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PART I
Item 1. Business.
The Goldfield Corporation, incorporated in Wyoming in 1906 and
subsequently reincorporated in Delaware in 1968, is engaged in
electrical construction and mining activities. Since January 1,
1996, the electrical construction segment has included the
construction of fiber optic communication systems. Unless the
context otherwise requires, the terms "Goldfield" and "the Company"
as used herein mean The Goldfield Corporation and its consolidated
subsidiaries. For information concerning sales, operating profits
and identifiable assets by business segment, see Note 14 of Notes to
Consolidated Financial Statements.
Electrical Construction
The Company, through its subsidiary, Southeast Power Corporation, a
Florida corporation ("Southeast Power"), is engaged in the
construction and maintenance of electrical facilities for utilities
and industrial customers in Florida, Georgia and Alabama. As a
result of an acquisition effected January 1, 1996, electrical
construction operations now includes through the Company's
subsidiary Fiber Optic Services, Inc., a Florida corporation,
("Fiber Optic Services"), the construction of fiber optic
communication systems throughout the United States.
The Company's construction business through Southeast Power includes
the construction of transmission lines, distribution systems and
substations and other electrical installation services for utility
systems and industrial and specialty projects. Fiber Optic Services
provides various construction services, including installation of
aerial and underground cable systems, conduit systems and the
splicing, testing and documentation of optical fibers. Fiber Optic
Services performs these services primarily for power utilities and
telecommunications companies, pursuant to fixed and unit price
contracts.
It is the Company's policy to commit itself only to the amount of
work it believes it can properly supervise, equip and complete to
the customer's satisfaction and schedule. As a result of these
policies and the magnitude of some of the construction projects
undertaken by the Company, a substantial portion of the Company's
annual revenue is derived from a relatively small number of
customers, the specific identity of which vary from year to year.
See Note 14 of Notes to Consolidated Financial Statements.
Construction is customarily performed pursuant to the plans and
specifications of customers. The Company generally supplies the
management, labor, equipment, tools and, except with respect to some
utility customers, the materials necessary to construct a project.
Contracts may extend beyond one year, although most projects are
completed within 90 days.
The electrical construction business is highly competitive. Certain
of the Company's actual or potential competitors have substantially
greater financial resources available to them. A portion of the
electrical construction work requires payment and performance bonds.
The Company has adequate bonding availability.
The Company enters into contracts on the basis of either competitive
bidding or direct negotiations with its customers. Competitively
bid contracts account for a majority of the Company's construction
revenues. Although there is considerable variation in the terms of
the contracts undertaken, such contracts typically involve either
lump sum or unit price contracts, pursuant to which the Company
agrees to do the work for a fixed amount.
The magnitude and duration of projects undertaken by the Company
vary, which may result in substantial fluctuations in its backlog
from time to time. At February 14, 1997, the approximate value of
uncompleted contracts was $4,000,000, compared to $3,480,000 at
February 14, 1996 and $1,700,000 at February 14, 1995.
As of February 14, 1997, electrical construction had a staff of 16
salaried employees, including executive officers, division managers,
superintendents, project managers and administrative personnel. In
addition, at such date, electrical construction had 72 hourly-rated
employees, none of whom are affiliated with any trade or labor
organization. The number of hourly-rated employees fluctuates
depending upon the number and size of projects under construction at
any particular time. The Company believes that the experience and
continuity of its staff employees has been an important factor in
its success. Management of the Company believes its relations with
both its salaried and hourly rated employees are good.
The Company is subject to the authority of state and municipal
regulatory bodies concerned with the licensing of contractors. The
Company believes that it is in compliance with such licensing
requirements in all jurisdictions in which it conducts its business.
The administrative and maintenance facilities of Southeast Power are
located on a 13-acre tract of land near Titusville, Florida owned by
the Company. The office building has 3,744 feet of floor space and
the shop and buildings contain approximately 17,000 feet of floor
space.
The administrative and maintenance facility of Fiber Optic Services
is located in Clearwater, Florida, where the Company leases
approximately 5,000 square feet of space at an annual rental rate of
$16,800. This lease expires in January 1998.
Mining
The Company, through its subsidiaries, explores for, mines,
processes and markets industrial minerals, aggregate products and base
and precious metals from properties located in New Mexico.
The Company does not consider itself to be a significant factor in
the mining industry. The Company competes with other companies in
the search for and the acquisition of mining properties and their
exploration and development. Many of these competitors have
substantially greater financial resources than the Company, which
may give them certain competitive advantages, especially with
respect to projects requiring large amounts of capital.
The Company's mining operations are subject to the jurisdiction of
federal and state governmental authorities which have responsibility
for environmental matters such as air and water quality, the
promotion of occupational safety and minimum standards for mine
reclamation. The Company has in the past reclaimed mining areas,
tailing impoundments and other associated disturbances and expects
to continue to do so in the future. Costs of such reclamation are
charged against earnings as incurred. Future costs or capital
expenditures relating to the protection of the environment are not
expected to have a material adverse effect on the Company's
earnings. The Company believes that compliance with mine reclamation
laws will not adversely affect the competitive position of its
operations since competitors in the mining industry are subject to
the same laws. The Company currently holds all federal and state
environmental permits and licenses required for the operation of its
mining activities.
St. Cloud - Industrial Minerals
St. Cloud Mining Company, a Florida Corporation ("St. Cloud"), is a
wholly-owned subsidiary of the Company and operates the St. Cloud
mill and mining properties in Sierra County, New Mexico. The St.
Cloud mill and mining properties encompass approximately 1,500 acres
which are estimated to contain several million tons of geologic
reserves of natural zeolites, a special type of volcanic ash
(clinoptilolite).
The clinoptilolite mineral occurs in flat lying beds and is
extracted by conventional open pit mining methods. At the St. Cloud
mill, the clinoptilolite minerals are crushed, dried, and sized
without beneficiation and shipped in bulk, packaged or modified to
customer's specifications. Most deliveries are by contract
motor carriers to manufacturers, brokers, or independent sales agents
who incorporate zeolites into specific consumer products or for specific
industrial uses.
The zeolite products were originally sold as animal feed
supplements. Zeolite products now include cat litter, industrial
absorbents, air and water filtration media, environmental products
and soil conditioners. The zeolite product is also used in other
applications where ammonia control or specific cation exchange
capacity is required. Zeolite sales are currently at approximately
81% the 1995 level as a result of the change in the needs of one
customer which accounted for 51% of 1995 sales. The Company is
continually seeking other customers to replace this business.
In 1996, St. Cloud sold 14,456 tons of natural zeolite, compared to
20,775 tons and 20,921 tons in 1995 and 1994, respectively. St.
Cloud has made several modifications to its zeolite operation
including the addition of cation exchange capacity, drying, warehousing,
bagging and additional screening capabilities to the mill.
At February 14, 1997, St. Cloud had a total of 17 full-time
employees, none of whom are affiliated with trade or labor
organizations.
St. Cloud - Base and Precious Metals Mining
Since 1968, the Company has been involved in the exploration, mining
and milling of silver, copper and gold ores at the St. Cloud
property. Production commenced at St. Cloud in 1981. However,
surface and underground mining has been halted since the third
quarter of 1991 and the first quarter of 1992, respectively, due to
declining metal prices and mine grades. St. Cloud's viability is
sensitive to the future price of base and precious metals,
particularly silver. Significant portions of the Company's
investment in St. Cloud's silver mines, processing facilities and
equipment were written-down at the end of 1993.
St. Cloud's principal properties are located within the Gila
National Forest in the Chloride Mining District and encompass
approximately 500 acres in two main claim blocks.
Individual ore shoots containing base and precious metals are
confined to steeply dipping, silicified fissure veins with normal
fault displacement. Several veins are known to exist in the
Chloride Mining District. The Company's two main deposits, the St.
Cloud and U. S. Treasury mines, have been partially explored at
depths up to 1,000 feet. Mining widths vary from 3 to more than 20
feet and have averaged approximately 10-12 feet. The underground
mines have been developed by declined ramps utilizing rubber-tired
trucks and loaders, and the principal mining method has been
conventional shrink stoping. St. Cloud currently estimates their
demonstrated reserves to be approximately 379,000 tons averaging
0.76% copper, 6.23 ounces silver per ton and 0.029 ounces gold per
ton. Based on current metal prices, the Company believes that the
above-estimated reserves are not, at present, economically
recoverable.
During 1994, the Company implemented a plan to refocus mining
operations on the production of industrial minerals. As a result,
mineralized siliceous converter flux sales at St. Cloud were
virtually discontinued. Subsequent to the first quarter of 1992,
the only base and precious metal mining activity at St. Cloud was
the sale of stockpiled ore of mineralized siliceous converter flux.
No significant amount of stockpiled ore remains at St. Cloud. There
were no such sales in 1996, 1995 and 1994.
Management of the Company reviews the net carrying value of all
mining facilities on a periodic basis to determine, among other
factors, (1) the net realizable value of each major project, (2) the
ability of the Company to fund all care, maintenance and standby
costs, (3) the status and usage of the assets while in a standby
mode, to determine whether some form of amortization is appropriate
and (4) current projections of metal prices that affect the decision
to reopen or make a disposition of the Company's assets.
