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, 2001
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
THE MIDDLETON DOLL COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-1364345
(State or other jurisdiction of incorporation) (I.R.S. Employer
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 14, 2001, there were 3,727,589 shares outstanding of the Registrant's
common stock, 6-2/3 cents par value.
THE MIDDLETON DOLL COMPANY
FORM 10-Q INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2001 (Unaudited)
and December 31, 2000................................................ 3
Consolidated Statements of Operations - For the Three Months
Ended March 31, 2001 and 2000 (Unaudited) ........................... 5
Consolidated Statements of Cash Flows - For the Three Months
Ended March 31, 2001 and 2000 (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...........................................14
Item 2. Changes in Securities.......................................14
Item 3. Defaults Upon Senior Securities.............................14
Item 4. Submission of Matters to a Vote of Security Holders.........14
Item 5. Other Information...........................................14
Item 6. Exhibits and Reports on Form 8-K............................14
Signatures...........................................................15
Exhibit Index........................................................16
2
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
March 31, 2001 2000
-------------- ------------
ASSETS
Consumer Products
Cash $ 682,928 $ 628,418
Accounts receivable, net of allowance of
$141,961 and $120,639 as of March 31,
2001 and December 31, 2000, respectively 3,026,686 3,886,502
Inventory 6,465,562 6,444,038
Prepaid inventory 687,237 662,036
Prepaid corporate taxes 348,689 315,035
Other prepaid expenses 422,105 225,183
------------ ------------
Total current assets 11,633,207 12,161,212
Fixed assets, net of accumulated depreciation
of $2,149,270 and $1,990,879 as of March 31,
2001 and December 31, 2000, respectively 3,690,728 3,434,808
Loans 621,968 621,968
Prepaid expenses and other assets 829,873 796,219
Licensing Agreement 1,041,666 1,166,666
Goodwill, net of accumulated amortization
of $90,370 and $82,624 as of March 31,
2001 and December 31, 2000, respectively 529,383 537,129
------------ ------------
Total Consumer Products assets 18,346,825 18,718,002
------------ ------------
Financial Services
Cash 168,606 85,276
Interest receivable 579,175 772,904
Rent receivable 241,399 296,454
Loans, net of allowance for doubtful
accounts of $150,000 as of March 31, 2001
and December 31, 2000, respectively 107,802,106 111,269,302
Leased properties:
Buildings, net of accumulated depreciation
of $1,419,127 and $1,220,426 as of March 31,
2001 and December 31, 2000, respectively 30,372,945 30,570,290
Land 4,738,169 4,738,169
Construction in progress 111,849 111,849
------------ ------------
Total leased properties 35,222,963 35,420,308
Fixed assets, net of accumulated depreciation
of $544,392 and $522,005 as of March 31,
2001 and December 31, 2000, respectively 207,140 229,527
Investment in swap contracts at fair value 2,027,402 -
Other assets, net 1,377,424 1,422,411
------------ ------------
Total Financial Services assets 147,626,215 149,496,182
------------ ------------
Total Assets $165,973,040 $168,214,184
============ ============
3
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
December 31,
March 31, 2001 2000
-------------- ------------
LIABILITIES, MINORITY INTEREST,
PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Consumer Products
Short-term borrowings $ 1,476,926 $ 1,176,926
Accounts payable 479,188 901,340
Accrued salaries 592,687 415,230
Accrued liabilities 476,247 667,044
------------ ------------
Total current liabilities 3,025,048 3,160,540
Long-term debt 316,114 317,816
------------ ------------
Total Consumer Products liabilities 3,341,162 3,478,356
------------ ------------
Financial Services
Commercial paper 59,710,237 61,345,865
Notes payable to banks 8,350,000 8,000,000
Other short-term borrowings 11,950,000 12,085,000
