SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6 (e)(2)
/X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240. 14a-11(c) or Section
240. 14a-12
SAMARNAN INVESTMENT CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a (i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SAMARNAN
INVESTMENT CORPORATION
PO Box 651 / Cleburne, Texas 76033-0651
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on April 25, 2000
The Annual Meeting of Shareholders of Samarnan Investment Corporation,
a Texas corporation ( the "Company"), will be held on Tuesday, April 25, 2000,
at 10:30 a.m., in the Bellevue Room I of The Fort Worth Club, 306 West Seventh
Street, Fort Worth, Texas, for the following purposes:
Proposal (1) To elect seven (7) directors to serve until the next annual
meeting of shareholders and until their successors are elected
and qualified.
Proposal (2) To ratify or reject the selection by the Board of Directors of
Cheshier & Fuller, L.L.P. as the independent certified public
accountants of the Company for the current fiscal year.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 17, 2000,
shall be entitled to notice of, and to vote at, the meeting or any adjournment
or adjournments thereof.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed herewith. If you do not expect to be present at the meeting, please
sign, date and return the Proxy promptly in the enclosed envelope to which no
postage need be affixed if mailed in the United States. If you attend the
meeting, you may, if you wish, withdraw your Proxy and vote in person.
Prompt response by our shareholders will reduce the time and expense of
solicitation.
By Order of the Board of Directors
George S. Walls, Jr.
President
Cleburne, Texas
March 31, 2000
<PAGE>
SAMARNAN
INVESTMENT CORPORATION
PO Box 651 / Cleburne, Texas 76033-0651
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
To be held April 25, 2000
----------------
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Samarnan Investment
Corporation, a Texas corporation (the "Company"), for use at the annual meeting
of shareholders of the Company to be held on April 25, 2000, and any adjournment
thereof, for the purposes set forth in the accompanying notice of meeting. It is
anticipated that this Proxy Statement and the accompanying Proxy will first be
mailed to shareholders on or about March 31, 2000.
ANNUAL REPORT
Accompanying this Proxy Statement is a copy of the Company's 1999
Annual Report to Shareholders.
COST OF SOLICITATION
The cost of solicitation of proxies, including the cost of preparing
and mailing this Proxy Statement, will be paid by the Company. Proxies may be
solicited without extra compensation by officers and employees of the Company by
telephone, telegram or personally. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
REVOCATION OF PROXIES
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice to the Secretary of
the Company of his or her election to vote in person, without compliance with
any other formalities. In addition, any proxy given pursuant to this
solicitation may be revoked prior to the meeting by delivering an instrument
revoking it or a duly executed proxy bearing a later date to the Secretary of
the Company.
RECORD DATE AND VOTING RIGHTS
The record date of shareholders entitled to vote was taken as of the
close of business on March 17, 2000. On that date the Company had outstanding
and entitled to vote, 1,201,768 shares of Common Stock, par value $1.00 per
share, with each share entitled to one vote on each matter presented for action
at the meeting. All votes cast in person or by proxy will be counted. Cumulative
voting for directors is prohibited.
If the proxy is properly executed, completed and returned by the
shareholder and is not revoked, it will be voted at the meeting in the manner
specified therein. If no specification is made, the proxy will be voted in favor
of each of the proposals.
-1-
<PAGE>
QUORUM AND REQUIRED VOTE
The holders of a majority of the number of shares of the Company's
outstanding Common Stock entitled to vote at the meeting, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the meeting. Abstentions and broker non-votes will be counted for
the purpose of determining whether a quorum is present at the meeting.
In all matters except the election of directors, the affirmative vote
of the holders of a majority of the shares present in person or represented by
proxy at the meeting shall be the act of the shareholders. Abstentions will be
treated as votes against a proposal and broker non-votes will have no effect on
the vote. Directors will be elected by a plurality of the votes cast by holders
of shares present in person or represented by proxy at the meeting.
George S. Walls, Jr., President and a director of the Company, and his
sisters, Martha Walls Murdoch and Nancy Walls Devaney, both of whom are
directors of the Company, together beneficially owned or had the right to vote
as of March 17, 2000, an aggregate of 1,088,586 shares (90.58%) of Common Stock.
(For additional information with respect to ownership of the Company's stock by
members of the Walls family and by directors and officers of the Company, see
"Principal Shareholders" and "Election of Directors-Stock Ownership of Directors
and Officers"). The above named members of the Walls family have advised the
Company that it is their present intention and the intention of the other record
owners of such shares to vote all of their shares (i) for the election as
directors of the nominees named under "Election of Directors" herein (Proposal
1); and ( ii) the ratification of the selection of Cheshier & Fuller, L.L.P. as
the independent certified public accountants for the Company (Proposal 2).
Accordingly, in such event, the election of such nominees as directors, and the
ratification of the selection of such independent certified public accountants,
is assured.
PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of March 17, 2000 by those shareholders known
to the Company to own more than 5% of the Company's outstanding Common Stock.
