<PAGE>
GENERAL AMERICAN INVESTORS
COMPANY, INC.
SEMI-ANNUAL REPORT
JUNE 30, 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
- --------------------------------------------------------------------------------
For the six months ended June 30, 1999, the investment return to our
stockholders was 12.3%, consisting of a 9.5% 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 10.4%
currently. The rate of return (including income) for our benchmark, the Standard
& Poor's 500 Stock Index, was also 12.3%. For the twelve months ended June 30,
1999, the return to stockholders was 25.9% and the return on the net asset
value per Common Share was 23.7%; these compare to a return of 22.7% for the S&P
500.
If current trends persist, by year-end the U.S. stock market will have risen
by more than 20% for a fifth year in succession. This unprecedented streak is
remarkable and unusual, furthermore, for having continued in the face of the
recent rise in interest rates. While the demand for equities appears to be
insatiable, the rising supply of new issues and moderating economic growth may
temper near-term gains. Meanwhile, we continue to focus on our historic
investment approach, which emphasizes traditional measures of value and
individual stock selection, while maintaining adequate cash reserves.
As set forth in the accompanying financial statements (unaudited), as of June
30, 1999, the net assets of the Company were $1,069,637,875. Net assets
applicable to the Common Stock were $919,637,875, equal to $36.56 per Common
Share.
The increase in net assets resulting from operations for the six months ended
June 30, 1999 was $82,881,974. During this period, net realized gain on
securities sold was $61,654,864 ($2.45 per share) and the increase in unrealized
appreciation was $14,759,539. Net investment income for the six months was
$6,467,571.
During the six months, 500,600 shares of the Company's Common Stock were
repurchased for $15,855,898 at an average discount from net asset value of
10.1%.
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 June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
ASSETS
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS, AT VALUE ( NOTE 1a )
Common stocks (cost $358,630,947) ................... $ 805,621,518
Convertible corporate note (cost $2,265,500) ........ 15,894,380
Corporate discount notes (cost $246,469,633) ........ 246,469,633
------------
Total investments (cost $607,366,080) .......... 1,067,985,531
CASH, RECEIVABLES AND OTHER ASSETS
Cash ................................................ $ 114,280
Receivable for securities sold ...................... 1,344,248
Dividends, interest and other receivables ........... 2,484,205
Prepaid expenses .................................... 4,223,217
Other ............................................... 631,778 8,797,728
----------- -----------
TOTAL ASSETS .......................................... 1,076,783,259
LIABILITIES
- -------------------------------------------------------------------------------------
Payable for securities purchased ................... 1,766,732
Preferred dividend accrued but not yet declared .... 240,000
Accrued expenses and other liabilities ............. 5,138,652
-----------
TOTAL LIABILITIES ..................................... 7,145,384
------------
NET ASSETS ............................................ $1,069,637,875
==============
Net Assets applicable to Preferred Stock at a
liquidation value of $25 per share ............... $ 150,000,000
==============
Net Assets applicable to Common Stock ................. $ 919,637,875
==============
NET ASSET VALUE PER COMMON SHARE ...................... $ 36.56
==============
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
25,154,443 shares (exclusive of
271,800 shares in Treasury) ..................... 25,154,443
Additional paid-in capital (note 2) ................ 516,269,475
Undistributed realized gain on securities sold ..... 61,414,589
Undistributed net income ........................... 5,819,917
Unallocated distributions on Preferred Stock ....... (5,640,000)
Unrealized appreciation on investments (including
aggregate gross unrealized appreciation of
$476,775,762) ................................... 460,619,451
------------
TOTAL NET ASSETS ...................................... $1,069,637,875
==============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
