STERLING CAPITAL CORPORATION
Report for the Year Ended December 31, 1995
OFFICERS
Walter Scheuer .........Chairman of the Board of Directors
Wayne S. Reisner ...... President
Richard Kaufman ....... Executive Vice President and Treasurer
Tracey Schadewald ..... Secretary
DIRECTORS
Jay Eliasberg Nathan Kingsley
Arthur P. Floor Archer Scherl
Walter Scheuer
Transfer Agent and Registrar Custodian
Registrar and Transfer Company Chemical Bank
10 Commerce Drive 4 New York Plaza
Cranford, New Jersey 07016 New York, New York 10004
Auditors General Counsel
Stavisky, Knittle, Isaacs Skadden, Arps,
& Dichek, C.P.A., P.C. Slate, Meagher & Flom
342 Madison Avenue 919 Third Avenue
New York, New York 10173 New York, New York 10022
STERLING CAPITAL CORPORATION
635 Madison Avenue
New York, N.Y. 10022
February 22, 1996
To our Shareholders:
We enclose a report of our Corporation's operations for the year ended
December 31, 1995. The net asset value per share of the Corporation's
Common Stock as at December 31, 1995 was $7.49, as compared with its net
asset value at December 31, 1994 of $6.20 per share, in both instances
giving effect to the Corporation's distributions to shareholders of $.028
per share paid on August 23, 1995 to shareholders of record at the close of
business on July, 28, 1995, and $.65 per share paid on January 18, 1996 to
shareholders of record at the close of business on December 26, 1995. As at
February 21, 1996 the unaudited net asset value per share was approximately
$7.72.
The past year was an exceptional one for the financial markets with
both stocks and bonds recording returns well above their historical
averages. The S&P 500 Index, which appreciated by 34%, recorded its
largest increase since 1958 and the third largest since World War II.
Following a weak performance in 1994, bond prices recovered sharply in 1995
with yields on long-term Treasury bonds declining approximately 200 basis
points as the economy began to exhibit noticeable signs of weakness.
The economic environment is not expected to materially change in the
near term with most forecasters predicting a continuation of slow GDP
growth in the first half of 1996. Inflation is similarly projected to
remain subdued following a modest 2.5% increase in the Consumer Price Index
in 1995. Federal Reserve policy remains unchanged following three
reductions in the Federal funds rate and one decrease in the discount rate.
Further reductions in short-term interest rates may be required to
stimulate economic growth, although this could ultimately lead to an
increase in inflation. Despite this generally benign climate, we would note
that investor sentiment toward bonds has reached a very bullish level and
the positive factors appear to a large extent already discounted. In our
opinion, a further substantial decline in bond yields from present levels
would require a much weaker economic environment than that currently
envisioned. As a result, we are maintaining short durations on our fixed
income investments.
In addition to the aforementioned decline in interest rates, stock
performance has benefited from the strength in corporate profits, and an
extremely favorable demand/supply condition for equities. With respect to
earnings growth, we expect the rate of increase to diminish going forward
as many of the benefits derived from corporate cost cutting measures have
already been achieved. In addition, continued strength of the U.S. dollar
should slow demand for exports and adversely affect the translation of
foreign earnings for multinational corporations.
The demand for equities has become a very powerful force driving
equity prices higher. Net purchases of equity mutual funds increased to a
record $118 billion in 1995. Moreover, corporate share repurchases and
cash acquisitions, adjusted for new stock issuance, removed approximately
$150 billion of equity value from the market. Given the increased interest
in savings by individuals and the strong flow of capital into 401K and
other employee directed retirement plans, we do not expect these trends to
reverse in the near future. However, the recent pace of these activities
appears unsustainable and, combined with certain speculative excesses that
are now emerging with respect to stock valuations, has caused us to remain
less than fully invested in equities.
As stated above, the net asset value per share of the Corporation's
stock as at December 31, 1995 and as at February 21, 1996 was $7.49 and
$7.72, respectively. As at December 31, 1995 and February 21, 1996 the
closing sales price for shares of the Corporation's Common Stock on the
American Stock Exchange was $6.4375 and $5.875, respectively. Thus, as at
December 31, 1995 and February 21, 1996 the market price for the
Corporation's shares represented discounts of approximately 14% and 24%,
respectively, from the Corporation's net asset values at such dates.
