EXHIBIT No. 9

OFFICE OF LOANS,

BUSINESS LOAN BRANCH,
September 22, 1949.

ADDITIONAL AND REFUNDING LOAN

American Lithofold Corp., St. Louis, Mo.

Loan applied for.-$500,000.

Deferred September 19, 1949.

Re-presented September 22, 1949.

Attachment.-Report of Business Loan Branch, doted September 19, 1949.

OFFICE OF LOANS, BUSINESS LOAN BRANCH,

St. Louis Agency, September 19, 1949.

ADDITIONAL AND REFUNDING LOAN

American Lithofold Corp., St. Louis, Mo.

Date of application.-June 30, 1949.

Received in Washington.—August 15, 1949.

Established.-June 1936.

Business.-Printing of continuous, tabulating, fanfold, and snapout forms. Loan applied for.-$500,000.

Maturity requested.-$300,000-7 years; $200,000-3 years.

1 Appraisals of buildings and machinery were made by Lloyd-Thomas Co., Appraisal Engineers, Chicago, Ill., and are dated July 31, 1944. These reports have been revised from time to time and values used were those assigned by the Appraiser as of May 31, 1949.

Condensed balance sheet.-As of May 31, 1949. (000 omitted)

Condensed earnings statement (fiscal year ends December 31) (000 omitted).—

Comments on earnings by agency examiner.-Borrower's earnings for years 1944 and 1945 were fairly satisfactory. Earnings for 1946 were $6,000 on a decline in sales volume. The year 1947 shows an operating loss after depreciation of $129,000, which figure was reduced to $48,000 by a Federal excess profits tax refund of $81,000. There was a material decline in sales volume, and, according to Price-Waterhouse & Co. in its December 31, 1947, audit report, a decrease of 8.36 percent in gross profit for the year is traceable to, in addition to decreasing sales, increases in labor and material costs, a narrower margin resulting from an increasingly competitive market and less efficient operations arising from crowded plant conditions and training of new personnel to operate equip ment from Forms, Inc. This loss can, no doubt, be further traceable to the conversion from almost 100-percent Government work to peactime private work. The 1948 operations continued to show a loss in operations, although there was an increase in sales volume and conversion had been completed. An increasing loss of $31,000 is reflected for first 5 months of 1949.

In analyzing operating statement submitted with the application, it would appear that the company's operations are, so far as operating profits are concerned, considerably below the median for the industry as a whole. A comparison of total expense with similar operations known to your examiner shows about an average of 7.4 percent higher expense for a 5-year period for borrower as compared to median for the industry.

A review of past withdrawals, salaries, commissions, etc., paid to R. J. Blauner and members of his family and to affiliated companies gives a definite index as to why of declining profits. The time for a serious review of expenses by members of borrower's management group and a retrenchment program in connection with company's operations should have taken place over 2 years ago.

In discussing with officers of borrower the prospects for the ensuing 6 months, it was indicated that profitable operations were anticipated and the following projection was submitted:

Comments on management.-This company might be said to be suffering from "relativitis." Mr. Leschen, 62, is president, and, although he draws a salary of $6,000 per annum, apparently contributes nothing to the management. He is otherwise inactive in the company's affairs. His son-in-law, Robert A. Blauner, is the son of Robert J. Blauner, general manager and director, who is the dominant figure in the company, with a salary of $12,000 per year.

Robert A. Blauner is the salesman and Washington representative and formerly received $36,000 per year, of which 50 percent is now in stand-by pursuant to the provisions of the last loan.

A. M. Bridell, the son-in-law of Robert J. Blauner, is the Chicago representative of the firm and draws the same salary as the younger Blauner.

Robert J. Blauner lives in Chicago, Ill., and operates the company, more or less, by remote control.

Joseph H. Husgen, although production manager, is totally subservient to the elder Blauner.

Management is highly sales-minded but has not had the ability to convert the business from wartime to peacetime economy. Certainly they have not been able to handle the company's finances. As stated above, losses have continued from 1947 to date, some of which would seem to be attributable to the relatively high salaries, commissions, and general overhead expenses.

Agency indicates that the elder Blauner has never in the past effected any reductions in expenses or accomplished any economies voluntarily, but only after suggestions of and restrictions imposed by RFC.

Comments of Washington examiner.-On the basis of the loan value assigned to the collateral of $266,475, and which we believe to be conservative and justified, it is our opinion that a loan of $265,000 on fixed assets would be so secured as to reasonably assure repayment. However, there is serious doubt that repayment can be made from earnings if we are to judge from the company's experience over the last few years. However, by making salary adjustments and effecting other economies, it would seem possible that it can be placed on a profitable basis. Obviously, a drastic change in this regard is to be made if the RFC is to be paid the amount of the existing loans of $219,611.

