-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WDuX4DQqyx58O6WhphHu635SAECaxT57PX3dQFmxLwlPhZYCR4scFonemlTBgr3Z FEJT7jepB5qPkjAqJmvJfA== 0001047469-04-006832.txt : 20040308 0001047469-04-006832.hdr.sgml : 20040308 20040305181620 ACCESSION NUMBER: 0001047469-04-006832 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040308 EFFECTIVENESS DATE: 20040308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FPA PERENNIAL FUND INC CENTRAL INDEX KEY: 0000732041 IRS NUMBER: 953901760 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03896 FILM NUMBER: 04653182 BUSINESS ADDRESS: STREET 1: 11400 WEST OLYMPIC BLVD STREET 2: SUITE 1200 CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 3104730225 MAIL ADDRESS: STREET 1: 11400 WEST OLYMPIC BLVD STREET 2: SUITE 1200 CITY: LOS ANGELES STATE: CA ZIP: 90064 N-CSR 1 a2128909zn-csr.txt N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-3896 FPA PERENNIAL FUND, INC. (Exact name of registrant as specified in charter) 11400 WEST OLYMPIC BLVD., SUITE 1200, LOS ANGELES, CALIFORNIA 90064 (Address of principal executive offices) J. RICHARD ATWOOD, 11400 WEST OLYMPIC BLVD., SUITE 1200, LOS ANGELES, CALIFORNIA 90064 (Name and address of agent for service) Registrant's telephone number, including area code: 310-473-0225 Date of fiscal year end: DECEMBER 31 Date of reporting period: DECEMBER 31, 2003 Item 1. Report to Stockholders. FPA Perennial Fund, Inc. ANNUAL REPORT DECEMBER 31, 2003 [FPA LOGO] DISTRIBUTOR: FPA FUND DISTRIBUTORS, INC. 11400 West Olympic Boulevard, Suite 1200 Los Angeles, CA 90064 39743 LETTER TO SHAREHOLDERS Dear Fellow Shareholders: The year 2003 marked a dramatic reversal of the stock market decline which began in March 2000, although at year-end most stocks were still well below their record highs. Clearly, market participants decided that the economy was rapidly improving, and that foreign affairs and the U.S. dollar were not concerns either. The year's advance was uneven, however. Smaller and more speculative stocks dominated, those with low absolute prices, high beta (a measure of price volatility), and often no earnings, with the Russell 2000 and the Nasdaq performing far better that the S & P 500. We are concerned that we may be seeing a re-emergence of the Bubble Market of the 1998-1999 period. The extreme volatility of the stock market in recent years is clearly seen on the following table. Massive advances in the late 90s was followed by several years of dramatic decline. This ended in early 2003, and the market has forged ahead ever since, with gains of over 70% for the Nasdaq and Russell 2000 from the March 2003 lows to late January 2004. The market's performance over the entire 6-year period, however, is less exciting. After dramatic ups and downs, we ended up only a little higher than we started, with annualized gains of just 4-5% for the major indexes.
CUMULATIVE RETURNS ANNUALIZED RETURN 1998-1999 2000-2002 2003 1998-2003 --------- --------- ------ --------- Nasdaq 159% (67)% 50% 4% S&P 500 56% (38)% 29% 4% Russell 2000 18% (21)% 47% 5% Perennial 31% 21% 38% 14%
Perennial's performance in 2003, a 37.9% gain, represents a dramatic contrast to the prior year. In 2002, Perennial had one of its worst years while in 2003 it had one of its best. The table below shows Perennial's investment performance for each of the past five years, as well as that of the benchmark Russell 2500.
FIVE 1999 2000 2001 2002 2003 YEARS* ------ ------ ------ ------- ------ ------- Perennial 25.3% 10.2% 22.7% (10.6)% 37.9% 15.9% Russell 2500 24.2% 4.3% 1.2% (17.8)% 45.5% 9.4%
*Annualized Return We would like to take this opportunity to review significant recent developments affecting four Perennial holdings. GRACO, a manufacturer of systems for dispensing viscous fluids like paint, adhesives, and lubricants, has been one of the stars of the Perennial portfolio since its purchase in 1996. Its earnings have increased three-fold and its share price six-fold since that date. It has earned extraordinarily high returns - recently 35% on equity and 50% pre-tax on operating assets. The negative aspect of these high returns has been that cash flow has greatly exceeded available investment opportunities. After prudent reinvestment in its existing business, and a few small acquisitions, its surplus cash has been mostly spent on several large share repurchases, totaling about 20% of shares outstanding. More recently, Graco management has taken a somewhat different tack, perhaps in response to the stock's historically rich PE ratio, and has decided to pay out the surplus cash directly to shareholders. Graco's regular dividend has been increased by 70%, and a special $2.25 per share payment has been declared as well. The latter will consume most of Graco's $100 million of balance sheet cash. DENISON INTERNATIONAL, a manufacturer of hydraulic components for both stationary and mobile machinery, was added to the portfolio in 1997. At the time, we were attracted by Denison's high returns on capital and its