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American Capital Announces Q2 2009 Results
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BETHESDA, Md., Aug 04, 2009 /PRNewswire-FirstCall via COMTEX/ -- American Capital ("ACAS" or the "Company") (Nasdaq: ACAS) announced net operating income ("NOI") for the quarter ended June 30, 2009 of $20 million, or $0.09 per diluted share. Earnings (loss) less appreciation and depreciation ("Realized (Loss) Earnings") for the quarter was $(306) million, or $(1.41) per diluted share. For the quarter ended June 30, 2009, the Company reported a net loss of $(547) million, or $(2.52) per diluted share.

Q2 2009 HIGHLIGHTS

  • $1.07 per share dividend declared (in the aggregate 10% to be paid in cash and 90% in stock)
  • $20 million of NOI
  • $(308) million net realized loss on portfolio investments
  • $125 million of realizations
  • $8.76 net asset value ("NAV") per share
    • $7.42 NAV per share adjusted for stock portion of accrued dividend payable and August 7, 2009 share dividend
  • $12.83 anticipated realizable value upon settlement or maturity ("Realizable Value") per share
    • $10.52 Realizable Value NAV per share adjusted for stock portion of accrued dividend payable and August 7, 2009 share dividend
  • 44% reduction in workforce to date since March 31, 2008

NET OPERATING INCOME

NOI decreased 87% to $0.09 per diluted share for the quarter ended June 30, 2009, compared to $0.71 per diluted share for the prior year quarter. Relative to the first quarter of 2009, NOI in the second quarter was lower by $0.22 per diluted share primarily due to additional reversals of prior quarter accrued payment in kind ("PIK") interest and dividends (which are non-cash items) and increased interest costs related to default and rating downgrade provisions.

REALIZED (LOSS) EARNINGS

Realized (Loss) Earnings decreased to $(1.41) per diluted share for the quarter ended June 30, 2009, compared to $0.95 per diluted share for the prior year quarter. The Realized (Loss) Earnings for the quarter included a realized loss of $(196) million, or $(0.90) per diluted share, related to the sale of our portfolio company Consolidated Bedding, Inc.

NET LOSS

Net loss increased to $(2.52) per diluted share for the quarter ended June 30, 2009, compared to $(0.34) per diluted share for the prior year quarter.

For the quarter ended June 30, 2009, net unrealized depreciation of portfolio investments totaled $(311) million. The primary components of the net unrealized depreciation were as follows:

  • $315 million of reversals of prior depreciation associated with net realized losses on portfolio investments;
  • $(409) million of depreciation of American Capital's investment in European Capital, Ltd., reflecting a significant discount to its NAV due to covenant defaults under European Capital's credit facilities, which could prevent realization of the NAV;
  • $(289) million of net depreciation of American Capital's private finance portfolio;
  • $35 million of appreciation of American Capital's investment in American Capital Agency Corp. and our portfolio company American Capital, LLC, an alternative asset fund manager; and
  • $37 million of net appreciation from structured products.

FINANCIAL HIGHLIGHTS

As of June 30, 2009, NAV per share was $8.76, down from $12.32 per share as of March 31, 2009 and $15.41 per share as of December 31, 2008. NAV per share was $7.42 as of June 30, 2009, when adjusted for the $207 million accrued dividend payable in stock and for the 67 million shares to be distributed on August 7, 2009. Based on Realizable Value, NAV per share was $12.83 as of June 30, 2009, down from $17.07 per share as of March 31, 2009 and $20.63 per share as of December 31, 2008. Realizable Value NAV per share was $10.52 as of June 30, 2009, when adjusted for the $207 million accrued dividend payable in stock and for the 67 million shares to be distributed on August 7, 2009.

"While we believe the broader economy has begun to recover in the second half of 2009, American Capital continues to face challenges," said Malon Wilkus, Chairman and Chief Executive Officer. "We remain focused on resolving the defaults with each of our unsecured creditor groups; providing operational, managerial and financial support to our portfolio companies; and improving operational efficiencies."

FINANCING UPDATE AND COVENANT BREACHES

The Company remains in default on $2.3 billion of unsecured credit arrangements outstanding as of June 30, 2009. The Company was able to reduce its outstanding securitized debt by $59 million during the quarter ended June 30, 2009. During the quarter ended June 30, 2009, the Company incurred expenses of $7 million related to its current debt restructuring efforts. In addition, the Company incurred $19 million during the quarter of interest expense as a result of default and rating agency downgrade provisions.

The Company continues to be below the 200% asset coverage ratio set forth in the Investment Company Act of 1940 and, as a result, the Company is generally restricted from issuing any new debt except to refinance existing debt. This does not restrict the use of cash from operations, allowing the reinvestment of proceeds from realizations of portfolio exits. The Company believes that it has sufficient liquidity to meet its currently scheduled debt amortization and the investment needs within its portfolio.

PORTFOLIO LIQUIDITY AND PERFORMANCE

In the second quarter of 2009, $125 million of proceeds were received from realizations of portfolio investment repayments and exits, which were 1% higher than the prior quarter's valuations of each investment. There was $39 million in new committed investments in the quarter. The weighted average effective interest rate on the Company's debt investments as of June 30, 2009, was 9.7%, 100 basis points lower than as of December 31, 2008. Cash and cash equivalents totaled $183 million as of June 30, 2009 and currently total approximately $300 million.

"While we expect to experience losses and depreciation during a severe recession," said John Erickson, Chief Financial Officer, "we continue to work hard to recover value from our underperforming companies. Our experience from the last recession leads us to believe that we will recover value in our portfolio companies as the economy strengthens. Despite having depreciation in some of our investments, we also have many fine investments such as People Media, where we generated a $15 million gain, a 30% annual return and $57 million in cash proceeds in July on our investment, despite one of the worst environments for middle market M&A. With our large and diverse portfolio, we continue to generate liquidity despite the poor M&A environment, as evidenced by the $125 million of proceeds during the second quarter. That trend continued in July, as we sold over $100 million of investments at approximately their fair value. We believe the worst is behind us."

