0000912057-95-006514.txt : 19950815 0000912057-95-006514.hdr.sgml : 19950815 ACCESSION NUMBER: 0000912057-95-006514 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED CAPITAL CORP CENTRAL INDEX KEY: 0000003845 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 530245085 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 811-00907 FILM NUMBER: 95563387 BUSINESS ADDRESS: STREET 1: 1666 K ST N W STE 901 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2023311112 MAIL ADDRESS: STREET 2: 1666 K STREET NW 9TH FL CITY: WASHINGTON STATE: DC ZIP: 20006 10-Q 1 10-Q Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period Commission file number: ended JUNE 30, 1995 814-97 ------------- ---------- ALLIED CAPITAL CORPORATION ------------------------------------------------------ (exact name of Registrant as specified in its charter) MARYLAND 53-0245085 ------------------------------ -------------------- (State or jurisdiction of (IRS Employer incorporation or organization) Identification No.) 1666 K STREET, N.W. SUITE 901 WASHINGTON, DC 20006 --------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (202) 331-1112 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 12 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --------------------- On August 11, 1995 there were 6,174,047 shares outstanding of the Registrant's common stock, $1 par value. ALLIED CAPITAL CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX PART I. Financial Information Item 1. Financial Statements Consolidated Statement of Financial Position as of June 30, 1995 and December 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . 1 Consolidated Statement of Operations - For the Three and Six Months Ended June 30, 1995 and 1994. . . . . . . . . . . . . . . 2 Consolidated Statement of Changes in Net Assets - For the Six Months Ended June 30, 1995 and 1994. . . . . . . . . . . . . . . 3 Consolidated Statement of Cash Flows - For the Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements . . . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . 7 PART II. Other Information Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 10 Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . 10 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . 10 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 10 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 11 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PART I - Financial Information Item 1. Financial Statements ALLIED CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in thousands, except number of shares)
June 30, 1995 December 31, 1994 --------------- ------------------- (unaudited) Assets Investments at Value: Loans and debt securities. . . . . . . . . . . . . . . . . $ 88,971 $ 84,949 Equity securities. . . . . . . . . . . . . . . . . . . . . 31,825 28,225 Other investment assets. . . . . . . . . . . . . . . . . . 1,448 1,852 ------------ ------------- Total investments. . . . . . . . . . . . . . . . . . . . 122,244 115,026 Cash and cash equivalents. . . . . . . . . . . . . . . . . . 1,991 6,609 U.S. government securities . . . . . . . . . . . . . . . . . 9,347 10,210 Other asset. . . . . . . . . . . . . . . . . . . . . . . . . 2,670 3,672 ------------ ------------- Total assets . . . . . . . . . . . . . . . . . . . . . . 136,252 135,517 ------------ ------------- ------------ ------------- Liabilities Revolving line of credit . . . . . . . . . . . . . . . . . . -- 2,205 Debentures and notes payable . . . . . . . . . . . . . . . . 74,800 74,800 Accrued interest payable . . . . . . . . . . . . . . . . . . 1,408 1,393 Investment advisory fee payable. . . . . . . . . . . . . . . 709 658 Dividends and distributions payable. . . . . . . . . . . . . -- 3,910 Other liabilities. . . . . . . . . . . . . . . . . . . . . . 1,188 1,564 ------------ ------------- Total liabilities. . . . . . . . . . . . . . . . . . . . 78,105 84,530 ------------ ------------- Redeemable preferred stock . . . . . . . . . . . . . . . . . 1,000 1,000 ------------ ------------- Commitments and Contingencies Shareholders' Equity Preferred Stock of wholly owned subsidiary, $100 par value; 60,000 shares authorized, issued and outstanding at 6/30/95 and 12/31/94. . . . . . . . . . . . 6,000 6,000 Common stock, $1 par value; 10,000,000 shares authorized; 6,174,047 and 6,152,703 shares issued and outstanding at 6/30/95 and 12/31/94. . . . . . 6,174 6,153 Additional paid-in capital . . . . . . . . . . . . . . . . 41,192 40,960 Notes receivable from sale of common stock . . . . . . . . (666) (816) Net unrealized appreciation on investments . . . . . . . . 8,760 1,110 Distributions in excess of accumulated earnings. . . . . . (4,313) (3,420) ------------ ------------- Total shareholders' equity . . . . . . . . . . . . . . . 57,147 49,987 ------------ ------------- Total liabilities and shareholders' equity . . . . . . . $136,252 $135,517 ------------ ------------- ------------ -------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 1 ALLIED CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share amounts) (unaudited)
