SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
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PMD INVESTMENT COMPANY
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid: -------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
PMD INVESTMENT COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 2, 2000
The Annual Meeting of Shareholders of PMD INVESTMENT COMPANY, a Nebraska
corporation, will be held on Monday, October 2, 2000, at 9:30 A.M., at the First
National Bank of Omaha, Terrace Level, One First National Center, Omaha,
Nebraska, for the following purposes:
1. To elect a Board of Directors.
2. To ratify or reject the selection by the Board of Directors of
Deloitte & Touche LLP as the Corporation's independent accountants for
2000.
3. To vote on the proposed dissolution of the Corporation.
4. To transact such other business as properly may come before the
meeting and any adjournments thereof.
The stock transfer books of the Corporation will not be closed. The Board
of Directors of the Corporation has fixed the close of business on August 21,
2000, as the record date for determining the shareholders of the Corporation
entitled to notice of and to vote at the meeting.
Dated: August 23, 2000 BY ORDER OF THE BOARD OF DIRECTORS,
Herbert B. Underwood,
Secretary
PLEASE MARK, SIGN, AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE ENCLOSED FOR YOUR USE. THE PROXY WILL NOT BE USED IF YOU ATTEND THE
MEETING IN PERSON AND SO REQUEST.
<PAGE>
PMD INVESTMENT COMPANY
PROXY STATEMENT
Annual Meeting of Shareholders
October 2, 2000
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board of Directors") of PMD Investment Company (the
"Corporation") of proxies from holders of the Corporation's $0.50 par value
Common Stock ("Common Stock") for use at the annual meeting of shareholders of
the Corporation to be held on October 2, 2000, at 9:30 A.M., at the First
National Bank of Omaha, Terrace Level, One First National Center, Omaha,
Nebraska, and at any adjournments thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
The mailing address and telephone number of the principal executive offices
of the Corporation is 10050 Regency Circle, Suite 315, Omaha, Nebraska 68114,
402-392-0608. This Proxy Statement and the accompanying form of Proxy are first
being sent to the holders of Common Stock on or about August 25, 2000.
The accompanying Proxy may be revoked by the person giving it at any time
prior to its being voted; such revocation may be accomplished by a letter, or by
a duly executed Proxy bearing a later date, filed with the Secretary of the
Corporation prior to the Annual Meeting. If a shareholder who has given a Proxy
is present at the Annual Meeting and wishes to vote in person, such shareholder
may withdraw the Proxy at that time.
DISSOLUTION SUMMARY TERM SHEET
The Board of Directors has proposed and recommends to the shareholders that
the Corporation dissolve in accordance with Section 21-20,152 of the Business
Corporation Act of Nebraska, as more particularly described in the REDEMPTION OF
SHARES and DISSOLUTION OF CORPORATION sections of this Proxy Statement. For the
dissolution of the Corporation to occur, the following steps must be completed:
o The dissolution proposal outlined in this Proxy Statement must be
approved by a two-thirds majority of all of the votes entitled to
be cast on the proposal.
o The Corporation must file Articles of Dissolution with the
Secretary of State of Nebraska as required by Section 21-20,153
of the Business Corporation Act of Nebraska.
o The Corporation must collect and liquidate its remaining assets,
pay or provide for the payment of its expenses and liabilities,
and distribute its remaining property to the shareholders of the
Corporation in accordance with Section 21-20,155 of the Business
Corporation Act of Nebraska.
o A Form N-8F Application for Deregistration of Certain Registered
Investment Companies must be filed with and accepted by the
Securities and Exchange Commission (the "SEC").
The Board of Directors has proposed and is recommending to the shareholders
dissolution of the Corporation because of the effects of the Corporation's
recent redemption of approximately 66% of the Corporation's outstanding Common
Stock from the principal shareholder of the Corporation, as more particularly
discussed in the REDEMPTION OF SHARES and DISSOLUTION OF CORPORATION sections of
this Proxy Statement.
COMMON STOCK AND PRINCIPAL HOLDERS
The Board of Directors has fixed the close of business on August 21, 2000,
as the record date for determining the shareholders of the Corporation entitled
to notice of and to vote at the Annual Meeting.
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<PAGE>
On August 21, 2000, the Corporation had outstanding 1,129,041 shares of
Common Stock, each such share entitling the holder thereof to one vote upon each
matter to be voted upon at the Annual Meeting. Shareholders entitled to vote at
the Annual Meeting have cumulative voting rights in the election of directors,
and there are no conditions precedent to the exercise of such rights. The
existence of cumulative voting rights means that a shareholder may cast a total
number of votes in the election for directors which is equal to the number of
directors to be elected multiplied by the number of such shareholder's shares;
such votes may be cast entirely for one candidate or may be distributed equally
or unequally among as many candidates as the shareholder may consider
appropriate.
In the election of directors, any action other than a vote for a nominee
will have the practical effect of a vote against such nominee, but only votes in
favor of a nominee will directly affect the outcome of the election since the
three nominees receiving the greatest number of votes will be elected. Any
action other than a vote for the proposal to dissolve the Corporation, including
abstentions from voting and broker "non-votes", will have the practical effect
of a vote against such proposal and may affect the outcome of the voting on such
proposal since the approval of such proposal requires the favorable vote of a
two-thirds majority of all of the votes entitled to be cast on the proposal.
Abstentions from voting and broker "non-votes" on the selection of independent
accountants will have the practical effect of votes against such proposal but
will not affect the outcome of the voting on such proposal since the approval of
such proposal requires only a majority of the votes cast with respect to such
proposal.
Abstentions and broker "non-votes" are not deemed to be "votes cast" for
any purpose but will be included for purposes of determining whether a quorum is
present at the Annual Meeting. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner gives a proxy for the Annual Meeting but does not
vote on a particular matter because the nominee does not have discretionary
authority to vote on such matter and has not received voting instructions from
the beneficial owner of the shares involved.
The following table sets forth information as to the beneficial ownership
of Common Stock of each person or group who, as of August 1, 2000, to the
knowledge of the Corporation, owned more than 5% of the Common Stock.
<TABLE>
<CAPTION>
Amount and
Title Name and Nature of Percent
of Address of Beneficial of
Class Beneficial Owner Ownership Class
<S> <C> <C> <C>
Common Stock First National Bank of Omaha, 783,969 (1) 69.4%
$0.50 par value as personal representative of
the Estate of D. J. Witherspoon, deceased
1620 Dodge Street
Omaha, Nebraska 68102
Common Stock John Patrick Witherspoon 274,071 (2) 24.3%
$0.50 par value 611 Shorewood Lane
Waterloo, Nebraska 68069
<FN>
(1) First National Bank of Omaha, as personal representative of the Estate of
D. J. Witherspoon, deceased, has sole voting and investment power over such
shares but no pecuniary interest in such shares.
(2) 245,183 of these shares (21.7% of the outstanding shares) are owned both of
record and beneficially by John Patrick Witherspoon. 28,888 of these shares
(2.6% of the outstanding shares) are held by Iris J. Norman, as trustee for
the benefit of John Patrick Witherspoon.
</FN>
</TABLE>
No director or officer of the Corporation other than John Patrick
Witherspoon owned any shares of the Corporation's Common Stock on August 1,
2000.
