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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, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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)
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
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
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At March 31, 1997 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
<TABLE>
<CAPTION>
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(IN THOUSANDS, EXCEPT PER UNIT DATA) 1997 1996
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<S> <C> <C>
Losses on dispositions of assets, net $(94) $(6)
Interest, dividend and other income 504 1,676
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Total income 410 1,670
Administrative expenses 72 80
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NET INCOME $338 $1,590
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NET INCOME PER UNIT $0.01 $0.04
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OUTSTANDING UNITS 38,979 38,979
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<CAPTION>
BALANCE SHEETS
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MARCH 31, DECEMBER 31,
($ IN THOUSANDS) 1997 1996
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<S> <C> <C>
ASSETS
Cash and cash equivalents $58 $78
Investment securities 56,588 56,438
Restricted funds 3,959 3,751
Investments 609 609
Real estate 4,628 4,628
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TOTAL ASSETS $65,842 $65,504
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LIABILITIES AND TRUST EQUITY
Trust equity $65,842 $65,504
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TOTAL LIABILITIES AND TRUST EQUITY $65,842 $65,504
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</TABLE>
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
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<CAPTION>
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($ IN THOUSANDS) 1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $338 $1,590
Adjustments to reconcile net income to net cash provided by (used for) operating
activities:
Interest income earned on investment in U.S. Treasuries (43) (1,493)
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Net cash provided by operating activities 295 97
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CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of U.S. Treasuries 14,107 28,236
Purchases of U.S. Treasuries (14,214) (27,892)
Restricted funds (208) (284)
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Net cash (used for) provided by investing activities (315) 60
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Net (decrease) increase in cash and cash equivalents (20) 157
Cash and cash equivalents at beginning of year 78 217
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $58 $374
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</TABLE>
STATEMENTS OF CHANGES IN TRUST EQUITY
THREE MONTHS ENDED MARCH 31
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<CAPTION>
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($ IN THOUSANDS) 1997 1996
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<S> <C> <C>
Balance at December 31 $65,504 $62,557
Net income 338 1,590
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BALANCE AT MARCH 31 $65,842 $64,147
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</TABLE>
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The March 31, 1997 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 as prepared on a Federal income
tax basis. 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:
<TABLE>
<CAPTION>
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MARCH 31, 1997 DECEMBER 31, 1996
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CARRYING FAIR CARRYING FAIR
VALUE COST VALUE VALUE COST VALUE
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<S> <C> <C> <C> <C> <C> <C>
U.S. Treasuries
maturing within
one year $56,588 $56,588 $58,066 $56,438 $56,438 $57,385
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</TABLE>
The gross unrealized gains on investment securities, at March 31, 1997 and
December 31, 1996, are $1,478 and $947, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
NOTE 6 - RESTRICTED FUNDS
Restricted funds represent funds held in escrow in connection with the
following:
<TABLE>
<CAPTION>
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MARCH 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
City Investing Company Liquidating Trust
v. Continental Casualty $3,956 $3,748
Other 3 3
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Total restricted funds $3,959 $3,751
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</TABLE>
See Part II, Item 1., "Legal Proceedings," for further information.
NOTE 7 - INVESTMENTS
Investments are as follows:
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<CAPTION>
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MARCH 31, DECEMBER 31,
1997 1996
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<S> <C> <C>
Cayman Resources Corporation $27 $27
Other investments 582 582
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Total investments $609 $609
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</TABLE>
The Trust holds 3,108,105 shares of Cayman Resources Corporation ("Cayman")
common stock, which are carried at their tax basis. At March 31, 1997 and
December 31, 1996, the fair market value of the Cayman stock, based on quoted
market prices, was $155 and $124, respectively.
NOTE 8 - REAL ESTATE
Prior to January 2, 1990, the Trust held an undivided interest in a July 22,
1983 note received from Texas City Investment Company ("Texas City") in
connection with a sale of land located in Galveston County, Texas. 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, less $47, the carrying value of two parcels sold on
April 15, 1996. The Trust realized a long term gain of $81 on the April 15, 1996
sale of approximately two per cent of the real estate.
NOTE 9 - CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge all litigation and other contingent
liabilities of City which existed at September 25, 1985. The Trust may have a
contingent liability with respect to certain issues raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed with
respect to periods ending on or before September 25, 1985. These issues, if
resolved unfavorably to City, would result in a substantial liability. As other
parties are primarily and jointly responsible for this contingent liability, the
Trust is unable to estimate the ultimate cost, if any, of its exposure. The
Trust also remains subject to possible claims by the United States Environmental
Protection Agency and other third parties.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
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
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 Trust recorded net income of $338 ($0.01
per unit) in the first quarter ended March 31, 1997, compared to net income of
$1,590 ($0.04 per unit) in the first quarter of 1996. The losses on the
dispositions of assets of $94 in the first quarter of 1997 and $6 in the first
quarter of 1996 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 $504 in the first quarter of
1997, compared with $1,676 in the first quarter of 1996. The decrease in the
1997 period was due to the timing of the recognition of interest income and a
decrease in yield on investment securities compared to the 1996 period.
Administrative expenses were $72 and $80 in the first quarter of 1997 and 1996.
At March 31, 1997, the Trust had cash and cash equivalents, investment
securities and restricted funds of $60,605. 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, 1996 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.
Income Tax Matters. The issue currently pending before the Tax Court of the
United States as to which the Trust may have a contingent liability was the
subject of a one-day trial on March 24, 1997. The Tax Court requested briefing
on several issues and reserved decision on the matter.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 Financial Data Schedule.
(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, 1997.
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 18, 1997 By: LESTER J. MANTELL
Trustee
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in Item 1 of Form 10-Q for the period
ended March 31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 58
<SECURITIES> 56,588
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 65,842
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 65,842
<TOTAL-LIABILITY-AND-EQUITY> 65,842
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 338
<DISCONTINUED> 0
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<NET-INCOME> 338
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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