格雷厄姆-纽曼公司——致股东的信函及1957财年年度报告

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GRAHAM-NEWMAN CORPORATION

122 EAST A2ND STREET

NEW YORK 17, N. Y.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO THE STOCKHOLDERS OF GRAHAM-NEWMAN CORPORATION:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders

• at the office of the Corpora-at 250124.520 the food purpose t, On Honday, Apsi 8, 3951, N.Y., on Monday, April 8, 1957,

(1) To elect five Directors to hold office until the

Annual Meeting of Stockholders next ensuing after

their election and until their successors shall have

been elected and shall have qualified or until the

dissolution of the corporation, whichever occurs first.

(2) To consider and vote upon a proposal to ratify the

selection oi Messrs, stern, Porter, Kingston & Coleman

as auditors of the Corporation for the Corporation's

fiscal year ending January 31, 1958.

(3) To transact such other business as may properly come

before the meeting of any adjournment or adjournments

thereof.

There will be laid before the meeting the Annual Report of the Corporation, including financial statements for the fiscal year ending January 31st, 1957, In the form in which it was mailed to the Stockholders of the Corporation on February 25, 1957. Stockholders will not be called upon to take any action in connection with the said Annual report. The minute book of the Corporation, containing the minutes of all meetings of the Board of Directors since the last Annual Meeting of Stockholders, will be available at the meeting for inspection.

The stock transfer books of the Corporation will not be closed, but in lieu thereof, the Board of Directors has fixed the close of business on March 15, 1957, as the record date for the determination of stockholders entitled to notice of, and to vote, at the meeting.

Each stockholder who does not expect to attend in person is re-quested promptly to date, fill in, sign and return the enclosed Form of Proxy. This Proxy is solicited on behalf of the Management of the Company.

By Order of the Board of Directors.

New York, N. Y. DOUGLAS NEWMAN March 15, 1957. Secretary

PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. A SELF- ADDRESSED STAMPED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.

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PROXY STATEMENT

Annual Meeting of Stockholders

GRAHAM-NEWMAN CORPORATION

to be held April 8, 1957

This statement is furnished in connection with a solicitation by the management of Graham-Newman Corporation (hereinafter called the "Corporation") of proxies to be used at the Annual Meeting of Stockholders of the Corporation to be held at 2:00 P.M. on Monday, April 1957 at the Office of the Corporation, 122 East 42nd Street, in the city of New York, N. Y., for the purpose set forth in the accompanying Notice of Annual Meeting of Stockholders.

An Annual Report of the Corporation was mailed to Stockholders on February 25, 195T. This report included financial statements for the Fiscal year ended January 31, 1951. Such report is not to be incorporated in this Proxy Statement by reference and is not to be deemed to be a part of the proxy soliciting material.

At the close of business on March 15, 1951, there were 4,855 shares of capital stock of the Corporation outstanding. Each of such shares held of record on March 15, 1957 is entitled to one vote.

If the enclosed Form of Proxy is executed and returned, It may, nevertheless, be revoked at any time in so far as it has not been ex-ercised.

A. Election of Directors.

Five Directors are to be elected, each to hold office until the annual meeting of Stockholders next ensuing after his election and until his successor shall have been elected and shall have qualified or until the dissoiution of the corporation, whichever occurs first. It is the intention of the persons named in the enclosed Form of Proxy to nominate and vote such proxy for the election of the following persons, all of whom are candidates for re-election.

Benjamin Graham Robert J. Marony

Jerome A. Newman David I. Doda

Howard A. Newman

In the event of the inability of any of such nominees to accept nomination or election, it is the intention of the persons named in the enclosed Form of Proxy to vote such proxy for the election of such other person as Director as they may in their discretion determine.

The By-Laws provide that the Board of Directors shall consist of five members and may be increased to not more than nine. The number of Directors now has been fixed at five.

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B. Information about Nominees for Election as Directors.

Names

Benjamin Graham

Jerome A. Newman

Robert J. Marony

David I. Doda

Howard A. Newman

Served

continu-

ously

as a

Principal Occupation Director

or Employment Since

Chairman of Board of

Directors, Graham-

Newman Corp. 1936

President

Graham-Newman Corp. 1936

Director, Chicago

Milwaukee, St. Paul

& Pacific RR 1936

Professor of Finance,

Columbia University 1944

President, Phila. and

Reading corp. and

Graham oman Corp.

Graham-Newman Corp. 1952

Number of Shares

Graham-Newman

Corporation

Common Stock

Beneficially

Owned Directly

and/or Indirectly

on February 15, 1957

(1) (3) 84

(2) (3) None

(3) None

(4) (3) 41

(3) 4

(1) Mrs. Graham owns 12 shares.

(2) Mrs. Newman owns 159 shares.

Partners in a firm that owns 289 shares.

(3)

(4)

Mrs. Dodd owns 56 shares.

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C. Remuneration and other Transactions with Directors,

Nominees, officers and others

Capacity Salaries Pension

in which for Retire-

Renumera- Fiscal Year ment and

Name of tion was ended Shares in Similar

Individual Received Jan. 31, 1957 Profits Payments

Benjamin Graham Chairman of

19 August 31, $35, 226,43(1) None

Board of Direc-

tors, Graham- $7500.

Newman Corp.

Jerome A. Newman President $25,000 $53,458.13(2)

Graham-Newman

corp.

Howard A. Newman Vice-President To March 31, $44,960.76(3) None

and Treasurer, 1956

Graham-Newman $4,166.67

corp.

No other Director or Officer of the Graham-Newman Corporation re-

ceived remuneration in excess of $25,000, for the fiscal year ending

January 31, 1957.

All persons, as a group, who were Directors or Officers of the

Corporation:

Salaries of Directors and Officers as such $ 43,733.31

Additional compensation based on profits 133,645.32

$17T, 378.63

(1) Of this amount $35,226.43 is payable after January 31, 1957.

Total amount shown is $46,452.80 less than that received in

previous fiscal year.

(2) Of this amount $53,458.13 1s payable after January 31, 1957.

Total amount shown is $28,221.10 less than that received in pre-

vious fiscal vear.

(3) Of this amount $44,960.76 is payable after January 31, 192|•

Total amount shown is $19,514.76 more than that received in

vious fiscal year.

(4) Represents decrease of $95,008.16 over preceding year.

D. Selection of Independent Public Accountants.

Pursuant to the Investment Company Act of 1940, those members of

the Board of Directors of the Corporation who are not officers or em-

ployees thereof have selected Messrs. Stern, Porter, Kingston & Coleman

as the firm of independent public accountants to Audit the accounts and

to report on the financial statements of the Corporation for or during

the year ended January 31, 1958. This firm has been the independent

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public accountants for the Corporation since January 31, 1939. This selection will be submitted for ratification or rejection at the Annual Meeting.

