<PAGE>
GENERAL AMERICAN INVESTORS
COMPANY, INC.
THIRD QUARTER REPORT
SEPTEMBER 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 nine months ended September 30, 1999, the investment return to our
stockholders was 11.7%, consisting of a 6.5% 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 8.4%
currently. By comparison the rate of return (including income) for our
benchmark, the Standard & Poor's 500 Stock Index, was 5.3%. For the twelve
months ended September 30, 1999, the return to stockholders was 31.4% and the
return on the net asset value per Common Share was 30.9%; these compare to a
return of 27.7% for the S&P 500.
As set forth in the accompanying financial statements (unaudited), as of
September 30, 1999, the net assets of the Company were $1,039,909,959. Net
assets applicable to the Common Stock were $889,909,959, equal to $35.55 per
Common Share.
The increase in net assets resulting from operations for the nine months ended
September 30, 1999 was $59,774,743. During this period, net realized gain on
securities sold was $67,851,090, of which approximately $58,240,000 ($2.33 per
share) is applicable to the Common Stock, and the decrease in unrealized
appreciation was $17,605,107. Net investment income for the nine months was
$9,528,760.
During the nine months, 619,300 shares of the Company's Common Stock were
repurchased for $19,776,583 at an average discount from net asset value of
10%.
The seemingly inexorable advance in equities has moderated. While most indices
remain near record levels, the great majority of stocks are well off their
highs. Our near perfect economic environment, which like Goldilock's porridge
has been not too hot and not too cold, has started to show some strain. Consumer
demand remains robust, buoyed by the increased value of financial assets and
real estate. At the same time, the growing level of imports, and attendant trade
deficit, has held prices in check. But the combination of rising interest rates,
higher energy prices and tight labor markets is impacting profit margins. In
consequence, corporate earnings have become less predictable and shortfalls more
common. In this somewhat more uncertain environment our fundamental investment
style should continue to prove rewarding.
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 September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
ASSETS
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS, AT VALUE ( NOTE 1a )
Common stocks (cost $370,366,364) ................... $ 798,621,169
Corporate discount notes (cost $237,760,416) ........ 237,760,416
------------
Total investments (cost $608,126,780) .......... 1,036,381,585
CASH, RECEIVABLES AND OTHER ASSETS
Cash ................................................ $ 60,554
Receivable for securities sold ...................... 8,364,831
Dividends, interest and other receivables ........... 2,490,564
Prepaid expenses .................................... 4,294,570
Other ............................................... 656,250 15,866,769
----------- -----------
TOTAL ASSETS .......................................... 1,052,248,354
LIABILITIES
- -------------------------------------------------------------------------------------
Payable for securities purchased ................... 6,418,959
Preferred dividend accrued but not yet declared .... 240,000
Accrued expenses and other liabilities ............. 5,679,436
-----------
TOTAL LIABILITIES ..................................... 12,338,395
------------
NET ASSETS ............................................ $1,039,909,959
==============
Net Assets applicable to Preferred Stock at a
liquidation value of $25 per share ............... $ 150,000,000
==============
Net Assets applicable to Common Stock ................. $ 889,909,959
==============
NET ASSET VALUE PER COMMON SHARE ...................... $ 35.55
==============
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
25,035,743 shares (exclusive of
390,500 shares in Treasury) ..................... 25,035,743
Additional paid-in capital (note 2) ................ 512,467,490
Undistributed realized gain on securities sold ..... 67,610,815
Undistributed net income ........................... 8,881,106
Unallocated distributions on Preferred Stock ....... (8,340,000)
Unrealized appreciation on investments (including
aggregate gross unrealized appreciation of
$454,146,355) ................................... 428,254,805
------------
TOTAL NET ASSETS ...................................... $1,039,909,959
==============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
3 STATEMENT OF OPERATIONS Nine Months Ended September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
INCOME
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividends ................................. $ 5,172,678
Interest .................................. 9,849,630 $ 15,022,308
----------
EXPENSES
- --------------------------------------------------------------------------------
Investment research ....................... 2,800,583
Administration and operations ............. 1,694,018
Office space and general .................. 452,583
Transfer agent, custodian and registrar
fees and expenses ....................... 163,434
Directors' fees and expenses .............. 127,615
Stockholders' meeting and reports ......... 106,815
Auditing and legal fees ................... 87,000
Miscellaneous taxes (note 1b) ............. 61,500 5,493,548
--------- ---------
