<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly report pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period Commission file number:
ended JUNE 30, 1995 814-97
------------- ----------
ALLIED CAPITAL CORPORATION
------------------------------------------------------
(exact name of Registrant as specified in its charter)
MARYLAND 53-0245085
------------------------------ --------------------
(State or jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1666 K STREET, N.W.
SUITE 901
WASHINGTON, DC 20006
---------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 331-1112
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods as the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
---------------------
On August 11, 1995 there were 6,174,047 shares outstanding of the
Registrant's common stock, $1 par value.
<PAGE>
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
FORM 10-Q INDEX
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Financial Position as of June 30, 1995
and December 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations - For the Three and
Six Months Ended June 30, 1995 and 1994. . . . . . . . . . . . . . . 2
Consolidated Statement of Changes in Net Assets - For the
Six Months Ended June 30, 1995 and 1994. . . . . . . . . . . . . . . 3
Consolidated Statement of Cash Flows - For the Six Months Ended
June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . . 7
PART II. Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 10
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 11
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands, except number of shares)
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
--------------- -------------------
(unaudited)
<S> <C> <C>
Assets
Investments at Value:
Loans and debt securities. . . . . . . . . . . . . . . . . $ 88,971 $ 84,949
Equity securities. . . . . . . . . . . . . . . . . . . . . 31,825 28,225
Other investment assets. . . . . . . . . . . . . . . . . . 1,448 1,852
------------ -------------
Total investments. . . . . . . . . . . . . . . . . . . . 122,244 115,026
Cash and cash equivalents. . . . . . . . . . . . . . . . . . 1,991 6,609
U.S. government securities . . . . . . . . . . . . . . . . . 9,347 10,210
Other asset. . . . . . . . . . . . . . . . . . . . . . . . . 2,670 3,672
------------ -------------
Total assets . . . . . . . . . . . . . . . . . . . . . . 136,252 135,517
------------ -------------
------------ -------------
Liabilities
Revolving line of credit . . . . . . . . . . . . . . . . . . -- 2,205
Debentures and notes payable . . . . . . . . . . . . . . . . 74,800 74,800
Accrued interest payable . . . . . . . . . . . . . . . . . . 1,408 1,393
Investment advisory fee payable. . . . . . . . . . . . . . . 709 658
Dividends and distributions payable. . . . . . . . . . . . . -- 3,910
Other liabilities. . . . . . . . . . . . . . . . . . . . . . 1,188 1,564
------------ -------------
Total liabilities. . . . . . . . . . . . . . . . . . . . 78,105 84,530
------------ -------------
Redeemable preferred stock . . . . . . . . . . . . . . . . . 1,000 1,000
------------ -------------
Commitments and Contingencies
Shareholders' Equity
Preferred Stock of wholly owned subsidiary, $100 par
value; 60,000 shares authorized, issued and
outstanding at 6/30/95 and 12/31/94. . . . . . . . . . . . 6,000 6,000
Common stock, $1 par value; 10,000,000 shares
authorized; 6,174,047 and 6,152,703 shares
issued and outstanding at 6/30/95 and 12/31/94. . . . . . 6,174 6,153
Additional paid-in capital . . . . . . . . . . . . . . . . 41,192 40,960
Notes receivable from sale of common stock . . . . . . . . (666) (816)
Net unrealized appreciation on investments . . . . . . . . 8,760 1,110
Distributions in excess of accumulated earnings. . . . . . (4,313) (3,420)
------------ -------------
Total shareholders' equity . . . . . . . . . . . . . . . 57,147 49,987
------------ -------------
Total liabilities and shareholders' equity . . . . . . . $136,252 $135,517
------------ -------------
------------ -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
1
<PAGE>
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30 June 30
-------------------------- -------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,574 $ 2,079 $ 5,716 $ 4,266
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . 362 414 708 821
Other income . . . . . . . . . . . . . . . . . . . . . . . 293 14 354 14
---------- ---------- ---------- ---------
Total investment income. . . . . . . . . . . . . . . . . 3,229 2,507 6,778 5,101
---------- ---------- ---------- ---------
Expenses:
Interest expense . . . . . . . . . . . . . . . . . . . . . 1,649 1,556 3,346 3,122
Investment advisory fee. . . . . . . . . . . . . . . . . . 709 568 1,346 1,107
Legal and audit fees . . . . . . . . . . . . . . . . . . . 178 120 368 332
Other operating expenses . . . . . . . . . . . . . . . . . 189 132 333 204
---------- ---------- ---------- ---------
Total expenses . . . . . . . . . . . . . . . . . . . . . 2,725 2,376 5,393 4,765
---------- ---------- ---------- ---------
Net investment income. . . . . . . . . . . . . . . . . . . . 504 131 1,385 336
