AMERICAN CAPITAL, LTD - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBIT 32 - AMERICAN CAPITAL, LTD	acas10q33116ex32.htm
EX-31.1 - EXHIBIT 31.1 - AMERICAN CAPITAL, LTD	acas10q33116ex311.htm
EX-31.2 - EXHIBIT 31.2 - AMERICAN CAPITAL, LTD	acas10q33116ex312.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, 2016



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

Commission file number 814-00149

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, as amended (the “Exchange Act”) 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 o

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 o No o

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 o
Non-accelerated filer o	(Do not check if a smaller reporting company)	Smaller Reporting Company o

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

The number of shares of the issuer’s common stock, $0.01 par value legally outstanding as of April 29, 2016, was 218,338,980.

________________________________________________________________________________________________________________________

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	42
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	63
Item 4.	Controls and Procedures	64

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	65
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	66
Signatures		67

Table of Contents

PART I. FINANCIAL INFORMATION


ITEM 1.	Financial Statements

AMERICAN CAPITAL, LTD.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)



	March 31,			December 31,
	2016			2015
	(unaudited)
Assets
Investments at fair value
Non-Control/Non-Affiliate investments (cost of $2,211 and $2,368, respectively)	$	1,921		$	2,097
Affiliate investments (cost of $26 and $35, respectively)	84			77
Control investments (cost of $2,488 and $2,502, respectively)	2,732			2,824
Total investments at fair value (cost of $4,725 and $4,905, respectively)	4,737			4,998
Cash and cash equivalents	364			483
Restricted cash and cash equivalents	32			46
Interest and dividend receivable	54			48
Deferred tax asset, net	212			198
Trade date settlement receivable	32			373
Other	84			94
Total assets	$	5,515		$	6,240
Liabilities and Shareholders’ Equity
Debt ($109 and $204 due within one year, respectively), net	$	887		$	1,253
Long term incentive plan liability	27			34
Other	121			131
Total liabilities	1,035			1,418
Commitments and contingencies (Note 12)
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, 227.6 and 247.3 issued and 222.4 and 242.6 outstanding, respectively	2			2
Capital in excess of par value	5,561			5,847
Cumulative translation adjustment, net of tax	(93		)	(101		)
Distributions in excess of net realized earnings	(877		)	(879		)
Net unrealized depreciation of investments	(113		)	(47		)
Total shareholders’ equity	4,480			4,822
Total liabilities and shareholders’ equity	$	5,515		$	6,240
Net Asset Value Per Common Share Outstanding	$	20.14		$	19.88

See accompanying notes.

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AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except per share data)



	Three Months Ended March 31,
	2016			2015
Operating Revenue
Interest and dividend income
Non-Control/Non-Affiliate investments	$	59		$	78
Control investments	90			60
Total interest and dividend income	149			138
Fee income
Non-Control/Non-Affiliate investments	3			2
Control investments	10			14
Total fee income	13			16
Total operating revenue	162			154
Operating Expenses
Interest	15			17
Salaries, benefits and stock-based compensation	34			40
European Capital management fees	2			4
General and administrative	17			15
Total operating expenses	68			76
Net Operating Income Before Income Taxes	94			78
Tax provision	(20		)	(28		)
Net Operating Income	74			50
Net realized gain (loss)
Non-Control/Non-Affiliate investments	(15		)	(8		)
Affiliate investments	2			—
Control investments	(70		)	(198		)
Foreign currency transactions	—			(2		)
Derivative agreements and other	(17		)	(48		)
Tax benefit	12			43
Total net realized loss	(88		)	(213		)
Net unrealized appreciation (depreciation)
Portfolio company investments	(76		)	229
Foreign currency translation	(8		)	19
Derivative agreements and other	13			6
Tax benefit (provision)	5			(76		)
Total net unrealized (depreciation) appreciation	(66		)	178
Total net loss	(154		)	(35		)
Net (Decrease) Increase in Net Assets Resulting from Operations (“Net (Loss) Earnings”)	$	(80	)	$	15

Net Operating Income Per Common Share
Basic	$	0.31		$	0.18
Diluted	$	0.31		$	0.18
Net (Loss) Earnings Per Common Share
Basic	$	(0.34	)	$	0.06
Diluted	$	(0.34	)	$	0.05
Weighted Average Shares of Common Stock Outstanding
Basic	235.0			271.1
Diluted	235.0			282.9

See accompanying notes.

