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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-KSB
[X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 1998 or
[_] Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from _____________ to ____________
Commission file number 1-3753
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UNITED PARK CITY MINES COMPANY
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(Name of small business issuer in its charter)
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Delaware 87-0219807
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(State or other jurisdiction of incorporation or organization) (I. R. S. Employer Identification No.)
P. O. Box 1450, Park City, Utah 84060
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (435) 649-8011
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Securities registered under Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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Common Stock, $0.01 Par Value New York Stock Exchange
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Securities Registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 .
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Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
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Issuer's revenues for its most recent fiscal year. $7,253,172
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Based on the closing sales price on March 12, 1999, the aggregate market value
of the voting stock held by nonaffiliates of the registrant was $107,835,911.
For purposes of this computation, voting stock directly held by officers and
directors of the registrant has been excluded. Such exclusion is not intended,
nor shall it be deemed, an admission that such officers and directors are
affiliates of the registrant.
The number of shares outstanding of the registrant's common stock was 3,249,411
on March 12, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
The definitive Proxy Statement for the 1999 Annual Meeting of Stockholders,
which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 1998, is incorporated by reference in Part III of this Form
10-KSB; and the Prospectus which is a part of the Form S-3, Amendment No. 1,
dated April 8, 1998 filed by the Company with the Securities and Exchange
Commission is incorporated by reference in Part I of this Form 10-KSB.
Transitional Small Business Disclosure Format (Check One): Yes . No X .
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Exhibit Index on Page 29
Page 1 of 33
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PART I
Item 1. Description of Business
General
United Park City Mines Company ("United Park" or "Company") is a Delaware
corporation formed in 1953. United Park's principal business is currently the
lease, development, and sale of real property located in or near Park City, Utah
United Park acquired mining properties in the Park City area upon its
formation in 1953. Prior to 1982, United Park's principal business was the
mining of lead, zinc, silver, gold, and copper ores from these properties or the
leasing of these properties to other mine operators. United Park now conducts no
active mining operations and has no agreement to sell or lease its mining
properties. The mining properties are maintained on a stand-by basis. The
Company also performs mine and tunnel maintenance for other entities on a
contract basis.
United Park completed construction of a mine tour attraction at its Ontario
Mine facilities near Park City, Utah and opened the attraction to the public on
December 15, 1995. The mine tour attraction is operated by the Company's wholly
owned subsidiary Park City Silver Mine Adventure, Inc. and combines an
underground mine tour with extensive historical exhibits that depict the mining
heritage of the Park City area.
United Park also leases land for skiing to the operators of the Park City
Ski Area and the Deer Valley Ski Area.
Real Estate
United Park owns the surface estate to more than 8,300 acres of land. Of
this land, United Park leases to ski resort operators its surface estate to
approximately 5,300 acres for skiing. (See "Resort Agreements.") However, United
Park has the right to sell certain portions of the leased properties, subject to
the lessees' rights of first refusal to purchase the properties. United Park
believes that a substantial portion of its land, including land not subject to
lease and land which may become unencumbered by the leases in the future, may be
suitable for resort, residential, commercial, or industrial development.
In the third quarter of 1995, Blue Ledge Corporation ("Blue Ledge"), a
wholly owned subsidiary of the Company, received approval for annexation and
master plan of a proposed single family lot subdivision, Hidden Meadows, on
approximately 258 acres of land adjacent to the Company's Morning Star Estates
subdivision. The Hidden Meadows subdivision is a 45 lot subdivision, which was
developed during 1995. Blue Ledge sold eighteen lots in the Hidden Meadows
subdivision in 1995 and 1996. During 1997, Blue Ledge sold seven lots, and Blue
Ledge sold another nine lots in the subdivision during 1998. Blue Ledge expects
to sell the balance of the Hidden Meadows subdivision lots in 1999.
During 1991, the Company entered into a series of transactions involving
water rights. As a result of these transactions, United Park has fully satisfied
its future obligation to dedicate water rights to Park City Municipal
Corporation ("Park City") as a direct or indirect condition of the annexation to
or development in Park City of all of the real property currently owned by
United Park. At that time, the Company also received a contract right for 400
acre feet per year of water for snow-making purposes.
On November 6, 1992, United Park entered into a Settlement Agreement and
Release ("Settlement Agreement") with Royal Street Land Company, Deer Valley
Resort Company, Royal Street of Utah, Royal Street Development Company
(collectively "Deer Valley"), and Wells Fargo Bank, N.A. In the settlement, Deer
Valley conveyed its interests in certain water rights, located in Wasatch and
Summit Counties, Utah, to United Park, and United Park assigned its contract
right with Park City for 400 acre feet per year of snow-making water to Deer
Valley. The Settlement Agreement also provides United Park the opportunity to
develop, without the encumbrance of the Deer Valley Ski Lease, certain parcels
of land which are currently subject to the Deer Valley Ski Lease. The Settlement
Agreement further provides Deer Valley the opportunity to acquire United Park's
interest in the surface estate to the balance of the land within the Deer Valley
Ski Lease. Both United Park's and Deer Valley's opportunities concerning these
parcels of land currently under the Deer Valley Ski Lease are contingent upon
master plan approval by the appropriate government agencies and acceptance of
the master plan by United Park.
2
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During 1993, the Company actively worked on the design of a real estate
development project known as Flagstaff Mountain Resort. The Company requested
annexation and master plan approval for the project from Park City during 1994.
The Company refined and improved the master plan and vigorously pursued approval
for the project during 1995, 1996 and the first half of 1997. As provided by
Utah statutes, the Company also pursued its development opportunities for this
project in Summit County pursuant to an application which the Company filed in
1996.
In the third quarter of 1997, the Company submitted to Wasatch County a
master plan for the development of a golf course and a 260-unit development in
the Bonanza Flats area of Wasatch County and pursued approval for this project
known as Bonanza Mountain Resort.
During the second quarter of 1998, the Company combined its Bonanza
Mountain Resort project into the master plan of the Flagstaff Mountain project
and pursued the necessary approvals for the two projects with Park City and
Wasatch County as one master planned project. The Company received from Park
City approval of the parameters by which Park City would annex and approve the
master plan for the Company's Flagstaff Mountain Resort project during the third
quarter of 1998. As currently planned, Flagstaff Mountain Resort will feature a
village concept with a 200-room hotel, a mix of multi-family uses of
condominiums and townhouses totaling 420 units, 75,000 square feet of commercial
space and 54 single-family dwellings. The Company anticipates master plan
approval of the combined projects during 1999.
In conjunction with another developer, the Company completed a master plan
for twelve lots on its properties which adjoin the other developer's project
known as Deer Crest. The Company received the necessary approvals to develop
and market eight of those twelve lots during 1998 and sold four of the approved
lots during the fourth quarter of 1998. The remaining four approved lots are
expected to be sold during 1999. The Company also expects to receive the
necessary approvals to develop the other four master planned lots during 1999.
During 1997, the Company received a master plan approval for 354
residential unit equivalents on another portion of its property which overlooks
the Jordanelle Reservoir in the vicinity of Keetley, Utah. The Company has
prepared and submitted detailed development plans for a portion of this new
project during 1998, and is pursuing final approvals for this development
project.
During the first quarter of 1998, the Company acquired the assets of New
Quincy Mining Company (hereinafter "New Quincy") and Lucky Bill Mining Company
(hereinafter "Lucky Bill"). The assets of New Quincy and Lucky Bill consisted of
approximately 212 acres of land within the area of the Company's Flagstaff
Mountain Resort project. This acquisition of land should greatly enhance the
Company's development opportunities with the project. The Company exchanged
203,700 shares of its capital stock for the land (reference is made to the
Prospectus which is a part of the Form S-3, Amendment No. 1, dated April 8,
1998, filed by the Company with the Securities and Exchange Commission for a
more complete description of the transaction).
Some of the factors that influence the development of the Company's real
estate include competition, cooperative agreements with other parties,
governmental approvals, master plans, engineering, installation of utility
service, and financing. The Company also faces competition in its real estate
development activities from developers that have completed and are currently
marketing other development projects in the Park City area. The market for
developed real estate in the Park City area is also subject to seasonal
fluctuations, with most sales occurring during the ski season from December
through March of each year. The Company believes that the quantity and variety
of its real estate holdings, which may be suitable for resort, residential,
industrial or commercial uses, gives the Company a competitive advantage and the
ability to adapt to changing market conditions. The Company occasionally sells
parcels of land outside of United Park's development areas, as opportunities
become available.
While the Board of Directors is of the opinion that the current value of
the Company's real property is in excess of its book value, the Board of
Directors believes that by holding the property for future sale or development,
the property's value will increase as the real estate market continues to
improve in the Park City area and funds are more readily available to finance
real estate development. Management believes that the recorded costs associated
with land and real estate on the balance sheet will be recoverable through the
sale and development of the related properties.
3
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The Park City real estate market for single-family lots has been
consistently good during the past several years and the Company expects the Park
City real estate market to improve in the future.
The International Olympic Committee has chosen the Salt Lake City
metropolitan area, including Park City, to host the 2002 Winter Olympic Games.
The Company believes that the national and international exposure of the Park
City area before, during and after the 2002 Winter Olympic Games will favorably
impact real estate values.
Mine Maintenance
United Park owns the mineral estate to more than 13,400 acres of land
principally located near or in Park City, Utah, with the exception of 21 acres
of patented mining claims located in Beaver County, Utah. United Park's total
mining properties consist of more than 10,500 acres of patented (fee title)
mining claims, together with an additional 2,726 acres of fee lands and 201
acres of unpatented mining claims. Portions of the surface estate of these
properties have been sold; however, United Park has retained the surface estate
to more than 8,300 acres, which was described under "Real Estate."
The Company owns several underground mines, most of which are
interconnected via underground tunnels and shafts. United Park's mining
properties have not been operated since 1982, but are maintained on a stand-by
basis. The Ontario Mine serves as United Park's primary facility for its
maintenance activities; however, the Company also maintains facilities at
several other locations. United Park has three principal shafts and four adits
used for drainage, ventilation, and transportation as well as numerous drifts,
raises, underground workings, and facilities on the surface of its properties.
