<PAGE>
GENERAL AMERICAN INVESTORS
COMPANY, INC.
FIRST QUARTER REPORT
MARCH 31, 2000
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
E-mail: [email protected]
<PAGE>
TO THE STOCKHOLDERS
- --------------------------------------------------------------------------------
For the three months ended March 31, 2000, the investment return to our
stockholders was 11.5%, 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 10.9% at the end of 1999 to 9.3%
currently. By comparison, the rate of return (including income) for our
benchmark, the Standard & Poor's 500 Stock Index, was 2.3%. For the twelve
months ended March 31, 2000, the return to stockholders was 43.4% and the return
on the net asset value per Common Share was 45.6%; these compare to a return of
17.9% for the S&P 500.
As set forth in the accompanying financial statements (unaudited), as of
March 31, 2000, the net assets of the Company were $1,312,407,185. Net assets
applicable to the Common Stock were $1,162,407,185, equal to $43.39 per Common
Share.
The increase in net assets resulting from operations for the three months ended
March 31, 2000 was $101,546,881. During this period, net realized gain on
securities sold was $115,543,492, of which approximately $104,930,000 ($3.92 per
share) is applicable to the Common Stock, and the decrease in unrealized
appreciation was $16,940,993. Net investment income for the three months was
$2,944,382.
During the three months, 355,700 shares of the Company's Common Stock were
repurchased for $13,590,755 at an average discount from net asset value of 9.4%.
By most measures, the U.S. stock market has continued to gain despite
extraordinary volatility and a restrictive Federal Reserve Board. Historically,
of course, interest rate hikes have been inimical to advancing stock prices. Our
portfolio, meanwhile, has generated performance that would result in an
unprecedented sixth consecutive year of 20%+ gains, were it to continue. From a
review of our major stock changes during the first quarter, as presented on page
10, however, a less sanguine picture emerges. We have been sellers, on balance,
particularly in the technology arena, reflecting valuations which we regard as
full if not frothy. While the economy may be characterized as new, moreover, our
stockholders should be well served by our historic investment approach
predicated on traditional measures of value.
We are pleased to report that, on March 8, 2000, 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, (2) ratified
the selection of Ernst & Young LLP as auditors of the Company for the year 2000
and (3) approved the proposal to amend the Company's Restated Certificate of
Incorporation to increase the authorized Common Stock of the Company from
30,000,000 to 50,000,000 shares.
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, 2000 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
ASSETS
- -------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENTS, AT VALUE ( NOTE 1a )
Common stocks (cost $454,633,770) ................... $1,047,911,127
Corporate discount notes (cost $242,426,692) ........ 242,426,692
-------------
Total investments (cost $697,060,462) .......... 1,290,337,819
CASH, RECEIVABLES AND OTHER ASSETS
Cash ................................................ $ 96,319
Receivable for securities sold ...................... 20,689,819
Dividends, interest and other receivables ........... 2,241,417
Prepaid expenses .................................... 4,531,717
Other ............................................... 600,308 28,159,580
----------- -----------
TOTAL ASSETS .......................................... 1,318,497,399
LIABILITIES
- -------------------------------------------------------------------------------------
Payable for securities purchased ................... 248,313
Preferred dividend accrued but not yet declared .... 240,000
Accrued expenses and other liabilities ............. 5,601,901
-----------
TOTAL LIABILITIES ..................................... 6,090,214
------------
NET ASSETS ............................................ $1,312,407,185
==============
Net Assets applicable to Preferred Stock at a
liquidation value of $25 per share ............... $ 150,000,000
==============
Net Assets applicable to Common Stock ................. $1,162,407,185
==============
NET ASSET VALUE PER COMMON SHARE ...................... $ 43.39