3 STATEMENT OF OPERATIONS Six Months Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
INCOME
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividends ................................. $ 3,478,291
Interest .................................. 6,674,257 $ 10,152,548
----------
EXPENSES
- --------------------------------------------------------------------------------
Investment research ....................... 1,867,123
Administration and operations ............. 1,118,260
Office space and general .................. 303,688
Transfer agent, custodian and registrar
fees and expenses ....................... 125,934
Stockholders' meeting and reports ......... 85,258
Directors' fees and expenses .............. 85,414
Auditing and legal fees ................... 57,000
Miscellaneous taxes (note 1b) ............. 42,300 3,684,977
--------- ---------
NET INVESTMENT INCOME ........................ 6,467,571
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1c AND 4)
- -----------------------------------------------------------------------------------
Net realized gain on sales of securities
(long-term except for $11,019,537) ....... 61,654,864
Net increase in unrealized appreciation ... 14,759,539
----------
NET GAIN ON INVESTMENTS ...................... 76,414,403
------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. $ 82,881,974
==============
<FN>
(see notes to financial statements)
</FN>
</TABLE>
<PAGE>
4 STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31,
OPERATIONS (Unaudited) 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment income ..................... $ 6,467,571 $ 11,554,362
Net realized gain on sales of securities .. 61,654,864 109,379,689
Net increase in unrealized appreciation ... 14,759,539 119,454,056
------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. 82,881,974 240,388,107
------------- -------------
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income ........................... -- (734,400)
From long-term capital gain ............... -- (4,785,600)
Unallocated distributions on Preferred
Stock .................................... (5,400,000) (240,000)
------------- -------------
DECREASE IN NET ASSETS FROM PREFERRED
DISTRIBUTIONS ............................ (5,400,000) (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) .. (15,855,898) (27,310,005)
Net proceeds from the issuance of
Preferred Stock (note 2) ................ -- 144,575,000
------------- -------------
INCREASE IN NET ASSETS - CAPITAL TRANSACTIONS 6,893,710 168,449,987
------------- -------------
NET INCREASE IN NET ASSETS ................... 50,704,778 316,336,097
NET ASSETS
- --------------------------------------------------------------------------------
BEGINNING OF PERIOD .......................... 1,018,933,097 702,597,000
-------------- -------------
END OF PERIOD (including undistributed net
income of $5,819,917 and distributions
in excess of net income of $647,654,
respectively) ............................. $1,069,637,875 $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 six months ended June 30, 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>
Six Months
Ended Year Ended December 31,
June 30, 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 ........................... .26 .47 .21 .22 .08 .05
Net gain (loss) on securities -
realized and unrealized .................... 3.00 9.44 7.15 3.86 4.54 (.94)
------------ ---------- --------- --------- --------- ---------
Total from investment operations ................... 3.26 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 ..................................... (.21) (.01) -- -- -- --
------------ ---------- --------- --------- --------- ---------
(.21) (.24) -- -- -- --
------------ ---------- --------- --------- --------- ---------
Total Distributions ................................ (1.57) (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 ..................... $ 36.56 $ 34.87 $ 29.15 $ 25.24 $ 23.94 $ 22.31
============ ========== ========= ========= ========== =========
Per share market value, end of period .............. $ 32.75 $ 30.44 $ 26.19 $ 21.00 $ 20.00 $ 19.00
============ ========== ========= ========= ========== =========
TOTAL INVESTMENT RETURN - Stockholder Return, based
on market price per share ........................ 12.35%* 31.31% 42.58% 19.48% 21.22% -7.86%
