March 31, 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 Three Months Ended March 31, 1998 Compared
to Three Months Ended March 31, 1997.
Net Income (Loss)
The Company incurred a net loss of $145,634 for the three months
ended March 31, 1998, compared to a net income of $78,004 for the
three months ended March 31, 1997.
Revenues
Total revenues for the three months ended March 31, 1998 were
$4,295,830, compared to $3,345,071 in the like 1997 period, an
increase of 28%.
Electrical construction revenue increased by 42% in the three months
ended March 31, 1998 to $3,868,215 from $2,733,526 for the three
months ended March 31, 1997. Electrical construction revenue
includes the results of the subsidiary acquired in January 1996,
Fiber Optic Services, which had revenue of $170,648 for the three
months ended March 31, 1998, compared to $234,449 for the three
months ended March 31, 1997.
Revenue from mining operations for the three months ended March 31,
1998 was $346,661, compared to $515,570 for the three months ended
March 31, 1997. The decrease in revenue from mining for 1998 was
primarily due to the completion of a single land restoration project
in the first quarter of 1997.
Operating Results
Electrical construction operations had an operating profit of $252,178
during the three months ended March 31, 1998, compared to an
operating profit of $295,741 during the three months ended March 31,
1997. 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, 1998, the approximate value
of uncompleted contracts was $1,450,000, compared to $6,350,000
at March 31, 1997.
During the three months ended March 31, 1998, the operating loss
from mining operations was $100,807, compared to an operating profit
of $23,419 during the three months ended March 31, 1997. The
decrease in operating results from mining operations in 1998 was
primarily due to the completion of a single land restoration project in
the first quarter of 1997. Operating profit (loss) includes
depreciation expense.
St. Cloud Mining Company, a wholly-owned subsidiary of the Company
("St. Cloud"), sold 3,375 tons of natural zeolite during the three
months ended March 31, 1998, compared to 4,000 tons during the three
months ended March 31, 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 March 31, 1998, The Lordsburg Mining
Company, a wholly-owned subsidiary of the Company ("Lordsburg"),
sold 9,076 tons of construction aggregate material, compared to
7,263 tons sold 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
Total costs and expenses increased approximately 37% during the
three months ended March 31, 1998, compared to the like period 1997.
This increase was primarily a result of the increased revenue in
electrical construction.
Electrical construction costs were $3,473,529 and $2,295,278 in the
three months ended March 31, 1998 and 1997, respectively.
Depreciation and amortization was $259,481 in the three months ended
March 31, 1998, compared to $235,023 in the three months ended March
31, 1997.
General corporate expenses of the Company increased to $377,959 in
the three months ended March 31, 1998, compared to $313,131 in the
three months ended March 31, 1997.
Liquidity and Capital Resources
Cash and cash equivalents at March 31, 1998 were $3,716,996 as
compared to $4,397,281 as of December 31, 1997. Working capital at
March 31, 1998 was $5,956,603, compared to $6,371,043 at December
31, 1997. The Company's ratio of current assets to current
liabilities was 8.0 to 1 at March 31, 1998, compared to 7.3 to 1 at
December 31, 1997.
The Company paid cash dividends on its Series A Preferred Stock in
the amount of $5,939 in each of the three month periods ended March 31,
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
three months ended March 31, 1998 and 1997. 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, 1998 were $460,814, compared to $137,810 for the three months
ended March 31, 1997. The higher level of capital expenditures for the
1998 period was primarly attributable to increase in equipment purchases
in both the electrical construction and mining operations.
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 March 31, 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)
Dated: May 15, 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,716,996
<SECURITIES> 0
<RECEIVABLES> 1,607,091
<ALLOWANCES> 0
<INVENTORY> 304,825
<CURRENT-ASSETS> 6,802,300
<PP&E> 22,222,357
<DEPRECIATION> 17,575,209
<TOTAL-ASSETS> 13,641,436
<CURRENT-LIABILITIES> 845,697
<BONDS> 0
0
339,407
<COMMON> 2,687,211
<OTHER-SE> 9,655,428
<TOTAL-LIABILITY-AND-EQUITY> 13,641,436
<SALES> 4,214,876
<TOTAL-REVENUES> 4,295,830
<CGS> 3,815,024
<TOTAL-COSTS> 4,441,464
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (145,634)
<INCOME-TAX> 0
<INCOME-CONTINUING> (145,634)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (145,634)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
