Exhibit 99.1
|
| | |
| Two Bethesda Metro Center |
14th Floor |
| Bethesda, MD 20814 |
| (301) 951-6122 |
| (301) 654-6714 Fax |
|
FOR IMMEDIATE RELEASE
May 3, 2011
CONTACT:
Investors - (301) 951-5917
Media - (301) 968-9400
AMERICAN CAPITAL REPORTS FIRST QUARTER 2011 NET EARNINGS OF $434 MILLION, OR $1.21 PER DILUTED SHARE AND NET OPERATING INCOME OF $83 MILLION, OR $0.23 PER DILUTED SHARE
Bethesda, MD - May 3, 2011 - American Capital, Ltd. (“ACAS” or the “Company”) (Nasdaq: ACAS) announced net operating income (“NOI”) for the quarter ended March 31, 2011, of $83 million, or $0.23 per diluted share. Net earnings for the quarter were $434 million, or $1.21 per diluted share. Net asset value (“NAV”) per share increased 12%, or $1.26 per share, from December 31, 2010 to $11.97 as of March 31, 2011.
Q1 2011 FINANCIAL SUMMARY
ü $16 million, or 24%, increase over Q4 2010
ü Includes $15 million, or $0.04 per diluted share, of non-recurring income related to the removal of investments from non-accrual status
| |
| • | $354 million net unrealized appreciation of investments |
ü $(22) million, or 6%, decrease over Q4 2010
| |
| • | $80 million net realized earnings (net earnings less net unrealized appreciation) |
ü $75 million improvement over Q4 2010
| |
| • | $434 million net earnings |
ü $53 million, or 14%, improvement over Q4 2010
ü 44.6% annualized return on average equity (“ROE”)
| |
| • | $269 million of cash proceeds from realizations |
| |
| • | $517 million of debt repaid |
ü $1.26 per share, or 12%, increase over Q4 2010
“Our book value per share grew by $1.26 for the quarter to $11.97, delivering a 45% annualized return on equity for the quarter,” said Malon Wilkus, Chairman and Chief Executive Officer. “We have now experienced seven consecutive quarters of net unrealized appreciation on our investments. We believe that the performance of our portfolio will continue to improve as the economy continues to recover. We remain focused on improving our balance sheet and originating high quality investment opportunities.”
PORTFOLIO VALUATION
For the quarter ended March 31, 2011, net unrealized appreciation of investments totaled $354 million. The primary components of the net unrealized appreciation were:
| |
| • | $133 million unrealized appreciation in American Capital's investment in European Capital, excluding any impact of foreign currency translation on European Capital's cost basis or cumulative unrealized depreciation, primarily due to an increase in European Capital's NAV and a decrease in the implied discount to its NAV, |
ü The equity investment in European Capital is valued at $780 million, compared to the $970 million fair value of European Capital's NAV;
American Capital, Ltd.
May 3, 2011
Page 2
| |
| • | $75 million net unrealized appreciation from American Capital's private finance portfolio as a result of improved portfolio company performance and improved multiples; |
| |
| • | $60 million unrealized appreciation in American Capital's investment in American Capital, LLC, its alternative fund management company, primarily due to an increase in its funds under management; and |
| |
| • | $39 million net unrealized appreciation from structured products investments as a result of improved cash flow projections and improved pricing of comparable transactions. |
“During the quarter, we followed up on our success in 2010 and continued to strengthen our balance sheet,” said John Erickson, Chief Financial Officer. “We paid down an additional $517 million of debt, including $300 million of secured debt due 2013 and improved our asset coverage ratio to 336%. We continued to see strong liquidity in our portfolio during the quarter and focused on maximizing the value of our investments through organic growth and acquisitions to generate shareholder value. Additionally, we are adding shareholder value by growing our asset management business. Our assets under management grew by $14.6 billion as American Capital Agency Corp. raised $1.8 billion of equity and $13 billion of financing during the quarter.”
PORTFOLIO LIQUIDITY AND PERFORMANCE
In the first quarter of 2011, $269 million of cash proceeds were received from realizations of portfolio investments and exits. The Company made $152 million in new committed investments during the quarter. The weighted average effective interest rate on the Company's private finance debt investments as of March 31, 2011, was 10.3%, which was 10 basis points higher than the December 31, 2010 rate of 10.2%.
