<PAGE>
GENERAL AMERICAN INVESTORS
COMPANY, INC.
FIRST QUARTER REPORT
MARCH 31, 1999
A Closed-End Investment Company
listed on the New York Stock Exchange
450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017
212-916-8400 1-800-436-8401
<PAGE>
TO THE STOCKHOLDERS
- --------------------------------------------------------------------------------
The year has started on a firm note. For the three months ended March 31, 1999,
the investment return to our stockholders was 8.3%, consisting of a 2.6%
increase in net asset value per Common Share (assuming reinvestment of all
dividends) together with a decline in the discount, at which our shares trade,
from 12.7% at year end to below 8% currently. By comparison, the rate of return
(including income) for the Standard & Poor's 500 Stock Index was 5%. For the
twelve months ended March 31, 1999, the return to stockholders was 26.5% and the
return on the net asset value per Common Share was 23.2%; these compare to a
return of 18.4% for the S&P 500.
While the U.S. stock market has continued to advance as measured by the popular
averages, divergences are developing which have warranted caution historically.
Market breadth is exceptionally narrow, with securities of larger capitalization
companies markedly outperforming those of smaller companies and a great majority
of stocks actually declining. Traditional value investing has taken a back seat
to more speculative activity as reflected in the day trading phenomenon and the
resurgence of underwritings of initial public offerings. This is not to say that
further market progress is not possible or even likely. It does suggest that
your management's maintenance of adequate cash reserves may be the prudent
course to follow at present.
As set forth in the accompanying financial statements (unaudited), as of March
31, 1999, the net assets of the Company were $1,019,945,847. Net assets
applicable to the Common Stock were $869,945,847, equal to $34.26 per Common
Share.
The increase in net assets resulting from operations for the three months ended
March 31, 1999 was $22,935,814. During this period, net realized gain on
securities sold was $25,519,731 ($1.01 per share) and the decrease in unrealized
appreciation was $5,686,356. Net investment income for the three months was
$3,102,439.
During the three months, 264,300 shares of the Company's Common Stock were
repurchased for $8,301,766 at an average discount from net asset value of 10.5%.
We are pleased to report that, on March 10, 1999, at the Company's annual
meeting, the Stockholders (1) elected twelve directors, including two directors
who were elected by the holders of the Company's Preferred Stock, and (2)
ratified the selection of Ernst & Young LLP as auditors of the Company for the
year 1999.
By Order of the Board of Directors,
GENERAL AMERICAN INVESTORS COMPANY, INC.
Spencer Davidson
President and Chief Executive Officer
<PAGE>
2 STATEMENT OF ASSETS AND LIABILITIES March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
ASSETS
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS, AT VALUE ( NOTE 1a )
Common stocks (cost $308,236,260) ................... $ 736,814,941
Convertible corporate note (cost $2,265,500) ........ 13,860,375
Corporate discount notes (cost $267,065,812) ........ 267,065,812
------------
Total investments (cost $577,567,572) .......... 1,017,741,128
CASH, RECEIVABLES AND OTHER ASSETS
Cash ................................................ $ 57,236
Receivable for securities sold ...................... 6,446,035
Dividends, interest and other receivables ........... 2,779,162
Prepaid expenses .................................... 4,101,020
Other ............................................... 642,687 14,026,140
----------- -----------
TOTAL ASSETS .......................................... 1,031,767,268
LIABILITIES
- -------------------------------------------------------------------------------------
Payable for securities purchased ................... 6,928,872
Preferred dividend accrued but not yet declared .... 240,000
Accrued expenses and other liabilities ............. 4,652,549
-----------
TOTAL LIABILITIES ..................................... 11,821,421
------------
NET ASSETS ............................................ $1,019,945,847
==============
Net Assets applicable to Preferred Stock at a
liquidation value of $25 per share ............... $ 150,000,000
==============
Net Assets applicable to Common Stock ................. $ 869,945,847
==============
NET ASSET VALUE PER COMMON SHARE ...................... $ 34.26
==============
NET ASSETS
- -------------------------------------------------------------------------------------
7.20% Tax-Advantaged Cumulative Preferred Stock,
$1 par value (note 2)
Authorized 10,000,000 shares;
outstanding 6,000,000 shares .................... $ 6,000,000
