<PAGE>
<PAGE>
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, 1998
[ ] 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)
<TABLE>
<S> <C>
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)
</TABLE>
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
----- ----
At September 30, 1998 there were 38,979,372 Trust Units of Beneficial Interest
outstanding.
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF INCOME
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
THIRD QUARTER NINE MONTHS
($ IN THOUSANDS, EXCEPT PER UNIT DATA) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gains (losses) on dispositions of assets, net $ 20 $(12) $ (68) $ (108)
Interest, dividend and other income 852 840 2,654 2,235
- --------------------------------------------------------------------------------------------------
Total income 872 828 2,586 2,127
Administrative expenses 38 55 180 188
- --------------------------------------------------------------------------------------------------
NET INCOME $834 $773 $2,406 $1,939
- --------------------------------------------------------------------------------------------------
NET INCOME PER UNIT $0.02 $0.02 $ 0.06 $ 0.05
- --------------------------------------------------------------------------------------------------
OUTSTANDING UNITS 38,979 38,979 38,979 38,979
- --------------------------------------------------------------------------------------------------
</TABLE>
Balance Sheets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
($ IN THOUSANDS) 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $113 $243
U.S. Treasury Bills 64,053 58,541
Restricted funds 3 2,968
Investments 609 609
Real estate 4,617 4,628
- --------------------------------------------------------------------------------------------------
TOTAL ASSETS $69,395 $66,989
- --------------------------------------------------------------------------------------------------
LIABILITIES AND TRUST EQUITY
Trust equity $69,395 $66,989
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND TRUST EQUITY $69,395 $66,989
- --------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
- 1 -
<PAGE>
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
($ IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,406 $1,939
Adjustments to reconcile net income to net cash (used for) provided by operating
activities:
Gain on sale of real estate (20) 0
Interest income earned on investment in U.S. Treasuries (2,444) (1,621)
- ------------------------------------------------------------------------------------------------------------------
Net cash (used for) provided by operating activities (58) 318
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 31 0
Maturities of U.S. Treasuries 47,770 44,410
Purchases of U.S. Treasuries (50,838) (44,127)
Restricted funds, net 2,965 (308)
- -------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (72) (25)
- -------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (130) 293
Cash and cash equivalents at beginning of year 243 78
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $113 $371
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN TRUST EQUITY
NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
($ IN THOUSANDS) 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at December 31 $66,989 $65,504
Net income 2,406 1,939
- -------------------------------------------------------------------------------------------------------------------
Balance at September 30 $69,395 $67,443
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
- 2 -
<PAGE>
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The September 30, 1998 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;
certain expenses are recognized when paid rather than when the obligation is
incurred; and assets are reflected at their tax basis.
NOTE 3 - GAINS (LOSSES) ON DISPOSITIONS OF ASSETS
Gains (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>
- -------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1998 DECEMBER 31, 1997
-------------------------------------- ---------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE COST VALUE VALUE COST VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasuries
maturing within
one year $64,053 $64,053 $65,983 $58,541 $58,541 $60,182
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The gross unrealized gains on investment securities, at September 30, 1998 and
December 31, 1997, are $1,930 and $1,641, respectively.
- 3 -
<PAGE>
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
NOTE 6 - RESTRICTED FUNDS
Restricted funds represent funds held in escrow in connection with the
following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
City Investing Company Liquidating Trust
v. Continental Casualty $0 $2,965
Other 3 3
- -------------------------------------------------------------------------------------------------------------------
Total restricted funds $3 $2,968
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Part II, Item 1. "Legal Proceedings" for further information.
NOTE 7 - INVESTMENTS
Investments are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Oklahoma Energy Corp. $ 27 $ 27
Global Bancorporation 582 582
- -------------------------------------------------------------------------------------------------------------------
Total investments $609 $ 609
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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, 1998 and December 31, 1997, the fair market value of the
Oklahoma Energy stock, based on quoted market prices, was $155 and $137,
respectively. The Trust holds 10,000 shares of Global Bancorporation which are
carried at their tax basis. It is currently projected that a final liquidating
distribution will be received by the Trust in respect of those Global
Bancorporation shares in the amount of $20.
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. The Trust now holds an undivided interest in the
property classified as real estate, which is valued at the January 2, 1990 fair
market value. The Trust realized a long term gain of $81 on two 1996 sales of
approximately two per cent of the real estate. The Trust realized a long term
gain of $20 on a sale of approximately one-half of one per cent of the real
estate during the third quarter of 1998.
NOTE 9 - LITIGATION AND OTHER CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge all litigation and other contingent
liabilities of City which existed at September 25, 1985. The Trust may have a
contingent liability with respect to certain issues raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed with
respect to periods ending on or before
- 4 -
<PAGE>
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
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.
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.
NOTE 11 - NASDAQ LISTING
The Trust has come into compliance with NASDAQ's minimum $1.00 bid price
requirement, as the units traded at a closing bid price of $1.00 or greater for
more than ten consecutive trading days in August.
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 $834 ($0.02 per unit) in the third quarter of
1998 and net income of $2,406 ($0.06 per unit) in the nine-month period ended
September 30, 1998, compared with $773 ($0.02 per unit) and a net income of
$1,939 ($0.05 per unit) in the corresponding 1997 periods. In the third quarter
of 1998, a gain on disposition of assets of $20 was attributable to the sale of
approximately one-half of one per cent of the Trust's real estate. The losses on
dispositions of assets, net, reflect losses of $68 in the nine-month period of
1998; $12 in the third quarter of 1997; and $108 in the nine-month period of
1997 attributable primarily 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 $852 and
$2,654 in the third quarter and nine months ended September 30, 1998, and $840
and $2,235 in the corresponding 1997 periods. The primary reason for the
increase 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 $38 and $180 for the third quarter
and nine months of 1998, compared with $55 and $188 for the comparable 1997
periods.
At September 30, 1998, the Trust had cash and cash equivalents and U. S.
Treasury Bills of $64,166. The Trustees believe that such cash resources and
investment securities are sufficient to meet all anticipated liquidity
requirements.
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, 1997 and Forms 10-Q for the
quarters ended March 31, 1998 and June 30, 1998 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.
- 5 -
<PAGE>
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
Rolo and Tenerelli v. City Investing Company Liquidating Trust, et al.
Plaintiffs are owners of lots and houses who have instituted this putative class
action as members of the North Port Out-Of-State Lot Owners' Association on
behalf of all persons who purchased lots or houses from General Development
Corporation ("GDC").
The action has been filed in the U.S. District Court for the District of New
Jersey. An amended complaint filed in May 1991 names as defendants AmBase
Corporation ("AmBase"), the Trust, The Home Insurance Company, Carteret Savings
Bank, and certain individual former and current directors and officers of AmBase
and City and trustees of the Trust, and certain financial institutions. The
amended complaint contains eight counts and pleads RICO and securities law
violations, as well as state common law causes of action for breach of contract,
fraud, negligence and negligent misrepresentation. Equitable and injunctive
relief is sought, as well as damages.
On August 31, 1998, the United States Court of Appeals affirmed dismissal of
this case. Plaintiffs can seek review of the Circuit Court's decision by the
Supreme Court any time before November 30, 1998. Pending final resolution of
this appeal, the Trust is unable to make any dividend payments or liquidation
distributions without further judicial action. For information concerning other
restrictions on dividend payments or liquidating distributions, see Note 9 to
Financial Statements - Litigation and Other Contingent Liabilities.
ITEM 2. CHANGES IN SECURITIES
Trust Units of Beneficial Interest. On July 28, 1998, the Trustees amended the
Trust agreement to extend the existence of the Trust (and thereby the existence
of the Trust Units) until the earlier of (a) the complete distribution of the
Trust Estate or (b) September 25, 1999, unless an earlier termination is
required by the applicable laws of the State of Delaware or by the action of the
Beneficiaries as provided in Section 4.2 of the Trust Agreement or a later
termination is required by the Trustees pursuant to Section 6.2 (q) of the Trust
Agreement.
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, 1998.
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: October 16, 1998 By: /s/ Lester J. Mantell
--------------------------------------
Lester J. Mantell, Trustee
- 6 -
<PAGE>
<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
September 30, 1998 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-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 113
<SECURITIES> 64,053
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 69,395
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 69,395
<TOTAL-LIABILITY-AND-EQUITY> 69,395
<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> 834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 834
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
