American Capital Announces Q4 and Full Year 2009 Results
BETHESDA, Md., Feb. 23, 2010 /PRNewswire-FirstCall/ -- American Capital, Ltd. ("ACAS" or the "Company") (Nasdaq: ACAS) announced net operating income ("NOI") for the quarter and year ended December 31, 2009 of $19 million, or $0.07 per diluted share, and $135 million, or $0.56 per diluted share, respectively. Net earnings (loss) less appreciation and depreciation ("Realized (Loss) Earnings") for the quarter and year were $(283) million, or $(1.00) per diluted share, and $(678) million, or $(2.81) per diluted share, respectively. For the quarter and year ended December 31, 2009, the Company reported net earnings (loss) of $107 million, or $0.38 per diluted share, and $(910) million, or $(3.77) per diluted share, respectively.
2009 FINANCIAL SUMMARY
- $135 million of NOI
- $(340) million net unrealized depreciation of portfolio investments
- $(716) million net realized loss on portfolio investments
- $(910) million net loss
- 71% improvement over 2008
- $1,143 million of realizations
- $8.29 net asset value ("NAV") per share
- 6% increase over Q3 2009 NAV per share of $7.80
- $835 million of unrestricted cash and cash equivalents at year end
"Last year was a tremendously difficult year," said Malon Wilkus, Chairman and Chief Executive Officer. "We worked diligently to restructure our debt facilities and position ourselves for the future. Since announcing the agreement in principle with all of the revolving credit facility lenders we have drafted and negotiated restructuring documentation with representatives of all of the creditor groups. While this has taken us longer than any of us anticipated, and though there is more to be done with respect to these agreements, we are working towards launching an exchange offer during March to solicit formal approval of a complete debt restructuring."
"While working hard on our debt restructuring, we have been providing operational, managerial and financial support to our portfolio companies for growth, acquisitions and support in distressed situations. We continue to stand by our portfolio companies. We have reduced our own operating costs and implemented several staff reductions, which have reduced our staff by more than half from its peak, and we remain focused on efficiency. We are making good progress towards restructuring the credit facilities at European Capital to maximize the value of our 100% ownership interest. And, finally, in 2009 we focused on realizing $1.1 billion of liquidity in our portfolio at fair values to position ourselves to reduce our debt, and we remain focused on producing liquidity at fair values. We are diligently working towards rebuilding shareholder value and look for 2010 to be a better year."
NET OPERATING INCOME
NOI decreased 67% to $0.07 per diluted share for the quarter ended December 31, 2009, compared to $0.21 per diluted share for the prior year quarter.
NOI decreased 77% to $0.56 per diluted share for the year ended December 31, 2009, compared to $2.42 per diluted share for the prior year.
NET REALIZED (LOSS) EARNINGS
Net realized (loss) earnings declined to $(1.00) per diluted share for the quarter ended December 31, 2009, compared to $(0.01) per diluted share for the prior year quarter. Net realized (loss) earnings declined to $(2.81) per diluted share for the year ended December 31, 2009, compared to $2.58 per diluted share for the prior year.
NET EARNINGS (LOSS)
Net earnings (loss) improved to $0.38 per diluted share for the quarter ended December 31, 2009, compared to $(8.13) per diluted share for the prior year quarter. Net earnings (loss) improved to $(3.77) per diluted share for the year ended December 31, 2009, compared to $(15.29) per diluted share for the prior year.
PORTFOLIO VALUATION
For the quarter ended December 31, 2009, net unrealized appreciation of portfolio investments totaled $410 million. The primary components of the net unrealized appreciation were:
- $284 million of reversals of prior depreciation associated with net realized losses on portfolio investments;
- The associated realizations were within 1% of the prior quarter's valuation.
- $124 million of appreciation of American Capital's investment in European Capital, Ltd., reflecting a decrease to the discount applied to its NAV due to the current status of its credit facilities, which could prevent realization of the NAV;
- The equity investment in European Capital is valued at $0.2 billion compared to European Capital's NAV of approximately $0.7 billion.
- $22 million of net appreciation of American Capital's private finance portfolio; and
- $(25) million of net depreciation from structured products.
