UNITED STATES
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended________________March 31, 1998____________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________________to_________________________
Commission file number__________________________1-6026__________________________
_____________________________The Midland Company________________________________
(Exact name of registrant as specified in its charter)
________Incorporated in Ohio_________________ _________31-0742526___________
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
7000 Midland Boulevard, Amelia, Ohio 45102-2607
(Address of principal executive offices)
(Zip Code)
(513) 943-7100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes____X___ . No_______ .
The number of common shares outstanding as of March 31, 1998 was
9,300,738 (3,100,246 shares before adjustment for a three-for-one
stock split. See footnote 2 to the information contained in Part I,
Financial Information.)
<PAGE>
PART I. FINANCIAL INFORMATION
THE MIDLAND COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
Mar. 31, Dec. 31,
ASSETS 1998 1997
------------- -------------
CASH $ 3,402,000 $ 5,277,000
------------- -------------
MARKETABLE SECURITIES:
Fixed income (cost, $383,685,000 at March 31,
1998 and $397,033,000 at December 31, 1997) 390,255,000 404,038,000
Equity (cost, $35,407,000 at March 31, 1998 and
$33,928,000 at December 31, 1997) 102,958,000 94,791,000
------------- -------------
Total 493,213,000 498,829,000
------------- -------------
RECEIVABLES:
Accounts receivable 57,737,000 59,492,000
Less allowance for losses 753,000 753,000
------------- -------------
Net 56,984,000 58,739,000
------------- -------------
REINSURANCE RECOVERABLES AND
PREPAID REINSURANCE PREMIUMS 43,850,000 49,016,000
------------- -------------
PROPERTY, PLANT AND EQUIPMENT - AT COST 113,347,000 111,418,000
Less accumulated depreciation and amortization 41,467,000 39,806,000
------------- -------------
Property, Plant and Equipment - Net 71,880,000 71,612,000
------------- -------------
INVESTMENTS IN REAL ESTATE 14,779,000 14,779,000
------------- -------------
DEFERRED INSURANCE POLICY ACQUISITION COSTS 56,807,000 55,590,000
------------- -------------
OTHER ASSETS 6,754,000 6,621,000
------------- -------------
TOTAL $747,669,000 $760,463,000
============= =============
See notes to the consolidated financial statements.
<PAGE>
THE MIDLAND COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
Mar. 31, Dec. 31,
LIABILITIES & SHAREHOLDERS' EQUITY 1998 1997
------------- -------------
NOTES PAYABLE WITHIN ONE YEAR:
Banks $ 4,000,000 $ 24,000,000
Commercial paper 6,147,000 5,791,000
------------- -------------
Total 10,147,000 29,791,000
------------- -------------
INSURANCE COMMISSIONS PAYABLE 16,013,000 19,033,000
------------- -------------
OTHER PAYABLES AND ACCRUALS 49,337,000 49,998,000
------------- -------------
FUNDS HELD UNDER REINSURANCE AGREEMENTS
AND REINSURANCE PAYABLES 13,188,000 15,443,000
------------- -------------
UNEARNED INSURANCE PREMIUMS 236,309,000 240,340,000
------------- -------------
INSURANCE LOSS RESERVES 126,733,000 120,134,000
------------- -------------
DEFERRED FEDERAL INCOME TAX 28,317,000 26,180,000
------------- -------------
LONG-TERM DEBT 61,544,000 62,518,000
------------- -------------
SHAREHOLDERS' EQUITY:
Common stock (issued and outstanding: 9,301,000
shares at March 31, 1998 and 9,334,000 shares
at December 31, 1997 after deducting treasury
stock of 1,627,000 shares and 1,594,000
shares, respectively - All amounts are adjusted
for the three-for-one stock split - Note 2 911,000 911,000
Additional paid-in capital 15,354,000 15,359,000
Retained earnings 159,256,000 153,797,000
Accumulated other comprehensive income (net
unrealized gain on marketable securities) 48,160,000 44,123,000
Treasury stock - at cost (15,369,000) (14,704,000)
Unvested restricted stock awards (2,231,000) (2,460,000)
------------- -------------
Total 206,081,000 197,026,000
------------- -------------
TOTAL $747,669,000 $760,463,000
============= =============
See notes to the consolidated financial statements.
