FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
[ ] 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.)
51 WEAVER STREET, BUILDING 2
GREENWICH, CONNECTICUT 06831-5155
(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 March 31, 2001, there were 46,208,519 shares of registrant's common stock,
$0.01 par value per share, outstanding, excluding 126,488 treasury shares.
AmBase Corporation
Quarterly Report on Form 10-Q
March 31, 2001
CROSS REFERENCE SHEET FOR
PARTS I and II Page
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.................................................................................1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................................................7
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................................................11
Item 2. Changes in Securities and Use of Proceeds...........................................................11
Item 3. Defaults Upon Senior Securities.....................................................................11
Item 4. Submission of Matters to a Vote of Security Holders.................................................11
Item 5. Other Information...................................................................................11
Item 6. Exhibits and Reports on Form 8-K....................................................................11
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended March 31
(Unaudited)
(in thousands, except per share data)
First Quarter
2001 2000
==== ====
Operating expenses:
Compensation and benefits....................................................... $ 938 $ 939
Professional and outside services............................................... 206 290
Insurance....................................................................... 12 14
Occupancy....................................................................... 25 24
Other operating................................................................. 34 36
-------- --------
1,215 1,303
-------- --------
Operating loss.................................................................. (1,215) (1,303)
-------- --------
Interest income................................................................. 706 582
Other income.................................................................... 50 50
-------- --------
Loss before income taxes........................................................ (459) (671)
Income tax expense.............................................................. (55) (55)
-------- --------
Net loss........................................................................ $ (514) $ (726)
===== =====
Earnings per common share:
Net loss - basic................................................................ $ (0.01) $ (0.02)
Net loss - assuming dilution.................................................... (0.01) (0.02)
===== =====
Average shares outstanding...................................................... 46,209 46,190
===== =====
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
March 31, December 31
2001 2000
(unaudited)
======== =========
Assets
Cash and cash equivalents......................................................... $ 762 $ 4,844
Investment securities - held to maturity (market
value $49,109 and $46,595, respectively).......................................... 48,983 46,547
Investment in SDG, Inc. at cost................................................... 1,250 1,250
Other assets...................................................................... 435 461
-------- --------
Total assets...................................................................... $ 51,430 $ 53,102
===== =====
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities.......................................... $ 637 $ 1,889
Supplemental retirement plan...................................................... 6,195 6,033
Postretirement welfare benefits................................................... 1,019 1,053
Other liabilities................................................................. 90 90
Litigation and contingency reserves............................................... 1,713 1,746
Withholding issue reserve......................................................... 66,388 66,388
-------- --------
Total liabilities................................................................. 76,042 77,199
-------- --------
Commitments and contingencies..................................................... -- --
-------- --------
Stockholders' equity:
Common stock...................................................................... 463 463
Paid-in capital................................................................... 547,940 547,940
Accumulated deficit............................................................... (572,368) (571,853)
Treasury stock.................................................................... (647) (647)
-------- --------
Total stockholders' equity........................................................ (24,612) (24,097)
-------- --------
Total liabilities and stockholders' equity........................................ $ 51,430 $ 53,102
===== =====
The accompanying notes are an integral part of these consolidated financial
statements.
AMBASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31
(Unaudited)
(in thousands)
2001 2000
==== ====
Cash flows from operating activities:
Net loss.......................................................................... $ (514) $ (726)
Adjustments to reconcile net loss to net cash provided (used) by operations:
Other assets...................................................................... 23 15
Accounts payable and accrued liabilities.......................................... (1,252) (1,297)
Litigation and contingency reserves uses.......................................... (33) (31)
Accretion of discount - investment securities..................................... (689) (577)
Other, net........................................................................ 130 74
-------- --------
Net cash used by operating activities............................................. (2,335) (2,542)
-------- --------
Cash flows from investing activities:
Maturities of investment securities - held to maturity............................ 10,740 61,300
Purchases of investment securities - held to maturity............................. (12,487) (60,745)
-------- --------
Net cash provided (used) by investing activities.................................. (1,747) 555
-------- --------
Cash flows from financing activities:
Stock options exercised........................................................... -- 153
-------- --------
Net cash provided by financing activities......................................... -- 153
-------- --------
Net decrease in cash and cash equivalents......................................... (4,082) (1,834)
Cash and cash equivalents at beginning of period.................................. 4,844 2,646
-------- --------
Cash and cash equivalents at end of period........................................ $ 762 $ 812
===== =====
Supplemental cash flow disclosures:
Income taxes paid................................................................. $ 66 $ 49
===== =====
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 of normal recurring adjustments, necessary for a fair presentation 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 generally accepted
accounting principles ("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 accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. Substantial contingent and
alleged liabilities exist against the Company through certain lawsuits and
governmental proceedings; see Part II - Item 1. These factors raise substantial
doubt about the Company's ability to continue as a going concern. The financial
statements do not include adjustments to the carrying value of assets and
liabilities, which might be necessary should the Company not continue in
operation. In order to continue on a long-term basis, the Company must both
resolve its contingent and alleged liabilities by prevailing upon or settling
these claims for less than the amounts claimed and generate profits by acquiring
existing operations and/or by developing new operations. 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 and alleged
liabilities, as described in Part II - Item 1. The Company intends to
aggressively contest all pending and threatened litigation and governmental
proceedings, 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, 2000.
