PMD Investment Company
Annual Report
December 31, 1995
10050 Regency Circle
Suite 315
Omaha, Nebraska 68114
Directors and Officers
J.G. Sawicki President, Treasurer, and Director
John Patrick
Witherspoon Vice President and Director
H.B. Underwood Vice President, Secretary,
and Director
Custodian and Transfer Agent
First National Bank of Omaha
Trust Department
One First National Center
Omaha, Nebraska 68102-1596
Investment Adviser
Commonwealth Investment Counsel, Inc.
Riverfront Plaza
901 East Byrd Street
Richmond, Virginia 23219
Independent Accountants
Deloitte & Touche LLP
2000 First National Center
Omaha, Nebraska 68102
Legal Counsel
Abrahams, Kaslow & Cassman
8712 West Dodge Road
Suite 300
Omaha, Nebraska 68114
Financial Statements for the Year
Ended December 31, 1995 and
Independent Auditors' Report
To The Shareholders and
Board of Directors
PMD Investment Company
Omaha, Nebraska
We have audited the accompanying statement of assets and liabilities
of PMD Investment Company, including the statement of investments,as
of December 31, 1995, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and the selected per share
data and ratios for each of the five years in the period then ended.
These financial statements and per share data and ratios are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and per share data
and ratios based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and per share data and ratios are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and per share data and
ratios referred to above present fairly, in all material respects,
the financial position of PMD Investment Company as of December 31,
1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period
then ended, and the selected per share data and ratios for each of
the five years in the period then ended, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
January 19, 1996
Omaha, Nebraska
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in securities, at approximate market value,
amortized cost of $15,424,546 $16,031,085
Investment in tax-exempt money-market fund 593,476
-----------
Total Investments 16,624,561
Interest receivable 250,263
-----------
Total Assets 16,874,824
LIABILITIES:
Accrued expenses 9,018
-----------
NET ASSETS (equivalent to $4.43 per share based on
3,805,327 shares of common stock outstanding at
December 31, 1995) $16,865,806
===========
See notes to financial statements.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Interest Income:
From investments $918,590
Expenses:
Investment advisory fee 32,375
Custodian fees 8,258
Professional fees 27,957
Shareholders' servicing costs 5,487
Directors' fees 14,583
Other 3,642
----------
Total Expenses 92,302
----------
Net Investment Income 826,288
Realized Loss from Securities Transactions:
Proceeds from sales 9,955,599
Cost of securities sold 9,760,403
----------
Net Realized Gain 195,196
Unrealized Appreciation of Investments:
Beginning of period 232,626
End of period 606,538
----------
Change in Unrealized Appreciation 373,912
Net Realized Gain and Increase in Unrealized
Appreciation on Investments 569,108
----------
Increase in Net Assets Resulting from Operations $1,395,396
==========
See notes to financial statements.
<TABLE>
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<CAPTION>
Principal Amortized Market
Amount Cost Value
<S> <C>
Abby National PLC Sub, 6.69%, due October 17, 2005 $ 550,000 $ 556,619 $ 569,030
Baltimore, Maryland, General Obligation Public
Improvement, 9%, due October 15, 1996 500,000 505,696 520,800
Clark County, Washington Public Utilities
District #1 Electric Revenue, 6.3%, due
January 1, 2004, callable January 1, 2001 250,000 248,848 271,225
Denver Met Major League Baseball Stadium
District Colorado, 6.35%, due October 1, 2003 250,000 250,000 277,425
Douglas County, Nebraska SID #17 (Millard)
Series A, 5.8%, due September 15, 1997 125,000 125,000 126,100
Douglas County, Nebraska SID #17 (Millard),
6.1%, due October 1, 2002 200,000 200,000 205,580
Federal Home Loan Mortgage Company, 7.0%,
due June 1, 2024 2,241,837 2,251,619 2,251,701
Federal Home Loan Mortgage Company, 8.19%,
due October 6, 2024 750,000 797,478 807,000
Federal National Mortgage Association, 6.5%,
due January 1, 2024 1,200,187 1,182,616 1,185,905
Federal National Mortgage Association, 7.8%,
due March 29, 2005 1,000,000 1,060,625 1,061,900
Florida State, General Services Revenues,
6%, due July 1, 2001 220,000 216,690 238,502
Grand Island, Nebraska Sanitary Sewer Revenue,
4.8%, due April 1, 2000 400,000 400,000 404,080
Hanover County, Virginia IDA Public Facilities
Lease Revenue, 6.75%, due July 15, 2007 150,000 150,000 166,710
Jefferson County, West Virginia Residential
Mortgage Revenue, Refunding Series A, 7.75%
due January 1, 2012, callable January 1, 2001 80,000 80,402 85,960
Lincoln, Nebraska Hospital Revenue, 7%, due
December 1, 1999 180,000 180,000 197,370
Lincoln, Nebraska Water Revenue, 6.7%, due
November 1, 2000 250,000 250,000 277,450