For the Three Months Ended For the Six Months Ended June 30 June 30 -------------------------- ------------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Investment income: Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,574 $ 2,079 $ 5,716 $ 4,266 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . 362 414 708 821 Other income . . . . . . . . . . . . . . . . . . . . . . . 293 14 354 14 ---------- ---------- ---------- --------- Total investment income. . . . . . . . . . . . . . . . . 3,229 2,507 6,778 5,101 ---------- ---------- ---------- --------- Expenses: Interest expense . . . . . . . . . . . . . . . . . . . . . 1,649 1,556 3,346 3,122 Investment advisory fee. . . . . . . . . . . . . . . . . . 709 568 1,346 1,107 Legal and audit fees . . . . . . . . . . . . . . . . . . . 178 120 368 332 Other operating expenses . . . . . . . . . . . . . . . . . 189 132 333 204 ---------- ---------- ---------- --------- Total expenses . . . . . . . . . . . . . . . . . . . . . 2,725 2,376 5,393 4,765 ---------- ---------- ---------- --------- Net investment income. . . . . . . . . . . . . . . . . . . . 504 131 1,385 336 Net realized gains on investments. . . . . . . . . . . . . . 217 1,547 295 1,788 ---------- ---------- ---------- --------- Net investment income before net unrealized appreciation on investments . . . . . . . . . . . . . . . . 721 1,678 1,680 2,124 Net unrealized appreciation on investments . . . . . . . . . 6,475 963 7,650 1,269 ---------- ---------- ---------- --------- Net increase in net assets resulting from operations . . . . $ 7,196 $ 2,641 $ 9,330 $ 3,393 ---------- ---------- ---------- --------- ---------- ---------- ---------- --------- Earnings per common share. . . . . . . . . . . . . . . . . . $ 1.16 $ 0.42 $ 1.49 $ 0.53 ---------- ---------- ---------- --------- ---------- ---------- ---------- --------- Weighted average number of common shares and common share equivalents outstanding. . . . . . . . . . . . 6,174 6,171 6,174 6,182 ---------- ---------- ---------- --------- ---------- ---------- ---------- ---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 2 ALLIED CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (in thousands, except per share amounts) (unaudited)
For the Six Months Ended June 30 -------------------------------- 1995 1994 ---------- ---------- Increase in net assets resulting from operations: Net investment income. . . . . . . . . . . . . . . . . . . $ 1,385 $ 336 Net realized gains on investments. . . . . . . . . . . . . 295 1,788 Net change in unrealized appreciation on investments . . . 7,650 1,269 ---------- ---------- Net increase in net assets resulting from operations . . 9,330 3,393 Distributions to shareholders from: Common stock dividend. . . . . . . . . . . . . . . . . . . (2,463) (2,454) Preferred stock dividend . . . . . . . . . . . . . . . . . (110) (110) Capital Share Transactions . . . . . . . . . . . . . . . . . 403 135 ---------- ---------- Net increase (decrease) in net assets. . . . . . . . . . . . 7,160 964 Net assets at beginning of the period. . . . . . . . . . . 49,987 58,185 ---------- ---------- Net assets at end of Period. . . . . . . . . . . . . . . . 57,147 59,149 Preferred stock of wholly-owned subsidiary . . . . . . . . 6,000 6,000 ---------- ---------- Net asset value available to common shareholders . . . . . $ 51,147 $ 53,149 ---------- ---------- ---------- ---------- Net asset value per common share . . . . . . . . . . . . . . $ 8.28 $ 8.64 ---------- ---------- ---------- ---------- Common shares outstanding at end of period . . . . . . . . . 6,174 6,155 ---------- ---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 3 ALLIED CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) (unaudited)
For the Six Months Ended June 30, --------------------------------- 1995 1994 ----------- ----------- Cash Flows From Operating Activities: Net increase in net assets resulting from operations . . . . . . . . $ 9,330 $ 3,393 Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: Net unrealized appreciation on investments . . . . . . . . . . . . (7,650) (1,269) Net realized gains on investments. . . . . . . . . . . . . . . . . (295) (1,788) Non-cash dividends from investments. . . . . . . . . . . . . . . . -- (801) Changes in assets and liabilities: Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,002) 1,127 Accrued interest payable . . . . . . . . . . . . . . . . . . . . . 15 98 Investment advisory fee payable. . . . . . . . . . . . . . . . . . 51 152 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . (376) 474 ----------- ----------- Net cash provided by operating activities . . . . . . . . . . . 73 1,386 ----------- ----------- Cash Flows From Investing Activities: Net (increase) decrease in investments . . . . . . . . . . . . . . 657 (7,998) Net purchase of U.S. government securities . . . . . . . . . . . . (863) (6,380) Payments on notes receivable . . . . . . . . . . . . . . . . . . . 150 -- ----------- ----------- Net cash used in investing activities . . . . . . . . . . . . . (56) (14,378) ----------- ----------- Cash Flows From Financing Activities: Common distributions paid. . . . . . . . . . . . . . . . . . . . . (2,210) (6,034) Preferred distributions paid . . . . . . . . . . . . . . . . . . . (220) (220) Payments on revolving line of credit . . . . . . . . . . . . . . . (2,205) -- ----------- ----------- Net cash used in financing activities . . . . . . . . . . . . . (4,635) (6,254) ----------- ----------- Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . (4,618) (19,246) Cash and cash equivalents, beginning of period . . . . . . . . . . . . 