<PAGE>
- ----------------------------------
BERGSTROM
CAPITAL
CORPORATION
- ----------------------------------
1997 FIRST QUARTER 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, Boston, Massachusetts
Legal Counsel: Howard, Rice, Nemerovski, Canady, Falk & Rabkin PC, San
Francisco, California
<PAGE>
BERGSTROM CAPITAL CORPORATION
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NOTICE TO STOCKHOLDERS OF NEW DISTRIBUTION POLICY
May 12, 1997
On May 12, 1997, the Board of Directors of Bergstrom Capital Corporation
adopted a new distribution policy which provides for an annual distribution to
the Company's stockholders, during the month of June each year, of a cash
dividend at the rate of a minimum of 6 percent of the Company's net asset
value per share as calculated on the last business day in March of that year.
The new policy was adopted primarily as a means to help narrow the difference
between the Company's market price and its net asset value. There is no
assurance that the new policy will achieve this result. The Board of Directors
may modify or terminate the new policy at any time at its discretion.
Please refer to the President's Letter in this report regarding the annual
distribution for the year 1997 in the amount of $8.50 per share, payable on
June 9, 1997 to stockholders of record on May 22, 1997.
Under the new policy, distributions in any year in excess of the Company's
net investment income and net realized capital gains for such year will
constitute a return of stockholders' capital. For federal income tax purposes,
any return of capital will generally be treated as a non-taxable recovery of
basis to the extent of the stockholders' basis in their shares, and as capital
gain to the extent that the return of capital is in excess of such basis.* The
Company will be required to liquidate a portion of its portfolio in order to
fund any return of capital. Any return of capital will also reduce the assets
of the Company available for investment and will likely have the effect of
increasing the Company's expense ratio.
In any year in which the total of the Company's net investment income and
net realized capital gains exceeds the amount distributable for that year
under the new distribution policy, the Company may, as is its present policy
at the discretion of the Board of Directors, retain a portion of the net
realized long-term capital gains for such year.
* The portion of any return of capital representing the Company's accumulated
earnings and profits from prior years will be treated as ordinary income.
The Company's accumulated earnings and profits as of December 31, 1996
amounted to $155,052.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
505 Madison Street, Suite 220
Seattle, Washington 98104
May 12, 1997
Dear Fellow Stockholders:
The Board of Directors of Bergstrom Capital Corporation has declared a
dividend of $8.50 per share payable on June 9, 1997 to stockholders of record
on May 22, 1997. The Company estimates that the sources of this dividend will
be $.41 per share from net investment income for the year ending December 31,
1997, $.07 per share from net short-term capital gains realized during the
year ending December 31, 1997 and $8.02 per share from net long-term capital
gains realized during the year ending December 31, 1997. The Company does not
intend to pay further dividends in 1997 and intends to retain any
undistributed net long-term capital gains realized during the year. Please
refer to the Notice To Stockholders Of New Distribution Policy in this report.
During the first quarter of 1997 the Company's net assets increased from
$151,427,077 to $152,836,238 which is an increase of $1,409,161. This increase
in net assets is after the repurchase of stock during the first quarter of
1997 for $1,922,386. The increase in net assets, before deducting the
repurchase of stock, was $3,331,547 which was composed of net investment
income of $159,038, realized gain from the sale of investments of $12,165,969,
and a decrease in unrealized appreciation of $8,993,460.
The per share net asset value (based on the number of shares outstanding at
the end of each period) increased from $136.15 on December 31, 1996 to $139.39
on March 31, 1997, an increase of 2.4%. During the same period the Dow Jones
Industrial Average, adjusted for dividends, increased 2.6% and the Standard &
Poor's 500 Stock Average, adjusted for dividends, increased 2.7%. The per share
net asset value on Friday, May 9, 1997 was $148.39.
On February 26, 1996, the Company's Board of Directors authorized the
Company to purchase, on the American Stock Exchange, up to 50,000 shares of
its capital stock at market prices not in excess of the then current net asset
value per share. During the first quarter of 1997 the Company purchased the
remaining 12,200 shares of its capital stock under this authorization.
