<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 MARCH 31, 1997 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 or 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 May 12, 1997 there were 7,343,041 shares outstanding of the Registrant's
common stock, $1 par value.
<PAGE> 2
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
FORM 10-Q INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheet as of March 31, 1997
and December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations - For the Three Months Ended
March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statement of Changes in Net Assets - For the Three Months
Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Cash Flows - For the Three Months Ended
March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
</TABLE>
<PAGE> 3
ALLIED CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands, except number of shares)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
Assets
Investments at Value:
Loans and debt securities (cost: 1997 - $95,882; 1996 - $97,805) . . $ 89,014 $ 90,581
Equity securities (cost: 1997 - $14,613; 1996 - $14,610) . . . . . . 26,272 25,896
Other investment assets (cost: 1997 - $108; 1996 - $123) . . . . . . 115 131
--------- ---------
Total investments . . . . . . . . . . . . . . . . . . . . . . 115,401 116,608
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 43,711 44,915
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,165 4,228
--------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 165,277 $ 165,751
========= =========
Liabilities
Debentures and notes payable . . . . . . . . . . . . . . . . . . . . . $ 91,950 $ 90,600
Dividends and distributions payable . . . . . . . . . . . . . . . . . . 55 2,988
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,125 2,843
--------- ---------
95,130 96,431
--------- ---------
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 shares issued and
outstanding at 3/31/97 and 12/31/96 . . . . . . . . . . . . . . . 6,000 6,000
Common stock, $1 par value, 10,000,000 shares
authorized; 7,343,041 and 7,299,091 shares
issued and outstanding at 3/31/97 and 12/31/96 . . . . . . . . . . 7,343 7,299
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 55,069 54,440
Notes receivable from sale of common stock . . . . . . . . . . . . . (3,088) (3,759)
Net unrealized appreciation on investments . . . . . . . . . . . . . 4,798 4,070
Undistributed (distributions in excess of) accumulated earnings . . . (975) 270
--------- ---------
Total shareholders' equity . . . . . . . . . . . . . . . . . 69,147 68,320
--------- ---------
Total liabilities and shareholders' equity . . . . . . . . . $ 165,277 $ 165,751
========= =========
</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
March 31,
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,342 $ 3,334
Dividends and other income . . . . . . . . . . . . . . . . . . . 392 418
------- -------
Total investment income . . . . . . . . . . . . . . . . . . . . 3,734 3,752
------- -------
Expenses:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . 1,933 1,831
Investment advisory fee . . . . . . . . . . . . . . . . . . . . . 745 734
Other operating expenses . . . . . . . . . . . . . . . . . . . . 147 205
------- -------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . 2,825 2,770
------- -------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 909 982
Net realized gains on investments . . . . . . . . . . . . . . . . . 319 3,176
------- -------
Net investment income before net unrealized
appreciation on investments . . . . . . . . . . . . . . . . . . 1,228 4,158
Net unrealized appreciation on investments . . . . . . . . . . . . 728 284
------- -------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,956 $ 4,442
======= =======
Earnings per common share . . . . . . . . . . . . . . . . . . . . . $ 0.26 $ 0.69
======= =======
Weighted average number of common shares and
common share equivalents outstanding . . . . . . . . . . . . . 7,394 6,343
======= =======
</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 Three Months Ended March 31,
------------------------------------
1997 1996
--------- --------
<S> <C> <C>
Increase in net assets resulting from operations:
Net investment income . . . . . . . . . . . . . . . . . . $ 909 $ 982
Net realized gains on investments . . . . . . . . . . . . 319 3,176
Net unrealized appreciation on investments . . . . . . . 728 284
------- -------
Net increase in net assets resulting from operations 1,956 4,442
------- -------
Distributions to shareholders:
Common stock dividend . . . . . . . . . . . . . . . . . . (2,418) (1,793)
Preferred stock dividend . . . . . . . . . . . . . . . . (55) (55)
------- -------
Net decrease in net assets resulting from
distributions to shareholders . . . . . . . . . . (2,473) (1,848)
------- -------
Capital share transactions:
Net decrease in notes receivable from sale of common
stock . . . . . . . . . . . . . . . . . . . . . . . . 671 28
Issuance of common stock upon the exercise of stock 100 -
options . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock in lieu of cash distributions . 573 635
Issuance of common stock in rights offering . . . . . . . - 8,351
------- -------
Net increase in assets resulting from capital share
transactions . . . . . . . . . . . . . . 1,344 9,014
------- -------
Net increase in net assets . . . . . . . . . . . . . . . . 827 11,608
Net assets at beginning of the period . . . . . . . . . . . 68,320 57,181
------- -------
Net assets at end of period . . . . . . . . . . . . . . . . 69,147 68,789
Preferred stock of wholly owned subsidiary . . . . . . . . (6,000) (6,000)
------- -------
Net asset value available to common shareholders . . . . . $63,147 $62,789
======= =======
Net asset value per common share . . . . . . . . . . . . . $ 8.60 $ 9.09
======= =======
Common shares outstanding at end of period . . . . . . . . 7,343 6,908
======= =======
</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 Three Months Ended March 31,
------------------------------------
1997 1996
---------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net increase in net assets resulting from operations . . . . . . . . . $ 1,956 $ 4,442
Adjustments to reconcile net increase in net assets resulting from
operations to net cash provided by (used in) operating activities:
Net unrealized appreciation on investments . . . . . . . . . . . . . (728) (284)
Net realized gains on investments . . . . . . . . . . . . . . . . . (319) (3,176)
Amortization of loan discounts . . .. . . . . . . . . . . . . . . (123) (174)
Changes in assets and liabilities:
Other assets . . . . . . . .. . . . . . . . . . . . . . . . . . (1,937) (1,143)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 282 630
------- -------
Net cash provided by (used in) operating activities . . . . . (869) 295
------- -------
Cash Flows From Investing Activities:
Investments in small business concerns . . . . . . . . . . . . . . . (3,750) (5,000)
Payments on loans and debt securities and other investment assets . 5,386 4,919
Net proceeds from sale of equity securities . . . . . . . . . . . . 741 4,293
Payments on notes receivable from sale of common stock . . . . . . . 671 28
------- -------
Net cash provided by investing activities . . . . . . . . . 3,048 4,240
------- -------
Cash Flows From Financing Activities:
Sale of common stock . . . . . . . . . . . . . . . . . . . . . . . 100 8,200
Common dividends and distributions paid . . . . . . . . . . . . . . (4,613) (4,749)
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . (220) (220)
Proceeds from debentures and notes payable . . . . . . . . . . . . . 1,350 3,500
------- -------
Net cash provided by (used in) financing activities . . . . (3,383) 6,731
------- -------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . (1,204) 11,266
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . 44,915 22,743
------- -------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . $43,711 $34,009
======= =======
</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
MARCH 31, 1997
(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 March
31, 1997 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, 1996 Annual Report. The results of operations for the
three months ended March 31, 1997 are not necessarily indicative of the
operating results to be expected for the full year. Certain reclassifications
have been made to the 1996 financial statements in order to conform to the 1997
presentation.
NOTE 2. DIVIDENDS
The Company's board of directors declared a $0.33 per share first quarter
dividend that was paid on March 31, 1997 to shareholders of record as of March
14, 1997. In connection with this dividend, the Company paid cash of $2,156,000
and distributed new shares of common stock to participants in the dividend
reinvestment plan with a value of $262,000 for a total dividend of $2,418,000.
The Company's board of directors also declared an extra distribution in
December 1996 of $0.38 per share, which was paid to shareholders on January 31,
1997, for a total distribution for 1996 equal to $1.51 per share.
NOTE 3. DEBT
The Company repaid one U.S. Small Business Administration debenture during the
first quarter of 1997 totaling $1,000,000, which matured February 1, 1997.
NOTE 4. EARNINGS PER SHARE
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.128, "Earnings per Share" (SFAS 128). SFAS
128 is effective for financial statements for both interim and annual periods
ending after December 15, 1997. SFAS 128 modifies the method of calculation of
net income per share and also requires a reconciliation between basic and
diluted per share amounts. Early adoption of the statement prior to the end of
1997 is not allowed.
