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 September 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 SEPTEMBER 30, 2001: 759,315.94 shares.
Filing Contains 13 pages.
<page>CALIFORNIA-ENGELS MINING COMPANY
BALANCE SHEETS
(Unaudited)
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<table>
ASSETS
<caption>
September 30, December 31,
2001 2000
--------- ---------
CURRENT ASSETS
Cash $ 107,609 $ 39,462
Deeds of Trust - current
portion 2,909 11,842
Deferred income taxes - -
Reimbursements receivable - -
Deposits - -
Prepaid income tax - 5,874
Total Current Assets $ 110,518 $ 57,178
PROPERTY AND EQUIPMENT, NET $ 357,166 $ 397,995
OTHER ASSETS
Investments available-for-sale $ 12,037 $ 12,011
Investments held-to-maturity 1,870 2,472
Deeds of trust - net of current
portion 158,296 162,464
Total Other Assets $ 172,203 $ 176,947
Total Assets $ 639,887 $ 632,120
</table>
<table>
LIABILITIES AND STOCKHOLDERS' EQUITY
<caption>
September 30, December 31,
2001 2000
--------- --------
CURRENT LIABILITIES
Income taxes payable $ 442 $ -
Deferred tax liabilities 19,843 19,843
Accrued expenses 33,630 40,976
Notes payable, current portion 2,072 8,014
Total Current Liabilities $ 55,987 $ 68,833
LONG TERM LIABILITIES
Notes payable, net of current
portion $ 106,549 $ 106,549
Total Liabilities $ 162,536 $ 175,382
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
BALANCE SHEETS
(Unaudited)
<table>
STOCKHOLDER'S EQUITY
<caption>
September 30, December 31,
2001 2000
--------- ---------
STOCKHOLDERS' EQUITY
Capital stock, par value $.25:
4,000,000 shares authorized
759,315.94 shares issued and
outstanding in 2001 and
760,815.94 in 2000 $ 189,829 $ 190,206
Accumulated other comprehensive
income (loss) $ 308 $ 308
Reduction surplus $2,800,108 $2,800,856
Accumulated deficit (2,512,894) (2,534,632)
Total Stockholders' Equity $ 477,351 $ 456,738
Total Liabilities and
Stockholders' Equity $ 639,887 $ 632,120
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF ACCUMULATED DEFICIT AND ACUMULATED OTHER COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
<table>
<caption>
September 30, December 31,
2001 2000
------------ ------------
Accumulated Deficit,
Beginning of Year $ (2,534,632) $ (2,613,532)
Net Income (Loss) $ 21,738 $ 78,900
Accumulated Deficit,
End of Year $ (2,512,894) $ (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 OPERATIONS
(Unaudited)
<table>
<caption>
Three Months Ended September 30,
2001 2000
---------- ----------
REVENUE
Timber and rock revenue $ 98,241 $ 480
Dividend income 764 200
Interest income 4,068 2,717
Total revenue $ 103,073 $ 3,397
OPERATING AND GENERAL EXPENSES
Depreciation $ 505 501
Director fees - 2,000
Insurance - -
Miscellaneous 387 268
Office and storage rents 2,127 3,127
Office expenses 380 460
Professional fees 685 930
Reclamation plan expense - 12,738
Repairs and maintenance 226 -
Taxes and licenses 8,965 222
Travel and per diem - 230
Vehicle expense 1.904 249
Wages and related taxes 2,437 3,334
Total Operating and
General Expenses $ 17,616 $ 24,059
Income (Loss) from
Operations $ 85,457 $ (20,662)
OTHER INCOME and (EXPENSE)
Depletion $ (6,326) $ -
Gain on sale of land - 143,240
Interest (3,210) (4,752)
Timber harvest expense (77,982) (4,600)
Timber management expense - 9,919
Office and bookkeeping
service 4,425 5,790
Total Other Income
and (Expense) $ (83,093) $ 149,597
Income (Loss) Before Taxes $ 2,364 $ 128,935
Provision for income taxes $ (6,316) $ (29,824)
Net Income (Loss) $ (3,952) $ 99,111
Income (Loss) Per Share $ (0.005) $ 0.130
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
<table>
<caption>
Nine Months Ended September 30,
2001 2000
---------- ----------
REVENUE
Timber and rock revenue $ 591,798 $ 1,525
Dividend income 2,140 967
Interest income 11,733 5,706
Total revenue $ 605,671 $ 8,198
OPERATING AND GENERAL EXPENSES
Depreciation $ 1,514 $ 1,503
Director fees - 2,000
Insurance 1,860 1,900
Miscellaneous 557 631
Office and storage rents 8,882 9,383
Office expenses 2,606 3,140
Professional fees 4,335 3,970
Reclamation plan expense 240 12,738
Repairs and maintenance 1,396 1,050
Taxes and licenses 13,617 3,111
Travel and per diem 405 714
Vehicle expense 2,883 945
Wages and related taxes 8,359 9,511
Total operating and
general expenses $ 46,654 $ 50,596
Net income (loss) from
operations $ 559,017 (42,398)
OTHER INCOME and (EXPENSE)
Depletion $ (39,315) $ -
Gain on sale of land - 143,240
Interest (9,972) (12,679)
Timber harvest expense (489,138) (4,600)
Timber management expense (10,513) (1,560)
Office and bookkeeping
service 17,975 22,365
Total other income
and(expense) $ (530,963) $ 146,766
Income (Loss) Before Taxes $ 28,054 $ 104,368
Provision for income taxes $ (6,316) $ (29,824)
Net Income (Loss) $ 21,738 $ 74,544
Income (Loss) Per Share $ 0.029 $ 0.098
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Three Months Ended September 30,
2001 2000
