SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2001
Commission File No. 1-3871
CALIFORNIA-ENGELS MINING COMPANY
(Exact name of registrant as specified in its charter)
State of California
(State or other jurisdiction of incorporation or organization)
94-0357560 (I.R.S. Employer Identification Number)
Address: 117 Crescent Street, P. O. Box 778,
Greenville, California 95947-0778
(Address of principal executive office) (Zip Code)
(530) 284-6191
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
CLASS
Capital Stock, par value: $0.25 per share.
OUTSTANDING AT JUNE 30, 2001: 759,415.94 shares.
Filing Contains 14 pages.
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CALIFORNIA-ENGELS MINING COMPANY
BALANCE SHEETS
(Unaudited)
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<table>
ASSETS
<caption>
June 30, December 31,
2001 2000
--------- ---------
CURRENT ASSETS
Cash $ 94,987 $ 39,462
Deeds of Trust - current
portion $ 3,381 $ 11,842
Deferred income taxes $ - $ -
Reimbursements receivable $ - $ -
Deposits $ - $ -
Prepaid income tax $ 5,874 $ 5,874
Total Current Assets $ 104,242 $ 57,178
PROPERTY AND EQUIPMENT, NET $ 363,997 $ 397,995
OTHER ASSETS
Investments available-for-sale $ 12,037 $ 12,011
Investments held-to-maturity $ 2,071 $ 2,472
Deeds of trust - net of current
portion $ 163,214 $ 162,464
Total Other Assets $ 177,322 $ 176,947
Total Assets $ 645,561 $ 632,120
</table>
<table>
LIABILITIES AND STOCKHOLDERS' EQUITY
<caption>
June 30, December 31,
2001 2000
--------- --------
CURRENT LIABILITIES
Income taxes payable $ - $ -
Deferred tax liabilities $ 19,843 $ 19,843
Accrued expenses $ 33,693 $ 40,976
Notes payable, current portion $ 4,098 $ 8,014
Total Current Liabilities $ 57,634 $ 68,833
LONG TERM LIABILITIES
Notes payable, net of current
portion $ 106,549 $ 106,549
Total Liabilities $ 164,183 $ 175,382
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
BALANCE SHEETS
(Unaudited)
<table>
STOCKHOLDER'S EQUITY
<caption>
June 30, December 31,
2001 2000
--------- ---------
STOCKHOLDERS' EQUITY
Capital stock, par value $.25:
4,000,000 shares authorized
759,415.94 shares issued and
outstanding in 2001 and
760,815.94 in 2000 $ 189,854 $ 190,206
Accumulated other comprehensive
income (loss) $ 308 $ 308
Reduction surplus $2,800,158 $2,800,856
Accumulated deficit (2,508,942) (2,534,632)
Total Stockholders' Equity $ 481,378 $ 456,738
Total Liabilities and
Stockholders' Equity $ 645,561 $ 632,120
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
<table>
<caption>
Three Months Ended June 31,
2001 2000
---------- ----------
REVENUE
Timber and rock revenue $ 409,927 $ -
Dividend income 757 57
Interest income 3,898 2,289
Total revenue $ 414,582 $ 2,346
OPERATING AND GENERAL EXPENSES
Depreciation $ 504 501
Director fees - -
Insurance - -
Memberships and dues 510 -
Miscellaneous 106 171
Office and storage rents 3,127 3,128
Office expenses 2,048 2,405
Professional fees 675 3,040
Reclamation plan expense 240 -
Repairs and maintenance - 1,050
Superior quarry expense - -
Taxes and licenses 3,644 2,136
Travel and per diem 405 484
Vehicle expense 122 252
Wages and related taxes 2,902 2,445
Total Operating and
General Expenses $ 14,283 $ 15,792
Income (Loss) from
Operations $ 400,299 $ (13,446)
OTHER INCOME and (EXPENSE)
Depletion $ (26,574) $ -
Interest $ (3,344) $ (3,935)
Timber harvest expense $ (352,100) $ -
Timber management expense $ (6,298) $ (10,819)
Office and bookkeeping
service $ 6,275 $ 7,205
Total Other Income
and (Expense) $ (382,041) $ (7,549)
Income (Loss) Before Taxes $ 18,258 $ (20,995)
Provision for income taxes $ - $ -
Net Income (Loss) $ 18,258 $ (20,995)
Income (Loss) Per Share $ 0.024 $ (0.028)
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
<table>
<caption>
Six Months Ended June 30,
2001 2000
---------- ----------
REVENUE
Timber and rock revenue $ 493,557 $ 1,045
Dividend income 1,376 767
Interest income 7,665 2,989
Total revenue $ 502,598 $ 4,801
OPERATING AND GENERAL EXPENSES
Depreciation $ 1,009 1,002
Director fees - -
Insurance 1,860 1,900
Memberships and dues 510 -
Miscellaneous 170 363
Office and storage rents 6,755 6,256
Office expenses 2,226 2,680
Professional fees 3,650 3,040
Reclamation plan expense 240 -
Repairs and maintenance 1,170 1,050
Superior quarry expense - -
Taxes and licenses 4,142 2,889
Travel and per diem 405 484
Vehicle expense 979 693
Wages and related taxes 5,922 6,177
Total operating and
general expenses $ 29,038 $ 26,534
Net income (loss) from
operations $ 473,560 $ (21,733)
