American Capital Reports 2010 Earnings of $1 Billion, or $3.02 Per Share and Net Operating Income of $204 Million, or $0.62 Per Share
BETHESDA, Md., Feb. 15, 2011 /PRNewswire/ -- American Capital, Ltd. (“ACAS” or the “Company”) (Nasdaq: ACAS) announced net operating income (“NOI”) for the quarter and year ended December 31, 2010 of $67 million, or $0.19 per diluted share, and $204 million, or $0.62 per diluted share, respectively. Net earnings for the quarter and year were $381 million, or $1.08 per diluted share, and $998 million, or $3.02 per diluted share, respectively. As of December 31, 2010, net asset value (“NAV”) per share was $10.71, a 12%, or $1.12 per share increase from the September 30, 2010 NAV per share of $9.59 and a 29%, or $2.42 per share increase from the December 31, 2009 NAV per share of $8.29.
Q4 2010 FINANCIAL SUMMARY
- $67 million NOI
- $8 million, or 14%, increase over Q3 2010
- $376 million net unrealized appreciation of investments
- $218 million, or 138%, improvement over Q3 2010
- $5 million net realized earnings (net earnings less net unrealized appreciation)
- $14 million improvement over Q3 2010
- $381 million net earnings
- $232 million, or 156%, improvement over Q3 2010
- 44% annualized return on average equity (“ROE”)
- $474 million of cash proceeds from realizations
- $258 million of debt repaid
2010 FINANCIAL SUMMARY
- $204 million NOI
- $69 million, or 51%, increase over 2009
- $1,370 million net unrealized appreciation of investments
- $1,602 million improvement over 2009
- $(372) million net realized loss (net earnings less net unrealized appreciation)
- $306 million improvement over 2009
- $998 million net earnings
- $1,908 million improvement over 2009
- 34% ROE
- $1,293 million of cash proceeds from realizations
- $1,881 million of debt repaid
- $10.71 NAV per share
- $2.42 per share, or 29%, increase over Q4 2009
- $1.12 per share, or 12%, increase over Q3 2010
“This past year was the year that many companies, including American Capital, emerged from the great recession, and the year we began rebuilding shareholder value,” said Malon Wilkus, Chairman and Chief Executive Officer. “We earned $1.0 billion in 2010 and repaid $1.9 billion of debt, while growing NAV per share $2.42 to $10.71, delivering a 34% return on equity. We believe this is just the beginning of a growth phase for the economy and American Capital, and we look forward to continuing the progress we made last year in 2011.”
PORTFOLIO VALUATION
For the quarter ended December 31, 2010, net unrealized appreciation of investments totaled $376 million. The primary components of the net unrealized appreciation were:
- $120 million appreciation in American Capital’s investment in European Capital, excluding any impact of foreign currency translation on European Capital’s cost basis or cumulative unrealized depreciation, primarily due to an increase in European Capital’s NAV and a decrease to the implied discount to its NAV;
- The equity investment in European Capital is valued at $608 million compared to European Capital’s NAV of $842 million.
- $82 million net appreciation from American Capital’s private finance portfolio as a result of improved portfolio company performance and improved multiples;
- $54 million net appreciation from structured products investments as a result of improved cash flow projections and improved pricing of comparable transactions;
- $49 million appreciation in American Capital’s investment in American Capital, LLC, its alternative fund management company, primarily due to an increase in its funds under management; and
- $61 million of reversals of prior unrealized depreciation associated with net realized losses on portfolio investments.
“In 2010, we strengthened our balance sheet by reducing our debt to equity ratio to our stated goal of 0.6:1,” said John Erickson, Chief Financial Officer. “We further reduced our secured debt due in 2013 by repaying another $150 million in the first quarter of 2011. With no amortization required on that debt until 2013, we have the flexibility to make capital allocation decisions based on the best risk adjusted returns. During 2010, we began to see the re-emergence of the M&A and refinancing markets for middle market companies. That allowed our seasoned portfolio to experience $1.3 billion of liquidity in 2010. We look forward to continuing to harvest mature investments and deploying the capital at attractive risk adjusted returns in 2011.”
