| American Capital Announces Q1 2009 Earnings | ||||
Bethesda, MD – May 5, 2009 – American Capital Ltd. (“ACAS” or the “Company”) (Nasdaq: ACAS) announced net operating income (“NOI”) for the quarter ended March 31, 2009 of $64 million, or $0.31 per diluted share. Earnings (loss) less appreciation and depreciation (“Realized (Loss) Earnings”) for the quarter was $(55) million, or $(0.27) per diluted share. For the quarter ended March 31, 2009, there was a net loss of $(547) million, or $(2.65) per diluted share. Q1 2009 FINANCIAL HIGHLIGHTS
2009 DIVIDENDS NET OPERATING INCOME REALIZED (LOSS) EARNINGS NET LOSS For the quarter ended March 31, 2009, net unrealized depreciation of portfolio investments totaled $(525) million. The primary components of the net unrealized depreciation were as follows:
FINANCIAL HIGHLIGHTS In the first quarter of 2009, $79 million of proceeds were received from realizations of portfolio investment repayments and exits. There was $40 million in new committed investments in the quarter. The weighted average effective interest rate on the Company’s debt investments as of March 31, 2009, was 9.5%, 120 basis points lower than as of December 31, 2008. "Although we are still going through a severe recession, the recent growth in investment spreads slowed significantly during the first quarter of 2009, compared to the prior quarter, which is a positive indicator that we are nearing the bottom of this cycle," said Malon Wilkus, Chairman and Chief Executive Officer. “We experienced approximately $150 million of the depreciation due to widening investment spreads and approximately $450 million due to a decline in portfolio performance and credit impairment. While it is too early to call a bottom to the recession and asset depreciation, we are cautiously optimistic based on recent economic data showing that the rate of economic decline has significantly slowed. Additionally, while we are not pleased with the amount of depreciation on our portfolio in the quarter, it is a significant improvement from last quarter. We had hoped that the Financial Accounting Standards Board would make changes that would have positively impacted our valuations when they proposed amendments to SFAS 157 in March. However, despite the efforts of several BDCs the final amendments to SFAS 157 differed markedly from the initial proposal and had no impact on our valuations. We continue to believe that our valuations under GAAP reflect depreciation that does not correspond to what we believe is the Realizable Value of our portfolio. We believe that our Realizable NAV per share is $17.07 as of March 31, 2009.” FINANCING UPDATE AND COVENANT BREACHES “We have continued to work with our lenders to reach a resolution of our defaults,” said John Erickson, Chief Financial Officer. “Once we reported the defaults in March, we engaged Miller Buckfire & Co. LLC, a leading restructuring advisory firm, to represent us in the negotiations. Our lenders have also engaged financial and legal advisors and we are required to reimburse them for this expense. We are also paying higher interest rates due to the defaults and credit downgrades so, unfortunately, we will see an increase in our expenses until we reach a resolution. In the quarter, we also retired $20 million of debt in one of our securitizations by purchasing one AA rated bond for $3 million, (or 18% of its face value), which resulted in a gain of $17 million. With our current restructuring discussions underway, we are unlikely to purchase more debt in the market until we reach an overall resolution of our defaults.” Asset value declines have also caused the Company to continue to be below the 200% asset coverage ratio set forth in the Investment Company Act of 1940, which generally restricts the Company 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. “At our Annual Meeting on June 11, we are asking our stockholders to approve a charter amendment allowing up to four reverse stock splits over the next year,” noted Sam Flax, Executive Vice President and General Counsel. “Our Board of Directors may determine a reverse stock split is in the Company’s best interests if, among other factors, our continued stock exchange listing is in doubt. If we do complete a reverse split, it will automatically adjust the authority our stockholders granted us in February to sell a limited number of shares below net asset value and, while SEC approval will be required, we hope for an appropriate adjustment to the strike price of our options and the number of shares for which the options would be exercised.” PORTFOLIO LIQUIDITY AND PERFORMANCE As of March 31, 2009, loans with a fair value of $214 million were on non-accrual. The $214 million fair value of non-accruing loans represented 4.4% of total loans at fair value as of March 31, 2009, compared to the $150 million fair value of non-accrual loans representing 2.9% of total loans at fair value as of December 31, 2008. “During the quarter we completed the purchase of the remaining outstanding shares of our portfolio company European Capital,” said Tom McHale, Senior Vice President, Finance. “We had expected to value our investment in European Capital at its NAV as a result of this purchase, but European Capital breached some of its debt covenants in the quarter. Although its lenders have agreed to forbear for a period of time, the existing defaults could prevent our realization of NAV. Miller Buckfire & Co. LLC has also been engaged to assist in restructuring the credit of European Capital and Citigroup Global Markets Inc. has been engaged to advise on strategic alternatives. If European Capital successfully restructures its debt, this may result in appreciation of American Capital’s investment in European Capital.”
