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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, 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)
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, 1998 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) 1998 1997
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<S> <C> <C>
Losses on dispositions of assets, net $(65) $(94)
Interest, dividend and other income 867 504
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Total income 802 410
Administrative expenses 93 72
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NET INCOME $709 $338
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NET INCOME PER UNIT $0.02 $0.01
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OUTSTANDING UNITS 38,979 38,979
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<CAPTION>
BALANCE SHEETS
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MARCH 31, DECEMBER 31,
($ IN THOUSANDS) 1998 1997
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<S> <C> <C>
ASSETS
Cash and cash equivalents $81 $243
U.S. Treasury Bills 62,377 58,541
Restricted funds 3 2,968
Investments 609 609
Real estate and mortgage receivable (net of unrealized gain) 4,628 4,628
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TOTAL ASSETS $67,698 $66,989
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LIABILITIES AND TRUST EQUITY
Trust equity $67,698 $66,989
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TOTAL LIABILITIES AND TRUST EQUITY $67,698 $66,989
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</TABLE>
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
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($ IN THOUSANDS) 1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $709 $338
Adjustments to reconcile net income to net cash (used for)
provided by operating activities:
Interest income earned on investment in U.S. Treasuries (738) (43)
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Net cash (used for) provided by operating activities (29) 295
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CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of U.S. Treasuries 14,952 14,107
Purchases of U.S. Treasuries (18,050) (14,214)
Restricted funds 2,965 (208)
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Net cash used for investing activities (133) (315)
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Net decrease in cash and cash equivalents (162) (20)
Cash and cash equivalents at beginning of year 243 78
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $81 $58
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STATEMENTS OF CHANGES IN TRUST EQUITY
THREE MONTHS ENDED MARCH 31
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($ IN THOUSANDS) 1998 1997
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Balance at December 31 $66,989 $65,504
Net income 709 338
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BALANCE AT MARCH 31 $67,698 $65,842
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</TABLE>
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The March 31, 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; and
certain expenses are recognized when paid rather than when the obligation is
incurred; and assets are reflected at their tax basis.
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 certain 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. Treasury Bills with maturities of less
than one year and are carried at cost. Investment securities consist of the
following:
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MARCH 31, 1998 DECEMBER 31, 1997
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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. Treasury Bills
maturing within
one year $62,377 $62,377 $64,088 $58,541 $58,541 $60,182
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</TABLE>
The gross unrealized gains on investment securities, at March 31, 1998 and
December 31, 1997, were $1,711 and $1,641, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
NOTE 6 - RESTRICTED FUNDS
Restricted funds represent funds held in escrow in connection with the
following:
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<CAPTION>
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MARCH 31, DECEMBER 31,
1998 1997
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City Investing Company Liquidating Trust
v. Continental Casualty $0 $2,965
Other 3 3
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Total restricted funds $3 $2,968
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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,
1998 1997
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Oklahoma Energy Corp. $27 $27
Global Bancorporation 582 582
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Total investments $609 $609
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</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 March 31, 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, and a mortgage receivable. The Trust realized a long term gain of
$81 on two 1996 sales of approximately two per cent of the real estate. The
Trust has projected that later in 1998, a long term gain of $22 will be realized
when the proceeds are collected on a sale of approximately one-half of one per
cent of the real estate.
NOTE 9 - LITIGATION AND OTHER CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge certain litigation and other
contingent liabilities of City which existed at September 25, 1985. The Trust
may have a contingent liability with respect to certain issues raised by the
Internal Revenue Service upon audit of tax returns of City Investing Company
filed with respect to periods ending
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
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.
NOTE 10 - DIVIDEND RESTRICTIONS
The existence of the litigation and other 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 $709 ($0.02 per unit) in the first quarter
ended March 31, 1998, compared to net income of $338 ($0.01 per unit) in the
first quarter of 1997. The losses on the dispositions of assets, net, reflect
losses of $65 in the first quarter of 1998 and $94 in the first quarter of 1997
attributable primarily to legal fees incurred in connection with the defense of
litigation against the Trust. The Trust received the $2,965 escrow balance
remaining after the Continental Casualty Co. settlement of $1,150 was paid in
1997.
Interest, dividend and other income, principally consisting of interest earned
on the investment of cash equivalents and investment securities was $867 in the
first quarter of 1998, compared with $504 in the first quarter of 1997. The
increase in the 1998 period was due to the timing of the recognition of interest
income net of a decrease in yield on investment securities compared to the 1997
period. Administrative expenses were $93 and $72 in the first quarters of 1998
and 1997, respectively. The increase of administrative expenses in 1998 was due
to the payments in the first quarter of 1998 of transfer agent services, as well
as Form 10-K printing and report mailing costs.
At March 31, 1998, the Trust had cash and cash equivalents and U. S. Treasury
Bills of $62,458. 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, 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.
City Investing Company Liquidating Trust v. Continental Casualty Co. The Trust
received the $2,965,000 escrow balance remaining after the Continental Casualty
Co. settlement of $1,150,000 was paid in 1997.
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, 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: April 28, 1998 By: LESTER J. MANTELL
Trustee
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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 March
31, 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> MAR-31-1998
<CASH> 81
<SECURITIES> 62,377
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 67,698
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 67,698
<TOTAL-LIABILITY-AND-EQUITY> 67,698
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
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<OTHER-EXPENSES> 0
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<INCOME-CONTINUING> 709
<DISCONTINUED> 0
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<NET-INCOME> 709
<EPS-PRIMARY> 0
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