2014

American Capital Reports Net Operating Income Before Income Taxes Of $0.06 Per Diluted Share, Net Earnings Of $0.25 Per Diluted Share And Net Asset Value Per Share Of $19.29

BETHESDA, Md., May 7, 2014 /PRNewswire/ -- American Capital, Ltd. ("American Capital" or the "Company") (NASDAQ: ACAS) announced net operating income ("NOI") before income taxes for the quarter ended March 31, 2014 of $16 million, or $0.06 per diluted share.  NOI for the quarter ended March 31, 2014 was $5 million, or $0.02 per diluted share.  Net earnings for the quarter ended March 31, 2014 was $70 million, or $0.25 per diluted share.  As of March 31, 2014, net asset value ("NAV") per share was $19.29, a 7% annualized, or $0.32 per share, increase from the December 31, 2013 NAV per share of $18.97.

Q1 2014 FINANCIAL SUMMARY

  • $19.29 NAV per share
    • $0.32 per share, or 7%, annualized increase
  • $0.06 NOI before income taxes per diluted share, or $16 million
    • 69% decline from Q4 2013
    • $0.02 NOI after income taxes per diluted share, or $5 million
  • $0.09 net realized earnings per diluted share, or $26 million
    • $0.12 per diluted share, or 57%, decline from Q4 2013
  • $0.16 net unrealized appreciation per diluted share, or $44 million
    • $1.02 per diluted share, or $283 million, improvement over Q4 2013
  • $0.25 net earnings per diluted share, or $70 million
    • 6% annual return on average shareholders' equity
    • $0.91 per diluted share, or $252 million, improvement over Q4 2013
  • $442 million of cash proceeds from realizations
    • $104 million dividend distribution from European Capital Limited ("European Capital")
    • Plus, $195 million in proceeds from American Capital Asset Management, LLC ("ACAM") related to the repayment of ACAM's initial investment in American Capital Senior Floating, Ltd. ("ACSF")
  • 8.9 million shares of American Capital common stock repurchased, totaling $137 million
    • $15.38 average price per share
    • $0.13 accretive to NAV per share
  • Refinanced $450 million Secured Term Loan
    • Reduced interest rate from LIBOR + 3.00% to LIBOR + 2.75%
    • Reduced LIBOR floor from 1.00% to 0.75%
    • Extended maturity date by one year to August 2017

American Capital also announced that it has retained Goldman Sachs as a financial advisor to the Company as it evaluates separating its investment assets from its asset management business.  As discussed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2013, the Company is undertaking a process to evaluate its corporate structure to determine whether that structure and the various legal, regulatory and accounting regimes under which it operates are the optimum means for the operation and capitalization of its business.  There is no assurance that this evaluation process will result in any changes to the Company's corporate structure or operations or that the Company will provide any further communications regarding the progress or results of this evaluation process.

"We have made progress evaluating our corporate structure," said Malon Wilkus, Chairman and Chief Executive Officer.  "In addition to engaging Goldman Sachs, our Board of Directors suspended our Share Repurchase and Dividend Program, as we evaluate the capital requirements of our alternatives."

"Also, subsequent to quarter end, we created ACE III, our fifth fund or company investing in private equity, which will have $1.1 billion of assets and committed capital," continued Mr. Wilkus.  "This significant development in our asset management business expands our base of institutional investors and provides the opportunity to become their long-term asset management partner.  ACE III increases ACAM's earning assets under management by 7%, and it will earn fees and participate in investment gains.  It also will generate liquidity of up to approximately $640 million."

"With our substantial liquidity, excellent Leverage Finance Team and an unlevered balance sheet, we have begun investing in senior floating rate loans," said Mr. Wilkus.  "Late in the first quarter, we invested $199 million in these loans, and have invested approximately $140 million more quarter to date and intend on investing significantly more during the remaining portion of this quarter and the year.  This will have a positive impact on earnings starting in the second quarter."

PORTFOLIO VALUATION
For the quarter ended March 31, 2014, net unrealized appreciation, before income taxes, totaled $32 million.  The primary components of the net unrealized appreciation were:

  • $121 million unrealized appreciation in American Capital's investment in ACAM, primarily due to an increase in actual and forecasted growth and multiple expansion;
  • $60 million unrealized appreciation in American Capital's investment in European Capital, driven by a reduction in the discount applied to the NAV of European Capital and net unrealized appreciation of European Capital's underlying investment portfolio.
    • The Company's equity investment in European Capital was valued at $801 million as of March 31, 2014, or 87% of European Capital's NAV, compared to $841 million as of December 31, 2013 or 85% of European Capital's NAV; partially offset by
  • $146 million net unrealized depreciation from American Capital's private finance portfolio primarily driven by the ACE III transaction and declining company specific performance.