Lordsburg
In 1990, The Lordsburg Mining Company, a wholly-owned subsidiary of
the Company ("Lordsburg"), entered into a venture agreement with
Federal Resources Corporation ("Federal") to explore, develop and
mine deposits near the town of Lordsburg in southwestern New Mexico.
Under this operating agreement, Federal conveyed and assigned to the
venture, The Lordsburg Mining Company, approximately 12,000 acres of
patented and unpatented mining claims which include certain mining
claims leased in the Lordsburg Mining District by Federal, and
existing milling facilities, buildings and other personal property
located on the claims. In April 1994, the Company acquired
Federal's 50% interest in the Lordsburg properties for $75,000.
Prior to the acquisition of Federal's interest, Lordsburg did not
produce sufficient revenue over the related expenses to permit a net
proceeds distribution to Lordsburg and Federal.
During 1993, a large number of unpatented claims were dropped due to
increased holding costs imposed by the Federal government, but most
of the important mining and exploration potential is on patented
property and was retained. Underground reserves are estimated to be
103,800 tons averaging 0.53% copper, 1.0 ounces silver per ton and
0.097 ounces gold per ton. Based on current metal prices and
operating costs, the above estimated reserves are not, at present,
economically recoverable.
Production from underground mining, 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.
In 1996, Lordsburg sold 17,190 tons of barren, siliceous flux to
copper smelters, compared to 20,993 tons and 6,319 tons sold in 1995
and 1994, respectively. Lordsburg also sold 14,070 tons of
construction aggregate material in 1996, compared to 17,347 tons and
14,190 tons in 1995 and 1994, respectively.
At February 14, 1997, Lordsburg had a total of 2 full-time employees
in New Mexico, none of whom are affiliated with trade or labor
organizations.
San Pedro
In April 1993, the capital stock of The San Pedro Mining Corporation
("San Pedro"), a then wholly-owned subsidiary of the Company, was
sold for $1,220,000 of which $50,000 in cash was paid at closing
with the balance of the purchase price represented by a promissory
note payable to the Company in equal monthly principal installments
of $15,000 through January 2000, with the exception of six
installments being reduced to $7,500 payable February 1996 through
July 1996 as a result of an amendment dated April 3, 1996. The note
bears interest at the rate of prime plus 1% (9.25% at December 31,
1996) payable monthly and is secured by a first real estate mortgage
and personal property security agreement upon substantially all of
the assets of and a pledge of all of the outstanding capital stock
of San Pedro. Effective February 18, 1997, the agreement was
amended to provide for the debtor to reduce $150,000 of principal
and interest with the transfer of equipment with an estimated fair
value when received of $150,000. This equipment would be used in
the Company's mining operations. The debtor has the right to
repurchase this equipment for $150,000 through April 18, 1997. The
Company has classified this note receivable as noncurrent as of
December 31, 1996.
Since the purchaser's initial investment in the property amounted to
less than 20% of the sale price, the installment method of profit
recognition was used resulting in a deferred gain of $330,214 of
which $24,360, $48,720 and $48,720 were recognized as revenue during
1996, 1995 and 1994, respectively. The installment method
recognizes proportionate amounts of the gain associated with the
transaction as payments are received.
The primary assets of San Pedro were represented by mining
properties with a net book value of $889,786 at the date of sale.
Royalty
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% to be paid until
2002.
During 1996, the Company earned $20,000 from the Harlan coal
royalty, compared to $183,308 in 1995 and $236,094 in 1994. 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.
Item 2. Properties.
For information with respect to the principal properties and
equipment utilized in the Company's mining and electrical
construction operations, see "Item 1. Business."
The Company's principal office is located in Melbourne, Florida,
where the Company leases 3,560 square feet of space at an annual
rental rate of $48,402. The lease, which expires in January 1998
may be renewed for two additional three year terms.
Item 3. Legal Proceedings.
There are no material pending legal proceedings, other than routine
litigation incidental to the business of the Company, to which the
Company or any of its subsidiaries is a party or of which any of
their property is subject.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the
fourth quarter of 1996.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Common Stock of the Company is traded on the American Stock
Exchange, Inc. under the symbol GV. The following table shows the
reported high and low sales price at which the Common Stock of the
Company was traded in 1996 and 1995.
1996 1995
High Low High Low
First Quarter 7/16 1/4 7/16 5/16
Second Quarter 3/8 1/4 7/16 5/16
Third Quarter 3/8 1/4 1/2 5/16
Fourth Quarter 5/16 1/4 7/16 1/4
As of February 19, 1997, the Company had approximately 19,630
holders of record.
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.
Item 6. Selected Financial Data.
The following table sets forth summary consolidated financial
information of the Company for each of the years in the five-year
period ended December 31, 1996.
Years Ended December 31,
1996 1995 1994 1993 1992
(in thousands except per share amounts)
Statements of Operations
Total revenues $13,544 $13,328 $13,394 $12,826 $15,048
Net income (loss) (338) (678) (1,101) (2,554)* 1,124
Earnings (loss) per
share of common
stock (0.01) (0.03) (0.04) (0.10) 0.04
Balance Sheets
Total assets 13,652 13,847 14,458 16,402 18,301
Working capital 5,934 6,241 7,511 8,362 9,161
Stockholders' equity 12,443 12,805 13,506 14,631 17,208
(*) Includes a credit of $917,500 which represents the cumulative effect from
the adoption of SFAS 109, "Accounting For Income Taxes" and a charge of
$2,668,559 from the write-down of certain mining assets.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Net Income (Loss)
The Company incurred a net loss of $337,838 for the year ended
December 31, 1996, compared to net losses of $677,558 and $1,100,516
for the years ended December 31, 1995 and 1994, respectively.
Revenues
Total revenues in 1996 were $13,544,392, compared to $13,328,184 and
$13,393,832 in 1995 and 1994, respectively. The revenue levels and
revenue contributions by electrical construction and mining
operations during the past three years have remained substantially
constant.
Electrical construction revenue increased to $11,628,898 in 1996,
compared to $10,676,254 in 1995. In 1994, electrical construction
was $10,811,611. The increase in electrical construction revenue
for 1996 was primarily due to revenue from the newly acquired subsidiary,
Fiber Optic Services, which, net of intercompany eliminations, was
$788,690.
Revenue from mining operations decreased to $1,506,797 for the year ended
December 31, 1996 from $1,907,684 for the year ended December 31, 1995.
The decrease in revenue from mining for 1996 was primarily a result of
the change in the needs of one customer which accounted for 51% of 1995
zeolite sales. In 1994, revenue from mining operations was $1,783,728.
Operating Results
Electrical construction operations had operating profit of $578,265
in 1996, compared to operating losses of $223,154 and $181,278 in
1995 and 1994, respectively. The increase in operating results for
1996 was due to 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. As of February 14, 1997, the approximate value of
uncompleted contracts was $4,000,000, compared to $3,480,000 at
February 14, 1996.
The operating loss from mining operations was $179,542 in 1996
compared to an operating profit of $72,150 and $25,288 in 1995 and
1994, respectively. Operating profit(loss) includes royalty income
and depreciation expense. The decrease in operating results from
mining operations in 1996 was primarily due to decreased royalty
income. Royalty income was $20,000 in 1996 as compared to $183,308
and $236,094 in 1995 and 1994, respectively. 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.
Other Income
Other income for 1996 was $388,697 as compared to $560,938 and
$562,399 for 1995 and 1994, respectively. The decrease in 1996 from
1995 was primarily attributable to a decrease in interest income.
Costs and Expenses
Electrical construction costs were $10,482,506 and $10,358,367 in
1996 and 1995, respectively as compared to $10,433,366 in 1994.
Depreciation and amortization was $916,726 in 1996, compared to
$902,524 and $824,664 in 1995 and 1994, respectively.
General corporate expenses of the Company increased to $1,125,348 in
1996 from $1,025,492 in 1995. The increase in general corporate
expense was primarily a result of increased salary expense. General
corporate expenses were $1,481,925 in 1994. The decrease in general
corporate expenses for 1995 was primarily due to the termination of
the employment agreement between the Company and James Sottile,
Chairman of the Board.
Liquidity and Capital Resources
Cash and cash equivalents as of December 31, 1996 were $4,610,198 as
compared to $4,447,810 as of December 31, 1995. Working capital was
$5,933,947 and $6,240,833 as of December 31, 1996 and 1995,
respectively. The Company's ratio of current assets to current
liabilities was 6.8 to 1 at December 31, 1996, compared to 7.9 to 1
at December 31, 1995.
The Company paid cash dividends on its Series A Preferred Stock in
the amount of $23,758 in each of the years ended December 31, 1996,
1995 and 1994. 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, 1997, at
which time the Company expects to renew it for an additional year.
No borrowings were outstanding under this line of credit during
1996, 1995 and 1994. However, beginning in 1996 $100,000 of this
line of credit was reserved for a standby letter of credit.
The Company's capital expenditures in 1996 decreased to $736,406
from $1,260,127 in 1995. The capital expenditures for 1996 included
the acquisition of the fixed assets of Fiber Optic Services for
$173,138 as described in Note 9 of Notes to Consolidated Financial
Statements. Capital expenditures in 1997 are expected to be
approximately $800,000, which the Company expects to finance through
existing credit facilities or cash reserves.
Item 8. Financial Statements and Supplementary Data.