As of December 31, 2009, NAV per share was $8.29, an increase from $7.80 per share as of September 30, 2009 and a decrease from $15.41 per share as of December 31, 2008.
"During 2009, we received $1.1 billion of liquidity from our portfolio, including $476 million in the fourth quarter," said John Erickson, Chief Financial Officer. "Despite the poor M&A environment in 2009, we exited both performing and non-performing assets at approximately fair value which is a testament to both the quality of our valuations and the quality of our portfolio. Additionally, we believe that the recession has ended and we are seeing a modest improvement in the performance of the portfolio and the M&A market. We expect that if the economy continues to recover, our portfolio and its valuation should also continue to improve."
PORTFOLIO LIQUIDITY AND PERFORMANCE
In the fourth quarter of 2009, $476 million of proceeds were received from realizations of portfolio investments and exits, which were within 1% of the prior quarter's valuations of the investments. There was $23 million in new committed investments in the quarter. The weighted average effective interest rate on the Company's private finance debt investments as of December 31, 2009 was 9.9%, unchanged from September 30, 2009 and 80 basis points lower than as of December 31, 2008. Unrestricted cash and cash equivalents totaled $835 million as of December 31, 2009.
As of December 31, 2009, loans with a fair value of $290 million were on non-accrual representing 7.8% of total loans at fair value as of December 31, 2009, compared to $285 million fair value of non-accrual loans representing 6.9% of total loans at fair value as of September 30, 2009.
AMERICAN CAPITAL, LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2009 and 2008
(in millions, except per share data)
(unaudited)
2009 Versus 2008
------------------
2009 2008 $ %
---- ---- - -
Assets
Investments at fair value (cost of
$9,158 and $10,691, respectively) $5,576 $7,427 $(1,851) -25%
Cash and cash equivalents 835 209 626 300%
Restricted cash and cash equivalents 96 71 25 35%
Interest receivable 38 44 (6) -14%
Other assets 127 159 (32) -20%
--- --- --- ---
Total assets $6,672 $7,910 $(1,238) -16%
====== ====== ======= ===
Liabilities and Shareholders' Equity
Debt $4,142 $4,428 $(286) -6%
Derivative and option agreements
(cost of $0 and $(20), respectively) 102 222 (120) -54%
Other liabilities 99 105 (6) -6%
-- --- -- --
Total liabilities 4,343 4,755 (412) -9%
----- ----- ---- --
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, 292.9
and 214.3 issued and 280.9 and
204.7 outstanding, respectively 3 2 1 50%
Capital in excess of par value 6,735 6,545 190 3%
(Distributions in excess of)
undistributed net realized
earnings (709) 76 (785) NM
Net unrealized depreciation of
investments (3,700) (3,468) (232) -7%
------ ------ ---- --
Total shareholders' equity 2,329 3,155 (826) -26%
----- ----- ---- ---
Total liabilities and
shareholders' equity $6,672 $7,910 $(1,238) -16%
====== ====== ======= ===
Net asset value per common share $8.29 $15.41 $(7.12) -46%
===== ====== ====== ===
NM = Not meaningful.