On February 10, 1997, the Company's Board of Directors authorized the
Company to purchase, on the American Stock Exchange, up to 100,000 shares of
its capital stock at market prices not in excess of the then current net asset
value per share. During the first quarter of 1997 the Company purchased 3,500
shares of its capital stock under this authorization. As of March 31, 1997 the
Company had 96,500 shares remaining under this authorization.
During the first quarter of 1997 the Company had total interest and dividend
income of $464,873 as compared to $438,143 for the same period in 1996 for an
increase of $26,730. During the first quarter of 1997 operating expenses were
$305,835 which is a $16,381 increase from $289,454 for the first quarter of
1996. The resulting net investment income of $159,038 for the first quarter of
1997 is an increase from $148,689 for the first quarter of 1996. This resulted
in an increase to $.14 per share versus $.13 per share.
The following are the major ($500,000 or more) changes made in the Company's
portfolio of common stocks during the first quarter of 1997:
<PAGE>
BERGSTROM CAPITAL CORPORATION
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<TABLE>
<CAPTION>
SHARES
---------------------------------------
HELD
SECURITY NAME ADDITIONS REDUCTIONS MARCH 31, 1997
- ---------------------------------------- --------- ---------- --------------
<S> <C> <C> <C>
Ascend Communications, Inc.............. 11,500 6,000 5,500
Bank New York, Inc...................... 18,000 18,000
Bristol-Myers Squibb, Inc............... 8,000(1) 8,000 16,000
Cognizant Corporation................... 45,000 45,000
Consolidated Stores Corp................ 17,000 17,000
Glaxo PLC ADR........................... 17,000 17,000
Glendale Federal Bank FSB............... 34,000 34,000
Host Marriott Corp...................... 45,000 106,000
Manpower, Inc........................... 24,000 155,322
Medtronic, Inc.......................... 18,000 18,000
Motorola, Inc........................... 8,000 8,000
Panamerican Beverages, Inc.............. 10,000 2,900 7,100
Petsmart, Inc........................... 29,000 29,000
Sterling Commerce, Inc.................. 24,000 24,000
Worldcom, Inc........................... 75,600(2) 75,600
The Adams Express Company............... 174,484 0
Allergan, Inc........................... 18,000 0
Amgen, Inc.............................. 140,000 360,000
Boston Scientific Corp.................. 30,000 0
Cabletron Systems, Inc.................. 20,000 0
Cisco Systems, Inc...................... 13,000 0
Electronic Data Systems Corp............ 17,000 0
Federated Department Stores, Inc........ 25,000 0
International Business Machines......... 12,000 0
Marriott International, Inc............. 15,000 20,000
McDonalds Corp.......................... 26,000 42,000
MFS Communications, Inc................. 36,000(2) 0
Morgan (J.P.) & Co., Inc................ 10,000 20,000
Oracle Corporation...................... 29,000 0
Pepsico, Inc............................ 30,000 0
</TABLE>
(1) Received as a stock split.
(2) Received 75,600 shares of Worldcom, Inc. in exchange for 36,000 shares of
MFS Communications, Inc.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
On September 20, 1996, the Company made an in-kind distribution of one share
of the common stock of The Adams Express Company ("ADX") for every five shares
of the Company's capital stock, together with a cash dividend of $3.00 per
share, to stockholders of record on August 22, 1996. Because of complexities
encountered with the in-kind distribution of ADX shares in 1996, the Company
elected to sell the remaining ADX shares during the first quarter of 1997 and
to distribute the gains as part of the cash dividend payable on June 9, 1997.
The value of the Company's investment in the securities of Amgen, Inc.
amounted to 13.1% of the Company's total assets at March 31, 1997. 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.
