| | | | |
 | | | | Two Bethesda Metro Center 14th Floor Bethesda, MD 20814 (301) 951-6122 (301) 654-6714 Fax Info@AmericanCapital.com www.AmericanCapital.com |
FOR IMMEDIATE RELEASE
October 31, 2006
CONTACT:
John Erickson, Chief Financial Officer - (301) 951-6122
Tom McHale, Senior Vice President, Finance - (301) 951-6122
AMERICAN CAPITAL INCREASES Q4 2006 DIVIDEND 11% TO $0.88 PER SHARE
REPORTS $1.14 IN REALIZED EARNINGS PER BASIC SHARE IN Q3 2006
Bethesda, MD – October 31, 2006 – American Capital Strategies Ltd. (NASDAQ: ACAS) announced today its fourth quarter 2006 dividend and its results for the third quarter of 2006.
FOURTH QUARTER 2006 DIVIDEND DECLARATION
American Capital’s Board of Directors has declared a fourth quarter 2006 regular dividend of $0.88 per share to record holders as of December 6, 2006, payable on January 18, 2007. This is an 11% increase over the fourth quarter 2005 regular dividend of $0.79 per share. Dividends declared in 2006 total $3.33 per share compared to $3.08 per share in 2005, an 8% increase. American Capital has paid a total of $1.3 billion in dividends and paid or declared dividends of $22.44 per share since its August 1997 IPO at $15.00 per share.
THIRD QUARTER 2006 RESULTS
In addition, American Capital announced today its results for the quarter ended September 30, 2006. Realized earnings (earnings less unrealized appreciation and depreciation) for the quarter increased 96% to $162 million, compared to $82 million for third quarter of 2005. On a basic per share basis, realized earnings increased 41% to $1.14 per share compared to $0.81 per share for the third quarter of 2005.
Net operating income (earnings less appreciation, depreciation, gains and loss (“NOI”)) for the quarter increased 28% to $110 million compared to $86 million for third quarter of 2005. On a basic per share basis, NOI decreased 7% to $0.78 per share compared to $0.84 per share in the third quarter of 2005.
For the quarter, the net increase in net assets resulting from operations (earnings) was $132 million, or $0.93 per basic share, compared to $94 million, or $0.92 per basic share, in the third quarter of 2005.
Washington, D.C. New York San Francisco Dallas Chicago Los Angeles Philadelphia
American Capital
October 31, 2006
Page 2
Third quarter 2006 dividends were $0.83 per share, a 6% growth over third quarter 2005 dividends of $0.78 per share. American Capital’s realized earnings of $1.14 per basic share were 137% greater than the third quarter 2006 dividend per share. American Capital’s net asset value per share at September 30, 2006 was $27.96, a $3.59 or 15% growth over the December 31, 2005 net asset value per share of $24.37, and $4.62 or 20% growth over the September 30, 2005 net asset value per share of $23.34.
“The third quarter results were extremely strong with realized earnings of $1.14 per share,” said Malon Wilkus, American Capital Chairman, President and CEO. “We have increased our regular quarterly dividend for the fourth quarter to $0.88 per share, exceeding our previous guidance by $0.04 per share. This increase reflects a number of positive factors, including outstanding portfolio performance, the impact of our growing asset management business including European Capital and American Capital Equity I, and our assessment of the future performance of our realized earnings and, ultimately, our taxable income. We plan to release dividend guidance for 2007 in February. We expect that the creation of the $1 billion American Capital Equity I will be accretive to our 2007 NOI by more than $0.25 per basic share.”
In the third quarter of 2006, American Capital invested $1.2 billion of capital and received $811 million of proceeds from amortization and exits of portfolio investments. In the third quarter of 2006, American Capital recorded $46 million in portfolio net realized gains and $5 million in net realized gains attributable to interest rate derivatives. In the third quarter of 2006, net unrealized depreciation totaled $30 million, consisting of gross appreciation of $136 million from 37 portfolio companies, $123 million of gross depreciation from 28 portfolio companies, $15 million of net unrealized depreciation resulting from the recognition of net realized gains, $15 million of net unrealized appreciation associated with the translation of foreign currency denominated investments and $42 million of net depreciation on interest rate derivatives. Interest rate derivatives are required by American Capital’s loan agreements and asset securitizations to lock in interest rate spreads and reduce interest rate risks. They appreciate or depreciate based on relative market interest rates and remaining term to maturity.
“We received more than $800 million in capital back during the third quarter,” said Ira Wagner, Chief Operating Officer. “We received $594 million in principal payments and loan sales as well as $217 million in proceeds from the sale of portfolio company equity investments, which resulted in net realized gains of $46 million. To date, we have enjoyed $410 million of net appreciation, depreciation, gains and losses from our 2001 - 2006 static pools, including $241 million of net gains and $170 million of net unrealized appreciation. Thirty-one percent of all the capital we’ve invested since our 1997 IPO has been exited or repaid. These net gains and appreciation and the overall volume of exits and repayments confirm the quality of our investments. We have built the finest institution for investing in the capital of private companies and we continue to see excellent opportunities.”
Washington, D.C. New York San Francisco Dallas Chicago Los Angeles Philadelphia
American Capital
October 31, 2006
Page 3
The weighted average effective interest rate on American Capital’s total investments in debt securities as of September 30, 2006 was 12.6%. At September 30, 2006, the weighted average loan grade of American Capital’s loan portfolio was 3.1 on a scale of 1 to 4, with 4 being the highest quality, compared to 3.1 as of September 30, 2005. As of September 30, 2006, loans totaling $164 million, with a fair value of $63 million, were on non-accrual. Delinquent and non-accruing loans to 11 portfolio companies totaled $184 million, or 4% of total loans, at September 30, 2006, compared to $181 million, or 5% of total loans, at September 30, 2005. The $63 million fair value of non-accrual loans represented 1% of total loans at fair value, at September 30, 2006, compared to $44 million fair value of non-accrual loans representing 1% of total loans at fair value, at September 30, 2005.
