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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 June 30, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-7265
AMBASE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-2962743
(State of incorporation) (I.R.S. Employer Identification No.)
100 PUTNAM GREEN, 3RD FLOOR
GREENWICH, CONNECTICUT 06830-6027
(Address of principal executive offices) (Zip Code)
(203) 532-2000
(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 and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ______
------- -------
At June 30, 2002, there were 46,208,519 shares outstanding of the registrant's
common stock, $0.01 par value per share.
AmBase Corporation
Quarterly Report on Form 10-Q
June 30, 2002
TABLE OF CONTENTS Page
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.................................................................................1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................................................8
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................................................12
Item 4. Submission of Matters to a Vote of Security Holders.................................................12
Item 6. Exhibits and Reports on Form 8-K....................................................................13
- 4 -
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except for share amounts)
June 30, December 31,
2002 2001
(unaudited)
======== =========
Assets:
Cash and cash equivalents......................................................... $ 2,486 $ 6,130
Investment securities:
Held to maturity (market value $39,736 and $40,245, respectively)............. 39,734 40,232
Available for sale, carried at fair value .................................... 427 -
-------- --------
Total investment securities....................................................... 40,161 40,232
-------- --------
Fixed assets, net of accumulated depreciation of $128 and $89, respectively....... 2,385 2,424
Investment in SDG, Inc. at cost................................................... 1,250 1,250
Other assets...................................................................... 367 409
-------- --------
Total assets...................................................................... $ 46,649 $ 50,445
===== =====
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities.......................................... $ 886 $ 3,267
Supplemental retirement plan...................................................... 7,145 6,682
Postretirement welfare benefits................................................... 847 913
Other liabilities................................................................. 92 99
Litigation reserves............................................................... 1,405 1,471
-------- --------
Total liabilities................................................................. 10,375 12,432
-------- --------
Commitments and contingencies..................................................... - -
-------- --------
Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized,
46,335,007 issued).............................................................. 463 463
Paid-in capital................................................................... 547,940 547,940
Accumulated other comprehensive income............................................ 27 -
Accumulated deficit............................................................... (511,509) (509,743)
Treasury stock, at cost 126,488 shares............................................ (647) (647)
-------- --------
Total stockholders' equity........................................................ 36,274 38,013
-------- --------
Total liabilities and stockholders' equity........................................ $ 46,649 $ 50,445
===== =====
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Second Quarter and Six Months Ended June 30
(Unaudited)
(in thousands, except per share data)
Second Quarter Six Months
2002 2001 2002 2001
==== ==== ==== ====
Operating expenses:
Compensation and benefits................... $ 867 $ 826 $ 1,798 $ 1,710
Professional and outside services........... 309 326 430 391
Insurance................................... 29 10 45 28
Occupancy................................... 19 44 41 67
Other operating............................. 50 30 93 78
-------- -------- -------- --------
1,274 1,236 2,407 2,274
-------- -------- -------- --------
Operating loss.............................. (1,274) (1,236) (2,407) (2,274)
-------- -------- -------- --------
Interest income............................. 189 782 381 1,313
Reversal of withholding obligation reserve.. - 66,388 - 66,388
Other income................................ 71 56 350 99
-------- -------- -------- --------
Income (loss) before income taxes........... (1,014) 65,990 (1,676) 65,526
Income tax expense.......................... (45) (55) (90) (110)
-------- -------- -------- --------
Net income (loss) .......................... $ (1,059) $ 65,935 $ (1,766) $ 65,416
===== ===== ===== =====
Income (loss) per common share:
Net income (loss) - basic........................$ (0.02) $ 1.43 $ (0.04) $ 1.42
===== ===== ===== =====
Net income (loss) - assuming dilution............$ (0.02) $ 1.42 $ (0.04) $ 1.41
===== ===== ===== =====
Weighted average shares outstanding:
Basic................................................ 46,209 46,209 46,209 46,209
===== ===== ===== =====
Diluted.............................................. 46,361 46,279 46,421 46,270
===== ===== ===== =====
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statement of Comprehensive Income (Loss)
Second Quarter and Six Months Ended June 30
(Unaudited)
(in thousands)
Second Quarter Six Months
2002 2002
====== ======
Net loss............................................................................ $ (1,059) $ (1,766)
Unrealized holding gains on investment securities - available for sale, net of tax.. 9 27
-------- --------
Comprehensive income (loss)......................................................... $ (1,050) $ (1,739)
====== ======
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30
(Unaudited)
(in thousands)
2002 2001
==== ====
Cash flows from operating activities:
Net income (loss)................................................................. $ (1,766) $ 65,416
Adjustments to reconcile net income (loss) to net cash used by operations:
Depreciation and amortization................................................. 39 8
Accretion of discount - investment securities................................. (355) (1,262)
Changes in other assets and liabilities:
Other assets.................................................................. 42 (21)
Accounts payable and accrued liabilities...................................... (2,381) (995)
Litigation and contingency reserves uses...................................... (66) (39)
Reversal of withholding obligation reserve.................................... - (66,388)
Other liabilities............................................................. 390 284
-------- --------
Net cash used by operating activities............................................. (4,097) (2,997)
-------- --------
Cash flows from investing activities:
Maturities of investment securities - held to maturity............................ 72,035 48,585
Purchases of investment securities - held to maturity............................. (71,182) (46,982)
Purchases of investment securities - available for sale........................... (400) -
Fixed assets purchase............................................................. - (2,434)
Other, net........................................................................ - 9
-------- --------
Net cash provided (used) by investing activities.................................. 453 (822)
-------- --------
Net decrease in cash and cash equivalents......................................... (3,644) (3,819)
Cash and cash equivalents at beginning of period.................................. 6,130 4,844
-------- --------
Cash and cash equivalents at end of period........................................ $ 2,486 $ 1,025
===== =====
Supplemental cash flow disclosures:
Income taxes paid................................................................ $ 128 $ 144
===== =====
The accompanying notes are an integral part of these consolidated
financial statements
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Organization
The accompanying consolidated financial statements of AmBase Corporation and
subsidiaries (the "Company") are unaudited and subject to year-end adjustments.
All material intercompany transactions and balances have been eliminated. In the
opinion of management, the interim financial statements reflect all adjustments,
consisting only of normal recurring adjustments unless otherwise disclosed,
necessary for a fair statement of the Company's financial position and results
of operations. Results for interim periods are not necessarily indicative of
results for the full year. Certain reclassifications have been made to the prior
year consolidated financial statements to conform with the current year
presentation. The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). The preparation of financial statements in conformity with
GAAP requires management to make certain estimates and assumptions, that it
deems reasonable, 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 such estimates and
assumptions.
The Company continues to evaluate a number of possible acquisitions, and is
engaged in the management of its remaining assets and liabilities, including the
contingent assets and alleged liabilities, as described in Part II - Item 1. The
Company intends to aggressively contest all pending and threatened litigation
and contingencies, as well as pursue all sources for contributions to
settlements. The unaudited interim financial statements presented herein should
be read in conjunction with the Company's consolidated financial statements
filed in its Annual Report on Form 10-K for the year ended December 31, 2001.
The Company's main source of non-operating revenue is interest earned on
investment securities and cash equivalents and rental income on the leased
portion of the building owned by the Company. The Company's management expects
that operating cash needs for the remainder of 2002 will be met principally by
the Company's current financial resources, and the receipt of non-operating
revenue consisting of interest income on investment securities and cash
equivalents and rental income.
Note 2 - Legal Proceedings
The Company has certain alleged liabilities and is a defendant in certain
lawsuits. The accompanying consolidated financial statements do not include
adjustments that might result from an ultimate unfavorable outcome of these
uncertainties. Although the basis for the calculation of the litigation reserves
is regularly reviewed by the Company's management and outside legal counsel, the
assessment of these reserves includes an exercise of judgment and is a matter of
opinion. At June 30, 2002, the litigation reserves were $1,405,000.
See Part II - Item 1 - Legal Proceedings, for a further discussion of the
Company's legal proceedings, including the Supervisory Goodwill Litigation.
Note 3 - Cash and Cash Equivalents
Highly liquid investments, consisting principally of funds held in short-term
money market accounts, are classified as cash equivalents.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 4 - Investment Securities
Investment securities - held to maturity consist of U.S. Treasury Bills with
original maturities of one year or less and are carried at amortized cost based
upon the Company's intent and ability to hold these investments to maturity.
Investment securities - available for sale, consist of investments in equity
securities held for an indefinite period and are carried at fair value with net
unrealized gains and losses recorded directly in a separate component of
stockholders' equity.