AMERICAN CAPITAL, LTD.
CONSOLIDATED BALANCE SHEETS
As of March 31, 2009, December 31, 2008 and March 31, 2008
(in millions)
Q1 2009
Versus Q4
2008
Q1 Q4 ------------
2009 2008 $ %
---- ---- --- ---
(unaudited)
Assets
Investments at fair value
(cost of $10,707, $10,691
and $10,292, respectively) $6,849 $7,427 $(578) -8%
Cash and cash equivalents 88 209 (121) -58%
Restricted cash and cash equivalents 68 71 (3) -4%
Interest receivable 44 44 - -
Other 162 159 3 2%
--- --- -- --
Total assets $7,211 $7,910 $(699) -9%
====== ====== ===== ==
Liabilities and Shareholders' Equity
Debt $4,377 $4,428 $(51) -1%
Derivative and option agreements
(cost of $0, $(20) and $1,
respectively) 102 222 (120) -54%
Accrued dividends payable - - - -
Other 78 105 (27) -26%
-- --- --- ---
Total liabilities 4,557 4,755 (198) -4%
----- ----- ---- --
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 210.0 issued and
215.4, 204.7 and 203.1 outstanding,
respectively 2 2 - -
Capital in excess of par value 6,591 6,545 46 1%
Undistributed net realized earnings 21 76 (55) -72%
Net unrealized depreciation of
investments (3,960) (3,468) (492) -14%
------ ------ ---- ---
Total shareholders' equity 2,654 3,155 (501) -16%
----- ----- ---- ---
Total liabilities and
shareholders' equity $7,211 $7,910 $(699) -9%
====== ====== ===== ==
Q1 2009 Versus
Q1 2008
Q1 ----------------
2008 $ %
---- --- ---
(unaudited)
Assets
Investments at fair value (cost of
$10,707, $10,691 and $10,292,
respectively) $9,639 $(2,790) -29%
Cash and cash equivalents 37 51 138%
Restricted cash and cash equivalents 280 (212) -76%
Interest receivable 55 (11) -20%
Other 208 (46) -22%
--- --- ---
Total assets $10,219 $(3,008) -29%
======= ======= ===
Liabilities and Shareholders'
Equity
Debt $4,079 $298 7%
Derivative and option
agreements (cost of $0, $(20)
and $1, respectively) 150 (48) -32%
Accrued dividends payable 196 (196) -100%
Other 75 3 4%
-- -- --
Total liabilities 4,500 57 1%
----- -- --
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 210.0 issued and
215.4, 204.7 and 203.1 outstanding,
respectively 2 - -
Capital in excess of par value 6,301 290 5%
Undistributed net realized earnings 241 (220) -91%
Net unrealized depreciation of
investments (825) (3,135) -380%
---- ------ ----
Total shareholders' equity 5,719 (3,065) -54%
----- ------ ---
Total liabilities and
shareholders' equity $10,219 $(3,008) -29%
======= ======= ===
AMERICAN CAPITAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Twelve Months Ended March 31, 2009 and 2008
(in millions, except per share data)
(unaudited)
Three Months
Three Months Ended
Ended March 31, 2009
March 31, Versus 2008
--------- -----------
2009 2008 $ %
---- ---- --- ---
OPERATING INCOME:
Investing operating income(1) $181 $255 $(74) -29%
Asset management and advisory operating
income(2) 14 37 (23) -62%
-- -- --- ---
Total operating income 195 292 (97) -33%
--- --- --- ---
OPERATING EXPENSES:
Interest 52 63 (11) -17%
Salaries, benefits and stock-based
compensation 53 56 (3) -5%
General and administrative 26 23 3 13%
-- -- -- --
Total operating expenses 131 142 (11) -8%
--- --- --- --
OPERATING INCOME BEFORE INCOME TAXES 64 150 (86) -57%
-- --- --- ---
Provision for income taxes - 1 (1) -100%
-- -- -- ----
NET OPERATING INCOME 64 151 (87) -58%
-- --- --- ---
Gain on extinguishment of debt, net 12 - 12 100%
-- -- -- ---
Net realized (loss) gain on investments
Portfolio company investments (79) 28 (107) NM
