®

Citi US Financial Services
Conference
March 6, 2013
© 2012 American Capital. All Rights Reserved.

Nasdaq: ACAS

Nasdaq: ACAS

SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This presentation contains statements that, to the extent they are not recitations of historical fact,
constitute "forward-looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All such forward-looking statements are intended to be subject to the safe
harbor protection provided by the Reform Act. Actual outcomes and results could differ
materially from those forecast due to the impact of many factors beyond the control of American
Capital. All forward looking statements included in this presentation are made only as of the date
of this presentation and are subject to change without notice. Certain factors that could cause
actual results to differ materially from those contained in the forward-looking statements are
included in our periodic reports filed with the SEC. Copies are available on the SEC’s website at
www.sec.gov. We disclaim any obligation to update our forward looking statements unless
required by law.
The following slides contain summaries of certain financial and statistical information about
American Capital, Ltd. They should be read in conjunction with our periodic reports that are filed
from time-to-time with the Securities and Exchange Commission including our annual report on
Form 10-K for the year ended December 31, 2011 and our subsequent periodic filings. Historical
results discussed in this presentation are not indicative of future results.
Additional Information
No information contained in this presentation constitutes an offer or invitation to acquire or
dispose of any securities or investment advice in any jurisdiction. Any statements included
herein regarding earnings enhancement are not a profit forecast and should not be interpreted to
mean that American Capital’s future earnings will necessarily match or exceed those of any prior
year.

2

Nasdaq: ACAS

2012 HIGHLIGHTS

$17.84 Net Asset Value (“NAV”) Per Share
 $3.97 per share, or 29%, increase from 2011

$1.16 Net Operating Income (“NOI”) Before Income Taxes Per Diluted
Share, or $383 MM
 7.7% return on average shareholders’ equity

$3.44 Net Earnings Per Diluted Share, or $1,136 MM
 22.1% return on average shareholders’ equity

$1,498 MM in Realizations
 $719 MM in New Committed Investments*
 Stock Repurchase and Dividend Program

 35 MM shares repurchased for $362 MM at an average price of $10.39 per share
 $0.77 per share accretive to December 31, 2012 NAV per share
● Per share impact equivalent to $234 MM of additional retained earnings

Refinanced Secured Debt with a $600 MM Four-year Term Facility and
Obtained a New Four-year $250 MM Senior Secured Revolving Credit
Facility
 $487 MM of Securitized Debt Repaid
 S&P Credit Rating Upgraded from B to B+

*

New investments reported on committed amounts at origination.

3

Nasdaq: ACAS

Q4 2012 HIGHLIGHTS

$17.84 NAV Per Share
 $0.45 per share, or 10% annualized increase from Q3 2012

$0.36 NOI Before Income Taxes Per Diluted Share, or $115 MM
 $0.26 NOI after taxes per diluted share, or $83 MM
● 6.1% annualized return on average shareholders’ equity

$0.38 Net Earnings Per Diluted Share, or $123 MM
 9.1% annualized return on average shareholders’ equity

$634 MM in Realizations

$527 MM in New Committed Investments*

$28 MM of Securitized Debt Repaid

Stock Repurchase and Dividend Program
 9 MM shares repurchased for $103 MM at an average price of $11.72 per share
 $0.18 per share accretive to December 31, 2012 NAV per share
● Per share impact equivalent to $55 MM of additional retained earnings

*

New investments reported on committed amounts at origination.

4

Nasdaq: ACAS

$719 MM OF 2012 NEW INVESTMENTS*
BY USE OF FUNDS
$22 MM for Growth and
Working Capital in 3
Portfolio Companies,
3%
$22 MM for Working

$19 MM for Acquisitions
in 3 Portfolio
Companies,
3%

Capital in Distressed
Situations in 4 Portfolio
Companies,
3%
$71 MM for
Recapitalization in 5
Portfolio Companies**,
10%
$301 MM for 2 One Stop
Buyout® Investments,
42%

$116 MM for Investment
in American Capital
Asset Management,
LLC,
16%

$9 MM for a CLO
Investment,
1%
$50 MM for Investment
in European Capital,
7%
*
**

New investments reported on committed amounts at origination.
Recapitalization occurred in non-distressed portfolio companies

