UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2000
--------------
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: 0-22663
BANDO McGLOCKLIN CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1364345
---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
W239 N1700 Busse Road
Waukesha, Wisconsin 53188-1160
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (262) 523-4300
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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
On May 12, 2000, there were 3,841,789 shares outstanding of the Registrant's
common stock, 6-2/3 cents par value.
BANDO McGLOCKLIN CAPITAL CORPORATION
FORM 10-Q INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000
(Unaudited) and December 31, 1999 ...................................3
Consolidated Statements of Operations - For the Three
Months Ended March 31, 2000 and 1999 (Unaudited) ....................5
Consolidated Statements of Cash Flows - For the Three
Months Ended March 31, 2000 and 1999 (Unaudited) ....................7
Notes to the Consolidated Financial Statements (Unaudited) ..........8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ..........................................15
Item 2. Changes in Securities ......................................15
Item 3. Defaults Upon Senior Securities ............................15
Item 4. Submission of Matters to a Vote of Security Holders ........15
Item 5. Other Information ..........................................15
Item 6. Exhibits and Reports on Form 8-K ...........................15
Signatures .........................................................16
Exhibit Index ......................................................17
2
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2000 1999
------------ ------------
ASSETS
Consumer Products
Cash $ 812,114 $ 530,919
Accounts receivable, net of allowance of
$121,758 and $129,280 as of March 31, 2000
and December 31, 1999, respectively 2,834,710 2,954,428
Inventory 5,628,264 4,784,645
Prepaid inventory 710,019 872,531
Other prepaid expenses 395,484 407,361
------------ ------------
Total current assets 10,380,591 9,549,884
------------ ------------
Fixed assets, net of accumulated depreciation
of $1,519,911 and $1,408,103 as of March 31,
2000 and December 31, 1999, respectively 2,925,270 2,880,881
Loans 621,968 621,968
Prepaid royalties 1,541,666 1,666,667
Prepaid expenses and other assets 288,926 288,926
Goodwill, net of accumulated amortization
of $59,386 and $51,640 as of March 31,
2000 and December 31, 1999, respectively 560,367 568,113
------------ ------------
Total Consumer Products assets 16,318,788 15,576,439
------------ ------------
Financial Services
Cash 358,030 1,509,148
Interest receivable 727,245 597,705
Rent receivable 114,401 125,436
Other current assets 60,140 78,788
------------ ------------
Total current assets 1,259,816 2,311,077
------------ ------------
Loans, net of allowance for doubtful accounts
of $150,000 as of March 31, 2000 and
December 31, 1999, respectively 112,887,292 113,229,680
Leased properties:
Buildings, net of accumulated depreciation
of $677,022 and $536,684 as of March 31,
2000 and December 31, 1999, respectively 22,867,715 17,897,897
Land 3,377,609 2,848,326
Construction in progress 4,504,602 3,324,085
------------ ------------
Total leased properties 30,749,926 24,070,308
Fixed assets, net of accumulated depreciation
of $453,653 and $429,167 as of March 31,
2000 and December 31, 1999, respectively 290,073 313,393
Other assets, net 745,520 564,627
------------ ------------
Total Financial Services assets 145,932,627 140,489,085
------------ ------------
Total Assets $162,251,415 $156,065,524
============ ============
3
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
March 31, December 31,
2000 1999
------------ ------------
LIABILITIES, MINORITY INTEREST,
PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Consumer Products
Short-term borrowings $ 500,000 $ 200,000
Accounts payable 608,218 888,469
Accrued salaries 467,845 355,075
Accrued corporate taxes 244,326 431,309
Accrued liabilities 419,999 336,029
------------ ------------
Total current liabilities 2,240,388 2,210,882
Long-term debt 322,507 29,926
------------ ------------
Total Consumer Products liabilities 2,562,895 2,240,808
Financial Services
Commercial paper 57,766,820 68,657,172
Notes payable to banks 7,500,000 5,000,000
------------ ------------
Short-term borrowings 65,266,820 73,657,172
Accrued liabilities 1,269,729 1,760,157
------------ ------------
Total current liabilities 66,536,549 75,417,329
