格雷厄姆-纽曼公司——致股东的最后信函及截至1958年1月31日的年度报告（公司解散；董事以受托人身份签署）

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GRAHAM-NEWMAN CORPORATION

400 Park Avenue

New York 22, N.J.

March 21, 1958

TO THE "STOCKHOLDERS OF GRAHAM-NEWMAN CORPORATION":

The Corporation has been dissolved. The Directors

are acting as Trustees for the benefit of stockholders

and we are pleased to enclose a cops of the report of

the auditors for the year ending January 31,1958, which

shows an overall profit for the twelve months.

When the New Haven matter is disposed of, a final

accounting will be made to you. Pending that, the assets

will continue to be invested in short term Government

obligations.

Jerome A. Newman

Benjamin Graham

Robert J. Marony

David L. Dodd

Howard 4. Newman

Trustees

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STERN, PORTER, KINGSTON & COLEMAN

CERTIFIED PUBLIC ACCOUNTANTS

1I West #2nd Street, New Sork 36, N. T.

OXFORD 5-3650

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, 1958 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 accounting 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 supplemented by the notes appended thereto, present fairly the financial position of Graham-Newman Corporation as at January 31, 1958 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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-Ster boter Kingota Column

STERN, PORTER, KINGSTON & COLEMAN

Certified Public Accountants

New York, N.Y.

March 6, 1958

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GRAHAM-NEWMAN

(IN LIQUIDATION

A S E

CASH

INITED STATES TREASURY BILL

lue March 24, 1958

(face amount $100,000)

GRAHAM-NEWMAN CORPORATION LIQUIDATION TRUST CERTIFICATE,

4,870 certificates-ledger value $420,605.58

Notes A and D)

BALANCE

JANUARY 31,

$ 37,033.39

99,433.34

432,028.50

$568.495.23

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CORPORATION

• NOTE A)

SHEET

1958

• LIABILITIES -AND _ CALLIAL.=

SUNDRY PAYABLES AND ACCRUALS

DUE TO OFFICERS-for balance of additional compensation

payable-on basis of realized net income for the

three fiscal years ended January 31st 1954, 1955

and 1956 (Note B) 254,557.26

Less-Amount on deposit with Manufacturers Trust Co.

with Instructions to pay installments as and wher

payable (at February Ist, 1958, 1959 and 1960) _ 254,557.26

PROVISION FOR ADDITIONAL CONTINGENT COMPENSATION

for perlod subsequent to January 31, 1956 (Note B)

CONTINGENT LIABILITIES (Note E)

NET ASSETS APPLICABLE TO CAPITAL STOCK (Note E)

Capital Stock:

Authorized and Issued-5,000 shares of no par

value; stated value $500.00 per share

Less retired 145 shares

Outstanding 4,855 shares 2,427,500.00

Capital Surplus 1,401, 271.37

Earned Surplus 692,366.34

Total 4,521,137.71

Less Liquidating Distributions 4,081,233.78

Balance-Net Assets before Including unrealized

appreciation of Graham-Newman Corporation

Liquidation Trust certificates 439,903.93

Unrealized appreciation _ 11,422.92

Total 451,326.85

(equivalent to-on 4,855 shares-$92.96 per share)

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GRAHAM-NEWMAN CORPORATION

(IN LIQUIDATION - NOTE A)

PROFIT AND LOSS STATEMENT

FOR THE FISCAL YEAR ENDED JANUARY 31, 1958

STATEMENT OF INCOME AND EXPENSES

Incomexcluding gain or 1038 on Investmenta)

Income

Dividends $ 875.00

Less-Dividends paid on short securities (2,510.40) $ (1,635.40

Shaee of 1085 of Grantm-Newman Corporation

In indestments) (dee Luding gain or 1038

Total

Expenses

13,541.63

office safartes (Nuteing severance pay)

6,935.00

Directors' fees 250.00

Rent and 1ight 1,508.02

Taxes (other than Federal Income tax) 1,111.05

Legal and accounting 4,000.00

General expense 940.26

Depreciation 581.55

Loss on abandonment of furniture and fixtures 2,701.60

Total 31,569.11

Deduct-Unabsorbed balance of provision for

Liquidation expenses as at January 31,1957 21,028.15

(Note D)