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ELECTION OF DIRECTORS
Under Nebraska law a dissolved corporation may not carry on any business
except that which is appropriate to wind up and liquidate its business and
affairs. Accordingly, if the dissolution of the Corporation is approved by the
shareholders and the Corporation completes the liquidation and distribution of
its assets prior to the date for the 2001 annual meeting of shareholders, no
further meetings of shareholders of the Corporation will be held. At the Annual
Meeting, the shareholders will elect a board of three directors for a term
extending until the earlier of completion of the dissolution of the Corporation
or the 2001 annual meeting of the shareholders of the Corporation, if such a
meeting is necessary. Proxies in the accompanying form which are received by the
Board of Directors in response to this solicitation will, unless contrary
instructions are given therein, be voted by the persons named therein as proxies
in favor of the three nominees for directors listed below. The persons named as
proxies reserve the right, however, to vote such proxies cumulatively and for
the election of fewer than all of the nominees for directors but do not intend
to do so unless nominees other than those listed below are nominated at the
Annual Meeting. The Board of Directors believes that all of the three nominees
listed below will be available to serve and will serve as directors if elected;
however, if any of such nominees is not so available at the time of the
election, the proxies will be voted in the discretion of the persons named
therein for the election of a substitute nominee. The three nominees receiving
the greatest number of votes at the Annual Meeting will be elected as directors.
Set forth below is certain information as of August 1, 2000, with respect
to the nominees for election as directors of the Corporation. The information
relating to their respective business experience was furnished to the
Corporation by such persons. All of the nominees presently are serving as
directors of the Corporation, and all of the nominees have been nominated for
reelection by the Board of Directors.
Nominees and Business Experience
J. G. Sawicki
Mr. Sawicki, age 86, retired in 1979 as a vice president of Mid-Continent
Bottlers, Inc. (soft drink bottlers) after having served in such capacity for
more than five years. He has been a director of the Corporation since 1969. In
addition, he has been President and Treasurer of the Corporation since 1991.
Herbert B. Underwood
Mr. Underwood, age 73, retired in 1991 as Vice President of Pamida, Inc.
(owner and operator of general merchandise discount stores) after having served
in such capacity for more than five years. He has been a director of the
Corporation since 1991. In addition, he has been a Vice President and the
Secretary of the Corporation since 1991.
John Patrick Witherspoon*
Mr. Witherspoon, age 39, has been engaged in the business of real estate
management and development for more than five years. He has been a director of
the Corporation since 1994 and has been a Vice President of the Corporation
since 1994.
* Mr. Witherspoon is an "interested person" within the definition of
Section 2(a)(19) of the Investment Company Act of 1940.
The persons named above are all of the executive officers of the
Corporation and hold the offices indicated in their respective biographical
paragraphs. All executive officers of the Corporation may be removed from their
respective positions as such officers at any time by the Board of Directors.
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<PAGE>
Shareholdings
The following table sets forth information as to the Common Stock
beneficially owned as of August 1, 2000, by (i) all nominees and present
directors of the Corporation and (ii) all present directors and officers of the
Corporation as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
<S> <C> <C>
J. G. Sawicki None --
Herbert B. Underwood None --
John Patrick Witherspoon 274,071 (1) 24.3%
All present directors and officers as a group
(3 persons) 274,071 (1) 24.3%
<FN>
(1) 245,183 of these shares (21.7% of the outstanding shares) are owned both of
record and beneficially by John Patrick Witherspoon. 28,888 of these shares
(2.6% of the outstanding shares) are held by Iris J. Norman, as trustee for
the benefit of John Patrick Witherspoon.
</FN>
</TABLE>
The Board
During the year ended December 31, 1999, the Board of Directors met one
time and on six other occasions acted by unanimous written consent. The
Corporation does not have a standing audit, nominating, or compensation
committee.
Compensation
The Corporation pays no compensation to any of its officers for their
service in such capacities. Each director of the Corporation is entitled to
receive an annual director's fee of $5,000 and an additional $500 for each
meeting of the Board of Directors of the Corporation in excess of four which
such director attends during any fiscal year of the Corporation. The Corporation
has not paid and does not expect to pay any other or additional compensation or
benefits to any of its directors or officers. During the year ended December 31,
1999, the total directors' fees paid or accrued by the Corporation were as
follows:
<TABLE>
<CAPTION>
Name of Person, Total Compensation From Corporation Paid to
Position Directors
<S> <C>
J. G. Sawicki, Director $5,000
Herbert B. Underwood, Director $5,000
John Patrick Witherspoon, Director $5,000
</TABLE>
INVESTMENT ADVISORY AGREEMENT
Agreement with First National Bank of Omaha
The Corporation's current investment adviser is First National Bank of
Omaha ("FNBO"). The present Investment Advisory Agreement with FNBO (the "FNBO
Advisory Agreement"), dated June 16, 1997, was submitted to a vote and approved
at the annual meeting of shareholders of the Corporation held on June 16, 1997.
The FNBO Advisory Agreement was approved for continuance until December 31,
2000, by unanimous action of the Board of Directors of the Corporation on
November 1, 1999. However, the FNBO Advisory Agreement may be terminated by the
Corporation at any time without penalty, on 30 days written notice to FNBO, by a
resolution of the Board of Directors or by the vote of a majority of the
outstanding shares of Common Stock (as
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<PAGE>
defined in the Investment Company Act of 1940). The FNBO Advisory Agreement
provides that it will terminate automatically in the event of its assignment.
Unless sooner terminated, the FNBO Advisory Agreement is to continue after
December 31, 2000, for successive one-year periods so long as such continuation
is specifically approved at least annually in the manner required by the
Investment Company Act of 1940.
The FNBO Advisory Agreement provides that FNBO shall perform a continuous
review of the Corporation's portfolio of securities and shall determine the
securities to be purchased or sold by the Corporation (including the placing of
orders for the purchase and sale of such securities), the portion of the
Corporation's assets which shall remain uninvested, and the extent to which the
Corporation shall use its investment powers. In performing such services, FNBO
is required to follow, among other guidelines, the Corporation's investment
policies and restrictions set forth in an exhibit to the FNBO Advisory
Agreement. In addition, FNBO is required to compute the net asset value per
share of the Corporation's Common Stock as of the close of business on the last
day in each month on which the New York Stock Exchange is open for trading and
at such times as the Corporation's Board of Directors may direct. The FNBO
Advisory Agreement provides that FNBO is not required to give the Corporation
preferential treatment as compared with the treatment given to any other
investment company or customer. At its own expense FNBO may employ, retain, or
otherwise avail itself of the services and facilities of other persons or
organizations for the purpose of obtaining such statistical and other factual
information, such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities, and such other information,
advice, or assistance as FNBO may deem necessary, appropriate, or convenient for
the discharge of its obligations under the FNBO Advisory Agreement. FNBO also is
required to maintain a continuous record of all of the Corporation's securities
and to furnish to the Corporation's Board of Directors, upon request, a resume
of the Corporation's securities portfolio. FNBO also must report to the
Corporation's Board of Directors on all matters pertaining to FNBO's services as
investment adviser at the regular meetings of the Board and at such other times
as the Board may request. FNBO must pay all of the costs and expenses of
performing the services described above. The Corporation, however, must pay all
brokerage commissions (if any) on its portfolio transactions and the expenses
for its custodian, transfer agent, registrar, accountants, and attorneys and for
other expenses (such as printing, postage, directors' fees, and state
corporation fees) not covered by the FNBO Advisory Agreement.
As compensation for FNBO's services under the FNBO Advisory Agreement, the
FNBO Advisory Agreement presently provides for the Corporation's payment of a
monthly fee to FNBO equal to (a) 1/12 of 0.25% of the first $10,000,000 of the
net asset value of the Corporation as of the last day of each month on which the
New York Stock Exchange is open for trading and (b) 1/12 of 0.15% of the net
asset value of the Corporation in excess of $10,000,000 as of the last day of
each month on which the New York Stock Exchange is open for trading, with a
minimum fee of $10,000 for each successive 12-month period. During the year
ended December 31, 1999, the Corporation paid or accrued $32,565 as advisory
fees for FNBO.