As of June 30, 2009, loans with a fair value of $310 million were on non-accrual. The $310 million fair value of non-accruing loans represented 7.2% of total loans at fair value as of June 30, 2009, compared to the $214 million fair value of non-accrual loans representing 4.4% of total loans at fair value as of March 31, 2009.

2009 DIVIDENDS

On July 31, 2009, American Capital announced the results of its stockholders' elections relating to the Company's dividend previously declared by its Board of Directors on June 11, 2009. The dividend of $1.07 per share is payable on August 7, 2009 to stockholders of record as of the close of business on June 22, 2009, with an ex-dividend date of June 18, 2009. Stockholders had until July 24, 2009 to elect whether to receive the dividend in cash (up to an aggregate maximum of 10% of the total dividend paid) or in shares of common stock. Due to the original terms of the dividend, stockholders who elected to receive cash will receive a combination of cash and common stock.

Based on stockholder elections and the price of American Capital's common stock, the dividend will consist of approximately $24 million in cash and approximately 67 million shares of common stock. The amount of cash elected to be received was greater than the cash limit of 10% of the aggregate dividend amount, and therefore stockholders who elected to receive all cash will receive a combination of cash and stock. Stockholders electing to receive the dividend in all cash, will receive cash in the amount of $0.185 per share or 17% of the $1.07 dividend and 0.275 shares of common stock or 83% of the total dividend for each share of common stock they owned on the record date. The number of shares of common stock comprising the stock portion was calculated based on a price of $3.2199 per share, the average of the volume weighted trading price per share on the NASDAQ Global Select Market on July 27, 28 and 29, 2009.

                           AMERICAN CAPITAL, LTD.
                        CONSOLIDATED BALANCE SHEETS
         As of June 30, 2009, December 31, 2008 and June 30, 2008
                               (in millions)



                                                        Q2 2009 Versus Q4
                                                               2008
                                            Q2      Q4  ------------------
                                           2009    2008      $         %
                                           ----    ----     ---       ---
                                       (unaudited)
    Assets
    Investments at fair value
     (cost of $10,295, $10,691
     and $10,680, respectively)           $6,193  $7,427  $(1,234)    -17%
    Cash and cash equivalents                183     209      (26)    -12%
    Restricted cash and cash equivalents      55      71      (16)    -23%
    Interest receivable                       43      44       (1)     -2%
    Other assets                             154     159       (5)     -3%
                                             ---     ---       --      --
              Total assets                $6,628  $7,910  $(1,282)    -16%
                                          ======  ======  =======     ===

    Liabilities and Shareholders' Equity
    Debt                                  $4,321  $4,428    $(107)     -2%
    Derivative and option agreements
     (cost of $0, $(20) and $1,
     respectively)                            92     222     (130)    -59%
    Accrued dividends payable                231       -      231     100%
    Other liabilities                         94     105      (11)    -10%
                                              --     ---      ---     ---
              Total liabilities            4,738   4,755      (17)      -
                                           -----   -----      ---     ---

    Commitments and contingencies

    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, 225.8, 214.3
       and 214.0 issued and
       215.7, 204.7 and 207.2
       outstanding, respectively               2       2        -       -
      Capital in excess of par value       6,605   6,545       60       1%
      (Distributions in excess
       of) undistributed net
       realized earnings                    (516)     76     (592)     NM
      Net unrealized depreciation of
       investments                        (4,201) (3,468)    (733)    -21%
                                          ------  ------     ----     ---
           Total shareholders' equity      1,890   3,155   (1,265)    -40%
                                           -----   -----   ------     ---
           Total liabilities and
            shareholders' equity          $6,628  $7,910  $(1,282)    -16%
                                          ======  ======  =======     ===



                                                             Q2 2009 Versus
                                                                Q2 2008
                                                       Q2    --------------
                                                      2008       $      %
                                                      ----       -      -
                                                  (unaudited)

    Assets
    Investments at fair value (cost of $10,295,
     $10,691 and $10,680, respectively)               $9,687  $(3,494)  -36%
    Cash and cash equivalents                            262      (79)  -30%
    Restricted cash and cash equivalents                 229     (174)  -76%
    Interest receivable                                   42        1     2%
    Other assets                                         236      (82)  -35%
                                                         ---      ---   ---
              Total assets                           $10,456  $(3,828)  -37%
                                                     =======  =======   ===

    Liabilities and Shareholders' Equity
    Debt                                              $4,475    $(154)   -3%
    Derivative and option agreements (cost of
      $0, $(20) and $1, respectively)                     76       16    21%
    Accrued dividends payable                            209       22    11%
    Other liabilities                                    100       (6)   -6%
                                                         ---       --    --
              Total liabilities                        4,860     (122)   -3%
                                                       -----     ----    --

    Commitments and contingencies

    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, 225.8, 214.3 and 214.0
        issued and 215.7, 204.7 and 207.2
         outstanding, respectively                         2        -     -
      Capital in excess of par value                   6,457      148     2%
      (Distributions in excess of) undistributed
       net realized earnings                             226     (742)   NM
      Net unrealized depreciation of investments      (1,089)  (3,112) -286%
                                                      ------   ------  ----
           Total shareholders' equity                  5,596   (3,706)  -66%
                                                       -----   ------   ---
           Total liabilities and shareholders'
            Equity                                   $10,456  $(3,828)  -37%
                                                     =======  =======   ===



                              AMERICAN CAPITAL, LTD.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
              Three and Six Months Ended June 30, 2009 and 2008
                    (in millions, except per share data)
                                  (unaudited)

                                                            Three Months Ended
                                          Three Months Ended  June 30, 2009
                                               June 30,        Versus 2008
                                            ----------------  --------------
                                            2009        2008      $     %
                                            ----        ----      -     -

     OPERATING INCOME:
     Investing operating income(1)          $126        $231   $(105)  -45%
     Asset management and advisory
      operating income(2)                     14          32     (18)  -56%
                                              --          --     ---   ---

     Total operating income                  140         263    (123)  -47%
                                             ---         ---    ----   ---

     OPERATING EXPENSES:
     Interest                                 60          48      12    25%
     Salaries, benefits and stock-based
      compensation                            47          57     (10)  -18%
     General and administrative               24          20       4    20%
                                              --          --      --    --
     Total operating expenses                131         125       6     5%
                                             ---         ---      --    --

     OPERATING INCOME BEFORE INCOME TAXES      9         138    (129)  -93%
                                              --         ---    ----   ---

     Benefit for income taxes                 11           7       4    57%
                                              --          --      --    --

     NET OPERATING INCOME                     20         145    (125)  -86%
                                              --         ---    ----   ---

     Net gain on extinguishment of debt        -           -       -     -
                                              --          --      --    --

     Net realized (loss) gain on investments
     Portfolio company investments          (308)         63    (371)   NM
     Taxes on net realized gain                -          (3)      3   100%
     Foreign currency transactions             -           1      (1) -100%
     Derivative and option agreements        (18)        (12)     (6)  -50%
                                             ---         ---      --   ---
     Total net realized (loss) gain on
      investments                           (326)         49    (375)   NM
                                            ----          --    ----    --

     REALIZED (LOSS) EARNINGS               (306)        194    (500)   NM
                                            ----         ---    ----    --

     Net unrealized (depreciation)
      appreciation of investments
     Portfolio company investments          (311)       (336)     25     7%
     Foreign currency translation             66           -      66   100%
     Derivative and option agreements and
      other                                    4          72     (68)  -94%
                                              --          --     ---   ---
     Total net unrealized depreciation of
      investments                           (241)       (264)     23     9%
                                            ----        ----      --    --

     NET DECREASE IN NET ASSETS RESULTING
      FROM OPERATIONS ("NET LOSS")         $(547)       $(70)  $(477) -681%
                                           =====        ====   =====  ====

     NET OPERATING INCOME PER
     COMMON SHARE*:
       Basic                               $0.09       $0.71  $(0.62)  -87%
       Diluted                             $0.09       $0.71  $(0.62)  -87%

     REALIZED (LOSS) EARNINGS PER
     COMMON SHARE*:
       Basic                              $(1.41)      $0.95  $(2.36)   NM
       Diluted                            $(1.41)      $0.95  $(2.36)   NM

     NET LOSS PER COMMON SHARE*:
       Basic                              $(2.52)     $(0.34) $(2.18) -641%
       Diluted                            $(2.52)     $(0.34) $(2.18) -641%

     WEIGHTED AVERAGE SHARES OF COMMON
      STOCK OUTSTANDING:
       Basic                               217.0       204.4    12.6     6%
       Diluted                             217.0       204.4    12.6     6%

     DIVIDENDS DECLARED PER COMMON SHARE   $1.07 (3)   $1.03   $0.04     4%




                                                           Six Months Ended
                                       Six Months Ended      June 30, 2009
                                           June 30,           Versus 2008
                                       -----------------    ----------------
                                        2009      2008        $         %
                                        ----      ----       --        --
    OPERATING INCOME:
    Investing operating income(1)       $307      $486     $(179)     -37%
    Asset management and advisory
     operating income(2)                  28        69       (41)     -59%
                                          --        --       ---      ---

    Total operating income               335       555      (220)     -40%
                                         ---       ---      ----      ---

    OPERATING EXPENSES:
    Interest                             112       111         1        1%
    Salaries, benefits and
     stock-based compensation            100       113       (13)     -12%
    General and administrative            50        43         7       16%
                                          --        --        --       --
    Total operating expenses             262       267        (5)      -2%
                                         ---       ---        --       --

    OPERATING INCOME BEFORE INCOME
     TAXES                                73       288      (215)     -75%
                                          --       ---      ----      ---

    Benefit for income taxes              11         8         3       38%
                                          --        --        --       --

    NET OPERATING INCOME                  84       296      (212)     -72%
                                          --       ---      ----      ---

    Net gain on extinguishment of
     debt                                 12         -        12      100%
                                          --        --        --      ---

    Net realized (loss) gain on
     investments
    Portfolio company investments       (387)       91      (478)      NM
    Taxes on net realized gain             -        (4)        4      100%
    Foreign currency transactions         (2)        6        (8)      NM
    Derivative and option
     agreements                          (68)      (11)      (57)    -518%
                                         ---       ---       ---    -----
    Total net realized (loss) gain
     on investments                     (457)       82      (539)      NM
                                        ----        --      ----       --

    REALIZED (LOSS) EARNINGS            (361)      378      (739)      NM
                                        ----       ---      ----       --

    Net unrealized (depreciation)
     appreciation of investments
    Portfolio company investments       (836)   (1,333)      497       37%
    Foreign currency translation          (3)       73       (76)      NM
    Derivative and option
     agreements and other                106        (1)      107       NM
                                         ---        --       ---       --
    Total net unrealized
     depreciation of investments        (733)   (1,261)      528       42%
                                        ----    ------       ---       --

    NET DECREASE IN NET ASSETS
     RESULTING FROM OPERATIONS
     ("NET LOSS")                    $(1,094)    $(883)    $(211)     -24%
                                     =======     =====     =====      ===

    NET OPERATING INCOME PER
     COMMON SHARE*:
      Basic                            $0.40     $1.48    $(1.08)     -73%
      Diluted                          $0.40     $1.48    $(1.08)     -73%

    REALIZED (LOSS) EARNINGS PER
     COMMON SHARE*:
      Basic                           $(1.70)    $1.89    $(3.59)      NM
      Diluted                         $(1.70)    $1.89    $(3.59)      NM

    NET LOSS PER COMMON SHARE*:
      Basic                           $(5.16)   $(4.42)   $(0.74)     -17%
      Diluted                         $(5.16)   $(4.42)   $(0.74)     -17%

    WEIGHTED AVERAGE SHARES OF
     COMMON STOCK OUTSTANDING:
      Basic                            211.9     199.8      12.1        6%
      Diluted                          211.9     199.8      12.1        6%

    DIVIDENDS DECLARED PER COMMON
     SHARE                             $1.07     $2.04    $(0.97)     -48%

    NM = Not meaningful.

    * May not recalculate due to rounding.

    (1) The investing operating income consists of interest, dividends,
        prepayment fees and other investment fee income.
    (2) The asset management and advisory operating income consists primarily
        of asset management fees and reimbursements, dividends from portfolio
        company fund managers, transaction structuring fees, equity and loan
        financing fees, portfolio company management and administrative fees
        and other fee income.
    (3) Dividend payable on August 7, 2009 in the form of $24 million in cash
        and approximately 67 million shares.



                           AMERICAN CAPITAL, LTD.
                        OTHER FINANCIAL INFORMATION
     Three Months Ended June 30, 2009, March 31, 2009 and June 30, 2008
                    (in millions, except per share data)
                                 (unaudited)

                                                        Q2 2009 Versus Q1 2009
                                                        ----------------------
                                    Q2 2009     Q1 2009        $         %
                                    -------     -------       ---       ---
    Assets Under Management:
      American Capital Assets at
       Fair Value(1)                 $6,628      $7,211     $(583)      -8%
      Externally Managed Assets at
       Fair Value(2)                  4,070       3,659       411       11%
                                     ------      ------     -----       --
          Total                     $10,698     $10,870     $(172)      -2%
                                    =======     =======     =====       ==

    Capital Resources Under Management:
      American Capital Assets at
       Fair Value plus Available
       Capital Resources(1)         $ 6,628     $ 7,211     $(583)      -8%
      Externally Managed Assets at
       Fair Value plus Available
        Capital Resources(2)          4,294       3,884       410       11%
                                     ------      ------     -----       --
          Total                     $10,922     $11,095     $(173)      -2%
                                    =======     =======     =====       ==

    New Investments:
      Senior Debt                        $2         $27      $(25)     -93%
      Subordinated Debt                   8           5         3       60%
      Preferred Equity                    3           8        (5)     -63%
      Common Equity                      26           -        26      100%
      Structured Products                 -           -         -        -
                                     ------      ------     -----       --
          Total                         $39         $40       $(1)      -3%
                                        ===         ===       ===       ==

      Investments in Managed Funds       $-          $-        $-        -
      Financing for Private Equity
       Buyouts                            -           -         -        -
      Direct Investments                  -           -         -        -
      Structured Products                 -           -         -      100%
      Add-on Financing for Working
       Capital in Distressed
       Situations                        36          25        11       44%
      Add-on Financing for Growth
       and Working Capital                2           -         2      100%
      Add-on Financing for Acquisitions   -           -         -        -
      Add-on Financing for
       Recapitalizations                  1          15       (14)     -93%
                                     ------      ------     -----       --
          Total                         $39         $40       $(1)      -3%
                                        ===         ===       ===       ==

    Realizations:
      Scheduled Principal Amortization  $15         $10        $5       50%
      Loan Syndications and Sales        21           8        13      163%
      Principal Prepayments              35          42        (7)     -17%
      Payment of Accrued Payment-in-kind
       Interest and Dividends and
       Original Issue Discount            1           4        (3)     -75%
      Sale of Equity Investments         53          15        38      253%
                                     ------      ------     -----      ---
          Total                        $125         $79       $46       58%
                                       ====         ===       ===       ==

    Appreciation, Depreciation,
     Gain and Loss:
      Gross Realized Gain               $35          $8       $27      338%
      Gross Realized Loss              (343)        (87)     (256)    -294%
                                       ----         ---      ----     ----
      Portfolio Net Realized (Loss)
       Gain                            (308)        (79)     (229)    -290%
      Taxes on Realized Net Gain          -           -         -        -
      Foreign Currency                    -          (2)        2      100%
      Option Agreement                    -         (44)       44      100%
      Derivative Agreements             (18)         (6)      (12)    -200%
                                       ----         ---      ----     ----
        Net Realized (Loss) Gain       (326)       (131)     (195)    -149%
                                       ----         ---      ----     ----

      Gross Unrealized Appreciation of
       Private Finance Portfolio
       Investments                      187          33       154      467%
      Gross Unrealized Depreciation of
       Private Finance Portfolio
       Investments                     (476)       (453)      (23)      -5%
                                       ----         ---      ----     ----
      Net Unrealized Depreciation of
       Private Finance Portfolio
       Investments                     (289)       (420)      131       31%
      Net Unrealized Appreciation
       (Depreciation) of European
       Capital Limited                 (409)         43      (452)      NM
      Net Unrealized Appreciation
       (Depreciation) of American
       Capital Agency Corp.              31         (18)       49      272%
      Net Unrealized Appreciation
       (Depreciation) of American
       Capital, LLC                       4        (162)      166       NM
      Net Unrealized Appreciation
       (Depreciation) of Structured
       Products                          37         (46)       83       NM
      Reversal of Prior Period Net
       Unrealized Depreciation Upon
       Realization                      315          78       237      304%
                                       ----         ---      ----     ----
      Net Unrealized Depreciation
       of Portfolio Investments        (311)       (525)      214       41%
      Foreign Currency Translation       66         (69)      135       NM
      Derivative Agreements and Other     4          53       (49)     -92%
      Reversal of Prior Period Net
       Unrealized Depreciation
       (Appreciation) on Option
       Agreements                         -          49       (49)    -100%
                                       ----         ---      ----     ----
        Net Unrealized Depreciation
         of Investments                (241)       (492)      251      51%
                                       ----         ---      ----     ----