E. Liquidation

On August 20th, 1956, the stockholders voted the liquidation and dissolution of the Corporation within one year of that date. Liquidat-ing dividends of $760.02 per share have been paid to stockholders. is contemplated that the liquidation will be completed by August 1957.

F. Other Matters

The management knows of no other matters which are to be brought before the meeting. However, it any other matters, not now known or determined, properly come before the meeting, it is the intention of the persons named in the enclosed Form of Proxy to vote such proxy in accordance with their judgment on such matter.

All proxies received will be voted in accordance with the instructions and specifications contained therein, as regard selection of auditors and other matters.

G. Expenses

The cost of preparing, assembling and mailing material in connection with this solicitation of proxies will be borne by the Corporation, and will not exceed $150.

Very truly yours,

JEROME A. NEWMAN

President

March 15, 1951.

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GRAHAM-NEWMAN CORPORATION

122 EAST 42ND STREET

NEW YORK 17. N. Y.

#ebruary 25, 1957

TO THE STOCKHOLDERS OF GRAHAM-NEWMAN CORPORATION:

Submitted herewith are financial statements of the Corporation covering the fiscal year ended January 31, 1957.

On August 20,1956 the stockholders voted to dissolve the corporation within one year from that date. the e rogues include toe period of 1 guidation from elore, 20,1956 to January 31,1957.

The appended Balance Sheet indicates a • net asset value of $165.66 per share after deducting the liquidating dividend voted January 28,1957 and paid on February iI, 1957.

the overall profit for the year exclusive of the provision for liquidation expenses, was $56.48 per share.

The indicated net asset value on February 15,1957 after giving effect to the aforementioned dividend, was approximately $165.70 per share.

'e report eate foe h total dividends an aividends per share paid during the fiscal year

t Is anticipated that final distribution in liquidatio ill be made in accordance with the resolution adopted at th special meeting.

which The begard 8,937, austined to toe boders, holders on or about March 15,1957.

By order of the Board of Directors,

Benjamin Graham, Jerome A. Newman,

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Chairman of the Board fresident

BOARD OF DIRECTORS

David I. Doda Robert J. Marony

Benjamin Grahem Howard A, Newman

Jerome A. Newman

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STERN, PORTER, KINGSTON & COLEMAN

CERTIFIED PUBLIC ACCOUNTANTS

IT Mest 12nd Treet, New York 36,. N. 31.

OXFORD 5-3660 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, 1957 and the related statements of Profit and Loss, and Changes In Net Assets for the flacal 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 me considered necessary In the circumstances.

In our opinion, the accompanying Balance Sheet and related statements of Profit and Ioss and Changes In Net Assets, as supplemented by the notes appended thereto, present fairly the financial position of araham-Newman Corporation as at January 31, 1957 and the results of Its operations for the Ilscal year then ended, and except for the change noted In Note A-3 of the Notes to Financial Statements in respect of expenses Incurred subsequent to August 31, 1956, which change has our approval, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

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Stea Torter Kuigatn "Colevan

Say ate Kaigen

Pert Poled Pubie Accountant RAN

Rebruary New Yory 24, Y957.

STERN. PORTER, KINGSTON & COLEMAN

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S _E

CASH

DEPOSIT WITH BROKER

INVESTMENTS IN SECURITIES-AT MARKET VALUE (Note B)

(Cost $809, 920.69)

OTHER ASSETS

Dividends receivable $ 62.50

Interest accrued on bonds 250.00

Sunny re and Fitures 1,984.80

furniture and fixtures 4, 137.15

GRAHAM-NEWMAN

NEW

BALANCE

JANUARY 31,

$ 186, 812.03

416,227.59

931, 646.62

6,434.45

$1,541,120.69

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CORPORATION

YORK

SHEET

1957

LIABILIIIES AND CAPITA L

THIRD LIQUIDATING DISTRIBUTION PAYABLE $ 194,200.00

($40.00 per share on 4,855 shares

declared January 28, 1957; payable February 11, 1957,

SECURITIES SHORT-AT COVER VALUE (Note B.

(net proceeds of sale $339,577.24

SUNDRY PAYABLES AND ACCRUALS

DUE TO OFFICERS (Note C)

for additional compensation-on basis of realized

net income for the four fiscal years ended

_396,321.96

sannounted deposited with Manufacturers Trust

less-amounted

co. with instructions to pay when due 396,321.96

(payable in Installments 1957-1960)

PROVISION FOR ADDITIONAL COMPENSATION SUBSEQUENT

TO JANUARY 31, 1956 (Note C)

on basis of realized net income to January 31,1957 133, 645.32

on basis of increase in unrealized appreciation

subsequent to January 31, 1948 9,627.66

(payable in five equal annual Installments-

1957 to 1961)

PROVISION FOR LIQUIDATION EXPENSES

(unexpended balance) (Note A)

NEL ASSETS APPLICABLE TO CAPITAL STOCK (after providing

for third liquidating distribution as above)

Capital Stock:

Authorized and issued-

5,000 shares of no par value

stated value $500.00 per share ($2,500,000)

Less-retired - 145 shares ($72,500)

Outstanding -4, 855 shares 2,427,500.00

Capital surpius 1,401,271.37

Earned Surplus

4,507, 32-39

Total

Less-Liquidating distributions 3,692, 833.78

Balance-Net Assets before including unrealized

appreciation of investments 724,260.58

Add-Unrealized appreciation of investments-after

deducting provision for related additional

contingent compensation of officers 80,002.51

Total 'equivalent to . on 4,855 shares outstand-

1n840,86 per sure payable february it, 15-

$165.66 per share) $ 804,263.09

$2,541,120.69

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GRAHAM-HEWMAN CORPORATION

NEW YORK

PROFIT AND LOSS STATEMENT

FOR THE FISCAL YEAR ENDED JANUARY 31, 1957

STATEMENT OF INCOME AND EXPENSE:

excluding gain or loss on investments.