Information Concerning First National Bank of Omaha
FNBO is a national banking association and is a subsidiary of First
National of Nebraska, Inc., a Nebraska corporation. First National of Nebraska,
Inc. owns 99.67% of the outstanding voting securities of FNBO. The address of
both FNBO and First National of Nebraska, Inc. is One First National Center,
1620 Dodge Street, Omaha, Nebraska 68102. FNBO provides a full range of
financial and trust services to businesses, individuals, and government
entities. The FNBO trust division provides a full range of administrative
services including estate settlement, personal trust administration, employee
benefit administration and record keeping, institutional custody, corporate
trust, and transfer and paying agent services. FNBO also serves as investment
adviser and custodian for the First Omaha Family of Mutual Funds which consist
of the First Omaha Small-Cap Value Fund, the First Omaha Equity Fund, the First
Omaha Balanced Fund, the First Omaha Fixed Income Fund, the First Omaha
Short/Intermediate Fund, the First Omaha Growth Fund, and the First Omaha U.S.
Government Obligations Fund.
The following individuals are principal executive officers and/or directors
of FNBO: Bruce R. Lauritzen, Chairman and Director; F. Phillips Giltner,
Chairman Emeritus and Director; Elias J. Eliopoulos, President of Consumer
Banking and Director; Dennis A. O'Neal, President of Corporate Banking and
Director; J. William Henry, Executive Vice President and Director; Richard A.
Frandeen, Director; Charles H. Fries, Jr., Director; Thomas R. Haller, Director;
Timothy D. Hart, Director; Frances A. Marshall, Director; Russell K. Oatman,
Director; James C. C. Schmidt, Director; James L. Doody, Director; Meg Lauritzen
Dodge, Director; Nick Baxter, Director;
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<PAGE>
Craig McGarry, Director; and Robert W. Tritsch, Director. The address of all of
such officers and/or directors is One First National Center, 1620 Dodge Street,
Omaha, Nebraska 68102. All of such officers' and/or directors' principal
occupations are as such executive officers and/or as employees of FNBO.
As of March 28, 2000, Bruce R. Lauritzen beneficially owned 37.91% of the
outstanding Common Stock of First National of Nebraska, Inc., Elizabeth D.
Lauritzen beneficially owned 26.05% of the outstanding Common Stock of First
National of Nebraska, Inc., Lauritzen Corporation beneficially owned 24.99% of
the outstanding Common Stock of First National of Nebraska, Inc., and Thomas L.
Davis owned 11.77% of the outstanding Common Stock of First National of
Nebraska, Inc. The shares reported as beneficially owned by Mr. Lauritzen and
Ms. Lauritzen include shares owned directly by the Lauritzen Corporation and
shares over which such persons were acting as co-conservators. The address of
Mr. Lauritzen, Ms. Lauritzen, and Lauritzen Corporation is One First National
Center, 1620 Dodge Street, Omaha, Nebraska 68102. Mr. Davis' address is c/o
Trust Department, First National Bank of Omaha, One First National Center, 1620
Dodge Street, Omaha, Nebraska 68102. No other person owns, of record or
beneficially, as much as 10% of the Common Stock of First National of Nebraska,
Inc.
FNBO acts as the personal representative of the Estate of D. J.
Witherspoon, deceased, which is the principal shareholder of the Corporation.
Mr. Witherspoon died on January 10, 2000. FNBO, as personal representative of
the Estate of Mr. Witherspoon, has sole voting and investment power over 69.4%
of the outstanding shares of Common Stock of the Corporation.
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
A majority of the members of the Board of Directors who are not "interested
persons" of the Corporation, as defined in the Investment Company Act of 1940,
have selected the firm of Deloitte & Touche LLP to serve as independent
accountants for the Corporation for the year ending December 31, 2000. Deloitte
& Touche LLP or its predecessor has served the Corporation as its independent
accountants since 1969. Such selection is required by the Investment Company Act
of 1940 to be submitted to the shareholders of the Corporation for ratification
or rejection.
Accordingly, the following resolution will be offered by the Board of
Directors at the Annual Meeting:
"RESOLVED, that the selection by the Board of Directors of PMD
Investment Company of Deloitte & Touche LLP, independent certified public
accountants, to examine the financial statements of and to serve as the
independent public accountants for PMD Investment Company for the year
ending December 31, 2000, hereby is ratified."
Approval of such resolution requires the affirmative vote of a majority of
the shares voted with respect to such resolution. The Board of Directors intends
that proxies solicited by this Proxy Statement will be voted in favor of such
resolution unless contrary instructions are given therein. The Board of
Directors recommends that shareholders of the Corporation vote "FOR" such
resolution.
The Corporation expects that a representative of Deloitte & Touche LLP will
be present at the Annual Meeting, with the opportunity to make a statement if he
or she desires to do so, and that such representative will be available to
respond to appropriate questions.
BROKERAGE COMMISSIONS
Purchases and sales of the types of assets in which the Corporation
presently invests usually are effected by the Corporation with the seller or
purchaser on a principal (net) basis, with no brokerage commission being paid by
the Corporation. Since all of the Corporation's portfolio transactions were
handled on a principal (net) basis during the year ended December 31, 1999, the
Corporation paid no brokerage commissions during such year.
FNBO's policy in purchasing and selling portfolio securities for the
Corporation is to seek favorable net prices and reliable execution. After these
primary considerations have been satisfied, FNBO may give additional
consideration to other services which FNBO deems to be of value to the
Corporation or to FNBO in terms of the particular transaction or FNBO's overall
responsibilities to the Corporation. Although the Corporation's securities
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<PAGE>
transactions generally do not involve the payment of any brokerage commissions,
where brokerage commissions are payable FNBO may be authorized, subject to the
foregoing primary considerations and to review by the Corporation's Board of
Directors, to execute orders with brokers in return for brokerage and research
services which are of use to the Corporation, even though the commission rates
at which such orders are executed may be higher than those charged by other
brokers. Such research services also may be useful to FNBO in connection with
its services to other advisory clients, and FNBO may not use all of such
research services in connection with the performance of its responsibilities to
the Corporation.
REDEMPTION OF SHARES
D. J. Witherspoon, who was the principal shareholder of the Corporation
during his lifetime, died on January 10, 2000. In anticipation of the need to
pay federal and state death tax obligations and administrative expenses incident
to the settlement of Mr. Witherspoon's estate, First National Bank of Omaha, as
the personal representative of Mr. Witherspoon's estate, tendered 2,206,000 of
Mr. Witherspoon's 2,989,969 shares of the Corporation's Common Stock for
redemption by the Corporation effective June 30, 2000, pursuant to the PMD
Investment Company Periodic Stock Redemption Arrangement dated January 1, 1983.
Based upon the net asset value of the Corporation's Common Stock as of June 30,
2000, Mr. Witherspoon's estate received approximately $9,880,720 pursuant to
such redemption.
