-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IBSJGyJ5pbANp/eYrg+kA3UciZNmdyadj0bhpeG+oHsyXS1wkws5GkZFHipj4o0f WAKB0DyhU74as1vg72pLaQ== 0000042316-97-000004.txt : 19970327 0000042316-97-000004.hdr.sgml : 19970327 ACCESSION NUMBER: 0000042316-97-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970326 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDFIELD CORP CENTRAL INDEX KEY: 0000042316 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 880031580 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07525 FILM NUMBER: 97563898 BUSINESS ADDRESS: STREET 1: 100 RIALTO PL STE 500 CITY: MELBOURNE STATE: FL ZIP: 32901 BUSINESS PHONE: 4077241700 MAIL ADDRESS: STREET 1: 100 RIALTO PLACE STREET 2: SUITE 500 CITY: MEMBOURNE STATE: FL ZIP: 32901 FORMER COMPANY: FORMER CONFORMED NAME: GOLDFIELD CONSOLIDATED MINES CO DATE OF NAME CHANGE: 19670628 10-K 1 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. EX-27 2
5 12-MOS DEC-31-1996 DEC-31-1996 4,610,198 0 1,420,270 0 228,049 6,962,384 21,315,163 17,127,875 13,652,243 1,028,437 0 0 339,407 2,687,211 9,416,788 13,652,243 13,135,695 13,544,392 11,870,656 13,882,230 0 0 0 (337,838) 0 (337,838) 0 0 0 (337,838) (.01) (.01)
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