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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the year ended December 31, 2003;

OR

[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from __________ to __________

Commission File Number: 0-22663

THE MIDDLETON DOLL COMPANY
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (262) 523-4300

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:

        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 periods 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   [   ]

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes   [   ]    No   [X]

        The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant at March 15, 2004 was $12,943,578.

        The number of shares of common stock outstanding at March 15, 2004 was 3,727,589.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the The Middleton Doll Company Proxy Statement for the 2004 Annual Meeting of Shareholders (to be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of the Registrant’s year) are, upon such filing, to be incorporated by reference into Part III.

THE MIDDLETON DOLL COMPANY

Index to Annual Report on Form 10-K
For the Year Ended December 31, 2003

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Part I

Item 1.    Description of Business

Introduction

        The Middleton Doll Company was incorporated in February, 1980 to provide long-term collateralized loans to small businesses. The Middleton Doll Company and its subsidiaries are referred to herein as the “Company”. At present the Company consists of two business segments, the Financial Services Business and the Consumer Products Business. The Middleton Doll Company, when referred to singularly and not with its subsidiaries is referred to herein as the “Parent”.

        The Financial Services Business segment consists of the Parent and its wholly-owned subsidiary Bando McGlocklin Small Business Lending Corporation (“BMSBLC”). The principal business of the segment is making loans and leasing buildings to small businesses. The segment also participates in loans with third party loan originators. Both the Parent and BMSBLC are operated as a real estate investment trust (“REIT”) pursuant to the provisions of Section 856 of the Internal Revenue Code of 1986, as amended. The REIT does not pay any corporate income taxes because it has a tax exempt status. To achieve the tax exempt status a REIT must be in compliance with tests concerning the nature of the assets of the REIT and the income earned. In addition, a REIT must distribute substantially all of its taxable income each year in dividends to its shareholders.

        The Consumer Products Business segment consists of a 99% interest in Lee Middleton Original Dolls, Inc. (“LMOD”). George R. Schonath, President and Chief Executive Officer, owns the remaining 1% of the stock of LMOD. LMOD is a manufacturer of vinyl collectible dolls and a distributor of vinyl play dolls. LMOD has a wholly-owned subsidiary, License Products, Inc. (“LPI”), that designs, develops and markets a line of proprietary time pieces. Prior to 2002, LMOD owned a 51% interest in LPI. On January 1, 2002, LMOD acquired the remaining outstanding 49% interest in LPI. During 2002, LMOD disposed of its 51% interest in Middleton (HK) Limited (“MHK”), a Hong Kong corporation that provided LMOD with raw material and finished goods from Asia. Neither of these transactions had a material impact upon the financial statements.

        In order to qualify as a REIT under the Internal Revenue Code, the Parent cannot hold more than 10% of the outstanding voting securities of any one issuer except for “Taxable Real Estate Investment Trust Subsidiaries” (“TRSs”). LMOD and LPI became TRSs as of January 1, 2001, which allowed the Company on June 25, 2001, to exchange its non-voting stock in LMOD for voting stock. Both LMOD and LPI are operated as C-Corporations under the Internal Revenue Code and are subject to corporate income tax rates.

        On September 3, 1997, the Company capitalized InvestorsBancorp, Inc., a bank holding company for approximately $6.2 million and then distributed all of the outstanding shares of InvestorsBancorp, Inc. to the Company’s shareholders. The Company and InvestorsBancorp, Inc., together with its wholly-owned subsidiary, InvestorsBank (the “Bank”), share common offices and personnel. Expenses are shared between the two entities in accordance with a Management Services and Allocation of Expenses Agreement (the “Management Agreement”). See “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Overview”.

Financial Services Business

        Loans

        The Company, through its Financial Services Business, (i) manages its loan portfolio comprised primarily of loans to small business entities collateralized by first or second mortgages, (ii) purchases loan participations from banks, including the Bank, and (iii) owns industrial and commercial real estate for lease to small businesses.

        Until the distribution of the shares of InvestorsBancorp, Inc. in September, 1997, the Parent and BMSBLC had engaged in the business of originating loans to small businesses. Concurrent with such distribution, the Parent, BMSBLC, and the Bank agreed in the Management Agreement that neither the Parent nor BMSBLC would originate any loans unless agreed to by the Bank in writing, unless the loans were made to current customers or unless the loans were outside the Bank’s lending limitations. Thus, except for the making of loans to customers who desire to increase their loan amounts with the Parent or BMSBLC and for loans outside the Bank’s lending limitations, neither the Parent nor BMSBLC can solicit any loans.

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        The loan and leased property portfolio is managed by the Bank for an annual fee, payable monthly, equal to 25 basis points of the total dollar amount of loans under management and 6% of the rents from leased properties. Operating expenses are also shared between the Bank and BMSBLC, as well as certain expenses of employees providing accounting, reporting and related services to the Company.

