FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
(State of organization)
|
13-6859211
(I.R.S. Employer Identification No.)
|
99 University Place, 7th Floor
New York, New York
(Address of principal executive offices)
|
10003-4528
(Zip Code)
|
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, 1998 there were 38,979,372 Trust Units of Beneficial
Interest
outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CITY INVESTING COMPANY LIQUIDATING TRUST
Statements of Income
Three Months Ended March 31
|
($ in thousands, except per unit data)
| 1998
| 1997
|
|
Losses on dispositions of assets, net
|
$(65)
|
$(94)
|
|
Interest, dividend and other income
|
867
|
504
|
|
|
Total income
| 802
| 410
|
| Administrative expenses
| 93
| 72
|
|
|
Net Income
| $709
| $338
|
|
|
Net Income Per Unit
| $0.02
| $0.01
|
|
|
Outstanding units
|
38,979
|
38,979
|
|
Balance Sheets
|
|
| March 31,
| December 31,
|
|
($ in thousands)
| 1998
| 1997
|
|
|
Assets
|
| Cash and cash equivalents
| $81
| $243
|
| U.S Treasury Bills
| 62,377
| 58,541
|
| Restricted funds
| 3
| 2,968
|
| Investments
| 609
| 609
|
| Real estate and mortgage receivable (net of unrealized gain)
| 4,628
| 4,628
|
|
| Total assests
| $67,698
| $66,989
|
|
Liabilities and Trust Equity
Trust equity
|
$67,698
|
$66,989
|
|
|
Total liabilities and trust equity
|
$67,698
|
$66,989
|
|
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
Statements of Cash Flows
Three Months Ended March 31
|
| ($ in thousands)
| 1998
| 1997
|
|
|
Cash flows from operating activities:
|
| Net income
| $709
| $338
|
Adjustments to reconcile net income to net cash provided by
(used for) operating activities:
|
|
Interest income earned on investment in U.S. Treasuries
|
(738)
|
(43)
|
|
| Net cash (used for) provided by operating activities
| (29)
| 295
|
|
|
Cash flows from investing activities:
|
| Maturities of U.S. Treasuries
| 14,952
| 14,107
|
| Purchases of U.S. Treasuries
| (18,050)
| (14,214)
|
| Restricted funds
| 2,965
| (208)
|
|
| Net cash used for investing activities
| (133)
| (315)
|
|
| Net decrease in cash and cash equivalents
| (162)
| (20)
|
| Cash and cash equivalents at beginning of year
| 243
| 78
|
|
|
Cash and cash equivalents at end of period
| $81
| $58
|
|
Statements of Changes in Trust Equity
Three Months ended March 31
|
|
($ in thousands)
|
1998
|
1997
|
|
|
Balance at December 31
| $66,989
| $65,504
|
| Net income
| 709
| 338
|
|
| Balance at March 31
|
$67,698
|
$65,842
|
|
See accompanying notes to financial statements.
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CITY INVESTING COMPANY LIQUIDATING TRUST
Notes to Financial Statements
($ in thousands)
Note 1 - Organization
The March 31, 1998 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 - Losses on Dispositions of Assets
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 all 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. Treasuries with maturities of less than
one year and are carried at cost. Investment securities consist of the
following:
|
|
March 31, 1998
|
December 31, 1997
|
|
|
|
|
Carrying
Value
|
Cost
|
Fair
Value
|
Carrying
Value
|
Cost
|
Fair
Value
|
U.S. Treasuries
maturing within
one year
| $62,377
| $62,377
| $64,088
| $58,541
| $58,541
| $60,182
|
|
The gross unrealized gains on investment securities, at March 31, 1998 and
December 31, 1997, are $1,711 and $1,641, respectively.
