x
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
No. 04-3291176
|
|
(State of Incorporation)
|
(IRS Employer Identification No.)
|
Class Outstanding
|
Par Value
|
Shares Outstanding
|
|||
Common Stock
|
$
|
.01
|
18,242,728
|
3
|
||
3
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
22
|
||
49
|
||
50
|
||
50
|
||
50
|
||
50
|
||
50
|
||
51
|
||
51
|
||
51
|
||
53
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Interest and dividend income on investments
|
$
|
8,308,924
|
|
$
|
11,413,800
|
|
$
|
17,984,302
|
|
$
|
24,742,979
|
|
||||
Interest income on short-term investments
|
|
114,500
|
|
|
204,357
|
|
|
218,034
|
|
|
249,309
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total investment income
|
|
8,423,424
|
|
|
11,618,157
|
|
|
18,202,336
|
|
|
24,992,288
|
|
||||
Notes payable to banks
|
|
3,169,449
|
|
|
5,694,719
|
|
|
7,006,884
|
|
|
11,485,191
|
|
||||
Senior secured notes
|
|
835,318
|
|
|
838,927
|
|
|
1,893,178
|
|
|
1,660,792
|
|
||||
SBA debentures
|
|
917,800
|
|
|
451,583
|
|
|
1,779,059
|
|
|
884,755
|
|
||||
Commercial paper
|
|
|
|
|
27,287
|
|
|
|
|
|
182,816
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total interest expense
|
|
4,922,567
|
|
|
7,012,516
|
|
|
10,679,121
|
|
|
14,213,554
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income
|
|
3,500,857
|
|
|
4,605,641
|
|
|
7,523,215
|
|
|
10,778,734
|
|
||||
Gain on sale of loans
|
|
258,591
|
|
|
278,857
|
|
|
588,219
|
|
|
712,037
|
|
||||
Other income
|
|
2,162,547
|
|
|
1,017,496
|
|
|
3,053,891
|
|
|
1,988,742
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total noninterest income
|
|
2,421,138
|
|
|
1,296,353
|
|
|
3,642,110
|
|
|
2,700,779
|
|
||||
Salaries and benefits
|
|
2,393,003
|
|
|
2,159,230
|
|
|
4,737,847
|
|
|
4,836,306
|
|
||||
Professional fees
|
|
623,291
|
|
|
586,336
|
|
|
1,516,528
|
|
|
981,583
|
|
||||
Amortization of goodwill
|
|
|
|
|
135,095
|
|
|
|
|
|
267,621
|
|
||||
Costs of debt extinguishment
|
|
3,101,783
|
|
|
|
|
|
3,101,783
|
|
|
|
|
||||
Other operating expenses
|
|
1,626,948
|
|
|
539,216
|
|
|
3,390,916
|
|
|
2,153,203
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses
|
|
7,745,025
|
|
|
3,419,877
|
|
|
12,747,074
|
|
|
8,238,713
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net investment income (loss)
|
|
(1,823,030
|
)
|
|
2,482,117
|
|
|
(1,581,749
|
)
|
|
5,240,800
|
|
||||
Net realized losses on investments
|
|
(3,369,637
|
)
|
|
(602,548
|
)
|
|
(4,069,270
|
)
|
|
(1,500,961
|
)
|
||||
Net change in unrealized appreciation on investments
|
|
2,185,449
|
|
|
499,446
|
|
|
1,234,974
|
|
|
965,521
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized/unrealized gain (loss) on investments
|
|
(1,184,188
|
)
|
|
(103,102
|
)
|
|
(2,834,296
|
)
|
|
(535,440
|
)
|
||||
Income tax provision
|
|
|
|
|
14,757
|
|
|
|
|
|
51,873
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations
|
$
|
(3,007,218
|
)
|
$
|
2,364,258
|
|
$
|
(4,416,045
|
)
|
$
|
4,653,487
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations per share
|
||||||||||||||||
Basic
|
$
|
(0.16
|
)
|
$
|
0.16
|
|
$
|
(0.24
|
)
|
$
|
0.31
|
|
||||
Diluted
|
|
(0.16
|
)
|
|
0.16
|
|
|
(0.24
|
)
|
|
0.31
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding
|
||||||||||||||||
Basic
|
|
18,242,728
|
|
|
15,215,002
|
|
|
18,242,728
|
|
|
14,895,144
|
|
||||
Diluted
|
|
18,242,728
|
|
|
15,220,407
|
|
|
18,242,728
|
|
|
14,903,764
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2002
|
December 31, 2001
|
|||||||
Assets
|
||||||||
Medallion loans
|
$
|
219,465,426
|
|
$
|
252,674,634
|
|
||
Commercial loans
|
|
176,587,054
|
|
|
199,328,787
|
|
||
Equity investments
|
|
4,976,199
|
|
|
3,591,962
|
|
||
|
|
|
|
|
|
|||
Net investments
|
|
401,028,679
|
|
|
455,595,383
|
|
||
Investment in and loans to Media
|
|
5,745,913
|
|
|
6,658,052
|
|
||
|
|
|
|
|
|
|||
Total investments
|
|
406,774,592
|
|
|
462,253,435
|
|
||
Cash
|
|
28,919,329
|
|
|
25,409,058
|
|
||
Accrued interest receivable
|
|
3,929,287
|
|
|
3,989,989
|
|
||
Servicing fee receivable
|
|
3,173,838
|
|
|
3,575,079
|
|
||
Fixed assets, net
|
|
1,748,670
|
|
|
1,933,918
|
|
||
Goodwill, net
|
|
5,007,583
|
|
|
5,007,583
|
|
||
Other assets, net
|
|
6,315,794
|
|
|
5,586,720
|
|
||
|
|
|
|
|
|
|||
Total assets
|
$
|
455,869,093
|
|
$
|
507,755,782
|
|
||
|
|
|
|
|
|
|||
Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
5,311,948
|
|
$
|
7,105,309
|
|
||
Dividends payable
|
|
|
|
|
1,643,656
|
|
||
Accrued interest payable
|
|
2,960,037
|
|
|
2,138,240
|
|
||
Notes payable to banks
|
|
195,027,592
|
|
|
233,000,000
|
|
||
Senior secured notes
|
|
29,209,283
|
|
|
45,000,000
|
|
||
SBA debentures
|
|
52,845,000
|
|
|
43,845,000
|
|
||
|
|
|
|
|
|
|||
Total liabilities
|
|
285,353,860
|
|
|
332,732,205
|
|
||
|
|
|
|
|
|
|||
Shareholders Equity
|
||||||||
Preferred stock (1,000,000 shares of $0.01 of par value stock authorizednone outstanding)
|
|
|
|
|
|
|
||
Common stock (50,000,000 of $0.01 par value stock authorized18,242,728 shares outstanding at June 30, 2002 and
18,242,035 at December 31, 2001)
|
|
182,421
|
|
|
182,421
|
|
||
Capital in excess of par value
|
|
183,724,180
|
|
|
184,486,259
|
|
||
Accumulated net investment losses
|
|
(13,391,368
|
)
|
|
(9,645,103
|
)
|
||
|
|
|
|
|
|
|||
Total shareholders equity
|
|
170,515,233
|
|
|
175,023,577
|
|
||
|
|
|
|
|
|
|||
Total liabilities and shareholders equity
|
$
|
455,869,093
|
|
$
|
507,755,782
|
|
||
|
|
|
|
|
|
|||
Number of common shares
|
|
18,242,728
|
|
|
18,242,035
|
|
||
Net asset value per share
|
$
|
9.35
|
|
$
|
9.59
|
|
||
|
|
|
|
|
|
Six Months Ended June 30,
|
||||||||
2002
|
2001
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net increase (decrease) in net assets resulting from operations
|
($
|
4,416,045
|
)
|
$
|
4,653,487
|
|
||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used
in) operating activities:
|
||||||||
Depreciation and amortization
|
|
300,887
|
|
|
246,865
|
|
||
Amortization of goodwill
|
|
|
|
|
267,621
|
|
||
Amortization of loan origination costs
|
|
800,830
|
|
|
588,842
|
|
||
Increase in net unrealized appreciation on investments
|
|
(3,478,238
|
)
|
|
(1,276,192
|
)
|
||
Net realized loss on investments
|
|
4,069,270
|
|
|
1,500,961
|
|
||
Net realized gain on sales of loans
|
|
(588,219
|
)
|
|
(712,037
|
)
|
||
Equity in losses of Media
|
|
2,243,264
|
|
|
310,671
|
|
||
(Increase) decrease in accrued interest receivable
|
|
60,702
|
|
|
(548,905
|
)
|
||
Decrease in servicing fee receivable
|
|
401,241
|
|
|
612,720
|
|
||
(Increase) decrease in other assets
|
|
(821,375
|
)
|
|
287,351
|
|
||
Decrease in accounts payable and accrued expenses
|
|
(1,793,361
|
)
|
|
(486,839
|
)
|
||
Increase (decrease) in accrued interest payable
|
|
821,797
|
|
|
(2,476,504
|
)
|
||
|
|
|
|
|
|
|||
Net cash provided by (used in) operating activities
|
|
(2,399,247
|
)
|
|
2,968,041
|
|
||
|
|
|
|
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Investments originated
|
|
(62,834,597
|
)
|
|
(48,173,509
|
)
|
||
Proceeds from sales and maturities of investments
|
|
116,597,660
|
|
|
88,579,498
|
|
||
Investment in and loans to Media, net
|
|
(1,331,125
|
)
|
|
(2,805,957
|
)
|
||
Capital expenditures
|
|
(115,639
|
)
|
|
(214,813
|
)
|
||
|
|
|
|
|
|
|||
Net cash provided by investing activities
|
|
52,316,299
|
|
|
37,385,219
|
|
||
|
|
|
|
|
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from (repayments of) notes payable to banks
|
|
(37,972,408
|
)
|
|
9,020,000
|
|
||
Repayments of commercial paper
|
|
|
|
|
(23,829,141
|
)
|
||
Proceeds from issuance of SBA debentures
|
|
9,000,000
|
|
|
10,500,000
|
|
||
Payments of senior secured notes
|
|
(15,790,717
|
)
|
|
|
|
||
Issuance of stock
|
|
|
|
|
37,403,275
|
|
||
Payments of declared dividends to current stockholders
|
|
(1,643,656
|
)
|
|
(7,287,920
|
)
|
||
|
|
|
|
|
|
|||
Net cash provided by (used in) financing activities
|
|