Net Loss (excluding gain or loss on investments)

(before deducting provision for additional contingent

compensation of officers and provision for Federal

income tax)

NET REALIZED GAIN ON INVESIMENTS

Amount realized 431,413.96

Cost 439.488.03

Loss (2,074.07)

Share of net realized gain on investments of Graham-

Newman Corporation Liquidation Trust (Note D) 128, 706.79 126,632.72

NET INCOME (before deducting provision for additional

countingent compensation of officers and provision

for Federal income tax)

DEDUCT

Provision for additional contingent compensation

of officers (Note B) 9,627.66

Provision for Federal income tax (Note C) None

NET INCOME FOR YEAR

DEDUCT-DECREASE IN UNREALIZED APPRECIATION

At January 31, 1957 89,630.17

At January 31, 1958 (78,227:35)

Decrease

Less reduction in related additional contingent

compensation of officers (Note B) 12,627.66) (68.579.59)

OVER ALL NET INCOME FOR YEAR (Note E)

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¡RAHAM-NEWMAN CORPORATIO

(IN LIQUIDATION - NOTE A

STATEMENT OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED JANUARY 31, 1958

$804, 263.09 (a)

NET ASSETS AT JANUARY 31, 1957

NET INCOME FOR YEAR

Deduct-Additional contingent compensation of officers (Note B) 9.627.66

104.043.35

Net Income for year 908,306-44

DEDUCT (78,207.25)

Decress reduction in delated dation ond consingent compensat10n

of officers (Note B) 12.827.68) (68,520.59)

(388,400.00)

Iquidating distribution May 24, 1957 - $80.00 per share

$451,326.85

BALANCE - NET ASSETS AT JANUARY 31, 1958

Represented by it January 31, 195 it January 31,195

2,427,500.0

Capital Stock 1,401,271.37

2401,322:30

Capital Surpius $588,322.99

Earned surplus - at January 31, 1957 104,043.35 _692.366.34

Add - Net income for year 4,521,137.71

To38- L1qudat1ng datributons-to Maguary 34,1957 3,692,833.78

388.400.00 1,081,233.78

Balance-Net Assets, before including unrealized 439,903.93

appreciation of Investments

Add-Unrealized appreciation of investments 0,002.51

at January 31, 1957 11.422.92

Decrease for year 8,579.59(1 8,579.59(b) _17.422.9

$_151,326.85 $

Total - Net Assets

1) after providing for third liquidating distribution ($40.00 per share on 4,855 shares-$194,20

eclared January 28, 1957; paid February 11, 1957

b) represents the amount of uated add onal contingent compensation 0 orade capital stock

fter deducting the related additiona

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GRAHAM-NEWMAN CORPORATION LIQUIDATION TRUST

SUMMARY STATEMENTS

FOR THE PERIOD FEBRUARY 1,1957 IO JANUARY 31,1958

APPLICABLE TO

CERTIFICATES OWNED

BY GRAHAM-NEWMAN

TOTAL CORPORATION

OPERATIONS (5,000 certificates) (1,870 certificates)

Net Realized Gain on

sales of securities $132, 142.50 $128,706.79

Other Income

Dividends $1,240.00

Interest 5,024.97

Total 6,264.97

Less-New York State

Less-New YochiSe taxes 6,597.95*

Legal expense 2,824.92

Accountirg 700.0010,122.87 (3,857.90) (3,757.58)

Total Net Income for period $128,284.60 $124,949.21

#Includes tax on gains reported in prior year

SUMMARY STATEMENT for the perlod February 1,1957

to January 31, 1958

Net Assets at January 51, 1957 $483,548.64 $470,976.37

(on basis of cost of securities)

Add-Realized net income for period,as above 128,284.60 124,949.21

611,833.24 595,925.58

Deduct-Distributions to certificate holders:

Feb. 6,1957 $11.00 per ctf. 55,000.00

May 22,1957 25.00 125,000.00 180,000.00 175,320.00

Balance-Net Assets at January 31,1958

on basis of cost of securities $431,833.24 $420,605.58

on basis of market value (see below) $443,561.09 $432,028.50

ASSETS AT JANUARY 31e 1958 Value

Cash-Manufacturers Trust Co. $ 99,929•84 $ 99,929.84

U.S.Ireasury Notes 2-7/89-615/58 297,328.13

accrued interest thereon 1,078.12

Other securities

1,100 shares Arkansas Fuel

011 Corp. 35,297.15 40,425.00

1,100 shares Cleveland Worsted

Mills Co. - 6,600.00

Total 433,633.24 445,361.09

Deduct-Provision for New York

State Franchise tax 1,800.00

Net Assets at January 31,1958 $431,833.24 $443,561.09

Per certificate $ 86.37 $88.71

(5,000 certificates)

Applicable to certificates owned

by Graham-Newman Corporation

(4,870 certificates) $420,605.58 #432, 028.50

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1958

NOTE A - LIQUIDATION-DISSOLUTION- LIQUIDATING DISTRIBUTIONS

The company was dissolved on September 30, 1957 and is presently In the process of winding up its affairs. Liquidation and dissolution had been voted by the stockholders at a special meeting held August 20, 1956.

1956 the company-in order to effect an orderly liquidation of certain not readily marketable securities-trens erred certain securities to Manufacturers Trust Company and Jerome A. Newman as trustees, In exchange for 5,000 trust certificates (being the equivalent of one 4372 certificate for each share of stock then outstanding). The trust was designated Graham Newman Corporation Liquidation Irust, and is herein referred to as the "Iiquidation trust".

Between July 6, 1956 and October 5, 1956, 145 shares of the company's stock were tendered to the company and retired, leaving 4,855 outstanding-upon which Iiquidating distributions were made as noted below. Certain of these stockholders elected to take liquidation trust certili-

in part payment of the redemption price of their stock, and 130 trust certificates were distributed to them, reducing the company's holding to 4,870 trust certificates.

iquidating distributions have been made totalling $840.62° er share (on 4,855 shares) of which $760.62- per share were voted durin the prior fiscal year (including the distribution of $40 per snare wnicn was paid on February 11, 1957) and $80 per share additional was paid at May 24, 1951.

By July 31, 1957 the company had disposed of all Of Its securi-ties other than the liquidation trust certificates, and the liquidation trust had disposed of substantially all of its securities (retaining only two investments which had a then market value of $85,800) • At August 7, 1957 the directors voted-in view of the pending litigation in which the company had been named as one of the defendants (see Note E). to retain its then present assets until the company's liability, if any, shall have been finally determined.

At January 31, 1958, the assets of the company consisted solely of cash, short term United States Government obligations, and Graham Newman Corporation Liquidation Trust certificates. At that date the assets of Graham Newman Liquidation Trust consisted solely of cash, short term United states Government obligations, and two other investments having a market value of $47,025.

NOTE B - COMPENSATION OF OFFICERS

the president was paid a salary at the rate of $25,000 per annur or the period February 1, 1957 to August 15, 1957 (6-1/2 months).

The three principal executive officers (chairman of the boara, president, and vice-president) were entitled, as a group, to additional compensation equivalent to 20% of the excess of the realized net income In each year (less the net unrealized depreciation, If any, in the value of investments at the year end which had accrued subsequent to January 31, 1948) over an amount equivalent to $40 per share per annum ($10 per share per quarter) on the outstanding capital stock-subject to certain limitations as noted in prior annual reports;-such additional annual compensation beirg payable in five equal annual installments-within sixty days after the close

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1958

(CONTINUED)

NOTE B. - COMPENSATION OF OFFICERS (Continued)

of the respective fiscal years, but payment of deferred Installments could be accelerated at the discretion of the directors.

The balance of the accrued additional compensation (in respect of the four fiscal years ended January 31, 1956) which remained unpaid at June 28, 1956, was, pursuant to resolution of the board of directors at a meeting on that date, deposited on July 9, 1956 with Manufacturers Trust Company in a special account with instructions to make payment to the respective officers (or to their executors, administrators or assigns) February Ist of each year (1957 to 1960), as the respective Installments became due and payable. The installment due on February 1, 1957 was paid. At January 31, 1958 the unpaid balance of additional compensation (being the unpaid Installments of additional compensation accrued for the three fiscal years ended January 31, 1954-1955 and 1956) and I1kewise the amount on deposit with Manufacturers Trust Company to pay the same, amounted to $254,557.26.