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AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in millions, except per share data)



	Three Months Ended March 31,
	2016			2015

Net (loss) earnings	$	(80	)	$	15
Other comprehensive income (loss):
Cumulative translation adjustment, net of tax of $0 and ($21), respectively	8			(96		)
Comprehensive loss	$	(72	)	$	(81	)

See accompanying notes.

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AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in millions, except per share data)



	Three Months Ended March 31,
	2016			2015
Operations
Net operating income	$	74		$	50
Net realized loss, net of tax	(88		)	(213		)
Net unrealized (depreciation) appreciation, net of tax	(66		)	178
Net (loss) earnings	(80		)	15
Capital Share Transactions
Proceeds from issuance of common stock upon exercise of stock options	4			17
Repurchase of common stock	(297		)	—
Stock-based compensation	7			13
Cumulative translation adjustment, net of tax	8			(96		)
Other	16			5
Net decrease in net assets resulting from capital share transactions	(262		)	(61		)
Total decrease in net assets	(342		)	(46		)
Net assets at beginning of period	4,822			5,472
Net assets at end of period	$	4,480		$	5,426

Net asset value per common share outstanding	$	20.14		$	20.12
Common shares outstanding at end of period	222.4			269.7

See accompanying notes.

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AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)



	Three Months Ended March 31,
	2016			2015
Operating Activities
Net (loss) earnings	$	(80	)	$	15
Adjustments to reconcile net (loss) earnings to net cash provided by (used in) operating activities:
Net unrealized depreciation (appreciation) of investments	71			(254		)
Net realized loss on investments	100			256
Effects on exchange rate changes on assets and liabilities denominated in foreign currencies	1			3
Accrued PIK interest and dividends on investments	(29		)	(25		)
Stock-based compensation	7			7
(Increase) decrease in interest and dividend receivable	(7		)	5
(Increase) decrease in deferred tax asset, net	(14		)	62
Decrease (increase) in other assets	2			(6		)
Decrease in other liabilities	(5		)	(27		)
Payment of long term incentive plan liability	(12		)	(46		)
Other	16			(2		)
Net cash provided by (used in) operating activities	50			(12		)
Investing Activities
Purchases and originations of investments	(154		)	(807		)
Repayments from portfolio company revolving credit facility investments, net	7			2
Principal repayments on debt investments	50			61
Proceeds from loan syndications and loan sales	539			54
Payment of accrued PIK notes and dividend and accreted original issue discounts	14			17
Proceeds from equity investments	32			93
Increase in cash collateral on total return swaps	—			95
Other	—			(3		)
Net cash provided by (used in) investing activities	488			(488		)
Financing Activities
(Payments on) proceeds from revolving credit facilities, net	(368		)	304
Decrease (increase) in debt service escrows	1			(11		)
Proceeds from issuance of common stock upon exercise of stock options	4			17
Repurchase of common stock	(297		)	—
Other	3			2
Net cash (used in) provided by financing activities	(657		)	312
Effect of currency rate changes on cash and cash equivalents	—			(19		)
Net decrease in cash and cash equivalents	(119		)	(188		)
Cash and cash equivalents at beginning of period	483			676
Cash and cash equivalents at end of period	$	364		$	469

See accompanying notes.

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AMERICAN CAPITAL, LTD.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(unaudited)

(in millions, except per share data)



