AMERICAN CAPITAL, LTD - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBTI 32 - AMERICAN CAPITAL, LTD	dex32.htm
EX-31 - EXHIBIT 31 - AMERICAN CAPITAL, LTD	dex31.htm
EX-10.4 - EXHIBIT 10.4 - AMERICAN CAPITAL, LTD	dex104.htm
EX-10.2 - EXHIBIT 10.2 - AMERICAN CAPITAL, LTD	dex102.htm
EX-10.3 - EXHIBIT 10.3 - AMERICAN CAPITAL, LTD	dex103.htm
EX-10.1 - EXHIBIT 10.1 - AMERICAN CAPITAL, LTD	dex101.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 814-00149

LOGO

AMERICAN CAPITAL, LTD.

(Exact name of registrant as specified in its charter)

Delaware

52-1451377

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

2 Bethesda Metro Center

14th Floor

Bethesda, Maryland 20814

(Address of principal executive offices)

(301) 951-6122

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x		Accelerated filer ¨
Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of October 30, 2009, was 280,840,667.

AMERICAN CAPITAL, LTD.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	61
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	88
Item 4.	Controls and Procedures	88

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	89
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	94
Item 3.	Defaults Upon Senior Securities	94
Item 4.	Submission of Matters to a Vote of Security Holders	94
Item 5.	Other Information	95
Item 6.	Exhibits	96
Signatures		97

Item 1. Financial Statements

AMERICAN CAPITAL, LTD.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)


	September 30, 2009			December 31, 2008
	September 30, 2009			December 31, 2008
	(unaudited)
Assets
Investments at fair value (cost of $9,860 and $10,691, respectively)
Non-Control/Non-Affiliate investments (cost of $5,394 and $5,904, respectively)	$	3,452		$	4,182
Affiliate investments (cost of $401 and $405, respectively)		315			338
Control investments (cost of $4,065 and $4,382, respectively)		2,126			2,898
Derivative agreements (cost of $0 and $0, respectively)		9			9

Total investments at fair value		5,902			7,427
Cash and cash equivalents		445			209
Restricted cash and cash equivalents		132			71
Interest receivable		43			44
Other assets		146			159

Total assets	$	6,668		$	7,910

Liabilities and Shareholders’ Equity
Debt ($2,654 and $2,512 due within one year, respectively)	$	4,279		$	4,428
Derivative and option agreements (cost of $0 and $(20), respectively)		118			222
Other liabilities		81			105

Total liabilities		4,478			4,755

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, 292.9 and 214.3 issued and 280.6 and 204.7 outstanding, respectively		3			2
Capital in excess of par value		6,827			6,545
(Distributions in excess of) undistributed net realized earnings		(550	)		76
Net unrealized depreciation of investments		(4,090	)		(3,468	)

Total shareholders’ equity		2,190			3,155

Total liabilities and shareholders’ equity	$	6,668		$	7,910

Net asset value per common share	$	7.80		$	15.41

See accompanying notes.

AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
OPERATING INCOME:
Interest and dividend income
Non-Control/Non-Affiliate investments	$	110		$	144		$	305		$	461
Affiliate investments		14			9			36			31
Control investments		52			98			141			256

Total interest and dividend income		176			251			482			748

Asset management and other fee income
Non-Control/Non-Affiliate investments		9			12			17			30
Affiliate investments		—			—			—			1
Control investments		8			15			29			54

Total asset management and other fee income		17			27			46			85

Total operating income		193			278			528			833

OPERATING EXPENSES:
Interest		85			50			197			161
Salaries, benefits and stock-based compensation		47			52			147			165
General and administrative		28			21			78			64

Total operating expenses		160			123			422			390

NET OPERATING INCOME BEFORE INCOME TAXES		33			155			106			443
(Provision) benefit for income taxes		(1	)		(2	)		10			6

NET OPERATING INCOME		32			153			116			449

Net gain on extinguishment of debt		—			—			12			—

Net realized (loss) gain on investments
Non-Control/Non-Affiliate investments		(27	)		51			(96	)		46
Affiliate investments		—			5			(5	)		7
Control investments		(20	)		17			(333	)		111
Taxes on net realized gain		—			(49	)		—			(53	)
Foreign currency transactions		—			(13	)		(2	)		(7	)
Derivative and option agreements		(19	)		(14	)		(87	)		(25	)

Total net realized (loss) gain on investments		(66	)		(3	)		(523	)		79

Net unrealized appreciation (depreciation) of investments
Portfolio company investments		86			(599	)		(750	)		(1,932	)
Foreign currency translation		57			(90	)		54			(17	)
Derivative and option agreements and other		(32	)		(9	)		74			(10	)

Total net unrealized appreciation (depreciation) of investments		111			(698	)		(622	)		(1,959	)

Total net realized (loss) gain and net appreciation (depreciation) on investments		45			(701	)		(1,145	)		(1,880	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (NET EARNINGS (LOSS))	$	77		$	(548	)	$	(1,017	)	$	(1,431	)

NET OPERATING INCOME PER COMMON SHARE:
Basic	$	0.12		$	0.74		$	0.51		$	2.22
Diluted	$	0.11		$	0.74		$	0.51		$	2.22
NET EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.30		$	(2.63	)	$	(4.48	)	$	(7.06	)
Diluted	$	0.27		$	(2.63	)	$	(4.48	)	$	(7.06	)
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic		256.5			208.1			226.9			202.6
Diluted		284.3			208.1			226.9			202.6
DIVIDENDS DECLARED PER COMMON SHARE	$	—		$	1.05		$	1.07		$	3.09

See accompanying notes.

AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in millions, except per share data)


	Nine Months Ended September 30,
	2009			2008
Operations:
Net operating income	$	116		$	449
Net gain on extinguishment of debt		12			—
Net realized (loss) gain on investments		(523	)		79
Net unrealized depreciation of investments		(622	)		(1,959	)

Net decrease in net assets resulting from operations		(1,017	)		(1,431	)

Shareholder distributions:
Common stock dividends from net operating income		(116	)		(406	)
Common stock dividends in excess of net operating income and net realized gain on investments		(115	)		—

Net decrease in net assets resulting from shareholder distributions		(231	)		(406	)

Capital share transactions:
Issuance of common stock		232			444
Issuance of common stock under stock option plans		—			5
Purchase of common stock held in deferred compensation trusts		—			(50	)
Purchase of treasury stock		—			(6	)
Stock-based compensation		52			63
Other		(1	)		1

Net increase in net assets resulting from capital share transactions		283			457

Total decrease in net assets		(965	)		(1,380	)
Net assets at beginning of period		3,155			6,441

Net assets at end of period	$	2,190		$	5,061

Net asset value per common share at end of period	$	7.80		$	24.43

Common shares outstanding at end of period		280.6			207.2

See accompanying notes.

AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)


	Nine Months Ended September 30,
	2009			2008
Operating activities:
Net decrease in net assets resulting from operations	$	(1,017	)	$	(1,431	)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
Net unrealized depreciation of investments		622			1,959
Net realized loss (gain) on investments		523			(79	)
Net gain on extinguishment of debt		(12	)		—
Accrued payment-in-kind interest and dividends		(58	)		(146	)
Accrued payment-in-kind interest for make-whole payment		22			—
Collection of loan origination fees		—			12
Amortization of deferred finance costs, premiums and discounts		10			9
Depreciation of property and equipment		11			9
Stock-based compensation		52			63
(Increase) decrease in interest receivable		(10	)		9
Decrease (increase) in other assets		12			(50	)
Decrease in other liabilities		(34	)		(102	)
Other		(1	)		(14	)

Net cash provided by operating activities		120			239

Investing activities:
Purchases of investments		(107	)		(1,413	)
Fundings on portfolio company revolving credit facility investments, net		(72	)		(328	)
Principal repayments		262			727
Proceeds from loan syndications and loan sales		107			343
Collection of payment-in-kind notes and dividends and accreted loan discounts		32			60
Proceeds from sale of equity investments		266			800
Interest rate derivative periodic payments, net		(43	)		(25	)
Capital expenditures for property and equipment		(1	)		(7	)
Termination of European Capital Limited put option agreement		(65	)		—
Other		(8	)		2

Net cash provided by investing activities		371			159

Financing activities:
Payment on issuance of notes payable from asset securitizations, net		(151	)		(227	)
Payments on revolving credit facilities, net		(1	)		(81	)
(Increase) decrease in debt service escrows		(61	)		292
Issuance of common stock		—			448
Purchase of common stock held in deferred compensation trusts		—			(50	)
Distributions paid		(24	)		(601	)
Other		(18	)		(2	)

Net cash used in financing activities		(255	)		(221	)

Net increase in cash and cash equivalents		236			177
Cash and cash equivalents at beginning of period		209			143

Cash and cash equivalents at end of period	$	445		$	320

Non-cash financing activities:
Issuance of common stock in conjunction with acquisition of European Capital Limited	$	25		$	—
Issuance of common stock in conjunction with shareholder distribution	$	207		$	—

See accompanying notes.

AMERICAN CAPITAL, LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(unaudited)

(in millions, except per share data)


	Nine Months Ended September 30,
	2009		2008
Per Share Data:
Net asset value at beginning of the period	$15.41		$32.88

Net operating income(1)	0.51		2.22
Net gain on extinguishment of debt(1)	0.05		—
Net realized (loss) gain on investments(1)	(2.30	)	0.39
Net unrealized depreciation on investments(1)	(2.74	)	(9.67	)

Net decrease in net assets resulting from operations(1)	(4.48	)	(7.06	)
Issuance of common stock(2)	(0.70	)	0.09
Shareholder distributions	(1.07	)	(2.04	)
Other, net(3)	(1.36	)	0.56

Net asset value at end of period	$7.80		$24.43

Ratio/Supplemental Data:
Per share market value at end of period	$3.23		$25.51
Total gain (loss)(4)	32.82	%	(16.88	)%
Shares outstanding at end of period	280.6		207.2
Net assets at end of period	$2,190		$5,061
Average net assets(5)	$2,472		$5,704
Average debt outstanding(6)	$4,343		$4,549
Average debt outstanding per common share(1)(6)	$19.14		$22.45
Ratio of operating expenses to average net assets(7)	22.82	%	9.11	%
Ratio of operating expenses, net of interest expense, to average net assets(7)	12.17	%	5.35	%
Ratio of interest expense to average net assets(7)	10.65	%	3.76	%
Ratio of net operating income to average net assets(7)	6.27	%	10.49	%

(1)	Weighted average basic per share data.

(2)	For the nine months ended September 30, 2009, represents the issuance of common stock in conjunction with the acquisition of European Capital Limited.

(3)

Represents the impact of (i) the other components in the changes in net assets, including other capital transactions such as the purchase of common stock held in deferred compensation trusts, stock-based compensation, income tax deductions related to the exercise of stock options and distribution of stock awards in excess of GAAP expense credited to additional paid-in capital, repayments of notes receivable from the sale of common stock and the purchase of treasury stock and (ii) the different share amounts used in calculating per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

(4)	Total gain (loss) is based on the change in the market value of our common stock taking into account dividends reinvested in accordance with the terms of our dividend reinvestment plan. Total gain (loss) is not annualized.

(5)	Based on the average of ending net assets as of the beginning and end of each period presented.

(6)	Based on a daily weighted average balance of debt outstanding during the period.

(7)	Ratios are annualized.

See accompanying notes.

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)		Maturity Date (5)	# of shares/ units owned	Principal		Cost		Fair Value

