-----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, Qg61W4roPjJV6BdRfuHDIbiTEAWBDyPd/iLGVI+jJSzeZJOgf7lboLEVlOsDmCcO 0haRh3bhe06AIdCbsXSPZQ== 0000859765-04-000004.txt : 20040227 0000859765-04-000004.hdr.sgml : 20040227 20040227153231 ACCESSION NUMBER: 0000859765-04-000004 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040227 EFFECTIVENESS DATE: 20040227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAVILCO INC/WA/ CENTRAL INDEX KEY: 0000859765 IRS NUMBER: 920045958 STATE OF INCORPORATION: AK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06027 FILM NUMBER: 04634968 BUSINESS ADDRESS: STREET 1: ONE UNION SQUARE STREET 2: SUITE 3010 CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 2066246166 N-CSR 1 shrhldrpt.txt ANNUAL SHAREHOLDER REPORT 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 811-6027 KAVILCO INCORPORATED (Exact name of registrant as specified in charter) 600 UNIVERSITY STREET, SUITE 3010 SEATTLE, WASHINGTON 98101-1129 (Address of Principal executive offices) (Zip Code) Registrant's telephone number, including area code: (206) 624-6166 Date of fiscal year end: December 31 Date of reporting period: January 1, 2003 - December 31, 2003 ITEM 1. REPORT TO SHAREHOLDERS - ------------------------------------- DEAR SHAREHOLDERS, Enclosed are the annual audited financial statements for the year ended December 31, 2003. The audit was conducted by our accountants, Anderson ZurMuehlen & Co., P.C. The financial statements are presented in a format that all investment companies must adhere too pursuant to Security and Exchange Commission requirements and Generally Accepted Accounting Principles. In an investment company, the primary objective of the financial statements is to show how the net asset value changed throughout the year (net asset value is defined as the value of securities owned, cash, receivables and other assets less liabilities). We realize the statements are esoteric to say the least. However, to make the financial information more meaningful, we have included a Glossary of Terms, to assist you in interpreting the terminology in the financial statement. STATEMENT OF ASSETS AND LIABILITIES This statement reflects everything the corporation owns or is obligated to pay as of December 31, 2003. Assets and liabilities are stated in terms of current market value. SCHEDULE OF INVESTMENTS The majority of Kavilco's portfolio is primarily made up of debt instruments comprised of government securities and corporate obligations. Corporate obligation is another term for bonds. These bonds carry a stated interest rate and maturity date. The Federal, State and Municipal governments, along with corporations, can issue bonds. Kavilco has shifted its investments from Treasury notes to corporate bonds. STATEMENT OF OPERATIONS The Statement of Operations is an analysis of all income and expense that the corporation incurred during the year. We had a decrease in value of $11,017 in our portfolio. However, valuation changes in the portfolio do not impact the dividends you receive. STATEMENT OF CHANGES IN NET ASSETS What happened to our assets during the year? This statement shows all increases and decreases in our assets. Except for the dividends to shareholder account, it is identical to the Statement of Operations. Page 2 FINANCIAL HIGHLIGHTS This schedule is a comparative analysis that combines all previously discussed statements in terms of one share of stock. NOTES AND TAX INFORMATION TO THE FINANCIAL STATEMENTS The notes are an integral part of the financial statements and provide information that will give the shareholder a complete summary of the operation. Sincerely, KAVILCO INCORPORATED /s/Louis A. Thompson Louis A. Thompson President/Chief Executive Officer [ANDERSON ZURMUEHLEN & CO., P.C. LETTERHEAD] INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Directors of Kavilco Incorporated (an investment company) We have audited the accompanying statement of assets and liabilities of Kavilco Incorporated (an investment company), including the schedule of investments, as of December 31, 2003, and the related statements of operations for the year then ended, and the financial highlights of the year then ended, and the statements of changes in net assets and the financial highlights for the years ended December 31, 2003 and 2002. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights for each of the three years in the period ended December 31, 2001, were audited by other auditors whose report dated February 15, 2002, expressed an unqualified opinion on that statement and those highlights. We conducted our audit 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. 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 audit provides 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 Kavilco Incorporated as of December 31, 2003, the results of its operations for the year ended, and the changes in its net assets and the 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/Anderson ZurMuehlen & Co., P.C. Seattle, Washington January 29, 2004