(46,406,781
|
)
|
|
25,806,214
|
|
||
|
|
|
|
|
|
|||
NET INCREASE IN CASH
|
|
3,510,271
|
|
|
66,159,474
|
|
||
CASH, beginning of period
|
|
25,409,058
|
|
|
15,652,878
|
|
||
CASH, end of period
|
|
28,919,329
|
|
|
81,812,352
|
|
||
|
|
|
|
|
|
|||
SUPPLEMENTAL INFORMATION
|
||||||||
Cash paid during the period for interest
|
$
|
8,739,222
|
|
$
|
16,690,058
|
|
||
|
|
|
|
|
|
2002
|
2001
|
|||||
Balance at January 1
|
$
|
2,376,000
|
$
|
205,000
|
||
Additions
|
|
|
|
31,000
|
||
|
|
|
|
|||
Balance at March 31
|
|
2,376,000
|
|
236,000
|
||
Additions
|
|
|
|
83,000
|
||
|
|
|
|
|||
Balance at June 30
|
$
|
2,376,000
|
$
|
319,000
|
||
|
|
|
|
Loans
|
Equity
Investments
|
Total
|
||||||||||
Balance as of December 31, 2001
|
|
(9,626,304
|
)
|
$
|
2,125,252
|
|
($
|
7,501,052
|
)
|
|||
Change in unrealized
|
||||||||||||
Appreciation on investments
|
|
|
|
|
757,822
|
|
|
757,822
|
|
|||
Depreciation on investments
|
|
(890,020
|
)
|
|
|
|
|
(890,020
|
)
|
|||
Realized
|
||||||||||||
Gains on investments
|
|
(1,411
|
)
|
|
|
|
|
(1,411
|
)
|
|||
Losses on investments
|
|
696,536
|
|
|
|
|
|
696,536
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Balance as of March 31, 2002
|
|
(9,821,199
|
)
|
|
2,883,074
|
|
|
(6,938,125
|
)
|
|||
Change in unrealized
|
||||||||||||
Appreciation on investments
|
|
|
|
|
569,841
|
|
|
569,841
|
|
|||
Depreciation on investments
|
|
(922,895
|
)
|
|
(66,669
|
)
|
|
(989,564
|
)
|
|||
Realized
|
||||||||||||
Losses on investments
|
|
3,255,018
|
|
|
80,016
|
|
|
3,335,034
|
|
|||
Balance as of June 30, 2002
|
($
|
7,489,076
|
)
|
$
|
3,466,262
|
|
($
|
4,022,814
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Balance as of December 31, 2000
|
($
|
6,988,790
|
)
|
($
|
422,577
|
)
|
($
|
7,411,367
|
)
|
|||
Change in unrealized
|
||||||||||||
Appreciation on investments
|
|
|
|
|
176,407
|
|
|
176,407
|
|
|||
Depreciation on investments
|
|
(558,159
|
)
|
|
|
|
|
(558,159
|
)
|
|||
Realized
|
||||||||||||
Gains on investments
|
|
(3,375
|
)
|
|
(120,389
|
)
|
|
(123,764
|
)
|
|||
Losses on investments
|
|
1,384,856
|
|
|
|
|
|
1,384,856
|
|
|||
Other
|
|
236,499
|
|
|
240,779
|
|
|
477,278
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Balance as of March 31, 2001
|
|
(5,928,969
|
)
|
|
(125,780
|
)
|
|
(6,054,749
|
)
|
|||
Change in unrealized
|
||||||||||||
Appreciation on investments
|
|
178,623
|
|
|
452,000
|
|
|
630,623
|
|
|||
Depreciation on investments
|
|
(716,369
|
)
|
|
(92,080
|
)
|
|
(808,449
|
)
|
|||
Realized
|
||||||||||||
Losses on investments
|
|
323,633
|
|
|
|
|
|
323,633
|
|
|||
Other
|
|
(236,369
|
)
|
|
|
|
|
(236,369
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Balance as of June 30, 2001
|
($
|
6,379,451
|
)
|
$
|
234,140
|
|
($
|
6,145,311
|
)
|
|||
|
|
|
|
|
|
|
|
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
2002
|
June 30, 2001
|
June 30,
2002
|
June 30,
2001
|
|||||||||||||
Increase in net unrealized appreciation (depreciation) on investments
|
||||||||||||||||
Unrealized appreciation
|
$
|
569,841
|
|
$
|
630,623
|
|
$
|
1,327,663
|
|
$
|
807,030
|
|
||||
Unrealized depreciation
|
|
(989,564
|
)
|
|
(808,449
|
)
|
|
(1,879,584
|
)
|
|
(1,366,608
|
)
|
||||
Unrealized depreciation on Media
|
|
(729,862
|
)
|
|
116,518
|
|
|
(2,243,264
|
)
|
|
(310,671
|
)
|
||||
Realized gain
|
|
|
|
|
|
|
|
(1,411
|
)
|
|
(123,764
|
)
|
||||
Realized loss
|
|
3,335,034
|
|
|
323,633
|
|
|
4,031,570
|
|
|
1,708,489
|
|
||||
Other
|
|
|
|
|
237,121
|
|
|
|
|
|
251,045
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
2,185,449
|
|
$
|
499,446
|
|
$
|
1,234,974
|
|
$
|
965,521
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net realized gain (loss) on investments
|
||||||||||||||||
Realized gain
|
$
|
|
|
($
|
239,355
|
)
|
$
|
1,411
|
|
($
|
105,234
|
)
|
||||
Realized loss
|
|
(3,335,034
|
)
|
|
(363,193
|
)
|
|
(4,031,570
|
)
|
|
(1,395,727
|
)
|
||||
Direct charge-off
|
|
(34,603
|
)
|
|
|
|
|
(39,111
|
)
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total
|
($
|
3,369,637
|
)
|
($
|
602,548
|
)
|
($
|
4,069,270
|
)
|
($
|
1,500,961
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2002
|
June 30, 2001
|
|||||||||||||||||
Three months ended
|
# of Shares
|
EPS
|
# of Shares
|
EPS
|
||||||||||||||
Net increase in net assets resulting from operations
|
($
|
3,007,218
|
)
|
|
|
|
|
$
|
2,364,258
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic EPS
|
||||||||||||||||||
Income available to common shareholders
|
|
(3,007,218
|
)
|
18,242,728
|
($
|
0.16
|
)
|
|
2,364,258
|
15,215,002
|
$
|
0.16
|
||||||
Effect of dilutive stock options
|
|
|
|
|
|
|
|
|
|
5,405
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income available to common shareholders
|
($
|
3,007,218
|
)
|
18,242,728
|
($
|
0.16
|
)
|
$
|
2,364,258
|
15,220,407
|
$
|
0.16
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net increase in net assets resulting from operations
|
($
|
4,416,045
|
)
|
|
|
|
|
$
|
4,653,487
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic EPS
|
|
|
|
|
|
|||||||||||||
Income available to common shareholders
|
|
(4,416,045
|
)
|
18,242,728
|
($
|
0.24
|
)
|
|
4,653,487
|
14,895,144
|
$
|
0.31
|
||||||
Effect of dilutive stock options (1)
|
|
|
|
|
|
|
|
|
|
8,620
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Diluted EPS
|
||||||||||||||||||
Income available to common shareholders
|
($
|
4,416,045
|
)
|
18,242,728
|
($
|
0.24
|
)
|
$
|
4,653,487
|
14,903,764
|
$
|
0.31
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
2002
|
2001
|
2002
|
2001
|
||||||||||||
Advertising revenue
|
$
|
1,809,387
|
|
$
|
3,862,841
|
$
|
3,229,699
|
|
$
|
7,218,067
|
|
||||
Cost of fleet services
|
|
722,579
|
|
|
2,063,831
|
|
2,421,953
|
|
|
4,231,447
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit
|
|
1,086,808
|
|
|
1,799,010
|
|
807,746
|
|
|
2,986,620
|
|
||||
Other operating expenses
|
|
1,816,027
|
|
|
1,681,921
|
|
3,694,858
|
|
|
3,619,860
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) before taxes
|
|
(729,219
|
)
|
|
117,089
|
|
(2,887,112
|
)
|
|
(633,240
|
)
|
||||
Income tax provision (benefit)
|
|
643
|
|
|
571
|
|
(643,848
|
)
|
|
(322,569
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income (loss)
|
($
|
729,862
|
)
|
$
|
116,518
|
($
|
2,243,264
|
)
|
($
|
310,671
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
June 30,
2002
|
December 31, 2001
|
|||||||
Cash
|
$
|
588,829
|
|
$
|
270,350
|
|
||
Accounts receivable
|
|
1,172,052
|
|
|
1,531,183
|
|
||
Federal income tax receivable
|
|
272,750
|
|
|
1,106,778
|
|
||
Equipment, net
|
|
2,564,469
|
|
|
3,068,854
|
|
||
Prepaid signing bonuses
|
|
2,519,859
|
|
|
2,890,613
|
|
||
Goodwill
|
|
2,086,760
|
|
|
2,086,760
|
|
||
Other
|
|
290,076
|
|
|
342,118
|
|
||
|
|
|
|
|
|
|||
Total assets
|
$
|
9,494,795
|
|
$
|
11,296,656
|
|
||
|
|
|
|
|
|
|||
Accounts payable and accrued expenses
|
$
|
1,073,083
|
|
$
|
1,831,554
|
|
||
Deferred revenue
|
|
782,695
|
|
|
755,358
|
|
||
Due to parent
|
|
9,077,988
|
|
|
7,697,309
|
|
||
Note payable to banks
|
|
1,916,717
|
|
|
2,117,462
|
|
||
|
|
|
|
|
|
|||
Total liabilities
|
|
12,850,483
|
|
|
12,401,683
|
|
||
Equity
|
|
1,001,000
|
|
|
1,001,000
|
|
||
Accumulated deficit
|
|
(4,356,688
|
)
|
|
(2,106,027
|
)
|
||
|
|
|
|
|
|
|||
Total equity
|
|
(3,355,688
|
)
|
|
(1,105,027
|
)
|
||
|
|
|
|
|
|
|||
Total liabilities and equity
|
$
|
9,494,795
|
|
$
|
11,296,656
|
|
||
|
|
|
|
|
|
June 30, 2002
|
December 31, 2001
|
|||||
Notes payable to banks
|
$
|
195,028,000
|
$
|
233,000,000
|
||
Senior secured notes
|
|
29,209,000
|
|
45,000,000
|
||
|
|
|
|
|||
Total
|
$
|
224,237,000
|
$
|
278,000,000
|
||
|
|
|
|
|
|
Proposed New Facility
The commitment letter has a proposed maturity date of the earlier of (i) one year from the facilitys closing date or
(ii) two years from the facilitys closing date if certain conditions are met, and an interest rate of One Month LIBOR plus 1.50%.
