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, 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: 0-22663
BANDO McGLOCKLIN CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1364345
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
W239 N1700 Busse Road
P.O. Box 190 53072-0190
Pewaukee, Wisconsin (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (414) 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 15, 1998 there was 3,689,102 shares outstanding of the
Registrant's common stock, 6 2/3 cents par value.
BANDO McGLOCKLIN CAPITAL CORPORATION
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 1998 and
December 31, 1997 . . . . . . . . . . . . . . . . . . . . . 3-4
Consolidated Statement of Operations - For the Three
Months Ended March 31, 1998 and 1997 . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows - For the Three
Months Ended March 31, 1998 and 1997 . . . . . . . . . . . 6-7
Notes to the Consolidated Financial Statements . . . . . . 8-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 10-13
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
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31, 1998 December 31, 1997
ASSETS
Consumer Products:
Cash $ 134,236 $ -
Accounts receivable, net of
allowance of $313,252 and
$268,796 as of March 31, 1998
and December 31, 1997,
respectively 1,228,322 1,958,672
Inventory 3,829,270 3,280,172
Prepaid expenses 160,432 320,339
---------- ----------
Total current assets 5,352,260 5,559,183
---------- ----------
Fixed assets, net of accumulated
depreciation of $822,159 and
$756,901 as of March 31, 1998
and December 31, 1997,
respectively 1,743,058 1,666,399
Other assets 1,199,037 943,402
---------- ----------
Total Consumer Products
assets 8,294,355 8,168,984
---------- ----------
Financial Services:
Cash 402,539 197,576
Interest receivable 764,446 844,840
---------- ----------
Total current assets 1,166,985 1,042,416
---------- ----------
Loans 130,281,285 130,413,277
Less: reserve for loan losses (437,577) (450,000)
Leased properties under
construction 1,233,799 399,844
Fixed assets, net of accumulated
depreciation of $260,462 and
$236,869 as of March 31, 1998
and December 31, 1997,
respectively 407,806 427,999
Investments in swap contracts at
market value 106,554 123,013
Other assets, net 274,209 211,697
---------- ----------
Total Financial Services
assets 133,033,061 132,168,246
----------- -----------
Total Assets $141,327,416 $140,337,230
=========== ===========
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET-(Continued)
(Unaudited)
March 31, 1998 December 31, 1997
LIABILITIES, MINORITY INTEREST,
PREFERRED STOCK AND SHAREHOLDERS'
EQUITY
Consumer Products:
Short-term borrowings $ 88,175 $ -
Accounts payable 613,869 948,075
Accrued liabilities 1,040,777 1,179,476
---------- ----------
Total current liabilities 1,742,821 2,127,551
Long-term debt - 22,936
---------- -----------
Total Consumer Products
liabilities 1,742,821 2,150,487
---------- ----------
Financial Services:
Commercial paper 41,227,588 25,009,972
Notes payable to banks 6,120,000 7,500,000
---------- ----------
Short-term borrowings 47,347,588 32,509,972
Accrued liabilities 1,085,461 1,090,965
---------- ----------
Total current liabilities 48,433,049 33,600,937
State of Wisconsin Investment
Board note payable 5,833,334 6,000,000
Loan participations with
repurchase options 56,082,456 69,250,467
---------- ----------
Total Financial Services
liabilities 110,348,839 108,851,404
----------- -----------
Minority interest in
subsidiaries 1,793,120 1,684,512
Redeemable Preferred stock, 1
cent par value, 3,000,000
shares authorized in 1998 and
1997; 674,791 shares issued and
outstanding after deducting
15,209 shares in treasury as of
March 31, 1998 and December 31,
1997 16,908,025 16,908,025
Shareholders' Equity
Common stock, 6 2/3 cents par
value, 15,000,000 shares
authorized in 1998 and 1997,
4,001,540 shares issued and
outstanding as of March 31,
1998 and December 31, 1997,
before deducting shares in
treasury 266,769 266,769
Additional paid-in capital 13,671,947 13,671,947
Retained earnings 448,406 656,597
Treasury stock, at cost (312,438
shares as of March 31, 1998 and
December 31, 1997) (3,852,511) (3,852,511)
----------- -----------
Total Shareholders' Equity 10,534,611 10,742,802
----------- -----------
Total Liabilities, Minority
Interest, Preferred Stock
and Shareholders' Equity $141,327,416 $140,337,230
=========== ===========
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1998 1997
Consumer Products:
Net sales $ 3,431,767 $ 3,029,640
Cost of sales 1,819,440 1,637,134
---------- ----------