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
program would not be commensurate with the benefit. The Company's policy of
retaining 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
Exchange 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, each Sunday in the New York Times, and each Monday in the Wall Street
Journal 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 02266-8200 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
March 31, 1997 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (see accompanying schedule):
Short-term investments (cost $17,332,969) $ 17,332,969
Common stocks (cost $68,322,673) 136,114,330
------------
TOTAL INVESTMENTS (COST $85,655,642) 153,447,299
Cash 5,588
Receivable for securities sold 136,073
Interest and dividends receivable 153,213
Other assets 135,059
------------
TOTAL ASSETS 153,877,232
------------
LIABILITIES:
Advisory fee payable 65,762
Payable for securities purchased 947,296
Other accrued expenses 27,936
------------
TOTAL LIABILITIES 1,040,994
------------
NET ASSETS applicable to 1,096,500 outstanding shares of
capital stock equivalent to
$139.39 per share on March 31, 1997 $152,836,238
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 159,038 $ 148,689
Realized gain on investments 12,165,969 6,751,972
Decrease in unrealized appreciation (8,993,460) (1,682,846)
------------- -------------
Net increase in net assets resulting
from operations 3,331,547 5,217,815
COST OF SHARES OF BERGSTROM CAPITAL
CORPORATION STOCK
PURCHASED (15,700 SHARES-1997; 5,500
SHARES-1996) (1,922,386) (642,340)
------------- -------------
TOTAL INCREASE IN NET ASSETS 1,409,161 4,575,475
NET ASSETS, BEGINNING OF PERIOD 151,427,077 149,357,224
------------- -------------
NET ASSETS, END OF PERIOD $ 152,836,238 $ 153,932,699
============= =============
</TABLE>
See also Notes to Financial Statements in the Company's 1996 Annual Report to
Stockholders.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 (Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 180,825
Dividends 284,048
----------
TOTAL INCOME 464,873
----------
EXPENSES:
Advisory fees 229,217
Legal fees 11,126
Auditing fees 22,900
Stockholders' meeting and reports 5,082
Transfer agent fees and expenses 6,226
Custodian fees 6,550
Directors' fees and expenses 10,175
Fee for shares listed on American Stock Exchange 1,750
State and other taxes 7,717
Other 5,092
----------
TOTAL EXPENSES 305,835
----------
NET INVESTMENT INCOME ($.14 PER SHARE) 159,038
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on investments (excluding short-term
investments):
Proceeds from sale of securities $28,735,680
Cost of securities sold 16,569,711
-----------
Realized gain on investments 12,165,969
Unrealized appreciation of investments:
Beginning of period 76,785,117
End of period 67,791,657
-----------
Decrease in unrealized appreciation (8,993,460)
----------
NET GAIN ON INVESTMENTS ($2.87 PER SHARE) 3,172,509
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,331,547
==========
</TABLE>
See also Notes to Financial Statements in the Company's 1996 Annual Report to
Stockholders.
<PAGE>
BERGSTROM CAPITAL CORPORATION
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SCHEDULE OF INVESTMENTS
March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT COST VALUE
<C> <S> <C> <C>
SHORT-TERM INVESTMENTS (11.3%):
$ 9,346,000 State Street Bank and Trust Company, 5.25% Euro-Dollar
Deposit due 4/01/97 $ 9,346,000 $ 9,346,000
2,000,000 General Motors Acceptance Corp., 5.35% Note due 4/03/97 1,999,406 1,999,406
6,000,000 General Motors Acceptance Corp., 5.33% Note due 4/15/97 5,987,563 5,987,563
----------- ----------- ------------
$17,346,000 TOTAL - SHORT-TERM INVESTMENTS 17,332,969 17,332,969