"American Capital Asset Management appreciated this quarter by $121 million," said John Erickson, Chief Financial Officer.  "The appreciation was in part due to an improving outlook for AGNC and MTGE, the two mortgage REITs ACAM manages, and the creation of ACE III.  Also, ACSF, a business development company managed by ACAM and focused on senior floating rate loans, successfully completed its IPO.  By quarter end, ACSF had fully invested the IPO proceeds at attractive risk adjusted yields.  Like AGNC and MTGE, we expect ACSF to perform and grow as it has quite attractive investment opportunities in a very large market."

PORTFOLIO REALIZATIONS AND PERFORMANCE
In the first quarter of 2014, $442 million of cash proceeds were received from realizations of portfolio investments, including a dividend distribution of $104 million from European Capital and $195 million in proceeds from ACAM related to the repayment of ACAM's initial investment in ACSF.  American Capital made $321 million in new committed investments during the quarter, including $199 million of senior floating rate loans.

The weighted average effective interest rate on American Capital's debt investments as of March 31, 2014 was 9.1%, 90 basis points lower than the December 31, 2013 rate of 10.0%.  The primary drivers of the decline in the weighted average effective interest rate relates to the new investments in senior floating rate loans at quarter end and new non-accruing loans as a result of weaker company performance.

As of March 31, 2014, loans with a fair value of $165 million were on non-accrual, representing 9.2% of total loans at fair value, compared to $154 million fair value of non-accrual loans, or 9.7% of total loans at fair value as of December 31, 2013.  The $11 million increase in the fair value of loans on non-accrual was generally driven by loans placed on non-accrual status due to weaker portfolio company performance.  Total loans on non-accrual were valued at 52.4% of cost at the end of the quarter, a 1.3% decrease from the prior quarter.  This is an estimate of the amount the Company expects to recover on non-accruing loans.  The estimated loss on total loans at cost, defined as net accumulated depreciation on non-accrual loans plus realized losses on loans during the period, was $150 million, or 7.8%.  Net operating income before income taxes of $0.06 per diluted share during the quarter was reduced by $0.06 per diluted share due to the net impact of debt and equity securities being added and removed from non-accrual status.

"European Capital received €141 million of realizations in the first quarter, which allowed European Capital to distribute €75 million, or $104 million, to American Capital," said Ira Wagner, President, European Private Finance.  "It's also gratifying to report that European Capital increased its NAV by €25 million, or 12% annualized, prior to its distributions to American Capital, and that American Capital's investment in European Capital appreciated $60 million."

STOCK REPURCHASE AND DIVIDEND PROGRAM
American Capital's Board of Directors adopted a program that may provide for repurchases of shares or dividend payments.  Under the program, American Capital may consider quarterly setting an amount to be utilized for stock repurchases or dividends.  Generally, the amount may be utilized for repurchases if the price of American Capital's common stock represents a discount to the NAV of its shares, and the amount may be utilized for the payment of cash dividends if the price of American Capital's common stock represents a premium to the NAV of its shares.

During the quarter, American Capital made open market purchases of 8.9 million shares, or $137 million, of American Capital common stock at an average price of $15.38 per share.  Since the inception of the program in August 2011, American Capital has made open market purchases of 101.6 million shares, or $1.2 billion, of American Capital common stock at an average price of $11.74 per share. This represents 29% of shares outstanding immediately prior to the launch of the program.

In March 2014, American Capital's Board of Directors suspended the program for an indefinite period.

 

AMERICAN CAPITAL, LTD.

