Exhibit 99.1
|
| | |
| Two Bethesda Metro Center |
14th Floor |
| Bethesda, MD 20814 |
| (301) 951-6122 |
| (301) 654-6714 Fax |
|
FOR IMMEDIATE RELEASE
February 24, 2015
CONTACT:
Investors - (301) 951-5917
Media - (301) 968-9400
AMERICAN CAPITAL REPORTS 2014 NET OPERATING INCOME BEFORE INCOME TAXES OF $0.65 PER DILUTED SHARE, NET EARNINGS OF $1.55 PER DILUTED SHARE AND NET ASSET VALUE PER SHARE OF $20.50
Bethesda, MD - February 24, 2015 - American Capital, Ltd. (“American Capital” or the “Company”) (Nasdaq: ACAS) announced consolidated net operating income (“NOI”) before income taxes for the year and quarter ended December 31, 2014 of $183 million, or $0.65 per diluted share, and $60 million, or $0.21 per diluted share, respectively. Consolidated NOI for the year and quarter ended December 31, 2014 was $117 million, or $0.42 per diluted share, and $35 million, or $0.12 per diluted share, respectively. Consolidated net earnings for the year and quarter ended December 31, 2014 was $434 million, or $1.55 per diluted share, and $38 million, or $0.14 per diluted share, respectively. As of December 31, 2014, consolidated net asset value (“NAV”) per share was $20.50, a 1% annualized, or $0.04 per share, decrease from the September 30, 2014 NAV per share of $20.54 and an 8%, or $1.53 per share, increase from the December 31, 2013 NAV per share of $18.97.
2014 CONSOLIDATED FINANCIAL SUMMARY
| |
| • | $20.50 NAV per share outstanding |
| |
| ü | $1.53 per share increase, or 8%, over Q4 2013 of $18.97 per share outstanding |
| |
| • | $0.65 NOI before income taxes per diluted share, or $183 million |
| |
| ü | $0.11 per diluted share decrease from 2013, or $49 million |
| |
| ü | $0.07 per diluted share decrease from severance related costs, or $19 million |
| |
| ü | $0.42 NOI after income taxes per diluted share, or $117 million |
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| • | $1.55 net earnings per diluted share, or $434 million |
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| ü | $0.94 per diluted share increase, or 154%, from 2013, or $250 million |
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| • | $2.8 billion of cash proceeds from realizations |
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| ü | $265 million dividend distribution from American Capital’s investment in European Capital Limited (“European Capital”) through September 30, 2014 |
ü $540 million of proceeds from American Capital’s investment in portfolio companies sold to American Capital Equity III, LP (“ACE III”)
| |
| • | $3.6 billion in new committed investments |
ü $1.9 billion in Senior Floating Rate Loans (“SFRLs”)
| |
| ü | $1.6 billion in Sponsor Finance, Structured Products and American Capital Asset Management, LLC (“ACAM”) and Fund Development |
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| • | $137 million of stock buybacks in Q1 2014 producing $0.16 accretion per share |
American Capital, Ltd.
February 24, 2015
Page 2
Q4 2014 CONSOLIDATED FINANCIAL SUMMARY
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| • | $20.50 NAV per share outstanding |
| |
| ü | $0.04 per share decrease, or 1% annualized, from Q3 2014 |
| |
| • | $0.21 NOI before income taxes per diluted share, or $60 million |
| |
| ü | $0.02 per diluted share increase over Q4 2013, or $8 million |
| |
| ü | $0.07 per diluted share decrease from severance related costs, or $19 million |
| |
| ü | $0.12 NOI after income taxes per diluted share, or $35 million |
•$0.14 net earnings per diluted share, or $38 million
| |
| ü | $0.80 per diluted share, or $220 million, improvement over Q4 2013 net loss of $182 million |
| |
| • | $773 million of cash proceeds from realizations |
| |
| • | $1,033 million in new committed investments |
ü $288 million in Senior Floating Rate Loans
| |
| ü | $703 million in Sponsor Finance, Structured Products and ACAM |
In October 2014, the Division of Investment Management of the Securities and Exchange Commission (“SEC”) issued SEC IM Guidance Update No. 2014-11, Investment Company Consolidation (“IM Update 2014-11”), which recommends that business development companies (“BDCs”) consolidate wholly-owned subsidiaries when the design and purpose of the subsidiary is to act as an extension of the BDC's investment operations and to facilitate the execution of the BDC's investment strategy. In October 2014, American Capital’s Board of Directors approved a preliminary plan to transfer most of American Capital’s investment assets to two newly formed BDCs, which will be implemented through dividends of the new BDCs' shares to American Capital's shareholders. The board approval marked a change in American Capital’s intent with respect to European Capital, because it is no longer considered a vehicle for third-party capital but rather is viewed as an extension of American Capital’s investment operations. As a result, in accordance with IM Update 2014-11, American Capital has consolidated European Capital’s financial results as of and for the three months ended December 31, 2014 with its financial results for the same periods. The day one financial impact of the European Capital consolidation was as follows:
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| • | $0.06 per share increase in NAV, or $16 million |
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| ü | $87 million of unrealized appreciation related to the difference between the fair value of American Capital's investment in European Capital and European Capital's NAV as of September 30, 2014 |
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| ü | $71 million tax provision due to the difference between the removal of the deferred tax asset previously recorded on American Capital's equity investment in European Capital and the deferred tax asset on European Capital's investment portfolio that was recorded upon consolidation |
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| ◦ | The $71 million tax provision represents an accounting adjustment only and does not reflect a substantive change in American Capital's expectations of the amount or timing of future cash tax payments since European Capital has been included in our consolidated U.S. tax returns since inception |
The impact of the European Capital consolidation on the American Capital consolidated results as of and for the three months ended December 31, 2014 was as follows:
| |
| • | No impact to NAV from Q4 2014 |
ü $0.14 per share increase from net earnings, or $38 million
ü $0.14 per share decrease from foreign exchange cumulative translation adjustment, net of tax, or $38 million
| |
| • | $0.01 per diluted share increase in NOI in Q4 2014, or $4 million |
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| • | $0.14 per diluted share increase in net earnings in Q4 2014, or $38 million |
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| • | $386 million in cash proceeds from realizations in Q4 2014 |
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| • | $39 million in new committed investments in Q4 2014 |
“Since our board approved our plan to spin off two new BDCs to our shareholders, we have been working with our advisors and have had discussions with our regulators concerning a variety of matters related to the spin off. We have made good progress and are awaiting important feedback to determine the appropriate path to proceed to execute the transaction,” said Malon Wilkus, Chairman and Chief Executive Officer. “We continue to adjust our assets so that the two new BDCs will be able to pay market rate dividends and so that the asset composition of the new BDCs will meet statutory requirements.”
American Capital, Ltd.
February 24, 2015
Page 3
“We had a very successful 2014,” continued Mr. Wilkus. “We increased total earning assets under management by 19%, raising five new funds under ACAM management. We invested $1.9 billion in a highly diverse set of Senior Floating Rate Loans, plus we invested $1.6 billion in Sponsor Finance, Structured Products, ACAM and fund development, all toward improving our net operating income, expanding ACAM and advancing our spin off plans. At year end, Senior Floating Rate Loans represented 22% and equity in middle market companies represented 12% of total assets. As a result of our efforts in 2014, we increased NAV per share by 8% and net earnings per diluted share by 154% to $434 million."