=========== ----------- ------------
COMMON STOCKS (88.7%):
ADVERTISING (0.9%):
25,000 Interpublic Group Of Companies, Inc. 771,004 1,318,750
----------- ------------
AEROSPACE AND DEFENSE (0.8%):
5,500 Rockwell International Corp. 377,366 356,813
20,000 Sundstrand Corp. 505,395 867,500
----------- ------------
882,761 1,224,313
----------- ------------
BANKS (3.2%):
18,000 Bank New York, Inc. 717,966 661,500
9,000 Citicorp 851,250 974,250
23,000 Comerica, Inc. 744,004 1,296,625
20,000 Morgan (J.P.) & Co., Inc. 1,312,601 1,965,000
----------- ------------
3,625,821 4,897,375
----------- ------------
BEVERAGES (4.0%):
24,000 Coca Cola Enterprises, Inc. 990,732 1,377,000
77,500 Coca-Cola Co. 104,001 4,330,313
7,100 Panamerican Beverages, Inc. 369,456 380,738
----------- ------------
1,464,189 6,088,051
----------- ------------
BIOTECHNOLOGY (13.1%):
360,000 Amgen, Inc. (B) 1,880,819 20,115,000
----------- ------------
BUSINESS SERVICES (8.8%):
185,000 ADT Limited (B) 1,809,792 4,625,000
45,000 Cognizant Corporation 1,498,600 1,310,625
135,000 Huntingdon International Holdings plc ADR 741,765 1,265,625
155,322 Manpower, Inc. 3,094,527 5,591,592
20,000 USA Waste Services, Inc. (B) 658,700 710,000
----------- ------------
7,803,384 13,502,842
----------- ------------
COMMUNICATION SYSTEMS (3.3%):
50,000 MCI Communications Corp. 1,241,084 1,781,250
30,000 SBC Communications, Inc. 273,724 1,578,750
75,600 Worldcom, Inc. 1,440,418 1,663,200
----------- ------------
2,955,226 5,023,200
----------- ------------
COMPUTERS AND INFORMATION (0.5%):
14,000 Hewlett Packard Co. 492,639 745,500
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED (UNAUDITED) COST VALUE
<C> <S> <C> <C>
COSMETICS/PERSONAL CARE (0.5%):
14,000 Avon Products, Inc. $ 418,369 $ 735,000
----------- ------------
DIVERSIFIED TECHNOLOGY (0.9%):
23,000 Nokia Corp. Sponsored ADR 858,978 1,339,750
----------- ------------
DRUGS AND HEALTH SUPPLIES (6.9%):
17,000 Glaxo PLC ADR 549,270 601,375
32,000 Guidant Corp. 1,035,795 1,968,000
20,000 Johnson & Johnson 898,474 1,057,500
18,000 Medtronic, Inc. 1,164,530 1,120,500
12,000 Merck & Co., Inc. 770,986 1,011,000
13,000 Pfizer, Inc. 929,116 1,093,625
36,000 Pharmacia & Upjohn, Inc. (B) 1,377,690 1,318,500
31,000 Smithkline Beecham PLC ADR 1,295,975 2,170,000
10,100 Vivra Incorporated 336,525 272,700
----------- ------------
8,358,361 10,613,200
----------- ------------
ELECTRICAL COMPONENTS (1.5%):
16,000 Emerson Electric Co. 223,593 720,000
16,000 General Electric Co. 1,402,960 1,588,000
69,000 Micro-Metrics, Inc. (A,B) 227,700 24,992
----------- ------------
1,854,253 2,332,992
----------- ------------
ELECTRONICS/NEW TECHNOLOGY ( 3.5%):
5,500 Ascend Communications, Inc. 225,186 225,186
33,000 Ericsson L M Tel Co ADR 786,857 1,115,812
13,000 Intel Corp. 776,776 1,808,625
11,000 Lucent Technologies, Inc. 508,107 580,250
8,000 Motorola, Inc. 537,256 483,000
28,000 Newbridge Networks Corp. 904,550 801,500
26,000 Nextel Communications, Inc. 389,848 347,750
----------- ------------
4,128,580 5,362,123
----------- ------------
FINANCIAL SERVICES, DIVERSIFIED (1.3%):
15,000 Amresco, Inc. 324,375 251,250
25,000 Federal National Mortgage Association 645,849 903,125
34,000 Glendale Federal Bank FSB 937,264 782,000
----------- ------------
1,907,488 1,936,375
----------- ------------
HARDWARE AND TOOLS (0.5%):
20,000 Snap-On, Inc. 585,650 775,000
----------- ------------
HOUSEHOLD PRODUCTS (NON-DURABLE) (1.9%):
15,000 Kimberly Clark Corp. 1,092,658 1,490,625
12,000 Proctor & Gamble Co. 572,220 1,380,000
----------- ------------
1,664,878 2,870,625
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED (UNAUDITED) COST VALUE
<C> <S> <C> <C>
INDUSTRIAL MACHINERY (0.3%):