Incone

Dividends

$ 36,258.50

Less-Dividends paid on short securities

17,191.25 $ 19,067.2

Interest on investments

1,195.4'

Share of net Income of Graham-Newman Corporation

Inves date Tete excluding gain or 1088 on

Total

3,089,60

29,352.32

Expenses (Notes A(3) and F)

Salaries of officers

Office salaries

Executive committee fees

Directors' fees

Rent and 1ight

28,750.00

22350.00

1,666.64

400.00

2,014.81

Taxes (other than Federal income tax)

Legal and auditing

Custodian fees

Interest

General expenses

Depreciation

3,105.04

5,500.00

Total expenses (exclusive of additional

compensation of officers)

53,719,05

Net Loss (excluding gain or loss on investments-before

deducting additional compensation of officers and

provision for Federal Income tax)

(24,366.73)

NET REALIZED GAIN ON INVESTMENTS (Note F)

Amount realized

Cost

4,596,431.48

3.903,064.04

ada-Share of net realized gain on investments of

Graham-Newman Corporation Liquidating Trust

(Note F)

63,467.60

858,835, 04

NET INCOME (before deducting provision for

additional compensation

of officers and

provision for Federal income tax)

DEDUCT

834,468.31

Provision for additional compensation

of officers (Note C)

133,645.32

Provision for Federal Income tax (Note D)

NET INCOME FOR PERIOD

None

133,645,32

700,822.99

DEDUCT-DECREASE IN UNREALIZED APPRECIATION

At January 31, 1957

At January 31 1956

$ 89,630.17

617,233,09 (527,602.92)

Less-Reduction in related additional

contingent compensation of officers (Note C) (109,167.24) {418,435,68)

"OVER ALI" NET INCOME FOR PERIOD (Notes A (3) and F)

STERN. PORTER. KINGSTON & COLEMAN

$282,387.31

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GRAHAM-NEWMAN CORPORATION

STATEMENT OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED JANUARY 31, 1957

NEI ASSETS AT JANUARY 31, 1956

Per share

$4,458, 062.98(1) $891.61

(5,000 shares issued and outstanding)

NET INCOME FOR YEAR

Loss for year-excluding gain or loss on

Investments (before deducting add1-

tional compensation of officers) $( 24,366.73)

Net realized gain on sales of

investments

Total

Deduct-Additional compensation of

officers (Note C)

Net Income for year

DEDUCT

Decrease in unrealized appreciation

of Investments

Less-Reduction in related additional

contingent compensation of

officers (Note C)

358, 835. 0

34,468.3

133,645.32

(527,602.92)

700,822.99 140.17

(109,167,24) (418,435.68)

(83,69)

Provision for 11quidation expenses (Note A)

< 50,000,00) (10.00)

4, 690,450.29 938.09

$12.50 per share

Dividend paid June 14, 1956

62,500.00 12.50

4,627,950.29 925.59

capital Stock redeemed-July 6,1956 to Oct.5,1956

(Note E) (145 shares)

130,853.42 902.44

Balance (applicable to 4,855 shares)

4,497,096.87 926.28(2)

Ilquidating distributions (on 4,855 shares):

per share

September 19, 1956 $620.625

october 25, 1956 100.

February 11, 1957 40.

(declared Jan, 28, 1957)

Total $760.625

BALANCE-NET ASSETS AT JANUARY 31

declared January 28

$3, 013, 133.78

195,200000

3,692, 833,78 760,62(2)

$ 804,263.09 $165.66(2)

1957-payable February 11,

1957 - $40.00 per share)

(1) Net assets at January 31, 1956, after deducting final dividen

$950,850 18090.17 per shareded - pald March 12, 1956, viz:

(2) Computed on basis of 4,855 shares outstanding (after retire-

ment of 145 shares)

STERN, PORTER. KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

ANALYSIS OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED JANUARY 31, 1957

NET ASSETS AT JANUARY 31, 1956

ADD - Net income for year

TOTAL

$4,458,062.98

CAPITAL

STOCK

$2,500,000.00

CAPITAL

SURPLUS

$1, 459, 624.79

EARNED

SURPLUS

$ -e-

700,822.99

UNREALIZED

APPRECIATION

(Net*)

$498,438.19*

$700,822.99

Decrease in unrea 1zed

(418,435.68)

appreciation (net*)

Provision for liquidation

(50,000,00)

(418,435.68)*

(50,000.00)

expenses

BALANCE

DEDUCT

Paster base 0 e d 259) 62, 500.00

130, 853.47

BALANCE

Capital stock

Capital Surplus

Earned Surplus

Total

DEDUCT - Ilquidating distributions

BALANCE-NET ASSETS AI JANUARY 31, 1957

applicable to

232.387.31

4, 690, 450.29

193,353.42

4,497, 096.87

3,692,833.78

$ 804,263.09

2,500,000.00

72,500.00

3,427,500.00

2.431:300-30

_ 588.322.99

4,417,094.36

3.692,833.78

$ 724,260,58

1,459, 624.79

58,353.42

$1.401,271.37

650,822.99

62,500.00

$588,322.99

80,002.51*

80,002.51*

30,002.51*

$ 80,002.52*

STERN. FORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

NOTE A - LIQUIDATION AND DISSOLUTION OF THE CORPORATION

1 - Liquidation and Dissolution

at a special meeting of stockholders

on August 20

2 - Graham-Newman Corporation Llguidating Trust

At June 28, 1956 certain not readily marketable securities were

transferred to Manulacturers Irust Company and Jerome A. Newman,

trustees. The trust was designated as Graham-Newman Corporation

Liquidating Trust, and trust certificates were issued to the corporation

in exchange for the assets transierred. The total number of certif1-

'ates received was 5,000 (being the equivalent of one certificate for

each share of stock), of which 130 certificates were distributed in

connection with the retirement of 130 shares of capital stock (see #4

below) and 4, 876 certificates are presently held by the corporation.

3 - Provision for Liquidation Expenses

The management determined to set up a Provision for Liquidation

Expenses in the amount of $50,000 (equivalent to $10.00 per share), and

further, to consider all expenses incurrea subsequent to August 31,19st

as liquidation expenses and Chargeable to this Provision. The Provision

has accordingly been charged with expenses incurred during the period

September 1, 1956 to January 31, 1957 for rent, salaries and other

expenses of a character which would ordinarily, in the case of a contin-

uing business At January able to Income, in the aggregate amount of

$26,152.21. 1957 the unexpended balance of the Provisior

$21 Whether this amount 1s excessive or insufficient 1s not

presently determinable.

4 - Retirement of Stock

Between July 6, 1956 and October 5, 1956, 145 shares of Capital

Stock were tendered by stockholders and retired. As part of the amount

pald in redemption of 130 shaver the retiring stockholders received

Grahan-Newman Corporation Liguidating Trust certificates on the basis

of one certificatefor each share tendered.

5 - Iquidating DistrIbutIons

Per share

At September 19, 1956 $620.625 3,013,133.7

October 25, 1956 100.00

total distributions to January 31,1957 720.625 3,498,633.78

to which 1s to be added a third liquidating

distribution, declared January 28, 1957 and

payable February 11, 1957 40.00 194,200,00

Total $760,622 $3.692,833,78

STERN, PORTER. KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE A - LIQUIDATION AND DISSOLUTION OF THE CORPORATION (Continued)

5 - Liguidating Distributions (continued)

1o2 are no i do axed 50 share PIt despite Radiatooke

corporation stock Iot each share oi Graham-Newman Corporation stock-

(valued at the average price on the New York Stock Exchange on

September 5th, 6th and 7th, 1956-subsequently determined to be 22-1/16,

equivalent for the 10 shares of the distributed stock to $220.625) -

Or in the alternative, to those stockholders not exercising this option,

of the equivalent amount in cash, Viz: $220.625 per share.