DISSOLUTION OF CORPORATION
Background
The Corporation is a closed-end diversified management company under
Sections 4 and 5 of the Investment Company Act of 1940. The investment objective
of the Corporation is to obtain as high a level of interest income as is
consistent with prudent investment management and the preservation of capital of
the Corporation. The Corporation invests at least 60% of its assets in (i) debt
obligations issued by states, territories, and possessions of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, and their political
subdivisions and instrumentalities, the interest on which is, at the time of the
issuance of such debt obligations in the opinion of bond counsel for the
issuers, exempt from federal income tax, and (ii) securities of other regulated
investment companies (subject to applicable restrictions imposed by the
Investment Company Act of 1940) whose investments consist exclusively of those
types of debt obligations described in this sentence. The Corporation invests up
to 40% of its assets in (i) fixed-income debt securities, the interest on which
is not, at the time of the issuance of such fixed-income debt securities, exempt
from federal income tax, and (ii) securities of other regulated investment
companies (subject to applicable restrictions imposed by the Investment Company
Act of 1940) whose investments consist exclusively of those types of
fixed-income debt securities described in this sentence.
The Corporation's Common Stock (its only security) is not listed on any
stock exchange. The Corporation believes that there has been no market for its
Common Stock since April 1981. At June 30, 2000, the net asset value of the
Corporation's Common Stock was $4.12 per share, and there were approximately 403
holders of Common Stock of the Corporation. Quarterly dividends on the Common
Stock of the Corporation for the past two years are set forth below:
Date Income Dividend Long Term Capital Gain
per Share Dividend per Share
2nd Quarter, 2000 $0.04790 --
1st Quarter, 2000 $0.04819 --
4th Quarter, 1999 $0.052969 $0.004261
3rd Quarter, 1999 $0.05163 --
2nd Quarter, 1999 $0.05092 --
1st Quarter, 1999 $0.04860 --
4th Quarter, 1998 $0.0564962608 $0.00337182631
3rd Quarter, 1998 $0.05391 --
8
<PAGE>
Reasons for Dissolution
The Corporation's primary objective is to produce interest income. The
regulatory requirements applicable to the Corporation as a closed-end
diversified management company result in substantial annual administrative,
legal, and accounting expenses for the Corporation. The Corporation also pays
significant annual fees to its investment advisor and to the members of the
Board of Directors. Except for the investment advisor's fee (which is subject to
a minimum amount), such expenses generally do not vary according to the asset
size of the Corporation.
Prior to the redemption described in the REDEMPTION OF SHARES section
above, D. J. Witherspoon (and, after his death, his estate) owned approximately
90% of the Corporation's outstanding Common Stock, and the Corporation's
expenses for investment advisory fees, custodian fees, professional fees,
directors' fees, shareholders' servicing costs, and other miscellaneous expenses
amounted to approximately 15% of the Corporation's annual investment income. As
a result of the redemption, the Corporation's net assets have been reduced from
approximately $13.7 million to approximately $4.6 million as of June 30, 2000.
Because of the substantial reduction in the Corporation's net assets resulting
from the redemption, the Corporation's estimated future annual expenses will
represent approximately 30% of the Corporation's annual investment income.
For the year ended December 31, 1999, the Corporation's net investment
income was $678,766, which represented an approximately 4.7% net investment
return on its average net assets for 1999. The Board of Directors estimates
that, subsequent to the redemption, the Corporation's annual net investment
income will be approximately $186,000, resulting in an estimated annual net
investment return on the Corporation's estimated average net assets of
approximately 3.9% (assuming the current level of expenses). The Board of
Directors does not believe the annual estimated investment income and net
investment return on net assets subsequent to the redemption are cost effective
for the remaining shareholders of the Corporation.
Contingent Liabilities; Risk to Shareholders
On January 15, 1981, the Corporation sold substantially all of its assets
which had been used in its former discount store business. Although the
purchaser of the Corporation's operating assets assumed substantially all of the
Corporation's liabilities and obligations as part of the purchase transaction,
the Corporation remains contingently liable for such liabilities and
obligations, presently consisting only of obligations under various real estate
leases, 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 $5,652,000 as of June 30,
2000, the most recent date for which such information is available.
Pamida, Inc., the purchaser in the 1981 transaction, is now a wholly owned
subsidiary of ShopKo Stores, Inc. and has continuously operated its discount
store business since 1981. To the best knowledge of the Corporation, Pamida,
Inc. has not been in default with regard to any of such obligations at any time
since its assumption of such obligations in 1981, and the Corporation has not
been required at any time to satisfy any of such contingent obligations and
liabilities.
Although the Board of Directors has no reason to believe that Pamida, Inc.
will default with regard to any of such assumed obligations at any time in the
future and be financially unable to satisfy such obligations, if the dissolution
of the Corporation is approved by the shareholders and the Corporation completes
the liquidation and distribution of its assets, the shareholders receiving such
distribution could potentially be liable to creditors of the Corporation having
claims based upon the contingent liabilities discussed above. Section 21-20,156
of the Business Corporation Act of Nebraska provides that known creditors having
only contingent claims do not need to be formally notified of the dissolution of
a corporation. Section 21-20,157 of the Business Corporation Act of Nebraska
provides that creditors with contingent claims may bring a claim against the
dissolved corporation, or, if the dissolved corporation has no remaining assets,
against such corporation's shareholders, during the five years immediately
following the publication of a notice of dissolution as provided for in the
statute. However, recovery with regard to any successful claim brought pursuant
to Section 21-20,157 of the Business Corporation Act of Nebraska would be
limited in all cases to the total amount of assets distributed to shareholders
in the dissolution of the corporation, and no shareholder would be liable for
more than the lesser of (i) a pro rata share of the claim or (ii) the total
amount of assets distributed to such shareholder.
9
<PAGE>
Proposal for Dissolution of Corporation
Because of the Corporation's reduced net assets, estimated future
investment income, continuing substantial expenses, and estimated future net
investment return, the Board of Directors has proposed that the Corporation
dissolve, collect and liquidate its remaining assets, pay or provide for the
payment of its expenses and liabilities, and distribute its remaining property
to the Corporation's shareholders.
Except for the filing of a Form N-8F Application for Deregistration of
Certain Registered Investment Companies with the SEC, the Corporation is not
required to comply with any federal or state regulatory requirements or to
obtain any federal or state approvals in connection with the dissolution of the
Corporation.
Accordingly, the following resolution will be offered by the Board of
Directors at the Annual Meeting:
"RESOLVED, that the shareholders of PMD Investment Company (the
"Corporation") hereby approve the dissolution of the Corporation as
described in the Proxy Statement for the 2000 Annual Meeting of
Shareholders of the Corporation and hereby authorize and direct the
directors and officers of the Corporation to take any and all actions
necessary or appropriate to effect such dissolution in accordance with the
Business Corporation Act of Nebraska."
Approval of such resolution requires the affirmative vote of a two-thirds
majority of all of the shares entitled to be cast with respect to such
resolution. Each outstanding share of Common Stock is entitled to one vote on
such resolution. The Board of Directors intends that proxies solicited by this
Proxy Statement will be voted in favor of such resolution unless contrary
instructions are given therein. The Board of Directors recommends the
dissolution of the Corporation and that shareholders of the Corporation vote
"FOR" such resolution.
Distribution of Net Assets
Subject to shareholder approval of the dissolution, the Board of Directors
intends to fix a record date (which will be a date subsequent to the Annual
Meeting date) for the purpose of establishing the shareholders of the
Corporation who will be entitled to receive distributions from the Corporation
as a result of the dissolution.
Upon shareholder approval of the dissolution, the Corporation will notify
the shareholders of record who will be entitled to receive such distributions
and will provide instructions to such shareholders as to the procedure they must
follow to obtain their distributions.
