<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 1997 Commission File Number 0-21984
AEROSPACE CREDITORS LIQUIDATING TRUST
(Exact name of registrant)
New York 13-7020026
(State of organization) (I.R.S. Employer
Identification Number)
444 Madison Avenue, 7th Floor, New York, New York 10022
(Address of principal executive offices and zip code)
(212) 317-8292
(Registrant's telephone Number)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
------ ------
Number of Units of Beneficial Interest outstanding as of October 30, 1997 was
3,298,284.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AEROSPACE CREDITORS LIQUIDATING TRUST
STATEMENT of NET ASSETS in LIQUIDATION
as of September 30, 1997 and 1996
(In thousands)
---------
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Assets:
Cash and temporary cash investments $3,910 $ 948
Restricted cash (Note 8) 83
Interest receivable 15 13
Assets, at estimated fair value 10,559
------- -------
Total assets 3,925 11,603
------- -------
Liabilities:
Estimated costs of liquidation (Notes 1, 2 and 3) 178 747
Distributions payable 60
------- -------
Total liabilities 238 747
------- -------
Net assets in liquidation $3,687 $10,856
======= =======
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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<PAGE> 3
AEROSPACE CREDITORS LIQUIDATING TRUST
STATEMENT of CHANGES in NET ASSETS in LIQUIDATION
(In thousands)
----------
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Changes in net assets in liquidation before distributions:
Increase in interest income $ 76 $ 85
Increase in accrued interest income 7 15
Gain on receipt of proceeds from Thomson Litigation 3,844
Increase in estimated fair value of assets in liquidation 266
Decrease in estimated costs of liquidation, net (26) (118)
------- --------
Net increase in net assets in
liquidation before distributions 57 4,092
Distributions (7) (11,209)
Net assets in liquidation, beginning
of period 3,624 10,804
------- --------
Net assets in liquidation, end of period $3,687 $ 3,687
======= ========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
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<PAGE> 4
AEROSPACE CREDITORS LIQUIDATING TRUST
STATEMENT of RECEIPTS and DISBURSEMENTS
(In thousands)
----------
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Receipts:
Interest income $ 76 $ 85
Proceeds from Thomson litigation 14,669
------ -------
Total Receipts 76 14,754
------ -------
Disbursements:
Payments of estimated costs of
liquidation:
Trustee fees 105 240
Professional fees 124 203
Other 58 132
------ -------
Total Disbursements 287 575
------ -------
(Decrease)/Increase in cash and temporary
cash investments before distributions (211) 14,179
Distributions 67 (11,149)
------ --------
(Decrease)/Increase in cash (144) 3,030
Cash, beginning of period 4,054 880
------ -------
Cash, end of period $3,910 $ 3,910
====== =======
</TABLE>
The accompanying notes are an integral
part of these financial statements.
- 4 -
<PAGE> 5
AEROSPACE CREDITORS LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation:
The Aerospace Creditors Liquidating Trust (the "Trust") was established
on June 28, 1993 in accordance with the LTV Second Modified Joint Plan
of Reorganization (the "Plan") confirmed by the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court") by order dated May 26, 1993. The purpose of the Trust is to
marshal, liquidate and distribute the Trust assets in an expeditious
and orderly manner.
The Trust issued certificates of beneficial interest ("CBIs") to
holders of allowed claims against the LTV Aerospace and Defense Company
("Aerospace") in exchange for receiving certain assets deemed
distributed to the creditors and contributed to the Trust. The
Aerospace Creditors Liquidating Trust Agreement (the "Trust Agreement")
provides that the Trust will terminate ten years from the date of the
transfer of the Initial Trust Assets to the Trust, unless earlier
termination is required by action of New York State law or CBI holders
or by distribution of all Trust assets, unless extended for one-year
renewal terms pursuant to the terms of the Trust Agreement.
In accordance with the Trust Agreement, each Trustee shall be
indemnified by and receive reimbursement from the Trust against and
from any and all loss, liability or damage, including payment of
attorney's fees and other costs of defending himself, which such
Trustee may inure or sustain, without gross negligence or willful
misconduct, in the exercise and performance of any of the powers and
duties of such Trustee under the Trust Agreement.