5
<PAGE> 8
The following table (in thousands, except per share data) presents the effect
of SFAS 128 on the Company's net income per share as if adopted for current
period disclosure.
<TABLE>
<CAPTION>
Quarter Ended March 31
1997 1996
---- ----
<S> <C> <C>
Net income .......................................... $1,956 $4,442
====== ======
Basic average shares outstanding .................... 7,316 6,302
====== ======
Basic net income per share .......................... $ 0.27 $ 0.70
====== ======
Effect of dilutive securities:
Outstanding stock options ...................... 78 41
------ ------
Diluted average shares outstanding................... 7,394 6,343
====== ======
Diluted net income per share ........................ $ 0.26 $ 0.69
====== ======
</TABLE>
NOTE 5. COMMITMENTS AND CONTINGENCIES
Commitments. The Company had commitments outstanding of $7,579,000 at March
31, 1997 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. 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
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere in this report.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1997 and 1996.
For the three months ended March 31, 1997, net increase in net assets resulting
from operations was $2.0 million, or $0.26 per common share as compared to $4.4
million, or $0.69 per common share for the first quarter of 1996. The
comparison of first quarter 1997 earnings to first quarter 1996 earnings is
significantly effected by the level of investment sales and other exit
activities occurring in the respective quarters, and the timing of recognition
of capital gains. Net realized gains for the first quarter of 1996 were $3.2
million, or $0.50 per common share. First quarter 1997 exit activity was not
as significant, and as a result, net realized gains for the first quarter of
1997 were $319,000, or $0.04 per common share. The impact of the timing of
gain recognition on quarterly earnings of the Company can be significant, and
thus quarterly earnings are not necessarily reflective of expected annual
results. Net income per common share for the quarter ended March 31, 1997 also
reflects an increase of 17% in the weighted average common shares and common
share equivalents outstanding, due to the effect of new shares issued in the
Company's March 1996 rights offering.
Net investment income, which totaled $909,000 for the quarter, remained
relatively constant to that of the first quarter 1996. The Company sold
several portfolio investments in the latter part of 1996, and as a result,
total investments have remained relatively constant between the first quarters
of 1997 and 1996. The Company continues to see increased competition for
quality investments in the market place, and is cautiously approaching new
investment activity to assure that the portfolio is receiving adequate
compensation for new investments, and is accepting appropriate levels of risk.
Total expenses increased 2% to $2.8 million for the quarter ended March 31,
1997. Interest expense increased 6% for the first quarter of 1997 as compared
to the comparable quarter of the previous year as a result of the Company's
outstanding borrowings increasing to $92 million from $86 million at March 31,
1996. The Company's investment advisory fee increased 1% to $745,000 for the
quarter ended March 31, 1997 from $734,000 in the first quarter of 1996.
Again, this small increase was expected given the fact that invested assets in
the portfolio have remained relatively constant. Other operating expenses
decreased approximately 28% for the first quarter of 1997 as compared to 1996
as a result of lower legal expenses.
LIQUIDITY AND CAPITAL RESOURCES
Total assets decreased $474,000 to $165.3 million as of March 31, 1997 from
$165.8 million as of December 31, 1996. Total investments as of March 31, 1997
decreased $1.2 million from December 31, 1996 as total repayments and changes
in investment valuations during the first quarter of 1997 offset first quarter
new investments of $3.7 million. Cash and cash equivalents decreased $1.2
million to $43.7 million as of March 31, 1997.
Given the balance of cash and cash equivalents at March 31, 1997 and its
available credit facilities, the Company believes it has adequate capital
to continue to satisfy its operating needs, commitments and other future
investment opportunities that may arise throughout the remainder of 1997.
7
<PAGE> 10
PORTFOLIO CHANGES
For the three months ended March 31, 1997, the Company's portfolio had net
unrealized appreciation of $728,000 due to the sale of certain investments
which resulted in realized gains (losses), changes in market prices for public
equity investments, and changes in value of certain private investments.
