SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the Fiscal Year Ended December 31, 1998
Commission File No. 1-3871
CALIFORNIA-ENGELS MINING COMPANY
Incorporated in the State of California
IRS Employer I.D. No. 94-0357560
117 Crescent Street
P. O. Box 778
Greenville, California 95947-0778
Telephone Number (530) 284-6191
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT
Title of Each Class - Capital Stock, par value, $0.25 per share.
Number of Shares outstanding: 761,135.6
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90
days. Yes: X No:
As of March 5, 1999, 761,135.6 capital shares were outstanding,
and the aggregate market value of the common shares of California-
Engels Mining Company held by nonaffiliates was approximately
$311,830.
Documents Incorporated by Reference: NONE
Filing Contains 30 Pages
<PAGE>
PART 1
ITEM 1. BUSINESS
Registrant was incorporated under the laws of the State of
California on July 12, 1922, under the name of California Copper
Corporation, as a holding company for the shares of its operating
company Engels Copper Mining Company which was incorporated under
the laws of the State of California on June 19, 1901. Engels
Copper Mining Company was merged into California Copper Corporation
on March 3, 1936, and the name of the merged company was changed to
California-Engels Mining Company. Exploration and development
commenced at the Engels Mine, Lights Creek Mining District, Plumas
County, California, upon organization of Engels Copper Mining
Company; but it was not until 1914 that milling facilities were
available and actual production of copper started. From 1914 until
operations were suspended due to the low price of copper in July,
1930, approximately 4,700,000 tons of ore were mined from the
Engels and Superior mines and milled producing 160,170,000 pounds
of copper and substantial values in gold and silver. Out of
profits of this operation, the Registrant retired a bond issue of
$500,000 and paid out more than $1,285,000 in dividends. During
the 1930's the mining and milling plant, Engelmine townsite and the
Indian Valley Railroad subsidiary were dismantled and sold.
Registrant's mining properties were continuously leased from
September, 1947, to March, 1951; from March, 1951, to December,
1959; from November, 1960, to October, 1979; from August, 1980, to
August, 1990; and from November, 1990, to April 1993. The lessee
from 1964 to 1993 was Placer Dome U.S. Inc., the U.S. Subsidiary of
Placer Dome Inc., Vancouver, B.C., Canada. The Mining Lease With
Option to Purchase, between the Registrant (Lessor) and Placer Dome
U.S. Inc. (Lessee) was terminated by Placer Dome U.S. Inc.
effective April 20, 1993. Registrant has received a substantial
amount of technical data on its mining properties. Thousands of
feet of drill core from the Superior Mine, Sulphide Ridge and the
Engels Mine are stored at Crescent Mills, California. Registrant's
mineral deposits and prospects are not deemed economically
attractive under current conditions for the mining industry in
California and the United States, nor are they likely to be so in
the foreseeable future.
The Non-Industrial Timber Management Plan as prepared by
Shasta Land Management Consultants and the archaeological survey
begun in 1994 are complete and have been filed with the California
Department of Forestry. The field inspection by the Department of
Forestry awaits the melting of snow at the 5,000 foot elevation.
The Plan estimates that the four parcles comprising the Lights
Creek Unit contain 4,532,000 board feet with an annual growth rate
of 67,000 board feet. The three Ward Creek parcles are estimated
to contain 983,000 board feet with an annual growth rate of 9,420
board feet.
<PAGE>
The Non-Industrial Timber Management Plan is an assessment of
the timber inventory, conditions and potential of the entire
property broken down into units with similar growing conditions
within each unit. Its intent is to demonstrate a long-term
commitment to appropriately manage the resource. It functions as
a coordinated collection of individual Timber Harvest Plans and its
advantage is that, once filed, the paperwork necessary to initiate
individual timber harvests is minimal. Under this Plan we are
restricted in management options to those silvicultural systems
that produce uneven-aged stands of timber. Uneven-aged management
means the management of a specific forest with the goal of
establishing a well-stocked stand of various age classes of trees
scattered over the forest. It will permit the periodic harvest of
all size classes as individual or small groups to realize yield.
Over the long term, forest growth and yield will be balanced. The
Registrant will also have the advantage of being able to time
harvests for favorable market conditions. It will take a number of
years to fully implement the Plan.
