Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K PRESS RELEASE - AMERICAN CAPITAL, LTD | d8k.htm |
Exhibit 99.1
|
Two Bethesda Metro Center 14th Floor Bethesda, MD 20814 (301) 951-6122 (301) 654-6714 Fax
www.AmericanCapital.com | |||
FOR IMMEDIATE RELEASE
February 15, 2011
CONTACT:
Investors – (301) 951-5917
Media – (301) 968-9400
AMERICAN CAPITAL REPORTS 2010 EARNINGS OF $1 BILLION, OR $3.02 PER
SHARE AND NET OPERATING INCOME OF $204 MILLION, OR $0.62 PER SHARE
Bethesda, MD – February 15, 2011 – American Capital, Ltd. (“ACAS” or the “Company”) (Nasdaq: ACAS) announced net operating income (“NOI”) for the quarter and year ended December 31, 2010 of $67 million, or $0.19 per diluted share, and $204 million, or $0.62 per diluted share, respectively. Net earnings for the quarter and year were $381 million, or $1.08 per diluted share, and $998 million, or $3.02 per diluted share, respectively. As of December 31, 2010, net asset value (“NAV”) per share was $10.71, a 12%, or $1.12 per share increase from the September 30, 2010 NAV per share of $9.59 and a 29%, or $2.42 per share increase from the December 31, 2009 NAV per share of $8.29.
Q4 2010 FINANCIAL SUMMARY
| • | $67 million NOI |
| ü | $8 million, or 14%, increase over Q3 2010 |
| • | $376 million net unrealized appreciation of investments |
| ü | $218 million, or 138%, improvement over Q3 2010 |
| • | $5 million net realized earnings (net earnings less net unrealized appreciation) |
| ü | $14 million improvement over Q3 2010 |
| • | $381 million net earnings |
| ü | $232 million, or 156%, improvement over Q3 2010 |
| ü | 44% annualized return on average equity (“ROE”) |
| • | $474 million of cash proceeds from realizations |
| • | $258 million of debt repaid |
2010 FINANCIAL SUMMARY
| • | $204 million NOI |
| ü | $69 million, or 51%, increase over 2009 |
| • | $1,370 million net unrealized appreciation of investments |
| ü | $1,602 million improvement over 2009 |
| • | $(372) million net realized loss (net earnings less net unrealized appreciation) |
| ü | $306 million improvement over 2009 |
American Capital, Ltd.
February 15, 2011
Page 2
| • | $998 million net earnings |
| ü | $1,908 million improvement over 2009 |
| ü | 34% ROE |
| • | $1,293 million of cash proceeds from realizations |
| • | $1,881 million of debt repaid |
| • | $10.71 NAV per share |
| ü | $2.42 per share, or 29%, increase over Q4 2009 |
| ü | $1.12 per share, or 12%, increase over Q3 2010 |
“This past year was the year that many companies, including American Capital, emerged from the great recession, and the year we began rebuilding shareholder value,” said Malon Wilkus, Chairman and Chief Executive Officer. “We earned $1.0 billion in 2010 and repaid $1.9 billion of debt, while growing NAV per share $2.42 to $10.71, delivering a 34% return on equity. We believe this is just the beginning of a growth phase for the economy and American Capital, and we look forward to continuing the progress we made last year in 2011.”
PORTFOLIO VALUATION
For the quarter ended December 31, 2010, net unrealized appreciation of investments totaled $376 million. The primary components of the net unrealized appreciation were:
| • | $120 million appreciation in American Capital’s investment in European Capital, excluding any impact of foreign currency translation on European Capital’s cost basis or cumulative unrealized depreciation, primarily due to an increase in European Capital’s NAV and a decrease to the implied discount to its NAV; |
| ü | The equity investment in European Capital is valued at $608 million compared to European Capital’s NAV of $842 million. |
| • | $82 million net appreciation from American Capital’s private finance portfolio as a result of improved portfolio company performance and improved multiples; |
| • | $54 million net appreciation from structured products investments as a result of improved cash flow projections and improved pricing of comparable transactions; |
| • | $49 million appreciation in American Capital’s investment in American Capital, LLC, its alternative fund management company, primarily due to an increase in its funds under management; and |
| • | $61 million of reversals of prior unrealized depreciation associated with net realized losses on portfolio investments. |
“In 2010, we strengthened our balance sheet by reducing our debt to equity ratio to our stated goal of 0.6:1,” said John Erickson, Chief Financial Officer. “We further reduced our secured debt due in 2013 by repaying another $150 million in the first quarter of 2011. With no amortization required on that debt until 2013, we have the flexibility to make capital allocation decisions based on the best risk adjusted returns. During 2010, we began to see the re-emergence of the M&A and refinancing markets for middle market companies. That allowed our seasoned portfolio to experience $1.3 billion of liquidity in 2010. We look forward to continuing to harvest mature investments and deploying the capital at attractive risk adjusted returns in 2011.”