Independent Auditors' Report
The Shareholders and Board of Directors
The Goldfield Corporation:
We have audited the consolidated financial statements of The
Goldfield Corporation and subsidiaries as listed in the accompanying
index (Item 14(a)(1)). These consolidated financial statements are
the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of The Goldfield Corporation and subsidiaries at December
31, 1996 and 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
/ /
Orlando, Florida
February 21, 1997
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31,
1996 1995
ASSETS
Current assets
Cash and cash equivalents $ 4,610,198 $ 4,447,810
Accounts receivable and accrued billings 1,420,270 1,538,039
Current portion of notes receivable
(Note 3) 39,771 191,438
Inventories (Note 4) 228,049 165,608
Costs and estimated earnings in excess
of billings on uncompleted contracts
(Note 2) 600,302 639,186
Prepaid expenses and other current assets 63,794 162,470
Total current assets 6,962,384 7,144,551
Properties, net (Note 5) 4,187,288 4,355,900
Notes receivable, less current portion
(Note 3) 875,100 810,000
Deferred charges and other assets
Deferred income taxes (Note 6) 860,000 860,000
Repurchased royalty at cost, less
accumulated amortization of $184,718
in 1996 and $158,640 in 1995 134,732 160,810
Cash surrender value of life insurance
(Note 7) 632,739 515,499
Total deferred charges and other assets 1,627,471 1,536,309
Total assets $13,652,243 $13,846,760
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities
(Note 8) $ 954,366 $ 819,847
Billings in excess of costs and estimated
earnings on uncompleted contracts
(Note 2) 74,071 35,151
Current portion of deferred gain (Note 3) -- 48,720
Total current liabilities 1,028,437 903,718
Deferred gain on installment sale, less
current portion (Note 3) 180,400 138,040
Total liabilities 1,208,837 1,041,758
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
(Note 11) 339,407 339,407
Common stock, $.10 par value per share,
40,000,000 shares authorized; issued
26,872,106 shares (Notes 11 and 13) 2,687,211 2,687,211
Capital surplus 18,369,860 18,369,860
Retained earnings (deficit) (8,934,352) (8,572,756)
Total 12,462,126 12,823,722
Less common stock in treasury, 17,358
shares, at cost 18,720 18,720
Total stockholders' equity 12,443,406 12,805,002
Total liabilities and stockholders' equity $13,652,243 $13,846,760
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
1996 1995 1994
Revenue
Electrical construction $ 11,628,898 $ 10,676,254 $ 10,811,611
Mining 1,506,797 1,907,684 1,783,728
Royalty income 20,000 183,308 236,094
Other income, net (Note 12) 388,697 560,938 562,399
Total revenue 13,544,392 13,328,184 13,393,832
Costs and expenses
Electrical construction 10,482,506 10,358,367 10,433,366
Mining 1,388,150 1,712,404 1,763,677
Depreciation and amortization 916,726 902,524 824,664
General and administrative 1,094,848 970,447 1,447,641
Total costs and expenses 13,882,230 13,943,742 14,469,348
Loss from operations before
income taxes (337,838) (615,558) (1,075,516)
Income taxes (Note 6) -- 62,000 25,000
Net loss (337,838) (677,558) (1,100,516)
Preferred stock dividends 23,758 23,758 23,758
Loss available to common
stockholders $ (361,596) $ (701,316) $ (1,124,274)
Loss per share of common
stock (Note 13) $ (0.01) $ (0.03) $ (0.04)
Weighted average number of
shares outstanding 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
Years Ended December 31,
1996 1995 1994
Cash flows from operating activities
Net loss $ (337,838) $ (677,558) $(1,100,516)
Adjustments to reconcile net loss
to net cash provided from
(used by) operating activities
Depreciation and amortization 916,726 902,524 824,664
Amortization of excess of cost over
equity in net assets of the acquired
business -- -- 124,331
Deferred income taxes -- 62,000 25,000
Deferred gain on sale of
subsidiary (24,360) (48,720) (48,720)
Gain on sale of property and equipment (32,288) (88,640) (115,239)
Decrease (increase) in accounts
receivable and accrued billings 117,769 (53,579) 609,494
Notes receivable granted (42,600) -- --
Decrease (increase) in inventories (62,441) 51,100 140
Decrease (increase) in costs and
estimated earnings in excess of
billings on uncompleted contracts 38,884 (390,866) (12,575)
Decrease (increase) in prepaid
expenses and other current assets 98,676 97,400 (67,505)
Increase in cash surrender value of
life insurance (117,240) (115,988) (94,444)
Increase (decrease) in accounts
payable and accrued liabilities 134,519 211,788 (804,633)
Increase (decrease) in billings
in excess of costs and
estimated earnings on
uncompleted contracts 38,920 (72,898) 108,049
Deferred income from notes granted 18,000 -- --
Total adjustments 1,084,565 554,121 548,562
Net cash provided from (used by)
operating activities 746,727 (123,437) (551,954)
Cash flows from investing activities
Proceeds from the disposal of
fixed assets 46,658 100,070 169,919
Loans granted (71,278) (352,863) (10,962)
Collections from notes receivable 200,445 232,387 193,485
Purchases of fixed assets (563,268) (1,260,127) (862,467)
Payments made to acquire fixed
assets of Fiber Optic Services (173,138) -- --
Net cash used by investing
activities (560,581) (1,280,533) (510,025)
Cash flows from financing activities
Payments of preferred stock
dividends (23,758) (23,758) (23,758)
Net cash used by financing
activities (23,758) (23,758) (23,758)
Net increase (decrease) in cash and
cash equivalents 162,388 (1,427,728) (1,085,737)
Cash and cash equivalents at
beginning of period 4,447,810 5,875,538 6,961,275
Cash and cash equivalents at end of
period $ 4,610,198 $ 4,447,810 $ 5,875,538
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31,
1996 1995 1994
RETAINED Beginning balance $(8,572,756) $(7,871,440) $(6,747,166)
EARNINGS Net loss (337,838) (677,558) (1,100,516)
(DEFICIT) Cash dividends
Series A
Stock (per
share: 7%) (23,758) (23,758) (23,758)
Ending balance (8,934,352) (8,572,756) (7,871,440)
PREFERRED Beginning and
STOCK ending balance 339,407 339,407 339,407
SERIES A
COMMON STOCK Beginning and
ending balance 2,687,211 2,687,211 2,687,211
CAPITAL Beginning and
SURPLUS ending balance 18,369,860 18,369,860 18,369,860
TREASURY Beginning and
STOCK ending balance (18,720) (18,720) (18,720)
Total
consolidated
stockholders'
equity $12,443,406 $12,805,002 $13,506,318
See accompanying Notes to Consolidated Financial Statements
THE GOLDFIELD CORPORATION
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
Note 1 - Summary of Significant Accounting Policies
Basis of Financial Statement Presentation - The accompanying
consolidated financial statements include the accounts of The
Goldfield Corporation ("Parent") and its subsidiaries (collectively,
"the Company"), all of which are wholly-owned. All significant
intercompany balances and transactions have been eliminated.
Nature of Operations - The Company's principal lines of business are
electrical construction and the mining of industrial minerals as
well as base and precious metals. The principal market for the
Company's electrical construction operation is electric utilities in
Florida, Georgia and Alabama. The principal market for the
Company's mining operations is purchasers of zeolite products
throughout the United States.
Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased
to be cash equivalents.
Inventories - Inventories are valued at the lower of cost or market.
Cost is determined by the first-in, first-out method. Costs
associated with extraction and milling or production activities are
inventoried and valued at lower of cost or estimated final smelter
settlement or net sales (net realizable value).
Properties and Depreciation - Property, buildings and equipment are
stated at cost. The Company provides depreciation for financial
reporting purposes over the estimated useful lives of fixed assets
using the straight-line and units-of-production methods.
Repurchased Royalty - 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.
Mining Revenues - Zeolite sales are recorded upon delivery. Other
sales are recorded in the month of delivery. Recorded values are
adjusted periodically and upon final settlement.
Mine Exploration and Development - Exploration costs and normal
development costs at operating mines are charged to operations as
incurred.
Long-Term Electrical Contracts - Revenues are earned under long-
term fixed price contracts and units of delivery contracts.
Revenues from units of delivery contracts are recorded as the
service is performed. For completed contracts, the revenue is based
on actual billings. For uncompleted contracts the revenue is based
on actual labor hours incurred and estimated final billing rates.
Revenues from long-term fixed price construction contracts are
recognized on the percentage-of-completion method measured by
comparing the costs incurred to date to the estimated total costs to
be incurred for each contract. The asset, "costs and estimated
earnings in excess of billings on uncompleted contracts" represents
revenues recognized in excess of amounts billed. The liability,
"billings in excess of costs and estimated earnings on uncompleted
contracts" represents billings in excess of revenue recognized.
Contract costs include all direct material, direct labor,
subcontractor costs and other indirect costs related to contract
performance, such as supplies, tools and repairs. General and
administrative costs are charged to expense as incurred. Provisions
for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. Changes in job performance,
job conditions, estimated profitability and final contract
settlements may result in revisions to costs and income and are
recognized in the period in which the revisions are determined.
Deferred Charge - The Company amortized the excess cost over equity
in net assets of a subsidiary on a straight-line basis over the
period ended December 31, 1994.