strong competitive position in high-end niche hydraulic markets, as well as its fortress balance sheet. Although Denison has been able to maintain its strong competitive position, and has not squandered capital on unwise investments, it has not been able to achieve meaningful earnings growth, in part burdened by difficult economic environments as well as adverse currency movements. As a result, we must describe Denison as one of Perennial's less successful investments. In recent months Denison has put itself up for sale, and in December announced a deal with Parker Hannifin, one of the world's largest hydraulics companies. The price, $24 per share in cash, is a fair one in our opinion. Compared to our original purchase price of about $16 per share, it represents a 50% gain, not a bad outcome for an unsuccessful investment. LINCARE is the leading company providing oxygen to patients in their homes, mostly people suffering from chronic obstructive pulmonary disease or congestive heart failure. Because a large percent of Lincare's revenue is paid by Medicare, it has always been exposed to changes in government reimbursement rates. Recently, these rates have changed for the worse. The recently passed 1 Medicare Prescription Drug legislation also contained some provisions which could significantly reduce the revenue of home oxygen providers like Lincare. This would involve both the rate paid for asthma drugs, often provided by oxygen companies, as well as the basic rate for oxygen equipment. The effects of this legislation on Lincare's 2004 earnings are well understood, but the year 2005 consequences are highly uncertain and potentially very adverse. In response to the impending changes, Lincare's stock price declined from over $40 to about $30, or almost 30%. Our response to the price decline was to add to Perennial's position. We did this for two reasons. First, we believe that the worst-case reimbursement changes directed by Congress would result in the exit from the business of many smaller operators, with severe negative effects on the mostly elderly oxygen using population. Since the federal agency overseeing Medicare, or CMS, has considerable discretion in making the changes, we do not expect the worst case to be implemented. Second, Lincare has demonstrated in the past that it can take advantage of adverse environments. In the late 1990's, for example, Medicare rates were reduced by 30% over a two-year period. Lincare responded by cutting costs and taking market share from weakened competitors, with the result that its earnings actually went up. While we certainly do not expect an earnings increase, we do expect Lincare to greatly outperform its competitors in the coming challenging period. NORTH FORK BANK, first purchased late in 2002, has recently announced a major acquisition. At the time we first purchased shares in North Fork, we were impressed by its ability to gain market share as it steadily expanded west from its original home in New York's Nassau and Suffolk counties. This was especially true in the very large Manhattan market, which was poorly served by Citigroup and Morgan Chase, the market share leaders there. North Fork's December announcement of its agreement to purchase the Trust Company of New Jersey represents a continuation of this strategy, and gives it a substantial presence in the rapidly growing northern New Jersey suburbs. The stock market seemingly shares our enthusiasm for the acquisition. North Fork's shares rose on the announcement, unlike the typical bank merger, where only the acquired bank's shares go up, while the buyer's shares fall. Respectfully submitted, /s/ Eric S. Ende Eric S. Ende President and Portfolio Manager February 2, 2004 2 HISTORICAL PERFORMANCE [CHART] CHANGE IN VALUE OF A $10,000 INVESTMENT IN FPA PERENNIAL FUND, INC. VS. RUSSELL 2500 INDEX AND LIPPER SMALL-CAP VALUE FUND AVERAGE FROM JANUARY 1, 1994 TO DECEMBER 31, 2003
AVERAGE ANNUAL TOTAL RETURN YEARS ENDED DECEMBER 31, 2003 ----------------------------- FPA PERENNIAL FUND, INC. 1 YEAR 5 YEARS 10 YEARS - -------------------------------- ------ ------- -------- At Net Asset Value 37.89% 15.87% 14.40% With Maximum 5.25% Sales Charge 30.65% 14.63% 13.79%
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 -------- -------- -------- -------- -------- -------- Russell 2500 10,000 9,894 13,030 15,510 19,288 19,362 Lipper Small-Cap Core Fund Average 10,000 9,900 11,244 13,221 16,073 16,970 FPA Perennial Fund, Inc. (NAV) 10,000 9,997 11,723 14,114 17,544 18,386 FPA Perennial Fund, Inc. 9,475 9,472 11,108 13,373 16,623 17,420 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 -------- -------- -------- -------- -------- Russell 2500 24,037 25,064 25,370 20,854 30,344 Lipper Small-Cap Core Fund Average 19,380 21,938 23,620 19,496 28,131 FPA Perennial Fund, Inc. (NAV) 23,039 25,380 31,149 27,850 38,404 FPA Perennial Fund, Inc. 21,830 24,047 29,513 26,388 36,388