RATIOS AND SUPPLEMENTAL DATA
Total net assets, end of period
(000's omitted) ................................. $ 1,069,638 $1,018,933 $ 702,597 $ 597,597 $ 573,693 $ 519,722
Net assets attributable to Common Stock, end
of period (000's omitted) ....................... $ 919,638 $ 868,933 $ 702,597 $ 597,597 $ 573,693 $ 519,722
Ratio of expenses to average net assets
applicable to Common Stock ...................... 0.42%* 0.95% 0.98% 1.05% 1.25% 1.17%
Ratio of net income to average net assets
applicable to Common Stock ...................... 0.74%* 1.50% 0.80% 0.88% 0.36% 0.21%
Portfolio turnover rate .......................... 15.83%* 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 ................................... 713% 679% -- -- -- --
Liquidation preference per share ................. $ 25.00 $ 25.00 -- -- -- --
Market value per share ........................... $ 25.00 $ 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 June 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS PRINCIPAL AMOUNT (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS AND INFORMATION SERVICES (5.0%)
Cox Communications, Inc. Class A + ................ 520,000 $ 19,142,500
NTL Incorporated + ................................ 210,000 18,099,375
Reuters Group plc-ADR ............................. 94,000 7,619,875
TCA Cable TV, Inc. ................................ 50,000 2,775,000
Wolters Kluwer NV-ADR ............................. 140,000 5,586,000
----------
(COST $14,567,566) -- 53,222,750
----------
COMPUTER SOFTWARE AND SYSTEMS (3.9%)
Cisco Systems, Inc.+ .............................. 450,000 28,996,875
MetaCreations Corporation + ....................... 300,000 1,725,000
Seagate Technology, Inc.+ ......................... 430,000 11,018,750
----------
(COST $13,585,280) -- 41,740,625
----------
CONSUMER PRODUCTS AND SERVICES (9.0%)
Buffets, Inc.+ .................................... 1,125,000 12,937,500
DaimlerChrysler A.G. .............................. 221,000 19,669,000
Ford Motor Company ................................ 500,000 28,218,750
Interim Services Inc.+ ............................ 450,000 9,281,250
PepsiCo, Inc. ..................................... 200,000 7,737,500
Philip Morris Companies Inc. ...................... 250,000 10,046,875
The ServiceMaster Company ......................... 450,000 8,437,500
----------
(COST $61,891,735) -- 96,328,375
----------
ELECTRONICS (1.6%)
Molex Incorporated Class A ........................ 562,500 17,718,750
----------
(COST $14,647,502)
ENVIRONMENTAL CONTROL
(INCLUDING SERVICES) (2.1%)
Waste Management, Inc. ............................ 413,000 22,198,750
----------
(COST $ 5,954,561)
FINANCE AND INSURANCE (18.6%)
American International Group, Inc. ................ 125,000 14,656,250
AmerUs Life Holdings, Inc. Class A ................ 450,000 12,150,000
Annaly Mortgage Management, Inc. .................. 550,000 6,187,500
Annuity and Life Re (Holdings), Ltd. .............. 500,000 11,218,750
Berkshire Hathaway Inc. Class A + ................. 350 24,115,000
CCB Financial Corp. ............................... 200,000 10,575,000
Everest Reinsurance Holdings, Inc. ................ 400,000 13,050,000
First Midwest Bancorp, Inc. ....................... 275,000 10,931,250
Golden West Financial Corporation ................. 160,000 15,680,000
Huntington Bancshares Incorporated ................ 175,000 6,125,000
M&T Bank Corporation .............................. 45,000 24,750,000
ReliaStar Financial Corp. ......................... 210,000 9,187,500
SunTrust Banks, Inc. .............................. 240,000 16,665,000
Transatlantic Holdings, Inc. ...................... 200,000 14,987,500
XL Capital Ltd .................................... 151,890 8,581,785
-----------
(COST $95,288,150) -- 198,860,535
-----------
HEALTH CARE (10.9%)
PHARMACEUTICALS (9.5%)
AstraZeneca plc ................................... 606,661 23,684,055
Centocor, Inc.+ ................................... 200,000 9,325,000
GelTex Pharmaceuticals, Inc.+ ..................... 300,000 5,400,000
IDEC Pharmaceuticals Corporation + ................ 390,000 30,054,375
Magainin Pharmaceuticals Inc.+ .................... 300,000 768,750
Pfizer Inc. ....................................... 295,000 32,155,000
-----------
(COST $57,540,986) -- 101,387,180
-----------
MEDICAL INSTRUMENTS AND DEVICES (1.1%)