PORTFOLIO LIQUIDITY AND PERFORMANCE
In the fourth quarter of 2010, $474 million of cash proceeds were received from realizations of portfolio investments and exits. The Company made $35 million in new committed investments to existing portfolio companies during the quarter. The weighted average effective interest rate on the Company’s private finance debt investments as of December 31, 2010 was 10.2%, which was 20 basis points higher than the September 30, 2010 rate of 10.0% and 30 basis points higher than the December 31, 2009 rate of 9.9%.
American Capital, Ltd.
February 15, 2011
Page 3
“We have produced a 44% return on equity since the low point of our book value in the middle of 2009,” noted Gordon O’Brien, President, Specialty Finance and Operations. “We believe there are further opportunities for growth in our book value assuming the economy continues to improve in the U.S. and Europe. As of quarter end, the fair value of our equity investment in European Capital was $234 million less than its book value. We believe European Capital’s book value will continue to grow as it retains earnings, as well as realizes a potential additional $176 million of value if its performing debt portfolio is repaid at cost. We also believe the value of American Capital’s performing debt and equity portfolio will continue to grow. We could realize a potential additional $61 million of value if our existing performing debt assets are repaid at cost. In addition, we have $1.6 billion of private equity assets, excluding our investment in European Capital, that are forecast to grow at equity rates of return.”
As of December 31, 2010, loans with a fair value of $239 million were on non-accrual, representing 7.8% of total loans at fair value, compared to $265 million fair value of non-accrual loans, representing 7.8% of total loans at fair value as of September 30, 2010.
American Capital, Ltd.
February 15, 2011
Page 4
AMERICAN CAPITAL, LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2010 and 2009
(in millions, except per share amounts)
| 2010 Versus 2009 | ||||||||||||||||
| 2010 | 2009 | $ | % | |||||||||||||
| (unaudited) | ||||||||||||||||
| Assets |
||||||||||||||||
| Investments at fair value (cost of $7,698 and $9,158, respectively) |
$ | 5,475 | $ | 5,575 | $ | (100 | ) | -2 | % | |||||||
| Cash and cash equivalents |
269 | 835 | (566 | ) | -68 | % | ||||||||||
| Restricted cash and cash equivalents |
185 | 96 | 89 | 93 | % | |||||||||||
| Interest receivable |
37 | 38 | (1 | ) | -3 | % | ||||||||||
| Derivative agreements at fair value |
4 | 1 | 3 | 300 | % | |||||||||||
| Other |
114 | 127 | (13 | ) | -10 | % | ||||||||||
| Total assets |
$ | 6,084 | $ | 6,672 | $ | (588 | ) | -9 | % | |||||||
| Liabilities and Shareholders’ Equity |
||||||||||||||||
| Debt |
$ | 2,259 | $ | 4,142 | $ | (1,883 | ) | -45 | % | |||||||
| Derivative agreements at fair value |
106 | 102 | 4 | 4 | % | |||||||||||
| Other |
51 | 99 | (48 | ) | -48 | % | ||||||||||
| Total liabilities |
2,416 | 4,343 | (1,927 | ) | -44 | % | ||||||||||
| 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, 352.7 and 292.9 issued and 342.4 and 280.9 outstanding, respectively |
3 | 3 | — | — | ||||||||||||
| Capital in excess of par value |
7,131 | 6,735 | 396 | 6 | % | |||||||||||
| Distributions in excess of net realized earnings |
(1,136 | ) | (709 | ) | (427 | ) | -60 | % | ||||||||
| Net unrealized depreciation of investments |
(2,330 | ) | (3,700 | ) | 1,370 | 37 | % | |||||||||
| Total shareholders’ equity |
3,668 | 2,329 | 1,339 | 57 | % | |||||||||||
| Total liabilities and shareholders’ equity |
$ | 6,084 | $ | 6,672 | $ | (588 | ) | -9 | % | |||||||
| Net asset value per common share outstanding |
$ | 10.71 | $ | 8.29 | $ | 2.42 | 29 | % | ||||||||
American Capital, Ltd.