Common Stock, $1 par value (note 2)
Authorized 30,000,000 shares; outstanding
25,390,743 shares (exclusive of
35,500 shares in Treasury) ...................... 25,390,743
Additional paid-in capital (note 2) ................ 523,587,307
Undistributed realized gain on securities sold ..... 25,279,456
Undistributed net income ........................... 2,454,785
Unallocated distributions on Preferred Stock ....... (2,940,000)
Unrealized appreciation on investments (including
aggregate gross unrealized appreciation of
$456,178,454) ................................... 440,173,556
------------
TOTAL NET ASSETS ...................................... $1,019,945,847
==============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
3 STATEMENT OF OPERATIONS Three Months Ended March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
INCOME
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividends ................................. $ 1,497,557
Interest .................................. 3,449,356 $ 4,946,913
----------
EXPENSES
- --------------------------------------------------------------------------------
Investment research ....................... 929,221
Administration and operations ............. 588,015
Office space and general .................. 135,061
Transfer agent, custodian and registrar
fees and expenses ....................... 49,317
Stockholders' meeting and reports ......... 46,888
Directors' fees and expenses .............. 46,072
Auditing and legal fees ................... 28,500
Miscellaneous taxes (note 1b) ............. 21,400 1,844,474
--------- ---------
NET INVESTMENT INCOME ........................ 3,102,439
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1c AND 4)
- -----------------------------------------------------------------------------------
Net realized gain on sales of securities
(long-term except for $7,743,264) ........ 25,519,731
Net decrease in unrealized appreciation .... (5,686,356)
----------
NET GAIN ON INVESTMENTS ..................... 19,833,375
------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. $ 22,935,814
==============
<FN>
(see notes to financial statements)
</FN>
</TABLE>
<PAGE>
4 STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31, 1999 December 31,
OPERATIONS (Unaudited) 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment income ..................... $ 3,102,439 $ 11,554,362
Net realized gain on sales of securities .. 25,519,731 109,379,689
Net increase (decrease) in
unrealized appreciation ................ (5,686,356) 119,454,056
------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. 22,935,814 240,388,107
------------- -------------
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income ........................... -- (734,400)
From long-term capital gain ............... -- (4,785,600)
Unallocated distributions on Preferred
Stock .................................... (2,700,000) (240,000)
------------- -------------
DECREASE IN NET ASSETS FROM PREFERRED
DISTRIBUTIONS ............................ (2,700,000) (5,760,000)
------------- -------------
DISTRIBUTIONS TO COMMON STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income ........................... -- (11,114,275)
From long-term capital gain ............... (33,670,906) (75,627,722)
------------- -------------
DECREASE IN NET ASSETS FROM COMMON
DISTRIBUTIONS ............................ (33,670,906) (86,741,997)
------------- -------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Value of Common Shares issued in payment
of dividends (note 2) ................... 22,749,608 51,184,992
Cost of Common Shares purchased (note 2) .. (8,301,766) (27,310,005)
Net proceeds from the issuance of
Preferred Stock (note 2) ................ -- 144,575,000
------------- -------------
INCREASE IN NET ASSETS - CAPITAL TRANSACTIONS 14,447,842 168,449,987
------------- -------------
NET INCREASE IN NET ASSETS ................... 1,012,750 316,336,097
NET ASSETS
- --------------------------------------------------------------------------------
BEGINNING OF PERIOD .......................... 1,018,933,097 702,597,000
-------------- -------------
END OF PERIOD (including undistributed net
income of $2,454,785 and distributions
in excess of net income of $647,654,
respectively) ............................. $1,019,945,847 $1,018,933,097
============== ==============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
5 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
General American Investors
The following table shows per share operating performance data, total investment
return, ratios and supplemental data for the three months ended March 31, 1999
and for each year in the five-year period ended December 31, 1998. This
information has been derived from information contained in the financial
statements and market price data for the Company's shares.