Net realized gains on investments. . . . . . . . . . . . . . 217 1,547 295 1,788
---------- ---------- ---------- ---------
Net investment income before net unrealized
appreciation on investments . . . . . . . . . . . . . . . . 721 1,678 1,680 2,124
Net unrealized appreciation on investments . . . . . . . . . 6,475 963 7,650 1,269
---------- ---------- ---------- ---------
Net increase in net assets resulting from operations . . . . $ 7,196 $ 2,641 $ 9,330 $ 3,393
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Earnings per common share. . . . . . . . . . . . . . . . . . $ 1.16 $ 0.42 $ 1.49 $ 0.53
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Weighted average number of common shares and
common share equivalents outstanding. . . . . . . . . . . . 6,174 6,171 6,174 6,182
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
2
<PAGE>
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended June 30
--------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Increase in net assets resulting from operations:
Net investment income. . . . . . . . . . . . . . . . . . . $ 1,385 $ 336
Net realized gains on investments. . . . . . . . . . . . . 295 1,788
Net change in unrealized appreciation on investments . . . 7,650 1,269
---------- ----------
Net increase in net assets resulting from operations . . 9,330 3,393
Distributions to shareholders from:
Common stock dividend. . . . . . . . . . . . . . . . . . . (2,463) (2,454)
Preferred stock dividend . . . . . . . . . . . . . . . . . (110) (110)
Capital Share Transactions . . . . . . . . . . . . . . . . . 403 135
---------- ----------
Net increase (decrease) in net assets. . . . . . . . . . . . 7,160 964
Net assets at beginning of the period. . . . . . . . . . . 49,987 58,185
---------- ----------
Net assets at end of Period. . . . . . . . . . . . . . . . 57,147 59,149
Preferred stock of wholly-owned subsidiary . . . . . . . . 6,000 6,000
---------- ----------
Net asset value available to common shareholders . . . . . $ 51,147 $ 53,149
---------- ----------
---------- ----------
Net asset value per common share . . . . . . . . . . . . . . $ 8.28 $ 8.64
---------- ----------
---------- ----------
Common shares outstanding at end of period . . . . . . . . . 6,174 6,155
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
3
<PAGE>
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net increase in net assets resulting from operations . . . . . . . . $ 9,330 $ 3,393
Adjustments to reconcile net increase in net assets resulting from
operations to net cash provided by operating activities:
Net unrealized appreciation on investments . . . . . . . . . . . . (7,650) (1,269)
Net realized gains on investments. . . . . . . . . . . . . . . . . (295) (1,788)
Non-cash dividends from investments. . . . . . . . . . . . . . . . -- (801)
Changes in assets and liabilities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,002) 1,127
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . 15 98
Investment advisory fee payable. . . . . . . . . . . . . . . . . . 51 152
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . (376) 474
----------- -----------
Net cash provided by operating activities . . . . . . . . . . . 73 1,386
----------- -----------
Cash Flows From Investing Activities:
Net (increase) decrease in investments . . . . . . . . . . . . . . 657 (7,998)
Net purchase of U.S. government securities . . . . . . . . . . . . (863) (6,380)
Payments on notes receivable . . . . . . . . . . . . . . . . . . . 150 --
----------- -----------
Net cash used in investing activities . . . . . . . . . . . . . (56) (14,378)
----------- -----------
Cash Flows From Financing Activities:
Common distributions paid. . . . . . . . . . . . . . . . . . . . . (2,210) (6,034)
Preferred distributions paid . . . . . . . . . . . . . . . . . . . (220) (220)
Payments on revolving line of credit . . . . . . . . . . . . . . . (2,205) --
----------- -----------
Net cash used in financing activities . . . . . . . . . . . . . (4,635) (6,254)
----------- -----------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . (4,618) (19,246)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . 6,609 24,358
----------- -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . $ 1,991 $ 5,112
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
<PAGE>
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
NOTE 1. GENERAL
In the opinion of management, the accompanying unaudited
consolidated financial statements of Allied Capital Corporation and
subsidiaries (the Company) contain all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the
Company's consolidated financial position as of June 30, 1995 and the
results of operations, changes in net assets, and cash flows for the
periods indicated. Certain information and footnote disclosures
normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's December 31, 1994 Annual
Report. The results of operations for the six months ended June 30,
1995 are not necessarily indicative of the operating results to be
expected for the full year. Certain reclassifications have been made
to the 1994 condensed financial statements in order to conform to the
1995 presentation.
