Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K PRESS RELEASE - AMERICAN CAPITAL, LTD | acas8k93011.htm |
Exhibit 99.1
 | Two Bethesda Metro Center | |
14th Floor | ||
Bethesda, MD 20814 | ||
(301) 951-6122 | ||
(301) 654-6714 Fax | ||
FOR IMMEDIATE RELEASE
November 1, 2011
CONTACT:
Investors - (301) 951-5917
Media - (301) 968-9400
AMERICAN CAPITAL REPORTS THIRD QUARTER 2011 NET OPERATING INCOME OF $65 MILLION, OR $0.19 PER DILUTED SHARE, AND A NET LOSS OF $(464) MILLION, OR $(1.34) PER DILUTED SHARE
Bethesda, MD - November 1, 2011 - American Capital, Ltd. (“American Capital” or the “Company”) (Nasdaq: ACAS) announced net operating income (“NOI”) for the quarter ended September 30, 2011, of $65 million, or $0.19 per diluted share. Net loss for the quarter was $(464) million, or $(1.34) per diluted share. Net asset value (“NAV”) per share decreased (9)%, or $(1.24) per share, from $13.16 per share as of June 30, 2011 to $11.92 per share as of September 30, 2011.
Q3 2011 FINANCIAL SUMMARY
• | $65 million NOI |
ü | $6 million, or 10%, increase over Q3 2010 |
• | $98 million net realized earnings (net loss less net unrealized depreciation) |
ü | $107 million improvement over Q3 2010 |
• | $(562) million net unrealized depreciation of investments |
ü | Compared to $158 million net unrealized appreciation in Q3 2010 |
• | $(464) million net loss |
ü | Compared to $149 million net earnings in Q3 2010 |
• | $260 million of cash proceeds from realizations |
• | $123 million of securitization debt repaid |
• | Repurchased 9.1 million shares, totaling $75 million, of American Capital common stock at $8.21 per share |
• | $11.92 NAV per share |
ü | $(1.24) per share, or (9)%, decrease over Q2 2011 |
“Despite the significant downturn in the capital markets in the third quarter, which impacted valuations in our investment portfolio, the overall underlying performance of our portfolio companies continued to be positive,” said Malon Wilkus, Chairman and Chief Executive Officer. “Third quarter depreciation was primarily driven by declines in comparable company multiples, declines in foreign currency translation and two non-performing Sponsor Finance loans. In the aggregate, revenues and EBITDA of our portfolio companies continued to show growth. The positive performance of our portfolio companies, the recently released 2.5% U.S. GDP growth rate for the third quarter and the fourth quarter rebound in the capital markets has us cautiously optimistic that our portfolio companies will continue to perform well in the near future and that our earnings will return to their overall positive trend, similar to the previous eight quarters. Based on this confidence and the current price to book, we believe our shares are an excellent bargain and intend to continue the share repurchases we began in the third quarter.”
American Capital, Ltd.
November 1, 2011
Page 2
PORTFOLIO VALUATION
For the quarter ended September 30, 2011, net unrealized depreciation of investments totaled $(562) million. The primary components of the net unrealized depreciation were:
• | $(300) million unrealized depreciation in American Capital's investment in European Capital, primarily due to an increase in the implied discount to its NAV, resulting from declining comparable company multiples and foreign currency translation; |
ü The Company's equity investment in European Capital was valued at $634 million, compared to the $921 million fair value of European Capital's NAV at the end of the third quarter, which was 69% of NAV as of September 30, 2011 compared to 90% of NAV at the end of the prior quarter;
• | $(203) million net unrealized depreciation primarily due to both declining performance of non-control debt in two Sponsor Finance companies and declining comparable company multiples; and |
• | $(47) million unrealized depreciation in American Capital's investment in American Capital, LLC, its alternative asset management company, due to a decrease in comparable company multiples and reduced forecasted growth. |
“Since the beginning of the recession of 2008, we have significantly delevered our balance sheet and have a portfolio of proven assets that is well positioned to weather the current economic uncertainty,” said John Erickson, President, Structured Finance and Chief Financial Officer. “Given our current strong capital position, we implemented a stock repurchase and dividend program in the third quarter where we repurchased shares that added $0.10 to our NAV per share. We believe that buying our stock at a 31% discount to our September 30 NAV was a compelling opportunity to add value for our shareholders.”
PORTFOLIO LIQUIDITY AND PERFORMANCE
In the third quarter of 2011, $260 million of cash proceeds were received from realizations of portfolio investments and exits. The Company made $128 million in new committed investments during the quarter. The weighted average effective interest rate on the Company's private finance debt investments as of September 30, 2011 was 10.3%, which was 20 basis points lower than the June 30, 2011 rate of 10.5% and 10 basis points higher than the December 31, 2010 rate of 10.2%.
As of September 30, 2011, loans with a fair value of $173 million were on non-accrual, representing 6.6% of total loans at fair value, compared to $255 million fair value of non-accrual loans, representing 9.0% of total loans at fair value as of June 30, 2011.