Investment securities consist of the following:
June 30, 2002 December 31, 2001
========================================================================================
Cost or
Carrying Amortized Fair Carrying Amortized Fair
(in thousands) Value Cost Value Value Cost Value
====== ====== ======= ====== ======== ======
Held to Maturity:
U.S. Treasury Bills
maturing within
one year $ 39,734 $ 39,734 $ 39,736 $ 40,232 $ 40,232 $ 40,245
Available for Sale:
Equity Securities 427 400 427 - - -
---------- ---------- ---------- ----------- ----------- -----------
$ 40,161 $ 40,134 $ 40,163 $ 40,232 $ 40,232 $ 40,245
======= ======= ====== ====== ====== ======
The gross unrealized gains and losses on investment securities, at June 30, 2002
and December 31, 2001 consist of the following:
(in thousands) 2002 2001
======= ======
Held to Maturity:.
Gross unrealized gains $ 2 $ 13
======= ======
Available for Sale:
Gross unrealized gains $ 27 $ -
======= ======
Other investment securities consist of convertible preferred and common stock in
AMDG, Inc., which were purchased through private placements, are classified as
other assets, and are carried at cost which approximates market value; $350,000
at June 30, 2002 and December 31, 2001. No investment securities - available for
sale were sold in the first six months of 2002.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 5 - Income Taxes
The Company and its 100% owned domestic subsidiaries file a consolidated federal
income tax return. The Company recognizes both the current and deferred tax
consequences of all transactions that have been recognized in the financial
statements, calculated based on the provisions of enacted tax laws, including
the tax rates in effect for current and future years. Net deferred tax assets
are recognized immediately when a more likely than not criterion is met; that
is, greater than 50% probability exists that the tax benefits will actually be
realized sometime in the future. The Company has calculated a net deferred tax
asset of $30 million as of June 30, 2002 and December 31, 2001, respectively
arising primarily from net operating loss ("NOL") carryforwards/carrybacks,
alternative minimum tax ("AMT") credits and the excess of book over tax reserves
(not including the anticipated tax effects of NOL's expected to be generated
from the Company's tax basis in Carteret Savings Bank, F.A. and subsidiaries
("Carteret"), resulting from the election decision, as more fully described
below). A valuation allowance has been established for the entire net deferred
tax asset, as management, at the present time, has no basis to conclude that
realization is more likely than not.
As a result of the Office of Thrift Supervision's December 4, 1992 placement of
Carteret in receivership, under the management of the Resolution Trust
Corporation ("RTC")/Federal Deposit Insurance Corporation ("FDIC"), and then
proposed Treasury Reg. ss.1.597-4(g), the Company had previously filed its 1992
and subsequent federal income tax returns with Carteret disaffiliated from the
Company's consolidated federal income tax return. Based upon the impact of
Treasury Reg. ss.1.597-4(g), which was issued in final form on December 20,
1995, a continuing review of the Company's tax basis in Carteret, and the impact
of prior year tax return adjustments on the Company's 1992 federal income tax
return as filed, the Company decided not to make an election pursuant to final
Treasury Reg. ss.1.597-4(g) to disaffiliate Carteret from the Company's
consolidated federal income tax return effective as of December 4, 1992 (the
"election decision").
The Company has made numerous requests to the RTC/FDIC for tax information
pertaining to Carteret and the resulting successor institution, Carteret Federal
Savings Bank ("Carteret FSB"); however all of the information still has not been
received. Based on the Company's election decision, as described above, and the
receipt of some of the requested information from the RTC/FDIC, the Company has
amended its 1992 consolidated federal income tax return to include the federal
income tax effects of Carteret and Carteret FSB. The Company is still in the
process of amending its consolidated federal income tax returns for 1993 and
subsequent years.
The Company anticipates that, as a result of filing a consolidated federal
income tax return with Carteret FSB, a total of approximately $170 million of
tax NOL carryforwards will be generated from the Company's tax basis in
Carteret/Carteret FSB as tax losses are incurred by Carteret FSB of which $158
million are still available for future use. Based on the Company's filing of its
amended 1992 consolidated federal income tax return to include the federal
income tax effects of Carteret FSB (the "1992 Amended Return"), approximately
$56 million of NOL carryforwards are generated for tax year 1992 which expire in
2007, with the remaining approximately $102 million of NOL carryforwards to be
generated, expiring no earlier than 2008. These NOL carryforwards would be
available to offset future taxable income, in addition to the NOL carryforwards
as further detailed below.