PORTFOLIO VALUATION
For the quarter ended December 31, 2014, net unrealized depreciation, before income taxes, totaled $150 million. The primary components of the net unrealized depreciation were:
| |
| • | $179 million of reversal of prior period unrealized appreciation associated with net realized gains on portfolio investments; |
| |
| • | $29 million net unrealized depreciation from American Capital One Stop Buyouts® as a result of declining portfolio company performance primarily in one portfolio company offset by appreciation as a result of increased multiples and improved performance in portfolio companies; and |
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| • | $8 million net unrealized depreciation in Senior Floating Rate Loans; partially offset by |
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| • | $87 million unrealized appreciation due to the elimination of the discount to NAV on the consolidation of European Capital. |
“During the quarter, the SEC updated guidance for investment company consolidation,” said John Erickson, Chief Financial Officer. “Under our strategic plan, we plan that future equity capital raises in Europe will be done via new funds and not by European Capital. Therefore, we concluded it was appropriate to consolidate ECAS under the updated SEC accounting guidance and did so during the quarter. As part of the consolidation, we recognized a $16 million net increase to NAV, comprised of $87 million of unrealized appreciation associated with the removal of the discount to the European Capital NAV as of September 30, 2013 and a $71 million tax provision, which does not reflect a substantive change in our expectations of the amount or timing of future cash tax payments but is required under GAAP due to the consolidation of European Capital.”
PORTFOLIO REALIZATIONS AND PERFORMANCE
In 2014, $2.8 billion of cash proceeds were received from realizations of portfolio investments, including a $265 million dividend distribution from European Capital through September 30, 2014, $386 million from European Capital's investment portfolio in the fourth quarter of 2014 and $540 million of proceeds from the portfolio companies sold to ACE III, a new American Capital private equity fund, which closed on September 23, 2014. American Capital made $3.6 billion in new committed investments during the year, including $1.9 billion in Senior Floating Rate Loans. In the fourth quarter of 2014, $773 million of cash proceeds were received from realizations of portfolio investments, including $386 million from European Capital's investment portfolio. American Capital made $1.0 billion in new committed investments during the quarter, including $0.3 billion in Senior Floating Rate Loans.
As of December 31, 2014, the Company's investments in Senior Floating Rate Loans were diversified across 230 portfolio companies and 51 industries, with the average issuer concentration at 0.4% and no single company representing more than 1.7% of the Company's Senior Floating Rate Loans. The weighted average effective interest rate on the Company's Senior Floating Rate Loans as of December 31, 2014 was 4.4%, which was the same as of September 30, 2014. The weighted average effective interest rate on the Company's debt investments, excluding Senior Floating Rate Loans and European Capital's debt investments, as of December 31, 2014 was 9.3%, 20 basis points higher than the September 30, 2014 rate of 9.1% and 70 basis points lower than the December 31, 2013 rate of 10.0%. The weighted average effective interest rate on European Capital’s debt investments as of December 31, 2014 was 5.0%.
As of December 31, 2014, American Capital loans with a fair value of $116 million were on non-accrual, representing 3.5% of total American Capital loans at fair value, compared to $172 million fair value of non-accrual American Capital loans, or 5.7% of total American Capital loans at fair value as of September 30, 2014. The $56 million decrease in the fair value of American Capital loans on non-accrual was generally driven by net depreciation of existing non-accrual loans. Total American Capital loans on non-accrual were valued at 57.7% of cost at the end of the fourth quarter, a 9.5% decrease from the prior quarter. This is an estimate of the amount the Company expects to recover on non-accruing loans. The estimated loss on total loans at cost, defined as net accumulated depreciation on non-accrual loans plus realized losses on loans during the period, was $108 million, or 3.2%.
American Capital, Ltd.
February 24, 2015
Page 4
As of December 31, 2014, European Capital loans with a fair value of $32 million were on non-accrual, representing 8.9% of total European Capital loans at fair value. Total European Capital loans on non-accrual were valued at 33.3% of cost at the end of the fourth quarter. This is an estimate of the amount the Company expects to recover on non-accruing loans. The estimated loss on total loans at cost was $140 million, or 27.4%.
Due to changes in the composition of American Capital’s investment portfolio and market conditions, strategic reviews of its business were conducted in the fourth quarter of 2014, which resulted in the closing of one office and a workforce reduction of approximately 13% of its employees. As a result, a charge of approximately $19 million was recorded for the fourth quarter of 2014 related to accrued severance payments and stock based compensation charges associated with the workforce reduction.
American Capital, Ltd.
February 24, 2015
Page 5
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| AMERICAN CAPITAL, LTD. |
| CONSOLIDATED BALANCE SHEETS |
| As of December 31, 2014 and 2013 |
| (in millions, except per share amounts) |
| | | | | | | |
| | | | | 2014 Versus 2013 |
| 2014 | | 2013 | | $ | | % |
| (unaudited) | | | | | | |
| Assets | | | | | | | |
| Investments at fair value (cost of $6,416 and $5,548, respectively) | $ | 6,280 |
| | $ | 5,072 |
| | $ | 1,208 |
| | 24 | % |
| Cash and cash equivalents | 676 |
| | 315 |
| | 361 |
| | 115 | % |
| Restricted cash and cash equivalents | 167 |
| | 74 |
| | 93 |
| | 126 | % |
| Interest and dividend receivable | 46 |
| | 38 |
| | 8 |
| | 21 | % |
| Deferred tax asset, net | 354 |
| | 414 |
| | (60 | ) | | (14 | %) |
| Other | 117 |
| | 96 |
| | 21 |
| | 22 | % |
| Total assets | $ | 7,640 |
| | $ | 6,009 |
| | $ | 1,631 |
| | 27 | % |
| | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | |
| Debt | $ | 1,703 |
| | $ | 791 |
| | $ | 912 |
| | 115 | % |
| Trade date settlement liability | 191 |
| | 15 |
| | 176 |
| | NM |
|
| Long term incentive plan liability | 82 |
| | — |
| | 82 |
| | 100 | % |
| Other | 192 |
| | 77 |
| | 115 |
| | 149 | % |
| Total liabilities | 2,168 |
| | 883 |
| | 1,285 |
| | 146 | % |
| | | | | | | | |
| 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, 271.1 and 274.8 issued and 266.9 and 270.2 outstanding, respectively | 3 |
| | 3 |
| | — |
| | — | % |
| Capital in excess of par value | 6,246 |
| | 6,296 |
| | (50 | ) | | (1 | %) |
| Cumulative translation adjustment | (38 | ) | | — |
| | (38 | ) | | (100 | %) |
| Distributions in excess of net realized earnings | (505 | ) | | (774 | ) | | 269 |
| | 35 | % |
| Net unrealized depreciation of investments | (234 | ) | | (399 | ) | | 165 |
| | 41 | % |
| Total shareholders' equity | 5,472 |
| | 5,126 |
| | 346 |
| | 7 | % |
| Total liabilities and shareholders' equity | $ | 7,640 |
| | $ | 6,009 |
| | $ | 1,631 |
| | 27 | % |
| | | | | | | | |
| NAV per common share outstanding | $ | 20.50 |
| | $ | 18.97 |
| | $ | 1.53 |
| | 8 | % |
______________________________
Note: Effective October 1, 2014, European Capital's financial results as of and for the three months ended December 31, 2014 have been consolidated with the financial results of ACAS for the same periods.