Registrant is subject to a State of California General
Industrial Activities Storm Water Permit. During the year,
pursuant to the Registrant's Storm Water Pollution Prevention Plan,
catch and evaporation basins and storm records were maintained.
Registrant's property on Lights Creek along Diamond Mountain
Road received substantial damage from the 1997 New Years Flood. A
completely new Engelmine Bridge was built to replace the 1931
bridge which was destroyed and over one mile of Diamond Mountain
Road was either rebuilt or repaired. Reconstruction was funded by
the Federal Emergency Management Agency and Plumas County. The
Registrant built a new Superior Ravine Road to replace the old road
which was also washed out.
ITEM 2. PROPERTIES
(a) Registrant is the fee owner of 36 patented lode mining
claims totaling 736 acres and 202.12 acres of other patented lands
at Engelmine, Lights Creek Mining District, Plumas County,
California. None of the claims or patented lands are subject to
any encumbrance.
(b) The Registrant is the fee owner of 11 patented lode mining
claims totaling 204.75 acres and 184.20 acres of deeded mineral
rights in the Genesee Mining District, Plumas County, California.
None of the patented claims and mineral rights are subject to any
encumbrance.
ITEM 3. LEGAL PROCEEDINGS
None
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. MARKET FOR THE REGISTRANT'S CAPITAL STOCK AND RELATED
SHAREHOLDER MATTERS
(a) Principal Markets.
Registrant's shares of Capital Stock are listed on the OTC
Bulletin Board.
The following table shows the high and low bid prices of
Registrant's Capital Shares in the Over-the-Counter Market for the
past two years:
[CAPTION]
High Bid Low Bid
[S] [C] [C]
1998 Market Price $.6875 $ .375
1997 Market Price $.375 $ .25
[/TABLE]
(b) Approximate number of holders of capital stock.
The approximate number of holders of record of Registrant's
Capital Stock as of March 5, 1999, is 944.
(c) The Registrant has never paid a dividend on its Capital
Stock because it has had an accumulated deficit since the merger in
1936. The Board of Directors of the Registrant is endeavoring to
earn income from the sale of timber so that funds are available for
the maintenance of its properties. It is not the intention of the
Registrant to pay dividends in the foreseeable future.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Year Ended December 31
<CAPTION>
Selected Financial Data 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Revenues 43,314 39,212 14,463 25,202 22,935
Net Income (Loss) 22,228 (5,101) 7,538 (2,719) (9,024)
Income (loss) from
continuing operations
per capital share .029 (.007) .001 (.004) (.0118)
Total Assets 350,531 347,884 347,033 355,732 338,175
Working Capital 10,128 24,896 33,394 22,830 12,032
Shareholder's Equity 347,259 344,684 346,983 355,682 329,325
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) Financial condition, changes in financial condition and
results of operations.
During the 30 years its mining properties were leased, the Board
of Directors of the Registrant endeavored to increase working
capital, total assets and shareholder's equity in the event that
its lessee, Placer Dome, U.S. Inc., terminated its Mining Lease
With Option to Purchase agreement and return the mining properties
to the Registrant. This event occurred effective April 20, 1993.
Changes in working capital, total assets and shareholder's equity
for the past five years are summarized as follows:
<TABLE>
<CAPTION>
Changes 1998 1997 1996 1995 1994
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Working
Capital ($) 10,128 24,896 33,394 22,830 12,032
Total Assets 350,531 347,884 347,033 355,732 338,175
Shareholders Equity 347,259 344,684 346,983 355,682 329,325
</TABLE>
The objective of the Board of Directors of the Registrant is to
earn income from the sale of timber so funds are available for the
maintenance of its properties and development of its timber
resource.
<PAGE>
(b) Results of operations.
Registrant's principal sources of income are from the sale of
timber, interest, capital gains, dividends and sale of sand and
rock. There is no assurance that any of the sources of income will
continue at current rates into the future. The termination of the
Mining Lease with Option to Purchase agreement substantially
increased Registrant's property maintenance expenses.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements relying on Rule 3-11 of Regulation S-X
which allows the filing of unaudited statements of inactive
registrants are listed in the index to financial statements and
schedules, and are included under PART IV, Item 14, of this report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
There were no disagreements on accounting and financial
disclosure matters required to be disclosed in this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
(a) Identification of Directors.