“We continue to find new ways to raise capital,” said Chief Financial Officer John Erickson. “We issued $212 million of equity in two direct placements to institutional investors in the third quarter. These transactions are not as expensive as broadly distributed public offerings, and do not require the marketing period of typical equity offerings. Now that we have reached $6 billion of market capitalization, we are more attractive to large-cap institutional investors. On October 1, 2006, we established American Capital Equity I, a $1 billion equity fund as part of our asset management strategy. A wholly-owned taxable affiliate of American Capital will be paid 2% of the assets of the fund annually as a management fee and receive up to 30% of its profits in return for managing American Capital Equity I. This transaction allowed us to access for the first time a set of global institutional investors with significant funds and expertise dedicated to private equity. Our sale of $670 million of equity investments to American Capital Equity I and its $330 million of untapped capital commitments for additional equity investments provide additional sources of capital to fund our business and increase our flexibility in determining how and when we raise capital.”
In the third quarter of 2006, American Capital portfolio company European Capital, with $2.1 billion of capital resources, managed by a wholly-owned taxable subsidiary of American Capital, made investments in 10 portfolio companies, totaling $560 million. Since inception in September of last year, it has invested in 31 portfolio companies totaling $1.2 billion. European Capital is expected to declare its first dividend in the fourth quarter of 2006.
Since its August 1997 IPO through the third quarter of 2006, American Capital has earned an 18% compounded annual return, including interest, dividends, fees and net gains, on 149 exits and prepayments of senior debt, subordinated debt and equity investments, totaling $3.6 billion of invested capital. These exits and prepayments represent 31% of all amounts invested by American Capital since its August 1997 IPO. Proceeds from these exits and prepayments exceeded the associated prior quarter valuation of the investments by $78 million in aggregate, or 2%. Twenty percent of these exits and prepayments were from portfolio companies that had at one time been either a loan grade 1 or 2 in American Capital’s four point loan grading system, with 1 being the lowest loan grade. Since its IPO through the third quarter of 2006, $134 million of American Capital’s Payment in Kind (“PIK”) interest and dividends and accreted Original Interest Discount (“OID”) have been repaid, representing 35% of all PIK and OID recorded.
Washington, D.C. New York San Francisco Dallas Chicago Los Angeles Philadelphia
American Capital
October 31, 2006
Page 4
“We substantially exited Aeriform, Iowa Mold Tooling and Optima during the third quarter,” said Gordon O’Brien, Senior Vice President in charge of the 29 person Operations Team. “These companies had performed below our expectations at various times during our ownership and the Operations Team assisted them in improving their performance. Their cumulative net realized and net unrealized gains were $97 million above their lowest fair values, which demonstrates our ability to help a company manage through difficult times and as a result recover significant value that would otherwise be lost.
THIRD PARTY VALUATION OF PORTFOLIO INVESTMENTS
American Capital’s Board of Directors is responsible for determining the fair value of American Capital’s portfolio investments on a quarterly basis. In that regard in the third quarter of 2003, the board retained Houlihan Lokey Howard & Zukin Financial Advisors Inc. (“Houlihan Lokey”) to assist it by having Houlihan Lokey regularly review a designated percentage of our fair value determinations. Houlihan Lokey is a leading valuation firm in the U.S., engaged in approximately 1,000 valuation assignments per year for clients worldwide. Each quarter, Houlihan Lokey reviews American Capital’s determination of the fair value of approximately 25% of its portfolio company investments that have been portfolio companies for at least one year and that have a fair value in excess of $10 million. In the third quarter of 2006, Houlihan Lokey reviewed valuations of 30 portfolio company investments having an aggregate $1.7 billion in fair value as of the period end. Over the last four quarters, Houlihan Lokey has reviewed 99 portfolio companies totaling $4.4 billion in fair value as of their respective valuation dates. In addition, Houlihan Lokey representatives attend American Capital’s quarterly valuation meetings and provide periodic reports and recommendations to the Audit and Compliance Committee of the Board of Directors.
For those portfolio company investments that Houlihan Lokey has reviewed during each applicable period since its engagement, using the scope of review set forth by American Capital’s Board of Directors, the Board has made a fair value determination that is within the aggregate range of fair value for such investments as determined by Houlihan Lokey.
In addition to its standard scope, American Capital engaged Houlihan Lokey to review the value of ASAlliances Biofuels, LLC. As of September 30, 2006, the fair value of this investment as determined by American Capital’s Board is within the range of fair value for the investment as determined by Houlihan Lokey.
Washington, D.C. New York San Francisco Dallas Chicago Los Angeles Philadelphia
American Capital
October 31, 2006
Page 5
Financial highlights for the quarter are as follows:
AMERICAN CAPITAL STRATEGIES, LTD.
CONSOLIDATED BALANCE SHEETS
As of September 30, 2006, December 31, 2005 and September 30, 2005
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q3 2006 | | | Q4 2005 | | | Q3 2006 Versus Q4 2005 | | | Q3 2005 | | | Q3 2006 Versus Q3 2005 | |
| | | | | $ | | | % | | | | $ | | | % | |
| | | (unaudited) | | | | | | | | | | | | (unaudited) | | | | | | | |
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investments at fair value (cost of $7,383,863, $5,134,398 and $4,583,194, respectively) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-Control/Non-Affiliate investments | | $ | 4,489,646 | | | $ | 2,135,795 | | | $ | 2,353,851 | | | 110 | % | | $ | 1,728,526 | | | $ | 2,761,120 | | | 160 | % |
Affiliate investments | | | 431,336 | | | | 449,026 | | | | (17,690 | ) | | -4 | % | | | 469,101 | | | | (37,765 | ) | | -8 | % |
Control investments | | | 2,593,096 | | | | 2,516,282 | | | | 76,814 | | | 3 | % | | | 2,379,437 | | | | 213,659 | | | 9 | % |
Derivative agreements | | | 20,758 | | | | 18,132 | | | | 2,626 | | | 14 | % | | | 7,940 | | | | 12,818 | | | 161 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total investments at fair value | | | 7,534,836 | | | | 5,119,235 | | | | 2,415,601 | | | 47 | % | | | 4,585,004 | | | | 2,949,832 | | | 64 | % |
| | | | | | | |
Cash and cash equivalents | | | 34,129 | | | | 97,134 | | | | (63,005 | ) | | -65 | % | | | 116,125 | | | | (81,996 | ) | | -71 | % |
Restricted cash | | | 124,315 | | | | 121,772 | | | | 2,543 | | | 2 | % | | | 110,503 | | | | 13,812 | | | 12 | % |
Interest receivable | | | 43,983 | | | | 32,668 | | | | 11,315 | | | 35 | % | | | 32,508 | | | | 11,475 | | | 35 | % |
Other | | | 118,169 | | | | 78,300 | | | | 39,869 | | | 51 | % | | | 127,559 | | | | (9,390 | ) | | -7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 7,855,432 | | | $ | 5,449,109 | | | $ | 2,406,323 | | | 44 | % | | $ | 4,971,699 | | | $ | 2,883,733 | | | 58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | |
Debt | | $ | 3,603,664 | | | $ | 2,466,860 | | | $ | 1,136,804 | | | 46 | % | | $ | 2,266,906 | | | $ | 1,336,758 | | | 59 | % |
Derivative agreements | | | 14,022 | | | | 2,140 | | | | 11,882 | | | 555 | % | | | 3,515 | | | | 10,507 | | | 299 | % |
Accrued dividends payable | | | 118,476 | | | | 3,574 | | | | 114,902 | | | 3215 | % | | | 81,325 | | | | 37,151 | | | 46 | % |
Other | | | 99,594 | | | | 78,898 | | | | 20,696 | | | 26 | % | | | 89,831 | | | | 9,763 | | | 11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 3,835,756 | | | | 2,551,472 | | | | 1,284,284 | | | 50 | % | | | 2,441,577 | | | | 1,394,179 | | | 57 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shareholders’ equity: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Undesignated preferred stock, $0.01 par value, 5,000 shares authorized, 0 issued and outstanding | | | — | | | | — | | | | — | | | 0 | % | | | — | | | | — | | | 0 | % |
Common stock, $0.01 par value, 200,000 shares authorized, 147,079, 119,123 and 108,771 issued and 143,777, 118,913 and 108,386 outstanding, respectively | | | 1,437 | | | | 1,189 | | | | 248 | | | 21 | % | | | 1,084 | | | | 353 | | | 33 | % |
Capital in excess of par value | | | 3,812,639 | | | | 2,942,814 | | | | 869,825 | | | 30 | % | | | 2,562,723 | | | | 1,249,916 | | | 49 | % |
Notes receivable from sale of common stock | | | (6,655 | ) | | | (6,655 | ) | | | — | | | 0 | % | | | (6,667 | ) | | | 12 | | | NM | |
Undistributed (distributions in excess of) net realized earnings | | | 76,168 | | | | (22,408 | ) | | | 98,576 | | | NM | | | | (25,313 | ) | | | 101,481 | | | NM | |
Net unrealized appreciation (depreciation) of investments | | | 136,087 | | | | (17,303 | ) | | | 153,390 | | | NM | | | | (1,705 | ) | | | 137,792 | | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total shareholders’ equity | | | 4,019,676 | | | | 2,897,637 | | | | 1,122,039 | | | 39 | % | | | 2,530,122 | | | | 1,489,554 | | | 59 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 7,855,432 | | | $ | 5,449,109 | | | $ | 2,406,323 | | | 44 | % | | $ | 4,971,699 | | | $ | 2,883,733 | | | 58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
NM = Not Meaningful
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AMERICAN CAPITAL STRATEGIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended September 30, 2006 and 2005
(in thousands, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Three Months Ended
September 30, 2006 Versus 2005 | | | Nine Months Ended
September 30, | | | Nine Months
Ended
September 30, 2006 Versus 2005 | |
| | | 2006 | | | 2005 | | | $ | | | % | | | 2006 | | | 2005 | | | $ | | | % | |
OPERATING INCOME: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Interest and dividend income | | $ | 179,645 | | | $ | 114,405 | | | $ | 65,240 | | | 57 | % | | $ | 467,309 | | | $ | 298,733 | | | $ | 168,576 | | | 56 | % |
Fee and other income | | | 51,182 | | | | 34,347 | | | | 16,835 | | | 49 | % | | | 148,731 | | | | 82,606 | | | | 66,125 | | | 80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating income | | | 230,827 | | | | 148,752 | | | | 82,075 | | | 55 | % | | | 616,040 | | | | 381,339 | | | | 234,701 | | | 62 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest | | | 55,625 | | | | 27,889 | | | | 27,736 | | | 99 | % | | | 132,385 | | | | 67,225 | | | | 65,160 | | | 97 | % |
Salaries, benefits and stock-based compensation | | | 40,928 | | | | 20,837 | | | | 20,091 | | | 96 | % | | | 102,943 | | | | 55,850 | | | | 47,093 | | | 84 | % |
