SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by 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 to ss. 240.14A-11(c) or ss. 240.14a-12
BDI Investment Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
BDI INVESTMENT CORPORATION
Notice is hereby given that the Annual Meeting of Stockholders of BDI
Investment Corporation will be held at the offices of the Company, 990 Highland
Drive, Suite 100, Solana Beach, California on Friday, October 22, 1999 at 11:00
in the forenoon for the following purposes:
1. To elect three (3) directors for the ensuing year.
2. To ratify the selection of Lavine, Lofgren, Morris & Engelberg
certified public accountants, as the Company's auditors for
fiscal 2000.
3. To consider and act upon other matters which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on August 16,
1999 as the date of determining the stockholders of record entitled to receive
notice of, and to vote at, the Annual Meeting. Whether or not you expect to be
present you are requested to complete and sign the enclosed proxy and return it
in the stamped envelope provided. Stockholders who are present at the meeting
may revoke their proxies and vote in person.
By Order of the Board of Directors
BDI INVESTMENT CORPORATION
/s/Donald Brody
Donald Brody
Secretary
Solana Beach, CALIFORNIA
August 31, 1999
<PAGE>
BDI INVESTMENT CORPORATION
PROXY STATEMENT
The following statement is furnished in connection with the
solicitation by the board of directors of BDI Investment Corporation, 990
Highland Drive, Suite 100, Solana Beach, CA 92075, a New Jersey corporation
(hereinafter called the "Company"), of proxies to be used at the Annual Meeting
of Stockholders of the Company to be held at the offices of the Company on
Friday, October 22, 1999 at 11:00 in the forenoon, and at all adjournments
thereof. The Company is registered pursuant to Section 8(b) of the Investment
Company Act of 1940 as a closed end diversified investment company. This Proxy
Statement and the enclosed form of proxy are being sent or given to stockholders
on or about August 31, 1999.
Proxies and Voting at the Meeting
The Board of Directors has fixed the close of business on August 16,
1999 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting and, accordingly, only
stockholders of record at the close of business on that date will be entitled to
receive notice of and to vote at said meeting. At the close of business on the
record date, there were outstanding and entitled to vote at the meeting
1,421,551 shares of the Company's Common Stock which were held of record by 209
stockholders. Each share is entitled to one vote. A majority of the shares of
Common Stock voting at the meeting is required for the approval of each matter
being submitted to a vote of stockholders.
A form of proxy is enclosed for use at the meeting if a stockholder is
unable to attend in person. The proxy may be revoked at any time before it is
exercised if a stockholder notifies the secretary of the meeting, in writing, of
a desire to revoke or by attending the meeting and voting in person. All shares
represented by valid proxies pursuant to this solicitation (and not revoked
before they are exercised) will be voted for the proposals described in this
Proxy Statement. In the event a stockholder specifies a different choice by
means of the proxy, that stockholder's shares will be voted in accordance with
such specification.
The entire cost of soliciting these proxies will be borne by the
Company. In following up the original solicitation of the proxies by mail, the
Company will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy material to the beneficial
owners of the stock and may reimburse them for their expense in so doing. If
necessary, the Company my also use its Secretary and his assistants to solicit
proxies from the stockholders, either personally or by telephone or special
letter.
<PAGE>
Principal Stockholders
The only person or entity that owns of record, or that is known by the
Company to own beneficially, more than five (5) percent of the outstanding
voting securities of the Company is Arsobro, L.P. Its holdings as of August 16,
1999 were as follows:
Shares of Common
Stock Owned
Names and Address of Beneficially as of Percent of
Stockholders August 16, 1999 Class
- ------------ --------------- -----
Arsobro, L.P. 1,316,957 92.64%
990 Highland Drive
Solana Beach, California
- ---------------
(1) Arthur Brody generally possesses the sole power to vote and to make
investment decisions with respect to all of the shares beneficially
owned by the Arsobro, L.P. By virtue of his beneficial ownership of
such shares, Mr. Brody is a "control person" of the Company.
DESIGNATION OF INVESTMENT
ADVISER, PAYMENT OF
BROKERAGE COMMISSIONS
All investment decisions for the Company are made by Arthur Brody. Mr.
Brody is the principal partner of the principal shareholder of the company and
is the company's chairman and chief executive officer. Mr. Brody does not
receive a salary for his services in selecting investments and managing the
Company's investment portfolio. The Company has not entered into in the past and
does not now intend during the coming fiscal year to enter into a contract with
any person or firm to serve as an investment adviser.
During the fiscal year ended July 3, 1999 the Company's investment
portfolio consisted largely of tax exempt notes and bonds. Tax exempt
obligations are purchased and sold by municipal securities dealers on a
principal basis. No separately identifiable commission is paid.