The remaining property of the Corporation (after payment or provision for
payment of all liabilities of the Corporation and expenses incident to the
dissolution and the winding up of the Corporation's affairs) will be distributed
in one or more installments to the shareholders of record on the record date for
dissolution distributions referred to above. Such distributions will be made in
proportion to the respective shareholdings of such shareholders on such record
date. The Corporation presently anticipates that substantially all of the
remaining property of the Corporation available for distribution will be
distributed during 2000; however, the Corporation cannot assure that it will be
able to complete the dissolution process in its entirety and make all
distributions to shareholders by December 31, 2000.
Shareholders of the Corporation entitled to receive distributions as a
result of the dissolution will need to submit their certificates for shares of
the Common Stock to the Corporation's disbursing agent at the appropriate time
as a condition of receiving their distributions. NO CERTIFICATES SHOULD BE SENT
UNTIL INSTRUCTIONS ARE PROVIDED BY THE CORPORATION. However, shareholders may
wish to take action at the present time to locate and have available their
certificates (or to confirm that their shares of Common Stock are held for them
by a broker or other nominee) so that there will be no delay in submitting such
certificates at the appropriate time.
Once the shareholders of record entitled to receive dissolution
distributions have been determined, the Corporation intends to close its stock
transfer books and not to process any further transfers of the Common Stock.
10
<PAGE>
Upon approval of the dissolution by the shareholders, the PMD Investment
Company Periodic Stock Redemption Program dated March 3, 1981, as amended, will
be terminated and no further redemptions will be permitted thereunder.
FINANCIAL STATEMENTS
The Corporation's Annual Report as of December 31, 1999, and Semi-Annual
Report as of June 30, 2000, are attached to this Proxy Statement as Exhibits A
and B, respectively. The Annual Report reflects the financial statements of the
Corporation prior to the redemption of a portion of D. J. Witherspoon's shares
discussed above, and the Semi-Annual Report reflects the financial statements of
the Corporation immediately after such redemption.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
The Company's officers and directors, and persons who own more than 10% of
the Corporation's Common Stock, are required to file reports of ownership and
changes in ownership of the Corporation's Common Stock with the Securities and
Exchange Commission. Copies of such reports must also be furnished to the
Corporation. Based solely upon a review of the copies of reports furnished to
the Corporation and written representations that no other reports were required,
the Corporation believes that during 1999 its officers and directors and greater
than 10% beneficial owners complied with such filing requirements.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business which will be presented for consideration at the Annual Meeting.
As to other business, if any, that properly may come before the Annual Meeting,
the Board of Directors intends that proxies in the accompanying form will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies.
SHAREHOLDER PROPOSALS
If the dissolution proposal set forth in this Proxy Statement is approved
by shareholders, then the Corporation will be dissolved and there will be no
annual meeting in 2001. If for any reason an annual meeting of shareholders of
the Corporation is required to be held in 2001, then shareholder proposals
intended to be presented at the 2001 annual meeting must be received by the
Corporation not later than January 8, 2001, for inclusion in the Corporation's
proxy statement and form of proxy relating to that meeting. If a shareholder
wishes to present a proposal for consideration at the 2001 annual meeting of
shareholders of the Corporation without having such matter included in the proxy
statement of the Corporation for such annual meeting but does not give the
Corporation notice of such matter by March 30, 2001, then the proxies solicited
by the Board of Directors for such annual meeting may confer discretionary
authority on the persons holding such proxies to vote on such matter in
accordance with their judgment. Shareholder proposals should be sent to the
Corporation at the principal executive office of the Corporation.
ADDITIONAL INFORMATION
The cost of soliciting proxies in the accompanying form will be borne by
the Corporation. Officers and directors of the Corporation, without compensation
other than their regular compensation, also may solicit proxies either by mail,
personal conversation, telephone, or telegraph. The Corporation will reimburse
brokerage firms, nominees, and others for their expenses in forwarding
solicitation material to the beneficial owners of Common Stock.
Dated: August 23, 2000 BY ORDER OF THE BOARD OF DIRECTORS,
Herbert B. Underwood,
Secretary
11
<PAGE>
EXHIBIT A
PMD Investment Company Annual Report dated December 31, 1999
A-1
<PAGE>
PMD INVESTMENT COMPANY
Financial Statements for the
Year Ended December 31, 1999 and
Independent Auditors' Report
A-2
<PAGE>
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 schedule of investments, as of December 31,
1999, and the related statement of operations for the year then ended, the
statements 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, 1999, by correspondence with the custodian. 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 selected 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, 1999, 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.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 2, 2000
A-3
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, at fair value,
amortized cost of $12,902,432 $ 12,792,412
Investment in tax-exempt money market fund 971,203
------------
Total investments 13,763,615
Interest receivable 196,777
------------
Total assets 13,960,392
LIABILITIES:
Accrued expenses
17,758
------------
Commitments and contingencies
NET ASSETS (common stock, $.50 par value; 20,000 shares authorized; equivalent
to $4.17 per share based on 3,341,764 shares of common stock outstanding at
December 31, 1999) $ 13,942,634
============
</TABLE>
See notes to financial statements.
A-4
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Amortized Fair
Amount Cost Value
Abbey National PLC Sub, 6.69%, due October 17,
2005 $ 550,000 $ 553,911 $ 526,916
Austin, Texas, Independent School District, 4.75%,
due August 1, 2008 500,000 496,801 490,320
Citigroup Inc., Serial Note, 9.5%, due
March 1, 2002 550,000 575,323 576,119
Clark County, Washington Public Utilities District #1
Electric Revenue, 6.3%, due January 1, 2004 250,000 249,773 259,428
Denver Metropolitan Major League Baseball Stadium
District Colorado, 6.35%, due October 1, 2003 250,000 250,000 260,680
Federal Home Loan Mortgage Corporation, 7.0%,
due June 1, 2024 1,169,840 1,173,905 1,137,237
Federal National Mortgage Association, 6.5%,
due January 1, 2024 771,678 762,396 735,648
Federal National Mortgage Association, 7.8%,
due March 29, 2005 1,000,000 1,002,421 998,340
Florida State, General Services Revenues,
6%, due July 1, 2001 220,000 219,916 225,925
Grand Island, Nebraska Sanitary Sewer Revenue,
4.8%, due April 1, 2000 400,000 400,000 400,556
Hanover County, Virginia IDA Public Facilities
Lease Revenue, 6.75%, due July 15, 2007 150,000 150,000 158,339
Jefferson County, West Virginia Residential
Mortgage Revenue, Refunding Series A, 7.75%
due January 1, 2012 65,000 65,171 65,660
King County, Washington School District, 4.3%,
due June 1, 2010 500,000 495,947 460,350
Lincoln, Nebraska Water Revenue, 6.7%, due
November 1, 2000 250,000 250,000 255,420
Mecklenburg County, North Carolina Public
Service, 4.4%, due February 1, 2011 500,000 492,046 467,805
Memphis, Tennessee, 4.65%, due July 1, 2007 500,000 498,638 488,555
Minneapolis, Minnesota Refunding Service, 4.25%,
due December 1, 2008 500,000 503,658 471,550
</TABLE>
See notes to financial statements.