Certain of the Corporation's officers and directors and their
associates may from time to time add to their investments in the
Corporation's Common Stock by open market purchases or in private
transactions. Since January 1, 1995 certain of the Corporation's officer's
and directors and their associates have purchased an aggregate of 1,000
shares of the Corporation's capital stock. Officers and directors of the
Corporation currently own beneficially, directly or indirectly, an
aggregate of 1,859,796 shares (74.4% of the outstanding shares) of the
Corporation's capital stock, not including 101,000 shares (4.04% of the
Corporation's outstanding shares) owned by certain associates of such
persons with respect to which such officers and directors disclaim any
beneficial interest.
Very truly yours,
Wayne S. Reisner
President
Report of Independent
Certified Public Accountants
To the Board of Directors and Shareholders of
Sterling Capital Corporation
We have audited the statement of assets and liabilities of Sterling
Capital Corporation, including the portfolio of investments in securities,
as of December 31, 1995, and the related statement of operations for the
year then ended, and the statement of changes in net assets for the two
years then ended, as well as the supplementary information, included on
page 17, for the five years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. Our procedures included confirmation of
securities owned by correspondence with the custodian and brokers. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. 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 referred to above present
fairly, in all material respects, the financial position of Sterling
Capital Corporation as of December 31, 1995, and the results of its
operations for the year then ended, and the changes in net assets for the
two years then ended, as well as the supplementary information included on
page 17 for the five years then ended in conformity with generally accepted
accounting principles.
STAVISKY, KNITTLE, ISAACS & DICHEK, C.P.A., P.C.
New York, N.Y.
February 22, 1996
<TABLE>
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES
As at December 31, 1995
<CAPTION>
Number of Market Value
Shares (Note A)
<S> <C> <C>
Common and Preferred Stocks - 54.18%
Financial Services and Insurance - 12.78%
Chemical Banking Corporation ................. 7,500 $440,625
Mellon Bank Corp. ............................ 8,000 430,000
American Express Co. ......................... 10,000 413,750
PartnerRe Ltd ................................ 10,000 275,000
Long Island Bancorp .......................... 10,000 263,750
Fleet Financial Group ........................ 5,000 203,750
Norwalk Savings Society * .................... 10,000 190,000
Marsh & McLennan ............................. 2,000 177,500
$2,394,375
Real Estate Investment Trusts - 11.80%
Camden Property Trust ........................ 24,000 $570,000
Capstead Mortgage ............................ 22,500 514,688
Oasis Residential ............................ 20,000 455,000
ROC Communities .............................. 15,000 360,000
General Growth Properties..................... 15,000 311,250
$2,210,938
Telecommunication and Media - 6.78%
Airtouch Communications Corporation *......... 10,000 $281,250
Cellular Technical Services *................. 10,000 232,500
Tele-Communications Int'l *................... 10,000 227,500
News Corp Ltd ADS ............................ 10,000 213,750
Tele-Communications Inc. Liberty Media "A" * 7,500 201,562
Grupo Televisa S.A............................ 5,000 112,500
$1,269,062
* Non-income producing security
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at December 31, 1995
<CAPTION>
Number of Market Value
Shares (Note A)
<S> <C> <C>
Healthcare Products and Services - 4.67%
FoxMeyer Health $4.20 Preferred ...... 10,265 $382,371
Bristol-Myers Squibb Co...................... 3,000 257,625
Mylan Laboratories .......................... 10,000 235,000
$874,996
Publishing - 2.91%
K-III Communications Senior
Exchangeable Preferred ..................... 20,000 $545,000
Construction - 2.68%
Manville Corp. Preferred B .................. 20,000 $502,500
Chemical Products - 2.44%
Rhone Poulenc Overseas LTD 8.125%
Preferred Series A ....................... 10,000 $243,750
Rhone Poulenc S.A. ADR... ................... 10,000 213,750
$457,500
Transportation Services - 1.98%
Ryder System Inc. ........................... 15,000 $371,250
Retail - 1.70%
Carson Pirie Scott & Co. *................... 10,000 $198,750
J C Penny Inc. .............................. 2,500 119,063
$317,813
________________
* Non-income producing security
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at December 31, 1995
<CAPTION>
Number of Market Value
Shares (Note A)
<S> <C> <C>
Food Production - 1.44%
Archer-Daniels-Midland ................... 15,000 $270,000
Technology - 1.39%
Parkervision Inc. * ...................... 33,000 $259,875
Consumer Goods - 1.33%
Kimberly Clark Corp. ..................... 3,000 $248,250
Automotive Products - 0.97%
Goodyear Tire & Rubber Co. ............... 4,000 $181,500
Industrial Products - 0.96%
General Electric ......................... 2,500 $180,000
Miscellaneous Securities - 0.35%
Technology General Corp. * **.......... 292,600 $58,520
Schweitzer-Mauduit Int'l Inc. *........... 300 6,937
$65,457
Total common and preferred stocks (cost $8,461,028)
$10,148,516
________________
* Non-income producing security
</TABLE>
** Investment in a company representing 5% or more of such company's
outstanding voting securities (such company is defined as an "affiliated
company" in Section 2(a)(2) of the Investment Company Act of 1940, as
amended). This investment was purchased on February 7, 1969 at a cost of
$266,000 and is valued at the average of the bid and ask prices in the
over-the-counter market on December 31, 1995.
