American Capital Reports $0.09 Net Operating Income Per Diluted Share and $0.84 Net Earnings Per Diluted Share
BETHESDA, Md., Aug. 3 /PRNewswire-FirstCall/ -- American Capital, Ltd. ("ACAS" or the "Company") (Nasdaq: ACAS) announced net operating income ("NOI") for the quarter ended June 30, 2010 of $29 million, or $0.09 per diluted share. Net earnings (loss) less appreciation and (depreciation) ("Net Realized Loss") for the quarter was $(291) million, or $(0.87) per diluted share. For the quarter ended June 30, 2010, the Company reported net earnings of $281 million, or $0.84 per diluted share.
Q2 2010 FINANCIAL SUMMARY
- $29 million NOI
- 45% increase over Q2 2009
- $17 million of debt refinancing costs in Q2 2010 versus $7 million in Q2 2009
- $572 million net unrealized appreciation of investments
- $(291) million net realized loss on portfolio investments
- $281 million net earnings
- $828 million increased over Q2 2009
- $351 million of cash proceeds from realizations
- $9.15 net asset value ("NAV") per share
- $0.17 per share, or 2% increase over Q1 2010
- $295 million equity offering in April 2010
"We had another good quarter with respect to the strong growth in our book value and substantial progress towards deleveraging our balance sheet," said Malon Wilkus, Chairman and Chief Executive Officer. "Our asset coverage ratio is now back over 200% as our book value has grown by $1.2 billion and we have repaid $1.4 billion of debt since the low-point in the second quarter last year. We are now focused on originating high quality investment opportunities while continuing to improve our balance sheet. We have generated a 27% return on equity since the second quarter of 2009 and believe we will continue to generate strong book value growth for our shareholders as we recover from the recession."
NET OPERATING INCOME
NOI increased to $29 million, or $0.09 per diluted share, for the quarter ended June 30, 2010 compared to $20 million, or $0.09 per diluted share, for the comparable quarter in 2009.
NET REALIZED LOSS
Net Realized Loss improved to $(291) million, or $(0.87) per diluted share, for the quarter ended June 30, 2010 compared to $(306) million, or $(1.41) per diluted share, for the comparable quarter in 2009.
NET EARNINGS (LOSS)
Net earnings (loss) improved to $281 million, or $0.84 per diluted share, for the quarter ended June 30, 2010 compared to $(547) million, or $(2.52) per diluted share, for the comparable quarter in 2009.
PORTFOLIO VALUATION
For the quarter ended June 30, 2010, net unrealized appreciation of investments totaled $572 million. The primary components of the net unrealized appreciation were:
- $157 million of appreciation on American Capital's investment in European Capital Limited, excluding any impact of foreign currency translation on European Capital Limited's cost basis or cumulative unrealized depreciation, primarily due to appreciation in the NAV of European Capital Limited and a decrease to the implied discount to NAV;
- The equity investment in European Capital Limited is valued at $0.4 billion compared to European Capital Limited's NAV of approximately $0.7 billion.
- $139 million of net appreciation of American Capital's private finance portfolio primarily a result of improved portfolio company performance, multiples and investment spreads; and
- $309 million of reversals of prior unrealized depreciation associated with net realized losses on portfolio investments.
As of June 30, 2010, NAV per share was $9.15, an increase of $0.17 per share from a NAV per share of $8.98 as of March 31, 2010.
"With our asset coverage ratio now above 200%, we no longer have restrictions on our ability to pay dividends," said John Erickson, Chief Financial Officer. "But, our realized losses have reduced the requirement for a dividend in the near term. We have no remaining undistributed taxable income for our 2009 tax year and we currently project that we will have no 2010 taxable income due to carry over capital losses and additional ordinary loan losses from assets that are already depreciated on our books. We will continue to focus on maximizing the value of our assets to drive strong growth in shareholder value."
PORTFOLIO LIQUIDITY AND PERFORMANCE
In the second quarter of 2010, $351 million of cash proceeds were received from realizations of portfolio investments and exits, which were 7.7% higher than the prior quarter's valuations of the investments. There was $52 million in new committed investments during the quarter. The weighted average effective interest rate on the Company's private finance debt investments as of June 30, 2010 was 10.3%, which was equal to the March 31, 2010 rate and 40 basis points higher than as of December 31, 2009.
