-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BUFlnQT4d1syL0a/KmEufsNMlTFQlTa/FvNIVk8Z0u2WolhnmenJUWcEwABLOjvp Xm9J/K4amxa4rX5z9oUZ0Q== 0000066025-98-000007.txt : 19980511 0000066025-98-000007.hdr.sgml : 19980511 ACCESSION NUMBER: 0000066025-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980508 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDLAND CO CENTRAL INDEX KEY: 0000066025 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 310742526 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06026 FILM NUMBER: 98614193 BUSINESS ADDRESS: STREET 1: 7000 MIDLAND BLVD STREET 2: P O BOX 125 CITY: AMELIA STATE: OH ZIP: 45102-2607 BUSINESS PHONE: 5139437100 MAIL ADDRESS: STREET 2: P O BOX 1256 CITY: CINCINNATI STATE: OH ZIP: 45201 10-Q 1 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.) 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. 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. 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). 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 ------------------------------------------------------------------------------------------ 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.
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. 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. 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. 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 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. 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. 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 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 EX-15 2 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 EX-27 3
7 3-MOS DEC-31-1998 MAR-31-1998 379,234,000 0 0 102,958,000 0 0 493,213,000 14,423,000 25,096,000 56,807,000 747,669,000 126,733,000 236,309,000 0 29,201,000 71,691,000 911,000 0 0 205,170,000 747,669,000 90,479,000 5,842,000 1,039,000 9,877,000 48,121,000 25,513,000 14,855,000 8,584,000 2,544,000 6,040,000 0 0 0 6,040,000 0.67 0.64 108,334,000 0 0 0 0 112,149,000 0
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