KAVILCO INCORPORATED (an investment company) STATEMENT OF ASSETS AND LIABILITIES December 31, 2003 ------------------------------------ ASSETS Investments in securities, at market value (identified cost $33,054,621) $ 35,385,339 Real estate at fair value 3,588,815 Cash and cash equivalents 99,198 Interest receivable 500,616 Premises and equipment, net 5,200 Prepaid expenses and other assets 14,166 ------------ Total assets 39,593,334 ------------ LIABILITIES Accounts payable and accrued expenses 20,088 ------------ Total liabilities 20,088 ------------ COMMITMENTS AND CONTINGENCIES Net assets $ 39,573,246 ============ Net assets consist of: Unrealized appreciation on Investments 2,330,718 Real estate 2,534,726 Contributed capital 34,707,802 ------------ Net assets $ 39,573,246 ============ Net asset value per share of common stock divided by 12,000 shares outstanding) $ 3,297.77 ============ The Notes to Financial Statements are an integral part of this statement
KAVILCO INCORPORATED (an investment company) SCHEDULE OF INVESTMENTS December 31, 2003 ----------------------- Principal Market amount/ value shares INVESTMENTS IN SECURITIES - 89.4% OF NET ---------- --------- ASSETS U.S. GOVERNMENT SECURITIES - 18.17% United States Treasury Notes, 7.250% due August 15, 2004 5,000,000 $5,189,060 Federal National Mortgage Association, 6.210% due November 7, 2007 1,000,000 1,111,470 Federal National Mortgage Association, 6.150% due December 10, 2007 1,000,000 1,106,641 --------- Total U.S. government securities (cost $6,989,442) 7,407,171 --------- CORPORATE OBLIGATIONS - 44.4% Auto and truck - 2.3% Ford Motor Company, 6.625% due February 15, 1,000,000 915,215 2028 Banking - 5.7% Chase Manhattan Corp., 7.875% due July 15, 1,000,000 1,124,133 2006 J.P. Morgan Chase & Co., 6.500% due January 1,000,000 1,109,731 15,2009 Beverage (soft drink) - 2.2% Coca-Cola Enterprises, 8.500% due February 700,000 865,880 1, 2012 Diversified financial services - 3.0% General Electric Cap Corp., 8.500% due July 1,000,000 1,194,041 24, 2008 Electric utility - 3.2% Potomac Electric Power Co., 6.500% due March 190,000 211,456 15, 2008 Northern States Power Co., 6.500% due March 1,000,000 1,045,956 1, 2028 Entertainment - 0.8% Walt Disney Company, 5.800% due October 27, 290,000 314,278 2008 Finance - auto loans - 2.2% General Motors Acceptance Corp., 6.625% due 827,000 880,403 October 15, 2005 Financial services - 2.6% Marsh & McLennan Co., 6.625% due June 15, 1,000,000 1,023,001 2004 Food processing - 3.6% Heinz Corp., 6.000% due March 15, 2008 229,000 251,282 Hershey Foods, 6.950% due August 15, 2012 1,000,000 1,157,937 Petroleum (integrated) - 2.6% Texaco Capital, Inc., 5.700% due December 1, 975,000 1,034,285 2008 Retail store - 3.2% Wal-Mart Stores, 6.875% due August 10, 2009 1,000,000 1,149,520 Dayton Hudson, 8.600% due January 15, 2012 100,000 126,301 Securities brokerage - 8.9% Bear Stearns Co., 6.150% due March 2, 2004 172,000 173,304 Paine Webber Group, Inc., 8.875% due March 15, 2005 1,000,000 1,071,567 Merrill Lynch & Co., 6.375% due October 15, 1,000,000 1,117,583 2008 Bear Stearns Co., 7.625% due December 7, 1,000,000 1,178,073 2009 Telecommunication services - 4.1% Pacific Bell, 6.125% due February 15, 2008 1,000,000 1,093,054 GTE Corp., 6.460% due April 15, 2008 500,000 548,815 June 15, 2003 --------- Total corporate obligations (cost 17,585,815 $15,771,482) ---------- COMMON STOCK - 0.6% Technology - 0.4% Microsoft Corp. 5,440 148,893 Drug industry - 0.05% Merck & Co, Inc. 550 25,410 Gold/Silver mining - 0.1% Barrick Gold 1,200 27,252 Newmont Mining 500 24,305 Real estate investment trust - 0.05% First Industrial Realty Trust 700 23,625 --------- Total common stock (cost $150,829) 249,485 --------- SHORT-TERM INVESTMENTS - 25.7% Prime Obligation Funds 10,142,868 10,142,868 ---------- Total short-term investments (cost 10,142,868 $10,142,868) ---------- Total investments in securities (identified cost $33,054,621) $35,385,339 =========== The Notes to Financial Statements are an integral part of this statement.