NOTE 2. DISTRIBUTIONS
The Company's Board of Directors declared a second quarter
dividend equivalent to $0.20 per share payable on June 30, 1995 to
shareholders of record on June 16, 1995. In connection with this
dividend, the Company paid cash of $1,102,000 and distributed new
shares of common stock with a value of $131,000 for a total dividend
of $1,233,000. In addition, the Company's Board of Directors declared
a first quarter dividend equivalent to $0.20 per share payable on
March 31, 1995 to shareholders of record on March 17, 1995. In
connection with this dividend, the Company paid cash of $1,108,000
and distributed new shares of common stock with a value of $122,000
for a total dividend of $1,230,000.
The Company owned all of the outstanding capital stock of Allied
Capital Lending Corporation ("Allied Lending") prior to consummation
of the initial public offering of Allied Lending shares in November
1993. As a result of that initial public offering, the Company's
ownership of Allied Lending shares was reduced to 1,580,000 shares, or
36.2% of the Allied Lending shares outstanding at December 31, 1993.
The Company has agreed that it would divest itself of all shares of
Allied Lending by December 31, 1998 by public offerings, private
placements, distributions to the Company's shareholders or otherwise.
The Company declared an extra dividend in December of 1994 and
distributed on January 6, 1995 an aggregate of 335,086 Allied Lending
shares, which reduced its ownership of Allied Lending shares to
1,244,914 shares, or 28.5% of the Allied Lending shares then
outstanding.
NOTE 3. DEBT
As of June 30, 1995, the Company has $4.5 million in SBA
debentures that have matured and for which the SBA has temporarily
converted to demand instruments with principal due on September 30,
1995. In addition, $2 million in SBA debentures have matured
subsequent to June 30, 1995, and the Company is working with the
SBA to temporarily convert these debentures to similar demand notes.
During the second quarter of 1995, the Company applied for a
forward commitment from the SBA to provide for up to $12 million in
financing to its SBIC subsidiary. The Company has received the
commitment from the SBA for this financing; however, the Company must
first submit an application to draw on the committed funds and receive
SBA approval of that application. In addition, the Company's ability
to draw funds under the commitment is contingent upon the completion
of a current regular SBA examination, which is nearing completion.
In the event the Company is denied the ability to draw funds
under the forward commitment, the Company will either request that the
SBA extend the current demand notes or repay the maturing notes with
our available line of credit and cash and cash equivalents on hand.
5
<PAGE>
Subsequent to June 30, 1995, the Company has also applied for a
$6 million forward commitment from the SBA for its SSBIC subsidiary.
The outcome of this application process is currently unknown.
On April 10, 1995, the Company entered into a loan agreement with
the Overseas Private Investment Corporation under which the Company
may borrow up to $20 million to provide financing for international
projects involving qualifying U.S. small businesses. Loans made under
this agreement bear interest at the U.S. Treasury Rate plus .5%, and
have a ten year maturity from the date of disbursement. The loan
agreement expires on the earlier of the first date on which the amount
of the loan(s) equal $20 million or April 10, 1998. At June 30, 1995,
there were no outstanding borrowings under the loan agreement.
NOTE 4. EARNINGS PER SHARE
Earnings per share is computed assuming that all issuances of
the Company's common stock in connection with its dividend reinvestment
plan are outstanding for all periods presented. During 1995, the
Company has issued 21,344 shares of common stock pursuant to the
dividend investment plan. The weighted average number of shares and
share equivalents outstanding for the three and six months ended
June 30, 1994 have been restated to include the 1995 common stock
issuances under the dividend reinvestment plan. In addition, the
computation of net assets per common share as of June 30, 1994 has
been restated to reflect the issuance of common stock pursuant to the
dividend reinvestment plan during 1995.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Commitments. The Company had loan commitments outstanding equal to
$3.6 million at June 30, 1995 to invest in various existing and
prospective portfolio companies.
