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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the Transition period from ____________ to ____________
Commission File Number 0-13881
CITY INVESTING COMPANY LIQUIDATING TRUST
(Exact name of registrant as specified in its charter)
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DELAWARE 13-6859211
(State of organization) (I.R.S. Employer Identification No.)
99 UNIVERSITY PLACE, 7TH FLOOR 10003-4528
NEW YORK, NEW YORK (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 473-1918
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Indicate by check mark whether the registrant ( l ) has filed all reports
required to be filed by Section 13 or l5(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.
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Yes X No
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At March 31, 1996 there were 38,979,372 Trust Units of Beneficial Interest
outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31
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(IN THOUSANDS, EXCEPT PER UNIT DATA) 1996 1995
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Losses on dispositions of assets, net $ (6) $ (69)
Interest, dividend and other income 1,676 458
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Total income 1,670 389
Administrative expenses 80 62
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NET INCOME $ 1,590 $ 327
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NET INCOME PER UNIT $ 0.04 $ 0.01
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OUTSTANDING UNITS 38,979 38,979
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BALANCE SHEETS
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(IN THOUSANDS) MARCH 31, DECEMBER 31,
1996 1995
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ASSETS
Cash and cash equivalents $ 374 $ 217
Investment securities 54,227 53,078
Restricted funds 4,497 4,213
Investments 609 609
Real estate 4,675 4,675
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TOTAL ASSETS $ 64,382 $ 62,792
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LIABILITIES AND TRUST EQUITY
Accounts payable $ 235 $ 235
Trust equity 64,147 62,557
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TOTAL LIABILITIES AND TRUST EQUITY $ 64,382 $ 62,792
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
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(IN THOUSANDS) 1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,590 $ 327
Adjustments to reconcile net income to net cash provided by
(used for) operating activities:
Interest income earned on investment in U.S. Treasuries (1,493) (348)
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Net cash provided by (used for) operating activities 97 (21)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of U.S. Treasuries 28,236 14,588
Purchases of U.S. Treasuries (27,892) (14,274)
Restricted funds (284) (42)
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Net cash provided by investing activities 60 272
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Net increase in cash and cash equivalents 157 251
Cash and cash equivalents at beginning of year 217 108
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 374 $ 359
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STATEMENTS OF CHANGES IN TRUST EQUITY
THREE MONTHS ENDED MARCH 31
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(IN THOUSANDS) 1996 1995
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Balance at December 31 $62,557 $62,105
Net income 1,590 327
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BALANCE AT MARCH 31 $64,147 $62,432
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1- ORGANIZATION
The March 3l, 1996 financial statements for the City Investing Company
Liquidating Trust (the "Trust") are unaudited and subject to year-end
adjustments. In the opinion of the Trustees, the interim financial statements
reflect all adjustments necessary for a fair presentation of the financial
position and income and expenses of the Trust. Results for interim periods are
not necessarily indicative of results for the full year.
NOTE 2 - BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the basis of
accounting used for Federal income tax purposes. Accordingly, certain revenue
and the related assets are recognized when received rather than when earned; and
certain expenses are recognized when paid rather than when the obligation is
incurred.
NOTE 3 - LOSSES ON DISPOSITIONS OF ASSETS
Losses on dispositions of assets, net, include settlement costs and legal fees
attributable to the disposition of assets incurred in connection with the
defense of litigation against the Trust.
NOTE 4 - TRUST AGREEMENT
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge all litigation and other contingent
liabilities of City Investing Company ("City") which existed on September 25,
1985.
NOTE 5 - INVESTMENT SECURITIES
Investment securities consist of U.S. Treasuries with maturities of less than
one year and are carried at cost. Investment securities consist of the
following:
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MARCH 31, 1996 DECEMBER 31, 1995
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CARRYING FAIR CARRYING FAIR
(IN THOUSANDS) VALUE COST VALUE VALUE COST VALUE
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U.S. Treasuries
maturing within
one year $54,227 $54,227 $55,275 $53,078 $53,078 $55,085
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The gross unrealized gains on investment securities, at March 31, 1996 and
December 31, 1995, are $1,048,000 and $2,007,000, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - RESTRICTED FUNDS
Restricted funds represent funds held in escrow in connection with the
following:
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MARCH 31, DECEMBER 31,
(IN THOUSANDS) 1996 1995
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City Investing Company Liquidating Trust
v. Continental Casualty $ 3,608 $ 3,391
Tapken v. Brown, et al. 550 550
Mortgage Maturing, May 1996 336 268
Other 3 4
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Total restricted funds $ 4,497 $ 4,213
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[See Part II, Item 1., "Legal Proceedings," for further information.]