KAVILCO INCORPORATED (an investment company) STATEMENT OF OPERATIONS Year Ended December 31, 2003 ---------------------------- Investment income Interest $ 1,962,258 Dividends from money market fund 51,862 Dividends 1,810 ----------- Total investment income 2,015,930 ----------- Expenses Salaries and benefits 299,292 Directors' compensation and expenses 239,184 Legal and accounting 18,758 Custodian 11,788 Insurance expense 66,042 Office and equipment leases 77,020 General and administrative 62,156 ----------- Total expenses 774,240 ----------- Net investment income 1,241,690 ----------- Realized and unrealized gain on investments Net realized gain on investments 235,174 Net decrease in unrealized appreciation on investments (11,017) ----------- Net realized and unrealized gain on investments 224,157 ----------- Net operating income 1,465,847 --------- Other income 34,129 --------- Net increase in net assets resulting from operations $1,499,976 =========== The Notes to Financial Statements are an integral part of this statement.
KAVILCO INCORPORATED (an investment company) STATEMENTS OF CHANGES IN NET ASSETS Years Ended December 31, 2003 and 2002 -------------------------------------- 2003 2002 ----------- ----------- Increase (decrease) in net assets from operations Net investment income $1,241,690 $1,484,381 Net realized gain on investments 235,174 130,140 Net increase (decrease) in unrealized appreciation (11,017) 468,842 Net other income 34,129 185,854 Net increase in net assets resulting ----------- ----------- from operations 1,499,976 2,269,217 ----------- ----------- Dividends and distributions Net investment income (1,380,697) (1,403,937) Net realized gain on investments (235,174) (130,140) Net other income (34,129) (229,923) ----------- ----------- (1,650,000) (1,764,000) ----------- ----------- Total increase (decrease) in net assets (150,024) 505,217 Net assets Beginning of year 39,723,270 39,218,053 ----------- ----------- End of year (including undistributed net investment income of $0 and $74,516, respectively) $39,573,246 $39,723,270 =========== =========== The Notes to Financial Statements are an integral part of these statements.
KAVILCO INCORPORATED (an investment company) FINANCIAL HIGHLIGHTS Years Ended December 31, 1999 - 2003 ------------------------------------ Per share operating performance (for a share of capital stock outstanding throughout the period): 2003 2002 2001 2000 1999 Net asset value, --------- --------- --------- --------- --------- beginning of year $3,310.27 $3,268.17 $3,203.96 $2,901.74 $3,123.38 Income from investment operations Net investment income 103.48 123.70 150.06 150.10 157.47 Net realized and unrealized gain (loss) 18.68 49.91 70.41 300.65 (212.90) Net other income 2.84 15.49 4.74 3.47 2.72 ------- ------- ------- ------- ------- Total from investment operations 125.00 189.10 225.21 454.22 (52.71) ------- ------- ------- ------- ------- Less dividends and distributions from Net investment income (115.06) (116.99) (159.93) (144.40) (157.47) Net realized gain on (19.60) (10.85) - (4.13) (8.10) investments Net other income (2.84) (19.16) (1.07) (3.47) (2.72) Return of capital - - - - (.64) ------- ------- ------- ------- ------- Total distributions (137.50) (147.00) (161.00) (152.00) (168.93) ------- ------- ------- ------- ------- Net asset value, $3,297.77 $3,310.27 $3,268.17 $3,203.96 $2,901.74 end of year ========= ========= ========= ========= ========= Total return (%) 3.78 5.79 7.54 16.05* (1.42) Ratios/supplemental data Net assets, end of year (in thousands)($) 39,573 39,732 39,218 38,447 34,821 Ratio to average net assets (%) Expenses 1.92 1.88 1.78 1.88 1.85 Net investment income 3.08 3.75 4.54 5.07 5.41 Portfolio turnover rate (%) 56.7 9.6 3.0 27.6 0.2 *8.40% of 16.05% is a result of unrealized appreciation on real estate. The Notes to Financial Statements are an integral part of these statements.
