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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 June 30, 2000
[ ] 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, 2000 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) 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Gains (losses) on dispositions of assets, net $157 ($16) $191 ($29)
Interest, dividend and other income 959 829 1,718 1,615
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Total income 1,116 813 1,909 1,586
Administrative expenses 63 54 139 140
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NET INCOME $1,053 $759 $1,770 $1,446
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NET INCOME PER UNIT $0.03 $0.02 $0.05 $ 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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(UNAUDITED)
JUNE 30, DECEMBER 31,
($ IN THOUSANDS) 2000 1999
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<S> <C> <C>
ASSETS
Cash and cash equivalents $185 $51
U.S. Treasury Bills 71,993 67,671
Restricted funds 5 4
Investments 27 609
Real estate and mortgage receivable, net of $1,171 deferred gain 2,512 4,617
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TOTAL ASSETS $74,722 $72,952
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LIABILITIES AND TRUST EQUITY
Trust equity $74,722 $72,952
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TOTAL LIABILITIES AND TRUST EQUITY $74,722 $72,952
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30
(UNAUDITED)
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($ IN THOUSANDS) 2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,770 $1,446
Adjustments to reconcile net income to
net cash used for operating activities:
Gain on sale of real estate (781) --
Loss on Global Bancorporation liquidation 562 --
Interest income earned on investment in U.S. Treasuries (1,664) (1,545)
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Net cash used for operating activities (113) (99)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 2,886 --
Proceeds from Global Bancorporation liquidation 20 --
Maturities of investment securities 58,015 33,595
Purchases of investment securities (60,673) (33,546)
Restricted funds (1) (1)
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Net cash provided by investing activities 247 48
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Net increase (decrease) in cash and cash equivalents 134 (51)
Cash and cash equivalents at beginning of year 51 87
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $185 $36
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STATEMENTS OF CHANGES IN TRUST EQUITY
SIX MONTHS ENDED JUNE 30
(UNAUDITED)
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($ IN THOUSANDS) 2000 1999
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<S> <C> <C>
Balance at December 31 $72,952 $70,153
Net income 1,770 1,446
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BALANCE AT JUNE 30 $74,722 $71,599
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See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The June 30, 2000 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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JUNE 30, 2000 DECEMBER 31, 1999
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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 $71,993 $71,993 $73,956 $67,671 $67,671 $69,245
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The gross unrealized gains on investment securities at June 30, 2000 and
December 31, 1999, are $1,963 and $1,574, respectively.
NOTE 6 - RESTRICTED FUNDS
Restricted funds at June 30, 2000 and December 31, 1999 represent a rent deposit
of $5 and $4, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
NOTE 7 - INVESTMENTS
Investments are as follows:
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JUNE 30, DECEMBER 31,
($ IN THOUSANDS) 2000 1999
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<S> <C> <C>
Global Bancorporation $-- $582
Oklahoma Energy Corp. 27 27
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Total investments $27 $609
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The Trust held 10,000 shares of Global Bancorporation which were carried at
their tax basis. In February 2000, the Trust collected a final liquidating
distribution of $20 from Global Bancorporation which resulted in a long-term
capital loss of $562. 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, 2000 and December 31, 1999, the fair market
value of the Oklahoma Energy stock, based on quoted market prices, was $994 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. The Trust now holds an undivided interest in the
mortgage receivable on the property. 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.
In February 2000, the Trust sold about 39 percent of the real estate acreage for
approximately $2,410 cash, which resulted in a long-term capital gain of $610.
In May 2000, the Trust sold the remaining real estate acreage for approximately
$476 cash and a non-recourse promissory note of approximately $3,683, payable in
five equal annual installments, bearing interest at 8 percent allocable to the
Trust. The May 2000 sale resulted in a recognized long-term capital gain of some
$171. The deferred gain of $1,171 has been recorded as a reduction to the
mortgage receivable of $3,683. The Year 2000 U.S. Federal Tax Information letter
will provide sufficient detail to permit those taxpayers who are required or
choose to report the deferred gain attributable to the mortgage portion of the
proceeds.
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.
Lease Commitment. The Trust agreed to enter into a one-year lease of office
space that expires June 30, 2001 with a monthly rental payment of $2.
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CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
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 $1,053 ($0.03 per unit) in the second quarter
of 2000 and net income of $1,770 ($0.05 per unit) in the six-month period ended
June 30, 2000, compared to net income of $759 ($0.02 per unit) and net income of
$1,446 ($0.04 per unit) in the corresponding 1999 periods. The reported gains
(losses) on the dispositions of assets, net, reflect gains of $157 and $191 in
the second quarter and six-month periods of 2000 as compared to losses of $16
and 29 in the respective 1999 periods. In February 2000, the Trust sold about 39
percent of the real estate acreage for approximately $2,410 cash, which resulted
in a long- term capital gain of $610. In May 2000, the Trust sold the remaining
real estate acreage for approximately $476 cash and a non-recourse promissory
note of approximately $3,683, payable in five equal annual installments, bearing
interest at 8 percent allocable to the Trust. The May 2000 sale resulted in a
recognized long-term capital gain of some $171. The deferred gain of $1,171 has
been recorded as a reduction to the mortgage receivable of $3,683. The Year 2000
U.S. Federal Tax Information letter will provide sufficient detail to permit
those taxpayers who are required or choose to report the deferred gain
attributable to the mortgage portion of the proceeds.
In February 2000, the Trust also received $20 as the final liquidating
distribution from Global Bancorporation which resulted in a long-term capital
loss of $562. Other expenses affecting gains (losses) on disposition of assets,
net, consist of 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 $959 and
$1,718 in the second quarter and six months ended June 30, 2000, and $829 and
$1,615 in the corresponding 1999 periods. The increase in the second quarter and
six-month period of 2000 was due to the Treasury issuing Treasury Bills only
once a quarter so that the Trust had to extend its investment in Treasury Bills
by five weeks in the second quarter and an increase in yield on investment
securities compared to the 1999 periods. Administrative expenses were $63 and
$139 for the second quarter and six months of 2000, compared with $54 and $140
for the comparable 1999 periods.
At June 30, 2000, the Trust had cash and cash equivalents and U. S. Treasury
Bills of $72,178. 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, 1999 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 17, 2000, 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, 2001, 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 17, 2000.
(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, 2000.
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 17, 2000 By: LESTER J. MANTELL
Trustee
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