FORM 10Q
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 June 30, 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 08016
OLD STONE CORPORATION
(Exact name of registrant as specified in its charter)
Rhode Island 050341273
(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) 5210065
(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, $1.00 par value, as of June 30, 1995: 8,246,175
INDEX
PART I FINANCIAL INFORMATION: PAGE NO.
Item 1. Financial Statements
Consolidated Balance Sheets 1
June 30, 1995 and December 31, 1994
Consolidated Statements of Operations 2
For the Three Months and Nine Months Ended
June 30, 1995 and 1994
Consolidated Statements of Changes 3
in Stockholders'
Equity (Deficit) -
For the Three Months Ended June 30,
1995 and 1994
Consolidated Statements of Cash Flows 4
For the Three Months Ended June 30, 1995
and 1994.
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 3. Defaults Upon Senior Securities 9
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
OLD STONE CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in Thousands)
June 30, December 31,
1995 1994
Unaudited
ASSETS
Cash $ 31$ 32
Short-term investments 591 797
Loans (net of reserve for loan losses
of $112 in 1995 and 1994) 116117
Accrued interest receivable 76
Other assets 640 534
TOTAL ASSETS $1,385$1,486
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Other liabilities $ 1,336$ 1,319
TOTAL LIABILITIES 1,3361,319
REDEEMABLE PREFERRED STOCK
Preferred stock, series B, $1.00 par value;
1,046,914 shares authorized, issued and
outstanding (Liquidation value $20,938) 19,80919,711
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $1.00 par value; 25,000,000 shares
authorized; 8,300,175 shares issued in 1995
and 1994 8,3008,300
Additional paid-in capital 92,17692,274
Surplus 30,00030,000
Accumulated deficit (149,093) (148,975)
Treasury stock, at cost; 54,000 shares in 1995
and 1994 ( 1,143) ( 1,143)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ( 19,760) ( 19,544)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 1,385$ 1,486
The accompanying notes are an integral part of the
consolidated financial statements.
OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands except for per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
INCOME:
Interest income $ 12$ 11$ 25$ 22
Securities gains, net 9151724
Other income 53 72 85119
TOTAL INCOME 74 98127165
EXPENSES:
Salaries and employee benefits 4559 84111
Net occupancy expense 871715
Equipment expense, including
depreciation 37 614
Other expenses 64 72137143
TOTAL EXPENSES 120145244283
(Loss) from continuing operations
before income taxes ( 46) ( 47) ( 117) ( 118)
Income taxes -0-111
NET (LOSS) ($46) ($ 48) ($118) ($119)
NET (LOSS) AVAILABLE FOR
COMMON STOCKHOLDERS ($723) ($725) ($1,472) ($1,473)
AVERAGE SHARES OUTSTANDING 8,246,1758,246,1758,246,1758,246,175
(LOSS) PER SHARE ($.09) ($.09) ($.18) ($.18)
The accompanying notes are an integral part of the
consolidated financial statements.
OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1995 and 1994
($ in Thousands)
(Unaudited)
1995 1994
Operating activities:
Net (loss) ($118) ($119)
Adjustments to reconcile net (loss) to net
cash provided (used) by operating activities:
(Increase) in interest receivable ( 1) ( 2)
Other, net ( 89) ( 53)
Net cash provided (used) by operating
activities ( 208) ( 174)
Investing activities:
Net decrease in investments 206290
Net (increase) decrease in loans 1 2
Net cash provided by investing
activities 207292
Increase (decrease) in cash ( 1) 118
Cash at beginning of period 3218
Cash at end of period $31$136
The accompanying notes are an integral part of the
consolidated financial statements.
OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
Six Months Ended June 30, 1995 and 1994
($ in Thousands)
(Unaudited)
Additional
Common Paid-In
AccumulatedTreasury
Stock Capital Surplus
(Deficit) Stock Total
December 31, 1993 $8,300$92,470$30,000($148,595) ($1,143) ($18,968)
Net (loss) ( 119) ( 119)
Accretion of discount on
preferred stock, series B ( 98) ( 98)
June 30, 1994 $8,300 $92,372$30,000($148,714) ($1,143) ($19,185)
December 31, 1994 $8,300$92,274$30,000($148,975) ($1,143) ($19,544)
Net (loss) ( 118) ( 118)
Accretion of discount on
preferred stock, series B ( 98) ( 98)
June 30, 1995 $8,300 $92,176$30,000($149,093) ($1,143) ($19,760)
The accompanying notes are an integral
part of the consolidated financial
statements.