The accompanying notes are an integral part of these statements
[/TABLE]
<TABLE>
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at December 31, 1995
<CAPTION>
Principal Market Value
Amount (Note A)
<S> <C> <C>
Commercial Paper - 8.01%
General Motors Acceptance Corporation
5.85% due 1/4/1996 .................. $500,000 $500,000
General Electric Capital Corporation
5.79% due 1/8/1996 .................. 500,000 500,000
Ford Financial Services, Inc.
5.76% due 1/12/1996 ................. 500,000 500,000
Total Commercial Paper (cost $1,500,000).. $1,500,000
Corporate Bonds and Notes - 10.96%
Chemical Banking Corporation floating
rate senior note due 3/11/1996 .... $400,000 $403,264
MCO Resources Inc. 7.375%
note due 8/1/1996 (1)............... 63,250 44,275
ADT Operations Inc. 8.25% debenture
due 8/1/2000 ........................ 50,000 158,625
Kroger Co. floating rate note
series B, due 12/15/2000 ........... 75,000 174,563
Ethan Allen, Inc. 8.75% senior note
due 3/15/2001 ..................... 50,000 52,000
Stop and Shop Companies 9.75%
senior subordinated note due 2/1/2002 .. 150,000 164,250
Caesar's World 8.875% senior
subordinated note due 8/15/2002 ........ 200,000 212,500
World Color Press 9.125% senior
subordinated note due 3/15/2003 ....... 200,000 198,250
ADT Operations Inc. 9.25% senior
subordinated note due 8/1/2003 ........ 250,000 267,500
Community Health Systems Inc. 10.25% senior
subordinated debenture due 11/30/2003 . 100,000 108,000
(1) Valued at fair value as determined by the Board of Directors
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at December 31, 1995
<CAPTION>
Principal Market Value
Amount (Note A)
<S> <C> <C>
Kroger Co. 9.75% senior subordinated
debenture due 2/15/2004 .............. $250,000 $270,000
Other.................................... 160
Total corporate bonds and notes
(cost $1,952,488) ................. $2,053,387
U.S. Government Obligations - 7.28%
U.S. Treasury Note 6.125% due 7/31/1996 . $250,000 $251,250
U.S. Treasury Note 6.25% due 8/31/1996 .. 500,000 502,969
U.S. Treasury Note 6.5% due 9/30/1996 ... 300,000 302,625
U.S. Treasury Note 7.5% due 12/31/1996 .. 300,000 306,563
Total U.S. Government Obligations (cost $1,349,915) $1,363,407
Other Investments - 1.35%
Federal National Mortgage Association
Step Up Note 7.0% due 5/24/01 ....... $250,000 $253,170
Total Other Investments (cost $250,000) $253,170
Total Investments (cost $13,513,431) $15,318,480
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
As at December 31, 1995
<CAPTION>
ASSETS
<S> <C>
Investment in securities, at value
(identified cost $13,513,431) (Note A)................ $15,318,480
Cash.................................................... 18,877
Hanover Funds Government Money Market II Fund........... 4,571,567
Investment in real estate (cost $100,000)............... 50,000
Receivables:
Investment securities sold............................ 247,526
Dividends and interest................................ 138,801
Deferred Pension Costs.................................. 86,676
Prepaid Insurance....................................... 7,821
Total assets............................................ $20,439,748
LIABILITIES
Distribution payable to shareholders................... $1,625,000
Payables:
Accrued expenses and other liabilities............... 85,179
Total liabilities...................................... $1,710,179
NET ASSETS
Common Stock, authorized 10,000,000 shares,
outstanding 2,500,000 shares, $1 par value each ..... $2,500,000
Paid in capital........................................ 17,722,718
Excess of distributions over accumulated net investment loss (6,563,534)
Excess of net realized gain on investments over distributions 3,315,336
Unrealized appreciation of investments................ 1,755,049
Net assets............................................ $18,729,569
Net assets per outstanding share...................... $7.49
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<S> <C>
Investment income and expenses:
Interest........................................... $526,085
Dividends.......................................... 415,438
Other income....................................... 27,110
Total income..................................... $968,633
Expenses (Notes C, D and E):
Officers' salaries................................. $257,688
Pension plan....................................... 98,915
Office salaries.................................... 57,093
Payroll taxes, fees and employee benefits ......... 47,097
Directors' fees and expenses....................... 31,099
Equipment rentals.................................. 30,548
Rent and Electric.................................. 28,959
Transfer agent and registrar fees.................. 28,052
Legal, audit and professional fees................. 26,359
Custodian fees and expenses........................ 12,271
American Stock Exchange listing fee ............... 7,500
Miscellaneous...................................... 6,322
Federal, state and local taxes..................... 1,833
Insurance.......................................... 283
Total expenses................................... $634,019
Net investment income................................ $334,614
(continued)
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
STATEMENT OF OPERATIONS-continued
For the year ended December 31, 1995
<CAPTION>
<S> <C>
Net investment income (from previous page).......... $334,614
Net gain/(loss) on investments (Notes A and B):
Realized gain/(loss) from securities transactions:
Long transactions:
Proceeds from sales............................. $12,134,337
Cost of securities sold......................... 10,696,677
Net realized gain from long transactions........ $ 1,437,660
Short sale transactions:
Proceeds from securities sold short ............ $ 436,875
Cost of securities purchased to cover short sales. 454,121
Net realized loss from short sale transactions.. $ (17,246)
Net realized gain............................... $ 1,420,414
Unrealized appreciation (depreciation) of investments:
Beginning of period............................... $ 272,639
End of period..................................... 1,755,049
Net increase in unrealized appreciation........... $ 1,482,410
Net realized and unrealized gain on investments..... $ 2,902,824
Net increase in net assets resulting from operations. $ 3,237,438
The accompanying notes are an integral part of these statements
</TABLE>
<TABLE>
STERLING CAPITAL CORPORATION
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<CAPTION>
Year ended
December 31, December 31,
1995 1994
<S> <C> <C>
From investment activities:
Net investment income ......................... $ 334,614 $ 241,049
Net realized gain/(loss) from securities transactions 1,420,414 (5,111)
Net change in unrealized appreciation (depreciation) 1,482,410 (1,683,197)
Increase (decrease) in net assets derived from
investment activities ........................ 3,237,438 (1,447,259)
Distributions to shareholders (Note F) ........ (1,695,000) (200,000)
Net Assets:
Beginning of year ............................. 17,187,131 18,834,390
End of year.................................... $18,729,569 $17,187,131
The accompanying notes are an integral part of these statements
</TABLE>
STERLING CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
As at December 31, 1995
Note A - Significant Accounting Policies
Sterling Capital Corporation (the "Corporation") (formerly known as
The Value Line Development Capital Corporation) is registered under the
Investment Company Act of 1940, as amended (the "Act"), and is a
diversified, closed-end investment company. The Corporation operates
exclusively as an internally managed investment company whereby its own
officers and employees, under the general supervision of its Board of
Directors, conduct its operations. The following is a summary of
significant accounting policies consistently followed, in all material
respects, by the Corporation in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles.