NOTE B - VALUATION OF INVESTMENTS-UNREALIZED APPRECIATION OF INVESTMENTS

Investments have been evaluated at their quoted market values as

at January 31, 1957, except as noted below. These valuations are not

however, Intended as representations of the amounts which may be actuall

realizable upon sale of the securities.

The unrealized appreciation at January 31, 1957 1s represented

as follows:

Ledger Value at Unrealized

Value Jan. 31,1957 Appreciation

Investments in securities $338,944.31 $364,250.00 $ 25,305.69

Certificates of Interest in Graham-

Newman Corporation Liquidating

Trust (4,870 certificates) 470,976,38 567,396,62 96.420.24

Total 809,920.69 931, 646.62 121,725.93

Securities short (a) (339,577.24) (371,673.00) (32,095,76)

Net securities postion $470,343.45 $559,973.62

Unrealized appreciation at January 31, 1957 $_89,630.17

(a) securities short are stated at amount realized on sale,

cover value and indicated 1oss.

The unrealized appreciation at the beginning of the year, the

decrease for the year, and the unrealized appreciation at the close thereof,

together with the related additional contingent compensation of officers

(Note C) and the balance applicable to the outstanding capital stock in

respect of each of these Items, were as follows:

Deduct- Balance of

Related

Additional Unrealized

Total contingent Appreciation

Unrealized Compensatior applicable to

Appreciation of officers Capital Stock

At January 31, 1956 $617,253.09 $118,794.90 $498,438.19

Decrease for year 521,602,92 109,167, 24 418.435.68

At January 31, 1957 $ 89,630.17 $_ 2,627.66 $ 80,002,51

STERN. PORTER. KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE B - VALUATION OF INVESTMENTS-UNREALIZED APPRECIATION OF INVESTMENTS

(Continued)

The Investment in Graham-Newman Corporation Iiquidating Trust certificates has been evaluated on the basis of the net assets in the Trust - securities having been evaluated on the basis of their market values as at January 31, 1957, except for an investment in respect of which the company has a put option exercisable at June 28, bane Bals a 2 Option pesos, and an Ingoernen o 0,253 0 230)

quotation was obtainable which has been evaluated at cost ($441.00).

NOTE C - COMPENSATION OF OFFICERS

Salaries were paid to the officers during the year as follows: to the chairman of the board $7,500; to the president $25,000; to the Vice-president (and former treasurer) $4,166.67 and to his successor as treasurer $0,000, a total of $41,666.67, of which $28, 750 was applicable to the period ended August 31, 1956, and has been charged to income, and the balance, Viz: $12,916.67, applicable to the period subsequent to August 31, 1956, has been charged to the provision for liquidation expenses. (see Note The salary of the chairman of the board was reduced at April 1, 1956 at his request from $15,000 to $12,000 per year, and was terminated, also at his request, at August 31, 1956. The salary of the vice-president (and former treasurer) was terminated, at his request, at

31, 1956. The salary of his successor as treasurer became effective at April 1, 1956.

Additional compensation is payable to the first three of the doove named olticers, as a group, of 20% of the excess of the realized net income in each year, as determined at the close thereof (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

to 25% of the excess of dividends paid during this period over the amount of the exclusion above noted. For the purpose of computing this 1imitation, the "final dividend" in respect of any fiscal year, which is in fact declared and paid subsequent to the close of the year, 1s considered as having been paid in the prior year. The additional compensation is payable In five equal Installments within sixty days after the close of the respective years, but payment of deferred installments may be accelerated at the discretion of the directors.

The balance of accrued and unpaid additional compensation at February 28, 1956 (after payment at February 15, 1956 of the installments then due) for the four fiscal years ended January 31, 1956 was $396, 321.96, which amount will become payable in annual installments in the early (within 60 days of the close of the respective fiscal years) of 1957 to 1960. Pursuant to resolution of the board of directors at a meeting held June 28, 1956 this amount was on July 9, 1956 deposited with Manufacturers Trust Co. In a special account with instructions to pay to the respective officers (or to their executors, administrators or assigns) on February Ist

-ll .

STERN, PORTER. KINGSTON & COLEMAN

[p.16]

GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE C - COMPENSATION OF OFFICERS (Continued)

of each of these years (1957 to 1960) the amounts which would become payable to them on these dates.

Lonal of the

appreciation or depreciation) as at the date of such event.

However, the directors at a meeting held August 21, 1956 deter. nined that, in view of the pending liquidation of the company, the addi. tional compensation accruing from and after February 1, 1956 would in no event be greater than the amount thereof as computed on the basis of the net assets as at August 31, 1956; that no additional compensation would be payable in respect of any subsequent appreciation and that in the event of a subsequent shrinkage In assets upon final liquidation, the amount of additional compensation would be subject to downward revision. The amount of additional compensation upon the basis of August 31, 1956 asset values, and therefore the maximum amount payable in respect of additional compensation accruing from and after February I, 1956 has been determined at $143,272.98. This additional compensation (subject to possible downward adjustment as hereinabove noted) will be payable in five equal annual installments, the first of which 1s to be made at the date of the final liquidating distribution to stockholders.

Of the above amount, $133, 645.32 1s applicable to realized net income, and viz: $9,627.66, to unrealized appreciation. the purpose of determining the base upon which the additional compensation applicable to realized net income 18 computed, deduction has been taken from income of the amount set up as provision for liquidation expenses ($50,000).

NOTE D - TAX STATUS

The corporation has elected to be taxed as a "regulated Invest- MO span ee take asy on the one r 0 unesses batte not one, Ior Federal Income taxes only on the amount of its undistributed net long term capital gain (less Its net short term capital loss, 1f any) and 1ta undistributed net income from other sources. The corporation has during the year made liquidating distributions, and will I1kewise in the future make Turner liquidating distributions, in an amount which will absorb the total net income reportable for Federal tax purposes in each of the above categories. No provision has therefore been made for Federal Income tax, either in respect of the realized net income for the year or in respect of unrealized appreciation at the close thereof.

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE E - REDEMPTION OF CAPITAL STOCK

There were tendered to the corporation between July 6,1956

and October 5, 1956 - 145 shares which were redeemed for $150,855. 42

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representing an average of $902.44 per share. In connection with

distributions were made in kind - (to those stockholders who elected to receive these securities) - 130 certificater of interest of Graham Newman Corporation Liquidating Trust, ano 250 shares Philadelphia & Reading Corporation stock.