American Capital, Ltd.
February 24, 2015
Page 6
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| AMERICAN CAPITAL, LTD. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| Three Months and Fiscal Years Ended December 31, 2014 and 2013 |
| (in millions, except per share data) |
| | | | | | | | | | | | | | | | |
| | | | Three Months Ended | | | | | | Fiscal Year Ended |
| | Three Months Ended | | December 31, | | Fiscal Year Ended | | December 31, |
| | December 31, | | 2014 Versus 2013 | | December 31, | | 2014 Versus 2013 |
| | 2014 | | 2013 | | $ | | % | | 2014 | | 2013 | | $ | | % |
| | (unaudited) | | (unaudited) | | | | | | (unaudited) | | | | | | |
| OPERATING REVENUE | | | | | | | | | | | | | | | |
| Interest and dividend income | $ | 144 |
| | $ | 92 |
| | $ | 52 |
| | 57 | % | | $ | 413 |
| | $ | 423 |
| | $ | (10 | ) | | (2 | %) |
| Fee income | 14 |
| | 26 |
| | (12 | ) | | (46 | %) | | 58 |
| | 64 |
| | (6 | ) | | (9 | %) |
| Total operating revenue | 158 |
| | 118 |
| | 40 |
| | 34 | % | | 471 |
| | 487 |
| | (16 | ) | | (3 | %) |
| | | | | | | | | | | | | | | | |
| OPERATING EXPENSES | | | | | | | | | | | | | | | |
| Interest | 17 |
| | 12 |
| | 5 |
| | 42 | % | | 54 |
| | 44 |
| | 10 |
| | 23 | % |
| Salaries, benefits and stock-based compensation | 54 |
| | 41 |
| | 13 |
| | 32 | % | | 168 |
| | 156 |
| | 12 |
| | 8 | % |
| Management fees | 5 |
| | — |
| | 5 |
| | 100 | % | | 5 |
| | — |
| | 5 |
| | 100 | % |
| General and administrative | 22 |
| | 13 |
| | 9 |
| | 69 | % | | 61 |
| | 55 |
| | 6 |
| | 11 | % |
| Total operating expenses | 98 |
| | 66 |
| | 32 |
| | 48 | % | | 288 |
| | 255 |
| | 33 |
| | 13 | % |
| | | | | | | | | | | | | | | | |
| NET OPERATING INCOME BEFORE INCOME TAXES | 60 |
| | 52 |
| | 8 |
| | 15 | % | | 183 |
| | 232 |
| | (49 | ) | | (21 | %) |
| | | | | | | | | | | | | | | | |
| Tax provision | (25 | ) | | (14 | ) | | (11 | ) | | (79 | %) | | (66 | ) | | (76 | ) | | 10 |
| | 13 | % |
| NET OPERATING INCOME | 35 |
| | 38 |
| | (3 | ) | | (8 | %) | | 117 |
| | 156 |
| | (39 | ) | | (25 | %) |
| | | | | | | | | | | | | | | | |
| Net realized gain (loss) | | | | | | | | | | | | | | | |
| Portfolio company investments | 210 |
| | 12 |
| | 198 |
| | NM |
| | 263 |
| | (104 | ) | | 367 |
| | NM |
|
| Foreign currency transactions | (12 | ) | | 3 |
| | (15 | ) | | NM |
| | (17 | ) | | 3 |
| | (20 | ) | | NM |
|
| Derivative agreements | 1 |
| | 1 |
| | — |
| | — | % | | (41 | ) | | (14 | ) | | (27 | ) | | (193 | %) |
| Tax (provision) benefit | (72 | ) | | 3 |
| | (75 | ) | | NM |
| | (53 | ) | | 60 |
| | (113 | ) | | NM |
|
| Total net realized gain (loss) | 127 |
| | 19 |
| | 108 |
| | 568 | % | | 152 |
| | (55 | ) | | 207 |
| | NM |
|
| | | | | | | | | | | | | | | | |
| Net unrealized appreciation (depreciation) | | | | | | | | | | | | | | | |
| Portfolio company investments | (206 | ) | | (261 | ) | | 55 |
| | 21 | % | | 149 |
| | 49 |
| | 100 |
| | 204 | % |
| Foreign currency translation | 8 |
| | 21 |
| | (13 | ) | | (62 | %) | | (74 | ) | | 52 |
| | (126 | ) | | NM |
|
| Derivative agreements and others | 48 |
| | 3 |
| | 45 |
| | NM |
| | 35 |
| | 19 |
| | 16 |
| | 84 | % |
| Tax benefit (provision) | 26 |
| | (2 | ) | | 28 |
| | NM |
| | 55 |
| | (37 | ) | | 92 |
| | NM |
|
| Total net unrealized (depreciation) appreciation | (124 | ) | | (239 | ) | | 115 |
| | 48 | % | | 165 |
| | 83 |
| | 82 |
| | 99 | % |
| | | | | | | | | | | | | | | | |
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ("NET EARNINGS (LOSS) ") | $ | 38 |
| | $ | (182 | ) | | $ | 220 |
| | NM |
| | $ | 434 |
| | $ | 184 |
| | $ | 250 |
| | 136 | % |
| | | | | | | | | | | | | | | | |
| NET OPERATING INCOME PER COMMON SHARE | | | | | | | | | | | | | | | |
| Basic | $ | 0.13 |
| | $ | 0.14 |
| | $ | (0.01 | ) | | (7 | %) | | $ | 0.44 |
| | $ | 0.53 |
| | $ | (0.09 | ) | | (17 | %) |
| Diluted | $ | 0.12 |
| | $ | 0.14 |
| | $ | (0.02 | ) | | (14 | %) | | $ | 0.42 |
| | $ | 0.51 |
| | $ | (0.09 | ) | | (18 | %) |
| | | | | | | | | | | | | | | | |
| NET REALIZED EARNINGS PER COMMON SHARE | | | | | | | | | | | | | | | |
| Basic | $ | 0.60 |
| | $ | 0.21 |
| | $ | 0.39 |
| | 186 | % | | $ | 1.00 |
| | $ | 0.35 |
| | $ | 0.65 |
| | 186 | % |
| Diluted | $ | 0.58 |
| | $ | 0.21 |
| | $ | 0.37 |
| | 176 | % | | $ | 0.96 |
| | $ | 0.33 |
| | $ | 0.63 |
| | 191 | % |
| | | | | | | | | | | | | | | | |
| NET EARNINGS (LOSS) PER COMMON SHARE | | | | | | | | | | | | | | | |
| Basic | $ | 0.14 |
| | $ | (0.66 | ) | | $ | 0.80 |
| | NM |
| | $ | 1.62 |
| | $ | 0.63 |
| | $ | 0.99 |
| | 157 | % |
| Diluted | $ | 0.14 |
| | $ | (0.66 | ) | | $ | 0.80 |
| | NM |
| | $ | 1.55 |
| | $ | 0.61 |
| | $ | 0.94 |
| | 154 | % |
| | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | | | | | | | | | | | | | | | |
| Basic | 269.0 |
| | 277.5 |
| | (8.5 | ) | | (3 | %) | | 268.2 |
| | 291.6 |
| | (23.4 | ) | | (8 | %) |
| Diluted | 281.1 |
| | 277.5 |
| | 3.6 |
| | 1 | % | | 280.7 |
| | 303.9 |
| | (23.2 | ) | | (8 | %) |
______________________________
Note: Effective October 1, 2014, European Capital's financial results as of and for the three months ended December 31, 2014 have been consolidated with the financial results of ACAS for the same periods.