	Three Months Ended March 31,
	2016			2015
Per Share Data
Net asset value at beginning of the period	$	19.88		$	20.50
Net operating income⁽¹⁾	0.31			0.18
Net realized loss, net of tax⁽¹⁾	(0.37		)	(0.78		)
Net unrealized (depreciation) appreciation, net of tax⁽¹⁾	(0.28		)	0.66
Net (loss) earnings⁽¹⁾	(0.34		)	0.06
Issuance of common stock from stock compensation plans	(0.02		)	(0.15		)
Repurchase of common stock	0.53			—
Cumulative translation adjustment, net of tax	0.04			(0.36		)
Other, net⁽²⁾	0.05			0.07
Net asset value at end of period	$	20.14		$	20.12
Ratio/Supplemental Data
Per share market value at end of period	$	15.24		$	14.79
Total investment return⁽³⁾	10.51		%	1.23		%
Shares of common stock outstanding at end of period	222.4			269.7
Net assets at end of period	$	4,480		$	5,426
Average net assets⁽⁴⁾	$	4,651		$	5,449
Average debt outstanding⁽⁵⁾	$	1,012		$	1,845
Average debt outstanding per common share⁽¹⁾	$	4.31		$	6.81
Portfolio turnover rate⁽⁶⁾	11.09		%	14.60		%
Ratio of operating expenses to average net assets⁽⁶⁾	5.88		%	5.66		%
Ratio of operating expenses, net of interest expense, to average net assets⁽⁶⁾	4.58		%	4.39		%
Ratio of interest expense to average net assets⁽⁶⁾	1.30		%	1.27		%
Ratio of net operating income to average net assets⁽⁶⁾	6.40		%	3.72		%


(1)	Weighted average basic per share data.

(2)

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 U.S. GAAP expense credited to additional paid-in capital 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.


(3)	Total investment return is based on the change in the market value of our common stock taking into account dividends, if any, reinvested in accordance with the terms of our dividend reinvestment plan. The total investment return has not been annualized.


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


(5)	Based on a daily weighted average balance of debt outstanding, excluding deferred financing costs and discounts, during the period.


(6)	Ratios are annualized.

See accompanying notes.

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AMERICAN CAPITAL, LTD. CONSOLIDATED SCHEDULE OF INVESTMENTS March 31, 2016 (unaudited) (in millions, except share data)