Except as otherwise indicated, (i) each beneficial owner has sole voting and
investment power with respect to the shares set forth opposite such
shareholder's name and (ii) none of the shares shown are known to be shares with
respect to which the listed beneficial owner has the right to acquire beneficial
ownership.
Name and Address Shares Owned Percent of Class
- ---------------- ------------ ----------------
The George S. Walls Trust B 134,250(a) 11.17%
Cleburne, Texas
Nancy Walls Devaney 391,701(b) 32.59%
Cleburne, Texas
George S. Walls, Jr. 336,552(c) 28.01%
Cleburne, Texas
Martha Walls Murdoch 226,083(d) 18.81%
Cleburne, Texas
- -------------------------
(a) These shares are held in a trust created under the last will and
testament of George S. Walls, deceased, for the benefit of the
grandchildren of the late Mr. George S. Walls and his wife, the late
Mrs. George S. Walls. Under the terms of the trust, the trustees may,
at their sole discretion, make distributions from time to time of the
income and assets of the trust to such grandchildren and, upon the
death of Nancy Walls Devaney or George S. Walls, Jr., whichever is the
last to die, are required to distribute all of the assets and income of
the trust to such grandchildren. Nancy Walls Devaney, Martha Walls
Murdoch and George S. Walls, Jr. are the Co-Trustees of such trust.
-2-
<PAGE>
(b) Includes (i) 5,500 shares owned by the husband of Nancy Walls Devaney;
(ii) 25,275 shares held by Mr. and Mrs. Devaney as custodians for their
children; (iii) 75,272 shares held by three trusts for the benefit of
the children of Nancy Walls Devaney who is the sole trustee of each of
such trusts; and (iv) 64,071 shares held by three trusts for the
benefit of the children of Nancy Walls Devaney, of which Nancy Walls
Devaney, her husband Pete Devaney, and George S. Walls, Jr., are the
trustees of each of such trusts; however, Mrs. Devaney disclaims
beneficial ownership of all the shares referred to above in this note
(b). Does not include 134,250 shares held by The George S. Walls Trust
B, described in note (a) above, of which Nancy Walls Devaney is a
Co-Trustee, since Mrs. Devaney disclaims beneficial ownership of such
shares.
(c) Includes (i) 5,225 shares owned by Mr. Walls' wife; (ii) 20,850 shares
held by Mr. Walls as custodian for his children; and (iii) 89,895
shares held by four trusts for the benefit of Mr. Walls' children of
which he is the sole trustee of each such trusts; however, Mr. Walls
disclaims beneficial ownership of all the shares referred to above in
this note (c). Does not include 134,250 shares held by The George S.
Walls Trust B, described in note (a) above, of which George S. Walls,
Jr. is a Co-Trustee, since Mr. Walls disclaims beneficial ownership of
such shares.
(d) Includes, 4,500 shares owned by the husband of Martha Walls Murdoch.
Does not include 134,250 shares held by the George S. Walls Trust B,
described in note (a) above, of which Martha Walls Murdoch is a
Co-Trustee, since Mrs. Murdoch disclaims beneficial ownership of such
shares.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors
constituting the Board of Directors shall be not less than three or more than
nine, with the exact number to be determined from time to time by the Board of
Directors. The Board of Directors has adopted a resolution fixing the number of
directors at seven for the current year.
Each of the following persons is a nominee for director for a term of
office expiring at the annual meeting of shareholders in the year 2001, or when
his or her successor is elected and qualified.
The information set forth below as to the principal occupations or
employment of each of the nominees is for at least five years, with the
exception of Mr. Yater. Since retiring in February 1996, Mr. Yater has managed
his personal investments and those of his family. Prior to his retirement, he
had for more than five years been a partner of Y&Y Partnership, Fort Worth,
Texas (real estate investments) and an officer, director and stockholder of
Stockyard Hotel, Inc., Fort Worth, Texas (hotel operations).
Name and Principal Director
Occupation or Employment Age Since
------------------------ --- --------
*Nancy Walls Devaney 52 1978
--- Family Manager, Cleburne, Texas
Joseph A. Monteleone 57 1992
--- Certified Public Accountant, Fort Worth, Texas
*Martha Walls Murdoch 56 1978
--- Family Manager, Cleburne, Texas
Steve Sikes 47 1993
--- President and Chief Executive Officer
AMSCO Steel Company, Inc.,
Fort Worth Texas (steel fabricating)
Roland Walden 70 1989
--- Retired.
Prior thereto, President and Chief Executive Officer
Brazos Bank, National Association, Alvarado, Texas
*George S. Walls, Jr. 60 1978
--- President and Chief Executive Officer of the Company
Tolbert F. Yater, III 60 1998
--- Personal Investments, Cleburne, Texas
- --------------------------
* George S. Walls, Jr., and his sisters, Nancy Walls Devaney and Martha
Walls Murdoch, may be deemed to be "interested persons" as that term is
defined in Section 2 (a)(19) of the Investment Company Act of 1940 and
"parents" as that term is defined in the rules and regulations of the
Securities and Exchange Commission by virtue of their ownership of
Common Stock and their family relationship.
