<PAGE>
- --------------------------------------------------------------------------------
- ----------------
BERGSTROM
CAPITAL
CORPORATION
- ----------------
1999 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
- -------------------------------------------------------------------------------
DISTRIBUTION POLICY
The Company's distribution policy, which was adopted by the Board of
Directors on May 12, 1997, 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 Board
of Directors may modify or terminate the distribution policy at any time at
its discretion.
Please refer to the President's Letter in this report regarding the annual
distribution for the year 1999 in the amount of $13.50 per share, payable on
June 7, 1999 to stockholders of record on May 20, 1999.
Under the distribution 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 distributed for that year under
the distribution policy, the Company may, at the discretion of the Board of
Directors, retain a portion of the net realized long-term capital gains for
such year.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
505 Madison Street, Suite 220
Seattle, Washington 98104
May 10, 1999
Dear Fellow Stockholders:
The Board of Directors of Bergstrom Capital Corporation (the "Company") has
declared a dividend of $13.50 per share payable on June 7, 1999 to
stockholders of record on May 20, 1999. The Company estimates that the sources
of this dividend will be $.12 per share from net investment income for the
year ending December 31, 1999, $1.64 per share from net short-term capital
gains realized during the year ending December 31, 1999 and $11.74 per share
from net long-term capital gains realized during the year ending December 31,
1999. Please refer to the Distribution Policy in this report.
During the first quarter of 1999 the Company's net assets increased from
$200,332,879 to $222,865,109 which is an increase of $22,532,230. The increase
in net assets was composed of net investment income of $11,841, realized gain
on investments of $15,567,366, and an increase in unrealized appreciation of
$6,953,023.
The per share net asset value increased from $200.33 on December 31, 1998 to
$222.87 on March 31, 1999, an increase of 11.3%. During the same period the
Dow Jones Industrial Average, adjusted for dividends, increased 6.6% and the
Standard & Poor's 500 Stock Average, adjusted for dividends, increased 5.0%.
The per share net asset value on Friday, May 7, 1999 was $217.31.
During the first quarter of 1999 the Company had total interest and dividend
income of $310,026 as compared to $408,007 for the same period in 1998 for a
decrease of $97,981. During the first quarter of 1999 operating expenses were
$298,185 which is a $23,816 decrease from $322,001 for the first quarter of
1998. The resulting net investment income of $11,841 for the first quarter of
1999 is a decrease of $74,165 from $86,006 for the first quarter of 1998. This
resulted in a decrease to $.01 per share versus $.08 per share.
The following are the major ($500,000 or more) purchases and sales made in the
Company's portfolio of securities during the first quarter of 1999:
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
---------------------------------------
HELD
SECURITY NAME ADDITIONS REDUCTIONS MARCH 31, 1999
- ---------------------------------------- --------- ---------- --------------
<S> <C> <C> <C>
Alza Corp. ............................. 21,000 57,000
Ascend Communications, Inc. ............ 8,000 32,000
Bergen Brunswig Corp. .................. 24,000 0
BMC Software, Inc. ..................... 101,250(1) 101,250
Boole & Babbage, Inc. .................. 500,000(1) 0
Chancellor Media Corp. ................. 21,500 21,500 0
Clorox Co. ............................. 10,000 0
Colgate Palmolive Co. .................. 9,000 29,000
Dell Computer Corp. .................... 22,000(2) 17,000(2) 37,000
EMC Corp. Mass.......................... 15,000 40,000
Enron Corp. ............................ 31,000 31,000
Family Dollar Stores, Inc. ............. 34,000 0
Gillette Co. ........................... 54,000 54,000
Hewlett Packard Co. .................... 14,000 14,000
IMS Health, Inc. ....................... 70,000 0
Intel Corp. ............................ 4,500 30,500
International Business Machines......... 4,000 11,000
Liberty Financial Companies............. 24,000 0
McDonalds Corp. ........................ 11,000 118,000
McKesson HBOC, Inc. .................... 14,000 14,000 0
Medtronic, Inc. ........................ 31,380(3) 32,380(3) 24,000
Microsoft Corp. ........................ 54,000(4) 92,000
Motorola, Inc. ......................... 15,000 15,000
Networks Associates, Inc. .............. 16,000 0
North Fork Bancorporation, Inc. ........ 32,000 0
Schlumberger Ltd. ...................... 18,000 18,000
Sofamor/Danek Group, Inc. .............. 19,000(3) 0
Texas Instruments, Inc. ................ 10,000 10,000
Time Warner, Inc. ...................... 23,000 23,000
Tricon Global Restaurants, Inc. ........ 14,000 39,000
US Bancorp DEL.......................... 48,000 0
Yahoo, Inc. ............................ 6,000 4,500 6,000
</TABLE>
- -------
(1) Sold 350,000 shares of Boole & Babbage, Inc. and then 150,000 shares of
Boole & Babbage, Inc. were exchanged for 101,250 shares of BMC Software,
Inc. as a result of a merger.