General and administrative | | | 18,676 | | | | 12,216 | | | | 6,460 | | | 53 | % | | | 50,603 | | | | 27,309 | | | | 23,294 | | | 85 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 115,229 | | | | 60,942 | | | | 54,287 | | | 89 | % | | | 285,931 | | | | 150,384 | | | | 135,547 | | | 90 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OPERATING INCOME BEFORE INCOME TAXES | | | 115,598 | | | | 87,810 | | | | 27,788 | | | 32 | % | | | 330,109 | | | | 230,955 | | | | 99,154 | | | 43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for income taxes | | | (5,600 | ) | | | (1,884 | ) | | | (3,716 | ) | | 197 | % | | | (17,976 | ) | | | (7,668 | ) | | | (10,308 | ) | | 134 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET OPERATING INCOME | | | 109,998 | | | | 85,926 | | | | 24,072 | | | 28 | % | | | 312,133 | | | | 223,287 | | | | 88,846 | | | 40 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized gain (loss) on investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio company investments | | | 46,227 | | | | (769 | ) | | | 46,996 | | | NM | | | | 106,294 | | | | 39,709 | | | | 66,585 | | | 168 | % |
Derivative agreements | | | 5,487 | | | | (2,706 | ) | | | 8,193 | | | NM | | | | 11,117 | | | | (8,162 | ) | | | 19,279 | | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total net realized gain (loss) | | | 51,714 | | | | (3,475 | ) | | | 55,189 | | | NM | | | | 117,411 | | | | 31,547 | | | | 85,864 | | | 272 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REALIZED EARNINGS | | | 161,712 | | | | 82,451 | | | | 79,261 | | | 96 | % | | | 429,544 | | | | 254,834 | | | | 174,710 | | | 69 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net unrealized appreciation (depreciation) of investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio company investments | | | (2,576 | ) | | | (6,735 | ) | | | 4,159 | | | 62 | % | | | 148,471 | | | | 10,110 | | | | 138,361 | | | NM | |
Unrealized gain on exchange rate | | | 14,725 | | | | — | | | | 14,725 | | | 100 | % | | | 14,175 | | | | — | | | | 14,175 | | | 100 | % |
Derivative agreements | | | (42,299 | ) | | | 18,341 | | | | (60,036 | ) | | NM | | | | (9,256 | ) | | | 20,142 | | | | (28,871 | ) | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total net unrealized appreciation (depreciation) | | | (30,150 | ) | | | 11,606 | | | | (41,756 | ) | | NM | | | | 153,390 | | | | 30,252 | | | | 123,138 | | | 407 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | | | 131,562 | | | | 94,057 | | | | 37,505 | | | 40 | % | | | 582,934 | | | | 285,086 | | | | 297,848 | | | 104 | % |
Cumulative effect of accounting change, net of tax (1) | | | — | | | | — | | | | — | | | 0 | % | | | 1,026 | | | | — | | | | 1,026 | | | 0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS (“EARNINGS”) | | $ | 131,562 | | | $ | 94,057 | | | $ | 37,505 | | | 40 | % | | $ | 583,960 | | | $ | 285,086 | | | $ | 298,874 | | | 105 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NET OPERATING INCOME PER COMMON SHARE: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.78 | | | $ | 0.84 | | | $ | (0.06 | ) | | -7 | % | | $ | 2.37 | | | $ | 2.34 | | | $ | 0.03 | | | 1 | % |
Diluted | | $ | 0.77 | | | $ | 0.82 | | | $ | (0.05 | ) | | -6 | % | | $ | 2.35 | | | $ | 2.29 | | | $ | 0.06 | | | 3 | % |
| | | | | | | | |
REALIZED EARNINGS PER COMMON SHARE: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 1.14 | | | $ | 0.81 | | | $ | 0.33 | | | 41 | % | | $ | 3.26 | | | $ | 2.67 | | | $ | 0.59 | | | 22 | % |
Diluted | | $ | 1.13 | | | $ | 0.79 | | | $ | 0.34 | | | 43 | % | | $ | 3.23 | | | $ | 2.61 | | | $ | 0.62 | | | 24 | % |
| | | | | | | | |
EARNINGS PER COMMON SHARE: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.93 | | | $ | 0.92 | | | $ | 0.01 | | | 1 | % | | $ | 4.44 | | | $ | 2.99 | | | $ | 1.45 | | | 48 | % |
Diluted | | $ | 0.92 | | | $ | 0.90 | | | $ | 0.02 | | | 2 | % | | $ | 4.39 | | | $ | 2.92 | | | $ | 1.47 | | | 50 | % |
| | | | | | | | |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 141,589 | | | | 102,366 | | | | 39,223 | | | 38 | % | | | 131,660 | | | | 95,319 | | | | 36,341 | | | 38 | % |
Diluted | | | 143,274 | | | | 104,499 | | | | 38,775 | | | 37 | % | | | 132,929 | | | | 97,587 | | | | 35,342 | | | 36 | % |
| | | | | | | | |
DIVIDENDS DECLARED PER COMMON SHARE | | $ | 0.83 | | | $ | 0.78 | | | $ | 0.05 | | | 6 | % | | $ | 2.45 | | | $ | 2.26 | | | $ | 0.19 | | | 8 | % |
NM = Not meaningful.
| (1) | Effective January 1, 2006, American Capital adopted FASB Statement No. 123 (revised 2004), “Share-Based Payment,” a revision to FASB Statement No. 123 (“SFAS 123R”). American Capital had adopted SFAS 123R using the “modified prospective” method. Effective January 1, 2003, American Capital adopted the fair-value-based method of accounting for stock-based compensation plans for all stock options granted in 2003 and forward as permitted under FASB Statement No. 148. All of American Capital’s stock options granted prior to January 1, 2003, which were accounted for under APB No. 25 and not expensed in the consolidated statements of operations, were fully vested as of January 1, 2006 and therefore, no additional stock compensation costs for those stock option grants will be recorded as a result of the adoption of SFAS 123R. Under FASB Statement No. 123, American Capital elected to adjust compensation costs for forfeitures when the unvested awards were actually forfeited. Under SFAS 123R American Capital is required to estimate forfeitures of unvested awards when recognizing compensation cost. Upon the adoption of SFAS 123R, American Capital recorded a cumulative effect of an accounting change for an adjustment to compensation costs recognized in prior periods to record forfeitures based on the amounts that would have been estimated during those periods. |
AMERICAN CAPITAL STRATEGIES, LTD.