AMERICAN CAPITAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Twelve Months Ended December 31, 2009 and 2008
(in millions, except per share data)
(unaudited)
Three Months Ended
Three Months Ended December 31, 2009
December 31, Versus 2008
------------ -----------
2009 2008 $ %
---- ---- --- ---
OPERATING INCOME:
Interest and dividend income $156 $202 $(46) -23%
Asset management and other
fee income 13 16 (3) -19%
-- -- -- ---
Total operating income 169 218 (49) -22%
--- --- --- ---
OPERATING EXPENSES:
Interest 59 59 - 0%
Salaries, benefits and stock-based
compensation 68 41 27 66%
General and administrative 33 31 2 6%
-- -- -- --
Total operating expenses 160 131 29 22%
--- --- -- --
OPERATING INCOME BEFORE INCOME TAXES 9 87 (78) -90%
-- -- --- ---
Benefit (provision) for income taxes 10 (43) 53 NM
-- --- -- --
NET OPERATING INCOME 19 44 (25) -57%
-- -- --- ---
Net gain on extinguishment of debt - - - -
-- -- -- --
Net realized (loss) gain on
investments
Portfolio company investments (282) (32) (250) -781%
Taxes on net realized gain - (1) 1 100%
Foreign currency transactions (1) 1 (2) NM
Derivative and option agreements (19) (15) (4) -27%
--- --- -- ---
Total net realized (loss) gain on
investments (302) (47) (255) -543%
---- --- ---- ----
NET REALIZED (LOSS) EARNINGS (283) (3) (280) NM
---- -- ---- --
Net unrealized appreciation
(depreciation) of investments
Portfolio company investments 410 (1,548) 1,958 NM
Foreign currency translation (26) (24) (2) -8%
Derivative and option agreements
and other 6 (109) 115 NM
-- ---- --- --
Total net unrealized appreciation
(depreciation) of investments 390 (1,681) 2,071 NM
--- ------ ----- --
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS
("NET EARNINGS (LOSS)") $107 $(1,684) $1,791 NM
==== ======= ====== ==
NET OPERATING INCOME PER COMMON SHARE*:
Basic $0.07 $0.21 $(0.14) -67%
Diluted $0.07 $0.21 $(0.14) -67%
NET REALIZED (LOSS) EARNINGS PER COMMON
SHARE*:
Basic $(1.00) $(0.01) $(0.99) NM
Diluted $(1.00) $(0.01) $(0.99) NM
NET EARNINGS (LOSS) PER COMMON SHARE*:
Basic $0.38 $(8.13) $8.51 NM
Diluted $0.38 $(8.13) $8.51 NM
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 283.2 207.1 76.1 37%
Diluted 284.3 207.1 77.2 37%
DIVIDENDS DECLARED PER COMMON SHARE $- $- $- -
Fiscal Year Ended Fiscal Year Ended
December 31, December 31, 2009
Versus 2008
------------ -----------
2009 2008 $ %
---- ---- --- ---
OPERATING INCOME:
Interest and dividend income $638 $950 $(312) -33%
Asset management and other
fee income 59 101 (42) -42%
-- --- --- ---
Total operating income 697 1,051 (354) -34%
--- ----- ---- ---
OPERATING EXPENSES:
Interest 256 220 36 16%
Salaries, benefits and stock-based
compensation 215 206 9 4%
General and administrative 111 95 16 17%
--- -- -- --
Total operating expenses 582 521 61 12%
--- --- -- --
OPERATING INCOME BEFORE INCOME TAXES 115 530 (415) -78%
--- --- ---- ---
Benefit (provision) for income taxes 20 (37) 57 NM
-- --- -- --
NET OPERATING INCOME 135 493 (358) -73%
--- --- ---- ---
Net gain on extinguishment of debt 12 - 12 100%
-- -- -- ---
Net realized (loss) gain on
investments
Portfolio company investments (716) 132 (848) NM
Taxes on net realized gain - (54) 54 100%
Foreign currency transactions (3) (6) 3 50%
Derivative and option agreements (106) (40) (66) -165%
---- --- --- ----
Total net realized (loss) gain on
investments (825) 32 (857) NM
---- -- ---- --
NET REALIZED (LOSS) EARNINGS (678) 525 (1,203) NM
---- --- ------ --
Net unrealized appreciation
(depreciation) of investments
Portfolio company investments (340) (3,480) 3,140 90%
Foreign currency translation 28 (41) 69 NM
Derivative and option agreements
and other 80 (119) 199 NM
-- ---- --- --
Total net unrealized appreciation
(depreciation) of investments (232) (3,640) 3,408 94%
---- ------ ----- --
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS
("NET EARNINGS (LOSS)") $(910) $(3,115) $2,205 71%
===== ======= ====== ==
NET OPERATING INCOME PER COMMON SHARE*:
Basic $0.56 $2.42 $(1.86) -77%
Diluted $0.56 $2.42 $(1.86) -77%
NET REALIZED (LOSS) EARNINGS PER COMMON
SHARE*:
Basic $(2.81) $2.58 $(5.39) NM
Diluted $(2.81) $2.58 $(5.39) NM
NET EARNINGS (LOSS) PER COMMON SHARE*:
Basic $(3.77) $(15.29) $11.52 75%
Diluted $(3.77) $(15.29) $11.52 75%
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 241.1 203.7 37.4 18%
Diluted 241.1 203.7 37.4 18%
DIVIDENDS DECLARED PER COMMON SHARE $1.07 $3.09 $(2.02) -65%
NM = Not meaningful.