The maintenance activities on a number of these shafts and adits are undertaken
to provide that all types of equipment are in adequate condition, that
underground transportation and ventilation systems are adequate, and that the
Company is in compliance with its governmental permits and regulations.
The costs associated with maintaining and holding the Company's mining
properties include, but are not limited to, costs for water treatment and
pumping, tunnel maintenance, security, equipment and building maintenance,
utilities, fuel, payroll, insurance, property taxes, other taxes, and compliance
with various governmental regulations.
The Company, from time to time, performs tunnel maintenance and repair work
for other entities on a contract basis. It has performed work for Park City in
the Judge Tunnel and the Spiro Tunnel since 1991. The Company anticipates
continued contract work in 1999.
The water which is discharged from the Ontario Mine is subject to a Utah
Pollutant Discharge Elimination System ("UPDES") permit issued by the Division
of Water Quality, Utah Department of Environmental Quality, with oversight by
the U. S. Environmental Protection Agency ("EPA"). This permit sets limitations
on the concentrations of various metals allowed in the water before the water
can be released into the environment. To comply with the UPDES permit, the
Company must monitor the concentrations of various metals in the water flowing
from the mine and treat the water before it is released. The Company maintains a
water treatment facility at its Keetley plant for this purpose.
United Park remains in compliance under its environmental and regulatory
permits issued by various governmental agencies. A portion of United Park's
mining property, known as "Richardson Flat Tailings," which the Company monitors
under its UPDES permit, has been subject to testing and evaluation by the EPA
under the National Contingency Plan pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"). On June 24, 1988, the EPA
proposed that the Richardson Flat Tailings site be added to the EPA's National
Priorities List ("NPL"), the EPA's listing of national priority hazardous waste
sites. In response to the comments submitted by United Park, the EPA determined
not to list the site on the NPL in a final rule published February 11, 1991, in
the Federal Register. On February 7, 1992, the EPA again proposed the listing of
the Richardson Flat Tailings site to the NPL. In April 1992, the Company again
submitted written comments opposing the EPA's listing on a number of substantive
and procedural grounds. The EPA has neither responded to United Park's comments
nor finalized its proposal to list the site. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations, Liquidity and Capital
Resources, Mine Maintenance" for a more complete description of the issue.
4
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United Park is unable to predict when, if ever, it will be economically
feasible for it or another company to resume mining operations. The economic
feasibility of resuming mining operations will depend upon, among other things,
an increase in metals prices and the resolution of technical problems such as
groundwater problems and certain milling applications. The Company cannot
currently predict the metals prices which would allow for economic mining
operations. If the Company or another operator resumes active mining operations
on the properties, it would be necessary to update or acquire certain additional
permits, licenses or approvals from the appropriate governmental agencies.
The resumption of mining operations may also be hindered by the recent
construction of the Jordanelle Dam and Reservoir in the Bonneville Unit of the
Central Utah Project ("CUP"). The Jordanelle Reservoir covers only minor
portions of United Park's mining properties, but it could cause United Park's
mines to be inundated by the impounded water seeping underground through
existing faults and fissures. This underground seepage would exacerbate the
current problems caused by groundwater in the mines, such as the necessity of
pumping and treating all discharged waters and dewatering additional portions of
the mines before mining operations could be resumed. The United States
Department of Interior, Bureau of Reclamation ("BOR") began construction of the
Jordanelle Dam in 1987 and began filling the Jordanelle Reservoir in 1993. The
reservoir was filled ahead of schedule in 1996. Since 1979, the Company has
continually provided BOR and other government agencies with oral and written
comments concerning the impact of the Jordanelle Dam on the Company's mining
properties. The Company has established a system to monitor water flows in its
mines. This monitoring system is currently providing data which is being
analyzed. The Company intends to continue to pursue the administrative and legal
remedies currently available to it and such other appropriate remedies in the
future as may be necessary to protect the Company's property rights.
United Park's wholly owned subsidiary The Weber Coal Company ("Weber Coal")
owns approximately 811 acres of fee land located east of Coalville, Utah.
Historically, Weber Coal was a coal producer but the mines were plugged and
abandoned in the 1950's. Pursuant to prior leases for oil and gas development,
which have all now expired by their own terms, an oil and gas exploratory well
was drilled on this land in 1979 to a depth of 17,954 feet. Although this well
was later abandoned for lack of production, Weber Coal does not believe the oil
and gas potential of these lands was adequately tested because of the
substantial subsurface deviation of this wellbore from the targeted formation.
Weber Coal does not currently have any plans for additional exploration or
development of these oil and gas properties. Weber Coal has leased the surface
of its properties for grazing and permits natural gas to be stored under the
surface, but does not receive material revenue from these activities.
Mine Tour Attraction
During 1995, the Company, assisted by an outside consultant, finalized the
design, development and construction of a mine tour attraction at some of its
mining facilities. The mine tour attraction is located at the Ontario Mine and
includes history and mining exhibits, multi-media presentations, computer
interactive programs, dioramas, a theater, and pictorial displays, along with a
gift shop and a food concession. The primary attraction is an underground tour
of a part of the Company's Ontario Mine. As part of this attraction, guests
descend 1,500 feet into the Ontario Mine, ride a specially designed mine train
through mine tunnels, view mine equipment from several different eras, and
observe a multi-media presentation. The mine tour attraction is operated by the
Company's wholly owned subsidiary Park City Silver Mine Adventure, Inc. and has
been well received by the public. The mine tour attraction was opened to the
public on December 15, 1995, and approximately 362,500 guests have experienced
the mine tour attraction to date.
Resort Agreements
From 1963 to 1971, United Park operated a ski resort in Park City, Utah, on
the surface of portions of its properties not used in connection with its mining
operations. Effective January 1, 1971, United Park entered into certain
interrelated agreements ("Resort Agreements") whereby United Park agreed to sell
and lease its ski resort properties to Treasure Mountain Resort Company, which
later changed its name to Greater Park City Company ("GPCC"). The Resort
Agreements were amended in 1975 and were subject to litigation which commenced
in 1986 and was settled on November 13, 1995.
5
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As part of the Resort Agreements, the Water Rights Purchase Agreement,
dated January 1, 1971, as amended, provided for the sale of certain water rights
by United Park to GPCC, and United Park perpetually reserved to itself, from
some of the water rights which it sold to GPCC, the right to use the first 2,850
gallons of water per minute for mining, milling, and related purposes.
In addition, United Park entered into three leases with GPCC. These leases
have been amended from time to time. The leases, which together cover the
surface of approximately 5,300 acres of land, permit the operation of ski lifts
and ski runs on the leased land. The term of each lease has been extended to
April 30, 2011 by notice to the Company. The lessees have the right to extend
each lease for two additional periods of 20 years each. Certain portions of the
Company's surface interest in the property subject to the leases may be sold by
United Park subject to the lessees' rights of first refusal. Under the extension
provisions, the leases require the lessees to pay rent to United Park annually
at the greater of $0.50 per acre per year or (a) 1.0% of the first $100,000 of
gross lift revenue, plus 0.5% of gross lift revenue in excess of $100,000,
annually through the fiscal year ending April, 2011; (b) 2.0% of the first
$100,000 of gross lift revenue, plus 1.0% of gross lift revenue in excess of
$100,000, annually for fiscal years 2012 through 2031; and (c) 3.0% of the first
$100,000 of gross lift revenue, plus 1.5% of gross lift revenue in excess of
$100,000, annually for fiscal years 2032 through 2051. The Deer Valley and Park
City resort operators paid United Park for the 1996-97 ski season a total of
$176,969, and for the 1997-98 ski season, a total of $176,105.
Employees
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United Park and its subsidiary Park City Silver Mine Adventure, Inc. employ
a total of thirty-eight full-time employees in their operations. United Park
maintains a staff of nine full-time salaried employees in the Ontario #3 office.
In addition, United Park maintains a staff of eight full-time salaried
employees, seven full-time hourly employees and one part-time hourly employee,
each of whom is an experienced underground miner, for its mine maintenance
operations. Park City Silver Mine Adventure, Inc. maintains a staff of five
full-time employees, nine full-time hourly employees and an average of
approximately thirty part-time employees.
Item 2. Description of Property
In addition to the following description, please refer to Item 1.
Description of Business under the headings "Real Estate," "Mine Maintenance" and
"Resort Agreements."
The Weber Coal Company
The Weber Coal Company, a wholly-owned subsidiary of United Park, owns
approximately 811 acres of fee land east of Coalville, Utah. Historically, Weber
Coal was a coal producer, but the mines were plugged and abandoned in the
1950's. The Company has leased the surface of its properties for grazing and
permits natural gas to be stored under the surface, but does not receive
material revenue from these activities.
Title To Properties
United Park has obtained certified abstracts of title on virtually all of
its patented mining claims and fee lands. In general, these abstracts contain
all recorded documents appearing in the chain of title to the particular
property from the original notice of location or patent through the conveyance
into United Park. With respect to fee properties acquired during the past 20
years, however, the seller has generally provided United Park a policy of title
insurance. Although United Park has generally not obtained title opinions from
independent legal counsel or policies of title insurance on its properties,
management has satisfied itself as to title matters either by in-house reviews
of abstracts by Company personnel or by purchasing policies of title insurance
on selected properties on an "as sold" or "as needed" basis.
United Park's unpatented, lode mining claims are generally located on small
"open" areas between its patented mining claims. Under applicable law, United
Park does not hold fee title to these unpatented claims, as is the case with its
patented mining claims, but rather holds equitable and beneficial title to the
mineral estate subject to the paramount title of the United States and to the
requirements of maintaining the claims imposed by applicable federal and state
laws and regulations. United Park maintains files for each of these unpatented,
lode mining claims documenting its compliance with these requirements for the
location and maintenance of the unpatented claims. The claim files have been
reviewed by Company personnel for completeness and compliance, but no title
opinions have been obtained on these properties from independent legal counsel.
Policies of title insurance
6
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generally are not available for unpatented mining claims prior to the time a
patent conveying fee title to the claim is issued by the United States.
