<PAGE> 1
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, 1996 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.)
C/O ALLIED CAPITAL ADVISERS, INC.
1666 K STREET, N.W.
9TH FLOOR
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 5, 1996 there were 6,972,823 shares outstanding of the Registrant's
common stock, $1 par value.
<PAGE> 2
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations - For the Three and Six
Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . 2
Consolidated Statement of Changes in Net Assets - For the Six
Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . 3
Consolidated Statement of Cash Flows - For the Six Months Ended
June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 9
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE> 3
PART I - Financial Information
Item 1. Financial Statements
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands, except number of shares)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(unaudited)
<S> <C> <C>
Assets
Investments at Value:
Loans and debt securities (cost: 1996 - $94,262; 1995 - $98,119) . . . $ 86,644 $ 90,377
Equity securities (cost: 1996 - $16,725; 1995 - $15,039) . . . . . . . 28,669 31,600
Other investment assets (cost: 1996 - $1,947; 1995 - $2,457) . . . . . 756 1,207
-------- -------
Total investments . . . . . . . . . . . . . . . . . . . . 116,069 123,184
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 37,679 22,743
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,178 2,341
------- -------
Total assets . . . . . . . . . . . . . . . . . . . . . . $156,926 $148,268
======= =======
Liabilities
Debentures and notes payable . . . . . . . . . . . . . . . . . . . . . . $ 86,300 $ 81,300
Revolving line of credit . . . . . . . . . . . . . . . . . . . . . . . . - 1,500
Dividends and distributions payable . . . . . . . . . . . . . . . . . . . 110 3,808
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,600 3,479
------- -------
89,010 90,087
Redeemable preferred stock . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Commitments and Contingencies
Shareholders' Equity
Preferred Stock of wholly owned subsidiary, $100 par
value; 200,000 shares authorized, 60,000 issued and
outstanding at 6/30/96 and 12/31/95 . . . . . . . . . . . . . . . . .
6,000 6,000
Common stock, $1 par value; 10,000,000 shares
authorized; 6,963,371 and 6,198,138 shares
issued and outstanding at 6/30/96 and 12/31/95 . . . . . . . . . . .
6,963 6,198
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . 50,335 41,491
Notes receivable from sale of common stock . . . . . . . . . . . . . . (573) (401)
Net unrealized appreciation on investments . . . . . . . . . . . . . . 3,135 7,569
Undistributed (distributions in excess of) accumulated earnings . . . . 1,056 (3,676)
------- -------
Total shareholders' equity . . . . . . . . . . . . . . . . . . 66,916 57,181
------- -------
Total liabilities and shareholders' equity . . . . . . . . . . $156,926 $148,268
======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
1
<PAGE> 4
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,
------- -------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . $3,891 $2,574 $7,225 $5,716
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 389 362 762 708
Other income . . . . . . . . . . . . . . . . . . . . . . . . 23 293 68 354
----- ----- ------- ------
Total investment income . . . . . . . . . . . . . . . . . . 4,303 3,229 8,055 6,778
----- ----- ----- ------
Expenses:
Interest expense . . . . . . . . . . . . . . . . . . . . . . 1,860 1,649 3,691 3,346
Investment advisory fee . . . . . . . . . . . . . . . . . . . 704 709 1,438 1,346
Other operating expenses . . . . . . . . . . . . . . . . . . 362 367 567 701
----- ------ ------ ------
Total expenses . . . . . . . . . . . . . . . . . . . . . . 2,926 2,725 5,696 5,393
----- ----- ----- ------
Net investment income . . . . . . . . . . . . . . . . . . . . . 1,377 504 2,359 1,385
Net realized gains on investments . . . . . . . . . . . . . . . 2,975 217 6,151 295
----- ------ ----- ------
Net investment income before net unrealized
appreciation (depreciation) on investments . . . . . . . . 4,352 721 8,510 1,680
Net unrealized appreciation (depreciation) on investments . . . (4,718) 6,475 (4,434) 7,650
------ ----- ------ ------
Net increase (decrease) in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . . . . . . $ (366) $ 7,196 $ 4,076 $ 9,330
======= ======= ====== =======
Earnings (loss) per common share . . . . . . . . . . . . . . . $(0.06) $ 1.16 $ 0.59 $ 1.50
======= ======= ======== =======
Weighted average number of common shares and
common share equivalents outstanding . . . . . . . . . . . . 6,918 6,163 6,730 6,158
===== ===== ===== =====
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
2
<PAGE> 5
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,
-------
1996 1995
---- ----
<S> <C> <C>
Increase in net assets resulting from operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,359 $ 1,385
Net realized gains on investments . . . . . . . . . . . . . . . . . . . . . . . . . . 6,151 295
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . . . . (4,434) 7,650
------- ------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . 4,076 9,330
------- ------
Distributions to shareholders:
Common stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,668) (2,463)
Preferred stock dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (110) (110)
------- ------
Net decrease in net assets resulting from distributions to shareholders . . . . . (3,778) (2,573)
------- ------
Capital share transactions:
Net (increase) decrease in notes receivable from sale of common stock . . . . . . . . (172) 150
Issuance of common shares upon the exercise of stock options . . . . . . . . . . . . 493 -
Issuance of common shares in lieu of cash distributions . . . . . . . . . . . . . . . 852 253
Issuance of common shares in rights offering . . . . . . . . . . . . . . . . . . . . 8,264 -
------ -------
Net increase in net assets resulting from capital share transactions . . . . . . 9,437 403
------ -------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,735 7,160
Net assets at beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . 57,181 49,987
------ ------
Net assets at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,916 57,147
Preferred stock of wholly owned subsidiary . . . . . . . . . . . . . . . . . . . . . . (6,000) (6,000)
------ ------
Net assets value available to common shareholders . . . . . . . . . . . . . . . . . . . $60,916 $51,147
====== ======
Net asset value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8.75 $ 8.28
====== ======
Common shares outstanding at end of period . . . . . . . . . . . . . . . . . . . . . . 6,963 6,174
======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
3
<PAGE> 6
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-------
1996 1995
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net increase in net assets resulting from operations . . . . . . . . . $ 4,076 $ 9,330
Adjustments to reconcile net increase in net assets resulting from
operations to net cash provided by operating activities:
Net unrealized (appreciation) depreciation on investments . . . . . 4,434 (7,650)
Net realized gains on investments . . . . . . . . . . . . . . . . . (6,151) (295)
Amortization of loan discounts . . . . . . . . . . . . . . . . . . . (762) (330)
Changes in assets and liabilities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (837) 1,002
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . (879) (310)
------- ------
Net cash provided by (used in) operating activities . . . . . . . (119) 1,747
------- ------
Cash Flows From Investing Activities:
Investments in small business concerns . . . . . . . . . . . . . . . (8,661) (13,929)
Collections of loans and debt securities and other investment assets 10,031 12,495
Net proceeds from sale of equity securities . . . . . . . . . . . . 8,224 417
Net purchase of U.S. government securities . . . . . . . . . . . . . - (863)
Collections of notes receivable from sale of common stock . . . . . 28 150
------ ------
Net cash provided by (used in) investing activities . . . . . . . 9,622 (1,730)
------ ------
Cash Flows From Financing Activities:
Issuance of common shares . . . . . . . . . . . . . . . . . . . . . 8,557 -
Common distributions paid . . . . . . . . . . . . . . . . . . . . . (6,404) (2,210)
Preferred distributions paid . . . . . . . . . . . . . . . . . . . . (220) (220)
Proceeds from the issuance of OPIC debentures . . . . . . . . . . . 5,000 -
Net payments on revolving line of credit . . . . . . . . . . . . . . (1,500) (2,205)
------ ------
Net cash provided by (used in) financing activities . . . . . . . 5,433 (4,635)
------ ------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . 14,936 (4,618)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . 22,743 6,609
------ ------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . $37,679 $ 1,991
====== ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
<PAGE> 7
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
NOTE 1. GENERAL
In the opinion of management, the accompanying unaudited consolidated
financial statements of Allied Capital Corporation and its
subsidiaries (the Company) contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial
position of the Company as of June 30, 1996 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 consolidated financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31,
1995 Annual Report. The results of operations for the six months
ended June 30, 1996 are not necessarily indicative of the operating
results to be expected for the full year.
Certain reclassifications have been made to the 1995 financial
statements in order to conform to the 1996 presentation.
NOTE 2. DIVIDENDS AND DISTRIBUTIONS
The Company's board of directors declared a second quarter dividend
equivalent to $0.27 per share payable on June 28, 1996 to shareholders
of record on June 14, 1996. In connection with this dividend, the
Company paid cash of $1,654,000 and distributed new shares of common
stock to participants in the dividend reinvestment plan with a value
of $222,000 for a total dividend of $1,876,000. In addition, the
Company's board of directors declared a first quarter dividend
equivalent to $0.26 per share payable on March 29, 1996 to
shareholders of record on March 15, 1996. In connection with this
dividend, the Company paid cash of $1,579,000 and distributed new
shares of common stock to participants in the dividend reinvestment
plan with a value of $213,000 for a total dividend of $1,792,000.