CONSOLIDATED BALANCE SHEETS

As of March 31, 2014, December 31, 2013 and March 31, 2013

(in millions, except per share amounts)
















Q1


Q4  


Q1 2014 Versus
Q4 2013


Q1  


Q1 2014 Versus
Q1 2013


2014


2013


$


%


2013


$


%


(unaudited)








(unaudited)





Assets














Investments at fair value (cost of $5,465, $5,548 and $5,694, respectively)

$          5,020


$          5,072


$               (52)


(1%)


$          5,411


$             (391)


(7%)

Cash and cash equivalents

468


315


153


49%


360


108


30%

Restricted cash and cash equivalents

104


74


30


41%


53


51


96%

Interest and dividend receivable

32


38


(6)


(16%)


48


(16)


(33%)

Deferred tax asset, net

419


414


5


1%


452


(33)


(7%)

Other

91


96


(5)


(5%)


79


12


15%

Total assets

$          6,134


$          6,009


$               125


2%


$          6,403


$             (269)


(4%)















Liabilities and Shareholders' Equity














Debt

$             790


$             791


$                 (1)


—%


$             662


$               128


19%

Trade date settlement liability 

202


15


187


 NM 



202


100%

Other

64


77


(13)


(17%)


72


(8)


(11%)

Total liabilities

1,056


883


173


20%


734


322


44%















Shareholders' equity














Undesignated preferred stock, $0.01 par value, 5.0 shares
    authorized, 0 issued and outstanding




—%




—%

Common stock, $0.01 par value, 1,000.0 shares authorized, 267.9, 274.8 and
    303.0 issued and 263.3, 270.2 and 297.8 outstanding, respectively

3


3



—%


3



—%

Capital in excess of par value

6,178


6,296


(118)


(2%)


6,677


(499)


(7%)

Distributions in excess of net realized earnings

(748)


(774)


26


3%


(837)


89


11%

Net unrealized depreciation of investments

(355)


(399)


44


11%


(174)


(181)


(104%)

Total shareholders' equity

5,078


5,126


(48)


(1%)


5,669


(591)


(10%)

Total liabilities and shareholders' equity

$          6,134


$          6,009


$               125


2%


$          6,403


$             (269)


(4%)















NAV per common share outstanding

$          19.29


$18.97


$0.32


2%


$19.04


$0.25


1%

 

 

AMERICAN CAPITAL, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2014 and December 31, 2013

(in millions, except per share data)

(unaudited)











Q1 2014 Versus
Q4 2013



Q1 2014


Q4 2013


$


%











OPERATING REVENUE









Interest and dividend income

$               71


$               92


$             (21)


(23%)


Fee income

13


26


(13)


(50%)


Total operating revenue

84


118


(34)


(29%)











OPERATING EXPENSES









Interest

12


12



—%


Salaries, benefits and stock-based compensation

42


41


1


2%


General and administrative

14


13


1


8%


Total operating expenses

68


66


2


3%











NET OPERATING INCOME BEFORE INCOME TAXES

16


52


(36)


(69%)











Tax provision

(11)


(14)


3


21%


NET OPERATING INCOME

5


38


(33)


(87%)











Net realized gain (loss)









Portfolio company investments

21


12


9


75%


Foreign currency transactions

2


3


(1)


(33%)


Derivative agreements

1


1



—%


Tax (provision) benefit

(3)


3


(6)


NM


Total net realized gain

21


19


2


11%











NET REALIZED EARNINGS

26


57


(31)


(54%)











Net unrealized appreciation (depreciation)









Portfolio company investments

35


(261)


296


 NM 


Foreign currency translation

(4)


21


(25)


 NM 


Derivative agreements and other

1


3


(2)


(67%)


Tax benefit (provision)

12


(2)


14


NM


Total net unrealized appreciation (depreciation)

44


(239)


283


 NM 











NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
    ("NET EARNINGS (LOSS)")

$               70


$           (182)


$             252


 NM 











NET OPERATING INCOME PER COMMON SHARE









Basic

$            0.02


$            0.14


$          (0.12)


(86%)


Diluted

$            0.02


$            0.14


$          (0.12)


(86%)











NET REALIZED EARNINGS PER COMMON SHARE









Basic

$            0.10


$            0.21


$          (0.11)


(52%)


Diluted

$            0.09


$            0.21


$          (0.12)


(57%)











NET EARNINGS (LOSS) PER COMMON SHARE









Basic

$            0.26


$          (0.66)


$            0.92


 NM 


Diluted

$            0.25


$          (0.66)


$            0.91


 NM 











WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING









Basic

270.7


277.5


(6.8)


(2%)


Diluted

283.4


277.5


5.9


2%




















NM = Not meaningful.









 

 

AMERICAN CAPITAL, LTD.