<CAPTION>
Directors Name Positions Year First Principal
and Age and Offices Elected Occupation
- ------------- ----------- ---------- ---------
<S> <C> <C> <C>
Norman A. Lamb President 1978 Mining
(62) & Director Executive
Greenville, CA
Thomas J. Reardon Vice President 1975 Retired
(77) & Director
Daly City, CA
James E. Brousseau Secretary-Treasurer 1987 Mining
(67) & Director Executive
Vallejo, CA
Richard C. Poulton Director 1993 Consultant
(55)
San Mateo, CA
</TABLE>
<PAGE>
There are no arrangements or understandings between any of the
foregoing persons and any other person or persons pursuant to which
any of the foregoing persons were named as directors.
<TABLE>
(b) Identification of Executive Officers.
<CAPTION>
Name of Officer Age Office Held
- --------------- ---- -----------
<S> <C> <C>
Norman A. Lamb 62 President
James E. Brousseau 67 Secretary-Treasurer
</TABLE>
There are no arrangements or understandings between any of the
foregoing persons and any other person or persons pursuant to which
any of the foregoing persons were named as executive officers.
(c) Identification of certain significant employees.
None
(d) No family relationships exist between any of the above
named directors and executive officers of the Registrant.
(e) Business experience.
(1) Norman A. Lamb is a Mining Executive and an officer and
director of several public mineral companies. He serves the
Registrant as President, was Secretary-Treasurer until November 16,
1987, and has been a Director since 1978.
(2) Thomas J. Reardon is retired and formerly was a
Department Manager for Foremost Dairies. He serves the Registrant
as Vice-president and has been a Director since 1975.
(3) James E. Brousseau is a Mining Executive and an officer
and director of several public mineral companies. He was elected
Secretary-Treasurer and a Director on November 16, 1987.
(4) Richard C. Poulton is a Consultant. He was elected
a Director of the Registrant on March 27, 1993.
(5) Leola M. Schwarz passed away on October 28, 1993, at the
age of 95. She had served as a Director since 1976, was the mother
of Thomas J. Reardon, an officer and director of the Registrant,
and the widow of Paul W. Schwarz, an officer and director of the
Registrant from 1954 to 1978.
<PAGE>
(f) Involvement in certain legal proceedings.
There have been no events under any bankruptcy act, no criminal
proceedings and no judgments or injunctions material to the
evaluation of the ability and integrity of any director or
executive officer during the past five years.
(g) Compliance with Section 16(a) of the Exchange Act
Registrant is not aware of any person who at any time during the
year 1998 was a director, officer or beneficial owner of more than
10 percent of Registrant's capital stock who failed to file on a
timely basis reports required by Section 16(a) during 1998 or prior
years.
ITEM 11. Executive Compensation
<TABLE>
(a) Cash Compensation.
<CAPTION>
Name of individual or Capacity Cash Compensation
number in group
- --------------------- --------- -------------------
<S> <C> <C>
Norman A. Lamb President $0.00
Officers and Directors
as a group - Four persons
including those named above. $0.00
</TABLE>
(b) Compensation pursuant to plans.
During the fiscal year, Norman A. Lamb was reimbursed for out-
of-pocket expenses.
(c) Other compensation.
None
(d) Compensation of directors.
During the fiscal year, directors waived a fee of $500 each for
their services as directors.
(e) Termination of employment and change of control
arrangement.
None
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
(a) Security ownership of certain beneficial owners.
<TABLE>
The following table shows, as of March 5, 1999, the number of
shares of Capital Stock held by every person owning of record or
known by the Registrant as owning beneficially more than five
percent of the outstanding stock:
<CAPTION>
Security Ownership of Certain Beneficial Owners
Title of Class Name and Address Amount and Nature Percent
of Owner of Ownership of Class
- -------------- --------------- ----------------- -------
<S> <C> <C> <C>
Capital Stock Norman A. Lamb 174,692 shares 23%
Par Value P. O. Box 778 owned of record and
$0.25/share Greenville, CA beneficially*
95947
Poulton Trust 50,253 shares 6.6%
551 West 30th Ave owned of record
San Mateo, CA
94403
Thomas J. Reardon 81,620 shares 10.7%
162 E Market St owned of record
Daly City, CA and beneficially**
94403
State Controller 96,070.4 shares 12.6%
State of CA owned of record
Div. of Unclaimed
Property
P.O. Box 942850
Sacramento, CA
94250
</TABLE>
* Includes 89,295 shares owned by Nevex Corporation, a Nevada
corporation and wholly owned subsidiary of Jenex Gold Corporation,
a Washington Corporation, of which Mr. Lamb is President, a
Director and majority shareholder.