        The loan portfolio is primarily comprised of long-term, variable rate, collateralized loans to small business entities. The loans are primarily collateralized by first mortgages on real estate, although some loans are collateralized by second mortgages. Approximately 87% of loans by dollar volume are loans to borrowers located in the State of Wisconsin. Substantially all of the loan portfolio is held by BMSBLC.

        The borrowers include manufacturers, wholesalers, retailers, professionals and service providers. The Parent and BMSBLC fund their lending operations through their equity capital, bank and institutional borrowings, commercial paper sales and the sale of loan participations.

        The Company’s exposure to loss in the event of nonperformance by the borrower is represented by the outstanding principal amount of loans of $52.29 million at December 31, 2003. Substantially all loans are fully secured by first or second mortgages on commercial real estate. Diversification across industries is a means of managing market risk by decreasing loan concentrations. The following table provides information regarding the outstanding principal amount of loans by industry.

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        The loans are further comprised of fixed rate loans, variable rate loans with fixed cap rates and variable rate loans.

Further detail regarding the fixed rate loans and the variable rate loans with a fixed cap is provided in the following table.

        A loan is considered to be impaired when, based on current information and events, management does not expect to collect all amounts due according to the contractual terms of the loan agreement in the normal course of business. A loan is also impaired when the loan contract is restructured by extending the due date of either principal or interest payments or by reducing the interest rate on the loan. A loan is not impaired during a period of delay in payment if management expects to collect all amounts due including accrued interest at the contractual interest rate for the period of the delay. When the projected cash flow of the business from all sources including capital contributions, conversion of assets to cash and net income plus depreciation are inadequate to make contractual payments as scheduled, then the loan is considered impaired. Impaired loans totaled $0.25 million and $2.01 million at December 31, 2003 and 2002, respectively. Interest income of $0.02 million would have been recorded during 2003 had the impaired loans been current in accordance with their original terms.

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        Real Estate

        At December 31, 2003 BMSBLC owned 22 buildings and had entered into long-term lease agreements on 20 of the properties. During the year BMSBLC completed construction of one property and sold two properties. BMSBLC anticipates that it will continue to construct or purchase additional industrial or commercial properties to lease. The total cost of the BMSBLC’s properties at December 31, 2003, was $33.60 million and the depreciated carrying value was $30.81 million.

        BMSBLC anticipates that its rental properties will either be industrial real estate (i.e. used for manufacturing purposes), or commercial real estate properties, such as office buildings and retail stores and that substantially all of its properties will be located in Wisconsin. The following table sets forth additional information regarding BMSBLC’s leased properties, all of which are located in Wisconsin.

        Competition

        BMSBLC, in managing its loan portfolio, competes primarily with commercial banks and commercial finance companies, many of which have substantially more assets and capital than BMSBLC. Banks, in particular, have been active in seeking to refinance outstanding loans.

        In owning and leasing real estate, BMSBLC competes primarily with other REITs and other investors such as insurance companies and a variety of investment companies which seek to own and lease real estate. In addition, BMSBLC competes with banks and other financial institutions, which seek to lend money to potential tenants of BMSBLC in order to allow the potential tenants to construct and own their own building rather than to lease a building owned by BMSBLC.

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        Employees

        On December 31, 2003, the Company employed only its President and Vice President. All other duties are performed by Bank employees pursuant to the Management Agreement.

        Credit Concentration

        As of December 31, 2003, BMSBLC had seven loans with outstanding balances totaling $10.70 million to one customer and its affiliated companies, which accounted for approximately 20% of the total loans outstanding.

Consumer Products Business

        Lee Middleton Original Dolls, Inc.

        Lee Middleton Original Dolls, Inc. (“LMOD”), headquartered in Westerville, Ohio with its manufacturing facility located in Belpre, Ohio, is a 99% owned subsidiary of the Company, with the President of the Company owning the remaining 1%. LMOD is a manufacturer of artist-designed vinyl collectible dolls and a distributor of vinyl play dolls. LMOD uses a multi-step process to manufacture its vinyl collectible dolls that includes (1) rotational molding to create body parts for dolls, (2) painting, eyeing and wigging each doll, and (3) dressing the dolls in custom designed clothes.

        LMOD distributes its collectible doll lines through a network of independent, specialty retail stores throughout the United States. Distribution is also slowly expanding into Canada, Japan, Mexico and Europe. Competition is with various other doll manufacturers including Adora, Madam Alexander, Ashton Drake, Mattel’s American Girl and a variety of small artist-owned manufacturers. LMOD has two outlet stores and a mall-based retail location showcasing the Newborn Nursery concept that was developed at the factory outlet retail store. LMOD is continuing to focus its efforts on re-emphasizing the name recognition and high product quality of LMOD in the collectible doll market by developing new products for the artist studio collection line of dolls. The emphasis on marketing through the traditional independent doll dealers is being accompanied during this transition period by de-emphasizing the focus on play-dolls in the competitive mass merchandise market. In addition, LMOD is pursuing a limited expansion of its “Newborn Nursery Adoption Centers” that go beyond selling dolls to evoke an emotional experience as children “adopt” their new baby doll.

