EXHIBIT 99.1
Allied Capital Announces First Quarter 2004 Financial Results;
Quarterly Dividend of $0.57 Per Share Declared
WASHINGTON--(BUSINESS WIRE)--April 28, 2004--Allied Capital
Corporation (NYSE: ALD) today announced first quarter 2004 financial
results.
Highlights for Q1 2004
-- Net income was $0.15 per share, or $20.3 million
-- Net investment income was $0.34 per share, or $44.5 million
-- The total of net investment income and net realized gains was
$1.46 per share, or $192.4 million
-- Net unrealized depreciation was $1.30 per share, or $172.1
million
-- First regular quarterly dividend of $0.57 per share was paid;
second quarter dividend of $0.57 per share was declared
-- Net asset value per share was $14.60 per share
-- Shareholders' equity was $1.88 billion
-- New investments totaled $170.3 million for the quarter
Operating Results
For the three months ended March 31, 2004, net investment income
was $44.5 million or $0.34 per share, as compared to $42.7 million or
$0.39 per share for the three months ended March 31, 2003. Net
investment income for the three months ended March 31, 2004, was
reduced by $3.5 million, or $0.03 per share, related to the accrual of
the company's new individual performance award. Net realized gains
were $147.9 million, or $1.12 per share for the quarter ended March
31, 2004, which includes a realized gain totaling $149.0 million from
the sale of The Hillman Companies, Inc. Net realized gains were $48.3
million or $0.44 per share for the quarter ended March 31, 2003. The
sum of net investment income and net realized gains or losses was
$192.4 million or $1.46 per share for the three months ended March 31,
2004, as compared to $91.0 million or $0.83 per share for the three
months ended March 31, 2003.
Net income for the quarter ended March 31, 2004, was $20.3 million
or $0.15 per share, after net unrealized depreciation of $172.1
million or $1.30 per share. Net unrealized depreciation included the
reversal of $142.8 million in net unrealized appreciation associated
with net realized gains. Net income for the quarter ended March 31,
2003, was $19.9 million or $0.18 per share, after net unrealized
depreciation of $71.1 million or $0.65 per share. Net income can vary
substantially from quarter to quarter primarily due to changes in
unrealized appreciation or depreciation and the recognition of
realized gains or losses, which vary from quarter to quarter. As a
result, quarterly comparisons of net income may not be meaningful.
During the quarter, the company invested a total of $170.3
million. After total repayments and asset sales of $237.1 million and
valuation and other changes during the quarter, total assets were
$3.01 billion at March 31, 2004. Shareholders' equity was $1.88
billion at March 31, 2004, as compared to $1.91 billion at December
31, 2003. Net asset value per share was $14.60 at March 31, 2004, as
compared to $14.94 at December 31, 2003.
Portfolio Activity for Q1 2004
New private finance investments totaled $110.2 million and
commercial real estate investments totaled $60.1 million for the
quarter. At March 31, 2004, the overall weighted average yield on the
interest-bearing portfolio was 14.3%, as compared to 14.7% at December
31, 2003.
Private Finance
The private finance portfolio totaled $1.69 billion at March 31,
2004. Loans and debt securities, which totaled $1.18 billion at March
31, 2004, had a weighted average yield of 14.4% as compared to 15.0%
at December 31, 2003. Significant new private finance investments
during the first quarter of 2004 included:
-- $27.5 million to Diversified Collection Services, Inc., a
leading private collections agency for government obligations,
as part of that company's recapitalization;
-- $13.7 million to Universal Environmental Services LLC, a
leading regional provider of environmental services to the
automotive service sector, to support the acquisition of that
company;
-- $11.7 million to Nexcel Synthetics, LLC, a manufacturer of
carpet backing, specialty synthetic yarns and fibers, and
other polypropylene- and polyethylene-based products, as part
of that company's recapitalization;
-- $11.0 million to Homax Holdings, Inc., a leading supplier of
branded, specialty-application products for the home care and
home improvement markets, to support the acquisition of the
company; and
-- $5.6 million to Advantage Sales & Marketing LLC, a leading
sales and marketing agency providing outsourced sales,
merchandising, and marketing services to the consumer packaged
goods industry, and $12.4 million to Advantage Mayer, Inc., a
member thereof, to finance the acquisition of other members.