|
|
|
Company Bank Loan
The non-binding term sheet to amend the MFC Bank Loan has proposed a maturity date of August 31, 2003. The unpaid loans would bear
interest at the rate per annum of prime plus 0.5%. The amortization schedule is as proposed on page 18. The Company Bank Loan will permit the payment of dividends solely to the extent necessary to enable the Company to maintain its status as a RIC
and to avoid the payment of excise taxes, which is consistent with the Companys dividend policy. The Company Bank Loan would be secured by all receivables and various other assets owned by the Company. All financial covenants would be waived
during the term of the loan.
|
|
|
MFC Bank Loan
The non binding term sheet to amend the MFC Bank Loan has proposed a maturity date of August 31, 2003; an annual interest rate of
prime which increases four months after closing to prime plus 0.5% and further increases eight months after closing to prime plus 1%. The amortization schedule is as proposed on page 18. The MFC Bank Loan would permit the payment of dividends solely
to the extent necessary to enable the Company to maintain its status as a RIC and to avoid the payment of excise taxes, which is consistent with the Companys dividend policy. The collateral for the MFC Bank Loan would secure both the MFC Bank
Loan and MFCs obligations under the Notes issued under the Note Purchase Agreements on an equal basis. All financial covenants would be waived during the term of the loan.
|
|
|
MFC Note Purchase Agreements
The Note Purchase Agreements non-binding term sheet to amend the Note Purchase Agreement has similar terms to the
MFC Bank Loans term sheet except the initial interest rate would be 8.85% shall increase to 9.35% four months after closing and increase to 9.85% eight months after closing; and the make whole payment of approximately $3,500,000 must be paid
on or before maturity. The amortization schedule is as proposed
|
|
|
General Provisions
Applicable to the Amended Company Bank Loan, Amended MFC Bank Loan and Amended Note Purchase Agreements
The amended
Company Bank Loan, MFC Bank Loan and Note Purchase Agreements (Financing Agreements) would not contain any financial covenants. However, as is the case under the currently existing financing agreements, the Financing Agreements will obligate the
Company or MFC, as applicable, to prepay the loans under the applicable Financing Agreement in the event the outstanding amount thereunder exceeds an agreed upon borrowing base (which is, generally, equal to a specified percentage of the outstanding
amount of commercial and medallion loans meeting eligibility criteria specified in the loan documents). In addition, as noted above and as is standard with servicing agreements, the Proposed New Facility would contain a Servicer Default if MFC fails
to satisfy certain financial tests and other requirements, but such failure does not, in itself, provide the Proposed New Lender the right to accelerate the maturity of loans under the Proposed New Facility. If the Proposed New Lender obtains the
right under such provisions to replace MFC as the servicer under the Proposed New Facility, so notifies MFC and fails to retract such notice within seven days, the lenders or note holders, as the case may be, under the Company Bank Loan, MFC Bank
Loan and Note Purchase Agreements would thereupon obtain the right to replace the Company or MFC, as applicable, as servicer under the loans constituting collateral under applicable loan agreement or note purchase agreement. Without the
lenders prior written approval, the Financing Agreements would continue to contain numerous and substantial operating restrictions on the Company and MFC, including restrictions on their ability to incur debt, incur liens, merge, consolidate,
sell or transfer assets, loan and invest in third parties and our subsidiaries, repurchase or redeem stock, purchase portfolios, acquire or form other entities, amend certain material agreements, make capital expenditures, have outstanding
intercompany receivables and further securitize our assets. In addition to the amortization schedule for the loans and notes shown below, the Company and MFC would be required to prepay the loans and notes out of the proceeds from the sale of
equity, debt, or assets, subject to certain exceptions.
|
MFC
|
||||||||||||
The Company
|
Banks
|
Senior Noteholders
|
Total
|
|||||||||
2002
|
||||||||||||
Closing date of proposed new facility
|
$
|
1,500,000
|
$
|
86,008,000
|
$
|
17,992,000
|
$
|
105,500,000
|
||||
September
|
|
500,000
|
|
1,654,000
|
|
346,000
|
|
2,500,000
|
||||
October
|
|
1,250,000
|
|
1,654,000
|
|
346,000
|
|
3,250,000
|
||||
November
|
|
1,250,000
|
|
14,059,000
|
|
2,941,000
|
|
18,250,000
|
||||
December
|
|
1,500,000
|
|
4,549,000
|
|
951,000
|
|
7,000,000
|
||||
2003
|
||||||||||||
January
|
|
1,500,000
|
|
17,780,000
|
|
3,720,000
|
|
23,000,000
|
||||
February
|
|
23,500,000
|
|
1,654,000
|
|
346,000
|
|
25,500,000
|
||||
March
|
|
1,000,000
|
|
1,654,000
|
|
346,000
|
|
3,000,000
|
||||
April
|
|
18,000,000
|
|
827,000
|
|
173,000
|
|
19,000,000
|
||||
May
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
June
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
July
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
August
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
54,000,000
|
$
|
133,147,000
|
$
|
27,853,000
|
$
|
215,000,000
|
||||
|
|
|
|
|
|
|
|
Three Months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
The Company
|
||||||||||||||||
Commitment fee expense
|
$
|
19,076
|
|
$
|
41,708
|
|
$
|
30,242
|
|
$
|
82,958
|
|
||||
Debt-related amortized costs
|
|
907,863
|
|
|
117,559
|
|
|
1,490,237
|
|
|
158,836
|
|
||||
Prepayment fee on senior secured notes
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
|
816,031
|
|
|
1,610,922
|
|
|
2,038,117
|
|
|
3,454,338
|
|
||||
Average borrowings outstanding
|
|
59,418,924
|
|
|
102,860,440
|
|
|
68,731,628
|
|
|
103,996,685
|
|
||||
Weight average interest cost for the period
|
|
5.67
|
%
|
|
6.90
|
%
|
|
7.42
|
%
|
|
7.17
|
%
|
||||
Amount outstanding
|
|
|
|
|
|
|
$
|
54,930,000
|
|
$
|
102,050,000
|
|
||||
Weighted average interest cost at period end
|
|
|
|
|
|
|
|
7.70
|
%
|
|
5.53
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
MFC
|
||||||||||||||||
Commitment fee expense
|
$
|
1,620
|
|
$
|
5,195
|
|
$
|
15,387
|
|
$
|
8,860
|
|
||||
Debt-related amortized costs
|
|
927,665
|
|
|
65,845
|
|
|
1,395,825
|
|
|
88,978
|
|
||||
Prepayment fee on senior secured notes
|
|
1,082,512
|
|
|
|
|
|
1,082,512
|
|
|
|
|
||||
Interest expense
|
|
2,891,828
|
|
|
4,650,041
|
|
|
5,824,506
|
|
|
9,405,512
|
|
||||
Average borrowings outstanding
|
|
178,479,934
|
|
|
255,859,011
|
|
|
185,434,662
|
|
|
256,759,503
|
|
||||
Weight average interest cost for the period
|
|
7.11
|
%
|
|
7.40
|
%
|
|
6.93
|
%
|
|
7.46
|
%
|
||||
Amount outstanding
|
|
|
|
|
|
|
$
|
169,306,875
|
|
$
|
254,170,000
|
|
||||
Weighted average interest cost at period end
|
|
|
|
|
|
|
|
8.27
|
%
|
|
6.86
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Combined
|
||||||||||||||||
Commitment fee expense
|
$
|
20,696
|
|
$
|
46,903
|
|
$
|
45,629
|
|
$
|
91,818
|
|
||||
Debt-related amortized costs
(1)
|
|
1,835,528
|
|
|
183,404
|
|
|
2,886,062
|
|
|
247,814
|
|
||||
Prepayment fee on senior secured notes
|
|
1,082,512
|
|
|
|
|
|
1,082,512
|
|
|
|
|
||||
Interest expense
|
|
3,707,859
|
|
|
6,260,963
|
|
|
7,862,623
|
|
|
12,859,850
|
|
||||
Average borrowings outstanding
|
|
237,898,858
|
|
|
358,719,451
|
|
|
254,166,290
|
|
|
360,756,188
|
|
||||
Weight average interest cost for the period
|
|
6.75
|
%
|
|
7.26
|
%
|
|
7.06
|
%
|
|
7.38
|
%
|
||||
Amount outstanding
|
|
|
|
|
|
|
$
|
224,236,875
|
|
$
|
356,220,000
|
|
||||
Weighted average interest cost at period end
|
|
|
|
|
|
|
|
8.47
|
%
|
|
6.48
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes $1,398,000 of costs of debt extinguishment reflected in other operating expenses on the consolidated statements of income for the 2002 second quarter
and six months.
