FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended March 31, 1995
or
[ ] Transition Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period of
to
Commission File Number 0-8016
OLD STONE CORPORATION
(Exact name of registrant as specified in its charter)
Rhode Island 05-0341273
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Four Davol Square, Suite 320
Providence, Rhode Island 02903
(Address of Principal Executive Offices) Zip Code
(401) 521-0065
(Registrant's Telephone Number, Including Area Code)
*Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes: X No:
The number of shares outstanding of the registrant's Common
Stock, $1.00 par value, as of March 31, 1995: 8,246,175
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1INDEX
PART I - FINANCIAL INFORMATION: PAGE NO.
Item 1. Financial Statements
Consolidated Balance Sheets - 1
March 31, 1995 and December 31, 1994
Consolidated Statements of Operations - 2
For the Three Months and Nine Months Ended
March 31, 1995 and 1994
Consolidated Statements of Changes in Stockholders' 3
Equity (Deficit) -
For the Three Months Ended March 31, 1995 and 1994
Consolidated Statements of Cash Flows - 4
For the Three Months Ended March 31, 1995 and 1994.
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities 9
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
OLD STONE CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in Thousands)
March 31, December 31,
1995 1994
Unaudited
ASSETS
Cash $ 25 $ 32
Short-term investments 716 797
Loans (net of reserve for loan
losses of $112 in
1995 and 1994) 116 117
Accrued interest receivable 7 6
Other assets 535 534
TOTAL ASSETS $ 1,399 $ 1,486
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Other liabilities 1,303 1,319
TOTAL LIABILITIES 1,303 1,319
REDEEMABLE PREFERRED STOCK
Preferred stock, series B, $1.00 par value;
1,046,914 shares authorized, issued and
outstanding
(Liquidation value $20,938) 19,760 19,711
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $1.00 par value; 25,000,000
shares authorized; 8,300,175 shares
issued in 1995 and 1994 8,300 8,300
Additional paid-in capital 92,225 92,274
Surplus 30,00030,000
Accumulated deficit (149,04) (148,975)
Treasury stock, at cost; 54,000 shares
in 1995 and 1994 ( 1,143) ( 1,143)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ( 19,664) ( 19,544)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 1,399 $ 1,486
The accompanying notes are an integral part of the consolidated financial
statements.
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OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1995 and 1994
($ in Thousands except for per share data)
(Unaudited)
1995 1994
INCOME:
Interest income $13 $11
Securities gains, net 8 9
Other income 32 47
TOTAL INCOME 53 67
EXPENSES:
Salaries and employee benefits 39 52
Net occupancy expense 9 8
Equipment expense, including depreciation 3 7
Other expenses 73 71
TOTAL EXPENSES 124 138
Income (loss) from continuing operations before
income taxes ( 71) (71)
Income taxes -0- -0-
NET (LOSS) ($71) ($71)
NET (LOSS) AVAILABLE FOR COMMON
STOCKHOLDERS ($748) ($748)
(LOSS) PER SHARE: ( .09) ( .09)
AVERAGE SHARES OUTSTANDING 8,246,175 8,246,175
The accompanying notes are an integral part of the consolidated
financial statements.
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OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1995 and 1994
($ in Thousands)
(Unaudited)
1995 1994
Operating activities:
Net (loss) ($ 71) ($ 71)
Adjustments to reconcile net (loss)
to net cash provided (used) by
operating activities:
(Increase) in interest receivable ( 1) ( 1)
Other, net ( 17) ( 6)
Net cash provided (used) by
operating activities ( 89) 78
Investing activities:
Net decrease in investments 81 102
Net (increase) decrease in loans 1 ( -0-)
Net cash provided by investing
activities 82 102
Increase (decrease) in cash ( 7) 24
Cash at beginning of period 32 18
Cash at end of period $ 25 $ 42
The accompanying notes are an integral part of the consolidated financial
statements.
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OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
Three Months Ended March 31, 1995 and 1994
($ in Thousands)
(Unaudited)
Additional
Common Paid-In Accumulated Treasury
Stock Capital Surplus (Deficit) Stock Total
December 31, 1993 $8,300 $92,470 $30,000 ($148,595) ($1,143) ($18,968)
Net (loss) ( 71) ( 71)
Accretion of discount
on preferred stock
series B ( 49) ( 49)
March 31, 1994 $8,300 $92,421 $30,000 ($148,666) ($1,143) ($19,088)
December 31, 1994 $8,300 $92,274 $30,000 ($148,975) ($1,143) ($19,544)
Net (loss) ( 71) ( 71)
Accretion of discount
on preferred stock
series B ( 49) ( 49)
March 31, 1995 $8,300 $92,225 $30,000 ($149,046) ($1,143) ($19,664)
The accompanying notes are an integral part of the consolidated financial
statements.
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OLD STONE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Three Months Ended March 31, 1995 and 1994
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES:
COMPANY DESCRIPTION AND BASIS OF PRESENTATION
Until January 28, 1993, Old Stone Corporation (The "Company" or
"OSC") was a unitary savings and loan holding company which
conducted substantially all of its business primarily through
its ownership of Old Stone Bank, a Federal Savings Bank and its
subsidiaries (the "Bank" or "Old Stone"). On January 29, 1993,
the Office of Thrift Supervision of the United States
Department of the Treasury (the "OTS") placed the Bank into
receivership due to the Bank being critically undercapitalized.
The OTS created a new institution, Old Stone Federal Savings
Bank ("Old Stone Federal") to assume all deposits and certain
assets and liabilities of Old Stone. The Resolution Trust
Corporation (the "RTC") was appointed Receiver to handle all
matters related to Old Stone and as Conservator of Old Stone
Federal.