Taxes on net realized gain - (1) 1 100%
Foreign currency transactions (2) 5 (7) NM
Derivative and option agreements (50) 1 (51) NM
--- -- --- --
Total net realized (loss) gain (131) 33 (164) NM
---- -- ---- --
REALIZED (LOSS) EARNINGS (55) 184 (239) NM
--- --- ---- --
Net unrealized (depreciation) appreciation
of investments
Portfolio company investments (525) (997) 472 47%
Foreign currency translation (69) 73 (142) NM
Derivative and option
agreements 102 (73) 175 NM
--- --- --- --
Total net unrealized depreciation (492) (997) 505 51%
---- ---- --- --
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ("NET LOSS") $(547) $(813) $266 33%
===== ===== ==== ==
NET OPERATING INCOME PER COMMON SHARE*:
Basic $0.31 $0.77 $(0.46) -60%
Diluted $0.31 $0.77 $(0.46) -60%
REALIZED (LOSS) EARNINGS PER COMMON SHARE*:
Basic $(0.27) $0.94 $(1.21) NM
Diluted $(0.27) $0.94 $(1.21) NM
NET LOSS PER COMMON SHARE*:
Basic $(2.65) $(4.16) $1.51 36%
Diluted $(2.65) $(4.16) $1.51 36%
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic 206.6 195.2 11.4 6%
Diluted 206.6 195.2 11.4 6%
DIVIDENDS DECLARED PER COMMON SHARE $- $1.01 $(1.01) -100%
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.
AMERICAN CAPITAL, LTD.
OTHER FINANCIAL INFORMATION
Three Months Ended March 31, 2009, December 31, 2008
and March 31, 2008
(in millions, except per share data)
(Unaudited)
Q1 2009
Versus Q4 2008
Q1 Q4 --------------
2009 2008 $ %
------ ------ --- ---
Assets Under Management:
American Capital Assets at
Fair Value(1) $7,211 $7,910 $(699) -9%
Externally Managed Assets
at Fair Value(2) 3,659 5,477 (1,818) -33%
----- ----- ------ ---
Total $10,870 $13,387 $(2,517) -19%
======= ======= ======= ===
Capital Resources Under Management:
American Capital Assets at
Fair Value plus Available
Capital Resources(1) $7,234 $8,430 $(1,196) -14%
Externally Managed Assets
at Fair Value plus
Available Capital
Resources(2) 3,884 5,956 (2,072) -35%
----- ----- ------ ---
Total $11,118 $14,386 $(3,268) -23%
======= ======= ======= ===
New Investments:
Senior Debt $27 $288 $(261) -91%
Subordinated Debt 5 16 (11) -69%
Preferred Equity 8 22 (14) -64%
Common Equity - 11 (11) -100%
Structured Products - - - -
-- -- -- --
Total $40 $337 $(297) -88%
=== ==== ===== ===
Investments in Managed Funds $- $250 $(250) -100%
Financing for Private Equity
Buyouts - 27 (27) -100%
Direct Investments - 9 (9) -100%
American Capital Sponsored
Buyouts - - - -
Structured Products - - - -
Add-on Financing for Working
Capital in Distressed
Situations 25 37 (12) -32%
Add-on Financing for Growth
and Working Capital - 10 (10) -100%
Add-on Financing for Acquisitions - 2 (2) -100%
Add-on Financing for
Recapitalizations 15 2 13 650%
-- -- -- ---
Total $40 $337 $(297) -88%
=== ==== ===== ===
Realizations:
Scheduled Principal
Amortization $10 $11 $(1) -9%
Loan Syndications and Sales 8 6 2 33%
Principal Prepayments 42 112 (70) -63%
Payment of Accrued Payment-in-
kind Interest and Dividends and
Original Issue Discount 4 4 - -
Sale of Equity Investments 15 113 (98) -87%
-- --- --- ---
Total $79 $246 $(167) -68%
=== ==== ===== ===
Appreciation, Depreciation, Gain
and Loss:
Gross Realized Gain $8 $8 $- -
Gross Realized Loss (87) (40) (47) -118%
--- --- --- ----
Portfolio Net Realized
(Loss) Gain (79) (32) (47) -147%
Taxes on Realized Net Gain - (1) 1 100%
Foreign Currency (2) 1 (3) NM
Option Agreement (44) - (44) -100%
Derivative Agreements (6) (15) 9 60%