As of June 30, 2010, loans with a fair value of $308 million were on non-accrual representing 8.5% of total loans at fair value, compared to $263 million fair value of non-accrual loans representing 7.0% of total loans at fair value as of March 31, 2010.
"The quality of the portfolio continues to improve," said Gordon O'Brien, President of Specialty Finance and Operations. "Our investment and operations teams have made good progress in improving many of our troubled companies and the pace of new troubles developing in the portfolio has slowed significantly. We are pleased to now be able to turn our focus to making new investments. History has shown that the most attractive investment opportunities are made during the recovery from a recession and we believe that will continue to hold true."
AMERICAN CAPITAL, LTD.
CONSOLIDATED BALANCE SHEETS
As of June 30, 2010, December 31, 2009 and June 30, 2009
(in millions, except per share amounts)
Q2 2010 Versus
Q4 2009
Q2 Q4 --------------
2010 2009 $ %
---- ---- --- ---
(unaudited)
Assets
Investments at fair value (cost of
$8,439, $9,158 and $10,295,
respectively) $5,694 $5,575 $119 2%
Cash and cash equivalents 176 835 (659) -79%
Restricted cash and cash equivalents 185 96 89 93%
Interest receivable 32 38 (6) -16%
Derivative agreements at fair value 3 1 2 200%
Other 131 127 4 3%
--- --- --- ---
Total assets $6,221 $6,672 $(451) -7%
====== ====== ===== ===
Liabilities and Shareholders' Equity
Debt $2,924 $4,142 $(1,218) -29%
Derivative agreements at fair value 120 102 18 18%
Accrued dividends payable - - - -
Other 64 99 (35) -35%
--- --- --- ---
Total liabilities 3,108 4,343 (1,235) -28%
----- ----- ------ ---
Commitments and contingencies
Shareholders' equity
Undesignated preferred stock,
$0.01 par value, 5.0 shares
authorized, 0 issued and
outstanding - - - -
Common stock, $0.01 par value,
1,000.0 shares authorized, 351.5,
292.9 and 225.8 issued and 340.1,
280.9 and 215.7 outstanding,
respectively 3 3 - -
Capital in excess of par value 7,051 6,735 316 5%
Distributions in excess of Net
realized earnings (1,077) (709) (368) -52%
Net unrealized depreciation of
investments (2,864) (3,700) 836 23%
------ ------ --- ---
Total shareholders' equity 3,113 2,329 784 34%
----- ----- --- ---
Total liabilities and
shareholders' equity $6,221 $6,672 $(451) -7%
====== ====== ===== ===
Net asset value per common share $9.15 $8.29 $0.86 10%
===== ===== ===== ===
Q2 2010 Versus
Q2 2009
Q2 --------------
2009 $ %
---- --- ---
(unaudited)
Assets
Investments at fair value (cost of
$8,439, $9,158 and $10,295,
respectively) $6,185 $(491) -8%
Cash and cash equivalents 183 (7) -4%
Restricted cash and cash equivalents 55 130 236%
Interest receivable 43 (11) -26%
Derivative agreements at fair value 8 (5) -63%
Other 154 (23) -15%
--- --- ---
Total assets $6,628 $(407) -6%
====== ===== ===
Liabilities and Shareholders' Equity
Debt $4,321 $(1,397) -32%
Derivative agreements at fair value 92 28 30%
Accrued dividends payable 231 (231) -100%
Other 94 (30) -32%
--- --- ---
Total liabilities 4,738 (1,630) -34%
----- ------ ---
Commitments and contingencies
Shareholders' equity
Undesignated preferred stock, $0.01
par value, 5.0 shares authorized,
0 issued and outstanding - - -
Common stock, $0.01 par value,
1,000.0 shares authorized, 351.5,
292.9 and 225.8 issued and 340.1,
280.9 and 215.7 outstanding,
respectively 2 1 50%
Capital in excess of par value 6,605 446 7%
Distributions in excess of net
realized earnings (516) (561) -109%
Net unrealized depreciation of
investments (4,201) 1,337 32%
------ ----- ---
Total shareholders' equity 1,890 1,223 65%
----- ----- ---
Total liabilities and
shareholders' equity $6,628 $(407) -6%
====== ===== ===
Net asset value per common share $8.76 $0.39 4%
===== ===== ===
AMERICAN CAPITAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 2010 and 2009
(in millions, except per share data)
(unaudited)
Three Months Ended
Three Months Ended June 30, 2010
June 30, Versus 2009