OTHER FINANCIAL INFORMATION

Three Months Ended March 31, 2014, December 31, 2013 and March 31, 2013

(in millions, except per share data)

(unaudited)






 Q1 2014 Versus
Q4 2013




 Q1 2014 Versus
Q1 2013




Q1 2014


Q4 2013


$


%


Q1 2013


$


%



















Assets Under Management
















 American Capital Assets at Fair Value

$           6,134


$        6,009


$              125


2%


$           6,403


$         (269)


(4%)



 Third-Party Assets at Fair Value(1)

77,425


87,201


(9,776)


(11%)


105,222


(27,797)


(26%)



Total

$         83,559


$      93,210


$         (9,651)


(10%)


$       111,625


$    (28,066)


(25%)



















Third-Party Earning Assets Under Management(2)

$         12,771


$      12,677


$                94


1%


$         14,881


$      (2,110)


(14%)



Total Earning Assets Under Management(3)

$         18,825


$      18,603


$              222


1%


$         21,208


$      (2,383)


(11%)



















New Investments
















 Senior Debt

$              264


$           499


$            (235)


(47%)


$                80


$           184


230%



 Mezzanine Debt

4



4


100%



4


100%



 Preferred Equity

1


103


(102)


(99%)


16


(15)


(94%)



 Common Equity

13


230


(217)


(94%)


2


11


550%



 Structured Products

39


65


(26)


(40%)



39


100%



Total by Security Type

$              321


$           897


$            (576)


(64%)


$                98


$           223


228%



















Senior Floating Rate Loans ("SFRL")

$              199


$              -


$              199


100%


$                  -


$           199


100%



Sponsor Finance Investments

62


94


(32)


(34%)


29


33


114%



Investments in ACAM and Fund Development

34


240


(206)


(86%)



34


100%



Structured Products

19


27


(8)


(30%)



19


100%



American Capital One Stop Buyouts®




—%


27


(27)


(100%)



Add-on Financing for Growth and Working Capital

4


44


(40)


(91%)


3


1


33%



Add-on Financing for Distressed Situations

3


33


(30)


(91%)


3



—%



Add-on Financing for Acquisitions


391


(391)


(100%)




—%



Add-on Financing for Recapitalizations, not Including Distressed Investments


68


(68)


(100%)


36


(36)


(100%)



Total by Use

$              321


$           897


$            (576)


(64%)


$                98


$           223


228%



















Realizations
















Equity Investments

$              324


$           245


$                79


32%


$                60


$           264


440%



Payment of Accrued Payment-in-Kind Notes and Dividends and Accreted OID

63


52


11


21%


60


3


5%



Loan Syndications and Sales

20


10


10


100%


4


16


400%



Scheduled Principal Amortization

19


7


12


171%


9


10


111%



Principal Prepayments

16


245


(229)


(93%)


148


(132)


(89%)



Total by Source

$              442


$           559


$            (117)


(21%)


$              281


$           161


57%



















Asset Management

$              198


$              -


$              198


100%


$                  8


$           190


NM



European Capital

104


158


(54)


(34%)



104


100%



American Capital One Stop Buyouts®

66


141


(75)


(53%)


169


(103)


(61%)



Sponsor Finance Investments

56


248


(192)


(77%)


86


(30)


(35%)



Structured Products

17


4


13


325%


5


12


240%



Direct and Other Investments

1


8


(7)


(88%)


13


(12)


(92%)



Total by Business Line

$              442


$           559


$            (117)


(21%)


$              281


$           161


57%



















Appreciation, Depreciation, Gain and Loss
















Gross Realized Gain

$                25


$             66


$              (41)


(62%)


$                31


$             (6)


(19%)



Gross Realized Loss

(4)


(54)


50


93%


(38)


34


89%



Portfolio Net Realized Gain (Loss)

21


12


9


75%


(7)


28


NM



Foreign Currency Transactions

2


3


(1)


(33%)



2


100%



Derivative Agreements

1


1



—%


(14)


15


NM



Tax (Provision) Benefit

(3)


3


(6)


NM


13


(16)


NM



Net Realized Gain (Loss) 

21


19


2


11%


(8)


29


NM



















Gross Unrealized Appreciation of American Capital One Stop Buyouts®

29


66


(37)


(56%)


54


(25)


(46%)



Gross Unrealized Depreciation of American Capital One Stop Buyouts®

(142)