February 15, 2011
Page 5
AMERICAN CAPITAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months and Fiscal Year Ended December 31, 2010 and 2009
(in millions, except per share data)
| Three Months Ended December 31, |
Three Months Ended December 31, 2010 Versus 2009 |
Fiscal Year Ended December 31, |
Fiscal Year Ended December 31, 2010 Versus 2009 |
|||||||||||||||||||||||||||||
| 2010 | 2009 | $ | % | 2010 | 2009 | $ | % | |||||||||||||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
| OPERATING INCOME |
||||||||||||||||||||||||||||||||
| Interest and dividend income |
$ | 133 | $ | 156 | $ | (23 | ) | -15 | % | $ | 546 | $ | 638 | $ | (92 | ) | -14 | % | ||||||||||||||
| Fee income |
10 | 13 | (3 | ) | -23 | % | 54 | 59 | (5 | ) | -8 | % | ||||||||||||||||||||
| Total operating income |
143 | 169 | (26 | ) | -15 | % | 600 | 697 | (97 | ) | -14 | % | ||||||||||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||||||||||||||||
| Interest |
28 | 59 | (31 | ) | -53 | % | 177 | 256 | (79 | ) | -31 | % | ||||||||||||||||||||
| Salaries, benefits and stock-based compensation |
35 | 68 | (33 | ) | -49 | % | 134 | 215 | (81 | ) | -38 | % | ||||||||||||||||||||
| General and administrative |
13 | 28 | (15 | ) | -54 | % | 64 | 91 | (27 | ) | -30 | % | ||||||||||||||||||||
| Debt refinancing costs |
— | 5 | (5 | ) | -100 | % | 21 | 20 | 1 | 5 | % | |||||||||||||||||||||
| Total operating expenses |
76 | 160 | (84 | ) | -53 | % | 396 | 582 | (186 | ) | -32 | % | ||||||||||||||||||||
| OPERATING INCOME BEFORE INCOME TAXES |
67 | 9 | 58 | 644 | % | 204 | 115 | 89 | 77 | % | ||||||||||||||||||||||
| Benefit for income taxes |
— | 10 | (10 | ) | -100 | % | — | 20 | (20 | ) | -100 | % | ||||||||||||||||||||
| NET OPERATING INCOME |
67 | 19 | 48 | 253 | % | 204 | 135 | 69 | 51 | % | ||||||||||||||||||||||
| Net gain on extinguishment of debt |
— | — | — | — | — | 12 | (12 | ) | -100 | % | ||||||||||||||||||||||
| Net realized loss on investments |
||||||||||||||||||||||||||||||||
| Portfolio company investments |
(47 | ) | (282 | ) | 235 | 83 | % | (499 | ) | (716 | ) | 217 | 30 | % | ||||||||||||||||||
| Foreign currency transactions |
— | (1 | ) | 1 | 100 | % | (2 | ) | (3 | ) | 1 | 33 | % | |||||||||||||||||||
| Derivative and option agreements |
(15 | ) | (19 | ) | 4 | 21 | % | (75 | ) | (106 | ) | 31 | 29 | % | ||||||||||||||||||
| Total net realized loss on investments |
(62 | ) | (302 | ) | 240 | 79 | % | (576 | ) | (825 | ) | 249 | 30 | % | ||||||||||||||||||
| NET REALIZED EARNINGS (LOSS) |
5 | (283 | ) | 288 | NM | (372 | ) | (678 | ) | 306 | 45 | % | ||||||||||||||||||||
| Net unrealized appreciation (depreciation) of investments |
||||||||||||||||||||||||||||||||
| Portfolio company investments |
388 | 410 | (22 | ) | -5 | % | 1,468 | (340 | ) | 1,808 | NM | |||||||||||||||||||||
| Foreign currency translation |
(36 | ) | (26 | ) | (10 | ) | -38 | % | (107 | ) | 28 | (135 | ) | NM | ||||||||||||||||||
| Derivative and option agreements |
24 | 6 | 18 | 300 | % | 9 | 80 | (71 | ) | -89 | % | |||||||||||||||||||||
| Total net unrealized appreciation (depreciation) of investments |
376 | 390 | (14 | ) | -4 | % | 1,370 | (232 | ) | 1,602 | NM | |||||||||||||||||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (“NET EARNINGS (LOSS)”) |
$ | 381 | $ | 107 | $ | 274 | 256 | % | $ | 998 | $ | (910 | ) | $ | 1,908 | NM | ||||||||||||||||
| NET OPERATING INCOME PER COMMON SHARE |
||||||||||||||||||||||||||||||||
| Basic |
$ | 0.19 | $ | 0.07 | $ | 0.12 | 171 | % | $ | 0.63 | $ | 0.56 | $ | 0.07 | 13 | % | ||||||||||||||||
| Diluted |
$ | 0.19 | $ | 0.07 | $ | 0.12 | 171 | % | $ | 0.62 | $ | 0.56 | $ | 0.06 | 11 | % | ||||||||||||||||
| NET REALIZED EARNINGS (LOSS) PER COMMON SHARE |
||||||||||||||||||||||||||||||||
| Basic |
$ | 0.01 | $ | (1.00 | ) | $ | 1.01 | NM | $ | (1.14 | ) | $ | (2.81 | ) | $ | 1.67 | 59 | % | ||||||||||||||
| Diluted |
$ | 0.01 | $ | (1.00 | ) | $ | 1.01 | NM | $ | (1.12 | ) | $ | (2.81 | ) | $ | 1.69 | 60 | % | ||||||||||||||
| NET EARNINGS (LOSS) PER COMMON SHARE |
||||||||||||||||||||||||||||||||
| Basic |
$ | 1.11 | $ | 0.38 | $ | 0.73 | 192 | % | $ | 3.06 | $ | (3.77 | ) | $ | 6.83 | NM | ||||||||||||||||
| Diluted |
$ | 1.08 | $ | 0.38 | $ | 0.70 | 184 | % | $ | 3.02 | $ | (3.77 | ) | $ | 6.79 | NM | ||||||||||||||||
| WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING |
||||||||||||||||||||||||||||||||
| Basic |
344.6 | 283.2 | 61.4 | 22 | % | 325.9 | 241.1 | 84.8 | 35 | % | ||||||||||||||||||||||
| Diluted |
353.1 | 284.3 | 68.8 | 24 | % | 330.9 | 241.1 | 89.8 | 37 | % | ||||||||||||||||||||||
| DIVIDENDS DECLARED PER COMMON SHARE |
$ | — | $ | — | $ | — | — | $ | — | $ | 1.07 | (1.07 | ) | -100 | % | |||||||||||||||||
NM = Not meaningful.