OLD STONE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 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 June 30, 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 six months ended
June 30, 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.
OLD STONE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, 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 Six Months Ended
June 30, June 30,
1995 1994 1995 1994
PRIMARY (LOSS):
Net (loss) ($ 46) ($ 48)($118) ($119)
Deduct accretion of discount on
series B preferred stock and
preferred dividends 6776771,3541,354
Net (loss) applicable to common
stock ($723) ($725)($1,472) ($1,473)
ALLOCATION OF PRIMARY (LOSS):
(Loss) from continued operations ($46) ($
48) ($118)($119)
Deduct accretion of discount on
series B preferred stock
and preferred dividends 6776771,3541,354
TOTAL NET (LOSS) ($723) ($725) ($1,472) ($1,473)
Average shares outstanding 8,246,1758,246,1758,246,1758,246,175
PRIMARY (LOSS) PER
COMMON SHARE ($.09) ($.09)($.18) ($.18)
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 June 30, 1995,
cumulative preferred dividends of
$9,422,226 ($9.00 per share) had not been
declared or paid.
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 ($44,000) for
the six month period ended June 30, 1995, compared to a loss of
($69,000) for the six month period ended June 30, 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 June 30, 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 ($19.7)
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 $24,000 for the three month period ended
June 30, 1995 as compared to the same period in 1994. This
decrease was primarily attributable to a decrease in securities
gains of $6,000, and a decrease in other income of $19,000 in
the 1995 period over the comparable period in 1994. Total
income year to date decreased by $38,000 as compared to the
same period in 1994. The decrease was primarily attributable
to reductions in other income of $34,000 and a reduction in
securities gains of $7,000 in the 1995 period over the
comparable period in 1994. The decrease in other income is due
primarily to a lower fee income generated by Old Stone
Securities.
Interest income was $12,000 and $11,000 respectively, for the
three month periods ended June 30, 1995 and 1994. Other income
was $53,000 for the three month period ended June 30, 1995,
compared to $72,000 for the three month period ended June 30,
1994.
Total expenses decreased $25,000 for the three month period ended
June 30, 1995 as compared to the three month period ended June
30, 1994. The decrease was primarily attributable to a
reduction in salaries and benefits of $14,000 over the
comparable period in 1994.
Total expenses year to date decreased $39,000 as compared to the
same period in 1994. The decrease was primarily attributable
to a decrease in salaries and benefits of $27,000 and a
reduction in equipment expense of $8,000, respectively.
The Corporation's primary operating expenses have been insurance,
legal and accounting fees as well as the operating expenses of
OSSC. Operating expenses (including salaries and benefits)
were $120,000 for the three month period ended June 30, 1995,
compared to $145,000 for the same period in 1994. Operating
expenses year to date were $244,000 compared to $283,000 for
the same period in 1994.
As a result of the foregoing, the Corporation reported a net loss
of ($46,000) for the three month period ended June 30, 1995
compared to a net loss of ($48,000) for the same period in 1994.
The loss per share available for common stockholders was ($.09)
for the three month period ended June 30, 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 June 30, 1994 after the deduction of
preferred dividends of $677,000. No preferred or common
dividends have been paid since the second quarter of 1991 and
the Corporation does not expect to pay dividends in the
foreseeable future. Further, the Corporation is prohibited
from paying dividends on the Common Stock until the aggregate
deficiency on the preferred stock dividends is paid in full.
Total loss per share year to date, as well as for the same
period in 1994, was ($.18).
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 June 30, 1995 was $8,794,078.
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: August , 1995 /s/Geraldine Nelson
Geraldine Nelson
President and Treasurer
(Chief Executive and Chief
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 31,000
<RECEIVABLES> 11,000
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 591,000
<PP&E> 14,000
<TOTAL-ASSETS> 1,385,000
<SHORT-TERM> 0
<PAYABLES> 1,336,000
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 0
<LONG-TERM> 0
<COMMON> 8,300,000
19,809,000
0
<OTHER-SE> (28,060,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,385,000
<TRADING-REVENUE> 17,000
<INTEREST-DIVIDENDS> 25,000
<COMMISSIONS> 41,023
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 0
<COMPENSATION> 84,000
<INCOME-PRETAX> (117,000)
<INCOME-PRE-EXTRAORDINARY> (117,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118,000)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