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<PAGE>
Should any of the above named nominees become unable or unwilling to
accept nomination or election, any proxy granted pursuant to this solicitation
will be voted for the election in his or her stead for such other person as
management may recommend. The management has no reason to believe that any of
the nominees will be unable or unwilling to serve if elected. To the knowledge
of management, the nominees intend to serve the entire term for which election
is sought.
No officer, director or nominee to the Board of Directors of the
Company is a director, general partner, officer, employee or security holder of
Voyageur Asset Management LLC, one of the Company's investment advisors, or an
affiliate thereof, or of Westwood Management Corp., the other investment advisor
to the Company, or any affiliate thereof.
Since the Board of Directors does not have standing audit, nominating
or compensation committees, the functions that would normally be performed by
those committees are performed by the entire Board of Directors. The Board met
four times during 1999. Each member of the Board attended all of the meetings of
the Board during 1999, except Messrs. Sikes, Walden and Yater who each attended
75% of the meetings. .
Stock Ownership of Directors and Officers
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned by each present director, each nominee for
director, and all directors and officers as a group as of March 17, 2000. Except
as otherwise indicated, (i) each beneficial owner has sole voting and investment
power with respect to the shares set forth opposite such owner's name and (ii)
none of the shares shown are known to be shares with respect to which the listed
beneficial owner had the right to acquire beneficial ownership.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
- ----------------------- -------------------- --------
Nancy Walls Devaney 391,701 shares(a)(b) 32.59%
Martha Walls Murdoch 226,083 shares(b)(c) 18.81%
Joseph A. Monteleone None --
Steve Sikes None --
Roland W. Walden 4,415 shares 0.37%
George S. Walls, Jr. 336,552 shares(b)(d) 28.01%
Tolbert F. Yater, III None --
All officers and directors
as a group (8 persons) 1,092,986 shares(a)(c)(d)(e) 90.95%
- --------------------------
(a) Includes (i) 5,500 shares owned by the husband of Nancy Walls Devaney;
(ii) 25,275 shares held by Mr. and Mrs. Devaney as custodians for their
children; (iii) 75,272 shares held by three trusts for the benefit of
the children of Nancy Walls Devaney who is the sole trustee of each
such trust; and (iv) 64,071 shares held by three trusts for the benefit
of the children of Nancy Walls Devaney, of which Nancy Walls Devaney,
her husband Pete Devaney and George S. Walls, Jr., are the trustees of
each of such trusts; however, Mrs. Devaney disclaims beneficial
ownership of all the shares referred to above in this note (a).
(b) Does not include 134,250 shares held by The George S. Walls Trust B
described in note (a) under the caption "Principal Shareholders" above,
of which Nancy Walls Devaney, Martha Walls Murdoch and George S. Walls,
Jr. are Co-Trustees, since Nancy Walls Devaney, Martha Walls Murdoch
and George S. Walls, Jr. disclaim beneficial ownership of such shares.
-4-
<PAGE>
(c) Includes, 4,500 shares owned by the husband of Martha Walls Murdoch.
(d) Includes (i) 5,225 shares owned by Mr. Walls' wife; (ii) 20,850 shares
held by Mr. Walls as custodian for his children; and (iii) 89,895
shares held by four trusts for the benefit of Mr. Walls' children of
which he is the sole trustee of each of such trusts; however, Mr. Walls
disclaims beneficial ownership of all the shares referred to above in
this note (d).
(e) Includes 134,250 shares (11.17%) held by The George S. Walls Trust B of
which Nancy Walls Devaney, Martha Walls Murdoch and George S. Walls,
Jr. are Co-Trustees, although each of such trustees disclaims
beneficial ownership of such shares.
Remuneration
George S. Walls, Jr., President and Chief Executive Officer, and Jerry
D. Wheatley, Secretary and Treasurer, are presently the only officers of the
Company. The Company has no employees. No officer or other employee received any
remuneration from the Company during the year ended December 31, 1999 in his
capacity as an officer or employee; however, the accounting firm of Wheatley,
Cody and Fowler, P.C., of which Mr. Wheatley is a stockholder received fees from
the Company of $7,000 during 1999.
The Company does not have any stock option, bonus, profit sharing or
other compensation plans, contracts, or arrangements or any pension or
retirement plans, contracts or arrangements in which any director, nominee for
election as a director, or officer of the Company may participate.
The Company pays $300 to its directors for each meeting of the Board of
Directors they attend.
The following table sets forth the aggregate compensation paid by the
Company to each of its directors during the year ended December 31, 1999.
Aggregate
Name of Person and Capacity Compensation
in Which Remuneration is Received From The Company(1)
--------------------------------- -------------------
*Nancy Walls Devaney - Director $ 1,200.00
*Martha Walls Murdoch - Director $ 1,200.00
Joseph A. Monteleone - Director $ 1,200.00
Steve Sikes - Director $ 900.00
Roland W. Walden - Director $ 900.00
*George S. Walls, Jr. - Director $ 1,200.00
Tolbert F. Yater, III - Director $ 900.00
- ----------------
(1) Does not include $7,000 paid to Wheatley, Cody and Fowler, P.C. of
which Jerry D. Wheatley, Secretary and Treasurer of the Company, is a
stockholder.