As of March 31, 2011, loans with a fair value of $227 million were on non-accrual, representing 7.7% of total loans at fair value, compared to $239 million fair value of non-accrual loans, representing 7.8% of total loans at fair value as of December 31, 2010.
“The credit quality of our portfolio continued to improve this quarter,” noted Gordon O'Brien, President, Specialty Finance and Operations. “Our past due accruing loans declined to $3 million as of quarter end and we are seeing continued improvement in the amount of non-accruing loans in our portfolio. As the economy continues to improve, we expect to see the credit quality of our portfolio continue to improve.”
American Capital, Ltd.
May 3, 2011
Page 3
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| AMERICAN CAPITAL, LTD |
| CONSOLIDATED BALANCE SHEETS |
| As of March 31, 2011, December 31, 2010 and March 31, 2010 |
| (in millions, except per share amounts) |
| | | | | | | | | | | | | | |
| | Q1 | | Q4 | | Q1 2011 Versus
Q4 2010 | | Q1 | | Q1 2011 Versus
Q1 2010 |
| | 2011 | | 2010 | | $ | | % | | 2010 | | $ | | % |
| | (unaudited) | | | | | | | | (unaudited) | | | | |
| Assets | | | | | | | | | | | | | |
| Investments at fair value (cost of $7,535, 7,698 and $9,013, respectively) | $ | 5,652 | | | $ | 5,475 | | | $ | 177 | | | 3 | % | | $ | 5,698 | | | $ | (46 | ) | | (1 | )% |
| Cash and cash equivalents | 98 | | | 269 | | | (171 | ) | | (64 | )% | | 820 | | | (722 | ) | | (88 | )% |
| Restricted cash and cash equivalents | 98 | | | 185 | | | (87 | ) | | (47 | )% | | 79 | | | 19 | | | 24 | % |
| Interest receivable | 30 | | | 37 | | | (7 | ) | | (19 | )% | | 39 | | | (9 | ) | | (23 | )% |
| Derivative agreements at fair value | 5 | | | 4 | | | 1 | | | 25 | % | | 2 | | | 3 | | | 150 | % |
| Other | 120 | | | 114 | | | 6 | | | 5 | % | | 119 | | | 1 | | | 1 | % |
| Total assets | $ | 6,003 | | | $ | 6,084 | | | $ | (81 | ) | | (1 | )% | | $ | 6,757 | | | $ | (754 | ) | | (11 | )% |
| | | | | | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | | | | | |
| Debt | $ | 1,742 | | | $ | 2,259 | | | $ | (517 | ) | | (23 | )% | | $ | 4,026 | | | $ | (2,284 | ) | | (57 | )% |
| Derivative agreements at fair value | 95 | | | 106 | | | (11 | ) | | (10 | )% | | 109 | | | (14 | ) | | (13 | )% |
| Other | 50 | | | 51 | | | (1 | ) | | (2 | )% | | 96 | | | (46 | ) | | (48 | )% |
| Total liabilities | 1,887 | | | 2,416 | | | (529 | ) | | (22 | )% | | 4,231 | | | (2,344 | ) | | (55 | )% |
| | | | | | | | | | | | | | |
| 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, 353.8, 352.7 and 292.9 issued and 343.9, 342.4 and 281.3 outstanding, respectively | 3 | | | 3 | | | — | | | — | | | 3 | | | — | | | — | |
| Capital in excess of par value | 7,145 | | | 7,131 | | | 14 | | | — | | | 6,745 | | | 400 | | | 6 | % |
| Distributions in excess of net realized earnings | (1,056 | ) | | (1,136 | ) | | 80 | | | 7 | % | | (786 | ) | | (270 | ) | | (34 | )% |
| Net unrealized depreciation of investments | (1,976 | ) | | (2,330 | ) | | 354 | | | 15 | % | | (3,436 | ) | | 1,460 | | | 42 | % |
| Total shareholders' equity | 4,116 | | | 3,668 | | | 448 | | | 12 | % | | 2,526 | | | 1,590 | | | 63 | % |
| Total liabilities and shareholders' equity | $ | 6,003 | | | $ | 6,084 | | | $ | (81 | ) | | (1 | )% | | $ | 6,757 | | | $ | (754 | ) | | (11 | )% |
| | | | | | | | | | | | | | | | |
| NAV per common share outstanding | $ | 11.97 | | | $ | 10.71 | | | $ | 1.26 | | | 12 | % | | $ | 8.98 | | | $ | 2.99 | | | 33 | % |
American Capital, Ltd.