Gross profit 1,612,327 1,392,506
Operating expenses:
Sales and marketing 669,855 378,101
New product development 131,583 74,331
General and administrative 554,865 374,469
--------- -----------
Total operating expenses 1,356,303 826,901
Other income (expense):
Interest expense (4,792) (5,423)
Other income, net 9,654 12,436
---------- ----------
Total other income
(expense) 4,862 7,013
Net income before income taxes
and minority interest 260,886 572,618
Provision for income taxes (140,154) (225,825)
Minority interest in earnings
of subsidiaries (108,608) (189,834)
---------- ----------
Net income 12,124 156,959
---------- ----------
Financial Services:
Revenues:
Interest on loans 2,838,157 2,427,110
Other income (expense) 87,260 (26,772)
---------- -----------
Total Revenues 2,925,417 2,400,338
Expenses:
Interest expense 2,167,946 1,258,893
Operating expenses 313,748 666,672
--------- ----------
Total Expenses 2,481,694 1,925,565
Net income 443,723 474,773
--------- ----------
Total Company:
Net income before income taxes and
minority interest 704,609 1,047,391
Provision for income taxes (140,154) (225,825)
Minority interest in earnings of
subsidiaries (108,608) (189,834)
--------- ---------
Net income $ 455,847 $ 631,732
========= =========
Basic Earnings Per Share $ 0.12 $ 0.17
Diluted Earnings Per Share $ 0.12 $ 0.17
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three months ended Three months ended
March 31, 1998 March 31, 1997
Consumer Financial Consumer Financial
Products Services Products Services
Cash Flows from Operating
Activities:
Net income $ 12,124 $ 443,723 $ 156,959 $ 474,773
Adjustments to reconcile
net cash (used) provided
by operating activities:
Change in appreciation on
investment swaps - 16,459 - 133,056
Depreciation and
amortization 65,258 42,197 20,256 41,183
Change in minority
interest in subsidiaries 108,608 - 189,834 -
Increase (decrease) in cash
due to change in:
Accounts receivable 730,350 - (70,393) -
Inventory (549,098) - 169,883 -
Interest receivable - 80,394 - 262,594
Other assets (95,728) (86,391) 44,608 (376,030)
Accounts payable (334,206) - 53,158 -
Other liabilities (138,699) (5,504) 380,648 804,367
--------- --------- -------- ---------
Net Cash (Used) Provided by
Operations (201,391) 490,878 944,953 1,339,943
--------- --------- -------- ---------
Cash Flows from Investing
Activities:
Loans made - (27,316,811) - (13,274,823)
Principal collected on
loans - 27,448,803 - 10,197,537
Loans purchased - - - (32,388,084)
Loan and interest charge
off - (12,423) - -
Premium expense (income)
net - 5,275 - 68,727
Construction of leased
properties - (833,955) - -
Land sold - - 74,575 -
Purchase of short-term
securities - - - (525,000)
Purchase of fixed assets (141,917) (3,400) (100,682) (91,712)
--------- --------- ---------- ----------
Net Cash Used by Investing (141,917) (712,511) (26,107) (36,013,355)
--------- --------- ---------- ----------
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Unaudited)
Three months ended Three months ended
March 31, 1998 March 31, 1997
Consumer Financial Consumer Financial
Products Services Products Services
Cash Flows from Financing
Activities:
Increase in short term
borrowings 88,175 14,837,616 - (3,924,997)
Proceeds from loan
participations with
repurchase options net - (13,168,011) - 37,405,597
Repayment of SWIB note - (166,666) - (166,667)
Decrease in other notes
payable (22,936) - (2,502) -
Dividends paid - (664,038) - -
Proceeds from exercise of
stock options - - - 128,673
Repurchase of common stock - - - (473,431)
---------- ---------- --------- ----------
Net Cash Provided (Used) by
Financing 65,239 838,901 (2,502) 32,969,175
---------- ---------- --------- ----------
Net intercompany transactions 412,305 (412,305) (1,244,272) 1,244,272
Net increase (decrease) in
cash 134,236 204,963 (327,928) (459,965)
Cash, beginning of period - 197,576 663,936 673,620
---------- ---------- --------- ----------
Cash, end of period $ 134,236 $ 402,539 $ 336,008 $ 213,655
========== ========== ========= ==========
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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 Bando McGlocklin Investment Corporation,
Lee Middleton Original Dolls, Inc. ("Middleton Doll") and License
Products, Inc. ("License Products") as consumer product companies. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
NOTE 2 - RECLASSIFICATION
Certain amounts in the March 31, 1997 financial statements have been
reclassified to conform with the March 31, 1998 presentation. These
reclassifications have no effect on the retained earnings or net income
previously reported.