State of Wisconsin Investment Board notes payble 12,000,000 12,333,333
Loan participations with repurchase options 35,319,538 37,457,356
Other long-term debt 1,576,756 1,578,210
Accrued liabilities 1,586,021 1,789,758
------------ ------------
Total Financial Services liabilities 130,492,552 134,589,522
------------ ------------
Minority interest in subsidiaries 177,906 153,454
Redeemable Preferred stock, 1 cent par value,
3,000,000 shares authorized, 690,000 shares
issued and outstanding before deducting shares
in treasury 17,250,000 17,250,000
Redeemable Preferred Treasury stock, at cost
(15,809 shares) (395,225) (395,225)
Shareholders' Equity
Common stock, 6 2/3 cents par value,
15,000,000 shares authorized, 4,401,599
shares issued 293,441 293,441
Additional paid-in capital 16,604,744 16,604,744
Retained earnings 2,982,686 2,965,814
Common treasury stock, at cost (631,510 shares) (6,725,922) (6,725,922)
Accumulated other comprehensive income 1,951,696 -
------------ ------------
Total Shareholders' Equity 15,106,645 13,138,077
------------ ------------
Total Liabilities, Minority Interest,
Preferred Stock and Shareholders' Equity $165,973,040 $168,214,184
============ ============
4
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended March 31,
2001 2000
------------ ------------
Consumer Products
Net sales $ 6,758,223 $ 6,580,718
Cost of sales 3,389,195 3,336,188
------------ ------------
Gross profit 3,369,028 3,244,530
Operating expenses
Sales and marketing 1,129,338 1,104,400
New product development 239,460 154,911
General and administrative 1,249,792 791,324
------------ ------------
Total operating expenses 2,618,590 2,050,635
Net operating income 750,438 1,193,895
Other income (expense)
Interest expense (41,288) (16,039)
Other income, net 7,540 58,362
------------ ------------
Total other income (expense) (33,748) 42,323
Income before income taxes
and minority interest 716,690 1,236,218
Income tax expense (97,544) (294,207)
Minority interest in earnings
of subsidiaries (24,452) (30,816)
------------ ------------
Net income - Consumer Products 594,694 911,195
------------ ------------
Financial Services
Revenues
Interest on loans 2,319,575 2,457,524
Rental income 962,905 684,661
Other income 127,687 33,310
------------ ------------
Total revenues 3,410,167 3,175,495
------------ ------------
Expenses
Interest expense 2,357,466 2,189,630
Depreciation expense on
leased properties 198,700 140,338
Management fee expense 241,365 237,708
Other operating expenses 221,048 148,805
------------ ------------
Total expenses 3,018,579 2,716,481
------------ ------------
Net income - Financial Services $ 391,588 $ 459,014
------------ ------------
5
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued)
(Unaudited)
For the Three Months
Ended March 31,
2001 2000
------------ ------------
Total Company
Income before income taxes and
minority interest
Consumer products $ 716,690 $ 1,236,218
Financial services 391,588 459,014
------------ ------------
Total company 1,108,278 1,695,232
Income tax expense (97,544) (294,207)
Minority interest in earnings of
subsidiaries (24,452) (30,816)
------------ ------------
Net income 986,282 1,370,209
Preferred stock dividends (359,428) (321,498)
------------ ------------
Net income available to common
shareholders $ 626,854 $ 1,048,711
============ ============
Basic Earnings Per Share $ 0.17 $ 0.27
============ ============
Diluted Earnings Per Share $ 0.17 $ 0.27
============ ============
Weighted average shares outstanding (basic) 3,727,589 3,952,693
============ ============
Segment Reconciliation
Consumer products
Net income $ 594,694 $ 911,195
Interest/rental expense to parent (412,260) (287,693)
Management fees to parent (102,419) (130,500)
------------ ------------
Total segment net income 80,015 493,002
Financial services
Net income 391,588 459,014
Interest/rental income from subsidiary 412,260 287,693
Management fees from subsidiary 102,419 130,500
------------ ------------
Total segment net income 906,267 877,207
Total company net income $ 986,282 $ 1,370,209