Company(1)	Industry	Investments	Cash Interest Rate(2)		PIK Interest Rate(2)		Maturity Date(2)	# of Shares/ Units Owned	Principal		Cost		Fair Value
AMERICAN CAPITAL NON-CONTROL / NON-AFFILIATE INVESTMENTS
AmWINS Group, LLC	Insurance	Second Lien Senior Debt(6)	9.5	%	N/A		9/20		$	46.0	$	45.0	$	45.1
Bensussen Deutsch & Associates, LLC	Distributors	Second Lien Senior Debt(6)	12.0	%	2.0	%	9/19		43.1		41.3		44.7
Bensussen Deutsch & Associates, LLC		Common Stock						1,224,089			2.2		15.7
											43.5		60.4
BeyondTrust Software, Inc.	Software	First Lien Senior Debt(6)	8.0	%	N/A		9/19		30.1		30.1		29.2
BluePay Processing, LLC	Consumer Finance	Second Lien Senior Debt(6)	9.5	%	N/A		8/22		32.8		32.8		32.8
Blue Wolf Capital Fund II, L.P.(7)	Capital Markets	Limited Partnership Interest(4)									9.0		8.0
BRG Sports, Inc.	Leisure Products	Redeemable Preferred Stock(4)						2,009			2.5		3.0
		Common Units(4)						6,566,655			0.7		—
											3.2		3.0
CAMP International Holding Company	Transportation Infrastructure	Second Lien Senior Debt(6)	8.3	%	N/A		11/19		15.0		15.0		13.7
Cast & Crew Payroll, LLC	Commercial Services & Supplies	Second Lien Senior Debt(6)	8.8	%	N/A		8/23		36.0		35.7		34.5
CGSC of Delaware Holdings Corporation(7)	Insurance	Second Lien Senior Debt(6)	8.3	%	N/A		10/20		2.0		2.0		2.0
Chariot Acquisition, LLC	Distributors	First Lien Senior Debt(6)	7.3	%	N/A		9/21		29.9		29.6		28.5
Compusearch Software Systems, Inc.	Software	Second Lien Senior Debt(6)	9.8	%	N/A		11/21		51.0		51.0		51.0
Convergint Technologies, LLC	Commercial Services & Supplies	Second Lien Senior Debt(6)	9.0	%	N/A		12/17-12/20		94.0		94.0		94.0
CPI Buyer, LLC	Trading Companies & Distributors	Second Lien Senior Debt(6)	8.5	%	N/A		8/22		25.0		24.7		23.7
Crossroads Equity Holdings LLC	Real Estate	First Lien Senior Debt(6)	5.9	%	N/A		6/18		3.2		3.2		2.9
Datapipe, Inc.	IT Services	Second Lien Senior Debt(6)	8.5	%	N/A		9/19		29.5		29.2		28.8
Delsey Holding S.A.S.(7)	Textiles, Apparel & Luxury Goods	Mezzanine Debt(6)	N/A		13.5	%	7/21		1.4		1.4		1.1
DiversiTech Corporation	Building Products	Second Lien Senior Debt(6)	9.0	%	N/A		11/22		9.5		9.4		9.4
Electronic Warfare Associates, Inc.	IT Services	First Lien Senior Debt(6)	13.0	%	N/A		2/19		15.0		15.0		15.0
Electronic Warfare Associates, Inc.		Common Stock Warrants(4)(6)						863,887			0.8		0.8
											15.8		15.8
Financière OFIC S.A.S.(7)	Building Products	Warrants(4)						3,047,200			—		3.0
Flexera Software LLC	Software	Second Lien Senior Debt(6)	8.0	%	N/A		4/21		5.0		5.0		4.7
FXI Holdings, Inc.	Household Durables	Common Stock(4)						3,163			—		0.6
Galls, LLC	Specialty Retail	Second Lien Senior Debt(6)	9.5	%	N/A		6/17-8/21		31.6		31.6		31.6
The Gordian Group, Inc.	Internet Software & Services	First Lien Senior Debt(6)	5.6	%	N/A		7/19		40.7		40.7		39.9
Hyland Software, Inc.	Software	Second Lien Senior Debt(6)	8.3	%	N/A		7/23		10.0		10.0		9.5
Industrial Container Services, LLC	Containers & Packaging	First Lien Senior Debt(6)	6.8	%	N/A		12/18		49.7		49.7		49.7
		Second Lien Senior Debt(6)	10.2	%	N/A		12/19		10.0		9.9		9.9
											59.6		59.6
Infogix Parent Corporation	IT Services	First Lien Senior Debt(6)	7.8	%	N/A		12/21		90.0		88.3		88.1
		Redeemable Preferred Stock(6)						2,475			2.6		2.6
											90.9		90.7
Inmar, Inc.	Commercial Services & Supplies	Second Lien Senior Debt(6)	8.0	%	N/A		1/22		20.0		19.8		15.6
Iotum Global Holdings, Inc.(7)	Diversified Telecommunication Services	First Lien Senior Debt(6)	N/A		10.0	%	5/17		1.3		1.3		1.3
iParadigms, LLC	Internet Software & Services	Second Lien Senior Debt(6)	8.3	%	N/A		7/22		39.5		39.3		38.7
Iron Bow Technologies, LLC	Electronic Equipment, Instruments & Components	Second Lien Senior Debt(6)	10.4	%	2.8%		2/21		15.1		15.1		15.1
Jazz Acquisition, Inc.	Aerospace & Defense	Second Lien Senior Debt(6)	7.8	%	N/A		6/22		25.0		24.9		18.8
Kele Holdco, Inc.	Trading Companies & Distributors	First Lien Senior Debt(6)	7.0	%	N/A		10/20-10/22		71.3		71.3		71.3
	Trading Companies & Distributors	Common Stock(4)(6)						30,000			3.0		3.0
											74.3		74.3

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AMERICAN CAPITAL, LTD. CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued) March 31, 2016 (unaudited) (in millions, except share data)