OTHER FINANCIAL INFORMATION
Quarter Ended September 30, 2006, December 31, 2005 and September 30, 2005
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Q3 2006 | | | Q4 2005 | | | Q3 2006 Versus Q4 2005 | | | Q3 2005 | | | Q3 2006 Versus Q3 2005 | |
| | | | | $ | | | % | | | | $ | | | % | |
New Investments: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Senior Debt | | $ | 473,000 | | | $ | 382,800 | | | $ | 90,200 | | | 24 | % | | $ | 349,300 | | | $ | 123,700 | | | 35 | % |
Subordinated Debt | | | 407,700 | | | | 193,400 | | | | 214,300 | | | 111 | % | | | 309,900 | | | | 97,800 | | | 32 | % |
Preferred Equity | | | 199,500 | | | | 169,900 | | | | 29,600 | | | 17 | % | | | 160,900 | | | | 38,600 | | | 24 | % |
Common Equity | | | 20,600 | | | | 64,500 | | | | (43,900 | ) | | -68 | % | | | 628,500 | | | | (607,900 | ) | | -97 | % |
Common Equity warrants | | | 40,700 | | | | 86,700 | | | | (46,000 | ) | | -53 | % | | | — | | | | 40,700 | | | 100 | % |
CMBS Investments | | | 41,700 | | | | 80,500 | | | | (38,800 | ) | | -48 | % | | | — | | | | 41,700 | | | 100 | % |
CDO/CLO Investments | | | 23,600 | | | | — | | | | 23,600 | | | 100 | % | | | — | | | | 23,600 | | | 100 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,206,800 | | | $ | 977,800 | | | $ | 229,000 | | | 23 | % | | $ | 1,448,600 | | | $ | (241,800 | ) | | -17 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
American Capital Sponsored Buyouts | | $ | 533,100 | | | $ | 564,800 | | | $ | (31,700 | ) | | -6 | % | | $ | 410,500 | | | $ | 122,600 | | | 30 | % |
Financing for Private Equity Buyouts | | | 202,400 | | | | 121,700 | | | | 80,700 | | | 66 | % | | | 243,300 | | | | (40,900 | ) | | -17 | % |
Direct Investments | | | 92,100 | | | | — | | | | 92,100 | | | NM | | | | 132,500 | | | | (40,400 | ) | | -30 | % |
Investments in Managed Funds | | | — | | | | — | | | | — | | | NM | | | | 638,100 | | | | (638,100 | ) | | -100 | % |
CMBS Investments | | | 41,700 | | | | 80,500 | | | | (38,800 | ) | | -48 | % | | | — | | | | 41,700 | | | 100 | % |
CDO/CLO Investments | | | 23,600 | | | | — | | | | 23,600 | | | 100 | % | | | — | | | | 23,600 | | | 100 | % |
Add-on Financing for Acquisitions | | | 108,000 | | | | 20,300 | | | | 87,700 | | | 432 | % | | | 5,200 | | | | 102,800 | | | 1977 | % |
Add-on Financing for Recapitalizations | | | 187,000 | | | | 183,700 | | | | 3,300 | | | 2 | % | | | 9,200 | | | | 177,800 | | | 1933 | % |
Add-on Financing for Working Capital in Distressed Situations | | | 13,900 | | | | 2,800 | | | | 11,100 | | | 396 | % | | | — | | | | 13,900 | | | 100 | % |
Add-on Financing for Working Capital | | | 5,000 | | | | 4,000 | | | | 1,000 | | | 25 | % | | | 9,800 | | | | (4,800 | ) | | -49 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,206,800 | | | $ | 977,800 | | | $ | 229,000 | | | 23 | % | | $ | 1,448,600 | | | $ | (241,800 | ) | | -17 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Exits and Repayments(1): | | | | | | | | | | | | | | | | | | | | | | | | | | |
Scheduled Principal Amortization | | $ | 21,290 | | | $ | 16,990 | | | $ | 4,300 | | | 25 | % | | $ | 14,220 | | | $ | 7,070 | | | 50 | % |
Senior Loan Sales | | | 80,528 | | | | 174,037 | | | | (93,509 | ) | | -54 | % | | | 75,848 | | | | 4,680 | | | 6 | % |
Principal Prepayments | | | 447,897 | | | | 258,536 | | | | 189,361 | | | 73 | % | | | 169,309 | | | | 278,588 | | | 165 | % |
Payment of Accrued Payment-in-kind Interest and Dividends and Original Issue Discount | | | 44,026 | | | | 13,971 | | | | 30,055 | | | 215 | % | | | 11,400 | | | | 32,626 | | | 286 | % |
Sale of Equity Investments | | | 217,129 | | | | 81,239 | | | | 135,890 | | | 167 | % | | | 21,699 | | | | 195,430 | | | 901 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 810,870 | | | $ | 544,773 | | | $ | 266,097 | | | 49 | % | | $ | 292,476 | | | $ | 518,394 | | | 177 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Appreciation, Depreciation, Gains and Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Realized Gains | | $ | 148,593 | | | $ | 69,973 | | | $ | 78,620 | | | 112 | % | | $ | 14,367 | | | $ | 134,226 | | | 934 | % |
Gross Realized Losses | | | (102,366 | ) | | | (64,288 | ) | | | (38,078 | ) | | 59 | % | | | (15,136 | ) | | | (87,230 | ) | | 576 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio Net Realized Gains (Losses) | | | 46,227 | | | | 5,685 | | | | 40,542 | | | 713 | % | | | (769 | ) | | | 46,996 | | | NM | |
Net Realized Gains (Losses) From Interest Rate Derivatives | | | 5,487 | | | | (825 | ) | | | 6,312 | | | NM | | | | (2,706 | ) | | | 8,193 | | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Realized Gains (Losses) | | | 51,714 | | | | 4,860 | | | | 46,854 | | | 964 | % | | | (3,475 | ) | | | 55,189 | | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Unrealized Appreciation at 37, 24 and 20 Portfolio Companies | | | 135,566 | | | | 54,628 | | | | 80,938 | | | 148 | % | | | 46,377 | | | | 89,189 | | | 192 | % |
Gross Unrealized Depreciation at 28, 23 and 13 Portfolio Companies | | | (123,296 | ) | | | (78,807 | ) | | | (44,489 | ) | | 56 | % | | | (52,449 | ) | | | (70,847 | ) | | 135 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Current Portfolio Net Unrealized Appreciation (Depreciation) | | | 12,270 | | | | (24,179 | ) | | | 36,449 | | | NM | | | | (6,072 | ) | | | 18,342 | | | NM | |
Net Depreciation From the Recognition of Net Realized Gains | | | (14,846 | ) | | | (2,987 | ) | | | (11,859 | ) | | 397 | % | | | (663 | ) | | | (14,183 | ) | | -2139 | % |