Litigation. The Company is a party to a number of lawsuits in
connection with loans it has made to small businesses. In the opinion
of the Company's management, none of these proceedings are material in
relation to the Company's consolidated financial position.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Total investments increased by $7.2 million or 6.3% to
$122.2 million at June 30, 1995 from $115.0 million at December 31,
1994. This increase was primarily due to valuation changes in the
portfolio resulting in net unrealized appreciation of $7.7 million
for the six month period. In the first six months of 1995, the
Company invested approximately $14 million in small business concerns,
and received repayments and early payoffs from other small business of
approximately $8 million. Cash and cash equivalents decreased $4.6
million because new investments and cash dividends paid during 1995.
As of June 30, 1995, the Company has $4.5 million in SBA
debentures that have matured and for which the SBA has temporarily
converted to demand instruments with principal due on September 30,
1995. In addition, $2 million in SBA debentures have matured
subsequent to June 30, 1995, and the Company is working with the SBA
to temporarily convert these debentures to similar demand notes.
During the second quarter of 1995, the Company applied for a
forward commitment from the SBA to provide for up to $12 million in
financing to its SBIC subsidiary. The Company has received the
commitment from the SBA for this financing; however, the Company must
first submit an application to draw on the committed funds and receive
SBA approval of that application. In addition, the Company's ability
to draw funds under the commitment is contingent upon the completion of
a current regular SBA examination, which is nearing completion.
In the event the Company is denied the ability to draw funds under
the forward commitment, the Company will either request that the SBA
extend the current demand notes or repay the maturing notes with our
available line of credit and cash and cash equivalents on hand.
Subsequent to June 30, 1995, the Company has also applied for a
$6 million forward commitment from the SBA for its SSBIC subsidiary.
The outcome of this application process is currently unknown.
The Company has secured a credit facility with the Oversees
Private Investment Corporation for up to $20 million in financing for
international projects involving small businesses.
Given the availability of the Oversees Private Investment
Corporation facility, current cash and government securities available
at June 30, 1995, and its available line of credit, the Company
believes that it has adequate capital to continue to satisfy its
operating and investment needs throughout the year. The Company
continues to explore obtaining new debt or equity capital sources as
well.
RESULTS OF OPERATIONS
Second Quarter Ended June 30, 1995 Compared with Second Quarter Ended
June 30, 1994.
Net increase in net assets resulting from operations for the
second quarter of 1995 increased $4.6 million or 172% compared with
the 1994 net increase in net assets resulting from operations of
$2.6 million. Earnings per common share for the quarter increased to
$1.16 per common share from $0.42 per common share in 1994.
The largest single factor effecting the increase in net assets
resulting from operations for the second quarter ended June 30, 1995
resulted from an increase of $6.5 million in unrealized appreciation
on investments resulting from the Company's valuation process. The
Company believes that several small business concerns in the portfolio
have appreciated significantly and that this appreciation can be
evaluated through recent offerings of the small business concern's
stock or through current private negotiations for new financing or for
sale transactions.
Total investment income increased 28.8% from $2.5 million to
$3.2 million compared with the second quarter of last year primarily
due to the increase in interest income. Interest income increased
from the increase in performing loans and debt securities outstanding.
Other income consists primarily of legal fees recovered during the
second quarter of 1995. Expenses increased 14.7% from $2.4 million
to $2.7
7
<PAGE>
million compared with the corresponding period in 1994. The increase
was attributable to an increase in interest expense and investment
advisory fees. Net realized gains declined to $0.2 million to $1.5
million compared with the second quarter of last year. Net realized
gains are unpredictable, and the Company exits transactions when it
believes the realized gains can be maximized.
Six Months Ended June 30, 1995 Compared with Six Months Ended
June 30, 1994.
Net increase in net assets resulting from operations for the
first six month period ending June 30, 1995 increased to $9.3 million
or 175% from $3.4 million in the same period of 1994.
Earnings per common share for the period increased to $1.49 per
common share from $0.53 per common share in 1994. The increase in net
assets resulting from operations for the first six months was caused by
the same factors discussed in the quarter-to-quarter comparison above.
8
<PAGE>
PORTFOLIO CHANGES
The following represents portfolio investment balances in the
Company as of June 30, 1995 that have changes in appreciation or
depreciation by more than 10% as compared to the appreciation or
depreciation as of December 31, 1994.