Income Taxes - The Company accounts for income taxes using the asset
and liability method. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Use of Estimates - Management of the Company has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities
to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from
those estimates.
Financial Instruments Fair Value, Concentration of Business and
Credit Risks - The carrying amount reported in the balance sheet for
cash and cash equivalents, accounts receivable and accrued billing,
accounts payable and accrued liabilities approximates fair value
because of the immediate or short-term maturity of these financial
instruments. It is not considered practical to estimate the fair
value of the $600,000 note receivable relating to the sale of The
San Pedro Mining Corporation (see Note 3). The fair value of the
$212,500 note receivable which provides for an interest rate of 18%
and is collateralized by land located in Brevard County, Florida, is
considered to be its carrying value due to the lack of a ready
market for such loans. Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of accounts receivable, accrued billings and retainage
in the amount of $1,211,110 at December 31, 1996 due from electrical
utilities pursuant to contract terms. The Company considers these
electrical utility customers to be creditworthy. In January 1996,
the Company lost its largest zeolite customer which represented 38%
of mining revenue in 1995. The Company is continually seeking other
customers to replace this business.
Reclassifications - Certain amounts in 1995 and 1994 have been
reclassified to conform to the 1996 presentation.
Note 2 - Costs and Estimated Earnings on Uncompleted Contracts
At December 31, 1996 and 1995, long-term fixed price construction
contracts in progress accounted for on the percentage-of-completion
method consisted of:
1996 1995
Costs incurred on uncompleted
contracts $3,788,038 $9,039,931
Estimated earnings (loss) 790,319 (125,181)
4,578,357 8,914,750
Less billings to date 4,052,126 8,310,715
$ 526,231 $ 604,035
Included in the balance sheets
under the following captions
Costs and estimated earnings
in excess of billings on
uncompleted contracts $600,302 $639,186
Billings in excess of costs
and estimated earnings on
uncompleted contracts (74,071) (35,151)
Total $526,231 $604,035
The amounts billed but not paid by customers pursuant to retention
provisions of long-term construction contracts were $282,850 and
$468,474 at December 31, 1996 and 1995, respectively. The retainage
is expected to be collected within the next twelve months.
Note 3 - Sale of Mining Subsidiary
In April 1993, the capital stock of The San Pedro Mining Corporation
("San Pedro"), a then wholly-owned subsidiary of the Company was
sold for $1,220,000 of which $50,000 in cash was paid at closing
with the balance of the purchase price represented by a promissory
note payable to the Company in equal monthly principal installments
of $15,000 through January 2000, with the exception of six
installments being reduced to $7,500 payable February 1996 through
July 1996 as a result of an amendment dated April 3, 1996. The note
bears interest at the rate of prime plus 1% (9.25% at December 31,
1996) payable monthly and is secured by a first real estate mortgage
and personal property security agreement upon substantially all of
the assets of and a pledge of all of the outstanding capital stock
of San Pedro. Effective February 18, 1997, the agreement was
amended to provide for the debtor to reduce $150,000 of principal
and interest with the transfer of equipment with an estimated fair
value when received of $150,000. This equipment would be used in
the Company's mining operations. The debtor has the right to
repurchase this equipment for $150,000 through April 18, 1997. The
Company has classified this note receivable as noncurrent as of
December 31, 1996.
Since the purchaser's initial investment in the property amounted to
less than 20% of the sale price, the installment method of profit
recognition was used resulting in a deferred gain of $330,214. In
the years ended December 31, 1996, 1995 and 1994, $24,360, $48,720
and $48,720, respectively, of such deferred gain was recognized as
revenue. The installment method recognizes proportionate amounts of
the gain associated with the transaction as payments are received.
The primary assets of San Pedro were represented by mining
properties with a net book value of $889,786 at the date of sale.
Note 4 - Inventories
Inventories at December 31 are as follows:
1996 1995
Materials and supplies $106,672 $111,856
Industrial mineral products 62,983 46,838
Ores in process 58,394 6,914
Total inventories $228,049 $165,608
Note 5 - Properties
Balances of major classes of properties at December 31 are as
follows:
1996 1995
Land, mines and mining claims $ 5,255,047 $ 5,255,047
Buildings and improvements 1,729,313 1,721,825
Machinery and equipment 14,296,694 13,794,318
Construction in progress 34,109 --
Total 21,315,163 20,771,190
Less accumulated depreciation,
depletion and amortization 17,127,875 16,415,290
Net properties $ 4,187,288 $ 4,355,900
As a matter of policy, management of the Company reviews the net
carrying value of all mining facilities on a periodic basis. As a
result of such review, no write-down was considered necessary during
any of the years in the three year period ended December 31, 1996.
Note 6 - Income Taxes
The income tax provision (benefit) for the years ended December 31,
1996, 1995 and 1994 consist of the following:
1996 1995 1994
Current
Federal $ -- $ -- $ --
State -- -- --
-- -- --
Deferred
Federal -- 52,000 24,000
State -- 10,000 1,000
Total $ -- $62,000 $25,000
Temporary differences and carryforwards which give rise to deferred
tax assets and liabilities as of December 31, 1996 and December 31,
1995 are as follows:
December 31, December 31,
1996 1995
Deferred tax assets
Depletion, mineral rights
and deferred development
and exploration cost $ 325,000 $ 325,000
Accrued workers' compensation
costs 62,000 99,000
Accrued vacation and bonus 11,000 15,000
Property and equipment,
principally due to differences
in depreciation and valuation
write-downs 340,000 389,000
Net operating loss carryforwards 2,881,000 2,685,000
Investment tax credit
carryforwards 264,000 295,000
Alternative minimum tax
credit carryforwards 256,000 256,000
4,139,000 4,064,000
Valuation allowance (3,279,000) (3,204,000)
Total net deferred tax assets 860,000 860,000
Deferred tax liabilities -- --
Net deferred tax assets $ 860,000 $ 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 increased the valuation allowance for net
deferred tax assets by approximately $75,000 for the year ended
December 31, 1996.
At December 31, 1996, the Company had tax net operating loss
carryforwards of approximately $7,600,000 available to offset future
regular taxable income, which if unused, will expire from 1999
through 2011.
Additionally, the Company has investment tax credit carryforwards of
approximately $264,000 available to reduce future Federal income
taxes, which if unused, will expire from 1997 through 2000. In
addition, the Company has alternative minimum tax credit
carryforwards of approximately $256,000 which are available to
reduce future Federal income taxes over an indefinite period.
The differences between the Company's effective income tax rate and
the Federal statutory rate for the years ending December 31, 1996,
1995 and 1994 are reconciled below:
1996 1995 1994
Federal statutory rate (benefit) (34.0)% (34.0)% (34.0)%
Amortization of excess of cost
over equity in net assets of
business acquired -- -- 3.9
State income tax (3.6) 2.0 --
Other non-deductible expenses 6.4 3.0 1.6
Other -- 6.0 --
Valuation allowance 31.2 33.1 30.8
Total --% 10.1% 2.3%
Note 7 - Employee Benefit Agreements and 401(k) Plan
Beginning in 1989, the Company entered into employee benefit
agreements with certain employees of the Company. Under the terms
of the agreements, the Company buys life insurance policies that
build cash surrender value while also providing life insurance
benefits for the employee. The Company is entitled to a refund of
all previously paid premiums or the cash surrender value of the
policy, whichever is lower, if the agreement is terminated prior to
the employee attaining the age of 65. After an employee reaches age
65, the Company is entitled to a refund of all previously paid
premiums in ten annual installments. In the event of death, the
Company will immediately be entitled to a refund of all previously
paid premiums. The Company may terminate the agreements at any time
by giving written notice to the employee.
Effective January 1, 1995, the Company adopted The Goldfield
Corporation and Subsidiaries Employee Savings and Retirement Plan,
a defined contribution plan that qualifies under Section 401(k) of
the Internal Revenue Code. The plan provides retirement benefits to
all employees who meet eligibility requirements and elect to
participate. Under the plan, participating employees may defer up
to 15% of their pre-tax compensation per calendar year subject to
Internal Revenue Code limits. The Company's contributions to the
plan are discretionary and amounted to approximately $79,000 and
$74,000 for the years ended December 31, 1996 and 1995,
respectively.
Note 8 - Worker's Compensation Self-Insurance Plan
During 1990, the Company adopted a self-insured plan for worker's
compensation claims subject to certain limits. In July 1993, the
Company changed its method of insuring workers' compensation claims
to a plan that is not self-insured. As of December 31, 1996 and
1995, the estimated liability for workers' compensation for the
outstanding claims under the previous self-insured plan was
approximately $162,000 and $260,000, respectively. Such liability
is included in accounts payable and accrued liabilities in the
accompanying balance sheets.
Note 9 - Acquisition of Fiber Optic Services
In January 1996, the Company acquired the fixed assets of Fiber
Optic Services for payments of $173,138 and future payments equal to
2 1/2 times their average pre-tax earnings for the five years ended
December 31, 2000. This acquisition was accounted for as a
purchase. Accordingly, the initial payments were allocated to the
fixed assets acquired based upon their estimated fair market values.
Proforma effects of this acquisition for fiscal 1996 are considered
immaterial.
Fiber Optic Services is engaged in the construction of fiber optic
communication systems throughout the United States primarily for
electric utilities and communication companies.