NON-CONTROL / NON-AFFILIATE INVESTMENTS
Aerus, LLC	Household Durables	Common Membership Warrants(1)				250,000			$	0.2	$	—
Affordable Care Holding Corp.	Health Care Providers & Services	Subordinated Debt(7)	15.0	%	11/13-11/14		$	66.1		65.4		66.1
Affordable Care Holding Corp.	Health Care Providers & Services	Convertible Preferred Stock				70,752				89.1		97.6
		Common Stock(1)				17,687,156				17.7		19.8
										172.2		183.5
Algoma Holding Company	Building Products	Subordinated Debt(7)	12.6	%	4/13			15.1		15.0		14.2
American Acquisition, LLC	Diversified Financial Services	Senior Debt	13.4	%	12/12			18.4		18.1		16.7
AmWins Group, Inc.	Insurance	Senior Debt(7)	5.8	%	6/14			18.5		18.6		10.9
Anchor Drilling Fluids USA, Inc.	Energy Equipment & Services	Senior Debt(7)	11.3	%	4/13			7.9		7.8		5.9
Anchor Drilling Fluids USA, Inc.	Energy Equipment & Services	Subordinated Debt(6)(7)	14.7	%	4/15			20.8		19.8		—
										27.6		5.9
Aspect Software	IT Services	Senior Debt(7)	7.4	%	7/12			20.0		19.9		15.4
Avanti Park Place LLC	Real Estate	Senior Debt	8.3	%	6/10			5.8		5.8		5.8
Avalon Laboratories Holding Corp.	Health Care Equipment & Supplies	Senior Debt(7)	11.0	%	1/14			17.6		17.4		17.5
Avalon Laboratories Holding Corp.	Health Care Equipment & Supplies	Subordinated Debt(7)	15.4	%	1/15			22.6		21.6		20.5
		Convertible Preferred Stock(1)				148,742				24.3		—
		Common Stock(1)				7,829				1.3		—
										64.6		38.0
BBB Industries, LLC	Auto Components	Senior Debt(7)	5.7	%	6/14			21.2		21.2		15.4
Belloto Holdings Limited(3)	Household Durables	Subordinated Debt(6)	10.4	%	6/17			3.9		3.5		—
Belloto Holdings Limited(3)		PIK Note(1)	15.0	%	12/17			8.3		8.3		—
		Preference Shares(1)				2,975,839				4.4		—
		Ordinary Shares(1)				32,434				0.1		—
										16.3		—
Berry-Hill Galleries, Inc.	Distributors	Senior Debt	13.8	%	3/10			7.9		7.8		7.8
Blue Wolf Capital Fund II, L.P.	Capital Markets	Limited Partnership Interest(1)								2.8		2.8
Butler Animal Health Supply, LLC	Health Care Providers & Services	Senior Debt(7)	7.6	%	7/12			8.0		8.0		6.8
CAMP Systems International, Inc.	Transportation Infrastructure	Senior Debt(7)	6.4	%	9/14			30.0		29.8		19.7
Carestream Health, Inc.	Health Care Equipment & Supplies	Senior Debt(7)	5.5	%	10/13			15.0		15.0		10.7
CH Holding Corp.	Leisure Equipment & Products	Senior Debt(6)	7.2	%	5/11			15.9		13.0		4.9
		Redeemable Preferred Stock(1)				21,215				42.7		—
										55.7		4.9
Cinelease, Inc.	Electronic Equipment & Instruments	Senior Debt(7)	9.9	%	3/12-4/13			48.0		48.0		40.0
		Senior Debt(6)(7)	8.3	%	4/13			10.8		10.3		7.2
		Common Stock(1)				583				0.6		—
										58.9		47.2
Compusearch Holdings Company, Inc.	Software	Subordinated Debt(7)	12.0	%	7/12			12.6		12.5		12.5
Compusearch Holdings Company, Inc.		Convertible Preferred Stock(1)				23,342				0.9		2.2
										13.4		14.7
Contec LLC	Household Durables	Subordinated Debt(7)	14.0	%	9/15-9/16			135.0		133.8		114.6

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)		Maturity Date (5)	# of shares/ units owned	Principal	Cost	Fair Value
CyrusOne Networks, LLC	IT Services	Senior Debt(7)	7.5	%	1/14		19.9	19.8	17.3
Delsey Holding(3)	Textiles, Apparel & Luxury Goods	Senior Debt	7.5	%	2/12		20.5	20.5	22.7
DelStar, Inc.	Building Products	Subordinated Debt(7)	14.0	%	12/12		19.0	18.9	19.0
		Redeemable Preferred Stock(1)				26,613		14.8	32.2
		Convertible Preferred Stock(1)				29,569		3.0	—
		Common Stock Warrants(1)				89,020		16.9	—
								53.6	51.2
Direct Marketing International LLC	Media	Subordinated Debt(7)	15.2	%	7/12		30.0	29.8	26.5
Dyno Holding Corp.	Auto Components	Senior Debt(7)	11.8	%	11/15		41.2	40.9	41.3
		Subordinated Debt(7)	7.3	%	11/16		14.1	14.1	14.1
		Subordinated Debt(6)(7)	0.0	%	11/16		12.7	11.7	1.3
		Convertible Preferred Stock(1)				389,759		40.5	—
		Common Stock(1)				97,440		10.1	—
								117.3	56.7
Easton Bell Sports LLC	Leisure Equipment & Products	Redeemable Preferred Stock(1)				128		0.1	0.1
	Leisure Equipment & Products	Common Units(1)				2,177,415		0.7	3.5
								0.8	3.6
FAMS Acquisition, Inc.	Diversified Financial Services	Subordinated Debt(7)	14.8	%	11/13-11/14		26.7	25.8	26.1
	Diversified Financial Services	Redeemable Preferred Stock(1)				919		0.9	—
		Convertible Preferred Stock(1)				861,364		20.9	—
								47.6	26.1
FCC Holdings, LLC	Commercial Banks	Subordinated Debt	15.1	%	12/12		75.0	74.5	67.6
Ford Motor Company(2)	Automobiles	Senior Debt	2.6	%	12/11		28.2	27.4	25.4
FPI Holding Corporation	Food Products	Senior Debt	7.5	%	5/11		10.2	10.1	10.2
		Senior Debt(6)	13.8	%	5/13-6/15		24.7	24.0	2.1
		Subordinated Debt(6)	21.5	%	6/15-5/16		21.9	17.3	—
		Redeemable Preferred Stock(1)				4,469		39.1	—
		Convertible Preferred Stock(1)				21,715		23.3	—
		Common Stock(1)				5,429		5.8	—
								119.6	12.3
FU/WD Opa Locka, LLC	Real Estate	Senior Debt	8.1	%	9/17-9/24		32.0	30.6	22.4
Genband Inc.	Communications Equipment	Common Stock(1)				2,975,631		14.7	1.3
Golden Key US LLC	Diversified Financial Services	Commercial Paper(1)	5.3	%	1/14		7.3	7.3	3.6
HMSC Corporation	Insurance	Senior Debt(6)(7)	5.7	%	10/14		3.4	3.4	1.6
Hopkins Manufacturing Corporation	Auto Components	Subordinated Debt(7)	15.3	%	7/12		38.6	38.4	35.2
		Redeemable Preferred Stock				2,915		6.7	6.0
								45.1	41.2
Infiltrator Systems, Inc.	Building Products	Senior Debt(7)	16.5	%	10/13		38.8	38.4	37.8
Innova Holdings, Inc.	Energy Equipment & Services	Senior Debt(7)	7.8	%	4/13		11.5	11.4	11.5
	Energy Equipment & Services	Subordinated Debt(7)	15.0	%	3/14		18.0	17.8	18.0
		Convertible Preferred Stock				14,283		22.9	24.3
								52.1	53.8
Inovis International, Inc.	Software	Senior Debt(7)	16.0	%	6/10		88.7	88.5	88.5
Intergraph Corporation	Software	Senior Debt(7)	6.3	%	12/14		3.0	3.0	2.4
iTradeNetwork, Inc.	IT Services	Senior Debt(7)	11.5	%	12/13		25.0	24.8	25.0