<PAGE>
THE MIDLAND COMPANY
AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
1998 1997
------------- -------------
REVENUES:
Insurance:
Premiums earned $ 90,479,000 $ 75,270,000
Net investment income 5,842,000 5,033,000
Net realized investment gains 1,039,000 1,378,000
Other insurance income 485,000 721,000
Transportation 9,237,000 7,569,000
Other 155,000 56,000
------------- -------------
Total 107,237,000 90,027,000
------------- -------------
COSTS AND EXPENSES:
Insurance:
Losses and loss adjustment expenses 48,121,000 41,599,000
Commissions and other policy acquisition costs 25,513,000 21,883,000
Operating and administrative expenses 14,855,000 11,634,000
Transportation operating expenses 8,150,000 7,045,000
Interest expense 1,257,000 1,154,000
Other operating and administrative expenses 757,000 786,000
------------- -------------
Total 98,653,000 84,101,000
------------- -------------
INCOME FROM CONTINUING OPERATIONS
BEFORE FEDERAL INCOME TAX 8,584,000 5,926,000
PROVISION FOR FEDERAL INCOME TAX 2,544,000 1,660,000
------------- -------------
INCOME FROM CONTINUING OPERATIONS 6,040,000 4,266,000
------------- -------------
LOSS FROM DISCONTINUED OPERATIONS LESS
RELATED INCOME TAX CREDIT OF $625,000 - (1,175,000)
------------- -------------
NET INCOME $ 6,040,000 $ 3,091,000
============= =============
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
Continuing operations $ 0.67 $ 0.48
Discontinued operations - (0.13)
------------- -------------
Total $ 0.67 $ 0.35
============= =============
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
Continuing operations $ 0.64 $ 0.46
Discontinued operations - (0.12)
------------- -------------
Total $ 0.64 $ 0.34
============= =============
CASH DIVIDENDS PER SHARE OF COMMON STOCK $ .0625 $ .0583
============= =============
See notes to the consolidated financial statements. All per share amounts are
adjusted for the three-for-one stock split (Note 2).
<PAGE>
<TABLE>
THE MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (Unaudited)
Amounts in 000's
Accumulated Unvested
Additional Other Com- Restricted Compre-
Common Paid-In Retained prehensive Treasury Stock hensive
Stock Capital Earnings Income Stock Awards Total Income
------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 $ 911 $14,846 $138,423 $23,587 $(16,621) $(1,458) $159,688
Comprehensive income:
Net income 3,091 3,091 $ 3,091
Changes in unrealized gain
on investments, net of tax 1,263 1,263 1,263
-------
Total comprehensive income $ 4,354
=======
Purchase of treasury stock, net 18 45 63
Cash dividends declared (544) (544)
Exercise of stock options (19) 53 34
Restricted stock awards 626 1,808 (2,434) -
Amortization and cancellation of
unvested restricted stock awards (15) (21) 300 264
-------------------------------------------------------------------------------
BALANCE, MARCH 31, 1997 $ 911 $15,456 $140,970 $24,850 $(14,736) $(3,592) $163,859
===============================================================================
BALANCE, DECEMBER 31, 1997 $ 911 $15,359 $153,797 $44,123 $(14,704) $(2,460) $197,026
Comprehensive income:
Net income 6,040 6,040 $ 6,040
Changes in unrealized gain
on investments, net of tax 4,037 4,037 4,037
-------
Total comprehensive income $10,077
=======
Purchase of treasury stock, net 32 (642) (610)
Cash dividends declared (581) (581)
Exercise of stock options (7) 28 21
Amortization and cancellation of
unvested restricted stock awards (30) (51) 229 148
-------------------------------------------------------------------------------
BALANCE, MARCH 31, 1998 $ 911 $15,354 $159,256 $48,160 $(15,369) $(2,231) $206,081
===============================================================================
See notes to the consolidated financial statements.