NOTE E - PROFIT AND LOSS ITEMS

The expenses for the year as shown in the Profit and Loss statement herein represent the expenses incurred to August 31, 1956 only, the expenses incurred subsequent to that date having been considered as liquidation expenses, and charged to the Provision for Liquidation Expenses. (see Note A (3) ).

The share of the ircome and capital gains of Graham-Newman Come By he company have no been resorted in the statemen leavest owned by the company have been reflected in the statement.

The net realized gain on investments as shown in the state- 'ment Includes the excess of the amounts at which securities which were distributed to stockholders in kino were evaluated when distributed, over their cost, these amounts being (1) as to 32,920 shares Phila-delphia & Reading Corporation distributed as part of the first liqui-dating distribution at September 19, 1956 - $311,139.26; (2) as to 250 shares Philadelphia & Reading Corporation distributed as part of the redemption price of the company's stock - $1, 791.05, and (3) as to 130 certificates of interest of Graham-Newman Liquidating Trust distributed as part of the redemption price of the company's stock $3,128.23.

NOTE G - SUPPLEMENTARY INFORMATION

he aggregate amount of purchases and sales of investmen ecurities, other than United States Government obligations, mad during the year were as follows:

Cost of securities purchased $ 298,930.54

Proceeds of sales of securities 3,690,063.32

During the year securities were distributed to stockholders in the amount of 752, 221.32 (evaluated as of dates of distribution)

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NEW YORK

INVESTMENTS IN SECURITIES

JANUARY 31, 1957

No. Of

Shares

(or face

amount)

SECURITIES LONG

1,000 American Alrlines, Inc. 32% Cumu-

lative Convertible Preferre

900 American Cyanamid Cored #Ci

Convertible Preferred

Dow Chemical Co. Convertible

Subordinated Debentures 3/82

70 Thermoid Co. $2.50 Cumulative

Convertible Preferred

Total

4,870 Graham-Newman Corporation I1qu1d-

ation Trust-Certificates of

Interest

Total

SECURITIES SHORT

4,900 American and Inc.

2,184 Dow Chemical Co.

350 Thermoid co.

Total

STERN. PORTER, KINGSTON & COLEMAN

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GRAHAM-NEHMAN CORPORATION LIQIIDATION TRUST

NEW YORK

SCHEDULE OF NET ASSETS

JANUARY 31, 1957

No. of

Shares

(OI LaCe

amount

INVESTMENTS ON SECURITIES

1,20064/154 BoRn & Cochoonton

2-64/154

4,100 C.N. I. Iqurdating Corporation

,,500 carman & co. Inc

1,100 Cleveland Worsted M11ls Compans

5,005 engineers Public continy Sor

3,405

1,100 Houston 011 Co. Oi Texas

1,800 Kalamazoo Stove & Furnace Compan

1019 M.

Interest 241,951.00 (b)

600 ublicker IndustrLe

37 M. 5%

onvertible subordinate

lebentures-12/1/67

CASH - MANURACTURERS TRUST COe

ACCRUED INTEREST REGLIVABLE

TOTAL - represented by 5,000 Cer-

tificates of Interest

$582,542,73

HARE OF NET ASSETS-applicable t

ertificates owned by Grahan

Newman Corporation -

4,870 Certificater $567,396.62

(a) Evaluated at cost (no market quotation obtainable)

(b) Evaluated on basis of put option-see Note B

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

122 EAST 42ND STREET

NEW YORK 17. N. Y.

February 25, 1957

TO THE STOCKHOLDERS OF GRAHAM-NEWMAN CORPORATION:

Submitted herewith are financial statements of the Corporation covering fiscal year ended January 31, 1957.

On August 20,1956 the stockholders voted to dissolve

corporation within one year from that date. Therefore, these figures include the period of liquidation fron August 20,1956 to January 31,1957.

The appended Balance Sheet indicates a net asset value of $165.66 per share after deducting the liquidating dividend

January 28,1957 and paid on February 11,1957.

l'he overall profit for the year exclusive of the provision for liquidation expenses, was $56.48 per share. ivine endicated et resent oned dividera yas approximatel $165.70 per share.

l'he auditor

le reparturete foehitotadiridends and dividends per share paid during the fiscal year.

It is anticipated that final distribution in liquidation will be made, inaccordance with the resolution adopted at the special meeting.

The proxy statement for the Annual Meeting of Stockholders, which will be held on April 8,1957, will be mailed to the stockholders on or about March 15,1957.

By order of the Board of Directors,

Benjamin Graham, Jerome A. Newman,

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Chairman of the Board President

BOARD OF DIRECTORS

David L. Dodd Robert J. Marony

Benjamin • Graham Howard •A, Newman

Jerome A. Newnan

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[p.21]

STERN, PORTER, KINGSTON & COLEMAN

CERTIFIED PUBLIC ACCOUNTANTS

11 Test 12nd Treet, Neva York 36, N. 31.

OXFORD 5-3660 To the Board of Directors and Stockholders

of Graham-Nerman Corporation:

We have examined the Balance Sheet of Graham-Newman Corporation as at January 31, 1957 and the related statementa of Profit and LoBs, 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 me considered necessary in the circumstances.

In our opinion, the accompanying Balance Sheet and related statements of Profft 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, 1957 and the results of Its operations for the fiscal year then ended, and except for the change noted In Note A-3 of the Notes to Financial Statements in respect of expenses incurred subsequent to August 31, 1956, which change has our approval, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

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Sten Torter Cuigatre Colevan

KINGSTON & COLEMAN

Certified Public Accourtanti

New York, N. Y

February 14, 1957.

STERN, PORTER, KINGSTON & COLEMAN

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S E T

CASH

DEPOSIT WITH BROKER

INVESTMENTS IN SECURITIES-AT MARKET VALUE (Note B)

(Cost $809,920.69)

OTHER ASSETS

Dividends receivable $ 62.50

Interest accrued on bonds 250.00

sundry receivables 1,984.80

furniture and fixture $,137.15

GRAHAM-NEWMAN

NEW

BALANCE

JANUARY 31,

$186,812.03

416,227.59

931,646.62

6,434.45

$1,541,120.69

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CORPORATION

YORK

SHE E

1957

LIABILITIES AND CAPITAL

THIRD LIQUIDATING DISTRIBUTION PAYABLE $ 194,200.00

$40.00 per share on 4 855 shares

declared January 28, 1957; payable February 11, 1957.