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)		Maturity Date (5)	# of shares/ units owned		Principal	Cost	Fair Value
JHCI Acquisition, Inc.	Commercial Services & Supplies	Senior Debt(7)	5.8	%	12/14			19.0	19.1	12.1
Jones Stephens Corp.	Building Products	Subordinated Debt(7)	13.0	%	9/13			11.5	11.6	8.3
		Subordinated Debt(6)(7)	14.0	%	9/14			11.9	10.9	5.3
									22.5	13.6
J-Pac, LLC	Health Care Equipment & Supplies	Senior Debt(7)	12.0	%	1/14			15.0	14.9	11.2
	Health Care Equipment & Supplies	Subordinated Debt(6)	18.9	%	1/14			11.0	8.7	—
		Common Unit Warrants(1)				500,000			0.2	—
									23.8	11.2
KIK Custom Products, Inc.(3)	Household Products	Senior Debt(6)	5.2	%	12/14			20.1	20.1	10.6
LabelCorp Holdings, Inc	Paper & Forest Products	Senior Debt(7)	7.6	%	8/13-8/14			3.3	3.0	2.7
		Subordinated Debt	14.0	%	8/15-8/16			44.3	43.9	37.6
									46.9	40.3
LCW Holdings, LLC	Real Estate	Senior Debt	6.8	%	10/12			32.0	31.2	30.5
		Warrant(1)				12.3	%		0.8	6.1
									32.0	36.6
LJVH Holdings Inc.(3)	Beverages	Senior Debt(7)	5.8	%	1/15			28.5	28.5	19.8
LN Acquisition Corp.	Machinery	Senior Debt(7)	6.1	%	1/15			21.5	21.6	13.6
Logex Corporation	Road & Rail	Subordinated Debt(6)	0.0	%	12/09			1.1	0.9	1.0
MagnaCare Holdings, Inc.	Health Care Providers & Services	Subordinated Debt(7)	14.8	%	1/13			14.2	14.2	14.2
Medical Billing Holdings, Inc.	Commercial Services & Supplies	Subordinated Debt(7)	15.0	%	9/13			10.9	10.8	10.9
		Convertible Preferred Stock(1)				13,199,000			13.2	10.0
		Common Stock(1)				3,299,582			3.3	—
									27.3	20.9
Mirion Technologies	Electrical Equipment	Senior Debt(7)	5.4	%	6/11-11/11			124.7	124.3	126.6
		Subordinated Debt(7)	13.8	%	7/11-5/12			52.3	52.1	52.3
		Convertible Preferred Stock				435,724			53.0	105.7
		Common Stock(1)				24,503			2.8	4.3
		Common Stock Warrants(1)				222,156			18.6	37.3
									250.8	326.2
Mitchell International, Inc.	IT Services	Senior Debt(7)	5.6	%	3/15			5.0	5.0	3.1
National Processing Company Group, Inc.	Diversified Financial Services	Senior Debt(7)	10.8	%	9/14			53.0	52.8	41.7
Net1 Las Colinas Manager, LLC	Real Estate	Senior Debt	7.7	%	10/15			4.7	4.8	4.1
NBD Holdings Corp.	Diversified Financial Services	Subordinated Debt	14.0	%	8/13			46.6	46.1	46.5
	Diversified Financial Services	Convertible Preferred Stock				84,174			11.1	11.1
		Common Stock(1)				633,408			0.1	1.5
									57.3	59.1
Nivel Holdings, LLC	Distributors	Senior Debt(7)	10.6	%	10/13			61.7	61.2	54.9
Orchard Brands Corporation	Internet & Catalog Retail	Senior Debt(7)	7.3	%	4/13-4/14			172.1	172.1	101.4
		Senior Debt(6)(7)	10.0	%	4/14			154.5	117.3	68.2
		Subordinated Debt(6)	9.8	%	4/14			64.9	50.0	—
									339.4	169.6
Pan Am International Flight Academy, Inc.	Commercial Services & Supplies	Subordinated Debt(6)(7)	18.0	%	7/13			32.2	25.1	13.1
		Convertible Preferred Stock(1)				8,234			8.2	—
									33.3	13.1

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)		Maturity Date (5)	# of shares/ units owned		Principal	Cost	Fair Value
PaR Systems, Inc.	Machinery	Senior Debt	3.6	%	7/13			4.3	4.1	3.5
Parts Holding Coörperatief U.A(3)	Distributors	Membership Entitlements(1)				173,060			6.4	—
Phillips & Temro Industries, Inc.	Auto Components	Senior Debt(7)	13.0	%	12/10-1/12			24.0	24.0	22.1
		Subordinated Debt(7)	16.5	%	12/12			18.0	17.9	12.8
									41.9	34.9
Qioptiq S.A.R.L.(3)	Electronic Equipment & Instruments	Subordinated Debt	10.0	%	3/18			30.5	30.2	28.9
Ranpak Acquisition Company	Containers & Packaging	Senior Debt(7)	7.8	%	12/13-12/14			140.5	139.4	101.2
RDR Holdings, Inc.	Household Durables	Subordinated Debt(7)	15.4	%	10/14-11/15			225.0	223.3	218.6
		Convertible Preferred Stock				154,141			164.1	55.2
		Common Stock(1)				1,541,415			1.5	—
									388.9	273.8
Roark - Money Maller, LLC	Media	Common Membership Units(1)				3.5	%		0.9	—
Scanner Holdings Corporation	Computers & Peripherals	Subordinated Debt(7)	14.0	%	6/14			19.0	18.8	19.0
	Computers & Peripherals	Convertible Preferred Stock(1)				77,640,000			7.8	12.7
		Common Stock(1)				78,242			0.1	—
									26.7	31.7
Securus Technologies, Inc.	Diversified Telecommunication Services	Common Stock(1)				12			0.7	—
Seroyal Holdings, L.P.(3)	Health Care Equipment & Supplies	Redeemable Preferred Partnership Units				32,462			0.7	0.9
		Partnership Units(1)				95,280			0.8	1.5
		Common Stock Warrants(1)				36,132			0.1	0.1
									1.6	2.5
Small Smiles Holding Company, LLC	Health Care Providers & Services	Senior Debt	5.3	%	9/12			12.1	7.9	5.8
Small Smiles Holding Company, LLC	Health Care Providers & Services	Subordinated Debt(6)(7)	14.5	%	9/13			76.7	70.6	—
									78.5	5.8
Soil Safe Holdings, LLC	Commercial Services & Supplies	Senior Debt	9.2	%	8/13-8/14			46.2	45.7	39.8
	Commercial Services & Supplies	Subordinated Debt(7)	14.7	%	8/15-8/17			61.6	61.1	48.5
									106.8	88.3
SPL Acquisition Corp.	Pharmaceuticals	Senior Debt	6.7	%	10/13-10/13			63.7	63.1	63.7
		Subordinated Debt(7)	15.3	%	8/14-8/15			51.2	50.6	51.2
		Convertible Preferred Stock				84,043			50.8	50.8
		Common Stock(1)				84,043			—	13.8
									164.5	179.5
Supreme Corq Holdings, LLC	Household Products	Common Membership Warrants(1)				5,670			0.4	—
Swank Audio Visuals, L.L.C.	Commercial Services & Supplies	Senior Debt(7)	6.9	%	8/14			24.2	24.2	11.0
Swank Audio Visuals, L.L.C.	Commercial Services & Supplies	Senior Debt(6)(7)	7.6	%	8/14			23.8	23.4	10.9
									47.6	21.9
Tanenbaum-Harber Co. Holdings, Inc.	Insurance	Redeemable Preferred Stock				376			0.5	0.5
TestAmerica Environmental Services, LLC	Commercial Services & Supplies	Senior Debt(7)	5.3	%	12/11			7.5	7.4	6.8
		Senior Debt(6)(7)	7.2	%	12/12-12/13			43.6	37.7	13.0
		Preferred Units(1)				11,659,298			6.9	—
		Preferred Unit Warrants(1)				1,998,961			4.8	—
									56.8	19.8