(201)


59


29%


(45)


(97)


(216%)



Gross Unrealized Appreciation of Sponsor Finance, Direct and Other Investments

7


6


1


17%


28


(21)


(75%)



Gross Unrealized Depreciation of Sponsor Finance, Direct and Other Investments

(40)


(23)


(17)


(74%)


(24)


(16)


(67%)



Net Unrealized (Depreciation) Appreciation of Private Finance Portfolio Investments

(146)


(152)


6


4%


13


(159)


NM



Net Unrealized Appreciation of European Capital Investment

64


102


(38)


(37%)


111


(47)


(42%)



Net Unrealized Appreciation (Depreciation) of European Capital Foreign Currency Translation


(7)


7


100%


17


(17)


(100%)



Net Unrealized Appreciation (Depreciation) of American Capital Asset Management, LLC

121


(185)


306


NM


214


(93)


(43%)



Net Unrealized Depreciation of Structured Products

(2)


(14)


12


86%


(8)


6


75%



Reversal of Prior Period Net Unrealized Appreciation Upon Realization

(2)


(5)


3


60%


(12)


10


83%



Net Unrealized Appreciation (Depreciation) of Portfolio Company Investments

35


(261)


296


NM


335


(300)


(90%)



Foreign Currency Translation - European Capital

(4)


20


(24)


NM


(38)


34


89%



Foreign Currency Translation - Other


1


(1)


(100%)


(2)


2


100%



Derivative Agreements and Other

1


3


(2)


(67%)


4


(3)


(75%)



Reversal of Prior Period Net Unrealized Depreciation Upon Realization of Terminated Swaps




—%


9


(9)


(100%)



Tax Benefit (Provision)

12


(2)


14


NM



12


100%



Net Unrealized Appreciation (Depreciation) of Investments

44


(239)


283


NM


308


(264)


(86%)



















Net Gains, Losses, Appreciation and Depreciation

$                65


$         (220)


$              285


NM


$              300


$         (235)


(78%)



















Other Financial Data
















NAV per Share

$           19.29


$        18.97


$             0.32


2%


$           19.04


$          0.25


1%



Debt at Cost

$              790


$           791


$                (1)


—%


$              662


$           128


19%



Debt at Fair Value

$              821


$           817


$                  4


—%


$              674


$           147


22%



Market Capitalization

$           4,160


$        4,226


$              (66)


(2%)


$           4,348


$         (188)


(4%)



Total Enterprise Value(4)

$           4,482


$        4,706


$            (224)


(5%)


$           4,650


$         (168)


(4%)



Asset Coverage Ratio

528 %


588 %






956 %







Debt to Equity Ratio

0.2x


0.2x






0.1x







Credit Quality
















Weighted Average Effective Interest Rate on SFRL at Period End

4.5 %


N/A






N/A







Weighted Average Effective Interest Rate on Debt Investments, Excluding SFRL, at Period End

9.7 %


10.0 %






10.6 %







Weighted Average Effective Interest Rate on All Debt Investments at Period End

9.1 %


10.0 %






10.6 %







Loans on Non-Accrual at Cost

$              315


$           287


$                28


10%


$              313


$               2


1%



Loans on Non-Accrual at Fair Value

$              165


$           154


$                11


7%


$              208


$           (43)


(21%)



Non-Accrual Loans at Cost as a Percentage of Total Loans at Cost

16.4%


17.0%






16.3%







Non-Accrual Loans at Fair Value as a Percentage of Total Loans at Fair Value

9.2%


9.7%






11.3%







Non-Accruing Loans at Fair Value as a Percentage of Non-Accruing Loans at Cost

52.4%


53.7%






66.5%







Estimated Loss(5)

$              150


$           156


$                (6)


(4%)


$              124


$             26


21%



Estimated Loss as a Percentage of Total Loans at Cost

7.8%


9.3%






6.4%







Past Due Loans at Cost

$                  -


$             26


$              (26)


(100%)


$                73


$           (73)


(100%)



Debt to Equity Conversions at Cost

$                  -


$             74


$              (74)


(100%)


$                  1


$             (1)


(100%)



Return on Average Equity
















LTM Net Operating Income Return on Average Shareholders' Equity

2.1%


2.9%






7.3%







LTM Net Realized Earnings Return on Average Shareholders' Equity

1.7%


1.9%






4.1%







LTM Net (Loss) Earnings Return on Average Shareholders' Equity

(1.7%)


3.4%






16.8%







Current Quarter Annualized Net Operating Income Return on Average Shareholders' Equity

0.4%


2.8%






3.3%







Current Quarter Annualized Net Realized Earnings Return on Average Shareholders' Equity

2.1%


4.3%






2.8%







Current Quarter Annualized Net Earnings (Loss) Return on Average Shareholders' Equity

5.5%


(13.8%)






24.9%







































NM = Not meaningful.
