** Includes 74,508 shares owned by Thomas J. Reardon, Edward P.
Reardon, Michael T. Reardon and Frank J. Reardon, as joint tenants
with right of survivorship.
<PAGE>
(b) Security ownership of management.
The following table shows as of March 5, 1999 all shares of
Capital Stock beneficially owned by all directors and all directors
and officers of Registrant as a group:
<TABLE>
<CAPTION>
Capital Stock Beneficially Owned
<S> <C> <C> <C>
Title
of Class Name of Beneficial Amount and Nature of Percent
Owner Beneficial Ownership of Class
- -------------- ------------------ -------------------- --------
Capital Stock James E. Brousseau 90,295 shares owned 11.9%
Par Value of record and
$0.25 per share beneficially*
Norman A. Lamb 174,692 shares owned 23%
of record and
beneficially**
Richard C. Poulton 50,253 shares owned 6.6%
beneficially***
Thomas J. Reardon 81,620 shares owned 10.7%
of record and
beneficially****
All directors and 307,565 shares 40.4%
officers as a group
(four persons)
</TABLE>
* Includes 89,295 shares owned by Nevex Corporation, a Nevada
corporation, a wholly owned subsidiary of Jenex Gold Corporation,
a Washington corporation, of which Mr. Brousseau is Secretary-
Treasurer, a Director and substantial shareholder. Mr. Brousseau
may be deemed to have shared voting and investment power with
respect to such shares.
** Includes 89,295 shares owned by Nevex Corporation, a Nevada
corporation, a wholly owned subsidiary of Jenex Gold Corporation,
a Washington corporation, of which Mr. Lamb is President, a
Director and majority shareholder. Mr. Lamb may be deemed to have
shared voting and investment power with respect to such shares.
*** Includes 50,253 shares owned by the Poulton Trust, of which
Mr. Poulton is co-trustee. Mr. Poulton may be deemed to have
shared voting and investment power with respect to such shares.
**** Includes 74,508 shares owned by Thomas J. Reardon, Edward P.
Reardon, Michael T. Reardon and Frank J. Reardon, as joint tenants
with right of survivorship. Mr. Thomas J. Reardon may be deemed to
have shared voting and investment power with respect to such
shares.
<PAGE>
(c) Changes in control.
Mr. Lamb may be deemed the "parent" or a "control person" of
Registrant, as those terms are defined under the Securities
Exchange Act of 1934, as amended. There are no arrangements known
to Registrant the operation of which may at a subsequent date
result in a change of control of Registrant.
ITEM 13. Certain Relationships and Related Transactions
None
PART IV
ITEM 14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
(a) Financial Statements: Page
Balance Sheets as of December 31, 1998 F 2-3
and December 31, 1997.
Statements of Operations for the Years Ended
December 31, 1998, December 31, 1997, and
December 31, 1996. F 4
Statements of Accumulated Deficit and
Accumulated Other Comprehensive Income (Loss)
for the Years Ended December 31, 1998,
December 31, 1997, and December 31, 1996. F 5
Statements of Cash Flows for the years ended
December 31, 1998, December 31, 1997, and
December 31, 1996. F 6-7
(b) Notes to Financial Statements F 8-16
(c) Exhibits
EX-27 Financial Data Schedule.