“During the quarter, we deployed our capital into areas that we feel add significant shareholder value,” said Gordon O'Brien, President, Specialty Finance and Operations. “We invested $40 million as part of the IPO of our affiliate American Capital Mortgage Investment Corp (NASDAQ: MTGE), which we believe is not only a good stand alone investment but also enhances the value of our asset management portfolio company. In addition, we invested $72 million into 7 existing portfolio companies primarily to fund growth and acquisitions, and we invested another $16 million into two new portfolio companies with attractive risk/reward profiles. We are committed to supporting our existing portfolio by funding both organic growth and accretive add-on acquisitions as well as originating new, attractive investments.”
STOCK REPURCHASE AND DIVIDEND PROGRAM
During the third quarter of 2011, American Capital's Board of Directors adopted a program that may provide for additional repurchases of shares or dividend payments through December 31, 2012. Under the program, American Capital will consider quarterly setting an amount to be utilized for stock repurchases or dividends. Generally, the amount may be utilized for repurchases if the price of American Capital's common stock represents a discount to the net asset value of its shares, and the amount may be utilized for the payment of cash dividends if the price of American Capital's common stock represents a premium to the net asset value of its shares.
In determining the quarterly amount for repurchases or dividends, the Company's Board will be guided by the Company's cumulative net cash provided by operating activities in the prior quarter since the second quarter of 2011, cumulative repurchases or dividends, cash on hand, debt service considerations, investment plans, forecasts of financial liquidity and economic conditions, operational issues and the then current trading price of ACAS stock.
The repurchase and dividends program may be suspended, terminated or modified at any time for any reason. The program does not obligate American Capital to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. During the third quarter of 2011, American Capital made open market purchases of 9.1 million shares, or $75 million, of American Capital common stock at an average price of $8.21 per share.
American Capital, Ltd.
November 1, 2011
Page 3
AMERICAN CAPITAL, LTD. | |||||||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||
As of September 30, 2011, June 30, 2011 and December 31, 2010 | |||||||||||||||||||||||||
(in millions, except per share amounts) | |||||||||||||||||||||||||
Q3 | Q2 | Q3 2011 Versus Q2 2011 | Q4 | Q3 2011 Versus Q4 2010 | |||||||||||||||||||||
2011 | 2011 | $ | % | 2010 | $ | % | |||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Investments at fair value (cost of $7,148, $7,204 and $7,698, respectively) | $ | 5,295 | $ | 5,909 | $ | (614 | ) | (10 | )% | $ | 5,475 | $ | (180 | ) | (3 | )% | |||||||||
Cash and cash equivalents | 187 | 186 | 1 | 1 | % | 269 | (82 | ) | (30 | )% | |||||||||||||||
Restricted cash and cash equivalents | 85 | 116 | (31 | ) | (27 | )% | 185 | (100 | ) | (54 | )% | ||||||||||||||
Interest receivable | 25 | 25 | — | — | 37 | (12 | ) | (32 | )% | ||||||||||||||||
Derivative agreements at fair value | 13 | 8 | 5 | 63 | % | 4 | 9 | 225 | % | ||||||||||||||||
Other | 87 | 89 | (2 | ) | (2 | )% | 114 | (27 | ) | (24 | )% | ||||||||||||||
Total assets | $ | 5,692 | $ | 6,333 | $ | (641 | ) | (10 | )% | $ | 6,084 | $ | (392 | ) | (6 | )% | |||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||||||
Debt | $ | 1,519 | $ | 1,642 | $ | (123 | ) | (7 | )% | $ | 2,259 | $ | (740 | ) | (33 | )% | |||||||||
Derivative agreements at fair value | 108 | 98 | 10 | 10 | % | 106 | 2 | 2 | % | ||||||||||||||||
Other | 49 | 52 | (3 | ) | (6 | )% | 51 | (2 | ) | (4 | )% | ||||||||||||||
Total liabilities | 1,676 | 1,792 | (116 | ) | (6 | )% | 2,416 | (740 | ) | (31 | )% | ||||||||||||||
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, 344.8, 354.7 and 352.7 issued and 337.0, 345.1 and 342.4 outstanding, respectively | 3 | 3 | — | — | 3 | — | — | ||||||||||||||||||
Capital in excess of par value | 7,100 | 7,160 | (60 | ) | (1 | )% | 7,131 | (31 | ) | — | |||||||||||||||
Distributions in excess of net realized earnings | (1,137 | ) | (1,234 | ) | 97 | 8 | % | (1,136 | ) | (1 | ) | — | |||||||||||||
Net unrealized depreciation of investments | (1,950 | ) | (1,388 | ) | (562 | ) | (40 | )% | (2,330 | ) | 380 | 16 | % | ||||||||||||
Total shareholders' equity | 4,016 | 4,541 | (525 | ) | (12 | )% | 3,668 | 348 | 9 | % | |||||||||||||||
Total liabilities and shareholders' equity | $ | 5,692 | $ | 6,333 | $ | (641 | ) | (10 | )% | $ | 6,084 | $ | (392 | ) | (6 | )% | |||||||||
NAV per common share outstanding | $ | 11.92 | $ | 13.16 | $ | (1.24 | ) | (9 | )% | $ | 10.71 | $ | 1.21 | 11 | % | ||||||||||
American Capital, Ltd.