Preparation of the financial statements on the liquidating basis
required that the Trustees make a number of assumptions regarding the
value of the Trust's assets and the projected total cost of liquidating
such assets and winding up the affairs of the Trust. There may be
differences between the assumptions and the actual results because
events and circumstances frequently do not occur as expected. Those
differences, if any, could result in a change in the net assets
reflected in the statements of net assets in liquidation as of
September 30, 1997 and 1996.
2. Significant Accounting Principles:
Temporary cash investment alternatives are limited to certain
securities that comply with guidelines and regulations of the Internal
Revenue Service ("IRS") concerning investments by liquidating trusts.
Dividend and interest income is recorded as earned.
The present value discount recorded in the estimated costs of
liquidation is amortized using the interest method.
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<PAGE> 6
AEROSPACE CREDITORS LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS, Continued
3. Estimated Costs of Liquidation:
The estimated costs of liquidation represent the projected costs of
operating the Trust through its expected economic life, which the
Trustees estimate will extend to December 31, 1997, discounted using a
5.5% present value factor. These costs, which include staff, office
space, professional fees, trustee fees and transfer agent fees are
based on various assumptions regarding the administrative obligations,
use of professionals and other matters. Actual costs are likely to
differ from estimated costs.
4. Trust Assets:
The Trust assets were distributed to the Aerospace Creditors on June
28, 1993, (the "Effective Date") and immediately thereafter were
transferred to the Trust which then issued CBIs to the Aerospace
Creditors.
INITIAL THOMSON LITIGATION PROCEEDS. The Initial Thomson Litigation
Proceeds are the first $10 million in proceeds, plus a pro rata portion
of any interest actually received by LTV under any judgment or
settlement (to be paid without any deduction for legal fees or costs
incurred by LTV) actually received pursuant to the contractual claims
of Aerospace in the action entitled LTV Aerospace and Defense Co. v.
Thomson-CSF S.A., Adv. Proc. No. 920-9531A (Bankr. S.D.N.Y.) (the
"Thomson Litigation").
On April 28, 1997, the Trust received a cash payment of $14,669,480 of
the proceeds paid by Thomson (the "Thomson Payment"), which consisted
of $10,000,000, plus the Trust's pro rata portion of interest on the
judgment in the amount of $4,669,480. The Thomson Payment resulted in
a gain of $3,844,000 from the estimated fair value of $10,826,000 at
March 31, 1997.
5. Taxes:
The Trust was formed as a grantor trust, and thus, in its filings with
the IRS, the Trust itself is not a taxable entity. Accordingly, each
initial holder of a CBI is required to report on his federal tax return
his allocable share of any income, gain, loss, deduction or credit
recognized or incurred by the Trust. The Trust's tax basis in assets
transferred from holders of claims against Aerospace in connection with
the Plan generally equals the fair market value of such assets as of
June 28, 1993.
6. Certificates of Beneficial Interest:
The Trust issued 3,302,250 units of beneficial interest (the "Units")
on September 30, 1993 to holders of allowed claims in Classes 4.30,
5.30 and 7.30, the date registration of the Trust's Units became
effective on Form 10. During 1997, the Trust canceled 3,966 Units
pursuant to the terms of the Plan and the Trust Agreement. As of
September 30, 1997, 3,298,284 Units were outstanding.
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<PAGE> 7
AEROSPACE CREDITORS LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS, Continued
Upon a motion made by the Trust, the Bankruptcy Court entered an order
on September 24, 1997 that determined that all undeliverable CBIs or
cash distributions, and cash distribution checks that have not been
cashed, were to be declared Unclaimed Distributions (as defined in the
Plan) as of October 31, 1997. The Trust was ordered to cancel, as of
October 31, 1997, the undeliverable CBIs and the CBIs associated with
the undeliverable or uncashed distribution checks, to stop payment on
and cancel all outstanding checks that evidence such cash Unclaimed
Distributions, and to distribute such cash Unclaimed Distributions on a
pro rata basis to the identified and located CBI holders as part of the
final distribution of cash to CBI holders. The Trust expects to cancel
1,177 Units as a result of this order.
The Units were approved by the Pacific Exchange, Inc. on August 3,
1993, with trading activity authorized as of September 22, 1993. The
last trade on the Pacific Exchange, Inc. through September 30, 1997
occurred on August 8, 1997 and was for $1.38.