10,000 Tyco International Ltd. $ 549,381 $ 550,000
----------- ------------
INSURANCE (1.9%):
17,325 American International Group, Inc. 490,860 2,033,522
18,000 PMI Group, Inc. 818,585 902,250
----------- ------------
1,309,445 2,935,772
----------- ------------
LODGING (1.3%):
27,000 Doubletree Corp. 1,075,060 958,500
20,000 Marriott International, Inc. 540,111 995,000
----------- ------------
1,615,171 1,953,500
----------- ------------
MEDIA (1.1%):
51,000 Comcast UK Cable Partners Ltd. CI. A Com 650,250 567,375
15,000 Disney (Walt) Co. 560,460 1,095,000
----------- ------------
1,210,710 1,662,375
----------- ------------
MEDICAL SUPPLIES (3.3%):
12,900 Abbott Laboratories 452,270 724,012
100,000 Baxter International, Inc. 880,840 4,312,500
----------- ------------
1,333,110 5,036,512
----------- ------------
PETROLEUM SERVICES (0.7%):
<CAPTION>
10,000 Baker Hughes, Inc. 323,611 383,750
<C> <S> <C> <C>
7,000 Schlumberger, Ltd. 523,562 750,750
----------- ------------
847,173 1,134,500
----------- ------------
PHARMACEUTICALS (5.0%):
16,000 Bristol-Myers Squibb Co. 215,411 944,000
39,000 Lilly Eli & Co. 1,351,106 3,207,750
14,000 Schering-Plough Corp. 487,839 1,018,500
29,000 Warner Lambert Co. 1,178,477 2,508,500
----------- ------------
3,232,833 7,678,750
----------- ------------
RECREATION--TOYS (0.7%):
37,500 Hasbro, Inc. 926,822 1,026,562
----------- ------------
RECREATION PRODUCTS (0.4%):
9,000 Eastman Kodak Co. 439,010 682,875
----------- ------------
REGULATED INVESTMENT COMPANIES (6.8%):
300,000 Convertible Holdings, Inc. Capital Shares 3,024,788 4,425,000
31,200 Latin America Growth Fund, Inc. 320,556 335,400
50,000 Latin America Investment Fund 808,062 862,500
325,000 RCM Growth Equity Fund, Inc. 2,005,250 1,963,000
80,000 RCM International Growth Equity Fund A 994,050 1,044,800
175,000 RCM Small Cap Fund 1,961,750 1,860,250
----------- ------------
9,114,456 10,490,950
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED
(UNAUDITED) COST VALUE
<C> <S> <C> <C>
RESTAURANTS (2.4%):
106,000 Host Marriott Corp. $ 1,577,381 $ 1,802,000
42,000 McDonalds Corp. 1,184,151 1,984,500
----------- ------------
2,761,532 3,786,500
----------- ------------
RETAIL TRADE (2.1%):
17,000 Consolidated Stores Corp. 576,283 599,250
25,000 Crown Books Corporation (B) 309,500 300,000
18,000 CVS Corporation 687,129 830,250
18,000 Hannaford Bros. Co. 448,648 598,500
7,000 Nine West Group, Inc. (B) 324,408 313,250
29,000 Petsmart, Inc. 609,475 587,250
----------- ------------
2,955,443 3,228,500
----------- ------------
SOFTWARE AND PROCESSING (11.1%):
13,000 Automatic Data Processing, Inc. 285,181 544,375
573,750 Boole & Babbage, Inc. (B) 340,000 13,626,563
24,000 Microsoft Corp. (B) 999,600 2,200,500
24,000 Sterling Commerce, Inc. 750,406 696,000
----------- ------------
2,375,187 17,067,438
----------- ------------
TOTALS - COMMON STOCK 68,322,673 136,114,330
----------- ------------
TOTALS - INVESTMENTS $85,655,642 $153,447,299
=========== ============
</TABLE>
(A) Company "affiliated" with the Corporation as defined in the Investment
Company Act of 1940. There were no purchases or sales of this security
during the first quarter of 1997, nor was any income earned.
(B) Non-Income Producing Securities.
See also Notes to Financial Statements in the Company's 1996 Annual Report to
Stockholders.
<PAGE>
BOARD OF DIRECTORS
ERIK E. BERGSTROM GEORGE COLE SCOTT
Chairman Registered Representative
Anderson & Strudwick Incorporated
President
WILLIAM L. McQUEEN Closed-End Fund Advisors,Inc.
President and Treasurer
C.H. WILLIAMS
NORMAN R. NIELSEN Retired Banker
Manager and Senior Member
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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