NET INVESTMENT INCOME ........................ 9,528,760
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1c AND 4)
- -----------------------------------------------------------------------------------
Net realized gain on sales of securities
(long-term except for $8,522,189) ........ 67,851,090
Net decrease in unrealized appreciation ... (17,605,107)
----------
NET GAIN ON INVESTMENTS ...................... 50,245,983
------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. $ 59,774,743
==============
<FN>
(see notes to financial statements)
</FN>
</TABLE>
<PAGE>
4 STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, 1999 December 31,
OPERATIONS (Unaudited) 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment income ..................... $ 9,528,760 $ 11,554,362
Net realized gain on sales of securities .. 67,851,090 109,379,689
Net increase (decrease)
in unrealized appreciation ............ (17,605,107) 119,454,056
------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. 59,774,743 240,388,107
------------- -------------
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income ........................... -- (734,400)
From long-term capital gain ............... -- (4,785,600)
Unallocated distributions on Preferred
Stock .................................... (8,100,000) (240,000)
------------- -------------
DECREASE IN NET ASSETS FROM PREFERRED
DISTRIBUTIONS ............................ (8,100,000) (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) .. (19,776,583) (27,310,005)
Net proceeds from the issuance of
Preferred Stock (note 2) ................ -- 144,575,000
------------- -------------
INCREASE IN NET ASSETS - CAPITAL TRANSACTIONS 2,973,025 168,449,987
------------- -------------
NET INCREASE IN NET ASSETS ................... 20,976,862 316,336,097
NET ASSETS
- --------------------------------------------------------------------------------
BEGINNING OF PERIOD .......................... 1,018,933,097 702,597,000
-------------- -------------
END OF PERIOD (including undistributed net
income of $8,881,106 and distributions
in excess of net income of $647,654,
respectively) ............................. $1,039,909,959 $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 nine months ended September 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>
Nine Months
Ended Year Ended December 31,
September 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 ........................... .38 .47 .21 .22 .08 .05
Net gain (loss) on securities -
realized and unrealized .................... 1.98 9.44 7.15 3.86 4.54 (.94)
------------ ---------- --------- --------- --------- ---------
Total from investment operations ................... 2.36 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 ..................................... (.32) (.01) -- -- -- --
------------ ---------- --------- --------- --------- ---------
(.32) (.24) -- -- -- --
------------ ---------- --------- --------- --------- ---------
Total Distributions ................................ (1.68) (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 ..................... $ 35.55 $ 34.87 $ 29.15 $ 25.24 $ 23.94 $ 22.31
============ ========== ========= ========= ========== =========
Per share market value, end of period .............. $ 32.56 $ 30.44 $ 26.19 $ 21.00 $ 20.00 $ 19.00
============ ========== ========= ========= ========== =========
TOTAL INVESTMENT RETURN - Stockholder Return, based
on market price per share ........................ 11.70%* 31.31% 42.58% 19.48% 21.22% -7.86%
RATIOS AND SUPPLEMENTAL DATA
Total net assets, end of period
(000's omitted) ................................. $ 1,039,910 $1,018,933 $ 702,597 $ 597,597 $ 573,693 $ 519,722
Net assets attributable to Common Stock, end
of period (000's omitted) ....................... $ 889,910 $ 868,933 $ 702,597 $ 597,597 $ 573,693 $ 519,722
Ratio of expenses to average net assets
applicable to Common Stock ...................... 0.63%* 0.95% 0.98% 1.05% 1.25% 1.17%
Ratio of net income to average net assets
applicable to Common Stock ...................... 1.08%* 1.50% 0.80% 0.88% 0.36% 0.21%
Portfolio turnover rate .......................... 23.65%* 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 ................................... 693% 679% -- -- -- --
Liquidation preference per share ................. $ 25.00 $ 25.00 -- -- -- --
Market value per share ........................... $ 24.19 $ 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 September 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS PRINCIPAL AMOUNT (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS AND INFORMATION SERVICES (5.6%)
Cox Communications, Inc. Class A + ................ 644,180 $ 26,894,515
NTL Incorporated + ................................ 210,000 20,179,687
Reuters Group plc-ADR ............................. 94,000 6,474,250
Wolters Kluwer NV-ADR ............................. 140,000 4,790,800
----------
(COST $16,301,940) -- 58,339,252
----------
COMPUTER SOFTWARE AND SYSTEMS (4.3%)
Cisco Systems, Inc.+ .............................. 435,000 29,824,688
MetaCreations Corporation + ....................... 300,000 1,621,875
Seagate Technology, Inc.+ ......................... 430,000 13,168,750
----------
(COST $13,533,133) -- 44,615,313
----------
CONSUMER PRODUCTS AND SERVICES (7.4%)
Buffets, Inc.+ .................................... 1,125,000 13,078,125
Ford Motor Company ................................ 600,000 30,150,000