PORTFOLIO LIQUIDITY AND PERFORMANCE
In the fourth quarter of 2010, $474 million of cash proceeds were received from realizations of portfolio investments and exits. The Company made $35 million in new committed investments to existing portfolio companies during the quarter. The weighted average effective interest rate on the Company’s private finance debt investments as of December 31, 2010 was 10.2%, which was 20 basis points higher than the September 30, 2010 rate of 10.0% and 30 basis points higher than the December 31, 2009 rate of 9.9%.
“We have produced a 44% return on equity since the low point of our book value in the middle of 2009,” noted Gordon O’Brien, President, Specialty Finance and Operations. “We believe there are further opportunities for growth in our book value assuming the economy continues to improve in the U.S. and Europe. As of quarter end, the fair value of our equity investment in European Capital was $234 million less than its book value. We believe European Capital’s book value will continue to grow as it retains earnings, as well as realizes a potential additional $176 million of value if its performing debt portfolio is repaid at cost. We also believe the value of American Capital’s performing debt and equity portfolio will continue to grow. We could realize a potential additional $61 million of value if our existing performing debt assets are repaid at cost. In addition, we have $1.6 billion of private equity assets, excluding our investment in European Capital, that are forecast to grow at equity rates of return.”
As of December 31, 2010, loans with a fair value of $239 million were on non-accrual, representing 7.8% of total loans at fair value, compared to $265 million fair value of non-accrual loans, representing 7.8% of total loans at fair value as of September 30, 2010.
AMERICAN CAPITAL, LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2010 and 2009
(in millions, except per share amounts)
2010 Versus
2009
-----------
2010 2009 $ %
---- ---- -- --
(unaudited)
Assets
Investments at fair value (cost of
$7,698 and $9,158, respectively) $5,475 $5,575 $(100) -2%
Cash and cash equivalents 269 835 (566) -68%
Restricted cash and cash equivalents 185 96 89 93%
Interest receivable 37 38 (1) -3%
Derivative agreements at fair value 4 1 3 300%
Other 114 127 (13) -10%
--- --- --- ---
Total assets $6,084 $6,672 $(588) -9%
====== ====== ===== ==
Liabilities and Shareholders' Equity
Debt $2,259 $4,142 $(1,883) -45%
Derivative agreements at fair value 106 102 4 4%
Other 51 99 (48) -48%
-- -- --- ---
Total liabilities 2,416 4,343 (1,927) -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, 352.7
and 292.9 issued and 342.4 and
280.9 outstanding, respectively 3 3 - -
Capital in excess of par value 7,131 6,735 396 6%
Distributions in excess of net
realized earnings (1,136) (709) (427) -60%
Net unrealized depreciation of
investments (2,330) (3,700) 1,370 37%
------ ------ ----- --
Total shareholders' equity 3,668 2,329 1,339 57%
----- ----- ----- --
Total liabilities and shareholders'
equity $6,084 $6,672 $(588) -9%
====== ====== ===== ==
Net asset value per common share
outstanding $10.71 $8.29 $2.42 29%
====== ===== ===== ==
AMERICAN CAPITAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months and Fiscal Year Ended December 31, 2010 and 2009
(in millions, except per share data)
Three Months
Ended
Three Months December 31,
Ended 2010
December 31, Versus 2009
------------ ----------
2010 2009 $ %
---- ---- --- ---
(unaudited) (unaudited)
Operating Income
Interest and dividend income $133 $156 $(23) -15%
Fee income 10 13 (3) -23%
-- -- -- ---
Total operating income 143 169 (26) -15%
--- --- --- ---
Operating Expenses
Interest 28 59 (31) -53%