(1) Security Valuation
Investments in securities traded on a national securities exchange (or
reported on the NASDAQ national market) are valued at the last reported
sales price on the day of valuation; other securities traded in the
over-the-counter market and listed securities for which no sale was
reported on that date are valued at the last quoted bid price, except for
short positions and call options written, for which the last quoted asked
price is used. Investments in real estate are valued at fair value as
determined by the Board of Directors.
(2) Federal Income Taxes
The Corporation's policy is to comply with the requirements of the
Internal Revenue Code of 1986, as amended (the "Code") that are applicable
to regulated investment companies and to distribute substantially all its
taxable income to its shareholders.
The Corporation for the fiscal year ending December 31, 1995 was a
"personal holding company" under the Code, since five or fewer shareholders
own directly or indirectly more than 50% in value of the Corporation's
outstanding stock, and more than 60% of the Corporation's adjusted ordinary
income was "personal holding company income". As a personal holding
company, the Corporation will be subject to penalty taxes unless it
distributes to its shareholders an amount at least equal to its otherwise
undistributed personal holding company income, net of appropriate
deductions applicable thereto. The Corporation did not have any
undistributed personal holding company income for the year ended December
31, 1995. Personal holding company income does not include the excess, if
any, of net realized long-term capital gains over net realized short-term
capital losses, less any Federal income tax attributable to such excess.
The Corporation has considered methods of minimizing the possible tax
impact of being a personal holding company, and if appropriate, will make
sufficient distributions to shareholders so that the Corporation will not
be subject to such penalty tax.
(3) Securities Transactions
Securities transactions are accounted for on the date the securities
are purchased or sold (trade date), dividend income is recorded on the
ex-dividend date and interest income is accrued as earned. Gains and losses
from securities transactions were computed on the identified cost basis.
(4) Distributions to Shareholders
Dividends to shareholders are recorded on the ex-dividend date.
Note B - Securities Transactions
The following summarizes all securities transactions by the
Corporation for the year ended
December 31, 1995:
Purchases (includes $24,850,000 of short term corporate commercial
paper)....... $34,095,121
Sales (includes $23,350,000 of short term corporate commercial paper)
............. $37,638,898
Net gain on investments for the year ended December 31, 1995 was
$2,902,824. This amount represents the net increase in value of investments
held during the period. The components are as follows:
Long transactions ................... $2,925,682
Futures transactions ................ (22,858)
Net gain on investments ............. $2,902,824
Gross unrealized gains and losses in the Corporation's portfolio of
investments amounted to $2,028,968 and $273,919, respectively, as at
December 31, 1995.
Note C - Rent
The Corporation sublets a portion of office space at 635 Madison
Avenue, New York, NY, from Windy Gates Corporation ("Windy Gates"), a
corporation controlled by Walter Scheuer, the Chairman of the Board of
Directors and principal shareholder of the Corporation. The term of the
Windy Gates lease expires on June 30, 2004. The term of the sublease to the
Corporation expires on June 30, 2004. The annual rental obligation of
these premises is being allocated between the Corporation and Windy Gates
on the basis of each such party's use of this space. The Corporation's
current net annual expense for this space is approximately $28,000.
Note D - Other Transactions with Affiliates
Aggregate remuneration paid or accrued by the Corporation for the year
ended December 31, 1995 to certain persons who were "affiliated persons"
within the meaning of the Act, was as follows:
Officers' salaries.............................$257,688
Amount paid or accrued under Pension Plan...... 56,678
Directors' fees................................ 30,000
Incident to the sublease arrangements for office space at 635 Madison
Avenue referred to in Note C above, Mr. Scheuer and the Corporation, have
allocated certain of the expenses incurred in connection with each of such
party's use of various services located thereat, including office equipment
and secretarial, administrative and internal accounting personnel. For the
year ended December 31, 1995, Mr. Scheuer and the Corporation paid or
accrued approximately $325,000 and $90,000, respectively, in connection
with the allocation of expenses incurred with respect to the use of such
services. In addition, during the period certain persons who are also
officers of the Corporation rendered services to Mr. Scheuer personally for
which they received compensation from Mr. Scheuer.