Interim Services Inc.+ ............................ 400,000 6,550,000
PepsiCo, Inc. ..................................... 200,000 6,100,000
Philip Morris Companies Inc. ...................... 250,000 8,546,875
The ServiceMaster Company ......................... 786,500 12,633,156
----------
(COST $62,028,562) -- 77,058,156
----------
ELECTRONICS (1.8%)
Molex Incorporated Class A ........................ 562,500 18,210,938
----------
(COST $14,647,502)
ENVIRONMENTAL CONTROL
(INCLUDING SERVICES) (0.8%)
Waste Management, Inc. ............................ 413,000 7,950,250
----------
(COST $ 5,954,561)
FINANCE AND INSURANCE (17.6%)
American International Group, Inc. ................ 156,250 13,583,984
AmerUs Life Holdings, Inc. Class A ................ 450,000 9,534,375
Annaly Mortgage Management, Inc. .................. 550,000 5,121,875
Annuity and Life Re (Holdings), Ltd. .............. 500,000 12,437,500
Berkshire Hathaway Inc. Class A + ................. 320 17,600,000
CCB Financial Corp. ............................... 200,000 8,325,000
Everest Reinsurance Holdings, Inc. ................ 725,000 17,264,062
First Midwest Bancorp, Inc. ....................... 275,000 10,501,562
Golden West Financial Corporation ................. 160,000 15,730,000
Huntington Bancshares Incorporated ................ 192,500 5,113,281
M&T Bank Corporation .............................. 45,000 20,655,000
ReliaStar Financial Corp. ......................... 300,000 9,975,000
SunTrust Banks, Inc. .............................. 240,000 15,780,000
Transatlantic Holdings, Inc. ...................... 200,000 14,050,000
XL Capital Ltd .................................... 151,890 6,835,050
-----------
(COST $104,228,929) -- 182,506,689
-----------
HEALTH CARE (12.0%)
PHARMACEUTICALS (10.8%)
AstraZeneca plc ................................... 241,661 10,053,108
Centocor, Inc.+ ................................... 200,000 11,712,500
GelTex Pharmaceuticals, Inc.+ ..................... 535,000 5,951,875
IDEC Pharmaceuticals Corporation + ................ 337,500 31,735,547
Magainin Pharmaceuticals Inc.+ .................... 270,000 286,875
MedImmune, Inc.+ .................................. 203,739 20,303,865
Pfizer Inc. ....................................... 885,000 31,749,375
-----------
(COST $43,880,157) -- 111,793,145
-----------
MEDICAL INSTRUMENTS AND DEVICES (1.0%)
Medtronic, Inc. ................................... 300,000 10,668,750
-----------
(COST $ 906,118)
</TABLE>
<PAGE>
7 STATEMENT OF INVESTMENTS September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR VALUE
COMMON STOCKS (continued) PRINCIPAL AMOUNT (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE SERVICES (0.2%)
BioReliance Corporation + ......................... 317,000 $ 1,981,250
Huntingdon Life Sciences Group plc-ADR + .......... 524,500 655,625
-----------
(COST $ 6,665,019) -- 2,636,875
-----------
(COST $51,451,294) -- 125,098,770
-----------
MACHINERY & EQUIPMENT (0.5%)
Kennametal Inc. ................................... 190,000 4,916,250
-----------
(COST $ 3,309,203)
MISCELLANEOUS (1.4%)
Other ............................................. 14,487,250
----------
(COST $15,420,483)
OIL & NATURAL GAS (INCLUDING SERVICES) (1.3%)
Repsol, S.A.- ADR ................................. 700,000 13,956,250
----------
(COST $ 8,236,884)
RETAIL TRADE (16.5%)
Consolidated Stores Corporation + ................. 375,000 8,273,437
The Home Depot, Inc. .............................. 1,680,000 115,290,000
Saks Incorporated + ............................... 500,000 7,593,750
The TJX Companies, Inc. ........................... 300,000 8,418,750
Wal-Mart Stores, Inc. ............................. 675,000 32,104,688
------------
(COST $25,407,658) -- 171,680,625
------------
SEMICONDUCTORS (5.8%)
C-Cube Microsystems Inc.+ ......................... 150,000 6,525,000
DuPont Photomasks, Inc.+ .......................... 120,000 5,527,500
Lam Research Corporation + ........................ 535,000 32,635,000
PRI Automation, Inc.+ ............................. 245,000 8,850,625
TriQuint Semiconductor, Inc.+ ..................... 123,000 7,034,063
----------
(COST $28,255,810) -- 60,572,188
----------
SPECIAL HOLDINGS #+ (NOTE 6) (0.0%)
Sequoia Capital IV ................................ ++ 27,800*
----------
(COST $ 989,654)
TRANSPORTATION (1.8%)
AMR Corporation + ................................. 250,000 12,875,000
Ryder System, Inc. ................................ 310,500 6,326,438
----------
(COST $20,600,751) 19,201,438
----------
TOTAL COMMON STOCKS (76.8%) (COST $370,366,364) ... 798,621,169
------------
SHORT-TERM SECURITIES AND OTHER ASSETS
- --------------------------------------------------------------------------------
Ford Motor Credit Company notes
due 10/14-11/4/99; 5.13%-5.29% $57,400,000 56,794,012
General Electric Capital Corp. notes
due 10/4-10/18/99; 5.14%-5.29% 58,600,000 57,942,372
General Motors Acceptance Corp. notes
due 10/7-11/1/99; 5.12%-5.30% 62,800,000 62,161,504
Sears Roebuck Acceptance Corp. notes
due 10/28-11/15/99; 5.14%-5.34% 61,500,000 60,862,528
-------------
(COST $237,760,416) 237,760,416
Cash, receivables, prepaid expenses and other assets,
less liabilities ........................ 3,528,374
-------------
TOTAL SHORT-TERM SECURITIES AND OTHER ASSETS, NET (23.2%)
(COST $241,288,790) 241,288,790
--------------
NET ASSETS (COST $611,655,154) $1,039,909,959
==============
<FN>
+Non-income producing security. * Fair value in the opinion of the Directors.