Salaries, benefits and stock-based
compensation 35 68 (33) -49%
General and administrative 13 28 (15) -54%
Debt refinancing costs - 5 (5) -100%
-- -- -- ----
Total operating expenses 76 160 (84) -53%
-- --- --- ---
Operating Income Before Income Taxes 67 9 58 644%
-- -- -- ---
Benefit for income taxes - 10 (10) -100%
-- -- --- ----
Net Operating Income 67 19 48 253%
-- -- -- ---
Net gain on extinguishment of debt - - - -
-- -- -- --
Net realized loss on investments
Portfolio company investments (47) (282) 235 83%
Foreign currency transactions - (1) 1 100%
Derivative and option agreements (15) (19) 4 21%
--- --- - --
Total net realized loss on
investments (62) (302) 240 79%
--- ---- --- --
Net Realized Earnings (Loss) 5 (283) 288 NM
-- ---- --- --
Net unrealized appreciation
(depreciation) of investments
Portfolio company investments 388 410 (22) -5%
Foreign currency translation (36) (26) (10) -38%
Derivative and option agreements 24 6 18 300%
-- -- -- ---
Total net unrealized
appreciation (depreciation)
of investments 376 390 (14) -4%
--- --- --- --
Net Increase (Decrease) in Net
Assets Resulting From Operations
("Net Earnings (Loss)") $381 $107 $274 256%
==== ==== ==== ===
Net Operating Income Per Common Share
Basic $0.19 $0.07 $0.12 171%
Diluted $0.19 $0.07 $0.12 171%
Net Realized Earnings (Loss) Per
Common Share
Basic $0.01 $(1.00) $1.01 NM
Diluted $0.01 $(1.00) $1.01 NM
Net Earnings (Loss) Per Common Share
Basic $1.11 $0.38 $0.73 192%
Diluted $1.08 $0.38 $0.70 184%
Weighted Average Shares of Common
Stock Outstanding
Basic 344.6 283.2 61.4 22%
Diluted 353.1 284.3 68.8 24%
Dividends Declared Per Common Share $- $- $- -
Fiscal Year
Ended
Fiscal Year December 31,
Ended 2010
December 31, Versus 2009
------------ ------------
2010 2009 $ %
---- ---- --- ---
(unaudited)
Operating Income
Interest and dividend income $546 $638 $(92) -14%
Fee income 54 59 (5) -8%
-- -- -- --
Total operating income 600 697 (97) -14%
--- --- --- ---
Operating Expenses
Interest 177 256 (79) -31%
Salaries, benefits and stock-based
compensation 134 215 (81) -38%
General and administrative 64 91 (27) -30%
Debt refinancing costs 21 20 1 5%
-- -- - -
Total operating expenses 396 582 (186) -32%
--- --- ---- ---
Operating Income Before Income Taxes 204 115 89 77%
--- --- -- --
Benefit for income taxes - 20 (20) -100%
-- -- --- ----
Net Operating Income 204 135 69 51%
--- --- -- --
Net gain on extinguishment of debt - 12 (12) -100%
-- -- --- ----
Net realized loss on investments
Portfolio company investments (499) (716) 217 30%
Foreign currency transactions (2) (3) 1 33%
Derivative and option agreements (75) (106) 31 29%
--- ---- -- --
Total net realized loss on
investments (576) (825) 249 30%
---- ---- --- --
Net Realized Earnings (Loss) (372) (678) 306 45%
---- ---- --- --
Net unrealized appreciation
(depreciation) of investments
Portfolio company investments 1,468 (340) 1,808 NM
Foreign currency translation (107) 28 (135) NM
Derivative and option agreements 9 80 (71) -89%
-- -- --- ---
Total net unrealized
appreciation (depreciation)
of investments 1,370 (232) 1,602 NM
----- ---- ----- --
Net Increase (Decrease) in Net
Assets Resulting From Operations
("Net Earnings (Loss)") $998 $(910) $1,908 NM
==== ===== ====== ==
Net Operating Income Per Common Share
Basic $0.63 $0.56 $0.07 13%
Diluted $0.62 $0.56 $0.06 11%
Net Realized Earnings (Loss) Per
Common Share
Basic $(1.14) $(2.81) $1.67 59%
Diluted $(1.12) $(2.81) $1.69 60%
Net Earnings (Loss) Per Common Share
Basic $3.06 $(3.77) $6.83 NM
Diluted $3.02 $(3.77) $6.79 NM
Weighted Average Shares of Common
Stock Outstanding
Basic 325.9 241.1 84.8 35%
Diluted 330.9 241.1 89.8 37%
Dividends Declared Per Common Share $- $1.07 (1.07) -100%
NM = Not meaningful.