* May not recalculate due to rounding.
AMERICAN CAPITAL, LTD.
OTHER FINANCIAL INFORMATION
Three Months Ended December 31, 2009 and September 30, 2009 and Fiscal
Year Ended December 31, 2009 and 2008
(in millions, except per share data)
(unaudited)
Q4 2009
Versus
Q3 2009
-------
Q4 2009 Q3 2009 $ %
----------- ----------- --- ---
Assets Under Management:
American Capital Assets at
Fair Value(1) $6,672 $6,668 $4 0%
Externally Managed Assets at
Fair Value(2) 5,802 4,843 959 20%
----- ----- --- --
Total $12,474 $11,511 $963 8%
======= ======= ==== =
Capital Resources Under Management:
American Capital Assets at
Fair Value plus Available
Capital Resources(1) $6,672 $6,668 $4 0%
Externally Managed Assets
at Fair Value plus
Available Capital Resources(2) 6,020 5,064 956 19%
----- ----- --- --
Total $12,692 $11,732 $960 8%
======= ======= ==== =
New Investments:
Senior Debt $12 $- $12 100%
Subordinated Debt - 5 (5) -100%
Preferred Equity 4 1 3 300%
Common Equity 7 1 6 600%
Structured Products - - - -
-- -- -- --
Total $23 $7 $16 229%
=== == === ===
Investments in Managed Funds $- $- $- -
Financing for Private Equity
Buyouts - - - -
Direct Investments - - - -
American Capital Sponsored
Buyouts - - - -
Structured Products - - - -
Add-on Financing for Working
Capital in Distressed Situations 17 3 14 467%
Add-on Financing for Acquisitions 3 1 2 200%
Add-on Financing for Growth
and Working Capital 2 - 2 100%
Add-on Financing for
Recapitalizations 1 3 (2) -67%
-- -- -- ---
Total $23 $7 $16 229%
=== == === ===
Realizations:
Principal Prepayments $88 $151 $(63) -42%
Loan Syndications and Sales 303 78 225 288%
Scheduled Principal
Amortization 12 9 3 33%
Payment of Accrued
Payment-in-kind
Notes and Dividends and
Accreted Loan Discounts 16 27 (11) -41%
Sale of Equity Investments 57 198 (141) -71%
-- --- ---- ---
Total $476 $463 $13 3%
==== ==== === =
Appreciation, Depreciation, Gain and Loss:
Gross Realized Gain $3 $76 $(73) -96%
Gross Realized Loss (285) (123) (162) -132%
---- ---- ---- ----
Portfolio Net Realized
(Loss) Gain (282) (47) (235) -500%
Taxes on Realized Net Gain - - - -
Foreign Currency (1) - (1) -100%
Derivative and Option Agreements (19) (19) - -
--- --- -- --
Net Realized (Loss) Gain (302) (66) (236) -358%
---- --- ---- ----
Gross Unrealized Appreciation
of Private Finance
Portfolio Investments 163 154 9 6%
Gross Unrealized Depreciation
of Private Finance
Portfolio Investments (141) (140) (1) -1%
---- ---- -- --
Net Unrealized Appreciation
(Depreciation) of Private
Finance Portfolio Investments 22 14 8 57%
Net Unrealized Appreciation
(Depreciation) of European
Capital Limited 124 (6) 130 NM
Net Unrealized (Depreciation)
Appreciation of American
Capital Agency Corp. (5) 14 (19) NM
Net Unrealized Appreciation
(Depreciation) of American
Capital, LLC 10 - 10 100%
Net Unrealized (Depreciation)
Appreciation of Structured
Products (25) 23 (48) NM
Reversal of Prior Period
Net Unrealized Depreciation
(Appreciation) Upon
Realization 284 41 243 593%
--- -- --- ---
Net Unrealized Appreciation
(Depreciation) of Portfolio
Investments 410 86 324 377%
Foreign Currency Translation (26) 57 (83) NM
Derivative Agreements and Other 6 (32) 38 NM
Reversal of Prior Period Net
Unrealized Depreciation on Option