As a result of the receivership of the Bank, the Company has
undergone material changes in the nature of its business and is
no longer operating as a unitary savings and loan holding
company. As of March 31, 1995 the Company's business
activities included its only surviving subsidiary, Old Stone
Securities Company, a registered securities broker-dealer which
provides brokerage services to retail and institutional clients.
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have
been included and operating results for the three months ended
March 31, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial
statements and notes thereto included in the Old Stone
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994. All material intercompany transactions and
balances have been eliminated. Certain previously reported
amounts have been restated to conform with the current
presentation.
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OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1995 and 1994
($ in Thousands except for per share data)
(Unaudited)
NOTE 2 - (LOSS) PER SHARE
The calculation of loss per share is as follows ($ in thousands,
except for per share amounts):
Three Months Ended
March 31, March 31,
1995 1994
PRIMARY (LOSS):
Net (loss) ($71) ($71)
Deduct accretion of discount on
series B preferred stock
and preferred dividends 677 677
Net (loss) applicable to common stock ($748) ($748)
ALLOCATION OF PRIMARY (LOSS):
Income (loss) from continued operations ($71) $2
Deduct accretion of discount on series
B preferred stock and preferred dividends 677 677
TOTAL NET (LOSS) ($748) ($748)
AVERAGE SHARES OUTSTANDING 8,246,175 8,246,175
PRIMARY (LOSS) PER COMMON SHARE: ($.09) ($.09)
NOTE 3 - REDEEMABLE PREFERRED STOCK:
On October 6, 1991, the annual dividend of $2.40 per share of
the Preferred Series B stock was suspended. As of March 31,
1995, cumulative preferred dividends $8,794,078 ($8.40 per
share) had not been declared or paid.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Current Operations
As a result of the Bank Closing, the Corporation's present
business activities include its only surviving significant
subsidiary, Old Stone Securities Company, a registered
securities broker-dealer which provides brokerage services to
retail and institutional clients.
Old Stone Securities' loss before income taxes was $29,584 for
the three month period ended March 31, 1995, compared to a loss
of $34,902 for the three month period ended March 31, 1994.
Management has invested, and intends in the future to invest,
the Corporation's assets on a short-term basis. While the
Corporation's Board of Directors has considered selling Old
Stone Securities, the Board has determined not to do so at the
present time.
Liquidity and Capital Resources
At March 31, 1995, the Corporation had $1.4 million in assets,
$1.3 million in total liabilities, $19.8 million in redeemable
preferred stock, and a stockholders' deficit of ($19.6)
million, compared to $1.5 million in assets, $1.3 million in
total liabilities, $19.7 million in redeemable preferred stock
and stockholders' deficit of ($19.5) million at December 31,
1994.
The Corporation's assets are currently being invested
short-term, and expenses have been reduced to a level that
management believes is commensurate with the Corporation's
current activities pending resolution of any potential claims.
Results of Operations
Total income decreased $14,000 for the three month period ended
March 31, 1995 as compared to the same period in 1994. This
decrease was primarily attributable to a decrease in other
income of $15,000 in the 1995 period over the comparable period
in 1994 offset by an increase in interest income of $2,000.
Interest income was $11,000 for the three month period ended
March 31, 1995, compared to $11,000 for the three month period
ended March 31, 1994. Other income was $32,000 for the three
month period ended March 31, 1995, compared to $47,000 for the
three month period ended March 31, 1994. The decrease was
primarily due to lower fee income generated by Old Stone
Securities Company.
Total expenses decreased $14,000 for the three month period
ended March 31, 1995 as compared to the three month period
ended March 31, 1994. The decrease was primarily attributable
to a reduction in salaries and benefits of $13,000, over the
comparable period in 1994.
The Corporation's primary operating expenses have been legal and
accounting expenses as well as the operating expenses of Old
Stone Securities Company. Operating expenses (including
salaries and benefits) were $124,000 for the three month period
ended March 31, 1995, compared to $138,000 for the same period
in 1994.
As a result of the foregoing, the Corporation reported net loss
of $71,000 for the three month period ended March 31, 1995,
compared to $71,000 for the same period in 1994.
The loss per share available for common stockholders was ($.09)
for the three month period ended March 31, 1995 after the
deduction of preferred dividends of $677,000. The loss per
share available for common stockholders was ($.09) for the
three month period ended March 31, 1994 after the deduction of
preferred dividends of $677,000. No preferred or common
dividends have been paid since the second quarter of 1991 and
the Corporation does not expect to pay dividends in the
foreseeable future. Further, the Corporation is prohibited
from paying dividends on the Common Stock until the aggregate
deficiency on the preferred stock dividends is paid in full.
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PART II - OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Corporation discontinued dividends to holders of its
Cumulative Voting Convertible Preferred Stock, Series B (the
"Preferred Stock"), during 1991 and does not expect to pay any
dividends on such stock for the foreseeable future. As a
result of the failure to pay dividends on the Preferred Stock
for more than four quarters, the holders of the Preferred Stock
collectively are entitled to elect a number of directors of the
Corporation constituting twenty percent (20%) of the total
number of directors of the Corporation at the next meeting of
stockholders at which directors are to be elected. Until the
aggregate deficiency is declared and fully paid on the
Preferred Stock, the Corporation may not declare any dividends
or make any other distributions on or redeem the Common Stock.
The total amount of the arrearage as of March 31, 1995 was
$8,794,078.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLD STONE CORPORATION
Date: May , 1995 /s/Geraldine Nelson
Geraldine Nelson
President and Treasurer
(Chief Executive and Chief
Accounting Officer)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLD STONE CORPORATION
Date: May , 1995
Geraldine Nelson
President and Treasurer
(Chief Executive and Chief
Accounting Officer)