With reference to the loans due Walter E. Heller & Co. in the amount of $178,244, secured by accounts receivable and inventory, it is apparent that this factor, although charging no more than the customarily high interest rates and discount charges, is proving to be a severe drain on the company's cash working capital. The estimated savings of $1,500 per month or $18,000 per year through refinancing in the form of short-term bank or other credit would seem to be particularly desirable. As a matter of fact, it is apparent that unless some relief is obtained, the company cannot continue in operation indefinitely with the result that the RFC must ultimately look to the collateral for repayment. The accounts receivable due by reputable firms and the Government, and the inventory, no doubt, constitute adequate collateral. In these circumstances, it is our opinion that it is not only desirable but in the best interest of the RFC that a revolving loan of $200,000 be made, secured by accounts and receivables; in other words, that Heller & Co., be taken out of the picture.

Recommendation of Washington examiner.-Direct loan to American Lithofold Corp., St. Louis, Mo., in an amount of not more than $465,000, to be represented by a promissory note, payable $4,250 monthly, plus interest at 4 percent per annum, payable monthly, commencing in 30 days and maturing 7 years from date, with net earnings clause covering 50 percent of the borrower's net earnings, beginning with the calendar year 1950, the note to be secured by a mortgage representing a first and paramount lien on land, buildings, machinery, and equipment owned by the borrower, with after-acquired property clause, the loan to be otherwise subject to the following terms and conditions:

1. Assignment of insurance in the amount of not less than $100,000 on the life of R. J. Blauner;

2. Guaranty of American Carbon Co., R. J. Blauner and wife, secured by prime hypothecation of all of the stock or other interests or evidence of interests held by R. J. Blauner and wife in American Carbon Co., Machinery Development Co., Atlantic Coast Sales, Systems Engineering Co., and B. K. Supply Co.;

3. Management agreement;

4. All salaries, commissions, bonuses, royalties, etc., in any amount to be subject to the prior written approval of the agency manager, provided that no officer or director shall receive more than $10,000 per annum and the aggregate of all officers and directors shall not exceed $75,000 per annum; provided further that no officer or director shall receive compensation unless, in the opinion of agency manager, his services are required in the active management and actual operation of the borrower;

5. Borrower's salesmen and sales representatives shall be paid on a definite salary and/or commission basis and the scale of salaries and commissions shall have prior written approval of agency manager;

6. Stand-by agreements from all officers and directors and all members of the Blauner family, including relatives by marriages, on all amounts now due them from borrower;

7. No accounts or assets of any nature owned by the company shall be pledged or encumbered in any way without the prior written consent of agency manager;

8. No advances or expenditures for fixed assets or repair and rebuilding thereon in excess of $5,000 annually shall be made without the prior written consent of the agency manager;

9. Agreement by R. J. Blauner that he will spend such portion of his time in St. Louise and/or delegate authority to other officers or directors as in the opinion of agency manager is necessary to the efficient operation of the borrower;

10. Agreement by borrower to satisfy the agency manager of the desirability for continuing each branch office, otherwise the borrower will, on written instructions from agency manager, discontinue such office;

11. Future advances to salesmen shall not exceed $15,000 in the aggregate at any one time, net, after offsetting commissions earned but not paid against advances previously made, provided advances previously made will be liquidated in an orderly manner and satisfactory to agency manager; 12. The proceeds of loan shall be used as follows:

(1) Refund existing SWPC and RFC loans having a balance due of approximately $220,000;

(2) To pay off mortgage on land and buildings now used by borrower in its business, title to which is to be transferred to borrower by R. J. Blauner and wife, in the amount of approximately $38,000, in order that borrower may include said property in mortgage representing a first and paramount lien as security to subject loan;

(3) Not more than $180,000 for use in retiring loan (s) to borrower by W. E. Heller & Co.

(4) Balance for working capital.

13. Such other terms and conditions as agency manager and/or agency counsel may impose to the end of protecting the Corporation's interest and pursuant to outstanding general requirements and instructions.

14. Not more than $265,000 to be disbursed against collateral previously referred to balance, on accounts receivable and/or inventory at not to exceed 80 percent of receivables and 50 percent of cost or current market value of inventory.

Review committee recommends.-Decline for reasons set out in agency examiner's report dated July 29, 1949, as follows:

1. Unbalanced financial condition with a disproportionate total debt to net worth.

2. Past record of earnings such that no assurance that loan can be repaid from profits.

3. Too much of loan proceeds being used to pay existing indebtedness. 4. Lack of close managerial supervision to the end that economies necessary for profitable operation are not being effected.

5. Loan value which could be assigned to collateral insufficient for amount of loan requested.

G. P. LUCE.

J. C. KITT.
FRANK T. RONAN.
R. G. RHETT.

Approved September 30, 1949, per Washington examiner with added condition.-G. P. L.

Pursuant to the provisions of section 1733 (b), chapter 115, title 28 of the United States Code, as amended,

I, LEO NIELSON, Secretary of Reconstruction Finance Corporation, a corporation created and existing pursuant to the Reconstruction Finance Corporation Act, approved January 22, 1932 (47 Stat. 5), as amended, do here certify that the