* George S. Walls, Jr. and his sisters, Nancy Walls Devaney and Martha
Walls Murdoch, may be deemed to be "interested persons" as that term is
defined in Section 2(a)(19) of the Investment Company Act of 1940.
-5-
<PAGE>
PROPOSAL 2
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
A majority of the entire Board of Directors, including a majority of
those members of the Board of Directors who are not "interested persons", as
defined in the Investment Act of 1940, have selected Cheshier & Fuller, L.L.P.
as the Company's independent certified public accountants for the fiscal year
ending December 31, 2000. Cheshier & Fuller, L.L.P. has acted as the Company's
independent certified public accountants since January 1, 1992 and its selection
as the Company's independent certified public accountants for the fiscal year
ended December 31, 1999, was ratified by the shareholders on April 16. 1999.
If the shareholders do not ratify the selection of Cheshier & Fuller,
L.L.P., the selection of another independent auditor will be considered by the
Board of Directors. A representative of Cheshier & Fuller, L.L.P. will be
present at the meeting, will be given the opportunity to make a statement if he
or she desires to do so and will be available to answer appropriate questions
from shareholders.
INVESTMENT ADVISORS
The Company has two investment advisors, Voyageur Asset Management LLC
("Voyageur"), and Westwood Management Corp. ("Westwood").
Voyageur
Voyageur, the successor to Voyageur Fund Managers, has been the
Company's investment advisor for tax-exempt debt securities since April 1, 1991,
pursuant to an Investment Advisory Agreement of that date, as modified by an
Amendment to such Agreement, dated April 1, 1999, which Amendment was approved
by the Company's shareholders at their annual meeting on April 16, 1999.
Voyageur's address is 90 South Seventh Street, Suite 4300, Minneapolis,
Minnesota 55402.
Voyageur is a majority owned subsidiary of Dougherty Financial Group,
LLC ("DFG"). Twenty four percent (24%) of Voyageur is owned in equal parts by
Frank C. Tonnemaker, James C. King and Louis V. Nanne, senior executives of
Voyageur and 76% by DFG. DFG is owned by Michael E. Dougherty 37%, and 37% is
owned in equal parts by James O. Pohlad, Robert C. Pohlad and William M. Pohlad.
The remaining 26% of DFG is owned by three of its employees.
Steven P. Eldredge is the Company's portfolio manager. Mr. Eldredge, is
a Senior Fixed Income Portfolio Manager of Voyageur where he has been employed
since 1995. Mr. Eldredge has over 20 years experience in portfolio management.
Mr. Eldredge is assisted by Thor G. Raarup who has been with Voyageur since
1998. Prior to joining Voyageur, Mr. Raarup was a portfolio manager at Delaware
Management Company and a portfolio manager at Voyageur's predecessor. He has
over 10 years experience in portfolio management.
Westwood
Westwood is the Company's investment advisor for equity securities
pursuant to an Investment Advisory Agreement, dated April 1, 1999, which was
approved by the Company's shareholders at their annual meeting on April 16,
1999.
Westwood's address is 300 Crescent Court, Suite 1300, Dallas, Texas
75201.
Westwood is a New York corporation which is a wholly owned subsidiary
of Southwest Securities Group, Inc., a Delaware corporation ("Southwest
Securities"). Southwest Securities is a publicly owned holding company with
subsidiaries engaged in providing securities clearing, securities brokerage,
investment banking and investment advisory services. To the knowledge of
Southwest Securities no person owns 10% or more of its voting securities.
Susan M. Byrne, President of Westwood, is the Company's portfolio
manager for equity securities. Ms. Byrne, a founder of Westwood in 1983, has
over 17 years experience in equity portfolio management.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The date by which shareholder proposals must be received by the Company
for possible inclusion in the proxy statement and form of proxy relating to the
year 2001 annual meeting is December 1, 2000.
-6-
<PAGE>
MANAGEMENT'S RECOMMENDATIONS
The Board of Directors of the Company has nominated and recommended to
the shareholders the election of the seven nominees as directors (Proposal 1),
and the ratification of Cheshier & Fuller, L.L.P. as the Company's independent
certified public accountants (Proposal 2).
MISCELLANEOUS
Management of the Company knows of no matter, other than those
described herein, that will be presented for action by the shareholders at the
meeting, but it is intended that the proxies will be exercised upon any other
matters and proposals that may legally come before the meeting, or any
adjournment thereof, in accordance with the discretion of the persons named
therein.
Please date, sign and return the Proxy at your earliest convenience in
the enclosed envelope. No postage is required for mailing in the United States.
A prompt return of your Proxy will be appreciated as it will save the expense of
further solicitation.
By Order of the Board of Directors
George S. Walls, Jr.