6,609 24,358 ----------- ----------- Cash and cash equivalents, end of period . . . . . . . . . . . . . . . $ 1,991 $ 5,112 ----------- ----------- ----------- -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS 4 ALLIED CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (UNAUDITED) NOTE 1. GENERAL In the opinion of management, the accompanying unaudited consolidated financial statements of Allied Capital Corporation and subsidiaries (the Company) contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company's consolidated financial position as of June 30, 1995 and the results of operations, changes in net assets, and cash flows for the periods indicated. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 1994 Annual Report. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of the operating results to be expected for the full year. Certain reclassifications have been made to the 1994 condensed financial statements in order to conform to the 1995 presentation. NOTE 2. DISTRIBUTIONS The Company's Board of Directors declared a second quarter dividend equivalent to $0.20 per share payable on June 30, 1995 to shareholders of record on June 16, 1995. In connection with this dividend, the Company paid cash of $1,102,000 and distributed new shares of common stock with a value of $131,000 for a total dividend of $1,233,000. In addition, the Company's Board of Directors declared a first quarter dividend equivalent to $0.20 per share payable on March 31, 1995 to shareholders of record on March 17, 1995. In connection with this dividend, the Company paid cash of $1,108,000 and distributed new shares of common stock with a value of $122,000 for a total dividend of $1,230,000. The Company owned all of the outstanding capital stock of Allied Capital Lending Corporation ("Allied Lending") prior to consummation of the initial public offering of Allied Lending shares in November 1993. As a result of that initial public offering, the Company's ownership of Allied Lending shares was reduced to 1,580,000 shares, or 36.2% of the Allied Lending shares outstanding at December 31, 1993. The Company has agreed that it would divest itself of all shares of Allied Lending by December 31, 1998 by public offerings, private placements, distributions to the Company's shareholders or otherwise. The Company declared an extra dividend in December of 1994 and distributed on January 6, 1995 an aggregate of 335,086 Allied Lending shares, which reduced its ownership of Allied Lending shares to 1,244,914 shares, or 28.5% of the Allied Lending shares then outstanding. NOTE 3. DEBT As of June 30, 1995, the Company has $4.5 million in SBA debentures that have matured and for which the SBA has temporarily converted to demand instruments with principal due on September 30, 1995. In addition, $2 million in SBA debentures have matured subsequent to June 30, 1995, and the Company is working with the SBA to temporarily convert these debentures to similar demand notes. During the second quarter of 1995, the Company applied for a forward commitment from the SBA to provide for up to $12 million in financing to its SBIC subsidiary. The Company has received the commitment from the SBA for this financing; however, the Company must first submit an application to draw on the committed funds and receive SBA approval of that application. In addition, the Company's ability to draw funds under the commitment is contingent upon the completion of a current regular SBA examination, which is nearing completion. In the event the Company is denied the ability to draw funds under the forward commitment, the Company will either request that the SBA extend the current demand notes or repay the maturing notes with our available line of credit and cash and cash equivalents on hand. 5 Subsequent to June 30, 1995, the Company has also applied for a $6 million forward commitment from the SBA for its SSBIC subsidiary. The outcome of this application process is currently unknown. On April 10, 1995, the Company entered into a loan agreement with the Overseas Private Investment Corporation under which the Company may borrow up to $20 million to provide financing for international projects involving qualifying U.S. small businesses. Loans made under this agreement bear interest at the U.S. Treasury Rate plus .5%, and have a ten year maturity from the date of disbursement. The loan agreement expires on the earlier of the first date on which the amount of the loan(s) equal $20 million or April 10, 1998. At June 30, 1995, there were no outstanding borrowings under the loan agreement. NOTE 4. EARNINGS PER SHARE Earnings per share is computed assuming that all issuances of the Company's common stock in connection with its dividend reinvestment plan are outstanding for all periods presented. During 1995, the Company has issued 21,344 shares of common stock pursuant to the dividend investment plan. The weighted average number of shares and share equivalents outstanding for the three and six months ended June 30, 1994 have been restated to include the 1995 common stock issuances under the dividend reinvestment plan. In addition, the computation of net assets per common share as of June 30, 1994 has been restated to reflect the issuance of common stock pursuant to the dividend reinvestment plan during 1995. NOTE 5. COMMITMENTS AND CONTINGENCIES Commitments. The Company had loan commitments outstanding equal to $3.6 million at June 30, 1995 to invest in various existing and prospective portfolio companies. Litigation. The Company is a party to a number of lawsuits in connection with loans it has made to small businesses. In the opinion of the Company's management, none of these proceedings are material in relation to the Company's consolidated financial position. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Total investments increased by $7.2 million or 6.3% to $122.2 million at June 30, 1995 from $115.0 million at December 31, 1994. This increase was primarily due to valuation changes in the portfolio resulting in net unrealized appreciation of $7.7 million for the six month period. In the first six months of 1995, the Company invested approximately $14 million in small business concerns, and received repayments and early payoffs from other small business of approximately $8 million. Cash and cash equivalents decreased $4.6 million because new investments and cash dividends paid during 1995. As of June 30, 1995, the Company has $4.5 million in SBA debentures that have matured and for which the SBA has temporarily converted to demand instruments with principal due on September 30, 1995. In addition, $2 million in SBA debentures have matured subsequent to June 30, 1995, and the Company is working with the SBA to temporarily convert these debentures to similar demand notes. During the second quarter of 1995, the Company applied for a forward commitment from the SBA to provide for up to $12 million in financing to its SBIC subsidiary. The Company has received the commitment from the SBA for this financing; however, the Company must first submit an application to draw on the committed funds and receive SBA approval of that application. In addition, the Company's ability to draw funds under the commitment is contingent upon the completion of a current regular SBA examination, which is nearing completion. In the event the Company is denied the ability to draw funds under the forward commitment, the Company will either request that the SBA extend the current demand notes or repay the maturing notes with our available line of credit and cash and cash equivalents on hand. Subsequent to June 30, 1995, the Company has also applied for a $6 million forward commitment from the SBA for its SSBIC subsidiary. The outcome of this application process is currently unknown. The Company has secured a credit facility with the Oversees Private Investment Corporation for up to $20 million in financing for international projects involving small businesses. Given the availability of the Oversees Private Investment Corporation facility, current cash and government securities available at June 30, 1995, and its available line of credit, the Company believes that it has adequate capital to continue to satisfy its operating and investment needs throughout the year. The Company continues to explore obtaining new debt or equity capital sources as well. RESULTS OF OPERATIONS Second Quarter Ended June 30, 1995 Compared with Second Quarter Ended June 30, 1994. Net increase in net assets resulting from operations for the second quarter of 1995 increased $4.6 million or 172% compared with the 1994 net increase in net assets resulting from operations of $2.6 million. Earnings per common share for the quarter increased to $1.16 per common share from $0.42 per common share in 1994. The largest single factor effecting the increase in net assets resulting from operations for the second quarter ended June 30, 1995 resulted from an increase of $6.5 million in unrealized appreciation on investments resulting from the Company's valuation process. The Company believes that several small business concerns in the portfolio have appreciated significantly and that this appreciation can be evaluated through recent offerings of the small business concern's stock or through current private negotiations for new financing or for sale transactions. Total investment income increased 28.8% from $2.5 million to $3.2 million compared with the second quarter of last year primarily due to the increase in interest income. Interest income increased from the increase in performing loans and debt securities outstanding. Other income consists primarily of legal fees recovered during the second quarter of 1995. Expenses increased 14.7% from $2.4 million to $2.7 7 million compared with the corresponding period in 1994. The increase was attributable to an increase in interest expense and investment advisory fees. Net realized gains declined to $0.2 million to $1.5 million compared with the second quarter of last year. Net realized gains are unpredictable, and the Company exits transactions when it believes the realized gains can be maximized. Six Months Ended June 30, 1995 Compared with Six Months Ended June 30, 1994. Net increase in net assets resulting from operations for the first six month period ending June 30, 1995 increased to $9.3 million or 175% from $3.4 million in the same period of 1994. Earnings per common share for the period increased to $1.49 per common share from $0.53 per common share in 1994. The increase in net assets resulting from operations for the first six months was caused by the same factors discussed in the quarter-to-quarter comparison above. 8 PORTFOLIO CHANGES The following represents portfolio investment balances in the Company as of June 30, 1995 that have changes in appreciation or depreciation by more than 10% as compared to the appreciation or depreciation as of December 31, 1994.
