格雷厄姆-纽曼公司——致股东的信函及1954财年年度报告

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GRAHAM-NEWMAN CORPORATION

122 EAST 42ND STREET

NEW YORK 17, N. Y.

March Ist, 1954

To the Stockholders of Graham-Newman Corporation:

Submitted herewith are financial statements of the Corporation covering the fiscal year ended January 31st, 1954.

The appended balance sheet indicates a net asset value of $1,286.69 per share on January 31st, 1954, compared with $1,361.11 per share on January 31st, 1953. The indicated net asset value February 12th, 1954, was approximately $1,288 per share.

FISCAL YEAR RESULTS AND DIVIDENDS

Ine overall gain lor the fiscal year. including the net Increase in unrealized appreciation, was $15.89 per share, or 1.29 on the asset value of the shares at the beginning of the fiscal year.

Net realized profits for the fiscal year (without reflecting the decrease in unrealized appreciation) amounted to $139.12 per share. The total dividends paid and declared applicable to the net realized profits for the fiscal year aggregate $154 per share. Such dividends consist of the quarterly dividends of $12.50 each pala in June, September and December 1953, and a dividend of $116.50 declared February 17th, 1954 payable March 5th, 1954 to stockholders of record February 23rd, 1954.

Total dividends of $154 per share applicable to the fiscal Jear exceed the net realized profit for the fiscal year by $14.88 per share. This distribution 1s necessary due to applicable provis- Ions of the Internal Revenue Code under which we have elected taxed as a "regulated investment company".

Of the total dividends of $154 per share applicable to the fiscal Jear, the entire amount represents long term capital gains.

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CALENDAR YEAR DIVIDENDS

During the calendar year 1953 the total dividends paid amounted to $90.31, consisting of a dividend of $52.01 paid in March out of net realized profits of the fiscal year ended January 31st, 1953 and dividends of $37.50 paid as stated above.

$7407 per hire reds sents lon pala during the calendar year 1953,

'term capital gains, $14.07 per share represents ordinary income, and $+83 is a return of capital.

The financial statements have been reviewed by Messrs. Stern, Porter, Kingston and Coleman, Independent public accountants, whose certificate set forth herein.

THE ANNUAL MEETING

The proxy statement for the annual meeting of stockholders which will be held on April 12th, 1954 will be mailed to the stockholders on or about March 31st, 1954.

At the annual meeting resolutions, previously approved by the Board of Directors, will be presented, providing a more responsible position for Howard A. Newman In the Management of the Corporation. Mr. Howard A. Newman is presently Vice President and a Director of the Corporation, and a General Partner of Newman & Graham. Under the new arrangement Benjamin Graham will become Chairman of the Board, Jerome A. Newman will become President and Howard A. Newman will become Vice President and Treasurer of the Corporation. Management contract will be revised so as to name Howard A. Newman as a third Manager of the Corporation. However, there will be no increase in the total compensation provided for the Managers, including therein amounts paid last year to Howard A. Newman.

By order of the Board of Directors,

Ben j. Graham,

President

Jerome A. Newman,

Vice President & Treasurer

OFFICERS

Benjamin Graham, President Jerome A. Newman, Vice Pres. & Treas. Edward E. Laufer, Secretary Howard A. Newman, Vice Pres.

Walter J. Schloss, Asst. Secy.

DIRECTORS

Benjamin Graham Jerome A. Newman Wm. K. Jacobs, Jr. Robert J. Marony David I. Doda Howard A. Newmar

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STERN, PORTER, KINGSTON & COLEMAN

CERTIFIED PUBLIC ACCOUNTANTS

551 Felt Tronue, New York17N.?.

MURRAY HILL 2 - 8O75

To the Board of Directors and Stockholders

of Graham-Newman Corporation:

We have examined the Balance Sheet of Graham-Newman Corporation as at January 31, 1954 and the related statements of Profit and Loss, and Changes in Net Assets for the fiscal year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the account- 1ng records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying Balance Sheet and related statements of Profit and Loss and Changes in Net Assets, as supple-mented by the notes appended thereto present fairly the financial position of Graham-Newman Corporation as at January 31, 1954 and the results of its operations for the fiscal year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

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• + Coleman

to Ca King toni

Certified

New York, N.Y.