==============
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 50,000,000 shares; outstanding
26,792,329 shares (exclusive of
214,100 shares in Treasury) ..................... 26,792,329
Additional paid-in capital (note 2) ................ 571,589,270
Undistributed realized gain on securities sold ..... 115,728,612
Undistributed net income ........................... 1,959,617
Unallocated distributions on Preferred Stock ....... (2,940,000)
Unrealized appreciation on investments (including
aggregate gross unrealized appreciation of
$615,748,972) ................................... 593,277,357
------------
TOTAL NET ASSETS ...................................... $1,312,407,185
==============
<FN>
( see notes to financial statements )
</FN>
</TABLE>
<PAGE>
3 STATEMENT OF OPERATIONS Three Months Ended March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
INCOME
- --------------------------------------------------------------------------------
<S> <C> <C>
Dividends ................................. $ 1,559,836
Interest .................................. 3,772,134 $ 5,331,970
----------
EXPENSES
- --------------------------------------------------------------------------------
Investment research ....................... 1,257,769
Administration and operations ............. 787,607
Office space and general .................. 112,072
Transfer agent, custodian and registrar
fees and expenses ....................... 83,960
Directors' fees and expenses .............. 47,104
Stockholders' meeting and reports ......... 46,045
Auditing and legal fees ................... 31,500
Miscellaneous taxes (note 1b) ............. 21,531 2,387,588
--------- ---------
NET INVESTMENT INCOME ........................ 2,944,382
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS (NOTES 1c AND 4)
- -----------------------------------------------------------------------------------
Net realized gain on sales of securities
(long-term, except for $42,017,162) ....... 115,543,492
Net decrease in unrealized appreciation ... (16,940,993)
----------
NET GAIN ON INVESTMENTS ...................... 98,602,499
------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. $ 101,546,881
==============
<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, 2000 December 31,
OPERATIONS (Unaudited) 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Net investment income ..................... $ 2,944,382 $ 11,168,875
Net realized gain on sales of securities .. 115,543,492 129,187,204
Net increase (decrease)
in unrealized appreciation ............ (16,940,993) 164,358,438
------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. 101,546,881 304,714,517
------------- -------------
DISTRIBUTIONS TO PREFERRED STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income, including
short-term capital gain ............... -- (1,716,000)
From long-term capital gain ............... -- (9,084,000)
Unallocated distributions on Preferred
Stock .................................. (2,700,000) --
------------- -------------
DECREASE IN NET ASSETS FROM PREFERRED
DISTRIBUTIONS ............................ (2,700,000) (10,800,000)
------------- -------------
DISTRIBUTIONS TO COMMON STOCKHOLDERS
- --------------------------------------------------------------------------------
From net income, including
short-term capital gain ............... (8,635,960) (17,730,368)
From long-term capital gain ............... (42,918,106) (93,854,267)
------------- -------------
DECREASE IN NET ASSETS FROM COMMON
DISTRIBUTIONS ............................ (51,554,066) (111,584,635)
------------- -------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Value of Common Shares issued in payment
of dividends (note 2) ................... 34,186,001 73,742,396
Cost of Common Shares purchased (note 2) .. (13,590,755) (30,486,251)
------------- -------------
INCREASE IN NET ASSETS - CAPITAL TRANSACTIONS 20,595,246 43,256,145
------------- -------------
NET INCREASE IN NET ASSETS ................... 67,888,061 225,586,027
NET ASSETS
- --------------------------------------------------------------------------------
BEGINNING OF PERIOD .......................... 1,244,519,124 1,018,933,097
-------------- -------------
END OF PERIOD (including undistributed net
income of $1,959,617 and distributions
in excess of net income of $1,047,502,