(2) Sold 10,000 shares and then received 22,000 shares as a stock split and
then sold 7,000 shares.
(3) Received 31,380 shares of Medtronic, Inc. in exchange for 19,000 shares of
Sofamor/Danek Group, Inc. as a result of a merger and then sold 32,380
shares of Medtronic, Inc.
(4) Purchased 8,000 shares and then received 46,000 shares as a stock split.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
The value of the Company's investment in the securities of Amgen, Inc.
amounted to 12.1% of the Company's total assets at March 31, 1999. 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.
YEAR 2000 READINESS DISCLOSURE -- Like other investment companies and
financial and business organizations worldwide, the Company could be adversely
affected if computer systems on which the Company and its service providers
rely are unable to process correctly date-related information on and after
January 1, 2000. This risk is commonly called the Year 2000 issue. Failure to
address successfully the Year 2000 issue could result in interruptions in and
other adverse effects on the Company's business and operations. The Company is
continuing its review, both internally and as regards the Company's service
providers, of the Year 2000 issue as it may affect the Company. The Company is
taking steps it believes are reasonably designed to address the Year 2000 issue.
There can be no assurance that these steps will be sufficient. In addition,
there can be no assurance that the Year 2000 issue will not have an adverse
effect on the companies whose securities are held by the Company or on global
markets or economies generally.
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, 1999 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investments, at value (see accompanying schedule):
Short-term investments (cost $3,105,946) $ 3,105,946
Common stocks (cost $94,322,242) 219,509,366
------------
Total investments (cost $97,428,188) 222,615,312
Cash 5,000
Receivable for securities sold 374,159
Interest and dividends receivable 143,260
Other assets 4,927
------------
Total assets 223,142,658
------------
Liabilities:
Advisory fee payable 173,783
Payable for securities purchased 67,200
Other accrued expenses 36,566
------------
Total liabilities 277,549
------------
Net assets applicable to 1,000,000 outstanding shares of
capital stock equivalent to $222.87 per share on March 31,
1999 $222,865,109
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED
1999 DECEMBER 31,
(Unaudited) 1998
<S> <C> <C>
Operations:
Net investment income $ 11,841 $ 163,385
Realized gain on investments 15,567,366 16,030,888
Increase in unrealized appreciation 6,953,023 40,313,028
------------ ------------
Net increase in net assets resulting from
operations 22,532,230 56,507,301
------------ ------------
Dividends to stockholders:
From net investment income (163,385)
From net realized gain on investments (10,763,990)
------------ ------------
Total dividends to stockholders ($10.75 per
share--1998) (10,927,375)
------------ ------------
Cost of shares of Bergstrom Capital Corporation
stock repurchased (28,400 shares--1998) (4,141,868)
------------ ------------
Total increase in net assets 22,532,230 41,438,058
Net assets, beginning of period 200,332,879 158,894,821
------------ ------------
Net assets, end of period $222,865,109 $200,332,879
============ ============
</TABLE>
See also Notes to Financial Statements in the Company's 1998 Annual Report to
Stockholders.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (Unaudited)
<TABLE>
<S> <C> <C>
Investment Income:
Interest $ 5,606
Dividends 304,420
-----------
Total income 310,026
-----------
Expenses:
Advisory fees 173,240
Auditing fees 25,600
Directors' fees and expenses 21,924
Officer's salary and related expenses 21,452
Accounting expenses 15,182
Legal fees 9,590
State and other taxes 7,586
Transfer agent fees and expenses 6,106
Other expenses 6,005
Custodian fees 5,856
Stockholders' meeting and reports 3,894
Fee for shares listed on American Stock Exchange 1,750
-----------
Total expenses 298,185
