years after the date of the rejection which, assuming such date to be July 31, 1957, would make the termination effective at December 31, 1960.

LIABILITIES AND CAPITAL STOCK

An unaudited balance sheet as at April 30, 1956 is attached to the plan of reorganization as Exhibit “A”.

This balance sheet shows liabilities aggregating $7,933,494 consisting of the following:

Columbus Venetian Stevens Buildings, Inc. has total authorized capital stock of 58,057 shares of no par value common stock, all of which was issued to voting trustees in 1936 in consummation of the plan of reorganization of the Stevens Brothers Corporation, the predecessor of the debtor. Under the terms of the Stock Trust Agreement dated September 1, 1936, the trustees therein named issued 58,057 units of beneficial interest to the persons entitled to ownership of the 58,057 shares of stock. The stock is shown on the balance sheet at its aggregate stated value of $399,450.

EARNINGS AND VALUATION

The plan of reorganization of the predecessor corporation in effect placed the management of the debtor's affairs in the hands of the five voting trustees. As such voting trustees they had the power to, and did, elect themselves directors of the debtor corporation. The trustees named in 1936 were Arthur B. Hall, Francis Manierre, Gilbert Scribner, Newton C. Farr and Elmer T. Stevens. Except for the substitution of Raymond Donnersberger for Elmer T. Stevens effective September 1, 1954, these same men have been trustees and directors ever since. Arthur B. Hall served continuously as managing trustee to the

date of the appointment of the reorganization trustees in this proceeding on October 3, 1955, although a full time building manager and an assistant building manager have also been regularly employed by the corporation.

The prior plan of reorganization restricted the trustees to operating the three buildings essentially as they existed at the date of that reorganization except that they were empowered to demolish and remove the Columbus Memorial and Venetian Buildings provided they would replace them with a new structure not less than six stories in height to cost not less than $300,000. The plan would not permit the sale of the Columbus Memorial Building or Venetian Building separately but would permit the sale of the two buildings as one parcel for not less than $4,500,000. The Stevens Building could be sold for not less than $3,500,000.

The debtor corporation operates on a June 30 fiscal year basis. Rentals and Other Income for the fiscal years ended June 30, 1938 to 1955 are shown below:

Net Income before Interest on Bonds and Federal Income Taxes for these years was as follows:

Comparative Condensed Income Statements for the Columbus Memorial Building for the years ended June 30, 1952 to 1955 are presented below:

Comparative Condensed Income Statements for the Venetian Building for the same years are shown below:

Comparative Condensed Income Statements for the Stevens Build

ing for the same years are as follows:

For the three buildings combined, the Comparative Condensed Income Statements for the 4 years are as follows:

From the foregoing condensed income statements for the 4 fiscal years ended June 30, 1952 to 1955, it can be seen that "Rentals and Other Income" has steadily declined at an average of $33,000 for the last 3 years. At the same time "Operating Expenses" and "Real Estate Taxes" have steadily risen, the average rise per year for the former being $33,000 and the average rise for the latter being $20,000 over the past 3 years. The cumulative effect of these decreases in income and increases in expenses has been to make the 1955 net income, before bond interest, about $250,000 less than such income for 1952. Failure of the management to succeed in increasing rentals to compensate for increased costs, or to reduce those costs, is explained in part by falling sales of the Charles A. Stevens & Co. store and by the adverse effect on tenants of the uncertainties of the future of the three buildings.

There appears to be an improving trend beginning with October 1955 as indicated by the following comparative monthly figures for Total Income and Net Income:

37 S. E. C.

• Without provision for bond interest or income taxes.

Since in the period July 1, 1955 to May 31, 1956 the total income decreased slightly as compared with the corresponding period in the preceding fiscal year, the increase in the net income for that period must be due to a reduction in expenses of which $50,000 reflects reduced real estate taxes.

APPRAISALS

Three witnesses who had made appraisals of the debtor's properties testified at the hearing on the plan of reorganization and their appraisal reports were introduced in evidence. Their testimony and reports are summarized below:

HARRY L. SHLAES

Mr. Shlaes is a partner in the George S. Lurie Co., a downtown. Chicago real estate firm. Both he and George S. Lurie signed the appraisal report which they made as of December 1, 1955 at the request of the reorganization trustees. Their firm has served as advisers to the trustees upon real estate matters.

The valuations arrived at in the Shlaes and Lurie report were designated "Fair Cash Market Value" of the properties and were as follows: