<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 MARCH 31, 1995 0-22832
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ALLIED CAPITAL LENDING CORPORATION
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(exact name of Registrant as specified in its charter)
MARYLAND 52-1081052
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(State or jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1666 K STREET, N.W.
SUITE 901
WASHINGTON, DC 20006
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(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 331-1112
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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
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On May 1, 1995 there were 4,373,490 shares outstanding of the Registrant's
common stock, $0.0001 par value.
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ALLIED CAPITAL LENDING CORPORATION
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Financial Position as of March 31, 1995
and December 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . 1
Statement of Operations - For the Three Months Ended
March 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . 2
Statement of Changes in Net Assets - For the Three Months
Ended March 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . 3
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . . 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . 6
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 6
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
ALLIED CAPITAL LENDING CORPORATION
STATEMENT OF FINANCIAL POSITION
(in thousands, except number of shares)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
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(unaudited)
<S> <C> <C>
Assets
Investments at value:
Loans receivable . . . . . . . . . . . . . . . . . . . . $ 31,807 $ 32,771
Cash and cash equivalents. . . . . . . . . . . . . . . . . 1,434 1,297
Accrued interest receivable. . . . . . . . . . . . . . . . 607 451
Excess servicing asset . . . . . . . . . . . . . . . . . . 2,956 2,700
Other assets . . . . . . . . . . . . . . . . . . . . . . . 133 400
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Total assets . . . . . . . . . . . . . . . . . . . $ 36,937 $ 37,619
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Liabilities
Notes payable. . . . . . . . . . . . . . . . . . . . . . . $ 2,395 $ 3,130
Accounts payable and accrued expenses. . . . . . . . . . . 1,320 1,209
Investment advisory fee payable. . . . . . . . . . . . . . 225 230
Dividends payable. . . . . . . . . . . . . . . . . . . . . -- 262
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Total liabilities. . . . . . . . . . . . . . . . . 3,940 4,831
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Commitments and Contingencies
Shareholders' Equity
Common stock, $0.0001 par value; 20,000,000 shares
authorized; shares issued and outstanding at
3/31/95 - 4,373,490; 12/31/94 - 4,370,400. . . . . . . . -- --
Capital in excess of par value . . . . . . . . . . . . . . 33,112 33,069
Net unrealized depreciation on investments . . . . . . . . (223) (164)
Undistributed (distributions in excess of) accumulated
net realized earnings. . . . . . . . . . . . . . . . . . 108 (117)
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Total shareholders' equity . . . . . . . . . . . . 32,997 32,788
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Total liabilities and shareholders' equity . . . . $ 36,937 $ 37,619
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
1
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ALLIED CAPITAL LENDING CORPORATION
STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
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1995 1994
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(unaudited) (unaudited)
<S> <C> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 1,222 $ 683
Premium income . . . . . . . . . . . . . . . . . . . . . 605 454
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Total investment income. . . . . . . . . . . . . . . . 1,827 1,137
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Operating expenses:
Investment advisory fee. . . . . . . . . . . . . . . . . 224 180
Legal and audit fees . . . . . . . . . . . . . . . . . . 38 40
Interest expense . . . . . . . . . . . . . . . . . . . . 74 --
Other operating expenses . . . . . . . . . . . . . . . . 97 44
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Total expenses . . . . . . . . . . . . . . . . . . . . 433 264
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Net investment income. . . . . . . . . . . . . . . . . . . 1,394 873
Net realized recoveries (losses) on investments. . . . . . 10 (16)
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Net investment income before net unrealized
depreciation . . . . . . . . . . . . . . . . . . . . . . 1,404 857
Net unrealized depreciation on investments . . . . . . . . (59) (1)
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Net increase in net assets resulting from operations . . . $ 1,345 $ 856
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Earnings per share . . . . . . . . . . . . . . . . . . . . $ 0.31 $ 0.20
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Weighted average number of shares and share
equivalents outstanding. . . . . . . . . . . . . . . . . 4,370 4,368
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
2
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ALLIED CAPITAL LENDING CORPORATION
STATEMENT OF CHANGES IN NET ASSETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1995 1994
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(unaudited) (unaudited)
<S> <C> <C>
Increase in Net Assets Resulting from Operations:
Net investment income. . . . . . . . . . . . . . . . . . $ 1,394 $ 873
Net realized recoveries (losses) on investments . . . . 10 (16)
Net change in unrealized depreciation during the period. (59) (1)
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1,345 856
Distributions to Shareholders. . . . . . . . . . . . . . . (1,179) (1,091)
Capital Share Transactions . . . . . . . . . . . . . . . . 43 --
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Net Increase (Decrease) in Net Assets. . . . . . . . . . . 209 (235)
Net assets at beginning of period. . . . . . . . . . . . . 32,788 32,955
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Net assets at end of period. . . . . . . . . . . . . . . . $ 32,997 $ 32,720
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Net assets per share . . . . . . . . . . . . . . . . . . . $ 7.55 $ 7.49
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Shares outstanding at end of period. . . . . . . . . . . . 4,373 4,368
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
3
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ALLIED CAPITAL LENDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
NOTE 1. GENERAL:
In the opinion of management, the accompanying unaudited
financial statements of Allied Capital Lending Corporation (the
Company) contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the Company's financial position
as of March 31, 1995 and the results of operations, and changes in net
assets 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 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 three months ended March
31, 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 first quarter
dividend equivalent to $0.27 per share that was payable on March 31,
1995 to shareholders of record on March 17, 1995. In connection with
this dividend, the Company paid cash of $1,140,000 and distributed new
shares of common stock with a value of $39,000 for a total dividend of
$1,179,000.
NOTE 3. COMMITMENTS AND CONTINGENCIES:
Loans. The Company had loan commitments outstanding of $53.8 million
at March 31, 1995 to various existing and prospective portfolio
companies.
4
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Total loans decreased from $32.8 million at December 31, 1994 to
$31.8 million at March 31, 1995, or 2.9%. During the first quarter,
the Company originated new loans of $8.9 million and sold
participations to the secondary market of $12.1 million. Cash and
cash equivalents remained relatively constant at March 31, 1995 as
compared to December 31, 1994. Net assets increased from $32.8
million at December 31, 1994 to $33 million at March 31, 1995. This
increase is due primarily to investment income before net unrealized
depreciation for the three months ended March 31, 1995 that was in
excess of the first quarter dividend declared by the Company's Board
of Directors.
The Company continues to explore additional financing sources for
growth in its investment activity. At March 31, 1995, the Company had
available lines of credit totalling $12.6 million.
RESULTS OF OPERATIONS
Net increase in net assets resulting from operations was
$1,345,000 and $856,000 for the three months ended March 31, 1995 and
1994, respectively. The 1995 increase in net assets resulting from
operations is the result of a net increase in loans of approximately
$7 million from March 31, 1994, which had the effect of increasing
interest income earned by the Company. The Company had $605,000 in
gains from the sale of the guaranteed portion of SBA loans during the
first quarter of 1995 as compared to $454,000 in the corresponding
period in 1994. The Company incurred interest expense of $74,000 for
the three months ended March 31, 1995 as compared to none for the
prior corresponding period. This increase in interest expense is the
result of the Company leveraging the portfolio. The investment
advisory fee increased because of the higher rate the Company pays on
invested assets as compared to interim investments and cash.
5
<PAGE>
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not a defendant in any material pending legal
proceedings 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
None
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
11 Statements of Computation of Earnings Per Share
(b) No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1995.
6
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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 LENDING CORPORATION
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(Registrant)
/s/Jon A. DeLuca
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Date: May 12, 1995 Jon A. DeLuca
-------------- Senior Vice President and
Chief Financial Officer
7
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Allied Capital Lending Corporation
Exhibit 11 Computation of Earnings Per Common Share
Form 10-Q
March 31, 1995
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
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1995 1994
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<S> <C> <C>
Primary Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations $1,345,000 $ 856,000
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Weighted average number of
shares outstanding 4,370,434 4,368,420
Weighted average number of
shares issuable on exercise
of outstanding stock options - -
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Weighted average number of shares and
share equivalents outstanding 4,370,434 4,368,420
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Earnings per Share $ 0.31 $ 0.20
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Fully Diluted Earnings Per Common Share:
Net Increase in Net Assets Resulting
from Operations $1,345,000 $ 856,000
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Weighted average number of
shares and share equivalents
outstanding as computed for
primary earnings per share 4,370,434 4,368,420
Weighted average of additional
shares issuable on exercise
of outstanding stock options - -
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Weighted average of shares and
share equivalents outstanding, as adjusted 4,370,434 4,368,420
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Earnings per Share $ 0.31 $ 0.20
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</TABLE>