|
Due Date
|
June 30, 2002
|
December 31, 2001
|
Interest Rate
|
||||||
September 1, 2011
|
$
|
17,985,000
|
$
|
17,985,000
|
6.77
|
%
|
|||
June 23, 2012
|
|
6,000,000
|
|
|
7.22
|
|
|||
December 1, 2006
|
|
5,500,000
|
|
5,500,000
|
8.08
|
|
|||
March 1, 2012
|
|
4,500,000
|
|
4,500,000
|
7.22
|
|
|||
March 1, 2007
|
|
4,210,000
|
|
4,210,000
|
8.38
|
|
|||
September 1, 2007
|
|
4,060,000
|
|
4,060,000
|
7.76
|
|
|||
June 1, 2007
|
|
3,000,000
|
|
3,000,000
|
8.07
|
|
|||
March 1, 2003
|
|
3,000,000
|
|
|
3.16
|
|
|||
March 1, 2006
|
|
2,000,000
|
|
2,000,000
|
7.08
|
|
|||
December 16, 2002
|
|
1,300,000
|
|
1,300,000
|
7.51
|
|
|||
June 1, 2005
|
|
520,000
|
|
520,000
|
6.69
|
|
|||
December 1, 2005
|
|
520,000
|
|
520,000
|
6.54
|
|
|||
June 1, 2006
|
|
250,000
|
|
250,000
|
7.71
|
|
|||
|
|
|
|
|
|
||||
$
|
52,845,000
|
$
|
43,845,000
|
7.10
|
%
|
||||
|
|
|
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||
Financing costs for attorneys and loan fees
|
$
|
1,085,553
|
$
|
|
$
|
1,085,553
|
$
|
|
||||
Prepayment on senior secured notes
|
|
1,082,512
|
|
|
|
1,082,512
|
|
|
||||
Default interest
|
|
592,565
|
|
|
|
592,565
|
|
|
||||
Other professional fees
|
|
341,153
|
|
|
|
341,153
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
Total cost of debt extinguishment
|
$
|
3,101,783
|
$
|
|
$
|
3,101,783
|
$
|
|
||||
|
|
|
|
|
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||
2002
|
2001
|
2002
|
2001
|
||||||||||
Revenue sharing income
|
$
|
887,408
|
$
|
15,893
|
|
$
|
932,211
|
$
|
63,570
|
||||
Late charges and prepayment penalties
|
|
366,036
|
|
364,590
|
|
|
683,813
|
|
704,423
|
||||
Servicing fee income
|
|
281,640
|
|
286,087
|
|
|
511,030
|
|
499,287
|
||||
Accretion of discount
|
|
165,759
|
|
375,355
|
|
|
339,751
|
|
446,028
|
||||
Other
|
|
461,704
|
|
(24,429
|
)
|
|
587,086
|
|
275,434
|
||||
|
|
|
|
|
|
|
|
|
|||||
Total other income
|
$
|
2,162,547
|
$
|
1,017,496
|
|
$
|
3,053,891
|
$
|
1,988,742
|
||||
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||
2002
|
2001
|
2002
|
2001
|
||||||||||
Facilities expense
|
$
|
417,586
|
$
|
191,941
|
|
$
|
839,734
|
$
|
749,963
|
||||
Office expense
|
|
184,127
|
|
148,070
|
|
|
353,452
|
|
235,234
|
||||
Collections expense
|
|
157,658
|
|
12,291
|
|
|
284,404
|
|
89,852
|
||||
Insurance
|
|
138,789
|
|
59,230
|
|
|
287,864
|
|
129,712
|
||||
Travel, meals, and entertainment
|
|
137,183
|
|
109,150
|
|
|
312,886
|
|
255,450
|
||||
Bank charges
|
|
73,488
|
|
55,312
|
|
|
123,723
|
|
77,903
|
||||
Other
|
|
518,117
|
|
(36,778
|
)
|
|
1,188,853
|
|
615,089
|
||||
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses
|
$
|
1,626,948
|
$
|
539,216
|
|
$
|
3,390,916
|
$
|
2,153,203
|
||||
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Net share data
|
||||||||||||||||
Net asset value at the beginning of the period
|
$
|
9.52
|
|
$
|
10.32
|
|
$
|
9.59
|
|
$
|
10.16
|
|
||||
Net investment income (loss)
|
|
(0.10
|
)
|
|
0.14
|
|
|
(0.09
|
)
|
|
0.29
|
|
||||
Realized gain (loss) on investments
|
|
(0.18
|
)
|
|
(0.03
|
)
|
|
(0.22
|
)
|
|
(0.08
|
)
|
||||
Net unrealized appreciation (depreciation) on investments
|
|
0.12
|
|
|
0.02
|
|
|
0.07
|
|
|
0.05
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Increase (decrease) in shareholders equity from operations
|
$
|
(0.16
|
)
|
$
|
0.13
|
|
$
|
(0.24
|
)
|
$
|
0.26
|
|
||||
Issuance of common stock
|
|
0.00
|
|
|
0.01
|
|
|
0.00
|
|
|
0.01
|
|
||||
Distribution of net investment income
|
|
0.00
|
|
|
(0.11
|
)
|
|
0.00
|
|
|
(0.11
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net asset value at the end of the period
|
$
|
9.35
|
|
$
|
10.32
|
|
$
|
9.35
|
|
$
|
10.32
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Per share market value at beginning of period
|
$
|
7.77
|
|
$
|
10.13
|
|
$
|
7.90
|
|
$
|
14.63
|
|
||||
Per share market value at end of period
|
|
5.28
|
|
|
10.25
|
|
|
5.28
|
|
|
10.25
|
|
||||
Total return
(1)
|
|
(32.05
|
)%
|
|
9.97
|
%
|
|
(33.16
|
)%
|
|
(23.83
|
)%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Ratio/Supplemental Data
|
||||||||||||||||
Average net assets at the end of the period
|
$
|
170,515,000
|
|
$
|
187,561,000
|
|
$
|
170,515,000
|
|
$
|
187,561,000
|
|
||||
Ratio of operating expenses to average net assets
(2)
|
|
10.83
|
%
|
|
8.59
|
%
|
|
11.24
|
%
|
|
10.77
|
%
|
||||
Ratio of net investment income (loss) to average net assets
(2)
|
|
2.98
|
%
|
|
6.24
|
%
|
|
1.77
|
%
|
|
6.85
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Total return is calculated by comparing the change in value of a share of common stock assuming the reinvestment of dividends on the payment date.
|
(2)
|
|
For the 2002 second quarter and six months, excludes $3,102,000 costs of debt extinguishment from the calculation. Unadjusted, the ratios would have been
12.63% and (4.25%) for operating expenses and net investment income, respectively, for the 2002 second quarter, and would have been 13.03% and (1.84%) for the 2002 six months.