KAVILCO INCORPORATED (an investment company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 1. ORGANIZATION - -------------------- Kavilco Incorporated (the Company) is a village corporation within the Sealaska region organized pursuant to the Alaska Native Claims Settlement Act ("ANCSA"). Contributed capital includes receipts from the U.S. government and the state of Alaska under provisions of ANCSA. Under Section 12(a) of ANCSA, on December 5, 1979 the Company received entitlement to the surface estate of real property totaling approximately 23,055 acres. In 1987, 194 acres of the Company's real property were distributed to shareholders, and the timber rights on the remaining 22,861 acres were sold. However, the Company retains all other rights to the surface estate of the real property. The sale of the timber rights contract expired in December 2001, and the timber rights reverted back to the Company. However, at that time, there were no stands of economically viable timber remaining on the property. Since selling the timber rights, the Company has derived the majority of its income from investments. On November 1, 1989, the Company began to operate as a self- managed, closed-end management investment company, as defined by the Investment Company Act of 1940 (the "Act"). The Company is subject to various restrictions imposed by the Act and the Internal Revenue Code, including restrictions on borrowing, dividend and distribution policies, operations and reporting requirements. The Company's investment decisions, which focus primarily on fixed income investments, are made by management under the direction of the Board of Directors. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------- The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for investment companies. The following is a summary of the significant accounting policies consistently followed by the Company in the preparation of these financial statements. SECURITY VALUATION: Investments in securities consist primarily of U.S. government securities, corporate obligations and common stock. Investments in securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation; other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the last quoted bid price. INVESTMENT TRANSACTIONS: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the basis of identified cost. KAVILCO INCORPORATED (an investment company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - -------------------------------------------------------------- INVESTMENT INCOME: Interest income is recorded on an accrual basis as adjusted for the amortization of discounts and premiums using the effective interest method. Premiums and discounts, including original issue discounts, are amortized for both tax and financial reporting purposes. Dividend income is recorded as of the ex-dividend date. REAL ESTATE: Real estate is carried at fair value as determined in good faith by the board of directors. Real estate represents entitlement to the surface estate of real property described in Note 1, for which no readily available market quotation exists. The real estate was initially recorded by the Company at its appraised value at the date of conveyance ($934,089). In addition during the year 2002, the Company received an additional 89.24 acres in the process of closing out the timber sale contract, in payment of a past due rent obligation that was owed to the Company.The board of of directors engaged a Certified Forester (the "Forester") to provide an estimate of the value of the real property. The value of this additional land was estimated by the Forester to be $120,000 for a total cost basis of $1,054,089. In order to estimate the fair value of this real property, the board of directors has considered such relevant factors as the lack of commercially viable timber due to previous harvest, amount of capital expenditures required for future growth of timber, location of the property, recent sales of similar real property in the region and market demand and supply for this type of real property during the valuation process. The board of directors estimated the fair value of this real property at December 31, 2003 to be $3,588,815 on the basis of good faith consideration of both the aforementioned pertinent factors and the analysis performed by the Forester. Based on the inherent uncertainty of valuation, however,this estimated value may differ significantly from the value that would have been used had a ready market for the real property existed, and the difference could be material. FEDERAL INCOME TAXES: The Company's policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its net investment taxable income to its shareholders. Therefore, no federal income tax provision is required for the Company. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends and distributions to shareholders are recorded on payable date. Dividends are generally declared and paid twice a year. Capital gain distributions are generally declared and paid annually. The timing and characterization of certain income and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States of America. KAVILCO INCORPORATED (an investment company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - -------------------------------------------------------------- USE OF ESTIMATES: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. NOTE 3. INVESTMENTS - ------------------- Purchases of investment securities (consisting of U.S. government securities and common stock) aggregated $17,657,896 for the year ended December 31, 2003, and sales and maturities of investment securities (consisting of U.S. government securities and corporate obligations) aggregated $23,753,899 for the year ended December 31, 2003. NOTE 4. PREMISES AND EQUIPMENT - ------------------------------ Buildings and equipment are recorded at cost less accumulated depreciation. Depreciation is computed generally on the straight- line method over the estimated useful lives of the related assets, which range from 5 to 15 years. Depreciation expense was $6,335 for the year ended December 31, 2003. Building $154,369 Furniture, fixtures and equipment 94,908 -------- 249,277 Less accumulated depreciation (244,077) --------- $ 5,200 =========