In effecting trades, the Company utilizes municipal securities dealers
with a national reputation and expertise in trading tax exempt securities. The
Company selects dealers who, in the judgement of management, are able to execute
orders on an expeditious basis and at the best obtainable price. The providing
of research or other services to the Company is not a factor affecting the
selection of a municipal securities dealer.
<PAGE>
PROPOSAL 1
ELECTION OF THREE DIRECTORS
The Bylaws of the Company provides that the number of directors shall
be not less than three and no more than eleven members. By resolution the Board
of Directors has fixed the number of directors at three. Therefore, three
directors are to be elected to serve a term of one year and thereafter until
their respective successors shall have been elected and shall have qualified.
Unless a stockholder either indicates "authority withheld" on his/her proxy or
indicates on his/her proxy that his/her shares should not be voted for certain
nominees, it is intended that the person named in the proxy will vote for all of
the nominees listed below. Discretionary authority is solicited to vote for the
election of a substitute for any of said nominees, who, for any reason presently
unknown, cannot be a candidate for election. Three of the Company's present
directors intend to stand for reelection. Each nominee has consented to being
named in the Proxy Statement and to serve if elected.
During the fiscal year ended July 3, 1999 the Board of Directors held
three regular meetings. All of the Company's directors were present for all
three meetings. The Board of Directors does not have standing audit, nominating
or compensation committees or committees performing similar functions. The board
held special telephonic board meetings on August 24, 1998 and June 29, 1999 at
which all directors participated by conference call.
The following table sets forth the names of the three nominees for
election to the Board of Directors, the principal occupation or employment of
each nominee during the last five years, the principal business of the
organization in which said occupation or employment is carried on, the age of
each nominee, the period during which each nominee has served as a director of
the Company, the expiration date of the term for which each nominee has been
nominated, and the approximate number of shares and percentage of the class of
Common Stock of the Company beneficially owned by each nominee as of August 16,
1999. All nominees are presently serving as directors of the Company.
<PAGE>
<TABLE>
<CAPTION>
Owned
Position and Office with Beneficially
Company and Other Director Expiration as of Percentage
Name Principal Occupation Age Since of Term 8/16/99 (1) of Class
---- -------------------- --- ----- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Arthur Brody Chairman of the Board of 79 1958 10/2000 1,316,957 (2) 92.64
Directors, President and
Chief Executive Officer of
the Company. Also serves as
Chairman and Chief Executive
Officer of Brodart Co.
(Library services and
retail book stores.)
Edward L. Kane Independent Consultant; 61 1990 10/2000 600 0.04
Adjunct Professor,
California Western School
of Law; Chairman and CEO of
Altis Outpatient Services,
Inc. 1993 thru 1/95; President
of Craig Corporation from 1988
to 1993; President of Reading
Company from 1991 to 1993;
Director since 1989.
Michael Stolper President, Stolper and Company, 53 1986 10/2000 250 0.01
Inc. (pension consulting firm
which is a registered investment
advisor); member of Board of
Directors of Meridian Fund
(registered investment company),
1983 to present; Director and
shareholder of Aster Capital
Management (registered investment
advisor); and Director of Janus
Capital (registered investment
advisor).
</TABLE>
- ------------------
*Arthur Brody and Sophie Brody may be deemed to be interested persons of the
Company as that term is defined in Section 2(a)(19) of the Investment Company
Act of 1940 by virtue of their owning in excess of five (5) percent of the
Company's Common Stock.
(1) As of August 16, 1999, the only officer of the Company nominated herein
who owned beneficially shares of the Company's Common Stock was Arthur
Brody. (1,316,957 shares in the aggregate representing 92.64% of the
outstanding Common Stock).
(2) For a description of the nature of the beneficial ownership of Arthur
and Sophie Brody, see footnotes (1) to the "Principal Stockholders"
chart.
(3) Mr. Kane and Mr. Stolper are the only nominees to the Company's Board
of Directors who are directors of another company with a class of
securities registered pursuant to Section 12 of the Securities and
Exchange Act of 1934, or any company subject to Section 15(d) of that
Act or registered as an investment company under the Investment Company
Act of 1940.
(4) Although Stolper and Company, Inc., is a registered investment adviser,
Mr. Stolper does not provide investment advice to the Company other
than in his capacity as a board member and does not receive any fees or
compensation other than regular fees paid to all non-officer board
members.
<PAGE>
Remuneration of Officers and Directors
During the fiscal year ended July 3, 1999, no officer or director of
the Company received any direct or contingent form of remuneration other than
fees paid to all non-officer directors.
Non-officer directors presently receive an annual director's fee of
$5,000, plus $500 for each meeting of the Board which they attend.
The Company does not presently maintain any stock option plan, pension
plan or profit sharing plan for officers or employees.
PROPOSAL 2
SELECTION OF INDEPENDENT AUDITORS
Lavine, Lofgren, Morris & Engelberg, certified public accountants, has
been selected and approved by the Board of Directors to examine and report on
the accounts of the Company for the fiscal year ending July 2, 2000. That firm
conducted the audit of the Company's accounts for the 1999 fiscal year.
A representative of Lavine, Lofgren, Morris & Engelberg is not expected
to be present at the Annual Meeting of Stockholders on October 22, 1999.
Therefore, a representative will not have an opportunity to make a statement at
the meeting, and is not expected to be available to respond to questions from
stockholders.
Section 32(b) of the Investment Company Act or 1940 requires that the
selection of accountants by the Company's Board of Directors be ratified at the
Annual Meeting of Stockholders. Accordingly, stockholders are being asked to
ratify the selection of Lavine, Lofgren, Morris & Engelberg as the Company's
independent auditors for the fiscal year ending July 2, 2000.
<PAGE>
OTHER MATTERS
At the time this Proxy Statement was mailed to stockholders, the Board
of Directors was not aware that any matter other than those referred to in the
form of proxy would be presented for action at the meeting. If any other matters
properly come before the meeting, it is intended that the shares represented by
proxies will be voted with respect to those matters in accordance with the best
judgement of the persons voting them. The proxies will be effective at any
adjournment of the Annual Meeting. Provided a quorum is present in person or by
proxy, the Company does not intend to adjourn the meeting, even if an
insufficient number of affirmative votes is received with respect to any
proposal.
NOTICE REGARDING FILING OF SHAREHOLDER
PROPOSALS AT 2000 ANNUAL MEETING
As required by the Rules of the Securities and Exchange Commission, the
Company hereby notifies all stockholders that if a stockholder intends to
present a proposal at the 2000 Annual Meeting of Stockholders, the proposal must
be received by the Company in writing no later than April 15, 2000 in order for
such proposal to be eligible for inclusion in the Company's Proxy Statement and
form of proxy for next year's meeting.
<PAGE>
ANNUAL REPORT
A copy of the Company's annual report for the fiscal year ended July 3,
1999, including financial statements, is being sent along with this Proxy
Statement for review by the stockholders. The annual report is not to be
regarded as proxy soliciting material or as a communication by means of which
any solicitation is to be made. Additional copies of the Annual Report may be
obtained by writing to BDI Investment Corporation, 990 Highland Drive, Suite
100, Solana Beach, California 92075, Attention: Mr. Arthur Brody, Chairman.
By Order of the Board of Directors
/s/Donald Brody
Donald Brody
Secretary
August 31, 1999
<PAGE>
BDI INVESTMENT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 22, 1999
The undersigned hereby appoints ARTHUR BRODY attorney and proxy, with
power of substitution, to vote for and on behalf of the undersigned at the
annual meeting of stockholders of the Company to be held on October 22, 1999 and
at any adjournment thereof, upon matters properly coming before the meeting, as
set forth in the Notice of Meeting and Proxy Statement, both of which have been
received by the undersigned. Without otherwise limiting the general
authorization given hereby, said attorney and proxy is instructed to vote as
follows:
(1) Election of the Board's nominees for Directors. (The Board of
Directors recommends a vote "FOR".)
_______ FOR all nominees listed below (except as marked to the contrary below).
_______ WITHHOLD AUTHORITY to vote for nominees listed below.
Nominees: Arthur Brody, Edward L. Kane and Michael Stolper
INSTRUCTION: To withhold authority to vote for any one or more nominees, write
the name(s) of such nominee(s) in the space provided below:
(2) Ratification of the selection of Lavine, Lofgren, Morris &
Engelberg, certified public accountants, as the Company's independent auditors
for fiscal 2000. (The Board of Directors recommends a vote "FOR")
____ FOR ____ AGAINST ____ ABSTAIN
(Continued and to be signed on reverse side)
<PAGE>
(3) Upon all such other matters as may properly come before the meeting
and/or any adjournment thereof, as they in their discretion may determine. The
Board of Directors is not aware of any other matters.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED ON THIS PROXY, THIS
PROXY WILL BE VOTED FOR ALL OF THE BOARD'S NOMINEES AND FOR THE RATIFICATION OF
LAVINE, LOFGREN, MORRIS & ENGELBERG AS THE COMPANY'S INDEPENDENT AUDITORS.
Please sign exactly as DATED: _____________________________________
your name appears on your
stock certificate. Give
full title if any attorney,
executor, administrator,
trustee, Guardian, etc. SIGNATURE: _________________________________
For each account in the PRINT NAME: ________________________________
name of two or more
persons, each should Please sign this proxy and
sign, or if one signs return it promptly whether
he/she should attach or not you expect to attend
evidence of his/her the meeting. You may
authority. nevertheless vote in person
if you do attend.
<PAGE>
BDI INVESTMENT CORPORATION
FINANCIAL STATEMENTS
For the Year Ended July 3, 1999
(with auditor's report thereon)
<PAGE>
BDI INVESTMENT CORPORATION
TABLE OF CONTENTS
For The Year Ended July 3, 1999
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REPORT OF INDEPENDENT AUDITORS
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FINANCIAL STATEMENTS
Statement of Assets and Liabilities
Schedule of Portfolio Investments
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Financial Highlights
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Corporate Data
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<PAGE>
Lavine, Lofgren, Morris & Engelberg, LLP
Certified Public Accountants
4180 La Jolla Village drive
Suite 300
La Jolla, California 92037
Phone (619) 455-1200
Fax (619) 455-0898
E-Mail [email protected]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
BDI Investment Corporation
Solana Beach, California
We have audited the accompanying statement of assets and liabilities of BDI
Investment Corporation including the schedule of portfolio investments as of
July 3, 1999, the related statement of operations for the year then ended and
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights of BDI Investment Corporation for each of the three years in the
period ended, ended June 28, 1997, were audited by other auditors whose report
dated July 28, 1997, expressed an unqualified opinion on those financial
highlights.
We conducted our audit 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 financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of investments owned
as of July 3, 1999 by correspondence with the custodian and brokers. 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 financial highlights referred to
above present fairly, in all material respects, the financial position of BDI
Investment Corporation as of July 3, 1999, the results of its operations for the
year then ended, changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the two years in the
period then ended, in conformity with generally accepted accounting principles.
/s/Lavine, Lofgren, Morris & Engelberg, LLP
August 3, 1999
<PAGE>
BDI INVESTMENT CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
July 3, 1999
- --------------------------------------------------------------------------------
ASSETS AND LIABILITIES
Assets:
Investments, at value (cost: $13,597,000) .................. $14,154,000
Cash and cash equivalents .................................. 149,000
Interest receivable ........................................ 182,000
-----------
Total assets ....................................... 14,485,000
-----------
Liabilities:
Investment securities purchased ............................ 119,000
Payable to affiliate ....................................... 13,000
Accrued expenses ........................................... 8,000
Dividend payable ........................................... 343,000
-----------
Total liabilities .................................. 483,000
-----------
NET ASSETS
Net assets ....................................................... $14,002,000
===========
Net asset value per share (based on 1,421,551 shares outstanding) $ 9.85
===========
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
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Value at
Issuer and Title of Issue Par Value Year End
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California Tax Exempt Bonds
Anaheim, California; Water Revenue; .................. $100,000 $107,000
6.000%; July 1, 2003
Associated Bay Area Government; ...................... 100,000 100,000
Certificate of Participation;
5.900%; October 1, 1999
Associated Bay Area Government; ...................... 255,000 261,000
Certificate of Participation;
6.100%; October 1, 2000
Bakersfield, California; Public Financing ............ 200,000 208,000
Authority Revenue; Series A; 5.800%;
September 15, 2006
Banning, California; Community ....................... 105,000 109,000
Redevelopment Agency; 7.000%;
March 1, 2020
Berkeley California Unified School ................... 40,000 38,000
District; Refunding Unlimited Tax;
5.000%; August 1, 2017
Buena Park, California; Community .................... 265,000 265,000
Redevelopment Agency; 6.300%;
September 1, 1999
California Educational Facilities Authority .......... 135,000 150,000
Revenue Refunding, Harvey Mudd
College; 6.050%; December 1, 2008
California Health Facilities Financing ............... 100,000 105,000
Authority Revenue, AIDS
Healthcare Foundation; 5.900%
September 1, 2002
California Health Facilities Financing ............... 200,000 214,000
Authority Revenue, AIDS
Healthcare Foundation; 6.000%
September 1, 2003
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
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Value at
Issuer and Title of Issue Par Value Year End
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California Health Facilities Financing ............... $ 25,000 $ 26,000
Authority Revenue, Henry
Mayo Newhall; 7.700%; October 1, 2003
California Health Facilities Financing ............... 100,000 97,000
Authority Revenue, Stanford Healthcare;
5.000%; November 15, 2013
California Health Facilities Financing ............... 50,000 51,000
Authority Revenue, Kaiser
Permanente; Series A; 7.000%;
October 1, 2008
California Housing Finance Agency .................... 175,000 173,000
Revenue; Home Mortgage; Series F;
5.200%; February 1, 2013
California Housing Finance Agency .................... 25,000 27,000
Revenue, Home Mortgage; Series C;
6.250%; February 1, 2006
California; State Public Works Board; ................ 125,000 125,000
Lease; California State University;
5.000%; October 1, 2010
California; State Public Works Board; ................ 100,000 94,000
Lease; Department of Forestry and Fire;
4.700%; October 1, 2014
California; State Public Works Board; ................ 150,000 160,000
Lease; Long Beach and
San Luis Obispo Series B; 5.600%;
April 1, 2006
California; State Public Works Board; ................ 100,000 107,000
Series 1991 A; Lease Revenue Bonds,
Department of Correction; 6.400%;
September 1, 2008
California; Statewide Community ...................... 425,000 442,000
Development Certificate of Participation,
San Gabriel Valley, 5.375%;
September 1, 2007
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
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Value at
Issuer and Title of Issue Par Value Year End
- --------------------------------------------------------------------------------
Carlsbad, California; Improvement Board; ............. $ 95,000 $ 95,000
Act 1915; District 97-1; 5.450%;
September 2, 2010
Carlsbad, California; Improvement Board; ............. 95,000 95,000
Act 1915; District 97-1; 5.350%;
September 2, 2009
Compton, California; Community ....................... 100,000 100,000
Redevelopment Agency;
Walnut Industrial Series B;
7.700%; August 1, 1999
Compton, California; Community ....................... 325,000 331,000
Redevelopment Agency;
Walnut Industrial Series B;
7.800%; August 1, 2001
Contra Costa County, California; ..................... 100,000 110,000
CTFS PTRN; 6.200%; August 1, 2008
Contra Costa County, California; ..................... 165,000 180,000
CTFS PTRN; Merrithew Memorial
Hospital Replacement Project;
6.400%; November 1, 2005
Corona, California; Single Family .................... 35,000 37,000
Mortgage Revenue Service; 5.500%;
November 1, 2010
Duarte, California; Redevelopment .................... 100,000 105,000
Agency; Tax Allocation; 5.950%;
September 1, 2004
East Municipal Water & Sewer ......................... 250,000 259,000
District of California; 5.375%;
July 1, 2013
Emeryville, California; Public Financing ............. 340,000 357,000
Authority; Revenue Bond;
5.700%; September 1, 2007
Escondido, California; Multi-Family .................. 75,000 78,000
Housing Revenue; FNMA; 5.250%;
January 1, 2005
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
- --------------------------------------------------------------------------------
Value at
Issuer and Title of Issue Par Value Year End
- --------------------------------------------------------------------------------
Escondido, California; Multi-Family .................. $ 75,000 $ 78,000
Housing Revenue; 5.400%; FNMA;
July 1, 2007
Inyo County, California; CTFS PARTN; ................. 175,000 171,000
County Jail; 5.000%; February 1, 2011
Loomis, California; Unified School ................... 200,000 206,000
District; CTFS PARTN; 6.375%;
March 1, 2009
Los Angeles County, California; ...................... 50,000 51,000
Multi-Family Housing Revenue;
FHA; 7.300%; July 20, 2011
Lynwood, California; Public Financing ................ 250,000 269,000
Authority; Lease Revenue; 6.000%;
September 1, 2012
Metro Water District R.G.O.; ......................... 225,000 226,000
5.250%; March 1, 2022
Metro Water District; Waterworks ..................... 500,000 518,000
Revenue; 5.400%; July 1, 2010
Metro Water District; Waterworks ..................... 50,000 51,000
Revenue; 5.500%; July 1, 2019
Metro Water District; Waterworks ..................... 600,000 621,000
Revenue; 5.500%; July 1, 2013
Metro Water District; Waterworks ..................... 350,000 340,000
Revenue; 5.000%; July 1, 2020
Mid-Peninsula Regional Open .......................... 150,000 169,000
Space District; 6.950%;
September 1, 2008
Montclair, California; Redevelopment ................. 20,000 23,000
Agency; Residential Mortgage Revenue;
7.750%; October 1, 2011
Montebello, California; Community .................... 100,000 99,000
Redevelopment Agency; 5.150%
September 1, 2012
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
- --------------------------------------------------------------------------------
Value at
Issuer and Title of Issue Par Value Year End
- --------------------------------------------------------------------------------
Oakland, California; YMCA; ........................... $125,000 $132,000
7.400%; June 1, 2010
Palmdale, California; Single ......................... 45,000 51,000
Family Mortgage Revenue;
7.000%; September 1, 2011
Placer County, California Water Agency; .............. 600,000 627,000
Revenue; Certificate of Participation;
5.500%; July 1, 2010
Pleasanton, California; CTFS Partnership; ............ 145,000 156,000
6.700%; October 1, 2006
Pomona, California; CTFS Partnership; ................ 120,000 121,000
5.600%; August 1, 2011
Redding, California; School District; ................ 40,000 39,000
5.000%; March 1, 2019
Riverside County, California; Asset .................. 235,000 250,000
Leasehold Revenue Hospital;
6.000%; June 1, 2004
Riverside City, California; .......................... 600,000 594,000
Electric Revenue; 5.000%;
October 1, 2013
Rossmoor Community Services .......................... 105,000 108,000
District Improvement Board; 5.800%;
September 2, 2005
Sacramento, California; New Public ................... 50,000 51,000
Housing Authority; 6.000%;
December 1, 2007
San Clemente, California; LTD ........................ 185,000 186,000
Obligation Wastewater Treatment
Plant; 7.900%; September 2, 1999
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
- --------------------------------------------------------------------------------
Value at
Issuer and Title of Issue Par Value Year End
- --------------------------------------------------------------------------------
San Francisco, California; City and .................. $155,000 $162,000
County General Obligation; 6.100%;
June 15, 2007
San Francisco, California; Port ...................... 100,000 105,000
Commission; Revenue; 5.500%;
July 1, 2004
San Francisco, California; New Public ................ 50,000 51,000
Housing Authority; 5.125%; August 1, 2010
San Joaquin, California; Certificate ................. 200,000 213,000
of Participation; General Hospital
Project; 5.900%; September 1, 2003
San Luis Obispo, California; ......................... 100,000 103,000
Water Treatment Plant;
5.375%; June 1, 2008
San Luis Obispo, California; ......................... 105,000 109,000
Water Treatment Plant;
5.500%; June 1, 2009
Sanger, California; Unified School ................... 125,000 126,000
District; 5.350%; August 1, 2015
Santa Clara County, California; ...................... 150,000 149,000
Housing Authority; 4.500%;
November 1, 2007
Santa Maria, California; Redevelopment; .............. 600,000 588,000
5.000%; June 1, 2016
Sierra Unified School District, ...................... 200,000 206,000
California; CTFS PARTN Financing;
5.650%; March 1, 2004
Sonoma, California; Community ........................ 90,000 90,000
Redevelopment Agency, Tax Allocation;
7.900%; August 1, 2014
Tahoe Forest Hospital District, ...................... 250,000 266,000
California; Insured Health Facility
Revenue; 5.850%; August 1, 2004
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
- --------------------------------------------------------------------------------
Value at
Issuer and Title of Issue Par Value Year End
- --------------------------------------------------------------------------------
Tehachapi School District; 6.300%; ................... $600,000 $642,000
August 1, 2021
Temecula Valley Unified School District .............. 100,000 107,000
Financing Project; California; 5.900%;
September 1, 2004
University of California, Revenue Bond, .............. 130,000 140,000
Series B; 5.875%; September 1, 2008
Vallejo, California; Mortgage Revenue; ............... 575,000 587,000
5.650%; May 1, 2027
Westminster City, California; Certificate ............ 335,000 360,000
of Participation - Public Improvement
Project; 5.750%; June 1, 2009
- --------------------------------------------------------------------------------
Total California Tax Exempt Bonds (98.2%) ......... $13,315,000 $13,747,000
================================================================================
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
SCHEDULE OF PORTFOLIO INVESTMENTS
July 3, 1999
- --------------------------------------------------------------------------------
Value at
Issuer and Title of Issue Par Value Year End
- --------------------------------------------------------------------------------
Tax Exempt Bonds
- --------------------------------------------------------------------------------
Puerto Rico Tax Exempt Bonds
Puerto Rico; HFC SFM
Mortgage Revenue;
7.500%; April 1, 2022 ...................... $ 280,000 $ 291,000
Puerto Rico; Housing and
Financial Corporation; GNMA;
7.650%; October 15, 2022 .................... 110,000 116,000
- -------------------------------------------------------------------------------
Total Puerto Rico Tax Exempt Bonds (2.9%) ... 390,000 407,000
- -------------------------------------------------------------------------------
Total Portfolio (101.1%) ....... $13,705,000 $14,154,000
- -------------------------------------------------------------------------------
Excess of liabilities over cash
and other assets (1.1%) ..................... (152,000)
- -------------------------------------------------------------------------------
Net Assets (100%) ...... $14,002,000
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of
the financial statements.
<PAGE>
<TABLE>
<CAPTION>
BDI INVESTMENT CORPORATION
STATEMENT OF OPERATIONS
For the Year Ended July 3, 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Tax-exempt interest ...................................................... $ 788,000
Tax-exempt dividends ..................................................... 4,000
- -------------------------------------------------------------------------------------------
Total income ................................................ $ 792,000
Expenses:
Bookkeeping .............................................................. 27,000
Professional fees ........................................................ 11,000
Directors' fees .......................................................... 13,000
Transfer agent fees ...................................................... 6,000
Other operating expense .................................................. 3,000
- -------------------------------------------------------------------------------------------
Total expenses .............................................. 60,000
- ----------------------------------------------------------------------------------------------------------------
Net investment income ....................................... 732,000
- ----------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Proceeds from sales and bond redemptions ................................. 715,000
Cost of investments sold and redeemed (identified cost basis) ............ (715,000)
Net realized loss on liquidation of partnership interest ................. (23,000)
- -------------------------------------------------------------------------------------------
Net realized loss on investment transactions ................ (23,000)
Net change in unrealized appreciation on investments ..................... (137,000)
- -------------------------------------------------------------------------------------------
Net realized/unrealized loss on investments ................. (160,000)
- ----------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations ..................... $ 572,000
================================================================================================================
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
<TABLE>
<CAPTION>
BDI INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended July 3, 1999 and June 27, 1998
- --------------------------------------------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income .................................................... $ 732,000 $ 723,000
Net realized gain (loss) on investment transactions ...................... (23,000) 13,000
Net change in unrealized appreciation on investments ..................... (137,000) 496,000
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations ..................................................... 572,000 1,232,000
Distributions to shareholders from net investment income ................. (723,000) (771,000)
- --------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ............................. (151,000) 461,000
Net assets:
Beginning of period ...................................................... 14,153,000 13,692,000
- --------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $546,000 - 1999 and
514,000 - 1998) ..................................................... $ 14,002,000 $ 14,153,000
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
BDI INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
July 3, 1999
- --------------------------------------------------------------------------------
NOTE 1
GENERAL
After many years as an operating company, on January 10, 1984, BDI Investment
Corporation ("the Company") filed a Registration Statement on Form N-2 with the
Securities and Exchange Commission to register under the Investment Company Act
of 1940 as a closed-end diversified management investment company. The Company
initiated operations as a regulated investment company on June 30, 1984. The
Company was incorporated under the laws of New Jersey.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year
The Company's fiscal year ends on the Saturday nearest June 30. The fiscal years
ending in 1999 and 1995 reflect a 53 week year and the fiscal years ending in
1998 - 1996 reflect a 52 week year.
Cash Equivalents
Cash equivalents include highly liquid money market funds.
Investments
The investment portfolio consists primarily of tax-exempt bonds which are valued
at the last bid price on the last business day of the period.
Gross unrealized appreciation and depreciation on investments on a federal
income tax basis as of July 3, 1999 were $579,000 and ($22,000), respectively.
The aggregate cost of securities for federal income tax purposes approximates
amortized cost.
<PAGE>
BDI INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
July 3, 1999
- --------------------------------------------------------------------------------
NOTE 2 - CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Recognition
Security transactions are recorded on the trade date. Purchases of securities
are recorded at cost. Any premiums paid or discounts received are recognized in
the determination of realized gain or loss. The Company amortizes bond premiums
and discounts over the life of the bond using the effective yield method.
Purchased interest income is accrued and recorded based upon settlement dates.
The differences between amortized cost and value is reflected as unrealized
appreciation (depreciation) on investments.
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 revenue and expense during the reporting period.
Actual results could differ from estimates.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosure About
Fair Value of Financial Instruments, defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying value of cash, cash
equivalents, interest receivable, investment securities purchased payable,
accrued expenses, dividend payable and payable to affiliate approximate fair
value because of the short maturity of those instruments.
Taxes
The Company has qualified as a Regulated Investment Company under certain
provisions of the Internal Revenue Code beginning with the fiscal year starting
July 1, 1984. Under such provisions, the Company will not be subject to federal
income tax on income which it receives and distributes to its shareholders,
provided that it distributes substantially all such income. As a Regulated
Investment Company, the Company "passes through" to its shareholders the
character of the income which it receives.
<PAGE>
BDI INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
July 3, 1999
- --------------------------------------------------------------------------------
NOTE 2 - CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Distributions
It is the Company's policy to record distributions to shareholders as of the
earlier of the date they are declared by the Board of Directors or the record
date. All dividends declared during the current year represent distributions
from net investment income.
Distributions per share during 1999 consisted of $.25, $.0185 and $.24; and
during 1998 consisted of $.25, $.0523 and $.24 respectively.
NOTE 3
OFF BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK
The Company invests primarily in California state and municipal bonds, most of
which are guaranteed by the state or privately insured. At July 3, 1999, the
value of all municipal bonds was $14,154,000. In addition, the Company's cash
and cash equivalents consist of uninsured deposits with a major broker-dealer.
The Company holds financial instruments with off balance sheet risk in the
normal course of business, specifically relating to bonds with call provisions.
Such bonds are recorded at the market value in the amount of $7,496,000 and
though this is in excess of stated call value of $7,230,000 at year end, the
market value reflects, among other things, the call value risk.
NOTE 4
DIRECTORS' FEES
The Company pays fees and provides expense reimbursement to members of the Board
of Directors who are not officers of the Company. Directors' fees for the year
ended July 3, 1999 were $13,000.
<PAGE>
BDI INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
July 3, 1999
- --------------------------------------------------------------------------------
NOTE 5
RELATED PARTY TRANSACTIONS
The Company pays an affiliate for bookkeeping services. Fees for the year ended
July 3, 1999 were approximately $27,000.
Investment management services are provided to the Company by its chief
executive officer and principal shareholder. The Company's chief executive
officer does not charge fees for these services because he is the majority
shareholder.
NOTE 6
PURCHASES AND SALES OF SECURITIES
For the year ended July 3, 1999, the aggregate cost of security purchases was
$920,000 and the aggregate proceeds from sales or redemptions of securities was
$715,000.
No fees are charged by the securities custodian, a customary practice when
securities transactions occur with that institution.
NOTE 7
INCOME TAXES
For the year ended July 3, 1999, no income tax expense was incurred due to the
Company's qualification as a Regulated Investment Company and the distribution
of substantially all its income for the current fiscal year to its shareholders.
At July 3, 1999, the Company has capital loss carryovers totaling $115,000 which
expire in the years 2000 to 2008.
NOTE 8
NET ASSETS
As of July 3, 1999, net assets consist of:
Preferred stock, without par value: authorized
500,000 shares; issued, none $ --
Common stock, par value $.10 per share: authorized
4,500,000 shares; issued, 1,425,151 143,000
Less treasury stock at cost, 3,600 shares (22,000)
Additional paid-in capital 3,673,000
Accumulated undistributed net investment income 546,000
Accumulated undistributed net realized losses (115,000)
Unrealized appreciation on investments 535,000
Retained earnings at June 30, 1984 9,242,000
------------
$ 14,002,000
============
Retained earnings at June 30, 1984 represents cumulative undistributed earnings
of the Company prior to its qualification as a regulated investment company.
<PAGE>
BDI INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS
For the Years Ended July 3, 1999, June 27, 1998, June 28, 1997,
June 29, 1996 and July 1, 1995
- --------------------------------------------------------------------------------
NOTE 9
CAPITAL STOCK TRANSACTIONS
There were no capital stock transactions for the Company for the years ending
July 3, 1999 and June 27, 1998.
Selected data for one share of common stock outstanding throughout each year
follows (1999 and 1995 are 53 week years, 1998 - 1996 are 52 week years):
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 9.96 9.63 9.34 9.14 9.03
===========================================================================================================================
Income from investment operations:
Net investment income ........ 0.51 0.51 0.53 0.54 0.56
Net realized and unrealized
gain (loss) on investments (0.11) 0.36 0.32 0.16 0.12
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment
operations ........... 0.40 0.87 0.85 0.70 0.68
Less distributions to shareholders:
Distributions from
net investment income ... (0.51) (0.54) (0.56) (0.50) (0.57)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ...... $ 9.85 9.96 9.63 9.34 9.14
===========================================================================================================================
Total return ...................... 4.04% 9.00% 7.81% 7.66% 7.53%
===========================================================================================================================
Net assets, end of period
(in millions) ................ 14.0 14.2 13.7 13.3 12.8
Ratio of expenses to
average net assets ........... .42% .48% .47% .44% 0.50%
Ratio of net investment
income to average net
assets ....................... 5.15% 5.16% 5.60% 5.76% 6.29%
Portfolio turnover ................ 5.06% 6.15% 5.24% 12.92% 15.47%
===========================================================================================================================
Number of shares outstanding
at end of period .................. 1,421,551 1,421,551 1,421,551 1,421,551 1,421,551
</TABLE>
Average commission paid per share for portfolio transactions (*)
* Not applicable, no stocks purchased
<PAGE>
BDI INVESTMENT CORPORATION
CORPORATE DATA
Chairman of the Board of Directors, Arthur Brody
Chief Executive Officer, President
and Treasurer
Director Edward Kane
Director Michael Stolper
Secretary Donald Brody
Counsel Lowenstein, Sandler, Kohl,
Fisher and Boylan
Auditors Lavine, Lofgren, Morris
& Engelberg, LLP
Transfer Agent Registrar and
Transfer Company
Custodian Morgan Stanley Dean Witter