American Capital, Ltd.
February 24, 2015
Page 7
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| AMERICAN CAPITAL, LTD. |
| OTHER FINANCIAL INFORMATION |
| Three Months Ended December 31, 2014 and September 30, 2014 and Fiscal Years Ended December 31, 2014 and 2013 |
| (in millions, except per share data) |
| (unaudited) |
| | | | | | | | | | | | | | | | |
| | | | | | Q4 2014 Versus
Q3 2014 | | | | | | 2014 Versus 2013 |
| | Q4 2014 | | Q3 2014 | | $ | | % | | 2014 | | 2013 | | $ | | % |
| | | | | | | | | | | | | | | | |
| Assets Under Management | | | | | | | | | | | | | | | |
| American Capital Total Assets at Fair Value | $ | 7,640 |
| | $ | 7,176 |
| | $ | 464 |
| | 6 | % | | $ | 7,640 |
| | $ | 6,009 |
| | $ | 1,631 |
| | 27 | % |
| Externally Managed Assets at Fair Value(1) | 78,782 |
| | 73,304 |
| | 5,478 |
| | 7 | % | | 78,782 |
| | 87,201 |
| | (8,419 | ) | | (10 | %) |
| Total | $ | 86,422 |
| | $ | 80,480 |
| | $ | 5,942 |
| | 7 | % | | $ | 86,422 |
| | $ | 93,210 |
| | $ | (6,788 | ) | | (7 | %) |
| | | | | | | | | | | | | | | | |
| Third-Party Earning Assets Under Management(2) | $ | 14,467 |
| | $ | 14,044 |
| | $ | 423 |
| | 3 | % | | $ | 14,467 |
| | $ | 12,594 |
| | $ | 1,873 |
| | 15 | % |
| Total Earning Assets Under Management(3) | $ | 22,107 |
| | $ | 21,220 |
| | $ | 887 |
| | 4 | % | | $ | 22,107 |
| | $ | 18,603 |
| | $ | 3,504 |
| | 19 | % |
| | | | | | | | | | | | | | | | |
| New Investments | | | | | | | | | | | | | | | |
| First Lien Senior Debt | $ | 385 |
| | $ | 928 |
| | $ | (543 | ) | | (59 | %) | | $ | 2,039 |
| | $ | 103 |
| | $ | 1,936 |
| | NM |
|
| Second Lien Senior Debt | 248 |
| | 129 |
| | 119 |
| | 92 | % | | 589 |
| | 511 |
| | 78 |
| | 15 | % |
| Mezzanine Debt | — |
| | 4 |
| | (4 | ) | | (100 | %) | | 10 |
| | — |
| | 10 |
| | 100 | % |
| Preferred Equity | 10 |
| | 23 |
| | (13 | ) | | (57 | %) | | 35 |
| | 125 |
| | (90 | ) | | (72 | %) |
| Common Equity | 122 |
| | 207 |
| | (85 | ) | | (41 | %) | | 405 |
| | 236 |
| | 169 |
| | 72 | % |
| Structured Products | 268 |
| | 152 |
| | 116 |
| | 76 | % | | 532 |
| | 132 |
| | 400 |
| | 303 | % |
| Total by Security Type | $ | 1,033 |
| | $ | 1,443 |
| | $ | (410 | ) | | (28 | %) | | $ | 3,610 |
| | $ | 1,107 |
| | $ | 2,503 |
| | 226 | % |
| | | | | | | | | | | | | | | | |
| Sponsor Finance Investments | $ | 281 |
| | $ | 155 |
| | $ | 126 |
| | 81 | % | | $ | 597 |
| | $ | 125 |
| | $ | 472 |
| | 378 | % |
| Senior Floating Rate Loans | 288 |
| | 825 |
| | (537 | ) | | (65 | %) | | 1,891 |
| | — |
| | 1,891 |
| | 100 | % |
| Structured Products | 268 |
| | 152 |
| | 116 |
| | 76 | % | | 512 |
| | 75 |
| | 437 |
| | 583 | % |
| Investments in ACAM and Fund Development | 152 |
| | 201 |
| | (49 | ) | | (24 | %) | | 437 |
| | 271 |
| | 166 |
| | 61 | % |
| European Capital | 39 |
| | — |
| | 39 |
| | 100 | % | | 39 |
| | — |
| | 39 |
| | 100 | % |
| American Capital One Stop Buyouts® | — |
| | — |
| | — |
| | — | % | | — |
| | 27 |
| | (27 | ) | | (100 | %) |
| Add-on Financing for Growth and Working Capital | 3 |
| | 106 |
| | (103 | ) | | (97 | %) | | 116 |
| | 56 |
| | 60 |
| | 107 | % |
| Add-on Financing for Distressed Situations | 2 |
| | — |
| | 2 |
| | 100 | % | | 14 |
| | 42 |
| | (28 | ) | | (67 | %) |
| Add-on Financing for Acquisitions | — |
| | — |
| | — |
| | — | % | | — |
| | 391 |
| | (391 | ) | | (100 | %) |
| Add-on Financing for Recapitalizations, not Including Distressed Investments | — |
| | 4 |
| | (4 | ) | | (100 | %) | | 4 |
| | 104 |
| | (100 | ) | | (96 | %) |
| Add-on Financing for Purchase of Debt of a Portfolio Company | — |
| | — |
| | — |
| | — | % | | — |
| | 16 |
| | (16 | ) | | (100 | %) |
| Total by Use | $ | 1,033 |
| | $ | 1,443 |
| | $ | (410 | ) | | (28 | %) | | $ | 3,610 |
| | $ | 1,107 |
| | $ | 2,503 |
| | 226 | % |
| | | | | | | | | | | | | | | | |
| Realizations | | | | | | | | | | | | | | | |
| Equity Investments | $ | 401 |
| | $ | 656 |
| | $ | (255 | ) | | (39 | %) | | $ | 1,523 |
| | $ | 362 |
| | $ | 1,161 |
| | 321 | % |
| Principal Prepayments | 166 |
| | 332 |
| | (166 | ) | | (50 | %) | | 699 |
| | 604 |
| | 95 |
| | 16 | % |
| Payment of Accrued PIK Notes and Dividends and Accreted OID | 155 |
| | 110 |
| | 45 |
| | 41 | % | | 389 |
| | 187 |
| | 202 |
| | 108 | % |
| Loan Syndications and Sales | 45 |
| | 32 |
| | 13 |
| | 41 | % | | 98 |
| | 14 |
| | 84 |
| | 600 | % |
| Scheduled Principal Amortization | 6 |
| | 12 |
| | (6 | ) | | (50 | %) | | 56 |
| | 41 |
| | 15 |
| | 37 | % |
| Total by Source | $ | 773 |
| | $ | 1,142 |
| | $ | (369 | ) | | (32 | %) | | $ | 2,765 |
| | $ | 1,208 |
| | $ | 1,557 |
| | 129 | % |
| | | | | | | | | | | | | | | | |
| European Capital(6) | $ | 386 |
| | $ | 127 |
| | $ | 259 |
| | 204 | % | | $ | 651 |
| | $ | 195 |
| | $ | 456 |
| | 234 | % |
| American Capital One Stop Buyouts® | 180 |
| | 639 |
| | (459 | ) | | (72 | %) | | 1,167 |
| | 530 |
| | 637 |
| | 120 | % |