SECURITIES SHORT-AT COVER VALUE (Note B

(net proceeds of sale $339,577.24)

SUNDRY PAYABLES AND ACCRUALS

DUE TO OFFICERS (Note C)

for additional compensation-on basis of realized

net income for the four fiscal years ended

January 31, 1956 $ 396,321.96

less-amounted deposited with Manufacturers Trust

396,321.96

partne in untons to p 1957-1du)

PROVISION FOR ADDITIONAL COMPENSATION SUBSEQUENT

TO JANUARY 31, 1956 (Note C)

on basis of realized net income to January 31,1957 133, 645.32

on basis of Increase in unrealized appreciation

subsequent to January 31, 1948 9,627.66

(payable in five equal annual installments.

1957 to 1961.

PROVISION FOR LIQUIDATION EXPENSES

(unexpended balance) (Note A)

NET ASSETS APPLICABLE TO CAPITAL STOCK (atter providing

for third 11quidating distribution as above)

Capital Stock:

Authorized and issued-

5,000 shares of no par value

stated value $500.00 per share ($2,500,000)

Less-retired - 145 shares ($72,500)

Outstanding -4,855 shares 2,427,500.00

Capital Surplus 1,401,271.37

Earned Surplus

• 500.32: 39

Total

Less-Liquidating distributions 3,692,833.78

Balance-Net Assets before Including unrealized

appreciation of Investments 724,260.58

Add-Unrealized appreciation of investments-alter

deducting provision for related additional

contingent compensation 80,002.51

Total 'equivalent to - on 4,855 shares outstand-

do 40.36 ere are payable date y 1t,1u520n

$165.66 per share) $ 804,263.09

$2,541,120.69

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GRAHAM-NEWMAN CORPORATION

NEW YORK

PROFIT AND LOSS STATEMENT

FOR THE FISCAL YEAR ENDED JANUARY 31, 1957

STATEMENT OF INCOME AND EXPENSES

excluding gain or loss on investments

Income

Dividends $ 36,258.50

Less-Dividends paid on short securities

(.291.25 * 19,087:35

Interest on investments

Share of net income of Graham-Newman Corporation

Liquidating Trust (excluding gain or loss or

investments) (Note F)

Total

Expenses (Notes A (3) and F)

Salaries of officers 28,750.00

Office salaries

committee fees 1:274:74

Executive

Directors' fees 400.00

Rent and 11ght 2,014.81

Taxes (other than Federal income tax)

3,505.04

Legal and auditing ,500.00

Custodian fees

Interest

General expenses

Depreciation 906,97

Total expenses (exclusive of additional

compensation of officers)

Net Loss (excluding gain or 10as on Investments-before

deducting additional, compensation of officers and

provision for Federal income tax)

NET REALIZED GAIN ON INVESTMENTS (Note F)

Amount realized 4,596,431.48

cost

3.305,064:04

Gain

Add-Share of net realized gain on investments of

Graham-Newman Corporation Liquidating Trust 63,467.60

(Note F)

NET INCOME (before deducting provision for

additional compensation of officers and

provision for Federal income tax)

DEDUCT

Provision for additional compensation

of officers (Note C) 133, 645.32

Provision for Federal Income tax (Note D) None

NET INCOME FOR PERIOD

DEDUCT-DECREASE IN UNREALIZED APPRECIATION

At January • 31, 1957

At January 31 * 39330,03 (527,602,92)

Less-Reduction in related additional

3,089.60

29,352.3

53,719,05

(24,366.73)

858,835.04

834, 468.31

133,645,32

700,822.99

contingent compensation of officers (Note C) (109,167.24) {418,435,68)

"OVER ALI" NET INCOME FOR PERIOD (Notes A(3) and F)

STERN, PORTER, KINGSTON & COLEMAN

$282,387.31

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GRAHAM-NEWMAN CORPORATION

STATEMENT OF CHANGES IN NET ASSETS

FOR THE FISCAL YEAR ENDED JANUARY 31, 1957

NET ASSETS AT JANUARY 31, 1956

Per share

$4,458, 062.98(1) $891.61

(5,000 shares issued and outstanding)

NET INCOME FOR YEAR

Loss for year-excluding gain or loss on

investments (before deducting addi-

tional compensation of officers) $( 24,366.73)

Net realized gain on sales of

investments

Total

Deduct-Additional compensation of

oficers (Note C)

Net Income for year

DEDUCT

858, 935. 9đ

133, 645.32

700,822.99 140.17

Decrease in unrealized appreciation

of investments

(527,602.92)

Less-Reduction in related additional

contingent compensation of

(83.69)

(109,167,24) (418,435.68)

officers (Note C)

(50,000,00) (10.00)

Provision for Iiquidation expenses (Note A)

Dividend paid June 14, 1956

$12.50 per share

4, 690,450.29 938.09

62,500.00 12.50

4, 627,950.29 925.59

Capltal Stock redeemed-July 6,1956 to Oct.5,1956

(Note E) (145 shares)

130, 853.42 902.41

926.28(2)

Balance (applicable to 4,855 shares)

4,497,096.87

Ilquidating distributions (on 4,855 shares):

per

share

$620.625

September 19, 1956

October 25, 1956 100.

February 11, 1957 40.

(declared Jan, 28, 1951) -

Total

$3,013, 133.78

485, 500.00

194, 200.00

3,692,833, 78 760,62(2)

$760.625

$_ 804, 263. 09 $165.66(2.

(1) Net assets at January 31, 1956, after deducting final dividenc

$950, 850 18190.17 per shareded - pald March 12, 1956, viz:

2) Computed on basis of 4,855 shares outstanding (after retire

nent of 145 shares

STERN. PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

ANALYSIS OF CHANGES IN NET ASSETS

FOR THE PISCAL YEAR ENDED JANUARY 31, 1957

NET ASSETS AT JANUARY 31, 1956

TOTAL

$4,458, 062.98

CAPITAL

STOCK

$2,500,000.00

CAPITAL

SURPLUS

$1,459,624.79

EARNED

SURPLUS

$

700, 822.99

UNREALIZED

APPRECIATION

(Net*)

$498,438.19*

$700, 822.99

ADD - Net Income for year

DEDUCT

Decrease in unrealizec

(418,435.68)*

(418, 435.68)

appreciation (net*

Provision for liquidation

(50,000.00)

(50,000.00)

expenses

BALANCE

62, 500.00

130,853.42

BALANCE

Capital Stock

Capital Surplus

Earned Surplus

Total

DEDUCT - Iiquidating distributions

BALANCE-NET ASSETS AT JANUARY 31, 1957

applicable to the

232,387.31

4,690, 450.29

193,353.42

4,497,096.87

3.692,833.78

$ 804,263.09

2,500,000.00

72,500.00

3,527,500.00

2,427,500. 0

1,401,271.3

588,322.99

4, 417, 094.36

3,692.833.78

$ 724,260.58

1,459, 624.79

58,353.42

$1,401,271.37

650,822.99

62,500.00

$588,322.92

80,002. 51*

80,002. 51*

80,002.51*

$_80,002.51*

related additional contingent compensation of officers.