NOTE 3 - BASIS OF PRESENTATION
The accompanying unaudited consolidated 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,
1997.
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 three months ended March
31, 1998 may not be indicative of the results that may be expected for the
year ending December 31, 1998.
NOTE 4 - 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, December 31,
1998 1997
Raw materials $2,067,817 $1,975,002
Work in process 352,916 282,484
Finished goods 1,595,645 1,230,298
Inventory reserve (187,108) (207,612)
---------- ----------
Total $3,829,270 $3,280,172
NOTE 5 - SHORT-TERM BORROWINGS
BMSBLC has entered into one loan agreement with four participating banks
as of March 11, 1998. The current loan agreement provides for a maximum
of $50,000,000 less the outstanding principal amount of commercial paper.
The facility bears interest at the prime rate or at the 30-, 60- or 90-day
LIBOR plus one and three-eighths percent. Interest is payable monthly,
and the loan agreement expires on April 30, 1999. BMSBLC is also required
to pay a commitment fee equal to 1/2 of 1% per year on the unused amount of
the loan commitment. At March 31, 1998, under this agreement, the
outstanding principal balance was $6,120,000.
NOTE 6 - EARNINGS PER SHARE
See Exhibit 11
NOTE 7 - SUBSEQUENT EVENTS
On April 30, 1998 the Company acquired the remaining 49% interest of
Middleton Doll for $5 million in cash.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Amounts presented as of March 31, 1998 and December 31, 1997, and for the
three months ended March 31, 1998 and March 31, 1997 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 Bando McGlocklin
Investment Corporation ("BMIC"), a 99%-owned subsidiary of the Company;
Lee Middleton Original Dolls, Inc. ("Middleton Doll") and License
Products, Inc. ("License Products"), 51%-owned subsidiaries of BMIC.
Results of Operations
For the three months ended March 31, 1998 and March 31, 1997
The Company's total net income after income taxes and minority interest
for the quarter ended March 31, 1998 equaled $0.46 million or $0.12 per
share (basic) as compared to $0.63 million or $0.17 per share (basic) for
the quarter ended March 31, 1997, a 27% decrease.
Consumer Products
Net income from consumer products after income taxes and minority interest
for the quarter ended March 31, 1998 was $0.01 million compared to $0.16
million for the quarter ended March 31, 1997, a 94% decrease.
Net sales from consumer products for the quarter ended March 31, 1998
increased 13% to $3.43 million from $3.03 million over the corresponding
prior year period. This increase was due to increased sales of $0.34
million at Middleton Doll and $0.06 million at License Products for the
quarter ended March 31, 1998. Cost of sales also increased 12% to $1.82
million for the quarter ended March 31, 1998 from $1.63 million for the
prior year quarter. Gross profit margin increased slightly to 47% for the
quarter ended March 31, 1998 from 46% for the quarter ended March 31,
1997.
Total operating expenses of consumer products for the quarter ended March
31, 1998 were $1.35 million compared to $0.82 million for the quarter
ended March 31, 1997, a 65% increase. Sales and marketing expense
increased $0.29 million, a 77% increase. The majority of this increase
was a result of Middleton Doll hiring additional sales personnel and
implementing major expansion of trade shows, including more advertising
and more leased space per show. In addition, Middleton Doll's royalty
payments increased $0.05 million in the quarter ended March 31, 1998.
License Products' sales and marketing expense increased $0.06 million.
New product development expense increased $0.04 million at Middleton Doll
because of two new artists that were introduced later in 1997 and
increased $0.02 million at License Products because of the reformation of
its product lines into new catalogs. General and administrative expenses
increased $0.18 million from $0.55 million for the quarter ended March 31,
1998 compared to $0.37 million for the quarter ended March 31, 1997.
Middleton Doll's expense increased $0.10 million due to a new collector
club that was started in April 1997 and increased personnel and related
expenses stemming from the continued growth of the company. License
Products' expense increased $0.03 million due to the reformation of its
product lines and BMIC's expense increased $0.05 million as a result of
additional salaries for officers.
The consumer products' consolidated net income was reduced by the minority
interest ownership in the net earnings of Middleton Doll and the net
consolidated earnings of BMIC. The minority interest in earnings of
subsidiaries equaled $0.11 million for the quarter ended March 31, 1998
and $0.19 million for the quarter ended March 31, 1997. The consumer
products' consolidated net income was reduced by a provision for income
taxes of $0.14 million and $0.23 million for the quarters ended March 31,
1998 and 1997, respectively.
