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Proc-Type: 2001,MIC-CLEAR
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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, 2000 Commission File No. 1-3871 CALIFORNIA-ENGELS MINING COMPANY (Exact name of registrant as specified in its charter) State of California 94-0357560 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 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 OUTSTANDING AT SEPTEMBER 30, 2000 Capital Stock, par 760,954.34 Shares Value, $0.25 per share Filing Contains 8 pages CALIFORNIA-ENGELS MINING COMPANY BALANCE SHEETS (Unaudited) PART I FINANCIAL INFORMATION Item 1. Financial Statements September 30 December 31 2000 1999 ASSETS Current Assets Cash $ 54,467 $ 71,295 Deeds of trust - current portion 2,837 5,317 Deferred income tax - - Reimbursements receivable - - Deposits - - Prepaid income tax - - Total Current Assets 57,304 76,612 Property and Equipment, net 398,243 450,804 Other Assets Investments available-for-sale 1,575 1,549 Investments held-to-maturity 2,367 2,790 Deeds of trust - net of current portion 174,544 30,830 Total Other Assets 178,486 35,169 Total Assets $ 634,033 $ 562,585 LIABILITIES Current Liabilities Income taxes payable $ 23,284 $ 4,697 Deferred tax liabilities 50 50 Accrued expenses 41,594 48,614 Notes payable, current portion 1,894 6,444 Total Current Liabilities 66,822 59,805 Long-term Liabilities Notes payable, net of current portion 114,563 124,866 Total Long-term Liabilities 114,563 124,866 Total Liabilities 181,385 184,671 STOCKHOLDER'S EQUITY Stockholder's Equity Capital stock, par value $0.25: 4,000,000 shares authorized 760,954.3 shares issued and outstanding in 1999 and 2000 190,241 190,241 Accumulated other comprehensive income (loss) 288 288 Reduction surplus 2,800,917 2,800,917 Accumulated deficit (2,538,798) (2,613,532) Total Stockholder's Equity 452,648 377,914 Total Liabilities and Stockholder's Equity $ 634,033 $ 562,585 CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, 2000 1999 Revenue Timber and rock revenue $ 480 $ 695 Dividend income 200 347 Interest income 2,717 1,030 Total Revenue 3,397 2,072 Operating and General Expenses Depreciation 501 1,836 Director fees 2,000 - Insurance - - Miscellaneous 268 473 Memberships and dues - - Office and storage rents 3,127 878 Office expenses 460 217 Professional fees 930 - Reclamation plan expense 12,738 - Repairs and maintenance - 30 Superior quarry expense - - Taxes and licenses 222 976 Travel and per diem 230 - Vehicle expense 249 355 Wages and related taxes 3,334 - Total Operating and General Expenses 24,059 4,765 Net Income (Loss) from Operations (20,662) (2,693) Other Income and (Expense) Depletion - - Gain (loss) on sale of securities - - Gain on sale of land 143,240 - Interest (4,752) (1,110) Timber management expense 5,319 (8,156) Office and bookkeeping service 5,790 - Total other income and (expense) 149,597 (9,266) Income (Loss) Before Taxes 128,935 (11,959) Provision for Income Taxes (29,824) - Net Income (Loss) $ 99,111 $ (11,959) Earnings (Loss) per Share $ 0.130 $ (0.016) CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF OPERATIONS (Unaudited) Nine Months Ended September 30, 2000 1999 Revenue Timber and rock revenue $ 1,525 $ 2,798 Dividend income 967 1,209 Interest income 5,706 4,646 Total revenue 8,198 8,653 Operating and General Expenses Depreciation 1,503 3,672 Director fees 2,000 - Insurance 1,900 1,900 Miscellaneous 631 1,255 Memberships and dues - 350 Office and storage rents 9,383 2,883 Office expenses 3,140 768 Professional fees 3,970 1,838 Reclamation plan expense 12,738 - Repairs and maintenance 1,050 3,770 Superior quarry expense - - Taxes and licenses 3,111 3,114 Travel and per diem 714 411 Vehicle expense 945 973 Wages and related taxes 9,511 - Total Operating and General Expenses 50,596 20,934 Net Income (Loss) from Operations (42,398) (12,281) Other Income and (Expense) Depletion - - Gain (loss) on sale of securities - - Gain (loss) on sale of land 143,240 - Interest (12,679) (1,110) Timber management expense (6,160) (11,042) Office and bookkeeping service 22,365 - Total Other Income and (Expense) 146,766 (12,152) Income (Loss) Before Taxes 104,368 (24,433) Provision for Income Taxes (29,824) - Net Income (Loss) $ 74,544 $ (24,433) Earnings (Loss) per Share $ 0.098 $ (0.032) CALIFORNIA-ENGELS MINING COMPANY STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2000 1999 Cash Flows from Operating Activities Net Income (Loss) $ 74,544 $ (24,433) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and depletion 1,503 3,672 Amortization of GNMA discount - - (Gain) loss on sale of securities - (2,948) (Gain) loss on sale of land (143,228) - (Increase) decrease in assets Prepaid expenses - - Deposits - 563 Increase (decrease) in liabilities Taxes payable 18,587 (1,650) Accrued expenses (7,020) 49,114 Net cash provided (used) by operating activities (55,614) 24,318 Cash Flows from Investing Activities Payments received on notes receivable 4,683 35,232 Notes issued (49,117) - Purchases of securities and investments (26) - Proceeds from sale of securities - 20,824 Proceeds from sale of land 98,248 - Return of principal GNMA 613 1,095 Capital expenditures (762) (233,003) Net cash provided (used) by investing activities 53,639 (175,852) Cash Flows from Financing Activities Purchase of treasury shares - (90) Notes payable - 177,600 Payments on notes payable (14,853) (28,890) Net cash provided (used) by financing activities (14,853) 148,620 Net Increase (Decrease) in Cash and Cash Equivalents (16,828) (2,914) Cash and Cash Equivalents, Beginning of period 71,295 10,128 End of period $ 54,467 $ 7,214 CALIFORNIA-ENGELS MINING COMPANY FIXED ASSET SUMMARY (Unaudited) September 30, December 31, 2000 1999 Furniture and Equipment $ 38,273 $ 33,775 Land 239,702 116,696 Less: Accumulated Depreciation (25,713) (18,700) Subtotal 252,262 131,771 Timber Management Development 164,078 109,636 Less: Accumulated Depletion (18,097) (2,896) Subtotal 145,981 106,740 Total Property and Equipment $ 398,243 $ 238,511 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.
Because timber revenues are sporadic, in order to provide regular monthly income the President of the Company, on January 1, 2000, transferred management of the office building at 117 Crescent Street, Greenville, CA and its related bookkeeping business to
the Company. The Company filed a Notice of Timber Operations pursuant to its Non-Industrial Timber Management Plan with the California Department of Forestry on September 7, 2000 for a mechanical thinning and biomass project on its Engels
Parcel and is completing a Timber Harvest Plan for its Henry Parcel. Results of Operations The Company had net gain, for the three months ending September 30, of $ 99,111 in 2000, compared to net loss of $ 11,959 in the 1999 period. The change in net income for the third quarter of 2000 over the third quarter of 1999
was due to the gain on the sale of land.
The Company's principal sources of income are office management and bookkeeping fees, sale of timber, interest, dividends, capital gains on sale of real estate 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.
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 risks, trends and uncertainties include the highly cyclical nature of the forest products industry, general economic conditions, competition, price conditions or trends for the Company's products, the possibility that timber supply could increase if governmental, environmental or endangered species policies change, and limitations on the Company's ability to harvest its timber due to adverse natural conditions or increased governmental restrictions. These and other risks are 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 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
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
DATE: November 10, 2000 By _/s/ Norman A. Lamb_____
Norman A. Lamb, President
and Chief Executive Officer
DATE: November 10, 2000 By _/s/ James E. Brousseau__
James E. Brousseau, Secretary-
Treasurer and Chief Financial
Officer
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