Company(1)	Industry	Investments	Cash Interest Rate(2)		PIK Interest Rate(2)		Maturity Date(2)	# of Shares/ Units Owned	Principal	Cost	Fair Value
Landslide Holdings, Inc.	Software	Second Lien Senior Debt(6)	8.3	%	N/A		2/21		9.0	9.0	8.1
Lenox Park C-F Owner, LLC	Real Estate	First Lien Senior Debt(6)	5.2	%	N/A		4/18		17.0	17.0	16.6
LTG Acquisition, Inc.	Communications Equipment	Second Lien Senior Debt(6)	9.0	%	N/A		10/20		46.0	46.0	42.2
	Communications Equipment	Common Stock(4)(6)						5,000		5.0	3.6
										51.0	45.8
Mitchell International, Inc.	Software	Second Lien Senior Debt(6)	8.5	%	N/A		10/21		17.0	16.9	15.1
M-IV Lake Center LLC	Real Estate	First Lien Senior Debt(6)	5.7	%	N/A		12/17		7.0	7.0	6.6
Novetta Solutions, LLC	IT Services	First Lien Senior Debt(6)	6.0	%	N/A		10/22		13.0	12.9	12.7
		Second Lien Senior Debt(6)	9.5	%	N/A		10/23		31.0	30.7	29.9
										43.6	42.6
OnCourse Learning Corporation	Diversified Consumer Services	First Lien Senior Debt(6)	8.5	%	N/A		2/19		19.5	19.4	19.4
Osmose Utility Services, Inc.	Commercial Services & Supplies	Second Lien Senior Debt(6)	8.8	%	N/A		8/23		34.0	33.7	33.1
Park Place Technologies, LLC	IT Services	Second Lien Senior Debt(6)	10.0	%	N/A		12/22		41.5	41.5	41.5
Parmenter Woodland Park Plaza, LLC	Real Estate	First Lien Senior Debt(6)	5.3	%	N/A		9/18		17.5	17.5	16.2
Photonis Technologies SAS(7)	Aerospace & Defense	First Lien Senior Debt(6)	8.5	%	N/A		9/19		29.7	29.4	29.2
Project Silverback Holdings Corp.	IT Services	First Lien Senior Debt(6)	6.5	%	N/A		7/20		23.9	23.7	23.2
Project Silverback Holdings Corp.		Convertible Preferred Stock(6)						743		0.9	0.7
		Common Stock(4)						308,224		—	0.4
										24.6	24.3
Qualium I(7)	Capital Markets	Common Stock(4)						247,939		5.2	5.0
Ranpak Corp.	Containers & Packaging	Second Lien Senior Debt(6)	8.3	%	N/A		10/22		25.0	25.0	22.0
Sage Products Holdings III, LLC	Health Care Equipment & Supplies	Second Lien Senior Debt(6)	9.3	%	N/A		6/20		20.6	20.7	20.6
Severin Acquisition, LLC	Software	Second Lien Senior Debt(6)	9.8	%	N/A		7/22		29.9	29.4	29.4
Systems Maintenance Services Holding, Inc.	IT Services	Second Lien Senior Debt(6)	9.3	%	N/A		10/20		35.0	34.8	34.8
TA THI Parent, Inc.	Auto Components	Second Lien Senior Debt(6)	9.8	%	N/A		1/21		41.5	41.0	41.9
		Convertible Preferred Stock(4)(6)						25,000		2.5	3.3
										43.5	45.2
Teasdale Foods, Inc.	Food & Staples Retailing	Second Lien Senior Debt(6)	8.8	%	N/A		10/21		31.5	31.5	30.4
Tyche Holdings, LLC	IT Services	Second Lien Senior Debt(6)	10.5	%	N/A		11/22		35.0	34.9	35.0
Tyden Cayman Holdings Corp.(7)	Electronic Equipment, Instruments & Components	Convertible Preferred Stock(4)(6)						46,276		0.1	0.1
Tyden Cayman Holdings Corp.(7)		Common Stock(4)(6)						5,521,203		5.5	3.4
										5.6	3.5
W3 Co.	Commercial Services & Supplies	Second Lien Senior Debt(6)	9.3	%	N/A		9/20		8.9	8.8	4.0
WP CPP Holdings, LLC	Aerospace & Defense	Second Lien Senior Debt(6)	8.8	%	N/A		4/21		19.7	19.6	17.1
WRH, Inc.	Life Sciences Tools & Services	Mezzanine Debt(6)	8.9	%	6.3	%	8/18		104.2	103.9	100.3

EUROPEAN CAPITAL NON-CONTROL / NON-AFFILIATE INVESTMENTS
Delsey Holding S.A.S.(7)	Textiles, Apparel & Luxury Goods	Mezzanine Debt	N/A		13.5	%	7/21		8.0	8.0	6.7
Financière Newglass S.A.S.(7)	Building Products	Convertible Preferred Stock						15,000,000		18.2	16.4
Modacin France S.A.S.(7)	Specialty Retail	Mezzanine Debt(5)	—	%	4.0	%	11/19		22.7	11.7	—
Mobipark S.A.S.(7)	Electronic Equipment, Instruments & Components	First Lien Senior Debt	0.7	%	N/A		10/17-12/17		2.3	2.2	2.2
Zodiac Marine and Pool S.A.(7)	Marine	Second Lien Senior Debt(5)	—	%	4.0	%	3/17		37.2	25.7	0.4
Zodiac Marine and Pool S.A.(7)	Marine	Mezzanine Debt(5)	—	%	8.6	%	9/17		77.4	38.8	0.2
										64.5	0.6