(d) No reports on Form 8-K were filed during the last
quarter of 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CALIFORNIA-ENGELS MINING COMPANY
Registrant
By Norman A. Lamb
Norman A. Lamb, President and
Chief Executive Officer
Date: March 31, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
By Norman A. Lamb
Norman A. Lamb
President and Director
March 31, 1999
By Thomas J. Reardon
Thomas J. Reardon
Vice-President and Director
March 31, 1999
By James E. Brousseau
James E. Brousseau
Secretary-Treasurer
Chief Financial and Accounting
Officer, March 31, 1999
By Richard C. Poulton
Richard C. Poulton
Director, March 31, 1999
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
(A California Corporation)
FINANCIAL STATEMENTS
December 31, 1998
page F-1
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(Unaudited)
<TABLE>
ASSETS
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10,128 $ 24,896
Current portion of deeds of
trust - Note 5 $ 9,944 $ 7,746
Deferred tax assets $ 305 $ -
Deposits $ 563 $ -
Total Current Assets $ 20,940 $ 32,642
PROPERTY AND EQUIPMENT
Furniture and equipment $ 33,775 $ 33,775
Land $ 116,696 $ 117,696
Less: Accumulated depletion $ (18,700) $ (16,925)
$ 131,771 $ 134,546
Timber Management Development $ 109,636 $ 85,153
Less: Accumulated depreciation $ (2,896) $ (1,604)
$ 106,740 $ 83,549
Total Property and Equipment $ 238,511 $ 218,095
OTHER ASSETS
Investments available-for-sale
at estimated fair value -
Note 5 $ 19,974 $ 48,522
Investments held-to-maturity
Note 5 $ 3,572 $ 4,401
Deeds of trust - Note 4 $ 67,534 $ 44,224
Total Other Assets $ 91,080 $ 97,147
Total Assets $ 350,531 $ 347,884
</TABLE>
The accompanying notes are an integral part of these financial
statements.
page F-2
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(Unaudited)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
1998 1997
--------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
LIABILITIES
Income taxes payable $ 3,272 $ -
Deferred tax liabilities $ - $ 3,150
Accrued expenses $ - $ 50
Total Liabilities $ 3,272 $ 3,200
STOCKHOLDERS' EQUITY
Common stock, par value $.25:
California-Engels Mining Company,
4,000,000 shares authorized
761,135.6 shares issued and
outstanding in 1998 and
761,235.6 shares issued and
outstanding in 1997 $ 190,284 $ 190,309
Accumulated other comprehensive
income (loss) $ (1,721) $ 17,856
Reduction surplus $2,801,164 $2,801,215
Accumulated deficit (2,642,468) (2,664,696)
Total Stockholders' Equity $ 347,259 $ 344,684
Total Liabilities and
Stockholders' Equity $ 350,531 $ 347,884
</TABLE>
The accompanying notes are an integral part of these financial
statements.
page F-3
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
REVENUE
Timber and gravel revenue $ 33,258 $ 28,683 $ 2,727
Dividend income 2,155 3,675 3,935
Interest income 7,901 6,854 7,695
Miscellaneous income - - 106
Total revenue 43,314 39,212 14,463
OPERATING AND GENERAL EXPENSES
Depreciation 1,775 2,950 4,950
Depletion 1,293 1,604 -
Reclamation plan expense - 4,231 191
Timber management expense 15,358 10,755 -
Superior quarry expense - 3,510 -
Insurance 1,900 2,352 4,180
Office and storage rents 3,510 3,510 4,110
Office expenses 1,887 2,036 1,372
Professional fees 1,793 1,531 1,350
Taxes and licenses 3,793 2,759 5,185
Travel and per diem 537 439 676
Miscellaneous 1,006 272 -
Repairs and maintenance 4,800 4,935 1,687
Vehicle expense 1,186 2,086 1,584
Total operating and
general expenses $ 38,838 $ 42,970 $ 25,285
Net income (loss) from
operations $ 4,476 $ (3,758) $ (10,822)
OTHER INCOME
Gain (loss) on sale
of securities $ 20,733 $ (543) $ 19,160
Gain on sale of land $ 1,000 $ - $ -
Total other income (expense)$ 21,733 $ (543) $ 19,160
Income (Loss) Before Taxes $ 26,209 $ (4,301) $ 8,338
Provision for income taxes $ (3,981) $ (800) $ (800)
Net Income (Loss) $ 22,228 $ (5,101) $ 7,538
Earnings (Loss) Per Share $ 0.029 $ (0.007) $ 0.001
</TABLE>
The accompanying notes are an integral part of these financial
statements.
page F-4
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF ACCUMULATED DEFICIT AND ACCUMULATED OTHER
COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
ACCUMULATED DEFICIT,
Beginning of year $(2,664,696) $(2,659,595) $(2,667,133)
Net Income (Loss) $ 22,228 $ (5,101) $ 7,538
ACCUMULATED DEFICIT,
End of year $(2,642,468) $(2,664,696) $(2,659,595)
ACCUMULATED OTHER COMPREHENSIVE INCOME,
Beginning of year $ 17,856 $ 12,762 $ 26,563
Other Comprehensive Income
(Loss) $ (19,577) $ 5,094 $ (13,801)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS),
End of year $ (1,721) $ 17,856 $ 12,762
</TABLE>
The accompanying notes are an integral part of these financial
statements.