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)		Maturity Date (5)	# of shares/ units owned	Principal	Cost	Fair Value
The Tensar Corporation	Construction & Engineering	Senior Debt(7)	8.2	%	5/13		82.0	81.3	54.3
The Tensar Corporation	Construction & Engineering	Subordinated Debt	17.5	%	10/13		49.1	48.8	33.2
								130.1	87.5
ThreeSixty Sourcing, Inc.(3)	Commercial Services & Supplies	Common Stock Warrants(1)				35		4.1	—
TransFirst Holdings, Inc.	Commercial Services & Supplies	Senior Debt(7)	7.0	%	6/15		50.9	50.5	35.6
triVIN, Inc.	Commercial Services & Supplies	Subordinated Debt(7)	15.0	%	6/14-6/15		20.3	20.1	20.3
triVIN, Inc.	Commercial Services & Supplies	Convertible Preferred Stock				247,000,000		27.2	19.2
		Common Stock(1)				6,319,923		6.3	—
								53.6	39.5
Tyden Caymen Holdings Corp.	Electronic Equipment & Instruments	Senior Debt(7)	13.0	%	5/10-11/11		13.4	13.3	13.4
Tyden Caymen Holdings Corp.	Electronic Equipment & Instruments	Subordinated Debt(7)	16.0	%	5/12		14.5	14.4	14.3
		Common Stock(1)				1,165,930		1.2	1.3
								28.9	29.0
Venus Swimwear, Inc.	Internet & Catalog Retail	Senior Debt(6)	9.8	%	12/12		8.1	8.0	5.8
WRH, Inc.	Life Sciences Tools & Services	Senior Debt(7)	4.0	%	9/13		4.0	4.0	4.0
WRH, Inc.	Life Sciences Tools & Services	Subordinated Debt(7)	14.6	%	7/14-9/15		87.1	86.5	87.1
		Convertible Preferred Stock(1)				2,008,575		213.0	86.9
		Common Stock(1)				502,144		49.8	—
								353.3	178.0
WWC Acquisitions, Inc.	Commercial Services & Supplies	Senior Debt(7)	7.0	%	12/13		34.0	33.6	24.0
ZSF/WD Fitzgerald, LLC	Real Estate	Senior Debt	8.2	%	9/24		1.3	1.2	0.8
ZSF/WD Hammond, LLC	Real Estate	Senior Debt	8.1	%	9/17-9/24		40.1	38.4	28.1
ZSF/WD Jacksonville, LLC	Real Estate	Senior Debt	8.1	%	9/17-9/24		20.3	19.4	13.7
ZSF/WD Montgomery-31, LLC	Real Estate	Senior Debt	8.1	%	9/17-9/24		33.2	31.8	23.3
ZSF/WD Opa Locka, LLC	Real Estate	Senior Debt	8.2	%	9/24		0.4	0.4	0.1
ZSF/WD Orlando, LLC	Real Estate	Senior Debt	8.1	%	9/17-9/24		20.6	19.6	14.3
CMBS AND REAL ESTATE CDO INVESTMENTS
ACAS CRE CDO 2007-1, Ltd	Real Estate	Class C through Class N Notes	2.7	%	11/31		349.2	195.0	5.7
ACAS CRE CDO 2007-1, Ltd		Preferred Shares(1)				417,086,293		17.7	—
								212.7	5.7
Banc of America Commercial Mortgage Trust 2007-1	Real Estate	Commercial Mortgage Pass-Through Certificates	5.7	%	2/17-2/18		12.4	4.8	1.8
CD 2007-CD4 Commercial Mortgage Trust	Real Estate	Commercial Mortgage Pass-Through Certificates	5.7	%	4/17		14.0	9.1	1.6
CD 2007-CD5 Mortgage Trust	Real Estate	Commercial Mortgage Pass-Through Certificates	6.4	%	12/17		14.8	10.5	2.6
Citigroup Commercial Mortgage Securities Trust 2007-C6	Real Estate	Commercial Mortgage Pass-Through Certificates	5.5	%	7/17		183.9	83.5	18.4