Financial Services
Net income from financial services for the quarter ended March 31, 1998
was $0.45 million compared to $0.47 million for the quarter ended March
31, 1997, a 4% decrease.
Total revenues increased to $2.93 million for the quarter ended March 31,
1998 from $2.40 million for the quarter ended March 31, 1997, a 22%
increase. Interest on loans increased to $2.84 million for the quarter
ended March 31, 1998 from $2.43 million for the comparative quarter as a
result of the repurchase of $25 million of loans that were previously sold
to a third party. Average loans under management increased $1.4 million
to $138.0 million for the quarter ended March 31, 1998, from $139.4
million for the comparative quarter. The average prime rate also
increased to 8.5% for the three months ended March 31, 1998 compared to
8.27% for the three months ended March 31, 1997. However, these changes
were offset by the decreasing yield on the portfolio of loans due to the
market's competitive pricing.
Other income (expense) increased $0.11 million. Of this amount, $0.05
million was due to an increase in rental income, commitment fees and
prepayment penalty fees as compared with the quarter ended March 31, 1997.
In addition, during the quarter ended March 31, 1997 financial services
had premium expense of $0.07 million relating to repurchasing of loans
from third parties compared to $5,000 for the quarter ended March 31,
1998.
Interest expense increased to $2.17 million from $1.26 million for the
quarter ended March 31, 1998 as compared with the quarter ended March 31,
1997. Interest expense increased approximately $0.46 million as a result
of the repurchase of loans by BMSBLC that had been previously sold. Those
repurchased loans were funded with new debt. This repurchase had no impact
on net operating income as both interest income and interest expense
increased by approximately the same amount. Interest expense, which is
offset by swap income, increased by $0.45 million because of a decline in
swap income due to investment swaps maturing and no new agreements being
entered into.
Operating expenses decreased 54% to $0.31 million for the quarter ended
March 31, 1998 from $0.67 million for the prior year quarter. All
employees of the Company terminated their employment with the Company on
September 8, 1997 to become employees of InvestorsBank (the "Bank"), a
wholly owned subsidiary of InvestorsBancorp, Inc., except for certain
executive officers who are employees of both the Company and the Bank. The
Company and the Bank entered into a Management Services and Allocation of
Operating Expenses Agreement (the "Agreement"). The effect of such
agreement has been to reduce the level of operating expenses in the
Company. Salaries were reduced by $0.16 million and other operating
expenses were reduced by $0.08 million. In addition the expense resulting
from the change in appreciation on investment swaps decreased $0.12
million for the three months ended March 31, 1998. No new investment
swaps were entered into during the quarter ended March 31, 1998.
Liquidity and Capital
Consumer Products
Total assets of consumer products were $8.29 million as of March 31, 1998
and $8.17 million as of March 31, 1997, a 1% increase.
Cash increased to $0.13 million at March 31, 1998 from zero at December
31, 1997.
Accounts receivable decreased to $1.23 million at March 31, 1998 from
$1.96 million at December 31, 1997. A decrease of $0.63 million is
attributable to Middleton Doll, and the remaining $0.10 million is
attributable to License Products. Both companies are seasonal and
typically have lower sales in the first quarter of the year, which
corresponds to lower accounts receivable balances.
Inventory was up to $3.83 million at March 31, 1998 compared to $3.28
million at December 31, 1997. $0.36 million is the result of Middleton
Doll's anticipated sales in future quarters and $0.19 million is the
result of License Products' anticipated sales in a new merchandise line.
Fixed assets increased slightly by $0.08 million, and other assets and
prepaid expenses also increased slightly by $0.10 million.
Middleton Doll increased its short-term borrowings by borrowing $0.09
million on a line of credit with InvestorsBank during the quarter ended
March 31, 1998. Middleton Doll also paid off a long-term note payable of
$0.02 million with another bank during the first quarter.
Accounts payable decreased to $0.61 million as of March 31, 1998 compared
to $0.95 million as of December 31, 1997. $0.12 million is attributable
to Middleton Doll and $0.22 million is attributable to License Products.
Other liabilities decreased by $0.13 million.
Financial Services
Total assets of financial services were $133.03 million as of March 31,
1998 and $132.17 million as of March 31, 1997, a 1% increase.
Total loans on the balance sheet decreased slightly by $0.13 million, or
0.1%, to $130.28 million at March 31, 1998 from $130.41 million at
December 31, 1997. The Company's loan loss reserve decreased by $0.01
million due to a charge off of a loan. The Company's loans under
management decreased to $135.1 million as of March 31, 1998 from $135.5
million as of December 31, 1997. Leased properties under construction
increased by $0.83 million as a result of the construction progress on two
new buildings. Expected completion is June and July of 1998 for these
buildings.