Agreements - - - -
-- -- -- --
Net Unrealized Appreciation
(Depreciation) of Investments 390 111 279 251%
--- --- --- ---
Net Gains, Losses, Appreciation
and Depreciation $88 $45 $43 96%
=== === === ==
Other Financial Data:
NAV per Share $8.29 $7.80 $0.49 6%
Debt at Cost $4,142 $4,279 $(137) -3%
Debt at Fair Value $3,929 $3,743 $186 5%
Market Capitalization $685 $906 $(221) -24%
Total Enterprise Value(3) $3,992 $4,741 $(749) -16%
Credit Quality:
Weighted Average Effective
Interest Rate
on Private Finance Debt
Investments at
Period End 9.9% 9.9% - -
Loans on Non-Accrual at Cost $811 $889 $(78) -9%
Loans on Non-Accrual at Fair
Value $290 $285 $5 2%
Non-Accrual Loans at Cost as
a Percentage of Total Loans 18.1% 17.3%
Non-Accrual Loans at Fair Value as a
Percentage of Total Loans 7.8% 6.9%
Past Due Loans at Cost $88 $209 $(121) -58%
Number of Portfolio Companies
on Non-Accrual and Past Due 40 41
Debt to Equity Conversions at
Cost $54 $6 $48 800%
Return on Equity:
LTM Net Operating Income
Return on Average Equity at Cost 2.1% 2.5%
LTM Realized (Loss) Earnings
Return on Average Equity at Cost -10.7% -6.1%
LTM Net Loss Return on Average
Equity -37.3% -90.3%
Current Quarter Net Operating
Income Return on Average Equity at
Cost Annualized 1.2% 2.1%
Current Quarter Realized
Loss Return on Average Equity at
Cost Annualized -18.4% -2.2%
Current Quarter Earnings
Return (Loss) on
Average Equity Annualized 18.9% 15.0%
2009 Versus 2008
----------------
2009 2008 $ %
---- ---- --- ---
Assets Under Management:
American Capital Assets at
Fair Value(1) $6,672 $7,910 $(1,238) -16%
Externally Managed Assets at
Fair Value(2) 5,802 5,477 325 6%
----- ----- --- --
Total $12,474 $13,387 $(913) -7%
======= ======= ===== ==
Capital Resources Under Management:
American Capital Assets at
Fair Value plus
Available Capital
Resources(1) $6,672 $8,430 $(1,758) -21%
Externally Managed Assets
at Fair Value plus Available
Capital Resources(2) 6,020 5,956 64 1%
----- ----- -- --
Total $12,692 $14,386 $(1,694) -12%
======= ======= ======= ===
New Investments:
Senior Debt $41 $1,007 $(966) -96%
Subordinated Debt 18 920 (902) -98%
Preferred Equity 16 222 (206) -93%
Common Equity 34 307 (273) -89%
Structured Products - 151 (151) -100%
-- --- ---- ----
Total $109 $2,607 $(2,498) -96%
==== ====== ======= ===
Investments in Managed
Funds $- $775 $(775) -100%
Financing for Private Equity
Buyouts - 485 (485) -100%
Direct Investments - 192 (192) -100%
American Capital Sponsored
Buyouts - 303 (303) -100%
Structured Products - 151 (151) -100%
Add-on Financing for Working
Capital in Distressed Situations 81 125 (44) -35%
Add-on Financing for
Acquisitions 4 98 (94) -96%
Add-on Financing for Growth
and Working Capital 4 368 (364) -99%
Add-on Financing for
Recapitalizations 20 110 (90) -82%
-- --- --- ---
Total $109 $2,607 $(2,498) -96%
==== ====== ======= ===
Realizations:
Principal Prepayments $316 $770 $(454) -59%
Loan Syndications and Sales 410 349 61 17%
Scheduled Principal Amortization 46 80 (34) -43%
Payment of Accrued
Payment-in-kind
Notes and Dividends and
Accreted Loan
Discounts 48 64 (16) -25%
Sale of Equity Investments 323 913 (590) -65%
--- --- ---- ---
Total $1,143 $2,176 $(1,033) -47%
====== ====== ======= ===