|
June 30, 2002
|
March 31, 2002
|
December 31, 2001
|
June 30, 2001
|
|||||||||||||||||||||||||||||||||||||
% of
Portfolio
|
Interest
Rate
|
Principal
Balance
|
% of
Portfolio
|
Interest
Rate
|
Principal
Balance
|
% of
Portfolio
|
Interest
Rate
|
Principal
Balance
|
% of
Portfolio
|
Interest
Rate
|
Principal
Balance
|
|||||||||||||||||||||||||||||
Medallion loans
|
||||||||||||||||||||||||||||||||||||||||
New York
|
43.3
|
%
|
7.91
|
%
|
$
|
175,860
|
|
42.2
|
%
|
8.04
|
%
|
$
|
187,409
|
|
44.4
|
%
|
8.48
|
%
|
$
|
205,598
|
|
45.5
|
%
|
8.54
|
%
|
$
|
217,123
|
|
||||||||||||
Chicago
|
5.0
|
|
10.08
|
|
|
20,284
|
|
4.8
|
|
10.02
|
|
|
21,171
|
|
4.5
|
|
9.86
|
|
|
20,910
|
|
4.9
|
|
9.58
|
|
|
23,653
|
|
||||||||||||
Boston
|
2.4
|
|
11.98
|
|
|
9,749
|
|
2.6
|
|
11.80
|
|
|
11,327
|
|
2.8
|
|
11.41
|
|
|
13,170
|
|
3.1
|
|
11.06
|
|
|
14,873
|
|
||||||||||||
Newark
|
2.0
|
|
10.48
|
|
|
7,957
|
|
1.7
|
|
9.83
|
|
|
7,344
|
|
1.3
|
|
10.33
|
|
|
6,208
|
|
1.6
|
|
11.40
|
|
|
7,483
|
|
||||||||||||
Cambridge
|
0.5
|
|
10.55
|
|
|
1,991
|
|
0.3
|
|
10.99
|
|
|
1,374
|
|
0.4
|
|
11.66
|
|
|
1,718
|
|
0.4
|
|
11.82
|
|
|
1,766
|
|
||||||||||||
Other
|
1.0
|
|
11.02
|
|
|
4,256
|
|
1.3
|
|
11.49
|
|
|
5,798
|
|
1.4
|
|
11.30
|
|
|
6,548
|
|
1.5
|
|
11.43
|
|
|
7,397
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total medallion loans
|
54.2
|
%
|
8.46
|
%
|
|
220,097
|
|
52.9
|
%
|
8.56
|
%
|
|
234,423
|
|
54.8
|
%
|
8.88
|
%
|
|
254,152
|
|
57.0
|
%
|
8.95
|
%
|
|
272,295
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Add: FASB 91
|
|
484
|
|
|
671
|
|
|
541
|
|
|
744
|
|
||||||||||||||||||||||||||||
Less: Unrealized depreciation on loans
|
|
(1,116
|
)
|
|
(1,782
|
)
|
|
(2,019
|
)
|
|
(67
|
)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Medallion loans, net
|
54.
|
%7
|
$
|
219,465
|
|
53.6
|
%
|
$
|
233,312
|
|
55.5
|
%
|
$
|
252,674
|
|
57.7
|
%
|
$
|
272,972
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Commercial loans
|
||||||||||||||||||||||||||||||||||||||||
Asset based receivable
|
12.4
|
%
|
9.85
|
%
|
$
|
50,408
|
|
11.5
|
%
|
8.89
|
%
|
$
|
50,719
|
|
11.6
|
%
|
9.20
|
%
|
$
|
53,955
|
|
9.2
|
%
|
11.38
|
%
|
$
|
44,000
|
|
||||||||||||
SBA Section 7(a)
|
12.0
|
|
5.99
|
|
|
48,816
|
|
11.9
|
|
7.96
|
|
|
52,860
|
|
12.2
|
|
5.73
|
|
|
56,702
|
|
12.8
|
|
8.42
|
|
|
61,079
|
|
||||||||||||
Secured mezzanine
|
9.6
|
|
9.54
|
|
|
38,886
|
|
9.1
|
|
12.75
|
|
|
40,372
|
|
7.8
|
|
12.77
|
|
|
36,313
|
|
6.5
|
|
12.88
|
|
|
31,252
|
|
||||||||||||
Other commercial secured
|
11.4
|
|
9.96
|
|
|
45,949
|
|
14.2
|
|
9.82
|
|
|
62,694
|
|
13.1
|
|
10.38
|
|
|
60,773
|
|
14.1
|
|
11.07
|
|
|
67,431
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total commercial loans
|
45.4
|
%
|
9.49
|
%
|
|
184,059
|
|
46.7
|
%
|
9.69
|
%
|
|
206,645
|
|
44.8
|
%
|
9.22
|
%
|
|
207,743
|
|
42.6
|
%
|
10.62
|
%
|
|
203,762
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Add: FASB 91
|
|
1,207
|
|
|
1,271
|
|
|
1,608
|
|
|
1,135
|
|
||||||||||||||||||||||||||||
Less: Discount on loans sold
|
|
(2,306
|
)
|
|
(2,363
|
)
|
|
(2,415
|
)
|
|
|
|
||||||||||||||||||||||||||||
Less: Unrealized depreciation on loans
|
|
(6,373
|
)
|
|
(8,040
|
)
|
|
(7,607
|
)
|
|
(6,312
|
)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Commercial loans, net
|
44.0
|
%
|
$
|
176,587
|
|
45.4
|
%
|
$
|
197,513
|
|
43.8
|
%
|
$
|
199,329
|
|
41.9
|
%
|
$
|
198,585
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Equity Investments
|
0.4
|
%
|
0.00
|
%
|
$
|
1,510
|
|
0.4
|
%
|
0.00
|
%
|
$
|
1,767
|
|
0.4
|
%
|
0.00
|
%
|
$
|
1,467
|
|
0.4
|
%
|
0.00
|
%
|
$
|
1,855
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Plus: Unrealized appreciation
|
|
3,466
|
|
|
2,883
|
|
|
2,125
|
|
|
234
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Equity investments, net
|
$
|
4,976
|
|
$
|
4,650
|
|
$
|
3,592
|
|
$
|
2,089
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total investments at cost
|
100.0
|
%
|
8.93
|
%
|
$
|
405,666
|
|
100.0
|
%
|
9.09
|
%
|
$
|
442,835
|
|
100.0
|
%
|
9.04
|
%
|
$
|
463,362
|
|
100.0
|
%
|
9.66
|
%
|
$
|
477,912
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Add: FASB 91
|
|
1,691
|
|
|
1,942
|
|
|
2,149
|
|
|
1,879
|
|
||||||||||||||||||||||||||||
Plus: Unrealized appreciation on equity investments
|
|
3,466
|
|
|
2,883
|
|
|
2,125
|
|
|
234
|
|
||||||||||||||||||||||||||||
Less: Discount on Loans Sold
|
|
(2,306
|
)
|
|
(2,363
|
)
|
|
(2,415
|
)
|
|
|
|
||||||||||||||||||||||||||||
Less: Unrealized depreciation on loans
|
|
(7,489
|
)
|
$
|
(9,822
|
)
|
|
(9,626
|
)
|
|
(6,379
|
)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total investments, net
|
$
|
401,028
|
|
$
|
435,475
|
|
$
|
455,595
|
|
$
|
473,646
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Net investments at beginning of period
|
$
|
435,474,864
|
|
$
|
492,454,756
|
|
$
|
455,595,383
|
|
$
|
514,153,606
|
|
||||
Investments originated
|
|
17,760,312
|
|
|
27,762,312
|
|
|
62,834,599
|
|
|
48,173,509
|
|
||||
Sales and maturities of investments
|
|
(51,585,406
|
)
|
|
(46,313,867
|
)
|
|
(116,597,660
|
)
|
|
(88,579,498
|
)
|
||||
Increase in unrealized appreciation, net
|
|
2,915,311
|
|
|
382,928
|
|
|
3,478,238
|
|
|
1,276,192
|
|
||||
Realized losses, net
|
|
(3,369,637
|
)
|
|
(602,548
|
)
|
|
(4,069,270
|
)
|
|
(1,500,961
|
)
|
||||
Realized gain on sales of loans
|
|
258,591
|
|
|
278,857
|
|
|
588,219
|
|
|
712,037
|
|
||||
Amortization of origination costs
|
|
(425,358
|
)
|
|
(316,395
|
)
|
|
(800,830
|
)
|
|
(588,842
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net decrease in investments
|
|
(34,446,185
|
)
|
|
(18,808,713
|
)
|
|
(54,566,704
|
)
|
|
(40,507,563
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net investments at end of period
|
$
|
401,028,679
|
|
$
|
473,646,043
|
|
$
|
401,028,679
|
|
$
|
473,646,043
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2002
|
March 31, 2002
|
December 31, 2001
|
June 30, 2001
|
|||||||||||||||||||||
$
|
%(1)
|
$
|
%(1)
|
$
|
%(1)
|
$
|
%(1)
|
|||||||||||||||||
Medallion loans
|
$
|
14,983,000
|
3.7
|
%
|
$
|
9,339,000
|
2.1
|
%
|
$
|
12,352,000
|
2.7
|
%
|
$
|
8,530,000
|
1.8
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial loans
|
||||||||||||||||||||||||
SBA Section 7(a)
|
|
9,664,000
|
2.4
|
|
|
11,934,000
|
2.7
|
|
|
12,637,000
|
2.7
|
|
|
13,504,000
|
2.8
|
|
||||||||
Secured mezzanine
|
|
8,071,000
|
2.0
|
|
|
10,297,000
|
2.4
|
|
|
8,426,000
|
1.9
|
|
|
3,803,000
|
0.8
|
|
||||||||
Asset-based receivable
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
|
|
0.0
|
|
||||||||
Other commercial secured
|
|
8,401,000
|
2.1
|
|
|
9,940,000
|
2.2
|
|
|
10,000,000
|
2.2
|
|
|
5,214,000
|
1.1
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total commercial loans
|
|
26,136,000
|
6.5
|
|
|
32,171,000
|
7.3
|
|
|
31,063,000
|
6.8
|
|
|
22,521,000
|
4.7
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total loans 90 days or more past due
|
$
|
41,119,000
|
10.2
|
%
|
$
|
41,510,000
|
9.4
|
%
|
$
|
43,415,000
|
9.5
|
%
|
$
|
31,052,000
|
6.5
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Percentage is calculated against the total investment portfolio.
