SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 1996 COMMISSION FILE NUMBER: 0-3777
PETRIE STORES LIQUIDATING TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 22-6679945
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
70 ENTERPRISE AVENUE
SECAUCUS, NEW JERSEY 07094
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 422-0496
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF
CHANGED SINCE LAST REPORT:
The Petrie Stores Liquidating Trust, which has a
calendar year as its fiscal year, is the successor
to Petrie Stores Corporation which had a fiscal year
that ended on the Saturday nearest to January 31.
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: As of May 13, 1996, there were
52,350,238 Units of Beneficial Interest outstanding; and
the aggregate market value of the Units of Beneficial
Interest held by nonaffiliates was $71,097,676, based
upon the average of the closing bid and asked prices on
May 13, 1996 of $2.9375 per Unit of Beneficial Interest
(as quoted on the OTC Bulletin Board).
PETRIE STORES LIQUIDATING TRUST
(SUCCESSOR TO PETRIE STORES CORPORATION)
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements (unaudited)
Statements of Net Assets in Liquidation
- March 31, 1996 and January 22,
1996 . . . . . . . . . . . . . . . . . 2
Statements of Changes in Net Assets in
Liquidation - For the Period from
January 23, 1996 through March 31,
1996 and for the Three Months
Ended April 29, 1995 . . . . . . . . . 3
Notes to Financial Statements . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . 18
PETRIE STORES LIQUIDATING TRUST
(SUCCESSOR TO PETRIE STORES CORPORATION)
STATEMENTS OF NET ASSETS IN LIQUIDATION
(IN THOUSANDS)
March 31, January 22,
1996 1996
(Unaudited) (Predecessor)
___________ _____________
Assets
Cash and cash equivalents $ 64,066 $ 63,647
Cash and cash equivalents held in escrow 68,121 67,470
Investments in common stock (including
3,493,450 shares of Toys "R" Us
common stock held in escrow) 136,501 106,799
-------- --------
Total assets 268,688 237,916
Liabilities
Accrued expenses and other liabilities 36,147 35,322
-------- --------
Total liabilities 36,147 35,322
Commitments and contingencies
-------- --------
Net assets in liquidation $232,541 $202,594
======== ========
See accompanying notes.
PETRIE STORES LIQUIDATING TRUST
(SUCCESSOR TO PETRIE STORES CORPORATION)
STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT AND PER SHARE AMOUNTS)
For the Period
from Three Months
January 23, 1996 Ended
through March 31, April 29, 1995
1996 (Predecessor)
---------------- --------------
Net assets in liquidation at
beginning of period $ 202,594 $ 836,470
------------- ------------
Investment income 1,261 164
Corporate overhead (1,016) (1,888)
Unrealized gain (loss)
on Toys "R" Us common
stock 29,702 (214,234)
------------- ------------
Income (loss) before income
tax benefit 29,947 (215,958)
Income tax benefit 85,693
------------- ------------
Net income (loss) for the
period 29,947 (130,265)
Distributions of 26,173,718
shares of Toys "R" Us common
stock, net of related
deferred taxes (394,409)
------------ ------------
Increase (decrease) in net
assets 29,947 (524,674)
----------- ------------
Net assets in liquidation at
end of period $ 232,541 $ 311,796
=========== ============
Net income (loss) per unit
or share $ .57 (2.49)
=========== ============
Weighted average number of
units or shares 52,350 52,350
=========== ===========
See accompanying notes.
PETRIE STORES LIQUIDATING TRUST
(SUCCESSOR TO PETRIE STORES CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
1. INTERIM REPORTING
The accompanying unaudited financial statements of the
Petrie Stores Liquidating Trust (the "Liquidating Trust") have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the in-
structions to Form 10-Q and Rule 10-01 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 the
Liquidating Trust, all adjustments (consisting of only normal
recurring accruals) considered necessary for a fair presentation
have been included. Results for the period ended March 31, 1996
are not necessarily indicative of the results that may be expect-
ed for the current fiscal year. For further information,
reference is made to the financial statements and footnotes
thereto included in the Liquidating Trust's Annual Report on Form
10-K for the period ended January 22, 1996.
2. BASIS OF PRESENTATION
The Liquidating Trust is the successor to Petrie Stores
Corporation ("Petrie"). Prior to December 9, 1994, Petrie
operated a chain of retail stores that specialized in women's
apparel and were located throughout the United States (including
Puerto Rico and the U.S. Virgin Islands). At Petrie's Annual
Meeting, held on December 6, 1994, Petrie's shareholders ap-
proved the sale of Petrie's retail operations (the "Sale"). On
December 9, 1995, pursuant to a Stock Purchase Agreement, dated
as of August 23, 1994 and amended as of November 3, 1994 (the
"Retail Operations Stock Purchase Agreement"), PS Stores Acquisi-
tion Corporation ("PS Stores") purchased all of the stock of
Petrie Retail, Inc., a former subsidiary of Petrie to which all
of Petrie's retail operations had been transferred ("Petrie
Retail"). At Petrie's Reconvened Annual Meeting, held on January
24, 1995, Petrie's shareholders approved (i) an exchange of
shares of Toys "R" Us, Inc. ("Toys 'R' Us") common stock ("Toys
Common Stock") with Toys "R" Us (Note 3) and (ii) the liquidation
and dissolution of Petrie pursuant to a plan of liquidation and
dissolution (the "Plan of Liquidation").
Pursuant to the Plan of Liquidation, and the Agreement and
Declaration of Trust, dated as of December 6, 1995 (the "Liqui-
dating Trust Agreement"), between Petrie and the trustees named
therein (the "Liquidating Trustees"), effective as of the close
of business on January 22, 1996 (the "Succession Date"), Petrie
transferred its remaining assets (then consisting of approximate-
ly $131 million in cash and cash equivalents and 5,055,576 shares
of Toys Common Stock) to, and its remaining fixed and contingent
liabilities were assumed by (the "Succession"), the Liquidating
Trust.
Beginning with the period ending December 31, 1996, the
Liquidating Trust has adopted the calendar year as its fiscal
year. A liquidation basis of accounting was implemented as of
January 28, 1995. The statements of net assets in liquidation
at March 31, 1996 and January 22, 1996 do not distinguish between
current and long-term balances as would be reflected if such
statements had been prepared on a going-concern basis.
