<PAGE>
- - --------------------------------------------------------------------------------
- - -----------------
BERGSTROM
CAPITAL
CORPORATION
- - -----------------
1995 ANNUAL REPORT
Listed: American Stock Exchange (Ticker symbol: BEM)
Transfer Agent, Registrar and Custodian: State Street Bank and Trust
Company, Boston, Massachusetts
Independent Auditors: Deloitte & Touche LLP, Seattle, Washington
Legal Counsel: Howard, Rice, Nemerovski, Canady, Falk & Rabkin PC,
San Francisco, California
- - --------------------------------------------------------------------------------
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
NOTICE OF IMPORTANT FEDERAL INCOME TAX INFORMATION
It is the presently declared policy of the Board of Directors, which is
subject to review by the Board of Directors from time to time, that in any
year in which the Company is taxed as a regulated investment company all or a
portion of the net long-term capital gains of the Company for such year may be
retained by the Company, and if such gains are retained taxes thereon would be
paid by the Company and appropriate credit therefore allowed to the
stockholders of the Company, all as provided in Section 852(b)(3)(D) of the
Internal Revenue Code. Stockholders of record on December 31 of such year
would be required to include in their income tax returns their share of the
Company's net long-term capital gains retained and take credit for the tax
paid on their behalf by the Company. Stockholders of record on December 31 of
such year should increase the tax basis of their stock by the excess of their
share of the net long-term capital gains retained over the tax paid on their
behalf. On or about February 1 following the end of such year the Company
would send Form 2439, Notice to Shareholders of Undistributed Capital Gains,
to stockholders of record on December 31 of such year. For the years 1980
through 1984, 1986, 1987, 1989, 1991, 1992, 1993 and 1994, the Company
retained all or a portion of the net long-term capital gains realized. For the
years 1985, 1988 and 1990 all of the net long-term capital gains realized were
distributed.
For the year 1995 the Company has retained a portion of the net long-term
capital gains realized ($6.57985 per share) and has paid the federal income
tax thereon ($2.30295 per share) on behalf of its stockholders of record on
December 31, 1995. The Company has sent Form 2439, Notice to Shareholders of
Undistributed Capital Gains, to stockholders of record on December 31, 1995.
If you owned shares on December 31, 1995 registered in the name of a broker or
nominee you should contact the broker or nominee for your copies of Form 2439
which they are required to send to you.
The portion of the net long-term capital gains realized during the year 1995
which was not retained was distributed as a part of the dividend paid on
December 4, 1995.
A Form 1099 was mailed in January 1996 to all stockholders of record on the
dividend record date in 1995 setting forth the specific amounts to be included
in their 1995 tax returns.
NOTICE OF DIVIDENDS PAID DURING THE YEAR 1995
<TABLE>
<CAPTION>
DIVIDEND DIVIDEND FROM
FROM NET LONG-TERM TOTAL
1995 NET CAPITAL GAINS PAYMENTS
PAYMENT INVESTMENT REALIZED IN PER
RECORD DATE DATE INCOME 1995 SHARE
----------- ------- ---------- ------------- --------
<S> <C> <C> <C> <C>
11-16-95 12-4-95 $1.33* $3.67 $5.00
====== ===== =====
</TABLE>
* Includes short-term capital gain of $.32 per share.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
505 Madison Street, Suite 220
Seattle, Washington 98104
January 29, 1996
Dear Fellow Stockholders:
Please refer to the Notice of Important Federal Income Tax Information and
the Notice of Dividends Paid During The Year 1995 in this report regarding the
retention of net long-term capital gains realized in 1995 and details of the
dividend paid in 1995. No predictions can be made as to the amounts of future
dividends since the amount of dividends paid is necessarily dependent on the
Company's future net investment income and other factors.
During the year 1995 the Company's net assets increased from $114,680,269 to
$149,357,224 which is an increase of $34,676,955. This increase in net assets
is after payment by the Company of $5,850,500 in dividends ($5.00 per share on
December 4, 1995). This increase is also after the repurchase of stock during
the year 1995 for $5,164,844. The increase in net assets, before deducting the
payment of dividends and the repurchase of stock, was $45,692,299 which was
composed of net investment income of $1,185,532, realized gain from the sale
of investments of $9,642,002 (after deducting $2,679,941 in income taxes paid
on behalf of stockholders), and an increase in unrealized appreciation of
$34,864,765.
The per share net asset value (based on the number of shares outstanding at
the end of each period) increased from $94.56 on December 31, 1994 to $128.35
on December 31, 1995. After adjustment for the dividends and the federal in-
come tax on net long-term capital gains retained, which tax was paid on behalf
of the Company's stockholders, the per share net asset value increased 43.5%.
The Company's performance for the year 1995 was affected by the increase in
the value of the Company's investment in the securities of Amgen, Inc. Exclud-
ing the value of the Company's investment in the securities of Amgen, Inc.,
the per share net asset value increased 29.2% during the year 1995. During the
same period the Dow Jones Industrial Average, adjusted for dividends, in-
creased 36.9% and the Standard & Poor's 500 Stock Average, adjusted for divi-
dends, increased 37.5%. The per share net asset value on Friday, January 26,
1996 was $127.58.
The value of the Company's investment in securities of Amgen, Inc. has in-
creased since the date of acquisition relative to the Company's other assets,
causing the Amgen, Inc. securities to account for 25.8% of the Company's total
assets on December 31, 1995. The investment of a substantial percentage of the
Company's assets in the securities of a single issuer or industry exposes the
Company to a greater risk of loss resulting from unfavorable price movements
or market conditions relating to such issuer or industry. To help reduce this
risk, the Company has been selling shares of Amgen, Inc. since the third quar-
ter of 1992. On September 30, 1992 the Company owned 1,240,000 shares of
Amgen, Inc. (as adjusted for the 2 for 1 stock split on August 16, 1995). On
December 31, 1995 the Company owned 660,000 shares of Amgen, Inc. This is a
reduction of 46.8% since September 30, 1992.
On October 29, 1987 the Company's Board of Directors authorized the Company
to purchase, on the American Stock Exchange, up to 83,700 shares of its capi-
tal stock at market prices not in excess of the then current net asset value
per share. During the first half of 1995 the Company purchased the remaining
300 shares of its capital stock under this authorization.
On January 24, 1994 the Company's Board of Directors authorized the Company
to purchase, on the American Stock Exchange, up to 62,500 shares of its capi-
tal stock at market prices not in excess of the then current net asset value
per share. This authorization is in addition to the 1987 authorization dis-
cussed above. During the year 1995 the Company purchased 48,800 shares of its
capital stock under this authorization. As of December 31, 1995 the Company
had 13,700 shares remaining under this authorization.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
During the year 1995 the Company had total interest and dividend income of
$2,293,547 as compared to $2,442,567 for the year 1994 for a decrease of
$149,020. During the year 1995 operating expenses were $1,108,015 which is a
$146,381 increase from $961,634 for the year 1994. The resulting net invest-
ment income of $1,185,532 for the year 1995 is a decrease from $1,480,933 for
the year 1994. This resulted in a decrease to $.99 per share versus $1.22 per
share.
During the fourth quarter the following changes were made in the Company's
portfolio of common stocks and convertible securities.
SHARES PURCHASED OR ACQUIRED
<TABLE>
<CAPTION>
<S> <C>
15,000 Air Touch Communications, Inc.
12,000 Alco Standard Corp. (1)
16,800 Allergan, Inc.
1,000 Barnes & Noble, Inc.
4,000 Block (H&R), Inc.
127,500 Boole & Babbage, Inc. (2)
3,500 Cabletron Systems, Inc.
7,100 Cooper and Chyan Technology
2,900 Donaldson Lufkin & Jenrette
9,000 Dreyers Grand Ice Cream, Inc.
13,940 Lilly Eli & Co. (3)
14,000 Ericsson L M Tel Co ADR
2,900 Estee Lauder
30,000 Federated Department Stores, Inc.
25,840 Fritz Companies, Inc. (4)
6,000 Grace (W.R.) & Co.
18,000 Hannaford Bros. Co.
5,000 Hewlett Packard Co.
2,000 Host Marriott Corp.
4,000 International Business Machines
5,000 Johnson & Johnson
11,700 Kimberly Clark Corp. (5)
21,000 Loral Corp. (6)
83,322 Manpower, Inc. (7)
3,000 Microsoft Corp.
6,000 PMI Group, Inc.
5,000 Pepsico, Inc.
12,000 Pharmacia & Upjohn, Inc.
1,517 RCM Growth Equity Fund, Inc. (8)
8,250 RPM, Inc. Ohio (9)
8,000 SGS Thomson Microelectronics
10,000 Snap-On, Inc.
3,000 Vodafone Group PLC Sponsored ADR
</TABLE>
SHARES OR PRINCIPAL AMOUNT SOLD
<TABLE>
<CAPTION>
<S> <C>
3,000 Abbott Laboratories
14,000 Alco Standard Corp. (1)
11,000 Amoco Corporation
5,000 Barnes & Noble, Inc.
15,000 CBS, Inc.
8,000 Coca-Cola Bottling Co. Consolidated
7,100 Cooper and Chyan Technology
600 Disney (Walt) Co.
2,900 Donaldson Lufkin & Jenrette
25,000 Ericsson L M Tel Co ADR Rights, Expiring 10/26/95
2,900 Estee Lauder
5,638 Guidant Corp.
5,000 Hewlett Packard Co.
22,000 Hormel Foods Corp.
1,500,000 Manpower, Inc., 6.25% Conv. Sub. Deb. due 10/01/2002 (7)
2,000 Manpower, Inc. (7)
56,000 RPM, Inc Ohio (9)
20,000 SBC Communications, Inc.
15,000 Scott Paper Co. (5)
8,000 Smithkline Beecham Units-ADR
7,000 Talbots, Inc.
</TABLE>
(1) Received 12,000 shares as 2 for 1 split and then sold 14,000 shares.
(2) Received as a 3 for 2 split.
(3) Received as a 2 for 1 split.
(4) Received as a 2 for 1 split.
(5) 11,700 shares of Kimberly Clark Corp. were received in exchange for
15,000 shares of Scott Paper Co. in a merger.
(6) Received as a 2 for 1 split.
(7) Purchased 2,000 shares and then exchanged $1,500,000 Manpower, Inc.,
6.25% Conv. Sub. Deb. due 10/01/2002 for 81,322 shares of Manpower,
Inc. common stock and then sold 2,000 shares.
(8) Received under a dividend reinvestment program.
(9) Sold 39,000 shares and then received 8,250 shares as a 5 for 4 split
and then sold 17,000 shares.
Note--The cost basis of Convertible Holdings, Inc. Capital Shares was in-
creased by $144,685 for the long-term capital gains retained less the
federal income tax paid thereon.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
RCM Capital Management ("RCM"), one of the Company's subadvisers, has agreed
to be acquired by Dresdner Bank AG, a German bank. RCM has informed the Com-
pany that RCM's day-to-day operations will not be affected by the acquisition
and that the individuals who are primarily responsible for the management of
the RCM portion of the Company's portfolio will remain the same. The transac-
tion is currently expected to close in mid-1996 and is subject to a number of
contingencies. The Company intends to seek Board of Directors and stockholder
approval of a new management agreement with RCM prior to the closing of the
transaction.
The Company does not have a dividend reinvestment program. The Company has
considered this over the years and has determined that the cost of such a pro-
gram would not be commensurate with the benefit. The Company's policy of re-
taining all or a portion of the net long-term capital gains in certain years
accomplishes some of the same goals as would a dividend reinvestment program.
The Company's shares of capital stock are traded on the American Stock Ex-
change and are identified by the stock ticker symbol BEM. The net asset value
per share as of Friday's close of business is published each Saturday in
Barrons and each Monday in the Wall Street Journal, the New York Times and
certain other publications under "Closed-End Funds."
Your Company welcomes questions or comments from stockholders. If you wish
to communicate with the Company's transfer agent, State Street Bank and Trust
Company, the address is P.O. Box 8200, Boston, Massachusetts 02266 and the
telephone number is 1-800-426-5523.
Yours very truly,
/s/ William L. McQueen
William L. McQueen
President
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at value (see accompanying schedule) (Note 1):
Short-term investments (cost $4,059,744) $ 4,059,744
Common stocks (cost $72,375,038) 147,636,825
------------
TOTAL INVESTMENTS (cost $76,434,782) 151,696,569
Cash 5,939
Receivable for securities sold 145,560
Interest and dividends receivable 258,801
Other assets 7,806
------------
TOTAL ASSETS 152,114,675
------------
LIABILITIES:
Advisory fee payable (Note 5) 73,268
Payable for securities purchased 65,996
Federal income tax payable (Note 2) 2,602,034
Other accrued expenses 16,153
------------
TOTAL LIABILITIES 2,757,451
------------
NET ASSETS applicable to 1,163,700 outstanding shares of capi-
tal stock equivalent to $128.35 per share on December 31, 1995
(Note 3) $149,357,224
============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,185,532 $ 1,480,933
Realized gain on investments 9,642,002 7,397,310
Increase (decrease) in unrealized appreciation 34,864,765 (4,741,339)
------------ ------------
Net increase in net assets resulting from opera-
tions 45,692,299 4,136,904
DIVIDENDS TO STOCKHOLDERS ($5.00 PER SHARE--1995;
$4.00 PER SHARE--1994) (5,850,500) (4,851,200)
COST OF SHARES OF BERGSTROM CAPITAL CORPORATION
STOCK
PURCHASED (49,100 SHARES--1995; 24,300 SHARES--
1994) (5,164,844) (2,209,148)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 34,676,955 (2,923,444)
NET ASSETS, BEGINNING OF PERIOD 114,680,269 117,603,713
------------ ------------
NET ASSETS, END OF PERIOD $149,357,224 $114,680,269
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 649,273
Dividends 1,644,274
-----------
TOTAL INCOME 2,293,547
-----------
EXPENSES:
Advisory fees (Note 5) 800,692
Legal fees 104,507
Auditing fees 42,900
Stockholders' meeting and reports 14,037
Transfer agent fees and expenses 35,317
Custodian fees 33,118
Directors' fees and expenses 38,095
Fee for shares listed on American Stock Exchange 7,000
State and other taxes 16,654
Other 15,695
-----------
TOTAL EXPENSES 1,108,015
-----------
NET INVESTMENT INCOME ($.99 PER SHARE) (NOTES 2 AND
8) 1,185,532
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on investments (excluding short-term
investments):
Proceeds from sales $41,249,053
Cost of securities sold 28,927,110
-----------
Realized gain before provision for income taxes 12,321,943
Provision for income taxes (Note 2) 2,679,941
-----------
Realized gain on investments (Notes 2 and 4) 9,642,002
Unrealized appreciation of investments:
Beginning of period 40,397,022
End of period 75,261,787
-----------
Increase in unrealized appreciation 34,864,765
-----------
NET GAIN ON INVESTMENTS ($37.16 PER SHARE) (NOTES 2
AND 8) 44,506,767
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERA-
TIONS $45,692,299
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT COST VALUE
<C> <S> <C> <C>
SHORT-TERM INVESTMENTS (2.7%):
$ 2,062,000 State Street Bank and Trust Company,
4.75% Euro-Dollar Deposit due 1/02/96 $ 2,062,000 $ 2,062,000
2,000,000 General Motors Acceptance Corp., 5.80%
Note due 1/08/96 1,997,744 1,997,744
----------- ----------- ------------
$ 4,062,000 TOTAL -- SHORT-TERM INVESTMENTS 4,059,744 4,059,744
=========== ----------- ------------
COMMON STOCKS (97.3%):
ADVERTISING (0.8%):
27,500 Interpublic Group Of Companies, Inc. 851,484 1,192,812
----------- ------------
AEROSPACE AND DEFENSE (1.4%):
42,000 Loral Corp. 826,773 1,485,750
10,000 Sundstrand Corp. 505,395 703,750
----------- ------------
1,332,168 2,189,500
----------- ------------
BANKS (2.2%):
23,000 Comerica, Inc. 744,004 920,000
30,000 Morgan (J.P.) & Co., Inc. 2,024,651 2,407,500
----------- ------------
2,768,655 3,327,500
----------- ------------
BEVERAGES (2.4%):
40,000 Coca-Cola Co. 107,495 2,970,000
11,000 Pepsico, Inc. 554,900 614,625
----------- ------------
662,395 3,584,625
----------- ------------
BIOTECHNOLOGY (25.8%):
660,000 Amgen, Inc. (B) 3,448,169 39,187,500
----------- ------------
BUSINESS SERVICES (5.9%):
185,000 ADT Limited (B) 1,809,792 2,775,000
10,000 Alco Standard Corp. 130,300 456,250
18,000 Danka Business Systems PLC Sponsored
ADR 491,529 666,000
135,000 Huntingdon International Holdings plc-
ADR 741,765 742,500
131,322 Manpower, Inc. 2,250,241 3,693,431
17,000 Olsten Corp. 521,215 671,500
----------- ------------
5,944,842 9,004,681
----------- ------------
CHEMICALS (0.8%):
10,000 Air Products & Chemicals, Inc. 494,350 527,500
6,000 Grace (W.R.) & Co. 374,496 354,750
24,250 RPM, Inc. Ohio 334,003 400,125
----------- ------------
1,202,849 1,282,375
----------- ------------
COMMUNICATION SYSTEMS (3.4%):
15,000 Air Touch Communications, Inc. (B) 447,081 421,875
28,000 GTE Corp. 961,930 1,228,500
15,000 MCI Communications Corp. 350,775 391,875
45,000 SBC Communications, Inc. 418,798 2,576,250
17,000 Vodafone Group PLC Sponsored ADR 614,140 599,250
----------- ------------
2,792,724 5,217,750
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS-CONTINUED COST VALUE
<C> <S> <C> <C>
COMPUTERS AND
INFORMATION (1.5%):
14,000 Hewlett Packard Co. $ 1,074,189 $1,172,500
12,000 International Business
Machines 1,087,868 1,096,500
------------ ----------
2,162,057 2,269,000
------------ ----------
CONSUMER DURABLES
(0.8%):
29,400 Harman International
Industries, Inc. New 1,108,110 1,179,675
------------ ----------
CONSUMER SERVICES
(2.1%):
78,000 Block (H&R), Inc. 909,876 3,159,000
------------ ----------
COSMETICS/PERSONAL CARE
(0.6%):
12,000 Avon Products, Inc. 719,256 904,500
------------ ----------
DIVERSIFIED TECHNOLOGY
(0.7%):
28,000 Nokia Corp. Sponsored
ADR 757,452 1,092,000
------------ ----------
DRUGS AND HEALTH
SUPPLIES (3.5%):
19,000 Allergan, Inc. 616,711 617,500
18,000 Boston Scientific Corp.
(B) 325,080 886,500
13,000 Forest Labs, Inc. (B) 557,561 588,250
19,001 Guidant Corp. 446,633 802,792
5,000 Johnson & Johnson 426,550 427,500
10,000 Merck & Co., Inc. 478,630 656,250
12,000 Pharmacia & Upjohn, Inc.
(B) 423,720 465,000
16,000 Smithkline Beecham
Units-ADR 574,832 884,000
------------ ----------
3,849,717 5,327,792
------------ ----------
ELECTRICAL COMPONENTS
(2.2%):
11,000 Emerson Electric Co. 307,904 899,250
17,000 Grainger (W.W.), Inc. 686,425 1,126,250
18,900 Hubbell, Inc. Class B 995,572 1,242,675
69,000 Micro-Metrics, Inc.
(A,B,C) 227,700 25,000
------------ ----------
2,217,601 3,293,175
------------ ----------
ELECTRONICS/NEW
TECHNOLOGY (1.5%):
3,500 Cabletron Systems, Inc.
(B) 266,770 283,500
39,000 Ericsson L M Tel Co ADR 789,900 760,500
15,000 Intel Corp. 896,809 851,250
8,000 SGS Thomson
Microelectronics (B) 343,342 322,000
------------ ----------
2,296,821 2,217,250
------------ ----------
FINANCIAL SERVICES,
DIVERSIFIED (0.6%):
7,000 American Express Co. 231,420 289,625
5,000 Federal National
Mortgage Association 490,549 619,375
------------ ----------
721,969 909,000
------------ ----------
FOOD/FOOD PROCESSING
(1.2%):
9,000 Dreyers Grand Ice Cream,
Inc. 281,117 299,250
55,000 Eskimo Pie Corporation 981,063 1,003,750
18,000 Sara Lee Corporation 476,469 576,000
------------ ----------
1,738,649 1,879,000
------------ ----------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS-CONTINUED COST VALUE
<C> <S> <C> <C>
HARDWARE AND TOOLS (0.3%):
10,000 Snap-On, Inc. $ 421,687 $ 452,500
---------- ----------
HOUSEHOLD PRODUCTS (DURABLE) (0.7%):
41,000 Newell Co. 864,047 1,060,875
---------- ----------
HOUSEHOLD PRODUCTS (NON-DURABLE) (2.2%):
28,000 American Greetings Corp. Class A 826,221 773,500
11,700 Kimberly Clark Corp. 724,775 968,175
19,000 Proctor & Gamble Co. 906,015 1,577,000
---------- ----------
2,457,011 3,318,675
---------- ----------
INSURANCE (1.6%):
17,325 American International Group, Inc. 490,860 1,602,563
18,000 PMI Group, Inc. 818,585 814,500
---------- ----------
1,309,445 2,417,063
---------- ----------
LODGING (1.2%):
48,000 Marriott International, Inc. 1,357,310 1,836,000
---------- ----------
MEDICAL SUPPLIES (3.3%):
18,000 Abbott Laboratories 635,148 749,250
100,000 Baxter International, Inc. 952,713 4,187,500
---------- ----------
1,587,861 4,936,750
---------- ----------
OFFICE EQUIPMENT (0.7%):
8,000 Xerox Corp. 845,314 1,096,000
---------- ----------
OIL, INTEGRATED MAJORS (0.5%):
5,000 Royal Dutch Petroleum Company 575,853 705,625
---------- ----------
OTHER RECREATION (0.9%):
23,400 Disney (Walt) Co. 891,571 1,377,675
---------- ----------
PHARMACEUTICALS (3.3%):
16,000 Bristol-Myers Squibb Co. 430,822 1,374,000
27,880 Lilly Eli & Co. 763,080 1,568,250
14,000 Schering-Plough Corp. 487,839 766,500
14,000 Warner Lambert Co. 1,122,972 1,359,750
---------- ----------
2,804,713 5,068,500
---------- ----------
RECREATION--TOYS (1.6%):
76,250 Mattel, Inc. 1,573,548 2,344,688
---------- ----------
RECREATION PRODUCTS (0.8%):
19,000 Eastman Kodak Co. 929,830 1,273,000
---------- ----------
REGULATED INVESTMENT COMPANIES (9.1%):
390,000 The Adams Express Company 7,318,253 7,215,000
250,000 Convertible Holdings, Inc. Capital Shares 2,196,833 2,937,500
60,000 General American Investors Company, Inc. 995,525 1,200,000
10,816 RCM Growth Equity Fund, Inc. 2,166,523 2,468,594
---------- ----------
12,677,134 13,821,094
---------- ----------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS-CONTINUED COST VALUE
<C> <S> <C> <C>
RESTAURANTS (2.5%):
24,000 Host Marriott Corp. $ 323,689 $ 315,000
76,000 McDonalds Corp. 2,152,551 3,429,500
----------- ------------
2,476,240 3,744,500
----------- ------------
RETAIL TRADE (1.6%):
12,000 Barnes & Noble, Inc. (B) 379,224 348,000
25,000 Crown Books Corporation (B) 309,500 306,250
30,000 Federated Department Stores, Inc. (B) 822,693 817,500
18,000 Hannaford Bros. Co. 448,648 443,250
24,000 Officemax (B) 507,100 537,000
----------- ------------
2,467,165 2,452,000
----------- ------------
SOFTWARE AND PROCESSING (8.2%):
14,300 Automatic Data Processing, Inc. 627,398 1,061,775
382,500 Boole & Babbage, Inc. (B) 340,000 9,371,250
17,000 General Motors Corp. Class E 648,108 884,000
12,000 Microsoft Corp. (B) 999,600 1,053,000
----------- ------------
2,615,106 12,370,025
----------- ------------
TRANSPORTATION SERVICES (1.4%):
51,680 Fritz Companies, Inc. (B) 1,036,409 2,144,720
----------- ------------
TOTALS -- COMMON STOCKS 72,375,038 147,636,825
----------- ------------
TOTALS -- INVESTMENTS $76,434,782 $151,696,569
=========== ============
</TABLE>
(A) Company "affiliated" with the Corporation as defined in the Investment
Company Act of 1940.
(B) Presently non dividend paying.
(C) Venture security.
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Bergstrom Capital Corporation:
We have audited the accompanying statement of assets and liabilities including
the schedule of investments of Bergstrom Capital Corporation as of December
31, 1995 and the related statements of operations for the year then ended and
of changes in net assets for the years ended December 31, 1995 and 1994. These
financial statements are the responsibility of the Corporation'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 stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. Our proce-
dures included confirmation of securities owned at December 31, 1995 by corre-
spondence 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 referred to above present fairly, in
all material respects, the financial position of Bergstrom Capital Corporation
at December 31, 1995 and the results of its operations and the changes in its
net assets for the respective stated periods, in conformity with generally ac-
cepted accounting principles.
/s/ Deloitte & Touche LLP
Seattle, Washington
January 29, 1996
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The Corporation is registered under the Investment Company Act of 1940 as a
nondiversified, closed-end management company. The following is a summary of
significant accounting policies consistently followed by the Corporation in
the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
A. Security valuation--Securities traded on national exchanges are valued at
the closing prices on the last business day of the reported period. Over-
the-counter securities and listed securities not traded on that day are
valued at the bid prices (asked prices for short open positions) at the
close of business on that day. Securities not publicly traded are valued at
fair value as determined by the Board of Directors. Cost of securities is
determined on the specific identification basis. Short-term notes which ma-
ture in sixty or less days from the last day of the reported period are
valued at amortized cost, which approximates market value. Short-term notes
which mature in more than sixty days are valued at the quoted yield equiva-
lent on the last day of the reported period for securities of a comparable
maturity, quality, and type.
B. Security transactions and related investment income--Security transactions
are accounted for on the trade date (date the order to buy or sell is exe-
cuted). Dividend income and distributions to stockholders are recorded on
the ex-dividend dates and interest income is recorded on the accrual basis.
Realized gains and losses on investments sold are computed on the basis of
identified cost.
C. 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 revenues and ex-
penses during the reported period. Actual results could differ from those
estimates.
NOTE 2--FEDERAL INCOME TAXES
No provision has been made for federal taxes on net investment income be-
cause the Corporation has elected to be taxed as a regulated investment com-
pany under the Internal Revenue Code, and intends to maintain this qualifica-
tion and to distribute each year all of its taxable net investment income to
its stockholders in accordance with the minimum distribution requirements of
the Internal Revenue Code. In addition, under the Internal Revenue Code, the
Corporation may, but need not, distribute net long-term capital gains real-
ized. It is the presently declared policy of the Board of Directors, which is
subject to review by the Board of Directors from time to time, that in any
year in which the Corporation is taxed as a regulated investment company, all
or a portion of the net long-term capital gains realized by the Corporation
for such year may be retained by the Corporation, taxes thereon paid by the
Corporation and appropriate credit therefore allowed to the stockholders of
the Corporation, all as provided in Section 852(b)(3)(D) of the Internal Reve-
nue Code. After review by the Board of Directors during the year 1995, it was
determined that a portion of the net long-term capital gains realized during
the year 1995 should be retained by the Corporation and taxes thereon should
be paid by the Corporation, and that the remainder of the net long-term capi-
tal gains realized during the year 1995 should be distributed in 1995.
For federal income tax purposes at December 31, 1995 the aggregate gross
unrealized appreciation for all securities in which there is an excess of
value over tax cost is $75,834,443, the aggregate gross unrealized deprecia-
tion for all securities in which there is an excess of tax cost over value is
$572,656, the net unrealized appreciation is $75,261,787 and the aggregate
cost of securities for federal income tax purposes is $76,434,782.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
NOTE 3--CAPITAL STOCK
At December 31, 1995 the issued and outstanding capital stock of the Corpo-
ration consisted of 1,163,700 shares of $1 par value capital stock (1,505,462
shares are authorized) and capital paid in aggregated $25,380,516. During the
year ended December 31, 1995, 49,100 shares of Bergstrom Capital Corporation
stock were purchased from stockholders at an average discount of 12.9% from
net asset value. These shares were retired and restored to the status of au-
thorized but unissued shares.
As of December 31, 1995 the Corporation was authorized to purchase, on the
American Stock Exchange, up to 13,700 shares of its capital stock. Purchases
will be made at market prices prevailing at the time of purchase, but in no
event will purchases be made at prices in excess of the then current net asset
value per share.
NOTE 4--SECURITIES
During the year ended December 31, 1995, the cost of securities purchased
and the proceeds from securities sold, other than short-term investments, ag-
gregated $36,842,003 and $41,249,053, respectively.
The Company's investment in securities of the biotechnology industry as a
whole accounted for 25.8% of the Company's total assets on December 31, 1995.
The investment of a substantial percentage of the Company's assets in the se-
curities of a single issuer or industry exposes the Company to a greater risk
of loss resulting from unfavorable price movements or market conditions relat-
ing to such issuer or industry.
NOTE 5--INVESTMENT ADVISORY CONTRACT AND PAYMENTS TO AFFILIATES
The Corporation's advisory contract ("Contract") with Bergstrom Advisers,
Inc. (the "Adviser"), wholly owned by a principal stockholder of the Corpora-
tion, provides for an advisory fee which on an annual basis would amount to
3/4 of 1% of the first $50,000,000 of the Corporation's average net assets,
plus 1/2 of 1% of the value of the average net assets of the Corporation in
excess of $50,000,000. Such fee is computed weekly.
The Contract also provides that if in any fiscal year of the Corporation the
sum of the fee paid and payable to the Adviser for such year plus the operat-
ing expenses, as defined, for such year exceeds 1 1/2% of the first
$50,000,000 of the Corporation's average net assets, plus 1% of the Corpora-
tion's average net assets in excess of $50,000,000, the Adviser will reimburse
the Corporation for such excess, up to the amount of the fee received by the
Adviser for such year. In the event the excess operating expenses are greater
than the Adviser's fee for such year, the maximum amount payable by the Ad-
viser would be the amount of the fee received, and there would be no
carryforward or carryback of the unrecovered portion to any other period.
There was no reduction in the fee in 1995.
NOTE 6--DIRECTORS' FEES
One director of the Corporation is an officer and director of the Corpora-
tion's investment adviser. Directors' fees and expenses in the amount of
$38,095 have been paid in 1995 only to directors of the Corporation who were
not affiliated with any investment adviser to the Corporation.
NOTE 7--QUARTERLY RESULTS OF OPERATIONS (Unaudited) (The per share data is
based on the weighted average number of shares outstanding throughout each pe-
riod).
<TABLE>
<CAPTION>
FOR QUARTERS ENDED IN 1995
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
DEC. 31 SEPT. 30 JUNE 30 MARCH 31
------- -------- ------- --------
<S> <C> <C> <C> <C>
Total investment income $ 548 $ 564 $ 583 $ 599
Net investment income 289 283 311 303
Per share .25 .24 .25 .25
Net realized and unrealized gain on
investments 9,364 13,810 10,328 11,005
Per share 8.05 11.51 8.53 9.07
</TABLE>
<TABLE>
<CAPTION>
FOR QUARTERS ENDED IN 1994
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
DEC. 31 SEPT. 30 JUNE 30 MARCH 31
------- -------- ------- --------
<S> <C> <C> <C> <C>
Total investment income $ 669 $ 618 $ 590 $ 566
Net investment income 398 389 366 328
Per share .33 .32 .30 .27
Net realized and unrealized gain (loss) on
investments 152 9,025 2,854 (9,375)
Per share .18 7.36 2.32 (7.63)
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- - -------------------------------------------------------------------------------
NOTE 8--FINANCIAL HIGHLIGHTS
There are set forth below income and capital changes per share of capital
stock of the Corporation outstanding throughout each period, market value per
share at the end of each period, total investment returns for each period, and
certain ratios and other supplemental data for each period. This information
was taken from the Corporation's financial statements except for market values
which were the closing prices on the American Stock Exchange on the dates in-
dicated.
The total investment returns shown below are a record of the past and should
not be regarded as a representation of future results.
<TABLE>
<CAPTION>
FOR YEARS ENDED DECEMBER 31
------------------------------------------
1995 1994 1993 1992 1991
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $ 94.56 $95.06 $102.68 $104.89 $ 62.98
Net investment income (1) .99 1.22 1.10 1.05 1.05
Net realized and unrealized gain
(loss) on investments 37.16 2.23 (6.72) (1.23) 43.86
Dividends from:
Net investment income (2) (1.01) (1.22) (1.10) (1.05) (1.07)
Net realized gain on investments (3.99) (2.78) (.90) (.95) (1.93)
------- ------ ------- ------- -------
Total dividends (5.00) (4.00) (2.00) (2.00) (3.00)
------- ------ ------- ------- -------
Increase due to sale of Bergstrom
stock under rights offering at
more than net asset value .09
Rights offering expenses charged
to paid in capital (.12)
Increase due to purchase of
Bergstrom stock at less than net
asset value .64 .05 --
------- ------ ------- ------- -------
Net asset value at end of period $128.35 $94.56 $ 95.06 $102.68 $104.89
======= ====== ======= ======= =======
Market value per share at end of
period $109.50 $84.88 $ 94.50 $132.13 $122.63
======= ====== ======= ======= =======
Total investment returns:
Based on market value per share
(3) 38.1% (3.4)% (25.1)% 10.1% 111.8%
Based on net asset value per
share (4) 43.5% 5.6% (3.8)% 1.1% 74.9%
Net assets at end of period (in
millions) $ 149 $ 115 $ 118 $ 127 $ 118
Ratio of expenses to average net
assets .82% .84% .81% .79% .88%
Ratio of net investment income to
average net assets .88% 1.29% 1.11% 1.08% 1.25%
Portfolio turnover rate 29.69% 25.58% 26.16% 13.55% 16.82%
Number of shares outstanding at
end of period (in thousands) 1,164 1,213 1,237 1,238 1,125
</TABLE>
(1) Based on average number of shares outstanding.
(2) Based on number of shares outstanding on record date.
(3) Based on market value per share adjusted for reinvestment of dividends and
distributions of the federal income tax on net long-term capital gains re-
tained, which tax was paid on behalf of the Corporation's stockholders.
(4) Based on net asset value per share adjusted for reinvestment of dividends
and distributions of the federal income tax on net long-term capital gains
retained, which tax was paid on behalf of the Corporation's stockholders.
<PAGE>
- - --------------------------------------------------------------------------
BOARD OF DIRECTORS
ERIK E. BERGSTROM GEORGE COLE SCOTT
Chairman President
Cole Publishing, Inc.
Registered Representative
WILLIAM L. McQUEEN Registered Investment AdviserRepresentative
President and Treasurer Anderson & Strudwick Incorporated
NORMAN R. NIELSEN C.H. WILLIAMS
Manager and Senior Member Retired Banker
of Research Staff
SRI International
OFFICERS
WILLIAM L. McQUEEN PAMELA A. FIORINI
President and Treasurer Secretary
ELIZABETH C. HEDLUND
Assistant Secretary
--------------------------------------------------------------
BERGSTROM CAPITAL CORPORATION
505 Madison Street, Suite 220
Seattle, Washington 98104
(206) 623-7302
- - --------------------------------------------------------------------------------
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