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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 September 30, 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 September 30, 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
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30
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THIRD QUARTER NINE MONTHS
(IN THOUSANDS, EXCEPT PER UNIT DATA) 1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Losses on dispositions of assets, net $(12) $(173) $(108) $(156)
Interest, dividend and other income 840 885 2,235 3,402
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Total income 828 712 2,127 3,246
Administrative expenses 55 60 188 226
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NET INCOME $773 $652 $1,939 $3,020
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NET INCOME PER UNIT $0.02 $0.02 $0.05 $0.08
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OUTSTANDING UNITS 38,979 38,979 38,979 38,979
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BALANCE SHEETS
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SEPTEMBER 30, DECEMBER 31,
($ IN THOUSANDS) 1997 1996
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<S> <C> <C>
ASSETS
Cash and cash equivalents $371 $78
Investment securities 57,776 56,438
Restricted funds 4,059 3,751
Investments 609 609
Real estate 4,628 4,628
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TOTAL ASSETS $67,443 $65,504
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LIABILITIES AND TRUST EQUITY
Trust equity $67,443 $65,504
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TOTAL LIABILITIES AND TRUST EQUITY $67,443 $65,504
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</TABLE>
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30
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($ IN THOUSANDS) 1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,939 $3,020
Adjustments to reconcile net income to
net cash used for operating activities:
Gain on sale of real estate 0 (82)
Interest income earned on investment in U.S. Treasuries (1,621) (3,035)
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Net cash provided by (used for) operating activities 318 (97)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 0 129
Maturities of U.S. Treasuries 44,410 56,779
Purchases of U.S. Treasuries (44,127) (56,929)
Restricted funds, net (308) (39)
Other, net 0 54
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Net cash used for investing activities (25) (6)
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Net increase (decrease) in cash and cash equivalents 293 (103)
Cash and cash equivalents at beginning of year 78 217
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $371 $114
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STATEMENT OF CHANGES IN TRUST EQUITY
NINE MONTHS ENDED SEPTEMBER 30
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($ IN THOUSANDS) 1997 1996
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Balance at December 31 $65,504 $62,557
Net income 1,939 3,020
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BALANCE AT SEPTEMBER 30 $67,443 $65,577
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</TABLE>
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The September 30, 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:
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SEPTEMBER 30, 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 $57,776 $57,776 $59,388 $56,438 $56,438 $57,385
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</TABLE>
The gross unrealized gains on investment securities, at September 30, 1997 and
December 31, 1996, are $1,612 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:
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SEPTEMBER 30, DECEMBER 31,
1997 1996
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City Investing Company Liquidating Trust
v. Continental Casualty $4,056 $3,748
Other 3 3
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Total restricted funds $4,059 $3,751
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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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SEPTEMBER 30, DECEMBER 31,
1997 1996
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<S> <C> <C>
Oklahoma Energy Corp. $ 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 Oklahoma Energy Corp., previously known as
Cayman Resources Corporation common stock, which are carried at their tax basis.
At September 30, 1997 and December 31, 1996, the fair market value of the
Oklahoma Energy 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 $47, the carrying value of two parcels sold on
April 15, 1996.
NOTE 9 - CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge all litigation and other contingent
liabilities of City which existed at September 25, 1985. The Trust may have a
contingent liability with respect to certain issues raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed with
respect to periods ending on or before September 25, 1985. These issues, if
resolved unfavorably to City, would result in a substantial liability. As other
parties are primarily and jointly responsible for this contingent liability, the
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
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.
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 $773 ($0.02
per unit) in the third quarter of 1997 and net income of $1,939 ($0.05 per unit)
in the nine-month period ended September 30, 1997, compared with $652 ($0.02 per
unit) and a net income of $3,020 ($0.08 per unit) in the corresponding 1996
periods. Interest, dividend and other income, principally consisting of interest
earned on the investment of cash equivalents and investment securities, was $840
and $2,235 in the third quarter and nine months ended September 30, 1997, and
$885 and $3,402 in the corresponding 1996 periods. The primary reason for the
decrease in net income and income from investment securities for the third
quarter and nine-month periods was due to the timing of the recognition of
interest income. Administrative expenses were $55 and $188 for the third quarter
and nine months of 1997, compared with $60 and $226 for the comparable 1996
periods. The primary reason that 1997 administrative expenses were less than
1996 is that there was a reduction in legal costs of the Trust.
At September 30, 1997, the Trust had cash and cash equivalents, investment
securities and restricted funds of $62,206. 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 and Forms 10-Q for the
quarters ended March 31, 1997 and June 30, 1997 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.
Marina Pacifica: Environmental Protection Agency Claim. On September 30, 1997,
the EPA sent a special notice letter to all PRPs, including Marina Pacifica,
demanding payment of unreimbursed costs incurred by the government as of June
30, 1997, of at least $28.9 million. The EPA also requested a good-faith offer
to perform or pay for the final remedial measures covered by the September 1996
Record of Decision which it estimates will cost $289 million. The EPA included
an updated list of 280 PRPs on which Marina Pacifica appeared 84th in volumetric
terms. The Trust is considering what response, if any, to make. Counsel has
advised that, based on its volumetric share and other material factors, actual
payments, if any, required of Marina Pacifica would be a small fraction of the
$576 million estimated costs of the remediation effort, comprised of the $287
million cost of initial stages of remediation and the $289 million cost of final
remediation measures.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
1. 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 September 30, 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
By: /s/ Lester J. Mantell
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Lester J. Mantell, Trustee
Date: October 16, 1997
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<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
September 30, 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> SEP-30-1997
<CASH> 371
<SECURITIES> 57,776
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
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<TOTAL-ASSETS> 67,443
<CURRENT-LIABILITIES> 0
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0
0
<OTHER-SE> 67,443
<TOTAL-LIABILITY-AND-EQUITY> 67,443
<SALES> 0
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<INCOME-CONTINUING> 1,939
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<NET-INCOME> 1,939
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