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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 001-12212
DRUMMOND FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 95-4426690
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17 Dame Street, Dublin 2 Ireland
(Address of principal executive offices)
(3531) 679 1688
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date:
Class Outstanding at November 13, 2000
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Common Stock, $0.01 2,718,600
par value
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FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent that they are not based on
historical events, constitute forward-looking statements. Forward-looking
statements include, without limitation, statements regarding the outlook
for future operations, forecasts of future costs and expenditures,
evaluation of market conditions, the outcome of legal proceedings, the
adequacy of reserves, or other business plans. Investors are cautioned
that forward-looking statements are subject to an inherent risk that
actual results may vary materially from those described herein. Factors
that may result in such variance, in addition to those accompanying the
forward-looking statements, include changes in interest rates, prices, and
other economic conditions; actions by competitors; natural phenomena;
actions by government authorities; uncertainties associated with legal
proceedings; technological development; future decisions by management in
response to changing conditions; and misjudgments in the course of
preparing forward-looking statements.
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
DRUMMOND FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
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DRUMMOND FINANCIAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, 2000 June 30, 2000
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 7,081 $ 6,238
Other receivables 8,768 9,508
Investments 9,096 9,371
Deferred debt issuance costs, net 850 883
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$ 25,795 $ 26,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued
liabilities $ 61 $ 50
Interest payable 1,476 1,207
Accrued dividends payable 224 149
Debt 21,515 21,515
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23,276 22,921
SHAREHOLDERS' EQUITY
Capital stock
Preferred stock, $0.01 par value
5,000,000 shares authorized
3,000,000 shares issued and
outstanding 30 30
Additional paid-in capital 5,970 5,970
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6,000 6,000
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Common stock, $0.01 par value
10,000,000 shares authorized
2,718,600 shares issued and
outstanding 27 27
Additional paid-in capital 14,727 14,727
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14,754 14,754
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Deficit (18,235) (17,675)
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2,519 3,079
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$ 25,795 $ 26,000
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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DRUMMOND FINANCIAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
September 30, 2000 September 30, 1999
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<S> <C> <C>
Revenue
Interest and loan fee income $ 216 $ 429
Loss on securities (275) (375)
Dividend and other 93 76
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34 130
Costs and expenses
Interest 302 442
General and administrative 215 201
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517 643
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Loss before income tax (483) (513)
Income tax expense 1 1
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Net loss (484) (514)
Accumulated deficit, beginning
of period (17,675) (17,483)
Dividends payable (76) (76)
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Accumulated deficit, end
of period $ (18,235) $ (18,073)
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Loss per share $ (0.21) $ (0.22)
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Weighted average number of shares
outstanding 2,718,600 2,718,600
============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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DRUMMOND FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
September 30, 2000 September 30, 1999
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<S> <C> <C>
Operating activities:
Net loss $ (484) $ (514)
Adjustments to reconcile
net loss to cash flows
from operating activities
Loss on securities 275 375
Amortization of deferred debt
issuance costs 33 33
Changes in non-cash working
capital balances
Other receivables (122) (97)
Interest receivable (178) (350)
Due from affiliates 1,056 -
Interest payable 269 408
Accounts payable and accrued
liabilities (6) (77)
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843 (222)
Purchase of trading securities - -
Proceeds from sales of trading
securities - -
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Net cash (used in) provided
by operating activities 843 (222)
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Investing activities:
Net cash from investing
activities - -
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Financing activities:
Net cash from financing
activities - -
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Net change in cash and cash
equivalents 843 (222)
Cash and cash equivalents,
beginning of period 6,238 4,280
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Cash and cash equivalents,
end of period $ 7,081 $ 4,058
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Cash paid during the period for:
Interest expense $ - $ -
Income taxes $ 1 $ 1
</TABLE>
The accompanying notes are an integral part of these financial statements.
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DRUMMOND FINANCIAL CORPORATION
Notes to Consolidated Financial Statements
September 30, 2000
(Unaudited)
Note 1. Basis of Presentation
The accompanying financial statements of Drummond Financial Corporation
(the "Corporation") are unaudited. However, in the opinion of management,
they include all adjustments necessary for a fair presentation of the
financial position, results of operations and cash flows of the
Corporation for the specified periods.