KAVILCO INCORPORATED (an investment company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 5. LEASE OBLIGATION - ------------------------ The Company leases office space under a non-cancelable operating lease agreement, which terminates September 30, 2008. Rent expense for the year ended December 31, 2003 was $50,681, which includes $45,681 for office rent, with the balance consisting mostly of parking rent and storage rent. Rent expense has been included in the general and administrative expenses. At December 31, 2003, future minimum lease commitments under the non-cancelable operating lease are as follows: 2004 $29,700 2005 29,700 2006 29,700 2007 29,700 2008 22,200 ------- $141,000 ========
NOTE 6. NET ASSETS - ------------------ The Company's capital structure is as follows: Common Stock Class A, no par value - Authorized, 1,000,000 shares; issued and outstanding, 11,576.83 shares Class B, no par value - Authorized, 500,000 shares; issued and outstanding, 423.17 shares Upon organization, 100 shares of common stock (Class A) were issued to each qualified shareholder enrolled in the Company pursuant to ANCSA. The Company utilized a roll comprising 120 Alaska Natives eligible to receive stock certificates as certified by the U. S. Secretary of the Interior. Under the provisions of ANCSA, stock dividends paid or other stock grants are restricted, and the stock may not be sold, pledged, assigned, or otherwise alienated, except in certain circumstances by court decree or death, unless approved by a majority of the shareholders. (Before the Company's stock may be publicly traded, it must amend its Articles of Incorporation.) The stock carries voting rights only if the holder hereof is an eligible Alaska Native. Nonvoting common stock (Class B) is issued to non-Native persons who inherit stock. KAVILCO INCORPORATED (an investment company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 NOTE 6. NET ASSETS (CONTINUED) - ------------------------------ The following reclassifications have been made to reflect activity for the year ended December 31, 2003: Undistributed Accumulated net net investment realized Contributed income gain capital ------------- ------------ --------------- 64,491 - (64,491)
NOTE 7. TAX BASIS OF DISTRIBUTABLE INCOME - ----------------------------------------- At December 31, 2003, there was no undistributed ordinary income for tax purposes. During the year ended December 31, 2002, $1,622,070 of the Company's distributions comprised ordinary income, and $27,930 were considered long-term capital gains. The tax cost of investments is the same as for financial reporting purposes. The gross unrealized appreciation and gross unrealized depreciation on a tax basis is $2,403,364 and $72,646, respectively. NOTE 8. PENSION PLAN - -------------------- Employees of the Company are covered by a defined contribution pension plan. The Company contributes 20% of each participant's compensation to the plan. The Company's contributions during the year ended December 31, 2003 totaled $49,882. ITEM 2. CODE OF ETHICS - ------------------------ Kavilco adopted a code of ethics on January 29, 1990. That code of ethics was amended on November 10, 2000 can be viewed at our website: www.kavilco.com. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT - ------------------------------------------ Kavilco Incorporated is subject to the Alaska Native Claims Settlement Act (Act). Pursuant to the Act, Kavilco's stock and dividends may not be sold, pledged, subjected to a lien or judgement execution, assigned in present or future, or otherwise alienated, except pursuant to a court decree of separation or child support. However, the stock can be gifted to a relative provided the recipient is a descendant of an Alaska Native. The Chief Financial Officer has no control over the financial records of the corporation. The Corporate Secretary maintains the accounting records. Monthly, an independent accountant performs various reconciliation's and adjusting journal entries on the corporate books and records. Kavilco does not have an audit committee. The CFO reviews the entire audited financial statement and various CPA correspondences with the board of directors. Two board members have degrees in business. However, pursuant to SEC regulations their experience would not qualify them as financial experts. The only contentious financial issue that Kavilco has had to deal with since becoming and Investment Company involves the evaluation of our land holdings in Alaska. After a two-year battle with our previous auditors, PricewaterhouseCoopers, and pressure by the Security Exchange Commission, the Board relented and increased the value of our land holdings. The CFO opposed this action because it served no practical purpose. The primary purpose of a financial expert serving on the board of directors is to prevent the gross accounting inequities that were driven by greed and outright thievery at such firms as Qwest Communications, Enron, and Tyco. There is no incentive on behalf of management to commit fraud since Kavilco's stock cannot be publicly traded and we do not have compensation incentives. More importantly, the board of directors is not a rubber stamp for management. Many of the shareholders are related to the directors, which acts as an additional incentive to have a high degree of business probity. Kavilco is celebrating its thirty-year anniversary and has never been involved in financial deceit. This superior track record can only be attributed to the excellent oversight of an active and knowledgeable board of directors. Accordingly, Kavilco does not have an audit committee or a financial expert as defined by the SEC. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - ------------------------------------------------ AUDIT FEES 2003 2002 - ----------------------------------------------------- Anderson ZurMuehlen & Co $13,500 0 PriceWaterhouseCoopers $26,050 AUDIT RELATED FEES - ----------------------------------------------------- 0 0 TAX FEES - ----------------------------------------------------- Anderson ZurMuehlen & Co. $2,500 $2,500 ALL OTHER FEES - ----------------------------------------------------- 0 0