Medtronic, Inc. ................................... 150,000 11,681,250
-----------
(COST $ 906,118)
</TABLE>
<PAGE>
7 STATEMENT OF INVESTMENTS June 30, 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 1,014,812
-----------
(COST $ 8,335,304) -- 3,075,312
-----------
(COST $66,782,408) -- 116,143,742
-----------
MACHINERY & EQUIPMENT (0.6%)
Kennametal Inc. ................................... 210,000 6,510,000
-----------
(COST $ 3,669,693)
MISCELLANEOUS (1.4%)
Other ............................................. 15,005,738
----------
(COST $12,107,643)
OIL & NATURAL GAS (INCLUDING SERVICES) (1.3%)
Repsol, S.A.- ADR ................................. 700,000 14,218,750
----------
(COST $ 8,236,884)
RETAIL TRADE (14.4%)
Consolidated Stores Corporation + ................. 375,000 10,125,000
The Home Depot, Inc. .............................. 1,680,000 108,255,000
The TJX Companies, Inc. ........................... 90,000 2,998,125
Wal-Mart Stores, Inc. ............................. 675,000 32,568,750
------------
(COST $14,261,806) -- 153,946,875
------------
SEMICONDUCTORS (3.3%)
DuPont Photomasks, Inc. + ......................... 120,000 5,745,000
Lam Research Corporation + ........................ 535,000 24,977,813
TriQuint Semiconductor, Inc.+ ..................... 82,000 4,658,625
----------
(COST $17,625,189) -- 35,381,438
----------
SPECIAL HOLDINGS #+ (NOTE 6) (0.0%)
Sequoia Capital IV ................................ ++ 41,440*
----------
(COST $ 1,003,144)
TRANSPORTATION (3.2%)
AMR Corporation + ................................. 380,000 25,935,000
Ryder System, Inc. ................................ 325,000 8,368,750
----------
(COST $29,009,386) 34,303,750
----------
TOTAL COMMON STOCKS (75.3%) (COST $358,630,947) ... 805,621,518
------------
CONVERTIBLE CORPORATE NOTE (1.5%)
- --------------------------------------------------------------------------------
MedImmune, Inc., 7% due 7/1/2003 ** ............... $ 2,300,000 15,894,380
------------
(COST $ 2,265,500)
SHORT-TERM SECURITIES AND OTHER ASSETS
- --------------------------------------------------------------------------------
Ford Motor Credit Company notes
due 7/6-8/2/99; 4.78%-5.06% $61,600,000 61,032,869
General Electric Capital Corp. notes
due 7/13-8/5/99; 4.81%-5.13% 52,000,000 51,469,463
General Motors Acceptance Corp. notes
due 7/15-7/29/99; 4.80%-5.00% 60,500,000 59,920,076
Sears Roebuck Acceptance Corp. notes
due 7/1-8/3/99; 4.78%-4.86% 74,700,000 74,047,225
-------------
(COST $246,469,633) 246,469,633
Cash, receivables, and other assets,
less liabilities ........................ 1,652,344
-------------
TOTAL SHORT-TERM SECURITIES AND OTHER ASSETS, NET (23.2%)
(COST $248,121,977) 248,121,977
--------------
NET ASSETS (COST $609,018,424) $1,069,637,875
==============
<FN>
+Non-income producing security. * Fair value 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 six months ended June 30, 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 10.1% and 11.1%, respectively) ............... 500,600 943,500 ( 500,600) ( 943,500)
Decrease in paid-in capital ............................. ( 15,355,298) (26,366,505)
------------ ------------
Total decrease .................................... ( 15,855,898) (27,310,005)
------------ ------------
Net increase ............................................ $ 6,893,710 $ 23,874,987
============ ============
</TABLE>
The cost of the 271,800 shares of Common Stock held in Treasury at June 30,
1999 amounted to $8,671,476.
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 six months ended
June 30, 1999 to its officers amounted to $1,489,502.
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 six
months ended June 30, 1999 were $128,184,025 and $120,898,004, respectively. At
June 30, 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 six months ended June 30, 1999 were $207,261,
including $32,650 paid to Goldman, Sachs & Co. The Chairman Emeritus of the
Company is a retired partner 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
========== ==========
<FN>
* The amounts shown are net of distributions from this limited partnership
interest which, in the aggregate, amounted to $4,689,667. The initial investment
the 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 $160,500 for the six months ended June 30, 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.