-----------
Net investment income ($.01 per share) 11,841
-----------
Realized and unrealized gain on investments:
Realized gain on investments (excluding short-term
investments):
Proceeds from sale of securities $ 28,997,225
Cost of securities sold 13,429,859
------------
Realized gain on investments sold 15,567,366
Unrealized appreciation of investments:
Beginning of period 118,234,101
End of period 125,187,124
------------
Increase in unrealized appreciation 6,953,023
-----------
Net gain on investments ($22.53 per share) 22,520,389
-----------
Net increase in net assets resulting from operations $22,532,230
===========
</TABLE>
See also Notes to Financial Statements in the Company's 1998 Annual Report to
Stockholders.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Cost Value
<C> <S> <C> <C>
Short-Term Investments (1.4%):
3,105,946 SSgA Money Market Fund $ 3,105,946 $ 3,105,946
--------- ----------- ------------
3,105,946 Total--Short-Term Investments 3,105,946 3,105,946
========= ----------- ------------
Common Stocks (98.6%):
Aerospace (0.5%):
17,000 General Dynamics Corp. 970,787 1,092,250
----------- ------------
Banks (2.5%):
52,000 Bank New York, Inc. 1,065,418 1,868,750
35,000 Citigroup, Inc. 1,433,940 2,235,625
17,000 Firstar Corp. 1,042,947 1,521,500
----------- ------------
3,542,305 5,625,875
----------- ------------
Beverages (3.0%):
60,000 Coca Cola Enterprises, Inc. 810,797 1,815,000
77,500 Coca-Cola Co. 104,001 4,756,563
----------- ------------
914,798 6,571,563
----------- ------------
Biotechnology (12.1%):
360,000 Amgen, Inc. (A) 940,410 26,955,000
----------- ------------
Broadcasting (1.5%):
34,000 Clear Channel Communications, Inc. 1,775,263 2,280,125
15,000 Jacor Communications, Inc. 832,456 1,140,000
----------- ------------
2,607,719 3,420,125
----------- ------------
Business Services (0.5%):
22,000 Fiserv, Inc. 1,024,671 1,179,750
----------- ------------
Communication Systems (5.6%):
18,000 Bell Atlantic Corp. 1,029,039 930,375
15,500 GTE Corp. 862,042 937,750
91,000 MCI WorldCom, Inc. 2,114,237 8,059,187
41,000 Nextel Communications, Inc. 687,750 1,501,625
23,000 SBC Communications, Inc. 1,075,954 1,083,875
----------- ------------
5,769,022 12,512,812
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
SHARES
<TABLE>
<CAPTION>
Common Stocks (Unaudited)--Continued
Cost Value
<C> <S> <C> <C>
Computers and Information (2.0%):
37,000 Dell Computer Corp. $ 781,368 $ 1,512,375
14,000 Hewlett-Packard Co. 1,031,911 949,375
11,000 International Business Machines 1,582,895 1,949,750
----------- -----------
3,396,174 4,411,500
----------- -----------
Diversified Technology (1.8%):
25,000 Nokia Corp. Sponsored ADR 450,507 3,893,750
----------- -----------
Drugs and Health Supplies (4.7%):
25,000 Johnson & Johnson 1,614,356 2,342,188
24,000 Medtronic, Inc. 1,293,548 1,722,000
37,000 Pfizer, Inc. 1,791,096 5,133,750
18,000 Smithkline Beecham PLC ADR 298,469 1,287,000
----------- -----------
4,997,469 10,484,938
----------- -----------
Electrical Components (1.9%):
38,000 General Electric Co. 2,112,832 4,203,750
----------- -----------
Electronics/New Technology (9.6%):
32,000 Ascend Communications, Inc. 1,938,552 2,678,000
40,500 Cisco Systems, Inc. 1,322,839 4,437,281
40,000 EMC Corp. Mass 3,040,122 5,110,000
30,500 Intel Corp. 2,280,975 3,633,312
19,000 Lucent Technologies, Inc. 769,305 2,047,250
15,000 Motorola, Inc. 1,066,194 1,098,750
15,000 Perkin-Elmer Corp. 1,054,466 1,455,938
10,000 Texas Instruments, Inc. 1,047,200 992,500
----------- -----------
12,519,653 21,453,031
----------- -----------
Financial Services, Diversified (1.0%):
15,000 Federal Home Loan Mortgage Corp. 799,225 856,875
18,000 Federal National Mortgage Association 440,845 1,246,500
----------- -----------
1,240,070 2,103,375
----------- -----------
Food Processing (0.5%):
30,000 Pioneer Hi-Bred International, Inc. 616,320 1,128,750
----------- -----------
Health Care Services (0.7%):
22,500 Cardinal Health, Inc. 1,182,982 1,485,000
----------- -----------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