============ ============
6
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated
Additional Other
Common Paid-In Retained Treasury Comprehensive
Stock Capital Earnings Stock Income Total
--------- ----------- ---------- ----------- ------------- -----------
BALANCES,
December 31, 1999 $293,441 $16,604,744 $1,218,617 $(4,633,158) $ - $13,483,644
Purchase 106,000
shares of treasury
stock - - - (726,878) - (726,878)
Net income - 1999 - - 1,370,209 - - 1,370,209
Cash dividends on
preferred stock ($0.53) - - (321,498) - - (321,498)
Cash dividends
on common stock ($0.16) - - (655,021) - - (655,021)
-------- ----------- ---------- ----------- ---------- -----------
BALANCES,
March 31, 2000 $293,441 $16,604,744 $1,612,307 $(5,360,036) $ - $13,150,456
======== =========== ========== =========== ========== ===========
BALANCES,
December 31, 2000 $293,441 $16,604,744 $2,965,814 $(6,725,922) $ - $13,138,077
Comprehensive
income
Net income - 2000 - - 986,282 - - 986,282
Net unrealized
appreciation on
investment swaps - - - - 1,951,696 1,951,696
-------- ----------- ---------- ----------- ---------- -----------
Total Comprehensive
Income - - 986,282 - 1,951,696 2,937,978
Cash dividends on
preferred stock ($0.53) - - (359,428) - - (359,428)
Cash dividends on
common stock ($0.16) - - (609,982) - - (609,982)
-------- ----------- ---------- ----------- ---------- -----------
BALANCES,
March 31, 2000 $293,441 $16,604,744 $2,982,686 $(6,725,922) $1,951,696 $15,106,645
======== =========== ========== =========== ========== ===========
7
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months For the Three Months
Ended March 31, 2001 Ended March 31, 2000
------------------------- ---------------------------
Consumer Financial Consumer Financial
Products Services Products Services
---------- ----------- ----------- ------------
Cash Flows from Operating Activities:
Net income $ 594,694 391,588 $ 911,195 $ 459,014
Adjustments to reconcile net cash
provided by operating activities:
Depreciation and amortization 166,137 221,088 119,554 164,824
Allowance for doubtful accounts 21,322 - (7,522) -
Provision for inventory reserve 22,993 - 25,014 -
Change in appreciation on investments - (48,833) - (5,172)
Change in minority interest in
subsidiaries 24,452 - 37,130 -
Increase (decrease) in cash due to
change in:
Accounts receivable 838,494 - 127,240 -
Inventory 617,519 - (1,578,652) -
Interest receivable - 193,729 - (129,540)
Other assets (826,467) 73,169 1,009,409 (146,038)
Accounts payable (422,152) - (280,251) -
Other liabilities (13,340) (203,737) 9,757 (490,428)
---------- ----------- ----------- ------------
Net Cash from Operating Activities 1,023,652 627,004 372,874 (147,340)
---------- ----------- ----------- ------------
Cash Flows from Investing Activities:
Loans made - (2,508,032) - (29,158,724)
Principal collected on loans - 5,975,228 - 29,501,112
Purchase or improvements of leased
properties - (1,356) - (6,819,956)
Purchase of fixed assets (414,311) - (156,197) (1,166)
---------- ----------- ----------- ------------
Net Cash from Investing Activities (414,311) 3,465,840 (156,197) (6,478,734)
---------- ----------- ----------- ------------
Cash Flows from Financing Activities:
Increase (decrease) in short term
borrowings 300,000 (1,285,628) 594,000 (8,390,352)
Proceeds from loan participations
with repurchase options - net - (2,137,818) - 15,413,589
Repayment of IRB participations - (135,000) - -
Repayment of SWIB notes - (333,333) - (333,334)
Decrease in other notes payable (1,702) (1,454) (1,419) (1,363)
Preferred stock dividends paid - (359,428) - (359,748)
Common stock dividends paid - (609,982) - (655,021)
Repurchase of common stock - - - (726,878)
---------- ----------- ----------- ------------
Net Cash from Financing Activities 298,298 (4,862,643) 592,581 4,946,893
---------- ----------- ----------- ------------
Net intercompany transactions (853,129) 853,129 (528,063) 528,063
Net increase (decrease) in cash 54,510 83,330 281,195 (1,151,118)
Cash, beginning of period 628,418 85,276 530,919 1,509,148
---------- ----------- ----------- ------------
