<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 March 31, 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)
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
------ ------
At March 31, 2000 there were 38,979,372 Trust Units of Beneficial Interest
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
($ IN THOUSANDS, EXCEPT PER UNIT DATA) 2000 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Gains (losses) on dispositions of assets, net $34 $(13)
Interest, dividend and other income 759 786
- ---------------------------------------------------------------------------------------
Total income 793 773
Administrative expenses 76 86
- ---------------------------------------------------------------------------------------
NET INCOME $717 $687
- ---------------------------------------------------------------------------------------
NET INCOME PER UNIT $0.02 $0.02
- ---------------------------------------------------------------------------------------
OUTSTANDING UNITS 38,979 38,979
- ---------------------------------------------------------------------------------------
</TABLE>
BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
(UNAUDITED)
MARCH 31, DECEMBER 31,
($ IN THOUSANDS) 2000 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $45 $51
U.S. Treasury Bills 70,776 67,671
Restricted funds 4 4
Investments 27 609
Real estate 2,817 4,617
- ---------------------------------------------------------------------------------------
TOTAL ASSETS $73,669 $72,952
- ---------------------------------------------------------------------------------------
LIABILITIES AND TRUST EQUITY
Trust equity $73,669 $72,952
- ---------------------------------------------------------------------------------------
TOTAL LIABILITIES AND TRUST EQUITY $73,669 $72,952
- ---------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
-1-
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
($ IN THOUSANDS) 2000 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $717 $687
Adjustments to reconcile net income to net cash
used for operating activities:
Gain on sale of real estate (610) -
Loss on Global Bancorporation liquidation 562 -
Interest income earned on investment in U.S. Treasuries (731) (742)
- ---------------------------------------------------------------------------------------
Net cash used for operating activities (62) (55)
- ---------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 2,410 -
Proceeds from Global Bancorporation liquidation 20 -
Maturities of U.S. Treasuries 17,140 16,393
Purchases of U.S. Treasuries (19,514) (16,409)
- ---------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities 56 (16)
- ---------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (6) (71)
Cash and cash equivalents at beginning of year 51 87
- ---------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $45 $16
- ---------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN TRUST EQUITY
THREE MONTHS ENDED MARCH 31
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
($ IN THOUSANDS) 2000 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Balance at December 31 $72,952 $70,153
Net income 717 687
- ----------------------------------------------------------------------------------------
BALANCE AT MARCH 31 $73,669 $70,840
- ---------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)
NOTE 1 - ORGANIZATION
The March 31, 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:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARCH 31, 2000 DECEMBER 31, 1999
------------------------------------------------- ----------------------------------------------
CARRYING FAIR CARRYING FAIR
($ IN THOUSANDS) VALUE COST VALUE VALUE COST VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Bills
maturing within
one year $70,776 $70,776 $72,538 $67,671 $67,671 $69,245
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
The gross unrealized gains on investment securities, at March 31, 2000 and
December 31, 1999, were $1,762 and $1,574, respectively.
-3-
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
NOTE 6 - RESTRICTED FUNDS
Restricted funds at March 31, 2000 and December 31, 1999 represent a rent
deposit of $4.
NOTE 7 - INVESTMENTS
<TABLE>
<CAPTION>
Investments are as follows:
- ---------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
($ IN THOUSANDS) 2000 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Global Bancorporation $- $582
Oklahoma Energy Corp. 27 27
- ---------------------------------------------------------------------------------------------
Total investments $27 $609
- ---------------------------------------------------------------------------------------------
</TABLE>
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 March 31, 2000 and December 31, 1999, the fair market
value of the Oklahoma Energy stock, based on quoted market prices, was $1,290
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
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.
In February 2000, the Trust sold about 39 percent of the real estate acreage for
approximately $2.4 million cash allocable to the Trust which resulted in a
long-term capital gain of $610. With respect to the remaining acreage, there is
a non-refundable escrow of approximately $100 allocable to the Trust. A closing
with respect to the remaining acreage is scheduled to occur in May 2000 for
approximately $400 cash and a non-recourse promissory note of approximately $3.4
million, allocable to the Trust, payable in five equal annual installments
bearing interest at 8 percent.
NOTE 9 - LITIGATION AND OTHER CONTINGENT LIABILITIES
In accordance with the Trust Agreement, the Trust has assumed the obligation to
make payments, where required, to discharge certain litigation and other
contingent liabilities of City which existed at September 25, 1985. The Trust
may have a contingent liability with respect to an issue raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed with
respect to periods ending on or before September 25, 1985. This issue is
currently pending before the Tax Court of the United States. This issue, if
resolved unfavorably to City, would result in a substantial liability. As other
parties are primarily and jointly responsible for this contingent liability, the
Trust is unable to estimate the ultimate cost, if any, of its exposure. The
Trust also remains subject to possible claims by the United States Environmental
Protection Agency and other third parties.
-4-
<PAGE>
CITY INVESTING COMPANY LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ 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 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 $717 ($0.02 per unit) in the quarter ended
March 31, 2000, compared to net income of $687 ($0.02 per unit) in the first
quarter of 1999. The reported gains (losses) on the dispositions of assets, net,
reflect gains of $34 in 2000 as compared to losses of $13 in 1999. In February
2000, the Trust sold about 39 percent of its real estate acreage for
approximately $2.4 million cash allocable to the Trust which resulted in a
capital gain of $610. The remaining acreage is contracted to be sold in May 2000
for approximately $400 cash and a non-recourse promissory note of approximately
$3.4 million, allocable to the Trust, payable in five equal annual installments
bearing interest at 8 percent. 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
dispositions 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 $759 in the
first quarter of 2000, compared with $786 in the first quarter of 1999. The
decrease in the 2000 period was due to a reduction in both the yield on
investment securities and other income received from real estate compared to the
1999 period. Administrative expenses were $76 and $86 in the first quarters of
2000 and 1999, respectively.
At March 31, 2000, the Trust had cash and cash equivalents and U.S. Treasury
Bills of $70,821. The Trustees believe that such cash resources and investment
securities are sufficient to meet all anticipated liquidity requirements.
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 the entities with which the Trust does business. An
evaluation of the Trust's computer systems, software, non-information systems
and entities with which the Trust does business was performed, revealing that
the Trust had no meaningful Year 2000 issues. To date, the Year 2000 Issue has
not had a material adverse effect on the Trust and its operations.
-5-
<PAGE>
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
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, 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: May 3, 2000 By: LESTER J. MANTELL
Trustee
<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 March
31, 2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 45
<SECURITIES> 70,776
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 73,669
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 73,669
<TOTAL-LIABILITY-AND-EQUITY> 73,669
<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> 717
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 717
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