American Capital, Ltd.
February 15, 2011
Page 6
AMERICAN CAPITAL, LTD.
OTHER FINANCIAL INFORMATION
Three Months Ended December 31, 2010 and September 30, 2010
and Fiscal Year Ended December 31, 2010 and 2009
(unaudited)
(in millions, except per share data)
| Q4 2010 |
Q3 2010 |
Q4 2010 Versus Q3 2010 |
2010 Versus 2009 |
|||||||||||||||||||||||||||||
| $ | % | 2010 | 2009 | $ | % | |||||||||||||||||||||||||||
| Assets Under Management |
||||||||||||||||||||||||||||||||
| American Capital Assets at Fair Value |
$ | 6,084 | $ | 5,972 | $ | 112 | 2 | % | $ | 6,084 | $ | 6,672 | $ | (588 | ) | -9 | % | |||||||||||||||
| Externally Managed Assets at Fair Value(1) |
16,561 | 12,429 | 4,132 | 33 | % | 16,561 | 7,350 | 9,211 | 125 | % | ||||||||||||||||||||||
| Total |
$ | 22,645 | $ | 18,401 | $ | 4,244 | 23 | % | $ | 22,645 | $ | 14,022 | $ | 8,623 | 61 | % | ||||||||||||||||
| New Investments |
||||||||||||||||||||||||||||||||
| Senior Debt |
$ | 35 | $ | 41 | $ | (6 | ) | -15 | % | $ | 123 | $ | 41 | $ | 82 | 200 | % | |||||||||||||||
| Preferred Equity |
— | 22 | (22 | ) | -100 | % | 24 | 16 | 8 | 50 | % | |||||||||||||||||||||
| Subordinated Debt |
— | — | — | — | 85 | 18 | 67 | 372 | % | |||||||||||||||||||||||
| Common Equity |
— | — | — | — | 2 | 34 | (32 | ) | -94 | % | ||||||||||||||||||||||
| Total |
$ | 35 | $ | 63 | $ | (28 | ) | -44 | % | $ | 234 | $ | 109 | $ | 125 | 115 | % | |||||||||||||||
| Direct Investments |
$ | — | $ | — | $ | — | — | $ | 35 | $ | — | $ | 35 | 100 | % | |||||||||||||||||
| Add-on Financing for Recapitalizations |
— | — | — | — | 80 | 20 | 60 | 300 | % | |||||||||||||||||||||||
| Add-on Financing for Purchase of Debt of a Portfolio Company |
25 | 32 | (7 | ) | -22 | % | 57 | — | 57 | 100 | % | |||||||||||||||||||||
| Add-on Financing for Working Capital in Distressed Situations |
10 | 8 | 2 | 25 | % | 38 | 81 | (43 | ) | -53 | % | |||||||||||||||||||||
| Add-on Financing for Acquisitions |
— | 22 | (22 | ) | -100 | % | 22 | 4 | 18 | 450 | % | |||||||||||||||||||||
| Add-on Financing for Growth and Working Capital |
— | 1 | (1 | ) | -100 | % | 2 | 4 | (2 | ) | -50 | % | ||||||||||||||||||||
| Total |
$ | 35 | $ | 63 | $ | (28 | ) | -44 | % | $ | 234 | $ | 109 | $ | 125 | 115 | % | |||||||||||||||
| Realizations |
||||||||||||||||||||||||||||||||
| Principal Prepayments |
$ | 330 | $ | 181 | $ | 149 | 82 | % | $ | 874 | $ | 316 | $ | 558 | 177 | % | ||||||||||||||||
| Sale of Equity Investments |
97 | 75 | 22 | 29 | % | 266 | 323 | (57 | ) | -18 | % | |||||||||||||||||||||
| Loan Syndications and Sales |
— | 25 | (25 | ) | -100 | % | 40 | 410 | (370 | ) | -90 | % | ||||||||||||||||||||
| Payment of Accrued Payment-in-Kind Notes and Dividends and Accreted Original Issue Discounts |
33 | 17 | 16 | 94 | % | 77 | 48 | 29 | 60 | % | ||||||||||||||||||||||
| Scheduled Principal Amortization |
14 | 7 | 7 | 100 | % | 36 | 46 | (10 | ) | -22 | % | |||||||||||||||||||||
| Total |
$ | 474 | $ | 305 | $ | 169 | 55 | % | $ | 1,293 | $ | 1,143 | $ | 150 | 13 | % | ||||||||||||||||
| Appreciation, Depreciation, Gain and Loss |
||||||||||||||||||||||||||||||||
| Gross Realized Gain |
$ | 24 | $ | 11 | $ | 13 | 118 | % | $ | 54 | $ | 122 | $ | (68 | ) | -56 | % | |||||||||||||||
| Gross Realized Loss |
(71 | ) | (65 | ) | (6 | ) | -9 | % | (553 | ) | (838 | ) | 285 | 34 | % | |||||||||||||||||
| Portfolio Net Realized Loss |
(47 | ) | (54 | ) | 7 | 13 | % | (499 | ) | (716 | ) | 217 | 30 | % | ||||||||||||||||||
| Foreign Currency |
— | — | — | — | (2 | ) | (3 | ) | 1 | 33 | % | |||||||||||||||||||||
| Derivative and Option Agreements |
(15 | ) | (14 | ) | (1 | ) | -7 | % | (75 | ) | (106 | ) | 31 | 29 | % | |||||||||||||||||
| Net Realized Loss |
(62 | ) | (68 | ) | 6 | 9 | % | (576 | ) | (825 | ) | 249 | 30 | % | ||||||||||||||||||
| Gross Unrealized Appreciation of Private Finance Portfolio Investments |
163 | 135 | 28 | 21 | % | 611 | 297 | 314 | 106 | % | ||||||||||||||||||||||
| Gross Unrealized Depreciation of Private Finance Portfolio Investments |
(81 | ) | (145 | ) | 64 | 44 | % | (289 | ) | (970 | ) | 681 | 70 | % | ||||||||||||||||||
American Capital, Ltd.