-- --- -- --
Net Realized (Loss) Gain (131) (47) (84) -179%
---- --- --- ----
Gross Unrealized Appreciation
of Private Finance Portfolio
Investments 33 15 18 120%
Gross Unrealized Depreciation
of Private Finance Portfolio
Investments (401) (728) 327 45%
Impact of Adopting SFAS No. 157 (52) (248) 196 79%
--- ---- --- --
Net Unrealized Depreciation
of Private Finance Portfolio
Investments (420) (961) 541 56%
Net Unrealized Appreciation
(Depreciation) of Managed
Funds 25 (280) 305 NM
Net Unrealized Depreciation
of American Capital, LLC (162) (141) (21) -15%
Net Unrealized Depreciation
of Structured Products (46) (206) 160 78%
Reversal of Prior Period
Net Unrealized Depreciation
(Appreciation) Upon
Realization 78 40 38 95%
-- -- -- --
Net Unrealized Depreciation
of Portfolio Investments (525) (1,548) 1,023 66%
Foreign Currency Translation (69) (24) (45) -188%
Derivative Agreements 53 (109) 162 NM
Reversal of Prior Period
Net Unrealized Depreciation
(Appreciation) on Option
Agreements 49 - 49 100%
-- -- -- ---
Net Unrealized Depreciation
of Investments (492) (1,681) 1,189 71%
---- ------ ----- --
Net Gains, Losses,
Appreciation and
Depreciation $(623) $(1,728) $1,105 -64%
===== ======= ====== ===
Other Financial Data:
Net Asset Value per Share $12.32 $15.41 $(3.09) -20%
Net Asset Value per Share
Based on Realizable Value
(3) $17.07 $20.63 $(3.56) -17%
Financial Liabilities at
Cost $4,377 $4,428 $(51) -1%
Financial Liabilities at
Fair Value $3,212 $3,172 $40 1%
Market Capitalization $403 $663 $(260) -39%
Total Enterprise Value $4,692 $4,882 $(190) -4%
Credit Quality:
Weighted Average Effective
Interest Rate on Debt
Investments
at Period End 9.5% 10.7% -1.2% -11%
Loans on Non-Accrual at
Face $1,103 $871 $232 27%
Loans on Non-Accrual at Fair
Value $214 $150 $64 43%
Past Due Loans at Face $41 $50 $(9) -18%
Past Due and Non-Accrual
Loans at Face as a
Percentage of Total Loans 18.1% 14.5%
Non-Accrual Loans at Fair
Value as a Percentage of
Total Loans 4.4% 2.9%
Number of Portfolio Companies
on Non-Accrual and Past Due 38 35
Debt to Equity Conversions at
Cost $35 $- $35 100%
Return on Equity:
LTM Net Operating Income
Return on Average Equity
at Cost 6.1% 7.5%
LTM Realized Earnings Return
on Average Equity at Cost 4.3% 8.0%
LTM Loss on Average Equity -64.2% -60.0%
Current Quarter Net Operating
Income Return on Average
Equity at Cost Annualized 3.9% 2.6%
Current Quarter Realized
(Loss) Earnings Return on
Average Equity at Cost
Annualized -3.4% -0.2%
Current Quarter Loss on
Average Equity Annualized -75.4% -164.0%
2009 Versus 2008
Q1 ----------------
2008 $ %
------ --- ---
Assets Under Management:
American Capital Assets at Fair Value(1) $10,219 $(3,008) -29%
Externally Managed Assets at Fair
Value(2) 4,874 (1,215) -25%
----- ------ ---
Total $15,093 $(4,223) -28%
======= ======= ===
Capital Resources Under Management:
American Capital Assets at Fair Value
plus Available Capital Resources(1) $12,412 $(5,178) -42%
Externally Managed Assets at Fair Value
plus Available Capital Resources(2) 6,268 (2,384) -38%
----- ------ ---
Total $18,680 $(7,562) -40%
======= ======= ===
New Investments:
Senior Debt $510 $(483) -95%
Subordinated Debt 113 (108) -96%
Preferred Equity 115 (107) -93%
Common Equity 123 (123) -100%
Structured Products 48 (48) -100%
-- --- ----
Total $909 $(869) -96%
==== ===== ===
Investments in Managed Funds $400 $(400) -100%
Financing for Private Equity Buyouts - - -