State of Wisconsin Investment
Board notes payble 13,333,333 13,666,667
Loan participations with repurchase options 39,402,824 32,724,235
Other long-term debt 10,317,398 1,583,761
------------ ------------
Total Financial Services liabilities 129,590,104 123,391,992
------------ ------------
Minority interest in subsidiaries 78,185 41,055
Redeemable Preferred stock, 1 cent par value,
3,000,000 shares authorized, 674,791 shares
issued and outstanding after deducting
15,209 shares in treasury as of March 31,
2000 and December 31, 1999 16,869,775 16,908,025
Shareholders' Equity
Common stock, 6 2/3 cents par value,
15,000,000 shares authorized, 4,401,599
shares issued and outstanding as of
March 31, 2000 and December 31, 1999,
respectively, before deducting shares
in treasury 293,441 293,441
Additional paid-in capital 16,604,744 16,604,744
Retained earnings 1,612,307 1,218,617
Treasury stock, at cost (522,710 shares
and 416,710 shares as of March 31, 2000
and December 31, 1999, respectively) (5,360,036) (4,633,158)
------------ ------------
Total Shareholders' Equity 13,150,456 13,483,644
------------ ------------
Total Liabilities, Minority Interest,
Preferred Stock and Shareholders' Equity $162,251,415 $156,065,524
============ ============
4
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended March 31,
2000 1999
------------ ------------
Consumer Products
Net sales $ 6,580,718 $ 4,218,825
Cost of sales 3,336,188 2,133,059
------------ ------------
Gross profit 3,244,530 2,085,766
Operating expenses
Sales and marketing 1,104,400 909,665
New product development 154,911 142,598
General and administrative 791,324 506,595
------------ ------------
Total operating expenses 2,050,635 1,558,858
Other income (expense)
Interest expense (16,039) (4,131)
Other income, net 58,362 32,702
------------ ------------
Total other income 42,323 28,571
Income before income taxes
and minority interest 1,236,218 555,479
Income tax expense (294,207) (74,174)
Minority interest in earnings
of subsidiaries (30,816) (720)
------------ ------------
Net income 911,195 480,585
------------ ------------
Financial Services
Revenues
Interest on loans 2,457,524 2,279,589
Rental income 684,661 633,820
Other income 33,310 159,983
------------ ------------
Total revenues 3,175,495 3,073,392
------------ ------------
Expenses
Interest expense 2,189,630 1,769,540
Other operating expenses 526,851 526,589
------------ ------------
Total expenses 2,716,481 2,296,129
------------ ------------
Net income $ 459,014 $ 777,263
------------ ------------
5
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued)
(Unaudited)
For the Three Months
Ended March 31,
2000 1999
------------ ------------
Total Company
Income before income taxes and
minority interest
Consumer products $ 1,236,218 $ 555,479
Financial services 459,014 777,263
------------ ------------
Total company 1,695,232 1,332,742
Income tax expense (294,207) (74,174)
Minority interest in earnings of
subsidiaries (30,816) (720)
------------ ------------
Net income 1,370,209 1,257,848
Preferred stock dividends (321,498) (359,748)
------------ ------------
Net income available to common
shareholders $ 1,048,711 $ 898,100
============ ============
Basic Earnings Per Share $ 0.27 $ 0.22
============ ============
Diluted Earnings Per Share $ 0.27 $ 0.22
============ ============
Segment Reconciliation
Consumer products
Net income $ 911,195 $ 480,585
Intersegment expenses (418,193) (409,292)
------------ ------------
Total segment net income 493,002 71,293
Financial services
Net income 459,014 777,263
Intersegment income 418,193 409,292
------------ ------------
Total segment net income 877,207 1,186,555
Total company net income $ 1,370,209 $ 1,257,848
============ ============
6
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months For the Three Months
Ended March 31, 2000 Ended March 31, 1999
-------------------- --------------------
Consumer Financial Consumer Financial
Products Services Products Services
------------ ------------- ------------ -------------
Cash Flows from Operating Activities:
Net income $ 911,195 $ 459,014 $ 480,585 $ 777,263
Adjustments to reconcile net cash
provided by operating activities:
Depreciation and amortization 119,554 164,824 100,653 142,306
Allowance for doubtful accounts (7,522) - 26,061 -
Provision for inventory reserve 25,014 - (242,027) -
Change in appreciation on investments - (5,172) - 36,203
Change in minority interest in subsidiaries 37,130 - 721 -
Increase (decrease) in cash due to change in:
Accounts receivable 127,240 - 895,477 -
Inventory (1,578,652) - (770,412) -
Interest receivable - (129,540) (84,501)
Other assets 1,009,409 (146,038) 165,048 (83,361)
Accounts payable (280,251) - (195,934) -
Other liabilities 9,757 (490,428) (905,123) 2,988,422
----------- ------------ ----------- ------------
Net Cash (Used) Provided by Operations 372,874 (147,340) (444,951) 3,776,332
----------- ------------ ----------- ------------
Cash Flows from Investing Activities:
Loans made - (29,158,724) - (15,074,609)
Principal collected on loans - 29,501,112 - 19,130,975
Proceeds from sale of leased properties - - - 917,150
Purchase or construction of leased properties - (6,819,956) (1,162,825)
Purchase of fixed assets (156,197) (1,166) (253,779) (12,910)
----------- ------------ ----------- ------------
Net Cash (Used) Provided by Investing (156,197) (6,478,734) (253,779) 3,797,781
----------- ------------ ----------- ------------
Cash Flows from Financing Activities:
Increase (decrease) in short term borrowings 594,000 (8,390,352) - (2,035,416)
Proceeds from loan participations with
repurchase options - net - 15,413,589 - (4,868,783)
Repayment of SWIB notes - (333,334) (333,333)
(Decrease) in other notes payable (1,419) (1,363) (1,260) (1,310)
Preferred stock dividends paid - (359,748) - (359,748)
Common stock dividends paid - (655,021) - (664,038)
Repurchase of common stock - (726,878) - -
----------- ------------ ----------- ------------
Net Cash (Used) Provided by Financing 592,581 4,946,893 (1,260) (8,262,628)
----------- ------------ ----------- ------------
Net intercompany transactions (528,063) 528,063 (471,312) 471,312
Net (decrease) increase in cash 281,195 (1,151,118) (1,171,302) (217,203)
Cash, beginning of period 530,919 1,509,148 2,209,105 626,838
----------- ------------ ----------- ------------
Cash, end of period $ 812,114 $ 358,030 $ 1,037,803 $ 409,635
=========== ============ =========== ============
7
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. NATURE OF BUSINESS
The consolidated financial statements of Bando McGlocklin Capital Corporation
(the "Company") include two segments of business; financial services and
consumer products. The consolidated financial statements as of and for the
periods presented include the accounts of the Company and Bando McGlocklin Small
Business Lending Corporation ("BMSBLC") as financial services companies and Lee
Middleton Original Dolls, Inc. ("Middleton Doll"), License Products, Inc.
("License Products") and Middleton (HK) Limited ("Middleton (HK)") as consumer
product companies. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Effective January 1, 2000, Middleton Doll acquired a 51% equity ownership in
Middleton (HK), a Hong Kong corporation. Middleton (HK) is a management
corporation which provides Middleton Doll with all of its raw materials and
finished goods from Asia.
NOTE 2. BASIS OF PRESENTATION
The accompanying unaudited financial statements of the Company and its
majority-owned subsidiaries have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the other information and
disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
The accompanying consolidated financial statements have not been audited by
independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements include
all adjustments, consisting only of normal recurring accruals, necessary to
summarize fairly the Company's financial position and results of operations. The
results of operations for the period ended March 31, 2000 may not be indicative
of the results that may be expected for the year ending December 31, 2000.
8
NOTE 3. INVENTORY
Inventories of Middleton Doll and License Products are valued at the lower of
cost or market. Middleton Doll and License Products utilize the average cost
method to determine cost. The components of inventory are as follows:
March 31, 2000 December 31, 1999
-------------- -----------------
Raw materials, net of reserve
of $260,582 and $235,568,
respectively $ 2,283,162 $ 2,157,740
Work in process 410,791 90,613
Finished goods 2,934,311 2,536,292
------------ -----------
Total $ 5,628,264 $ 4,784,645
============ ===========
NOTE 4. LONG-TERM DEBT
On March 23, 2000, BMSBLC entered into a Loan and Trust Agreement with one of
its correspondent banks for issuance of industrial revenue bonds. The bonds have
varying maturities from 2004 through 2015 with interest payments and principal
reductions payable monthly to the trustee. The interest rate changes weekly
based upon the remarketing agent's lowest rate to permit the sale of the bonds.