Although it has not conducted an examination of the public records
affecting its properties and has not obtained title opinions or policies of
title insurance covering all of its properties, United Park is not aware of any
encumbrances, other than those discussed under "Legal Proceedings" and those
utility and access easements or rights of way either placed upon the properties
by United Park or otherwise affecting the properties.
Item 3. Legal Proceedings
As of March 12, 1999, United Park was a party to the following legal
proceedings:
United States of America v. 107.28 Acres of Land, United Park City
Mines Company, et al.
Civil No. 2:88-C-0231C, United States District Court for the
District of Utah
In March, 1988, the United States of America filed a complaint in
condemnation against United Park in order to take properties under power of
eminent domain for the Jordanelle Dam and Reservoir and for relocation of
highways in connection with the construction of the Jordanelle Dam and
Reservoir. United Park has filed an answer to the complaint in condemnation in
order to protect its rights and obtain just compensation. As a condition to the
exercise of the power of eminent domain, the United States deposited $460,850
with the Registry of the court for the use and benefit of the landowner.
Pursuant to a stipulation of the parties and order of the court, the deposited
$460,850 and accrued interest was distributed to United Park; however, the
stipulation and order provide that none of United Park's defenses raised in its
answer are waived by its receipt of the deposited funds. When a final judgment
is entered in this condemnation case, the final compensation awarded to United
Park may be adjusted. The Company is currently pursuing a conclusion to this
condemnation through mediation.
Charles Frank Gillmor, et al. v. United Park City Mines Company,
et al.
Civil No. 94-030-0087QT, Third Judicial District Court, Summit
County, Utah
In the third quarter of 1994, Charles Frank Gillmor and Nadine Gillmor
("Gillmors") filed a complaint in an action to quiet title against United Park,
Blue Ledge, and others, as defendants, in which the Gillmors claimed an interest
in a number of properties, including a prescriptive easement over, and title to,
a portion of Lot 1 of the Morning Star Estates subdivision, a prescriptive
easement over another parcel of property owned by Blue Ledge, and title by
adverse possession to the surface estate of portions of property owned by Blue
Ledge. After the death of Charles Frank Gillmor, Nadine Gillmor ("Gillmor")
filed numerous amendments to the Gillmor complaint, and United Park and Blue
Ledge responded to the amended complaint by filing an answer denying Gillmor's
claims. Blue Ledge also filed a counterclaim against Gillmor for causes of
action to: (1) quiet title in the name of Blue Ledge to the surface estate of
those portions of the property to which Gillmor had filed a claim; (2) declare
that Gillmor has no right, title or interest in or to any portion of the real
property comprising the Morning Star Estates subdivision as recorded on the
subdivision plat with Summit County, Utah; and (3) declare that Gillmor has no
right to an easement across Lot 1 of the Morning Star Estates subdivision,
Summit County, Utah.
On March 25, 1996, the court dismissed with prejudice Gillmor's claims to
various easements and any ownership interest in the Morning Star Estates
subdivision, and Blue Ledge's counterclaims against Gillmor regarding Gillmor's
claim to an easement across, and ownership interest in, the Morning Star Estates
subdivision. Therefore, Gillmor's sole remaining claim and Blue Ledge's sole
remaining counterclaim in this lawsuit concern the ownership of the surface
estate of certain portions of property.
On June 18, 1996, Gillmor filed a motion for summary judgment to quiet
title in the name of Gillmor to the surface estate of the disputed real
property. On July 16, 1996, Blue Ledge filed a detailed memorandum in opposition
to Gillmor's motion for summary judgment. On September 18, 1996, Gillmor filed a
notice of withdrawal of Gillmor's motion for summary judgment. While Gillmor has
expressed the desire to pursue additional discovery in this case, Gillmor has
not taken additional depositions or conducted any additional discovery in this
matter.
7
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Sandra Shelton v. Park City Silver Mine Adventure, Inc., United Park
City Mines Company, et al.
Civil No. 2:99-CV-0200K, United States District Court of the
District Utah
On April 5, 1999, United Park received a copy of a complaint filed by a
former employee of Park City Silver Mine Adventure, Inc. ("PCSMA") alleging
violations of the Civil Rights Act of 1964, the Utah Anti-Discrimination Act and
the Fair Labor Standards Act ("FLSA"). The complaint seeks $250,000 in
compensatory damages and $500,000 in punitive damages based on allegations of
sexual harassment and retaliation. It also seeks $250,000 in compensatory
damages and $500,000 in punitive damages under an alleged FLSA claim.
The plaintiff appears not to have exhausted the required administrative
remedies for her discrimination claims. She cannot pursue these claims in
federal court without receiving a notice of her right to sue from the
administrative agency. Her FLSA claim does not, as a matter of law, state a
FLSA claim.
PCSMA plans to file a motion to dismiss, which it believes will be
successful. United Park also plans to file a motion to dismiss.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
8
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The common stock of United Park City Mines Company (hereinafter "United
Park" or "Company"), $.01 par value, is traded on the New York Stock Exchange
under the symbol "UPK." As of March 12, 1999, United Park had 3,249,411
outstanding shares of common stock held by approximately 1,086 stockholders of
record. The following table sets forth the high and low sales price for United
Park's common stock during the last two years, as reported in the consolidated
transaction reporting system.
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<CAPTION>
1998 1997
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High Low High Low
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<S> <C> <C> <C> <C>
First Quarter $37.8750 $25.5000 $13.750 $11.125
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Second Quarter $35.8125 $29.8750 $21.187 $12.375
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Third Quarter $30.5000 $27.6250 $27.500 $21.000
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Fourth Quarter $30.2500 $24.6250 $29.000 $25.500
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Since its incorporation, United Park has not paid a dividend on its common
stock and it does not expect to pay a dividend in the near future.
Item 6. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Form 10-KSB may contain trend information and forward-looking
statements that involve risks and uncertainties. The actual results of
operations of the Company could differ materially from the Company's historical
results of operations and those discussed in such forward-looking statements as
a result of certain factors set forth in this section and elsewhere in this Form
10-KSB, including information incorporated by reference.
Liquidity and Capital Resources
Cash Flow
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The Company's Consolidated Statements of Cash Flows reflects that
$1,205,954 in net cash was provided by operating activities during 1998. In
1998, the Company used existing cash balances and its positive cash flow to fund
its operations.
During 1997, $1,971,269 in net cash was used in operating activities as
stated in the Company's Consolidated Statements of Cash Flows. The Company used
existing cash balances, proceeds from the sale of lots, some of the proceeds
from borrowings, and a portion of the receipts from a rights offering to fund
its operations in 1997.
The Company's cash position increased by $529,596 during 1998. The Company
used funds from its cash balances and its positive cash flow to fund its
operations, capital asset additions and the development of its real estate
projects during 1998. The Company spent $593,331 on capital expenditures in 1998
and expects additional capital expenditures at similar levels of capital
activity through 1999 in connection with the approval and development of its
Flagstaff Mountain Resort project, Bonanza Mountain Resort project and various
other projects.
To improve its cash position, the Company conducted a rights offering
during 1997 and received $5,304,052 in net proceeds from the offering. An
outstanding loan balance of $886,083 was repaid during 1997 using proceeds from
lot sales and receipts from the rights offering.
9
<PAGE>
Real Estate Development
-----------------------
During 1995, Blue Ledge Corporation ("Blue Ledge"), a wholly owned
subsidiary of the Company, developed forty-five improved building lots on a 258
acre parcel of land. This project is known as Hidden Meadows and Blue Ledge sold
eighteen lots during 1995 and 1996. Blue Ledge sold an additional seven lots in
the Hidden Meadows subdivision during 1997. During 1998, Blue Ledge sold nine
lots in the Hidden Meadows subdivision.
In December 1995, Blue Ledge obtained a $1,000,000 loan from a local bank.
The funds from this loan were used to fund operations and developments. The
unpaid principal on the loan carried interest at 1-1/2 percent over the bank's
prime lending rate and was collateralized by the remaining land and improvements
of the Hidden Meadows development. This loan was repaid in full during 1997.
Pursuant to an agreement with Deer Valley Resort Company and others
(collectively "Deer Valley"), United Park has the opportunity to develop,
without the encumbrance of the Deer Valley Ski Lease, certain parcels of land
which are currently subject to the Deer Valley Ski Lease. The agreement further
provides Deer Valley the opportunity to acquire United Park's interest in the
surface estate to the balance of the land within the Deer Valley Ski Lease which
is not developed by United Park. Both United Park's and Deer Valley's
opportunities concerning these parcels of land currently under the Deer Valley
Ski Lease are contingent upon master plan approval by the appropriate government
agencies and acceptance of the master plan by United Park. With the appropriate
approvals, the positive impact of this agreement upon the Company's real estate
development could be substantial.
In 1993, the Company began actively designing a real estate development
project, known as Flagstaff Mountain Resort, on parcels of land currently
included within the Deer Valley Ski Lease. In 1994, the Company requested
annexation and master plan approval for the project from Park City Municipal
Corporation ("Park City"). During 1995 and 1996, the Company revised the master
plan and diligently pursued approval for the project with Park City. As provided
by Utah statutes, the Company pursued its development opportunities for this
project in Summit County pursuant to an application which the Company had
previously filed with Summit County.
In the third quarter of 1997, the Company submitted to Wasatch County a
master plan for the development of a golf course and a 260 unit development in
the Bonanza Flats area of that County and pursued approval for this project
known as Bonanza Mountain Resort.
During the second quarter of 1998, the Company combined its Bonanza
Mountain Resort project into the master plan of the Flagstaff Mountain Resort
project and pursued the necessary approvals for the two projects with Park City
and Wasatch County as one master planned project. The Company received from Park
City approval of the parameters by which Park City would annex and approve the
master plan for the Company's Flagstaff Mountain project during the third
quarter of 1998. As currently planned, Flagstaff Mountain Resort will feature a
village concept with a 200-room hotel, a mix of multi-family uses of
condominiums and townhouses totaling 420 units, 75,000 square feet of commercial
space and 54 single-family dwellings. The Company anticipates master plan
approval of the combined projects during 1999 and the Company expects to utilize
proceeds from future lot sales and other forms of financing to obtain approval
for these projects and the eventual development of the projects.