Cash, end of period $ 682,928 $ 168,606 $ 812,114 $ 358,030
========== =========== =========== ============
8
THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. NATURE OF BUSINESS
The consolidated financial statements of The Middleton Doll Company, formerly
known as 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, 2001, Middleton Doll, Middleton (HK) and License Products
were each classified as a "Taxable Real Estate Investment Trust Subsidiary"
("TRS") under the Internal Revenue Code of 1986, as amended. This allows the
Company, operating as a real estate investment trust ("REIT"), to hold more than
10% of the voting common stock of these corporations and to own TRSs having an
aggregate value equal to not more than 20% of the value of the total assets of
the Company.
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 accounting principles generally accepted in the United
States of America. 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, 2000.
The balance sheet for consumer products is classified due to its normal business
cycle being less than twelve months. Financial services' balance sheet is not
classified as its normal business cycle is greater than twelve months.
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, 2001 may not be indicative
of the results that may be expected for the year ending December 31, 2001.
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, 2001 December 31, 2000
-------------- -----------------
Raw materials, net of reserve
of $156,054 and $133,061,
respectively $ 2,057,040 $ 2,018,040
Work in process 375,211 350,675
Finished goods 4,033,311 4,075,323
----------- -----------
Total $ 6,465,562 $ 6,444,038
=========== ===========
9
NOTE 4. INVESTMENT SWAPS
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities". The statement, as amended, establishes accounting and
reporting standards for derivative instruments and was effective January 1,
2001, for the Company. At March 31, 2001, the Company's investment swaps had a
fair market value of $2.03 million and unrealized gains of $2.03 million. The
unrealized gains on the effective portion of the swaps was $1.95 million and was
recognized through other comprehensive income. The unrealized gains on the
ineffective portion of the swaps was $0.8 million and was recognized through
current other income.
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. The
income tax expense recorded by the Company is attributable to the Consumers
Product segment. Tax expense is calculated on net income before the elimination
of intercompany expenses and, at the present time, is attributable only to
Middleton Doll income as License Products has a net operating loss carryforward
to offset its current net income.
NOTE 6. EARNINGS PER SHARE
See Exhibit 11 for the computation of the net income per common share.
NOTE 7. COMMITMENTS
Undisbursed construction loan commitments and lines of credit totaled $5.56
million at March 31, 2001.
NOTE 8. SUBSEQUENT EVENTS
At the Annual Meeting held on May 3, 2001, shareholders approved an amendment to
the Articles of Incorporation of the Company changing the Company name to "The
Middleton Doll Company". The name change was effective on May 4, 2001.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
Amounts presented as of March 31, 2001 and December 31, 2000, and for the three
months ended March 31, 2001 and March 31, 2000 include the consolidation of two
segments. The financial services segment includes The Middleton Doll Company
(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, Middleton (HK) Limited ("Middleton (HK)"), a
51% owned subsidiary of Middleton Doll and License Products, Inc. ("License
Products"), a 51% owned subsidiary of Middleton Doll.
Results of Operations
For the three months ended March 31, 2001 and March 31, 2000
The Company's total net income available to common shareholders for the quarter
ended March 31, 2001 was $0.63 million or $0.17 per share (diluted) as compared
to $1.05 million or $0.27 per share (diluted) for the quarter ended March 31,
2000, a 40% decrease in net income.