November 1, 2011
Page 4
AMERICAN CAPITAL, LTD. | |||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||
Three and Nine Months Ended September 30, 2011 and 2010 | |||||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
Three Months Ended | September 30, | Nine Months Ended | September 30, | ||||||||||||||||||||||||||
September 30, | 2011 Versus 2010 | September 30, | 2011 Versus 2010 | ||||||||||||||||||||||||||
2011 | 2010 | $ | % | 2011 | 2010 | $ | % | ||||||||||||||||||||||
OPERATING INCOME | |||||||||||||||||||||||||||||
Interest and dividend income | $ | 117 | $ | 125 | $ | (8 | ) | (6 | )% | $ | 394 | $ | 413 | $ | (19 | ) | (5 | )% | |||||||||||
Fee income | 13 | 17 | (4 | ) | (24 | )% | 37 | 44 | (7 | ) | (16 | )% | |||||||||||||||||
Total operating income | 130 | 142 | (12 | ) | (8 | )% | 431 | 457 | (26 | ) | (6 | )% | |||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||||||||
Interest | 20 | 36 | (16 | ) | (44 | )% | 69 | 149 | (80 | ) | (54 | )% | |||||||||||||||||
Salaries, benefits and stock-based compensation | 33 | 31 | 2 | 6 | % | 107 | 99 | 8 | 8 | % | |||||||||||||||||||
General and administrative | 12 | 16 | (4 | ) | (25 | )% | 36 | 51 | (15 | ) | (29 | )% | |||||||||||||||||
Debt refinancing costs | — | — | — | — | — | 21 | (21 | ) | (100 | )% | |||||||||||||||||||
Total operating expenses | 65 | 83 | (18 | ) | (22 | )% | 212 | 320 | (108 | ) | (34 | )% | |||||||||||||||||
NET OPERATING INCOME | 65 | 59 | 6 | 10 | % | 219 | 137 | 82 | 60 | % | |||||||||||||||||||
Net realized gain (loss) on investments | |||||||||||||||||||||||||||||
Portfolio company investments | 44 | (54 | ) | 98 | NM | (181 | ) | (452 | ) | 271 | 60 | % | |||||||||||||||||
Foreign currency transactions | (1 | ) | — | (1 | ) | (100 | )% | — | (2 | ) | 2 | 100 | % | ||||||||||||||||
Derivative agreements | (10 | ) | (14 | ) | 4 | 29 | % | (37 | ) | (60 | ) | 23 | 38 | % | |||||||||||||||
Total net realized gain (loss) on investments | 33 | (68 | ) | 101 | NM | (218 | ) | (514 | ) | 296 | 58 | % | |||||||||||||||||
NET REALIZED EARNINGS (LOSS) | 98 | (9 | ) | 107 | NM | 1 | (377 | ) | 378 | NM | |||||||||||||||||||
Net unrealized (depreciation) appreciation of investments | |||||||||||||||||||||||||||||
Portfolio company investments | (477 | ) | 28 | (505 | ) | NM | 337 | 1,080 | (743 | ) | (69 | )% | |||||||||||||||||
Foreign currency translation | (80 | ) | 141 | (221 | ) | NM | 34 | (71 | ) | 105 | NM | ||||||||||||||||||
Derivative agreements | (5 | ) | (11 | ) | 6 | 55 | % | 8 | (15 | ) | 23 | NM | |||||||||||||||||
Total net unrealized (depreciation) appreciation of investments | (562 | ) | 158 | (720 | ) | NM | 379 | 994 | (615 | ) | (62 | )% | |||||||||||||||||
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ("NET (LOSS) EARNINGS") | $ | (464 | ) | $ | 149 | $ | (613 | ) | NM | $ | 380 | $ | 617 | $ | (237 | ) | (38 | )% | |||||||||||
NET OPERATING INCOME PER COMMON SHARE | |||||||||||||||||||||||||||||
Basic | $ | 0.19 | $ | 0.17 | $ | 0.02 | 12 | % | $ | 0.63 | $ | 0.43 | $ | 0.20 | 47 | % | |||||||||||||
Diluted | $ | 0.19 | $ | 0.17 | $ | 0.02 | 12 | % | $ | 0.61 | $ | 0.42 | $ | 0.19 | 45 | % | |||||||||||||
NET REALIZED EARNINGS (LOSS) PER COMMON SHARE | |||||||||||||||||||||||||||||
Basic | $ | 0.28 | $ | (0.03 | ) | $ | 0.31 | NM | $ | — | $ | (1.18 | ) | $ | 1.18 | 100 | % | ||||||||||||
Diluted | $ | 0.28 | $ | (0.03 | ) | $ | 0.31 | NM | $ | — | $ | (1.17 | ) | $ | 1.17 | 100 | % | ||||||||||||
NET (LOSS) EARNINGS PER COMMON SHARE | |||||||||||||||||||||||||||||
Basic | $ | (1.34 | ) | $ | 0.43 | $ | (1.77 | ) | NM | $ | 1.10 | $ | 1.93 | $ | (0.83 | ) | (43 | )% | |||||||||||
Diluted | $ | (1.34 | ) | $ | 0.43 | $ | (1.77 | ) | NM | $ | 1.06 | $ | 1.91 | $ | (0.85 | ) | (45 | )% | |||||||||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | |||||||||||||||||||||||||||||
Basic | 345.3 | 343.5 | 1.8 | 1 | % | 346.2 | 319.6 | 26.6 | 8 | % | |||||||||||||||||||
Diluted | 345.3 | 348.0 | (2.7 | ) | (1 | )% | 359.1 | 323.5 | 35.6 | 11 | % | ||||||||||||||||||
______________________________
NM = Not meaningful
American Capital, Ltd.