<TABLE>
<CAPTION>
Appreciation (Depreciation)
-------------------------------------
Percent
Investment Company June 30, 1995 December 31, 1994 $ Change Change
------------------ ------------- ----------------- ----------- -------
<S> <C> <C> <C> <C>
Allied Capital Lending $10,582,077 $ 8,245,687 $ 2,336,390 28%
Allied Waste 491,617 0 491,617 *
Bellefonte Lime Company 517,250 88,098 429,152 487%
Broadcast Holdings (255,555) (1,049,212) 793,657 (76%)
Consumer Health (180,019) (125,642) (54,377) 43%
CSG (103,459) 0 (103,459) *
Devlieg-Bullard, Inc. (74,615) 0 (74,615) *
DMI Furniture 9,916 75,770 (65,854) (87%)
Dogloo, Inc. 761,320 0 761,320 *
Edwards Heating (1,893,422) (1,423,704) (469,718) 33%
Envirco Corp 806,784 155,784 651,999 418%
Environmental Control Group 0 (16,480) 16,480 100%
Enviroplan (36,505) 84,136 (120,640) (143%)
Garden Ridge 3,204,567 508,736 2,695,831 530%
Geneoa Mine Acquisition 488,805 0 488,805 *
Genlime Group 440,974 0 440,974 *
Golden Eagle 0 (16,667) 16,667 100%
Grant Broadcasting 370,353 0 370,353 *
Jackson Products 208,785 73,367 135,418 185%
June Broadcasting 1,260,727 524,327 736,400 140%
Markings and Equipment (632,640) (315,000) (317,640) 101%
May Investments (46,902) 0 (46,902) *
MIK Enterprises 0 (651,732) 651,732 100%
Mill It Striping (125,000) 0 (125,000) *
MLX Corporation (182,754) (216,673) 33,919 (16%)
Momentum Broadcasting (41,886) (46,886) 5,000 (11%)
NNS Corporation (108,586) (79,294) (29,292) 37%
Old Mill (43,540) 0 (43,540) *
Piatl Holdings (223,049) (160,833) (62,216) 39%
Pizza shops (816,677) (155,986) (660,691) 423%
Princeton Care 7,882 0 7,882 *
Lona & George Reeves (72,880) (53,690) (19,190) 36%
R-Tex Decoratives (32,377) 0 (32,377) *
Spa Lending Corporation (2,174,740) (1,459,955) (714,785) 49%
Sunstates Refrigeration 1,164 0 1,164 *
West Virginia Radio Corporation (200,000) (122,113) (77,887) 64%
Williams Brothers 1,598,575 2,001,948 (403,372) (20%)
</TABLE>
* Percentage not applicable due to zero balance at December 31, 1994.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a defendant in any material pending legal
proceeding and no such material proceedings are known to be
contemplated.
ITEM 2. CHANGES IN SECURITIES
No material changes have occurred in the securities of the Registrant.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Allied Capital Corporation held its annual meeting of shareholders
on May 4, 1995 in Chevy Chase, Maryland. The following directors were
elected as proposed in the proxy material to serve until the next
annual shareholders meetting:
FOR WITHHELD
--------- --------
David Gladstone 5,074,732 69,857
George C. Williams 5,073,385 71,203
Joseph A. Clorety III 5,071,942 72,646
Michael Gallie 5,073,885 71,623
Warren K. Montouri 5,074,539 70,049
Guy T. Steuart II 5,074,580 70,009
T. Murray Toomey 5,071,673 72,914
G. Cabell Williams III 5,075,113 69,476
Shareholders also ratified the selection of Matthews Carter &
Boyce to serve as independent accountants until the next shareholders
meeting. The Company received 5,056,376 shares voting in favor of
ratification, 26,033 shares voting against the ratification, and
62,178 shares abstaining from voting.
Shareholders also approved a new Investment Advisory Agreement
which clarified certain provisions of the existing agreement and
ensured compliance with applicable requirements of the Investment
Company Act of 1940. The Company received 4,707,297 shares voting in
favor of approving the amendment, 169,223 shares voting against
approving the amendment, and 99,032 shares abstaining from voting.