AMERICAN CAPITAL, LTD.
OTHER FINANCIAL INFORMATION
Three Months Ended December 31, 2010 and September 30, 2010
and Fiscal Year Ended December 31, 2010 and 2009
(unaudited)
(in millions, except per share data)
Q4 2010
Versus
Q3 2010
------------
Q4 2010 Q3 2010 $ %
----------- ----------- -- --
Assets Under Management
American Capital Assets at
Fair Value $6,084 $5,972 $112 2%
Externally Managed Assets
at Fair Value(1) 16,561 12,429 4,132 33%
------ ------ ----- --
Total $22,645 $18,401 $4,244 23%
======= ======= ====== ==
New Investments
Senior Debt $35 $41 $(6) -15%
Preferred Equity - 22 (22) -100%
Subordinated Debt - - - -
Common Equity - - - -
-- -- -- --
Total $35 $63 $(28) -44%
=== === ==== ===
Direct Investments $- $- $- -
Add-on Financing for
Recapitalizations - - - -
Add-on Financing for
Purchase of Debt of a
Portfolio Company 25 32 (7) -22%
Add-on Financing for
Working Capital in
Distressed Situations 10 8 2 25%
Add-on Financing for
Acquisitions - 22 (22) -100%
Add-on Financing for
Growth and Working Capital - 1 (1) -100%
-- -- -- ----
Total $35 $63 $(28) -44%
=== === ==== ===
Realizations
Principal Prepayments $330 $181 $149 82%
Sale of Equity Investments 97 75 22 29%
Loan Syndications and Sales - 25 (25) -100%
Payment of Accrued Payment-
in-Kind Notes and
Dividends and Accreted
Original Issue Discounts 33 17 16 94%
Scheduled Principal
Amortization 14 7 7 100%
-- -- -- ---
Total $474 $305 $169 55%
==== ==== ==== ==
Appreciation, Depreciation, Gain
and Loss
Gross Realized Gain $24 $11 $13 118%
Gross Realized Loss (71) (65) (6) -9%
--- --- -- --
Portfolio Net Realized
Loss (47) (54) 7 13%
Foreign Currency - - - -
Derivative and Option
Agreements (15) (14) (1) -7%
--- --- -- --
Net Realized Loss (62) (68) 6 9%
--- --- -- --
Gross Unrealized
Appreciation of Private
Finance Portfolio
Investments 163 135 28 21%
Gross Unrealized
Depreciation of Private
Finance Portfolio
Investments (81) (145) 64 44%
--- ---- -- --
Net Unrealized
Appreciation
(Depreciation) of Private
Finance Portfolio
Investments 82 (10) 92 NM
Net Unrealized
Appreciation of European
Capital Limited Investment 120 44 76 173%
Net Unrealized
Appreciation
(Depreciation) of European
Capital Limited Foreign Currency
Translation 22 (88) 110 NM
Net Unrealized
Appreciation of American
Capital Agency Corp. - - - -
Net Unrealized
Appreciation
(Depreciation) of American
Capital, LLC 49 26 23 88%
Net Unrealized
Appreciation
(Depreciation) of
Structured Products 54 12 42 350%
Reversal of Prior Period
Net Unrealized
Depreciation Upon
Realization 61 44 17 39%
-- -- -- --
Net Unrealized
Appreciation
(Depreciation) of
Portfolio Investments 388 28 360 NM
Foreign Currency
Translation - European
Capital Limited (34) 135 (169) NM
Foreign Currency
Translation - Other (2) 6 (8) NM
Derivative Agreements and
Other 24 (11) 35 NM
Reversal of Prior Period
Net Unrealized
Depreciation on Option
Agreements - - - -
-- -- -- --
Net Unrealized
Appreciation of
Investments 376 158 218 138%
--- --- --- ---
Net Gains, Losses,