In addition, the Company provided $47.5 million in subordinated
debt to The Hillman Companies, Inc. in connection with the Company's
sale of Hillman on March 31, 2004.
Allied Capital has agreed to provide subordinated debt and equity
to recapitalize and acquire a majority interest in Advantage Sales &
Marketing, Inc. This commitment totaled approximately $133 million at
March 31, 2004. This transaction is subject to customary closing
conditions, including regulatory and shareholder approvals and certain
other adjustments, and is anticipated to close by the end of the
second quarter.
Commercial Real Estate Finance
At March 31, 2004, the company's commercial real estate finance
portfolio totaled $714.0 million, and the interest-bearing investments
had a weighted average yield of 14.0%, as compared to 14.1% at
December 31, 2003. Significant new CMBS investments totaled $48.9
million in four new CMBS transactions during the first quarter of
2004, including $27.6 million of investments in BB+, BB and BB- rated
bonds. The unamortized discount on the CMBS bond portfolio totaled
$670.4 million at March 31, 2004.
Portfolio Quality
Allied Capital employs a standard grading system to monitor the
quality of its portfolio. Grade 1 is for those investments from which
a capital gain is expected. Grade 2 is for investments performing in
accordance with plan. Grade 3 is for investments that require closer
monitoring; however, no loss of investment return or principal is
expected. Grade 4 is for investments that are in workout and for which
some loss of current investment return is expected, but no loss of
principal is expected. Grade 5 is for investments that are in workout
and for which some loss of principal is expected.
At March 31, 2004, Grade 1 investments totaled $687.0 million, or
28.6% of the total portfolio at value; Grade 2 investments totaled
$1.47 billion, or 61.2% of the total portfolio; Grade 3 investments
totaled $112.9 million, or 4.7% of the total portfolio; Grade 4
investments totaled $62.2 million, or 2.6% of the total portfolio; and
Grade 5 investments totaled $69.6 million, or 2.9% of the total
portfolio.
In the private finance portfolio, loans and debt securities over
90 days delinquent totaled $88.3 million at March 31, 2004, as
compared to $85.6 million at December 31, 2003. In the commercial real
estate portfolio, loans and debt securities over 90 days delinquent
totaled $59.6 million at March 31, 2004, as compared to $44.0 million
at December 31, 2003. Loans and debt securities not accruing interest
totaled $167.1 million at March 31, 2004, as compared to $118.0
million at December 31, 2003. At March 31, 2004, the company's CMBS
investments included investments in the first loss, unrated bond class
of 37 CMBS issuances. For these issuances, loans over 30 days
delinquent or classified as real estate owned totaled 1.6% of the
total outstanding principal balance of the underlying collateral pool
at March 31, 2004, as compared to 1.7% at December 31, 2003.
Liquidity and Capital Resources
The company had a strong liquidity and capital position at March
31, 2004. The company ended the quarter with total cash and cash
equivalents of $375.3 million. After reducing the company's debt
outstanding of $962.4 million by total cash and cash equivalents, net
outstanding debt was $587.1 million, for a ratio of net debt to equity
of 0.31 to 1 at March 31, 2004. At March 31, 2004, there were no
amounts drawn on the revolving line of credit. The amount available
under the line at March 31, 2004, was $488.4 million, net of amounts
committed for standby letters of credit of $44.1 million.
At March 31, 2004, the company had a weighted average cost of debt
of 7.5%. The company's regulatory asset coverage was 314%. The company
is required to maintain regulatory asset coverage of at least 200%.
Quarterly Dividend of $0.57 Per Share Declared
As previously released on April 15, 2004, the company declared its
163rd regular quarterly dividend of $0.57 per share for the second
quarter of 2004. The dividend is payable as follows:
Record date June 11, 2004
Payable date June 30, 2004
The company's dividend is paid from taxable income. The Board
determines the dividend based on annual estimates of taxable income,
which differ from book income due to changes in unrealized
appreciation and depreciation and due to temporary and permanent
differences in income and expense recognition.
Webcast/ Conference Call at 10:15 a.m. EDT on April 28, 2004
The company will host a webcast/conference call at 10:15 a.m.