</TABLE>
<PAGE>
THE MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
1998 1997
------------- -------------
Cash Flows from Operating Activities:
Net income $ 6,040,000 $ 3,091,000
Loss from discontinued operations - 1,175,000
------------- -------------
Income from continuing operations 6,040,000 4,266,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,111,000 2,136,000
Increase in insurance loss reserves 6,599,000 4,882,000
Decrease in reinsurance recoverables and
prepaid reinsurance premiums 5,166,000 5,336,000
Decrease in unearned insurance premiums (4,031,000) (4,999,000)
Decrease in insurance commissions payable (3,020,000) (1,621,000)
Decrease in funds held under reinsurance
agreements and reinsurance payables (2,255,000) (1,531,000)
Decrease (increase) in net accounts receivable 1,755,000 (2,626,000)
Increase (decrease) in other accounts payable
and accruals (1,242,000) 511,000
Decrease (increase) in deferred insurance policy
acquisition costs (1,217,000) 177,000
Increase in other assets (133,000) (19,000)
Decrease in deferred federal income tax (37,000) (87,000)
Other-net 563,000 171,000
------------- -------------
Net cash provided by continuing operations 10,299,000 6,596,000
Net cash used in discontinued operations - (1,512,000)
------------- -------------
Net cash provided by operating activities 10,299,000 5,084,000
------------- -------------
Cash Flows from Investing Activities:
Purchase of marketable securities (48,030,000) (61,798,000)
Decrease in cash equivalent marketable securities 24,511,000 34,536,000
Sale of marketable securities 23,844,000 26,752,000
Maturity of marketable securities 10,887,000 8,326,000
Acquisition of property, plant and equipment (2,223,000) (15,434,000)
Sale of property, plant and equipment 88,000 748,000
------------- -------------
Net cash provided by (used in)
investing activities 9,077,000 (6,870,000)
------------- -------------
Cash Flows from Financing Activities:
Increase (decrease) in net short-term borrowings (19,644,000) 2,105,000
Repayment of long-term debt (874,000) (821,000)
Net issuance (purchase) of treasury stock (633,000) 95,000
Payment of capitalized lease obligations (100,000) (90,000)
Issuance of long-term debt - 2,300,000
Dividends paid - (501,000)
------------- -------------
Net cash provided by (used in) financing
activities (21,251,000) 3,088,000
------------- -------------
Net Increase (Decrease) in Cash (1,875,000) 1,302,000
Cash at Beginning of Period 5,277,000 3,342,000
------------- -------------
Cash at End of Period $ 3,402,000 $ 4,644,000
============= =============
See notes to the consolidated financial statements.
<PAGE>
THE MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of The Midland
Company and subsidiaries (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete annual financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Financial information as of December 31, 1997 has been derived
from the audited consolidated financial statements of the Company. Revenue and
operating results for the three-month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the audited consolidated
financial statements and footnotes thereto for the year ended December 31, 1997
included in the Company's Annual Report on Form 10-K.
Reclassifications have been made to the 1997 amounts related to the previously
reported sale in 1997 of the Company's Sportswear subsidiary discontinued
operations. Certain other reclassifications (minor in nature) have been made to
the 1997 amounts to conform to 1998 classifications.
2. THREE-FOR-ONE STOCK SPLIT
On April 9, 1998, the Company approved a three-for-one stock split effective for
holders of record on April 30, 1998. Accordingly, data related to the Company's
common stock (number of shares, average shares outstanding, earnings per share
and dividends per share) have been adjusted for the current and prior periods to
reflect the impact of this stock split.
3. EARNINGS PER SHARE
Earnings per share (EPS) of common stock is computed by dividing net income by
the weighted average number of shares outstanding during the period for Basic
EPS, plus the dilutive share equivalents for stock options and restricted stock
awards for Diluted EPS. Shares used for EPS calculations were as follows:
For Basic EPS For Diluted EPS
------------- ---------------
Three months ended March 31:
1998 8,994,000 9,374,000
========= =========
1997 8,914,000 9,183,000
========= =========
4. INCOME TAXES
The federal income tax provisions for the three-month periods ended March 31,
1998 and 1997 are different from amounts derived by applying the statutory tax
rates to income before federal income tax as follows:
1998 1997
----------- -----------
Federal income tax at statutory rate $3,005,000 $1,444,000
Tax effect of:
Tax exempt interest and excludable
dividend income (451,000) (378,000)
Other - net (10,000) (31,000)
----------- -----------
Provision for federal income tax $2,544,000 $1,035,000
=========== ===========
5. SUPPLEMENTAL CASH FLOW DISCLOSURES
The Company paid interest of $1,211,000 and $1,752,000 in the first three months
of 1998 and 1997, respectively. The Company received tax refunds of $1,377,000
and $555,000 during the first three months of 1998 and 1997, respectively. In
January, 1997, the Company issued 196,050 shares (on a post-split basis) of
treasury stock under a restricted stock award program that relieved treasury
stock by approximately $1,808,000 and also increased paid-in capital by
approximately $626,000.
<PAGE>
THE MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards ("SFAS") No. 130 requires the
reporting of comprehensive income, and the Company adopted SFAS No. 130,
beginning in 1998. Comprehensive income for the Company consists of net income
and the after-tax effect of changes in the market values of the Company's
marketable securities. Comprehensive income is disclosed in the "Consolidated
Statements of Changes in Shareholders' Equity".