Cash increased to $0.40 million at March 31, 1998 from $0.20 million at
December 31, 1997.
Interest receivable decreased to $0.76 million from $0.84 million. Fixed
assets, investment swaps and other assets, in aggregate increased by only
$0.03 million.
The financial services' total consolidated indebtedness at March 31, 1998
increased $1.51 million. As of March 31, 1998, financial services had
$61.92 million outstanding in long-term debt and $47.35 million
outstanding in short-term borrowings compared to$75.25 million outstanding
in long-term debt and $32.51 million outstanding in short-term borrowings
as of December 31, 1997. Financial services' short-term facility increased
from $37.5 million to $50 million during the quarter ended March 31, 1998.
As a result of the increase in the short-term facility, the Company paid
off some higher cost participations during the quarter which lowered its
long-term debt. Financial services may increase its short-term facility
and its long-term debt by a total of $20 million in the upcoming quarter.
The additional $20 million in debt will allow financial services to expand
its leased property portfolio.
Year 2000 Compliance
The Company utilizes and is dependent upon data processing systems and
software to conduct its business. The data processing systems and
software include those developed and maintained by the Company's data
processing provider and purchased software which is run on in-house
computer networks. In 1997, the Company initiated a review and assessment
of all hardware and software to confirm that it will function properly in
the year 2000. The Company's data processing provider and those vendors
who have been contacted indicate that their hardware and/or software will
be Year 2000 compliant by the end of 1998. This will allow time for
compliance testing. Additionally, alarms, heating and cooling systems and
other computer-controlled mechanical devices on which the Company relies
have been evaluated. Those found not to be in compliance would be
modified or replaced with a compliant product. While there will be some
expenses incurred during the next two years, the Company has not
identified any situations at this time that will require material cost
expenditures to become fully compliant. An unknown element at this time
is the impact of the Year 2000 on the Company's borrowing customers and
their ability to repay. The Company has initiated a program to
communicate with key customers to ensure they are properly prepared for
the year 2000 and will not suffer serious adverse consequences.
Nevertheless, if not properly addressed, Year 2000 related computer issues
could result in interruptions to the operations of the Company and have a
material adverse effect on the Company's results of operations.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income,"
which establishes standards for reporting of comprehensive income and its
components. This statement is effective for the Company as of January 1,
1998. This statement requires that entities classify items of other
comprehensive income by their nature in a financial statement and display
the accumulated balance of other comprehensive income separately from
retained earnings and surplus in the equity section of a statement of
financial condition. Comprehensive income is composed of net income and
"other comprehensive income." Other comprehensive income includes charges
or credits to equity that are not the result of transactions with the
entities' shareholders. Currently, no items of other comprehensive income
result from activities of the Company.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information, (SFAS No. 131)" which establishes
standards for the way the Company reports information about its operating
segments in its annual report to shareholders and certain selected
information about its operating segments in interim reports to
shareholders. In addition, SFAS No. 131 also requires certain additional
disclosures on an enterprise-wide basis primarily related to geographic
information and revenue from major customers. The Company does not
believe that these enterprise-wide disclosures will be applicable. This
statement is effective for fiscal years beginning after December 15, 1997.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995
This report contains certain forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Exchange Act. The Company intends such forward-looking statements
to be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, and is
including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and
describe future plans, strategies and expectations of the Company, are
generally identifiable by use of the words "may," "will," "believe,"
"expect," "intend," "anticipate," "estimate," "project," or similar
expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse effect on the operations and future
prospects of the Company and the subsidiaries include, but are not limited
to, changes in: interest rates, general economic conditions guidelines,
including the condition of the local real estate market,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal
Reserve Board, the quality or composition of the loan or investment
portfolios, demand for loan products, deposit flows, competition, demand
for financial services in the Company's market area, demand for the
Company's consumer products, and accounting principles and policies.
These risks and uncertainties should be considered in evaluating forward-
looking statements and undue reliance should not be placed on such
statements.
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, 1998.
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 15, 1998 /s/ George R. Schonath
George R.Schonath
President and Chief Executive Officer
/s/ Susan J. Hauke
Date: May 15, 1998 Susan J. Hauke
Chief Accounting Officer
BANDO McGLOCKLIN CAPITAL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Exhibit
11 Statement Regarding Computation of Per
Share Earnings
27 Financial Data Schedule (EDGAR version
only)