Appreciation, Depreciation, Gain
and Loss:
Gross Realized Gain $122 $295 $(173) -59%
Gross Realized Loss (838) (163) (675) -414%
---- ---- ---- ----
Portfolio Net Realized
(Loss) Gain (716) 132 (848) -642%
Taxes on Realized Net Gain - (54) 54 100%
Foreign Currency (3) (6) 3 50%
Derivative and Option
Agreements (106) (40) (66) -165%
---- --- --- ----
Net Realized
(Loss) Gain (825) 32 (857) -2678%
---- -- ---- -----
Gross Unrealized Appreciation
of Private Finance
Portfolio Investments 297 192 105 55%
Gross Unrealized Depreciation
of Private Finance
Portfolio Investments (970) (1,955) 985 50%
---- ------ --- --
Net Unrealized Appreciation
(Depreciation) of Private
Finance Portfolio Investments (673) (1,763) 1,090 62%
Net Unrealized Appreciation
(Depreciation) of European
Capital Limited (248) (672) 424 63%
Net Unrealized
(Depreciation) Appreciation of
American Capital Agency Corp. 22 1 21 2100%
Net Unrealized Appreciation
(Depreciation) of American
Capital, LLC (148) (300) 152 51%
Net Unrealized (Depreciation)
Appreciation of Structured
Products (11) (606) 595 98%
Reversal of Prior Period
Net Unrealized Depreciation
(Appreciation) Upon
Realization 718 (140) 858 NM
--- ---- --- --
Net Unrealized Appreciation
(Depreciation) of Portfolio
Investments (340) (3,480) 3,140 90%
Foreign Currency
Translation 28 (41) 69 NM
Derivative Agreements and
Other 31 (119) 150 NM
Reversal of Prior Period Net
Unrealized Depreciation on Option
Agreements 49 - 49 100%
-- -- -- ---
Net Unrealized Appreciation
(Depreciation) of
Investments (232) (3,640) 3,408 94%
---- ------ ----- --
Net Gains, Losses,
Appreciation and
Depreciation $(1,057) $(3,608) $2,551 71%
======= ======= ====== ==
Other Financial Data:
NAV per Share $8.29 $15.41 $(7.12) -46%
Debt at Cost $4,142 $4,428 $(286) -6%
Debt at Fair Value $3,929 $3,172 $757 24%
Market Capitalization $685 $663 $22 3%
Total Enterprise Value(3) $3,992 $4,882 $(890) -18%
Credit Quality:
Weighted Average Effective
Interest Rate
on Private Finance Debt
Investments at
Period End 9.9% 10.7% -0.8% -7%
Loans on Non-Accrual at
Cost $811 $824 $(13) -2%
Loans on Non-Accrual at Fair
Value $290 $150 $140 93%
Non-Accrual Loans at Cost as
a Percentage of Total
Loans 18.1% 13.2%
Non-Accrual Loans at Fair
Value as a Percentage of Total
Loans 7.8% 2.9%
Past Due Loans at Cost $88 $49 $39 80%
Number of Portfolio Companies
on Non-Accrual and Past Due 40 35
Debt to Equity Conversions at
Cost $450 $69 $381 552%
Return on Equity:
LTM Net Operating Income
Return on Average Equity at Cost 2.1% 7.5%
LTM Realized (Loss) Earnings
Return on Average Equity at
Cost -10.7% 8.0%
LTM Net Loss Return on Average
Equity -37.3% -60.0%
Current Quarter Net Operating
Income Return on Average
Equity at Cost Annualized 1.2% 2.6%
Current Quarter Realized
Loss Return on Average Equity
at Cost Annualized -18.4% -0.2%
Current Quarter Earnings
Return (Loss) on Average
Equity Annualized 18.9% -164.0%
NM = Not meaningful.
(1) Includes American Capital's investment in its externally managed
funds.
(2) Includes European Capital Limited (2008 only), American Capital
Equity I, American Capital Equity II, ACAS CLO-1 and ACAS CRE CDO
2007-1.
(3) Enterprise value is calculated as debt at cost plus market
capitalization less cash on hand.