        License Products, Inc.

        License Products, Inc. (“LPI”) is a wholly-owned subsidiary of LMOD. Prior to January 1, 2002, LMOD owned 51% of LPI. On January 1, 2002, LMOD acquired the remaining 49% of the common stock of LPI. LPI, located in Hartland, Wisconsin, designs, develops and markets a line of proprietary time pieces. LPI’s products are distributed nationwide through major retail account channels.

        Employees

        The Consumer Products Business segment employs approximately 120 persons. At LMOD, approximately 50 employees are subject to a collective bargaining agreement which expires on April 30, 2004.

        Large Customers

        Two customers at LPI with total sales of $4.87 million and one customer at LMOD with total sales of $0.86 million accounted for approximately 33% of the Consumer Products Business’ total revenues for 2003.

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        Backlog

        The backlog of the Consumer Products Business was approximately $0.58 million as of December 31, 2003, all of which should be filled during 2004.

Revenues of Principal Product Groups

        The following table sets forth (in thousands of dollars), for each of the last three years, revenues attributable to the Company’s principal product groups:

Segment Information

        Financial information concerning the Company’s business segments is incorporated by reference from the consolidated financial statements on pages 25 to 28 herein.

Executive Officers

        George R. Schonath, 63, has served as Chief Executive Officer of the Company since 1983, as President since July, 1997, and as a director since May, 2001. Mr. Schonath has also served as President and Chief Executive Officer of InvestorsBancorp, Inc. and the Bank since they were established in 1997. From 1983 until July, 1997, he served as Chairman of the Board of the Company.

        Jon McGlocklin, 60, has served as a Vice President of the Company since November, 2001. From July, 1997, through November, 2001, he served as a Senior Vice President. Mr. McGlocklin has served as a director of InvestorsBancorp, Inc. since 1997. Until February 2001, Mr. McGlocklin had also served as Senior Vice President of InvestorsBancorp, Inc. and Senior Vice President of the Bank since they were established in 1997. He has also served as President of Healy Manufacturing, Inc., Menomonee Falls, Wisconsin, since 1997, and as an announcer for the Milwaukee Bucks, an NBA basketball team, since 1976. From 1980 through July, 1997, he served as a director of the Company and as President from 1991 through July, 1997.

        Susan J. Hauke, 38, has been the Company’s Chief Financial Officer since 2002 and Vice President – Finance, Secretary and Treasurer since 1997. In 2002, Ms. Hauke was also appointed Chief Financial Officer of InvestorsBancorp. She is also the Vice President – Finance and Secretary of InvestorsBancorp, Inc. and Controller, Vice President-Finance, and Treasurer of the Bank. From 1991 until 1997, Ms. Hauke served as Controller for the Company and was a senior accountant at PricewaterhouseCoopers LLP before joining the Company.

Item 2.    Properties

        In October, 2002, the Company sold the building located at W239 N1700 Busse Road, Pewaukee, Wisconsin, to the Bank for $2.4 million, which represented its fair market value at the time of the sale as determined by an independent appraiser. The Company now leases 4,000 square feet of the building from the Bank.

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        LMOD owns an approximately 51,000 square foot building that serves as its manufacturing facility located at 1301 Washington Boulevard, Belpre, Ohio. The one-story building also contains retail and warehouse space. During 1999, an additional leased retail outlet store was opened in West Virginia. A new 44,100 square foot facility in Columbus, Ohio, was leased beginning in June of 2000 which is used for distribution and to store raw materials and finished goods. In September, 2000, LMOD entered into a five year office lease for 18,800 square feet in Westerville, Ohio, which is LMOD’s headquarters.

        LPI leases approximately 62,000 square feet of office and warehouse space in a building owned by BMSBLC and located at 1050 Walnut Ridge Drive, Hartland, Wisconsin. During 2002, LPI added approximately 35,000 square feet of additional warehouse space to the building in order to accommodate future growth.

Item 3.    Legal Proceedings

        As of the date of this filing, neither the Parent nor any of its subsidiaries is a party to any legal proceedings, the adverse outcome of which, in management’s opinion, would have a material effect on the Company’s consolidated financial statements.

Item 4.    Submission of Matters to a Vote of Security Holders

        No matters were submitted to a vote of security holders during the quarter ended December 31, 2003.

Part II

Item 5.    Market for Common Equity and Related Shareholder Matters

        The common stock of the Company is traded on the Nasdaq Stock Market under the symbol DOLL. The table below represents the high and low sales price for the Company’s common stock as reported on the Nasdaq Stock Market and the cash dividends paid per share for 2003 and 2002.

        As of March 15, 2004, there were approximately 850 shareholders of record of the Company’s common stock.

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Item 6.    Selected