        Net Gains, Losses,
         Appreciation and
         Depreciation                 $(567)      $(623)      $56      -9%
                                      =====       =====       ===       ==

    Other Financial Data:
      NAV per Share                   $8.76      $12.32    $(3.56)    -29%
      NAV per Share Adjusted for Q2
       2009 Stock Dividend(3)         $7.42         N/A       N/A     N/A
      NAV per Share Based on
       Realizable Value(4)           $12.83      $17.07    $(4.24)    -25%
      Financial Liabilities at Cost  $4,321      $4,377      $(56)     -1%
      Financial Liabilities at
       Fair Value                    $3,189      $2,722      $467      17%
      Market Capitalization            $692        $403      $289      72%
      Total Enterprise Value         $4,830      $4,692      $138       3%
    Credit Quality:
      Weighted Average Effective
       Interest Rate on Debt
       Investments at Period End        9.7%        9.5%      0.2%      2%
      Loans on Non-Accrual at Face   $1,025      $1,103      $(78)     -7%
      Loans on Non-Accrual at
       Fair Value                      $310        $214       $96      45%
      Past Due Loans at Face            $45         $41        $4      10%
      Past Due and Non-Accrual
       Loans at Face as a
       Percentage of Total Loans       19.4%       18.1%
      Non-Accrual Loans at Fair
       Value as a Percentage
       of Total Loans                   7.2%        4.4%
      Number of Portfolio Companies
       on Non-Accrual and Past Due       40          38
      Debt to Equity Conversions
       at Cost                         $355         $35      $320     100%
    Return on Equity:
      LTM Net Operating Income
       Return on Average Equity
       at Cost                          4.3%        6.1%
      LTM Realized (Loss) Earnings
       Return on Average Equity
       at Cost                         -3.3%        4.3%
      LTM Loss on Average Equity      -90.6%      -64.2%
      Current Quarter Net Operating
       Income Return on Average
       Equity at Cost Annualized        1.3%        3.9%
      Current Quarter Realized (Loss)
       Earnings Return on Average
       Equity at Cost Annualized      -19.3%       -3.4%
      Current Quarter Loss on Average
       Equity Annualized              -96.2%      -75.4%


                                                               Q2 2009
                                                            Versus Q2 2008
                                                           ----------------
                                                  Q2 2008     $         %
                                                  -------  -------     ---
    Assets Under Management:
      American Capital Assets at Fair Value(1)    $10,456  $(3,828)    -37%
      Externally Managed Assets at Fair Value(2)    7,491   (3,421)    -46%
                                                    -----   ------     ---
        Total                                     $17,947  $(7,249)    -40%
                                                  =======  =======     ===

    Capital Resources Under Management:
     American Capital Assets at Fair Value plus
      Available Capital Resources(1)              $12,045  $(5,417)    -45%
     Externally Managed Assets at Fair Value
      plus Available Capital Resources(2)          7,934   (3,640)     -46%
                                                   -----   ------      ---
       Total                                     $19,979  $(9,057)     -45%
                                                 =======  =======      ===

    New Investments:
      Senior Debt                                   $111    $(109)     -98%
      Subordinated Debt                              475     (467)     -98%
      Preferred Equity                                82      (79)     -96%
      Common Equity                                  150     (124)     -83%
      Structured Products                            100     (100)    -100%
                                                     ---     ----     ----
        Total                                       $918    $(879)     -96%
                                                    ====    =====      ===

      Investments in Managed Funds                  $125    $(125)    -100%
      Financing for Private Equity Buyouts           109     (109)    -100%
      Direct Investments                              50      (50)    -100%
      Structured Products                            100     (100)    -100%
      Add-on Financing for Working Capital in
       Distressed Situations                          26       10       38%
      Add-on Financing for Growth and Working
       Capital                                       343     (341)     -99%
      Add-on Financing for Acquisitions               66      (66)    -100%
      Add-on Financing for Recapitalizations          99      (98)     -99%
                                                      --      ---      ---
        Total                                       $918    $(879)     -96%
                                                    ====    =====      ===

    Realizations:
      Scheduled Principal Amortization               $28     $(13)     -46%
      Loan Syndications and Sales                     21        -        -
      Principal Prepayments                          265     (230)     -87%
      Payment of Accrued Payment-in-kind Interest
       and Dividends and Original Issue Discount      16      (15)     -94%
      Sale of Equity Investments                     149      (96)     -64%
                                                     ---      ---      ---
        Total                                       $479    $(354)     -74%
                                                    ====    =====      ===

    Appreciation, Depreciation, Gain and Loss:
      Gross Realized Gain                           $102     $(67)     -66%
      Gross Realized Loss                            (39)    (304)    -779%
                                                     ---     ----     ----
        Portfolio Net Realized (Loss) Gain            63     (371)    -589%
      Taxes on Realized Net Gain                      (3)       3      100%
      Foreign Currency                                 1       (1)    -100%
      Option Agreement                                 -        -        -
      Derivative Agreements                          (12)      (6)     -50%
                                                     ---       --      ---
        Net Realized (Loss) Gain                      49     (375)      NM
                                                      --     ----       --