NOTE 7- INVESTMENTS
Investments are as follows:
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MARCH 31, DECEMBER 31,
(IN THOUSANDS) 1996 1995
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Cayman Resources Corporation $ 27 $ 27
Other Investments 582 582
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Total investments $ 609 $ 609
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The Trust holds 3,108,105 shares of Cayman Resources Corporation ("Cayman")
common stock, which are carried at their tax basis. At March 31, 1996 and
December 31, 1995, the fair market value of the Cayman stock, based on quoted
market prices, was $155,000 and $96,000, respectively.
NOTE 8 - REAL ESTATE
Prior to January 2, 1990 the Trust held an undivided interest in a note received
from Texas City Investment Company ("Texas City") in connection with a sale of
land located in Galveston County, Texas on July 22, 1983. Texas City failed to
fully pay the note in accordance with its terms. On January 2, 1990 the
beneficial owners of the note (including the Trust) foreclosed on the property
securing the note and the Trust now holds an undivided interest in the property.
The Trust's interest in the property is classified as real estate in the
accompanying financial statements and valued at the January 2, 1990 fair market
value of $4,675,000.
NOTE 9 - CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge all litigation and other contingent
liabilities of City which existed at September 25, 1985. The Trust may have a
contingent liability with respect to certain issues raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed with
respect to periods ending on or before September 25, 1985. These issues, if
resolved unfavorably to City, would result in a substantial liability. As other
parties are primarily and jointly responsible for this contingent liability, the
Trust is unable to estimate the ultimate cost, if any, of its exposure. The
Trust also remains subject to possible claims by the United States Environmental
Protection Agency and other third parties.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10- DIVIDEND RESTRICTIONS
The existence of the contingent liabilities referred to in Note 9 may affect the
timing of future distributions of Trust assets. In connection with the
proceeding entitled Rolo and Tenerelli v. City Investing Company Liquidating
Trust, et al. the Trust is unable to make any dividend payments or liquidating
distributions without further judicial action.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Trust recorded net income of $1,590,000 ($0.04 per unit) in the first
quarter ended March 31, 1996, compared to net income of $327,000 ($0.01 per
unit) in the first quarter of 1995. It is difficult to compare amounts in
comparable periods, as the financial statements of the Trust are prepared on the
basis of accounting used for Federal income tax purposes; that is, amounts are
reflected in the financial statements when amounts are received or paid.
The losses on the dispositions of assets of $6,000 in the first quarter of 1996
and $69,000 in the first quarter of 1995 were principally attributable to legal
fees incurred in connection with the defense of litigation against the Trust.
Interest, dividend and other income, principally consisting of interest earned
on the investment of cash equivalents and investment securities was $1,676,000
in the first quarter of 1996, compared with $458,000 in the respective 1995
period. The increase in the 1996 period was due to the timing of the recognition
of interest income, increase in cash attributable to the Trust's sale of its
interest in Pace/City Associates, L.P. ("PCA") and an increase in yield on
investment securities compared to the 1995 period. Administrative expenses were
$80,000 and $62,000 in the first quarter of 1996 and 1995, respectively. The
primary reason that 1996 first quarter administrative expenses are higher than
1995 is that there was no administration fee paid in the first quarter of 1995.
At March 31, 1996, the Trust had cash and cash equivalents, investment
securities and restricted funds of $59,098,000. The Trustees believe that such
cash resources and investment securities are sufficient to meet all anticipated
liquidity requirements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information contained under Legal Proceedings in the Trust's Annual Report
on Form 10-K for the year ended December 31, 1995 is incorporated by reference
herein. Except as set forth below, there have been no material developments in
such legal proceedings subsequent to the date of that information.
City Investing Company Liquidating Trust v. Continental Casualty Co. On March
27, 1996, the United States Court of Appeals for the Eleventh Circuit reversed
the District Court's holding that the Florida Department of Revenue ("DOR")
claim against General Development Corporation ("GDC") was entitled to priority
under the bankruptcy law. Had that decision been sustained, the Trust has been
advised that the bankrupt estate of GDC retains sufficient assets to satisfy
priority claims and the amount currently held in escrow by Bank of Delaware
(approximately $3,608,000) would have been returned to the Trust. If the DOR
claim is not entitled to priority, some part or all of the escrowed amount will
be required to be paid by the escrow agent to the DOR. The Trust intends to seek
review of the Eleventh Circuit decision by the United States Supreme Court.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
The Registrant was not required to file a Current Report on Form 8-K during
the quarter ended March 31, 1996.
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.
CITY INVESTING COMPANY LIQUIDATING TRUST
Date: April 20, 1996 By: LESTER J. MANTELL
Trustee
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