(1)  Includes total assets of American Capital Agency Corp., American Capital Mortgage Investment Corp., American Capital Senior Floating, Ltd, European Capital, American Capital Equity I, American Capital Equity II, ACAS CLO 2007-1, ACAS CLO

       2012-1, ACAS CLO 2013-1 and ACAS CLO 2013-2, less American Capital's investment in the funds.

(2)  Represents third-party earning assets under management from which the associated base management fees are calculated.

(3)  Represents total assets of American Capital less American Capital's investment in the funds as well as third-party earning assets under management from which the associated base management fees are calculated.

(4)  Enterprise value is calculated as debt at cost plus market capitalization less cash and cash equivalents on hand.

(5)  Net accumulated depreciation on non-accrual loans plus realized losses on loans during the period presented.

 

 


Static Pool (1)

Portfolio Statistics
($ in millions, unaudited)

1997-
2003










1997-2014
Static Pools
Aggregate

Aggregate

2004

2005

2006

2007

2008

2011

2012

2013

2014

IRR at Fair Value of All Investments(2)

12.2 %

12.6 %

13.4 %

10.5 %

(2.9%)

9.5 %

24.4 %

(3.8%)

48.0 %

7.4 %

8.8 %

IRR of Exited Investments(3)

12.8 %

15.8 %

20.2 %

8.2 %

(2.4%)

7.2 %

23.4 %

17.1 %

24.9 %

 N/A 

10.1 %

IRR at Fair Value of Equity Investments Only(2)(4)(5)

17.7 %

24.4 %

13.1 %

14.3 %

(9.7%)

20.6 %

35.6 %

(48.4%)

274.1 %

 N/A 

10.9 %

IRR of Exited Equity Investments Only(3)(4)(5)

21.9 %

45.8 %

38.2 %

11.0 %

7.9 %

21.7 %

35.1 %

 N/A 

 N/A 

 N/A 

24.3 %

IRR at Fair Value of All One Stop Buyout® Investments(2)

10.9 %

14.0 %

27.2 %

12.9 %

1.2 %

16.0 %

70.6 %

(11.0%)

338.5 %

 N/A 

13.0 %

IRR at Fair Value of All One Stop Buyout® Equity Investments(2)(4)(5)

15.8 %

23.6 %

38.4 %

16.0 %

(9.6%)

16.3 %

70.6 %

(48.4%)

337.8 %

 N/A 

16.6 %

IRR at Fair Value of Current One Stop Buyout® Investments(2)

11.3 %

(2.2%)

23.9 %

12.1 %

(2.5%)

19.4 %

70.6 %

(11.0%)

338.5 %

 N/A 

9.9 %

IRR of Exited One Stop Buyout® Investments(3)

10.4 %

21.4 %

25.8 %

11.3 %

13.9 %

14.2 %

 N/A 

19.6 %

 N/M 

 N/A 

14.6 %

Committed Investments(7)

$3,846

$2,289

$5,152

$5,329

$7,542

$1,063

$208

$880

$302

$270

$26,881

Total Exits and Prepayments of Committed Investments(7)

$3,513

$2,084

$2,703

$4,471

$5,754

$769

$168

$282

$17

$—

$19,761

Total Interest, Dividends and Fees Collected

$1,363

$707

$1,480

$1,508

$1,551

$424

$30

$55

$15

$—

$7,133

Total Net Realized (Loss) Gain on Investments

$(116)

$16

$368

$(317)

$(1,212)

$(113)

$11

$4

$—

$—

$(1,359)

Current Cost of Investments

$294

$215

$1,601

$623

$1,363

$245

$62

$566

$238

$258

$5,465

Current Fair Value of Investments

$294

$69

$2,021

$669

$616

$248

$72

$496

$276

$259

$5,020

Current Fair Value of Investments as a % of Total Investments at Fair Value

5.8 %

1.4%

40.3 %

13.3 %

12.3 %

4.9 %

1.4 %

9.9 %

5.5 %

5.2 %

100.0 %

Net Unrealized (Depreciation) Appreciation

$—

$(146)