------------------ ----------------
2010 2009 $ %
---- ---- --- ---
Operating Income
Interest and dividend income $138 $127 $11 9%
Fee income 13 13 - -
--- --- --- ---
Total operating income 151 140 11 8%
--- --- --- ---
Operating Expenses
Interest 56 60 (4) -7%
Salaries, benefits and stock-based
compensation 34 47 (13) -28%
General and administrative 15 17 (2) -12%
Debt refinancing costs 17 7 10 143%
--- --- --- ---
Total operating expenses 122 131 (9) -7%
--- --- --- ---
Operating Income Before Income Taxes 29 9 20 222%
--- --- --- ---
Benefit for income taxes - 11 (11) -100%
--- --- --- ----
Net Operating Income 29 20 9 45%
--- --- --- ---
Net gain on extinguishment of debt - - - -
--- --- --- ---
Net realized loss on investments
Portfolio company investments (291) (308) 17 6%
Foreign currency transactions 1 - 1 100%
Derivative and option agreements (30) (18) (12) -67%
--- --- --- ---
Total net realized loss on
investments (320) (326) 6 2%
---- ---- --- ---
Net Realized Loss (291) (306) 15 5%
---- ---- --- ---
Net unrealized appreciation
(depreciation) of investments
Portfolio company investments 695 (311) 1,006 NM
Foreign currency translation (125) 66 (191) NM
Derivative and option agreements 2 4 (2) -50%
--- --- --- ---
Total net unrealized appreciation
(depreciation) of investments 572 (241) 813 NM
--- ---- --- ---
Net Increase (Decrease) in Net
Assets Resulting From Operations
("Net Earnings (Loss)") $281 $(547) $828 NM
==== ===== ==== ===
Net Operating Income Per Common Share
Basic $0.09 $0.09 $- -
Diluted $0.09 $0.09 $- -
Net Realized Loss Per Common Share
Basic $(0.88) $(1.41) $0.53 38%
Diluted $(0.87) $(1.41) $0.54 38%
Net Earnings (Loss) Per Common Share
Basic $0.85 $(2.52) $3.37 NM
Diluted $0.84 $(2.52) $3.36 NM
Weighted Average Shares of Common Stock
Outstanding
Basic 330.9 217.0 113.9 52%
Diluted 335.7 217.0 118.7 55%
Dividends Declared Per Common Share $- $1.07(1) $(1.07) -100%
Six Months Ended
Six Months Ended June 30, 2010
June 30, Versus 2009
---------------- ----------------
2010 2009 $ %
---- ---- --- ---
Operating Income
Interest and dividend income $288 $306 $(18) -6%
Fee income 27 29 (2) -7%
--- --- --- ---
Total operating income 315 335 (20) -6%
--- --- --- ---
Operating Expenses
Interest 113 112 1 1%
Salaries, benefits and stock-based
compensation 68 100 (32) -32%
General and administrative 35 40 (5) -13%
Debt refinancing costs 21 10 11 110%
--- --- --- ---
Total operating expenses 237 262 (25) -10%
--- --- --- ---
Operating Income Before Income Taxes 78 73 5 7%
--- --- --- ---
Benefit for income taxes - 11 (11) -100%
--- --- --- ----
Net Operating Income 78 84 (6) -7%
--- --- --- ---
Net gain on extinguishment of debt - 12 (12) -100%
--- --- --- ----
Net realized loss on investments
Portfolio company investments (398) (387) (11) -3%
Foreign currency transactions (2) (2) - -
Derivative and option agreements (46) (68) 22 32%
--- --- --- ---
Total net realized loss on
investments (446) (457) 11 2%
---- ---- --- ---
Net Realized Loss (368) (361) (7) -2%
---- ---- --- ---
Net unrealized appreciation
(depreciation) of investments
Portfolio company investments 1,052 (836) 1,888 NM
Foreign currency translation (212) (3) (209) NM
Derivative and option agreements (4) 106 (110) NM
---- --- ---- ---
Total net unrealized appreciation
(depreciation) of investments 836 (733) 1,569 NM
--- ---- ----- ---
Net Increase (Decrease) in Net
Assets Resulting From Operations
("Net Earnings (Loss)") $468 $(1,094) $1,562 NM
==== ======= ====== ===
Net Operating Income Per Common Share
Basic $0.25 $0.40 $(0.15) -38%
Diluted $0.25 $0.40 $(0.15) -38%
Net Realized Loss Per Common Share
Basic $(1.20) $(1.70) $0.50 29%
Diluted $(1.18) $(1.70) $0.52 31%
Net Earnings (Loss) Per Common Share
Basic $1.52 $(5.16) $6.68 NM
Diluted $1.50 $(5.16) $6.66 NM
Weighted Average Shares of Common Stock
Outstanding
Basic 307.4 211.9 95.5 45%
Diluted 311.0 211.9 99.1 47%
Dividends Declared Per Common Share $- $1.07(1) $(1.07) -100%
NM = Not meaningful.