Appreciation (Depreciation) ------------------------------------- Percent Investment Company June 30, 1995 December 31, 1994 $ Change Change ------------------ ------------- ----------------- ----------- ------- Allied Capital Lending $10,582,077 $ 8,245,687 $ 2,336,390 28% Allied Waste 491,617 0 491,617 * Bellefonte Lime Company 517,250 88,098 429,152 487% Broadcast Holdings (255,555) (1,049,212) 793,657 (76%) Consumer Health (180,019) (125,642) (54,377) 43% CSG (103,459) 0 (103,459) * Devlieg-Bullard, Inc. (74,615) 0 (74,615) * DMI Furniture 9,916 75,770 (65,854) (87%) Dogloo, Inc. 761,320 0 761,320 * Edwards Heating (1,893,422) (1,423,704) (469,718) 33% Envirco Corp 806,784 155,784 651,999 418% Environmental Control Group 0 (16,480) 16,480 100% Enviroplan (36,505) 84,136 (120,640) (143%) Garden Ridge 3,204,567 508,736 2,695,831 530% Geneoa Mine Acquisition 488,805 0 488,805 * Genlime Group 440,974 0 440,974 * Golden Eagle 0 (16,667) 16,667 100% Grant Broadcasting 370,353 0 370,353 * Jackson Products 208,785 73,367 135,418 185% June Broadcasting 1,260,727 524,327 736,400 140% Markings and Equipment (632,640) (315,000) (317,640) 101% May Investments (46,902) 0 (46,902) * MIK Enterprises 0 (651,732) 651,732 100% Mill It Striping (125,000) 0 (125,000) * MLX Corporation (182,754) (216,673) 33,919 (16%) Momentum Broadcasting (41,886) (46,886) 5,000 (11%) NNS Corporation (108,586) (79,294) (29,292) 37% Old Mill (43,540) 0 (43,540) * Piatl Holdings (223,049) (160,833) (62,216) 39% Pizza shops (816,677) (155,986) (660,691) 423% Princeton Care 7,882 0 7,882 * Lona & George Reeves (72,880) (53,690) (19,190) 36% R-Tex Decoratives (32,377) 0 (32,377) * Spa Lending Corporation (2,174,740) (1,459,955) (714,785) 49% Sunstates Refrigeration 1,164 0 1,164 * West Virginia Radio Corporation (200,000) (122,113) (77,887) 64% Williams Brothers 1,598,575 2,001,948 (403,372) (20%)
* Percentage not applicable due to zero balance at December 31, 1994. 9 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not a defendant in any material pending legal proceeding and no such material proceedings are known to be contemplated. ITEM 2. CHANGES IN SECURITIES No material changes have occurred in the securities of the Registrant. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Allied Capital Corporation held its annual meeting of shareholders on May 4, 1995 in Chevy Chase, Maryland. The following directors were elected as proposed in the proxy material to serve until the next annual shareholders meetting: FOR WITHHELD --------- -------- David Gladstone 5,074,732 69,857 George C. Williams 5,073,385 71,203 Joseph A. Clorety III 5,071,942 72,646 Michael Gallie 5,073,885 71,623 Warren K. Montouri 5,074,539 70,049 Guy T. Steuart II 5,074,580 70,009 T. Murray Toomey 5,071,673 72,914 G. Cabell Williams III 5,075,113 69,476 Shareholders also ratified the selection of Matthews Carter & Boyce to serve as independent accountants until the next shareholders meeting. The Company received 5,056,376 shares voting in favor of ratification, 26,033 shares voting against the ratification, and 62,178 shares abstaining from voting. Shareholders also approved a new Investment Advisory Agreement which clarified certain provisions of the existing agreement and ensured compliance with applicable requirements of the Investment Company Act of 1940. The Company received 4,707,297 shares voting in favor of approving the amendment, 169,223 shares voting against approving the amendment, and 99,032 shares abstaining from voting. ITEM 5. OTHER INFORMATION During 1994, in the course of a review of certain regulatory matters, the Company determined that the board of directors of the Company was composed of a lesser percentage of non-interested directors than required by relevant provisions of the Investment Company Act of 1940 (the "1940 Act"). Specifically, certain non-officer directors of the Company owned stock of Allied Capital Advisers, Inc. ("Advisers"), and one non-officer director had a material business relationship with Advisers. Actions were taken promptly to bring the board of directors into compliance with the relevant provisions of the 1940 Act. A committee of non-interested directors of the Company and Allied Capital Corporation II was formed to review this matter. At its own initiative, Advisers also undertook an audit of compliance with securities laws as they relate to the Company. The Company currently does not believe that this situation will have a material adverse effect on the operations of the Company or on its financial position. 