Along with another developer, the Company completed a master plan for
twelve lots on its properties which adjoin the other developer's project which
is known as Deer Crest. The Company received the necessary approvals for eight
of the twelve lots in this project and began marketing these eight lots in the
fourth quarter of 1998. Blue Ledge sold four of the approved eight lots during
the last quarter of 1998 and expects to sell the remaining four approved units
during 1999. The Company expects to receive the necessary approvals to develop
the other four master planned lots during 1999.
During the first quarter of 1998, the Company acquired the assets of New
Quincy Mining Company (hereinafter "New Quincy") and Lucky Bill Mining Company
(hereinafter "Lucky Bill"). The assets of New Quincy and Lucky Bill consisted
of approximately 212 acres of land within the area of the Company's Flagstaff
Mountain Resort project. This acquisition of land should greatly enhance the
Company's development opportunities with the project. The Company exchanged
203,700 shares of its capital stock for the land (reference
10
<PAGE>
is made to the Prospectus which is a part of the Form S-3, Amendment No. 1,
dated April 8, 1998, filed by the Company with the Securities and Exchange
Commission for a more complete description of the transaction).
In 1997, the Company pursued and received a master plan approval for 354
residential unit equivalents on a portion of its property in the vicinity of
Keetley, Utah. This property overlooks the Jordanelle Reservoir. During 1998,
the Company prepared and submitted detailed development plans, and is actively
pursuing final approval for these new development projects.
The Company has also examined several of its other real estate parcels and
believes that real estate development potential exists on these properties, if
the necessary agreements and approvals are obtained. The Company will continue
to pursue development of these properties as the opportunities arise.
Mine Maintenance
----------------
The Company incurs direct costs associated with maintaining and holding the
Company's mining properties. These costs include, but are not limited to, costs
for water treatment and pumping, tunnel maintenance, security, equipment and
building maintenance, utilities, fuel, payroll, insurance, property taxes, other
taxes, and compliance with various regulations. The Company expended $1,356,434
in its mine maintenance activities during 1998 and $1,162,582 during 1997. The
Company anticipates similar expenditures during 1999.
In 1991, the Company entered into an agreement with Park City to perform
tunnel maintenance work in the Spiro Tunnel and the Judge Tunnel, which tunnels
supply some of Park City's culinary water. This contract provided revenue of
$66,694 during 1998 and $103,127 during 1997. Additional work will be performed
in the tunnels during 1999. The work involves reinforcement of the tunnels to
avoid possible cave-ins which may restrict the flow of water.
United Park continues to remain in compliance under all of its
environmental and regulatory permits. A portion of United Park's mining
property, known as "Richardson Flat Tailings," was proposed by the United States
Environmental Protection Agency ("EPA") on June 24, 1988, by notice published in
the Federal Register, to be added to the EPA's National Priorities List ("NPL"),
the EPA's listing of national priority hazardous waste sites. United Park
submitted written comments opposing the listing of the Richardson Flat Tailings
site on a number of procedural and substantive grounds. In response to the
comments submitted by United Park, the EPA determined not to list the site on
the NPL in a final rule published February 11, 1991, in the Federal Register.
On February 7, 1992, by notice published in the Federal Register, the EPA
again proposed that the Richardson Flat Tailings site be added to the NPL. In
April 1992, the Company submitted written comments opposing the listing on a
number of procedural and substantive grounds. As of this date, the EPA has
neither responded to United Park's comments nor finalized its proposal to list
the site on the NPL.
The NPL has been established by the EPA under the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") to identify,
inventory, and prioritize sites which warrant further investigation to assess
the nature and extent of any public health and environmental risks associated
with the site and to determine what remedial action, if any, may be appropriate.
Inclusion of a site on the NPL does not establish that the EPA will
necessarily require remedial action for the site. Listing on the NPL does not
establish that any remedial action by the EPA or any private party is necessary
nor does listing determine any liability for the cost of any remediation at the
site. The EPA, United Park, and/or other potentially responsible parties may
perform more detailed studies at the site to determine what response, if any, is
necessary.
Numerous mining properties throughout the United States owned by other
entities are currently proposed for listing or are listed on the NPL. As a
result of the EPA's evaluation of the Richardson Flat Tailings site, United Park
may be advised to continue its current environmental monitoring and practices at
the site under its Utah Pollutant Discharge Elimination System ("UPDES") permit,
or the Company may be required to undertake additional stabilization or
remediation activities on this portion of its mining property to comply with the
standards for disposal of mining wastes under CERCLA. In 1983, United Park began
a containment program, which is now substantially complete, to cover the
Richardson Flat Tailings area with topsoil and seed the site for vegetation.
Management is not now able to accurately predict whether the Richardson Flat
Tailings site will be listed on the
11
<PAGE>
NPL and, if it is listed, whether further remedial actions will be required.
United Park has engaged in the study and evaluation of the development of a
recreation complex in the area of Richardson Flat. It is believed that through
the development of the recreation complex, any remedial issues which might be
identified during the study or the development related to the Richardson Flat
Tailings site could be resolved. However, should substantial remediation be
required at the site beyond the scope of such development and should United Park
be designated as a potentially responsible party and it is later determined that
United Park is a responsible party liable for remediation, those costs could be
substantial to the Company.
As United Park has currently conducted its mine maintenance operations and
under current reclamation statutes and regulations, United Park is not liable
for reclamation costs associated with its mining properties. However, if United
Park ever elects to cease its mine maintenance operations, the Company may
choose to permanently restrict access to its mines. If management chooses to
perform certain elective reclamation of its surface areas disturbed by past
mining operations, management believes that such reclamation and access
restriction costs would be minimal.
The United States Department of Interior, Bureau of Reclamation ("BOR")
began construction of the Jordanelle Dam in 1987 and began filling the
Jordanelle Reservoir in 1993. The reservoir was filled ahead of schedule in
1996. Since 1979, the Company has continually provided BOR and other government
agencies with oral and written comments concerning the impact of the Jordanelle
Dam on the Company's mining properties. The Company has established a system to
monitor water flows in its mines. This monitoring system is currently providing
data which is being analyzed. The Company intends to continue to pursue the
administrative and legal remedies currently available to it and such other
appropriate remedies in the future as may be necessary to protect the Company's
property rights.
Mine Tour Attraction
--------------------
The Park City Silver Mine Adventure, which was designed and constructed by
the Company during 1995, is located at the Ontario Mine and operated by the
Company's wholly owned subsidiary Park City Silver Mine Adventure, Inc. The
project included the remodeling and renovation of more than 30,000 square feet
of building space above ground and the construction in that building of history
and mining exhibits, multi-media presentations, computer interactive programs,
dioramas, a theater, and pictorial displays, along with a gift shop and a food
concession. The project also included construction underground which consisted
of rehabilitation of shafts and tunnels along with the construction of specially
designed cages, a mine train, exhibits and a multi-media presentation.
Through 1998, the Company had on its books a total of $3,808,690 in
undepreciated assets which are associated with the development and construction
of the mine tour attraction. Management believes that their advertising,
marketing and promotional efforts, and a continual emphasis on cost efficiencies
will result in continued improvement in operations and the mine tour attraction
becoming profitable in the near future.
Year 2000 Compliance
--------------------
The year 2000 issue concerns the potential impact of computer software and
embedded computer processor chips being unable to accurately process data during
and after the year 2000. As a result, all business and government entities are
at risk for possible miscalculations or systems failure causing disruptions in
operations. This problem is commonly known as the Year 2000 Issue ("Y2K"). As
the Company uses computers and software in its financial, sales, maintenance,
development and engineering operations, this issue or problem could arise at any
point in its normal operations.
The Company and its operating subsidiaries have implemented a plan to
review and update its information systems (computers and software) to insure
that its systems are Y2K compliant and minimize, as much as possible, any impact
from Y2K problems that the Company or the Company's suppliers may encounter.
Under its plan, the Company's has reviewed, with its own staff and outside
consultants, its information systems and identified the computers and software
which will not be Y2K compliant. The Company is currently completing the
remedies, corrections and updates to its information systems (computers and
software) which correct or minimize the Company's risk. The costs associated
with updating and correcting computers and software are not expected to exceed
$30,000. The Company expects to be compliant by June 30, 1999.
12
<PAGE>
A part of the Company's plan is to identify and contact through letters and
interviews significant service providers, vendors, suppliers and government
entities that the Company believes to be critical to its normal business
operations after January 1, 2000, in an effort to ascertain both their
preparedness for the Y2K problem and the impact which their unpreparedness for
the Y2K problem could have upon the Company. In most cases, those service
providers, vendors, suppliers and government entities have exhibited a high
degree of awareness of the problem and have willingly provided information
concerning their state of readiness for the Y2K problem. This component of the
plan is still ongoing.
Also, a part of the Company's plan is to develop contingency measures
intended to mitigate the possible disruption of its normal business operations
that may result from the Y2K issue and to identify the costs for such plans.
Contingency measures may include stockpiling materials, securing alternative
sources of supplies, adjusting hours of operations and work-force, manual
operation of facilities and the manual recording and manipulation of data.
Because of the Company's small size, the costs of these contingency measures are
not expected to be either material or significant.
Rights Offering
---------------
During 1997, the Company conducted a rights offering to raise additional
capital to repay short-term indebtedness, to continue its real estate
development activities, and to provide working capital for the Company's
continuing operations. In the rights offering, the Company issued to its
stockholders non-transferable rights ("Rights") to subscribe for up to 340,000
additional shares of its capital stock. Such Rights were issued to the holders
of capital stock as of the close of business on August 18, 1997 (the "Record
Date"). The stockholders as of the Record Date received one (1) Right for each
eight (8) shares of capital stock they owned on the Record Date. The Rights were
not transferable and they were not traded on any exchange. Each Right entitled
the holder thereof to subscribe for one (1) additional share of capital stock
for $16.00 and provided a right to subscribe for any shares which were
unsubscribed for in the rights offering.
Stockholders subscribed for all of the shares offered in the rights
offering and all of the 340,000 additional shares of the Company's capital stock
offered in the rights offering were issued during the fourth quarter of 1997.
The Company raised approximately $5,440,000, before deducting expenses of the
offering in the amount of approximately $135,948.