With respect to additional compensation accruable from February 1, 1956 to date of final liquidation, the directors at a meeting held August 21, 1956 determined that, in view of the then pending liquidation of the company, the additional compensation for such period would in no event be greater than the amount thereof as computed on the basis of the value of the net assets as at August 31, 1956; that accordingly no additional compensation would be payable in respect of any subsequent appreciation in value, and that, in the event of a subsequent shrinkage in value upon final liquidation, the amount of additional compensation for this period would be subject to downward revision. The amount of the additional compensation for the period February 1, 1956 to August 31,1956, computed on the basis of asset values as at the latter date (after making provision as at that date in the amount of $50,000 to cover liquidation expenses) has been determined at $143,272.98• of this amount there had been charged to income for the prior fiscal year-ended january 51, 1957- the sum of $133,645.32 (computed on the basis of the realized net income for that year), leaving a balance of $9,627.66 which has been charged against income for the current fiscal year.

The additional compensation in respect of the period subsequent to January 31, 1956 1s payable In five annual installments. At August 7, 1957 the directors voted to make immediate payment of the first installment (computed on the basis of the maximum amount of additional compensation for the perlod as computed, Viz $143,272.98) In the amount of $28,654.60, leaving a balance of $114,618.38, which amount, in their opinion (in which we concur) is in excess of any downward adjustment in the amount of their additional compensation which would result from the most unfavorable determination in the pending litigation in which the company has been named as one of the defendants see Note E). No further payments on account OI additional compensation are to be made until the termination of this liti-

The balance of additional compensation, as then determined, will be payable in four instatiments, date of such final determination, and at February Ist of each of the three succeeding years.

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1958

(CONTINUED)

NOTE C - TAX STATUS

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The corporation had in prior years elected to be taxed as a regulated investment company under the internal revenue code, and, as such, having distributed its entire net income in each year, either as dividends or as 1iquidating distributions, was not llable for Federal income tax in those years. The cornoration, having been dissolved during the current fiscal year, is no longer, in the opinion of its counsel, regulated investment company. By reason of the fact that gains on sale of securities made within twelve months after the adoption of a plan oi liquidation are not reportable as taxable income under the internal revenue code and that deduction may be taken for tax purposes of the amount paid during the year on account of officers' deferred additional compensation, the company will not be subject to Federal income tax in the current year. The statement herein includes certain income and gains, and unrealized appreciation as at the year end of the liquidating trust, which are not yet reportable for tax purposes, but which will be more than offset by the allowable deduction noted above. No provision has therefore been made in the statements herein for Federal income tax for the current year or in respect of the items referred to in the preceding sentence.

NOTE D - PROFIT AND LOSS ITEMS

The share Of Income (loss) and capital gains of Graham-Newman Corporation Liquidation Trust allocable to the trust certificates owned by the company have been incorporated in the Profit and Loss statement herein. The book carrying value of the company's investment in the trust certif1- cates has been correspondingly Increased.

In July 1956 the management had determined to set up a provision to cover liquidation expenses in the amount of $50,000, and to charge thereto all expenses subsequent to August 31, 1956. The unexpended balance of this provision as at January 31, 1957 was $21,028.15 which amount has been applied in the statements herein against the expenses incurred during the current year.

NOTE E - CONTINGENT LIABILITIES

An action has been commenced against certain directors of New York, New Haven & Hartford Railroad Company and a large group of other defendants who had transactions with that company, - in which suit Graham-Newman Corporation has been named as one of the The company had

"certificates of beneficial interesting 1955 purchased in the open market Of the railroad company which, under a "put" option, It subsequently sold to the raliroad company, realizing a total sum of $512,610.83. suit seeks to have this purchase contract by the railroad company declarec null and void. The quoted market value of the "certificates of interest" at January 31, 1958 was approximately $82,000. The company has been advised by its counsel that in their opinion the suit can be successfully defended. The amount of loss, Ifany, which may be sustained by the company is not presently determinable. No provision for loss or for expenses in connection with this litigation has been set up, nor has any adjustment in the amount of the provision for officers' additional contingent compensation been made in the statements herein•