All adjustments made during the three months ended September 30, 2000 were
of a normal, recurring nature. The amounts presented for the three months
ended September 30, 2000 are not necessarily indicative of the results of
operations for a full year. Additional information is contained in the
audited consolidated financial statements and accompanying notes included
in the Corporation's annual report on Form 10-K for the fiscal year ended
June 30, 2000, and should be read in conjunction with such annual report.
Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
Note 2. Earnings (Loss) Per Share
Basic earnings (loss) per share is calculated by dividing the net income
or loss available to common shareholders by the weighted average number of
common shares outstanding during the three months ended September 30, 2000
and 1999, respectively. The weighted average number of shares outstanding
was 2,718,600 for the three months ended September 30, 2000 and 1999,
respectively.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations of Drummond Financial Corporation (the
"Corporation") for the three months ended September 30, 2000 should be
read in conjunction with the consolidated financial statements and related
notes included elsewhere herein.
Results of Operations - Three Months Ended September 30, 2000
Revenues for the three months ended September 30, 2000 decreased to
$34,000 from $0.1 million for the comparative period of 1999. Revenues
from interest and loan fees decreased to $0.2 million for the three months
ended September 30, 2000 from $0.4 million for the three months ended
September 30, 1999. Loss on securities decreased to $0.3 million for the
current period compared to a loss of $0.4 million for the comparative
period in 1999. Revenues from dividends and other activities increased to
$93,000 for the three months ended September 30, 2000 from $76,000 for the
three months ended September 30, 1999.
Costs and expenses for the three months ended September 30, 2000 decreased
to $0.5 million from $0.6 million for the three months ended September 30,
1999, as a result of a reduction in interest expense. General and
administrative expenses were $0.2 million for the three months ended
September 30, 2000 and1999, respectively.
Interest expense decreased to $0.3 million for the three months ended
September 30, 2000 from $0.4 million for the three months ended September
30, 1999, primarily as a result of a reduction in the interest rate on
indebtedness .
No income tax provision was recognized for the three months ended
September 30, 2000 and 1999, respectively, except for the payment of a
minimum tax of $1,000. The Corporation has deferred tax benefits with
respect to net operating loss carry-forwards which have not been
recognized as there is no assurance that they will be realized.
For the three months ended September 30, 2000, the Company reported a net
loss of $0.5million, or $0.21 per share, compared to a net loss of $0.5
million, or $0.22 per share, for the three months ended September 30,
1999.
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Liquidity and Capital Resources
The Corporation's cash and cash equivalents at September 30, 2000 were
$7.1 million, an increase of $0.8 million from June 30, 2000.
Cash provided by operating activities for the three months ended September
30, 2000 was $0.8 million, compared to cash used by operating activities
of $0.2 million for the three months ended September 30, 1999. An
increase in receivables used cash of $122,000 in the three months ended
September 30, 2000, compared to $97,000 in the three months ended
September 30, 1999.
Investing activities had no effect on cash flows in the three months ended
September 30, 2000 and 1999, respectively.
Financing activities had no effect on cash flows in the three months ended
September 30, 2000 and 1999, respectively.
The Corporation anticipates that its cash, investments on hand and
interest income will be sufficient to service the Corporation's debt costs
and cover the day-to-day general and administrative expenses of the
Corporation during the short-term.
Finance Receivables
The Corporation fully settled its loan portfolio during the fiscal year
ended June 30, 1999, and since then it has had no loan commitments or
finance receivables.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Reference is made to the Corporation's annual report on Form 10-K for the
year ended June 30, 2000 for information concerning market risk.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Corporation's annual report on Form 10-K for the
year ended June 30, 2000 for information concerning certain legal
proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
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27 Article 5 - Financial Data Schedule for the 1st
Quarter 2001 Form 10-Q.
(b) Reports on Form 8-K
None.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 14, 2000
DRUMMOND FINANCIAL CORPORATION
By: /s/ Michael J. Smith
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Michael J. Smith, President, Chief
Executive Officer and Chief Financial
Officer
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EXHIBIT INDEX
Exhibit
Number Description
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27 Article 5 - Financial Data Schedule for the 1st Quarter
2001 Form 10-Q.