President
Cleburne, Texas
March 31, 2000
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<PAGE>
SAMARNAN INVESTMENT CORPORATION
P.O. BOX 651 / CLEBURNE, TEXAS 76033
PROXY--ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Martha Walls Murdoch and Nancy Walls
Devaney, or either of them, with power of substitution, as Proxies to vote, as
designated below, all stock of Samaman Investment Corporation owned by the
undersigned at the Annual Meeting of Shareholders to be held in the Bellevue
Room I of The Fort Worth Club, 306 West 7th Street, Fort Worth, Texas, on April
25, 2000, at 10:30 a.m, upon such business as may properly come before the
meeting, including the following as set forth in the Notice of Annual Meeting of
Shareholders and the Proxy Statement:
Proposal (1) Election of Directors
[ ] FOR all nominees listed below (except as marked to the contrary below).
[ ] WITHHELD AUTHORITY to vote for all nominees listed below.
Nancy Walls Devaney, Martha Walls Murdoch, Roland W. Walden, Steve Sikes,
George S. Walls, Jr., Joseph A. Monteleone, and Tolbert F.Yater, III
(Instructions: to withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below:)
--------------------------------------------------------------------
Proposal (2) Approval of Appointment of Cheshier & Fuller, L.L.P.
[ ] FOR approval [ ] AGAINST approval [ ] ABSTAIN
(3) In their discretion on any other matter that may properly come
before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED (1) FOR PROPOSAL 1, THE ELECTION OF THE SEVEN NOMINEES FOR
DIRECTORS AND (2) FOR PROPOSAL 2, THE APPROVAL OF THE APPOINTMENT OF CHESHIER &
FULLER, L.L.P.
This proxy may be revoked prior to the exercise of the powers by the proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Dated: _______________, 2000
------------------------------
(Signature)
------------------------------
(Signature, if held jointly)
Note: Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your title as
such. If executed by a corporation, the proxy should be signed by a duly
authorized officer. If executed by a partnership please sign in the partnership
name by an authorized person.
Please date, sign and mail promptly this proxy in the enclosed envelope.
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Shareholders
Samarnan Investment Corporation
We have audited the accompanying statement of assets and liabilities of Samarnan
Investment Corporation, including the schedule of investment in securities, as
of December 31, 1999, and the related statements of operations for the year then
ended and changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Samarnan Investment Corporation as of December 31, 1999, the results of its
operations for the year then ended, the changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
CHESHIER & FULLER, L.L.P.
Dallas, Texas
March 10, 2000
<PAGE>
<TABLE>
<CAPTION>
SAMARNAN INVESTMENT CORPORATION
Statement of Assets and Liabilities
December 31, 1999
<S> <C>
Assets:
Cash $ 361,612
Investments in securities at market (identified cost $17,073,234) 17,268,412
Accrued interest receivable 199,490
------------
Total assets 17,829,514
------------
Liabilities:
Payables:
Accounts payable 21,052
------------
Total liabilities 21,052
------------
Net assets applicable to outstanding capital shares, equivalent
to $14.82 per share $ 17,808,462
============
Source of net assets:
Capital shares - authorized 2,000,000 shares of $1.00 par value;
outstanding 1,201,768 shares $ 1,201,768
Accumulated net realized gains of $1,032,910 less accumulated
distribution of $1,154,071 (121,161)
Unrealized appreciation of investments 195,178
Undistributed net investment income 726,368
Retained earnings at April 29, 1978, commencement of operations
as an investment company 15,806,309
------------
$ 17,808,462
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAMARNAN INVESTMENT CORPORATION
Statement of Operations
Year Ended December 31, 1999
<S> <C>
Investment income:
Dividends $ 26,733
Interest 883,928
-----------
Total income 910,661
-----------
Expenses:
Investment advisory fee 54,848
Legal and professional fees 29,252
Audit fees 8,500
Directors fees 7,800
Custodian expense 12,000
Administrative fees 11,980
Office and printing supplies 2,585
-----------
Total expenses 126,965
-----------
Net investment income 783,696
-----------
Realized and unrealized gain on investments:
Realized gain from security transactions - excluding short-term securities:
Proceeds from sales 6,489,029
Cost of securities sold, net of amortization of bond premiums 6,531,233
-----------
Net realized (loss) (42,204)
-----------
Unrealized appreciation of investments:
Beginning of period 1,006,552
End of period 195,178
-----------
Decrease in unrealized appreciation on investments (811,374)
-----------
Net realized and unrealized (loss) on investments (853,578)
-----------
Decrease in net assets from operations $ (69,882)
===========
Total expenses as a percentage of total investment income 13.9%
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAMARNAN INVESTMENT CORPORATION
Statement of Changes in Net Assets
Years Ended December 31, 1999 and 1998
1999 1998
------------ ------------
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income $ 783,696 $ 847,878
Net realized gain (loss) from security transactions (42,204) 33,127
Increase (decrease) in unrealized appreciation
of investments (811,374) 148,277
------------ ------------
Increase (decrease) in net assets from operations (69,882) 1,029,282
------------ ------------
Dividends and distributions to shareholders:
Net investment income (805,185) (853,255)
Capital gains -0- -0-
------------ ------------
Decrease in net assets from dividends and distributions
to shareholders (805,185) (853,255)
------------ ------------
Increase (decrease) in net assets (875,067) 176,027
Net assets:
Beginning of period 18,683,529 18,507,502
------------ ------------
End of period (including undistributed investment
income of $726,368 and $747,856, respectively) $ 17,808,462 $ 18,683,529
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Notes to Financial Statements
December 31, 1999
(1) Summary of Significant Accounting Policies
------------------------------------------
The Company is registered under the Investment Company Act of 1940 as a
diversified, closed-end, management investment company. The fund seeks
tax free income and preservation of capital through a diversified
portfolio of bonds and equity securities. The significant accounting
policies followed by the Company are summarized as follows:
(a) Securities
----------
Investments in securities are carried at market value.