Past performance is not indicative of future performance. The Russell 2500 Index consists of the 2,500 smallest companies in the Russell 3000 total capitalization universe. This index is considered a measure of small to medium capitalization stock performance. This index does not reflect any commissions or fees which would be incurred by an investor purchasing the stocks it represents. The Lipper Small-Cap Core Fund Average provides an additional comparison of how your Fund performed in relation to other mutual funds with similar objectives. The Lipper data does not include sales charges. The performance shown for FPA Perennial Fund, Inc., with an ending value of $36,388, reflects deduction of the current maximum sales charge of 5.25% of the offering price. In addition, since investors purchase shares of the Fund with varying sales charges depending primarily on volume purchased, the Fund's performance at net asset value (NAV) is also shown, as reflected by the ending value of $38,404. The performance of the Fund and of the Averages is computed on a total return basis which includes reinvestment of all distributions. 3 MAJOR PORTFOLIO CHANGES For the Six Months Ended December 31, 2003 (Unaudited)
SHARES OR PRINCIPAL AMOUNT ---------- NET PURCHASES COMMON STOCKS Advanced Fibre Communications, Inc. 85,000 Brown & Brown, Inc. 33,200 Cal Dive International, Inc. 92,500 CarMax, Inc. 15,000 Charles River Laboratories International, Inc. (1) 37,300 Cognex Corporation 25,000 Health Management Associates, Inc. (1) 68,000 Lincare Holdings Inc. 50,000 National Commerce Financial Corporation 34,600 Noble Corporation 77,500 North Fork Bancorporation, Inc. 40,000 Office Depot, Inc. 100,000 O'Reilly Automotive, Inc. 30,000 Renal Care Group, Inc. 35,000 Tidewater Inc. 80,000 NET SALES COMMON STOCKS Clayton Homes, Inc. (2) 225,000 OM Group, Inc. (2) 65,000 SanDisk Corporation 115,000 CONVERTIBLE DEBENTURE Reptron Electronics, Inc. --6.75% 2004 (2) $ 777,500
(1) Indicates new commitment to portfolio (2) Indicates elimination from portfolio 4 PORTFOLIO OF INVESTMENTS December 31, 2003
COMMON STOCKS SHARES VALUE - -------------------------------------------------- -------------- -------------- PRODUCER DURABLE GOODS -- 12.2% Cognex Corporation 165,000 $ 4,659,600 Crane Co. 105,000 3,227,700 Denison International plc (ADR)* 75,000 1,792,500 Graco Inc. 100,000 4,010,000 IDEX Corporation 66,500 2,765,735 Zebra Technologies Corporation (Class A)* 61,500 4,081,755 -------------- $ 20,537,290 -------------- ENERGY -- 10.1% Cal Dive International, Inc.* 250,000 $ 6,027,500 Noble Corporation* 162,500 5,814,250 Tidewater Inc. 175,000 5,229,000 -------------- $ 17,070,750 -------------- TECHNOLOGY -- 9.4% Advanced Fibre Communications, Inc.* 250,000 $ 5,037,500 KEMET Corporation* 60,900 833,721 Plantronics, Inc.* 95,000 3,101,750 SanDisk Corporation* 90,000 5,502,600 TriQuint Semiconductor, Inc.* 209,691 1,482,515 -------------- $ 15,958,086 -------------- HEALTH CARE -- 9.3% Charles River Laboratories International, Inc.* 37,300 $ 1,280,509 Health Management Associates, Inc. 68,000 1,632,000 Landauer, Inc. 10,000 407,800 Lincare Holdings Inc.* 135,000 4,054,050 Ocular Sciences, Inc.* 115,000 3,301,650 Renal Care Group, Inc.* 120,000 4,944,000 -------------- $ 15,620,009 -------------- RETAILING -- 7.6% CEC Entertainment, Inc.* 55,000 $ 2,606,450 CarMax, Inc.* 174,987 5,412,348 O'Reilly Automotive, Inc.* 125,000 4,795,000 -------------- $ 12,813,798 -------------- BUSINESS SERVICES & SUPPLIES -- 6.7% HON INDUSTRIES Inc. 85,000 $ 3,682,200 Manpower Inc. 65,000 3,060,200 Office Depot, Inc.* 275,000 4,595,250 -------------- $ 11,337,650 --------------
5
SHARES OR PRINCIPAL COMMON STOCKS--CONTINUED AMOUNT VALUE - ---------------------------------------------------------------- -------------- -------------- BANKING -- 5.6% National Commerce Financial Corporation 162,500 $ 4,433,000 North Fork Bancorporation, Inc. 125,000 5,058,750 -------------- $ 9,491,750 -------------- DISTRIBUTION -- 5.4% Black Box Corporation 65,000 $ 2,994,550 ScanSource, Inc.* 135,000 6,158,700 -------------- $ 9,153,250 -------------- MATERIALS -- 2.1% Engelhard Corporation 120,000 $ 3,594,000 -------------- INSURANCE -- 1.4% Brown & Brown, Inc. 70,000 $ 2,282,700 -------------- TRANSPORTATION -- 0.2% Knight Transportation, Inc.* 10,000 $ 256,500 -------------- TOTAL COMMON STOCKS -- 70.0% (Cost $82,192,255) $ 118,115,783 -------------- SHORT-TERM INVESTMENTS -- 24.9% (Cost $42,098,518) Short-term Corporate Notes: General Electric Capital Corporation -- 0.75% 1/02/04 $ 7,791,000 $ 7,790,838 International Lease Finance Corporation -- 1.04% 1/05/04 6,917,000 6,916,201 ChevronTexaco Funding Corporation -- 1.02% 1/06/04 6,000,000 5,999,150 Federal National Mortgage Association -- 1.03% 1/12/04 6,615,000 6,612,918 General Electric Capital Services Corporation -- 1.07% 1/14/04 4,077,000 4,075,425 Federal Home Loan Bank -- 1.01% 1/16/04 4,000,000 3,998,316 Toyota Motor Credit Corporation -- 0.92% 1/21/04 2,511,000 2,509,716 Federal Home Loan Mortgage -- 1.02% 2/04/04 4,200,000 4,195,954 -------------- TOTAL SHORT-TERM INVESTMENTS $ 42,098,518 -------------- TOTAL INVESTMENTS -- 94.9% (Cost $124,290,773) $ 160,214,301 Other assets less liabilities -- 5.1% 8,665,716 -------------- TOTAL NET ASSETS -- 100% $ 168,880,017 ==============