| Senior Floating Rate Loans | 98 |
| | 57 |
| | 41 |
| | 72 | % | | 163 |
| | — |
| | 163 |
| | 100 | % |
| Sponsor Finance Investments | 54 |
| | 234 |
| | (180 | ) | | (77 | %) | | 386 |
| | 444 |
| | (58 | ) | | (13 | %) |
| Structured Products | 50 |
| | 83 |
| | (33 | ) | | (40 | %) | | 192 |
| | 27 |
| | 165 |
| | 611 | % |
| American Capital Asset Management | 5 |
| | 2 |
| | 3 |
| | 150 | % | | 206 |
| | 12 |
| | 194 |
| | NM |
|
| Total by Business Line | $ | 773 |
| | $ | 1,142 |
| | $ | (369 | ) | | (32 | %) | | $ | 2,765 |
| | $ | 1,208 |
| | $ | 1,557 |
| | 129 | % |
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| | | | | | | | | | | | | | | | |
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American Capital, Ltd.
February 24, 2015
Page 8
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Appreciation, Depreciation, Gain and Loss | | | | | | | | | | | | | | | |
| Gross Realized Gain | $ | 270 |
| | $ | 110 |
| | $ | 160 |
| | 145 | % | | $ | 474 |
| | $ | 117 |
| | $ | 357 |
| | 305 | % |
| Gross Realized Loss | (60 | ) | | (64 | ) | | 4 |
| | 6 | % | | (211 | ) | | (221 | ) | | 10 |
| | 5 | % |
| Portfolio Net Realized Gain (Loss) | 210 |
| | 46 |
| | 164 |
| | 357 | % | | 263 |
| | (104 | ) | | 367 |
| | NM |
|
| Foreign Currency Transactions | (12 | ) | | (8 | ) | | (4 | ) | | (50 | %) | | (17 | ) | | 3 |
| | (20 | ) | | NM |
|
| Derivative Agreements | 1 |
| | (44 | ) | | 45 |
| | NM |
| | (41 | ) | | (14 | ) | | (27 | ) | | (193 | %) |
| Tax Benefit | (72 | ) | | 17 |
| | (89 | ) | | NM |
| | (53 | ) | | 60 |
| | (113 | ) | | NM |
|
| Net Realized Gain (Loss) | 127 |
| | 11 |
| | 116 |
| | NM |
| | 152 |
| | (55 | ) | | 207 |
| | NM |
|
| | | | | | | | | | | | | |
| | |
| Net Unrealized (Depreciation) Appreciation of American Capital One Stop Buyouts® | (29 | ) | | 110 |
| | (139 | ) | | NM |
| | (47 | ) | | (102 | ) | | 55 |
| | 54 | % |
| Net Unrealized Appreciation (Depreciation) of American Capital Sponsor Finance Investments | 7 |
| | 19 |
| | (12 | ) | | (63 | %) | | 11 |
| | (15 | ) | | 26 |
| | NM |
|
| Net Unrealized Appreciation of European Capital Investments | 7 |
| | — |
| | 7 |
| | 100 | % | | 7 |
| | — |
| | 7 |
| | 100 | % |
| Net Unrealized Appreciation of Investment in European Capital | — |
| | 37 |
| | (37 | ) | | (100 | %) | | 167 |
| | 281 |
| | (114 | ) | | (41 | %) |
| Net Unrealized Appreciation (Depreciation) of Investment in European Capital Foreign Currency Translation | — |
| | 12 |
| | (12 | ) | | (100 | %) | | 14 |
| | (14 | ) | | 28 |
| | NM |
|
| Net Unrealized Appreciation (Depreciation) of ACAM | — |
| | — |
| | — |
| | — | % | | 222 |
| | (165 | ) | | 387 |
| | NM |
|
| Net Unrealized Depreciation of SFRLs | (8 | ) | | (16 | ) | | 8 |
| | 50 | % | | (24 | ) | | — |
| | (24 | ) | | (100 | %) |
| Net Unrealized (Depreciation) Appreciation of Structured Products | (4 | ) | | 8 |
| | (12 | ) | | NM |
| | 5 |
| | (41 | ) | | 46 |
| | NM |
|
| Reversal of Prior Period Net Unrealized (Appreciation) Depreciation Upon Realization | (179 | ) | | (35 | ) | | (144 | ) | | (411 | %) | | (206 | ) | | 105 |
| | (311 | ) | | NM |
|
| Net Unrealized (Depreciation) Appreciation of Portfolio Company Investments | (206 | ) | | 135 |
| | (341 | ) | | NM |
| | 149 |
| | 49 |
| | 100 |
| | 204 | % |
| Net Unrealized Appreciation Due to Consolidation of European Capital | 87 |
| | — |
| | 87 |
| | 100 | % | | 87 |
| | — |
| | 87 |
| | 100 | % |
| Foreign Currency Translation - Investment in European Capital | — |
| | (63 | ) | | 63 |
| | 100 | % | | (75 | ) | | 49 |
| | (124 | ) | | NM |
|
| Foreign Currency Translation - European Capital Investments | 11 |
| | — |
| | 11 |
| | 100 | % | | 11 |
| | — |
| | 11 |
| | 100 | % |
| Foreign Currency Translation - Other | (3 | ) | | (3 | ) | | — |
| | — | % | | (10 | ) | | 3 |
| | (13 | ) | | NM |
|
| Derivative Agreements and Other | (39 | ) | | (11 | ) | | (28 | ) | | (255 | %) | | (52 | ) | | 19 |
| | (71 | ) | | NM |
|
| Tax Benefit (Provision) | 26 |
| | (6 | ) | | 32 |
| | NM |
| | 55 |
| | (37 | ) | | 92 |
| | NM |
|
| Net Unrealized (Depreciation) Appreciation of Investments | (124 | ) | | 52 |
| | (176 | ) | | NM |
| | 165 |
| | 83 |
| | 82 |
| | 99 | % |
| | | | | | | | | | | | | | | | |
| Net Gains, Losses, Appreciation and Depreciation | $ | 3 |
| | $ | 63 |
| | $ | (60 | ) | | (95 | %) | | $ | 317 |
| | $ | 28 |
| | $ | 289 |
| | NM |
|
| | | | | | | | | | | | | | | | |
| Other Financial Data | | | | | | | | | | | | | | | |
| NAV per Share | $ | 20.50 |
| | $ | 20.54 |
| | $ | (0.04 | ) | | — | % | | $ | 20.50 |
| | $ | 18.97 |
| | $ | 1.53 |
| | 8 | % |
| Debt at Cost | $ | 1,703 |
| | $ | 1,382 |
| | $ | 321 |
| | 23 | % | | $ | 1,703 |
| | $ | 791 |
| | $ | 912 |
| | 115 | % |
| Market Capitalization | $ | 3,899 |
| | $ | 3,751 |
| | $ | 148 |
| | 4 | % | | $ | 3,899 |
| | $ | 4,226 |
| | $ | (327 | ) | | (8 | %) |
| Total Enterprise Value(4) | $ | 4,926 |