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned	Principal	Cost	Fair Value
COBALT CMBS Commercial Mortgage Trust 2007-C3	Real Estate	Commercial Mortgage Pass-Through Certificates	5.2%	10/17		11.1	8.7	0.9
Countrywide Commercial Mortgage Trust 2007-MF1	Real Estate	Commercial Mortgage Pass-Through Certificates	6.1%	11/37-11/40		24.0	9.0	1.2
Credit Suisse Commercial Mortgage Trust 2007-C3	Real Estate	Commercial Mortgage Pass-Through Certificates	5.6%	7/17		13.2	10.7	0.8
Credit Suisse Commercial Mortgage Trust Series 2007-C4	Real Estate	Commercial Mortgage Pass-Through Certificates	5.8%	8/17		20.8	12.5	6.3
GE Commercial Mortgage Corporation, Series 2007-C1	Real Estate	Commercial Mortgage Pass-Through Certificates	5.5%	12/19		36.9	31.6	3.9
GS Mortgage Securities Trust 2006-GG10	Real Estate	Commercial Mortgage Pass-Through Certificates	5.7%	7/17		63.7	53.0	0.5
J.P. Morgan Chase Commercial Mortgage Securities Trust 2007-LDP11	Real Estate	Commercial Mortgage Pass-Through Certificates	5.6%	7/17		161.7	69.8	7.5
LB-UBS Commercial Mortgage Trust 2007-C6	Real Estate	Commercial Mortgage Pass-Through Certificates	6.2%	8/17		36.6	22.8	6.3
LB-UBS Commercial Mortgage Trust 2008-C1	Real Estate	Commercial Mortgage Pass-Through Certificates	6.1%	7/23-7/24		19.4	7.4	2.7
ML-CFC Commercial Mortgage Trust 2007-6	Real Estate	Commercial Mortgage Pass-Through Certificates	5.8%	4/17		9.8	3.5	1.2
ML-CFC Commercial Mortgage Trust 2007-8	Real Estate	Commercial Mortgage Pass-Through Certificates	6.0%	8/17		32.8	20.1	5.7
Wachovia Bank Commercial Mortgage Trust 2007-C31	Real Estate	Commercial Mortgage Pass-Through Certificates	5.8%	5/17		20.0	11.8	3.8
Wachovia Bank Commercial Mortgage Trust, Series 2007-C32	Real Estate	Commercial Mortgage Pass-Through Certificates	5.7%	10/17		161.6	76.1	11.1
Wachovia Bank Commercial Mortgage Trust, Series 2007-C34	Real Estate	Commercial Mortgage Pass-Through Certificates	5.3%	10/17-9/24		96.2	44.0	9.1
Wachovia Bank Commercial Trust 2006-C28	Real Estate	Commercial Mortgage Pass-Through Certificates	6.0%	11/16		5.0	3.2	0.7
CLO INVESTMENTS
ACAS CLO 2007-1, Ltd.	Diversified Financial Services	Secured Notes				8.5	8.3	2.5
	Diversified Financial Services	Subordinated Notes				25.9	21.7	13.5
							30.0	16.0
Ares IIIR/IVR CLO Ltd.	Diversified Financial Services	Subordinated Notes				20.0	17.6	8.1

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned	Principal	Cost		Fair Value
Ares VIII CLO, Ltd.	Diversified Financial Services	Preference Shares			6,241			4.6		0.8
Avalon Capital Ltd. 3	Diversified Financial Services	Preferred Securities			13,796			5.0		2.4
Babson CLO Ltd. 2006-II	Diversified Financial Services	Income Notes				15.0		14.6		7.9
BALLYROCK CLO 2006-2 LTD.	Diversified Financial Services	Deferrable Notes				2.0		1.6		0.7
Cent CDO 12 Limited	Diversified Financial Services	Income Notes				26.4		20.1		11.3
Centurion CDO 8 Limited	Diversified Financial Services	Subordinated Notes				5.0		3.0		2.1
Champlain CLO	Diversified Financial Services	Preferred Securities			1,000,000			0.6		0.3
CoLTs 2005-1 Ltd.(3)	Diversified Financial Services	Preference Shares(1)			360			6.7		3.9
CoLTs 2005-2 Ltd.(3)	Diversified Financial Services	Preference Shares			34,170,000			25.6		7.8
CREST Exeter Street Solar 2004-2	Diversified Financial Services	Preferred Securities			3,089,177			2.8		0.8
Eaton Vance CDO X PLC(3)	Diversified Financial Services	Preferred Securities				15.0		13.4		5.3
Essex Park CDO Ltd.	Diversified Financial Services	Secured Subordinated Income Notes			5,750,000			2.0		1.7
Flagship CLO V	Diversified Financial Services	Deferrable Notes				1.7		1.3		0.6
	Diversified Financial Services	Subordinated Securities			15,000			12.1		6.3
								13.4		6.9
Galaxy III CLO, Ltd	Diversified Financial Services	Subordinated Notes				4.0		2.5		0.7
LightPoint CLO IV, LTD	Diversified Financial Services	Income Notes				6.7		6.6		1.9
LightPoint CLO VIII, Ltd.	Diversified Financial Services	Deferrable Notes				7.0		6.4		2.5
LightPoint CLO VII, Ltd.	Diversified Financial Services	Subordinated Notes				9.0		7.3		2.3
Mayport CLO Ltd.	Diversified Financial Services	Income Notes				14.0		12.5		3.3
NYLIM Flatiron CLO 2006-1 LTD.(3)	Diversified Financial Services	Subordinated Securities			10,000			7.8		4.7
Octagon Investment Partners VII, Ltd.	Diversified Financial Services	Preferred Securities			5,000,000			2.0		1.0
Sapphire Valley CDO I, Ltd.	Diversified Financial Services	Subordinated Notes				14.0		13.5		2.3
Vitesse CLO, Ltd.	Diversified Financial Services	Preferred Securities			20,000,000			15.4		6.2
Subtotal Non-Control / Non-Affiliate Investments (60% of total investment assets and liabilities at fair value)							$	5,393.6	$	3,452.4
AFFILIATE INVESTMENTS
American Capital Agency Corp(2)	Real Estate Investment Trusts	Common Stock			2,500,100			50.0		71.1

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned		Principal	Cost		Fair Value
Comfort Co., Inc.	Household Durables	Senior Debt	13.5%	3/12			2.3		2.3		2.3
		Senior Debt(6)	11.5%	3/15			11.8		11.1		6.7
		Common Stock(1)			110,365				11.7		—
									25.1		9.0
Creditcards.com, Inc.	Diversified Consumer Services	Senior Debt	10.8%	7/13			104.9		104.9		86.4
Creditcards.com, Inc.	Diversified Consumer Services	Senior Debt(6)	11.8%	7/13			34.6		33.9		20.5
		Subordinated Debt(6)	15.0%	6/14			10.4		10.0		—
		Redeemable Preferred Stock(1)			1,022				1.1		—
		Common Stock(1)			1,094,645				1.5		—
									151.4		106.9
Egenera, Inc.	Computers & Peripherals	Subordinated Debt	15.0%	12/10			3.7		3.5		2.4
		Redeemable Preferred Stock(1)			523,040				0.4		—
		Common Stock(1)			8,046,865				25.0		—
									28.9		2.4
HALT Medical, Inc.	Health Care Equipment & Supplies	Convertible Preferred Stock(1)			5,592,367				8.9		9.6
IS Holdings I, Inc.	Software	Senior Debt(7)	6.3%	6/14			20.0		19.8		16.5
		Redeemable Preferred Stock(1)			1,297				1.7		1.8
		Common Stock(1)			1,165,930				—		5.5
									21.5		23.8
LTM Enterprises, Inc.	Personal Products	Senior Debt(6)(7)	17.3%	11/11			19.3		18.4		9.8
Narus, Inc.	Internet Software & Services	Convertible Preferred Stock(1)			31,835,900				9.2		6.2
Narus, Inc.	Internet Software & Services	Preferred Stock Warrants(1)			9,567,232				0.1		2.0
									9.3		8.2
Primrose Holding Corporation	Diversified Consumer Services	Common Stock(1)			4,213				2.7		3.7
Qualitor Component Holdings, LLC	Auto Components	Subordinated Debt(7)	17.0%	12/12			38.3		38.0		38.6
Qualitor Component Holdings, LLC	Auto Components	Redeemable Preferred Units(1)			3,150,000				3.1		1.2
		Common Units(1)			350,000				0.4		—
									41.5		39.8
Radar Detection Holdings Corp.	Household Durables	Senior Debt(7)	9.5%	11/12			13.0		13.0		9.7
		Common Stock(1)			40,688				0.6		0.4
									13.6		10.1
Roadrunner Dawes, Inc.	Road & Rail	Subordinated Debt(7)	18.5%	8/12			20.2		20.1		17.5
		Common Stock(1)			7,000				7.0		0.0
							19.9		27.1		17.5
WFS Holding, Inc.	Software	Convertible Preferred Stock			20,403,772				3.0		3.0
Subtotal Affiliate Investments (5% of total investments assets and liabilities at fair value)								$	401.4	$	314.9