Milwaukee County, Wisconsin, Series A, 6.4%,
due December 1, 2003 200,000 201,798 212,480
Nebraska Educational Facility Authority,
Creighton University, 6.45%, due September 1, 1996 250,000 250,000 254,700
Nebraska Educational Facility Authority,
Creighton University, 6.65%, due September 1, 1998 250,000 250,000 266,625
Nebraska Educational Facility Authority,
Creighton University, 5.75%, due June 1, 1997 125,000 125,000 128,350
Nebraska Investment Finance Authority, 6.9%,
due March 15, 2000 340,000 340,000 356,354
Nebraska Investment Finance Authority, SFM
Revenue, GNMA Mortgage Backed Security
Program, Series D, 6%, due September 15, 1997 225,000 225,000 230,940
Nebraska Public Power District Revenue, 7%,
due January 1, 1998, callable January 1, 1996 300,000 300,000 306,090
Norwest Corporation, 6.8%, due May 15, 2002 500,000 503,505 523,250
Omaha, Nebraska, 6.8%, due December 1, 1999 365,000 365,498 401,026
Omaha, Nebraska, 4.15%, due October 15,1998 485,000 486,798 487,765
Omaha Public Power District, Nebraska Electric
Revenue, 7%, due February 1, 1996 300,000 300,000 300,870
Omaha Public Power District, Nebraska Electric
Revenue, Series B, 5.9%, due February 1, 2006 450,000 450,000 490,635
Puerto Rico Public Buildings Authority,
Guaranteed Public Education and Health
Facilities, 7.75%, due July 1, 2002,
callable July 1, 1997 345,000 348,124 371,531
Richardson, Texas, 7%, due March 1, 2007 500,000 495,059 541,600
Sabine River Authority, Texas Water Supply Facility,
Lake Fork Project, 6.5%, due December 1, 2001 265,000 264,232 290,864
Travelers Group Inc., Serial Note, 9.5%, due
March 1, 2002 50,000 57,515 58,470
Travelers Group Inc., Serial Note, 9.5%, due
March 1,2002 500,000 565,661 584,700
Tucson, Arizona, G.O., Ref. 5.8%, due July 1, 2005 250,000 249,158 268,825
University of Nebraska Facilities Corp., 7.2%,
due July 1, 2004, callable July 1, 1991 250,000 250,000 282,475
Vermont State, Series B, 5.7%, due August 1, 2005 400,000 397,315 431,800
Washington State, Series A and AT-6, 5.8%, due
February 1, 2003 250,000 246,760 267,222
Wisconsin Housing and Economic Development,
Series 1, 7%, due October 1, 2003 295,000 294,530 327,775
----------- ----------- -----------
Totals $15,242,024 $15,424,546 $16,031,085
=========== =========== ===========
</TABLE>
See notes to financial statements.
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<CAPTION>
Accumulated
Undistributed Realized Unrealized
Common Stock Net Gain (Loss) Appreciation
$.50 Par Retained Investment on Sale of (Depreciation)
Shares Value Earnings Income Securities of Investments Total
Year ended December 31, 1994:
<S> <C>
Net investment income - $ - $ - $ 917,701 $ - $ - $ 917,701
Net realized loss from
securities transactions - - - - (274) - (274)
Unrealized depreciation of
investments - - - - - (968,424) (968,424)
--------- ---------- ---------- -------- -------- ---------- -----------
Decrease in net assets from
operations - - - 917,701 (274) (968,424) (50,997)
Dividends - $.243 per share - - - (966,188) - - (966,188)
Common stock redeemed
(Note B) (93,429) (46,715) (377,793) - - - (424,508)
--------- ---------- ----------- --------- -------- ---------- -----------
Total decrease in
net assets (93,429) (46,715) (377,793) (48,487) (274) (968,424) (1,441,693)
Net assets on January 1, 4,072,203 2,036,102 15,418,039 (48,370) (76,401) 1,201,050 18,530,420
1994 --------- ---------- ----------- --------- -------- ---------- -----------
Net assets on December 31,
1994 3,978,774 $1,989,387 $15,040,246 $ (96,857) $(76,675) $ 232,626 $17,088,727
========= ========== =========== ========= ======== ========== ===========
Year ended December 31, 1995:
Net investment income - $ - $ - $ 826,288 $ - $ - $ 826,288
Net realized gain from
securities transactions - - - - 195,196 - 195,196
Unrealized appreciation of
investments - - - - - 373,912 373,912
--------- ---------- ----------- --------- -------- ---------- -----------
Increase in net assets from
operations - - - 826,288 195,196 373,912 1,395,396
Dividends - $.228 per share - - - (873,849) - - (873,849)
Common stock redeemed
(Note B) (173,447) (86,724) (657,744) - - - (744,468)
--------- ---------- ----------- --------- -------- ---------- -----------
Total decrease in
net assets (173,447) (86,724) (657,744) (47,561) 195,196 373,912 (222,921)
Net assets on January 1,
1995 3,978,774 1,989,387 15,040,246 (96,857) (76,675) 232,626 17,088,727
--------- ---------- ----------- --------- -------- ---------- -----------
$3,805,327 $1,902,663 $14,382,502 $(144,418) $118,521 $606,538 $16,865,806
========= ========== =========== ========= ======== ========== ===========
</TABLE>
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
A. SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of
1940, as amended, as a closed-end diversified management
investment company. The following is a summary of significant
accounting policies followed by the Company in the preparation of
its financial statements.