Appreciation and
Depreciation $314 $90 $224 249%
==== === ==== ===
Other Financial Data
NAV per Share $10.71 $9.59 $1.12 12%
Debt at Cost $2,259 $2,517 $(258) -10%
Debt at Fair Value $2,208 $2,490 $(282) -11%
Market Capitalization $2,588 $1,981 $607 31%
Total Enterprise Value(2) $4,579 $4,389 $190 4%
Asset Coverage Ratio 262% 230%
Debt to Equity Ratio 0.6x 0.8x
Credit Quality
Weighted Average Effective
Interest Rate on Private
Finance Debt Investments
at Period End 10.2% 10.0% 0.2% 2.0%
Loans on Non-Accrual at
Cost $702 $746 $(44) -6%
Loans on Non-Accrual at
Fair Value $239 $265 $(26) -10%
Non-Accrual Loans at Cost
as a Percentage of Total
Loans at Cost 19.6% 18.8%
Non-Accrual Loans at Fair
Value as a Percentage of
Total Loans at Fair Value 7.8% 7.8%
Past Due Loans at Cost $58 $152 $(94) -62%
Debt to Equity Conversions
at Cost $9 $- $9 100%
Return on Equity
LTM Net Operating Income
Return on Average Equity
at Cost 3.4% 2.6%
LTM Net Realized Loss
Return on Average Equity
at Cost -6.2% -10.9%
LTM Net Earnings (Loss)
Return on Average Equity
at Fair Value 33.5% 26.9%
Current Quarter Net
Operating Income Return on
Average Equity at Cost
Annualized 4.5% 4.0%
Current Quarter Net
Realized Earnings (Loss)
Return on Average Equity
at Cost Annualized 0.3% -0.6%
Current Quarter Net
Earnings Return on Average
Equity at Fair Value
Annualized 44.0% 18.7%
2010 Versus
2009
-----------
2010 2009 $ %
---- ---- -- --
Assets Under Management
American Capital Assets at
Fair Value $6,084 $6,672 $(588) -9%
Externally Managed Assets
at Fair Value(1) 16,561 7,350 9,211 125%
------ ----- ----- ---
Total $22,645 $14,022 $8,623 61%
======= ======= ====== ==
New Investments
Senior Debt $123 $41 $82 200%
Preferred Equity 24 16 8 50%
Subordinated Debt 85 18 67 372%
Common Equity 2 34 (32) -94%
-- -- --- ---
Total $234 $109 $125 115%
==== ==== ==== ===
Direct Investments $35 $- $35 100%
Add-on Financing for
Recapitalizations 80 20 60 300%
Add-on Financing for
Purchase of Debt of a
Portfolio Company 57 - 57 100%
Add-on Financing for
Working Capital in
Distressed Situations 38 81 (43) -53%
Add-on Financing for
Acquisitions 22 4 18 450%
Add-on Financing for
Growth and Working Capital 2 4 (2) -50%
- - -- ---
Total $234 $109 $125 115%
==== ==== ==== ===
Realizations
Principal Prepayments $874 $316 $558 177%
Sale of Equity Investments 266 323 (57) -18%
Loan Syndications and Sales 40 410 (370) -90%
Payment of Accrued Payment-
in-Kind Notes and
Dividends and Accreted
Original Issue Discounts 77 48 29 60%
Scheduled Principal
Amortization 36 46 (10) -22%
-- -- --- ---
Total $1,293 $1,143 $150 13%
====== ====== ==== ==
Appreciation, Depreciation,
Gain and Loss
Gross Realized Gain $54 $122 $(68) -56%
Gross Realized Loss (553) (838) 285 34%
---- ---- --- --
Portfolio Net Realized
Loss (499) (716) 217 30%
Foreign Currency (2) (3) 1 33%
Derivative and Option
Agreements (75) (106) 31 29%
--- ---- -- --
Net Realized Loss (576) (825) 249 30%
---- ---- --- --
Gross Unrealized
Appreciation of Private
Finance Portfolio
Investments 611 297 314 106%
Gross Unrealized
Depreciation of Private
Finance Portfolio
Investments (289) (970) 681 70%
---- ---- --- --
Net Unrealized
Appreciation
(Depreciation) of Private
Finance Portfolio
Investments 322 (673) 995 NM
Net Unrealized
Appreciation of European
Capital Limited Investment 371 (224) 595 NM
Net Unrealized
Appreciation
(Depreciation) of European
Capital Limited Foreign Currency
Translation 97 (24) 121 NM
Net Unrealized
Appreciation of American
Capital Agency Corp. - 22 (22) -100%
Net Unrealized
Appreciation
(Depreciation) of American
Capital, LLC 111 (148) 259 NM
Net Unrealized
Appreciation
(Depreciation) of
Structured Products 50 (11) 61 NM
Reversal of Prior Period
Net Unrealized
Depreciation Upon
Realization 517 718 (201) -28%
--- --- ---- ---
Net Unrealized
Appreciation
(Depreciation) of
Portfolio Investments 1,468 (340) 1,808 NM
Foreign Currency
Translation - European
Capital Limited (104) 25 (129) NM
Foreign Currency
Translation - Other (3) 3 (6) NM
Derivative Agreements and
Other 9 31 (22) -71%
Reversal of Prior Period
Net Unrealized
Depreciation on Option
Agreements - 49 (49) -100%
-- -- --- ----
Net Unrealized
Appreciation of
Investments 1,370 (232) 1,602 NM
----- ---- ----- --
Net Gains, Losses,
Appreciation and
Depreciation $794 $(1,057) $1,851 NM
==== ======= ====== ==
Other Financial Data
NAV per Share $10.71 $8.29 $2.42 29%
Debt at Cost $2,259 $4,142 $(1,883) -45%
Debt at Fair Value $2,208 $3,929 $(1,721) -44%
Market Capitalization $2,588 $685 $1,903 278%
Total Enterprise Value(2) $4,579 $3,992 $587 15%
Asset Coverage Ratio 262% 156%
Debt to Equity Ratio 0.6x 1.8x
Credit Quality
Weighted Average Effective
Interest Rate on Private
Finance Debt Investments
at Period End 10.2% 9.9% 0.3% 3.0%
Loans on Non-Accrual at
Cost $702 $811 $(109) -13%
Loans on Non-Accrual at
Fair Value $239 $290 $(51) -18%
Non-Accrual Loans at Cost
as a Percentage of Total
Loans at Cost 19.6% 18.1%
Non-Accrual Loans at Fair
Value as a Percentage of
Total Loans at Fair Value 7.8% 7.8%
Past Due Loans at Cost $58 $88 $(30) -34%
Debt to Equity Conversions
at Cost $86 $450 $(364) -81%
Return on Equity
LTM Net Operating Income
Return on Average Equity
at Cost 3.4% 2.1%
LTM Net Realized Loss
Return on Average Equity
at Cost -6.2% -10.7%
LTM Net Earnings (Loss)
Return on Average Equity
at Fair Value 33.5% -37.3%
Current Quarter Net
Operating Income Return on
Average Equity at Cost
Annualized 4.5% 1.2%
Current Quarter Net
Realized Earnings (Loss)
Return on Average Equity
at Cost Annualized 0.3% -18.4%
Current Quarter Net
Earnings Return on Average
Equity at Fair Value
Annualized 44.0% 18.9%
NM = Not meaningful
(1) Includes total assets of American Capital Agency Corp., European
Capital Limited, American Capital Equity I,
American Capital Equity II and ACAS CLO-1 less American Capital's
investment in the funds.
(2) Enterprise value is calculated as debt at cost plus market
capitalization less cash and cash equivalents on hand.