The Company's main source of non-operating revenue is interest earned on
investment securities and cash equivalents. The Company's management expects
that operating cash needs for the remainder of 2001 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.
Note 2 - Legal Proceedings
The Company has significant alleged liabilities and is a defendant in certain
lawsuits and governmental proceedings, the ultimate outcome of which could have
a material adverse effect on its financial condition and results of operations.
Because of the nature of the contingent and alleged liabilities described in
Part II - Item 1, and the inherent difficulty in predicting the outcome of the
litigation and governmental proceedings, management is unable to predict whether
the Company's recorded reserves will be adequate or its resources sufficient to
satisfy its ultimate obligations. The accompanying consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. Although the basis for the calculation of the litigation
and contingency reserves and the withholding issue reserve 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 March 31, 2001, the litigation and contingency reserves, other than for the
withholding issue, were $1,713,000. For a discussion of alleged liabilities,
lawsuits and governmental proceedings, see Part II - Item 1.
In addition to the litigation and contingency reserves, the Company has a
withholding obligation reserve of $66,388,000 at March 31, 2001. For a further
discussion, see Item 2 - Financial Condition and Part II - Item 1 - Legal
Proceedings, Dispute with Internal Revenue Service over Withholding Obligations
(Netherlands Antilles).
See Part II - Item 1 - Legal Proceedings, for a discussion of Supervisory
Goodwill Litigation.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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.
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 - held to maturity at March 31, 2001 and December 31, 2000
consist of the following:
March 31, 2001 December 31, 2000
======================================= =======================================
Cost or Cost or
Carrying Amortized Fair Carrying Amortized Fair
(in thousands) Value Cost Value Value Cost Value
====== ========= ====== ====== ======== ======
U.S. Treasury Bills $ 48,983 $ 48,983 $ 49,109 $ 46,547 $ 46,547 $ 46,595
====== ====== ====== ====== ====== ======
The gross unrealized gains on investment securities was $126,000 gain at March
31, 2001 and $48,000 gain at December 31, 2000.
Other investment securities consist of convertible preferred and/or 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 March 31, 2001 and December 31, 2000.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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, unless a greater than 50% probability exists that the tax benefits will not
actually be realized sometime in the future. The Company has calculated a net
deferred tax asset of $27 million as of March 31, 2001 and December 31, 2000,
arising primarily from net operating loss ("NOL") carryforwards, alternative
minimum tax 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 current 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 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 not making the 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 recent filing
of its amended 1992 consolidated federal income tax return to include the
federal income tax effects of Carteret FSB, approximately $56 million of NOL
carryforwards are generated for tax year 1992 which expire in 2007, with the
remaining approximate $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 1999
(subject to IRS audit adjustments), and excluding the NOL carryfowards generated
from the Company's tax basis in Carteret/Carteret FSB, as noted above, at March
31, 2001 the Company has NOL carryforwards aggregating approximately $18
million, available to reduce future federal taxable income which expire if
unused beginning in 2009. 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 alternative minimum tax credit carryforwards, which are not subject to
expiration.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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 March 31, 2001 aggregated $51,430,000 consisting
principally of cash and cash equivalents of $762,000 and investment securities
of $48,983,000. At March 31, 2001, the Company's liabilities, including reserves
for contingent and alleged liabilities, as further described in Part II - Item
1, exceeded total recorded assets by $24,612,000.
In connection with the liquidation of City Investing Company ("City") the
Company, among others, contractually assumed certain tax liabilities of City,
which, prior to September 1985, owned all the outstanding shares of Common Stock
of the Company. Other liabilities were assumed by, among others, City Investing
Company Liquidating Trust (the "Trust"). For all periods through 1992, the only
issue that remains in dispute between City and the IRS is with respect to the
withholding obligations in connection with a Netherlands Antilles finance
subsidiary of City (the "Withholding Issue").