Note 10 - Credit Facility
Under an unsecured line of credit arrangement expiring April 30,
1997 (guaranteed by the Company), the Company's electrical
construction subsidiary may borrow up to $1,000,000 at the bank's
prime rate of interest. At December 31, 1996 and 1995, no
borrowings were outstanding under this line of credit; however,
during 1996, $100,000 of the line of credit was reserved for a
standby letter of credit for the outstanding self-insured workers
compensation claims. All stated conditions related to this
available credit line have been complied with in 1996 and 1995.
Note 11 - Preferred and Common Stock
The Series A 7% Voting Cumulative Convertible Preferred Stock
("Series A Stock") is convertible into common stock, presently at
the rate of 1.144929 shares of common stock for each share of Series
A Stock, and has an annual dividend rate of $.07 per share. The
Series A Stock may be redeemed by the Company at par. Holders of
the Series A Stock have the same voting rights as common
stockholders (except under certain circumstances arising from the
failure to pay dividends on the Series A Stock) and have certain
rights not held by common stockholders such as preferences in
liquidation and controlling voting rights in certain mergers, sales
and amendments to the Certificate of Incorporation.
At December 31, 1996, 26,872,106 shares of Common Stock were issued
and 388,597 shares of Common Stock were reserved for possible
conversion of the Series A Stock.
Note 12 - Other Income, Net
Other income, net consists of the following:
1996 1995 1994
Interest income $283,538 $404,646 $317,695
Recognized gain on sale of
subsidiary (Note 3) 24,360 48,720 48,720
Gain on sale of equipment 32,288 88,640 115,239
Other 48,511 18,932 80,745
Total other
income, net $388,697 $560,938 $562,399
Note 13 - Earnings (Loss) Per Share of Common Stock
Earnings (loss) per common share, after deducting dividend
requirements on the Company's Series A Stock of $23,758 in each of
the years ended December 31, 1996, 1995 and 1994 were based on the
weighted average number of shares of Common Stock outstanding,
excluding 17,358 shares of Treasury stock for each of the years
ended December 31, 1996, 1995 and 1994. 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.
Note 14 - Business Segment Information
Operations include mining and electrical construction. Intersegment
sales have been eliminated. The following table sets forth certain
segment information for the periods indicated:
1996 1995 1994
Sales from operations to
unaffiliated customers
Electrical construction $11,628,898 $10,676,254 $10,811,611
Mining 1,506,797 1,907,684 1,783,728
Total $13,135,695 $12,583,938 $12,595,339
Gross profit (loss)
Electrical construction $ 578,265 $ (223,154) $ (181,278)
Mining (179,452) 72,150 25,288
Total gross profit (loss) 398,813 (151,004) (155,990)
Interest and other income,
net 388,697 560,938 562,399
General corporate expenses (1,125,348) (1,025,492) (1,481,925)
Loss from operations
before income taxes $ (337,838) $ (615,558) $(1,075,516)
Identifiable assets
Electrical construction $ 6,459,253 $ 5,177,368 $ 5,172,820
Mining 2,835,680 3,140,009 3,052,651
Corporate 4,357,310 5,529,383 6,232,435
Total $13,652,243 $13,846,760 $14,457,906
Capital expenditures
Electrical construction $ 579,032 $ 780,613 $ 464,040
Mining 79,783 338,728 372,259
Corporate 77,591 140,786 42,168
Total $ 736,406 $ 1,260,127 $ 878,467
Depreciation and depletion
Electrical construction $ 568,127 $ 541,041 $ 559,523
Mining 280,720 280,360 204,779
Corporate 41,801 55,045 34,284
Total $ 890,648 $ 876,446 $ 798,586
Gross profit (loss) is total operating revenue less operating
expenses. Gross profits (losses) exclude general corporate expenses,
interest expense, interest income and income taxes. Royalty income
is included in the calculation of gross profit (loss) for the mining
segment. Identifiable assets by industry are used in the operations
of each industry.
Sales (in thousands of dollars) to major customers exceeding 10% of
total sales follows:
1996 1995 1994
% of % of % of
Total Total Total
Amount Sales Amount Sales Amount Sales
Electrical construction
Customer A $2,171 17 $2,081 17
Customer B $3,409 27
Customer C 3,081 23
Customer D 1,584 13 3,245 26
Customer E 3,781 30
Item 9. Charges In and Disagreements With Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information concerning the directors of the Company is contained
under "Election of Directors" in the Company's 1997 Proxy Statement,
which information is incorporated by reference.
The executive officers of the Company are as follows:
Year in which
Service Began
Name and Title(1) as Officer Age
James Sottile
Chairman of the Board
of Directors 1970 83
John H. Sottile, (2)
President and Chief
Executive Officer, Director 1983 49
John M. Starling
Secretary, Director 1996 67
Stephen R. Wherry,
Vice President, Treasurer
and Chief Financial Officer 1988 38
Throughout the past five years John H. Sottile and Stephen R. Wherry
have been principally employed as executive officers of the Company.
James Sottile has served as Chairman of the Board for the past five
years.
John M. Starling has been an executive officer of the Company since
March 15, 1996. Since January 1, 1995, Mr. Starling has acted as Of
Counsel for the law firm of Severs, Stadler & Harris, P.A. Prior to
such time, Mr. Starling was a member of the law firm of Holland,
Starling, Severs, Stadler & Friedland, P.A.
The term of office of all directors is until the next annual meeting
and the term of office of all officers is for one year and until
their successors are chosen and qualify.
(1) As of February 14, 1997.
(2) John H. Sottile is the son of James Sottile, Chairman of the
Board of Directors.
Item 11. Executive Compensation.
Information concerning executive compensation is contained under
"Executive Compensation" in the Company's 1997 Proxy Statement,
which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information concerning the security ownership of the directors and
officers of the registrant is contained under "Ownership of Voting
Securities by Certain Beneficial Owners and Management" in the
Company's 1997 Proxy Statement, which information is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information concerning relationships and related transactions of the
directors and officers of the Company is contained under "Election
of Directors" in the Company's 1997 Proxy Statement, which
information is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
(a) 1. Financial Statements Page
Report of Independent Certified Public Accountants 11
Consolidated Balance Sheets - December 31, 1996
and 1995 12
Consolidated Statements of Operations - Three Years
ended December 31, 1996 13
Consolidated Statements of Cash Flows - Three Years
ended December 31, 1996 14
Consolidated Statements of Stockholders' Equity-
Three Years ended December 31, 1996 15
Notes to Consolidated Financial Statements 16
3. Exhibits
3-1 Restated Certificate of Incorporation of the Company, as
amended, is hereby incorporated by reference to Exhibit
3-1 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1987, heretofore filed with the
Commission (file No. 1-7525).
3-2 By-Laws of the Company, as amended, is hereby incorporated by
reference to Exhibit 3-2 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1987,
heretofore filed with the Commission (file No. 1-7525).
4-1 Action by Unanimous Consent of Holders of Preferred Stock as
of September 30, 1979 permanently waiving mandatory
redemption is hereby incorporated by reference to Exhibit
3-5 of the Company's Registration Statement on Form S-l,
No. 2-65781, heretofore filed with the Commission on
November 28, 1979.
4-2 Specimen copy of Company's Common Stock certificate is
hereby incorporated by reference to Exhibit 4-5 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1987, heretofore filed with the Commission
(file No. 1-7525).
10-1 Employment Agreement dated January 1, 1986 between
Southeast Power Corporation and Romey A. Taylor is hereby
incorporated by reference to Exhibit 10-l(b) of the
Company's Registration Statement on Form S-l, No. 33-3866,
heretofore filed with the Commission on March 10, 1986.
10-1(a) Amendment No. 1 to Employment Agreement dated January 1,
1986 between Southeast Power Corporation, Romey A. Taylor
and The Goldfield Corporation is hereby incorporated by
reference to Exhibit 10-1(a) to the Company's report on
Form 10-Q for the quarter ended September 30, 1988,
heretofore filed with the Commission (file No. 1-7525).
10-1(b) Amendment dated September 11, 1995 to Employment Agreement
effective January 1, 1986 between Southeast Power
Corporation and Romey A. Taylor is hereby incorporated by
reference to Exhibit 10-1(b) to the Company's report on
Form 10-Q for the quarter ended September 30, 1995,
heretofore filed with the Commission (file No. 1-7525).
10-2 Employment Agreement effective January 15, 1985 between
The Goldfield Corporation and John H. Sottile is hereby
incorporated by reference to Exhibit 10-6 of the Company's
Registration Statement on Form S-l, No. 33-3866,
heretofore filed with the Commission on March 10, 1986.
10-2(a) Amendment dated February 25, 1986 to the Employment
Agreement included in Exhibit 10-2 is hereby incorporated
by reference to Exhibit 10-6(a) of the Company's
Registration Statement on Form S-l, No. 33-3866,
heretofore filed with the Commission on March 10, 1986.
10-2(b) Amendment dated September 23, 1988 to Employment Agreement
effective January 15, 1985 between The Goldfield
Corporation and John H. Sottile is hereby incorporated by
reference to Exhibit 10-2(b) to the Company's report on
Form 10-Q for the quarter ended September 30, 1988,
heretofore filed with the Commission (file No. 1-7525).