      Gross Unrealized Appreciation of Private
      Finance Portfolio Investments                  151       36       24%
      Gross Unrealized Depreciation of Private
      Finance Portfolio Investments                 (443)     (33)      -7%
                                                     ---      ---       --
      Net Unrealized Depreciation of Private
       Finance Portfolio Investments                (292)       3        1%
      Net Unrealized Appreciation (Depreciation)
       of European Capital Limited                    20     (429)      NM
      Net Unrealized Appreciation (Depreciation)
       of American Capital Agency Corp.              (26)      57       NM
      Net Unrealized Appreciation (Depreciation)
       of American Capital, LLC                      (17)      21       NM
      Net Unrealized Appreciation (Depreciation)
       of Structured Products                         46       (9)     -20%
      Reversal of Prior Period Net Unrealized
      Depreciation Upon Realization                  (67)     382       NM
                                                     ---      ---       --
      Net Unrealized Depreciation of Portfolio
       Investments                                  (336)      25        7%
      Foreign Currency Translation                     -       66      100%
      Derivative Agreements and Other                 72      (68)     -94%
      Reversal of Prior Period Net Unrealized
       Depreciation (Appreciation) on Option
       Agreements                                      -        -        -
                                                     ---      ---      ---
        Net Unrealized Depreciation of
         Investments                                (264)      23        9%
                                                    ----       --       --

        Net Gains, Losses, Appreciation
         and Depreciation                          $(215)   $(352)    -164%
                                                   =====    =====     ====

    Other Financial Data:
      NAV per Share                               $27.01  $(18.25)     -68%
      NAV per Share Adjusted for Q2 2009 Stock
       Dividend(3)                                   N/A      N/A      N/A
      NAV per Share Based on Realizable Value(4)  $30.09  $(17.26)     -57%
      Financial Liabilities at Cost               $4,475    $(154)      -3%
      Financial Liabilities at Fair Value         $4,153    $(964)     -23%
      Market Capitalization                       $4,925  $(4,233)     -86%
      Total Enterprise Value                      $9,137  $(4,307)     -47%
    Credit Quality:
      Weighted Average Effective Interest Rate on
       Debt Investments at Period End               11.2%    -1.5%     -13%
      Loans on Non-Accrual at Face                  $481     $544      113%
      Loans on Non-Accrual at Fair Value            $116     $194      167%
      Past Due Loans at Face                         $42       $3        7%
      Past Due and Non-Accrual Loans at Face as a
       Percentage of Total Loans                     8.6%
      Non-Accrual Loans at Fair Value as a
       Percentage of Total Loans                     2.1%
      Number of Portfolio Companies on
       Non-Accrual and Past Due                       24
      Debt to Equity Conversions at Cost             $30     $325     1083%
    Return on Equity:
      LTM Net Operating Income Return on Average
      Equity at Cost                                10.0%
      LTM Realized (Loss) Earnings Return on
      Average Equity at Cost                        13.2%
      LTM Loss on Average Equity                   -17.9%
      Current Quarter Net Operating Income Return
       on Average Equity at Cost Annualized          8.8%
       Current Quarter Realized (Loss) Earnings
       Return on Average Equity at Cost
       Annualized                                   11.8%
      Current Quarter Loss on Average Equity
       Annualized                                   -4.9%

    NM = Not meaningful

    (1) Includes American Capital's investment in its externally managed
        funds.
    (2) Includes European Capital (for Q2 2008), American Capital Equity I,
        American Capital Equity II, ACAS CLO-1 and ACAS CRE CDO 2007-1.
    (3) Dividend payable on August 7, 2009 in the form of $24 million in cash
        and approximately 67 million shares.
    (4) Realizable Value is a non-GAAP financial measure which does not
        represent current fair value or net present value.  Realizable Value
        is the future value that we anticipate realizing on the settlement or
        maturity of our investments.
        Refer to the table on the following page for additional information
        and discussion regarding the use of non-GAAP financial information.


                           AMERICAN CAPITAL, LTD.
                        OTHER FINANCIAL INFORMATION
                            As of June 30, 2009
                                (in millions)
                                 (unaudited)

    The following table summarizes the current GAAP cost basis and fair value
    of our investments as of June 30, 2009 compared to the realizable value,
    which is the amount that we currently anticipate realizing on settlement
    or maturity of these investments, or realizable value:


                                                                  Difference
                                                                    Between
                                                                  Realizable
                                                                     Value
                                   GAAP Cost GAAP Fair  Realizable  GAAP and
    Asset Class                      Basis      Value      Value   Fair Value
    -----------                    --------- ---------  ---------- ----------
                                     $7,882    $5,755     $6,126     $371
     Private finance
     European Capital Limited         1,266        97         97        -
     American Capital Agency
      Corp.                             100       115        115        -
     Structured products                952       174        737      563
     American Capital, LLC               95        44         44        -
     Derivatives, net and other           -       (87)      (143)     (56)
                                        ---       ---       ----      ---
          Total                     $10,295    $6,098     $6,976     $878
                                    =======    ======     ======     ====

USE OF NON-GAAP FINANCIAL INFORMATION

In addition to the results presented in accordance with generally accepted accounting principles ("GAAP"), this press release includes Realizable Value, a non-GAAP financial measure which management uses in its internal analysis of results, and believes may be informative to investors gauging the quality of the Company's assets and financial performance from a long-term perspective, identifying trends in its results and providing meaningful period-to-period comparisons. Realizable Value is defined as the future value that American Capital currently anticipates realizing on the settlement or maturity of its investments as of the reporting date. It does not represent current fair value or net present value and is based on assumptions of future cash flows as of the reporting date. Accordingly, changes to expectations of future cash flows as a result of events subsequent to the reporting date are not adjusted in the realizable value as of the reporting date. American Capital believes that this non-GAAP financial measure provides information useful to investors because the Company generally intends to hold its assets to settlement or maturity, and there may be material differences between the GAAP fair values of its investments and the amounts the Company expects to realize on settlement or maturity as of the reporting date. This is primarily because the current lack of liquidity in the financial markets has caused investment spreads between the cost of funds and investment income to widen significantly on investments, resulting in current fair values under Statement of Financial Accounting Standards No. 157, Fair Value Measurements, that are materially lower than what the Company currently anticipates realizing on settlement or maturity. American Capital believes that providing investors with Realizable Value in addition to the related GAAP fair value gives investors greater transparency to the information used by management in its financial operational decision-making. Although American Capital believes that this non-GAAP financial measure enhances investors' understanding of its business and performance, Realizable Value should not be considered as an alternative to GAAP basis financial measures. A reconciliation of non-GAAP Realizable Value to GAAP fair value is set forth above.