| | $ | 4,675 |
| | $ | 251 |
| | 5 | % | | $ | 4,926 |
| | $ | 4,702 |
| | $ | 224 |
| | 5 | % |
| Asset Coverage Ratio | 419 | % | | 423 | % | | | | | | 419 | % | | 588 | % | | | | |
| Debt to Equity Ratio | 0.3x |
| | 0.3x |
| | | | | | 0.3x |
| | 0.1x |
| | | | |
| Credit Quality | | | | | | | | | | | | | | | |
| Weighted Average Effective Interest Rate on SFRLs at Period End | 4.4 | % | | 4.4 | % | | | | | | 4.4 | % | | N/A |
| | | | |
| Weighted Average Effective Interest Rate on Debt Investments, Excluding SFRLs, at Period End | 8.2 | % | | 9.1 | % | | | | | | 8.2 | % | | 10.0 | % | | | | |
| Weighted Average Effective Interest Rate on All Debt Investments at Period End | 6.6 | % | | 6.8 | % | | | | | | 6.6 | % | | 10.0 | % | | | | |
| Loans on Non-Accrual at Cost | $ | 371 |
| | $ | 256 |
| | $ | 115 |
| | 45 | % | | $ | 371 |
| | $ | 287 |
| | $ | 84 |
| | 29 | % |
| Loans on Non-Accrual at Fair Value | $ | 148 |
| | $ | 172 |
| | $ | (24 | ) | | (14 | %) | | $ | 148 |
| | $ | 154 |
| | $ | (6 | ) | | (4 | %) |
| Non-Accrual Loans at Cost as a Percentage of Total Loans at Cost | 9.4 | % | | 8.3 | % | | | | | | 9.4 | % | | 17.0 | % | | | | |
| Non-Accrual Loans at Fair Value as a Percentage of Total Loans at Fair Value | 4.0 | % | | 5.7 | % | | | | | | 4.0 | % | | 9.7 | % | | | | |
| Non-Accruing Loans at Fair Value as a Percentage of Non-Accruing Loans at Cost | 39.9 | % | | 67.2 | % | | | | | | 39.9 | % | | 53.7 | % | | | | |
| Estimated Loss(5) | $ | 248 |
| | $ | 108 |
| | $ | 140 |
| | 130 | % | | $ | 648 |
| | $ | 531 |
| | $ | 117 |
| | 22 | % |
| Estimated Loss as a Percentage of Total Loans at Cost | 6.3 | % | | 3.7 | % | | | | | | 16.4 | % | | 31.4 | % | | | | |
| Past Due Loans at Cost | $ | — |
| | $ | 45 |
| | $ | (45 | ) | | (100 | %) | | $ | — |
| | $ | 26 |
| | $ | (26 | ) | | (100 | %) |
| Debt to Equity Conversions at Cost | $ | 9 |
| | $ | — |
| | $ | 9 |
| | 100 | % | | $ | 9 |
| | $ | 75 |
| | $ | (66 | ) | | (88 | %) |
| | | | | | | | | | | | | | | | |
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American Capital, Ltd.
February 24, 2015
Page 9
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| Return on Average Equity | | | | | | | | | | | | | | | |
| LTM Net Operating Income Before Income Taxes Return on Average Shareholders' Equity | 3.5 | % | | 3.3 | % | | | | | | 3.5 | % | | 4.3 | % | | | | |
| LTM Net Operating Income Return on Average Shareholders' Equity | 2.2 | % | | 2.3 | % | | | | | | 2.2 | % | | 2.9 | % | | | | |
| LTM Net Realized Earnings Return on Average Shareholders' Equity | 5.1 | % | | 3.1 | % | | | | | | 5.1 | % | | 1.9 | % | | | | |
| LTM Net Earnings Return on Average Shareholders' Equity | 8.2 | % | | 4.1 | % | | | | | | 8.2 | % | | 3.4 | % | | | | |
| Current Quarter Annualized Net Operating Income Before Income Taxes Return on Average Shareholders' Equity | 4.4 | % | | 5.0 | % | | | | | | 4.4 | % | | 3.9 | % | | | | |
| Current Quarter Annualized Net Operating Income Return on Average Shareholders' Equity | 2.6 | % | | 3.8 | % | | | | | | 2.6 | % | | 2.8 | % | | | | |
| Current Quarter Annualized Net Realized Earnings Return on Average Shareholders' Equity | 11.9 | % | | 4.6 | % | | | | | | 11.9 | % | | 4.3 | % | | | | |
| Current Quarter Annualized Net Earnings (Loss) Return on Average Shareholders' Equity | 2.7 | % | | 8.5 | % | | | | | | 2.7 | % | | (13.8 | %) | | | | |
______________________________
Note: Effective October 1, 2014, European Capital's financial results as of and for the three months ended December 31, 2014 have been consolidated with the financial results of ACAS for the same periods.
|
| | | | | | | | | | | | | |
| (1) Includes total assets of American Capital Agency, American Capital Mortgage, American Capital Senior Floating, investment in European Capital through September 30, 2014, American Capital Equity I, American Capital Equity II, American Capital Equity III, ACAS CLO 2007-1, ACAS CLO 2012-1, ACAS CLO 2013-1, ACAS CLO 2013-2, ACAS CLO 2014-1 and ACAS CLO 2014-2, less American Capital's investment in the funds. |
| (2) Represents third-party earning assets under management from which the associated base management fees are calculated, less American Capital's investment in the funds. |
| (3) Represents total assets of American Capital less American Capital's investment in the funds as well as third-party earning assets under management from which the associated base management fees are calculated. |
| (4) Enterprise value is calculated as debt at cost plus market capitalization less cash and cash equivalents on hand. |
| (5) Net accumulated depreciation on non-accrual loans plus realized losses on loans during the period presented. |
| (6) Includes realizations from American Capital's investment in European Capital through September 30, 2014. Includes European Capital investment portfolio realizations during the three months ended December 31, 2014. |
American Capital, Ltd.