February 20, 1954.

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GRAHAM-NEWMAN

BALANCE

JANUARY 31,

S E T S

CASH $1,041,274.63

U. S. TREASURY BILLS DUE MARCH 4,1954 ($750,000) 747,056.25

DUE FROM BROKERS FOR SECURITIES SOLD 9,195.56

DEPOSITS WITH BROKERS 254,993.35

INVESTMENTS IN SECURITIES-AT MARKET VALUE (Note A) 5,326,213.00

(Cost $3,495, 507.20)

OTHER ASSETS

Dividends receivable $ 6,137.26

Interest accrued on bonds 2,488.64

Deposits and sundry receivables 4,874.36

Furniture and fixtures 10,595.35 24,095.61

$1,402,828.40

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CORPORATION

YORK

SHEEI

1954

LIABILIJIES AND CAPITAL

SECURITIES SHORT - at cover value

(net proceeds of sales $209,597.20)

DUE TO BROKERS FOR SECURITIES PURCHASED

SUNDRY PAYABLES AND ACCRUALS

UE TO OFFICERS (Benjamin Graham and Jerome A. Newman

or additional compensation-on basis o

realized net income for the f1ve fiscal years

ended January 31, 1954 (Note B)

of which payable within one year $ 108,774.88

balance payable in Installments (1955-1958) 240,423.26

PROVISION FOR ADDITIONAL CONTINGENT COMPENSATION

OF OFFICERS (Benjamin Graham and Jerome A. Newman)

on increase in unrealized appreciation of investments

subsequent to January 31, 1948 (Note B)

NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK 6,433, 463.44

Capital Stock:

Authorized, issued and outstanding-

5,000 shares of no par value-

stated value $500.00 per share 2,500,000.00

Capital Surplus 2,097,580.92

Earned Surplus 401,386.80

Total Capital Stock and Surplus 4,998, 967.72

Unrealized appreciation of Investments-after

deducting provision for related additional

contingent compensation of officers (Note A) 1,434, 495.72

Total, as above $6,433,463.44

(equivalent to $1,286.69 per share)

$1,402,828.40

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GRAHAM NEWMAN CORPORATION

NEW YORK

PROFIT AND LOSS STATEMENT

FOR THE FISCAL YEAR ENDED JANUARY 31, 1954

STATEMENT OF INCOME AND EXPENSES

Texcluding gain or loss on Investments)

Income

Dividends

Interest on investments

Total

Expenses

Salaries of Officers:

Benjamin Graham (ote 3)

Jerome A. Newman

Other

Other:

Office salaries

Executive committee fees

Directors' fees

Rent and 11ght

Telephone and telegraph

$25,000.00

25,000.00

30,856.67

11,358.66

10,000.00

450.00

5,242.13

1,300.85

6,900.69

$160,366.54

7,040.22

167,406.76

Taxes (other than Federal taxes on income)

Legal and auditing

Custodian fees

Contributions

General expense

Depreciation (furniture and fixtures)

Total Expenses (exclusive of additional

10,304.08

1,801.90

4,650.00

2,761.94

1,667.17

137,294.09

compensation of officers)

Net Income (excluding gain or loss on investments,

beiore deducting additional compensation of officers

30,112.67

and provision for Federal taxes on Income)

NET REALIZED GAIN ON INVESTMENTS

Amount realized

Cost

2,751,366.22

1,961,963.59

189,402.63

NET INCOME, before deducting additional compensation of

819, 515.30

officers and provision for Federal taxes on income

Deduct-Additional compensation of officers (Note B):