--------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income (loss) $ (3,952) $ 99,111
Adjustments to reconcile
net income (loss) to net
cash provided (used) by
operating activities:
Depreciation and depletion 6,831 501
Amortization of GNMA discount - -
(Gain) loss on sale
of securities - -
(Gain) loss on sale of land - (143,228)
(Increase) decrease in assets
Prepaid expenses 5,874 4,360
Deposits - -
(Decrease) increase in liabilities
Taxes payable 442 23,284
Accrued expenses (63) (5,520)
Net cash provided (used)
by operating activities $ 9,132 $ (21,492)
<caption>
CASH FLOWS FROM INVESTING ACTIVITIES
Payments received on
notes receivable $ 5,390 $ 2,096
Notes issued - 194
Purchases of securities
and investments - -
Proceeds from sale
of securities - -
Proceeds from sale of land - 98,248
Return of principal GNMA 201 304
Capital expenditures - -
Net cash Provided (Used) by
investing activities $ 5,591 $ 100,842
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Three Months Ended September 30,
2001 2000
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase and retirement
of treasury shares $ (75) $ -
Notes payable - (17,000)
Payments on notes payable (2,026) (11,703)
Net cash provided (used) by
financing activities $ (2,101) $ (28,703)
Net increase (decrease) in
cash and cash equivalents $ 12,622 $ 50,647
CASH AND CASH EQUIVALENTS,
Beginning of Period $ 94,987 $ 3,820
CASH AND CASH EQUIVALENTS,
End of Period $ 107,609 $ 54,467
SUPPLEMENTAL DISCLOSURE of
CASH FLOW INFORMATION
Cash paid during the year:
Income taxes $ 5,874 $ 25,464
Interest $ 3,210 $ 4,752
SUPPLEMENTAL DISCLOSURE of
NONCASH INVESTING ACTIVITIES
Unrealized holding gains
(losses) arising during
period $ - $ -
Issuance of notes receivable
for sales of property $ - $ 96,800
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Nine Months Ended September 30,
2001 2000
-------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income (Loss) $ 21,738 $ 74,544
Adjustments to reconcile
net income (loss) to net
cash provided (used) by
operating activities:
Depreciation and depletion 40,829 1,503
Amortization of GNMA discount - -
(Gain)loss on sale
of securities - -
(Gain) loss on sale of land - (143,228)
(Increase) decrease in assets
Prepaid expenses 5,874 -
Deposits - -
Increase (decrease) in liabilities
Taxes payable 442 18,587
Accrued expenses (7,346) (7,020)
Net Cash Provided (Used)
by Operating Activities $ 61,537 $ (55,614)
<caption>
CASH FLOWS FROM INVESTING ACTIVITIES
Payments received on
notes receivable $ 13,101 $ 4,683
Notes issued - (49,117)
Purchases of securities
and investments (26) (26)
Proceeds from sale
of securities - -
Proceeds from sale of land - 98,248
Return of principal GNMA 602 613
Capital expenditures - (762)
Net cash Provided (Used) by
Investing Activities $ 13,677 $ 53,639
</table>
<page>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
<table>
<caption>
Nine Months Ended September 30,
2001 2000
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase and retirement of
treasury shares $ (1,125) $ -
Notes payable - -
Payments on notes payable (5,942) (14,853)
Net Cash Provided (Used) by
Financing Activities $ (7,067) $ (14,853)
Net Increase (Decrease) in
Cash and Cash Equivalents $ 68,147 $ (16,828)
CASH AND CASH EQUIVALENTS,
Beginning of Period $ 39,462 $ 71,295
CASH AND CASH EQUIVALENTS,
End of Period $ 107,609 $ 54,467
SUPPLEMENTAL DISCLOSURE of
CASH FLOW INFORMATION
Cash paid during the year:
Income taxes $ 5,874 $ 29,824
Interest $ 9,972 $ 12,679
SUPPLEMENTAL DISCLOSURE of
NONCASH INVESTING ACTIVITIES
Unrealized holding gains
(losses) arising during
period $ - $ -
Issuance of notes receivable
for sales of property $ - $ 96,800
</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.
The Company has completed the harvesting and hauling portion of its mechanical
thinning/biomass project pursuant to its Non-Industrial Timber Management Plan
on the Upper Engels portion of its Engels parcel. During the first nine
months of the year the Company's thinning harvest produced 1,331,000 board
feet of small logs generating sufficient funds to pay for the project. No
further mechanical thinning/harvesting is planned for this year. However hand
thinning on steeper over-stocked areas pursuant to the California Forest
Improvement Program as well as hand thinning projects funded by the Company
are ongoing.
Results of Operations
The Company had net loss, for the three months ending September 30, of $3,952
in 2001, compared to net gain of $99,111 in the 2000 period. The change in
net income for the third quarter of 2001 compared with the corresponding
period in 2000 was due to changes in amount of 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
October 14, 2001 By: /s/ Norman A. Lamb
Norman A. Lamb, President
and Chief Executive Officer
October 14, 2001 By: /s/ James E. Brousseau
James E. Brousseau, Secretary-
Treasurer and Chief
Financial Officer