OTHER INCOME and (EXPENSE)
Depletion $ (32,989) $ -
Interest $ (6,762) $ (7,927)
Timber harvest expense $ (411,156) $ -
Timber management expense $ (10,513) $ (11,479)
Office and bookkeeping
service $ 13,550 $ 16,575
Total other income
and(expense) $ (447,870) $ (2,831)
Income (Loss) Before Taxes $ 25,690 $ (24,564)
Provision for income taxes $ - $ -
Net Income (Loss) $ 25,690 $ (24,564)
Earnings (Loss) Per Share $ 0.034 $ (0.032)
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Three Months Ended June 30,
2001 2000
--------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income (loss) $ 18,258 $ (20,995)
Adjustments to reconcile
net income (loss) to net
cash provided (used) by
operating activities:
Depreciation and depletion 27,078 501
Amortization of GNMA discount - -
(Gain) loss on sale
of securities - -
(Gain) loss on sale of land - -
(Increase) decrease in assets
Prepaid expenses - (2,057)
Deposits - 1,295
Increase (decrease) in liabilities
Taxes payable - -
Accrued expenses (5,713) (4,109)
Net cash provided (used)
by operating activities $ 39,623 $ (25,365)
<caption>
CASH FLOWS FROM INVESTING ACTIVITIES
Payments received on
notes receivable $ 3,482 $ 1,613
Notes issued - -
Purchases of securities
and investments - (13)
Proceeds from sale
of securities - -
Proceeds from sale of land - -
Return of principal GNMA 266 196
Capital expenditures - -
Net cash Provided (Used) by
investing activities $ 3,748 $ 1,796
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Three Months Ended June 30,
2001 2000
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase and retirement
of treasury shares $ (1,050) $ -
Notes payable - 17,000
Payments on notes payable (1,979) (1,594)
Net cash provided (used) by
financing activities $ (3,029) $ 15,406
Net increase (decrease) in
cash and cash equivalents $ 40,342 $ (8,163)
CASH AND CASH EQUIVALENTS,
Beginning of Period $ 54,645 $ 11,983
CASH AND CASH EQUIVALENTS,
End of Period $ 94,987 $ 3,820
SUPPLEMENTAL DISCLOSURE of
CASH FLOW INFORMATION
Cash paid during the year:
Income taxes $ - $ 2,303
Interest $ 3,344 $ 3,935
SUPPLEMENTAL DISCLOSURE of
NONCASH INVESTING ACTIVITIES
Unrealized holding gains
(losses) arising during
period $ - $ -
Issuance of notes receivable
for sales of property $ - $ -
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF ACCUMULATED DEFICIT AND ACUMULATED OTHER COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
<table>
<caption>
June 30, December 31,
2001 2000
------------ ------------
Accumulated Deficit,
Beginning of Year $ (2,534,632) $ (2,613,532)
Net Income (Loss) $ 25,690 $ 78,900
Accumulated Deficit,
End of Year $ (2,508,942) $ (2,534,632)
Accumulated Other Comprehensive
Income (Loss), Beginning
of Year $ 308 $ 288
Other Comprehensive
Income (Loss) $ - $ 20
Accumulated Other Comprehensive
Income (Loss),
End of Year $ 308 $ 308
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Six Months Ended June 30,
2001 2000
-------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income (Loss) $ 25,690 $ (24,564)
Adjustments to reconcile
net income (loss) to net
cash provided (used) by
operating activities:
Depreciation and depletion 33,998 1,002
Amortization of GNMA discount - -
(Gain)loss on sale
of securities - -
(Gain) on sale of land - -
(Increase) decrease in assets
Prepaid expenses - (4,360)
Deposits - -
Increase (decrease) in liabilities
Taxes payable - (4,697)
Accrued expenses (7,283) 1,500
Net Cash Provided (Used)
by Operating Activities $ 52,405 $ (34,119)
<caption>
CASH FLOWS FROM INVESTING ACTIVITIES
Payments received on
notes receivable $ 7,711 $ 2,584
Notes issued - (49,311)
Purchases of securities
and investments (26) (26)
Proceeds from sale
of securities - -
Proceeds from sale of land - -
Return of principal GNMA 401 309
Capital expenditures - (762)
Net cash Provided (Used) by
Investing Activities 8,086 (47,206)
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Six Months Ended June 30,
2001 2000
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase and retirement of
treasury shares $ (1,050) $ -
Notes payable - 17,000
Payments on notes payable (3,916) (3,150)
Net Cash Provided (Used) by
Financing Activities $ (4,966) $ 13,850
Net Increase (Decrease) in
Cash and Cash Equivalents $ 55,525 $ (67,475)
CASH AND CASH EQUIVALENTS,
Beginning of Period $ 39,462 $ 71,295
CASH AND CASH EQUIVALENTS,
End of Period $ 94,987 $ 3,820
SUPPLEMENTAL DISCLOSURE of
CASH FLOW INFORMATION
Cash paid during the year:
Income taxes $ - $ 4,360
Interest $ 6,762 $ 7,927
SUPPLEMENTAL DISCLOSURE of