CONTROL INVESTMENTS
ACAS Equity Holdings Corp.	Diversified Financial Services	Common Stock(1)			589				14.7		0.8
ACAS Real Estate Holdings Corporation	Real Estate	Subordinated Debt(6)	15.0%	5/16			3.5		3.2		—
		Common Stock(1)			1,000				5.7		—
									8.9		—
American Capital, LLC	Capital Markets	Senior Debt	5.7%	9/12			10.2		10.1		11.0
		Common Membership interest			100	%			84.9		34.4
									95.0		45.4

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned		Principal	Cost	Fair Value
American Driveline Systems, Inc.	Diversified Consumer Services	Subordinated Debt(7)	14.0%	12/14-12/15			42.2	41.7	42.2
		Redeemable Preferred Stock			403,357			31.1	46.8
		Common Stock(1)			128,681			10.8	1.4
		Common Stock Warrants(1)			204,663			17.3	2.2
								100.9	92.6
Aptara, Inc.	IT Services	Senior Debt	11.5%	2/11			3.0	3.0	3.0
		Subordinated Debt(7)	16.9%	2/11			57.3	57.2	59.3
		Redeemable Preferred Stock(1)			15,107			14.1	10.7
		Convertible Preferred Stock(1)			2,549,410			8.7	—
		Preferred Stock Warrants(1)			230,681			1.0	—
								84.0	73.0
Capital.com, Inc.	Diversified Financial Services	Common Stock(1)			8,500,100			0.9	0.1
CIBT Travel Solutions, Inc	Commercial Services & Supplies	Senior Debt(7)	9.5%	1/13			49.9	49.5	49.9
		Subordinated Debt(7)	15.0%	1/15-1/16			54.2	53.8	54.3
		Redeemable Preferred Stock(1)			15,000			14.9	14.6
		Convertible Preferred Stock(1)			776,800			77.7	2.9
		Common Stock(1)			194,200			19.4	—
								215.3	121.7
CMX Inc.	Construction & Engineering	Senior Debt(7)	3.5%	5/11			18.0	17.9	18.3
		Senior Debt(6)(7)	5.8%	5/12			123.8	122.7	12.8
		Common Stock(1)			1,410,100			0.1	—
								140.7	31.1
Contour Semiconductor, Inc.	Semiconductors & Semiconductor Equipment	Convertible Preferred Stock(1)			9,738,995			10.0	16.4
Core Financial Holdings, LLC	Diversified Financial Services	Subordinated Debt	13.6%	4/14-5/15			37.8	37.5	37.5
		Common Stock(1)			57,940,360			54.4	23.7
								91.9	61.2
ECA Acquisition holdings, Inc	Health Care Equipment & Supplies	Subordinated Debt(7)	16.5%	12/14			13.3	13.2	13.3
		Common Stock(1)			583			11.1	12.8
								24.3	26.1
eLynx Holdings, Inc.	IT Services	Senior Debt(7)	8.7%	7/13			9.4	9.4	9.4
		Subordinated Debt(7)	8.6%	7/13			7.9	7.9	7.9
		Subordinated Debt (6)(7)	9.4%	7/13			7.8	6.1	0.5
		Redeemable Preferred Stock(1)			21,113			8.9	—
		Convertible Preferred Stock(1)			7,929			6.0	—
		Common Stock(1)			11,261			1.1	—
		Common Stock Warrants(1)			1,078,792			13.1	—
								52.5	17.8
Endeavor Fund I, LP	Thrifts & Mortgage Finance	Partnership Interest			100	%		18.2	17.0
ETG Holdings, Inc.	Containers & Packaging	Senior Debt(6)	8.8%	5/11			15.2	11.6	—
		Convertible Preferred Stock(1)			233,201			11.4	—
								23.0	—
European Capital Limited(3)	Diversified Financial Services	Subordinated Debt	7.3%	2/11			10.7	9.9	10.7
		Ordinary Shares(1)			431,895,528			1,267.3	143.8
								1,277.2	154.5