At the Succession Date, and as a result of the Succession,
Petrie ceased to be a taxable entity. The Liquidating Trust is a
complete pass-through entity for federal income taxes and,
accordingly, is not itself subject to income tax. Instead, each
holder of Units of Beneficial Interest in the Liquidating Trust
is required to take into account, in accordance with such
holder's method of accounting, his pro rata share of the Liqui-
dating Trust's items of income, gain, loss, deduction or credit,
regardless of the amount or timing of distributions to such
holder.
3. INVESTMENTS IN COMMON STOCK
The Liquidating Trust's investments in common stock consist
of shares, which are carried at market value, of Toys "R" Us, a
chain of specialty retail stores principally engaged in the sale
of toys and children's clothing in the United States and abroad.
On January 24, 1995, pursuant to the terms of an Acquisition
Agreement dated as of April 20, 1994, and amended as of May 10,
1994 (the "Toys Acquisition Agreement"), between Petrie and Toys
"R" Us, Petrie exchanged (the "Exchange") with Toys "R" Us all of
its shares of Toys Common Stock (39,853,403 shares), plus $165
million in cash, for 42,076,420 shares of Toys Common Stock
(approximately 15.0% of the outstanding Toys Common Stock at
January 28, 1995). In accordance with the Toys Acquisition
Agreement, the number of shares of Toys Common Stock received by
Petrie in the Exchange was approximately 3.3 million shares less
than the sum of the number of shares transferred by Petrie plus
the number of shares purchased with the $165 million cash pay-
ment. The market value of these 3.3 million shares retained by
Toys "R" Us was approximately $100 million at January 28, 1995.
Simultaneously with the closing of the Exchange, Petrie
placed 3,493,450 shares of its Toys Common Stock into an escrow
account (the "Escrow Account") pursuant to the terms of an escrow
agreement, dated as of January 24, 1995, between Petrie and
Custodial Trust Company, as Escrow Agent (the "Escrow Agree-
ment"). The shares of Toys Common Stock placed into the Escrow
Account pursuant to the Escrow Agreement secure the payment of
certain obligations of the Liquidating Trust, as successor to
Petrie, to Toys "R" Us arising (i) under (x) the Toys Acquisition
Agreement, (y) the Seller Indemnification Agreement, dated as of
December 9, 1994, among Petrie, Toys "R" Us, Petrie Retail, PS
Stores, and certain subsidiaries of PS Stores and (z) the Retail
Operations Stock Purchase Agreement, and (ii) otherwise.
The assets of the Liquidating Trust are subject to the terms
of a letter agreement, dated as of January 24, 1995, pursuant to
which Petrie agreed with Toys "R" Us that, until such time as a
hedge or similar arrangement is in place, Petrie will retain,
either individually or in combination, (i) cash in an amount of
at least $177.5 million (the "Reserved Amount") or (ii) shares of
Toys Common Stock having a market value (as of January 20, 1995)
of at least twice the Reserved Amount, to secure the payment of
Petrie's contingent liabilities (Note 4). At March 31, 1996, the
Liquidating Trust, as successor to Petrie, is required to retain
a substantial portion of its (i) 5,055,576 shares of Toys Common
Stock (including the 3,493,450 shares of Toys Common Stock held
in the Escrow Account) and (ii) approximately $132 million in
cash and cash equivalents.
Petrie had also placed 3,200,082 shares of Toys Common Stock
in a collateral account (the "Collateral Account") pursuant to
the terms of an Amended and Restated Cash Collateral and Pledge
Agreement, dated as of December 9, 1994 and amended as of January
24, 1995, among Petrie, PS Stores, certain subsidiaries of PS
Stores, and Custodial Trust Company, as Collateral Agent (the
"Amended and Restated Cash Collateral Agreement"). On December
19, 1995, the Amended and Restated Cash Collateral Agreement was
further amended and restated and, pursuant thereto, the 3,200,082
shares of Toys Common Stock held in the Collateral Account were
released to Petrie in exchange for Petrie's deposit of $67.5
million in cash equivalents into the Collateral Account. The
cash equivalents placed in the Collateral Account pursuant to the
Amended and Restated Cash Collateral Agreement secure the payment
of certain obligations of the Liquidating Trust, as successor to
Petrie, to PS Stores arising under (i) the Retail Operations
Stock Purchase Agreement and (ii) the Cross-Indemnification and
Procedure Agreement, dated as of December 9, 1994, between Petrie
and PS Stores (Note 4).
The price per share of Toys Common Stock, as reported on the
New York Stock Exchange Composite Tape, increased from $21 1/8
per share at January 22, 1996 to $29 1/2 per share at May 13,
1996.
4. COMMITMENTS AND CONTINGENCIES
As successor to Petrie, the Liquidating Trust has certain
contingent liabilities with respect to existing or potential
claims, lawsuits and other proceedings, which primarily relate to
(i) guarantees of certain retail store leases, expiring at
various times through 2011 to which Petrie Retail or an affiliate
thereof is a party, and certain other liabilities that were
assumed by Petrie Retail (but as to which Petrie's liability has
not been released) in connection with the Sale (collectively, the
"Assumed Obligations") to the extent that Petrie Retail fails to
perform; (ii) Petrie's agreement with Petrie Retail to indemnify
it for certain liabilities relating to Petrie Retail's withdrawal
from the United Auto Workers District 65 Security Plan Pension
Fund (the "Multiemployer Plan"), and (iii) an ongoing dispute
with the Internal Revenue Service (the "IRS") relating to the
manner in which Petrie computed the basis of shares of Toys
Common Stock transferred in connection with the exchange of
certain of Petrie's exchangeable subordinated debentures in
fiscal year 1989. The Liquidating Trust accrues liabilities when
it is probable that future costs will be incurred and when such
costs can be reasonably estimated. Such accruals are based on
developments to date, the Liquidating Trust's estimates of the
outcome of these matters and its experience (including that of
its predecessor, Petrie) in contesting, litigating and settling
matters. At March 31, 1996 and January 22, 1996, the Liquidating
Trust, as successor to Petrie, has accrued approximately $33
million for contingent liabilities. As the scope of these
liabilities becomes better defined, there may be changes in the
estimates of future costs, which could have a material effect on
the Liquidating Trust's financial condition or liquidity.