Unaudited
- --------------------------------------------------------------------------------
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 June 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR
SHARES OR PRINCIPAL AMOUNT HELD
INCREASES PRINCIPAL AMOUNT JUNE 30, 1999
- --------------------------------------------------------------------------------------------------------
NEW POSITIONS
<S> <C> <C>
AstraZeneca plc 606,661 (a) 606,661
The ServiceMaster Company 450,000 450,000
TCA Cable TV, Inc. 50,000 50,000
TriQuint Semiconductor, Inc. -- 82,000 (b)
XL Capital Ltd 151,890 (c) 151,890
ADDITIONS
Annuity and Life Re (Holdings), Ltd. 17,500 500,000
Berkshire Hathaway Inc. Class A 35 350
Buffets, Inc. 125,000 1,125,000
Centocor, Inc. 100,000 200,000 (d)
Consolidated Stores Corporation 25,000 375,000
DuPont Photomasks, Inc. 20,000 120,000
Everest Reinsurance Holdings, Inc. 65,000 400,000
First Midwest Bancorp, Inc. 22,500 275,000
Interim Services Inc. 50,000 450,000
Lam Research Corporation 35,000 535,000
Molex Incorporated Class A 162,500 562,500
ReliaStar Financial Corp. 67,500 210,000
Ryder System, Inc. 125,000 325,000 (d)
DECREASES
- --------------------------------------------------------------------------------------------------------
ELIMINATIONS
AB Astra Class A 482,500 (a) --
AB Astra Class B 720,000 (a) --
Deere & Company 100,000 --
NAC Re Corporation 166,000 (c) --
Williams-Sonoma, Inc. 100,000 --
REDUCTIONS
American International Group, Inc. 5,000 125,000
CCB Financial Corp. 17,000 200,000
The Home Depot, Inc. 15,000 1,680,000
IDEC Pharmaceuticals Corporation 25,000 390,000
Kennametal Inc. 90,000 210,000
Medtronic, Inc. 15,000 150,000
NTL Incorporated 100,000 210,000
Pfizer Inc. 5,000 295,000
Philip Morris Companies Inc. 50,000 250,000
Repsol, S.A. - ADR 50,000 700,000 (e)
Wal-Mart Stores, Inc. 25,000 675,000 (e)
Waste Management, Inc. 47,000 413,000
<FN>
* Excludes transactions in Stocks - Miscellaneous - Other.
(a) 606,661 shares of AstraZeneca plc were received in exchange for 482,500 shares of AB Astra Class A and
720,000 shares of AB Astra Class B in conjunction with a merger.
(b) Shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
(c) 151,890 shares of XL Capital Ltd were received in exchange for 166,000 shares of NAC Re Corporation
in conjunction with a merger.
(d) Includes shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
(e) Includes shares received in conjunction with a stock split.
</FN>
</TABLE>
<PAGE>
11 YEAR 2000 READINESS DISCLOSURE (Unaudited)
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General American Investors
Like other organizations around the world, General American Investors could be
adversely affected if the computer systems used by the Company, its service
providers or companies in which the Company invests do not properly process and
calculate information that relates to dates beginning on January 1, 2000, and
beyond. This situation may occur because for many years computer programs have
used only two digits to describe years, such as 99 for 1999. Such programs may
not work when they encounter the year 00.
We have been assured by our vendors that the Company's mission critical computer
programs are Year 2000 ("Y2K") compliant. These programs, including the
investment management and accounting system used by the Company which was
upgraded in late-1998, have been tested in a mock Y2K environment. Certain other
computer programs and computer hardware were upgraded and tested in the second
quarter of 1999. Thus, we believe that our computers and programs are ready for
the Year 2000. The cost of this effort has not been material to the Company's
operations and should be viewed as part of the Company's ongoing investment
required to keep its systems up-to-date. As a contingency, we plan to utilize
battery operated laptop computers to perform essential daily operations. The
contingency plan will be tested well before 2000.
We are in the process of replacing our telephone and security systems in order
to upgrade the quality of these systems and to make sure that they are Y2K
compliant. The new systems are expected to be in place by the end of the third
quarter of 1999.
We are actively assessing the Year 2000 readiness of our custodian bank,
transfer agent and other service providers, as well as the companies held in our
portfolio, through the review of correspondence and/or published disclosure
documents.
Due to the general uncertainty inherent in the Year 2000 problem, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company's results of operations or financial
condition.
- --------------------------------------------------------------------------------
The Letter to Stockholders and the Statement on Year 2000 contain
forward-looking statements which reflect our current beliefs regarding the
anticipated effects of information available to us at this time. These
forward-looking statements are not guarantees and the Company's results could
vary materially from those indicated by such statements.
<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
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
- --------------------------------------------------------------------------------
To the Board of Directors and Stockholders of
GENERAL AMERICAN INVESTORS COMPANY, INC.
We have reviewed the accompanying statement of assets and liabilities of
General American Investors Company, Inc., including the statement of
investments, as of June 30, 1999 and the related statements of operations and
changes in net assets and financial highlights for the six month period ended
June 30, 1999. These financial statements and financial highlights are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of changes in net assets for the year ended December
31, 1998 and financial highlights for each of the five years in the period then
ended and in our report, dated January 15, 1999, we expressed an unqualified
opinion on such financial statement and financial highlights.
ERNST & YOUNG LLP
New York, New York
July 15, 1999