(1) Dividend paid on August 7, 2009 in the form of $24 million in cash
and 67 million shares.
AMERICAN CAPITAL, LTD.
OTHER FINANCIAL INFORMATION
Three Months Ended June 30, 2010, December 31, 2009 and June 30, 2009
(in millions, except per share data)
(Unaudited)
Q2 2010 Versus
Q4 2009
-----------------
Q2 2010 Q4 2009 $ %
------- ------- --- ---
Assets Under Management
American Capital Assets at
Fair Value(1) $6,221 $6,672 $(451) -7%
Externally Managed Assets at
Fair Value(2) 8,961 5,802 3,159 54%
----- ----- ----- ---
Total $15,182 $12,474 $2,708 22%
======= ======= ====== ===
Capital Resources Under Management
American Capital Assets at
Fair Value plus Available
Capital Resources(1) $6,221 $6,672 $(451) -7%
Externally Managed Assets at
Fair Value plus Available
Capital Resources(2) 9,179 6,020 3,159 52%
----- ----- ----- ---
Total $15,400 $12,692 $2,708 21%
======= ======= ====== ===
New Investments
Senior Debt $47 $12 $35 292%
Subordinated Debt 4 - 4 100%
Preferred Equity 1 4 (3) -75%
Common Equity - 7 (7) -100%
--- --- --- ----
Total $52 $23 $29 126%
=== === === ===
Financing for Private Equity
Buyouts $35 $- $35 100%
Add-on Financing for Working
Capital in Distressed Situations 12 17 (5) -29%
Add-on Financing for Acquisitions - 3 (3) -100%
Add-on Financing for Growth and
Working Capital - 2 (2) -100%
Add-on Financing for
Recapitalizations 5 1 4 400%
--- --- --- ---
Total $52 $23 $29 126%
=== === === ===
Realizations
Principal Prepayments $272 $88 $184 209%
Loan Syndications and Sales - 303 (303) -100%
Scheduled Principal Amortization 9 12 (3) -25%
Payment of Accrued Payment-
in-kind Notes and Dividends
and Accreted Loan Discounts 25 16 9 56%
Sale of Equity Investments 45 57 (12) -21%
--- --- --- ---
Total $351 $476 $(125) -26%
==== ==== ===== ===
Appreciation, Depreciation,
Gain and Loss
Gross Realized Gain $10 $3 $7 233%
Gross Realized Loss (301) (285) (16) -6%
---- ---- --- ---
Portfolio Net Realized Loss (291) (282) (9) -3%
Foreign Currency 1 (1) 2 NM
Derivative and Option Agreements (30) (19) (11) -58%
--- --- --- ---
Net Realized Loss (320) (302) (18) -6%
---- ---- --- ---
Gross Unrealized Appreciation
of Private Finance Portfolio
Investments 213 163 50 31%
Gross Unrealized Depreciation
of Private Finance Portfolio
Investments (74) (141) 67 48%
--- ---- --- ---
Net Unrealized Appreciation
(Depreciation) of Private
Finance Portfolio Investments 139 22 117 532%
Net Unrealized Appreciation
(Depreciation) of European
Capital Limited Investment 157 102 55 54%
Net Unrealized Appreciation
(Depreciation) of European
Capital Limited Foreign
Currency Translation 94 22 72 327%
Net Unrealized Appreciation
(Depreciation) of American
Capital Agency Corp. 2 (5) 7 NM
Net Unrealized Appreciation
of American Capital, LLC 10 10 - -
Net Unrealized (Depreciation)
Appreciation of Structured
Products (16) (25) 9 36%
Reversal of Prior Period Net
Unrealized Depreciation Upon
Realization 309 284 25 9%
--- --- --- ---
Net Unrealized Appreciation
(Depreciation) of Portfolio
Investments 695 410 285 70%
Foreign Currency Translation
-European Capital Limited (120) (25) (95) -380%
Foreign Currency Translation
-Other (5) (1) (4) -400%
Derivative Agreements and
Other 2 6 (4) -67%
--- --- --- ---
Net Unrealized Appreciation
(Depreciation) of
Investments 572 390 182 47%
--- --- --- ---
Net Gains, Losses,
Appreciation and
Depreciation $252 $88 $164 186%
==== === ==== ===
Other Financial Data
NAV per Share $9.15 $8.29 $0.86 10%
Debt at Cost $2,924 $4,142 $(1,218) -29%
Debt at Fair Value $2,844 $3,929 $(1,085) -28%
Market Capitalization $1,639 $685 $954 139%
Total Enterprise Value(3) $4,387 $3,992 $395 10%