On October 12, 1995, Petrie Retail filed a voluntary peti-
tion for bankruptcy protection, under Chapter 11 of the Federal
Bankruptcy Code, with the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"). As a
result of its bankruptcy filing, Petrie Retail has failed to
perform or make payment with respect to certain of the Assumed
Obligations, including, but not limited to, Assumed Obligations
relating to store leases to which Petrie Retail or an affiliate
thereof is a party, employment agreements and state taxes.
Accordingly, the Liquidating Trust may be required to make
payments in respect of certain of the Assumed Obligations. The
Liquidating Trust intends to file a claim in the Bankruptcy Court
against Petrie Retail in respect of any such payments. Addition-
ally, the Liquidating Trust intends to assert a right of setoff
in respect of any such payments against any claims Petrie Retail
and its affiliates may have against Petrie. The Liquidating
Trust is unable to predict the timing or probability of the
collection of these claims against Petrie Retail.
Since filing its petition for bankruptcy protection, Petrie
Retail has closed approximately 375 of the roughly 1600 stores it
operated prior to filing the petition. Of the 375 closed stores,
240 relate to rejected leases and the remainder of the leases
generally had expired or were terminated by mutual landlord and
tenant consent. The Liquidating Trust, as successor to Petrie,
is a guarantor of approximately 35 of the rejected leases and its
aggregate guarantee liability on those leases is approximately
$15 million, which the Liquidating Trust, as successor to Petrie,
has included in accrued expenses and other liabilities in the
accompanying financial statements at March 31, 1996. The Liqui-
dating Trust's lease guarantee liability will be reduced by,
among other things, the extent to which new rent-paying tenants
are found for the closed stores.
Additionally, on May 7, 1996, Petrie Retail filed a motion
with the Bankruptcy Court to conduct going-out-of-business sales
at 226 stores and indicated, without identifying the relevant
leases, that it intended to close 12 additional stores where the
leases have expired or are scheduled to expire in the near
future. The Liquidating Trust, as successor to Petrie, is a
guarantor of approximately 35 of these leases. If Petrie Retail
were to close all 35 of the stores under such leases, the Liqui-
dating Trust's aggregate guarantee liability on these leases
would be approximately $13 million, which amount had been includ-
ed in the Liquidating Trust's previous estimates of its contin-
gent liabilities.
No assurance can be given as to how many additional stores
Petrie Retail will close for which the Liquidating Trust, as
successor to Petrie, has guarantee liability. If Petrie Retail
were to close every store for which the Liquidating Trust, as
successor to Petrie, believes it has liability as a lease guaran-
tor, giving effect to all the lease guarantee releases executed
by landlords and assuming that no mitigation or defense were
successful, the Liquidating Trust's theoretical exposure relating
to such leases, without giving effect to any present value
discount, would be approximately $100 million, with approximately
$16 million remaining due in the year ending December 31, 1996,
approximately $18 million due in 1997, approximately $16 million
due in 1998 and approximately $50 million due thereafter. As
discussed below, landlords under leases relating to approximately
146 stores operated by Petrie Retail or an affiliate thereof have
alleged in a complaint that the Liquidating Trust, as successor
to Petrie, has liability as a guarantor of certain leases not-
withstanding Petrie's receipt from these landlords of releases of
guarantees with respect to such leases. Based on the complaint,
such alleged guarantor liability represents approximately $85
million in lease payments, without giving effect to any present
value discount or rental payments made by Petrie Retail since the
complaint was filed and assuming that all of the approximately
146 stores which are the subject of these landlords' claims are
closed and that the landlord in each case is unable to mitigate
its damages. The Liquidating Trust believes it has substantial
legal defenses to these landlords' claims and is vigorously
contesting such claims. Although the Liquidating Trust considers
it unlikely, a decision by a court in favor of these landlords
could have a material adverse effect on the Liquidating Trust's
liquidity and financial condition.
In addition, since Petrie Retail's bankruptcy filing, a
dispute has arisen between the Liquidating Trust, on the one
hand, and Petrie Retail and its affiliates, on the other, as to
whether the Liquidating Trust, as successor to Petrie, or Petrie
Retail and its affiliates is responsible as guarantor of certain
additional leases. The maximum theoretical exposure relating to
such leases, based on the same assumptions set forth in the
preceding paragraph and without giving effect to any present
value discount, would be approximately $33 million, with approxi-
mately $3 million remaining due in the year ending December 31,
1996, approximately $5 million due in 1997, approximately $5
million due in 1998 and approximately $20 million due thereafter.
To date, Petrie Retail has rejected three of such leases, repre-
senting approximately $2 million in potential liability. Addi-
tionally, eleven of these leases, representing approximately $8
million in potential liability, are the subject of Petrie
Retail's May 7, 1996 motion to conduct going-out-of-business
sales at 226 stores.
The Liquidating Trust's lease exposure calculations reflect
the estimated sum of all base rent and additional rent (such as
taxes and common area charges) due under a lease through the end
of the current lease term, but do not reflect potential penal-
ties, interest and other charges to which a landlord may be
entitled. Such additional charges (which may in part be unen-
forceable) are not expected to materially increase the Liquidat-
ing Trust's lease guarantee liability.
A significant number of leases discussed above under which a
landlord might claim that the Liquidating Trust, as successor to
Petrie, has liability as a lease guarantor either expressly
contain mitigation provisions or relate to property in states
that imply such provisions as a matter of law. Mitigation
generally requires, among other things, that a landlord of a
closed store seek to reduce its damages, including by attempting
to locate a new tenant.