|
Three months ended June 30,
|
Six months ended
June
30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Total loans
|
||||||||||||||||
Medallion loans
|
$
|
219,465,425
|
|
$
|
272,971,622
|
|
||||||||||
Commercial loans
|
|
176,587,053
|
|
|
198,584,956
|
|
||||||||||
|
|
|
|
|
|
|||||||||||
Total loans
|
|
396,052,478
|
|
|
471,556,578
|
|
||||||||||
Equity investments (1)
|
|
4,976,199
|
|
|
2,089,465
|
|
||||||||||
|
|
|
|
|
|
|||||||||||
Net investments
|
$
|
401,028,677
|
|
$
|
473,646,043
|
|
||||||||||
|
|
|
|
|
|
|||||||||||
Realized losses on loans and equity investments
|
||||||||||||||||
Medallion loans
|
$
|
253,092
|
|
$
|
|
|
$
|
281,741
|
|
$
|
|
|
||||
Commercial loans
|
|
3,036,529
|
|
|
361,771
|
|
|
3,707,513
|
|
|
1,386,852
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total loans
|
|
3,289,621
|
|
|
361,771
|
|
|
3,989,254
|
|
|
1,386,852
|
|
||||
Equity investments
|
|
80,016
|
|
|
240,777
|
|
|
80,016
|
|
|
114,109
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total realized losses on loans and equity investments
|
$
|
3,369,637
|
|
$
|
602,548
|
|
$
|
4,069,270
|
|
$
|
1,500,961
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net unrealized (appreciation) depreciation on investments
|
||||||||||||||||
Medallion loans
|
$
|
1,104,917
|
|
$
|
|
|
||||||||||
Commercial loans
|
|
6,384,158
|
|
|
6,379,451
|
|
||||||||||
|
|
|
|
|
|
|||||||||||
Total loans
|
|
7,489,056
|
|
|
6,379,451
|
|
||||||||||
Equity investments
|
|
(3,466,262
|
)
|
|
(234,140
|
)
|
||||||||||
|
|
|
|
|
|
|||||||||||
Total net unrealized (appreciation) depreciation on investments
|
$
|
4,022,813
|
|
$
|
6,145,311
|
|
||||||||||
|
|
|
|
|
|
|||||||||||
Realized losses as a % of average balances outstanding (2)
|
||||||||||||||||
Medallion loans
|
|
0.46
|
%
|
|
0.00
|
%
|
|
0.25
|
%
|
|
0.00
|
%
|
||||
Commercial loans
|
|
6.55
|
|
|
0.37
|
|
|
4.00
|
|
|
1.41
|
|
||||
Total loans
|
|
3.23
|
|
|
0.15
|
|
|
1.96
|
|
|
0.58
|
|
||||
Equity investments
|
|
6.98
|
|
|
27.20
|
|
|
3.49
|
|
|
12.89
|
|
||||
Net investments
|
|
3.27
|
|
|
0.25
|
|
|
1.97
|
|
|
0.63
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Unrealized (appreciation) depreciation as a % of balances outstanding
|
||||||||||||||||
Medallion loans
|
|
0.50
|
%
|
|
0.00
|
%
|
||||||||||
Commercial loans
|
|
3.62
|
|
|
3.21
|
|
||||||||||
Total loans
|
|
1.89
|
|
|
1.35
|
|
||||||||||
Equity investments
|
|
(69.66
|
)
|
|
(11.21
|
)
|
||||||||||
Net investments
|
|
1.00
|
|
|
1.30
|
|
||||||||||
|
|
|
|
|
|
(1)
|
|
Represents common stock and warrants held as investments.
|
(2)
|
|
Realized losses as a % of average balances outstanding has been annualized.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||
Interest Expense
|
Average
Balance
|
Average
Cost of Funds
|
Interest Expense
|
Average
Balance
|
Average
Cost of Funds
|
|||||||||||||||
June 30, 2002
|
||||||||||||||||||||
Notes payable to banks
|
$
|
3,169,000
|
|
$
|
209,473,000
|
6.13
|
%
|
$
|
6,966,000
|
|
$
|
216,353,000
|
6.52
|
%
|
||||||
Senior secured notes
|
|
835,000
|
|
|
34,105,000
|
9.93
|
|
|
1,893,000
|
|
|
38,631,000
|
9.88
|
|
||||||
SBA debentures
|
|
918,000
|
|
|
52,095,000
|
7.14
|
|
|
1,779,000
|
|
|
50,274,000
|
7.14
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total
|
$
|
4,922,000
|
(1)
|
$
|
295,673,000
|
6.75
|
%
|
$
|
10,638,000
|
(1)
|
|
305,258,000
|
7.05
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
June 30, 2001
|
||||||||||||||||||||
Notes payable to banks
|
$
|
5,695,000
|
|
$
|
317,095,000
|
7.20
|
%
|
$
|
11,485,000
|
|
$
|
316,603,000
|
7.32
|
%
|
||||||
Senior secured notes
|
|
839,000
|
|
|
45,000,000
|
7.48
|
|
|
1,661,000
|
|
|
45,000,000
|
7.44
|
|
||||||
SBA debentures
|
|
452,000
|
|
|
23,985,000
|
7.55
|
|
|
885,000
|
|
|
22,860,000
|
7.80
|
|
||||||
Commercial paper
|
|
28,000
|
|
|
476,000
|
23.00
|
|
|
183,000
|
|
|
4,736,000
|
7.78
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total
|
$
|
7,014,000
|
|
$
|
386,556,000
|
7.28
|
%
|
$
|
14,214,000
|
|
$
|
389,199,000
|
7.36
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The 2002 second quarter interest expense does not include $3,102,000 of costs related to debt extinguishment above and beyond the normal interest charges for
prepayment penalties, default interest charges, loan fees, legal fees, and consultant costs, which were reclassified to operating expenses due to their large and unusual nature relative to the matured debt and ongoing negotiations with the lending
group. If included in interest expense, the average cost of funds would have been 10.89% and 9.08% for the 2002 quarter and six months.
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
Statement of Operations Data
|
||||||||||||||||
Investment income
|
$
|
8,423,424
|
|
$
|
11,618,157
|
|
$
|
18,202,336
|
|
$
|
24,992,288
|
|
||||
Interest expense
|
|
4,922,567
|
|
|
7,012,516
|
|
|
10,679,121
|
|
|
14,213,554
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income
|
|
3,500,857
|
|
|
4,605,641
|
|
|
7,523,215
|
|
|
10,778,734
|
|
||||
Other income
|
|
2,162,547
|
|
|
1,017,496
|
|
|
3,053,891
|
|
|
1,988,742
|
|
||||
Gain on sale of loans
|
|
258,591
|
|
|
278,857
|
|
|
588,219
|
|
|
712,037
|
|
||||
Operating expenses
|
|
7,745,025
|
|
|
3,419,877
|
|
|
12,747,074
|
|
|
8,238,713
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net investment income (loss) (1)
|
|
(1,823,030
|
)
|
|
2,482,117
|
|
|
(1,581,749
|
)
|
|
5,240,800
|
|
||||
Net realized losses on investments
|
|
(3,369,637
|
)
|
|
(602,548
|
)
|
|
(4,069,270
|
)
|
|
(1,500,961
|
)
|
||||
Net change in unrealized appreciation on investments (2)
|
|
2,185,449
|
|
|
499,446
|
|
|
1,234,974
|
|
|
965,521
|
|
||||
Income tax provision
|
|
|
|
|
(14,757
|
)
|
|
|
|
|
(51,873
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations (3)
|
$
|
(3,007,218
|
)
|
$
|
2,364,258
|
|
$
|
(4,416,045
|
)
|
$
|
4,653,487
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Per Share Data
|
||||||||||||||||
Net investment income (loss) (1)
|
$
|
(0.10
|
)
|
$
|
0.16
|
|
$
|
(0.09
|
)
|
$
|
0.35
|
|
||||
Net increase (decrease) in net assets resulting from operations (3)
|
|
(0.16
|
)
|
|
0.16
|
|
|
(0.24
|
)
|
|
0.31
|
|
||||
Dividends declared
|
|
|
|
|
0.14
|
|
|
|
|
|
0.14
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding
|
||||||||||||||||
Basic
|
|
18,242,728
|
|
|
15,215,002
|
|
|
18,242,728
|
|
|
14,895,144
|
|
||||
Diluted
|
|
18,242,728
|
|
|
15,220,407
|
|
|
18,242,728
|
|
|
14,903,764
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance Sheet Data
|
||||||||||||||||
Investments, net of unrealized depreciation on investments
|
$
|
401,028,679
|
|
$
|
473,646,043
|
|
||||||||||
Total assets
|
|
455,869,093
|
|
|
588,216,496
|
|
||||||||||
Notes payable to banks
|
|
195,027,592
|
|
|
314,720,000
|
|
||||||||||
Senior secured notes
|
|
29,209,283
|
|
|
45,000,000
|
|
||||||||||
SBA debentures
|
|
52,845,000
|
|
|
31,860,000
|
|
||||||||||
Commercial paper
|
|
|
|
|
237,128
|
|
||||||||||
Total liabilities
|
|
285,353,860
|
|
|
400,655,059
|
|
||||||||||
Total shareholders equity
|
|
170,515,233
|
|
|
187,561,437
|
|
||||||||||
|
|
|
|
|
|
Three months ended June 30,
|
Six months
ended June 30, |
|||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||
Selected Financial Ratios And Other Data
|
||||||||||||
Return on average assets (ROA) (4)
|
||||||||||||
Net investment income (loss)
|
(1.54
|
%)
|
1.79
|
%
|
(0.66
|
%)
|
1.91
|
%
|
||||
Net increase (decrease) in net assets resulting from operations
|
(2.54
|
%)
|
1.70
|
%
|
(1.83
|
%)
|
1.69
|
%
|
||||
Return on average equity (ROE) (5)
|
||||||||||||
Net investment income (loss)
|
(4.25
|
%)
|
6.24
|
%
|
(1.84
|
%)
|
6.85
|
%
|
||||
Net increase (decrease) in net assets resulting from operations
|
(7.01
|
%)
|
5.94
|
%
|
(5.15
|
%)
|
6.08
|
%
|
||||
|
|
|
|
|
|
|
|
|||||
Weighted average yield
|
8.02
|
%
|
9.59
|
%
|
8.39
|
%
|
10.19
|
%
|
||||
Weighted average cost of funds
|
4.68
|
%
|
5.79
|
%
|
4.92
|
%
|
5.80
|
%
|
||||
|
|
|
|
|
|
|
|
|||||
Net interest margin, (6)
|
3.34
|
%
|
3.80
|
%
|
3.47
|
%
|
4.39
|
%
|
||||
Other income ratio (7)
|
2.05
|
%
|
0.84
|
%
|
1.41
|
%
|
0.81
|
%
|
||||
Operating expense ratio (8)
|
7.33
|
%
|
2.82
|
%
|
5.88
|
%
|
3.36
|
%
|
||||
|
|
|
|
|
|
|
|
|||||
As a percentage of total investment portfolio
|
||||||||||||
Medallion loans
|
54.26
|
%
|
56.98
|
%
|
||||||||
Commercial loans
|
45.37
|
%
|
42.64
|
%
|
||||||||
Equity investments
|
0.37
|
%
|
0.38
|
%
|
||||||||
|
|
|
|
|||||||||
Investments to assets (9)
|
89.23
|
%
|
81.26
|
%
|
||||||||
Equity to assets (10)
|
37.40
|
%
|
31.89
|
%
|
||||||||
Debt to equity (11)
|
162.50
|
%
|
208.90
|
%
|
||||||||
|
|
|
|
(1)
|
|
Excluding the $3,102,000 of costs of debt extinguishment, net investment income would have been $1,278,000 or $0.07 per share and $1,520,000 or $0.08 per share
for the 2002 second quarter and six months.