respectively) ............................. $1,312,407,185 $1,244,519,124
============== ==============
<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, 2000
and for each year in the five-year period ended December 31, 1999. 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, 2000 ------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period .............. $ 41.74 $ 34.87 $ 29.15 $ 25.24 $ 23.94 $ 22.31
------------ ---------- --------- --------- --------- ---------
Net investment income .......................... .11 .45 .47 .21 .22 .08
Net gain on securities -
realized and unrealized ................... 3.61 11.32 9.44 7.15 3.86 4.54
------------ ---------- --------- --------- --------- ---------
Total from investment operations .................. 3.72 11.77 9.91 7.36 4.08 4.62
------------ ---------- --------- --------- --------- ---------
Less Distributions on:
Common Stock:
Dividends from investment income ............... (.33)(a) (.71)(b) (.48) (.26)(c) (.20) (.11)(d)
Distributions from capital gains ............... (1.64) (3.77) (3.24) (3.19) (2.58) (2.87)
In excess of net income ........................ -- -- -- -- -- (.01)
------------ ---------- --------- --------- --------- ---------
(1.97) (4.48) (3.72) (3.45) (2.78) (2.99)
Preferred Stock:
Dividends from investment income ............... -- (.07)(e) (.03) -- -- --
Distributions from capital gains ............... -- (.35) (.20) -- -- --
Unallocated .................................... (.10) -- (.01) -- -- --
------------ ---------- --------- --------- --------- ---------
(.10) (.42) (.24) -- -- --
------------ ---------- --------- --------- --------- ---------
Total Distributions ............................... (2.07) (4.90) (3.96) (3.45) (2.78) (2.99)
------------ ---------- --------- --------- --------- ---------
Capital Stock transaction - effect of Preferred
Stock offering .................................. -- -- (.23) -- -- --
------------ ---------- --------- --------- ---------- ---------
Net asset value, end of period .................... $ 43.39 $ 41.74 $ 34.87 $ 29.15 $ 25.24 $ 23.94
============ ========== ========= ========= ========== =========
Per share market value, end of period ............. $ 39.38 $ 37.19 $ 30.44 $ 26.19 $ 21.00 $ 20.00
============ ========== ========= ========= ========== =========
TOTAL INVESTMENT RETURN - Stockholder Return, based
on market price per share ....................... 11.55%* 39.22% 31.31% 42.58% 19.48% 21.22%
RATIOS AND SUPPLEMENTAL DATA
Total net assets, end of period
(000's omitted) ................................ $ 1,312,407 $1,244,519 $1,018,933 $ 702,597 $ 597,597 $ 573,693
Net assets attributable to Common Stock, end
of period (000's omitted) ...................... $ 1,162,407 $1,094,519 $ 868,933 $ 702,597 $ 597,597 $ 573,693
Ratio of expenses to average net assets
applicable to Common Stock ..................... 0.22%* 1.01% 0.95% 0.98% 1.05% 1.25%
Ratio of net income to average net assets
applicable to Common Stock ..................... 0.27%* 1.23% 1.50% 0.80% 0.88% 0.36%
Portfolio turnover rate ......................... 12.91%* 33.68% 34.42% 32.45% 33.40% 29.14%
PREFERRED STOCK
Liquidation value, end of period (000's omitted) $ 150,000 $ 150,000 $ 150,000 -- -- --
Asset coverage .................................. 875% 830% 679% -- -- --
Liquidation preference per share ................ $ 25.00 $ 25.00 $ 25.00 -- -- --
Market value per share .......................... $ 22.19 $ 21.75 $ 25.88 -- -- --
<FN>
(a) Represents short-term capital gain.
(b) Includes short-term capital gain in the amount of $.29 per share.
(c) Includes short-term capital gain in the amount of $.05 per share.
(d) Includes short-term capital gain in the amount of $.03 per share.
(e) Includes short-term capital gain in the amount of $.028 per share.
* Not annualized
</FN>
</TABLE>
<PAGE>
6 STATEMENT OF INVESTMENTS March 31, 2000 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS AND INFORMATION SERVICES (8.7%)
Brooktrout Technology, Inc.+ ...................... 175,000 $ 5,075,000
Cisco Systems, Inc.+ .............................. 715,000 55,278,438
Cox Communications, Inc. Class A + ................ 520,000 25,220,000
NTL Incorporated + ................................ 275,000 25,523,437
Wolters Kluwer NV-ADR ............................. 140,000 3,218,600