On October 23, 1995, Petrie Retail notified two former
executives of Petrie (one of whom is a current director of
Petrie) and Petrie's President and Chief Executive Officer (who
is also a current director of Petrie) that as a result of Petrie
Retail's bankruptcy filing, Petrie Retail would no longer honor
its obligations under the employment agreements each executive
had entered into with Petrie which had been assumed by Petrie
Retail in connection with the sale of the retail operations. On
April 25, 1996, the Liquidating Trust, while preserving its
rights against Petrie Retail, entered into settlement agreements
with one of the former executives and Petrie's President and
Chief Executive Officer. Pursuant to the settlement agreements,
the Liquidating Trust agreed to pay each substantially all the
amounts due under their respective agreements with Petrie. The
total cost of the settlement to the Liquidating Trust was approx-
imately $2.9 million (accrued for at January 22, 1996) of which
approximately $2.0 million has been paid.
On January 12, 1996, Petrie received a notice of final
determination from the New Jersey Division of Taxation of a
liability for New Jersey corporate income tax in the aggregate
amount (including interest) of approximately $3.1 million. The
liability, which relates to Petrie's 1987, 1989, 1990, 1991, 1992
and 1993 tax years, was assumed by Petrie Retail in connection
with the Sale. Additionally, the Liquidating Trust, as succes-
sor to Petrie, has been assessed approximately $270,000 (exclud-
ing interest) in sales and use taxes for the years 1989 through
1995. The Division of Taxation is currently engaged in a tax
amnesty program which provides for interest to be forgiven and
future penalties to be avoided if payment is made by June 1, 1996
and the taxpayer waives its right to any administrative and/or
judicial appeal of the determination. The Liquidating Trust, as
successor to Petrie, has notified the Division of Taxation that
it intends to participate in the tax amnesty program, pursuant to
which its ultimate liability to the Division of Taxation, for
corporate income and sales and use taxes, is expected to be
approximately $1.2 million.
Effective January 31, 1995, Petrie Retail withdrew from the
Multiemployer Plan. Due to underfunding of the Multiemployer
Plan, Petrie Retail and its affiliates have incurred liability
under the Employee Retirement Income Security Act of 1974, as
amended. Based upon preliminary discussions with the administra-
tors and trustees of the Multiemployer Plan, the Liquidating
Trust believes that the withdrawal liability allocated to Petrie
Retail and its affiliates, as a result of the withdrawal, will be
approximately $12 million, with an additional liability allocated
to Petrie Retail and its affiliates of approximately $3 million
attributable to the Multiemployer Plan's failure to meet certain
Internal Revenue Code minimum funding standards. In the event of
a mass withdrawal by contributing employers from the
Multiemployer Plan, the withdrawal liability allocated to Petrie
Retail and its affiliates may be higher. Pursuant to the Retail
Operations Stock Purchase Agreement, Petrie Retail and its
affiliates are responsible for the first $10 million in withdraw-
al and related liabilities, with the next $50 million of such
liabilities allocated 75 percent to the Liquidating Trust, as
successor to Petrie, and 25 percent to Petrie Retail and its
affiliates. It is unclear what effect, if any, Petrie Retail's
bankruptcy filing may have upon the timing and amount of any
payments the Liquidating Trust may be required to make under the
agreement with respect to the Multiemployer Plan, but in no event
does the Liquidating Trust believe that its maximum contractual
liability will be increased as a result of Petrie Retail's
bankruptcy filing.
Upon audit, the agent examining Petrie's tax return for its
fiscal year ended January 28, 1989 raised an issue regarding the
manner pursuant to which Petrie computed the basis of its Toys
Common Stock disposed of in connection with the exchange of
certain of its exchangeable subordinated debentures. The examin-
ing agent has proposed an adjustment to Petrie's taxable income
which would result in an additional federal tax liability,
including interest, of approximately $53 million. The Liquidat-
ing Trust, as successor to Petrie, is contesting the agent's
proposed adjustment in administrative proceedings. If the
Liquidating Trust and the IRS are unable to resolve this matter
in administrative proceedings, the Liquidating Trust intends to
litigate its position. The Liquidating Trust believes that the
agent's proposed adjustment is incorrect as a matter of law.
Depending on how and when this issue is resolved with the IRS,
there also may be due state and local taxes (and interest there-
on).
The Liquidating Trust believes that adequate accruals have
been established in the accompanying financial statements to
provide for any losses that may be incurred with respect to the
aforementioned contingencies.
Set forth below are the principal suits to which Petrie and
the Liquidating Trust, as successor to Petrie, are defendants.
Petrie, its directors and certain former members of its
senior management were the named defendants in a consolidated
class action brought on June 20, 1994 on behalf of Petrie's
shareholders. The plaintiffs in the action, which was consoli-
dated in New York Supreme Court, alleged that (i) Petrie's
directors violated their fiduciary duties of loyalty and fair
dealing by exclusively negotiating with PS Stores for the sale of
Petrie's retail operations, (ii) Petrie's directors failed to
adequately explore third-party interest and thus did not maximize
shareholder value and (iii) PS Stores was in possession of non-
public information that allowed it to purchase the retail opera-
tions at an inadequate price. The plaintiffs sought, among other
things, (i) a declaratory judgment that the individual defendants
breached their fiduciary duties and (ii) the recovery of unspeci-
fied damages. On August 22, 1995, Petrie filed a motion to
dismiss the consolidated amended complaint and on March 29, 1996
the court granted the motion to dismiss with prejudice. Plain-
tiffs have until May 20, 1996 to file a notice of appeal with the
Appellate Division of New York State Supreme Court.
A complaint was filed in the United States District Court
for the Southern District of Texas on October 31, 1995, as
amended on January 24, 1996, against Petrie by the landlord for
two retail stores which had been operated by an affiliate of
Petrie Retail prior to Petrie Retail's rejection of the underly-
ing leases in the Bankruptcy Court. The complaint alleges that,
in light of Petrie Retail's failure to perform its obligations
under these leases, Petrie has liability as a guarantor for the
amounts due under these two leases notwithstanding that Petrie
was released as a guarantor upon the execution and delivery of
substitute guarantees by Petrie Retail. The complaint further
alleges, among other things, that (i) at the time of delivery of
its substitute guarantees, Petrie Retail failed to have a net
worth of more than $150 million, a condition precedent to the
release of Petrie from its obligations as a guarantor; (ii)
Petrie breached its representations and warranties that Petrie
Retail would have the requisite net worth; (iii) in making the
representations and warranties regarding Petrie Retail's net
worth, Petrie acted fraudulently; and (iv) in making the repre-
sentations and warranties regarding Petrie Retail's net worth,
Petrie acted negligently. The complaint, as amended, seeks (i)
back rent and expenses not paid with respect to the two store
leases and (ii) a declaration that the Liquidating Trust, as
successor to Petrie, is liable as guarantor for all future lease
payments, and related costs, interest and expenses, due under the
leases. Petrie answered the amended complaint denying liability
and contending that, upon Petrie's delivery of Petrie Retail's
substitute guarantees, Petrie was released from any guarantor
liability. The parties are presently in discovery and trial has
been scheduled for March 1997. While no assurance can be given,
the Liquidating Trust believes that it has meritorious defenses
to this action and will defend itself vigorously.