Based upon the Company's federal income tax returns as filed from 1993 to 2000
(subject to IRS audit adjustments), and excluding the NOL carryforwards
generated from the Company's tax basis in Carteret/Carteret FSB, as noted above,
at June 30, 2002 the Company has NOL carryforwards aggregating approximately
$26.6 million, available to reduce future federal taxable income which expire if
unused beginning in 2008. The Company's federal income tax returns for years
subsequent to 1992 have not been reviewed by the IRS.
The utilization of certain carryforwards is subject to limitations under U.S.
federal income tax laws. In addition, the Company has approximately $21 million
of AMT credit carryforwards ("AMT Credits"), which are not subject to
expiration. As further discussed below the Company has filed several carryback
claims with the IRS seeking to realize approximately $8 million of the $21
million of AMT credits.
The Company has filed several carryback claims with the IRS (the "Carryback
Claims"), seeking refunds from the IRS of alternative minimum tax and other
federal income taxes paid by the Company in prior years plus applicable IRS
interest. The Carryback Claims are currently being reviewed by the IRS. The
Company can give no assurances that the Carryback Claims will be allowed by IRS,
the final amount of the refunds, if any, or when they might be received.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 6 - Comprehensive Income
Comprehensive income (loss), for the second quarter and six months ending June
30, 2002, is composed of net income (loss) and other comprehensive income (loss)
which includes the change in unrealized gains on investment securities available
for sale, as follows:
(in thousands)
Second Quarter Six Months
======================== ======================
Unrealized Accumulated Unrealized Accumulated
Gains (Losses) Other Gains (Losses) Other
on Investment Comprehensive on Investment Comprehensive
Securities Income Securities Income
======== ======== ======== ========
Balance beginning of period................. $ 18 18 - -
Change during the period.................... 9 9 27 27
....................................... -------- -------- -------- --------
Balance end of period....................... $ 27 27 27 27
===== ===== ===== =====
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which follows, should be read in conjunction with the consolidated
financial statements and related notes, which are contained in Item 1, herein.
FINANCIAL CONDITION
The Company's assets at June 30, 2002 aggregated $46,649,000 consisting
principally of cash and cash equivalents of $2,486,000 and investment securities
of $40,161,000. At June 30, 2002, the Company's liabilities, including reserves
for litigation liabilities, described in Part II - Item 1, aggregated
$10,375,000. Total stockholders equity was $36,274,000.
The Company has certain alleged liabilities and is a defendant in certain
lawsuits. Based upon an assessment of these proceedings the Company believes the
ultimate outcome of the proceedings will not have a material adverse effect on
its financial condition and results of operations. The accompanying consolidated
financial statements do not include adjustments that might result from an
ultimate unfavorable outcome of these uncertainties. Although the basis for the
calculation of the litigation reserves are regularly reviewed by the Company's
management and outside legal counsel, the assessment of these reserves includes
an exercise of judgment, and is a matter of opinion. At June 30, 2002, the
litigation reserves were $1,405,000. For a discussion of alleged liabilities and
lawsuits see Part II - Item 1.
For the six months ended June 30, 2002, cash of $4,097,000 was used by
operations, including the payment of prior year accruals and operating expenses,
partially offset by the receipt of interest income. The cash needs of the
Company for the first six months of 2002 were principally satisfied by interest
income received on investment securities and cash equivalents, and the Company's
current financial resources. Management believes that the Company's cash
resources are sufficient to continue operations for 2002.
For the six months ended June 30, 2001, cash of $2,997,000 was used by
operations, partially offset by the receipt of interest income including the
payment of prior year accruals and operating expenses.
The Company continues to evaluate a number of possible acquisitions and is
engaged in the management of its remaining assets and liabilities, including the
contingent assets and alleged litigation liabilities. Extensive discussions and
negotiations are ongoing with respect to certain of these matters. The Company
intends to aggressively contest all pending and threatened litigation and
contingencies, as well as pursue all sources for contributions to settlements.
In connection with an escrow account established by Zurich SF Holdings LLC ("SF
Holdings") pursuant to a June 2000 settlement agreement with SF Holdings, the
Company requested, in December 2001, the payment of approximately $1,500,000
from the escrow account for certain expenses previously paid by the Company. SF
Holdings objected to the payment of these expenses. As a result of SF Holdings'
objection, the payment request is being arbitrated pursuant to the terms of the
settlement agreement. Upon the final payment of outstanding expenses, the
residual of the escrow account, if any, will be delivered to an affiliate of SF
Holdings.