February 15, 2011
Page 7
| Q4 2010 |
Q3 2010 |
Q4 2010 Versus Q3 2010 |
2010 Versus 2009 |
|||||||||||||||||||||||||||||
| $ | % | 2010 | 2009 | $ | % | |||||||||||||||||||||||||||
| Net Unrealized Appreciation (Depreciation) of Private Finance Portfolio Investments |
82 | (10 | ) | 92 | NM | 322 | (673 | ) | 995 | NM | ||||||||||||||||||||||
| Net Unrealized Appreciation of European Capital Limited Investment |
120 | 44 | 76 | 173 | % | 371 | (224 | ) | 595 | NM | ||||||||||||||||||||||
| Net Unrealized Appreciation (Depreciation) of European Capital Limited Foreign Currency Translation |
22 | (88 | ) | 110 | NM | 97 | (24 | ) | 121 | NM | ||||||||||||||||||||||
| Net Unrealized Appreciation of American Capital Agency Corp. |
— | — | — | — | — | 22 | (22 | ) | -100 | % | ||||||||||||||||||||||
| Net Unrealized Appreciation (Depreciation) of American Capital, LLC |
49 | 26 | 23 | 88 | % | 111 | (148 | ) | 259 | NM | ||||||||||||||||||||||
| Net Unrealized Appreciation (Depreciation) of Structured Products |
54 | 12 | 42 | 350 | % | 50 | (11 | ) | 61 | NM | ||||||||||||||||||||||
| Reversal of Prior Period Net Unrealized Depreciation Upon Realization |
61 | 44 | 17 | 39 | % | 517 | 718 | (201 | ) | -28 | % | |||||||||||||||||||||
| Net Unrealized Appreciation (Depreciation) of Portfolio Investments |
388 | 28 | 360 | NM | 1,468 | (340 | ) | 1,808 | NM | |||||||||||||||||||||||
| Foreign Currency Translation - European Capital Limited |
(34 | ) | 135 | (169 | ) | NM | (104 | ) | 25 | (129 | ) | NM | ||||||||||||||||||||
| Foreign Currency Translation - Other |
(2 | ) | 6 | (8 | ) | NM | (3 | ) | 3 | (6 | ) | NM | ||||||||||||||||||||
| Derivative Agreements and Other |
24 | (11 | ) | 35 | NM | 9 | 31 | (22 | ) | -71 | % | |||||||||||||||||||||
| Reversal of Prior Period Net Unrealized Depreciation on Option Agreements |
— | — | — | — | — | 49 | (49 | ) | -100 | % | ||||||||||||||||||||||
| Net Unrealized Appreciation of Investments |
376 | 158 | 218 | 138 | % | 1,370 | (232 | ) | 1,602 | NM | ||||||||||||||||||||||
| Net Gains, Losses, Appreciation and Depreciation |
$ | 314 | $ | 90 | $ | 224 | 249 | % | $ | 794 | $ | (1,057 | ) | $ | 1,851 | NM | ||||||||||||||||
| Other Financial Data |
||||||||||||||||||||||||||||||||
| NAV per Share |
$ | 10.71 | $ | 9.59 | $ | 1.12 | 12 | % | $ | 10.71 | $ | 8.29 | $ | 2.42 | 29 | % | ||||||||||||||||
| Debt at Cost |
$ | 2,259 | $ | 2,517 | $ | (258 | ) | -10 | % | $ | 2,259 | $ | 4,142 | $ | (1,883 | ) | -45 | % | ||||||||||||||
| Debt at Fair Value |
$ | 2,208 | $ | 2,490 | $ | (282 | ) | -11 | % | $ | 2,208 | $ | 3,929 | $ | (1,721 | ) | -44 | % | ||||||||||||||
| Market Capitalization |
$ | 2,588 | $ | 1,981 | $ | 607 | 31 | % | $ | 2,588 | $ | 685 | $ | 1,903 | 278 | % | ||||||||||||||||
| Total Enterprise Value(2) |
$ | 4,579 | $ | 4,389 | $ | 190 | 4 | % | $ | 4,579 | $ | 3,992 | $ | 587 | 15 | % | ||||||||||||||||
| Asset Coverage Ratio |
262 | % | 230 | % | 262 | % | 156 | % | ||||||||||||||||||||||||
| Debt to Equity Ratio |
0.6x | 0.8x | 0.6x | 1.8x | ||||||||||||||||||||||||||||
| Credit Quality |
||||||||||||||||||||||||||||||||
| Weighted Average Effective Interest Rate on Private Finance Debt Investments at Period End |
10.2 | % | 10.0 | % | 0.2 | % | 2.0 | % | 10.2 | % | 9.9 | % | 0.3 | % | 3.0 | % | ||||||||||||||||
| Loans on Non-Accrual at Cost |
$ | 702 | $ | 746 | $ | (44 | ) | -6 | % | $ | 702 | $ | 811 | $ | (109 | ) | -13 | % | ||||||||||||||
| Loans on Non-Accrual at Fair Value |
$ | 239 | $ | 265 | $ | (26 | ) | -10 | % | $ | 239 | $ | 290 | $ | (51 | ) | -18 | % | ||||||||||||||
| Non-Accrual Loans at Cost as a Percentage of Total Loans at Cost |
19.6 | % | 18.8 | % | 19.6 | % | 18.1 | % | ||||||||||||||||||||||||
| Non-Accrual Loans at Fair Value as a Percentage of Total Loans at Fair Value |