Investment Securities - Investments in securities are valued at
market value as determined by the Company's investment advisor at
December 31, 1995.
Securities Transactions - Securities transactions are recorded on
a trade date basis. Cost of securities sold is determined using
the identified cost method.
Interest Income - Interest income, adjusted for amortization of
premium or accretion of discounts on investments in municipal
bonds and notes, is earned from settlement date and recorded on
the accrual basis.
Income Taxes - It is the Company's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
income, including capital gains, to its shareholders. No income
tax provision has been made since substantially all the income and
capital gains are reported by the shareholders on their own tax
returns.
Management and Service Fees - The investment advisory fee, which
is payable monthly, is based on the value of net assets at each
month-end at the annual rate of one-quarter of one percent on the
first $10,000,000 of the net asset value and .15 percent of the
net asset value in excess of $10,000,000, with a minimum fee of
$10,000 per year. Fees for the services of each of the directors
of the Company are $5,000 annually with an additional $500 for
each board or committee meeting attended in excess of four
meetings each year. No additional compensation or benefits are
paid to officers or directors of the Company.
B. REDEMPTION OF SHARES
At December 31, 1995, the Company had authorized 20,000,000 shares
of $.50 par value common stock.
Shareholders may redeem shares of stock and receive the net asset
value per share on any December 31 or June 30 by tendering the
shares to be redeemed 90 days prior to the intended redemption
date.
C. CONTINGENT LIABILITIES
On January 15, 1981, the Company sold substantially all of its
assets which had been used in its former operations as a discount
store business. Although the purchaser of the Company's operating
assets assumed substantially all of the Company's liabilities and
obligations as part of the purchase transaction, the Company
remains contingently liable for such liabilities and obligations,
including obligations under long-term real estate and equipment
leases and real estate mortgages until released by the obligees or
until such liabilities and obligations have been satisfied or
discharged. The total of such liabilities and obligations not
released by the obligees amounted to approximately $8,709,289 as
of December 31, 1995.
In connection with the asset sale transaction, the Company agreed
to deposit certain of its investment securities in an escrow fund
to provide additional collateral for the payment of certain
industrial development revenue (IDR) bonds which were outstanding
and assumed by the buyer. Among other provisions of the escrow
agreements, the value of securities deposited in escrow is
required to be at least 105% of the remaining principal amount of
IDR bonds outstanding. The IDR bonds are payable serially through
1996. At December 31, 1995, this provision required securities
with a total market value of $42,000 to be deposited in the escrow
fund. The Company had securities with a total market value of
$235,244 deposited in the escrow fund at December 31, 1995.
The following summarizes the approximate value of securities
transactions for the periods indicated.
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1995 1994
Purchases Sales Purchases Sales
<S> <C> <C> <C> <C>
Tax Exempt:
Municipal bonds and notes $ - $ 6,643,741 $ 400,000 $ 805,320
Taxable:
Corporate 1,686,395 - - -
Government agency 8,529,665 3,235,176 - -
---------- --------- --------- --------
10,216,060 3,235,176 - -
Other tax-exempt short-term
investments 10,980,674 11,893,891 1,905,028 2,389,360
----------- ----------- ---------- ----------
$21,196,734 $21,772,808 $2,305,028 $3,194,680
=========== =========== ========== ==========
</TABLE>
Net realized gain/(loss) on sale of investments was $195,196 and
$(274) for the year ended December 31, 1995 and 1994,
respectively.
<TABLE>
E. SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS
<CAPTION>
YearEnded December 31,
1995 1994 1993 1992 1991
<S> <C>
Income $ 0.240 $ 0.255 $ 0.268 $ 0.295 $ 0.322
Expenses 0.024 0.025 0.024 0.024 0.022
Net investment income 0.216 0.230 0.244 0.271 0.300
Distribution from net investment income (0.228) (0.243) (0.251) (0.286) (0.317)
Increase (decrease) in unrealized
appreciation of investments 0.098 (0.244) 0.116 (0.019) 0.076
Net realized gain (loss) from securities
transactions 0.051 - (0.002) (0.005) 0.008
Increase (decrease) in net assets 0.137 0.107 (0.257) (0.039) 0.067
Net asset value at beginning of period 4.294 4.551 4.444 4.483 4.416
---------- ---------- ---------- ---------- ---------
Net asset value at end of period $ 4.431 $ 4.294 $ 4.551 $ 4.444 $ 4.483
========= ========= ========= ========= =========
Ratio of expenses to average net assets 0.5 % 0.6% 0.5 % 0.5 % 0.5 %
Ratio of net investment income to
average net assets 4.9 % 5.2% 5.4 % 6.2 % 7.1 %
Portfolio turnover 59.6 % 2.3% 11.5 % 14.9 % 20.9 %
Number of shares outstanding at
end of period (in thousands) 3,805 3,979 4,072 4,074 4,135
</TABLE>