Security transactions are accounted for on the trade date. The
cost of securities sold is based on identifying specific
issues delivered against each sale. Dividend income is
recognized on the ex-dividend date, and interest income is
recognized on an accrual basis.
Fixed-income securities are valued at prices obtained from a
pricing service, when such prices are available; however, in
circumstances where the investment adviser deems it
appropriate to do so, such securities will be valued at the
mean quoted bid and asked prices or at prices for securities
of comparable maturity, quality and type.
Investments in securities traded on a national securities
exchange (or reported on the NASDAQ national market) are
stated at the last reported sales price on the day of
valuation; other securities traded in the over-the-counter
market and listed securities for which no sale was reported on
that date are stated at the last quoted bid price. Restricted
securities and other securities for which quotations are not
readily available are valued at fair value as determined by
the board of directors.
(b) Dividends and Distributions
---------------------------
Dividends and distributions to shareholders are recorded on
the ex-dividend date.
(c) Bond Premiums and Discounts
---------------------------
Bond premiums are amortized to the maturity date of the bond
on a straight-line basis. Bond discounts are not amortized;
these are included as realized gains when the bond is sold or
matures. The amortization for any one year is not material.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Notes to Financial Statements
December 31, 1999
(1) Summary of Significant Accounting Policies, continued
-----------------------------------------------------
(d) Accounting Estimates
--------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
(2) Investment Advisory Contract
----------------------------
The Company has contracted with Voyageur Fund Managers to provide
investment advisory services. Under this contract, the Company is
furnished investment, clerical and statistical services regarding its
investments in debt securities. The fee for these investment advisory
services is based on .27% of the value of the assets in the debt
portfolio and is paid on a quarterly basis in arrears.
Effective April 1, 1999 the Company contracted with Westwood Management
Corp. to provide investment advisory services. Under this contract, the
Company is furnished investment, supervisory and clerical services
regarding its investment in equity securities. The fee for these
investment advisory services is based on 0.75% of the value of the
assets in the equity portfolio and is paid on a quarterly basis in
arrears.
(3) Federal Income Taxes
--------------------
No provision has been made for Federal income taxes since it is the
plan of the Company to distribute substantially all of its investment
income, including the net realized gains on investments, and to qualify
as a "regulated investment company" under the applicable sections of
the Internal Revenue Code.
(4) Securities Transactions
-----------------------
In 1999, cost of purchases and proceeds from sales or maturities of
securities, other than short-term securities, amounted to $5,946,779
and $6,489,028, respectively.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Notes to Financial Statements
December 31, 1999
(4) Securities Transactions, continued
----------------------------------
There were no differences between the cost bases of securities for
Federal income tax and financial statement purposes. The aggregate
unrealized appreciation and depreciation for all securities as of
December 31, 1999 were $673,008 and $477,830, respectively.
(5) Dividends and Distributions to Shareholders
-------------------------------------------
Cash dividends paid during the years ended December 31, 1999 and 1998
amount to $.67 and $.71 per share, respectively.
Cash dividends of $.15 per share from the balance of undistributed net
investment income were declared by the Company's Board of Directors on
January 25, 2000, payable to shareholders of record February 7, 2000.