NOTE 3. DEBT
The Company had no borrowings outstanding under its revolving line of
credit agreement as of June 30, 1996.
The Company borrowed $5,000,000 under its loan agreement with the
Overseas Private Investment Corporation (OPIC) in order to finance its
first OPIC qualified investment in February, 1996. The OPIC loan
bears interest at 6.48% and all principal is due at the maturity date,
which is February, 2006. In addition, OPIC is entitled to receive
from the Company a contingent fee at maturity of the loan equal to
five percent of the return generated by the OPIC-related investments
in excess of seven percent.
NOTE 4. SHAREHOLDERS' EQUITY
The Company issued to the common stockholders at the close of business
on January 22, 1996, the record date, non-transferable subscription
rights that entitled record date stockholders to subscribe for and
purchase from the Company up to one authorized, but unissued share of
the Company's common stock for each seven subscription rights held.
The Company offered a total of 885,448 shares of common stock pursuant
to this offer. Stockholders who fully exercised their subscription
rights were entitled to the additional privilege of subscribing for
shares from the offering not acquired by exercise of subscription
rights.
The subscription price per common share was $13.11, which equaled 95
percent of the average of the last reported sale price of a share of
common stock on the Nasdaq National Market on February 27, 1996 (the
expiration date of the offer) and each of the four preceding business
days. Stockholders participating in the offering subscribed for
411,961 shares through the primary subscription and 251,749 shares
through the oversubscription privilege for a total of 663,710 shares.
The Company received net proceeds of $8,264,000 from the rights
offering after expenses of $437,000, including a 2.5 percent
commission paid to eligible broker/dealers on each share sold as a
result of their soliciting efforts.
5
<PAGE> 8
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
NOTE 5. COMMITMENTS AND CONTINGENCIES
Commitments. The Company had commitments outstanding of $7,782,000 at
June 30, 1996 to invest in various existing and prospective portfolio
companies.
Litigation. The Company is party to certain lawsuits in connection
with investments it has made to small businesses that are not deemed
to be material. While the outcome of these legal proceedings cannot
at this time be predicted with certainty, management does not expect
that these actions will have a material effect upon the consolidated
financial position of the Company.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the Second Quarter Ended June 30, 1996 and 1995.
The net decrease in net assets resulting from operations for the
quarter ended June 30, 1996 was $366,000 as compared to the net
increase in net assets resulting from operations for the quarter ended
June 30, 1995 of $7.2 million. Loss per common share was $0.06 for
the current quarter as compared to earnings per common share of $1.16
for the comparable quarter of the prior year.
For the quarter ended June 30, 1996, net investment income increased
173% to $1.4 million as compared to $504,000 for the comparable
quarter of 1995. Total investment income increased 33% in the second
quarter of 1996 as compared to the second quarter of 1995. These
increases are primarily attributable to the Company increasing its
investments in loans and debt securities that earn a current return,
increased amortization of loan discounts and points, and an increase
in dividends from the Company's investment in Allied Capital Lending
Corporation.
Total expenses increased 7.4% to $2.9 million for the quarter ended
June 30, 1996 from $2.7 million for the same period last year.
Interest expense increased 12.8% for the second quarter of 1996 as
compared to the comparable quarter of the previous year as a result of
the Company's outstanding borrowings increasing to $86.3 million from
$74.8 million at June 30,1995. The Company's investment advisory fee
for the second quarter 1996 of $704,000 was relatively even with the
same quarter in 1995 of $709,000. While total assets at June 30, 1996
of $157 million was higher than at June 30, 1995 of $148 million, cash
and cash equivalents at June 30, 1996 was $26 million higher than the
prior year. A lower advisory fee is paid on cash and cash
equivalents. Other operating expenses decreased 1.6% for the second
quarter of 1996 as compared to 1995.
Net realized gains on investments were $3.0 million for the quarter
ended June 30, 1996. During the quarter the Company successfully
liquidated certain equity investments in its portfolio and received
early payoffs of some loans in its portfolio. Net realized gains on
investments were $217,000 for the second quarter of 1995. Net gains
are realized when the Company sells or otherwise liquidates its
investments, and as a result may vary significantly from quarter to
quarter.