May 3, 2011
Page 4
|
| | | | | | | | | | | | | | |
| AMERICAN CAPITAL, LTD |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| Three Months Ended March 31, 2011 and 2010 |
| (in millions, except per share data) |
| (unaudited) |
| | | | | | | | |
| | | | Three Months Ended |
| | Three Months Ended | | March 31, |
| | March 31, | | 2011 Versus 2010 |
| | 2011 | | 2010 | | $ | | % |
| | | | | | | | |
| OPERATING INCOME | | | | | | | |
| Interest and dividend income | $ | 146 | | | $ | 150 | | | $ | (4 | ) | | (3 | )% |
| Fee income | 13 | | | 14 | | | (1 | ) | | (7 | )% |
| Total operating income | 159 | | | 164 | | | (5 | ) | | (3 | )% |
| | | | | | | | |
| OPERATING EXPENSES | | | | | | | |
| Interest | 29 | | | 57 | | | (28 | ) | | (49 | )% |
| Salaries, benefits and stock-based compensation | 36 | | | 34 | | | 2 | | | 6 | % |
| General and administrative | 11 | | | 20 | | | (9 | ) | | (45 | )% |
| Debt refinancing costs | — | | | 4 | | | (4 | ) | | (100 | )% |
| Total operating expenses | 76 | | | 115 | | | (39 | ) | | (34 | )% |
| | | | | | | | |
| NET OPERATING INCOME | 83 | | | 49 | | | 34 | | | 69 | % |
| | | | | | | | |
| Net realized gain (loss) on investments | | | | | | | |
| Portfolio company investments | 10 | | | (107 | ) | | 117 | | | NM | |
| Foreign currency transactions | — | | | (3 | ) | | 3 | | | 100 | % |
| Derivative agreements | (13 | ) | | (16 | ) | | 3 | | | 19 | % |
| Total net realized loss on investments | (3 | ) | | (126 | ) | | 123 | | | 98 | % |
| | | | | | | | |
| NET REALIZED EARNINGS (LOSS) | 80 | | | (77 | ) | | 157 | | | NM | |
| | | | | | | | |
| Net unrealized appreciation (depreciation) of investments | | | | | | | |
| Portfolio company investments | 256 | | | 357 | | | (101 | ) | | (28 | )% |
| Foreign currency translation | 85 | | | (87 | ) | | 172 | | | NM | |
| Derivative agreements | 13 | | | (6 | ) | | 19 | | | NM | |
| Total net unrealized appreciation of investments | 354 | | | 264 | | | 90 | | | 34 | % |
| | | | | | | | |
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ("NET EARNINGS") | $ | 434 | | | $ | 187 | | | $ | 247 | | | 132 | % |
| | | | | | | | |
| NET OPERATING INCOME PER COMMON SHARE | | | | | | | |
| Basic | $ | 0.24 | | | $ | 0.17 | | | $ | 0.07 | | | 41 | % |
| Diluted | $ | 0.23 | | | $ | 0.17 | | | $ | 0.06 | | | 35 | % |
| | | | | | | | |
| NET REALIZED EARNINGS (LOSS) PER COMMON SHARE | | | | | | | |
| Basic | $ | 0.23 | | | $ | (0.27 | ) | | $ | 0.50 | | | NM | |
| Diluted | $ | 0.22 | | | $ | (0.27 | ) | | $ | 0.49 | | | NM | |
| | | | | | | | |
| NET EARNINGS PER COMMON SHARE | | | | | | | |
| Basic | $ | 1.25 | | | $ | 0.66 | | | $ | 0.59 | | | 89 | % |
| Diluted | $ | 1.21 | | | $ | 0.65 | | | $ | 0.56 | | | 86 | % |
| | | | | | | | |
| WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | | | | | | | |
| Basic | 346.1 | | | 283.7 | | | 62.4 | | | 22 | % |
| Diluted | 358.4 | | | 286.0 | | | 72.4 | | | 25 | % |
| ___________________ | | | | | | | |
| NM = Not meaningful. | | | | | | | |
American Capital, Ltd.