Results of Operations
1998 Compared with 1997
-----------------------
The Company experienced a net profit of $648,995 for 1998 and a net loss of
$2,339,090 for 1997. The net profit for 1998 resulted from lot sales in the
Hidden Meadows subdivision and the Deer Crest development, and increased cost
efficiencies with the mine tour attraction. The net loss for 1997 is primarily
the result of lower than expected sales of lots in the Hidden Meadows
subdivision, costs exceeding revenue on the mine tour attraction, and continued
costs associated with mine maintenance.
Revenue in 1998 totaled $7,253,172, an increase of 132% over 1997 revenues.
The increase in revenues is the result of increased lot sales in the Company's
development projects.
Blue Ledge sold nine lots in the Hidden Meadows subdivision during 1998.
During 1997, Blue Ledge sold seven lots in the Hidden Meadows subdivision.
In the fourth quarter of 1998, Blue Ledge sold four lots in the Deer Crest
development. There were no lots available for sale in the Deer Crest development
during 1997.
During 1998, Park City Silver Mine Adventure, Inc. generated $1,484,510 in
revenues and experienced $1,672,585 in operating expenditures. Park City Silver
Mine Adventure, Inc. generated $1,440,947 in revenues and experienced $1,970,319
in operating expenditures during 1997. The mine tour attraction revenues
accounted for 20% of the Company's total revenue for 1998 and 46% of the
Company's total revenue in 1997.
13
<PAGE>
Interest income increased $72,758 or 135% during 1998 when compared with
1997. The increase is the result of larger cash balances available for
investment during 1998.
When compared with 1997, the Company experienced a 35% decrease in revenues
during 1998 and a more modest decrease in expenses associated with contract
services as a result of the Company's mine crews not being available to perform
as much work for third parties as in the prior year. The Company anticipates
that the contract work will increase during 1999.
The Company's other income decreased 48% during 1998 as a result of
decreased use of the Company's land and properties by third parties for the
production of motion pictures when compared with 1997.
Increased labor, material and contractor costs resulted in an increase in
mine maintenance and administrative costs of approximately 17% during 1998, when
compared with the same period in 1997. The increase in such costs is due to the
Company's allocation of personnel and resources to its tunnel maintenance
activities and its efforts to improve and mitigate problems with water drainage
from its vast mountainous properties.
The Company's interest expense decreased 60% during 1998, when compared
with 1997. This decrease in interest expense is the result of decreased bank
borrowings and borrowings from third parties during 1998.
Outlook
-------
The Company believes that its existing capital resources and anticipated
cash flows from operations will provide it with sufficient funds to meet its
anticipated capital and operating requirements for 1999.
Blue Ledge anticipates selling the remaining eleven building lots in the
Hidden Meadows subdivision and the remaining four approved lots in the Deer
Crest project during 1999. As the development of the Hidden Meadows subdivision
is substantially complete, Blue Ledge does not expect to incur any substantial
additional costs with this subdivision.
The Company believes that it will continue to incur development costs in
gaining approval for its Flagstaff Mountain Resort, Bonanza Mountain Resort, and
its various other projects, and expects to continue funding those costs through
its cash flows. The Company anticipates receiving proceeds from lot sales from
the remaining lots in the Hidden Meadows subdivision and the Deer Crest project
beginning with the second quarter of 1999. As development opportunities with
other parcels of the Company's real estate arise, the Company intends to pursue
those opportunities and will fund such development, as it then deems
appropriate.
Based upon projected revenues and expenses, the Company remains optimistic
that its wholly owned subsidiary Park City Silver Mine Adventure, Inc. should
continue to decrease its operating costs while increasing revenues throughout
1999 and, in time, should contribute to the Company's future cash flows.
Impact of Recently Issued Accounting Standards:
The Company has reviewed all recently issued Accounting Standards and does
not believe that any of the Standards will have a material effect upon the
financial statements of the Company.
14
<PAGE>
Item 7. Financial Statements
Report of Independent Accountants
To the Board of Directors and Stockholders of
United Park City Mines Company:
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows present fairly, in all material respects, the consolidated financial
position of United Park City Mines Company (the "Company") as of December 31,
1998, and the consolidated results of their operations, changes in stockholders'
equity and their cash flows for each of the two years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Salt Lake City, Utah
March 19, 1999
15
<PAGE>
UNITED PARK CITY MINES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1998
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents....................................................... $ 3,890,474
Accounts receivable............................................................. 55,411
Prepaid expenses................................................................ 183,546
Inventories..................................................................... 173,435
Deferred income taxes........................................................... 270,068
Other........................................................................... 21,100
------------
4,594,034
------------
Real estate:
Hidden Meadows development................................................. 858,207
Deer Crest development..................................................... 503,590
Deferred development costs - other......................................... 1,975,142
------------
3,336,939
------------
Property and equipment:
Mine shaft, buildings, and equipment....................................... 4,070,933
Mine tour attraction....................................................... 4,949,448
Construction-in-progress................................................... 235,968
Resort facilities.......................................................... 58,077
Less accumulated depreciation.............................................. (4,899,739)
------------
4,414,687
------------
Land less accumulated depletion of $1,062,190................................... 12,982,458
Water rights.................................................................... 400,000
------------
17,797,145
------------
Total assets.................................................................... $25,728,118
============
</TABLE>
-- continued --
The accompanying notes are an integral part of the consolidated financial
statements.
16
<PAGE>
UNITED PARK CITY MINES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
Accounts payable................................................................ $ 438,984
Accrued liabilities............................................................. 637,733
------------
Total liabilities.......................................................... 1,076,717
------------
Commitments and contingencies (Notes 6 and 7)
Stockholders' equity:
Capital stock, $.01 par value:
Authorized: 3,750,000 shares
Issued: 3,249,411 shares ............................................... 32,494
Capital in excess of par value............................................. 41,982,640
Accumulated deficit........................................................ (17,179,949)
------------
24,835,185
------------
Less cost of treasury stock: 1,294 shares................................. (183,784)
------------
Total stockholders' equity................................................. 24,651,401
------------
Total liabilities and stockholders' equity............................. $ 25,728,118
============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
17
<PAGE>
UNITED PARK CITY MINES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
Revenues: ----------- -----------
<S> <C> <C>
Lot sales................................................ $ 5,359,000 $ 1,270,000
Mine tour attraction..................................... 1,484,510 1,440,947
Interest................................................. 126,835 54,077
Royalties and rentals.................................... 173,105 178,009
Contract services........................................ 66,694 103,127
Other.................................................... 43,028 82,848
----------- -----------
7,253,172 3,129,008
----------- -----------
Expenses:
Cost of lot sales and selling expense.................... 1,956,288 867,408
Mine tour attraction..................................... 1,672,585 1,970,319
General and administrative costs......................... 798,135 798,814
Mine maintenance and administrative costs................ 1,356,434 1,162,582
Contract services costs.................................. 40,037 61,080
Depreciation............................................. 522,340 497,668
Interest................................................. 43,995 109,969
----------- -----------
6,389,814 5,467,840
----------- -----------
Net income (loss) before income taxes......................... 863,358 (2,338,832)
Income tax provision.......................................... (214,363) (258)
----------- -----------
Net income (loss)............................................. $ 648,995 $(2,339,090)
=========== ===========
Net income (loss) per share:
Basic......................................................... $ 0.20 $ (0.84)
Diluted....................................................... $ 0.20 $ (0.84)
============ ===========
Weighted average shares outstanding:
Basic........................................................ 3,222,065 2,777,222
Diluted....................................................... 3,255,398 2,777,222
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE>
UNITED PARK CITY MINES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Capital Stock Capital in Total Treasury Stock Total
------------------------ Excess of Accumulated ------------------------ Stockholders'
Description Shares Amount Par Value Deficit Shares Amount Equity
- ---------------------------- ---------- ----------- ----------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 2,701,544 $27,015 $31,126,187 $ (15,489,854) 1,294 $(183,784) $ 15,479,564
Rights Offering (1)....... 340,000 3,400 5,300,652 5,304,052
Exercise of stock option.. 4,167 42 28,602 28,644
Net loss.................. (2,339,090) (2,339,090)
---------- ----------- ----------- -------------- ----------- ----------- --------------
Balance at December 31, 1997 3,045,711 $ 30,457 $36,455,441 $ (17,828,944) 1,294 $(183,784) $ 18,473,170
Issue of stock for land... 203,700 2,037 5,527,199 5,529,236
Net income................ 648,995 648,995
---------- ----------- ----------- -------------- ----------- ----------- --------------
Balance at December 31, 1998 3,249,411 $ 32,494 $41,982,640 $ (17,179,949) 1,294 $ (183,784) $ 24,651,401
========== =========== =========== ============== =========== =========== ==============
</TABLE>
(1) Net of offering expenses of $135,948.
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE>
UNITED PARK CITY MINES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
Cash flows from operating activities: --------------- ---------------
<S> <C> <C>
Net income (loss)............................................... $ 648,995 $ (2,339,090)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation................................................ 522,340 497,668
Deferred income taxes....................................... 205,134 0
Increase (decrease) from changes in:
Accounts receivable.................................... 40,609 (50,645)
Prepaid expenses, inventory and other assets........... 28,582 (29,733)
Subdivision development costs.......................... 1,386,025 645,175
Deferred development costs - other..................... (1,563,083) (384,916)
Accounts payable and accrued liabilities............... 12,352 (305,654)
Contracts payable...................................... (65,000) (16,875)
Other.................................................. (10,000) 12,801
-------------- --------------
Total adjustments.................................. 556,959 367,821
-------------- --------------
Net cash provided by (used in) operating activities 1,205,954 (1,971,269)
-------------- --------------
Cash flows from investing activities:
Construction-in-progress........................................ (35,975) (29,509)
Capital expenditures ........................................... (593,331) (135,362)
-------------- --------------
Net cash used in investing activities.............. (629,306) (164,871)
-------------- --------------
Cash flows from financing activities:
Costs related to issuing stock for land......................... (47,052)
Proceeds from rights offering .................................. 5,440,000
Costs associated with rights offering .......................... (135,948)
Principal payments on bank note payable......................... (886,083)
Proceeds from sale of stock under employee stock option ........ 28,644
-------------- --------------
Net cash provided by financing activities.......... (47,052) 4,446,613
-------------- --------------
Net increase in cash and cash equivalents............................ 529,596 2,310,473
Cash and cash equivalents-beginning of period........................ 3,360,878 1,050,405
-------------- --------------
Cash and cash equivalents-end of period.............................. $ 3,890,474 $ 3,360,878
============== ==============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the periods presented for interest (net of
interest capitalized of $ 0 in 1998 and $ 0 in 1997)............ $ 43,995 $ 109,969
============== ==============
</TABLE>
During 1998, the Company acquired land in exchange for 203,700 shares of the
Company's capital stock with a value of $5,576,287.