Portfolio
Statistics (1)
($ in millions,
unaudited) Pre-2001 2001 2002 2003 2004
--------------- -------- ---- ---- ---- ----
IRR - GAAP Fair
Value - All
Investments(2) 7.9% 18.1% 7.8% 20.9% 13.3%
IRR - GAAP Fair
Value - Equity
Investments
Only(2)(3)(4) 5.8% 46.9% 11.4% 28.9% 27.5%
IRR – Exited
Investments(5) 8.6% 20.3% 9.1% 23.5% 19.0%
Original
Investments and
Commitments $1,065 $376 $961 $1,433 $2,266
Total Exits and
Prepayments of
Original
Investments $999 $351 $757 $1,083 $1,765
Total Interest,
Dividends and
Fees Collected $408 $148 $324 $391 $589
Total Net
Realized (Loss)
Gain on
Investments $(128) $(4) $(91) $143 $28
Current Cost of
Investments $76 $23 $195 $328 $469
Current Fair
Value of
Investments $17 $3 $134 $404 $357
Current Fair
Value of
Investments as
a % of Total
Investments at
Fair Value 0.3% 0.1% 2.4% 7.2% 6.4%
Net Unrealized
Appreciation/
(Depreciation) $(59) $(20) $(61) $76 $(112)
Non-Accruing
Loans at Cost $18 $14 $28 $- $41
Non-Accruing
Loans at Fair
Value $16 $3 $22 $- $24
Equity Interest
at Fair
Value(3) $- $- $- $177 $68
Debt to
EBITDA(6)(7)(8)
7.8 NM 8.4 4.4 6.4
Interest
Coverage(6)(8) 1.4 NM 0.9 2.4 2.0
Debt Service
Coverage(6)(8) 1.4 NM 0.8 2.3 1.5
Average Age of
Companies(8) 38 yrs 45 yrs 49 yrs 41 yrs 45 yrs
Diluted
Ownership
Percentage(3) 63% 59% 39% 52% 46%
Average
Sales(8)(9) $45 $5 $47 $184 $94
Average
EBITDA(8)(10) $3 $- $8 $37 $22
Average EBITDA
Margin 6.7% - 17.0% 20.1% 23.4%
Total
Sales(8)(9) $72 $263 $175 $1,266 $823
Total
EBITDA(8)(10) $5 $4 $17 $170 $168
% of Senior
Loans(8)(11) 83% 11% 58% 61% 42%
% of Loans with
Lien(8)(11) 100% 68% 100% 100% 91%
Portfolio
Statistics (1)
($ in millions,
unaudited) 2005 2006 2007 2008 2009
--------------- ---- ---- ---- ---- ----
IRR - GAAP Fair
Value - All
Investments(2) 1.1% 7.0% -12.1% -6.6% -
IRR - GAAP Fair
Value - Equity
Investments
Only(2)(3)(4) -11.7% 13.5% -18.0% -16.9% -
IRR – Exited
Investments(5) 23.9% 13.4% -6.3% -74.9% -
Original
Investments and
Commitments $4,561 $5,175 $7,324 $1,021 $-
Total Exits and
Prepayments of
Original
Investments $2,086 $3,105 $2,932 $54 $-
Total Interest,
Dividends and
Fees Collected $930 $913 $871 $171 $-
Total Net
Realized (Loss)
Gain on
Investments $292 $21 $(381) $(50) $-
Current Cost of
Investments $2,247 $1,712 $3,312 $796 $-
Current Fair
Value of
Investments $1,043 $1,267 $1,767 $583 $-
Current Fair
Value of
Investments as
a % of Total
Investments at
Fair Value 18.7% 22.7% 31.7% 10.5% -
Net Unrealized
Appreciation/
(Depreciation) $(1,204) $(445) $(1,545) $(213) $-
Non-Accruing
Loans at Cost $100 $252 $349 $9 $-
Non-Accruing
Loans at Fair
Value $65 $78 $78 $4 $-
Equity Interest
at Fair
Value(3) $470 $413 $426 $124 $-
Debt to
EBITDA(6)(7)(8) 4.9 5.2 6.9 6.8 -
Interest
Coverage(6)(8) 2.2 2.8 2.1 1.3 -
Debt Service
Coverage(6)(8) 1.5 2.2 1.8 1.2 -
Average Age of
Companies(8) 28 yrs 30 yrs 30 yrs 26 yrs -
Diluted
Ownership
Percentage(3) 49% 43% 47% 33% -
Average
Sales(8)(9) $119 $139 $226 $99 $-
Average
EBITDA(8)(10) $24 $37 $38 $27 $-
Average EBITDA
Margin 20.2% 26.6% 16.8% 27.3% -
Total
Sales(8)(9) $1,917 $4,983 $8,379 $1,233 $-
Total
EBITDA(8)(10) $313 $866 $1,579 $242 $-
% of Senior
Loans(8)(11) 49% 38% 60% 27% -
% of Loans with
Lien(8)(11) 89% 92% 92% 60% -
Portfolio Statistics (1) Pre-2001 - 2009 2005 - 2009
($ in millions, unaudited) Aggregate Aggregate
-------------------------- --------------- -----------
IRR - GAAP Fair Value - All Investments(2) 3.8% -2.3%
