<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 June 30, 1999
[ ] 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)
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<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)
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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 June 30, 1999 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
SECOND QUARTER AND SIX MONTHS ENDED JUNE 30
(UNAUDITED)
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SECOND QUARTER SIX MONTHS
$ IN THOUSANDS, EXCEPT PER UNIT DATA) 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Losses on dispositions of assets, net ($16) ($23) ($29) ($88)
Interest, dividend and other income 829 935 1,615 1,802
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Total income 813 912 1,586 1,714
Administrative expenses 54 49 140 142
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NET INCOME $759 $863 $1,446 $1,572
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NET INCOME PER UNIT $0.02 $0.02 $0.04 $ 0.04
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OUTSTANDING UNITS 38,979 38,979 38,979 38,979
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BALANCE SHEETS
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<CAPTION>
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(UNAUDITED)
JUNE 30, DECEMBER 31,
($ IN THOUSANDS) 1999 1998
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<S> <C> <C>
ASSETS
Cash and cash equivalents $36 $87
U.S. Treasury Bills 66,333 64,837
Restricted funds 4 3
Investments 609 609
Real estate 4,617 4,617
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TOTAL ASSETS $71,599 $70,153
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LIABILITIES AND TRUST EQUITY
Trust equity $71,599 $70,153
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TOTAL LIABILITIES AND TRUST EQUITY $71,599 $70,153
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30
(UNAUDITED)
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<CAPTION>
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($ IN THOUSANDS) 1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,446 $1,572
Adjustments to reconcile net income to
net cash used for operating activities:
Interest income earned on investment in U.S. Treasuries (1,545) (1,610)
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Net cash used for operating activities (99) (38)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of investment securities 33,595 31,361
Purchases of investment securities (33,546) (34,449)
Restricted funds (1) 2,965
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Net cash provided by (used for) investing activities 48 (123)
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Net decrease in cash and cash equivalents (51) (161)
Cash and cash equivalents at beginning of year 87 243
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $36 $82
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STATEMENTS OF CHANGES IN TRUST EQUITY
SIX MONTHS ENDED JUNE 30
(UNAUDITED)
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<CAPTION>
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($ IN THOUSANDS) 1999 1998
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<S> <C> <C>
Balance at December 31 $70,153 $66,989
Net income 1,446 1,572
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BALANCE AT JUNE 30 $71,599 $68,561
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
Notes to Financial Statements
($ in thousands)
----------------
NOTE 1 - ORGANIZATION
The June 30, 1999 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 - 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 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. The fair value of U.S. Treasuries is
based on quoted market prices. Investment securities consist of the following:
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JUNE 30, 1999 DECEMBER 31, 1998
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CARRYING FAIR CARRYING FAIR
($ IN THOUSANDS) 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 $66,333 $66,333 $67,945 $64,837 $64,837 $66,621
====================================================================================================================
</TABLE>
The gross unrealized gains on investment securities at June 30, 1999 and
December 31, 1998, are $1,612 and $1,784, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
----------------
NOTE 6 - RESTRICTED FUNDS
Restricted funds at June 30, 1999 and December 31, 1998 represent a rent deposit
of $4 and $3, respectively.
NOTE 7 - INVESTMENTS
Investments are as follows:
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JUNE 30, DECEMBER 31,
($ IN THOUSANDS) 1999 1998
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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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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 June 30, 1999 and December 31, 1998, the fair market value of the Oklahoma
Energy stock, based on quoted market prices, was $159 and $176, 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.
During 1998, a Geophysical Option Agreement was executed to sell oil and gas
leases on the property. The Agreement provided the Trust with $87 of income. In
April 1999, 212 acres were leased and the Trust received an additional $14.
On October 27, 1998, $47 allocable to the Trust was paid into escrow in
accordance with an Earnest Money Contract. The Contract, which has been amended
twice, currently permits a closing as late as October 23, 1999, at which 37 per
cent of the acreage would be purchased for $2,643 cash allocable to the Trust.
With respect to the remaining acreage, the contract provides for a cash down
payment of approximately $468 allocable to the Trust, and a non-recourse
promissory note of $3,667 allocable to the Trust payable in five annual
installments at 8 percent interest.