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

NOTE A - LIQUIDATION AND DISSOLUTION OF THE CORPORATION

1 - Liquidation and Dissolution

At June 28, 1956 the directors voted to recommend 11gu1dat1on and

and at a special meeting of stockholders

ela, darn auda ion to be plate within a ste rear

2 - Graham-Newman Corporation Liguidating Trust

At June 28, 1956 certain not readily marketable securities were

transferred to Manufacturers Trust Company and Jerome A. Newman, as

trustees. The trust was designated as Graham-Newman Corporation

Liquidating Trust, and trust certificates were Issued to the corporation

in exchange for the assets transierrea. The total number of certifi-

cates received was 5,000 (being the equivalent of one certificate lor

each share of stock), of which 130 certificates were distributed in

connection with the retirement of 130 shares of capital stock (see #4

below) and 4, 870 certificates are presently held by the corporation.

3 - Provision for L1qu1dation Expenses

The management determined to set up a Provision for Liquidation

Expenses in the amount of $50,000 (equivalent to $10,00 per share),

further, to consider all expenses incurred subsequent to August 31,1956

as liquidation expenses and chargeable to this Provision. The Provision

has accordingly been charged with expenses Incurred during the perioo

FACE September 1, 1956 to January 31, 1957 for rent, salaries and other

expenses of a character which would ordinarily, in the case of a contin-

be chargeable to Income, in the aggregate amount of

business it January 31, 1957 the unexpended balance of the Provision

Whether this amount is excessive or insufficient 1s not

present y determinate.

4 - Retirement of Stock

Stock vete te dered by 956 kho deto and retired. , 145 shares of Capital

As part of the amount

paid in redemption of 130 shaver the retiring stockholders received

Graham-Newman Corporation Liquidating Trust certificates on the basis

of one certificatefor each share tendered.

5 - Liquidating Distributions

Liquidating, distributions have been made to January 31, 195

Per share

At September 19, 1956 $620•62%

$3,013,133.78

October 25, 1956 100.00 485,500,00

total distributions to January 31,1957 720.625 3,498, 633.78

to which 1s to be added a third liquidating

distribution, declared January 28, 1957 and

payable February 11, 1957 40.00

Total $760.622 $3.692,833,78

STERN, PORTER. KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE A - LIQUIDATION AND DISSOLUTION OF THE CORPORATION (Continued)

5 - I1qu1dat1ng Distributions (continued)

The distribution at September 19, 1956 is represented by

(a) $400.00 per share, plus (b) distribution in kind-to those stock-

holders who elected to take-of 10 shares Philadelphia & Reading

Corporation stock for each share of Graham-Newman Corporation stock-

(valued at the average price on the New York Stock Exchange on

September 5th, 6th and 7th, 1956-subsequently determined to be 22-1/16,

equivalent for the 10 shares of the distributed stock to $220.623) -

or in the alternative, to those stockholders not exercising this option,

of the equivalent amount in cash, Viz: $220.625 per share.

NOTE B - VALUATION OF INVESTMENTS-UNREALIZED APPRECIATION OF INVESTMENTS

Investments have been evaluated at their quoted market values as

at January 31, 1957, except as noted below. These valuations are not,

however, Intended as representations of the amounts which may be actually

realizable upon sale of the securities.

The unrealized appreclation at January 31, 1957 1s represented

as follows:

Ledger Value at Unrealized

Value Jan. 31,1957 Appreciation

Investments in securities $338,944.31 $364,250,00 $ 25,305.69

Certificates of interest in Graham-

Newman Corporation Liquidating

Trust (4,870 certificates) 470,976,38 567,396,62 96.420.24

Total 809,920.69 931,646.62 121,725.93

Securities short (a) (339,577.24) (371,673.00) (32,095,76)

Net securities position $470,343.45 $559,973.62

Unrealized appreciation at January 31, 1957 $ 89,630.17

(a) securities short are stated at amount realized on sale,

cover value and indicated loss.

The unrealized appreclation at the beginning of the year, the

decrease for the year, and the unrealized appreciation at the close thereol,

More air he balance praise do eatening capital code geer,

(Note C) and the balance applicable to the outstanding capital stock in

respect of each of these Items, were as follows:

Deduct- Balance Of

Related

Additional Unrealized

Total contingent Appreciation

Unrealized Compensation applicable to

Appreciation of officers Capital Stock

At January 31, 1956 $617,233.09 $118,794.90 $498,438.19

Decrease for year 527, 602, 92 109,167,24 418,435.68

At January 31, 1957 $ 89,630.17 $- 2627.6 80,002.5

STERN. PORTER. KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE B - VALUATION OF INVESTMENTS-UNREALIZED APPRECIATION OF INVESTMENIS

(Continued)

The investment in Graham-Newman Corporation Liquidating Trust certificates has been evaluated on the basis of the net assets in the Trust - securities having been evaluated on the basis of their market values as at January 31, 1957, except for an investment in respect of which the company has a put option exercisable at June 20'1957 ($241, 951) has been evaluated at its present value as at January 31,. on the basis of the option price, and an investment for which no market quotation was obtalnable which has been evaluated at cost ($441.00).

NOTE C - COMPENSATION OF OFFICERS

Salaries were paid to the officers during the year as follows: to the chairman of the board $7,500; to the president $25,000; to the vice-president (and former treasurer) $4,166.67 and to his successor as treasurer $5,000, a total of $41,666.67, Of which $28, 750 was applicable

period ended August 31, 1956, and has been charged to income, and the balance, viz: $12, 916.67, applicable to the period subsequent to August 31, 1956, has been charged to the provision for liquidation expenses. (see Note The salary of the chairman of the board was reduced at Apr1l 1, 1956 at his request from $15,000 to $12,000 per year, and was terminated, also at his request, at August 31, 1956. The salary of the vice-president (and former treasurer) was terminated, at his request, at March 31, 1956. The salary of his successor as treasurer became effective at April 1, 1956.

Additional compensation 1s payable to the first three of the above named officers, as a group, of 20% of the excess of the realized net income in each year, as determined at the close thereof (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 $40.00 per share per annum ($10.00 per share per quarter) on the outstanding capital stock - such additional compensation, however, being limited (upon a cumulative basis from and after February 1, 1948) to 25% of the excess of dividends paid during this period over the amount Of the exclusion above noted. For the purpose of computing this 11mitation, the "final dividend" in respect of any fiscal year, which 1s In fact declared and paid subsequent to the close of the year, 1s considered as having been paid in the prior year. The additional compensation is payable in five equal installments within sixty days after the close of the respect- Ive years, but payment of deferred installments may be accelerated at the discretion of the directors.