November 1, 2011
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AMERICAN CAPITAL, LTD. | |||||||||||||||||||||||||
OTHER FINANCIAL INFORMATION | |||||||||||||||||||||||||
Three Months Ended September 30, 2011, June 30, 2011 and December 31, 2010 | |||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Q3 2011 Versus Q2 2011 | Q3 2011 Versus Q4 2010 | ||||||||||||||||||||||||
Q3 2011 | Q2 2011 | $ | % | Q4 2010 | $ | % | |||||||||||||||||||
Assets Under Management | |||||||||||||||||||||||||
American Capital Assets at Fair Value | $ | 5,692 | $ | 6,333 | $ | (641 | ) | (10 | )% | $ | 6,084 | $ | (392 | ) | (6 | )% | |||||||||
Externally Managed Assets at Fair Value(1) | 50,941 | 45,605 | 5,336 | 12 | % | 16,561 | 34,380 | 208 | % | ||||||||||||||||
Total | $ | 56,633 | $ | 51,938 | $ | 4,695 | 9 | % | $ | 22,645 | $ | 33,988 | 150 | % | |||||||||||
New Investments | |||||||||||||||||||||||||
Senior Debt | $ | 27 | $ | 5 | $ | 22 | 440 | % | $ | 35 | $ | (8 | ) | (23 | )% | ||||||||||
Mezzanine Debt | 57 | — | 57 | 100 | % | — | 57 | 100 | % | ||||||||||||||||
Preferred Equity | — | 1 | (1 | ) | (100 | )% | — | — | — | ||||||||||||||||
Common Equity | 43 | — | 43 | 100 | % | — | 43 | 100 | % | ||||||||||||||||
Equity Warrants | 1 | — | 1 | 100 | % | — | 1 | 100 | % | ||||||||||||||||
Total | $ | 128 | $ | 6 | $ | 122 | 2,033 | % | $ | 35 | $ | 93 | 266 | % | |||||||||||
Financing for Private Equity Buyouts | $ | 15 | $ | — | $ | 15 | 100 | % | $ | — | $ | 15 | 100 | % | |||||||||||
Investments in Managed Funds | 40 | — | 40 | 100 | % | — | 40 | 100 | % | ||||||||||||||||
American Capital buyouts | 1 | — | 1 | 100 | % | — | 1 | 100 | % | ||||||||||||||||
Add-on Financing for Growth and Working Capital | 13 | 2 | 11 | 550 | % | — | 13 | 100 | % | ||||||||||||||||
Add-on Financing for Working Capital in Distressed Situations | 2 | 3 | (1 | ) | (33 | )% | 10 | (8 | ) | (80 | )% | ||||||||||||||
Add-on Financing for Acquisitions | 57 | 1 | 56 | 5,600 | % | — | 57 | — | |||||||||||||||||
Add-on Financing for Purchase of Debt of a Portfolio Company | — | — | — | — | 25 | (25 | ) | (100 | )% | ||||||||||||||||
Total | $ | 128 | $ | 6 | $ | 122 | 2,033 | % | $ | 35 | $ | 93 | 266 | % | |||||||||||
Realizations | |||||||||||||||||||||||||
Sale of Equity Investments | $ | 127 | $ | 28 | $ | 99 | 354 | % | $ | 97 | $ | 30 | 31 | % | |||||||||||
Principal Prepayments | 96 | 114 | (18 | ) | (16 | )% | 330 | (234 | ) | (71 | )% | ||||||||||||||
Payment of Accrued Payment-in-Kind Notes and Dividends and Accreted Original Issue Discounts | 16 | 28 | (12 | ) | (43 | )% | 33 | (17 | ) | (52 | )% | ||||||||||||||
Scheduled Principal Amortization | 11 | 9 | 2 | 22 | % | 14 | (3 | ) | (21 | )% | |||||||||||||||
Loan syndications and sales | 10 | — | 10 | 100 | % | — | 10 | 100 | % | ||||||||||||||||
Total | $ | 260 | $ | 179 | $ | 81 | 45 | % | $ | 474 | $ | (214 | ) | (45 | )% | ||||||||||
Appreciation, Depreciation, Gain and Loss | |||||||||||||||||||||||||
Gross Realized Gain | $ | 96 | $ | 2 | $ | 94 | 4,700 | % | $ | 24 | $ | 72 | 300 | % | |||||||||||
Gross Realized Loss | (52 | ) | (237 | ) | 185 | 78 | % | (71 | ) | 19 | 27 | % | |||||||||||||
Portfolio Net Realized Gain (Loss) | 44 | (235 | ) | 279 | NM | (47 | ) | 91 | NM | ||||||||||||||||
Foreign Currency Transactions | (1 | ) | 1 | (2 | ) | NM | — | (1 | ) | (100 | )% | ||||||||||||||
Derivative Agreements | (10 | ) | (14 | ) | 4 | 29 | % | (15 | ) | 5 | 33 | % | |||||||||||||
Net Realized Gain (Loss) | 33 | (248 | ) | 281 | NM | (62 | ) | 95 | NM | ||||||||||||||||