-----------
(COST $15,443,731) 114,315,475
-----------
COMPUTER SOFTWARE AND SYSTEMS (2.4%)
Manugistics Group, Inc.+ .......................... 250,000 12,750,000
MetaCreations Corporation + ....................... 230,000 4,887,500
NCR Corporation + ................................. 200,000 8,025,000
Wind River Systems, Inc.+ ......................... 150,000 5,437,500
----------
(COST $15,281,766) 31,100,000
----------
CONSUMER PRODUCTS AND SERVICES (6.1%)
Buffets, Inc.+ .................................... 1,887,500 17,046,484
Ethan Allen Interiors, Inc. ....................... 275,000 6,875,000
Ford Motor Company ................................ 650,000 29,859,375
Interim Services Inc.+ ............................ 400,000 7,425,000
PepsiCo, Inc. ..................................... 200,000 6,975,000
Philip Morris Companies Inc. ...................... 150,000 3,168,750
The ServiceMaster Company ......................... 786,500 8,848,125
----------
(COST $74,941,693) 80,197,734
----------
ELECTRONICS (2.1%)
Molex Incorporated Class A ........................ 621,000 27,556,875
----------
(COST $12,921,204)
ENVIRONMENTAL CONTROL
(INCLUDING SERVICES) (0.4%)
Waste Management, Inc. ............................ 413,000 5,652,937
----------
(COST $ 5,954,561)
FINANCE AND INSURANCE (16.0%)
American International Group, Inc. ................ 150,000 16,425,000
AmerUs Life Holdings, Inc. Class A ................ 375,000 6,796,875
Annaly Mortgage Management, Inc. .................. 550,000 4,950,000
Annuity and Life Re (Holdings), Ltd. .............. 522,500 13,585,000
Berkshire Hathaway Inc. Class A + ................. 315 18,018,000
CCB Financial Corporation ......................... 155,000 6,858,750
Everest Reinsurance Holdings, Inc. ................ 850,000 27,731,250
First Midwest Bancorp, Inc. ....................... 375,000 9,093,750
Golden West Financial Corporation ................. 480,000 14,970,000
John Hancock Financial Services, Inc. ............. 400,000 7,225,000
M&T Bank Corporation .............................. 45,000 20,092,500
Reinsurance Group of America, Incorporated ........ 350,000 8,334,375
ReliaStar Financial Corp. ......................... 500,000 16,937,500
SunTrust Banks, Inc. .............................. 235,000 13,571,250
Transatlantic Holdings, Inc. ...................... 200,000 17,100,000
XL Capital Ltd .................................... 151,000 8,361,625
-----------
(COST $116,060,862) 210,050,875
-----------
HEALTH CARE (9.5%)
PHARMACEUTICALS (7.4%)
GelTex Pharmaceuticals, Inc.+ ..................... 300,000 5,025,000
IDEC Pharmaceuticals Corporation + ................ 385,000 37,826,250
Johnson & Johnson ................................. 127,500 8,956,875
Magainin Pharmaceuticals Inc.+ .................... 270,000 1,282,500
MedImmune, Inc.+ .................................. 68,000 11,840,500
Pfizer Inc ........................................ 885,000 32,357,813
-----------
(COST $22,323,923) 97,288,938
-----------
MEDICAL INSTRUMENTS AND DEVICES (1.2%)
Medtronic, Inc. ................................... 300,000 15,431,250
-----------
(COST $ 906,118)
</TABLE>
<PAGE>
7 STATEMENT OF INVESTMENTS March 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS (continued) (NOTE 1a)
- ---------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE SERVICES (0.9%)
BioReliance Corporation + ......................... 317,000 $ 1,703,875
Covance Inc.+ ..................................... 500,000 5,375,000
Huntingdon Life Sciences Group plc-ADR + .......... 524,500 590,063
Quintiles Transnational Corp.+ .................... 240,000 4,095,000
-----------
(COST $15,402,501) 11,763,938
-----------
(COST $38,632,542) 124,484,126
-----------
MISCELLANEOUS (4.6%)
Other ............................................. 60,575,824
----------
(COST $49,283,424)
OIL & NATURAL GAS (INCLUDING SERVICES) (1.1%)
Repsol, S.A.- ADR ................................. 700,000 14,918,750
----------
(COST $ 8,236,884)
RETAIL TRADE (16.0%)
Consolidated Stores Corporation + ................. 200,000 2,275,000
The Home Depot, Inc. .............................. 2,145,000 138,352,500
Saks Incorporated + ............................... 700,000 10,150,000
The TJX Companies, Inc. ........................... 1,240,000 27,512,500
Wal-Mart Stores, Inc. ............................. 570,000 32,205,000