(EDT) today to discuss first quarter financial results. All interested
parties are welcome to attend the live webcast, which will be hosted
through our web site at www.alliedcapital.com. Please visit the web
site to test your connection before the call. You can also access the
conference call by dialing (888) 689-4612 approximately 15 minutes
prior to the call. International callers should dial (706) 645-0106.
All callers should reference the passcode "Allied Capital".
An archived replay of the event will be available through May 12,
2004, by calling (800) 642-1687. (International callers please dial
(706) 645-9291.) Please reference passcode "6479927". An archived
replay will also be available on our website. For complete information
about the webcast/conference call and the replay, please visit our web
site or call Allied Capital Investor Relations at (888) 818-5298.
About Allied Capital
Allied Capital is the nation's largest business development
company and provides long-term debt and equity investment capital to
companies in a variety of industries. The company also participates in
the real estate capital markets as an investor in non-investment grade
commercial mortgage-backed securities and collateralized debt
obligation bonds and preferred shares. The company is headquartered in
Washington, DC. For more information, please visit the web site at
www.alliedcapital.com, call Allied Capital Investor Relations
toll-free at (888) 818-5298, or e-mail us at ir@alliedcapital.com.
Forward-Looking Statements
The information contained in this press release contains
forward-looking statements. These forward-looking statements are
subject to the inherent uncertainties in predicting future results and
conditions. Certain factors could cause actual results and conditions
to differ materially from those projected in these forward-looking
statements, and these factors are enumerated in Allied Capital's
filings with the Securities and Exchange Commission.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
At March At December
31, 2004 31, 2003
----------- -----------
(unaudited)
ASSETS
Portfolio at value:
Private finance $1,685,564 $1,902,672
Commercial real estate
finance 714,000 681,927
----------- -----------
Total portfolio at value 2,399,564 2,584,599
Deposits of proceeds from
sales of borrowed Treasury
securities 111,738 98,527
Accrued interest and
dividends receivable 58,831 53,079
Other assets 65,110 69,498
Cash and cash equivalents 375,277 214,167
----------- -----------
Total assets $3,010,520 $3,019,870
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable and debentures $962,420 $954,200
Revolving line of credit - -
Obligations to replenish
borrowed Treasury
securities 111,737 98,525
Accounts payable and other
liabilities 50,393 46,568
----------- -----------
Total liabilities 1,124,550 1,099,293
Preferred stock 6,000 6,000
Shareholders' equity:
Common stock 13 13
Additional paid-in capital 1,998,947 1,985,652
Notes receivable from sale
of common stock (13,440) (18,632)
Net unrealized appreciation
(depreciation) on portfolio (211,142) (39,055)
Undistributed (distributions
in excess of) earnings 105,592 (13,401)
----------- -----------
Total shareholders' equity 1,879,970 1,914,577
----------- -----------
Total liabilities and
shareholders' equity $3,010,520 $3,019,870
=========== ===========
Net asset value per common
share $14.60 $14.94
Common shares outstanding 128,761 128,118
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts) Three Months Ended
March 31,
--------------------
2004 2003
----------- --------
(unaudited)
Interest and related portfolio income
Interest and dividends $73,539 $65,521
Premiums from loan dispositions 950 1,121
Fees and other income 7,276 6,488
----------- --------
Total interest and related portfolio
income 81,765 73,130
----------- --------
Expenses
Interest 19,113 17,922
Employee 8,862 8,121
Individual performance award 3,493 -
Administrative 5,827 4,417
----------- --------
Total operating expenses 37,295 30,460
----------- --------
Net investment income before income taxes 44,470 42,670
Income tax expense (benefit) (75) -
----------- --------
Net investment income 44,545 42,670
----------- --------
Net realized and unrealized gains (losses)
Net realized gains 147,850 48,339
Net change in unrealized appreciation or
depreciation (172,087) (71,136)
----------- --------
Total net gains (losses) (24,237) (22,797)
----------- --------
Net increase in net assets resulting from
operations $20,308 $19,873
=========== ========
Diluted earnings per common share $0.15 $0.18
Weighted average common shares outstanding -
diluted 131,968 110,098
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