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE>
1. Significant Accounting Policies:
A. Principles of Consolidation
The consolidated financial statements include the accounts of United
Park City Mines Company (the "Company") and its wholly-owned subsidiaries.
The Company's current principal business is the development, sale, and
lease of real estate located near Park City, Utah. The Company has historically
been engaged in mining in Park City and is currently maintaining its mining
properties in an inactive status. In addition, the Company operates a mine tour
attraction near Park City which was opened in 1995.
The Company believes that cash and cash equivalents at December 31,
1998 plus cash flows from the sale of lots in the Hidden Meadows subdivision and
the Deer Crest project will be sufficient to fund its on-going operations in
1999.
B. Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents. Cash and cash
equivalents are deposited with one financial institution located in Salt Lake
City, Utah.
C. Income Taxes
The Company accounts for income taxes under the provisions of Statement
of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes." Deferred income taxes are provided for the difference between the
financial statement and tax bases of assets and liabilities using applicable
future tax rates. Investment tax credits are accounted for on the flow-through
method.
D. Property and Equipment
Property and equipment is recorded at cost. The investment in land has
been reduced by the gain on the 1971 sale of surface rights used for resort
operations.
Depreciation for assets purchased prior to 1983 has been computed over
estimated remaining useful lives of 10 years for mine equipment and buildings,
and 25 years for the mine shaft using the straight-line method of depreciation.
Depreciation for assets purchased after 1982 has been computed on the
straight-line method of depreciation over the following useful lives:
Automobiles, equipment and furniture 3-5 years
Real property and related improvements 15 years
Mine tour attraction 3-20 years
Upon the sale or retirement of property and equipment, any gain or loss
on disposition is reflected in the consolidated statement of operations and the
related asset cost and accumulated depreciation are removed from the respective
accounts.
- continued -
21
<PAGE>
1. Significant Accounting Policies, continued:
The units-of-production method of depletion has been adopted based on
estimates of ultimate ore reserves and mine production. However, the provision
in any one-year is limited by the royalty income received.
The Company assesses recoverability of the remaining net book value of
mine and mine tour attraction related assets based principally on the future net
tour attraction revenues. Though continued losses from operating the mine tour
attraction could indicate an inability to recover the related costs, management
continues to believe that their advertising efforts and emphasis on cost
efficiencies will result in the mine tour attraction being profitable in the
near future.
E. Mine Maintenance and Administrative Expenses
All costs pertaining to the maintenance and administration of the mine
are expensed as incurred.
F. Inventories
Material and supplies inventory for mine maintenance and gift shop and
concessions inventory for the mine tour attraction are stated at the lower of
cost (first-in, first-out) or market.
G. Real Estate
All direct and indirect costs relating to the Company's real estate
projects are capitalized as incurred.
Revenue from the sale of real estate is recognized at the time title is
conveyed to the buyer, minimum down payment requirements are met, the terms of
any notes received satisfy continuing payment requirements, and there are no
requirements for continuing involvement by the Company with the property. When
it is determined that the earnings process is not complete, income is deferred
using the installment, cost recovery or deposit methods of accounting, as
appropriate.
Expenditures relating to the future development of real estate held by
the Company are deferred and shown as an asset on the balance sheet as they are
expected to be recoverable through future sales. The Company allocates
capitalized real estate development costs on a specific identification basis.
Common costs and amenities are allocated on a relative fair value basis. If
necessary, a valuation allowance is recorded to reflect an impairment in the
carrying value of deferred real estate development costs or land that is held
for sale, lease or development. Additionally, although the Company believes that
it has no current requirements to incur remediation or reclamation costs, should
the Company pursue development of certain land parcels in the future, it could
incur material environmental costs related to preparing those parcels of land
for development.
Management believes that the recorded costs associated with land and
real estate on the balance sheet will be recoverable through the sale and
development of the real estate.
H. Net Income (Loss) Per Share
Basic net income (loss) per share was computed by dividing the net
income (loss) by the weighted average number of capital shares outstanding.
Diluted net income (loss) per share was computed by dividing the net income
(loss) by the sum of the weighted average number of capital shares and the
effect of dilutive unexercised stock options. Options to purchase 33,333 shares
of capital stock at $6.874 per share were outstanding during 1998 and were
included in the computation of diluted net income per share. For the year ended
December 31, 1997, These options were not included in the computation of net
loss per share because the effect would have been antidilutive.
I. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires
- continued -
22
<PAGE>
1. Significant Accounting Policies, continued:
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
J. Rights Offering
During the third quarter of 1997, the Company conducted a rights
offering to raise additional capital to repay short-term indebtedness, to
continue its real estate development activities, and to provide working capital
for the Company's continuing operations. In the rights offering, the Company
issued to its stockholders non-transferable rights "(Rights)" to subscribe for
up to 340,000 additional shares of its capital stock. Such Rights were issued to
the holders of capital stock as of the close of business on August 18, 1997 (the
"Record Date"). The stockholders as of the Record Date received one (1) Right
for each eight (8) shares of capital stock they owned on the Record Date. The
Rights were not transferable and they were not traded on any exchange. Each
Right entitled the holder thereof to subscribe for one (1) additional share of
capital stock for $16.00 and provided a right to subscribe for any shares which
were unsubscribed for in the rights offering.
Stockholders subscribed for all of the shares offered in the rights
offering and all of the 340,000 additional shares of the Company's capital stock
offered in the rights offering were issued during the fourth quarter of 1997.
The Company raised approximately $5,440,000, before deducting expenses of the
offering in the amount of approximately $135,948.
2. Mining Operations of the Company:
The Company is presently maintaining its inactive mine properties in
Park City, Utah. No actual mining operations have taken place since 1982.
The Company is unable to predict when, if ever, it will be economically
feasible for the Company or another company to resume mining operations on its
properties. The economic feasibility of resuming mining operations will depend
upon, among other things, an increase in metals prices and the resolution of
technical problems such as groundwater problems and certain milling
applications. The Company cannot currently predict the metals prices which would
allow for economic mining operations. If the Company or another operator resumes
active mining operations on the properties, it would be necessary to update or
acquire certain additional permits, licenses or approvals from the appropriate
governmental agencies. If necessary, a valuation allowance is recorded to
reflect an impairment in the carrying value of mining property and equipment.
From time to time the Company performs underground tunnel maintenance
and repair services for other entities, principally Park City Municipal
Corporation.
3. Ski Leases:
The Company has leased certain surface rights representing
approximately 5,273 acres to Greater Park City Company for use in its resort
operations. Greater Park City Company has assigned some of its rights in a
separate lease to Deer Valley Resort Company. The term of each lease has been
extended to April 30, 2011 by notice to the Company. The lessees have the right
to extend each lease for two additional periods of 20 years each. Annual rentals
are calculated as a percent of Gross Ski Revenue as defined by the lease
agreement and subsequent amendments thereto, but not less than a minimum annual
rental fee of fifty cents per acre leased. Greater Park City Company and Deer
Valley Resort Company paid United Park for the 1996-97 ski season, a total of
$176,969 and for the 1997-98 ski season, a total of $176,105.
- continued -
23
<PAGE>
4. Income Taxes:
The income tax provision for the years ended December 31, 1998 and 1997
consists of the following:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Current tax provision $ (9,229) $ (258)
Deferred tax provision (205,134) 0
------------- -------------
Income tax provision $(214,363) $ (258)
============= =============
</TABLE>
The reported provision from income taxes varies from the amount that
would be provided by applying the statutory U. S. Federal income tax rate to
income before taxes for the following reasons:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Federal statutory tax (benefit) provision $293,542 $(795,203)
Increase (reduction) in taxes resulting from:
State income taxes (net of federal benefit) 8,786 (76,850)
Alternative minimum tax 8,829 0
Change in valuation allowance (150,649) 870,836
Other 53,855 1,475
------------- -------------
Income tax provision $214,363 $ 258
============= =============
</TABLE>
At December 31, 1998 the Company had net operating loss carryforwards
for federal and state income tax purposes of approximately $16,578,485 and
$5,432,360 respectively, which will expire between 1999 and 2012 if not used to
reduce future taxable income.
The components of the net deferred tax asset and liability as of
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Tax net operating loss carryforwards $ 5,815,953
Tax credit carryforwards 5,447
Charitable contributions carryover 6,536
Valuation allowance (4,856,114)
-----------
Total deferred tax asset 971,822
Deferred tax liability:
Excess tax depreciation and amortization (701,754)
-----------
Net deferred tax asset $ 270,068
===========
</TABLE>
The valuation allowance at December 31, 1998 has been provided to
reduce the total deferred tax assets to the amount, which is considered more
likely than not to be realized. The net decrease in the valuation allowance for
the year ended December 31, 1998 was $150,649. The change in the valuation
allowance is due to a revised estimate of the expected future utilization of
federal net operating loss carryforwards and the expiration of state net
operating loss carryforwards.
- continued -
24
<PAGE>
5. Industry Segments:
During 1998, the Company adopted Statement of Financial Accounting
Standard No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The Company's reportable segments are strategic business units
that offer different products and services. They are managed separately because
each business requires different technology and marketing strategies. The
Company is organized into the following industry segments and management
accounts for revenues from these activities separately and evaluates each of the
following segments based upon performance: Mine Maintenance, Real Estate and
Mine Tour. The segment data here presented does not include intersegment
revenues or charges for corporate overhead costs.