As of March 31, 2000, the outstanding principal balance was $8,735,000 and the
interest rate was 4.1%. The principal balance is included in other long-term
debt on the balance sheet.
NOTE 5. INCOME TAXES
The Company and its qualified REIT subsidiary, BMSBLC, qualify as a real estate
investment trust under the Internal Revenue Code. Accordingly, they are not
subject to income tax on taxable income that is distributed to shareholders.
Middleton Doll and License Products file their own tax returns. Income tax
provision in the accompanying financial statements is based on their operations
prior to the elimination of approximately $400,000 of interest and other
expenses on transactions with the Company.
NOTE 6. TREASURY STOCK
During first quarter 2000 the Company purchased 106,000 shares of its common
stock in the open market at an average price of $7.49. It is the Company's
intention to hold these shares as treasury stock.
9
NOTE 7. EARNINGS PER SHARE
See Exhibit 11 for the computation of the net income per common share. The March
31, 1999 per share amount has been restate for the 10% stock dividend as the
December 31, 1999 record date.
NOTE 8. COMMITMENTS
Undisbursed construction loan commitments and lines of credit totaled $8,536,973
at March 31, 2000.
NOTE 9. SUBSEQUENT EVENTS
As of April 28, 2000, BMSBLC entered into an amended and restated loan agreement
with five participating banks. The loan agreement increased the existing
facility from a maximum of $70,000,000 to $75,000,000 less the outstanding
principal amount of commercial paper and industrial revenue bonds (see Note 4).
The facility will continue to bear interest at the prime rate or at the 30, 60,
or 90 day LIBOR rate plus one and three-eighths percent. Interest is payable
monthly and the loan agreement expires on June 30, 2000.
On April 28, 2000, BMCC entered into an amended credit agreement with one of its
correspondent banks providing for an increase of the existing $5,000,000 note to
a revolving note of $7,500,000 bearing interest at the prime rate. The
additional $2,500,000 is being loaned to InvestorsBancorp, Inc. through a 10
year, fixed rate promissory note. Interest is payable quarterly and the credit
agreement expires on June 30, 2000.
It is expected that both of these agreements will be extended for an additional
year at the renewal date of June 30, 2000.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
Amounts presented as of March 31, 2000 and December 31, 1999, and for the three
months ended March 31, 2000 and March 31, 1999 include the consolidation of two
segments. The financial services segment includes Bando McGlocklin Capital
Corporation (the "Company") and Bando McGlocklin Small Business Lending
Corporation ("BMSBLC"), a 100% owned subsidiary of the Company. The consumer
products segment includes Lee Middleton Original Dolls, Inc. ("Middleton Doll"),
a 99% owned subsidiary of the Company, License Products, Inc. ("License
Products"), a 51% owned subsidiary of the Company and Middleton (HK) Limited
("Middleton (HK)"), a 51% owned subsidiary of the Company.
Results of Operations
For the three months ended March 31, 2000 and March 31, 1999
The Company's total net income after income taxes and minority interest for the
quarter ended March 31, 2000 equaled $1.05 million or $0.27 per share (diluted)
as compared to $0.9 million or $0.22 per share (diluted) for the quarter ended
March 31, 1999, a 17% increase in net income. The March 31, 1999 per share
amount has been restated for the 10% stock dividend as of the December 31, 1999
record date.
Consumer Products
Net income from consumer products after income taxes and minority interest for
the quarter ended March 31, 2000 was $0.91 million compared to $0.48 million for
the quarter ended March 31, 1999, a 90% increase.
Net sales from consumer products for the quarter ended March 31, 2000 increased
56% to $6.58 million from $4.22 million in the corresponding prior year period.