Gross Unrealized Appreciation of Private Finance Portfolio Investments | 82 | 165 | (83 | ) | (50 | )% | 163 | (81 | ) | (50 | )% | ||||||||||||||
Gross Unrealized Depreciation of Private Finance Portfolio Investments | (285 | ) | (135 | ) | (150 | ) | (111 | )% | (81 | ) | (204 | ) | (252 | )% | |||||||||||
Net Unrealized (Depreciation) Appreciation of Private Finance Portfolio Investments | (203 | ) | 30 | (233 | ) | NM | 82 | (285 | ) | NM | |||||||||||||||
Net Unrealized (Depreciation) Appreciation of European Capital Investment | (248 | ) | 137 | (385 | ) | NM | 120 | (368 | ) | NM | |||||||||||||||
American Capital, Ltd.
November 1, 2011
Page 6
Net Unrealized Appreciation (Depreciation) of European Capital Foreign Currency Translation | 25 | (12 | ) | 37 | NM | 22 | 3 | 14 | % | ||||||||||||||||
Net Unrealized (Depreciation) Appreciation of American Capital, LLC | (47 | ) | 156 | (203 | ) | NM | 49 | (96 | ) | NM | |||||||||||||||
Net Unrealized Appreciation of Structured Products | 6 | 8 | (2 | ) | (25 | )% | 54 | (48 | ) | (89 | )% | ||||||||||||||
Reversal of Prior Period Net Unrealized (Appreciation) Depreciation Upon Realization | (10 | ) | 239 | (249 | ) | NM | 61 | (71 | ) | NM | |||||||||||||||
Net Unrealized (Depreciation) Appreciation of Portfolio Company Investments | (477 | ) | 558 | (1,035 | ) | NM | 388 | (865 | ) | NM | |||||||||||||||
Foreign Currency Translation - European Capital | (77 | ) | 28 | (105 | ) | NM | (34 | ) | (43 | ) | (126 | )% | |||||||||||||
Foreign Currency Translation - Other | (3 | ) | 1 | (4 | ) | NM | (2 | ) | (1 | ) | (50 | )% | |||||||||||||
Derivative Agreements | (5 | ) | — | (5 | ) | 100 | % | 24 | (29 | ) | NM | ||||||||||||||
Net Unrealized (Depreciation) Appreciation of Investments | (562 | ) | 587 | (1,149 | ) | NM | 376 | (938 | ) | NM | |||||||||||||||
Net Gains, Losses, Appreciation and Depreciation | $ | (529 | ) | $ | 339 | $ | (868 | ) | NM | $ | 314 | $ | (843 | ) | NM | ||||||||||
Other Financial Data | |||||||||||||||||||||||||
NAV per Share | $ | 11.92 | $ | 13.16 | $ | (1.24 | ) | (9 | )% | $ | 10.71 | $ | 1.21 | 11 | % | ||||||||||
Debt at Cost | $ | 1,519 | $ | 1,642 | $ | (123 | ) | (7 | )% | $ | 2,259 | $ | (740 | ) | (33 | )% | |||||||||
Debt at Fair Value | $ | 1,443 | $ | 1,591 | $ | (148 | ) | (9 | )% | $ | 2,208 | $ | (765 | ) | (35 | )% | |||||||||
Market Capitalization | $ | 2,299 | $ | 3,427 | $ | (1,128 | ) | (33 | )% | $ | 2,588 | $ | (289 | ) | (11 | )% | |||||||||
Total Enterprise Value(2) | $ | 3,631 | $ | 4,883 | $ | (1,252 | ) | (26 | )% | $ | 4,579 | $ | (948 | ) | (21 | )% | |||||||||
Asset Coverage Ratio | 364 | % | 376 | % | 262 | % | |||||||||||||||||||
Debt to Equity Ratio | 0.4x | 0.4x | 0.6x | ||||||||||||||||||||||
Credit Quality | |||||||||||||||||||||||||
Weighted Average Effective Interest Rate on Private Finance Debt Investments at Period End | 10.3 | % | 10.5 | % | 10.2 | % | |||||||||||||||||||
Loans on Non-Accrual at Cost | $ | 569 | $ | 519 | $ | 50 | 10 | % | $ | 702 | $ | (133 | ) | (19 | )% | ||||||||||
Loans on Non-Accrual at Fair Value | $ | 173 | $ | 255 | $ | (82 | ) | (32 | )% | $ | 239 | $ | (66 | ) | (28 | )% | |||||||||
Non-Accrual Loans at Cost as a Percentage of Total Loans at Cost | 18.6 | % | 16.7 | % | 19.6 | % | |||||||||||||||||||
Non-Accrual Loans at Fair Value as a Percentage of Total Loans at Fair Value | 6.6 | % | 9.0 | % | 7.8 | % | |||||||||||||||||||
Past Due Loans at Cost | $ | 3 | $ | 23 | $ | (20 | ) | (87 | )% | $ | 58 | $ | (55 | ) | (95 | )% | |||||||||