May 3, 2011
Page 5
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| AMERICAN CAPITAL, LTD |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| Three Months Ended March 31, 2011, December 31, 2010 and March 31, 2010 |
| (in millions, except per share data) |
| (unaudited) |
| | | | | | | | | | | | | | |
| | | | | | Q1 2011 Versus
Q4 2010 | | | | Q1 2011 Versus
Q1 2010 |
| | Q1 2011 | | Q4 2010 | | $ | | % | | Q1 2010 | | $ | | % |
| | | | | | | | | | | | | | |
| Assets Under Management | | | | | | | | | | | | | |
| American Capital Assets at Fair Value | $ | 6,003 | | | $ | 6,084 | | | $ | (81 | ) | | (1 | )% | | $ | 6,757 | | | $ | (754 | ) | | (11 | )% |
| Externally Managed Assets at Fair Value(1) | 31,205 | | | 16,561 | | | 14,644 | | | 88 | % | | 8,271 | | | 22,934 | | | 277 | % |
| Total | $ | 37,208 | | | $ | 22,645 | | | $ | 14,563 | | | 64 | % | | $ | 15,028 | | | $ | 22,180 | | | 148 | % |
| | | | | | | | | | | | | | |
| New Investments | | | | | | | | | | | | | |
| Senior Debt | $ | 138 | | | $ | 35 | | | $ | 103 | | | 294 | % | | $ | — | | | $ | 138 | | | 100 | % |
| Preferred Equity | — | | | — | | | — | | | — | | | 81 | | | (81 | ) | | (100 | )% |
| Mezzanine Debt | — | | | — | | | — | | | — | | | 1 | | | (1 | ) | | (100 | )% |
| Common Equity | 14 | | | — | | | 14 | | | 100 | % | | 2 | | | 12 | | | 600 | % |
| Total | $ | 152 | | | $ | 35 | | | $ | 117 | | | 334 | % | | $ | 84 | | | $ | 68 | | | 81 | % |
| | | | | | | | | | | | | | |
| Direct Investments | $ | 14 | | | $ | — | | | $ | 14 | | | 100 | % | | $ | — | | | $ | 14 | | | 100 | % |
| Add-on Financing for Recapitalizations | 25 | | | — | | | 25 | | | 100 | % | | 75 | | | (50 | ) | | (67 | )% |
| Add-on Financing for Purchase of Debt of a Portfolio Company | — | | | 25 | | | (25 | ) | | (100 | )% | | — | | | — | | | — | |
| Add-on Financing for Working Capital in Distressed Situations | 16 | | | 10 | | | 6 | | | 60 | % | | 8 | | | 8 | | | 100 | % |
| Add-on Financing for Growth and Working Capital | 97 | | | — | | | 97 | | | 100 | % | | 1 | | | 96 | | | NM | |
| Total | $ | 152 | | | $ | 35 | | | $ | 117 | | | 334 | % | | $ | 84 | | | $ | 68 | | | 81 | % |
| | | | | | | | | | | | | | |
| Realizations | | | | | | | | | | | | | |
| Principal Prepayments | $ | 149 | | | $ | 330 | | | $ | (181 | ) | | (55 | )% | | $ | 90 | | | $ | 59 | | | 66 | % |
| Sale of Equity Investments | 63 | | | 97 | | | (34 | ) | | (35 | )% | | 49 | | | 14 | | | 29 | % |
| Loan Syndications and Sales | 6 | | | — | | | 6 | | | 100 | % | | 15 | | | (9 | ) | | (60 | )% |
| Payment of Accrued Payment-in-Kind Notes and Dividends and Accreted Original Issue Discounts | 43 | | | 33 | | | 10 | | | 30 | % | | 2 | | | 41 | | | NM | |
| Scheduled Principal Amortization | 8 | | | 14 | | | (6 | ) | | (43 | )% | | 7 | | | 1 | | | 14 | % |
| Total | $ | 269 | | | $ | 474 | | | $ | (205 | ) | | (43 | )% | | $ | 163 | | | $ | 106 | | | 65 | % |