On January 17, 1996, a complaint was filed in New Jersey
Superior Court against Petrie and the Liquidating Trustees by a
landlord and certain of its affiliates seeking injunctive relief
and unspecified compensatory and punitive damages for breach of
contract, fraud and negligent misrepresentation with respect to
two office leases and three store leases under which the plain-
tiffs allege that (i) Petrie Retail has failed to perform and
(ii) Petrie has liability as the lessee or guarantor. The
alleged guarantor liability relates to approximately $18.4
million in lease payments, without giving effect to any present
value discount and assuming that all five leases which are the
subject of the complaint are rejected and further assuming that
the landlord in each case is unable to mitigate its damages. On
April 23, 1996, the parties agreed to a settlement which resulted
in the complaint being dismissed with prejudice. As a result of
the settlement, the Liquidating Trust remains contingently liable
for the $18.4 million in lease payments due under the five
leases, which amount has been included in the Liquidating Trust's
previous estimates of its contingent lease liability. To date,
none of the five leases has been rejected by Petrie Retail.
On February 7, 1996, a complaint was filed in New York State
Supreme Court against Petrie, the Liquidating Trust and the
Liquidating Trustees by five landlords and certain of their
affiliates seeking declaratory relief and unspecified damages for
breach of contract and fraud with respect to 146 store leases.
The complaint alleges that the Liquidating Trust, as successor to
Petrie, has liability as a guarantor of certain of these leases
notwithstanding Petrie's receipt from these landlords of releases
with respect to substantially all of the purported lease guaran-
tees. The complaint (i) alleges, among other things, that the
Liquidating Trust is liable for back rent and expenses not paid
in respect of such leases by Petrie Retail or an affiliate
thereof, as tenant under the leases, and (ii) seeks a declaration
that the Liquidating Trust is liable as guarantor for all future
lease payments and related costs and expenses due under the
leases. According to the plaintiffs, such alleged guarantor
liability relates to approximately $85 million in lease payments,
without giving effect to any present value discount or rental
payments made by Petrie Retail since the filing of the complaint,
and assuming all of the 146 stores which are subject of the
complaint are closed and that the landlord in each case is unable
to mitigate its damages. Approximately $2 million of this total
relates to unreleased guarantees which have been included in the
Liquidating Trust's previous estimates of its contingent lease
liability. To date, 19 of the 146 leases, representing approxi-
mately $9.6 million in lease payments, based on the plaintiffs'
liability estimates and without giving effect to any present
value discount or mitigation, have been rejected by Petrie
Retail. An additional 19 of the 146 leases, representing approxi-
mately $11.5 million in lease payments, based on the plaintiffs'
liability estimates and without giving effect to any present
value discount or mitigation, are the subject of Petrie Retail's
May 7, 1996 motion to conduct going-out-of-business sales at 226
stores. On March 11, 1996, the defendants filed a motion to
dismiss the complaint which is presently awaiting a decision.
While no assurance can be given, the defendants believe that they
have meritorious defenses to this action and will defend them-
selves vigorously.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with
the Financial Statements and the Notes thereto provided herein.
As previously disclosed, Petrie sold its retail operations
to PS Stores on December 9, 1994, and on January 24, 1995 (the
date on which Petrie's shareholders approved the Plan of Liquida-
tion), Petrie commenced its liquidation. As a result, effective
January 28, 1995, Petrie changed its basis of accounting from a
going-concern basis to a liquidation basis. As soon as practica-
ble, Petrie will file a Certificate of Dissolution with the
Secretary of State of the State of New York and, following the
receipt of all necessary consents, approvals and clearances,
Petrie will dissolve. For financial statement purposes, the
Liquidating Trust is deemed to be the successor to Petrie, and
the results of operations of Petrie are presented in the finan-
cial statements of the Liquidating Trust. Beginning with the
year ending December 31, 1996, the Liquidating Trust has adopted
the calendar year as its fiscal year.
RESULTS OF OPERATIONS
The Liquidating Trust's net income for the period from
January 23, 1996 through March 31, 1996 was $29,947,000, as
compared to a net loss of $130,265,000 incurred by Petrie for the
three months ended April 29, 1995.
As of May 13, 1996, the closing price per share of Toys
Common Stock as reported on the New York Stock Exchange Composite
Tape was 29 1/2 per share. In applying a liquidation basis of
accounting, the Liquidating Trust has given effect in its results
of operations to fluctuations in the market price of its Toys
Common Stock, and has recorded an unrealized gain on the Toys
Common Stock for the period ended March 31, 1996 of $29,702,000
as compared to an unrealized loss of $214,234,000 for the three
months ended April 29, 1995.
For the period ended March 31, 1996, the Liquidating Trust
incurred corporate overhead of $1,016,000 compared with
$1,888,000 for the three months ended April 29, 1995. The
decrease in corporate overhead is primarily the result of the
payment of $618,000 related to premiums for directors' and
officers' liability insurance during the three months ended April
29, 1995. The premiums for the current year's directors' and
officers' liability insurance was paid during the period ended
January 22, 1996. In connection with the application of a
liquidation basis of accounting, these premiums were expensed upon
payment. Corporate overhead generally consists of costs and expenses
related to the liquidation and dissolution of Petrie including,
but not limited to, legal fees, insurance, accounting fees,
salaries, real estate advisory fees, transfer agent fees, print-
ing and shareholder communications expenses and costs and expens-
es that the Liquidating Trust may have incurred as a result of
Petrie Retail's bankruptcy filing. The Liquidating Trust intends
to file a claim against Petrie Retail in the Bankruptcy Court in
respect of any payments which are made by the Liquidating Trust
for obligations that Petrie Retail or an affiliate thereof fails
to perform as a result of Petrie Retail's bankruptcy filing.