IRR - GAAP Fair Value - Equity Investments
Only(2)(3)(4) 1.4% -6.8%
IRR – Exited Investments(5) 13.7% 12.7%
Original Investments and Commitments $24,182 $18,081
Total Exits and Prepayments of Original
Investments $13,132 $8,177
Total Interest, Dividends and Fees Collected $4,745 $2,885
Total Net Realized (Loss) Gain on Investments $(170) $(118)
Current Cost of Investments $9,158 $8,067
Current Fair Value of Investments $5,575 $4,660
Current Fair Value of Investments as a %
of Total Investments at Fair Value 100.0% 83.6%
Net Unrealized Appreciation/ (Depreciation) $(3,583) $(3,407)
Non-Accruing Loans at Cost $811 $710
Non-Accruing Loans at Fair Value $290 $225
Equity Interest at Fair Value(3) $1,678 $1,433
Debt to EBITDA(6)(7)(8) 6.0 6.0
Interest Coverage(6)(8) 2.2 2.2
Debt Service Coverage(6)(8) 1.8 1.8
Average Age of Companies(8) 32 yrs 29 yrs
Diluted Ownership Percentage(3) 45% 44%
Average Sales(8)(9) $159 $166
Average EBITDA(8)(10) $32 $34
Average EBITDA Margin 20.1% 20.5%
Total Sales(8)(9) $19,111 $16,512
Total EBITDA(8)(10) $3,364 $3,000
% of Senior Loans(8)(11) 49% 48%
% of Loans with Lien(8)(11) 88% 87%
(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 current GAAP fair value.
(3) Excludes investments in structured products.
(4) Excludes equity investments that are the result of conversions
of debt and warrants received with the issuance of debt.
(5) Includes exited securities of existing portfolio companies.
(6) These amounts do not include investments in which we own only equity.
(7) For portfolio companies with a nominal EBITDA amount, the portfolio
company's maximum debt leverage is limited to 15 times EBITDA.
(8) Excludes investments in structured products, managed funds and
American Capital, LLC.
(9) Sales of the most recent twelve months, or when appropriate, the
forecasted twelve months.
(10) EBITDA of the most recent twelve months, or when appropriate, the
forecasted twelve months.
(11) As a percentage of our total debt investments.
SHAREHOLDER CALL
American Capital invites shareholders, prospective shareholders and analysts to attend the shareholder call on February 24, 2010 at 11:00 am ET. The shareholder call can be accessed through a live webcast, free of charge, at www.AmericanCapital.com or by dialing (877) 569-8701 (U.S. domestic) or +1 (574) 941-7382 (international). Please provide the operator with the conference ID number 52431651. If you do not plan on asking a question on the call and have access to the internet, please take advantage of the webcast.
A slide presentation will accompany the shareholder call and will be available at www.AmericanCapital.com in advance of the shareholder call. Select the Q4 2009 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. In addition, there will be a phone recording available from 3:00 pm ET February 24, 2010 until 11:59 pm ET March 10, 2010. If you are interested in hearing the recording of the presentation, please dial (800) 642-1687 (U.S. domestic) or +1 (706) 645-9291 (international). The access code for both domestic and international callers is 52431651.
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 $13 billion in capital resources under management and eight 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 and 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.
SOURCE American Capital Ltd.
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