| | | | | | | | | | | | | | |
| Appreciation, Depreciation, Gain and Loss | | | | | | | | | | | | | |
| Gross Realized Gain | $ | 14 | | | $ | 24 | | | $ | (10 | ) | | (42 | )% | | $ | 8 | | | $ | 6 | | | 75 | % |
| Gross Realized Loss | (4 | ) | | (71 | ) | | 67 | | | 94 | % | | (115 | ) | | 111 | | | 97 | % |
| Portfolio Net Realized Gain (Loss) | 10 | | | (47 | ) | | 57 | | | NM | | | (107 | ) | | 117 | | | NM | |
| Foreign Currency | — | | | — | | | — | | | — | | | (3 | ) | | 3 | | | 100 | % |
| Derivative Agreements | (13 | ) | | (15 | ) | | 2 | | | 13 | % | | (16 | ) | | 3 | | | 19 | % |
| Net Realized Loss | (3 | ) | | (62 | ) | | 59 | | | 95 | % | | (126 | ) | | 123 | | | 98 | % |
| | | | | | | | | | | | | | |
| Gross Unrealized Appreciation of Private Finance Portfolio Investments | 162 | | | 163 | | | (1 | ) | | (1 | )% | | 195 | | | (33 | ) | | (17 | )% |
| Gross Unrealized Depreciation of Private Finance Portfolio Investments | (87 | ) | | (81 | ) | | (6 | ) | | (7 | )% | | (84 | ) | | (3 | ) | | (4 | )% |
| Net Unrealized Appreciation of Private Finance Portfolio Investments | 75 | | | 82 | | | (7 | ) | | (9 | )% | | 111 | | | (36 | ) | | (32 | )% |
| Net Unrealized Appreciation of European Capital Investment | 133 | | | 120 | | | 13 | | | 11 | % | | 50 | | | 83 | | | 166 | % |
| Net Unrealized (Depreciation) Appreciation of European Capital Foreign Currency Translation | (43 | ) | | 22 | | | (65 | ) | | NM | | | 69 | | | (112 | ) | | NM | |
| Net Unrealized Depreciation of American Capital Agency Corp. | — | | | — | | | — | | | — | | | (2 | ) | | 2 | | | 100 | % |
| Net Unrealized Appreciation of American Capital, LLC | 60 | | | 49 | | | 11 | | | 22 | % | | 26 | | | 34 | | | 131 | % |
| Net Unrealized Appreciation of Structured Products | 39 | | | 54 | | | (15 | ) | | (28 | )% | | — | | | 39 | | | 100 | % |
American Capital, Ltd.
May 3, 2011
Page 6
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Reversal of Prior Period Net Unrealized (Depreciation) Appreciation Upon Realization | (8 | ) | | 61 | | | (69 | ) | | NM | | | 103 | | | (111 | ) | | NM | |
| Net Unrealized Appreciation of Portfolio Investments | 256 | | | 388 | | | (132 | ) | | (34 | )% | | 357 | | | (101 | ) | | (28 | )% |
| Foreign Currency Translation - European Capital | 82 | | | (34 | ) | | 116 | | | NM | | | (85 | ) | | 167 | | | NM | |
| Foreign Currency Translation - Other | 3 | | | (2 | ) | | 5 | | | NM | | | (2 | ) | | 5 | | | NM | |
| Derivative Agreements | 13 | | | 24 | | | (11 | ) | | (46 | )% | | (6 | ) | | 19 | | | NM | |
| Net Unrealized Appreciation of Investments | 354 | | | 376 | | | (22 | ) | | (6 | )% | | 264 | | | 90 | | | 34 | % |
| | | | | | | | | | | | | | |
| Net Gains, Losses, Appreciation and Depreciation | $ | 351 | | | $ | 314 | | | $ | 37 | | | 12 | % | | $ | 138 | | | $ | 213 | | | 154 | % |
| | | | | | | | | | | | | | |
| Other Financial Data | | | | | | | | | | | | | |