7.8 | % | 7.8 | % | 7.8 | % | 7.8 | % | ||||||||||||||||||||||||
| Past Due Loans at Cost |
$ | 58 | $ | 152 | $ | (94 | ) | -62 | % | $ | 58 | $ | 88 | $ | (30 | ) | -34 | % | ||||||||||||||
| Debt to Equity Conversions at Cost |
$ | 9 | $ | — | $ | 9 | 100 | % | $ | 86 | $ | 450 | $ | (364 | ) | -81 | % | |||||||||||||||
| Return on Equity |
||||||||||||||||||||||||||||||||
| LTM Net Operating Income Return on Average Equity at Cost |
3.4 | % | 2.6 | % | 3.4 | % | 2.1 | % | ||||||||||||||||||||||||
| LTM Net Realized Loss Return on Average Equity at Cost |
-6.2 | % | -10.9 | % | -6.2 | % | -10.7 | % | ||||||||||||||||||||||||
| LTM Net Earnings (Loss) Return on Average Equity at Fair Value |
33.5 | % | 26.9 | % | 33.5 | % | -37.3 | % | ||||||||||||||||||||||||
| Current Quarter Net Operating Income Return on Average Equity at Cost Annualized |
4.5 | % | 4.0 | % | 4.5 | % | 1.2 | % | ||||||||||||||||||||||||
| Current Quarter Net Realized Earnings (Loss) Return on Average Equity at Cost Annualized |
0.3 | % | -0.6 | % | 0.3 | % | -18.4 | % | ||||||||||||||||||||||||
| Current Quarter Net Earnings Return on Average Equity at Fair Value Annualized |
44.0 | % | 18.7 | % | 44.0 | % | 18.9 | % | ||||||||||||||||||||||||
NM = Not meaningful
| (1) | Includes total assets of American Capital Agency Corp., European Capital Limited, American Capital Equity I, American Capital Equity II and ACAS CLO-1 less American Capital’s investments in the funds. |
| (2) | Enterprise value is calculated as debt at cost plus market capitalization less cash and cash equivalents on hand. |
American Capital, Ltd.
February 15, 2011
Page 8
| Static Pool (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Statistics ($ in millions, unaudited) |
Pre-2001 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | Pre-2001 - 2010 Aggregate |
2006 - 2010 Aggregate |
|||||||||||||||||||||||||||||||||||||||
| IRR at Fair Value of All Investments(2) |
8.4 | % | 18.1 | % | 8.3 | % | 20.3 | % | 13.3 | % | 8.5 | % | 9.3 | % | -8.6 | % | 5.9 | % | — | — | 6.6 | % | 0.1 | % | ||||||||||||||||||||||||||||
| IRR of Exited Investments(5) |
8.6 | % | 20.3 | % | 9.7 | % | 23.3 | % | 16.8 | % | 21.9 | % | 10.6 | % | -8.6 | % | 12.9 | % | — | — | 11.8 | % | 2.5 | % | ||||||||||||||||||||||||||||
| IRR at Fair Value of Equity Investments Only(2)(3)(4) |
6.2 | % | 46.9 | % | 11.5 | % | 27.4 | % | 27.0 | % | -0.1 | % | 14.3 | % | -13.5 | % | 10.3 | % | — | — | 5.9 | % | 1.0 | % | ||||||||||||||||||||||||||||
| IRR of Exited Equity Investments Only(3)(4)(5) |
8.5 | % | 48.8 | % | 18.3 | % | 32.2 | % | 43.0 | % | 47.2 | % | 18.7 | % | 8.3 | % | 35.7 | % | — | — | 26.4 | % | 16.3 | % | ||||||||||||||||||||||||||||
| Original Investments and Commitments |
$ | 1,065 | $ | 376 | $ | 962 | $ | 1,436 | $ | 2,266 | $ | 4,643 | $ | 5,198 | $ | 7,434 | $ | 1,036 | $ | — | $ | — | $ | 24,416 | $ | 13,668 | ||||||||||||||||||||||||||
| Total Exits and Prepayments of Original Investments and Commitments |
$ | 998 | $ | 353 | $ | 810 | $ | 1,098 | $ | 1,909 | $ | 2,355 | $ | 3,743 | $ | 3,953 | $ | 238 | $ | — | $ | — | $ | 15,457 | $ | 7,934 | ||||||||||||||||||||||||||
| Total Interest, Dividends and Fees Collected |
$ | 405 | $ | 148 | $ | 338 | $ | 415 | $ | 632 | $ | 1,040 | $ | 1,030 | $ | 1,010 | $ | 258 | $ | — | $ | — | $ | 5,276 | $ | 2,298 | ||||||||||||||||||||||||||
| Total Net Realized (Loss) Gain on Investments |
$ | (128 | ) | $ | (4 | ) | $ | (90 | ) | $ | 143 | $ | 27 | $ | 279 | $ | (103 | ) | $ | (764 | ) | $ | (29 | ) | $ | — | $ | — | $ | (669 | ) | $ | (896 | ) | ||||||||||||||||||
| Current Cost of Investments |
$ | 81 | $ | 23 | $ | 157 | $ | 327 | $ | 418 | $ | 2,056 | $ | 1,260 | $ | 2,670 | $ | 706 | $ | — | $ | — | $ | 7,698 | $ | 4,636 | ||||||||||||||||||||||||||