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CITY INVESTING COMPANY LIQUIDATING TRUST
Notes to Financial Statements (continued)
($ in thousands)
Note 6 - Restricted Funds
|
Restricted funds represent funds held in escrow in connection with the
following:
|
|
|
March 31,
1998
|
December 31,
1997
|
|
City Investing Company Liquidating Trust
v. Continental Casualty
| $0
| $2,965
|
| Other
| 3
| 3
|
|
|
Total restricted funds
|
$3
|
$2,968
|
|
See Part II, Item 1., "Legal Proceedings," for further
information.
Note 7 - Investments
|
Investments are as follows:
|
|
|
March 31,
1998
|
December 31,
1997
|
|
|
Oklahoma Energy Corporation.
| $27
| $27
|
| Global Bancorporation
| 582
| 582
|
|
| Total investments
| $609
| $609
|
|
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, 1998 and
December 31, 1997, the fair market value of the Oklahoma Energy stock, based on quoted
market prices, was $155 and $137, 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,
and a mortgage receivable.
The Trust realized a long term gain of $81 on two 1996 sales of
approximately two per cent of the real estate. The Trust has projected that later in 1998, a long term gain
of $22 will be realized when the proceeds are collected on a sale of approximately
one-half of one per cent of the real estate.
Note 9 - Litigation and Other Contingent Liabilities
In accordance with the Trust Agreement, the Trust has assumed the
obligation to
make payments, where required, to discharge certain litigation and other
contingent
liabilities of City which existed at September 25, 1985. The Trust may
have a
contingent liability with respect to certain issues raised by the Internal
Revenue Service upon audit of tax returns of City Investing Company filed
with
respect to periods ending on or before September 25, 1985. These issues, if
resolved unfavorably to City, would result in a substantial liability. As
other
parties are primarily and jointly responsible for this contingent
liability, the
Trust is unable to estimate the ultimate cost, if any, of its exposure. The
Trust also remains subject to possible claims by the United States
Environmental
Protection Agency and other third parties.
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CITY INVESTING COMPANY LIQUIDATING TRUST
Notes to Financial Statements (continued)
($ in thousands)
Note 10 - Dividend Restrictions
The existence of the contingent liabilities referred to in Note 9 may
affect the
timing of future distributions of Trust assets. In connection with the
proceeding entitled Rolo and Tenerelli v. City Investing Company
Liquidating
Trust, et al., the Trust is unable to make any dividend payments or
liquidating
distributions without further judicial action.
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 $709 ($0.02
per unit) in the first quarter ended March 31, 1998, compared to net
income of $338 ($0.01 per unit) in the first quarter of 1997. The losses on the
dispositions of assets, net, reflect losses of $65 in the first quarter of 1998
and $94 in the first
quarter of 1997 attributable primarily to legal fees incurred in
connection with the defense of litigation against the Trust. The
Trust received the $2,965 escrow balance remaining after the Continental
Casualty Co. settlement of $1,150 was paid in 1997.
Interest,
dividend
and other income, principally consisting of interest earned on the
investment of
cash equivalents and investment securities was $867 in the first quarter of
1998, compared with $504 in the first quarter of 1997. The increase in the
1998 period was due to the timing of the recognition of interest income
net of a
decrease in yield on investment securities compared to the 1997 period.
Administrative expenses were $93 and $72 in the first quarter of 1998 and
1997, respectively. The increase of administrative expenses in 1998 was due to
the payments in the first quarters of 1998 of transfer agent services,
as well as Form 10-K printing and report mailing costs.
At March 31, 1998, the Trust had cash and cash equivalents and
U.S Treasury Bills of $62,458. 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, 1997 is incorporated by
reference
herein. Except as set forth below, there have been no material
developments in
such legal proceedings subsequent to the date of that information.
City Investing Company Liquidating Trust v. Continental Casualty Co.
The Trust received the $2,965,000 escrow balance remaining after the Continental
Casualty Co. settlement of $1,150,000 was paid in 1997.
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, 1998.
|
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: April 28, 1998
| By: LESTER J. MANTELL
Trustee
|
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