Additionally, the Liquidating Trust will assert a right of setoff
in respect of any such payments against any claims Petrie Retail
and its affiliates may have against Petrie. The Liquidating
Trust is unable to predict the timing or probability of the
collection of these claims against Petrie Retail. See "--
Liquidity and Capital Resources."
During the period ended March 31, 1996, the Liquidating
Trust earned $1,261,000 in investment income as compared to
$164,000 earned during the three months ended April 29, 1995.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
As previously disclosed, Petrie has placed 3,493,450 shares
of Toys Common Stock into an escrow account and $67.5 million in
cash equivalents into a collateral account. These assets were
placed into these accounts to secure Petrie's obligations relat-
ing to certain contingent liabilities pursuant to the terms of
the Toys Acquisition Agreement, the Retail Operations Stock
Purchase Agreement and other agreements with Toys "R" Us and/or
PS Stores. See "-- Contingent Liabilities."
The assets of the Liquidating Trust are subject to the terms
of a letter agreement dated as of January 24, 1995, pursuant to
which Petrie agreed with Toys "R" Us that, until such time as a
hedge or similar arrangement is in place, Petrie would retain,
either individually or in combination, (i) cash in an amount of
at least $177.5 million (the "Reserved Amount") or (ii) shares of
Toys Common Stock having a market value (as of January 20, 1995)
of at least twice the Reserved Amount, to secure the payment of
Petrie's contingent liabilities. Pursuant to the terms of this
letter agreement, the Liquidating Trust, as successor to Petrie,
is presently required to retain a substantial portion of its
assets (consisting of, at May 13, 1996, (i) 5,055,576 shares of
Toys Common Stock, including the 3,493,450 shares of Toys Common
Stock held in the escrow account, and (ii) approximately $130
million in cash and cash equivalents).
As of May 13, 1996, the Liquidating Trust's 5,055,576 shares
of Toys Common Stock had a market value of approximately $149
million, based upon a closing price per share of 29 1/2, as
reported on the New York Stock Exchange Composite Tape on May 13,
1996. During the fifty-two weeks prior to the date of this
report, the price per share of Toys Common Stock has fluctuated
from a high of $29 7/8 to a low of $20 1/2. No assurance can be
given as to the future market prices of Toys Common Stock.
As of May 13, 1996, the Liquidating Trust had approximately
$130 million in cash and cash equivalents. The Liquidating Trust
believes that it has sufficient liquid funds available to satisfy
the liabilities of the Liquidating Trust that are likely to occur
(including, without limitation, costs and expenses related to the
administration of the Liquidating Trust such as legal fees,
insurance, accounting fees, salaries, real estate advisory fees,
transfer agent fees and printing and shareholder communication
expenses). To the extent that the Liquidating Trust's liquid
funds are insufficient to satisfy such liabilities, however, the
Liquidating Trustees will liquidate some or all of the remaining
shares of Toys Common Stock that it holds. The Liquidating
Trustees have determined not to approve any further distributions
of shares of Toys Common Stock until the status of the Liquidat-
ing Trust's contingent liabilities is clarified. See "-- Contin-
gent Liabilities."
CONTINGENT LIABILITIES
The Liquidating Trust's contingent liabilities primarily
include liabilities relating to (i) guarantees of certain retail
store leases, expiring at various times through 2011 to which
Petrie Retail or an affiliate thereof is a party, and certain
other liabilities that were assumed by Petrie Retail (but as to
which Petrie's liability has not been released) in connection
with the Sale (collectively, the "Assumed Obligations") to the
extent that Petrie Retail fails to perform; (ii) Petrie's agree-
ment with Petrie Retail to indemnify it for certain liabilities
relating to Petrie Retail's withdrawal from the Multiemployer
Plan; and (iii) an ongoing dispute with the IRS relating to the
manner in which Petrie computed the basis of shares of Toys
Common Stock transferred in connection with the exchange of
certain of Petrie's exchangeable subordinated debentures in
Petrie's 1989 fiscal year.
Petrie Retail's Bankruptcy
As previously reported, on October 12, 1995, Petrie Retail
filed a voluntary petition for bankruptcy protection under
Chapter 11 of the Federal Bankruptcy Code. As a result of the
bankruptcy filing, Petrie Retail has failed to perform certain of
the Assumed Obligations, including, but not limited to, Assumed
Obligations relating to store leases to which Petrie Retail or an
affiliate thereof is a party, employment agreements and state
taxes. Accordingly, the Liquidating Trust may be required to
make payments in respect of certain of the Assumed Obligations.
The Liquidating Trust intends to file a claim against Petrie
Retail in the Bankruptcy Court in respect of such payments.
Additionally, the Liquidating Trust intends to assert a right of
setoff in respect of any such payments against any claims Petrie
Retail and its affiliates may have against Petrie. The Liquidat-
ing Trust is unable to predict the timing or probability of the
collection of these claims against Petrie Retail.
Store Leases. Since filing its petition for bankruptcy
protection, Petrie Retail has closed approximately 375 of the
roughly 1600 stores it operated prior to filing the petition. Of
the 375 closed stores, 240 relate to rejected leases and the
remainder generally either expired or were terminated by mutual
landlord and tenant consent. The Liquidating Trust, as successor
to Petrie, is a guarantor of approximately 35 of the rejected
leases, and its aggregate guarantee liability on those leases is
approximately $15 million, which the Liquidating Trust, as
successor to Petrie, has accrued in its financial statements at
January 22, 1996. The Liquidating Trust's liability will be
reduced by, among other things, the extent to which new rent-
paying tenants are found for the closed stores.