<TABLE>
<CAPTION>
December 31, 1998: Mine Maint. Real Estate Mine Tour Other Total
------------------ ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenue.......................... $ 93,944 $ 5,529,048 $1,484,510 $ 145,670 $ 7,253,172
Operating income (loss)(1)....... (872,095) 3,364,462 (623,588) (1,005,421) 863,358
Identifiable assets.............. 824,823 16,364,709 4,078,396 4,460,190 25,728,118
Depreciation..................... 100,038 2,905 389,695 29,702 522,340
Capital expenditures,
including deferred real
estate development costs.......... 24,001 545,010 104,465 7,076,656 7,750,132
<CAPTION>
December 31, 1997: Mine Maint. Real Estate Mine Tour Other Total
------------------ ----------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Revenue......................... $ 143,846 $ 1,465,667 $ 1,464,371 $ 55,124 $ 3,129,008
Operating income (loss)(1)...... (1,133,752) 466,600 (925,949) (745,989) (2,338,832)
Identifiable assets............. 879,915 10,150,435 4,310,985 4,261,199 19,602,534
Depreciation.................... 81,442 4,254 370,374 41,598 497,668
Capital expenditures,
including deferred real
estate development costs........ 11,332 384,916 117,267 36,272 549,787
</TABLE>
(1) Earnings before taxes
All of the segment revenues are derived from within the United States
and all segment assets are located in the United States. The Real Estate segment
had four customers from which revenues exceeded 10% of the Company's total
revenues. These real estate sales were one-time sales to those particular
customers and are not expected to reoccur to those customers due to the nature
of real estate sales.
6. Contingencies:
Litigation and Settlement Agreement
In May 1986, the Company filed a lawsuit against Greater Park City
Company ("GPCC"), Royal Street Land Company, Royal Street of Utah, and Deer
Valley Resort Company related to agreements which resulted in the restructuring
of Greater Park City Company in 1975 and later performance under these
agreements. The defendants filed counterclaims against the Company.
On November 13, 1995, an Order of Dismissal With Prejudice of all of
the Company's remaining claims and all of GPCC's claims was signed by the Court
and also filed, thereby finally disposing of all of the remaining aspects of
this litigation.
On November 6, 1992, the Company entered into a Settlement Agreement
and Release ("Settlement Agreement") with Royal Street Land Company, Deer Valley
Resort Company, Royal Street of Utah, Royal Street Development Company
(collectively "Deer Valley"), and Wells Fargo Bank, N.A. In this Settlement
Agreement, the Company, Deer Valley, and Wells Fargo agreed, among other things,
to dismiss with prejudice the claims and counterclaims.
- continued -
25
<PAGE>
6. Contingencies, continued:
The Settlement Agreement provides the Company the opportunity to
develop, without the encumbrance of the Deer Valley Ski Lease, certain parcels
of land, which are currently subject to the Deer Valley Ski Lease. The
Settlement Agreement further provides Deer Valley the opportunity to acquire the
Company's interest in the surface estate to the balance of the land within the
Deer Valley Ski Lease. Both the Company's and Deer Valley's opportunities
concerning those parcels of land covered under the Deer Valley Ski Lease are
contingent upon master plan approval by the appropriate government agencies and
acceptance of the master plan by the Company.
If the appropriate government agencies do not approve the master plan
or if the Company does not accept the master plan, the land within the Deer
Valley Ski Lease will remain encumbered by the Deer Valley Ski Lease. If master
plan approval is obtained and accepted, the Deer Valley Ski Lease will be
terminated. The Company could then proceed to develop those certain parcels of
land which were formerly encumbered by the Deer Valley Ski Lease and would
convey the balance of the surface estate of the land formerly encumbered by the
Deer Valley Ski Lease to Deer Valley. Additionally, if and when the master plan
is accepted by both the Company and the appropriate government agencies, the
exchange of the surface rights to the land by the Company for the termination of
the Deer Valley Ski Lease and the right to develop the land previously
encumbered by the lease will represent an exchange of similar productive assets.
Accordingly, the Company will transfer its basis in the surface rights to the
land to the basis in the land to be developed that was previously encumbered by
the Deer Valley Ski Lease, with no gain or loss recognized.
Richardson Flat
A portion of United Park's mining property, known as "Richardson Flat
Tailings," was proposed by the United States Environmental Protection Agency
("EPA") on June 24, 1988, by notice published in the Federal Register, to be
added to the EPA's National Priorities List ("NPL"), the EPA's listing of
national priority hazardous waste sites. United Park submitted written comments
opposing the listing of the Richardson Flat Tailings site on a number of
procedural and substantive grounds. In response to the comments submitted by
United Park, the EPA determined not to list the site on the NPL in a final rule
published February 11, 1991, in the Federal Register.
On February 7, 1992, by notice published in the Federal Register, the
EPA again proposed that the Richardson Flat Tailings site be added to the NPL.
In April 1992, the Company submitted written comments opposing the listing on a
number of procedural and substantive grounds. As of this date, the EPA has
neither responded to United Park's comments nor finalized its proposal to list
the site on the NPL.
The NPL has been established by the EPA under the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") to identify,
inventory, and prioritize sites which warrant further investigation to assess
the nature and extent of any public health and environmental risks associated
with the site and to determine what remedial action, if any, may be appropriate.
Inclusion of a site on the NPL does not establish that the EPA will necessarily
require remedial action for the site. Listing on the NPL does not establish that
any remedial action by the EPA or any private party is necessary nor does
listing determine any liability for the cost of any remediation at the site. The
EPA, United Park, and/or other potentially responsible parties may perform more
detailed studies at the site to determine what response, if any, is necessary.
Numerous mining properties throughout the United States owned by other
entities are currently proposed for listing or are listed on the NPL. As a
result of the EPA's evaluation of the Richardson Flat Tailings site, United Park
may be advised to continue its current environmental monitoring and practices at
the site under its Utah Pollutant Discharge Elimination System ("UPDES") permit,
or the Company may be required to undertake additional stabilization or
remediation activities on this portion of its mining property to comply with the
standards for disposal of mining wastes under CERCLA. In 1983, United Park began
a containment program, which is now substantially complete, to cover the
Richardson Flat Tailings area with topsoil and seed the site for vegetation.
Management is not now able to accurately predict whether the Richardson Flat
Tailings site will be listed on the NPL and, if it is listed, whether further
remedial actions will be required. United Park has engaged in the study and
evaluation of the development of a recreation complex in the area of Richardson
Flat. It is believed that through the development of the recreation complex, any
remedial issues which might be identified during the study or the development
related to the Richardson Flat Tailings site could be
-continued-
26
<PAGE>
6. Contingencies, continued:
resolved. However, should substantial remediation be required at the site beyond
the scope of such development and should United Park be designated as a
potentially responsible party and it is later determined that United Park is a
responsible party liable for remediation, those costs could be substantial to
the Company.
7. Retirement Savings Plan:
The Company has a contributory 401(k) Retirement Savings Plan covering
all employees who have completed one year of continuous service and have
attained the age of 21. Under the provisions of the Plan, the Company
contributes $0.50 for each dollar contributed by eligible employees up to a
limit of $1,000 per employee per year. Company contributions are 100% vested
after six years of continuous service. Total Company expense for the plan in
1998 and 1997 was $20,862 and $19,662, respectively.
8. Stock Options:
In 1993, the shareholders of the Company approved a stock option plan
("Plan") for key employees and consultants of the Company. Pursuant to the terms
of the Plan, as amended, 125,000 shares of the Company's $0.01 par value common
stock are reserved for issuance thereunder. The Plan consists of two autonomous,
separately administered programs: an "Employee Program" and a "Consultant
Program." The Employee Program is for key employees (including employees who are
members of the Company's Board of Directors), and the Consultant Program is for
consultants (including non-employee members of the Board of Directors). Stock
Options granted under the Employee Program are intended to be Incentive Stock
Options as defined in the Internal Revenue Code, and stock options granted under
the Consultant Program are intended to be Non-statutory Stock Options.
Under the Employee Program, a stock option committee ("Committee") of
the Board of Directors will, in its sole discretion, approve the grant of
options to key employees based upon the performance and contribution of each
such key employee and based upon the results achieved by the Company. The
Committee will also set the terms and conditions of the individual stock option
grants under the Employee Program within the framework of the Plan.
Under the Consultant Program, the entire Board of Directors will, in
its sole discretion, approve the grant of options to consultants, including
individual members of the Board of Directors. The Board of Directors will set
the terms and conditions of the individual stock option grants under the
Consultant Program, within the framework of the Plan.
No options may be granted under the Plan after June 10, 2003. Options
granted under the Plan are exercisable in such installments and for such periods
as specified by the Board of Directors and the Committee at the time of grant,
but may not be exercisable more than ten years after the date of grant (five
years for shareholders owning 10% or more of the Company's outstanding stock).
The option price with respect to each option will be determined by the
Committee or the Board of Directors of the Company, but shall not be less than
100% of the fair market value of the common stock of the Company at the time the
option is granted (110% for a shareholder owning 10% or more of the Company's
outstanding stock).
Outstanding stock options must be exercised during employment or within
three months after termination (other than by reason of death) as to any shares
of Common Stock which the employee might have purchased as of the date of -
termination.
The Plan provides that new stock options can be granted under the Plan
to holders of existing options in exchange for cancellation of the existing
options, in the sole discretion of the Committee or the Board of Directors.
- continued -
27
<PAGE>
8. Stock Options, continued:
Stock options under the Company's incentive and non-statutory stock
option plan were as follows:
<TABLE>
<CAPTION>
---------------------- ---------------------
1998 1997
---------------------- ---------------------
<S> <C> <C> <C> <C>
Exercise Exercise
Price per Price per
Options: Shares Share Shares Share
------------------------------------------------------------------------------------------------------
Outstanding and exercisable at beginning of year 33,333 $6.874 37,500 $6.874
Granted 0 0
Exercised 0 (4,167) $6.874
Forfeited and/or expired 0 0
---------- ---------
Outstanding and exercisable at end of year 33,333 $6.874 33,333 $6.874
------------------------------------------------------------------------------------------------------
</TABLE>
The weighted average remaining contractual life of the outstanding and
exercisable options is 6 years.
At December 31, 1998, a total of 87,500 shares were available for
grants of additional options under the plan.