The Company owns a 14,500 square feet office building in Greenwich, CT. The
Company utilizes 2,100 square feet for its executive offices and leases the
remaining approximately 12,400 square feet of office space to unaffiliated third
parties.
The Company has made no purchases under its common stock repurchase plan as of
June 30, 2002. There are no material commitments for capital expenditures as of
June 30, 2002. Inflation has had no material impact on the business and
operations of the Company.
From time to time, the Company may publish "Forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Act"), and Section 21E of the Exchange Act or make oral statements that
constitute forward-looking statements. The forward-looking statement may relate
to such matters as anticipated financial performance, future revenues or
earnings, business prospects, projected ventures, anticipated market
performance, and similar matters. The Private Securities Litigation Reform Act
of 1995 provides a safe harbor for forward-looking statements. In order to
comply with the terms of the safe harbor, the Company cautions readers that a
variety of factors could cause the Company's actual results to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. These risks and uncertainties, many of which are
beyond the Company's control, include, but are not limited to: (i) transaction
volume in the securities markets, (ii) the volatility of the securities markets,
(iii) fluctuations in interest rates, (iv) changes in regulatory requirements
which could affect the cost of doing business, (v) general economic conditions,
(vi) changes in the rate of inflation and the related impact on the securities
markets, (vii) changes in federal and state tax laws, and (viii) risks arising
from unfavorable decisions in our current material litigation matters, or
unfavorable decisions in other supervisory goodwill cases. The Company does not
undertake any obligation to update or revise any forward-looking statements
whether as a result of future events, new information or otherwise.
Results of Operations for the Second Quarter and Six Months ended June 30, 2002
The Company's main source of non-operating revenue is interest income earned on
investment securities and cash equivalents and rental income on the leased
portion of the building owned by the Company. The Company's management expects
that operating cash needs for the remainder of 2002 will be met principally by
the Company's current financial resources, the receipt of non-operating revenue
consisting of interest income earned on investment securities and cash
equivalents and rental income.
The Company recorded a net loss of $1,059,000 or $0.02 per share and $1,766,000
or $0.04 per share for the second quarter and six months ended June 30, 2002,
respectively. For the second quarter and six months ended June 30, 2001, the
Company recorded net income of $65,935,000 or $1.43 per share and net income of
$65,416,000 or $1.42 per share respectively. The second quarter and six months
periods ended June 30, 2001 include non-recurring other income representing the
reversal of the Withholding Obligation reserve. Excluding this other income the
Company would have reported a net loss of $453,000 and $972,000, for the second
quarter and six months ended June 30, 2001, respectively.
Compensation and benefits increased slightly to $867,000 and $1,798,000 in the
second quarter and six months ended June 30, 2002, respectively, compared with
$826,000 and $1,710,000 in respective 2001 periods. The slight increases were
principally the result of a higher level of benefit accruals.
Professional and outside services were $309,000 in the second quarter ended June
30, 2002, and $430,000 in the six months ended June 30, 2002, compared to
$326,000 and $391,000 in the respective 2001 periods. The increase in the 2002
six month period is due to an increase in tax related professional fees.
Occupancy expenses decreased to $19,000 and $41,000 in the second quarter and
six months ended June 30, 2002, respectively compared with $44,000 and $67,000
in the respective 2001 periods principally due to the costs related to office
relocation in the 2001 periods. Occupancy expenses have not been reduced by
tenant reimbursements or rental income, which are included with other income in
the Consolidated Statement of Operations.
Interest income in the second quarter and six months ended June 30, 2002
decreased to $189,000 and $381,000 respectively, from $782,000 and $1,313,000 in
the respective 2001 periods. The decrease is principally due to a significant
decrease in the yield on investments in 2002 as compared to the 2001 periods and
to a lesser extent a decrease in the average level of investments held.
Other income of $71,000 for the second quarter ended June 30, 2002 is
principally attributable to rental income earned. Other income of $350,000 for
the six month period ended June 30,2002 is principally attributable to a
collection of $205,000 on an investment previously written off and rental income
earned. Other income of $56,000 and $99,000 in second quarter and six months
ended June 30, 2001, respectively, is attributable to rental income earned
during the period of building ownership and the collection of a receivable
previously considered uncollectible.
As further noted above the second quarter and six month periods ended June 30,
2001 include a $66,388,000 Withholding Obligation reserve reversal which is
reflected as other income in the Consolidated Statement of Operations.