10-2(c) Amendment dated February 27, 1990 to Employment Agreement
effective January 15, 1985 between The Goldfield
Corporation and John H. Sottile, is hereby incorporated by
reference to Exhibit 10-2(c) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1989,
heretofore filed with the Commission (file No. 1-7525).
10-2(d) Amendment dated January 29, 1992 to Employment Agreement
effective January 15, 1985 between The Goldfield
Corporation and John H. Sottile, is hereby incorporated by
reference to Exhibit 10-2(d) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1991,
heretofore filed with the Commission (file No. 1-7525).
10-2(e) Amendment dated September 15, 1995 to Employment Agreement
effective January 15, 1985 between The Goldfield
Corporation and John H. Sottile, is hereby incorporated by
reference to Exhibit 10-2(e) of the Company's report on
Form 10-Q for the quarter ended September 30, 1995,
heretofore filed with the Commission (file No. 1-7525).
10-3 Employment Agreement dated January 1, 1986 among John H.
Sottile, Southeast Power Corporation and The Goldfield
Corporation is hereby incorporated by reference to Exhibit
10-8 of the Company's Registration Statement on Form S-l,
No. 33-3866, heretofore filed with the Commission on March
10, 1986.
10-3(a) Amendment No. 1 to Employment Agreement dated January 1,
1986 among John H. Sottile, Southeast Power Corporation
and The Goldfield Corporation is hereby incorporated by
reference to Exhibit 10-4(a) of the Company's report on
Form 10-Q for the quarter ended September 30, 1988,
heretofore filed with the Commission (file No. 1-7525).
10-3(b) Amendment No. 2 to Employment Agreement dated January 1,
1986 among John H. Sottile, Southeast Power Corporation
and The Goldfield Corporation, is hereby incorporated by
reference to Exhibit 10-4(b) of the Company's Annual
Report on Form 10-K for the year ended December 31, 1991,
heretofore filed with the Commission (file No. 1-7525).
10-3(c) Amendment dated September 11, 1995 to Employment Agreement
effective January 1, 1986 between Southeast Power
Corporation and John H. Sottile, is hereby incorporated by
reference to Exhibit 10-4(c) of the Company's report on
Form 10-Q for the quarter ended September 30, 1995
heretofore filed with the Commission (file No. 1-7525).
10-4 Employee Benefit Agreement dated November 20, 1989 between
The Goldfield Corporation and John H. Sottile, is hereby
incorporated by reference to Exhibit 10-5 of the Company's
Annual Report on Form 10-K for the year ended December
31, 1989, heretofore filed with the Commission (file No.
1-7525).
10-5 Employee Benefit Agreement dated November 16, 1989 between
The Goldfield Corporation and Stephen R. Wherry, is hereby
incorporated by reference to Exhibit 10-6 of the Company's
Annual Report on Form 10-K for the year ended December
31, 1989, heretofore filed with the Commission (file No.
1-7525).
10-6 Stock Purchase Agreement dated April 12, 1993 between
Florida Transport Corporation and Royalstar Southwest,
Inc. relating to the sale of San Pedro Mining Corporation
is hereby incorporated by reference to Exhibit 10-13 of
the Company's Annual Report on Form 10-K for the year
ended December 31, 1993, heretofore filed with the
Commission (file No. 1-7525).
*10-6(a) Amendment dated April 3, 1996 to Promissory Note dated
April 12, 1993 between Florida Transport Corporation
and The San Pedro Mining Corporation, Royalstar
Resources Ltd., and Royalstar Southwest.
*10-6(b) Amendment dated February 18, 1997 to Promissory Note
dated April 12, 1993 between Florida Transport
Corporation and The San Pedro Mining Corporation,
Royalstar Resources Ltd., and Royalstar Southwest.
10-7 The Goldfield Corporation and Subsidiaries Standardized
Adoption Agreement and Prototype Cash or Deferred Profit-
Sharing Plan and Trust Basic Plan Document #3 effective
January 1, 1995, is hereby incorporated by reference to
Exhibit 10-9 of the Company's report on Form 10-Q for the
quarter ended March 31, 1995, heretofore filed with the
Commission (file No. 1-7525).
*10-8 Royalty Agreement dated February 19, 1982 between Bow
Valley Coal Resources, Inc. and Northern Goldfield
Investments, Ltd., Inc.
*10-8(a) Amendment dated February 14, 1997 to Royalty Agreement
dated February 19, 1982 between Great Western Coal Inc.
dba New Horizons Coal Inc. and The Goldfield Corporation.
11 For computation of per share earnings, see Note 13 of
Notes to Consolidated Financial Statements.
*21 Subsidiaries of Registrant.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter
ended December 31, 1996.
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities 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
By /s/ John H. Sottile
(John H. Sottile)
President, Chief Executive Officer
and Director
Dated: March 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ James Sottile Chairman of the Board March 25, 1997
(James Sottile)
/s/ John H. Sottile President, March 25, 1997
(John H. Sottile) Chief Executive
Officer and Director
/s/ Stephen R. Wherry Vice President, March 25, 1997
(Stephen R. Wherry) Finance and Chief
Financial Officer
(Principal Financial
Officer), Treasurer
and Principal
Accounting Officer
/s/ John M. Starling Director and Secretary March 25, 1997
(John M. Starling)
/s/ John P. Fazzini Director March 25, 1997
(John P. Fazzini)
/s/ Danforth E. Leitner Director March 25, 1997
(Danforth E. Leitner)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996 Commission File No. 1-7525
THE GOLDFIELD CORPORATION
EXHIBITS
March 25, 1997
INDEX TO EXHIBITS
Sequentially
numbered
3. Exhibits pages
3-1 Restated Certificate of Incorporation of the Company,
as amended, is hereby incorporated by reference to
Exhibit 3-1 of the Company's Annual Report on Form
10-K for the year ended December 31, 1987, heretofore
filed with the Commission (file No. 1-7525).
3-2 By-Laws of the Company, as amended is hereby
incorporated by reference to Exhibit 3-2 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1987, heretofore filed with the Commission
(file No. 1-7525).
4-1 Action by Unanimous Consent of Holders of Preferred
Stock as of September 30, 1979 permanently waiving
mandatory redemption is hereby incorporated by
reference to Exhibit 3-5 of the Company's Registration
Statement on Form S-l, No. 2-65781, heretofore filed
with the Commission on November 28, 1979.
4-2 Specimen copy of Company's Common Stock certificate is
hereby incorporated by reference to Exhibit 4-5 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1987, heretofore filed with the Commission
(file No. 1-7525).
10-1 Employment Agreement dated January 1, 1986 between
Southeast Power Corporation and Romey A. Taylor is
hereby incorporated by reference to Exhibit l0-l(b) of
the Company's Registration Statement on Form S-l, No.
33-3866, heretofore filed with the Commission on March
10, 1986.
10-1(a) Amendment No. 1 to Employment Agreement dated January
1, 1986 between Southeast Power Corporation, Romey A.
Taylor and The Goldfield Corporation is hereby
incorporated by reference to Exhibit 10-1(a) to the
Company's report on Form 10-Q for the quarter ended
September 30, 1988, heretofore filed with the
Commission (file No. 1-7525).
10-1(b) Amendment dated September 11, 1995 to Employment
Agreement effective January 1, 1986 between Southeast
Power Corporation and Romey A. Taylor is hereby
incorporated by reference to Exhibit 10-1(b) to the
Company's report on Form 10-Q for the year ended
September 30, 1995, heretofore filed with the
Commission (file No. 1-7525).
10-2 Employment Agreement effective January 15, 1985
between The Goldfield Corporation and John H.
Sottile is hereby incorporated by reference to
Exhibit 10-6 of the Company's Registration
Statement on Form S-l, No. 33-3866, heretofore
filed with the Commission on March 10, 1986.
10-2(a) Amendment dated February 25, 1986 to the
Employment Agreement included in Exhibit 10-2
is hereby incorporated by reference to Exhibit
10-6(a) of the Company's Registration Statement
on Form S-l, No. 33-3866, heretofore filed
with the Commission on March 10, 1986.
10-2(b) Amendment dated September 23, 1988 to
Employment Agreement effective January 15, 1985
between The Goldfield Corporation and John H.
Sottile is hereby incorporated by reference to
Exhibit 10-2(b) to the Company's report on Form
10-Q for the quarter ended September 30, 1988,
heretofore filed with the Commission (file No.
1-7525).
10-2(c) Amendment dated February 27, 1990 to Employment
Agreement effective January 15, 1985 between
The Goldfield Corporation and John H. Sottile,
is hereby incorporated by reference to Exhibit
10-2(c) of the Company's Annual Report on Form
10-K for the year ended December 31, 1989,
heretofore filed with the Commission (file No.
1-7525).
10-2(d) Amendment dated January 29, 1992 to Employment
Agreement effective January 15, 1985 between
The Goldfield Corporation and John H. Sottile,
is hereby incorporated by reference to Exhibit
10-2(d) of the Company's Annual Report on Form
10-K for the year ended December 31, 1991,
heretofore filed with the Commission (file No.
1-7525).
10-2(e) Amendment dated September 15, 1995 to
Employment Agreement effective January 15, 1985
between The Goldfield Corporation and John H.
Sottile, is hereby incorporated by reference to
Exhibit 10-2(e) of the Company's report on Form
10-Q for the quarter ended September 30, 1995,
heretofore filed with the Commission (file No.
1-7525).