Table of Contents

AMERICAN CAPITAL, LTD. CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued) March 31, 2016 (unaudited) (in millions, except share data)

Company(1)	Industry	Investments	Cash Interest Rate(2)		PIK Interest Rate(2)	Maturity Date(2)	# of Shares/ Units Owned	Principal	Cost	Fair Value
SENIOR FLOATING RATE LOANS
BarBri, Inc.	Diversified Consumer Services	First Lien Senior Debt(6)	4.5	%	N/A	7/19		4.0	4.0	3.1
Mitchell International, Inc.	Software	First Lien Senior Debt(6)(8)	4.5	%	N/A	10/20		2.2	2.2	2.1
Southwire Company, LLC	Electrical Equipment	First Lien Senior Debt(6)(8)	3.2	%	N/A	2/21		8.0	8.0	7.6
Wesco Aircraft Hardware Corp.(7)	Aerospace & Defense	First Lien Senior Debt(6)(8)	3.3	%	N/A	2/21		1.7	1.7	1.6

AMERICAN CAPITAL CLO INVESTMENTS
ACAS CLO 2007-1, Ltd.(7)		Secured Notes(6)				4/21		8.5	8.4	8.3
		Subordinated Notes(6)				4/21		25.9	11.6	12.6
									20.0	20.9
Apidos CLO XVIII, Ltd.(7)		Subordinated Notes(6)				7/26		39.4	32.3	20.2
Apidos CLO XXI(7)		Subordinated Notes(6)				6/27		12.4	10.9	8.8
Ares IIIR/IVR CLO Ltd.(7)		Subordinated Notes(6)				4/21		20.0	11.1	3.9
Babson CLO Ltd. 2006-II(7)		Income Notes(4)(6)				10/20		15.0	2.7	—
Babson CLO Ltd. 2013-II(7)		Income Notes(6)				1/25		5.0	3.7	2.5
Babson CLO Ltd. 2014-I(7)		Subordinated Notes(6)				7/25		8.5	6.2	3.3
Babson CLO Ltd. 2014-II(7)		Subordinated Notes(6)				9/26		25.0	19.9	8.5
Blue Hill CLO, Ltd.(7)		Subordinated Notes(6)				1/26		23.1	17.3	5.8
Carlyle Global Market Strategies CLO 2013-3, Ltd.(7)		Subordinated Notes(6)				7/25		5.0	3.4	2.6
Carlyle Global Market Strategies CLO 2015-3, Ltd.(7)		Subordinated Notes(6)				7/28		28.2	24.1	20.6
Cent CDO 12 Limited(7)		Income Notes(6)				11/20		26.4	13.4	26.0
Cent CLO 22 Limited(7)		Subordinated Notes(6)				11/26		45.4	36.6	15.2
Cent CLO 24 Limited(7)		Subordinated Notes(6)				10/26		28.0	27.0	20.2
Centurion CDO 8 Limited(7)		Subordinated Notes(4)(6)				3/17		5.0	0.2	—
CoLTs 2005-1 Ltd.(7)		Preference Shares(4)(6)				3/16	360		1.7	0.1
CoLTs 2005-2 Ltd.(7)		Preference Shares(4)(6)				12/18	34,170,000		11.0	0.4
CREST Exeter Street Solar 2004-1(7)		Preferred Securities(4)(6)				6/39	3,500,000		3.2	—
Dryden 40 Senior Loan Fund(7)		Subordinated Notes(6)				8/28		9.5	8.3	6.2
Eaton Vance CDO X plc(7)		Secured Subordinated Notes(6)				2/27		15.0	11.1	4.1
Flagship CLO V(7)		Deferrable Notes(6)				9/19		1.7	1.5	1.7
		Subordinated Securities(6)				9/19	15,000		7.1	0.7
									8.6	2.4
Galaxy III CLO, Ltd(7)		Subordinated Notes(4)				8/16		4.0	0.2	—
GoldenTree Loan Opportunities VII, Limited(7)		Subordinated Notes(6)				4/25		35.3	30.5	20.7
Halcyon Loan Advisors Funding 2014-1 Ltd.(7)		Subordinated Notes(6)				2/26		1.3	1.0	0.4
Halcyon Loan Advisors Funding 2015-2, Ltd.(7)		Subordinated Notes(6)				7/27		21.7	18.9	14.8
Herbert Park B.V.(7)		Subordinated Notes(6)				10/26		25.5	26.7	19.8
LightPoint CLO IV, LTD(7)		Income Notes(4)(6)				4/18		6.7	3.6	—
LightPoint CLO VII, Ltd.(7)		Subordinated Notes(6)				5/21		9.0	2.6	1.4
Madison Park Funding XII, Ltd.(7)		Subordinated Notes(6)				7/26		10.0	8.3	6.4
Madison Park Funding XIII, Ltd.(7)		Subordinated Notes(6)				1/25		30.9	24.8	18.0