| Current Fair Value of Investments |
$ | 48 | $ | 3 | $ | 101 | $ | 412 | $ | 308 | $ | 1,465 | $ | 1,082 | $ | 1,468 | $ | 588 | $ | — | $ | — | $ | 5,475 | $ | 3,138 | ||||||||||||||||||||||||||
| Current Fair Value of Investments as a % of Total Investments at Fair Value |
0.9 | % | 0.1 | % | 1.8 | % | 7.5 | % | 5.6 | % | 26.8 | % | 19.8 | % | 26.8 | % | 10.7 | % | — | — | 100.0 | % | 57.3 | % | ||||||||||||||||||||||||||||
| Net Unrealized Appreciation (Depreciation) |
$ | (33 | ) | $ | (20 | ) | $ | (56 | ) | $ | 85 | $ | (110 | ) | $ | (591 | ) | $ | (178 | ) | $ | (1,202 | ) | $ | (118 | ) | $ | — | $ | — | $ | (2,223 | ) | $ | (1,498 | ) | ||||||||||||||||
| Non-Accruing Loans at Cost |
$ | — | $ | 14 | $ | 28 | $ | — | $ | 45 | $ | 41 | $ | 107 | $ | 445 | $ | 22 | $ | — | $ | — | $ | 702 | $ | 574 | ||||||||||||||||||||||||||
| Non-Accruing Loans at Fair Value |
$ | 1 | $ | 2 | $ | 21 | $ | — | $ | 16 | $ | 33 | $ | 26 | $ | 112 | $ | 28 | $ | — | $ | — | $ | 239 | $ | 166 | ||||||||||||||||||||||||||
| Equity Interest at Fair Value(3) |
$ | 23 | $ | — | $ | 7 | $ | 193 | $ | 74 | $ | 985 | $ | 443 | $ | 326 | $ | 160 | $ | — | $ | — | $ | 2,211 | $ | 929 | ||||||||||||||||||||||||||
| Debt to EBITDA(6)(7)(8) |
3.6 | NM | 8.6 | 4.3 | 5.9 | 5.0 | 4.5 | 6.5 | 5.6 | — | — | 5.5 | 5.6 | |||||||||||||||||||||||||||||||||||||||
| Interest Coverage(6)(8) |
2.7 | NM | 1.6 | 2.8 | 2.3 | 3.5 | 2.9 | 1.9 | 1.7 | — | — | 2.5 | 2.2 | |||||||||||||||||||||||||||||||||||||||
| Debt Service Coverage(6)(8) |
2.6 | NM | 1.5 | 2.7 | 1.7 | 2.4 | 2.4 | 1.6 | 1.6 | — | — | 2.0 | 1.9 | |||||||||||||||||||||||||||||||||||||||
| Average Age of Companies(8) |
35 yrs | 26 yrs | 33 yrs | 41 yrs | 49 yrs | 30 yrs | 37 yrs | 34 yrs | 26 yrs | — | — | 35 yrs | 35 yrs | |||||||||||||||||||||||||||||||||||||||
| Diluted Ownership Percentage(3) |
53 | % | 86 | % | 45 | % | 53 | % | 51 | % | 69 | % | 43 | % | 47 | % | 41 | % | — | — | 53 | % | 53 | % | ||||||||||||||||||||||||||||
| Average Sales(8)(9) |
$ | 48 | $ | 6 | $ | 44 | $ | 196 | $ | 72 | $ | 109 | $ | 147 | $ | 186 | $ | 106 | $ | — | $ | — | $ | 144 | $ | 157 | ||||||||||||||||||||||||||
| Average EBITDA(8)(10) |
$ | 6 | $ | (1 | ) | $ | 10 | $ | 37 | $ | 16 | $ | 21 | $ | 37 | $ | 39 | $ | 30 | $ | — | $ | — | $ | 32 | $ | 36 | |||||||||||||||||||||||||
| Average EBITDA Margin |
11.7 | % | -8.5 | % | 22.1 | % | 19.0 | % | 22.8 | % | 19.0 | % | 25.0 | % | 20.7 | % | 28.5 | % | — | — | 20.9 | % | 23.1 | % | ||||||||||||||||||||||||||||
| Total Sales(8)(9) |
$ | 84 | $ | 305 | $ | 186 | $ | 1,317 | $ | 474 | $ | 1,300 | $ | 4,433 | $ | 7,460 | $ | 1,324 | $ | — | $ | — | $ | 16,883 | $ | 13,217 | ||||||||||||||||||||||||||
| Total EBITDA(8)(10) |
$ | 10 | $ | 6 | $ | 25 | $ | 193 | $ | 96 | $ | 237 | $ | 462 | $ | 1,398 | $ | 263 | $ | — | $ | — | $ | 2,690 | $ | 2,123 | ||||||||||||||||||||||||||
| % of Senior Loans(8)(11) |
71 | % | 33 | % | 55 | % | 59 | % | 26 | % | 37 | % | 34 | % | 56 | % | 17 | % | — | — | 42 | % | 42 | % | ||||||||||||||||||||||||||||
| % of Loans with Lien(8)(11) |
100 | % | 68 | % | 100 | % | 100 | % | 88 | % | 91 | % | 92 | % | 91 | % | 55 | % | — | — | 89 | % | 85 | % | ||||||||||||||||||||||||||||
| (1) | Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. |
| (2) | Assumes investments are exited at current fair value. |
| (3) | Excludes investments in Structured Products. |
| (4) | Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt. |
| (5) | Includes exited securities of existing portfolio companies. |
| (6) | These amounts do not include investments in which we own only equity. |
| (7) | For portfolio companies with a nominal EBITDA amount, the portfolio company’s maximum debt leverage is limited to 15 times EBITDA. |