Benjamin Graham

Jerome A. Newman

$61,951.53

61,951.53 123, 903.06

None

123,903.06

Provision for Federal taxes on income (Note C)

NET INCOME FOR YEAR

695, 612.24

DEDUCT-DECREASE IN UNREALIZED APPRECIATION (Note A)

At January 31,

At January 31, 1953

$1,787,305.00

2,557,512.35 (770, 207.30)

Less-Reduction in related additional compensation

(154,041.46) (616,165.89;

of officers (Note B)

"OVER ALL" NET INCOME FOR YEAR

Equivalent to $15.89 per share

$ 79,446.35

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GRAHAM-NEWMAN CORPORATION

NEW YORK

STATEMENT OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED JANUARY 31, 1954

NET ASSETS AT JANUARY 31e 1953

$6,805,567.09

Per Share

$1,361.11

ADD-NET INCOME FOR THE FISCAL YEAR ENDED JAN.31,1954

Net Income, excluding gain or

investments (before deducting additional

compensation of officers)

Net realized gain on sales of investments

Deduct-Additional compensation of

officers (Note B)

Net Income for year

DEDUCT-Decrease in unrealized appreciation

of investments

Less-Reduction in related additional contingent

$ 30,112.67

189, 402.63

819,515.30

123,903.06

(770,207.35)

695,612.24

139.12

(123.23)

compensation of officers (Note B) (154, 041.46) (616:165.89)

TOTAL

DEDUCT-DIVIDENDS PAID Per Share

March 12, 1955 $52.81

June 12, 1953 12.50

Sept. 10, 1953 12.50

Dec. 18, 1953 12:50

$90.31

BALANCE-NET ASSEIS AI JANUARY 31, 1954

264,050.00

62,500.00

62,500.00

62,500.00

6,885,013.44

451,550.00

$6,433,463.44

1,377.00

90.31

$1,286.69

ANALYSIS OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED JANUARY 31, 1954

Capital

Total Stock

Net Assets at

Capital

Surplus

Earned

Surplus

Unrealized

Appreciation

(Net) (*)

$6,805,567.09 $2,500, 000 $2,097,580.92 $157, 324.56 $2, 050, 661.61

Jan. 31,1953

Add-Net Income

for the year 695,612.24

Deduct-Decrease

in unrealized

appreciation

(net) (*) (616, 165.89)

Total 6,885,013.44

Deduct-Dividends

paid 451,550.00

Balance-Net

Assets at

695, 612.24

852, 936.80

451,550.00

(616,165.89)

1,434,495.72

$6,433,463.44 $2,500, 000 $2,097,580.92 $401,386.80 $1,434,495.72

Jan. 31,1954

(*) Unrealized appreciation as shown herein represents the

net amount after deducting related contingent addi-

tional compensation of ofticers.

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GRAHAM-NEWMAN CORPORATION

NEW YORK

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1954

NOTE A - VALUATION OF INVESTMENTS-UNREALIZED APPRECIATION OF INVESTMENTS

Investments have been evaluated at their quoted market values as at Intense as representaton or the amounts it on say be act 20 peasabie intended as representations of the amounts which may be actually realizable upon sale of the securities.

The unrealized appreciation of investments at January 31, 1954 1s represented as follows:

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Value at

cost Jan. 31,1954 Appreciation

nvestments in securitie $3,495,507.20 $5, 326,213 $1,830,705.80

lecurities short (a (209,597.20) (252,998)

Net securities position $3,285,910.00 $5,073,215

Unrealized Appreciation at January 31, 1954 $1,787,305.00

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(a) Securities short are stated at amount realized

on sale, cover value, and indicated loss.