Additionally, on May 7, 1996, Petrie Retail filed a motion
with the Bankruptcy Court to conduct going-out-of-business sales
at 226 stores and indicated, without identifying the relevant
leases, that it intended to close 12 additional stores where the
leases have expired or are scheduled to expire in the near
future. The Liquidating Trust, as successor to Petrie, is a
guarantor of approximately 35 of these leases. If Petrie Retail
were to close all 35 of the stores under such leases, the Liqui-
dating Trust's aggregate guarantee liability on these leases
would be approximately $13 million, which amount had been includ-
ed in the Liquidating Trust's previous estimates of its contin-
gent liabilities.
No assurance can be given as to how many additional stores
Petrie Retail will close for which the Liquidating Trust, as
successor to Petrie, has guarantee liability. If Petrie Retail
were to close every store for which the Liquidating Trust, as
successor to Petrie, believes it has liability as a lease guaran-
tor, giving effect all the lease guarantee releases executed by
landlords and assuming that no mitigation or defense were suc-
cessful, the Liquidating Trust's theoretical exposure relating to
such leases, without giving effect to any present value discount,
would be approximately $100 million, with approximately $16
million remaining due in the year ending December 31, 1996,
approximately $18 million due in 1997, approximately $16 million
due in 1998 and approximately $50 million due thereafter. As
discussed in Item 1 above, landlords under leases relating to
approximately 146 stores operated by Petrie Retail or an affili-
ate thereof have alleged in a complaint that the Liquidating
Trust, as successor to Petrie, has liability as a guarantor of
certain leases notwithstanding Petrie's receipt from these
landlords of releases of guarantees with respect to such leases.
Based on the complaint, such alleged guarantor liability repre-
sents approximately $85 million in lease payments, without giving
effect to any present value discount or rental payments made by
Petrie Retail since the complaint was filed and assuming that all
of the approximately 146 stores which are the subject of these
landlords' claims are closed and that the landlord in each case
is unable to mitigate its damages. Approximately $2 million of
this total relates to unreleased guarantees which have been
included in the Liquidating Trust's previous estimates of its
contingent lease liability. To date, 19 of the 146 leases,
representing approximately $9.6 million in lease payments, based
on the plaintiffs' liability estimates and without giving effect
to any present value discount or mitigation, have been rejected
by Petrie Retail. An additional 19 of the 146 leases, representing
approximately $11.5 million in lease payments, based on the
plaintiffs' liability estimates and without giving effect to any
present value discount or mitigation, are the subject of Petrie
Retail's May 7, 1996 motion to conduct going-out-of-business
sales at 226 stores. The Liquidating Trust believes it has
substantial legal defenses to these landlords' claims and is
vigorously contesting such claims. Although the Liquidating
Trust considers it unlikely, a decision by a court in favor of
these landlords could have a material adverse effect on the
Liquidating Trust's liquidity and financial condition.
In addition, since Petrie Retail's bankruptcy filing, a
dispute has arisen between the Liquidating Trust, on the one
hand, and Petrie Retail and its affiliates, on the other, as to
whether the Liquidating Trust, as successor to Petrie, or Petrie
Retail and its affiliates is responsible as guarantor of certain
additional leases. The maximum theoretical exposure relating to
such leases, based on the same assumptions set forth in the
preceding paragraph and without giving effect to any present
value discount, would be approximately $33 million, with approxi-
mately $3 million remaining due in the year ending December 31,
1996, approximately $5 million due in 1997, approximately $5
million due in 1998 and approximately $20 million due thereafter.
To date, Petrie Retail has rejected three of such leases, repre-
senting approximately $2 million in potential liability.
Additionally, eleven of these leases, representing approximately
$8 million in potential liability, are the subject of Petrie
Retail's May 7, 1996 motion to conduct going-out-of-business
sales at 226 stores.
The Liquidating Trust's lease exposure calculations reflect
the estimated sum of all base rent and additional rent (such as
taxes and common area charges) due under a lease through the end
of the current lease term, but do not reflect potential penal-
ties, interest and other charges to which a landlord may be
entitled. Such additional charges (which may in part be unen-
forceable) are not expected to materially increase the Liquidat-
ing Trust's lease guarantee liability.
A significant number of the leases discussed above under
which a landlord might claim that the Liquidating Trust, as
successor to Petrie, has liability as a lease guarantor either
expressly contain mitigation provisions or relate to property in
states that imply such provisions as a matter of law. Mitigation
generally requires, among other things, that a landlord of a
closed store seek to reduce its damages including by attempting
to locate a new tenant.
Employment Agreements. On October 23, 1995, Petrie Retail
notified two former executives of Petrie (one of whom is a
current director of Petrie) and Petrie's President and Chief
Executive Officer (who is also a current director of Petrie) that
as a result of Petrie Retail's bankruptcy filing, Petrie Retail
would no longer honor its obligations under the employment
agreements each executive had entered into with Petrie which had
been assumed by Petrie Retail in connection with the sale of
retail operations. On April 25, 1996, the Liquidating Trust,
while preserving its rights against Petrie Retail, entered into
settlement agreements with one of the former executives and
Petrie's President and Chief Executive Officer. Pursuant to the
settlement agreements, the Liquidating Trust agreed to pay each
substantially all the amounts due under their respective agree-
ments with Petrie. The total cost of the settlement to the
Liquidating Trust was approximately $2.9 million (accrued for at
January 22, 1996) of which approximately $2.0 million has been
paid.
State Taxes. On January 12, 1996, Petrie received a notice
of final determination from the New Jersey Division of Taxation
of a liability for New Jersey corporate income tax in the aggre-
gate amount (including interest) of approximately $3.1 million.
The liability, which relates to Petrie's 1987, 1989, 1990, 1991,
1992 and 1993 tax years, was assumed by Petrie Retail in connec-
tion with the Sale. Additionally, the Liquidating Trust, as
successor to Petrie, has been assessed approximately $270,000
(excluding interest) in sales and use taxes for the years 1989
through 1995. The Division of Taxation is currently engaged in
a tax amnesty program which provides for interest to be forgiven
and future penalties to be avoided if payment is made by June 1,
1996 and the taxpayer waives its right to any administrative
and/or judicial appeal of the determination. The Liquidating
Trust, as successor to Petrie, has notified the Division of
Taxation that it intends to participate in the tax amnesty
program, pursuant to which its ultimate liability to the
Division of Taxation, for corporate income and sales and
use taxes, is expected to be approximately $1.2 million.