7. Distributions from the Trust:
The Trust Agreement provides for distributions to be made as often as,
and in the discretion and judgment of the Trustees, there are monies in
an amount sufficient to render feasible a distribution of cash or other
property to CBI holders, but no less often than annually (subject to
there being at least $3 million in cash or other non-cash property
designated by the Trustees available for distribution). Such
distributions are made to CBI holders based upon the number of Units
owned as of the record date determined by the Trustees.
Since inception, the Trust has made the following cash distributions,
in the aggregate amount of $83,766,291.30 ($25.37 per Unit):
(i) $4,590,127.50 ($1.39 per Unit) on March 15, 1994 to holders of
record as of March 7, 1994;
(ii) $2,245,530 ($0.68 per Unit) on June 3, 1994 to holders of
record as of May 23, 1994;
(iii) $2,972,025 ($0.90 per Unit) on February 24, 1995 to holders of
record as of February 10, 1995;
(iv) $42,268,800 ($12.80 per Unit) on June 14, 1995 to holders of
record as of May 31, 1995;
(v) $20,473,950 ($6.20 per Unit) on December 8, 1995 to holders of
record as of November 24, 1995; and
(vi) $11,215,858.80 ($3.40 per Unit) on June 13, 1997 to holders of
record as of May 30, 1997.
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<PAGE> 8
AEROSPACE CREDITORS LIQUIDATING TRUST
NOTES TO FINANCIAL STATEMENTS, Continued
---------
The Trust established an Escrow Account for the purpose of holding
undistributed Units and distributions allocated to such Units.
Pursuant to the terms of the Plan and the Trust Agreement, such funds
are no longer required to be segregated for the benefit of the
undistributed Units. Therefore, the Escrow Account was closed on
December 31, 1996 with the balance of $82,593 transferred to the
Trust's custodian account.
8. Subsequent Events
The Trustees have declared a record date of December 15, 1997 for the
final distribution of cash to CBI holders on or about December 29,
1997. The amount of cash to be distributed to CBI holders is subject
to Bankruptcy Court approval.
The Trust, by its counsel. will move the Bankruptcy Court on
December 11, 1997 for the entry of an order (the "Final Order"): (a)
authorizing the establishment of a windup reserve; (b) approving the
final distribution to CBI holders on or about December 29, 1997; (c)
approving the appointment of an administrator for the windup reserve;
(d) approving disposition of the remaining Trust assets; (e) confirming
the termination of the Trust as of December 31, 1997; (f) approving the
Final Report to CBI holders; and (g) releasing and discharging Trustees
from all claims arising from their duties as Trustees.
If the Bankruptcy Court enters the Final Order, the Trust will make a
final distribution of cash to CBI holders on December 29, 1997, all
issued and outstanding Units will be canceled as of that same date, the
Trustees will be released from all claims arising from their duties as
Trustees and will be discharged from further responsibility to the
Trust, and the Trust will terminate as of December 31, 1997.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Trust was established for the purpose of liquidating certain
assets. The Trust Agreement prohibits the Trustees from engaging in any
business. No part of the assets of the Trust or the proceeds, revenue or
income therefrom can be used or disposed of by the Trustees in furtherance of
any business.
As of September 30, 1997, the assets of the Trust consisted of the Cash
Reserve in the amount of approximately $3,910,000. The Trust's source of funds
as of September 30, 1997 is the Cash Reserve and interest income from temporary
cash investments. The Trust had interest income from the Trust's temporary
cash investments of $76,000 during the three month period and $85,000 during
the nine month period ended September 30, 1997 (and accrued interest of $15,000
as of September 30, 1997), as compared to interest income of $4,000 and $7,000
received during the three and nine month periods ended September 30, 1996 (and
accrued interest of $13,000 as of September 30, 1996). The increase in
interest income is a result of the earnings on the Thomson Payment prior to the
distribution to CBI holders in June of 1997, as compared to lower cash
investments during the same period in 1996. The Trust will not receive any
further income other than interest income from the Trust's temporary cash
investments.
The Trust incurred liquidation costs of $287,000 and $575,000 during
the three and nine month periods ended September 30, 1997, as compared to
$159,000 and $568,000 during the same period in 1996, consisting primarily of
professional fees (including fees related to reporting under the securities
laws and accounting fees), fees to the Trustees of the Trust, and fees for
office space. The increase in liquidation costs for the three months ended
September 30, 1997 as compared to the three months ended September 30, 1996 is
primarily due to the increase in professional fees associated with the winding
up of the Trust, some of which were prepaid during this quarter in anticipation
of the winding up of the Trust by the end of December 1997. The increase also
reflects the payment of professional fees that had accrued during the previous
quarter, but were not paid until the current quarter.