Direct Investments 113 (113) -100%
American Capital Sponsored Buyouts 303 (303) -100%
Structured Products 48 (48) -100%
Add-on Financing for Working Capital
in Distressed Situations 30 (5) -17%
Add-on Financing for Growth and Working
Capital 13 (13) -100%
Add-on Financing for Acquisitions - - -
Add-on Financing for Recapitalizations 2 13 650%
-- -- ---
Total $909 $(869) -96%
==== ===== ===
Realizations:
Scheduled Principal Amortization $17 $(7) -41%
Loan Syndications and Sales 274 (266) -97%
Principal Prepayments 240 (198) -83%
Payment of Accrued Payment-in-kind
Interest and Dividends and Original Issue
Discount 20 (16) -80%
Sale of Equity Investments 380 (365) -96%
--- ---- ---
Total $931 $(852) -92%
==== ===== ===
Appreciation, Depreciation, Gain and Loss:
Gross Realized Gain $51 $(43) -84%
Gross Realized Loss (23) (64) -278%
--- --- ----
Portfolio Net Realized (Loss) Gain 28 (107) NM
Taxes on Realized Net Gain (1) 1 100%
Foreign Currency 5 (7) NM
Option Agreement - (44) -100%
Derivative Agreements 1 (7) NM
-- -- --
Net Realized (Loss) Gain 33 (164) NM
-- ---- --
Gross Unrealized Appreciation of
Private Finance Portfolio Investments 129 (96) -74%
Gross Unrealized Depreciation of
Private Finance Portfolio Investments (276) (125) -45%
Impact of Adopting SFAS No. 157 (180) 128 71%
---- --- --
Net Unrealized Depreciation of Private
Finance Portfolio Investments (327) (93) -28%
Net Unrealized Appreciation
(Depreciation) of Managed Funds (123) 148 NM
Net Unrealized Depreciation of
American Capital, LLC (140) (22) -16%
Net Unrealized Depreciation of
Structured Products (361) 315 87%
Reversal of Prior Period Net
Unrealized Depreciation
(Appreciation) Upon Realization (46) 124 NM
--- --- --
Net Unrealized Depreciation of
Portfolio Investments (997) 472 47%
Foreign Currency Translation 73 (142) NM
Derivative Agreements (73) 126 NM
Reversal of Prior Period Net Unrealized
Depreciation (Appreciation) on Option
Agreements - 49 100%
-- -- ---
Net Unrealized Depreciation of
Investments (997) 505 51%
---- --- --
Net Gains, Losses,
Appreciation and Depreciation $(964) $341 35%
===== ==== ==
Other Financial Data:
Net Asset Value per Share $28.16 $(15.84) -56%
Net Asset Value per Share Based
on Realizable Value(3) $31.39 $(14.32) -46%
Financial Liabilities at Cost $4,079 $298 7%
Financial Liabilities at Fair Value $3,875 $(663) -17%
Market Capitalization $6,937 $(6,534) -94%
Total Enterprise Value $10,978 $(6,286) -57%
Credit Quality:
Weighted Average Effective Interest Rate
on Debt Investments at Period End 11.2% -1.7% -15%
Loans on Non-Accrual at Face $375 $728 194%
Loans on Non-Accrual at Fair Value $80 $134 168%
Past Due Loans at Face $106 $(65) -61%
Past Due and Non-Accrual Loans at Face
as a Percentage of Total Loans 8.2%
Non-Accrual Loans at Fair Value as a
Percentage of Total Loans 1.5%
Number of Portfolio Companies on
Non-Accrual and Past Due 24
Debt to Equity Conversions at Cost $40 $(5) -13%
Return on Equity:
LTM Net Operating Income Return on
Average Equity at Cost 10.9%
LTM Realized Earnings Return on
Average Equity at Cost 15.0%
LTM Loss on Average Equity -4.1%
Current Quarter Net Operating Income
Return on Average Equity at Cost
Annualized 9.4%
Current Quarter Realized (Loss)
Earnings Return on Average Equity at
Cost Annualized 11.5%
Current Quarter Loss on Average Equity
Annualized -53.5%
NM = Not meaningful
(1) Includes American Capital's investment in its externally managed
funds.