10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) List of Exhibits 11 Statement of Computation of Earnings Per Share (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended June 30, 1995. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized. ALLIED CAPITAL CORPORATION -------------------------- (Registrant) s/Jon A. DeLuca --------------------------- Date: August 14, 1995 Jon A. DeLuca --------------- Senior Vice President and Chief Financial Officer 12 EX-11 2 EX-11 Allied Capital Corporation and Subsidiaries Exhibit 11 Computation of Earnings Per Common Share Form 10-Q June 30, 1995
For the Three Months Ended For the Six Months Ended June 30, June 30, --------------------------- --------------------------- 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Primary Earnings Per Common Share: Net Increase in Net Assets Resulting from Operations $7,196,000 $2,641,000 $9,330,000 $3,393,000 Less: Dividends for Preferred Stock (55,000) (55,000) (110,000) (110,000) ----------- ----------- ----------- ----------- Net Increase in Net Assets Resulting from Operations Available to Common Shareholders $7,141,000 $2,586,000 $9,220,000 $3,283,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average number of common shares outstanding 6,152,703 6,134,191 6,152,703 6,134,191 Dividend reinvestment plan common shares issued 21,344 21,344 21,344 21,344 Weighted average number of common shares issuable on exercise of outstanding stock options - 15,585 - 26,228 ----------- ----------- ----------- ----------- Weighted average number of common shares and common share equivalents outstanding 6,174,047 6,171,120 6,174,047 6,181,763 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Earnings per Common Share $1.16 $0.42 $1.49 $0.53 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Fully Diluted Earnings Per Common Share: Net Increase in Net Assets Resulting from Operations $7,196,000 $2,641,000 $9,330,000 $3,393,000 Less: Dividends for Preferred Stock (55,000) (55,000) (110,000) (110,000) ----------- ----------- ----------- ----------- Net Increase in Net Assets Resulting from Operations Available to Common Shareholders $7,141,000 $2,586,000 $9,220,000 $3,283,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average number of common shares and common share equivalents outstanding as computed for primary earnings per share 6,174,047 6,171,120 6,174,047 6,181,763 Weighted average of additional shares issuable on exercise of outstanding stock options - - - - ----------- ----------- ----------- ----------- Weighted average number of common shares and common share equivalents outstanding, as adjusted 6,174,047 6,171,120 6,174,047 6,181,763 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Earnings per Common Share $1.16 $0.42 $1.49 $0.53 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
EX-27 3 EXHIBIT 27
6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALLIED CAPITAL CORPORATION AND SUBSIDIARIES, CONSOLIDATED STATEMENT OF FINANCIAL POSITION, CONSOLIDATED STATEMENT OF OPERATIONS, CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS AND STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JUN-30-1995 113,484 122,244 0 2,670 11,338 136,252 1,188 74,800 3,117 79,105 12,174 41,192 6,174 6,153 1,385 0 295 0 8,760 51,147 708 5,716 354 5,393 1,385 295 7,650 9,330 0 2,463 0 0 0 0 21 735 0 0 3,420 0 1,346 3,346 5,393 0 7.15 0.22 1.49 0.40 0 0 8.28 0 74,800 0