Debt to Equity Conversions at Cost | $ | — | $ | 58 | $ | (58 | ) | (100 | )% | $ | 9 | $ | (9 | ) | (100 | )% | |||||||||
Return on Equity | |||||||||||||||||||||||||
LTM Net Operating Income Return on Average Equity at Cost | 4.8 | % | 4.7 | % | 3.4 | % | |||||||||||||||||||
LTM Net Realized Earnings (Loss) Return on Average Equity at Cost | 0.1 | % | (1.7 | )% | (6.2 | )% | |||||||||||||||||||
LTM Net Earnings Return on Average Equity at Fair Value | 19.4 | % | 36.7 | % | 33.5 | % | |||||||||||||||||||
Current Quarter Annualized Net Operating Income Return on Average Equity at Cost | 4.3 | % | 4.8 | % | 4.5 | % | |||||||||||||||||||
Current Quarter Annualized Net Realized Earnings (Loss) Return on Average Equity at Cost | 6.6 | % | (11.8 | )% | 0.3 | % | |||||||||||||||||||
Current Quarter Annualized Net (Loss) Earnings Return on Average Equity at Fair Value | (43.4 | )% | 37.9 | % | 44.0 | % | |||||||||||||||||||
______________________________
NM = Not meaningful
(1) | Includes total assets of American Capital Agency Corp., American Capital Mortgage Investment Corp., European Capital, American Capital Equity I, American Capital Equity II and ACAS CLO-1, less American Capital's investment 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.
November 1, 2011
Page 7
Static Pool (1) | ||||||||||||||||||||||||||||||||||||
Portfolio Statistics ($ in millions, unaudited) | Pre- 2001 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2011 | Pre-2001 - 2011 Static Pools Aggregate | 2006 - 2011 Static Pools Aggregate | ||||||||||||||||||||||||
Aggregate | ||||||||||||||||||||||||||||||||||||
IRR at Fair Value of All Investments(2) | 8.5 | % | 18.1 | % | 8.2 | % | 20.1 | % | 13.4 | % | 9.8 | % | 10.0 | % | (7.2 | %) | 6.0 | % | (34.1 | %) | 7.1 | % | 1.1 | % | ||||||||||||
IRR of Exited Investments(3) | 9.1 | % | 19.4 | % | 9.5 | % | 23.3 | % | 17.1 | % | 22.8 | % | 10.4 | % | (10.3 | %) | 13.6 | % | N/A | 11.0 | % | 0.6 | % | |||||||||||||
IRR at Fair Value of Equity Investments Only(2)(4)(5) | 8.3 | % | 46.4 | % | 11.4 | % | 27.0 | % | 26.5 | % | 4.8 | % | 14.3 | % | (11.6 | %) | 18.6 | % | (76.4 | %) | 8.0 | % | 2.9 | % | ||||||||||||
IRR of Exited Equity Investments Only(3)(4)(5) | 10.9 | % | 48.3 | % | 21.4 | % | 36.7 | % | 49.0 | % | 54.1 | % | 18.1 | % | 9.3 | % | 35.5 | % | N/A | 28.6 | % | 15.8 | % | |||||||||||||
IRR at Fair Value of All One Stop Buyout® Investments(2)(6) | 2.9 | % | 17.1 | % | 10.9 | % | 18.3 | % | 15.7 | % | 25.4 | % | 12.6 | % | — | % | 14.5 | % | — | % | 12.3 | % | 7.2 | % | ||||||||||||
IRR at Fair Value of Current One Stop Buyout® Investments(2)(6) | 18.1 | % | (3.9 | %) | (0.3 | %) | 16.6 | % | 5.7 | % | 17.4 | % | 11.3 | % | (3.3 | %) | 14.5 | % | — | % | 8.4 | % | 4.6 | % | ||||||||||||
IRR of Exited One Stop Buyout® Investments(3)(6) | 1.3 | % | 19.3 | % | 14.7 | % | 21.9 | % | 27.5 | % | 31.3 | % | 15.3 | % | 16.6 | % | 10.7 | % | N/A | 16.7 | % | 15.6 | % | |||||||||||||
Committed Investments(7) | $ | 1,065 | $ | 376 | $ | 964 | $ | 1,436 | $ | 2,266 | $ | 4,752 | $ | 5,228 | $ | 7,451 | $ | 1,038 | $ | 127 | $ | 24,703 | $ | 13,844 | ||||||||||||
Total Exits and Prepayments of Committed Investments(7) | $ | 995 | $ | 363 | $ | 836 | $ | 1,098 | $ | 1,970 | $ | 2,420 | $ | 3,833 | $ | 4,567 | $ | 304 | $ | — | $ | 16,386 | $ | 8,704 | ||||||||||||
Total Interest, Dividends and Fees Collected | $ | 407 | $ | 148 | $ | 343 | $ | 429 | $ | 684 | $ | 1,090 | $ | 1,177 | $ | 1,097 | $ | 308 | $ | 3 | $ | 5,686 | $ | 2,585 | ||||||||||||