(2) Includes European Capital (for Q1 2008 and Q4 2008), American Capital
Equity I, American Capital Equity II, ACAS CLO-1 and ACAS CRE CDO
2007-1.
(3) 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 March 31, 2009
(in millions)
The following table summarizes the current GAAP cost basis and fair value
of our investments as of March 31, 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
GAAP GAAP Realizable Realizable
Cost Fair Value Value and
Asset Class Basis Value (Unaudited) GAAP Fair Value
------------- ------- ------- ------------ ---------------
Private finance $8,326 $6,168 $6,663 $495
Managed funds 1,355 517 517 -
Structured products 958 143 776 633
American Capital, LLC 68 11 11 -
Derivatives, net - (92) (198) (106)
-- --- ---- ----
Total $10,707 $6,747 $7,769 $1,022
======= ====== ====== ======
USE OF NON-GAAP FINANCIAL INFORMATION
Portfolio Statistics(1)
($ in millions, Pre-
unaudited) 2000 2000 2001 2002 2003
----------------------- ---- ---- ---- ---- ----
IRR - Realizable
Value - All
Investments(2) 7.7% 8.0% 18.3% 7.8% 21.3%
IRR - GAAP Fair
Value - All
Investments(3) 7.7% 8.0% 18.3% 7.7% 21.3%
IRR - GAAP Fair
Value - Equity
Investments
Only(3)(4)(5) 1.6% 12.1% 46.9% 11.1% 29.6%
IRR – Exited
Investments(6) 7.7% 8.0% 20.8% 10.5% 23.5%
Original Investments
and Commitments $780 $285 $376 $961 $1,432
Total Exits and
Prepayments of
Original Investments $690 $285 $336 $706 $1,083
Total Interest,
Dividends and Fees
Collected $302 $105 $148 $314 $374
Total Net Realized
(Loss) Gain on
Investments $(118) $(39) $9 $(51) $142
Current Cost of
Investments $82 $- $37 $233 $317
Current Fair Value of
Investments $43 $- $6 $132 $381
Current Fair
Value of Investments
as a % of Total
Investments at
Fair Value 0.6% - 0.1% 1.9% 5.6%
Net Unrealized
Appreciation/
(Depreciation) $(39) $- $(31) $(101) $64
Non-Accruing Loans
at Face $20 $- $50 $57 $-
Non-Accruing Loans
at Fair Value $6 $- $2 $11 $-
Equity Interest at
Fair Value(4) $31 $- $- $- $159
Debt to EBITDA
(7)(8)(9) 6.3 $- NM 5.7 4.3
Interest Coverage(7)(9) 3.3 - NM 1.4 2.0
Debt Service
Coverage(7)(9) 2.6 - NM 0.9 1.9
Average Age of
Companies(9) 63 yrs - 26 yrs 47 yrs 40 yrs
Diluted Ownership
Percentage(4) 54% - 83% 37% 52%
Average Sales(9)(10) $146 $- $12 $61 $198
Average EBITDA(9)(11) $11 $- $- $11 $39
Average EBITDA Margin 7.5% - - 18.0% 19.7%
Total Sales(9)(10) $374 $- $248 $233 $1,392
Total EBITDA(9)(11) $29 $- $5 $26 $195
% of Senior Loans(9)(12) 42% - 5% 70% 61%
% of Loans with
Lien(9)(12) 100% - 100% 100% 100%
Portfolio Statistics(1)
($ in millions,
unaudited) 2004 2005 2006 2007
------------------------ ---- ---- ---- ----
IRR - Realizable Value
- All Investments(2) 13.7% 2.9% 8.6% -1.9%
IRR - GAAP Fair Value
- All Investments(3) 13.1% 2.1% 6.3% -14.4%
IRR - GAAP Fair Value
- Equity Investments
Only(3)(4)(5) 27.1% -15.1% 13.8% -11.7%
IRR – Exited
Investments(6) 21.6% 25.2% 15.4% 11.4%
Original Investments
and Commitments $2,266 $4,527 $5,157 $7,315
Total Exits and
Prepayments of
Original Investments $1,655 $2,005 $2,813 $1,888
Total Interest,
Dividends and Fees
Collected $570 $881 $782 $669
Total Net Realized
(Loss) Gain on
Investments $166 $322 $66 $(36)
Current Cost of
Investments $606 $2,237 $2,027 $4,264