Multiemployer Plan
Due to underfunding of the Multiemployer Plan, Petrie Retail
and its affiliates incurred withdrawal liability under the
Employee Retirement Income Security Act of 1974, as amended, upon
their withdrawal from the Multiemployer Plan, effective January
31, 1995. Based upon preliminary discussions with the adminis-
trators and trustees of the Multiemployer Plan, the Liquidating
Trust believes that the withdrawal liability allocated to Petrie
Retail and its affiliates, as a result of the withdrawal, will be
approximately $12 million, with an additional liability allocated
to Petrie Retail and its affiliates of approximately $3 million
attributable to the Multiemployer Plan's failure to meet certain
Internal Revenue Code minimum funding standards. In the event of
a mass withdrawal by contributing employers from the
Multiemployer Plan, the withdrawal liability allocated to Petrie
Retail and its affiliates may be higher. Pursuant to the Retail
Operations Stock Purchase Agreement, Petrie Retail and its
affiliates are responsible for the first $10 million in withdraw-
al and related liabilities, with the next $50 million of such
liabilities allocated 75 percent to the Liquidating Trust, as
successor to Petrie, and 25 percent to Petrie Retail and its
affiliates. It is unclear what effect, if any, Petrie Retail's
bankruptcy filing may have upon the timing and amount of any
payments the Liquidating Trust may be required to make under the
agreement with respect to the Multiemployer Plan, but in no event
does the Liquidating Trust believe that its maximum contractual
liability will be increased as a result of Petrie Retail's
bankruptcy filing. See "-- Petrie Retail's Bankruptcy."
IRS Tax Dispute
Upon audit, the agent examining Petrie's tax return for its
fiscal year ended January 28, 1989 raised an issue regarding the
manner pursuant to which Petrie computed the basis of its Toys
Common Stock disposed of in connection with the exchange of
certain of its exchangeable subordinated debentures. The examin-
ing agent has proposed an adjustment to Petrie's taxable income
which would result in an additional federal tax liability,
including interest, of approximately $53 million. The Liquidat-
ing Trust, as successor to Petrie, is contesting the agent's
proposed adjustment in administrative proceedings. If the
Liquidating Trust and the IRS are unable to resolve this matter
in administrative proceedings, the Liquidating Trust intends to
litigate its position. The Liquidating Trust believes that the
agent's proposed adjustment is incorrect as a matter of law.
Depending on how and when this issue is resolved with the IRS,
there also may be due state and local taxes (and interest there-
on).
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical matters, the matters discussed in this
Form 10-Q are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include, but are not
limited to, statements relating to the Liquidating Trust's
contingent liabilities contained above in "Management's Discus-
sion and Analysis of Financial Condition and Results of Opera-
tions" and the Notes to Financial Statements.
The Liquidating Trust wishes to caution readers that in
addition to factors that may be described elsewhere in this Form
10-Q, the following important factors, among others, could cause
the Liquidating Trust's assets and liabilities to differ materi-
ally from those expressed in any forward-looking statements made
by, or on behalf of, the Liquidating Trust, and could materially
affect the Liquidating Trust's financial condition and liquidity:
(1) A decision by Petrie Retail to close additional stores
for which the Liquidating Trust, as successor to Petrie, has
liability as a guarantor;
(2) A decision by Petrie Retail to liquidate while in
Chapter 11 or the conversion of Petrie Retail's bankruptcy case
from Chapter 11 to a case under Chapter 7;
(3) Other actions by Petrie Retail which cause the default
of obligations assumed by Petrie Retail in connection with the
Sale for which the Liquidating Trust, as successor to Petrie, may
be deemed to have liability as the primary obligor;
(4) A decision by a court that the Liquidating Trust, as
successor to Petrie, has liability as a guarantor of certain
leases notwithstanding Petrie's receipt from the landlords
thereunder of releases of guarantees with respect to such leases;
(5) An unfavorable resolution of the Liquidating Trust's
dispute with the IRS with respect to the manner in which Petrie
computed the basis of its Toys Common Stock disposed of in its
fiscal year ended January 28, 1989 in connection with the ex-
change of certain of its exchangeable subordinated debentures;
(6) A material decline in the price per share of Toys
Common Stock;
(7) An adverse material change in general economic condi-
tions and the interest rate environment;
(8) The effects of, and changes in, laws and regulations
and other activities of federal and local governments, agencies
and similar organizations; and
(9) The costs and other effects of other legal and adminis-
trative cases and proceedings, settlements and claims relating to
the Liquidating Trust's contingent liabilities.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The description of legal proceedings involv-
ing the Liquidating Trust provided in Items 1 and
2 of Part I is herein incorporated by reference as
though fully set forth herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) LIST OF EXHIBITS
Exhibit 27 -- Financial Data Schedule
(b) REPORTS ON FORM 8-K
Current Report on Form 8-K, dated as of January
23, 1996, reporting the consummation of the suc-
cession of the Liquidating Trust to the assets and
liabilities of Petrie.
Current Report on Form 8-K, dated as of February
27, 1996, reporting that Petrie, the Liquidating
Trust and the Liquidating Trustees had been sued
by five landlords and their affiliates.
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.
PETRIE STORES LIQUIDATING TRUST
Dated: May 14, 1996 By /s/ STEPHANIE R. JOSEPH
Stephanie R. Joseph
Manager and Chief Executive Officer
Dated: May 14, 1996 By /s/ H. BARTLETT BROWN
H. Bartlett Brown
Assistant Manager, Chief Financial
Officer and Principal Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the Liquidating Trust's statement of net assets in liquida-
tion at March 31, 1996 and the Liquidating Trust's statement of
changes in net assets in liquidation for the period ended March
31, 1996, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 132,187
<SECURITIES> 136,501
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 268,688
<CURRENT-LIABILITIES> 36,147
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 232,541
<TOTAL-LIABILITY-AND-EQUITY> 268,688
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,016
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 29,947
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,947
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