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS - ----------------------------------------------- Kavilco is a privately held registered investment company. ITEM 6. RESERVED - ------------------ ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES - ---------------------------------------------------------------- The Board of Directors adopted the following resolution during the November board meeting: KAVILCO INCORPORTED RESOLUTION 11-14-03b: PROXY VOTING POLICIES - --------------------------------------------------------------- The Securities and Exchange Commission believes the recent scandals have created renewed investor interest in corporate governance issues. In response, the SEC has new rules designed to increase transparency of proxy voting by mutual funds. RESOLVED, on voting common stock, the Chief Financial Officer is hereby directed to vote the management slate of directors and management's recommendations on any corporate proposals that appear on the proxy. RESOLVED, where there is a material conflict of interest where the Chief Financial Officer has a business, personal, or family relationship with a public company, voting will be deferred until the next scheduled board of directors meeting at which time the issue will be discussed. RESOLVED, pusuant to rule 30b1-4 under the Investment Company Act, Kavilco will file form N-PX with the SEC detailing a complete voting record. This filing will be made for a 12 month period commencing on June 30, 2004. In addition, this information will be available on Kavilco's Web site as soon as reasonably practicable, after filing the report with the SEC, which means the same day, absent unforeseen circumstances. Date: November 14, 2004 /s/Louis A. Thompson Louis A. Thompson, President /s/John Campbell John Campbell, Secretary (Corporate Seal) ITEM 8. RESERVED - ------------------ ITEM 9. CONTROLS AND PROCEDURES - --------------------------------- (a) The registrant's President and Chief Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2 under the Investment Company Act of 1940) are effective in design and operation and are sufficient to form the basis of the certifications required, based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report. (b) There were no significant changes in the registrant'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)(1) CEO Certification (a)(2) CFO Certification SIGNATURES - ---------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of Kavilco Incorporated and in the capacities and on the dates indicated. By /s/Louis A. Thompson Louis A. Thompson Chief Executive Officer February 25, 2004 By /s/Scott Burns Scott Burns Chief Financial Officer February 25, 2004 EX-99.CERT 3 certificatelat.txt CEO CERTIFICATION [KAVILCO INCORPORATED OFFICE LETTERHEAD] Certification Required by Rule 301-2 Investment Company Act of 1940 I, Louis A. Thompson, Chief Executive Officer, certify that: I have reviewed this report on Form N-SAR of Kavilco Incorporated (Kavilco); 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; Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, 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 Kavilco as of, and for, the periods presented in this report; Kavilco'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 Kavilco and have: Designed such disclosure controls and procedures to ensure that material information relating to Kavilco, 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; 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; Presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; Kavilco's other certifying officers and I have disclosed, based on our most recent evaluation, to Kavilco's auditors and the audit committee of Kavilco's board of directors (or persons performing the equivalent functions): All significant deficiencies in the design or operation of internal controls which could adversely affect Kavilco's ability to record, process, summarize, and report financial data and have identified for Kavilco's auditors any material weaknesses in internal controls; and any fraud, whether or not material, that involves management or other employees who have a significant role in Kavilco's internal controls; and Kavilco'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. /s/Louis A. Thompson Louis A. Thompson Chief Executive Officer February 27, 2004 EX-99.CERT 4 certificatesb.txt CFO CERTIFICATION [KAVILCO INCORPORATED OFFICE LETTERHEAD] Certification Required by Rule 301-2 Investment Company Act of 1940 I, Scott Burns, Chief Financial Officer, certify that: I have reviewed this report on Form N-SAR of Kavilco Incorporated (Kavilco); 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; Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, 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 Kavilco as of, and for, the periods presented in this report; Kavilco'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 Kavilco and have: Designed such disclosure controls and procedures to ensure that material information relating to Kavilco, 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; 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; Presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; Kavilco's other certifying officers and I have disclosed, based on our most recent evaluation, to Kavilco's auditors and the audit committee of Kavilco's board of directors (or persons performing the equivalent functions): All significant deficiencies in the design or operation of internal controls which could adversely affect Kavilco's ability to record, process, summarize, and report financial data and have identified for Kavilco's auditors any material weaknesses in internal controls; and any fraud, whether or not material, that involves management or other employees who have a significant role in Kavilco's internal controls; and Kavilco'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. /s/Scott Burns Scott Burns Chief Financial Officer February 27, 2004 -----END PRIVACY-ENHANCED MESSAGE-----