With respect to the Withholding Issue, in connection with a Netherlands Antilles
finance subsidiary of City, on May 11, 1995, the IRS issued a Notice of
Deficiency for the withholding of tax on interest payments for the years 1979
through 1985. In the Notice of Deficiency, the IRS contends that City's wholly
owned Netherlands Antilles finance subsidiary should be disregarded for tax
purposes. The Company, on behalf of City, vigorously contested the IRS's
position in accordance with the IRS's internal appeals procedures. In January
1992, the National Office of the IRS issued technical advice supporting the
auditing agent's position. In October 1992, the Company appealed this technical
advice to the National Office. The National Office advised the Company that it
expected to issue technical advice supporting the auditing agent's position,
whereupon the Company advised the IRS that it was withdrawing its technical
advice request.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
On June 30, 1995, the Company, on behalf of City, filed a petition in the United
States Tax Court ("Tax Court") contesting the Notice of Deficiency. The IRS
filed its answer on August 23, 1995. The Company filed a motion for summary
judgment in its favor on February 13, 1996. On April 17, 1996, the IRS filed a
Notice of Objection to the Company's motion for summary judgment. The Tax Court
requested, and the Company filed, on July 3, 1996, a reply to the IRS's Notice
of Objection. On September 19, 1996, the Court denied the Company's motion for
summary judgment without prejudice. Based on the Tax Court's examination of the
record and the status of the discovery process, the Tax Court concluded that
summary adjudication at that time was inappropriate. The Tax Court directed the
parties to engage in full and complete discovery as expeditiously as possible. A
trial was held in this case on March 24, 1997, after which the Judge asked the
IRS and the Company to submit post-trial briefs, which were submitted to the Tax
Court in August 1997. If the IRS were to prevail on this issue, the Company
could be liable for City's withholding obligation plus interest in excess of the
Company's financial resources. A significant factor in determining the amount of
the Company's ultimate liability for this issue is whether pursuant to the
contractual arrangement between the Company and City, the Company is primarily
liable for the withholding obligation and interest. See Part II - Item 1 - Legal
Proceedings, AmBase Corporation v. City Investing Company Liquidating Trust et
al. for further information.
In a case dealing with a similar withholding issue, the Tax Court ruled in favor
of the taxpayer, Northern Indiana Public Service Co. ("Northern Indiana"), in
November 1995. The Tax Court rejected the IRS's contention that interest paid to
Northern Indiana's foreign subsidiary was subject to United States withholding
of tax. The IRS appealed this decision (Northern Indiana Public Service Co. v.
Commissioner) to the United States Court of Appeals for the 7th Circuit (the
"Appeals Court"). In June 1997 the Appeals Court affirmed the Tax Court's ruling
in favor of Northern Indiana. Although the Appeals Court decision in the
Northern Indiana case could be beneficial to the case involving City , it is not
necessarily indicative of the ultimate result of the final settlement of the
Netherlands Antilles issue involving City.
Based on an evaluation of the IRS's contention, counsel has advised the Company
that, although the outcome in litigation can by no means be assured, the Company
has a very strong case and should prevail. Notwithstanding counsel's opinion and
the Tax Court's ruling in the Northern Indiana case, it is not possible at this
time to determine the final disposition of this issue, when the issues will be
resolved, or their final financial effect. A final disposition of this issue in
the Company's favor would have a material positive effect on the Company's
Consolidated Statement of Operations and Financial Condition.
The Company has a Withholding Issue reserve of $ 66,388,000 at March 31, 2001.
For a further discussion, see Part II - Item 1 - Legal Proceedings, Dispute with
Internal Revenue Service over Withholding Obligations (Netherlands Antilles).
At March 31, 2001, the litigation and contingency reserves, other than for the
Withholding Issue, were $1,713,000. For a discussion of alleged liabilities,
lawsuits and governmental proceedings, see Part II - Item 1.
The Company has significant alleged liabilities and is a defendant in certain
lawsuits and governmental proceedings, the ultimate outcome of which could have
a material adverse effect on its financial condition and results of operations.
Because of the nature of the contingent and alleged liabilities and the inherent
difficulty in predicting the outcome of the litigation and governmental
proceedings, management is unable to predict whether the Company's recorded
reserves will be adequate or its resources sufficient to satisfy its ultimate
obligations. The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Although the basis for the calculation of the litigation and contingency
reserves and the Withholding Issue reserve 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. For a discussion
of alleged liabilities, lawsuits and governmental proceedings, see Part II -
Item 1.
For the three months ended March 31, 2001, cash of $2,335,000 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 three months of 2001 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 2001.
For the three months ended March 31, 2000, cash of $2,542,000 was used by
operations, including the payment of prior year accruals and operating expenses,
partially offset by the receipt of interest income.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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 and alleged liabilities, as described above. 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 governmental proceedings, as well as pursue all sources of contributions to
settlements. In order to continue on a long-term basis, the Company must both
resolve its contingent and alleged liabilities by prevailing upon or settling
these claims for less than the amounts claimed, and generate profits by
acquiring existing operations and/or by developing new operations.