page F-5
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ -----
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C>
Net Income (loss) $ 22,228 $ (5,101) $ 7,538
Adjustments to reconcile net income (loss)
to net cash provided (used) by
operating activities:
Depreciation and depletion 3,068 4,554 4,950
Amortization of GNMA discount (564) (596) (1,271)
(Gain) loss on
sale of securities and land (21,733) 543 (19,160)
(Increase) decrease in:
Prepaid expenses - 300 (300)
Deposits (563) - -
Increase (decrease) in:
Taxes payable 3,272 - -
Accrued expenses (50) - -
Net cash provided (used)
by operating activities $ 5,658 $ 300 $ (8,243)
<CAPTION>
CASH FLOWS FROM INVESTING ACTIVITIES
<S> <C> <C> <C>
Payments received on
notes receivable (25,508) 6,139 4,571
Purchases of securities
and investments (20,845) (77) (39)
Proceeds from sale
of securities 47,094 12,503 38,006
Proceeds from sale of land 34,000 - -
Return of principal GNMA 1,391 1,170 960
Capital expenditures (56,483) (27,893) (24,691)
Net cash provided (used)
by investing activities (20,351) (8,158) 18,807
</TABLE>
The accompanying notes are an integral part of these financial
statements.
page F-6
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury shares (75) (40) -
Notes payable 39,600 6,550 -
Payments on notes payable (39,600) (6,550) -
Net cash used by
financing activities (75) (40) -
Net increase (decrease) in
cash and cash equivalents $ (14,768) $ (8,498) $ 10,564
<CAPTION>
CASH AND CASH EQUIVALENTS,
<S> <C> <C> <C>
Beginning of Year $ 24,896 $ 33,394 $ 22,830
<CAPTION>
CASH AND CASH EQUIVALENTS,
<S> <C> <C> <C>
End of Year $ 10,128 $ 24,896 $ 33,394
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<S> <C> <C> <C>
Cash paid during the year:
For income taxes $ 800 $ 800 $ 800
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING ACTIVITIES
<S> <C> <C> <C>
Change in unrealized
gain (loss) on
investment securities $ (19,577) $ 5,992 $(16,237)
</TABLE>
The accompanying notes are an integral part of these financial
statements.
page F-7
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of California-
Engels Mining Company (the Company) is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company's
management who is responsible for their integrity and objectivity.
These accounting policies conform to Generally Accepted Accounting
Principles and have been consistently applied in the preparation of
the financial statements.
Nature of Activity
The Company's principal line of business is development of
mineral and timber properties. The principal revenue sources
currently consist of timber and rock sales and investment income.
The Company's properties are located in the western United States.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from
these estimates.
Basis of Accounting
The Company's books are maintained on the accrual method of
accounting.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments with a purchased
maturity of three months of less to be cash equivalents.
Concentration of Credit Risk
The Company places its temporary cash investments with financial
institutions and limits the amount of credit exposure to any one
financial institution.
page F-8
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
Mineral and Timber Lands
Mineral and timber lands and depreciable property are stated at
book value less accumulated depletion and depreciation.
Depreciation is calculated using the declining balance method over
five to seven year lives. Timber depletion is calculated based on
units of production.
New Accounting Standards
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income", which establishes standards for
the reporting and display of comprehensive income and its
components. This statement, which is effective for fiscal years
beginning after December 15, 1997, requires reclassification of
earlier financial statements presented.
Reclassification
Certain amounts in the prior year financial statements have been
reclassified to conform to the current years financial statement
presentation. Such reclassification had no effect on net equity or
net income.
NOTE 2 - MINING CLAIMS AND FEE LAND OWNED
At December 31, 1998, the Company was the owner of 36 patented
lode mining claims totaling 736 acres comprising the Engels and
Superior Mines and 162.12 acres of patented land at Engelmine,
Lights Creek Mining District, Plumas County, California. In
addition, the Company owned 40 acres of patented land at 6,000
Diamond Mountain Road within two miles of the above property. On
December 2, 1997, the Company deposited in escrow $1,000 toward the
purchase price of $33,000 for 7400 Diamond Mountain Road. Escrow
closed on January 8, 1998. On January 23, 1998, the Company sold
this parcel for $34,000 with escrow closing on March 30, 1998.
page F-9
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
At December 31, 1998, the Company was the owner of 11 patented
lode mining claims totaling 204.74 acres and 184.20 acres of deeded
mineral rights on Ward Creek in the Genesee Mining District, Plumas
County, California.