Static Pool (1)
---------------
Portfolio
Statistics
($ in millions,
unaudited) Pre-2001 2001 2002 2003 2004
--------------- -------- ---- ---- ---- ----
IRR at Fair
Value of All
Investments(2) 8.4% 18.1% 8.3% 20.3% 13.3%
IRR of Exited
Investments(5) 8.6% 20.3% 9.7% 23.3% 16.8%
IRR at Fair
Value of Equity
Investments
Only(2)(3)(4) 6.2% 46.9% 11.5% 27.4% 27.0%
IRR of Exited
Equity
Investments
Only(3)(4)(5) 8.5% 48.8% 18.3% 32.2% 43.0%
Original
Investments and
Commitments $1,065 $376 $962 $1,436 $2,266
Total Exits and
Prepayments of
Original
Investments and
Commitments $998 $353 $810 $1,098 $1,909
Total Interest,
Dividends and
Fees Collected $405 $148 $338 $415 $632
Total Net
Realized (Loss)
Gain on
Investments $(128) $(4) $(90) $143 $27
Current Cost of
Investments $81 $23 $157 $327 $418
Current Fair
Value of
Investments $48 $3 $101 $412 $308
Current Fair
Value of
Investments as
a % of Total
Investments at
Fair Value 0.9% 0.1% 1.8% 7.5% 5.6%
Net Unrealized
Appreciation
(Depreciation) $(33) $(20) $(56) $85 $(110)
Non-Accruing
Loans at Cost $- $14 $28 $- $45
Non-Accruing
Loans at Fair
Value $1 $2 $21 $- $16
Equity Interest
at Fair
Value(3) $23 $- $7 $193 $74
Debt to
EBITDA(6)(7)(8)
3.6 NM 8.6 4.3 5.9
Interest
Coverage(6)(8) 2.7 NM 1.6 2.8 2.3
Debt Service
Coverage(6)(8) 2.6 NM 1.5 2.7 1.7
Average Age of
Companies(8) 35 yrs 26 yrs 33 yrs 41 yrs 49 yrs
Diluted
Ownership
Percentage(3) 53% 86% 45% 53% 51%
Average
Sales(8)(9) $48 $6 $44 $196 $72
Average
EBITDA(8)(10) $6 $(1) $10 $37 $16
Average EBITDA
Margin 11.7% -8.5% 22.1% 19.0% 22.8%
Total
Sales(8)(9) $84 $305 $186 $1,317 $474
Total
EBITDA(8)(10) $10 $6 $25 $193 $96
% of Senior
Loans(8)(11) 71% 33% 55% 59% 26%
% of Loans with
Lien(8)(11) 100% 68% 100% 100% 88%
Portfolio
Statistics
($ in millions,
unaudited) 2005 2006 2007 2008
--------------- ---- ---- ---- ----
IRR at Fair
Value of All
Investments(2) 8.5% 9.3% -8.6% 5.9%
IRR of Exited
Investments(5) 21.9% 10.6% -8.6% 12.9%
IRR at Fair
Value of Equity
Investments
Only(2)(3)(4) -0.1% 14.3% -13.5% 10.3%
IRR of Exited
Equity
Investments
Only(3)(4)(5) 47.2% 18.7% 8.3% 35.7%
Original
Investments and
Commitments $4,643 $5,198 $7,434 $1,036
Total Exits and
Prepayments of
Original
Investments and
Commitments $2,355 $3,743 $3,953 $238
Total Interest,
Dividends and
Fees Collected $1,040 $1,030 $1,010 $258
Total Net
Realized (Loss)
Gain on
Investments $279 $(103) $(764) $(29)
Current Cost of
Investments $2,056 $1,260 $2,670 $706
Current Fair
Value of
Investments $1,465 $1,082 $1,468 $588
Current Fair
Value of
Investments as
a % of Total
Investments at
Fair Value 26.8% 19.8% 26.8% 10.7%
Net Unrealized
Appreciation
(Depreciation) $(591) $(178) $(1,202) $(118)
Non-Accruing
Loans at Cost $41 $107 $445 $22
Non-Accruing
Loans at Fair
Value $33 $26 $112 $28
Equity Interest
at Fair
Value(3) $985 $443 $326 $160
Debt to
EBITDA(6)(7)(8)
5.0 4.5 6.5 5.6
Interest
Coverage(6)(8) 3.5 2.9 1.9 1.7
Debt Service
Coverage(6)(8) 2.4 2.4 1.6 1.6
Average Age of
Companies(8) 30 yrs 37 yrs 34 yrs 26 yrs
Diluted
Ownership
Percentage(3) 69% 43% 47% 41%
Average
Sales(8)(9) $109 $147 $186 $106
Average
EBITDA(8)(10) $21 $37 $39 $30
Average EBITDA
Margin 19.0% 25.0% 20.7% 28.5%
Total
Sales(8)(9) $1,300 $4,433 $7,460 $1,324