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31,
March 31, 1999 ------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period ............... $ 34.87 $ 29.15 $ 25.24 $ 23.94 $ 22.31 $ 24.75
------------ ---------- --------- --------- --------- ---------
Net investment income ........................... .12 .47 .21 .22 .08 .05
Net gain (loss) on securities -
realized and unrealized .................... .74 9.44 7.15 3.86 4.54 (.94)
------------ ---------- --------- --------- --------- ---------
Total from investment operations ................... .86 9.91 7.36 4.08 4.62 (.89)
------------ ---------- --------- --------- --------- ---------
Less Distributions on:
Common Stock:
Dividends from investment income ................ -- (.48) (.26)(a) (.20) (.11)(b) (.05)
Distributions from capital gains ................ (1.36) (3.24) (3.19) (2.58) (2.87) (1.49)
In excess of net income ......................... -- -- -- -- (.01) (.01)
------------ ---------- --------- --------- --------- ---------
(1.36) (3.72) (3.45) (2.78) (2.99) (1.55)
Preferred Stock:
Dividends from investment income ................ -- (.03) -- -- -- --
Distributions from capital gains ................ -- (.20) -- -- -- --
Unallocated ..................................... (.11) (.01) -- -- -- --
------------ ---------- --------- --------- --------- ---------
(.11) (.24) -- -- -- --
------------ ---------- --------- --------- --------- ---------
Total Distributions ................................ (1.47) (3.96) (3.45) (2.78) (2.99) (1.55)
------------ ---------- --------- --------- --------- ---------
Capital Stock transaction - effect of Preferred
Stock offering .................................. -- (.23) -- -- -- --
------------ ---------- --------- --------- ---------- ---------
Net asset value, end of period ..................... $ 34.26 $ 34.87 $ 29.15 $ 25.24 $ 23.94 $ 22.31
============ ========== ========= ========= ========== =========
Per share market value, end of period .............. $ 31.56 $ 30.44 $ 26.19 $ 21.00 $ 20.00 $ 19.00
============ ========== ========= ========= ========== =========
TOTAL INVESTMENT RETURN - Stockholder Return, based
on market price per share 8.27%* 31.31% 42.58% 19.48% 21.22% -7.86%
RATIOS AND SUPPLEMENTAL DATA
Total net assets, end of period
(000's omitted) ................................. $ 1,019,946 $1,018,933 $ 702,597 $ 597,597 $ 573,693 $ 519,722
Net assets attributable to Common Stock, end
of period (000's omitted) ....................... $ 869,946 $ 868,933 $ 702,597 $ 597,597 $ 573,693 $ 519,722
Ratio of expenses to average net assets
applicable to Common Stock ...................... 0.22%* 0.95% 0.98% 1.05% 1.25% 1.17%
Ratio of net income to average net assets
applicable to Common Stock ...................... 0.36%* 1.50% 0.80% 0.88% 0.36% 0.21%
Portfolio turnover rate ............................ 6.08%* 34.42% 32.45% 33.40% 29.14% 17.69%
PREFERRED STOCK
Liquidation value, end of period (000's omitted) ... $ 150,000 $ 150,000 -- -- -- --
Asset coverage ..................................... 680% 679% -- -- -- --
Liquidation preference per share ................... $ 25.00 $ 25.00 -- -- -- --
Market value per share ............................. $ 25.38 $ 25.88 -- -- -- --
<FN>
(a) Includes short-term capital gain in the amount of $.05 per share.
(b) Includes short-term capital gain in the amount of $.03 per share.
* Not annualized
</FN>
</TABLE>
<PAGE>
6 STATEMENT OF INVESTMENTS March 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS PRINCIPAL AMOUNT (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS AND INFORMATION SERVICES (5.8%)
Cox Communications, Inc. Class A + ................ 260,000 $ 19,662,500
NTL Incorporated + ................................ 310,000 25,226,250
Reuters Group plc-ADR ............................. 94,000 8,166,250
Wolters Kluwer NV-ADR ............................. 35,000 6,356,350
----------
(COST $14,657,050) -- 59,411,350
----------
COMPUTER SOFTWARE AND SYSTEMS (3.9%)
Cisco Systems, Inc.+ .............................. 225,000 24,651,563
MetaCreations Corporation + ....................... 300,000 2,043,750
Seagate Technology, Inc.+ ......................... 430,000 12,711,875
----------
(COST $13,585,280) -- 39,407,188
----------
CONSUMER PRODUCTS AND SERVICES (8.0%)
Buffets, Inc.+ .................................... 1,000,000 9,875,000
DaimlerChrysler A.G. .............................. 221,000 18,964,562
Ford Motor Company ................................ 500,000 28,343,750