The balance of accrued and unpald additional compensation at February 28, 1956 (after payment at February 15, 1956 of the Installments then due) for the four fiscal years ended January 31, 1956 was $396, 321.96, which amount will become payable in annual installments in the early part (within 60 days of the close of the respective fiscal years) of 1957 to 1960. Pursuant to resolution of the board of directors at a meeting held June 28, 1956 this amount was on July 9, 1956 deposited with Manufacturers Irust Co. in a special account with instructions to pay to the respective officers (or to their executors, administrators or assigns) on February Ist

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE E - COMPENSATION OF OFFICERS (Continued)

of each of these years (1957 to 1960) the amounts which would become payable to them on these dates.

In the event of the death of any officer who was or might be entitled to additional compensation, or upon the termination of his tenure of oftice, the additional compensation due him was to be deter. Approaco or depreciate as of the date sun vant unfaird appreciation or depreciation) as at the date of such event

However, the directors at a meeting held August 21, 1956 determined that, in view of the pending liquidation of the company, the additional compensation accruing from and after February 1, 1956 would in no event be greater than the amount thereof as computed on the basis of the net assets as at August 31, 1956; that no additional compensation would be payable in respect of any subsequent appreciation and that in the event of a subsequent shrinkage in assets upon final liquidation, the amount of additional compensation would be gubject to downward revision. The amount of additional compensation upon the basis of August 31, 1956

values, and therefore the maximum amount payable in respect of additional compensation accruing from and aíter February 1, 1956 has been determined at $143,272.98. 'Ihis additional compensation (subject to possible downward adjustment as hereinabove noted) will be payable in five equal annual installments, the first of which 1s to be made at the date of the final liquidating distribution to stockholders.

Of the above amount, $133, 645.32 1s applicable to realized net Income, and the balance, viz: $9,627.66, to unrealized appreciation. the purpose of determining the base upon which the additional compengation applicable to realized net income 1s computed, deduction has been taken from income of the amount set up as provision for liquidation expenses ($50,000).

NOTE D - TAX STATUS

ment company, corporation has elected to be taxed as a "regulated Invest-

under the internal revenue coa, such will be liable 'or federal income taxes only on the amount of its undistributed net lone term capital gain (less its net short term capital loss, If any) and its undistributed net income from other sources. The corporation has during the year made 11quidating distributions, and will Ilkewise in the future make further I1quidating distributions, In an amount which will absorb the total net income reportable for Federal tax purposes in each of the above categories. No provision has therefore been made for Federal income tax, either in respect of the realized net income for the year or in respect of unrealized appreciation at the close thereof.

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NOTES IO FINANCIAL STATEMENTS

JANUARY 31, 1957

(CONTINUED)

NOTE EL - REDEMPTION OF CAPITAL STOCK

There were tendered to the corporation between July 6,1956

shares which were redeemed for $130, 853.42,

In connection with

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distributions were made in kind - to those stock-olders who elected to receive these securities) - 130 certificater f Interest of Graham Newman Corporation Liquidating Irust, and 250 shares Philadelphia & Reading Corporation stock.

NOTE E - PROFIT AND LOSS ITEMS

The expenses for the year as shown in the Profit and Loss statement herein represent the expenses Incurred to August 31, 1956 only, the expenses incurred subsequent to that date having been con- Bidered as liquidation expenses, and charged to the Provision for Liquidation Expenses. (see Note A (3) ).

The share of the income and capital gains of Graham-Newman Conger ay she daay have been ersated In the owned by the company have been reflected in the statement.

The net realized gain on Investments as shown in the statement includes the excess of the amounts at which securities which were distributed to stockholders in kind were evaluated when distributed, over their cost, these amounts being (1) as to 32,920 shares Phila-delphia & Reading Corporation distributed as part of the first liqui-dating distribution at September 19, 1956 - $311,139.26; (2) as to 250 shares Philadelphia & Reading Corporation distributed as part of the redemption price of the company's stock - $1, 791.05, and (3) as to 130 certificates of interest of Graham-Newman Liquidating Trust distributed as part of the redemption price of the company's stock $3,128.23.

NOTE & - SUPPLEMENTARY INFORMATION

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

Cost of securities purchased $ 298,930.54

Proceeds of sales of securities 3,690, 063.32

During the year securities were distributed

to stockholders in the amount of 752,221.32

(evaluated as of dates of distribution)

STERN, PORTER, KINGSTON & COLEMAN

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GRAHAM-NEWMAN CORPORATION

NEW YORK

INVESTMENTS IN SECURITIES

JANUARY 31, 1957

No. Of

Shares

(or face

amount)

SECURITIES LONG

,000 American Airlines, Inc. 32% Cumu

lative Convertible Preferre

900 American Cyanamid Co. 3-3gi

100 M. Dow Chemical Co. Convertible

Subordinated Debentures 3/82

70 Thermold Co. $2.50 Cumulative

Convertible Preferred

Total

,870 Graham-Newman Corporation Liquid.

tion Trust-Certificates o

Interest

Total

SECURITIES SHORI

4,800 American Airlines, Inc.

1,900 American Cyanamid

2,184 Dow Chemical Co.

350 Thermoid Co.

Total

STERN. PORTER, KINGSTON & COLEMAN

$102,000.00

129, 600.00

129,500.00

3,150,00

364,250.00

567,396,62

$931,646,62

$ 99,000.00

150,780.00

10:150;00

4,156,00

$371,673.00

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GRAHAM-NEHMAN CORPORATION LIQTIDATION TRUST

NEW YORK

SCHEDULE OF NET ASSETS

JANUARY 31, 1957

No. of

Shares

(or face

amount)

INVESTMENTS ON SECURITIES

1,100. Arkansas Fuel 011 Corporatior

2-64/154 Brooklyn & Richmond

4,100 C.N. I. IguratCos Corporation

1,500 Carman & CO. InC.

1,500 Carveland Horsted M1118 Company

5,005 Engineed Put atta Sor

Houston 011 CO. Of Texas

Kalamazoo Stove & Furnace Company

36 Valve Convent ERa PRom

400 Nat100a1 Presto Ten& Hartfordo.

1019 M.

Certificates of Benei icial

Interest 241,951.00(0)

60 suader on Products, Tc.

37 M. 5%

onvertible subordinate

lebentures-12/1/67

CASH - MANUP ACTURERS TRUST CO.

ACCRUED INTEREST RECEIVABLE

LOLAL - represented by 5,000 Cer.

1ficates of Interest

$582,542.73

SHARE OF NET ASSETS-applicable to

Certificates owned by Graham-

Newman Corporation

4,870 Certificates $567,396.62

(a) Evaluated at cost (no market quotation obtainable)

(b) Evaluated on basis of put option-see Note B

STERN, PORTER, KINGSTON & COLEMAN

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