Consumer Products
Net income from consumer products after income taxes and minority interest for
the quarter ended March 31, 2001 was $0.59 million compared to $0.91 million for
the quarter ended March 31, 2000, a 35% decrease. After giving effect to
interest, rental and management fees paid to the Company, the consumer products
segment net income was $0.08 million and $0.49 million for the quarters ended
March 31, 2001 and 2000, respectively.
Net sales from consumer products for the quarter ended March 31, 2001 increased
3% to $6.76 million from $6.58 million in the corresponding prior year period.
This was due to increased sales of $0.15 million at Middleton Doll and $0.03
million at License Products. Cost of sales increased 1% to $3.39 million for the
quarter ended March 31, 2001 from $3.34 million for the prior year quarter.
Middleton Doll's cost of sales increased to $2.73 million from $2.71 million
while License Products' cost of sales increased to $0.66 million from $0.63
million. Gross profit margin remained at 49% for both periods.
Total operating expenses of consumer products for the quarter ended March 31,
2001 were $2.62 million compared to $2.05 million for the quarter ended March
31, 2000, a 28% increase. Middleton Doll's total operating expenses increased
$0.56 million due to related expenses stemming from the continued growth of the
company while License Products' operating expenses increased $0.01 million.
Sales and marketing expense and new product development increased $0.10 million
to $1.36 million for the quarter ended March 31, 2001 compared to $1.26 million
for the quarter ended March 31, 2000. General and administrative expenses
increased $0.46 million at Middleton Doll for the quarter ended March 31, 2001.
This increase was primarily due to costs incurred with the relocation of the
Middleton Doll administrative offices to Westerville, Ohio and warehouse space
to Columbus, Ohio. Higher labor costs, additional personnel, computer expenses
and office and warehouse rental space all contributed to the increase in costs.
Other income, net decreased $0.08 million when compared to the same period a
year ago primarily due to an increase in interest expense. The minority interest
in earnings of subsidiaries decreased for the quarter ended March 31, 2001 due
to the decrease in net income. Consumer products recorded an income tax expense
of $0.10 million for the quarter ended March 31, 2001 as compared to $0.29
million for the quarter ended March 31, 2000. Income tax expense is attributable
to Middleton Doll's and Middleton (HK)'s income since License Products has a net
operating loss carryforward to offset its current net income.
11
Financial Services
Net income from financial services for the quarter ended March 31, 2001 was
$0.39 million compared to $0.46 million for the quarter ended March 31, 2000, a
15% decrease. After giving effect to interest, rental and management fees
received from the consumer products segment, the financial services segment net
income was $0.91 million and $0.88 million for the quarters ended March 31, 2001
and 2000, respectively.
Total revenues were $3.41 million for the quarter ended March 31, 2001 compared
to $3.18 million for the quarter ended March 30, 2000, a 7% increase. Interest
on loans decreased 6% to $2.32 million for the quarter ended March 31, 2001 from
$2.46 million for the comparative quarter. Average loans under management
decreased $4.25 million when comparing the first quarter of 2001 to the first
quarter of 2000. The average prime rate decreased from 8.69% in the first
quarter of 2000 to 8.64% in the first quarter of 2001.
Rental income increased $0.28 million to $0.96 million for the quarter ended
March 31, 2001 as compared to $0.68 million for the quarter ended March 31, 2000
due to an increase in ownership of commercial rental properties. At March 31,
2001 the Company had $35.22 million in leased properties, net of accumulated
depreciation, compared to $30.75 million at March 31, 2000.
Other income increased $0.09 million when comparing the quarter ended March 31,
2001 to March 31, 2000 due to an $0.08 million increase from an unrealized gain
on investment swaps (See Note 4).