Interim Services Inc.+ ............................ 400,000 6,000,000
PepsiCo, Inc. ..................................... 200,000 7,837,500
Philip Morris Companies Inc. ...................... 300,000 10,556,250
----------
(COST $53,566,466) -- 81,577,062
----------
ELECTRONICS (1.0%)
Molex Incorporated Class A ........................ 400,000 10,350,000
----------
(COST $10,659,377)
ENVIRONMENTAL CONTROL
(INCLUDING SERVICES) (2.0%)
Waste Management, Inc. ............................ 460,000 20,412,500
----------
(COST $ 7,875,160)
FINANCE AND INSURANCE (18.1%)
American International Group, Inc. ................ 130,000 15,681,250
AmerUs Life Holdings, Inc. Class A ................ 450,000 10,800,000
Annaly Mortgage Management, Inc. .................. 550,000 5,500,000
Annuity and Life Re (Holdings), Ltd. .............. 482,500 11,037,188
Berkshire Hathaway Inc. Class A + ................. 315 22,491,000
CCB Financial Corp. ............................... 217,000 11,731,562
Everest Reinsurance Holdings, Inc. ................ 335,000 10,447,812
First Midwest Bancorp, Inc. ....................... 252,500 9,595,000
Golden West Financial Corporation ................. 160,000 15,280,000
Huntington Bancshares Incorporated ................ 175,000 5,414,063
M&T Bank Corporation .............................. 45,000 21,555,000
NAC Re Corporation ................................ 166,000 8,912,125
ReliaStar Financial Corp. ......................... 142,500 6,074,062
SunTrust Banks, Inc. .............................. 240,000 14,940,000
Transatlantic Holdings, Inc. ...................... 200,000 15,000,000
-----------
(COST $87,573,560) -- 184,459,062
-----------
HEALTH CARE (10.8%)
PHARMACEUTICALS (9.3%)
AB Astra Class A .................................. 482,500 11,078,200
AB Astra Class B .................................. 720,000 16,531,200
GelTex Pharmaceuticals, Inc.+ ..................... 300,000 4,218,750
IDEC Pharmaceuticals Corporation + ................ 415,000 21,320,625
Magainin Pharmaceuticals Inc.+ .................... 300,000 468,750
Pfizer Inc. ....................................... 300,000 41,625,000
----------
(COST $28,782,580) -- 95,242,525
----------
MEDICAL INSTRUMENTS AND DEVICES (1.2%)
Medtronic, Inc. ................................... 165,000 11,859,375
-----------
(COST $ 1,036,631)
</TABLE>
<PAGE>
7 STATEMENT OF INVESTMENTS March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS (continued) PRINCIPAL AMOUNT (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE SERVICES (0.3%)
BioReliance Corporation + ......................... 317,000 $ 2,060,500
Huntingdon Life Sciences Group plc-ADR + .......... 624,500 1,209,969
-----------
(COST $ 8,335,304) -- 3,270,469
-----------
(COST $38,154,515) -- 110,372,369
-----------
MACHINERY & EQUIPMENT (0.9%)
Deere & Company ................................... 100,000 3,862,500
Kennametal Inc. ................................... 300,000 5,287,500
-----------
(COST $ 8,462,888) -- 9,150,000
-----------
MISCELLANEOUS (1.3%)
Other ............................................. 13,830,750
----------
(COST $13,298,554)
OIL & NATURAL GAS (INCLUDING SERVICES) (1.3%)
Repsol, S.A.- ADR ................................. 250,000 12,812,500
----------
(COST $ 8,914,519)
RETAIL TRADE (15.1%)
Consolidated Stores Corporation + ................. 350,000 10,609,375
The Home Depot, Inc. .............................. 1,695,000 105,513,750
The TJX Companies, Inc. ........................... 90,000 3,060,000
Wal-Mart Stores, Inc. ............................. 350,000 32,265,625
Williams-Sonoma, Inc.+ ............................ 100,000 2,825,000
------------
(COST $16,147,648) -- 154,273,750
------------
SEMICONDUCTORS (1.8%)
DuPont Photomasks, Inc. + ......................... 100,000 3,962,500
Lam Research Corporation + ........................ 500,000 14,500,000
----------
(COST $13,472,687) -- 18,462,500
----------
SPECIAL HOLDINGS #+ (NOTE 6) (0.0%)
Sequoia Capital IV ................................ ++ 41,440
Welsh, Carson, Anderson & Stowe III ............... ++ 720
----------
(COST $ 1,255,531) -- 42,160*
----------
TRANSPORTATION (2.2%)
AMR Corporation + ................................. 380,000 22,253,750
----------
(COST $20,613,025)
TOTAL COMMON STOCKS (72.2%) (COST $308,236,260) ... 736,814,941
------------
CONVERTIBLE CORPORATE NOTE (1.4%)
- --------------------------------------------------------------------------------