A-5
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999 (continued)
-------------------------------------------------------------------------------------------------------------------------------
Principal Amortized Fair
Amount Cost Value
<S> <C> <C> <C>
Nebraska Investment Finance Authority, 6.9%,
due March 15, 2000 $ 140,000 $ 140,000 $ 140,693
Ohio State Highway Capital Imports, Series B,
4.5%, due May 1, 2004 500,000 499,074 498,030
Omaha Public Power District, Nebraska Electric
Revenue, Series B, 5.9%, due February 1, 2006 450,000 450,000 474,372
Omaha Public Power District, Nebraska Electric
Revenue, Series A, 5%, due January 1, 2001 500,000 502,307 503,700
Sabine River Authority, Texas Water Supply
Facility, Lake Fork Project, 6.5%, due
December 1, 2001 265,000 264,755 270,846
Tucson, Arizona, G.O., Ref. 5.8%, due July 1, 2002 10,000 9,982 10,478
Tucson, Arizona, G.O., Ref. 5.8%, due July 1, 2005 240,000 239,534 251,129
University of Nebraska Facilities Corp., 7.2%,
due July 1, 2004 250,000 250,000 256,347
Utah State, 4.9%, due July 1, 2009 500,000 497,643 494,395
Vermont State, Series B, 5.7%, due August 1, 2005 400,000 398,441 416,440
Virginia State, G.O., 4%, due June 1, 2003 500,000 502,193 492,770
Wake City, North Carolina, 4.5%, due March 1, 2011 500,000 489,281 465,780
Washington State, Series A and AT-6, 5.8%, due
February 1, 2002 245,000 244,492 253,737
Washington State, Series A and AT-6, 5.8%, due
February 1, 2003 5,000 4,990 5,178
Wisconsin Housing and Economic Development,
Series 1, 7%, due October 1, 2003 270,000 269,884 279,669
------------ ------------ ------------
Totals $ 12,901,518 $ 12,902,432 $ 12,792,412
============ ============ ============
</TABLE>
See notes to financial statements.
A-6
<PAGE>
PMD INVESTMENT COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------------
Interest Income:
From investments $ 779,644
Expenses:
Investment advisory fee 32,565
Custodian fees 4,000
Professional fees 32,812
Shareholders servicing costs 5,652
Directors fees 15,000
Other 10,849
--------
Total expenses 100,878
--------
Net investment income 678,766
Realized and unrealized gain (loss) on sales of investments:
Net realized gain on sale of investments 336
Change in unrealized appreciation of investments (598,175)
--------
(597,839)
--------
Net increase in net assets resulting from operations $ 80,927
========
See notes to financial statements.
A-7
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------------------------------------------------------------------------------------------
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
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1998:
Net investment income - $ - $ - $ 736,071 $ - $ - $ 736,071
Net realized gain from
securities transactions - - - - 17,920 - 17,920
Change in unrealized appreciation
of investments - - - - - 59,085 59,085
--------- ---------- ----------- -------- ------- --------- -----------
Increase in net assets from
operations - - - 736,071 17,920 59,085 813,076
Dividends - $.217 per share - - - (727,782) (9,229) - (737,011)
Common stock redeemed (54,918) (27,459) (210,881) - - - (238,340)
--------- ---------- ----------- -------- ------- --------- -----------
Total decrease in net assets (54,918) (27,459) (210,881) 8,289 8,691 59,085 (162,275)
Net assets on January 1, 1998 3,453,773 1,726,886 12,616,121 189,797 16,670 429,070 14,978,544
--------- ---------- ----------- -------- ------- --------- -----------
Net assets on December 31, 1998 3,398,855 $1,699,427 $12,405,240 $198,086 $25,361 $488,155 $14,816,269
========= ========== =========== ======== ======= ========= ===========
Year ended December 31, 1999:
Net investment income - $ - $ - $ 678,766 $ - $ - $ 678,766
Net realized gain from securities
transactions - - - - 336 - 336
Change in unrealized appreciation
of investments - - - - - (598,175) (598,175)
--------- ---------- ----------- -------- ------- --------- -----------
Increase in net assets from
operations - - - 678,766 336 (598,175) 80,927
Dividends - $.211 per share - - - (699,855) (11,459) - (711,314)
Common stock redeemed (57,091) (28,546) (214,702) - - - (243,248)
--------- ---------- ----------- -------- ------- --------- -----------
Total decrease in net assets (57,091) (28,546) (214,702) (21,089) (11,123) (598,175) (873,635)
Net assets on January 1, 1999 3,398,855 1,699,427 12,405,240 198,086 25,361 488,155 14,816,269
--------- ---------- ----------- -------- ------- --------- -----------
Net assets on December 31, 1999 3,341,764 $1,670,881 $12,190,538 $176,997 $14,238 $(110,020) $13,942,634
========= ========== =========== ======== ======= ========= ===========
</TABLE>
See notes to financial statements.
A-8
<PAGE>
PMD INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
A. SIGNIFICANT ACCOUNTING POLICIES
PMD Investment Company (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 fair value as
determined by the Company's investment advisor at December 31, 1999.
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.
Distributions to Shareholders - Dividends to shareholders are recorded on the
ex-dividend date.
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 .25 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.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications - Certain amounts in the prior years' financial statements
have been reclassified to conform with the 1999 presentation.
B. REDEMPTION OF SHARES
At December 31, 1999, the Company had authorized 20,000,000 shares of $.50 par
value common stock.
A-9
<PAGE>
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 30
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 $5,652,000 as
of December 31, 1999, the most recent date for which such information is
available.
D. PURCHASES AND SALES OF SECURITIES
The following summarizes the approximate value of securities transactions for
the periods indicated.
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
Purchases Sales Purchases Sales
<S> <C> <C> <C> <C>
Tax Exempt:
Municipal bonds and notes $ - $ 90,000 $ 1,976,055 $ 1,364,787
Taxable:
Government agency - 473,549 504,060 1,190,827
--------- ----------- ----------- -----------
- 563,549 2,480,115 2,555,614
Other tax-exempt short-term
investments 498,106 796,666 3,367,242 3,485,820
--------- ----------- ----------- -----------
$ 498,106 $ 1,360,215 $ 5,847,357 $ 6,041,434
========= =========== =========== ===========
</TABLE>
Net realized gain on sale of investments was $336 and $17,920 for the years
ended December 31, 1999 and 1998, respectively.
The diversification of investments based on fair value at December 31, 1999 is
as follows:
State and municipal tax-exempt bonds 64.1 %
U.S. government agency bonds 20.9
Corporate bonds 8.0
Short-term tax-exempt money market fund 7.0
-----
100.0 %
=====
A-10
<PAGE>
E. DISTRIBUTIONS TO SHAREHOLDERS
On December 30, 1999, a quarterly income distribution of $0.052969 per share
aggregating $176,997 and a distribution of $0.004261 per share aggregating
$14,238 was declared from net realized gains from investment transactions during
1999. The dividend was paid on January 17, 2000 to shareholders of record on
January 10, 2000.
F. SUBSEQUENT EVENT
Subsequent to December 31, 1999, the principal shareholder of the Company died
on January 10, 2000. Federal estate tax obligations incident to his estate may
necessitate either liquidation of the Company or a substantial redemption of
shares of the Company's stock. No decisions have been made by the Board of
Directors of the Company or the shareholder's personal representative with
respect to such matters.
G. SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Weighted average shares outstanding 3,360,634 3,432,115 3,537,042 3,626,328 3,825,907
========= ========= ========= ========= =========
Interest income $ 0.232 $ 0.244 $ 0.243 $ 0.251 $ 0.240
Expenses 0.029 0.030 0.028 0.030 0.024
--------- --------- --------- --------- ---------
Net investment income 0.203 0.214 0.215 0.221 0.216
Distribution from net investment
income (0.211) (0.215) (0.234) (0.262) (0.228)
Increase (decrease) in unrealized
appreciation of investments (0.177) 0.017 0.047 (0.094) 0.098
Net realized gain (loss) from securities
transactions -- 0.005 0.003 0.010 0.051
--------- --------- --------- --------- ---------
Increase (decrease) in net assets (0.185) 0.021 0.031 (0.125) 0.137
Net asset value at beginning of period 4.358 4.337 4.306 4.431 4.294
--------- --------- --------- --------- ---------
Net asset value at end of period $ 4.173 $ 4.358 $ 4.337 $ 4.306 $ 4.431
========= ========= ========= ========= =========
Ratio of expenses to average net assets 0.7 % 0.7 % 0.7 % 0.7 % 0.5 %
Ratio of net investment income to
average net assets 4.7 % 5.0 % 5.0 % 5.0 % 4.9 %
Portfolio turnover -- 16.6 % 12.0 % 19.8 % 59.6 %
Number of shares outstanding at
end of period (in thousands) 3,342 3,399 3,454 3,597 3,805
</TABLE>
A-11
<PAGE>
EXHIBIT B
PMD Investment Company Semi-Annual Report dated June 30, 2000
B-1
<PAGE>
PMD INVESTMENT COMPANY
Financial Statements for the
Six Months Ended June 30, 2000 and
Independent Accountants' Review Report
B-2
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Shareholders and
the Board of Directors of
PMD Investment Company
Omaha, Nebraska
We have reviewed the accompanying statement of assets and liabilities of PMD
Investment Company, including the schedule of investments, as of June 30, 2000,
and the related statements of operations and changes in net assets for the six
months then ended. These financial statements 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 of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of 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 accompanying financial statements for them to be in conformity
with accounting principles generally accepted in the United States of America.
Our review was made for the purpose of expressing the limited assurance
described in the preceding paragraph concerning the financial statements taken
as a whole. The additional information in the supplementary information-selected
per share data and ratios included in footnote G for the six months ended June
30, 2000, is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. This additional information is
the responsibility of the Company's management. Such information has been
subjected to the inquiry and analytical procedures applied in the review of the
basic financial statements and we are not aware of any material modifications
that should be made thereto in order for such information to be in conformity
with accounting principles generally accepted in the United States of America
when considered in relation to the basic financial statements taken as a whole.
B-3
<PAGE>
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the statement of assets and
liabilities of PMD Investment Company, including the schedule of investments
(not presented herein), as of December 31, 1999, and the related statements of
operations (not presented herein) and changes in net assets for the year then
ended and the additional information included in footnote G for each of the five
years in the period ended December 31, 1999; and in our report dated February 2,
2000, we expressed an unqualified opinion on those financial statements and
additional information. In our opinion, the information set forth in the
accompanying statement of changes in net assets for the year ended December 31,
1999 and the per share data and ratios for each of the five years in the period
ended December 31, 1999 is fairly stated, in all material respects, in relation
to the financial statements from which it has been derived.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
July 25, 2000
B-4
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(Unaudited - See Independent Accountants' Review Report)
---------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, at approximate market value,
amortized cost of $2,662,081 $ 2,597,441
Investment in tax-exempt money-market fund 11,135,304
-----------
Total Investments 13,732,745
Interest receivable 44,565
-----------
Total Assets 13,777,310
LIABILITIES:
Accrued expenses 10,025
Due to shareholders for shares tendered for redemption 9,115,430
-----------
Total Liabilities 9,125,455
-----------
Commitments and contingencies
NET ASSETS (common stock $.50 par value; 20,000 shares authorized; equivalent to
$4.12 per share based on 1,129,041 shares of common stock outstanding at
June 30, 2000) $ 4,651,855
===========
</TABLE>
See notes to financial statements.
B-5
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(Unaudited - See Independent Accountants' Review Report)
-----------------------------------------------------------------------------------------------------------
Approximate
Principal Amortized Fair
Amount Cost Value
<S> <C> <C> <C>
Citigroup Inc., Senior Note, 9.5%, due
March 1, 2002 $ 550,000 $ 569,293 $ 568,062
Federal Home Loan Mortgage Corporation, 7.0%,
due June 1, 2024 1,111,520 1,115,242 1,076,863
Federal National Mortgage Association, 6.5%,
due January 1, 2024 736,108 727,545 700,016
University of Nebraska Facilities Corp., University
Medical Center, Series A, 7.2%, due July 1, 2004 250,000 250,000 252,500
---------- ---------- ----------
$2,647,628 $2,662,080 $2,597,441
========== ========== ==========
</TABLE>
See notes to financial statements.
B-6
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Unaudited - See Independent Accountants' Review Report)
---------------------------------------------------------------------------------
<S> <C>
Interest Income:
From investments $ 375,197
Expenses:
Investment advisory fee 14,037
Custodian fees 2,000
Professional fees 26,859
Shareholders' servicing costs 1,960
Directors' fees 7,500
Other 3,447
---------
Total Expenses 55,803
---------
Net Investment Income 319,394
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments (186,862)
Change in Unrealized Appreciation of Investments for the Period 45,380
---------
Net Realized Loss and Increase in Unrealized
Appreciation on Investments (141,482)
---------
Increase in Net Assets Resulting from Operations $ 177,912
=========
</TABLE>
See notes to financial statements.
B-7
<PAGE>
<TABLE>
<CAPTION>
PMD INVESTMENT COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE SIX MONTHS ENDED JUNE 30, 2000
(Unaudited - See Independent Accountants' Review Report)
---------------------------------------------------------------------------------------------------------------------------
Common Stock Undistributed
----------------------- Net
$.50 Par Retained Investment
Shares Value Earnings Income
------ ----- -------- ------
<S> <C> <C> <C> <C>
Year ended December 31, 1999:
Net investment income -- $ -- $ -- $ 678,766
Net realized gain from securities transactions -- -- -- --
Change in unrealized appreciation of investments -- -- -- --
--------- ------------ ------------ ------------
Increase in net assets from operations -- -- -- 678,766
Dividends - $.211 per share -- -- -- (699,855)
Common stock redeemed (Note B) (57,091) (28,546) (214,702) --
--------- ------------ ------------ ------------
Total decrease in net assets (57,091) (28,546) (214,702) (21,089)
Net assets on January 1, 1999 3,398,855 1,699,427 12,405,240 198,086
--------- ------------ ------------ ------------
Net assets on December 31, 1999 3,341,764 1,670,881 12,190,538 176,997
Net investment income -- -- -- 319,394
Net realized loss from securities transactions -- -- -- --
Change in unrealized appreciation of investments -- -- -- --
--------- ------------ ------------ ------------
Increase in net assets from operations -- -- -- 319,394
Dividends - $.057 per share -- -- -- (176,996)
Dividends - $.048 per share -- -- -- (161,026)
Common stock redeemed (Note B) (2,212,723) (1,106,362) (8,010,069) --
--------- ------------ ------------ ------------
Total decrease in net assets (2,212,723) (1,106,362) (8,010,069) (18,628)
Net assets on January 1, 2000 3,341,764 1,670,881 12,190,538 176,997
--------- ------------ ------------ ------------
Net assets on June 30, 2000 1,129,041 $ 564,519 $ 4,180,469 $ 158,369
========= ============ ============ ============
<CAPTION>
Accumulated
Realized Unrealized
Gain (Loss) Appreciation
on Sale of (Depreciation)
Securities of Investments Total
---------- -------------- -----
<S> <C> <C> <C>
Year ended December 31, 1999:
Net investment income $ -- $ -- $ 678,766
Net realized gain from securities transactions 336 -- 336
Change in unrealized appreciation of investments -- (598,175) (598,175)
------------ ------------ ------------
Increase in net assets from operations 336 (598,175) 80,927
Dividends - $.211 per share (11,459) -- (711,314)
Common stock redeemed (Note B) -- -- (243,248)
------------ ------------ ------------
Total decrease in net assets (11,123) (598,175) (873,635)
Net assets on January 1, 1999 25,361 488,155 14,816,269
------------ ------------ ------------
Net assets on December 31, 1999 14,238 (110,020) 13,942,634
Net investment income -- -- 319,394
Net realized loss from securities transactions (186,862) -- (186,862)
Change in unrealized appreciation of investments -- 45,380 45,380
------------ ------------ ------------
Increase in net assets from operations (186,862) 45,380 177,912
Dividends - $.057 per share (14,238) -- (191,234)
Dividends - $.048 per share -- -- (161,026)
Common stock redeemed (Note B) -- -- (9,116,431)
------------ ------------ ------------
Total decrease in net assets (201,100) 45,380 (9,290,779)
Net assets on January 1, 2000 14,238 (110,020) 13,942,634
------------ ------------ ------------
Net assets on June 30, 2000 $ (186,862) $ (64,640) $ 4,651,855
============ ============ ============
</TABLE>
B-8
<PAGE>
PMD INVESTMENT COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Unaudited - See Independent Accountants' Review Report)
--------------------------------------------------------------------------------
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.