The unrealized appreciation of investments at the beginning of the year, the decrease therein for the current year, the related additional contingent compensation of officers (see Note B) and the balance applicable to the outstanding capital stock were as follows: Additional

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Contingent

Total Compensation

At January 31, 1953 $2,557,512.35 $506,850.74 $2,050,661.61

Decrease for year (770,207.35) (154,041. 46) (616,165.89)

At January 31, 1954 $L,787,305.00 $352,809.28 $1,434,495.72

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The Investment in Atlantic Gulf and West Indies Steamship Lines (AGWI) common stock (the entire cost of which has already been realized through liquidating distributions) has been valued at its quoted market value on the New York Stock Exchange as at January 31, 1954, and upon this basis shows an unrealized appreciation at that date of $1,399,047.00. There have recently been only occasional transactions in AGWI common stock on the New York Stock Exchange. The Investment in Perkin Elmer Corporation 5% Income Debentures due March 1, 1967, for which no market quotations were available, has been evaluated by the management and in the statements herein at cost ($50,000), and the investment in Market Street Rallway Company Prior Preferred stock (the entire cost of which has 1ikewise already been realized through liquidating distributions) has been evaluated by the management at $10,000. The management is of the opinion that these investments have been fairly valued.

NOTE B - COMPENSATION OF OFFICERS

The President and Treasurer each receive a salary of $25,000 per annum, and additional compensation of 10% of the excess of the realized net income in each year as determined at the close thereof (less the net unrealized depreciation, 1i any, in the value oi investments at the year end which had accrued subsequent to January 31, 1948) over an amount equivalent to $40.00 per share per annum ($10.00 per share per quarter) on the presently outstanding capital stock. The total amount of addi-

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NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1954

(CONTINUED)

NOTE B - COMPENSATION OF OFFICERS (continued) tional compensation payable to each of these officers from and after February 1, 1948 is, however, limited to 122% of the excess of total dividends paid during this period over an amount equivalent to $40.00 per share per annum on the presently outstanding stock (or the equivalent on the old stock outstanding prior to recapitalization in 1950). of directors, with the approval of the company's counsel, has determined that for the purpose of computing this 1imitation, the first dividend paid in any • fiscal year which, under the provisions of the Internal Revenue Code, may be, included for tax purposes in the amount of dividends paid during the prior year shall be so included in the amount of dividends paid during such prior year. The additional compensation for the fiscal years ended January 31, 1950 to January 31, 1954 is payable in five equal annual installments within sixty days of the close of the respective years. In the event of the death of either of these officers, or the termination of his tenure of office, such officer or his estate will be entitled receive further additional compensation in an amount equal to 10% of the increase in unrealized appreciation, if any, which had accrued subsequent to January 31,1948, less the amount, If any, of the $40.00 per share per annum exclusion noted above to the extent that such exclusion had not previously been applied in the computation of additional compensation In any prior year.

NOTE C - TAX STATUS

The Corporation has elected to be taxed as a "regulated investment company" under the Internal Revenue Code, and as such will be llable to Federal taxes on income on such amount only as is represented by its distributed net long term capital gains (less its net short term capital loss if any) and Its undistributed net Income from other sources. Corporation has in the past, and intends in the future, to distribute as dividends each year, or within the time limit provided by the terms of the internal revenue code, an amount which will absorb the total net income in each of the above categories which is reportable for Federal income tax purposes, and in this event will not be liable for Federal taxes on income. No provision has therefore been made for such taxes either in respect oi spectation at the case herderent period or in respect or uncalied appreciation at the close

NOTE D - SUPPLEMENTARY INFORMATION

The aggregate dollar amounts of purchases and sales of investment securities, other than United States Government obligations, , made during the year were as follows:

Cost of Securities purchased $808,974.09

Proceeds of sales of securities $2,684,985.37

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GRAHAM-NEWMAN CORPORATION

NEW YORK

INVESTMENTS IN SECURITIES

JANUARY 31, 1954

SUMMARY

MARKET VALUE AT

JANUARY 31,1954

INVESTMENT COMPANIES

Common Stocks

HOLDING COMPANIES

Common Stocks

OTHER SECURITIES

Bonds

Rallroads

Utilities

Industrial

Preferred Stocks

Utilities

Industrial

Common Stocks

Railroads

Utilities

Banks

Industrial

TOTAL

$ 112,350

305,211

350,000

31,600

405,53

566,520

109,250

40,000

3,444,106

$5,326,213,

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GRAHAM-NEWMAN CORPORATION

NEW YORK

INVESTMENTS IN SECURITIES

JANUARY 31, 1954

No. of shares

MARKET VALUE

Face amount JAN. 31,1954

INVESTMENI COMPANIES

common Stocks

Amoskeag Company

1,000 Mission Development Co.

HOLDING COMPANIES

Common Stocks

Engineers Public Service

Company (stubs

,100 Georgia Raiiroad & Banking Compan

Royal Dutch Petroleum Co. (Cert1-

ficates for New York shares)

OTHER SECURITIES-BONDS

Railroads

25 M. Chicago, Indianapolis & Louisville

Railway Co. First Income

4% 1/1/1983

70 M. Chicago, Terre Haute & Southeastern

Railroad Co. Income Mortgage

2-3/4% 1/1/1994

50 M. International Great Northern Ra1l-

road Company Adjustment

Mortgage Series A 6% 1950

Missouri Pacific Railroad:

52% Series A 5/1/49

General Mortgage 5/1/1975

47% 65 year Series A When Issued

45% 75 year Series B When Issued

100 M. New York, New Haven & Hartford Ra11-

road Co. Certificates of

Beneficial Interest

Utilities

Brazilian Traction Light & Power Co.,

Ltd. Series E Convertible Collat-

eral Trust 42% 9/1/71

155 M. Chicago Rapid Transit Company First

& Refunding Mortgage

Series A 6% 7/1/1953 (stubs)

64% 7/1/1944 (stubs,

6 M. Union Elevated Railroad Company First

Mortgage 5% 10/1/1945 (stubs)

*Indicated loss

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INVESTMENTS IN SECURITIES

JANUARY 31, 1954

No. of shares

OI MARKET VALUE

Face amount JAN. 31,1954

OTHER SECURITIES-BONDS (Continued)

Industrial

50 M. Perkin Elmer Corporation 5% subor-

dinated Convertible Income

3/1/1967

OTHER SECURITIES-PREFERRED STOCKS

Utilities

1,200 Central States Blectric Corpora-

tion 7% Cumulative Preferred

stubs)

10,000 Market Street Railway Company 6%

Cumulative Prior Preferred (X

Industrial

500 American Woolen Co., Inc. $4.00

Cumulative Convertible Preferred

800 Avco Manufacturing Corporation $2.25

Cumulative Convertible Preferred

500 Cluett, Peabody & Co. 4% Cumulative

Convertible Second • Preferred

200 Consolidated cigar co. $5.00

Cumulative Preferred

900 Crucible Steel Company of America 5%

Cumulative Convertible Preferred

600 Fedders Quigan Corporation Series A

5% Cumulative Convertible Preferred

400 Gar Wood Industries, Inc. 45%

Cumulative Convertible Preferred

400 Mengel Co. 5% Cumulative Convertible

First Preferred

1,500 Murray Corporation Of America 4%

Cumulative Preferred

800 Thermoid Company $2.50 Cumulative

Convertible Preferred

,000 lung sod ELeCtrIC Inc. 5%

'umulative Convertible Preferre

OTHER SECURITIES-COMMON STOCKS

Rattroads

Cleveland & Pittsburgh Railroad Co.:

400 $3.50 Regular Guaranteed

400 $2.00 Special Guaranteed Betterment

200 Mahoning Coal Railroad Co.

4,000 Montgomery & Erie Railway Company

(35% guaranteed by Erie Railroad

Company) (x)

200 Northern Central Railroad Co.

1,000 Northern Pacific Railway Company

40 Vermont & Massachusetts Railroad Co

4,163 Western Pacific Railroad Company

**Evaluated by management

-12=

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INVESTMENTS IN SECURITIES

JANUARY 31, 1954

No. of

Shares MARKET VALUE

JAN.31, 1954

OTHER SECURITIES-COMMON STOCKS (Continued)

Utilities

500 Gold & Stock Telegraph Company

300 International Ocean Telegraph

Company

Banks

10,000

contimpany Bank Trust

Company (N.