NOTE 3 - VALUATION OF MINERAL LANDS - DEFERRED INCOME TAXES
The Mineral lands carried on the books at a value of $10,000
less depletion have a historical cost basis from June 19, 1901 of
$1,000,000. Beginning in 1913, different valuations were placed on
these lands by the Commissioner of Internal Revenue. Under
instructions of the Commissioner, the values of the land were
written up on the books to a high of $4,500,000 on February 23,
1928.
In 1934, because of depressed conditions, the mineral lands were
written down to $10,000 without any tax benefit. In the event of
a sale of these lands the recognized gain for tax purposes will be
substantially reduced or eliminated. Consequently a deferred tax
asset of approximately $340,000 has been offset by a
corresponding valuation allowance of approximately $340,000 due to
the unlikelihood of the sale of the property in the near future.
Current generally accepted accounting principles dictate
carrying properties such as these lands at historical cost or the
lower of cost or market value. It is estimated that the current
market value of the properties meets or exceeds the $1,000,000
historical cost basis; however, due to the length of time the
Company has reported the land values at the written down value of
$10,000, a change to the cost method has not been deemed
appropriate for reporting purposes.
page F-10
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 4 - DEEDS OF TRUST
<TABLE>
Trust deed notes receivable at December 31, 1998 and 1997
consist of the following:
<CAPTION>
1998 1997
--------------------------------- ------
Due within Due after Total Total
---------- ---------- -------- -------
<S> <C> <C> <C> <C>
Douglas R.
Friedrich
9% Note secured by
Plumas County,
California
real property $ 3,007 $ 31,595 $ 34,602 $ 37,352
Less unamortized
discount (688) (2,167) (2,855) (3,545)
--------- --------- --------- ---------
Total $ 2,319 $ 29,428 $ 31,747 $ 33,807
Robert F. Carmody
10% Note secured by
Plumas County,
California
real property $ 3,445 $ 1,286 $ 4,731 $ 6,906
John and Tina Tucker
9% Note secured by
Plumas County,
California
real property $ 2,471 $ 6,730 $ 9,201 $ 11,257
Monte C. Wolford
8% Note secured by
Plumas County,
California
real property $ 1,709 $ 30,090 $ 31,799 $ -
-------- -------- -------- --------
Total $ 9,944 $ 67,534 $ 77,478 $ 51,970
</TABLE>
page F-11
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 5 - INVESTMENT SECURITIES
At December 31, 1998 and 1997, the investment securities
portfolio is comprised of items classified as available-for-sale
and held-to-maturity. In accordance with the provisions of SFAS
No. 115, the available-for-sale securities are reported as an asset
at their fair market value with the unrealized gain or loss
excluded from earnings and reported as a separate component of
stockholders' equity and the held-to-maturity securities are
stated at amortized cost, adjusted for amortization of premiums and
accretion of discounts to maturity. realized gains and losses are
determined using specific identification of securities sold.
The following reflect the estimated fair values of investment
securities and amortized cost held at December 31, 1998, 1997, and
1996. Fair values are based on management's estimate
[CAPTION]
1998
----
[S] [C] [C] [C] [C]
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gain Loss Value
------ ---------- ---------- --------
Equity Securities
available-for-sale $ 22,000 $ 48 $(2,074) $ 19,974
Mortgage-backed securities
held to maturity $ 3,572 $ - $ - $ 3,572
-------- -------- --------- --------
Totals $ 25,572 $ 48 $(2 074) $ 23,546
page F-12
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
[CAPTION]
1997
----
[S] [C] [C] [C]
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gain Loss Value
------ ---------- ---------- --------
Equity Securities
available-for-sale $ 27,516 $ 21,006 $ - $ 48,522
Mortgage-backed securities
held to maturity $ 4,401 $ - $ - $ 4,401
-------- --------- -------- --------
Totals $ 31,917 $ 21,006 $ - $ 52,923
[/TABLE]
[CAPTION]
1996
----
[S] [C] [C] [C]
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gain Loss Value
------ ---------- ---------- --------
Equity Securities
available-for-sale $ 40,485 $ 15,564 $ (550) $ 55,499
Mortgage-backed securities
held to maturity $ 4,975 $ - $ - $ 4,975
-------- --------- -------- --------
Totals $ 45,460 $ 15,564 $ (550) $ 60,474
[/TABLE]
Sales of equity securities resulted in a gain of $20,733 in
1998, a loss of $543 in 1997 and a gain of $19,160 in 1996.
page F-13
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 6 - CAPITAL STOCK
The Company acquired and subsequently retired 100 shares of
common stock for $75 in 1998 and 22 shares for $40 in 1997.