Total Net Realized (Loss) Gain on Investments | $ | (137 | ) | $ | (14 | ) | $ | (99 | ) | $ | 142 | $ | 29 | $ | 372 | $ | (124 | ) | $ | (993 | ) | $ | (26 | ) | $ | — | $ | (850 | ) | $ | (1,143 | ) | ||||
Current Cost of Investments | $ | 77 | $ | 13 | $ | 144 | $ | 330 | $ | 336 | $ | 2,044 | $ | 1,138 | $ | 2,303 | $ | 666 | $ | 97 | $ | 7,148 | $ | 4,204 | ||||||||||||
Current Fair Value of Investments | $ | 56 | $ | 1 | $ | 92 | $ | 424 | $ | 231 | $ | 1,585 | $ | 1,042 | $ | 1,251 | $ | 525 | $ | 88 | $ | 5,295 | $ | 2,906 | ||||||||||||
Current Fair Value of Investments as a % of Total Investments at Fair Value | 1.1 | % | — | % | 1.7 | % | 8.0 | % | 4.4 | % | 29.9 | % | 19.7 | % | 23.6 | % | 9.9 | % | 1.7 | % | 100.0 | % | 54.9 | % | ||||||||||||
Net Unrealized (Depreciation) Appreciation | $ | (21 | ) | $ | (12 | ) | $ | (52 | ) | $ | 94 | $ | (105 | ) | $ | (459 | ) | $ | (96 | ) | $ | (1,052 | ) | $ | (141 | ) | $ | (9 | ) | $ | (1,853 | ) | $ | (1,298 | ) | |
Non-Accruing Loans at Cost | $ | — | $ | 4 | $ | 18 | $ | — | $ | 36 | $ | 58 | $ | 81 | $ | 216 | $ | 156 | $ | — | $ | 569 | $ | 453 | ||||||||||||
Non-Accruing Loans at Fair Value | $ | 1 | $ | 1 | $ | 9 | $ | — | $ | 7 | $ | 25 | $ | 39 | $ | 64 | $ | 27 | $ | — | $ | 173 | $ | 130 | ||||||||||||
Equity Interest at Fair Value(4) | $ | 30 | $ | — | $ | 6 | $ | 209 | $ | 71 | $ | 1,114 | $ | 443 | $ | 277 | $ | 244 | $ | 34 | $ | 2,428 | $ | 998 | ||||||||||||
Debt to Adjusted EBITDA(8)(9)(10)(11)(14) | 2.5 | NM | 9.2 | 3.5 | 6.6 | 3.6 | 4.7 | 6.3 | 4.7 | 5.5 | 5.0 | 5.4 | ||||||||||||||||||||||||
Interest Coverage(10)(11)(14) | 4.9 | NM | 1.8 | 3.9 | 2.5 | 2.1 | 2.9 | 2.0 | 2.3 | 2.4 | 2.5 | 2.4 | ||||||||||||||||||||||||
Debt Service Coverage(10)(11)(14) | 4.4 | NM | 1.8 | 3.1 | 1.4 | 1.1 | 2.5 | 1.7 | 1.8 | 2.3 | 2.0 | 2.1 | ||||||||||||||||||||||||
Average Age of Companies(11)(14) | 50 yrs | 26 yrs | 32 yrs | 41 yrs | 55 yrs | 20 yrs | 37 yrs | 32 yrs | 21 yrs | 24 yrs | 32 yrs | 32 yrs | ||||||||||||||||||||||||
Diluted Ownership Percentage(4)(14) | 61 | % | 86 | % | 42 | % | 56 | % | 70 | % | 75 | % | 45 | % | 50 | % | 62 | % | 8 | % | 59 | % | 49 | % | ||||||||||||
Average Sales(11)(12)(14) | $ | 47 | $ | 7 | $ | 47 | $ | 208 | $ | 61 | $ | 122 | $ | 167 | $ | 147 | $ | 94 | $ | 159 | $ | 138 | $ | 144 | ||||||||||||
Average Adjusted EBITDA(8)(11)(14) | $ | 7 | $ | — | $ | 11 | $ | 44 | $ | 16 | $ | 33 | $ | 40 | $ | 33 | $ | 29 | $ | 41 | $ | 34 | $ | 35 | ||||||||||||
Total Sales(11)(12) | $ | 98 | $ | 299 | $ | 180 | $ | 1,389 | $ | 334 | $ | 1,596 | $ | 4,306 | $ | 4,862 | $ | 1,477 | $ | 358 | $ | 14,899 | $ | 11,003 | ||||||||||||
Total Adjusted EBITDA(8)(11) | $ | 15 | $ | 8 | $ | 35 | $ | 197 | $ | 57 | $ | 428 | $ | 454 | $ | 841 | $ | 258 | $ | 96 | $ | 2,389 | $ | 1,649 | ||||||||||||
% of Senior Loans(11)(13) | 71 | % | 100 | % | 54 | % | 57 | % | 38 | % | 42 | % | 29 | % | 52 | % | 25 | % | 26 | % | 43 | % | 40 | % | ||||||||||||
% of Loans with Lien(11)(13) | 100 | % | 78 | % | 100 | % | 100 | % | 100 | % | 90 | % | 97 | % | 89 | % | 76 | % | 26 | % | 86 | % | 90 | % | ||||||||||||
One Stop Buyout® Portfolio Companies(6) | Pre-2001 - 2011 Static Pools Aggregate | |||||||||||||||||||||||||||||||||||
Total Current ACAS Investment in OSB | $ | 3,414 | ||||||||||||||||||||||||||||||||||
Diluted Ownership Percentage of ACAS in OSB(14) | 64% | |||||||||||||||||||||||||||||||||||
Total Cash | $ | 167 | ||||||||||||||||||||||||||||||||||