| NAV per Share | $ | 11.97 | | | $ | 10.71 | | | $ | 1.26 | | | 12 | % | | $ | 8.98 | | | $ | 2.99 | | | 33 | % |
| Debt at Cost | $ | 1,742 | | | $ | 2,259 | | | $ | (517 | ) | | (23 | )% | | $ | 4,026 | | | $ | (2,284 | ) | | (57 | )% |
| Debt at Fair Value | $ | 1,708 | | | $ | 2,208 | | | $ | (500 | ) | | (23 | )% | | $ | 3,955 | | | $ | (2,247 | ) | | (57 | )% |
| Market Capitalization | $ | 3,408 | | | $ | 2,588 | | | $ | 820 | | | 32 | % | | $ | 1,429 | | | $ | 1,979 | | | 138 | % |
| Total Enterprise Value(2) | $ | 5,052 | | | $ | 4,579 | | | $ | 473 | | | 10 | % | | $ | 4,635 | | | $ | 417 | | | 9 | % |
| Asset Coverage Ratio | 336 | % | | 262 | % | | | | | | 163 | % | | | | |
| Debt to Equity Ratio | 0.4x | | | 0.6x | | | | | | | 1.6x | | | | | |
| Credit Quality | | | | | | | | | | | | | |
| Weighted Average Effective Interest Rate on Private Finance Debt Investments at Period End | 10.3 | % | | 10.2 | % | | 0.1 | % | | 1 | % | | 10.3 | % | | — | | | — | |
| Loans on Non-Accrual at Cost | $ | 663 | | | $ | 702 | | | $ | (39 | ) | | (6 | )% | | $ | 671 | | | $ | (8 | ) | | (1 | )% |
| Loans on Non-Accrual at Fair Value | $ | 227 | | | $ | 239 | | | $ | (12 | ) | | (5 | )% | | $ | 263 | | | $ | (36 | ) | | (14 | )% |
| Non-Accrual Loans at Cost as a Percentage of Total Loans at Cost | 19.3 | % | | 19.6 | % | | | | | | 15.4 | % | | | | |
| Non-Accrual Loans at Fair Value as a Percentage of Total Loans at Fair Value | 7.7 | % | | 7.8 | % | | | | | | 7.0 | % | | | | |
| Past Due Loans at Cost | $ | 3 | | | $ | 58 | | | $ | (55 | ) | | (95 | )% | | $ | 47 | | | $ | (44 | ) | | (94 | )% |
| Debt to Equity Conversions at Cost | $ | 49 | | | $ | 9 | | | $ | 40 | | | 444 | % | | $ | 77 | | | $ | (28 | ) | | (36 | )% |
| Return on Equity | | | | | | | | | | | | | |
| LTM Net Operating Income Return on Average Equity at Cost | 4.0 | % | | 3.4 | % | | | | | | 1.9 | % | | | | |
| LTM Net Realized Loss Return on Average Equity at Cost | (3.6 | )% | | (6.2 | )% | | | | | | (11.3 | )% | | | | |
| LTM Net Earnings (Loss) Return on Average Equity at Fair Value | 37.3 | % | | 33.5 | % | | | | | | (7.6 | )% | | | | |
| Current Quarter Annualized Net Operating Income Return on Average Equity at Cost | 5.5 | % | | 4.5 | % | | | | | | 3.2 | % | | | | |
| Current Quarter Annualized Net Realized Earnings (Loss) Return on Average Equity at Cost | 5.3 | % | | 0.3 | % | | | | | | (5.1 | )% | | | | |
| Current Quarter Annualized Net Earnings Return on Average Equity at Fair Value | 44.6 | % | | 44.0 | % | | | | | | 30.7 | % | | | | |
______________________________
NM = Not meaningful
(1) Includes total assets of American Capital Agency Corp., European Capital, American Capital Equity I, American Capital Equity II and ACAS CLO-1 less American Capital's investment in the funds.
(2) Enterprise value is calculated as debt at cost plus market capitalization less cash and cash equivalents on hand.
American Capital, Ltd.