*Non-income producing security See notes to financial statements. 6 STATEMENT OF ASSETS AND LIABILITIES December 31, 2003 ASSETS Investments at value: Investment securities -- at market value (identified cost $82,192,255) $ 118,115,783 Short-term investments -- at cost plus interest earned (maturities 60 days or less) 42,098,518 $ 160,214,301 -------------- Cash 288 Receivable for: Capital stock sold $ 14,366,709 Dividends and accrued interest 28,580 14,395,289 -------------- -------------- $ 174,609,878 LIABILITIES Payable for: Investment securities purchased $ 5,267,911 Capital stock repurchased 347,911 Advisory fees and financial services 99,226 Accrued expenses 14,813 5,729,861 -------------- -------------- NET ASSETS $ 168,880,017 ============== SUMMARY OF SHAREHOLDERS' EQUITY Capital Stock -- par value $0.01 per share; authorized 25,000,000 shares; outstanding 6,243,918 shares $ 62,439 Additional Paid-in Capital 133,278,792 Distributions in excess of net realized gain on investments (384,742) Unrealized appreciation of investments 35,923,528 -------------- Net assets at December 31, 2003 $ 168,880,017 ============== NET ASSET VALUE, REDEMPTION PRICE AND MAXIMUM OFFERING PRICE PER SHARE Net asset value and redemption price per share (net assets divided by shares outstanding) $ 27.05 ============== Maximum offering price per share (100/94.75 of per share net asset value) $ 28.55 ==============
See notes to financial statements. 7 STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 INVESTMENT INCOME Interest $ 235,912 Dividends 537,813 -------------- $ 773,725 EXPENSES -- Note 3: Advisory fees $ 754,011 Transfer agent fees and expenses 173,361 Financial services 108,309 Reports to shareholders 30,066 Custodian fees 28,396 Audit fees 27,000 Directors' fees and expenses 20,251 Registration fees 20,025 Legal fees 2,379 Other expenses 8,323 1,172,121 -------------- -------------- Net investment loss $ (398,396) -------------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments: Proceeds from sales of investment securities (excluding short-term investments with maturities 60 days or less) $ 19,809,935 Cost of investment securities sold 13,868,549 -------------- Net realized gain on investments $ 5,941,386 Unrealized appreciation of investments: Unrealized appreciation at beginning of year $ 6,530,275 Unrealized appreciation at end of year 35,923,528 -------------- Increase in unrealized appreciation of investments 29,393,253 -------------- Net realized and unrealized gain on investments $ 35,334,639 -------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 34,936,243 ==============
See notes to financial statements. 8 STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------------------------------- 2003 2002 -------------------------------- -------------------------------- INCREASE IN NET ASSETS Operations: Net investment loss $ (398,396) $ (181,987) Net realized gain (loss) on investments 5,941,386 (68,221) Net unrealized appreciation (depreciation) of investments 29,393,253 (9,313,191) -------------- -------------- Increase (decrease) in net assets resulting from operations $ 34,936,243 $ (9,563,399) Distributions to shareholders from net realized capital gains (5,800,940) (1,036,773) Capital Stock transactions: Proceeds from Capital Stock sold $ 68,468,148 $ 86,075,280 Proceeds from shares issued to shareholders upon reinvestment of dividends and distributions 4,829,693 868,514 Cost of Capital Stock repurchased (25,331,757) 47,966,085 (36,540,287) 50,403,507 -------------- -------------- -------------- -------------- Total increase in net assets $ 77,101,388 $ 39,803,335 NET ASSETS Beginning of year 91,778,629 51,975,294 -------------- -------------- End of year $ 168,880,017 $ 91,778,629 ============== ============== CHANGE IN CAPITAL STOCK OUTSTANDING Shares of Capital Stock sold 2,726,602 3,789,069 Shares issued to shareholders upon reinvestment of dividends and distributions 182,321 39,676 Shares of Capital Stock repurchased (1,162,599) (1,576,575) -------------- -------------- Increase in Capital Stock outstanding 1,746,324 2,252,170 ============== ==============