Net Unrealized Appreciation for Foreign Currency Translation | | | 14,725 | | | | 1,167 | | | | 13,558 | | | 1162 | % | | | 604 | | | | 14,121 | | | 2338 | % |
Interest Rate Derivatives, net | | | (42,299 | ) | | | 10,401 | | | | (52,700 | ) | | NM | | | | 17,737 | | | | (60,036 | ) | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Unrealized Appreciation (Depreciation) | | | (30,150 | ) | | | (15,598 | ) | | | (14,552 | ) | | -93 | % | | | 11,606 | | | | (41,756 | ) | | NM | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Gains, Losses, Appreciation and Depreciation | | $ | 21,564 | | | $ | (10,738 | ) | | $ | 32,302 | | | NM | | | $ | 8,131 | | | $ | 13,433 | | | 165 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Financial Data: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Asset Value per Share | | $ | 27.96 | | | $ | 24.37 | | | $ | 3.59 | | | 15 | % | | $ | 23.34 | | | $ | 4.62 | | | 20 | % |
Market Capitalization | | $ | 5,674,878 | | | $ | 4,305,840 | | | $ | 1,369,038 | | | 32 | % | | $ | 3,973,431 | | | $ | 1,701,447 | | | 43 | % |
Total Enterprise Value | | $ | 9,244,413 | | | $ | 6,675,566 | | | $ | 2,568,847 | | | 38 | % | | $ | 6,124,212 | | | $ | 3,120,201 | | | 51 | % |
Credit Quality: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted Average Effective Interest Rate on Debt Investments | | | 12.6 | % | | | 12.8 | % | | | | | | | | | | 12.8 | % | | | | | | | |
Weighted Average Loan Grade | | | 3.1 | | | | 3.1 | | | | | | | | | | | 3.1 | | | | | | | | |
Loans on Non-Accrual at Face | | $ | 163,880 | | | $ | 132,330 | | | $ | 31,550 | | | 24 | % | | $ | 136,252 | | | $ | 27,628 | | | 20 | % |
Loans on Non-Accrual at Fair Value | | $ | 62,552 | | | $ | 48,304 | | | $ | 14,248 | | | 29 | % | | $ | 44,465 | | | $ | 18,087 | | | 41 | % |
Past Due Loans at Face | | $ | 20,037 | | | $ | 53,675 | | | $ | (33,638 | ) | | -63 | % | | $ | 44,730 | | | $ | (24,693 | ) | | -55 | % |
Past Due and Non-Accrual Loans as a Percentage of Total Loans | | | 4 | % | | | 5 | % | | | | | | | | | | 5 | % | | | | | | | |
Number of Portfolio Companies on Non-Accrual and Past Due | | | 11 | | | | 14 | | | | | | | | | | | 15 | | | | | | | | |
Debt to Equity Conversions at Face Value | | $ | 68,009 | | | $ | 24,769 | | | $ | 43,240 | | | 175 | % | | $ | — | | | $ | 68,009 | | | NM | |
Return on Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | |
LTM Net Operating Income Return on Average Equity at Cost | | | 12.5 | % | | | 13.6 | % | | | | | | | | | | 13.9 | % | | | | | | | |
LTM Realized Earnings Return on Average Equity at Cost | | | 16.3 | % | | | 15.2 | % | | | | | | | | | | 16.9 | % | | | | | | | |
LTM Earnings Return on Average Equity | | | 20.2 | % | | | 15.9 | % | | | | | | | | | | 18.6 | % | | | | | | | |
Current Quarter Net Operating Income Return on Average Equity at Cost Annualized | | | 11.7 | % | | | 13.3 | % | | | | | | | | | | 14.5 | % | | | | | | | |
Current Quarter Realized Earnings Return on Average Equity at Cost | | | 17.1 | % | | | 14.0 | % | | | | | | | | | | 13.9 | % | | | | | | | |
Current Quarter Earnings Return on Average Equity Annualized | | | 13.4 | % | | | 11.8 | % | | | | | | | | | | 15.9 | % | | | | | | | |
Dividend Coverage (Realized Earnings per Basic Share/Dividend per Share) | | | 1.37 | | | | 1.05 | | | | | | | | | | | 1.04 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Static Pool | | | | | | | |
Portfolio Statistics (1) ($ in millions, unaudited) | | Pre-1999 | | | 1999 | | | 2000 | | | 2001 | | | 2002 | | | 2003 | | | 2004 | | | 2005 | | | 2006 | | | Pre-1999 - 2006
Aggregate | | | 2001 - 2006
Aggregate | |
Internal Rate of Return(2) | | | 10.5 | % | | | 8.4 | % | | | 7.9 | % | | | 21.6 | % | | | 9.8 | % | | | 23.9 | % | | | 19.3 | % | | | 19.0 | % | | | 43.6 | % | | | 16.2 | % | | | 19.6 | % |
Original Investments and Commitments | | $ | 380 | | | $ | 380 | | | $ | 395 | | | $ | 370 | | | $ | 943 | | | $ | 1,361 | | | $ | 2,243 | | | $ | 3,205 | | | $ | 2,601 | | | $ | 11,878 | | | $ | 10,723 | |
Total Exits and Prepayments of Original Investments | | $ | 181 | | | $ | 203 | | | $ | 261 | | | $ | 266 | | | $ | 546 | | | $ | 813 | | | $ | 760 | | | $ | 550 | | | $ | 58 | | | $ | 3,638 | | | $ | 2,993 | |
Total Interest, Dividends and Fees Collected | | $ | 146 | | | $ | 134 | | | $ | 113 | | | $ | 144 | | | $ | 252 | | | $ | 295 | | | $ | 326 | | | $ | 293 | | | $ | 140 | | | $ | 1,843 | | | $ | 1,450 | |
Total Net Realized (Loss) Gain on Investments | | $ | (29 | ) | | $ | (27 | ) | | $ | (38 | ) | | $ | 41 | | | $ | 7 | | | $ | 154 | | | $ | 32 | | | $ | 5 | | | $ | 2 | | | $ | 147 | | | $ | 241 | |
Current Cost of Investments | | $ | 143 | | | $ | 111 | | | $ | 142 | | | $ | 87 | | | $ | 370 | | | $ | 565 | | | $ | 1,335 | | | $ | 2,333 | | | $ | 2,298 | | | $ | 7,384 | | | $ | 6,988 | |
Current Fair Value of Investments | | $ | 143 | | | $ | 74 | | | $ | 139 | | | $ | 67 | | | $ | 279 | | | $ | 596 | | | $ | 1,401 | | | $ | 2,436 | | | $ | 2,379 | | | $ | 7,514 | | | $ | 7,158 | |
Net Unrealized Appreciation/(Depreciation) | | $ | — | | | $ | (37 | ) | | $ | (3 | ) | | $ | (20 | ) | | $ | (91 | ) | | $ | 31 | | | $ | 66 | | | $ | 103 | | | $ | 81 | | | $ | 130 | | | $ | 170 | |
Non-Accruing Loans at Face | | $ | — | | | $ | 34 | | | $ | — | | | $ | 31 | | | $ | 42 | | | $ | 13 | | | $ | 5 | | | $ | 39 | | | $ | — | | | $ | 164 | | | $ | 130 | |
Equity Interest at Fair Value(9) | | $ | 65 | | | $ | 10 | | | $ | 3 | | | $ | 33 | | | $ | 47 | | | $ | 248 | | | $ | 357 | | | $ | 1,229 | | | $ | 859 | | | $ | 2,851 | | | $ | 2,773 | |