    Portfolio Statistics (1)                 Pre-2000  2000    2001    2002
    ($in millions, unaudited)                --------  ----    ----    ----
     ------------------------
     IRR - Realizable Value - All
      Investments(2)                              7.8%  8.0%   18.1%    7.3%
     IRR - GAAP Fair Value - All
      Investments(3)                              7.8%  8.0%   18.1%    7.2%
     IRR - GAAP Fair Value - Equity
      Investments Only(3)(4)(5)                   2.9% 12.1%   46.9%   11.1%
     IRR - Exited Investments(6)                  8.8%  8.0%   20.3%    9.1%
     Original Investments and Commitments        $780  $285    $376    $961
     Total Exits and Prepayments of Original
      Investments                                $713  $285    $351    $754
     Total Interest, Dividends and Fees
      Collected                                  $302  $105    $148    $317
     Total Net Realized (Loss) Gain on
      Investments                                $(89) $(39)    $(4)   $(88)
     Current Cost of Investments                  $76    $-     $24    $197
     Current Fair Value of Investments            $15    $-      $3    $120
     Current Fair Value of Investments as a
      % of Total Investments at Fair Value        0.2%    -       -     1.9%
     Net Unrealized
      Appreciation/(Depreciation)                $(61)   $-    $(21)   $(77)
     Non-Accruing Loans at Face                   $14    $-     $15     $53
     Non-Accruing Loans at Fair Value              $7    $-      $2     $30
     Equity Interest at Fair Value(4)              $4    $-      $-      $-
     Debt to EBITDA(7)(8)(9)                      8.6     -      NM     8.6
     Interest Coverage(7)(9)                      2.1     -      NM     1.4
     Debt Service Coverage(7)(9)                  1.7     -      NM     1.3
     Average Age of Companies(9)               49 yrs     -  24 yrs  45 yrs
     Diluted Ownership Percentage(4)               61%    -      86%     36%
     Average Sales(9)(10)                         $40    $-     $11     $52
     Average EBITDA(9)(11)                         $3    $-      $-      $9
     Average EBITDA Margin                        6.3%    -       -    16.5%
     Total Sales(9)(10)                          $131    $-    $239    $209
     Total EBITDA(9)(11)                          $11    $-      $4     $20
     % of Senior Loans(9)(12)                      58%    -      12%     64%
     % of Loans with Lien(9)(12)                  100%    -     100%    100%




    Portfolio Statistics (1)                   2003    2004     2005    2006
     ($in millions, unaudited)                 ----    ----     ----    ----
     ------------------------
     IRR - Realizable Value - All
      Investments(2)                           21.4%   13.9%    -2.0%    8.6%
     IRR - GAAP Fair Value - All
      Investments(3)                           21.4%   13.3%    -3.0%    6.5%
     IRR - GAAP Fair Value - Equity
      Investments Only(3)(4)(5)                30.0%   27.1%   -18.4%   15.4%
     IRR - Exited Investments(6)               23.5%   21.4%    24.3%   13.5%
     Original Investments and Commitments    $1,432  $2,266   $4,556  $5,163
     Total Exits and Prepayments of Original
      Investments                            $1,083  $1,661   $2,009  $2,876
     Total Interest, Dividends and Fees
      Collected                                $380    $576     $899    $822
     Total Net Realized (Loss) Gain on
      Investments                              $143    $161     $305     $24
     Current Cost of Investments               $309    $598   $2,260  $1,944
     Current Fair Value of Investments         $390    $356     $858  $1,472
     Current Fair Value of Investments as a
      % of Total Investments at Fair Value      6.3%    5.8%    13.9%   23.8%
     Net Unrealized
      Appreciation/(Depreciation)               $81   $(242) $(1,402)  $(472)
     Non-Accruing Loans at Face                  $-    $197      $81    $290
     Non-Accruing Loans at Fair Value            $-     $34      $36     $76
     Equity Interest at Fair Value(4)          $177     $59     $274    $546
     Debt to EBITDA(7)(8)(9)                    4.5     7.5      4.8     5.1
     Interest Coverage(7)(9)                    2.0     2.2      2.3     2.5
     Debt Service Coverage(7)(9)                1.9     1.8      1.6     2.1
     Average Age of Companies(9)             40 yrs  42 yrs   30 yrs  27 yrs
     Diluted Ownership Percentage(4)             52%     47%      38%     36%
     Average Sales(9)(10)                      $189    $102     $114    $136
     Average EBITDA(9)(11)                      $35     $21      $23     $36
     Average EBITDA Margin                     18.5%   20.6%    20.2%   26.5%
     Total Sales(9)(10)                      $1,360  $1,330   $2,568  $5,585
     Total EBITDA(9)(11)                       $183    $234     $361  $1,003
     % of Senior Loans(9)(12)                    60%     46%      46%     41%
     % of Loans with Lien(9)(12)                100%     92%      92%     96%