7. SEGMENT DISCLOSURES
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information", will be adopted by the Company for its annual financial
statements for 1998. Adoption will not impact the reported results of
operations of the Company but will require additional disclosures.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
The Midland Company:
We have reviewed the accompanying consolidated balance sheet of The Midland
Company and subsidiaries as of March 31, 1998, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
three-month periods ended March 31, 1998 and 1997. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Midland Company and
subsidiaries as of December 31, 1997, and the related consolidated statements of
income and of cash flows for the year then ended (not presented herein); and in
our report dated February 12, 1998, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet as of December 31, 1997 is fairly
stated, in all material respects, in relation to the consolidated financial
statements from which it has been derived.
s/Deloitte & Touche LLP
- -----------------------
Deloitte & Touche LLP
Cincinnati, Ohio
April 9, 1998
<PAGE>
THE MIDLAND COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A detailed discussion of the Company's liquidity and capital resources
is included in the 1997 Annual Report on Form 10-K. Except as discussed below,
no material changes have taken place since that date and, accordingly, the
discussion is not repeated here.
RESULTS OF OPERATIONS (Per share discussions are based on diluted earnings per
share)
Continuing Operations - First Quarter 1998 Compared to First Quarter 1997
- -------------------------------------------------------------------------
Insurance Operations
American Modern Insurance Group (AMIG), the Company's insurance
subsidiaries, experienced an increase in insurance premiums earned in the first
quarter of 1998 by approximately 20 percent over 1997 levels. This growth was
due to the continued premium growth within the Company's core property and
casualty insurance products coupled with the repatriation of insurance premiums
that were previously ceded to reinsurers under various reinsurance treaties. The
premium growth also resulted in a corresponding increase in insurance losses and
loss adjustment expenses, commissions and other policy acquisitions costs, and
operating and administrative expenses compared to the prior year.
Also contributing to the overall growth in insurance related revenues
was the increase in the income generated from the insurance investment
portfolio. Investment income increased 16 percent (excluding realized capital
gains) for the quarter over the comparable period in 1997. This increase was
due primarily to the growth of the investment portfolio since the prior year.
After-tax capital gains for the quarter totaled approximately $.07 per share (on
a post-split basis) in 1998 compared to approximately $.10 per share (on a post-
split basis) in 1997.
AMIG's underwriting profits were also improved in the first quarter of
1998 compared to 1997. The improved results were due primarily to the existence
of more favorable weather patterns throughout the United States in 1998 compared
to the prior year. The loss ratio (ratio of losses to net premiums earned) of
the property and casualty insurance companies was 53.3% during the first quarter
of 1998. This compares favorably to a loss ratio of 55.4% for the first quarter
of 1997.
Transportation Operations
Transportation revenues increased by approximately 22 percent while
expenses increased only 16 percent. This favorable scenario resulted in an
increase of more than 100 percent in after-tax profits generated by the
Transportation subsidiaries for the first quarter of 1998 compared to 1997.
These improved results are due, in part, to the fact that revenue and profits
were adversely affected by severe flooding conditions on the lower Mississippi
River during the first quarter of the prior year.
Discontinued Operations - Results of Operations
- -----------------------------------------------
As previously reported, on September 29, 1997, the Company's sportswear
subsidiary, CS Crable Sportswear, Inc., sold the majority of its assets to
Brazos, Inc., a subsidiary of Brazos Sportswear, Inc. After-tax operating
losses from the discontinued operations for the first quarter of 1997 amounted
to $(1,175,000), which equated to $(.13) per share (on a post-split basis).
There have been no material financial results reported from this subsidiary
since the date of sale.
CHANGES IN FINANCIAL CONDITION
Cash flows from operations, coupled with sales and maturities of
marketable securities, were used to reduce the Company's short-term borrowings
from year-end 1997. The increases in deferred federal income tax and net
unrealized gain on marketable securities (included in accumulated other
comprehensive income) are the result of the increase in the market value of the
Company's investment portfolio. The decreases in reinsurance recoverables and
prepaid reinsurance premiums are due primarily to a change in the amount of
insurance premium ceded to reinsurers under certain reinsurance treaties.
<PAGE>
THE MIDLAND COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
OTHER MATTERS
Comprehensive Income
- --------------------
The Company's comprehensive income includes the following for the three
months ended March 31, 1998 and 1997:
1998 1997
------------ ------------
Net income $ 6,040,000 $ 3,091,000
Change in unrealized gains on marketable securities
(net of tax effects) 4,037,000 1,263,000
------------ ------------
Total $10,077,000 $ 4,354,000
============ ============
In the first quarter of 1998 the Company experienced significantly more
net unrealized gains in its equity marketable securities than it did in the
first quarter of 1997.