SHARES
<TABLE>
<CAPTION>
Common Stocks (Unaudited)--Continued
Cost Value
<C> <S> <C> <C>
Household Products (Non-Durable) (2.5%):
54,000 Gillette Co. $ 3,029,283 $ 3,209,625
24,000 Proctor & Gamble Co. 572,220 2,350,500
----------- -----------
3,601,503 5,560,125
----------- -----------
Industrial Machinery (3.6%):
112,000 Tyco International Ltd. New 2,643,273 8,036,000
----------- -----------
Insurance (2.3%):
42,000 American International Group, Inc. 841,345 5,066,250
----------- -----------
Lodging (0.6%):
40,000 Marriott International, Inc. Class A 497,055 1,345,000
----------- -----------
Media (0.6%):
45,000 Disney (Walt) Co. 560,460 1,400,625
----------- -----------
Medical Supplies (5.6%):
25,800 Abbott Laboratories 452,270 1,207,762
57,000 Alza Corp. 2,521,493 2,180,250
37,000 American Home Products Corp. 1,755,990 2,414,250
100,000 Baxter International, Inc. 880,840 6,600,000
----------- -----------
5,610,593 12,402,262
----------- -----------
Petroleum Services (0.5%):
18,000 Schlumberger Ltd. 1,037,137 1,083,375
----------- -----------
Pharmaceuticals (5.6%):
32,000 Bristol-Myers Squibb Co. 215,411 2,058,000
54,000 Lilly Eli & Co. 1,545,624 4,583,250
56,000 Schering-Plough Corp. 487,839 3,097,500
40,000 Warner Lambert Co. 665,208 2,647,500
----------- -----------
2,914,082 12,386,250
----------- -----------
Publishing (0.7%):
23,000 Time Warner, Inc. 1,554,189 1,634,438
----------- -----------
Regulated Investment Companies (4.9%):
815,000 Dresdner RCM Growth Equity Fund, Inc. (B) 4,311,350 4,979,650
165,254 Dresdner RCM International Growth Equity
Fund (B) 2,155,956 2,467,244
450,000 Dresdner RCM Small Cap Fund (B) 4,085,154 3,559,500
----------- -----------
10,552,460 11,006,394
----------- -----------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
SHARES
<TABLE>
<CAPTION>
Common Stocks (Unaudited)--
Continued
Cost Value
<C> <S> <C> <C>
Restaurants (3.6%):
118,000 McDonalds Corp. $ 2,522,429 $ 5,346,875
39,000 Tricon Global Restaurants, Inc. 1,818,548 2,739,750
----------- ------------
4,340,977 8,086,625
----------- ------------
Retail Trade (7.8%):
67,500 Bed Bath & Beyond, Inc. 1,048,624 2,463,750
29,000 Colgate Palmolive Co. 2,255,864 2,668,000
34,000 Costco Companies, Inc. 2,115,016 3,113,125
20,000 CVS Corporation 381,438 950,000
23,000 Dayton Hudson Corp. 1,177,430 1,532,375
30,000 Home Depot, Inc. 943,546 1,867,500
20,000 Kohls Corp. 949,282 1,417,500
6,700 Lowe's Companies, Inc. 388,600 405,350
22,000 Safeway, Inc. 657,405 1,128,875
20,000 Wal-Mart Stores, Inc. 1,183,376 1,843,750
----------- ------------
11,100,581 17,390,225
----------- ------------
Software and Processing (11.5%):
80,000 America Online, Inc. 556,456 11,680,000
22,000 Automatic Data Processing, Inc. 241,307 910,250
101,250 BMC Software, Inc. (A) 23,704 3,752,578
92,000 Microsoft Corp. (A) 2,935,538 8,245,500
6,000 Yahoo, Inc. 1,037,750 1,010,250
----------- ------------
4,794,755 25,598,578
----------- ------------
Utilities (0.9%):
31,000 Enron Corp. 1,988,113 1,991,750
----------- ------------
Totals--Common Stocks 94,322,242 219,509,366
----------- ------------
Totals--Investments $97,428,188 $222,615,312
=========== ============
</TABLE>
(A) Non-income producing securities.
(B) Regulated investment company advised by Dresdner RCM Global Investors
LLC, the Corporation's investment adviser.
See also Notes to Financial Statements in the Company's 1998 Annual Report to
Stockholders.
<PAGE>
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
ERIK E. BERGSTROM GEORGE COLE SCOTT
Chairman Registered Representative
Anderson & Strudwick Incorporated
WILLIAM L. McQUEEN President
President and Treasurer Closed-End Fund Advisors, Inc.
NORMAN R. NIELSEN WILLIAM H. SPERBER
Manager and Senior Member Chairman, President and
of Research Staff Chief Executive Officer
SRI International The Trust Company of Washington
Director and President
Manzanita Capital, Inc.
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
- --------------------------------------------------------------------------------
[RECYCLE LOGO]