February 24, 2015
Page 10
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Static Pool (1) |
American Capital Portfolio Statistics
($ in millions, unaudited) Aggregate | 1997-
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2011 | 2012 | 2013 | 2014 | 1997-2014
Static Pools
Aggregate |
| IRR of All Investments(2) | 12.2 | % | 12.5 | % | 14.0 | % | 10.5 | % | (1.7 | %) | 9.7 | % | 21.8 | % | (13.3 | %) | 45.2 | % | 3.6 | % | 9.1 | % |
| IRR of Exited Investments(3) | 12.5 | % | 14.9 | % | 18.1 | % | 9.3 | % | (2.1 | %) | 9.7 | % | 21.9 | % | 16.4 | % | 16.4 | % | 5.4 | % | 10.2 | % |
| IRR of Equity Investments(2)(4)(5) | 17.5 | % | 24.4 | % | 14.1 | % | 13.8 | % | (6.4 | %) | 20.6 | % | 29.6 | % | (81.1 | %) | 192.4 | % | 56.0 | % | 11.4 | % |
| IRR of Exited Equity Investments(3)(4)(5) | 19.3 | % | 38.6 | % | 28.7 | % | 12.5 | % | 4.9 | % | 21.3 | % | 35.1 | % | N/A |
| N/A |
| N/A |
| 19.7 | % |
| IRR of All One Stop Buyout Investments(2)(19) | 10.9 | % | 13.8 | % | 27.3 | % | 12.8 | % | 2.5 | % | 15.8 | % | 31.2 | % | (20.2 | %) | 256.5 | % | N/A |
| 13.1 | % |
| IRR of All One Stop Buyout Equity Investments(2)(4)(5)(19) | 15.5 | % | 23.5 | % | 38.4 | % | 15.6 | % | (6.1 | %) | 16.0 | % | 33.1 | % | (81.1 | %) | 256.1 | % | N/A |
| 16.8 | % |
| IRR of Current One Stop Buyout Investments(2)(19) | 10.6 | % | (0.8 | %) | 25.4 | % | 10.7 | % | (0.5 | %) | 24.9 | % | 31.2 | % | (20.2 | %) | 256.5 | % | N/A |
| 9.7 | % |
| IRR of Exited One Stop Buyout Investments(3) | 11.4 | % | 19.7 | % | 21.7 | % | 12.2 | % | 11.4 | % | 15.8 | % | N/A |
| 19.6 | % | NM |
| N/A |
| 14.1 | % |
| Committed Investments(7) | $ | 3,848 |
| $ | 2,291 |
| $ | 5,540 |
| $ | 5,329 |
| $ | 7,552 |
| $ | 1,071 |
| $ | 216 |
| $ | 882 |
| $ | 334 |
| $ | 3,108 |
| $ | 30,171 |
|
| Total Exits and Prepayments of Committed Investments(7) | $ | 3,791 |
| $ | 2,127 |
| $ | 4,715 |
| $ | 4,811 |
| $ | 5,953 |
| $ | 832 |
| $ | 168 |
| $ | 289 |
| $ | 109 |
| $ | 224 |
| $ | 23,019 |
|
| Total Interest, Dividends and Fees Collected | $ | 1,426 |
| $ | 715 |
| $ | 1,663 |
| $ | 1,598 |
| $ | 1,591 |
| $ | 450 |
| $ | 32 |
| $ | 82 |
| $ | 44 |
| $ | 52 |
| $ | 7,653 |
|
| Total Net Realized (Loss) Gain on Investments | $ | (105 | ) | $ | (12 | ) | $ | 402 |
| $ | (258 | ) | $ | (1,291 | ) | $ | (78 | ) | $ | 12 |
| $ | 4 |
| $ | — |
| $ | (2 | ) | $ | (1,328 | ) |
| Current Cost of Investments | $ | 39 |
| $ | 175 |
| $ | 544 |
| $ | 284 |
| $ | 934 |
| $ | 192 |
| $ | 34 |
| $ | 582 |
| $ | 218 |
| $ | 2,572 |
| $ | 5,574 |
|
| Current Fair Value of Investments | $ | 24 |
| $ | 52 |
| $ | 1,251 |
| $ | 274 |
| $ | 629 |
| $ | 167 |
| $ | 44 |
| $ | 398 |
| $ | 302 |
| $ | 2,552 |
| $ | 5,693 |
|
| Current Fair Value of Investments as a % of Total Investments at Fair Value | 0.4 | % | 0.9 | % | 22.0 | % | 4.8 | % | 11.1 | % | 2.9 | % | 0.8 | % | 7.0 | % | 5.3 | % | 44.8 | % | 100.0 | % |
| Net Unrealized (Depreciation) Appreciation | $ | (15 | ) | $ | (123 | ) | $ | 707 |
| $ | (10 | ) | $ | (305 | ) | $ | (25 | ) | $ | 10 |
| $ | (184 | ) | $ | 84 |
| $ | (20 | ) | $ | 119 |
|
| Non-Accruing Loans at Cost | $ | 6 |
| $ | — |
| $ | 19 |
| $ | 49 |
| $ | 122 |
| $ | 5 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 201 |
|
| Non-Accruing Loans at Fair Value | $ | 2 |
| $ | — |
| $ | 4 |
| $ | 24 |
| $ | 81 |
| $ | 5 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 116 |
|
| Equity Interest at Fair Value(4) | $ | 3 |
| $ | 45 |
| $ | 1,138 |
| $ | 134 |
| $ | 253 |
| $ | 43 |
| $ | 36 |
| $ | 15 |
| $ | 138 |
| $ | 16 |
| $ | 1,821 |
|
| Debt to Adjusted EBITDA(8)(9)(12)(13)(16) | 13.2 |
| 2.3 |
| 0.8 |
| 7.5 |
| 5.1 |
| 6.6 |
| — |
| 6.8 |
| 6.6 |
| 5.9 |
| 4.1 |
|
| Interest Coverage(10)(12)(13)(16) | 0.2 |
| 6.7 |
| 0.2 |
| 1.1 |
| 1.9 |
| 1.7 |
| — |
| 2.1 |
| 2.5 |
| 2.5 |
| 1.3 |
|
| Debt Service Coverage(11)(12)(13)(16) | 0.2 |
| 1.4 |
| 0.1 |
| 0.8 |
| 1.7 |
| 1.3 |
| — |
| 1.8 |
| 2.2 |
| 2.1 |
| 1.1 |
|
| Average Age of Companies(13)(16) | 34 yrs |
| 40 yrs |
| 11 yrs |
| 46 yrs |
| 35 yrs |
| 21 yrs |
| 5 yrs |
| 19 yrs |
| 20 yrs |
| 26 yrs |
| 22 yrs |
|
| Diluted Ownership Percentage(4)(17) | 76 | % | 80 | % | 84 | % | 49 | % | 59 | % | 60 | % | 66 | % | 86 | % | 76 | % | 2 | % | 76 | % |
| Average Revenue(13)(14)(16) | $ | 78 |
| $ | 30 |
| $ | 175 |
| $ | 168 |
| $ | 249 |
| $ | 25 |
| $ | — |
| $ | 192 |
| $ | 294 |
| $ | 279 |
| $ | 201 |
|
| Average Adjusted EBITDA(8)(13)(16) | $ | 8 |
| $ | 7 |
| $ | 72 |
| $ | 34 |
| $ | 28 |
| $ | 12 |
| $ | — |
| $ | 49 |
| $ | 29 |
| $ | 64 |
| $ | 51 |
|
| Total Revenue(13)(14) | $ | 730 |
| $ | 87 |
| $ | 516 |
| $ | 2,197 |
| $ | 2,565 |
| $ | 52 |
| $ | — |
| $ | 933 |
| $ | 2,004 |
| $ | 4,688 |
| $ | 13,772 |
|
| Total Adjusted EBITDA(8)(13) | $ | 86 |
| $ | 3 |
| $ | 112 |
| $ | 29 |
| $ | 101 |
| $ | 23 |
| $ | — |
| $ | 287 |
| $ | 327 |
| $ | 1,202 |
| $ | 2,170 |
|
| % of Senior Loans(12)(13)(15) | 88 | % | 100 | % | 6 | % | 24 | % | 59 | % | 39 | % | 100 | % | 95 | % | 100 | % | 100 | % | 77 | % |
| % of Loans with Lien(12)(13)(15) | 100 | % | 100 | % | 88 | % | 100 | % | 94 | % | 46 | % | 100 | % | 100 | % | 100 | % | 100 | % | 94 | % |
| Diluted Ownership Percentage of ACAS in MOPC(6)(17) | — | % | 81 | % | 97 | % | 52 | % | 76 | % | 97 | % | 81 | % | 92 | % | 84 | % | N/A |
| 89 | % |
| Total Third-party Debt at Cost in MOPC(6)(18) | $ | 5 |
| $ | 74 |
| $ | 18 |
| $ | 353 |
| $ | 232 |
| $ | 42 |
| $ | — |
| $ | 24 |
| $ | — |
|
| N/A |
| $ | 748 |
|
| | | | | | | | | | | | |
———————
NM = Not Meaningful
| |
| Note: | Excludes portfolio companies of European Capital. For static pool statistics, American Capital’s investment in European Capital was treated as an exited investment at its net asset value on October 1, 2014, the date on which it was consolidated into American Capital. |