Asset Coverage Ratio 206% 156%
Debt to Equity Ratio 0.9x 1.8x
Credit Quality
Weighted Average Effective
Interest Rate on Private
Finance Debt Investments at
Period End 10.3% 9.9% 0.4% 4%
Loans on Non-Accrual at Cost $686 $811 $(125) -15%
Loans on Non-Accrual at Fair
Value $308 $290 $18 6%
Non-Accrual Loans at Cost as
a Percentage of Total Loans 16.5% 18.1%
Non-Accrual Loans at Fair
Value as a Percentage of
Total Loans 8.5% 7.8%
Past Due Loans at Cost $57 $88 $(31) -35%
Debt to Equity Conversions at
Cost $- $54 $(54) -100%
Return on Equity
LTM Net Operating Income Return
on Average Equity at Cost 2.1% 2.1%
LTM Realized (Loss) Return
on Average Equity at Cost -11.3% -10.7%
LTM Net Earnings (Loss) Return
on Average Equity 27.0% -37.3%
Current Quarter Net Operating
Income Return on Average
Equity at Cost Annualized 2.0% 1.2%
Current Quarter Realized Loss
Return on Average Equity at
Cost Annualized -19.5% -18.4%
Current Quarter Earnings
(Loss) Return on Average
Equity Annualized 39.8% 18.9%
Q2 2010 Versus
Q2 2009
-----------------
Q2 2009 $ %
------- --- ---
Assets Under Management
American Capital Assets at Fair Value(1) $6,628 $(407) -6%
Externally Managed Assets at Fair Value(2) 4,070 4,891 120%
----- ----- ---
Total $10,698 $4,484 42%
======= ====== ===
Capital Resources Under Management
American Capital Assets at Fair Value
plus Available Capital Resources(1) $6,628 $(407) -6%
Externally Managed Assets at Fair Value
plus Available Capital Resources(2) 4,294 4,885 114%
----- ----- ---
Total $10,922 $4,478 41%
======= ====== ===
New Investments
Senior Debt $2 $45 2250%
Subordinated Debt 8 (4) -50%
Preferred Equity 3 (2) -67%
Common Equity 26 (26) -100%
--- --- ----
Total $39 $13 33%
=== === ===
Financing for Private Equity Buyouts $- $35 100%
Add-on Financing for Working Capital in
Distressed Situations 36 (24) -67%
Add-on Financing for Acquisitions - - -
Add-on Financing for Growth and Working
Capital 2 (2) -100%
Add-on Financing for Recapitalizations 1 4 400%
--- --- ---
Total $39 $13 33%
=== === ===
Realizations
Principal Prepayments $35 $237 677%
Loan Syndications and Sales 21 (21) -100%
Scheduled Principal Amortization 15 (6) -40%
Payment of Accrued Payment-in-kind
Notes and Dividends and Accreted Loan
Discounts 1 24 2400%
Sale of Equity Investments 53 (8) -15%
--- --- ---
Total $125 $226 181%
==== ==== ===
Appreciation, Depreciation, Gain and Loss
Gross Realized Gain $35 $(25) -71%
Gross Realized Loss (343) 42 12%
---- --- ---
Portfolio Net Realized Loss (308) 17 6%
Foreign Currency - 1 100%
Derivative and Option Agreements (18) (12) -67%
--- --- ---
Net Realized Loss (326) 6 2%
---- --- ---
Gross Unrealized Appreciation of Private
Finance Portfolio Investments 187 26 14%
Gross Unrealized Depreciation of Private
Finance Portfolio Investments (476) 402 84%
---- --- ---
Net Unrealized Appreciation
(Depreciation) of Private Finance
Portfolio Investments (289) 428 NM
Net Unrealized Appreciation
(Depreciation) of European Capital
Limited Investment (355) 512 NM
Net Unrealized Appreciation
(Depreciation) of European Capital
Limited Foreign Currency Translation (54) 148 NM
Net Unrealized Appreciation
(Depreciation) of American Capital
Agency Corp. 31 (29) -94%
Net Unrealized Appreciation
of American Capital, LLC 4 6 150%
Net Unrealized (Depreciation) Appreciation
of Structured Products 37 (53) NM
Reversal of Prior Period Net Unrealized
Depreciation Upon Realization 315 (6) -2%
--- --- ---
Net Unrealized Appreciation
(Depreciation) of Portfolio Investments (311) 1,006 NM
Foreign Currency Translation -European
Capital Limited 62 (182) NM