See notes to financial statements. 9 FINANCIAL HIGHLIGHTS SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- Per share operating performance: Net asset value at beginning of year $ 20.41 $ 23.15 $ 20.59 $ 20.45 $ 20.15 ----------- ----------- ----------- ----------- ----------- Income from investment operations: Net investment income (loss) $ (0.06) $ (0.04) $ (0.02) -- $ (0.03) Net realized and unrealized gain (loss) on investment securities 7.77 (2.39) 4.65 $ 1.95 4.89 ----------- ----------- ----------- ----------- ----------- Total from investment operations $ 7.71 $ (2.43) $ 4.63 $ 1.95 $ 4.86 ----------- ----------- ----------- ----------- ----------- Less distributions from net realized capital gains $ (1.07) $ (0.31) $ (2.07) $ (1.81) $ (4.56) ----------- ----------- ----------- ----------- ----------- Net asset value at end of year $ 27.05 $ 20.41 $ 23.15 $ 20.59 $ 20.45 =========== =========== =========== =========== =========== Total investment return* 37.89% (10.59)% 22.73% 10.16% 25.31% Ratios/supplemental data: Net assets at end of year (in thousands) $ 168,880 $ 91,779 $ 51,975 $ 40,170 $ 43,116 Ratio of expenses to average net assets 1.05% 1.15% 1.24% 1.24% 1.30% Ratio of net investment income (loss) to average net assets (0.36)% (0.25)% (0.11)% 0.02% (0.15)% Portfolio turnover rate 23% 6% 25% 16% 16%
* Return is based on net asset value per share, adjusted for reinvestment of distributions, and does not reflect deduction of the sales charge. See notes to financial statements. 10 NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES FPA Perennial Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end, management investment company. The Fund's primary investment objective is long-term growth of capital. Current income is a secondary consideration. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. A. Security Valuation Securities listed or traded on a national securities exchange are valued at the last sale price. Securities traded on the NASDAQ National Market System are valued at the NASDAQ Official Closing Price. If there was not a sale that day, these securities are valued at the last bid price. Securities which are unlisted are valued at the most recent bid price. Short-term investments with maturities of 60 days or less are valued at cost plus interest earned which approximates market value. B. Federal Income Tax No provision for federal income tax is required because the Fund has elected to be taxed as a "regulated investment company" under the Internal Revenue Code and intends to maintain this qualification and to distribute each year to its shareholders, in accordance with the minimum distribution requirements of the Code, all of its taxable net investment income and taxable net realized gains on investments. C. Securities Transactions and Related Investment Income Securities transactions are accounted for on the date the securities are purchased or sold. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income and expenses are recorded on an accrual basis. D. Use of Estimates The preparation of the financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates. E. Reclassification of Capital Accounts As of December 31, 2003, $580,393 of accumulated net losses were reclassified to additional paid-in capital and undistributed net realized gains on investments in order to adjust for differences between income tax regulations and accounting principles generally accepted in the United States. NOTE 2 -- PURCHASES, SALES AND TAX DIFFERENCES The cost of purchases of investment securities (excluding short-term investments with maturities of 60 days or less) aggregated $31,191,402 for the year ended December 31, 2003. Realized gains or losses are based on the specific-certificate identification method. All of the amounts reported in the financial statements at December 31, 2003 were the same for federal income tax and financial reporting purposes. Gross unrealized appreciation and depreciation for all investments at December 31, 2003 for federal income tax and financial reporting purposes was $37,329,151 and $1,405,623, respectively. NOTE 3 -- ADVISORY FEES AND OTHER AFFILIATED TRANSACTIONS Pursuant to an Investment Advisory Agreement, advisory fees were paid by the Fund to First Pacific Advisors, Inc. (the "Adviser"). Under the terms of this Agreement, the Fund pays the Adviser a monthly fee calculated at the annual rate of 0.75% of the first $50 million of the Fund's average daily net assets and 0.65% of the average daily net assets in excess of $50 million. In addition, the Fund pays the Adviser an amount equal to 0.10% of the average daily net assets for each fiscal year in reimbursement for the provision of financial services to the Fund. The Agreement obligates the Adviser to reduce its fee to the extent 11 necessary to reimburse the Fund for any annual expenses (exclusive of interest, taxes, the cost of any supplemental statistical and research information, and extraordinary expenses such as litigation) in excess of 12% of the first $30 million and 1% of the remaining average net assets of the Fund for the year. For the year ended December 31, 2003, the Fund paid aggregate fees of $20,000 to all Directors who are not affiliated persons of the Adviser. Legal fees were for services rendered by O'Melveny & Myers LLP, counsel for the Fund. A Director of the Fund is of counsel to, and a retired partner of, that firm. Certain officers of the Fund are also officers of the Adviser and FPA Fund Distributors, Inc. NOTE 4 -- DISTRIBUTOR For the year ended December 31, 2003, FPA Fund Distributors, Inc. ("Distributor"), a wholly