NONCASH INVESTING ACTIVITIES
Unrealized holding gains
(losses) arising during
period $ - $ -
Issuance of notes receivable
for sales of property $ - $ -
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
FIXED ASSET SUMMARY
<table>
<caption>
June 30, December 31
2001 2000
--------- ----------
Furniture and equipment $ 34,538 $ 34,538
Land 239,702 239,702
Less: Accumulated depreciation (23,235) (22,226)
Subtotal $ 251,005 $ 252,014
Timber management development $ 164,078 $ 164,078
Less: Accumulated depletion (51,086) (18,097)
Subtotal $ 112,992 $ 145,981
Total Property and Equipment $ 363,997 $ 397,995
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are unaudited but, in the
opinion of the management, include all adjustments, consisting solely
of normal items, necessary for a fair presentation. Interim results
are not necessarily indicative of results for a full year.
These financial statements should be read in conjunction with the
financial statements and notes which are included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999. The
accounting policies set forth in those annual financial statements are
the same as the accounting policies utilized in the preparation of
these financial statements, except as modified for appropriate interim
financial statement presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
During the 30 years its mining properties were leased, the Company
endeavored to increase working capital, total assets and shareholder's
equity in the event that its lessee, Placer Dome U.S. Inc., terminated
its Mining Lease and Option to Purchase agreement and return the
mining properties to the Company. This event occurred effective April
20, 1993. Thus, funds were available to begin preparation of a Non-
Industrial Timber Management Plan which was approved by the California
Department of Forestry and became effective July 2, 1999. The
objective of the Company is to earn income from the sale of its timber
so funds are available for the maintenance of its properties and the
implementation of its timber management plan.
Pursuant to its Notice of Timber Operations the Company completed the
harvesting and hauling portion of its thinning/biomass project on the Upper
Camp portion of its Engels parcel during the quarter.
Results of Operations
The Company had net gain, for the three months ending June 30, of
$18,258 in 2001, compared to net loss of $20,995 in the 2000 period. The
change in net income for the second quarter of 2001 compared with the
corresponding period in 2000 was due to revenue from timber thinning and
harvest projects.
The Company's principal sources of income are office management and
bookkeeping fees, sale of timber, interest, dividends, capital gains
and sale of rock and sand. There is no assurance that any of the
sources of income will continue at current rates into the
future.
<page>
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995
The matters discussed in this report on Form 10-Q, when not historical
matters, are forward-looking statements that involve a number of risks
and uncertainties that could cause actual results to differ materially
from projected results. Such factors include, among others, the
speculative nature of mineral exploration, commodity prices,
production and reserve estimates, environmental and government
regulations, availability of financing, force majeure events, and
other risk factors as described from time to time in the Company's
filings with the Securities and Exchange Commission. Many of these
factors are beyond the Company's ability to control or predict. The
Company disclaims any intent or obligation to update its forward-looking
statements, whether as a result of receiving new information, the occurrence
of future events, or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Prices
The Company's earnings and cash flow may be significantly impacted by
changes in the market price of timber. Timber prices fluctuate and
may be affected by numerous factors, such as seasonal demand,
production levels, economic policies of central banks, interest rates
and producer hedging.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
None
<page>
SIGNATURE
Pursuant to the requirements 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.
CALIFORNIA-ENGELS MINING COMPANY
Registrant
August 8, 2001 By: /s/ Norman A. Lamb
Norman A. Lamb, President
and Chief Executive Officer
August 8, 2001 By: /s/ James E. Brousseau
James E. Brousseau, Secretary-
Treasurer and Chief
Financial Officer