Foreign Currency Translation - Other 4 (9) NM
Derivative Agreements and Other 4 (2) -50%
--- --- ---
Net Unrealized Appreciation
(Depreciation) of Investments (241) 813 NM
---- --- ---
Net Gains, Losses, Appreciation and
Depreciation $(567) $819 NM
===== ==== ===
Other Financial Data
NAV per Share $8.76 $0.39 4%
Debt at Cost $4,321 $(1,397) -32%
Debt at Fair Value $3,189 $(345) -11%
Market Capitalization $692 $947 137%
Total Enterprise Value(3) $4,830 $(443) -9%
Asset Coverage Ratio 144%
Debt to Equity Ratio 2.3x
Credit Quality
Weighted Average Effective Interest Rate
on Private Finance Debt Investments at
Period End 9.7% 0.6% 6%
Loans on Non-Accrual at Cost $996 $(310) -31%
Loans on Non-Accrual at Fair Value $310 $(2) -1%
Non-Accrual Loans at Cost as a
Percentage of Total Loans 18.3%
Non-Accrual Loans at Fair Value as a
Percentage of Total Loans 7.2%
Past Due Loans at Cost $40 $17 43%
Debt to Equity Conversions at Cost $355 $(355) -100%
Return on Equity
LTM Net Operating Income Return on
Average Equity at Cost 4.3%
LTM Realized (Loss) Return on
Average Equity at Cost -3.3%
LTM Net Earnings (Loss) Return on
Average Equity -90.6%
Current Quarter Net Operating Income
Return on Average Equity at Cost
Annualized 1.3%
Current Quarter Realized Loss Return on
Average Equity at Cost Annualized -19.3%
Current Quarter Earnings (Loss) Return
on Average Equity Annualized -96.2%
NM = Not meaningful.
(1) Includes American Capital's investment in its externally
managed funds.
(2) Includes American Capital Agency Corp., American Capital Equity I,
American Capital Equity II and ACAS CLO-1.
(3) Enterprise value is calculated as debt at cost plus market
capitalization less cash and cash equivalents on hand.
Static Pool (1)
-----------------------------------
Pre-
Portfolio Statistics 2001 2001 2002 2003 2004
($ in millions, unaudited) ----- ---- ---- ---- ----
--------------------------
IRR at Fair Value of All
Investments(2) 8.0% 18.1% 8.1% 20.3% 13.3%
IRR of Exited Investments(5) 8.6% 20.3% 9.1% 23.4% 17.1%
IRR at Fair Value of Equity
Investments Only(2)(3)(4) 5.9% 46.9% 11.5% 27.2% 27.5%
IRR of Exited Equity
Investments Only(3)(4)(5) 8.4% 48.8% 18.3% 32.2% 43.0%
Original Investments and
Commitments $1,065 $376 $962 $1,436 $2,266
Total Exits and Prepayments of
Original Investments and
Commitments $998 $353 $757 $1,083 $1,831
Total Interest, Dividends and
Fees Collected $404 $147 $327 $404 $618
Total Net Realized (Loss) Gain
on Investments $(128) $(4) $(90) $142 $26
Current Cost of Investments $79 $23 $200 $336 $463
Current Fair Value of Investments $23 $2 $142 $399 $351
Current Fair Value of
Investments as a % of Total
Investments at Fair Value 0.4% 0.0% 2.5% 7.0% 6.2%
Net Unrealized Appreciation
(Depreciation) $(56) $(21) $(58) $63 $(112)
Non-Accruing Loans at Cost $19 $14 $27 $- $31
Non-Accruing Loans at Fair Value $21 $2 $18 $- $8
Equity Interest at Fair Value(3) $- $- $5 $168 $75
Debt to EBITDA(6)(7)(8) 8.0 NM 7.7 3.8 5.9
Interest Coverage(6)(8) 1.9 NM 1.0 3.1 2.2
Debt Service Coverage(6)(8) 1.9 NM 0.8 2.9 1.7
Average Age of Companies(8) 40 yrs 25 yrs 53 yrs 40 yrs 45 yrs
Diluted Ownership Percentage(3) 63% 86% 37% 52% 45%
Average Sales(8)(9) $44 $7 $49 $197 $98
Average EBITDA(8)(10) $4 $- $9 $41 $25
Average EBITDA Margin 9.1% - 18.4% 20.8% 25.5%
Total Sales(8)(9) $73 $291 $169 $1,303 $833
Total EBITDA(8)(10) $7 $4 $19 $192 $169
% of Senior Loans(8)(11) 77% 21% 56% 61% 40%
% of Loans with Lien(8)(11) 100% 68% 100% 100% 90%
Static Pool (1)
-----------------------------
Portfolio Statistics 2005 2006 2007 2008
($ in millions, unaudited) ---- ---- ---- ----
--------------------------