This increase was due to increased sales of $1.78 million at Middleton Doll and
$0.58 million at License Products. The majority of the sales increase at
Middleton Doll was attributable to the introduction of Small Wonder, the new
smaller play doll and a 21% increase in sales of My Own Baby, the original play
doll, through its expanding national distribution. Small Wonder's sales for the
first quarter were $1.2 million. Cost of sales also increased 56% to $3.34
million for the quarter ended March 31, 2000 from $2.13 million for the prior
year quarter. Gross profit margin remained unchanged at 49% for the quarters
ended March 31, 2000 and 1999.
Total operating expenses of consumer products for the quarter ended March 31,
2000 were $2.05 million compared to $1.56 million for the quarter ended March
31, 1999, a 31% increase. Middleton Doll's total operating expenses increased
$0.46 million due to related expenses stemming from the continued growth of the
company. License Products' operating expense increased $0.03 million due to its
growth in sales. Sales and marketing expense and new product
11
development increased $0.21 million to $1.26 million for the quarter ended March
31, 2000 compared to $1.05 million for the quarter ended March 31, 1999. The
large increase in sales and marketing expense was due to Middleton Doll using a
TV advertising campaign for the new Small Wonder play doll. In addition,
royalties increased 45% due to the increase in sales volume and catalog costs
were higher because Middleton Doll introduced more dolls in 2000 compared to
1999. General and administrative expenses increased $0.28 million over the same
period a year ago. Middleton Doll reclassified offsite warehouse expenses from
cost of goods sold to general and administrative expenses in 2000. This
reclassification of $0.14 million is the result of the warehouse now being used
only as a distribution center. During the first quarter of 2000 Middleton Doll
had additional personnel expenses of $0.07 million and $0.07 million in other
expenses due to growth.
Other income increased to $0.04 million from $0.03 million when compared to the
same period a year ago. The minority interest in earnings of subsidiaries
increased $0.03 million when comparing the quarter ended March 31, 2000 to the
corresponding prior year period due to the acquisition by Middleton Doll of a
51% interest in Middleton (HK) on January 1, 2000. Middleton (HK) had net income
of $0.05 million for the quarter ended March 31,2000. Consumer products recorded
an income tax expense of $0.29 million for the quarter ended March 31, 2000 as
compared to $0.07 million for the quarter ended March 31, 1999, an increase of
$0.22 million due to the increase in Middleton Doll's income. The income tax
expense is attributable only to Middleton Doll's income since License Products
has a net operating loss carryforward to offset its current net income and
Middleton (HK)'s earnings are currently being retained in Hong Kong.
Financial Services
Net income from financial services for the quarter ended March 31, 2000 was
$0.46 million compared to $0.78 million for the quarter ended March 31, 1999, a
41% decrease.
Total revenues were $3.18 million for the quarter ended March 31, 2000 compared
to $3.07 million for the quarter ended March 31, 1999, a 4% increase. Interest
on loans increased 8% to $2.46 million for the quarter ended March 31, 2000 from
$2.28 million for the comparative quarter. Average loans under management
decreased $1.19 million from the first quarter of 2000 compared to the first
quarter of 1999 due to normal market competition. However, the average prime
rate went up from 7.75% in first quarter 1999 to 8.69% in first quarter 2000.
BMSBLC purchased two leased properties during first quarter 2000. At March 31,
2000, the Company had $26.25 million in leased properties net of construction in
progress compared to $20.89 million as of March 31, 1999. Rental income only
increased $0.05 million to $0.68 million for the quarter ended March 31, 2000.
Due to the timing of the purchase of these new properties, the rental income
stream did not start until later in the quarter.
Other income decreased $0.13 million to $0.03 million when comparing March 31,
2000 to March 31, 1999. In the first quarter of 1999 BMSBLC sold two properties
for a gain of $0.11 million which was included in other income.
12
Interest expense increased 24% to $2.19 million for the quarter ended March 31,
2000 as compared to $1.77 million for the quarter ended March 31, 1999. The
average debt balance increased $6.98 million in the first quarter of 2000
compared to the first quarter of 1999. In addition, due to the increase in the
average prime rate noted above the company's cost of funds increased. During
first quarter 1999 the company reduced its interest expense by $0.05 million as
a result of an investment swap that matured in June 1999.
The Company has not entered into any new investment swaps.
Operating expenses were the same at $0.53 million for the quarter ended March
31, 2000 and for the quarter ended March 31, 1999.