MedImmune, Inc., 7% due 7/1/2003 ** ............... $ 2,300,000 13,860,375
------------
(COST $ 2,265,500)
SHORT-TERM SECURITIES AND OTHER ASSETS
- --------------------------------------------------------------------------------
Ford Motor Credit Company notes
due 4/1-5/6/99; 4.78%-4.84% $64,100,000 63,489,574
General Electric Capital Corp. notes
due 4/8-5/6/99; 4.84%-4.86% 70,200,000 69,488,429
General Motors Acceptance Corp. notes
due 4/20-4/29/99; 4.75%-4.82% 63,900,000 63,290,207
Sears Roebuck Acceptance Corp. notes
due 4/12-5/4/99; 4.80%-4.88% 71,500,000 70,797,602
-------------
(COST $267,065,812) 267,065,812
Cash, receivables, and other assets,
less liabilities ........................ 2,204,719
-------------
TOTAL SHORT-TERM SECURITIES AND OTHER ASSETS, NET (26.4%)
(COST $269,270,531) 269,270,531
--------------
NET ASSETS (COST $579,772,291) $1,019,945,847
==============
<FN>
+Non-income producing security. * Fair value of each holding in the opinion of the Directors.
++ A limited partnership interest. **Security exempt from registration under Rule 144A of the
# Restricted security. Securities Act of 1933. This security may be resold in transactions
(see notes to financial statements) exempt from registration, normally to qualified institutional buyers.
</FN>
</TABLE>
<PAGE>
8 NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
1. SIGNIFICANT ACCOUNTING POLICIES
General American Investors Company, Inc. (the "Company"), established in 1927,
is registered under the Investment Company Act of 1940 as a closed-end,
diversified management investment company. It is internally managed by its
officers under the direction of the Board of Directors.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
a. SECURITY VALUATION Securities traded on securities exchanges or on the NASDAQ
National Market System are valued at the last reported sales price on the last
business day of the period. Listed and NASDAQ securities for which no sales are
reported on that day and other securities traded in the over-the-counter market
are valued at the last bid price on the valuation date. Corporate discount notes
are valued at amortized cost, which approximates market value. Special holdings
are valued at fair value in the opinion of the Directors. In determining fair
value, in the case of restricted shares, consideration is given to cost,
operating and other financial data and, where applicable, subsequent private
offerings or market price of the issuer's unrestricted shares (to which a 30
percent discount is applied); for limited partnership interests, fair value is
based upon an evaluation of the partnership's net assets.
b. FEDERAL INCOME TAXES The Company's policy is to fulfill the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all taxable income to its stockholders. Accordingly, no
provision for Federal income taxes is required.
c. OTHER As customary in the investment company industry, securities
transactions are recorded as of the trade date. Dividend income and
distributions to stockholders are recorded as of the ex-dividend dates.
2. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS
On June 19, 1998, the Company issued and sold 6,000,000 shares of its 7.20% Tax-
Advantaged Cumulative Preferred Stock. The stock has a liquidation preference of
$25.00 per share plus an amount equal to accumulated and unpaid dividends to the
date of redemption.
The Company is required to allocate distributions from long-term capital gains
and other types of income proportionately among holders of shares of Common
Stock and Preferred Stock. To the extent that dividends on the shares of
Preferred Stock are not paid from long-term capital gains, they will be paid
from ordinary income or net short-term capital gains or will represent a return
of capital.
Under the Investment Company Act of 1940, the Company is required to maintain an
asset coverage of at least 200% for the Preferred Stock. In addition, pursuant
to the Rating Agency Guidelines, the Company is required to maintain a certain
discounted asset coverage for its portfolio that equals or exceeds the Basic
Maintenance Amount under the guidelines established by Moody's Investors
Service, Inc. The Company has met these requirements since the issuance of the
Preferred Stock.
The holders of Preferred Stock have voting rights equivalent to those of the
holders of Common Stock (one vote per share) and, generally, vote together with
the holders of Common Stock as a single class.
