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The Year in Review

CONSOLIDATED OPERATIONS

The consolidated net income of the Company for the year 1959 amounted to $27,860,866, or $5.48 per share on the shares outstanding December 31. This compares with $26,802,391, or $5.29 per share, for the year 1958. Dividends paid in each year amounted to $2.80 per share.

There were 5,082,513 shares of common stock outstanding, owned by 30,709 stockholders. This

COMPARATIVE STATEMENT OF FINANCIAL CONDITION

Assets: Cash.

Securities..

Receivables..

Reserves.. Other assets..

Fixed assets.. Deferred charges.

Liabilities:

liabilities....

as of December 31, 1959

CHANGE

1958

S 107 936 822

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92 768 682

1 722 509 564

128 903 608

43 880 374

38 382 664

37 495 461

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78 611 849 + S 29 324 973 83 193 595 + 9 575 087 1 339 878 145 +382 631 419 97 755 069 + 31 148 539 43 461 070 + 419 304 + 887 203 + 4.391 925 +$396 081 372

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70 032 170

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Subordinated long-term

notes...... Stockholders' equity...

175 000 000

241 067 395

$1 892 037 870

125 000 000
227 326 408
$1 495 956 498

+ 50 000 000
+ 13 740 987
+ $396 081 372

is an increase of approximately 300 stockholders
for the year. The book value per share at December
31 was $47.43, an increase of $2.56 per share for
the year.

A comparative summary of operations shows that while the earnings of the finance and insurance companies amounted to $24,434,010, an increase of $269,216 over 1958, the earnings of the manufacturing companies increased $789,259 to $3,426,856.

The total indebtedness of the Company at December 31 amounted to $1,488,456,000. This represents an increase of $364,100,000 during the year. At the year end, the long-term indebtedness amounted to $627,500,000, or 42.2% of the total Subsequent to December 31, the Company increased the long-term indebtedness by two transactions. One involved the sale of $50,000,000 Twenty-Year Unsecured Notes to the public at a 54% interest rate through the underwriting organizations of The First Boston Corporation and Kidder, Peabody & Co., the proceeds of which were delivered January 14, 1960. The other resulted from the Company placing $25,000,000 Subordinated 5%%% Notes with an institutional investor, the proceeds being received January 15, 1960. Giving effect to these two transactions, the long-term indebtedness amounted to 47.2% of the total and the short-term indebtedness 52.8%.

The Semi-Annual Report pointed out that the Company had incurred junior subordinated in debtedness in the amount of $50,000,000 in May. 1959. The principal changes in our financial structure

COMMERCIAL

CREDIT
COMPANY

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during the year are reflected in the increase in our long-term subordinated indebtedness. If we are on the threshold of a growth in our economy and the business of our Company in the decade of the Sixties, the increased junior subordinated indebtedness will furnish the basis for expanding our short-term and long-term debt by approximately $250,000,000. This, coupled with the placement of subordinated notes in January, 1960, prepares us financially for that growth.

Our over-all money costs for 1959 increased approximately one-half of 1% over 1958. We were able to limit this increase principally by concentrating on very short maturities in the commercial paper market during certain periods of the year. Increased interest costs amounted to $13,200,000 in 1959-$5,900,000 of this being the result of employing additional funds and $7,300,000 being the higher cost of the funds employed. The Company has established credit lines with banking institutions aggregating $689,407,000 and at December 31, $301,280,000 was being borrowed and the balance was available for future use. On the same date, borrowings in the commercial paper market from corporate institutions, pension funds and other investors totalled $559,676,000.

On December 31, there were reserves totalling $162,577,316 which are available for credit to future operations, expenses, credit losses and earnings of the finance and insurance companies. This consisted of reserves of $21,907,729 for possible losses on receivables; $106,995,879 unearned income of the finance companies and $33,673,708 unearned premiums of the insurance companies. The reserves for possible losses on receivables are made up as follows: $14,251,585 for possible losses on motor, farm equipment and other retail; $2,312,076 on motor, farm equipment and other wholesale; $2,692,747 on open accounts, leases, notes, mortgages and loan factoring receivables; and $2,651,321 on receivables.

In addition to the above loss reserves, there were other reserves held against possible losses in the finance operations consisting of $13,597,530 due customers only when the related receivables are collected and $36,257,689 representing customers' loss reserves, a large portion of which, if needed, will be available for losses, adjustments and past due accounts applicable to specific transactions

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with particular customers. Reserves of $8,017,750 were available for losses and loss expenses of the insurance subsidiaries and reserves of $156,740 were available for bad debts of the manufacturing companies.

Commercial Credit Companies Foundation, Inc., which was established eight years ago, contributed $139,647 to national charitable organizations for the account of various subsidiaries during the year. In addition, it distributed $22,076 to forty-two colleges and universities under scholarship grants awarded to forty-seven girls and boys, with a desire for higher education, who are children of employes.

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$59

BOOK VALUE PER SHARE

Earnings retained in the business have increased
the ownership equity of shareholders

from $35.35 per share five years ago
to $47.43 per share now.

'55 '56 '57 "58 "59

EARNINGS PER

COMMON SHARE $5 22 526

533 529 548

Auditors' Certificate

F. W. LAFRENTZ & Co.

CERTIFIED PUBLIC ACCOUNTANTS
02 WILLIAM STREET - NEW YORK CITY

To the Board of Directors and Stockholders of

Commercial Credit Company:

We have examined the balance sheet of Commercial Credit Company consolidated with its Subsidiary Companies as of December 31, 1959, and the related statements of operations and surplus for the year then ended. We did not, however, examine the financial statements of the Company's non-consolidated Life Insurance Subsidiary, but accepted the report of other Independent Public Accountants. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying consolidated balance sheet and the related statements of operations and surplus, present fairly the consolidated financial position of Commercial Credit Company and its Subsidiary Companies as of December 31, 1959, and the results of their consolidated operations for the year then ended, in conformity with generally accepted accounting principles, or as otherwise prescribed for insurance companies by state regulatory authorities, applied on a basis consistent with that of the preceding year.

The accompanying balance sheets of “Commercial Credit Company consolidated with those of its Finance Subsidiary Companies Only"; of “Insurance Companies"; and of "Manufacturing Companies", in our opinion, present fairly the financial position of those companies as of December 31, 1959.

February 15, 1960.

F. W. LAFRENTZ & CO.

ANNUAL
REPORT

7

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