------------
(COST $41,518,109) 210,495,000
------------
SEMICONDUCTORS (9.3%)
C-Cube Microsystems Inc.+ ......................... 70,000 5,096,875
Cirrus Logic, Inc.+ ............................... 375,000 6,843,750
DuPont Photomasks, Inc.+ .......................... 120,000 6,952,500
EMCORE Corporation + .............................. 200,000 23,012,500
Lam Research Corporation + ........................ 1,102,500 49,681,406
PRI Automation, Inc.+ ............................. 135,000 8,251,875
TriQuint Semiconductor, Inc.+ ..................... 46,000 3,381,000
Uniroyal Technology Corporation + ................. 383,000 18,001,000
-----------
(COST $32,861,482) 121,220,906
-----------
SPECIAL HOLDINGS #+ (NOTE 6) (0.2%)
Sequoia Capital IV ................................ ++ 29,000
Standard MEMS, Inc. Series A Convertible Preferred ++ 3,003,000
----------
(COST $ 3,992,654) 3,032,000*
----------
TECHNOLOGY (0.3%)
Thermo Electron Corporation + ..................... 175,000 3,565,625
----------
(COST $ 2,930,774)
TRANSPORTATION (3.1%)
AMR Corporation + ................................. 700,000 22,312,500
Sabre Holdings Corporation + ...................... 505,000 18,432,500
----------
(COST $36,574,084) 40,745,000
----------
TOTAL COMMON STOCKS (79.8%) (COST $454,633,770) ... 1,047,911,127
-------------
SHORT-TERM SECURITIES AND OTHER ASSETS
- --------------------------------------------------------------------------------
Ford Motor Credit Company notes
due 4/3-5/9/00; 5.81%-6.02% $68,600,000 67,906,492
General Electric Capital Corp. notes
due 4/6-5/1/00; 5.80%-6.03% 62,700,000 62,022,895
General Motors Acceptance Corp. notes
due 4/17-4/27/00; 5.83%-6.00% 51,800,000 51,188,306
Sears Roebuck Acceptance Corp. notes
due 4/13-5/8/00; 5.95%-6.15% 62,000,000 61,308,999
-------------
(COST $242,426,692) 242,426,692
Cash, receivables, prepaid expenses and other assets,
less liabilities ........................ 22,069,366
-------------
TOTAL SHORT-TERM SECURITIES AND OTHER ASSETS, NET (20.2%)
(COST $264,496,058) 264,496,058
--------------
NET ASSETS (COST $719,129,828) $1,312,407,185
==============
<FN>
+Non-income producing security. # Restricted security.
++ A limited partnership interest. * Fair value of each holding in the opinion of the Directors.
(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.
On March 8, 2000, stockholders approved an increase in the number of authorized
shares of Common Stock from 30,000,000 to 50,000,000.
Transactions in Common Stock during the three months ended March 31, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------- ---------- ------------ -------------
2000 1999 2000 1999
--------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Shares issued in payment of dividends ................... 928,652 2,231,251 $ 928,652 $ 2,231,251
Increase in paid-in capital ............................. 33,257,349 71,511,145
------------ ------------
Total increase .................................... 34,186,001 73,742,396
------------ ------------
Shares purchased (at an average discount from net asset
value of 9.4% and 9.5%, respectively) ................. 355,700 928,593 ( 355,700) ( 928,593)
Decrease in paid-in capital ............................. ( 13,235,055) (29,557,658)
------------ ------------
Total decrease .................................... ( 13,590,755) (30,486,251)
------------ ------------
Net increase ............................................ $ 20,595,246 $ 43,256,145
============ ============
</TABLE>
The cost of the 214,100 shares of Common Stock held in Treasury at March 31,
2000 amounted to $8,311,655.
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, 2000 to its officers amounted to $962,935.
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, 2000 were $130,947,023 and $192,057,657,
respectively. At March 31, 2000, 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, 2000 were
$227,871.
6. RESTRICTED SECURITIES
<TABLE>
<CAPTION>
DATE VALUE
ACQUIRED COST (NOTE 1a)
-------- ---------- ----------
<S> <C> <C> <C>
Sequoia Capital IV* ............................... 1/31/84 $ 989,654 $ 29,000
Standard MEMS, Inc. Series A Convertible Preferred 12/17/99 3,003,000 3,003,000
---------- ----------
$3,992,654 $3,032,000
========== ==========
<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
in the limited partnership was $2,000,000.
</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 $60,600 for the three months ended March 31, 2000.
Minimum rental commitments under the operating lease are approximately $403,000
per annum in 2000 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 2000 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, 2000 (Unaudited)
- -------------------------------------------------------------------------------
General American Investors
<TABLE>
<CAPTION>
SHARES HELD
INCREASES SHARES MARCH 31, 2000
- --------------------------------------------------------------------------------------------------------
NEW POSITIONS
<S> <C> <C>
Brooktrout Technology, Inc. 175,000 175,000
Cirrus Logic, Inc. 375,000 375,000
Ethan Allen Interiors, Inc. 225,000 275,000 (a)
John Hancock Financial Services, Inc. 400,000 400,000
NCR Corporation 200,000 200,000
Reinsurance Group of America, Incorporated 205,000 350,000 (a)
Sabre Holdings Corporation 505,000 (b) 505,000
Thermo Electron Corporation 175,000 175,000
ADDITIONS
AMR Corporation 350,000 700,000
Buffets, Inc. 250,000 1,887,500
Covance Inc. 50,000 500,000
ReliaStar Financial Corp. 210,000 500,000
Saks Incorporated 100,000 700,000
The TJX Companies, Inc. 390,000 1,240,000
DECREASES
- --------------------------------------------------------------------------------------------------------
ELIMINATIONS
Alkermes, Inc. 50,000 --
Huntington Bancshares Incorporated 192,500 --
Seagate Technology, Inc. 430,000 --
REDUCTIONS
AmerUs Life Holdings, Inc. Class A 75,000 375,000
C-Cube Microsystems Inc. 80,000 70,000
Cisco Systems, Inc. 65,000 715,000 (c)
Consolidated Stores Corporation 175,000 200,000
Cox Communications, Inc. Class A 124,180 520,000
EMCORE Corporation 95,000 200,000
First Midwest Bancorp, Inc. 37,500 375,000
GelTex Pharmaceuticals, Inc. 235,000 300,000
IDEC Pharmaceuticals Corporation 210,000 385,000
Lam Research Corporation 167,500 1,102,500 (c)
Manugistics Group, Inc. 80,000 250,000
MedImmune, Inc. 78,239 68,000
MetaCreations Corporation 45,000 230,000
NTL Incorporated 40,625 275,000 (c)
PRI Automation, Inc. 110,000 135,000
Philip Morris Companies Inc. 100,000 150,000
Quintiles Transnational Corp. 10,000 240,000
TriQuint Semiconductor, Inc. 10,000 46,000 (c)
Uniroyal Technology Corporation 5,000 383,000 (a)
Wind River Systems, Inc. 50,000 150,000
<FN>
* Excludes transactions in Stocks - Miscellaneous - Other.
(a) Includes shares purchased in prior period and previously carried under Stocks - Miscellaneous - Other.
(b) 505,856 shares of Sabre Holdings Corporation were received in conjunction with a
spinoff from AMR Corporation.
(c) Includes shares received in conjunction with a stock split.
</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.
P.O. Box 3315
South Hackensack, NJ 07606-1915
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 8,
2000 were as follows:
Election of Directors:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Arthur G. Altschul, Jr. 27,554,848 148,198
Lawrence B. Buttenwieser 27,548,998 154,048
Lewis B. Cullman 27,470,275 232,771
Spencer Davidson 27,558,389 144,657
Gerald M. Edelman 27,520,238 182,808
Anthony M. Frank 27,546,649 156,397
John D. Gordan, III 27,548,497 154,549
Richard R. Pivirotto 27,518,846 184,200
Joseph T. Stewart, Jr. 27,536,898 166,148
Raymond S. Troubh 27,521,356 181,690
Elected by holders of Preferred Stock
Bill Green 5,281,428 35,252
Sidney R. Knafel 5,278,928 37,752
</TABLE>
Ratification of the selection of Ernst & Young LLP as auditors of the Company
for the year 2000:
For - 27,472,440; Against - 111,585; Abstain - 119,021
Proposal relating to the amendment of the Company's Restated Certificate of
Incorporation to increase the authorized Common Stock of the Company from
30,000,000 to 50,000,000 shares:
For - 26,583,099; Against - 743,003; Abstain - 376,944