NOTE 7 - NOTICE OF DEFAULT
On December 2, 1998, Cal-Sierra Title Company, as Trustee
under a Deed of Trust, filed a Notice of Default and Election to
Sell Under Deed of Trust to secure obligations in favor of the
Company as Beneficiary on real property in Plumas County,
California sold to Robert F. Carmody on May 16, 1990.
NOTE 8 - CONTINGENT LIABILITIES
The Company is not a defendant in any legal proceeding nor is
there any litigation in progress, pending or threatened against the
Company.
page F-14
<PAGE>
NOTE 9 - COMPREHENSIVE INCOME
As reported earlier in the Summary of Significant Accounting
Policies, there is a new accounting standard that required
additional reporting. This statement requires an entity to display
an amount representing total comprehensive income for the period
and in accumulation for all periods presented. This statement also
requires the entity to classify items of other comprehensive income
by their nature in the financial statements. The following is the
statements of comprehensive income as of December 31,:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Net Income (Loss) $ 22,228 $ (5,101) $ 7,538
Other Comprehensive Income,
net of tax:
Unrealized gains on securities:
Unrealized holding gains arising
during period $ (1,954) $ 4,632 $ 2,485
Less: reclassification
adjustment for gains
included in net income $ (17,623) $ 462 $(16,286)
Total Other Comprehensive
Income $ (19,577) $ 5,094 $(13,801)
Comprehensive Income $ 2,651 $ (7) $ (6,263)
</TABLE>
page F-15
<PAGE>
CALIFORNIA-ENGELS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
The following shows the tax effect of each component of
comprehensive income as of December 31,:
[CAPTION]
Calculation of Holding Gains (Losses)
1998 1997 1996
[S] [C] [C] [C]
Holding gains (losses)
recognized in other comprehensive
income $ (2,299) $ 5,449 $ 2,923
Tax (expense) benefit 345 (817) (438)
Total gain (loss), net of tax $ (1,954) 4,632 2,485
[CAPTION]
Reclassification Adjustments
[/TABLE]
1998 1997 1996
[S] [C] [C] [C]
Net income:
(Gain) loss on sale of
securities $ (20,733) $ 543 $(19,160)
Income tax (expense) benefit 3,110 (81) 2,874
Net gain (loss) realized in
net income $ (17,623) 462 (16,286)
[/TABLE]
Accumulated other comprehensive income is comprised of only
unrealized gains (losses) on investment securities.
NOTE 10 - INCOME TAXES
The Company's deferred tax assets and liabilities were
represented by unrealized gains or losses on investment securities
resulting in deferred tax assets of $305 for 1998 and deferred tax
liabilities of $3,151 for 1997.
page F-16
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
[DESCRIPTION] Exhibit 27 Financial Data Schedule for 1998.
This form contains summary financial information
extracted from Form 10K for California-Engels
Mining Company for the year ended 12/31/98 and is
qualified in its entirety by reference to such
financial statements.
[TEXT]
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<S> <C>
<CASH> 10,128
<SECURITIES> 23,546
<RECEIVABLES> 77,478
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,940
<PP&E> 260,107
<DEPRECIATION> 18,700
<depletion> 2,896
<TOTAL-ASSETS> 350,531
<CURRENT-LIABILITIES> 3,272
<BONDS> 0
0
0
<COMMON> 190,284
<OTHER-SE> 156,975
<TOTAL-LIABILITY-AND-EQUITY> 350,531
<SALES> 33,258
<TOTAL-REVENUES> 43,314
<CGS> 0
<TOTAL-COSTS> 38,838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,209
<INCOME-TAX> 3,981
<INCOME-CONTINUING> 22,228
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,228
<EPS-PRIMARY> 0.029
<EPS-DILUTED> 0.029
</TABLE>