| (8) | Excludes investments in Structured Products, managed funds and American Capital, LLC. |
| (9) | Sales of the most recent twelve months, or when appropriate, the forecasted twelve months. |
| (10) | EBITDA of the most recent twelve months, or when appropriate, the forecasted twelve months. |
| (11) | As a percentage of our total debt investments. |
American Capital, Ltd.
February 15, 2011
Page 9
SHAREHOLDER CALL
American Capital invites shareholders, analysts and interested parties to attend the shareholder call on February 16, 2011 at 11:00 am ET. The shareholder call can be accessed through a live webcast, free of charge, at www.AmericanCapital.com or by dialing (877) 569-8701 (U.S. domestic) or +1 (574) 941-7382 (international). All callers are asked to dial in 10-15 minutes prior to the call to register. Please provide the operator with the conference ID number 37368950. If you do not plan on asking a question on the call and have access to the internet, please take advantage of the webcast.
A slide presentation will accompany the shareholder call and will be available at www.AmericanCapital.com in advance of the shareholder call. Select the Q4 2010 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An archived audio replay of the shareholder call combined with the slide presentation will be made available on our website after the call on February 16. In addition, there will be a phone recording available from 2:00 pm ET February 16, 2011 until 11:59 pm ET March 2, 2011. If you are interested in hearing the recording of the presentation, please dial (800) 642-1687 (U.S. domestic) or +1 (706) 645-9291 (international). The access code for both domestic and international callers is 37368950.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $23 billion in assets under management and eight offices in the U.S., Europe and Asia. American Capital and its affiliates will consider investment opportunities from $10 million to $300 million. For further information, please refer to www.AmericanCapital.com.
ADDITIONAL INFORMATION
Persons considering an investment in American Capital should consider the investment objectives, risks and charges and expenses of the Company carefully before investing. Such information and other information about the Company is available in the Company’s annual reports on Form 10-K and Form 10-K/A, quarterly reports on Form 10-Q and in the prospectuses the Company issues from time to time in connection with its offering of securities. Such materials are filed with the Securities and Exchange Commission (“SEC”) and copies are available on the SEC’s website, www.sec.gov. Prospective investors should read such materials carefully before investing. Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor’s shares, when sold, may be worth more or less than their original cost. Additionally, American Capital’s current performance may be lower or higher than the performance data quoted above.
This press release contains forward-looking statements. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions or changes in the conditions of the industries in which American Capital has made investments. Certain factors that could cause actual results to differ materially from those contained in the
American Capital, Ltd.
February 15, 2011
Page 10
forward-looking statements are included in the “Risk Factors” section of the Company’s Annual Reports on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2009 and the Company’s subsequent periodic filings. Copies are available on the SEC’s website at www.sec.gov. Forward-looking statements are made as of the date of this press release, and are subject to change without notice. We disclaim any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.