owned subsidiary of the Adviser, received $59,069 in net Fund share sales commissions after reallowance to other dealers. The Distributor pays its own overhead and general administrative expenses, the cost of supplemental sales literature, promotion and advertising. INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF FPA PERENNIAL FUND, INC. We have audited the accompanying statement of assets and liabilities of FPA Perennial Fund, Inc. (the "Fund"), including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, and the statements of changes in net assets and financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of FPA Perennial Fund, Inc. for each of the three years in the period ended December 31, 2001 were audited by other auditors whose report, dated February 1, 2002, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. 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 FPA Perennial Fund, Inc. as of December 31, 2003, the results of its operations, for the year then ended and the changes in its net assets and financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Los Angeles, California January 30, 2004 12 DIRECTOR AND OFFICER INFORMATION (Unaudited)
PORTFOLIOS IN FUND COMPLEX NAME, AGE & POSITION(S) TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER ADDRESS WITH COMPANY YEARS SERVED DURING THE PAST 5 YEARS DIRECTOR DIRECTORSHIPS - ------------------------------ ----------------- ------------------ ------------------------------- ------------- ------------- Willard H. Altman, Jr. - (68)* Director+ Years Served: 6 Retired. Formerly, until 1995, 6 11400 W. Olympic Blvd. Partner of Ernst & Young LLP, a Suite 1200 public accounting firm. Los Angeles, CA 90064 John P. Endicott - (85)* Director+ Years Served: 21 Independent Management 1 11400 W. Olympic Blvd. Consultant. Suite 1200 Los Angeles, CA 90064 Leonard Mautner - (86)* Director+ Years Served: 21 President, Leonard Mautner 2 11400 W. Olympic Blvd. Associates; General Partner, Suite 1200 Goodman & Mautner Ltd. Los Angeles, CA 90064 Lawrence J. Sheehan - (71) Director+ Years Served: 13 Of counsel to, and partner 5 11400 W. Olympic Blvd. (1969 to 1994) of, the law firm Suite 1200 of O'Melveny & Myers LLP, legal Los Angeles, CA 90064 counsel to the Company. Eric S. Ende - (59) Director+, Senior Vice President of the 3 11400 W. Olympic Blvd. President & Years Served: 4 Adviser. Suite 1200 Portfolio Manager Los Angeles, CA 90064 Steven R. Geist - (50) Executive Years Served: 8 Vice President of the 11400 W. Olympic Blvd. Vice President Adviser. Suite 1200 & Portfolio Los Angeles, CA 90064 Manager J. Richard Atwood - (43) Treasurer Years Served: 7 Principal and Chief Operating First Pacific 11400 W. Olympic Blvd. Officer of the Adviser. Advisors, Suite 1200 President of FPA Inc. and Los Angeles, CA 90064 Fund Distributors, Inc. FPA Fund Distributors, Inc. Sherry Sasaki - (49) Secretary Years Served: 21 Assistant Vice President and 11400 W. Olympic Blvd. Secretary of the Adviser and Suite 1200 of FPA Fund Distributors, Los Angeles, CA 90064 Inc. Christopher H. Thomas - (46) Assistant Years Served: 9 Vice President and Controller FPA Fund 11400 W. Olympic Blvd. Treasurer of the Adviser and of FPA Distributors, Suite 1200 Fund Distributors, Inc. Inc. Los Angeles, CA 90064
+ Directors serve until their resignation, removal or retirement. * Audit Committee Member 13 FPA PERENNIAL FUND, INC. INVESTMENT ADVISER First Pacific Advisors, Inc. 11400 West Olympic Boulevard, Suite 1200 Los Angeles, California 90064 SHAREHOLDER SERVICE AGENT Boston Financial Data Services, Inc. P.O. Box 8115 Boston, Massachusetts 02266-8115 (800) 638-3060 (617) 483-5000 CUSTODIAN & TRANSFER AGENT State Street Bank and Trust Company Boston, Massachusetts TICKER SYMBOL: FPPFX CUSIP: 302548102 DISTRIBUTOR FPA Fund Distributors, Inc. 11400 West Olympic Boulevard, Suite 1200 Los Angeles, California 90064 COUNSEL O'Melveny & Myers LLP Los Angeles, California INDEPENDENT AUDITORS Deloitte & Touche LLP Los Angeles, California This report has been prepared for the information of shareholders of FPA Perennial Fund, Inc., and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Item 2. (a) The registrant has adopted a code of ethics that applies to the registrant's senior executive and financial officers. A copy of the code of ethics is filed as an exhibit to this Form N-CSR. (b) During the period covered by this report, there were not any amendments to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a). Item 3. The registrant's board of directors has determined that Willard H. Altman, Jr., a member of the registrant's audit committee and board of directors, is an "audit committee financial expert" and is "independent," as those terms are defined in this Item. This designation will not increase the designee's duties, obligations or liability as compared to his duties, obligations and liability as a member of the audit committee and of the board of directors. Item 4. Principal Accountant Fees and Services.