Industrials

1,000 Adam Hat Stores, 1 Corp.

7,500 Adam Hat Stores,

1,500 Allied Kid Company

5,800 American Hawaiian Steamship

Company

1,500 American La France Foamite

Corporation

1,300 American Woolen Co.

23,763 Atlantic Gulf & West Indies

Steamship Lines (x)

400 Brockway Motors

1,300 Burnswicke Balke Collander Co.

600 Carribean Sugar Co.

2,500 carman ă lo., 1nc.

1,000 Chamberlin Co. of America

1,150 Cleveland Worsted Mills Company

1,500 C. G. Conn Ltd.

1,000 Consolidated Cigar Corporatio

5,000 Consolidated Liquidating

Corporation

3,200 coro, Inc.

1,200 Crowley Milner & Co.

3,000 De Vilbiss Company

1,600 Diamond I Motor Car Co.

1,000 Dictograph Products Co., Inc.

4,000 Easy Washing Machine Corporation

Class B

45,950 Flagg Utica Corporation

1,600 General Cigar Co.

1,300 Greif Bros. Cooperage Class A

1,600 Gruen Watch Company

500 Hart Schaffner & Marx

800 Hercules Motors Corporation

700 Holland Furnace Co.

600 lowe scale company

600 Jenkins Brothers (Non-voting

500 Jones & Lamson Machine Co.

1,500 Kalamazoo Stove & Furnace Co.

400 Kayser (Julius) & Co.

300 I. B. Kleinert Rubber Company

700 Mandel Bros., Inc •

200 Manhattan Shirt Company

Forward

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INVESTMENIS IN SECURITIES

JANUARY 31, 1954

No. of

Shares MARKET VALUE

JAN. 31,1954

OTHER SECURITIES-COMMON STOCKS (Continued)

Industrials (Continued)

Forward

Marshall-Wells Company

Miller Falls Co.

6,000 Monterey 011 Company

Montgomery Ward & Co.

4,160 Nathan Straus-Duparquet, Inc.

1,100 National Department Stores

Corporation

2,300 Nesco, Inc.

2,300 New York Merchandise Co., Inc.

2,600 Pacific MIlls

26,600 Philadelphia & Reading Coal

& Iron Co.

Reliable Stores Corporation

1,100 Rellance Manufacturing Co.

1,100 Rice-StIX, Inc.

Sargent & Co.

Shuron Optical Company, Inc.

945 Timely Clothes, Inc.

1,450 Todd Shipyards Corporation

450 Iyer Rubber Company

700 Underwood Corporation

1,100 Youngstown Sheet & Tube Co.

(X) represents investment in a non-controlled affiliate

as defined in Investment Company Act of 1940, under

issuer is an affiliate of one who owns 5%

of its outstanding voting securities.

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No. of Shares

PREFERRED STOCKS

Railroads

2,500

2, 694-98/100

COMMON STOCKS

Industrials

1,999-36/100

2,362

2,800

GRAHAM-NEWMAN CORPORATION

NEW YORK

SECURITIES SHORT

JANUARY 31, 1954

COVER VALUE

JAN.31, 1954

Missouri Pacific

Railroad Company:

5% Cumulative Convertible

Preferred

$5.00 Preferred series A- $114,687

When Issued

(467)*

Crucible Steel Company

of America

Fedders Quigan Corporation 48,984

Gar Wood Industries, Inc. 34,544

Tung So1 Electric, Inc. 7,650

47,600

$252,998

*Indicated gain

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