The disposition of certain portfolio investments resulted in unrealized
appreciation (depreciation) and the recognition of realized gains (losses)
during the three months needed March 31, 1997 as follows:
<TABLE>
<CAPTION>
Unrealized Realized
Appreciation Gain
(Depreciation) (Loss)
-------------- -----------
<S> <C> <C>
ASW Holdings Corporation $(374,000) $715,000
Enviroplan, Inc. 341,000 (396,000)
</TABLE>
The Company's public equity investments which appreciated (depreciated) in
value during the three months ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
Unrealized
Appreciation
(Depreciation)
--------------
<S> <C>
Allied Capital Lending Corporation $787,000
Au Bon Pain Co., Inc. 18,000
Brazos Sportswear, Inc. 933,000
DeVlieg Bullard, Inc. 20,000
DMI Furniture 7,000
Esquire Communications, Ltd. 317,000
Gulf South Medical Supply, Inc. 73,000
Labor Ready, Inc. (840,000)
MLX 11,000
Nobel Education Dynamics, Inc. (235,000)
The Peerless Group, Inc. (349,000)
Quality Software Products Holdings, PLC 4,000
</TABLE>
The remaining appreciation during the three months ended March 31, 1997 was
$15,000.
FACTORS AFFECTING THE COMPANY'S BUSINESS
Illiquidity. Most of the Company's investments consist of securities acquired
directly from the issuers in private transactions. They are usually subject to
restrictions on resale or otherwise illiquid. There is usually no established
trading market for such securities into which they could be sold. In addition,
most of the securities are not eligible for sale to the public without
registration which would involve delay and expense.
Competition. A large number of entities and individuals compete for the
opportunity to make the kinds of investments made by the Company. Many of
these entities and individuals have greater financial resources than the
combined resources of the Company. As a result of this competition, the
Company may from time to time be precluded from making otherwise attractive
investments on terms considered to be prudent in light of the risks to be
assumed.
Statements included in this filing concerning the Company's future prospects
are "forward looking statements" under the Federal securities laws. There can
be no assurance that future results will be achieved and actual results could
differ materially from forecasts and estimates.
8
<PAGE> 11
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is party to certain lawsuits in connection with investments
it has made to small businesses. 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.
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
None
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 Common Share
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1997.
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: May 12, 1997 Jon A. DeLuca
------------ Executive Vice President, Treasurer
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
March 31, 1997
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1997 1996
----------------------------
<S> <C> <C>
Primary Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations $1,956,000 $4,442,000
Less: Dividends for Preferred Stock (55,000) (55,000)
----------------------------
Net Increase in Net Assets Resulting
from Operations Available to
Common Shareholders $1,901,000 $4,387,000
============================
Weighted average number of common
shares outstanding 7,316,014 6,301,619
Weighted average number of common
shares issuable on exercise
of outstanding stock options 78,122 41,135
----------------------------
Weighted average number of common
shares and common share equivalents outstanding 7,394,136 6,342,754
============================
Earnings per Common Share $0.26 $0.69
============================
Fully Diluted Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations $1,956,000 $4,442,000
Less: Dividends for Preferred Stock (55,000) (55,000)
----------------------------
Net Increase in Net Assets Resulting
from Operations Available to
Common Shareholders $1,901,000 $4,387,000
============================
Weighted average number of common
shares and common share
equivalents outstanding as computed for
primary earnings per share 7,394,136 6,342,754
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 7,394,136 6,342,754
============================
Earnings per Common Share $0.26 $0.69
============================
</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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 110,603
<INVESTMENTS-AT-VALUE> 115,401
<RECEIVABLES> 0
<ASSETS-OTHER> 6,165
<OTHER-ITEMS-ASSETS> 43,711
<TOTAL-ASSETS> 165,277
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 91,950
<OTHER-ITEMS-LIABILITIES> 3,180
<TOTAL-LIABILITIES> 95,130
<SENIOR-EQUITY> 7,343
<PAID-IN-CAPITAL-COMMON> 55,069
<SHARES-COMMON-STOCK> 7,343
<SHARES-COMMON-PRIOR> 7,299
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (975)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,798
<NET-ASSETS> 69,147
<DIVIDEND-INCOME> 270
<INTEREST-INCOME> 3,342
<OTHER-INCOME> 122
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</TABLE>