Net unrealized depreciation for the three months ended June 30, 1996
was $4.7 million as compared to net unrealized appreciation of $6.5
million for the three months ended June 30, 1995. The Company sold
two portfolio investments during the second quarter that had net
unrealized appreciation at March 31, 1996 of $2.3 million. When sold,
net unrealized appreciation was reduced by $2.3 million and the actual
net gains realized on these two investments were included in net
realized gains on investments. The remaining net unrealized
depreciation of $2.4 million for the second quarter of 1996 is due
primarily to the decline in the market value of the Company's
investment in Allied Capital Lending Corporation of $1.5 million and
the decrease in the value of the Company's investment in SunStates
Refrigerated Services, Inc. of $760,000.
For the Six Months ended June 30, 1996 and 1995.
Net increase in net assets resulting from operations was $4.1 million,
or $0.59 per common share, for the six months ended June 30, 1996,
compared to $9.3 million, or $1.50 per common share, for the same
period in 1995. Net investment income and net realized gains for the
six months ended June 30, 1996 increased 70% and 1,985%, respectively,
over the comparable six-month period of the prior year. These
increases, however, were offset by a significant decline in the net
unrealized appreciation in the investment portfolio.
During the six months ended June 30, 1996, the Company realized net
gains on the sale of investments which had net unrealized appreciation
totaling $4.6 million, or $0.68 per common share, that had been
previously recognized into net income as net unrealized appreciation.
Thus upon the realization of these gains, the year-to-date 1996 net
increase in net assets resulting from operations reflects an
offsetting decrease in net unrealized appreciation for the same
amount. As investments in the portfolio appreciate, the increase in
value is recognized into net income as the change in net unrealized
appreciation. When gains are realized on sale, the effect on net
income is computed by reducing net income by an amount equal to any
unrealized appreciation on the investment recognized in prior periods,
and increasing net income by the amount of the recognized gain.
7
<PAGE> 10
Other changes in the results of operations for the first six months of
1996 as compared to the six months ended June 30, 1995 were caused by
the same factors discussed in the quarter-to-quarter comparison above.
LIQUIDITY AND CAPITAL RESOURCES
Total assets increased $8.7 million to $156.9 million at June 30, 1996
from $148.3 million at December 31, 1995. This growth in total assets
resulted primarily from the Company's one-for-seven non-transferable
rights offering that was completed in February 1996, which netted $8.3
million in proceeds.
Total investments at June 30, 1996 decreased $7.1 million from
December 31, 1995 as total repayments and changes in investment
valuations during the first half of 1996 exceeded new investments of
$8.7 million. Cash and cash equivalents increased to $37.7 million as
of June 30, 1996 from $22.7 million at December 31, 1995 due to the
proceeds received from the rights offering and investment
dispositions.
The Company believes that it has adequate capital to continue to
satisfy its operating needs, commitments and other future investment
opportunities that may arise throughout the year.
PORTFOLIO CHANGES
For the six months ended June 30, 1996, the Company's portfolio
depreciated, net of appreciation, by $4.4 million due to the sale of
certain investments which resulted in realized gains, changes in
investment values from the change in market prices for public equity
investments, and changes in value of certain private investments.
The sale of the following portfolio investments resulted in unrealized
appreciation (depreciation) and the recognition of realized gains
(losses) during the six months ended June 30, 1996 as follows:
<TABLE>
<CAPTION>
Unrealized Realized
Appreciation Gain
(Depreciation) (Loss)
-------------- ------------
<S> <C> <C>
Garden Ridge Corporation (stock) $(1,518,000) $1,692,000
Garden Ridge Corporation (warrants) (1,996,000) 3,579,000
June Broadcasting, Inc. (1,948,000) 2,182,000
Palmer Corporation 100,000 (5,000)
Providential Corporation 789,000 (789,000)
</TABLE>
The Company's public equity investments which appreciated
(depreciated) in value during the six months ended June 30, 1996 were:
<TABLE>
<CAPTION>
Unrealized
Appreciation
(Depreciation)
--------------
<S> <C>
Allied Capital Lending Corporation $ 187,000
DMI Furniture, Inc. 150,000
Esquire Communications, Ltd. 27,000
Labor Ready, Inc. 1,443,000
Nobel Education Dynamics, Inc. 475,000
Quality Software Products Holdings, PLC (252,000)
</TABLE>
In addition, the Company's investments in the following private
companies also had unrealized depreciation during the six months
ended June 30, 1996 -- Enviroplan, Inc. - $432,000; SunStates
Refrigerated Services, Inc. - $766,000; and Williams Brothers Lumber
Company -$807,000. The remaining investment portfolio had net
unrealized appreciation during the six months ended June 30, 1996 of
$114,000.