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned		Principal	Cost	Fair Value
European Touch, LTD. II	Commercial Services & Supplies	Senior Debt	8.3%	1/12			0.3	0.3	0.3
	Commercial Services & Supplies	Subordinated Debt(6)	16.0%	1/11			18.2	13.5	2.7
		Redeemable Preferred Stock(1)			263			0.3	—
		Common Stock(1)			1,688			0.9	—
		Common Stock Warrants(1)			7,105			3.7	—
								18.7	3.0
EXPL Pipeline Holdings LLC	Oil, Gas & Consumable Fuels	Senior Debt	8.0%	1/17			45.1	44.7	45.1
		Common Membership Units(1)			58,297			44.5	12.0
								89.2	57.1
Formed Fiber Technologies, Inc.	Auto Components	Common Stock(1)			31,250			8.1	-
Fosbel Global Services (LUXCO) S.C.A.(3)	Commercial Services & Supplies	Subordinated Debt(7)	17.3%	12/13			22.6	22.6	22.6
		Subordinated Debt(6)(7)	20.0%	12/14			20.5	14.9	5.6
		Redeemable Preferred Stock(1)			18,449,456			18.5	—
		Convertible Preferred Stock(1)			1,519,368			3.0	—
		Common Stock(1)			108,526			0.2	—
								59.2	28.2
Fountainhead Estate Holding Corp.(3)	Internet Software & Services	Senior Debt	4.0%	10/13			21.9	21.9	21.9
		Redeemable Preferred Stock			115,538			14.8	14.8
		Convertible Preferred Stock(1)			59,250			59.2	30.8
								95.9	67.5
FreeConference.com, Inc.	Diversified Telecommunication Services	Senior Debt(7)	6.8%	4/11			12.6	12.5	12.6
		Subordinated Debt	15.0%	5/12			10.3	10.2	10.3
		Redeemable Preferred Stock			14,042,095			14.1	9.4
		Common Stock(1)			6,088,229			2.3	—
								39.1	32.3
Future Food, Inc.	Food Products	Senior Debt	5.3%	8/10			17.1	16.9	13.4
		Common Stock(1)			64,917			13.0	—
		Common Stock Warrants(1)			6,500			1.3	—
								31.2	13.4
FutureLogic, Inc.	Computers & Peripherals	Senior Debt(7)	8.3%	10/12-10/13			40.2	40.1	40.3
		Subordinated Debt(7)	18.4%	4/14-10/14			30.0	30.0	30.0
		Subordinated Debt(6)(7)	22.5%	10/14			12.7	8.7	3.1
		Redeemable Preferred Stock(1)			583,000			0.6	—
		Common Stock(1)			129,514			15.6	—
								95.0	73.4
FV Holdings Corporation	Food Products	Subordinated Debt(7)	14.5%	6/15			23.5	23.5	23.5
		Convertible Preferred Stock(1)			292,000			14.3	19.0
		Common Stock(1)			125,000			6.1	8.2
								43.9	50.7
Group Montana, Inc.	Textiles, Apparel & Luxury Goods	Senior Debt	10.5%	10/10-10/11			10.6	10.8	10.8
		Senior Debt(6)	12.5%	10/11			9.8	8.6	4.3
		Subordinated Debt(6)	24.5%	10/12			11.6	6.9	—
		Convertible Preferred Stock(1)			4,000			1.0	—
		Common Membership Interest(1)			2.5	%		0.7	—
								28.0	15.1
Halex Holdings Corp.	Construction Materials	Senior Debt(6)	7.0%	9/11			10.8	9.8	7.9
		Redeemable Preferred Stock(1)			23,504,546			30.6	—
								40.4	7.9

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned	Principal	Cost	Fair Value
Hartstrings Holdings Corp.	Textiles, Apparel & Luxury Goods	Senior Debt(6)	4.5%	12/10		10.8	10.8	6.7
		Convertible Preferred Stock(1)			10,196		2.9	—
		Common Stock(1)			14,250		4.8	—
							18.5	6.7
Imperial Supplies Holdings, Inc	Trading Companies and Distributors	Subordinated Debt	16.0%	10/14		22.8	22.6	22.8
Imperial Supplies Holdings, Inc	Trading Companies and Distributors	Redeemable Preferred Stock			19,604		16.1	23.0
		Convertible Preferred Stock(1)			19,604		20.2	21.8
		Common Stock(1)			442,187		11.3	—
							70.2	67.6
Kingway Inca Clymer Holdings, Inc.	Building Products	Subordinated Debt(6)	12.3%	4/12		2.0	—	1.1
		Redeemable Preferred Stock(1)			13,709		9.2	—
							9.2	1.1
Lifoam Holdings, Inc.	Leisure Equipment & Products	Senior Debt	10.5%	12/14		19.1	19.1	19.1
		Subordinated Debt	8.0%	12/14		39.0	38.9	39.0
		Redeemable Preferred Stock(1)			6,160		4.2	3.4
		Convertible Preferred Stock(1)			15,797		12.2	—
		Common Stock(1)			14,000		1.4	—
		Common Stock Warrants(1)			464,242		2.9	—
							78.7	61.5
LLSC Holdings Corporation	Personal Products	Senior Debt(7)	6.3%	8/12		4.7	4.7	4.7
		Subordinated Debt(7)	12.0%	9/13		5.5	5.5	5.5
		Convertible Preferred Stock(1)			7,496		8.1	4.7
							18.3	14.9
LVI Holdings, LLC	Commercial Services & Supplies	Senior Debt(7)	7.3%	2/10		2.7	2.7	2.7
		Subordinated Debt(6)(7)	18.0%	2/13		11.9	10.2	11.0
							12.9	13.7
Montgomery Lane, LLC	Diversified Financial Services	Common Membership Units(1)			100		9.0	3.9
Montgomery Lane, LTD(3)	Diversified Financial Services	Common Membership Units(1)			50,000		7.1	0.6
MW Acquisition Corporation	Health Care Providers & Services	Subordinated Debt(7)	16.2%	2/13-2/14		25.4	25.1	25.4
	Health Care Providers & Services	Redeemable Preferred Stock			2,485		1.0	1.0
		Convertible Preferred Stock(1)			38,016		13.5	8.6
							39.6	35.0
NECCO Holdings, Inc.	Food Products	Senior Debt	13.5%	12/12		4.3	4.3	4.3
		Common Stock(1)			760,869		0.1	—
							4.4	4.3
NECCO Realty Investments, LLC	Real Estate	Senior Debt	14.0 %	12/17		39.4	38.8	39.4
		Common Membership Units(1)			7,000		4.8	9.8
							43.6	49.2
Paradigm Precision Holdings, LLC	Aerospace & Defense	Subordinated Debt	17.0%	8/14		54.6	54.6	54.6
		Subordinated Debt(6)	20.0%	10/14		65.2	53.8	9.3
		Common Membership Units(1)			478,488		17.5	—
							125.9	63.9
PHC Sharp Holdings, Inc.	Commercial Services & Supplies	Senior Debt(7)	6.0%	12/11-12/12		16.5	16.3	13.0
	Commercial Services & Supplies	Subordinated Debt(6)(7)	17.0%	12/14		9.5	7.4	—
		Common Stock(1)			367,881		4.2	—
							27.9	13.0

AMERICAN CAPITAL, LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

September 30, 2009

(unaudited)

(in millions, except share data)


Company (4)	Industry	Investments	Interest Rate (5)	Maturity Date (5)	# of shares/ units owned	Principal	Cost	Fair Value
PHI Acquisitions, Inc.	Internet & Catalog Retail	Senior Debt(7)	12.0%	6/12		10.1	10.1	10.1
		Subordinated Debt(7)	17.7%	6/13		24.1	23.9	24.2
		Redeemable Preferred Stock(1)			36,267		24.6	47.9
		Common Stock(1)			40,295		3.9	—
		Common Stock Warrants(1)			116,065		11.6	—
							74.1	82.2
Resort Funding Holdings, Inc.	Diversified Financial Services	Senior Debt	8.2%	4/10		10.6

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AMERICAN CAPITAL, LTD - FORM 10-Q - November 9, 2009

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