++ A limited partnership interest.
# Restricted security.
(see notes to financial statements)
</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 nine months ended September 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 10.0% and 11.1%, respectively) ............... 619,300 943,500 ( 619,300) ( 943,500)
Decrease in paid-in capital ............................. ( 19,157,283) (26,366,505)
------------ ------------
Total decrease .................................... ( 19,776,583) (27,310,005)
------------ ------------
Net increase ............................................ $ 2,973,025 $ 23,874,987
============ ============
</TABLE>
The cost of the 390,500 shares of Common Stock held in Treasury at September 30,
1999 amounted to $12,592,162.
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 nine months ended
September 30, 1999 to its officers amounted to $2,234,253.
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
nine months ended Septmeber 30, 1999 were $194,361,238 and $183,801,526,
respectively. At September 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 nine months ended September 30, 1999 were
$367,811, including $35,875 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 $ 989,654 $ 27,800
========== ==========
<FN>
* The amounts shown are net of distributions from this limited partnership
interest which, in the aggregate, amounted to $4,703,157. 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 $227,900 for the nine months ended September 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.
- --------------------------------------------------------------------------------
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 September 30, 1999 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES OR
SHARES OR PRINCIPAL AMOUNT HELD
INCREASES PRINCIPAL AMOUNT SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------------------------------
NEW POSITIONS
<S> <C> <C>
C-Cube Microsystems Inc. -- 150,000 (a)
PRI Automation, Inc. 145,000 245,000 (a)
Saks Incorporated 500,000 500,000
ADDITIONS
Cox Communications, Inc. Class A 124,180 (b) 644,180
Everest Reinsurance Holdings, Inc. 325,000 725,000
Ford Motor Company 100,000 600,000
GelTex Pharmaceuticals, Inc. 235,000 535,000
ReliaStar Financial Corp. 90,000 300,000
The ServiceMaster Company 336,500 786,500
The TJX Companies, Inc. 210,000 300,000
DECREASES
- --------------------------------------------------------------------------------------------------------
ELIMINATIONS
MedImmune, Inc., 7% Convertible Corporate
Note due 7/1/2003 $2,300,000 (c) --
TCA Cable TV, Inc. 50,000 (b) --
DaimlerChrysler A.G. 221,000 --
REDUCTIONS
AMR Corporation 130,000 250,000
AstraZeneca plc 365,000 241,661
Berkshire Hathaway Inc. Class A 30 320
Cisco Systems, Inc. 15,000 435,000
Huntingdon Life Sciences Group plc-ADR 100,000 524,500
IDEC Pharmaceuticals Corporation 52,500 337,500
Interim Services Inc. 50,000 400,000
Kennametal Inc. 20,000 190,000
Magainin Pharmaceuticals Inc. 30,000 270,000
MedImmune, Inc. 30,000 203,739 (c)
Ryder System, Inc. 14,500 310,500
<FN>
* Excludes transactions in Stocks - Miscellaneous - Other.
(a) Includes shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
(b) 74,180 shares of Cox Communcations, Inc. Class A were received in exchange for 50,000 shares of TCA Cable TV, Inc.
in conjunction with a merger.
(c) 233,739 shares of MedImmune, Inc. were received in exchange for $2,300,000 MedImmune, Inc., 7% Convertible
Corporate Note due 7/1/2003 upon conversion.
</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