At all times, holders of Preferred Stock will elect two members of the Company's
Board of Directors and the holders of Preferred and Common Stock, voting as a
single class, will elect the remaining directors. If the Company fails to pay
dividends on the Preferred Stock in an amount equal to two full years'
dividends, the holders of Preferred Stock will have the right to elect a
majority of the directors. In addition, the Investment Company Act of 1940
requires that approval of the holders of a majority of any outstanding preferred
shares, voting separately as a class, would be required to (a) adopt any plan of
reorganization that would adversely affect the Preferred Stock and (b) take any
action requiring a vote of security holders, including, among other things,
changes in the Company's subclassification as a closed-end investment company or
changes in its fundamental investment policies.
Transactions in Common Stock during the three months ended March 31, 1999 and
the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------- ---------- ------------ -------------
1999 1998 1999 1998
--------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Shares issued in payment of dividends ................... 738,324 1,755,541 $ 738,324 $ 1,755,541
Increase in paid-in capital ............................. 22,011,284 49,429,451
------------ ------------
Total increase .................................... 22,749,608 51,184,992
------------ ------------
Shares purchased (at an average discount from net asset
value of 10.5% and 11.4%, respectively) ............... 264,300 943,500 ( 264,300) ( 943,500)
Decrease in paid-in capital ............................. ( 8,037,466) (26,366,505)
------------ ------------
Total decrease .................................... ( 8,301,766) (27,310,005)
------------ ------------
Net increase ............................................ $ 14,447,842 $ 23,874,987
============ ============
</TABLE>
The cost of the 35,500 shares of Common Stock held in Treasury at March 31,
1999 amounted to $1,117,344.
Dividends in excess of net income for financial statement purposes result
primarily from transactions where tax treatment differs from book treatment.
<PAGE>
9 NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
3. OFFICERS' COMPENSATION AND RETIREMENT AND THRIFT PLANS
The aggregate compensation paid by the Company during the three months ended
March 31, 1999 to its officers amounted to $744,751.
The Company has non-contributory retirement plans and a contributory thrift plan
which cover substantially all employees. The costs to the Company and the assets
and liabilities of the plans are not material. Costs of the plans are funded
currently.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (other than short-term securities) for the
three months ended March 31, 1999 were $45,434,840 and $52,409,099,
respectively. At March 31, 1999, the cost of investments for Federal income tax
purposes was the same as the cost for financial reporting purposes.
5. GENERAL INFORMATION
Brokerage commissions during the three months ended March 31, 1999 were
$125,840, including $27,250 paid to Goldman, Sachs & Co. The Chairman Emeritus
of the Company is a limited partner of The Goldman Sachs Group, L.P. which is an
affiliate of Goldman, Sachs & Co.
6. RESTRICTED SECURITIES
<TABLE>
<CAPTION>
DATE VALUE
ACQUIRED COST (NOTE 1a)
-------- ---------- ----------
<S> <C> <C> <C>
Sequoia Capital IV* ............................... 1/31/84 $1,003,144 $ 41,440
Welsh, Carson, Anderson & Stowe III* .............. 3/10/83 252,387 720
---------- ----------
Total ............................................. $1,255,531 $ 42,160
========== ==========
<FN>
* The amounts shown are net of distributions from these limited partnership
interests which, in the aggregate, amounted to $4,689,667 and $3,626,167,
respectively. The initial investment in each limited partnership was $2,000,000.
The Company also owns 5,262 shares of non-voting common stock of Multisystems,
Inc. which have no cost and are carried at no value.
</FN>
</TABLE>
7. OPERATING LEASE COMMITMENT
In July 1992, the Company entered into an operating lease agreement for office
space which expires in 2007 and provides for future rental payments in the
aggregate amount of approximately $5.6 million. The lease agreement contains a
clause whereby the Company received twenty months of free rent beginning in
December 1992 and escalation clauses relating to operating costs and real
property taxes.
Rental expense approximated $66,800 for the three months ended March 31, 1999.
Minimum rental commitments under the operating lease are approximately $403,000
per annum in 1999 through 2002, and $504,000 per annum in 2003 through 2007.
In March 1996, the Company entered into a sublease agreement which expires in
2003 and provides for future rental receipts. Minimum rental receipts under the
sublease are approximately $203,000 per annum in 1999 through 2002 and $64,000
in 2003. The Company will also receive its proportionate share of operating
expenses and real property taxes under the sublease.
- --------------------------------------------------------------------------------
In addition to purchases of the Company's Common Stock as set forth in Note 2 on
page 8, purchases of Common Stock may be made at such times, at such prices, in
such amounts and in such manner as the Board of Directors may deem advisable.