10-3 Employment Agreement dated January 1,
1986 among John H. Sottile, Southeast
Power Corporation and The Goldfield
Corporation is hereby incorporated by
reference to Exhibit 10-8 of the
Company's Registration Statement on Form
S-l, No. 33-3866, heretofore filed with
the Commission on March 10, 1986.
10-3(a) Amendment No. 1 to Employment Agreement
dated January 1, 1986 among John H.
Sottile, Southeast Power Corporation and
The Goldfield Corporation is hereby
incorporated by reference to Exhibit
10-4(a) of the Company's report on Form
10-Q for the quarter ended September 30,
1988, heretofore filed with the
Commission (file No. 1-7525).
10-3(b) Amendment No. 2 to Employment Agreement
dated January 1, 1986 among John H.
Sottile, Southeast Power Corporation and
The Goldfield Corporation, is hereby
incorporated by reference to Exhibit
10-4(b) of the Company's Annual Report
on Form 10-K for the year ended December
31, 1991, heretofore filed with the
Commission (file No. 1-7525).
10-3(c) Amendment dated September 11, 1995 to
Employment Agreement effective January 1,
1986 between Southeast Power Corporation
and John H. Sottile, is hereby
incorporated by reference to Exhibit 10-4(c)
of the Company's report on Form 10-Q
for the quarter ended September 30, 1995
heretofore filed with the Commission
(file No. 1-7525).
10-4 Employee Benefit Agreement dated November
20, 1989 between The Goldfield
Corporation and John H. Sottile, is
hereby incorporated by reference to
Exhibit 10-5 of the Company's Annual
Report on Form 10-K for the year ended
December 31, 1989, heretofore filed with
the Commission (file No. 1-7525).
10-5 Employee Benefit Agreement dated November
16, 1989 between The Goldfield
Corporation and Stephen R. Wherry, is
hereby incorporated by reference to
Exhibit 10-6 of the Company's Annual
Report on Form 10-K for the year ended
December 31, 1989, heretofore filed with
the Commission (file No. 1-7525).
10-6 Stock Purchase Agreement dated April 12, 1993
between Florida Transport Corporation and
Royalstar Southwest, Inc. relating to the sale
of San Pedro Mining Corporation is hereby
incorporated by reference to Exhibit 10-13 of
the Company's Annual Report on Form 10-K for
the year ended December 31, 1993, heretofore
filed with the Commission (file No. 1-7525).
*10-6(a) Amendment dated April 3, 1996 to Promissory
Note dated April 12, 1993 between Florida
Transport Corporation and The San Pedro Mining
Corporation, Royalstar Resources Ltd., and
Royalstar Southwest. 35
*10-6(b) Amendment dated February 18, 1997 to
Promissory Note dated April 12, 1993 between
Florida Transport Corporation and The San
Pedro Mining Corporation, Royalstar Resources
Ltd., and Royalstar Southwest. 36
10-7 The Goldfield Corporation and Subsidiaries
Standardized Adoption Agreement and Prototype
Cash or Deferred Profit-Sharing Plan and Trust
Basic Plan Document #3 effective January 1,
1995, is hereby incorporated by reference to
Exhibit 10-9 of the Company's report on Form
10-Q for the quarter ended March 31, 1995,
heretofore filed with the Commission (file No.
1-7525).
*10-8 Royalty Agreement dated February 19, 1982
between Bow Valley Coal Resources, Inc. and
Northern Goldfield Investments, Ltd., Inc. 38
*10-8(a) Amendment dated February 14, 1997 to Royalty
Agreement dated February 19, 1982 between
Great Western Coal Inc. dba New Horizons Coal
Inc. and The Goldfield Corporation. 41
11 For computation of per share earnings, see Note
13 of Notes to Consolidated Financial
Statements.
*21 Subsidiaries of Registrant. 42
(b) Reports on Form 8-K
No reports on Form 8-K were filed during
the fourth quarter ended December 31,
1996.
* Filed herewith.
FLORIDA TRANSPORT CORPORATION
100 Rialto Place, Suite 500
Melbourne, Florida 32901-3082
Telephone: (407) 724-1700
Fax: (407) 724-1703
April 3, 1996
Mr. John Young, President
Royalstar Resources Ltd.,
Royalstar Washington, Inc. and
The San Pedro Mining Corp.
Suite 1400 Guiness Tower
1055 West Hastings
Vancouver, BC V6E2E9
RE: Promissory Note dated April 12, 1993 executed by The San Pedro
Mining Corporation, Royalstar Resources Ltd., and Royalstar
Southwest (now assumed by Royalstar Washington, Inc.) in favor
of Florida Transport Corporation in the original amount of
$1,170,000.00, secured by Mortgage Security Agreement and
Financing Statement ("the Mortgage") dated April 12, 1993, and
Hypothecation Agreement dated April 12, 1993.
Dear John:
In accordance with our discussion today I have attached an invoice
which reflects a reduction in the monthly principal payment from
$15,000.00 to $7,500.00 plus accrued interest. As agreed, this
reduction in principal payments will be for a period of six (6)
months from February 12, 1996, through July 12, 1996. All other
terms and conditions of the note remain the same.
It is our understanding that you will forward this money to us by
wire such that we will have it tomorrow morning. I will draft the
necessary modifications to the note and forward you a copy for your
signature.
If you have any questions please call me.
Sincerely,
FLORIDA TRANSPORT CORPORATION
/ /
John H. Sottile
President
JHS/ps
Agreed and accepted this 3 day of April, 1996.
/ /
John Young
FLORIDA TRANSPORT CORPORATION
100 Rialto Place, Suite 500
Melbourne, FL 32901-3082
Telephone: (407) 724-1700
Fax: (407) 724-1703
February 18, 1997
Mr. John Young, President
Royalstar Resources Ltd.,
Royalstar Washington, Inc. and
The San Pedro Mining Corp.
Suite 1400 Guiness Tower
1055 West Hastings
Vancouver, BC V6E2E9
RE: Promissory Note dated April 12, 1993 executed by The San Pedro
Mining Corporation, Royalstar Resources Ltd., and Royalstar
Southwest (now assumed by Royalstar Washington, Inc.) in favor
of Florida Transport Corporation in the original amount of
$1,170,000.00, secured by Mortgage Security Agreement and
Financing Statement ("the Mortgage") dated April 12, 1993, and
Hypothecation Agreement dated April 12, 1993.
Dear John:
In accordance with our discussion we have agreed to accept the
attached list of Equipment (see Exhibit "A" Equipment) presently
owned by you as partial payment for the above captioned Note and
Mortgage.
The Equipment will be conveyed free and clear of any liens and
encumbrances by Warranty Bill of Sale in form as shown in Exhibit
"B" attached hereto.
The $150,000.00 partial payment will be applied as follows:
October 12, 1996 note payment - past due $ 15,000.00
November 12, 1996 note payment - past due 15,000.00
December 12, 1996 note payment - past due 15,000.00
January 12, 1997 note payment - past due 15,000.00
February 12, 1997 note payment - past due 15,000.00
March 12, 1997 note payment 15,000.00
April 12, 1997 note payment 15,000.00
Partial prepayment of May 12, 1997 note payment 11,795.04
Interest at 9.25%* (Amortization Schedule attached) 30,867.12
August 1996 interest paid with wire transfer (3,272.98)
Adjusted September 1996 interest recalculated on
September 27, 1996 (date of receipt) 5,610.82
TOTAL DUE ON APRIL 18, 1997 $150,000.00
*Changes in the Sun Bank prime Rate between the date of this billing
and the payment due date will be reflected in the next month's
billing and loan amortization schedule, as well as the timing of the
payments with corresponding interest.
It is further agreed that you may re-purchase this Equipment at any
time on or before April 18, 1997 for $150,000.00. Florida Transport
has agreed not to remove the Equipment from the San Pedro mill site
before May 31, 1997. Subsequent to that date you grant us
permission to enter upon the property for removal of this Equipment.
As you can see from the attached schedule no additional payments of
principal or interest will be due before May 12, 1997, when the
$3,204.96 remaining balance of the May note payment, plus accrued
interest, is payable.
Sincerely,
FLORIDA TRANSPORT CORPORATION
/ /
John H. Sottile
President
JHS/ps
Attachments: Exhibit "A EQUIPMENT"
Exhibit "B"
Amortization Schedule
Agreed and Accepted this 18th day of February, 1997.
Royalstar Resources Ltd.
Royalstar Washington, Inc.
The San Pedro Mining Corporation
By:/ /
John Young, President
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT, entered into on this 19th day of
February, 1982, between BOW VALLEY COAL RESOURCES, INC. ("Bow
Valley") and NORTHERN GOLDFIELD INVESTMENTS, LTD., INC. ("Northern
Goldfield").