| |
| 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 the 2009 and 2010 static pool years. |
| |
| 2) | Internal rate of return (“IRR”) calculations are based on a sequence of cash proceeds invested, cash realizations or non-cash consideration received, and the terminal value of an investment over time. For active investments, the terminal value is assumed to be the current fair value. For exited investments, the terminal value is the total cash realization received upon exit. Additionally, IRR calculations exclude securities traded but not yet settled at period end. |
| |
| 3) | IRR calculations are based on a sequence of cash proceeds invested, cash realizations or non-cash consideration received, and the terminal value of an investment over time. For exited investments, the terminal value is the total cash realization received upon exit. This includes fully exited investments of existing portfolio companies. Additionally, IRR calculations exclude securities traded but not yet settled at period end. |
| |
| 4) | Excludes investments in Structured Products. |
| |
| 5) | Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt. |
| |
| 6) | Majority Owned Portfolio Company (“MOPC”) investments represent portfolio company investments in which American Capital, or its affiliates, have a fully diluted ownership percentage of 50% or more or have over 50% board representation at the portfolio company. Includes American Capital Asset Management, LLC prior to the consolidation of the collateralized loan obligations. Excludes our investment in European Capital through September 30, 2014. |
| |
| 7) | Represents committed investment amount at the time of origination. |
| |
| 8) | Adjusted EBITDA may reflect certain adjustments to the reported EBITDA of a portfolio company for non-recurring, unusual or infrequent items or other pro-forma items or events to normalize current earnings which a buyer may consider in a change in control transactions. These adjustments may be material and are highly subjective in nature. Portfolio company reported EBITDA is for the most recently available twelve months, or when appropriate, the forecasted twelve months or current annualized run-rate. |
| |
| 9) | Debt, which represents the debt and other liabilities senior to ACAS and the total of ACAS’s debt in each portfolio company’s debt capitalization, divided by Adjusted EBITDA. For portfolio companies with a nominal Adjusted EBITDA amount, the portfolio company’s maximum debt leverage is limited to 15 times Adjusted EBITDA. |
| |
| 10) | Adjusted EBITDA divided by the total cash interest expense of the portfolio company during the most recent twelve month period, or when appropriate as a result of a new debt capital structure, the forecasted twelve months. |
| |
| 11) | Adjusted EBITDA divided by the total scheduled principal amortization and total cash interest expense of the portfolio company during the most recent twelve month period, or when appropriate, the forecasted twelve months. |
| |
| 12) | Excludes investments in which we own only equity. |
| |
| 13) | Excludes investments in Structured Products, Senior Floating Rate Loans and our investment in European Capital through September 30, 2014. |
| |
| 14) | For the most recent twelve months, or when appropriate, the forecasted twelve months. |
| |
| 15) | As a percentage of our total debt investments, excluding Senior Floating Rate Loans. |
| |
| 16) | Weighted average based on fair value. |
| |
| 17) | Weighted average based on fair value of equity investments. |
| |
| 18) | As of the most recent month end available. |
| |
| 19) | Includes American Capital Asset Management, LLC. |
American Capital, Ltd.
February 24, 2015
Page 11
SHAREHOLDER CALL
American Capital invites shareholders, analysts and interested parties to attend the shareholder call on February 25, 2015 at 11:00 am ET. Callers who do not plan on asking a question and have access to the internet are encouraged to utilize the free live webcast at www.AmericanCapital.com. Those who do plan on participating in the Q&A or do not have the internet available may access the call by dialing (877) 266-8979 (U.S. domestic) or (412) 902-6605 (international). All callers are asked to dial in 10-15 minutes prior to the call to register. Please advise the operator you are dialing in for the American Capital shareholder call.
A slide presentation will accompany the shareholder call and will be available at www.AmericanCapital.com. Select the Q4 2014 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 February 25, 2015. In addition, there will be a phone recording available one hour after the live call on February 25, 2015 through March 11, 2015. If you are interested in hearing the recording of the presentation, please dial (877) 344-7529 (U.S. domestic) or (412) 317-0088 (international). The access code for both domestic and international callers is 10058848.
ABOUT AMERICAN CAPITAL
American Capital, Ltd. (NASDAQ: ACAS) 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, energy & infrastructure and structured products. American Capital manages $22 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $86 billion of total assets under management (including levered assets). Through a wholly owned affiliate, American Capital manages publicly traded American Capital Agency Corp. (NASDAQ: AGNC), American Capital Mortgage Investment Corp. (NASDAQ: MTGE) and American Capital Senior Floating, Ltd. (NASDAQ: ACSF) with approximately $11 billion of total net book value. From its eight offices in the U.S., Europe and Asia, American Capital and its wholly owned affiliate, European Capital, will consider investment opportunities from $10 million to $750 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, 2013 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.
