Allied Capital Corp. announces third quarter results.

WASHINGTON--(BUSINESS WIRE)--Nov. 14, 1995--Allied Capital Corp. (NASDAQ:ALLC) announced third quarter results Tuesday.

For the three months ended Sept. 30, 1995, net income, which includes net unrealized appreciation and depreciation on the portfolio, increased to $3.1 million, or 49 cents per common share, from a net loss of $55,000, or (2 cents) per common share, for the comparative quarter in 1994. Net investment income was up by 74% for the quarter as compared to the third quarter of 1994.

A significant portion of the net unrealized appreciation on the portfolio at the end of the second quarter of 1995 was converted into net realized gains during the third quarter as several portfolio investments were sold.

As a result, net unrealized appreciation decreased for the quarter and net realized gains increased to $3.3 million for the three month period, as compared to $236,000 for the comparative quarter in 1994.

For the nine months ended Sept. 30, 1995, Allied Capital Corp. reported earnings of $12.4 million, or $1.97 per common share, a 272% increase over earnings of $3.3 million, or 51 cents per common share, for the same nine month period in 1994. Year to date, net investment income increased by 167% over last year and net realized income, which includes capital gains but not net unrealized appreciation or depreciation, increased by 104%.

"Our third quarter cumulative results indicate that we're on our way to achieving our objective of increasing the level of our ordinary investment income, which should stabilize quarter to quarter earnings," said Cabell Williams, president and portfolio manager.

"In addition to increasing the level of our recurring income from the portfolio, during the third quarter we also recognized $3.3 million in capital gains. These gains came from several winning portfolio companies including Dogloo, Inc., which provided a $1.8 million gain; Garden Ridge Corporation which provided a $432,000 gain; and Jackson Products, which provided a $327,000 gain," Williams continued.

Even after these capital gains, the company still had $7.8 million in unrealized appreciation on its balance sheet at quarter end, which should translate into future capital gains for the company.

During the third quarter of 1995, Allied Capital Corp. invested approximately $3.9 million in new or existing portfolio companies. After repayments, which totaled $2.6 million, and changes in valuations, the company's total investments in small businesses remained level during the quarter.

Total assets increased during the quarter to $146 million primarily from the $14 million in new SBIC borrowings that the company received from the SBA, $7.5 million of which was used to repay maturing SBA debentures. At Sept. 30, 1995 the company had more than $13 million in outstanding commitments.

"Because some of our portfolio investments were valued at significant mutliples, we took the opportunity to sell them. In this market, we will make new investments cautiously and only in situations where a reasonable risk/return ratio can be achieved," Williams remarked. -0-

(in thousands, except per share amounts)
                                       Per                   Per
(Unaudited)              9/30/95      Share     12/31/94    Share(1)
                         -------      -----     --------    -------
Financial Position
 Information
------------------
Total investments       $ 121,819       --    $ 115,026         --
Total assets              145,590       --      135,517         --
Common shareholders'
 equity (NAV)(2)           53,238   $ 8.61       43,987      $7.08

                           3 mos. ended           3 mos. ended
                                     Per                   Per
                         9/30/95    Share      9/30/94    Share(1)
                         -------    ------     -------    --------
Operating Information
---------------------
Net investment income     $   899   $ 0.14      $   518     $ 0.08
Net realized gains          3,289     0.53          236       0.04
                            -----                   ---
Net realized income         4,188     0.67          754       0.12
Net unrealized
 depreciation              (1,099)   (0.18)        (809)     (0.13)
                           ======                  ====
Net income (loss)(3)      $ 3,089   $ 0.49       $  (55)   $ (0.02)
                          =======                ======
Actual common shares
 outstanding                6,186       --        6,143         --
Weighted avg. common
 shares outstanding         6,193       --        6,146         --

Distributions to
 Shareholders
----------------
Regular dividends              --   $ 0.22           --     $ 0.20

                             9 mos. ended           9 mos. ended
                                       Per                    Per
                          9/30/95     Share       9/30/94    Share(1)
                          -------     ------      -------    --------
Operating Information
---------------------
Net investment income    $  2,284   $ 0.37      $   854     $ 0.14
Net realized gains          3,584     0.58        2,024       0.33
                            -----                 -----
Net realized income         5,868     0.95        2,878       0.47
Net unrealized
 appreciation               6,551     1.05          460       0.07
                            -----                   ---
Net income (3)           $ 12,419   $ 1.97       $3,338     $ 0.51
                         ========                ======
Actual common shares
 outstanding                6,186       --        6,143         --
Weighted avg. common
 shares outstanding         6,207       --        6,188         --

Distributions to
 Shareholders
----------------
Regular dividends              --   $ 0.62           --     $ 0.60

(1) The weighted average number of common shares and common share
equivalents outstanding and the per share computations for the prior
periods presented have been restated to include the issuance of
common stock pursuant to the company's dividend reinvestment plan in
1995.
(2) Shareholders' equity has been reduced by preferred stock for
the calculation of net asset value per common share.
(3) Net income has been reduced by preferred stock dividends for
the calculation of earnings per common share.

Quarterly cash dividend increased to 24 cents per share

    At their most recent meeting, the board of directors of Allied
Capital Corp. increased the company's quarterly cash dividend by
9% from 22 cents per share to 24 cents per share.  This is the second
time that the quarterly dividend has been increased this year.  The
dividend is payable on Dec. 29, 1995 to shareholders of record as
of Dec. 15, 1995.
-0-
    Allied Capital Corp. is a publicly traded business development
company, headquartered in Washington, D.C. traded on Nasdaq National
Market, symbol ALLC.  The company makes long-term investments ranging
in size from $1 million to $7 million in small, private growing
businesses throughout the United States.  There are 6,185,660 total
shares outstanding.
    Allied Capital pays a regular quarterly cash distribution of
24 cents per share and an annual extra distribution which is determined
at year end.  Allied Capital paid a total of $1.40 per share,
including a 60 cent per share annual extra distribution in the form of
shares of Allied Capital Lending Corp., for the year ended December
31, 1994.  Allied Capital paid $1.35 per share in cash distributions
for the year ended December 31, 1993 and $1.32 per share for 1992.
    Allied Capital has paid regular quarterly distributions and an
annual extra distribution since 1964.  All numbers have been adjusted
for stock splits.  Allied Capital's stock is marginable.  A recent
quote of the stock was $13 1/8.  For additional information, please
contact Allied Capital's Investor Relations Department at
202/973-6334 or fax to 202/659-2053.

CONTACT: Allied Capital, Washington

Suzanne Sparrow, 202/973-6334