(6) Concentrations of Credit Risk
-----------------------------
At December 31, 1999, and at various other times during the year, the
Company had cash balances in excess of federally insured limits of
$100,000.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Investments in Securities
December 31, 1999
Principal
Amount
or Shares Value
--------- -----------
Common Stocks--15.3%
Basic materials--0.50%
Alcoa 400 $ 33,200
Monsanto Co. 1,200 42,526
Vulcan Materials Co. 600 23,963
Capital goods--0.30%
Deere & Co. 700 30,363
General Dynamics Corp. 500 26,375
Consumer discretionary--1.90%
AMFM, Inc. 800 62,600
American Eagle Outfitters 600 31,500
Ann Taylor Stores Corp. 700 20,663
Limited, Inc. 1,300 56,307
Ross Stores, Inc. 1,300 23,319
Time Warner, Inc. 800 57,850
The Walt Disney Company 2,300 67,275
Consumer staples--0.90%
Anhueser Busch, Inc. 800 56,700
Brinker International, Inc. 2,200 53,075
Safeway, Inc. 1,500 53,625
Energy--0.80%
Apache Corp. 700 25,857
Burlington Resources, Inc. 800 26,450
Devon Energy Corp. 692 22,749
Texaco, Inc. 400 21,725
Transocean Offshore, Inc. 1,000 33,688
See accompanying notes to financial statements.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Investments in Securities
December 31, 1999
Principal
Amount
or Shares Value
--------- -----------
Financial--1.30%
Bear Stearns 1,460 62,415
Citigroup 1,000 55,688
PNC Bank Corp. 900 40,050
Southtrust Corp. 1,300 49,157
Health care--1.20%
King Pharmaceuticals, Inc. 2,550 142,961
Pharmacia & Upjohn, Inc. 800 36,000
Smithkline Beecham PLC 700 44,888
Technology--3.00%
Citrix Systems 700 86,100
Electronic Arts, Inc. 300 25,200
Electronic Data Systems 900 60,244
Hewlett Packard 700 79,625
IBM 600 64,725
Oracle Corp. 1,200 134,476
Rambus, Inc. 400 26,975
Sterling Software 1,200 37,800
Utilities--1.10%
Florida Progress Corp. 1,200 50,776
Hawaiian Electric Industries 1,600 46,200
SBC Communications 1,000 48,750
MCI WorldCom, Inc. 900 47,757
See accompanying notes to financial statements.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Investments in Securities
December 31, 1999
Principal
Amount
or Shares Value
--------- -----------
Transportation--0.10%
CNF Transportation 500 17,250
Reits--2.30%
Apartment & Investment Management 1,100 43,794
Boston Properties, Inc. 1,500 46,688
Equity Office Properties Trust 1,800 44,325
Equity Residential Properties Trust 1,000 42,688
Host Marriott Corp. 4,600 37,950
Kimco Realty Corp. 1,200 40,650
Prologis 2,300 44,275
Simon Property Group, Inc. 1,900 43,582
Vornado Realty Trust 1,400 45,500
International--1.90%
WEBS - Australia 5,000 55,315
WEBS - Austria 5,700 47,381
WEBS - Belgium 3,300 53,213
WEBS - Italy 2,500 62,500
WEBS - Singapore 6,200 56,966
WEBS - Spain 2,100 59,325
-----------
Total common stocks (cost $2,383,949) 2,650,999
-----------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAMARNAN INVESTMENT CORPORATION
Investments in Securities
December 31, 1999
Principal
Amount
or Shares Value
--------- -----------
<S> <C> <C>
Municipal bonds--84.70%
Naperville, IL-Electric Rev.--6.200% due 11/01/00 500,000 500,550
Wisconsin Public Power Rev.--6.400% due 07/01/01 500,000 515,395
Palatine, IL-Schl Dist #15 G.O.--5.900% due 12/01/01 450,000 462,393
King County, Washington ISD #408--6.100% due 12/01/01 300,000 309,042
Indiana Municipal Power--5.250% due 01/01/02 500,000 506,675
Bedford Park, IL-G.O.--5.200% due 12/01/04 500,000 507,910
Alaska State Housing Finance Corp.--5.900% due 12/01/04 600,000 625,944
Henderson, NV-G.O.--5.250% due 05/01/05 500,000 510,420
Box Elder, UT-G.O.--5.150% due 06/15/05 300,000 303,288
Indiana State Ed. MBIA--4.800% due 10/01/05 500,000 498,725
Chicago, IL-Wastewater Rev.--5.400% due 01/01/06 500,000 508,580
North Miami Health Fac.Rev.Catholic--5.300% due 08/15/06 200,000 205,142
Clark County, NV-School District--5.500% due 06/15/07 800,000 813,728
North Miami Health Fac.Rev.Catholic--5.400% due 08/15/07 375,000 386,213
Alabama CLG & Univ. Tuskegee--5.500% due 09/01/07 500,000 518,600
Wisconsin Health & Education-Sinai--5.500% due 08/15/08 600,000 615,822
Missouri State Health--5.550% due 02/01/09 200,000 199,708
North Dakota Bldg. Auth.--4.875% due 12/01/09 250,000 244,705
Goodhue City, MN EDA Lease--5.600% due 02/01/09 285,000 290,680
Illinois Health Fac. Auth.--6.000% due 02/15/11 500,000 496,535
Harmony, MN MFHR-Zedakah Found.--5.700% due 03/01/11 260,000 261,510
Harmony, MN MFHR-Zedakah Found.--5.700% due 09/01/11 265,000 266,540
See accompanying notes to financial statements.