2002 2003 (a) Audit Fees $ 25,200 $ 22,000 (b) Audit Related Fees -0- -0- (c) Tax Fees $ 3,200 $ 5,000 (d) All Other Fees -0- -0-
(e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. The audit committee shall pre-approve all audit and permissible non-audit services that the committee considers compatible with maintaining the independent auditors' independence. The pre-approval requirement will extend to all non-audit services provided to the registrant, the adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant; provided, however, that an engagement of the registrant's independent auditors to perform attest services for the registrant, the adviser or its affiliates required by generally accepted auditing standards to complete the examination of the registrant's financial statements (such as an examination conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants), will be deem pre-approved if: (i) the registrant's independent auditors inform the audit committee of the engagement, (ii) the registrant's independent auditors advise the audit committee at least annually that the performance of this engagement will not impair the independent auditor's independence with respect to the registrant, and (iii) the audit committee receives a copy of the independent auditor's report prepared in connection with such services. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full committee at its next meeting. (2) Disclose the percentage of services described in each of paragraphs (b) - (d) of this Item that were approved by the audit committee pursuant to paragraph (c) (7)(i)(C) of Rule 2-01 of Regulation S-X. 100% of the services provided to the registrant described in paragraphs (b) - (d) of this Item were pre-approved by the audit committee pursuant to paragraphs (e)(1) of this Item. There were no services provided to the investment adviser or any entity controlling, controlled by or under common control with the adviser described in paragraphs (b) - (d) of this Item that were required to be pre-approved by the audit committee. (f) If greater than 50%, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. All services performed on the engagement to audit the registrant's financial statements for the most recent fiscal year end were performed by the principal accountant's full-time, permanent employees. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. None (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. N/A Item 5. Audit Committee of Listed Registrants. N/A. Item is only applicable for annual reports for the year ending on or after January 15, 2004. Item 6. Reserved. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A. Item 8. Reserved. Item 9. Controls and Procedures. (a) The Principal Executive Officer and Principal Financial Officer of FPA Perennial Fund, Inc. ("Fund") have concluded that the Fund's Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. (b) There have been no significant changes in the Fund's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 10. Exhibits. (a) Code of ethics as applies to the registrant's officers and directors, as required to be disclosed under Item 2 of Form N-CSR. Attached hereto as Ex. 99.CODE ETH. (b) Separate certification for the registrant's principal executive officer and principal financial officer, as required by Rule 30a-2 under the Investment Company Act of 1940. Attached hereto. SIGNATURES Pursuant to the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FPA PERENNIAL FUND, INC. By: /s/ ERIC S. ENDE -------------------------------- Eric S. Ende, President Date: March 8, 2004 Pursuant to the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FPA PERENNIAL FUND, INC. By: /s/ J. RICHARD ATWOOD -------------------------------- J. Richard Atwood, Treasurer Date: March 8, 2004 EX-99.CERT 3 a2128909zex-99_cert.txt EX-99.CERT EXHIBIT 99.CODE ETH FPA CAPITAL FUND, INC. FPA FUNDS TRUST FPA NEW INCOME, INC. FPA PARAMOUNT FUND, INC. FPA PERENNIAL FUND, INC. SOURCE CAPITAL, INC. CODE OF ETHICS FOR SENIOR EXECUTIVE AND FINANCIAL OFFICERS I. Introduction The Board of Directors/Trustees of each registered investment company that is managed, sponsored, and distributed by First Pacific Advisors, Inc. ("FPA") (each an "FPA Fund" and collectively the "FPA Funds") has adopted this code of ethics ("Code") as required by the Section 406 of the Sarbanes-Oxley Act. The Code applies to the individuals in positions listed on Exhibit A ("Covered Officers"). All Covered Officers, along with employees of FPA, are subject to separate and distinct obligations from this Code under a Code of Ethics adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940 ("17j-1 Code of Ethics"), policies to prevent the misuse of non-public information, and other internal compliance guidelines and policies that may be in effect from time to time. This Code is designed to promote: - Honest and ethical conduct, including the ethical handling of conflicts of interest; - Full, fair, accurate, timely, and understandable disclosure in reports and documents that an FPA Fund files with, or submits to, the U.S. Securities and Exchange Commission, or in other public communications made by the FPA Funds or FPA; - Compliance with applicable laws, governmental rules, and regulations; - Prompt internal reporting to those identified in the Code of violations of the Code; and - Accountability for adherence to the Code. II. Actual or Apparent Conflicts of Interest A. Covered Officers should conduct all activities in accordance with the following principles: 1. Shareholders' interests come first. In the course of fulfilling their duties and responsibilities to FPA Fund shareholders, Covered Officers must at all times place the interests of FPA Fund shareholders first, and avoid serving their own personal interests ahead of the interests of FPA Fund shareholders. 2. Conflicts of interest must be avoided. Covered Officers must avoid any situation involving an actual or potential conflict of interest with respect to their duties and responsibilities to FPA Fund shareholders. 3. Compromising situations must be avoided. Covered Officers must not take advantage of their position of trust and responsibility. Covered Officers must avoid any situation that might compromise or call into question their exercise of full independent judgment in the best interests of FPA Fund shareholders. All activities of Covered Officers should be guided by and adhere to these fiduciary standards regardless of whether the activity is specifically described in this Code. B. Restricted Activities 1. Gifts. Under no circumstances shall any Covered Officer accept money, stocks, bonds, notes, etc. from any entity that does business with or on behalf of the FPA Funds. No Covered Officer shall accept any other type of gift or other thing of more than de minimis value ($250) from any person or entity that does business with or on behalf of the FPA Funds. Written documentation of any gift or other thing with an estimated value of more than $100 should be submitted within ten days of receipt and approved by J. Richard Atwood or Christopher H. Thomas. 