Current Fair Value of
Investments $350 $1,159 $1,499 $2,612
Current Fair Value of
Investments as a % of
Total Investments at
Fair Value 5.1% 17.0% 21.9% 38.2%
Net Unrealized Appreciation/
(Depreciation) $(256) $(1,078) $(528) $(1,652)
Non-Accruing Loans at Face $72 $90 $404 $380
Non-Accruing Loans at
Fair Value $13 $37 $67 $75
Equity Interest at
Fair Value(4) $57 $264 $501 $682
Debt to EBITDA(7)(8)(9) 7.6 4.8 5.3 6.3
Interest Coverage(7)(9) 1.6 2.3 2.3 1.9
Debt Service Coverage(7)(9) 1.3 1.6 1.8 1.7
Average Age of
Companies(9) 42 yrs 31 yrs 26 yrs 30 yrs
Diluted Ownership
Percentage(4) 45% 54% 35% 47%
Average Sales(9)(10) $109 $114 $137 $199
Average EBITDA(9)(11) $23 $22 $33 $39
Average EBITDA Margin 21.1% 19.3% 24.1% 19.6%
Total Sales(9)(10) $1,341 $2,619 $5,980 $10,889
Total EBITDA(9)(11) $232 $363 $979 $1,669
% of Senior Loans(9)(12) 53% 64% 42% 61%
% of Loans with Lien(9)(12) 92% 92% 94% 94%
Portfolio Statistics (1) Pre-2000
($ in millions, - 2009 2004 - 2009
unaudited) 2008 2009 Aggregate Aggregate
------------------------ ---- ---- --------- ---------
IRR - Realizable Value - All
Investments(2) -2.6% - 7.3% 4.7%
IRR - GAAP Fair Value - All
Investments(3) -18.4% - 4.0% -0.2%
IRR - GAAP Fair Value - Equity
Investments Only(3)(4)(5) -41.5% - 1.8% -3.1%
IRR – Exited Investments(6) 75.0% - 16.1% 20.6%
Original Investments and
Commitments $1,014 $- $24,113 $20,279
Total Exits and Prepayments of
Original Investments $15 $- $11,476 $8,376
Total Interest, Dividends and
Fees Collected $105 $- $4,250 $3,007
Total Net Realized (Loss) Gain
on Investments $6 $- $467 $524
Current Cost of Investments $904 $- $10,707 $10,038
Current Fair Value of Investments $657 $- $6,839 $6,277
Current Fair Value of Investments
as a % of Total Investments at
Fair Value 9.6% - 100.0% 91.8%
Net Unrealized Appreciation/
(Depreciation) $(247) $- $(3,868) $(3,761)
Non-Accruing Loans at Face $30 $- $1,103 $976
Non-Accruing Loans at Fair Value $3 $- $214 $195
Equity Interest at Fair Value(4) $136 $- $1,830 $1,640
Debt to EBITDA(7)(8)(9) 6.2 - 5.8 5.9
Interest Coverage(7)(9) 1.8 - 2.0 2.0
Debt Service Coverage(7)(9) 1.5 - 1.7 1.7
Average Age of Companies(9) 26 yrs - 31 yrs 30 yrs
Diluted Ownership Percentage(4) 30% - 44% 43%
Average Sales(9)(10) $128 $- $159 $159
Average EBITDA(9)(11) $33 $- $33 $34
Average EBITDA Margin 25.8% - 20.8% 21.4%
Total Sales(9)(10) $1,244 $- $24,320 $22,073
Total EBITDA(9)(11) $277 $- $3,775 $3,520
% of Senior Loans(9)(12) 26% - 54% 53%
% of Loans with Lien(9)(12) 55% - 90% 89%
(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
government securities and 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 An archived audio of the shareholder call combined with the slide presentation will be made available on our website after the call on May 6, 2009. In addition, there will be a phone recording available from 3:00 pm ET May 6, 2009 until 11:59 pm ET May 20, 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 996586. 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 $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 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: SOURCE: American Capital Ltd. www.americancapital.com |