|
(2)
|
|
Change in unrealized appreciation (depreciation) of investments represents the increase (decrease) for the period in the fair value of the Companys
investments, including the results of operations for Media for the periods presented.
|
(3)
|
|
Net increase (decrease) in net assets resulting from operations is the sum of net investment income, realized gains or losses on investments and change in
unrealized appreciation (depreciation) on investments and income tax benefit (provision). Excluding the $3,102,000 of costs of debt extinguishment, net increase (decrease) in net assets resulting from operations would have been $95,000 or $0.01 per
share and ($1,314,000) or ($0.07) per share for the 2002 second quarter and six months.
|
(4)
|
|
ROA represents the net investment income (loss) or net increase (decrease) in net assets resulting from operations, for the period indicated, divided by average
total assets. Excluding the $3,102,000 of costs of debt extinguishment, the ROAs would have been 1.08% and 0.08% for the 2002 second quarter and 0.63% and (0.54%) for the six months.
|
(5)
|
|
ROE equity represents the net investment income (loss) or net increase (decrease) in net assets resulting from operations, for the period indicated, divided by
average shareholders equity. Excluding the $3,102,000 of costs of debt extinguishment, the ROEs would have been 2.98% and 0.22% for the 2002 second quarter and 1.77% and (1.53%) for the six months.
|
(6)
|
|
Net interest margin represents net interest income for the period indicated divided by average interest earning assets.
|
(7)
|
|
Other income ratio represents other income for the period indicated divided by average interest earning assets.
|
(8)
|
|
Operating expense ratio represents operating expenses for the period indicated divided by average interest earning assets. Excluding the $3,102,000 of debt
extinguishment, the ratios would have been 3.93% and 4.00% for the 2002 second quarter and six months.
|
(9)
|
|
Represents total investments divided by total assets as of June 30.
|
(10)
|
|
Represents total shareholders equity divided by total assets as of June 30.
|
(11)
|
|
Represents total debt (commercial paper, notes payable to banks, senior secured notes, and SBA debentures) divided by total shareholders equity as of June
30.
|
|
|
Proposed New Facility-
The commitment letter has a proposed maturity date of the earlier of (i) one year from the facilitys closing date or (ii)
two years from the facilitys closing date if certain conditions are met, and an interest rate of One Month LIBOR plus 1.50%.
|
|
|
Company Bank Loan-
The non-binding term sheet has proposed a maturity date of August 31, 2003. The unpaid loans would bear interest at the rate per annum
of prime plus 0.5%. The amortization schedule is as proposed on page 39. The Company Bank Loan will permit the payment of dividends solely to the extent necessary to enable the Company to maintain its status as a RIC and to avoid the payment of
excise taxes which is consistent with the Companys dividend policy. The Company Bank Loan would be secured by all receivables and various other assets owned by the Company. All financial covenants would be waived during the term of the loan.
|
|
|
MFC Bank Loan-
The non binding term sheet to amend the MFC Bank Loan has proposed a maturity date of August 31, 2003; an annual interest rate of prime
which increases four months after closing to prime plus 0.5% and further increases eight months after closing to prime plus 1%. The amortization schedule is as proposed on page 39. The MFC Bank Loan would permit the payment of dividends solely to
the extent necessary to enable the Company to maintain its status as a RIC and to avoid the payment of excise taxes which is consistent with the Companys dividend policy. The collateral for the MFC Bank Loan would secure both the MFC Bank Loan
and MFCs obligations under the Notes issued under the Note Purchase Agreements on an equal basis. All financial covenants would be waived during the term of the loan.
|
|
|
MFC Note Purchase Agreements-
The Note Purchase Agreements non-binding term sheet to amend the Note Purchase Agreement has similar terms to the MFC
Bank Loans term sheet except the initial interest rate would be 8.85% shall increase to 9.35% four months after closing and increase to 9.85% eight months after closing; and the make whole payment of approximately $3,500,000 must be paid on or
before maturity. The amortization schedule is as proposed on page 39. The collateral under the Note Purchase Agreement would secure both the MFC Bank Loan and MFCs obligations under the Notes issued under the Note Purchase Agreements on an
equal basis. All financial covenants would be waived during the term of the loan.
|
|
|
General Provisions Applicable to the Amended Company Bank Loan, Amended MFC Bank Loan and Amended Note Purchase Agreements-
The amended Company Bank
Loan, MFC Bank Loan and Note Purchase Agreements (Financing Agreements) would not contain any financial covenants. However, as is the case under the currently existing financing agreements, the Financing Agreements will obligate the Company or MFC,
as applicable, to prepay the loans under the applicable Financing Agreement in the event the outstanding amount thereunder exceeds an agreed upon borrowing base (which is, generally, equal to a specified percentage of the outstanding amount of
commercial and medallion loans meeting eligibility criteria specified in the loan documents). In addition, as noted above and as is standard with servicing agreements, the Proposed New Facility would contain a Servicer Default if MFC fails to
satisfy certain financial tests and other requirements, but such failure does not, in itself, provide the Proposed New Lender the right to accelerate the maturity of loans under the Proposed New Facility. If the Proposed New Lender obtains the right
under such provisions to replace MFC as the servicer under the Proposed New Facility, so notifies MFC and fails to retract such notice within seven days, the lenders or note holders, as the case may be, under
|
|
MFC
|
|
||||||||||
The Company
|
Banks
|
Senior Noteholders
|
Total
|
|||||||||
2002
|
||||||||||||
Closing date of proposed new facility
|
$
|
1,500,000
|
$
|
86,008,000
|
$
|
17,992,000
|
$
|
105,500,000
|
||||
September
|
|
500,000
|
|
1,654,000
|
|
346,000
|
|
2,500,000
|
||||
October
|
|
1,250,000
|
|
1,654,000
|
|
346,000
|
|
3,250,000
|
||||
November
|
|
1,250,000
|
|
14,059,000
|
|
2,941,000
|
|
18,250,000
|
||||
December
|
|
1,500,000
|
|
4,549,000
|
|
951,000
|
|
7,000,000
|
||||
2003
|
||||||||||||
January
|
|
1,500,000
|
|
17,780,000
|
|
3,720,000
|
|
23,000,000
|
||||
February
|
|
23,500,000
|
|
1,654,000
|
|
346,000
|
|
25,500,000
|
||||
March
|
|
1,000,000
|
|
1,654,000
|
|
346,000
|
|
3,000,000
|
||||
April
|
|
18,000,000
|
|
827,000
|
|
173,000
|
|
19,000,000
|
||||
May
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
June
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
July
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
August
|
|
1,000,000
|
|
827,000
|
|
173,000
|
|
2,000,000
|
||||
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
54,000,000
|
$
|
133,147,000
|
$
|
27,853,000
|
$
|
215,000,000
|
||||
|
|
|
|
|
|
|
|
Three Months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2002