<PAGE>
SAMARNAN INVESTMENT CORPORATION
Investments in Securities
December 31, 1999
Principal
Amount
or Shares Value
--------- -----------
Volusia City Health Fac.--6.000% due 06/01/12 600,000 626,670
Montgomery County PA IDA--5.625% due 11/15/12 500,000 476,235
W. Washington Univ. Housing-5.000% due 10/01/14 300,000 278,001
Louisiana Housing Fin. Agency--6.000% due 09/01/15 670,000 669,129
Illinois Health Fac.--5.120% due 12/01/15 250,000 228,555
Missouri State Health--5.750% due 02/01/17 250,000 230,990
Florida Housing Fin. Corp.--6.000% due 10/01/19 480,000 463,656
Chicago Ref. Emergency Tel.--5.250% due 01/01/20 290,000 260,765
South Dakota Health--5.650% due 04/01/22 560,000 462,605
Detroit Metro Airport--4.875% due 12/01/23 750,000 616,283
St. Paul HRA--5.600% due 10/01/24 500,000 454,750
Golden Valley MN Rev.--5.500% due 12/01/25 350,000 301,669
-----------
Total municipal bonds (cost $14,689,285) 14,617,413
-----------
Total--100% (cost $17,073,234) $17,268,412
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAMARNAN INVESTMENT CORPORATION
Selected per Share Data and Ratios
For Each of the Years in the Five-Year Period Ended
December 31, 1999
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per share data
Investment income - interest $ .75 $ .81 $ .82 $ .82 $ .86
Expenses (.10) (.10) (.08) (.08) (.07)
--------- --------- --------- --------- ---------
Net investment income .65 .71 .74 .74 .79
Net realized and unrealized gains
(losses) on investments (.71) .15 .30 (.16) .52
Dividends from net investment income (.67) (.71) (.75) (.71) (.74)
Distributions from net realized
long-term gains on securities -- -- -- (.01) (.01)
--------- --------- --------- --------- ---------
Net increase (decrease) in
net asset value (.73) .15 .29 (.14) .56
Net asset value:
Beginning of period 15.55 15.40 15.11 15.25 14.69
--------- --------- --------- --------- ---------
End of period $ 14.82 $ 15.55 $ 15.40 $ 15.11 $ 15.25
========= ========= ========= ========= =========
Ratios
Expenses to average net assets .70 .66 .66 .51 .49
Investment income from operations
to average net assets 5.03 5.22 5.22 5.45 5.74
Portfolio turnover 34.00 29.00 23.72 19.05 28.20
========= ========= ========= ========= =========
Average shares outstanding 1,201,768 1,201,768 1,201,768 1,201,768 1,201,768
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Board of Directors
Samarnan Investment Corporation
In planning and performing our audit of the financial statements of Samarnan
Investment Corporation for the year ended December 31, 1999, we considered its
internal control, including controls over safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control.
The management of Samarnan Investment Corporation is responsible for
establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls that are
relevant to an audit pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls include the
safeguarding of assets against unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and may not be detected. Also, projection of any evaluation of internal control
to future periods is subject to the risk that it may become inadequate because
of changes in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of the
specific internal control component does not reduce to a relatively low level
the risk that errors or fraud in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control, including
controls over safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1999.
This report is intended solely for the information and use of the board of
directors and management of Samarnan Investment Corporation and the Securities
and Exchange Commission and should not be used for any other purpose.
CHESHIER & FULLER, L.L.P.
Dallas, Texas
March 10, 2000
<PAGE>
Consent of Independent Auditors
The Board of Directors
Samarnan Investment Corporation:
We consent to the use of our report included herein.
CHESHIER & FULLER, L.L.P.
Dallas, Texas
March 10, 2000
<PAGE>
SAMARNAN INVESTMENT CORPORATION
P.O. Box 651 / Cleburne, Texas 76031-0651/ Tel: 817.645-2108
Fax: 817.641-7884 / Email: [email protected] / Internet: www.samarnan.com
(pending)
BOARD OF DIRECTORS LEGAL COUNSEL
- -------------------- ---------------
Nancy Walls Devaney Richard S. Whitesell, Jr.
Joe Monteleone 4211 Arcady
Martha Walls Murdoch Dallas, Texas 75205
Steve Sikes
Roland Walden INDEPENDENT AUDITORS
Sam Walls, Chairman --------------------
Tommy Yater
Cheshier & Fuller, L.L.P.
14175 Proton Road
OFFICERS Dallas, Texas 75244
- --------
Sam Walls, President INVESTMENT ADVISORS
Jerry Wheatley, Secretary/Treasurer -------------------
CUSTODIAN Voyageur Asset Management LLC
- --------- 90 South Seventh Street, Suite 4300
Minneapolis, Minnesota 55402
Westwood Trust
300 Crescent Court, Suite 1300 Westwood Management Corp.
Dallas, Texas 75201 300 Crescent Court, Suite 1300
Dallas, Texas 75201
ANNUAL MEETING
- ---------------
The Annual Meeting of Shareholders of Samarnan Investment Corporation will be
held April 25, 2000, at 10:30 AM, in the Bellevue Room I, Twelfth Floor, The
Fort Worth Club Building, 306 West Seventh Street, Fort Worth, Texas.
- -------------------------------------------------
SAMARNAN INVESTMENT CORPORATION is registered under the Investment Act of 1940
as a diversified, closed end management company.