Debt to EBITDA(3)(4)(5) | | | 4.7 | | | | 5.5 | | | | 6.0 | | | | 4.1 | | | | 7.0 | | | | 5.4 | | | | 4.6 | | | | 4.5 | | | | 5.2 | | | | 5.0 | | | | 5.0 | |
Interest Coverage(3)(5) | | | 2.0 | | | | 2.0 | | | | 2.1 | | | | 2.5 | | | | 1.4 | | | | 1.7 | | | | 2.2 | | | | 2.3 | | | | 1.7 | | | | 2.0 | | | | 2.0 | |
Debt Service Coverage(3)(5) | | | 2.0 | | | | 1.4 | | | | 1.9 | | | | 1.5 | | | | 1.1 | | | | 1.4 | | | | 1.8 | | | | 1.7 | | | | 1.9 | | | | 1.7 | | | | 1.7 | |
Loan Grade(3)(10) | | | 3.0 | | | | 2.1 | | | | 3.0 | | | | 3.3 | | | | 2.4 | | | | 2.9 | | | | 3.3 | | | | 3.1 | | | | 3.0 | | | | 3.1 | | | | 3.1 | |
Average Age of Companies(5) | | | 43 yrs | | | | 59 yrs | | | | 21 yrs | | | | 34 yrs | | | | 37 yrs | | | | 33 yrs | | | | 35 yrs | | | | 33 yrs | | | | 28 yrs | | | | 32 yrs | | | | 32 yrs | |
Ownership Percentage(9) | | | 88 | % | | | 70 | % | | | 2 | % | | | 62 | % | | | 65 | % | | | 74 | % | | | 40 | % | | | 62 | % | | | 69 | % | | | 60 | % | | | 61 | % |
Average Sales(5)(6) | | $ | 131 | | | $ | 86 | | | $ | 140 | | | $ | 170 | | | $ | 73 | | | $ | 126 | | | $ | 90 | | | $ | 108 | | | $ | 114 | | | $ | 108 | | | $ | 107 | |
Average EBITDA(5)(7) | | $ | 8 | | | $ | 6 | | | $ | 55 | | | $ | 16 | | | $ | 11 | | | $ | 22 | | | $ | 22 | | | $ | 25 | | | $ | 20 | | | $ | 22 | | | $ | 22 | |
Average EBITDA Margin | | | 6.1 | % | | | 7.0 | % | | | 39.3 | % | | | 9.4 | % | | | 15.1 | % | | | 17.5 | % | | | 24.4 | % | | | 23.1 | % | | | 17.5 | % | | | 20.4 | % | | | 20.6 | % |
Total Sales(5)(6) | | $ | 472 | | | $ | 418 | | | $ | 277 | | | $ | 1,748 | | | $ | 531 | | | $ | 1,919 | | | $ | 3,181 | | | $ | 3,872 | | | $ | 2,339 | | | $ | 14,757 | | | $ | 13,590 | |
Total EBITDA(5)(7) | | $ | 36 | | | $ | 33 | | | $ | 83 | | | $ | 153 | | | $ | 57 | | | $ | 284 | | | $ | 656 | | | $ | 650 | | | $ | 471 | | | $ | 2,423 | | | $ | 2,271 | |
% of Senior Loans(5)(8) | | | 58 | % | | | 32 | % | | | 61 | % | | | 25 | % | | | 67 | % | | | 53 | % | | | 62 | % | | | 40 | % | | | 49 | % | | | 51 | % | | | 51 | % |
% of Loans with Lien(5)(8) | | | 63 | % | | | 50 | % | | | 78 | % | | | 100 | % | | | 98 | % | | | 96 | % | | | 86 | % | | | 84 | % | | | 79 | % | | | 84 | % | | | 85 | % |
American Capital
October 31, 2006
Page 9
| (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. Investments in government securities and interest rate derivative agreements are excluded. |
| (2) | Assumes investments are exited at current fair value. |
| (3) | These amounts do not include investments in which the Company owns only equity. |
| (4) | For portfolio companies with a nominal EBITDA amount, the portfolio company’s maximum debt leverage is limited to 15 times EBITDA. |
| (5) | Excludes investments in commercial mortgage backed securities, collateralized debt obligations and European Capital Limited. |
| (6) | Sales of the most recent twelve months, or when appropriate, the forecasted twelve months. |
| (7) | EBITDA of the most recent twelve months, or when appropriate, the forecasted twelve months. |
| (8) | As a percentage of our total debt investments. |
| (9) | Excludes investments in commercial mortgage backed securities and collateralized debt obligations. |
| (10) | Excludes investments in collateralized debt obligations and European Capital Limited. |
ADDITIONAL DIVIDEND INFORMATION
American Capital must make certain distributions of its taxable income in order to maintain its tax status as a regulated investment company. Investors can refer to American Capital’s most recent report on Form 10-K for more information about its tax status. American Capital intends to retain net long-term capital gains and treat them as deemed distributions for tax purposes. For its tax year ended September 30, 2006, American Capital retained $43 million of net long-term capital gains that will be treated as a deemed distribution to its shareholders. American Capital paid a federal tax of $15 million associated with these gains.
The taxable income that is distributed as dividends would be expected to be treated as ordinary income for tax purposes. Taxable income differs from GAAP income because of both temporary and permanent differences in income and expense recognition. For example, changes in appreciation and depreciation of portfolio investments have no impact on American Capital’s taxable income. American Capital reports the anticipated tax characteristics of each dividend when announced, while the actual tax characteristics of each year’s dividends are reported annually to stockholders on Form 1099DIV. The 2006 declared dividend to-date, totaling $3.33 per share, is anticipated to be a distribution of ordinary income for tax purposes.
American Capital anticipates that its 2006 ordinary taxable income will exceed its dividend and it will elect to pay a 4% excise tax and retain its excess ordinary taxable income.
DIVIDEND REINVESTMENT PLAN (DRIP)
In appreciation of the loyal support of our shareholders, American Capital’s Dividend Reinvestment Plan grants a 5% discount to the market price for reinvested dividends. Brokerages that have confirmed participation in the DRIP include:
Washington, D.C. New York San Francisco Dallas Chicago Los Angeles Philadelphia
American Capital
October 31, 2006
Page 10
A.G. Edwards
Citigroup-Smith Barney
Fidelity
Merrill Lynch
Morgan Keegan
RBC Dain Rauscher
UBS Financial
Wachovia Securities
Wedbush Morgan
A summary of American Capital’s dividend history and forecast follows. For further dividend history, please visit our website atwww.ACAS.com. For more information regarding the DRIP, please visit our website or call our Investor Relations Department at (301) 951-6122.