$420

$46

$(747)

$3

$10

$(70)

$38

$1

$(445)

Non-Accruing Loans at Cost

$52

$6

$19

$95

$110

$33

$—

$—

$—

$—

$315

Non-Accruing Loans at Fair Value

$22

$2

$4

$34

$74

$29

$—

$—

$—

$—

$165

Equity Interest at Fair Value(4)

$214

$60

$1,703

$405

$236

$109

$34

$99

$67

$—

$2,927

Debt to Adjusted EBITDA(8)(9)(12)(13)(16)

14.3

1.8

1.7

4.7

5.5

6.5

4.7

4.9

6.7

5.9

3.8

Interest Coverage(10)(12)(13)(16)

1.0

3.4

0.7

2.1

1.4

2.4

3.2

3.7

2.5

2.9

1.8

Debt Service Coverage(11)(12)(13)(16)

1.0

1.4

0.5

1.9

1.2

2.1

2.5

3.1

2.2

2.6

1.5

Average Age of Companies(13)(16)

  39 yrs 

  37 yrs 

  14 yrs 

  40 yrs 

  34 yrs 

  20 yrs 

  21 yrs 

  17 yrs 

  23 yrs 

  21 yrs 

  25 yrs 

Diluted Ownership Percentage(4)(17)

56 %

77 %

95 %

50 %

55 %

70 %

69 %

95 %

75 %

 N/A 

81 %

Average Revenue(13)(14)(16)

$180

$34

$198

$152

$176

$34

$100

$225

$284

$178

$178

Average Adjusted EBITDA(8)(13)(16)

$38

$8

$68

$39

$28

$15

$24

$64

$33

$48

$48

Total Revenue(13)(14)

$1,414

$227

$1,182

$2,971

$2,643

$220

$189

$1,883

$2,021

$719

$13,469

Total Adjusted EBITDA(8)(13)

$201

$40

$264

$371

$257

$87

$45

$403

$370

$214

$2,252

% of Senior Loans(12)(13)(15)

79 %

100 %

50 %

43 %

64 %

34 %

100 %

95 %

100 %

100 %

69 %

% of Loans with Lien(12)(13)(15)

100 %

100 %

95 %

100 %

95 %

44 %

100 %

100 %

100 %

100 %

94 %













Majority Owned Portfolio Companies ("MOPC")(6)

1997-2014 Static Pools
Aggregate










Total Number of MOPC

$42










Total Revenue(14)

$3,445










Total Gross Profit(14)

$1,731










Total Adjusted EBITDA(8)

$693





















Total Capital Expenditures(14)

$102










Total Current ACAS Investment in MOPC at Fair Value

$2,996










Total Current ACAS Investment in MOPC at Cost Basis

$3,066










Total Current ACAS Debt Investment in MOPC at Fair Value

$1,060










Total Current ACAS Debt Investment in MOPC at Cost Basis

$1,142










Diluted Ownership Percentage of ACAS in MOPC(17)

78 %





















Total Cash(18)

$235










Total Assets(18)

$4,475










Total Debt(18)

$3,585










Total Third-party Debt at Cost(18)

$1,946










Total Shareholders' Equity(18)(19)

$2,760












































NM = Not Meaningful

1)

Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. There were no investments made in

2009 and 2010 static pool years.

2)

Internal rate of return ("IRR") calculations are based on a sequence of cash proceeds invested, cash realizations or non-cash consideration received, and the terminal value of an investment over time. For active investments, the terminal value is assumed to be the current fair value. For exited investments, the terminal value is the total cash realization received upon exit. Additionally, IRR calculations exclude securities traded but not yet settled at period end.

3)

IRR calculations are based on a sequence of cash proceeds invested, cash realizations or non-cash consideration received, and the terminal value of an investment over time. For exited investments, the terminal value is the total cash realization received upon exit. This includes fully exited investments of existing portfolio companies. Additionally, IRR calculations exclude securities traded but not yet settled at period end.