May 3, 2011
Page 7
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Static Pool (1) |
Portfolio Statistics
($ in millions, unaudited) | Pre- 2001 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2011 | Pre-2001 - 2011 Aggregate | 2006 - 2011 Aggregate |
| IRR at Fair Value of All Investments(2) | 8.5 | % | 18.1 | % | 8.2 | % | 20.3 | % | 13.5 | % | 10.0 | % | 9.6 | % | (7.4 | )% | 7.8 | % | — | | 7.3 | % | 1.0 | % |
| IRR of Exited Investments(5) | 8.6 | % | 20.3 | % | 9.7 | % | 23.3 | % | 16.8 | % | 21.8 | % | 10.7 | % | (5.9 | )% | 12.9 | % | — | | 11.8 | % | 3.3 | % |
| IRR at Fair Value of Equity Investments Only(2)(3)(4) | 6.7 | % | 46.3 | % | 11.5 | % | 27.2 | % | 26.6 | % | 2.2 | % | 14.1 | % | (12.1 | )% | 13.1 | % | — | | 6.8 | % | 1.9 | % |
| IRR of Exited Equity Investments Only(3)(4)(5) | 8.6 | % | 48.2 | % | 18.3 | % | 32.2 | % | 42.8 | % | 47.2 | % | 18.7 | % | 9.3 | % | 35.7 | % | — | | 26.2 | % | 16.3 | % |
| Original Investments and Commitments | $ | 1,065 | | $ | 376 | | $ | 962 | | $ | 1,436 | | $ | 2,266 | | $ | 4,740 | | $ | 5,223 | | $ | 7,451 | | $ | 1,036 | | $ | 14 | | $ | 24,569 | | $ | 13,724 | |
| Total Exits and Prepayments of Original Investments and Commitments | $ | 998 | | $ | 353 | | $ | 810 | | $ | 1,098 | | $ | 1,908 | | $ | 2,373 | | $ | 3,743 | | $ | 4,128 | | $ | 238 | | $ | — | | $ | 15,649 | | $ | 8,109 | |
| Total Interest, Dividends and Fees Collected | $ | 405 | | $ | 148 | | $ | 340 | | $ | 419 | | $ | 637 | | $ | 1,056 | | $ | 1,113 | | $ | 1,060 | | $ | 275 | | $ | — | | $ | 5,453 | | $ | 2,448 | |
| Total Net Realized (Loss) Gain on Investments | $ | (128 | ) | $ | (4 | ) | $ | (90 | ) | $ | 143 | | $ | 28 | | $ | 279 | | $ | (103 | ) | $ | (756 | ) | $ | (28 | ) | $ | — | | $ | (659 | ) | $ | (887 | ) |
| Current Cost of Investments | $ | 82 | | $ | 23 | | $ | 157 | | $ | 329 | | $ | 421 | | $ | 2,050 | | $ | 1,217 | | $ | 2,547 | | $ | 706 | | $ | 3 | | $ | 7,535 | | $ | 4,473 | |
| Current Fair Value of Investments | $ | 55 | | $ | 1 | | $ | 97 | | $ | 420 | | $ | 323 | | $ | 1,701 | | $ | 1,064 | | $ | 1,366 | | $ | 622 | | $ | 3 | | $ | 5,652 | | $ | 3,055 | |
| Current Fair Value of Investments as a % of Total Investments at Fair Value | 1.0 | % | — | | 1.7 | % | 7.4 | % | 5.7 | % | 30.1 | % | 18.8 | % | 24.2 | % | 11.0 | % | 0.1 | % | 100.0 | % | 54.1 | % |
| Net Unrealized Appreciation (Depreciation) | $ | (27 | ) | $ | (22 | ) | $ | (60 | ) | $ | 91 | | $ | (98 | ) | $ | (349 | ) | $ | (153 | ) | $ | (1,181 | ) | $ | (84 | ) | $ | — | | $ | (1,883 | ) | $ | (1,418 | ) |
| Non-Accruing Loans at Cost | $ | — | | $ | 15 | | $ | 27 | | $ | — | | $ | 33 | | $ | 36 | | $ | 100 | | $ | 430 | | $ | 22 | | $ | — | | $ | 663 | | $ | 552 | |
| Non-Accruing Loans at Fair Value | $ | 1 | | $ | 1 | | $ | 14 | | $ | — | | $ | 11 | | $ | 25 | | $ | 35 | | $ | 111 | | $ | 29 | | $ | — | | $ | 227 | | $ | 175 | |
| Equity Interest at Fair Value(3) | $ | 31 | | $ | — | | $ | 8 | | $ | 201 | | $ | 75 | | $ | 1,225 | | $ | 410 | | $ | 330 | | $ | 181 | | $ | 3 | | $ | 2,464 | | $ | 924 | |