AMERICAN CAPITAL’S DIVIDEND HISTORY
$22.44 DECLARED SINCE AUGUST 1997 IPO AT $15.00 PER SHARE
| | | | | | | | | | |
Year/Quarter | | Regular Dividend | | % Change of
Regular
Dividend Over
Prior Year | | Additional
Dividend | | Total | | % Change
of Total
Dividend
Over Prior
Year |
Total 1997 to Q4 2006 Declared | | | | | | | | $22.44 | | |
| | | | | |
2006 | | $3.33 | | 9% | | Not Planned | | $3.33 | | 8% |
Q4 DECLARED | | $0.88 | | 11% | | | | | | |
Q3 | | $0.83 | | 6% | | | | | | |
Q2 | | $0.82 | | 9% | | | | | | |
Q1 | | $0.80 | | 10% | | | | | | |
| | | | | |
2005 | | $3.05 | | 7% | | $0.03 | | $3.08 | | 6% |
Q4 | | $0.79 | | 8% | | | | | | |
Q3 | | $0.78 | | 8% | | | | | | |
Q2 | | $0.75 | | 7% | | | | | | |
Q1 | | $0.73 | | 4% | | | | | | |
| | | | | |
2004 | | $2.85 | | 4% | | $0.06 | | $2.91 | | 4% |
Q4 | | $0.73 | | 6% | | | | | | |
Q3 | | $0.72 | | 4% | | | | | | |
Q2 | | $0.70 | | 3% | | | | | | |
Q1 | | $0.70 | | 4% | | | | | | |
Washington, D.C. New York San Francisco Dallas Chicago Los Angeles Philadelphia
American Capital
October 31, 2006
Page 11
| | | | | | | | | | |
| | | | | | | | | | | |
2003 | | $2.73 | | 7% | | $0.06 | | $2.79 | | 9% |
Q4 | | $0.69 | | 3% | | | | | | |
Q3 | | $0.69 | | 5% | | | | | | |
Q2 | | $0.68 | | 8% | | | | | | |
Q1 | | $0.67 | | 14% | | | | | | |
| | | | | |
2002 | | $2.55 | | 15% | | $0.02 | | $2.57 | | 12% |
Q4 | | $0.67 | | 18% | | | | | | |
Q3 | | $0.66 | | 18% | | | | | | |
Q2 | | $0.63 | | 15% | | | | | | |
Q1 | | $0.59 | | 11% | | | | | | |
| | | | | |
2001 | | $2.21 | | 13% | | $0.09 | | $2.30 | | 6% |
Q4 | | $0.57 | | 10% | | | | | | |
Q3 | | $0.56 | | 14% | | | | | | |
Q2 | | $0.55 | | 12% | | | | | | |
Q1 | | $0.53 | | 18% | | | | | | |
| | | | | |
2000 | | $1.95 | | 14% | | $0.22 | | $2.17 | | 25% |
Q4 | | $0.52 | | 18% | | | | | | |
Q3 | | $0.49 | | 14% | | | | | | |
Q2 | | $0.49 | | 14% | | | | | | |
Q1 | | $0.45 | | 10% | | | | | | |
| | | | | |
1999 | | $1.71 | | 39% | | $0.03 | | $1.74 | | 30% |
Q4 | | $0.44 | | 19% | | | | | | |
Q3 | | $0.43 | | 34% | | | | | | |
Q2 | | $0.43 | | 48% | | | | | | |
Q1 | | $0.41 | | 64% | | | | | | |
| | | | | |
1998 | | $1.23 | | N/A | | $0.11 | | $1.34 | | |
Q4 | | $0.37 | | 76% | | | | | | |
Q3 | | $0.32 | | N/A | | | | | | |
Q2 | | $0.29 | | N/A | | | | | | |
Q1 | | $0.25 | | N/A | | | | | | |
1997 Q4 | | $0.21 | | | | | | $0.21 | | |
| | | | | |
Total Declared | | | | | | | | $22.44 | | |
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American Capital
October 31, 2006
Page 12
SHAREHOLDER CALL
American Capital invites shareholders, prospective shareholders and analysts to attend the American Capital Shareholder Call on Wednesday, November 1, 2006 at 11:00 am ET. The dial in number will be (888) 428-4474. International callers should dial +1 (612) 234-9960. Please advise the operator you are dialing in for the American Capital Shareholder Call.
BEFORE THE CALL:
SLIDE PRESENTATION AVAILABLE IN ADVANCE OF THE SHAREHOLDER CALL
The quarterly shareholder presentation includes a summary slide show to accompany the call that participants may download from the American Capital website atwww.ACAS.com and print prior to the call. You may wish to take the time to review the slides in advance of the Shareholder Call.
DURING THE CALL:
VIEW STREAMING SLIDE PRESENTATION DURING THE SHAREHOLDER CALL
During the Shareholder Call you may access the webcast or listen to the Shareholder Call by phone and step through the slides at your own pace.
AFTER THE CALL:
LISTEN AND VIEW AUDIO SLIDE PRESENTATION AFTER THE CALL
The audio of the Shareholder Call combined with the slide presentation will be made available after the call on November 1 on our website. An archive of our audio and slide presentations of our quarterly shareholder calls can be found in the Investor Relations section of our website atwww.ACAS.com.
AUDIO ONLY PRESENTATION AVAILABLE AFTER THE SHAREHOLDER CALL:
There will be a phone recording available from 11:30 pm Wednesday, November 1 until 11:59 pm Tuesday, November 14. If you are interested in hearing the recording of the presentation, please dial (800) 475-6701. International callers may dial +1 (320) 365-3844. The access code for both domestic and international callers is 843571.
For further information or questions, please do not hesitate to call our Investor Relations Department at (301) 951-6122.
ABOUT AMERICAN CAPITAL
Since its August 1997 IPO through the third quarter of 2006, American Capital has invested $11.9 billion in 242 portfolio companies. As of September 30, 2006, American Capital shareholders have enjoyed a total return of 500% since the Company’s IPO — an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $1.3 billion in dividends and paid or declared $22.44 dividends per share since its August 1997 IPO at $15 per share.
Companies interested in learning more about American Capital’s flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit our website atwww.AmericanCapital.com.
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American Capital
October 31, 2006
Page 13
This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including 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.
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 report 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 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.
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