Note E - Pension Plan
The Corporation has a defined benefit pension plan covering
substantially all of its employees', other than Union employees and
part-time employees. The benefits are based on years of service and the
employee's compensation. The Corporation's funding policy is to contribute
annually the maximum amount that can be deducted for Federal income tax
purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned in
the future.
The following table sets forth the plan's funded status and amounts
recognized in the Corporation's statement of assets and liabilities at
December 31, 1995:
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including
vested benefits of $245,307.......................... ($245,968)
Projected benefit obligation for service rendered to date (409,112)
Plan assets at fair value............................ 211,559
Projected benefit obligation in excess of plan assets.. (197,553)
Prior service costs.................................... 47,034
Unrecognized net loss from past experience different from
that assumed and effect of changes in assumptions ..... 87,424
Unrecognized net transition obligation at January 1, 1995,
being recognized over 25 years......................... 115,362
Accrued pension expense.................................. 34,409
Prepaid pension cost included in other assets............ 86,676
Net pension cost for 1995 included the following components:
Service cost - benefits earned during the period......... $52,733
Interest cost on projected benefit obligation............ 28,734
Actual return on plan assets............................. (23,885)
Net amortization and deferral............................. 27,512
Net periodic pension cost................................. $85,094
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 6.0% and 3.0% respectively. The expected
long-term rate of return on assets was 8.0%.
Note F- Distributions to Shareholders
On August 23, 1995 the Corporation paid a cash distribution of $.028
per share to shareholders of record at the close of business on July 28,
1995. The entire amount of the distribution represents a distribution of
"investment company taxable income" to shareholders realized by the
Corporation during 1994 that was not previously distributed to
shareholders. The Corporation believes that the entire amount of the
distribution should be treated as a distribution of "investment company
taxable income" to shareholders and for Federal income tax purposes is
taxable to calendar year shareholders in 1995 even though the distribution
represented "investment company taxable income" realized by the Corporation
during 1994. The Board of Directors determined that the aggregate amount
of the distribution ($70,000) be considered a charge on the Corporation's
books against net investment income. Detailed information with respect to
the distribution has been provided to each shareholder
On January 18, 1996 the Corporation paid a cash distribution of $.65
per share to shareholders of record at the close of business on December
26, 1995. The Corporation believes that the entire amount of the
distribution should be treated as a distribution of net capital gains and
"investment company taxable income" to shareholders and for Federal income
tax purposes was taxable to calendar year shareholders in 1995 even though
the distribution was paid to shareholders in 1996. The Board of Directors
determined that of the aggregate amount of the distribution ($1,625,000),
$300,000 be considered a charge on the Corporation's books against net
investment income and $1,325,000 be considered a charge on the
Corporation's books against net realized gains. Detailed information with
respect to the distribution has been provided to each shareholder.
STERLING CAPITAL CORPORATION
SUPPLEMENTARY INFORMATION
As at December 31, 1995
Selected data for each share of capital stock outstanding throughout each
year:
<TABLE>
Year Ended December 31
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Investment income ..................... $.39 $.38 $.36 $.35 $.34
Expenses .............................. .25 .28 24 .31 .36
Net investment income (loss) .......... .14 .10 .12 .04 (.02)
Distributions of net realized
capital gains ......................... (.53) - (.67) (.96)(1.23)
Distributions of net investment income (.15) (.08) (.15) - -
Net realized gain (loss) and increase
(decrease) in unrealized appreciation.. 1.16 (.68) 1.08 .72 1.67
Net increase (decrease) in net asset value .62 (.66) .38 (.20) .42
Net asset value:
Beginning of period ................ 6.87 7.53 7.15 7.35 6.93
End of period ..................... $7.49 $6.87 $7.53 $7.15 $7.35
Ratio of expenses to average net assets 3.4% 3.8% 3.1% 4.0% 4.7%
Ratio of net investment income (loss) to
average net assets .................... 1.8% 1.3% 1.6% .6% (.3%)
Portfolio turnover (1) ................ 51% 77% 95% 99% 110%
Number of shares outstanding at end
of year (in 000's) ................... 2,500 2,500 2,500 2,500 2,500
</TABLE>
<F1>
(1) The portfolio turnover for December 31, 1991 has been restated to give
effect, in the calculation, to the exclusion of certain investments
expiring in less than one year from the date of purchase.