NOTE 9 - LITIGATION AND OTHER CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge certain litigation and other
contingent liabilities of City which existed at September 25, 1985. The Trust
may have a contingent liability with respect to certain issues raised by the
Internal Revenue Service upon audit of tax returns of City Investing Company
filed with respect to periods ending
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
----------------
on or before September 25, 1985. One of these issues is currently pending before
the Tax Court of the United States. 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.
Lease Commitment. The Trust agreed to enter into a one-year lease of office
space that expires June 30, 2000 with a monthly rental payment of $2.
NOTE 10 - FUTURE DISTRIBUTIONS OF TRUST ASSETS
The existence of the contingent liabilities referred to in Note 9 may affect the
timing of future distributions of Trust assets.
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 $759 ($0.02 per unit) in the second quarter of
1999 and net income of $1,446 ($0.04 per unit) in the six-month period ended
June 30, 1999, compared to net income of $863 ($0.02 per unit) and net income of
$1,572 ($0.04 per unit) in the corresponding 1998 periods. The losses on
dispositions of assets, net, reflect losses of $16 and $29 in the second quarter
and six-month periods of 1999 and $23 and $88 in the respective 1998 periods
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 $829 and
$1,615 in the second quarter and six months ended June 30, 1999, and $935 and
$1,802 in the corresponding 1998 periods. The decrease in the second quarter and
six-month period of 1999 was due to the decrease in yield on investment
securities compared to the 1998 periods. Administrative expenses were $54 and
$140 for the second quarter and six months of 1999, compared with $49 and $142
for the comparable 1998 periods.
At June 30, 1999, the Trust had cash and cash equivalents and U.S. Treasury
Bills of $66,369. The Trustees believe that such cash resources and investment
securities are sufficient to meet all anticipated liquidity requirements.
An evaluation of the Trust's current computer systems, software and suppliers
has been performed, revealing that the Trust has no meaningful Year 2000 Issue.
The Year 2000 issue is the result of computer programs having been written using
two digit dates rather than four to define an applicable year, which could
result in system failures or miscalculations causing disruptions in the
operations of the Trust and its suppliers. While the Trust believes the overall
risks associated with Year 2000 Issue have been adequately addressed, there can
be no guarantee that the Year 2000 Issue will not have a material adverse effect
on the Trust and its operations.
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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, 1998 is incorporated by reference
herein. There have been no material developments in such legal proceedings
subsequent to the date of that information.
ITEM 2. CHANGES IN SECURITIES
Trust Units of Beneficial Interest. On July 8, 1999, 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, 2000, 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.
2. Action taken by Trustees under City Investing Company Liquidating Trust
Agreement dated July 8, 1999.
(b) Reports on Form 8-K:
The Registrant was not required to file a Current Report on Form 8-K during
the quarter ended June 30, 1999.
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: July 15, 1999 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 June
30, 1999 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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 36
<SECURITIES> 66,333
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 71,599
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 71,599
<TOTAL-LIABILITY-AND-EQUITY> 71,599
<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> 759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 759
<EPS-BASIC> 0
<EPS-DILUTED> 0
<PAGE>
EXHIBIT 1
ACTION OF TRUSTEES UNDER CITY INVESTING
COMPANY LIQUIDATING TRUST AGREEMENT
The undersigned, Trustees under the City Investing Company
Liquidating Trust Agreement (the "Trust Agreement") dated September 25, 1985, by
and between City Investing Company and the undersigned, hereby take the
following action pursuant to Section 6.2(q) of the Trust Agreement:
RESOLVED that, because of the Trust's inability to dispose of
part of the Trust Estate in a commercially reasonable manner prior to
September 25, 1999 and the continued pendency of certain litigation
affecting the Trust, the existence of the Trust is hereby extended
until the earlier of (a) the complete distribution of the Trust Estate
or (b) September 25, 2000, 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.
IN WITNESS WHEREOF, the undersigned have caused this action to
be taken as of the 8th day of July 1999.
--------------------------------------------
Geo. T. Scharffenberger
Trustee
--------------------------------------------
Eben W. Pyne
Trustee
--------------------------------------------
Lester J. Mantell
Trustee