Total
EBITDA(8)(10) $237 $462 $1,398 $263
% of Senior
Loans(8)(11) 37% 34% 56% 17%
% of Loans with
Lien(8)(11) 91% 92% 91% 55%
Portfolio
Statistics Pre-2001 -
($ in millions, 2010 2006 - 2010
unaudited) 2009 2010 Aggregate Aggregate
--------------- ---- ---- ----------- ---------
IRR at Fair
Value of All
Investments(2) - - 6.6% 0.1%
IRR of Exited
Investments(5) - - 11.8% 2.5%
IRR at Fair
Value of Equity
Investments
Only(2)(3)(4) - - 5.9% 1.0%
IRR of Exited
Equity
Investments
Only(3)(4)(5) - - 26.4% 16.3%
Original
Investments and
Commitments $- $- $24,416 $13,668
Total Exits and
Prepayments of
Original
Investments and
Commitments $- $- $15,457 $7,934
Total Interest,
Dividends and
Fees Collected $- $- $5,276 $2,298
Total Net
Realized (Loss)
Gain on
Investments $- $- $(669) $(896)
Current Cost of
Investments $- $- $7,698 $4,636
Current Fair
Value of
Investments $- $- $5,475 $3,138
Current Fair
Value of
Investments as
a % of Total
Investments at
Fair Value - - 100.0% 57.3%
Net Unrealized
Appreciation
(Depreciation) $- $- $(2,223) $(1,498)
Non-Accruing
Loans at Cost $- $- $702 $574
Non-Accruing
Loans at Fair
Value $- $- $239 $166
Equity Interest
at Fair
Value(3) $- $- $2,211 $929
Debt to
EBITDA(6)(7)(8)
- - 5.5 5.6
Interest
Coverage(6)(8) - - 2.5 2.2
Debt Service
Coverage(6)(8) - - 2.0 1.9
Average Age of
Companies(8) - - 35 yrs 35 yrs
Diluted
Ownership
Percentage(3) - - 53% 53%
Average
Sales(8)(9) $- $- $144 $157
Average
EBITDA(8)(10) $- $- $32 $36
Average EBITDA
Margin - - 20.9% 23.1%
Total
Sales(8)(9) $- $- $16,883 $13,217
Total
EBITDA(8)(10) $- $- $2,690 $2,123
% of Senior
Loans(8)(11) - - 42% 42%
% of Loans with
Lien(8)(11) - - 89% 85%
(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.
(2) Assumes investments are exited at current 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, analysts and interested parties to attend the shareholder call on February 16, 2011 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). All callers are asked to dial in 10-15 minutes prior to the call to register. Please provide the operator with the conference ID number 37368950. 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 2010 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 February 16. In addition, there will be a phone recording available from 2:00 pm ET February 16, 2011 until 11:59 pm ET March 2, 2011. 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 37368950.
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 $23 billion in assets under management and eight offices in the U.S., Europe and Asia. American Capital and its affiliates will consider investment opportunities from $10 million to $300 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 reports on Form 10-K and Form 10-K/A, 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 Reports on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2009 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: |
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Investors - (301) 951-5917 |
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Media - (301) 968-9400 |
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SOURCE American Capital Ltd.
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