ITEM 5. OTHER INFORMATION
During 1994, in the course of a review of certain regulatory
matters, the Company determined that the board of directors of the
Company was composed of a lesser percentage of non-interested
directors than required by relevant provisions of the Investment
Company Act of 1940 (the "1940 Act"). Specifically, certain
non-officer directors of the Company owned stock of Allied Capital
Advisers, Inc. ("Advisers"), and one non-officer director had a
material business relationship with Advisers. Actions were taken
promptly to bring the board of directors into compliance with the
relevant provisions of the 1940 Act. A committee of non-interested
directors of the Company and Allied Capital Corporation II was formed
to review this matter. At its own initiative, Advisers also undertook
an audit of compliance with securities laws as they relate to the
Company. The Company currently does not believe that this situation
will have a material adverse effect on the operations of the Company
or on its financial position.
10
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
11 Statement of Computation of Earnings Per Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1995.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
ALLIED CAPITAL CORPORATION
--------------------------
(Registrant)
s/Jon A. DeLuca
---------------------------
Date: August 14, 1995 Jon A. DeLuca
--------------- Senior Vice President and
Chief Financial Officer
12
<PAGE>
Allied Capital Corporation and Subsidiaries
Exhibit 11 Computation of Earnings Per Common Share
Form 10-Q
June 30, 1995
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Primary Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations $7,196,000 $2,641,000 $9,330,000 $3,393,000
Less: Dividends for Preferred Stock (55,000) (55,000) (110,000) (110,000)
----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting
from Operations Available to
Common Shareholders $7,141,000 $2,586,000 $9,220,000 $3,283,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding 6,152,703 6,134,191 6,152,703 6,134,191
Dividend reinvestment plan common shares issued 21,344 21,344 21,344 21,344
Weighted average number of common
shares issuable on exercise
of outstanding stock options - 15,585 - 26,228
----------- ----------- ----------- -----------
Weighted average number of common
shares and common share equivalents outstanding 6,174,047 6,171,120 6,174,047 6,181,763
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per Common Share $1.16 $0.42 $1.49 $0.53
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully Diluted Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations $7,196,000 $2,641,000 $9,330,000 $3,393,000
Less: Dividends for Preferred Stock (55,000) (55,000) (110,000) (110,000)
----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting
from Operations Available to
Common Shareholders $7,141,000 $2,586,000 $9,220,000 $3,283,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common
shares and common share
equivalents outstanding as computed for
primary earnings per share 6,174,047 6,171,120 6,174,047 6,181,763
Weighted average of additional
shares issuable on exercise
of outstanding stock options - - - -
----------- ----------- ----------- -----------
Weighted average number of common
shares and common share equivalents
outstanding, as adjusted 6,174,047 6,171,120 6,174,047 6,181,763
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per Common Share $1.16 $0.42 $1.49 $0.53
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALLIED
CAPITAL CORPORATION AND SUBSIDIARIES, CONSOLIDATED STATEMENT OF FINANCIAL
POSITION, CONSOLIDATED STATEMENT OF OPERATIONS, CONSOLIDATED STATEMENT OF
CHANGES IN NET ASSETS AND STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 113,484
<INVESTMENTS-AT-VALUE> 122,244
<RECEIVABLES> 0
<ASSETS-OTHER> 2,670
<OTHER-ITEMS-ASSETS> 11,338
<TOTAL-ASSETS> 136,252
<PAYABLE-FOR-SECURITIES> 1,188
<SENIOR-LONG-TERM-DEBT> 74,800
<OTHER-ITEMS-LIABILITIES> 3,117
<TOTAL-LIABILITIES> 79,105
<SENIOR-EQUITY> 12,174
<PAID-IN-CAPITAL-COMMON> 41,192
<SHARES-COMMON-STOCK> 6,174
<SHARES-COMMON-PRIOR> 6,153
<ACCUMULATED-NII-CURRENT> 1,385
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 295
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,760
<NET-ASSETS> 51,147
<DIVIDEND-INCOME> 708
<INTEREST-INCOME> 5,716
<OTHER-INCOME> 354
<EXPENSES-NET> 5,393
<NET-INVESTMENT-INCOME> 1,385
<REALIZED-GAINS-CURRENT> 295
<APPREC-INCREASE-CURRENT> 7,650
<NET-CHANGE-FROM-OPS> 9,330
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,463
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 21
<NET-CHANGE-IN-ASSETS> 735
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 3,420
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,346
<INTEREST-EXPENSE> 3,346
<GROSS-EXPENSE> 5,393
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 7.15
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 1.49
<PER-SHARE-DIVIDEND> 0.40
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.28
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 74,800
<AVG-DEBT-PER-SHARE> 0
</TABLE>