IRR at Fair Value of All
Investments(2) 5.5% 8.3% -9.5% 0.9%
IRR of Exited Investments(5) 21.7% 9.8% -9.6% -74.9%
IRR at Fair Value of Equity
Investments Only(2)(3)(4) -4.0% 13.8% -16.4% -1.3%
IRR of Exited Equity Investments
Only(3)(4)(5) 47.2% 18.7% 8.1% 69.0%
Original Investments and
Commitments $4,642 $5,181 $7,369 $1,021
Total Exits and Prepayments of
Original Investments and
Commitments $2,253 $3,297 $3,542 $55
Total Interest, Dividends and Fees
Collected $991 $936 $939 $213
Total Net Realized (Loss) Gain on
Investments $280 $(93) $(651) $(50)
Current Cost of Investments $2,110 $1,539 $2,892 $797
Current Fair Value of Investments $1,196 $1,312 $1,639 $630
Current Fair Value of Investments
as a % of Total Investments at
Fair Value 21.0% 23.0% 28.8% 11.1%
Net Unrealized Appreciation
(Depreciation) $(914) $(227) $(1,253) $(167)
Non-Accruing Loans at Cost $59 $135 $377 $24
Non-Accruing Loans at Fair Value $49 $72 $114 $24
Equity Interest at Fair Value(3) $684 $492 $331 $166
Debt to EBITDA(6)(7)(8) 5.3 5.4 6.8 6.0
Interest Coverage(6)(8) 2.8 2.3 2.3 1.6
Debt Service Coverage(6)(8) 1.8 1.9 1.9 1.4
Average Age of Companies(8) 29 yrs 31 yrs 29 yrs 25 yrs
Diluted Ownership Percentage(3) 63% 46% 42% 36%
Average Sales(8)(9) $104 $127 $236 $100
Average EBITDA(8)(10) $21 $32 $41 $28
Average EBITDA Margin 20.2% 25.2% 17.4% 28.0%
Total Sales(8)(9) $1,315 $5,287 $8,145 $1,221
Total EBITDA(8)(10) $245 $701 $1,567 $244
% of Senior Loans(8)(11) 32% 39% 62% 26%
% of Loans with Lien(8)(11) 91% 92% 92% 60%
Static Pool (1)
--------------------------------
Pre-2001 - 2005 -
2010 2010
Portfolio Statistics 2009 2010 Aggregate Aggregate
($ in millions, unaudited) ---- ---- ---------- ---------
--------------------------
IRR at Fair Value of All
Investments(2) - - 5.4% 0.8%
IRR of Exited Investments(5) - - 11.7% 8.4%
IRR at Fair Value of Equity
Investments Only(2)(3)(4) - - 3.8% -2.6%
IRR of Exited Equity Investments
Only(3)(4)(5) - - 26.4% 27.9%
Original Investments and
Commitments $- $- $24,318 $18,213
Total Exits and Prepayments of
Original Investments and
Commitments $- $- $14,169 $9,147
Total Interest, Dividends and Fees
Collected $- $- $4,979 $3,079
Total Net Realized (Loss) Gain on
Investments $- $- $(568) $(514)
Current Cost of Investments $- $- $8,439 $7,338
Current Fair Value of Investments $- $- $5,694 $4,777
Current Fair Value of Investments
as a % of Total Investments at
Fair Value - - 100.0% 83.9%
Net Unrealized Appreciation
(Depreciation) $- $- $(2,745) $(2,561)
Non-Accruing Loans at Cost $- $- $686 $595
Non-Accruing Loans at Fair Value $- $- $308 $259
Equity Interest at Fair Value(3) $- $- $1,921 $1,673
Debt to EBITDA(6)(7)(8) - - 5.9 6.0
Interest Coverage(6)(8) - - 2.3 2.3
Debt Service Coverage(6)(8) - - 1.9 1.8
Average Age of Companies(8) - - 32 yrs 29 yrs
Diluted Ownership Percentage(3) - - 47% 47%
Average Sales(8)(9) $- $- $156 $162
Average EBITDA(8)(10) $- $- $32 $33
Average EBITDA Margin - - 20.5% 20.4%
Total Sales(8)(9) $- $- $18,637 $15,968
Total EBITDA(8)(10) $- $- $3,148 $2,757
% of Senior Loans(8)(11) - - 47% 46%
% of Loans with Lien(8)(11) - - 90% 88%
(1) Static pool classification is based on the year the initial
investment was made. Subsequent add-on investments are included in
the static pool year of the original investment.
(2) Assumes investments are exited at current fair value.
(3) Excludes investments in structured products.
(4) Excludes equity investments that are the result of conversions of
debt and warrants received with the issuance of debt.
(5) Includes exited securities of existing portfolio companies.
(6) These amounts do not include investments in which we own only equity.