The Trustees have declared a record date of December 15, 1997 for the
final distribution of cash to CBI holders on or about December 29, 1997. The
Trust by its counsel will move the Bankruptcy Court before the Honorable Burton
R. Lifland, Bankruptcy Judge for the Southern District of New York, on December
11, 1997 at 10:00 a.m. (the "Hearing Date") or as soon thereafter as counsel
can be heard, in a courtroom to be announced on the Hearing Date and located at
the United States Bankruptcy Court for the Southern District of New York,
Alexander Hamilton Customs House, One Bowling Green, New York, New York 10004,
for the entry of an order (the "Final Order"): (a) authorizing the
establishment of a windup reserve; (b) approving the final distribution to CBI
holders on or about December 29, 1997; (c) approving the appointment of an
administrator for the windup reserve; (d) approving disposition of the
remaining Trust assets; (e) confirming the termination of the Trust as of
December 31, 1997; (f) approving the Final Report to CBI holders; and (g)
releasing and discharging Trustees from all claims arising from their duties as
Trustees. The Trustees expect to begin mailing the Final Report to CBI holders
no later than November 21, 1997.
If the Bankruptcy Court enters the Final Order, the Trust will make a
final distribution of cash to CBI holders on December 29, 1997, all issued and
outstanding Units will be canceled as of that same date, the Trustees will be
released from all claims arising from their duties as Trustees and will be
discharged from further responsibility to the Trust, and the Trust will
terminate as of December 31, 1997. If the Trust incurs all of the current
estimated costs of liquidation, the final distribution of cash to CBI
holders would consist of approximately $3,705,000 ($1.12 per Unit). While the
Trust may not incur all of the
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<PAGE> 10
estimated costs of liquidation, there can be no assurance that the Trust will
not incur a greater amount, thereby reducing the actual distribution to CBI
holders.
The Trust assets consist solely of the Cash Reserve of approximately
$3,910,000 as of September 30, 1997. In order to maintain the listing of the
Units on the Pacific Exchange, Inc., the Units must trade at no less than $1.00
per Unit. If the trading price falls below $1.00 prior to the date of the
final distribution, the Pacific Exchange, Inc. may commence delisting
proceedings. There can be no assurance that the Units will continue to trade
at $1.00 per Unit or more during the period prior to the final distribution.
Subject to certain conditions, the Pacific Exchange, Inc. may suspend trading
of the Units prior to the final distribution. Effective as of the date of the
final distribution to CBI holders, the Units will be removed from listing on
the Pacific Exchange, Inc. and all Units will be canceled as of that same date.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Upon a motion made by the Trust, and after notice of the hearing was
provided to all CBI holders of record, the Bankruptcy Court entered an order on
September 24, 1997 that determined that all undeliverable CBIs or cash
distributions, and cash distribution checks that have not been cashed, were to
be declared Unclaimed Distributions (as defined in the Plan) as of October 31,
1997. The Trust was ordered (i) to cancel, as of October 31, 1997, the
undeliverable CBIs and the CBIs associated with the undeliverable or uncashed
distribution checks, (ii) to stop payment on and cancel all outstanding checks
that evidence such cash Unclaimed Distributions, and (iii) to distribute such
cash Unclaimed Distributions on a pro rata basis to the identified and located
CBI holders as part of the final distribution of cash to CBI holders. The
Trust expects to cancel 1,177 Units as a result of this order.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Trust during the
third quarter of 1997.
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<PAGE> 11
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.
AEROSPACE CREDITORS LIQUIDATING TRUST
(Registrant)
BY: /s/ MARK M. FELDMAN
---------------------------------------
Mark M. Feldman
Trustee
BY: /s/ BRADFORD T. WHITMORE
---------------------------------------
Bradford T. Whitmore
Trustee
BY: /s/ PAUL S. WOLANSKY
---------------------------------------
Paul S. Wolansky
Trustee
Dated: November 14, 1997
- 11 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,910
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,925
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<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> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