    Portfolio Statistics (1)                      2007      2008      2009
    ($in millions, unaudited)                     ----      ----      ----
     ------------------------
     IRR - Realizable Value - All
      Investments(2)                              -6.6%     -3.5%        -
     IRR - GAAP Fair Value - All
      Investments(3)                             -15.4%    -16.0%        -
     IRR - GAAP Fair Value - Equity
      Investments Only(3)(4)(5)                  -20.4%    -25.0%        -
     IRR - Exited Investments(6)                 -16.0%     75.0%        -
     Original Investments and Commitments       $7,320    $1,014        $-
     Total Exits and Prepayments of Original
      Investments                               $2,171       $15        $-
     Total Interest, Dividends and Fees
      Collected                                   $734      $125        $-
     Total Net Realized (Loss) Gain on
      Investments                                $(260)       $6        $-
     Current Cost of Investments                $3,980      $907        $-
     Current Fair Value of Investments          $2,352      $619        $-
     Current Fair Value of Investments as a
      % of Total Investments at Fair Value        38.0%     10.0%        -
     Net Unrealized
      Appreciation/(Depreciation)              $(1,628)    $(288)       $-
     Non-Accruing Loans at Face                   $312       $63        $-
     Non-Accruing Loans at Fair Value             $125        $-        $-
     Equity Interest at Fair Value(4)             $510      $154        $-
     Debt to EBITDA(7)(8)(9)                       6.7       6.8         -
     Interest Coverage(7)(9)                       1.8       1.4         -
     Debt Service Coverage(7)(9)                   1.6       1.2         -
     Average Age of Companies(9)                31 yrs    27 yrs         -
     Diluted Ownership Percentage(4)                45%       32%        -
     Average Sales(9)(10)                         $182      $115        $-
     Average EBITDA(9)(11)                         $33       $30        $-
     Average EBITDA Margin                        18.1%     26.1%        -
     Total Sales(9)(10)                         $8,547    $1,185        $-
     Total EBITDA(9)(11)                        $1,573      $259        $-
     % of Senior Loans(9)(12)                       61%       28%        -
     % of Loans with Lien(9)(12)                    94%       62%        -



                                                Pre-2000 -     2004 -
    Portfolio Statistics (1)                      2009         2009
     ($in millions, unaudited)                  Aggregate   Aggregate
    --------------------------                  ---------   ---------
    IRR - Realizable Value - All
     Investments(2)                                  5.3%       2.0%
    IRR - GAAP Fair Value - All
     Investments(3)                                  2.5%      -2.0%
    IRR - GAAP Fair Value - Equity
     Investments Only(3)(4)(5)                       0.1%      -5.3%
    IRR - Exited Investments(6)                     14.7%      17.3%
    Original Investments and Commitments         $24,153    $20,319
    Total Exits and Prepayments of Original
     Investments                                 $11,918     $8,732
    Total Interest, Dividends and Fees
     Collected                                    $4,408     $3,156
    Total Net Realized (Loss) Gain on
     Investments                                    $159       $236
    Current Cost of Investments                  $10,295     $9,689
    Current Fair Value of Investments             $6,185     $5,657
    Current Fair Value of Investments as a
     % of Total Investments at Fair Value          100.0%      91.5%
    Net Unrealized
     Appreciation/(Depreciation)                 $(4,110)   $(4,032)
    Non-Accruing Loans at Face                    $1,025       $943
    Non-Accruing Loans at Fair Value                $310       $271
    Equity Interest at Fair Value(4)              $1,724     $1,543
    Debt to EBITDA(7)(8)(9)                          6.0        6.1
    Interest Coverage(7)(9)                          2.1        2.1
    Debt Service Coverage(7)(9)                      1.7        1.7
    Average Age of Companies(9)                   31 yrs     30 yrs
    Diluted Ownership Percentage(4)                   41%        40%
    Average Sales(9)(10)                            $149       $148
    Average EBITDA(9)(11)                            $31        $31
    Average EBITDA Margin                           20.8%      21.2%
    Total Sales(9)(10)                           $21,153    $19,215
    Total EBITDA(9)(11)                           $3,648     $3,430
    % of Senior Loans(9)(12)                          50%        49%
    % of Loans with Lien(9)(12)                       91%        90%

    (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.  Investments in
          interest rate derivative agreements are excluded.
    (2)   Assumes investments are exited at realizable based on anticipated
          proceeds to be received upon settlement or maturity.
    (3)   Assumes investments are exited at current GAAP fair value.
    (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)   Includes exited securities of existing portfolio companies.
    (7)   These amounts do not include investments in which we own only
          equity.
    (8)   For portfolio companies with a nominal EBITDA amount, the portfolio
          company's maximum debt leverage is limited to 15 times EBITDA.
    (9)   Excludes investments in structured products, managed funds and
          American Capital, LLC.
    (10)  Sales of the most recent twelve months, or when appropriate, the
          forecasted twelve months.
    (11)  EBITDA of the most recent twelve months, or when appropriate, the
          forecasted twelve months.
    (12)  As a percentage of our total debt investments.

SHAREHOLDER CALL

American Capital invites shareholders, prospective shareholders and analysts to attend the shareholder call on August 5, 2009 at 11:00 am ET. The shareholder call can be accessed through a free live webcast at www.AmericanCapital.com or by dialing (877) 209-9919 (U.S. domestic) or +1 (612) 288-0329 (international). Please advise the operator you are dialing in for the American Capital shareholder call.

A slide presentation will accompany the shareholder call and will be available at www.AmericanCapital.com in advance of the shareholder call. Select the Q2 2009 Earnings Presentation link to download and print the presentation.

An archived audio replay of the shareholder call combined with the slide presentation will be made available on our website after the call. In addition, there will be a phone recording available from 3:00 pm ET August 5, 2009 until 11:59 pm ET August 19, 2009. If you are interested in hearing the recording of the presentation, please dial (800) 475-6701 (U.S. domestic) or +1 (320) 365-3844 (international). The access code for both domestic and international callers is 107656.

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 currently has $11 billion in capital resources under management and ten offices in the U.S., Europe and Asia. 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, 2008 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.

Contact:
Investors - (301) 951-5917

SOURCE: American Capital Ltd.

www.americancapital.com