(7) For portfolio companies with a nominal EBITDA amount, the
portfolio company’s maximum debt leverage is limited to 15 times
EBITDA.
(8) Excludes investments in structured products, managed funds and
American Capital, LLC.
(9) Sales of the most recent twelve months, or when appropriate, the
forecasted twelve months.
(10) EBITDA of the most recent twelve months, or when appropriate,
the forecasted twelve months.
(11) As a percentage of our total debt investments.
SHAREHOLDER CALL
American Capital invites shareholders, analysts and interested parties to attend the shareholder call on August 4, 2010 at 11:00 am ET. The shareholder call can be accessed through a live webcast, free of charge, at www.AmericanCapital.com or by dialing (877) 569-8701 (U.S. domestic) or +1 (574) 941-7382 (international). Please provide the operator with the conference ID number 88487445. If you do not plan on asking a question on the call and have access to the internet, please take advantage of the webcast.
A slide presentation will accompany the shareholder call and will be available at www.AmericanCapital.com in advance of the shareholder call. Select the Q2 2010 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An archived audio replay of the shareholder call combined with the slide presentation will be made available on our website after the call. In addition, there will be a phone recording available from 4:00 pm ET August 4, 2010 until 11:59 pm ET August 18, 2010. If you are interested in hearing the recording of the presentation, please dial (800) 642-1687 (U.S. domestic) or +1 (706) 645-9291 (international). The access code for both domestic and international callers is 88487445.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital currently has $15 billion in capital resources under management and eight offices in the U.S., Europe and Asia. American Capital and its affiliates will consider investment opportunities from $5 million to $100 million. For further information, please refer to www.AmericanCapital.com.
ADDITIONAL INFORMATION
Persons considering an investment in American Capital should consider the investment objectives, risks and charges and expenses of the Company carefully before investing. Such information and other information about the Company is available in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q and in the prospectuses the Company issues from time to time in connection with its offering of securities. Such materials are filed with the Securities and Exchange Commission ("SEC") and copies are available on the SEC's website, www.sec.gov. Prospective investors should read such materials carefully before investing. Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.
This press release contains forward-looking statements. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions or changes in the conditions of the industries in which American Capital has made investments. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and the Company's subsequent periodic filings. Copies are available on the SEC's website at www.sec.gov. Forward-looking statements are made as of the date of this press release, and are subject to change without notice. We disclaim any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.
CONTACT: |
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Investors - (301) 951-5917 |
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Media - (301) 968-9400 |
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SOURCE American Capital Ltd.
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