In April 2001 the Company through a wholly-owned subsidiary has purchased a
14,000 square feet office building in Greenwich, CT for approximately
$2,400,000. Approximately 3,000 square feet is expected to be used by the
Company for its executive offices with the remaining square footage leased to
unaffiliated third parties. Except for the purchase of this office building,
there are no material commitments for capital expenditures as of March 31, 2001.
Inflation has had no material impact on the business and operations of the
Company.
Results of Operations
Summarized financial information of the Company for the first quarter and three
months ended March 31 is as follows:
First Quarter
2001 2000
==== ====
Compensation and benefits....................................................... $ 938 $ 939
Professional and outside services............................................... 206 290
Insurance....................................................................... 12 14
Occupancy....................................................................... 25 24
Other operating................................................................. 34 36
-------- --------
1,215 1,303
-------- --------
Operating loss.................................................................. (1,215) (1,303)
-------- --------
Interest income................................................................. 706 582
Other income.................................................................... 50 50
-------- --------
Loss before income taxes........................................................ (459) (671)
Income tax expense.............................................................. (55) (55)
-------- --------
Net loss........................................................................ $ (514) $ (726)
===== =====
The Company's main source of non-operating revenue is interest income earned on
investment securities and cash equivalents. The Company's management expects
that operating cash needs for the remainder of 2001 will be met principally by
the Company's current financial resources and the receipt of non-operating
revenue consisting of interest income earned on investment securities and cash
equivalents.
The Company recorded a net loss of $514,000 or $0.01 per share, for the first
quarter ended March 31, 2001, compared to $726,000 or $0.02 per share, for the
first quarter ended March 31, 2000.
Professional and outside services were $206,000 in the first quarter ended March
31, 2001, compared to $290,000 in the respective 2000 period. The decrease is
principally due to a decrease in the amount of Supervisory Goodwill litigation
related expenses in the current period.
AMBASE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Interest income in the first quarter ended March 31, 2001 increased to $706,000
from $582,000 in the respective 2000 period. The increase is primarily
attributable to an increased yield on investments and a higher average level of
investments held in 2001 compared with 2000.
The additional other income in the 2001 and 2000 periods is principally due to
the continued collection by an inactive subsidiary of a receivable previously
considered uncollectible.
The income tax provisions of $55,000 in the first quarter ended March 31, 2001
and March 31, 2000, 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 March 31, 2001 and December 31, 2000 with
maturity dates of less than one year consist of the following:
2001 2000
======================= =========================
Carrying Fair Carrying Fair
Value Value Value Value
(in thousands) ----------- --------- -------- ------------
U.S. Treasury Bills......................... $48,983 $49,109 $46,547 $46,595
======= ======= ======= ======
Weighted average interest rate.............. 5.44% 5.80%
====== ======
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
40 Wall Street, 46th Floor
New York, NY 10005
Attention: Shareholder Services
(800) 937-5449 or (718) 921-8200
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.
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, 2000 is incorporated by reference herein
and the defined terms set forth below have the same meaning ascribed to them in
this report. There have been no material developments in such legal proceedings,
except as set forth below.
(a) The Company is or has been a defendant in a number of lawsuits or proceed-
ings.
The actions against the Company are in various stages. Nevertheless, the
allegations and claims are material and, if successful, could result in
substantial judgments against the Company. To the extent the aggregate of any
such judgments were to exceed the resources available, these matters would have
a material adverse effect on the Company's financial condition and results of
operations. Due to the nature of these proceedings, the Company and its counsel
are unable to express any opinion as to their probable outcome.
(b) Supervisory Goodwill Litigation:
On April 3, 2001 the United States Court of Appeals for the Federal Circuit
issued a decision in the case of California Federal Bank, FSB v. United States,
which involves certain damages issues related to the Company's case. The
decision vacated in part the decision of the United States Court of Federal
Claims dated April 16, 1999, and remanded the case back to the Court of Federal
Claims for a further determination of damages. The trial court and appellate
decisions in California Federal as well as other case decisions, may be relevant
to the Company's claims, but are not necessarily indicative of the ultimate
outcome of the Company's action.
(c) Other
AmBase Corporation v. City Investing Company Liquidating Trust, et al. - New
York Court Action. On March 19, 2001 the Trust filed its reply to the Company's
opposition. No assurance can be given regarding the ultimate outcome of this
litigation.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Does not apply.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Does not apply.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Does not apply.
Item 5. OTHER INFORMATION
Does not apply.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) 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
(Principal Financial and
Accounting Officer)
Date: May 9, 2001