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)

MOPC investments represent portfolio company investments in which American Capital, or its affiliates, have a fully diluted ownership percentage of 50% or more or have over 50% board representation at the portfolio company. Includes American Capital Asset Management, LLC prior to the consolidation of the collateralized loan obligations. Excludes our investment in European Capital.

7)

Represents committed investment amount at the time of origination.

8)

Adjusted EBITDA may reflect certain adjustments to the reported EBITDA of a portfolio company for non-recurring, unusual or infrequent items or other pro-forma items or events to normalize current earnings which a buyer may consider in a change in control transactions. These adjustments may be material and are highly subjective in nature. Portfolio company reported EBITDA is for the most recently available twelve months, or when appropriate, the forecasted twelve months or current annualized run-rate.

9)

Debt, which represents the debt and other liabilities senior to ACAS and the total of ACAS's debt in each portfolio company's debt capitalization, divided by Adjusted EBITDA. For portfolio companies with a nominal Adjusted EBITDA amount, the portfolio company's maximum debt leverage is limited to 15 times Adjusted EBITDA.

10)

Adjusted EBITDA divided by the total cash interest expense of the portfolio company during the most recent twelve month period, or when appropriate as a result of a new debt capital structure, the forecasted twelve months.

11)

Adjusted EBITDA divided by the total scheduled principal amortization and total cash interest expense of the portfolio company during the most recent twelve month period, or when appropriate, the forecasted twelve months.

12)

Excludes investments in which we own only equity.

13)

Excludes investments in Structured Products, Senior Floating Rate Loans and managed funds.

14)

For the most recent twelve months, or when appropriate, the forecasted twelve months.

15)

As a percentage of our total debt investments.

16)

Weighted average based on fair value.

17)

Weighted average based on fair value of equity investments.

18)

As of the most recent month end available.

19)

Calculated as the estimated enterprise value of the MOPC less the cost basis of any outstanding debt of the MOPC.

 

SHAREHOLDER CALL
American Capital invites shareholders, analysts and interested parties to attend the shareholder call on May 8, 2014 at 11:00 am ET.  Callers who do not plan on asking a question and have access to the internet are encouraged to utilize the free live webcast at www.AmericanCapital.com.  Those who do plan on participating in the Q&A or do not have the internet available may access the call by dialing (888) 317-6016 (U.S. domestic) or (412) 317-6016 (international).  All callers are asked to dial in 10-15 minutes prior to the call to register.  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.  Select the Q1 2014 Earnings Presentation link to download and print the presentation in advance of the shareholder call.

An archived audio replay of the shareholder call combined with the slide presentation will be made available on our website after the call on May 8, 2014.  In addition, there will be a phone recording available from 1:00 pm ET May 8, 2014 until 9:00 am ET May 22, 2014.  If you are interested in hearing the recording of the presentation, please dial (877) 344-7529 (U.S. domestic) or (412) 317-0088 (international).  The access code for both domestic and international callers is 10044208.

ABOUT AMERICAN CAPITAL
American Capital, Ltd. (NASDAQ: ACAS) 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, energy & infrastructure and structured products.  American Capital manages $19 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $84 billion of total assets under management (including levered assets).  Through an affiliate, American Capital manages publicly traded American Capital Agency Corp. (NASDAQ: AGNC) with approximately $9 billion of net book value, American Capital Mortgage Investment Corp. (NASDAQ: MTGE) with approximately $1 billion of net book value and American Capital Senior Floating, Ltd. (NASDAQ: ACSF) with approximately $151 million of net book value.  From its eight offices in the U.S. and Europe, American Capital and its affiliate, European Capital, will consider investment opportunities from $10 million to $750 million.  For further information, please refer to www.AmericanCapital.com.

ADDITIONAL INFORMATION
Persons considering an investment in American Capital should consider the investment objectives, risks and charges and expenses of the Company carefully before investing.  Such information and other information about the Company is available in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q and in the prospectuses the Company issues from time to time in connection with its offering of securities.  Such materials are filed with the Securities and Exchange Commission ("SEC") and copies are available on the SEC's website, www.sec.gov.  Prospective investors should read such materials carefully before investing.  Performance data quoted above represents past performance of American Capital.  Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate.  Consequently, an investor's shares, when sold, may be worth more or less than their original cost.  Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.

This press release contains forward-looking statements.  Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions.  Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions or changes in the conditions of the industries in which American Capital has made investments.  Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 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
Media - (301) 968-9400

SOURCE American Capital, Ltd.



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