Total Assets | $ | 4,904 | ||||||||||||||||||||||||||||||||||
Total Debt | $ | 3,643 | ||||||||||||||||||||||||||||||||||
Total Third-party Debt at Cost | $ | 1,330 | ||||||||||||||||||||||||||||||||||
Total Shareholders' Equity at Fair Value | $ | 2,504 | ||||||||||||||||||||||||||||||||||
Total Sales(12) | $ | 3,241 | ||||||||||||||||||||||||||||||||||
Total Gross Profit(12) | $ | 1,613 | ||||||||||||||||||||||||||||||||||
Total Adjusted EBITDA(8) | $ | 705 | ||||||||||||||||||||||||||||||||||
Total Capital Expenditures | $ | 97 | ||||||||||||||||||||||||||||||||||
———————
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. There were no investments made in 2009 and 2010 static pool years. |
2) | Assumes investments are exited at current fair value. |
3) | Includes fully exited investments of existing portfolio companies. |
4) | Excludes investments in structured products. |
5) | Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt. |
6) | One Stop Buyout® (“OSB”) investments represents investments in the formation or buyouts of private equity companies sponsored by American Capital. |
7) | Represents committed investment amount at the time of origination. |
8) | Adjusted EBITDA may reflect certain adjustments to the reported EBITDA of a portfolio company for non-recurring, unusual or infrequent items or other pro-forma items or events to normalize current earnings which a buyer may consider in a change in control transactions. These adjustments may be material and are highly subjective in nature. Portfolio company reported EBITDA is for the most recently available twelve months, or when appropriate, the forecasted twelve months or current annualized run-rate. |
9) | For portfolio companies with a nominal Adjusted EBITDA amount, the portfolio company's maximum debt leverage is limited to 15 times Adjusted EBITDA. |
10) | Excludes investments in which we own only equity. |
11) | Excludes investments in structured products and managed funds. |
12) | Sales of the most recent twelve months, or when appropriate, the forecasted twelve months. |
13) | As a percentage of our total debt investments. |
14) | Weighted average based on fair value. |
American Capital, Ltd.
November 1, 2011
Page 8
SHAREHOLDER CALL
American Capital invites shareholders, analysts and interested parties to attend the shareholder call on November 2, 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 (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 16825455. Callers who do not plan on asking a question and have access to the internet are asked to utilize 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 Q3 2011 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 November 2, 2011. In addition, there will be a phone recording available from 4:00 pm ET November 2, 2011 until 11:59 pm ET November 16, 2011. If you are interested in hearing the recording of the presentation, please dial (855) 859-2056 (U.S. domestic) or (404) 537-3406 (international). The access code for both domestic and international callers is 16825455.
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 $57 billion in assets under management and seven offices in the U.S. and Europe. American Capital and European Capital 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 report on Form 10-K, 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 forward-looking statements are included in the “Risk Factors” section of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 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.