WITNESSETH:
WHEREAS, Northern Goldfield and Bow Valley entered into an Agreement
for the Purchase and Sale of Stock dated January 20, 1982 (the
"Sales Agreement"), pursuant to the terms of which Northern
Goldfield sold to Bow Valley all of the outstanding shares of stock
of Harlan Fuel Company ("Harlan"); and,
WHEREAS, the Sales Agreement has been closed in accordance with its
terms and Bow Valley is now the owner of all of the outstanding
shares of stock of Harlan; and,
WHEREAS, Section 2.01(c) of the Sales Agreement provides that Bow
Valley Shall pay to Northern Goldfield a royalty on coal mined and
shipped from the property owned or leased by Harlan; and,
WHEREAS, the Sales Agreement further provides that Bow Valley shall
execute such separate documents as requested by Northern Goldfield
relating to royalty payments to be made to Northern Goldfield
pursuant to the Sales Agreement.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) in hand paid by Northern Goldfield to Bow Valley and in
further consideration of the mutual promises and covenants contained
in the Sales Agreement, Bow Valley hereby agrees to pay Northern
Goldfield a royalty on coal mined and shipped from the property
owned or leased by Harlan on the following basis:
(1) Amount of Royalty.
(a) 3% of the gross selling price of coal mined and
shipped from seams lying in elevations above the Upper Mason (also
known as Upper Pathfork) seam of coal ("Upper Mason Seam").
(b) 1 1/2% of the gross selling price of coal mined and
shipped from coal seams lying in elevations below the Upper Mason
Seam.
(c) There shall be no royalties payable to Northern
Goldfield for coal mined and shipped from the Upper Mason Seam.
Gross selling price as set forth herein is defined to mean the
ultimate selling price paid to Bow Valley by any unaffiliated firm
in an arms-length transaction, F.O.B. railroad loading points in
Harlan County, Kentucky utilized by Bow Valley.
The royalties payable by Bow Valley to Northern Goldfield shall
be paid on a monthly basis on the twentieth day of each month for
all coal mined and shipped the previous month.
Royalties calculated herein shall be payable upon "shipped"
coal which is defined by the parties as used herein to mean coal
loaded at Bow Valley's shipping points in Harlan County, Kentucky,
for transportation, whether said coal shall be "raw" coal or coal
which has been washed or processed by Bow Valley.
(2) Term of Royalty. All royalties provided for herein shall
be for a term of twenty (20) years until December 31, 2001, or until
exhaustion of said coal, whichever first occurs.
(3) Minimum Annual Royalties. During the year 1982, Bow
Valley shall pay to Northern Goldfield a minimum annual royalty of
$86,000. During the year 1983, Bow Valley shall pay to Northern
Goldfield a minimum annual royalty of $100,000. During each
subsequent year, commencing in 1984, Bow Valley shall pay to
Northern Goldfield a minimum annual royalty of $150,000. If, upon
an accounting by Bow Valley to Northern Goldfield, there is
reflected total annual royalty payments of less than the applicable
minimum annual royalty, then such deficiency shall be due and
payable on January 31st of the year following.
(4) Recoupment. Bow Valley shall have the right to recoup
minimum annual royalties paid to Northern Goldfield against coal
mined and shipped from Harlan's properties for a period of three (3)
calendar years following the payment of the Minimum Annual Royalty.
If Bow Valley shall fail during any calendar year period to mine and
ship a sufficient quantity of coal to pay the minimum annual
royalty, then it shall have the right, during the following three
years and after the minimum annual royalty for said year shall have
been paid, to mine and ship sufficient coal, free of royalty, to
reimburse Bow Valley for the minimum annual royalty paid in such
preceding period in excess of coal actually mined and shipped.
(5) Force Majeure. If mining operations on Harlan's
properties or Bow Valley's loading facilities are prevented by
reason of strikes, work stoppages, labor disputes, acts of the
public enemy, epidemics, riots, insurrections, war, railcar
shortages, earthquakes, floods, government legislation or
regulations or other unavoidable casualties or misfortunes of a
similar nature which shall occur without fault or negligence of Bow
Valley, the annual minimum royalties accruing for the year in which
said event or events occurred shall be reduced in proportion to the
length of such interruption.
(6) Off-Set Rights. Bow Valley shall have the right to off-set
against any royalties owing to Northern Goldfield pursuant to
this section any Liabilities of Harlan which were not reflected in
the February 19, 1982 financial statements of Harlan which were not
paid for out of the Hold-Back Fund ("Hold-Back") established
pursuant to Section 2.04 of the Sales Agreement in accordance with
the provisions of Article VIII of the Sales Agreement.
(7) Assignment of Royalties. Northern Goldfield shall have
the right to assign the royalties granted pursuant to this
paragraph. Any such assignment shall, however, be subject to the
off-set rights provided for in Paragraph (6) above. As a further
condition to such assignment, Northern Goldfield (except in the case
of an assignment to an affiliate, parent or subsidiary) shall grant
to Bow Valley the right to purchase the royalty upon the same terms
and conditions offered by an unrelated third party. Such option of
first refusal shall expire as to any specific offer unless Bow
Valley notifies Northern Goldfield or its successor of its intent to
purchase the royalty and pays the necessary consideration contained
in the offer by the unrelated third party to Northern Goldfield on
or before thirty (30) days from receipt by Bow Valley of notice of
the proposed sale from Northern Goldfield. The right of first
refusal shall be reinstated if the offer by a third party is not
accepted and consummated by Northern Goldfield.
IN WITNESS WHEREOF, Bow Valley and Northern Goldfield have duly
executed this Agreement as of the date written above.
Signed, sealed and delivered
in the presence of:
/ / BOW VALLEY COAL RESOURCES, INC.
/ / By: / /
Clyde E. Goins, President
/ / NORTHERN GOLDFIELD INVESTMENTS, LTD., INC.
/ / By: / /
James Sottile III, President
STATE OF FLORIDA
COUNTY OF BREVARD
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State and County aforesaid to take
acknowledgments, personally appeared CLYDE E. GOINS, as President of
Bow Valley Coal Resources, inc., well known to me to be said officer
of said corporation and he acknowledged before me that he executed
the foregoing instrument in behalf of said corporation, as officer
of said corporation, for the purposes therein expressed.
WITNESS my hand and official seal in the County and State named
above this 19th day of February , 1982.
/ /
Notary Public, State of Florida at Large
(Notary Seal)
My Commission Expires:
/ /
STATE OF FLORIDA
COUNTY OF BREVARD
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State and County aforesaid to take
acknowledgments, personally appeared JAMES SOTTILE III, as President
of Northern Goldfield Investments, Ltd., Inc., well known to me to
be said officer of said corporation and he acknowledged before me
that he executed the foregoing instrument in behalf of said
corporation, as officer of said corporation, for the purposes
therein expressed.
WITNESS my hand and official seal in the County and State named
above this 19th day of February, 1982.
/ /
Notary Public, State of Florida at Large
(Notary Seal)
My Commission Expires:
/ /
NEW HORIZONS COAL INC.
Corporate Headquarters
Coalgood, KY U.S.A. 40818
Telephone: (606) 573-1715
Facsimile: (606) 573-5130
February 14, 1997
The Goldfield Corporation
John H. Sottile, President
100 Rialto Place, Suite 500
Melbourne, FLA 31901
Re: Royalty Agreement of February 19, 1982
between Bow Valley Coal Resources, Inc. and
Northern Goldfield Investments, Ltd., Inc.
Dear John:
In accordance with our discussions today, we have agreed to modify
the above-captioned Royalty Agreement as follows:
1. Great Western Coal Inc. dba New Horizons Coal Inc. will make
an initial minimum payment to The Goldfield Corporation of
$20,000.00 on February 14, 1997; which is applicable to the
$150,000.00 minimum royalty payment for 1996 which became due
on January 31, 1997.
2. The minimum annual royalties of $150,000.00 for 1997 and
subsequent years will be paid at a minimum rate of $5,000.00
per month commencing April 14, 1997.
3. During the balance of the term of the Royalty Agreement, all
production royalties shall be paid as provided for in the
Royalty Agreement. To the extent that these production
royalty payments, including any monthly minimum payments, are
less than the $150,000.00 per year minimum royalty, the amount
of such deficit including the $130,000.00 1996 deficit will
thereafter be paid at a rate being the greater of the
production royalty or $5,000.00 per month commencing on
January 31, 2002.
4. Unpaid minimum royalties which extend the term of the Royalty
Agreement will not be subject to the recoupment provisions of
Paragraph 3 of the Agreement.
5. In the event the minimum monthly payment of $5,000.00 is
unpaid for a period of thirty (30) days, this Agreement will
terminate and the Royalty Agreement of February 19, 1982 will
be reinstated.
Very truly yours,
GREAT WESTERN COAL INC.
dba NEW HORIZONS COAL INC.
/ /
Oscar A. Nukka, President
AGREED AND ACCEPTED this 14th day February, 1997.
THE GOLDFIELD CORPORATION
/ /
John H. Sottile, President
Exhibit 21
Subsidiaries of Registrant
State of Percentage
Jurisdiction of Voting
of Securities
Company Organization Owned
Southeast Real Estate Resources
Corporation Florida 100%
Southeast Power Corporation Florida 100%
Fiber Optic Services, Inc. Florida 100%
Mamba Engineering Company, Inc.
(inactive) Florida 100%
St. Cloud Mining Company Florida 100%
Florida Transport Corporation
(inactive) Florida 100%
Steeple Rock Mining Company (inactive) Florida 100%
The Goldfield Consolidated Mines
Company (inactive) Florida 100%
Subsidiaries of The Goldfield
Consolidated Mines Company
Detrital Valley Salt Corporation
(inactive) Florida 100%
The Lordsburg Mining Company Florida 100%
All of the above subsidiaries are included in the consolidated
financial statements of the Company at December 31, 1996.