Six-Month Financial Statements - The financial statements for the six
months ended June 30, 2000 reflect all adjustments which are, in the
opinion of management, necessary to fairly present statements of operations
and changes in net assets for the six month period presented.
Investment Securities - Investments in securities are valued at fair value
as determined by the Company's investment advisor at June 30, 2000.
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 .25 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.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
B-9
<PAGE>
B. REDEMPTION OF SHARES
At June 30, 2000, 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
30 days prior to the intended redemption date.
The principal shareholder of the Company died on January 10, 2000. Federal
estate tax obligations incident to his estate necessitated the redemption
of 2,206,000 shares of the Company's stock. The shares were redeemed
effective June 30, 2000 at $4.12 per share. This redemption was paid on
July 5, 2000.
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 $5,652,000 as of February 1, 2000,
the most recent date for which such information is available.
D. PURCHASES AND SALES OF SECURITIES
The following summarizes the approximate value of securities transactions
for the periods indicated.
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
--------------------------- ----------------------------
Purchases Sales Purchases Sales
<S> <C> <C> <C> <C>
Tax Exempt:
Municipal bonds and notes $ -- $ 8,949,939 $ -- $ 35,000
Taxable:
Government agency -- 1,093,890 -- 301,438
----------- ----------- ----------- -----------
-- 10,043,829 -- 336,438
Other tax-exempt short-term
investments 10,268,803 104,702 481,277 165,321
----------- ----------- ----------- -----------
$10,268,803 $10,148,531 $ 481,277 $ 501,759
=========== =========== =========== ===========
</TABLE>
Net realized loss on sale of investments was $186,862 for the six months
ended June 30, 2000. Net realized gain on sale of investments was $112 for
the six months ended June 30, 1999.
The diversification of investments based on fair value at June 30, 2000 is
as follows:
State and municipal tax-exempt bonds 1.9 %
U.S. government agency bonds 12.9
Corporate bonds 4.1
Short-term tax-exempt money market fund 81.1
------
100.0 %
======
B-10
<PAGE>
E. DISTRIBUTIONS TO SHAREHOLDERS
On July 13, 2000, a quarterly income distribution of $0.0479 per share
aggregating $54,081 was declared from investment income realized during
2000. The dividend is payable on July 31, 2000 to shareholders of record on
July 24, 2000.
F. SUBSEQUENT EVENTS
The Board of Directors of the Company resolved on July 13, 2000 to dissolve
the Company pending approval of the shareholders.
G. SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, ---------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Weighted average shares
outstanding 3,329,471 3,360,634 3,432,115 3,537,042 3,626,328 3,825,907
========= ========= ========= ========= ========= =========
Interest income $0.113 $0.232 $0.244 $0.243 $0.251 $0.240
Expenses 0.017 0.029 0.030 0.028 0.030 0.024
--------- --------- --------- --------- --------- ---------
Net investment income 0.096 0.203 0.214 0.215 0.221 0.216
Distribution from net
investment income (0.106) (0.211) (0.215) (0.234) (0.262) (0.228)
Increase (decrease) in
unrealized appreciation
of investments 0.014 (0.177) 0.017 0.047 (0.094) 0.098
Net realized gain (loss)
from securities
transactions (0.057) -- 0.005 0.003 0.010 0.051
--------- --------- --------- --------- --------- ---------
Increase (decrease) in
net assets (0.053) (0.185) 0.021 0.031 (0.125) 0.137
Net asset value at
beginning of period 4.173 4.358 4.337 4.306 4.431 4.294
--------- --------- --------- --------- --------- ---------
Net asset value at end
of period $4.120 $4.173 $4.358 $4.337 $4.306 $4.431
========= ========= ========= ========= ========= =========
Ratio of expenses to
average net assets 0.8 %* 0.7 % 0.7 % 0.7 % 0.7 % 0.5 %
Ratio of net investment
income to average net
assets 4.6 %* 4.7 % 5.0 % 5.0 % 5.0 % 4.9 %
Portfolio turnover 0.0 %* 0.0 % 16.6 % 12.0 % 19.8 % 59.6 %
Number of shares
outstanding at end of
period (in thousands) 1,129 3,342 3,399 3,454 3,597 3,805
* Ratio has been annualized.
</TABLE>
B-11
<PAGE>
PROXY
PMD INVESTMENT COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE OCTOBER 2, 2000 ANNUAL MEETING OF THE SHAREHOLDERS
The undersigned hereby constitutes and appoints Herbert B. Underwood, J. G.
Sawicki, and John Patrick Witherspoon, and each of them individually, attorneys
and proxies of the undersigned, with full power of substitution to each of them,
to vote all stock of PMD Investment Company standing in the name of the
undersigned at the Annual Meeting of Shareholders of PMD Investment Company to
be held at First National Bank of Omaha, Terrace Level, One First National
Center, Omaha, Nebraska at 9:30 A.M., on October 2, 2000, and at any
adjournments thereof, (a) on the following matters, and (b) in their discretion
on any other matters that properly may come before the meeting or any
adjournments thereof.
Item 1 ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees below
[_] [_]
(INSTRUCTION: To withhold authority to vote for any individual nominee(s), draw
a line through the nominee's name below.)
John Patrick Witherspoon J. G. Sawicki Herbert B. Underwood
Item 2 RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE CORPORATION FOR THE YEAR ENDING
DECEMBER 31, 2000
FOR AGAINST ABSTAIN
[_] [_] [_]
Item 3 APPROVAL OF PROPOSED DISSOLUTION OF THE CORPORATION
FOR AGAINST ABSTAIN
[_] [_] [_]
<PAGE>
This proxy will be voted as specified. If no specification is given, this proxy
will be voted for the election of directors and for the other proposals set
forth above.
The undersigned hereby ratifies and confirms all that any of such attorneys and
proxies, or their substitutes, may do or cause to be done by virtue hereof and
acknowledges receipt of the Notice of Annual Meeting of Shareholders of PMD
Investment Company to be held on October 2, 2000, the Proxy Statement for such
meeting, and the Annual Report of PMD Investment Company for the year ended
December 31, 1999.
Dated: ______________________________________________, 2000
____________________________________________________________
(Signature of Shareholder)
____________________________________________________________
(Signature if held jointly)
Please sign exactly as your name exactly
as it appears on your stock certificate.
All joint owners should sign. When
signing as personal representative,
executor, administrator, attorney,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized person. If a
partnership, please sign in partnership
name by a partner. If a limited
liability company, please sign in
company name by a member or manager.
