BETHESDA, Md., Nov. 3 /PRNewswire/ -- American Capital Strategies, Ltd. (Nasdaq:ACAS), announced today the results for the quarter ended September 30, 1998, its fourth complete quarter of operations as a public company. Net operating income was $3,900,000 or $0.35 per share on total operating income of $4,762,000 compared to net operating income of $3,423,000 or $0.31 per share and total operating income of $3,684,000 for the quarter ended June 30, 1998. Net operating income increased 13% from the previous quarter. American Capital also declared and paid a $0.32 per share dividend for the third quarter.
During the quarter, American Capital completed three financing transactions totaling $31,500,000 composed of purchases of $29,561,000 of senior debt, subordinated debt and preferred stock at a weighted average interest and dividend rate of 13.3%, and $1,939,000 of warrants. These amounts include $9,000,000 of unfunded commitments and agreements to fund senior and subordinated debt for future acquisitions and working capital requirements. The weighted average interest and dividend rate on the total $22,500,000 of capital invested during the quarter was 12.6%. For the nine months ended September 30, 1998, American Capital has completed eleven financings totaling $99,300,000. At September 30, 1998, all of American Capital's loans were graded either 3 or 4 and the portfolio's weighted average grade was 3.2, with 4 the highest grade. There are no loans past due.
American Capital's Vice Chairman David Gladstone commented, "I am pleased that we were able to deliver another solid quarter that included a number of highlights. First, we invested $31.5 million in a buyout transaction, a recapitalization, and a growth financing in companies that are leaders in their respective markets. Secondly, we are seeing strong performance from our portfolio. All of our loans are current and I am very pleased with the early operating results from the portfolio companies. Our portfolio companies have a 2.4 times weighted average interest coverage ratio and a 2.0 times weighted average debt service coverage ratio. Additionally, we continued building the American Capital infrastructure by opening offices in Dallas and Chicago and staffing them with three extremely experienced principals."
American Capital Executive Vice President Adam Blumenthal commented, "Our portfolio companies' results are on course and they are performing in a satisfactory or outstanding fashion. Prior to making an investment decision, we perform a rigorous due diligence review of a potential investment including analyzing a number of economic models. I believe that the operating results from our initial investments serve to validate our approach and the depth of our due diligence. American Capital also benefits from the executive management leadership of David Gladstone, a veteran of numerous economic cycles."
John Erickson, Chief Financial Officer stated, "I am please at our continued financial strength including obtaining the credit facility announced yesterday and increasing our dividend by 16% to $0.37 per share for the quarter ending in December. The pipeline of potential investments has increased due to the current market conditions and we are well positioned to continue selecting excellent opportunities."
BETHESDA, Md., Nov 3 (Reuters) -
(In Thousands Except Share and Per Share Data)
3 9
Months Months
Ended Ended
9/30/98 9/30/98
Total operating income $4,762 $11,737
Total operating expenses 496 1,311
Operating income before
equity in earnings 4,266 10,427
of unconsolidated
operating subsidiary
Equity in earnings of
unconsolidated operating
subsidiary (366) (154)
Net operating income 3,900 10,273
Change in unrealized
appreciation 924 943
of investments
Net increase in
shareholders' equity 4,824 11,216
resulting from operations
Common stock outstanding 11,076,774
Net operating income
per share - Basic 0.35 0.93
Net increase in
shareholders' equity
resulting from
operations per share 0.44 1.01
Total assets 197,579,000
Total shareholders'
equity 152,442,000
Net asset value per share 13.76
Dividends per share 0.32
NOTE: Full company name is American Capital Strategies Ltd. In
the year-ago period, the company lost $0.02 per share on total
revenue of $959,000.
Additional information may be viewed at American Capital's Web site.
American Capital has elected to be regulated as a Business Development Company under the Investment Company Act of 1940, as amended. On October 1, 1997, American Capital elected to be taxed as a Regulated Investment Company (RIC) pursuant to subchapter M of the Internal Revenue Code. As contemplated by these transactions, American Capital materially changed its business plan and format from structuring and arranging financing for buyout transactions on a fee-for-services basis to primarily being a lender to and investor in middle market companies. As a result of the changes, American Capital's predominant source of operating income has changed from financial performance and advisory fees to interest and dividends earned from investing the company's assets in debt and equity of middle market companies and short-term government securities.
The results of ACS Capital Investments Corporation (CIC), a subsidiary of American Capital, were consolidated in the financial statements of American Capital through September 30, 1997. As of October 1, 1997, CIC has not been consolidated with American Capital and is accounted for under the equity method due to the change in American Capital's business format. As a result of these changes, American Capital's financial statements for periods through September 30, 1997 are not comparable with the financial statements for periods commencing after October 1, 1997.
American Capital is a buyout and specialty finance company with capital resources exceeding $175 million. American Capital invests $1 to $20 million in the form of senior debt, subordinated debt and equity to middle market companies in need of capital for growth, acquisitions, employee buyouts, management buyouts, liquidity and restructuring. Companies interested in learning more about American Capital and its unique and flexible financing should contact John Hoffmire, Vice President of Marketing, at 781-862-4447 or visit its Web site at www.American-Capital.com or its shareholder site at www.ACAS1.com
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements regarding expected results of American Capital Strategies, Ltd. are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings and national economic trends.