<PAGE>
10 MAJOR STOCK CHANGES* Three Months Ended March 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR
SHARES OR PRINCIPAL AMOUNT HELD
INCREASES PRINCIPAL AMOUNT MARCH 31, 1999
- --------------------------------------------------------------------------------------------------------
NEW POSITIONS
<S> <C> <C>
Interim Services Inc. 400,000 400,000
SunTrust Banks, Inc. 240,000 (a) 240,000
The TJX Companies, Inc. -- 90,000 (b)
Williams-Sonoma, Inc. 100,000 100,000
ADDITIONS
AMR Corporation 80,000 380,000
AmerUs Life Holdings, Inc. Class A 62,500 450,000
Annuity and Life Re (Holdings), Ltd. 7,500 482,500
Buffets, Inc. 226,500 1,000,000
Consolidated Stores Corporation 75,000 350,000
Everest Reinsurance Holdings, Inc. 15,000 335,000
GelTex Pharmaceuticals, Inc. 95,000 300,000
Kennametal Inc. 125,000 300,000
Lam Research Corporation 24,000 500,000
Molex Incorporated Class A 85,000 400,000
ReliaStar Financial Corp. 15,000 142,500
DECREASES
- --------------------------------------------------------------------------------------------------------
ELIMINATIONS
Crestar Financial Corp. 250,000 (a) --
FDX Corporation 100,000 --
Veeco Instruments Inc. 100,000 --
REDUCTIONS
American International Group, Inc. 5,000 130,000
Cisco Systems, Inc. 15,000 225,000
Deere & Company 50,000 100,000
The Home Depot, Inc. 85,000 1,695,000
IDEC Pharmaceuticals Corporation 10,000 415,000
Medtronic, Inc. 15,000 165,000
NTL Incorporated 27,000 310,000
Pfizer Inc. 30,000 300,000
Wal-Mart Stores, Inc. 50,000 350,000
<FN>
* Excludes transactions in Stocks - Miscellaneous - Other.
(a) 240,000 shares of SunTrust Banks, Inc. were received in exchange for 250,000 shares of
Crestar Financial Corp. in conjunction with a merger.
(b) Shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
</FN>
</TABLE>
<PAGE>
DIRECTORS
- --------------------------------------------------------------------------------
Lawrence B. Buttenwieser, Chairman
Arthur G. Altschul, Jr.
Lewis B. Cullman
Spencer Davidson
Gerald M. Edelman
Anthony M. Frank
John D. Gordan, III
Bill Green
Sidney R. Knafel
Richard R. Pivirotto
Joseph T. Stewart, Jr.
Raymond S. Troubh
Arthur G. Altschul, Chairman Emeritus
William O. Baker, Director Emeritus
William T. Golden, Director Emeritus
OFFICERS
- --------------------------------------------------------------------------------
Spencer Davidson, President & Chief Executive Officer
Andrew V. Vindigni, Vice-President
Eugene L. DeStaebler, Jr., Vice-President, Administration
Peter P. Donnelly, Vice-President & Trader
Diane G. Radosti, Treasurer
Carole Anne Clementi, Secretary
SERVICE COMPANIES
- --------------------------------------------------------------------------------
COUNSEL
Sullivan & Cromwell
INDEPENDENT AUDITORS
Ernst & Young LLP
CUSTODIAN
Bankers Trust Company
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
1-800-413-5499
www.chasemellon.com
RESULTS OF THE ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
The votes cast by Stockholders at the Company's annual meeting held on March 10,
1999 were as follows:
Election of Directors:
FOR WITHHELD
<TABLE>
<S> <C> <C>
Arthur G. Altschul, Jr. 26,090,250 298,077
Lawrence B, Buttenwieser 26,100,246 288,081
Lewis B. Cullman 26,002,316 386,011
Spencer Davidson 26,108,271 280,056
Gerald M. Edelman 26,065,125 323,202
Anthony M. Frank 26,097,591 290,736
John D. Gordan, III 26,104,260 284,067
Richard R. Pivirotto 26,056,275 332,052
Joseph T. Stewart, Jr. 26,132,453 255,874
Raymond S. Troubh 26,129,253 259,074
Elected by holders of Preferred Stock
Bill Green 5,179,494 56,495
Sidney R. Knafel 5,179,694 56,295
</TABLE>
Ratification of the selection of Ernst & Young LLP as auditors of the Company
for the year 1999:
For - 26,049,347; Against - 143,015; Abstain - 195,965