| Debt to EBITDA(6)(7)(8) | 3.6 | | NM | | 9.5 | | 4.0 | | 5.9 | | 5.1 | | 4.7 | | 6.9 | | 5.5 | | — | | 5.6 | | 5.8 | |
| Interest Coverage(6)(8) | 3.2 | | NM | | 1.7 | | 3.1 | | 2.5 | | 3.4 | | 2.6 | | 1.7 | | 1.7 | | — | | 2.4 | | 2.0 | |
| Debt Service Coverage(6)(8) | 3.0 | | NM | | 1.6 | | 2.9 | | 1.8 | | 2.4 | | 2.2 | | 1.5 | | 1.6 | | — | | 2.0 | | 1.8 | |
| Average Age of Companies(8) | 33 yrs | | 26 yrs | | 34 yrs | | 41 yrs | | 49 yrs | | 28 yrs | | 36 yrs | | 31 yrs | | 26 yrs | | 1 yr | | 33 yrs | | 33 yrs | |
| Diluted Ownership Percentage(3) | 56 | % | 86 | % | 45 | % | 53 | % | 53 | % | 74 | % | 44 | % | 50 | % | 42 | % | — | | 56 | % | 56 | % |
| Average Sales(8)(9) | $ | 48 | | $ | 7 | | $ | 45 | | $ | 193 | | $ | 72 | | $ | 115 | | $ | 155 | | $ | 183 | | $ | 115 | | $ | — | | $ | 145 | | $ | 159 | |
| Average EBITDA(8)(10) | $ | 6 | | $ | — | | $ | 9 | | $ | 40 | | $ | 16 | | $ | 22 | | $ | 37 | | $ | 36 | | $ | 32 | | $ | — | | $ | 31 | | $ | 36 | |
| Average EBITDA Margin | 12.5 | % | (6.8 | )% | 20.6 | % | 20.7 | % | 22.3 | % | 19.0 | % | 24.0 | % | 19.6 | % | 28.2 | % | — | | 20.9 | % | 22.4 | % |
| Total Sales(8)(9) | $ | 89 | | $ | 306 | | $ | 194 | | $ | 1,343 | | $ | 446 | | $ | 1,319 | | $ | 4,556 | | $ | 5,071 | | $ | 1,381 | | $ | — | | $ | 14,705 | | $ | 11,008 | |
| Total EBITDA(8)(10) | $ | 11 | | $ | 6 | | $ | 26 | | $ | 198 | | $ | 84 | | $ | 243 | | $ | 472 | | $ | 906 | | $ | 284 | | $ | — | | $ | 2,230 | | $ | 1,662 | |
| % of Senior Loans(8)(11) | 71 | % | 100 | % | 58 | % | 58 | % | 26 | % | 40 | % | 29 | % | 54 | % | 16 | % | — | | 40 | % | 39 | % |
| % of Loans with Lien(8)(11) | 100 | % | 67 | % | 100 | % | 100 | % | 88 | % | 93 | % | 93 | % | 91 | % | 56 | % | — | | 89 | % | 87 | % |
———————
(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. There were no investments made in 2009 and 2010 static pool years.
(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.
American Capital, Ltd.
May 3, 2011
Page 8
SHAREHOLDER CALL
American Capital invites shareholders, analysts and interested parties to attend the shareholder call on May 4, 2011 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). All callers are asked to dial in 10-15 minutes prior to the call to register. Please provide the operator with the conference ID number 58071190. Callers who do not plan on asking a question and have access to the internet are asked to utilize 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 Q1 2011 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 on May 4, 2011. In addition, there will be a phone recording available from 2:00 pm ET May 4, 2011 until 11:59 pm ET May 18, 2011. 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 58071190.
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 has $37 billion in assets under management and eight offices in the U.S., Europe and Asia. American Capital and European Capital will consider investment opportunities from $10 million to $300 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, 2010 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.