Overall net income decreased when comparing the first quarter of 2000 to the
first quarter of 1999. Interest rate increases for short-term borrowing at the
end of 1999 increased the Company's cost of funds at the beginning of 2000.
Also, the net interest margin on the portfolio decreased during the first
quarter of 2000 due to the rise in long-term borrowing rates.
Liquidity and Capital
Consumer Products
Total assets of consumer products were $16.22 million as of March 31, 2000 and
$15.58 million as of December 31, 1999, a 4.1% increase.
Cash increased to $0.81 million at March 31, 2000 from $0.53 million at December
31, 1999.
Accounts receivable, net of the allowance, decreased to $2.83 million at March
31, 2000 from $2.95 million at December 31, 1999. A decrease of $0.20 million is
attributable to Middleton Doll, and an increase of $0.08 million is attributable
to License Products. Typically both companies are seasonal with higher sales in
the third and fourth quarters, which corresponds with a large decrease in the
accounts receivable balance in the first quarter of the following year. However,
both companies continued to have high sales in the first quarter of 2000 which
resulted in only a 4% decrease in the accounts receivable balances at March 31,
2000.
Inventory was $5.63 million at March 31, 2000 compared to $4.78 million at
December 31, 1999. Middleton Doll's inventory increased $1.05 million due to new
doll lines that were introduced in the first quarter of 2000 while License
Products' inventory decreased $0.20 million. Usually the inventory level of
Middleton Doll would be very low at December 31 since it would have just
finished shipping for the Christmas season.
Fixed assets increased by $0.04 million and other assets and prepaid expenses
decreased by $0.41 million.
Middleton Doll increased its short-term borrowings by $0.30 million on a line of
credit with a bank during the three months ended March 31, 2000 to fund working
capital needs. Middleton (HK) Limited increased its long-term debt by $0.29
million also to fund working capital needs.
13
Accounts payable decreased by $0.28 million as of March 31, 2000 compared to
December 31, 1999. Middleton Doll's accounts payable decreased $0.25 million
while License Products' accounts payable decreased $0.03 million. Other
liabilities decreased by $0.09 million.
Financial Services
Total assets of financial services were $145.93 million as of March 31, 2000 and
$140.49 million as of December 31, 1999, a 3.9% increase.
Cash decreased to $0.36 million at March 31, 2000 from $1.51 million at December
31, 1999.
Interest receivable increased to $0.73 million from $0.60 million. Fixed assets
and other assets including prepaid amounts increased in the aggregate by $0.13
million.
Total loans decreased by $0.34 million or 0.3% to $112.89 million at March 31,
2000 from $113.23 million at December 31, 1999 due to normal market competition.
The Company expects to replace these loans. Leased properties under management
increased $6.68 million due to the purchase of two properties and the
construction in progress on two properties.
The financial services' total consolidated indebtedness at March 31, 2000
increased $6.69 million. As of March 31, 2000, financial services had $63.05
million outstanding in long-term debt and $65.27 million outstanding in
short-term borrowings compared to $47.97 million outstanding in long-term debt
and $73.66 million outstanding in short-term borrowings as of December 31, 1999.
During the first quarter of 2000 BMSBLC entered into a long-term debt agreement
for $8.74 million which refinanced BMSBLC's short-term borrowings.
The entire short-term borrowings have a stated maturity of April 30, 2000. As of
April 28, 2000 the maturity has been extended to June 30, 2000. However, it is
the intention of all parties to renew all loan agreements at June 30, 2000 for a
twelve month period.
14
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
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-k
(a) List of Exhibits
The Exhibits to this Quarterly Report on Form 10-Q are identified
on the Exhibit Index hereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 2000.
15
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 thereunder duly authorized.
BANDO McGLOCKLIN CAPITAL CORPORATION
(Registrant)
Date: May 12, 2000 /s/ George R. Schonath
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George R. Schonath
President and Chief Executive Officer
Date: May 12, 2000 /s/ Susan J. Hauke
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Susan J. Hauke
Vice President Finance
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BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX
Exhibit Number Exhibit
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4.1 Trust Indenture between Bando McGlocklin Small Business
Lending Corporation and Firstar Bank, National Association,
as trustee, dated March 1, 2000.
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule (EDGAR version only)
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