2. Prohibition on misuse of FPA Funds' property. Covered Officers are prohibited from making use of time, equipment, services, personnel or property of any FPA Fund for any purposes other than the performance of their duties and responsibilities in connection with the FPA Funds. III. Disclosure and Compliance A. Each Covered Officer should be familiar with the disclosure requirements generally applicable to the FPA Funds. B. Each Covered Officer should not knowingly misrepresent, or cause other to misrepresent, facts about the FPA Funds to others, including to the FPA Funds' directors/trustees and auditors, or to government regulators and self-regulatory organizations. C. Each Covered Officer should, to the extent appropriate within the Covered Officer's area of responsibility, consult with other officers and employees of FPA and of an FPA Fund with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FPA Fund files with, or submits to, the SEC and in other public communications made by an FPA Fund. D. It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules, regulations, and the 17j-1 Code of Ethics. IV. Reporting and Responsibility A. Each Covered Officer must: 1. Upon adoption or amendment of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing that he or she has received, read, and understands the Code; 2. Affirm at least annually in writing that he or she has complied with the requirements of the Code; 3. Not retaliate against any other Covered Officer or any employee of FPA for reports of potential violations of the Code that are made in good faith; and 4. Notify J. Richard Atwood or Christopher H. Thomas promptly if the Covered Officer knows of any violations of this Code. B. The FPA Funds will use the following procedures in investigating and enforcing this Code: 1. J. Richard Atwood or Christopher H. Thomas is responsible for applying this Code to specific situations and has the authority to interpret this Code in any particular situation. All determinations made by J. Richard Atwood or Christopher H. Thomas will be reported to the Board of Directors/Trustees of the FPA Funds in an annual report regarding activities subject to the Code. 2. J. Richard Atwood or Christopher H. Thomas will take all appropriate action to investigate any potential violations of the Code that are reported. 3. If, after investigation, J. Richard Atwood or Christopher H. Thomas believes that no material violation of the Code has occurred, no further action is required to be taken. 4. Any matter that J. Richard Atwood or Christopher H. Thomas believes is a material violation of the Code will be reported to the Board of Directors/Trustees of the FPA Funds. 5. If the Board of Directors/Trustees of the FPA Funds concurs that a material violation of the Code has occurred, the Board will consider appropriate action. Appropriate action may include reassignment, suspension, or dismissal of the applicable Covered Officer(s), or any other sanctions the Board deems appropriate. Appropriate action may also include review of, and appropriate modifications to, applicable policies and procedures. 6. Any changes to or waiver of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of conduct adopted by the FPA Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FPA Funds, FPA, or other service providers govern or purport to govern the behavior or activities of the Covered Officers, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. FPA's and the FPA Funds' 17j-1 Code of Ethics, policies to prevent the misuse of non-public information, and other internal compliance guidelines and policies that may be in effect from time to time are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. Amendments This Code may not be amended except by the approval of a majority vote of the FPA Funds' Boards of Directors/Trustees. All amendments must be in writing and communicated promptly to the Covered Officers, who shall affirm receipt of the amended Code in accordance with Section IV.A.1. VII. Confidentiality All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FPA Funds' Boards of Directors/Trustees, and J. Richard Atwood or Christopher H. Thomas. Date: December 8, 2003 EXHIBIT A TO THE FPA CAPITAL FUND, INC. FPA FUNDS TRUST FPA NEW INCOME, INC. FPA PARAMOUNT FUND, INC. FPA PERENNIAL FUND, INC. SOURCE CAPITAL, INC. CODE OF ETHICS FOR SENIOR EXECUTIVE AND FINANCIAL OFFICERS COVERED OFFICERS OF FPA FUNDS: President & CIO President & Portfolio Manager Executive VP & Portfolio Manager Senior VP & Fixed-Income Manager Vice Presidents Treasurer Secretary Assistant Treasurer EXHIBIT 99.CERT SECTION 302 CERTIFICATION I, Eric S. Ende, certify that: 1. I have reviewed this report on Form N-CSR of FPA Perennial Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 8, 2004 /s/ Eric S. Ende Eric S. Ende, President (Principal Executive Officer) SECTION 302 CERTIFICATION I, J. Richard Atwood, certify that: 1. I have reviewed this report on Form N-CSR of FPA Perennial Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 8, 2004 /s/ J. Richard Atwood J. Richard Atwood, Treasurer (Principal Financial Officer) EX-99.906CERT 4 a2128909zex-99_906cert.txt EX-99.906 CERT EXHIBIT 99.906 CERT SECTION 906 CERTIFICATION I, Eric S. Ende, President of FPA Perennial Fund, Inc. ("Fund"), certify that: 1. The Fund's periodic report on Form N-CSR for the period ended December 31, 2003 ("Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. March 8, 2004 /s/ ERIC S. ENDE - ----------------------- ------------------------------------ (Date) Eric S. Ende, President I, J. Richard Atwood, Treasurer of FPA Perennial Fund, Inc. ("Fund"), certify that: 1. The Fund's periodic report on Form N-CSR for the period ended December 31, 2003 ("Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. March 8, 2004 /s/ J. RICHARD ATWOOD - ----------------------- ------------------------------------ (Date) J. Richard Atwood, Treasurer A signed original of this written statement required by Section 906 has been provided to the Fund and will be retained by the Fund and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----