|
2001
|
2002
|
2001
|
|||||||||||||
The Company
|
||||||||||||||||
Commitment fee expense
|
$
|
19,076
|
|
$
|
41,708
|
|
$
|
30,242
|
|
$
|
82,958
|
|
||||
Debt-related amortized costs
|
|
907,863
|
|
|
117,559
|
|
|
1,490,237
|
|
|
158,836
|
|
||||
Prepayment fee on senior secured notes
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
|
816,031
|
|
|
1,610,922
|
|
|
2,038,117
|
|
|
3,454,338
|
|
||||
Average borrowings outstanding
|
|
59,418,924
|
|
|
102,860,440
|
|
|
68,731,628
|
|
|
103,996,685
|
|
||||
Weight average interest cost for the period
|
|
5.67
|
%
|
|
6.90
|
%
|
|
7.42
|
%
|
|
7.17
|
%
|
||||
Amount outstanding
|
|
|
|
|
|
|
$
|
54,930,000
|
|
$
|
102,050,000
|
|
||||
Weighted average interest cost at period end
|
|
|
|
|
|
|
|
7.70
|
%
|
|
5.53
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
MFC
|
||||||||||||||||
Commitment fee expense
|
$
|
1,620
|
|
$
|
5,195
|
|
$
|
15,387
|
|
$
|
8,860
|
|
||||
Debt-related amortized costs
|
|
927,665
|
|
|
65,845
|
|
|
1,395,825
|
|
|
88,978
|
|
||||
Prepayment fee on senior secured notes
|
|
1,082,512
|
|
|
|
|
|
1,082,512
|
|
|
|
|
||||
Interest expense
|
|
2,891,828
|
|
|
4,650,041
|
|
|
5,824,506
|
|
|
9,405,512
|
|
||||
Average borrowings outstanding
|
|
178,479,934
|
|
|
255,859,011
|
|
|
185,434,662
|
|
|
256,759,503
|
|
||||
Weight average interest cost for the period
|
|
7.11
|
%
|
|
7.40
|
%
|
|
6.93
|
%
|
|
7.46
|
%
|
||||
Amount outstanding
|
|
|
|
|
|
|
$
|
169,306,875
|
|
$
|
254,170,000
|
|
||||
Weighted average interest cost at period end
|
|
|
|
|
|
|
|
8.27
|
%
|
|
6.86
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Combined
|
||||||||||||||||
Commitment fee expense
|
$
|
20,696
|
|
$
|
46,903
|
|
$
|
45,629
|
|
$
|
91,818
|
|
||||
Debt-related amortized costs (1)
|
|
1,835,528
|
|
|
183,404
|
|
|
2,886,062
|
|
|
247,814
|
|
||||
Prepayment fee on senior secured notes
|
|
1,082,512
|
|
|
|
|
|
1,082,512
|
|
|
|
|
||||
Interest expense
|
|
3,707,859
|
|
|
6,260,963
|
|
|
7,862,623
|
|
|
12,859,850
|
|
||||
Average borrowings outstanding
|
|
237,898,858
|
|
|
358,719,451
|
|
|
254,166,290
|
|
|
360,756,188
|
|
||||
Weight average interest cost for the period
|
|
6.75
|
%
|
|
7.26
|
%
|
|
7.06
|
%
|
|
7.38
|
%
|
||||
Amount outstanding
|
|
|
|
|
|
|
$
|
224,236,875
|
|
$
|
356,220,000
|
|
||||
Weighted average interest cost at period end
|
|
|
|
|
|
|
|
8.47
|
%
|
|
6.48
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Medallion Financial
|
MFC
|
BLL
|
MCI
|
MBC
|
FSVC
|
Total
6/30/02
|
3/31/02
|
12/31/01
|
|||||||||||||||||||||||||
Cash
|
$
|
5,963
|
|
$
|
7,820
|
|
$
|
1,766
|
$
|
4,012
|
|
$
|
4,220
|
$
|
5,139
|
|
$
|
28,920
|
|
$
|
32,064
|
|
$
|
25,409
|
|
|||||||||
Bank loans(1)
|
|
54,930
|
|
|
150,000
|
|
|
204,930
|
|
|
290,000
|
|
|
318,000
|
|
|||||||||||||||||||
Amounts outstanding
|
|
54,930
|
|
|
140,098
|
|
|
195,028
|
|
|
219,289
|
|
|
233,000
|
|
|||||||||||||||||||
Average interest rate
|
|
7.70
|
%
|
|
8.27
|
%
|
|
8.11
|
%
|
|
5.02
|
%
|
|
5.30
|
%
|
|||||||||||||||||||
Maturity
|
|
Matured
|
|
|
Matured
|
|
|
Matured
|
|
|
5/02-6/02
|
|
|
11/01-6/02
|
|
|||||||||||||||||||
SBA debentures(2)
|
|
46,500
|
|
|
46,860
|
|
|
93,360
|
|
$
|
93,360
|
|
|
93,360
|
|
|||||||||||||||||||
Amounts available
|
|
21,000
|
|
|
19,515
|
|
|
40,515
|
|
|
43,515
|
|
|
49,515
|
|
|||||||||||||||||||
Amounts outstanding
|
|
25,500
|
|
|
27,345
|
|
|
52,845
|
|
|
49,845
|
|
|
43,845
|
|
|||||||||||||||||||
Average interest rate
|
|
7.31
|
%
|
|
6.91
|
%
|
|
7.11
|
%
|
|
6.50
|
%
|
|
6.96
|
%
|
|||||||||||||||||||
Maturity
|
|
3/06-3/12
|
|
|
12/02-3/12
|
|
|
12/02-3/12
|
|
|
12/02-9/11
|
|
|
12/02-12/11
|
|
|||||||||||||||||||
Senior secured notes(3)
|
|
29,209
|
|
|
29,209
|
|
$
|
44,000
|
|
|
45,000
|
|
||||||||||||||||||||||
Average interest rate
|
|
10.85
|
%
|
|
10.35
|
%
|
|
8.35
|
%
|
|
7.35
|
%
|
||||||||||||||||||||||
Maturity
|
|
6/03
|
|
|
6/03
|
|
|
6/02
|
|
|
6/04-9/04
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total cash and amounts undisbursed under credit facilities
|
|
5,963
|
|
|
7,820
|
|
|
1,766
|
|
25,012
|
|
|
4,220
|
|
24,654
|
|
|
69,435
|
|
$
|
75,579
|
|
$
|
74,924
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total debt outstanding
|
$
|
54,930
|
|
$
|
169,307
|
|
$
|
|
$
|
25,500
|
|
$
|
|
$
|
27,345
|
|
$
|
277,082
|
|
$
|
313,134
|
|
$
|
321,845
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Bank loans have matured and are the subject of ongoing discussions with the Bank group as to future amortization and terms of the debt. See Financing
Arrangements on page 35 for further information.
|
(2)
|
|
The remaining amounts under the approved commitment from the SBA may be drawn down over a five year period ending May, 2006, upon submission of a request for
funding by the Company and its subsequent acceptance by the SBA.
|
(3)
|
|
In connection with the maturity of the revolving lines described in (1) above, the terms of the senior secured notes were renegotiated on March 29, 2002,
generally providing for $13,000,000 of principal payments, higher levels of interest, and accelerated final maturities of June 30, 2003 from June and September 2004 (as well as required scheduled amortization and asset sales). The status of these
notes is also subject to the negotiations described in note (1) above.
|
2002
|
HIGH
|
LOW
|
||||
Second Quarter
|
$
|
7.20
|
$
|
3.71
|
||
First Quarter
|
|
9.20
|
|
7.77
|
||
2001
|
||||||
First Quarter
|
$
|
15.09
|
$
|
8.52
|
||
Second Quarter
|
|
13.54
|
|
8.46
|
||
Third Quarter
|
|
10.98
|
|
7.67
|
||
Fourth Quarter
|
|
9.52
|
|
6.90
|
||
|
|
|
|
|
|
loan amortization and prepayments;
|
|
|
sales of participations in loans; and
|
|
|
fixed-rate, long-term SBA debentures that are issued to or guaranteed by the SBA
|
|
|
the failure to meet its business plan;
|
|
|
a downturn in its industry or negative economic conditions;
|
|
|
the death, disability or resignation of one or more of the key members of management; or
|
|
|
the inability to obtain additional financing from traditional sources.
|
|
|
it may result in higher volatility of both our net asset value and the market price of our common stock;
|
|
|
since interest is paid to our creditors before any income is distributed to our stockholders, fluctuations in the interest payable to our creditors may decrease
the dividends and distributions to our stockholders; and
|
|
|
in the event of a liquidation of the Company, our creditors would have claims on our assets superior to the claims of our stockholders.
|
Votes For
|
Votes Withheld
|
|||
Alvin Murstein
|
14,422,428
|
3,645,227
|
||
Benjamin Ward
|
17,134,291
|
933,364
|
Votes For
|
Votes Against
|
Abstentions
|
||||
Stock Option Proposal
|
17,534,026
|
439,412
|
94,215
|
10.1
|
Medallion Financial Corp. Amended and Restated 1996 Stock Option Plan
|
|
99.1
|
Certification by the Chief Executive Officer
|
|
99.2
|
Certification by the Chief Financial Officer
|
Date: August 14, 2002
|
MEDALLION FINANCIAL CORP.
|
|||||||
By:
|
/
S
/ J
AMES
E. J
ACK
|
By:
|
/
S
/ L
ARRY
D. H
ALL
|
|||||
James E. Jack
Executive Vice President and
Chief Financial Officer
Signing on behalf of the registrant as principal financial officer
|
Larry D. Hall
Senior Vice President
and
Chief Accounting Officer
Signing on behalf of the registrant
as
principal accounting officer
|