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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2009

 

OR

 

  ¨ 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.

 

 

 


Table of Contents

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

 

2


Table of Contents

Item 1. Financial Statements

 

AMERICAN CAPITAL, LTD.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

 

     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.

 

3


Table of Contents

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.

 

4


Table of Contents

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.

 

5


Table of Contents

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.

 

6


Table of Contents

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.

 

7


Table of Contents

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
   

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
   

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
   

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     —  
   

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
   

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

 

8


Table of Contents

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
   

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
   

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
   

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

 

9


Table of Contents

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
   

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
   

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

 

10


Table of Contents

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
   

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
   

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
   

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
   

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

 

11


Table of Contents

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
   

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
   

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
   

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
   

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
   

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

 

12


Table of Contents

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
   

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

 

13


Table of Contents

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
   

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

 

14


Table of Contents

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
   

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
   

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
   

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

 

15


Table of Contents

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

 

16


Table of Contents

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
   

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

 

17


Table of Contents

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
   

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
   

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
    Subordinated Debt(6)(7)   17.0%   12/14     9.5   7.4   —  
    Common Stock(1)       367,881     4.2   —  
                            27.9   13.0

 

18


Table of Contents

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   10.6   7.8
    Common Stock(1)       583        20.5   —  
                            31.1   7.8
Sixnet Holdings, LLC  

Electronic Equipment & Instruments

  Senior Debt(7)   11.1%   6/12-6/13     37.4   37.2   36.4
    Membership Units(1)       446        5.6   5.3
                &nbs