Interest expense increased 8% to $2.36 million for the quarter ended March 31,
2001 as compared to $2.19 million for the quarter ended March 31, 2000. The
average debt balance increased $5.0 million in the first quarter of 2001
compared to the first quarter of 2000. The increase in debt is the result of the
purchase of additional leased properties and the funding of treasury stock.
Due to the increase in leased properties, depreciation expense was $0.06 million
higher when comparing the first quarter of 2001 to the first quarter of 2000.
Other operating expenses increased $0.08 million for the quarter ended March 31,
2001 compared to the quarter ended March 31, 2000. Leased property expenses
increased $0.05 million and the unrealized change in the value of an investment
was $0.03 million.
Overall net income decreased when comparing the first quarter of 2001 to the
first quarter of 2000 for both the consumer products and the financial services
segments. The consumer products segment's net income decreased due to an
increase in general and administrative expenses. These expenses were incurred in
order to meet increased product demand and to provide a framework for future
growth. The financial services segment's net income decreased due to the
increase in other operating expenses.
Liquidity and Capital
Consumer Products
Total assets of consumer products were $18.35 million as of March 31, 2001 and
$18.72 million as of December 31, 2000, a 2% decrease.
Cash increased to $0.68 million at March 31, 2001 from $0.63 million at December
31, 2000.
Accounts receivable, net of the allowance, decreased to $3.03 million at March
31, 2001 from $3.89 million at December 31, 2000. A decrease of $0.95 million is
attributable to Middleton Doll, and an increase of $0.09 million is attributable
to License Products. The decrease in Middleton Doll's accounts receivable is
attributable to the seasonality of their sales. The higher volume of sales in
the fourth quarter results in higher receivables at year end as compared to the
first quarter.
Inventory was $6.46 million at March 31, 2001 compared to $6.44 million at
December 31, 2000. Middleton Doll's inventory increased $0.22 million due to new
doll lines while License Products' inventory decreased $0.20 million.
12
Fixed assets increased by $0.26 million due to computer and software consulting
fees connected with the relocation. Other assets and prepaid expenses increased
by $0.16 million.
Middleton Doll increased its short-term borrowings by $0.30 million on a line of
credit with a bank.
Accounts payable decreased by $0.42 million as of March 31, 2001 compared to
December 31, 2000. Middleton Doll's accounts payable decreased by $0.41 million
while License Products' accounts payable decreased $0.01 million. The decrease
in accounts payable is also the result of Middleton Doll's seasonality in sales.
Material purchases are higher in the third and fourth quarters as compared to
the first quarter. Other liabilities decreased by $0.02 million.
Financial Services
Total assets of financial services were $147.63 million as of March 31, 2001 and
$149.50 million as of December 31, 2000, a 1% decrease.
Cash increased to $0.17 million at March 31, 2001 from $0.09 million at December
31, 2000.
Interest and rent receivable decreased to $0.82 million from $1.07 million.
Interest receivable decreased by $0.19 million as a result of interest rates and
loan balances being lower. Fixed assets and other assets including prepaid
amounts decreased in the aggregate by $0.06 million. Investment swap contracts
increased $2.03 million from December 31, 2000 under new reporting requirements
(See Note 4).
Total loans decreased by $3.47 million or 3% to $107.80 million at March 31,
2001 from $111.27 million at December 31, 2000 due to normal market competition.
Leased properties under management decreased $0.20 million due to depreciation.
The financial services' total consolidated indebtedness at March 31, 2001
decreased $3.89 million due to the decrease in loans.
13
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, 2001.
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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.
THE MIDDLETON DOLL COMPANY
(Registrant)
Date: May 14, 2001 /s/ George R. Schonath
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George R. Schonath
President and Chief Executive Officer
Date: May 14, 2001 /s/ Susan J. Hauke
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Susan J. Hauke
Vice President Finance
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THE MIDDLETON DOLL COMPANY AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX
Exhibit Number Exhibit
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11 Statement Regarding Computation of Per Share Earnings
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