8
<PAGE> 11
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 6, 1996 in North Bethesda, Maryland. The following directors were
elected as proposed in the proxy material to serve until the next
annual shareholders meeting:
<TABLE>
<CAPTION>
DIRECTOR FOR WITHHELD
-------- --- --------
<S> <C> <C>
David Gladstone 5,875,751 70,122
George C. Williams, Jr. 5,874,453 71,420
T. Murray Toomey 5,873,994 71,879
Joseph A. Clorety III 5,875,751 70,122
Guy T. Steuart II 5,874,359 71,514
Warren K. Montouri 5,874,453 71,420
G. Cabell Williams III 5,875,751 70,122
Michael I. Gallie 5,875,088 70,785
</TABLE>
Shareholders also ratified the selection of Matthews Carter & Boyce to
serve as independent accountants until the next shareholders meeting.
The Company received 5,870,626 shares voting in favor of ratification,
17,444 shares voting against the ratification, and 57,800 shares
abstaining from voting.
Item 5. OTHER INFORMATION
None.
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, 1996.
9
<PAGE> 12
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 12, 1996 Jon A. DeLuca
--------------- Executive Vice President and
Chief Financial Officer
10
<PAGE> 1
Allied Capital Corporation and Subsidiaries
Exhibit 11 Statement of Computation of Earnings Per Common Share
Form 10-Q
June 30, 1996
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- -----------------------------
1996 1995 1996 1995
---------------------------- -----------------------------
<S> <C> <C> <C> <C>
Primary Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations ($366,000) $7,196,000 $4,076,000 $9,330,000
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 ($421,000) $7,141,000 $3,966,000 $9,220,000
============================ =============================
Weighted average number of common
shares outstanding 6,918,100 6,163,241 6,692,479 6,158,058
Weighted average number of common
shares issuable on exercise
of outstanding stock options - - 37,663 -
---------------------------- -----------------------------
Weighted average number of common
shares and common share equivalents outstanding 6,918,100 6,163,241 6,730,142 6,158,058
============================ =============================
Earnings per Common Share ($0.06) $1.16 $0.59 $1.50
============================ =============================
Fully Diluted Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations ($366,000) $7,196,000 $4,076,000 $9,330,000
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 ($421,000) $7,141,000 $3,966,000 $9,220,000
============================ =============================
Weighted average number of common
shares and common share
equivalents outstanding as computed for
primary earnings per share 6,918,100 6,163,241 6,730,142 6,158,058
Weighted average of additional
shares issuable on exercise
of outstanding stock options - - 6,428 -
---------------------------- -----------------------------
Weighted average number of common
shares and common share equivalents
outstanding, as adjusted 6,918,100 6,163,241 6,736,570 6,158,058
============================ =============================
Earnings per Common Share ($0.06) $1.16 $0.59 $1.50
============================ =============================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Allied
Capital Corporation and subsidiaries' consolidated balance sheet and
consolidated statements of operations, changes in net assets and 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 112,934
<INVESTMENTS-AT-VALUE> 116,069
<RECEIVABLES> 0
<ASSETS-OTHER> 40,857
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 156,926
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 86,300
<OTHER-ITEMS-LIABILITIES> 2,710
<TOTAL-LIABILITIES> 89,010
<SENIOR-EQUITY> 6,963
<PAID-IN-CAPITAL-COMMON> 50,335
<SHARES-COMMON-STOCK> 6,963
<SHARES-COMMON-PRIOR> 6,198
<ACCUMULATED-NII-CURRENT> 1,056
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,135
<NET-ASSETS> 66,916
<DIVIDEND-INCOME> 762
<INTEREST-INCOME> 7,225
<OTHER-INCOME> 68
<EXPENSES-NET> 5,696
<NET-INVESTMENT-INCOME> 2,359
<REALIZED-GAINS-CURRENT> 6,151
<APPREC-INCREASE-CURRENT> (4,434)
<NET-CHANGE-FROM-OPS> 4,076
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,359
<DISTRIBUTIONS-OF-GAINS> 1,419
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 703
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 32
<NET-CHANGE-IN-ASSETS> 9,735
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,438
<INTEREST-EXPENSE> 3,691
<GROSS-EXPENSE> 5,696
<AVERAGE-NET-ASSETS> 62,049
<PER-SHARE-NAV-BEGIN> 8.26
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 0.26
<PER-SHARE-DIVIDEND> 0.53
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.75
<EXPENSE-RATIO> 0.09
<AVG-DEBT-OUTSTANDING> 83,800
<AVG-DEBT-PER-SHARE> 12.04
</TABLE>