Private Securities Reform Act of 1995 - Forward Looking Statements Disclosure
- -----------------------------------------------------------------------------
This Report may contain forward-looking statements. For purposes of
this Report, a "Forward Looking Statement", within the meaning of the Securities
Reform Act of 1995, is any statement concerning the remainder of the year 1998
and beyond. The actions and performance of the Company and its subsidiaries
could deviate materially from what is contemplated by the forward-looking
statements contained in this Report. Factors which might cause deviations from
the forward looking statements include, without limitations, the following:
1) changes in the laws or regulations affecting the operations of the Company or
any of its subsidiaries; 2) changes in the business tactics or strategies of the
Company or any of its subsidiaries; 3) acquisition(s) of assets or of new or
complementary operations, or divestiture of any segment of the existing
operations of the Company or any of its subsidiaries; 4) changing market forces
or litigation which necessitate, in Management's judgment, changes in plans,
strategy or tactics of the Company or its subsidiaries and 5) adverse weather
conditions, fluctuations in the investment markets, changes in the retail
marketplace or fluctuations in interest rates, any one of which might materially
affect the operations of the Company and/or its subsidiaries.
<PAGE>
PART II. OTHER INFORMATION
THE MIDLAND COMPANY
AND SUBSIDIARIES
MARCH 31, 1998
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
On April 9, 1998, the Company amended its Articles of Incorporation to
increase the number of authorized shares of common stock from 5,000,000
to 20,000,000.
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders (Votes below are
---------------------------------------------------
based on pre-stock split shares)
a.) At the Company's 1998 annual meeting of Shareholders held on
April 9, 1998, the following actions were taken:
Votes Broker
Directors Votes For Withheld Abstentions Non-Votes
--------- --------- -------- ----------- ---------
Joseph P. Hayden, Jr. 2,640,817 9,698 0 0
William T. Hayden 2,623,155 27,360 0 0
John M. O'Mara 2,640,771 9,744 0 0
Glenn E. Schembechler 2,636,279 14,236 0 0
John I. Von Lehman 2,640,817 9,698 0 0
b.) A proposal by the Board of Directors to ratify the appointment of
Deloitte & Touche, LLP as the Company's independent auditors to
conduct the annual audit of the financial statements of the Company
and its subsidiaries for the year ending December 31, 1998, was
approved by the Shareholders. The Shareholders cast 2,645,623 votes
in favor of this proposal and 1,154 votes against. There were 3,608
abstentions.
c.) A proposal by the Board of Directors to amend the Articles of
Incorporation of the Company to increase the authorized shares of
common stock from 5,000,000 to 20,000,000 was approved by the
Shareholders. The Shareholders cast 2,637,824 votes in favor of the
proposal and 10,953 votes against. There were 1,608 abstentions.
d.) A proposal by the Board of Directors to amend the Code of
Regulations of the Company to allow the Chief Executive Officer of
the Company to be someone other than the Chairman of the Board of
the Company was approved by the Shareholders. The Shareholders cast
2,645,856 votes in favor of this proposal and 2,980 votes against.
There were 1,549 abstentions.
e.) A proposal by the Board of Directors to amend and restate the
Company's stock option plan for non-employee Directors was approved
by the Shareholders. The Shareholders cast 2,512,749 votes in favor
of this proposal and 76,588 votes against. There were 1,048
abstentions.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a.) Exhibit 15 - Letter re: Unaudited Interim Financial Information
b.) Exhibit 15 - Financial Data Schedule
c.) Reports on Form 8-K - None
<PAGE>
SIGNATURE
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 thereunto dully authorized.
THE MIDLAND COMPANY
Date ___April 9, 1998__________ s/John I. Von Lehman_________________
John I. Von Lehman, Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT 15
LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION
The Midland Company:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of The Midland Company and subsidiaries for the periods ended
March 31, 1998 and 1997, as indicated in our report dated April 9, 1998; because
we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, is
incorporated by reference in Registration Statements No. 33-64821 on Form S-3
and No. 33-48511 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
s/Deloitte & Touche LLP
- -----------------------
Deloitte & Touche LLP
Cincinnati, Ohio
April 9, 1998
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<DEBT-HELD-FOR-SALE> 379,234,000
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 102,958,000
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 493,213,000
<CASH> 14,423,000
<RECOVER-REINSURE> 25,096,000
<DEFERRED-ACQUISITION> 56,807,000
<TOTAL-ASSETS> 747,669,000
<POLICY-LOSSES> 126,733,000
<UNEARNED-PREMIUMS> 236,309,000
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 29,201,000
<NOTES-PAYABLE> 71,691,000
<COMMON> 911,000
0
0
<OTHER-SE> 205,170,000
<TOTAL-LIABILITY-AND-EQUITY> 747,669,000
90,479,000
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