Pro forma disclosures of net income and earnings per share are not
included, as there were no options granted subsequent to December 31, 1995.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not Applicable
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Information concerning the Directors and Executive Officers of the Registrant is
incorporated herein by reference from page 2 of the Registrant's definitive
Proxy Statement for the 1999 Annual Meeting of Stockholders under the heading
"Proposal Number 1-To Elect Four Directors to the Board of Directors."
Item 10. Executive Compensation
Information concerning Executive Compensation of the Registrant's executive
officers is incorporated herein by reference from pages 3 and 4 of the
Registrant's definitive Proxy Statement for the 1999 Annual Meeting of
Stockholders under the heading "Executive Compensation."
Item 11. Security Ownership of Certain Beneficial Owners and Management
Information concerning Security Ownership of Certain Beneficial Owners and
Management of the Registrant is incorporated herein by reference from pages 4
and 5 of the Registrant's definitive Proxy Statement for the 1999 Annual Meeting
of Stockholders under the heading "Security Ownership of Certain Beneficial
Owners and Management."
Item 12. Certain Relationships and Related Transactions
Not Applicable
28
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Form 10-KSB
pursuant to Item 601 of Regulation S-B:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Reg. S-B Sequential
Reference Page
Number Document Number
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation, as amended by Certificate of 1
Amendment of Restated Certificate of Incorporation
- ----------------------------------------------------------------------------------------------------------------------------
3.2 Amendment to Restated Certificate of Incorporation filed in Delaware on 2
December 19, 1990
- ----------------------------------------------------------------------------------------------------------------------------
3.3 Amendment to Restated Certificate of Incorporation filed in Delaware on 5
September 8, 1993
- ----------------------------------------------------------------------------------------------------------------------------
3.4 Amendment to Restated Certificate of Incorporation filed in Delaware on 7
August 25, 1995
- ----------------------------------------------------------------------------------------------------------------------------
3.5 Bylaws 1
- ----------------------------------------------------------------------------------------------------------------------------
10.1 Purchase Agreement dated January 1, 1971 between United Park City Mines 1
Company and Greater Park City Company (formerly Treasure Mountain Resort
Company), as amended by First Amendment to Purchase Agreement dated June 11,
1971, Second Amendment to Purchase Agreement dated March 30, 1972, Third
Amendment to Purchase Agreement dated April 2, 1975, and Fourth Amendment to
Purchase Agreement dated July 1, 1975
- ----------------------------------------------------------------------------------------------------------------------------
10.2 Memorandum of Agreement dated June 23, 1975 among United Park City Mines 1
Company, Greater Park City Company, Unionamerica, Inc., Royal Street
Corporation, Morgan Guaranty Trust Company of New York as Trustee, The
Fidelity Bank as Trustee, and Alpine Meadows of Tahoe, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
10.3 Substituted Escrow Agreement dated October 11, 1975 among United Park City 1
Mines Company, Greater Park City Company, Royal Street Land Company, Greater
Properties, Inc., Park Properties, Inc., and First Security Bank of Utah, as
trustee and escrow agent, as amended by Amendment to Substituted Escrow
Agreement dated October 1, 1979
- ----------------------------------------------------------------------------------------------------------------------------
10.4 Acquisition Agreement dated October 11, 1975 between Greater Park City 1
Company and Royal Street Land Company
- ----------------------------------------------------------------------------------------------------------------------------
10.5 Resort Area Lease dated January 1, 1971 between United Park City Mines 1
Company and Greater Park City Company, as amended by Amendment to Resort
Area Lease dated May 1, 1975 and Second Amendment to Resort Area Lease dated
June 19, 1980, and Third Amendment to Resort Area Lease dated December 12,
1980
- ----------------------------------------------------------------------------------------------------------------------------
10.6 Crescent Ridge Lease dated January 1, 1971 between United Park City Mines 1
Company and Greater Park City Company, as amended by Crescent Ridge Lease
dated May 1, 1975
- ----------------------------------------------------------------------------------------------------------------------------
10.7 Deer Valley Lease dated January 1, 1971 between United Park City Mines 1
Company and Greater Park City Company, as amended by Deer Valley Lease dated
May 1, 1975, and Amendment to Deer Valley Lease dated May 21, 1979 and
Second Amendment to Deer Valley Lease dated July 31, 1980
- ----------------------------------------------------------------------------------------------------------------------------
10.8 Water Rights Purchase Agreement dated January 1, 1971 between United Park 1
City Mines Company and Greater Park City Company, as amended by Amendment to
Water Rights Purchase Agreement dated February 10, 1975 and Second Amendment
to Water Rights Purchase Agreement dated July 1, 1975
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Reg. S-B Sequential
Reference Page
Number Document Number
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
10.9 Settlement Agreement and Release by and between United Park City Mines 4
Company, Royal Street Land Company, Deer Valley Resort Company, Royal Street
of Utah, Royal Street Development Company, and Wells Fargo Bank, N.A. dated
November 6, 1992
- ----------------------------------------------------------------------------------------------------------------------------
10.10 Employment Agreement dated June 1, 1994 by and between United Park City 6
Mines Company and Hank Rothwell
- ----------------------------------------------------------------------------------------------------------------------------
10.11 Incentive Stock Option Agreement dated June 27, 1994 by and between United 6
Park City Mines Company and Hank Rothwell
- ----------------------------------------------------------------------------------------------------------------------------
10.12 Incentive Stock Option Agreement dated August 2, 1994 by and between United 6
Park City Mines Company and Edwin L. Osika, Jr.
- ----------------------------------------------------------------------------------------------------------------------------
10.13 Employment Agreement dated June 1, 1997 by and between United Park City 8
Mines Company and Hank Rothwell
- ----------------------------------------------------------------------------------------------------------------------------
10.14 Agreement of Purchase and Sale of Assets between New Quincy Mining Company 9
as Seller and United Park City Mines Company, dated December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
10.15 Agreement of Purchase and Sale of Assets between Lucky Bill Mining Company 9
as Seller and United Park City Mines Company, dated December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
22.1 Subsidiaries of the Registrant 3
- ----------------------------------------------------------------------------------------------------------------------------
27 Financial Data Schedule 32
- ----------------------------------------------------------------------------------------------------------------------------
99 Prospectus which is a part of the Form S-3, Amendment No. 1, dated April 8, 10
1998, filed by the Company with the Securities and Exchange Commission
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Incorporated by reference from Amendment Number 1 of the Registrant's
registration statement on Form S-1 filed with the Securities and
Exchange Commission on March 19, 1987 (Registration Number 33-11328)
2 Incorporated by reference from Amendment Number 1 of the Registrant's
registration statement on Form S-3 filed with the Securities and
Exchange Commission on January 28, 1991 (Registration Number 33-37914)
3 Incorporated by reference from the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1989
4 Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1992
5 Incorporated by reference from Amendment Number 1 of the Registrant's
registration statement on Form S-3 filed with the Securities and
Exchange Commission on October 12, 1993 (Registration Number 33-67458)
6 Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994
7 Incorporated by reference from the Registrant's Form 8-K filed with
the Securities and Exchange Commission on September 7, 1995
8 Incorporated by reference from the Registrant's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999
9 Incorporated by reference from the Registrant's Form 8-K filed with
the Securities and Exchange Commission on February 19, 1998
10 Incorporated by reference from the Registrant's Form S-3, Amendment
No. 1, dated April 8, 1998, filed by the Company with the Securities
and Exchange Commission
(b) Reports on Form 8-K:
Registrant filed a Form 8-K with the Securities and Exchange Commission on
February 19,1998 reporting thereon the acquisitions of assets of New Quincy
Mining Company and Lucky Bill Mining Company.
30
<PAGE>
(b) Reports on Form 8-K, Continued:
Registrant filed a Form 8-K with the Securities and Exchange Commission on April
8, 1998 reporting additional purchases of its capital stock by Labrador Partners
L.P., Farley Capital L.P. and Stephen L. Farley.
Registrant filed a Form 8-K with the Securities and Exchange Commission on April
23, 1998 reporting additional purchases of its capital stock by Labrador
Partners L.P., Farley Capital L.P. and Stephen L. Farley.
The above identified Reports on Form 8-K are hereby incorporated into this Form
10-KSB by reference.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
<TABLE>
<CAPTION>
<C> <S>
UNITED PARK CITY MINES COMPANY
(Registrant)
April 14, 1999 s/ Hank Rothwell
-------------------------------------------- ----------------------------------------------------
Date Hank Rothwell
President, Chief Executive Officer, and Director
</TABLE>
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE CAPACITY DATE
s/ Alan L. Gordon April 14, 1999
- --------------------------------------------- ----------------------------------
Alan L. Gordon Director Date
s/ Joseph S. Lesser April 14, 1999
- --------------------------------------------- ----------------------------------
Joseph S. Lesser Director Date
s/ Hank Rothwell April 14, 1999
- --------------------------------------------- ----------------------------------
Hank Rothwell President, Chief Executive Officer, and Date
Director
s/ Edwin L. Osika, Jr. April 14, 1999
- --------------------------------------------- ----------------------------------
Edwin L. Osika, Jr. Executive Vice President, Secretary, Date
Treasurer, Chief Financial Officer, and
Director
s/ Micheal R. Salmond April 14, 1999
- --------------------------------------------- ----------------------------------
Micheal R. Salmond Controller, and Chief Accounting Offical Date
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,890,474
<SECURITIES> 0
<RECEIVABLES> 55,411
<ALLOWANCES> 0
<INVENTORY> 173,435
<CURRENT-ASSETS> 4,594,034
<PP&E> 9,314,426
<DEPRECIATION> 4,899,739
<TOTAL-ASSETS> 25,728,118
<CURRENT-LIABILITIES> 1,076,717
<BONDS> 0
0
0
<COMMON> 32,494
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,728,118
<SALES> 5,359,000
<TOTAL-REVENUES> 7,253,172
<CGS> 1,956,298
<TOTAL-COSTS> 1,956,298
<OTHER-EXPENSES> 4,389,531
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,995
<INCOME-PRETAX> 863,358
<INCOME-TAX> 214,363
<INCOME-CONTINUING> 648,995
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 648,995
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