Table of Contents

AMERICAN CAPITAL, LTD. CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued) March 31, 2016 (unaudited) (in millions, except share data)

Company(1)	Industry	Investments	Cash Interest Rate(2)		PIK Interest Rate(2)	Maturity Date(2)	# of Shares/ Units Owned		Principal		Cost		Fair Value
NYLIM Flatiron CLO 2006-1 LTD.(7)		Subordinated Securities(6)				8/20	10,000				4.4		2.4
Och Ziff Loan Management XIII, Ltd.(7)		Subordinated Notes(6)				7/27			15.0		13.2		11.7
Octagon Investment Partners XVIII, Ltd.(7)		Subordinated Notes(6)				12/24			16.4		12.4		7.5
Octagon Investment Partners XIX, Ltd.(7)		Subordinated Notes(6)				4/26			25.0		18.2		12.8
OHA Credit Partners XI, Ltd.(7)		Subordinated Notes(6)				10/28			33.5		30.9		26.7
Sapphire Valley CDO I, Ltd.(7)		Subordinated Notes(6)				12/22			14.0		17.6		10.9
THL Credit Wind River 2014-2 CLO Ltd.(7)		Income Notes				7/26			15.0		9.7		7.4
Vitesse CLO, Ltd.(7)		Preferred Securities(4)(6)				8/20	20,000,000				11.9		—
Voya CLO 2014-4, Ltd.(7)		Subordinated Notes(6)				10/26			26.7		22.6		15.4
Subtotal Non-Control / Non-Affiliate Investments (40% of total investments at fair value)											$	2,211.3	$	1,921.4

AMERICAN CAPITAL AFFILIATE INVESTMENTS
IS Holdings I, Inc.	Software	Common Stock(4)(6)					2,000,000				$	5.2	$	11.5
Mobipark S.A.S.(7)	Electronic Equipment, Instruments & Components	First Lien Senior Debt(6)	2.1	%	N/A	12/17			$	4.0	3.8		3.4
		Convertible Preferred Stock(4)(6)					28,317,268				9.1		28.2
		Redeemable Preferred Stock(4)(6)					25,751,312				7.2		31.0
											20.1		62.6
Primrose Holding Corporation	Diversified Consumer Services	Common Stock(4)(6)					7,227				—		8.1
Roark - Money Mailer, LLC	Media	Common Membership Units(4)					6.0	%			0.7		1.7
Subtotal Affiliate Investments (2% of total investments at fair value)											$	26.0	$	83.9

AMERICAN CAPITAL CONTROL INVESTMENTS
ACAS Real Estate Holdings Corporation	Real Estate	Common Stock(6)					100	%			$	4.5	$	9.9
Alcami Holdings LLC	Life Sciences Tools & Services	First Lien Senior Debt(6)	6.5	%	N/A	3/17-10/20			103.6		102.8		105.7
		Mezzanine Debt(6)	7.1	%	6.1%	10/20			143.1		142.1		143.1

AMERICAN CAPITAL, LTD - FORM 10-Q - May 6, 2016

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