The income tax provisions of $45,000 and $90,000 in the second quarter and six
months ended June 30, 2002, respectively and $55,000 and $110,000 for the second
quarter and six months ended June 30, 2001, respectively periods are primarily
attributable to provisions for state taxes. Income taxes applicable to operating
income (loss) are generally determined by applying the estimated effective
annual income tax rates to pretax income (loss) for the year-to-date interim
period. Income taxes applicable to unusual or infrequently occurring items are
provided in the period in which such items occur.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company holds short-term investments as a source of liquidity. The Company's
interest rate sensitive investments at June 30, 2002 and December 31, 2001 with
maturity dates of less than one year consist of the following:
2002 2001
================= =================
Carrying Fair Carrying Fair
Value Value Value Value
(in thousands) ----------- --------- ----------- ---------
U.S. Treasury Bills......................... $ 39,734 $ 39,736 $ 40,232 $ 40,245
======= ======= ======= =======
Weighted average interest rate.............. 1.72% 1.87%
======= =======
The Company's current policy is to minimize the interest rate risk of its
short-term investments by investing in U.S. Treasury Bills with maturities of
less than one year. There were no significant changes in market exposures or the
manner in which interest rate risk is managed during the period.
STOCKHOLDER INQUIRIES
Stockholder inquiries, including requests for the following: (i) change of
address; (ii) replacement of lost stock certificates; (iii) Common Stock name
registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on
Form 10-K; (vi) proxy material; and (vii) information regarding stock holdings,
should be directed to:
American Stock Transfer and Trust Company
59 Maiden Lane
New York, NY 10038
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820
In addition, the Company's public reports, including Quarterly Reports on Form
10-Q, Annual Reports on Form 10-K and Proxy Statements, can be obtained through
the Securities and Exchange Commission EDGAR Database over the Internet, at
www.sec.gov.
The Company has made no purchases under its common stock repurchase plan as of
June 30, 2002.
Part II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information contained in Item 8 - Note 11 in AmBase's Annual Report on Form
10-K for the year ended December 31, 2001 and in AmBase's Quarterly Report on
Form 10-Q for the quarterly period ending March 31, 2002 are incorporated by
reference herein and the defined terms set forth below have the same meaning
ascribed to them in those reports. There have been no material developments in
such legal proceedings, except as set forth below.
(a) Marshall Manley v. AmBase Corporation. Manley has filed an appeal to the
Second Circuit Court of Appeals. The Company intends to vigorously oppose the
appeal. Manley seeks reimbursement of certain alleged payments he made to the
Trustee in the bankruptcy proceedings of the law firm of Finley, Kumble, Wagner,
Heine, Underberg, Manley & Casey of approximately $2.4 million plus interest
arguing that he served at such firm at the request of the Company.
The allegations and claims against the Company, as noted above, are material
and, if successful, could result in substantial judgments against the Company.
Due to the nature of these proceedings, the Company and its counsel are unable
to express any opinion to their probable outcome.
(b) AmBase Corporation v. City Investing Company Liquidating Trust, et al. -
Marshall Manley litigation. In response to a motion for summary judgment filed
by the Trust, the Company filed its own motion for summary judgment. In July
2002 the district court dismissed the Company's complaint. The Company is
presently reviewing its options.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company held on May 17, 2002, two
proposals were voted upon by the Company's stockholders. A brief discussion of
each proposal voted upon at the Annual Meeting and the number of votes cast for,
against, and withheld, as well as the number of abstentions to each proposal are
set forth below.
A vote was taken for the election of two Directors of the Company to hold office
for a three year term and until their respective successors shall have been duly
elected. The aggregate number of shares of Common Stock voted in person or by
proxy for each nominee were as follows:
Nominee For Withheld
================ ========= =========
Richard A. Bianco 42,733,140 445,027
John B. Costello 42,733,811 444,356
There were no broker non-votes.
A vote was taken on the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the independent accountants for the Company for
the year ending December 31, 2002. The aggregate numbers of shares of Common
Stock voted in person or by proxy were as follows:
For Against Abstain
========= ========= =========
43,087,376 54, 788 36,003
There were no broker non-votes.
The foregoing proposals are described more fully in the Company's definitive
proxy statement, filed with the Securities and Exchange Commission on March 28,
2002 pursuant to Section 14 (a) of the Securities Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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.
AMBASE CORPORATION
By JOHN P. FERRARA
Vice President, Chief Financial Officer and Controller
(Duly Authorized Officer and Principal Financial and
Accounting Officer)
Date: July 26, 2002