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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, 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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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 September 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
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
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THIRD QUARTER NINE MONTHS
($ IN THOUSANDS, EXCEPT PER UNIT DATA) 1999 1998 1999 1998
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Gains (losses) on dispositions of assets, net $0 $20 $(29) $(68)
Interest, dividend and other income 888 852 2,503 2,654
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Total income 888 872 2,474 2,586
Administrative expenses 39 38 179 180
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NET INCOME $849 $834 $2,295 $2,406
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NET INCOME PER UNIT $0.02 $0.02 $0.06 $0.06
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OUTSTANDING UNITS 38,979 38,979 38,979 38,979
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BALANCE SHEETS
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(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
($ IN THOUSANDS) 1999 1998
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ASSETS
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Cash and cash equivalents $54 $87
U.S. Treasury Bills 67,164 64,837
Restricted funds 4 3
Investments 609 609
Real estate 4,617 4,617
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TOTAL ASSETS $72,448 $70,153
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LIABILITIES AND TRUST EQUITY
Trust equity $72,448 $70,153
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TOTAL LIABILITIES AND TRUST EQUITY $72,448 $70,153
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
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($ IN THOUSANDS) 1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,295 $2,406
Adjustments to reconcile net income to
net cash used for operating activities:
Gain on sale of real estate 0 (20)
Interest income earned on investment in U.S. Treasuries (2,409) (2,444)
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Net cash used for operating activities (114) (58)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 0 31
Maturities of investment securities 50,848 47,770
Purchases of investment securities (50,766) (50,838)
Restricted funds, net (1) 2,965
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Net cash provided by (used for) investing activities 81 (72)
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Net decrease in cash and cash equivalents (33) (130)
Cash and cash equivalents at beginning of year 87 243
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $54 $113
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STATEMENT OF CHANGES IN TRUST EQUITY
NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
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($ IN THOUSANDS) 1999 1998
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Balance at December 31 $70,153 $66,989
Net income 2,295 2,406
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BALANCE AT SEPTEMBER 30 $72,448 $69,395
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The September 30, 1999 financial statements for the City Investing Company
Liquidating Trust (the "Trust") are unaudited. 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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SEPTEMBER 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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U.S. Treasury Bills
maturing within
one year $67,164 $67,164 $68,730 $64,837 $64,837 $66,621
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The gross unrealized gains on investment securities, at September 30, 1999 and
December 31, 1998, are $1,566 and $1,784, respectively.
NOTE 6 - RESTRICTED FUNDS
Restricted funds at September 30, 1999 and December 31, 1998 represent a rent
deposit of $4 and $3, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
NOTE 7 - INVESTMENTS
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Investments are as follows:
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SEPTEMBER 30, DECEMBER 31,
($ IN THOUSANDS) 1999 1998
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Global Bancorporation $582 $582
Oklahoma Energy Corp. 27 27
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Total investments $609 $609
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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. 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, 1999 and December 31, 1998, the fair market
value of the Oklahoma Energy stock, based on quoted market prices, was $112 and
$176, 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. 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 $20 on a sale of
approximately one-half of one per cent of the real estate during the third
quarter of 1998.
Approximately $187 allocable to the Trust is currently held in escrow in
accordance with an Earnest Money Contract. The Contract, which has been amended
three times, currently permits a closing as late as January 30, 2000, 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 bearing interest at 8 percent.
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 $14.
NOTE 9 - LITIGATION AND OTHER CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge certain litigation and other
contingent liabilities of City which existed at September 25, 1985. The Trust
may have a contingent liability with respect to an issue raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed with
respect to periods ending on or before September 25, 1985. This issue is
currently pending before the Tax Court of the United States. This issue, if
resolved unfavorably to City, would result in a substantial liability. As other
parties are primarily and jointly responsible for this contingent liability, the
Trust is unable to estimate the ultimate cost, if any, of its exposure. The
Trust also remains subject to possible claims by the United States Environmental
Protection Agency and other third parties.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
Lease Commitment. The Trust entered 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 has and will
continue to 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 $849 ($0.02 per unit) in the third quarter of
1999 and net income of $2,295 ($0.06 per unit) in the nine-month period ended
September 30, 1999, compared with $834 ($0.02 per unit) and a net income of
$2,406 ($0.06 per unit) in the corresponding 1998 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 $29 in the nine-month period of
1999 and $68 in the nine-month period of 1998 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 $888 and
$2,503 in the third quarter and nine months ended September 30, 1999, and $852
and $2,654 in the corresponding 1998 periods. The decrease in the nine-month
period of 1999 was due to the decrease in yield on investment securities
compared to the 1998 period. Administrative expenses were $39 and $179 for the
third quarter and nine months of 1999, compared with $38 and $180 for the
comparable 1998 periods.
At September 30, 1999, the Trust had cash and cash equivalents and U. S.
Treasury Bills of $67,218. 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 with the advent of the Year 2000.
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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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
(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, 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: November 3, 1999 By: /s/ Lester J. Mantell
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Lester J. Mantell, Trustee
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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, 1999 and is qualified in its entirety by reference to such
Financial statements.
</LEGEND>
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 54
<SECURITIES> 67,164
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 0
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<TOTAL-ASSETS> 72,448
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 72,448
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