$109 MM for 8 Sponsor
Finance Investments,
15%

5

Nasdaq: ACAS

$527 MM OF Q4 2012 NEW INVESTMENTS*
BY USE OF FUNDS
$29 MM for
Recapitalization in 3
Portfolio Companies**,
5%

$10 MM for Acquisitions $6 MM for Growth and
in 2 Portfolio
Working Capital in a
Companies,
Portfolio Company,
2%
1%

$5 MM for Working
Capital in Distressed
Situations in a Portfolio
Company,
1%

$30 MM for Investment
in American Capital
Asset Management,
LLC,
6%
$9 MM for a CLO
Investment,
2%
$50 MM for Investment
in European Capital,
9%

$87 MM for 6 Sponsor
Finance Investments,
17%

*
**

New investments reported on committed amounts at origination.
Recapitalization occurred in non-distressed portfolio companies

$301 MM for 2 One Stop
Buyout® Investments,
57%

6

Nasdaq: ACAS

CAMBRIDGE MAJOR LABORATORIES, INC. (“CML”)
ONE STOP BUYOUTS®

$212 MM Committed in Q4 2012
 $155 MM Unirate Note
 $57 MM Convertible Preferred Stock
 93% Diluted Ownership in the Company


Headquartered in Germantown, WI, Cambridge Major Laboratories, Inc.
(“CML”) is a leading, global chemistry-based development service and
active pharmaceutical ingredient (“API”) manufacturing company providing
comprehensive chemistry outsourcing services to a broad customer base
of pharmaceutical, biotech, and generic drug companies. CML operates
globally from three state-of-the-art facilities, two in Germantown, WI and
one in Weert, Netherlands.
CML boasts a robust pipeline of API’s, which includes approximately 40
pre-clinical compounds, 100 clinical compounds and 14 commercial
compounds.
The products CML manufactures span a wide range of therapeutic
categories from cancer to neurology to rare genetic diseases.
CML expands American Capital's portfolio of healthcare products and
services companies, which have aggregate revenues of over $600 MM.

7

Nasdaq: ACAS

ASAP INDUSTRIES, LLC (“ASAP”)
ONE STOP BUYOUTS®

$89 MM Committed in Q4 2012




$12 MM Revolving Credit Facility
$5 MM CAPEX Loan Facility
$23 MM Senior Term Loan
$20 MM Mezzanine Debt
$29 MM Preferred Equity

Founded in 2001, ASAP is a leading independent manufacturer and
refurbisher of high-pressure flow control products for the global oil
and gas industry.
 Based in Houma, Louisiana, ASAP manufactures a wide variety of flow
control products for small local operations to major oilfield services
companies and original equipment manufacturers. ASAP’s products
are used in numerous applications including onshore and offshore
projects, crude oil and natural gas wells and drilling, completion and
production applications.
 This acquisition is part of our Energy and Infrastructure fund
development efforts under Paul Hanrahan.

8

Nasdaq: ACAS

OPERATING COMPANIES* UPDATE
$2.5 B FAIR VALUE

$301 MM Committed in 2 New Operating Companies in Q4 2012

$19 MM Net Unrealized Depreciation in Q4 2012
 Driven primarily by reduced portfolio company performance
 $96 MM of net appreciation in 2012

Companies had a Modest Aggregate Revenue and Adjusted EBITDA
Increase in the Past 3 Months Year-Over-Year**

Outlook
 Working to increase value of portfolio companies through funding
● Organic growth
● Accretive add-on acquisitions

 Continuing to improve operational performance
 Continuing to pursue One Stop Buyouts®
 Continuing to pursue high operating company realizations

*
**

Includes our investments in One Stop Buyouts® less our investment in American Capital Asset Management, LLC.
For the most recent three months available, or when appropriate, forecasted data for portfolio companies held in
both periods and weighted based on fair value.

9

Nasdaq: ACAS

AMERICAN CAPITAL ASSET MANAGEMENT, LLC UPDATE
$828 MM FAIR VALUE

No Appreciation or Depreciation to Fair Value in Q4 2012
 $329 MM of appreciation in 2012

$110 B of Third-party Assets Under Management*
 $12 B third-party earning assets under management**
● 63% increase over 2011

$83 MM 2012 Dividend Income to American Capital
 $21 MM Q4 2012 dividend income to American Capital

$91 MM 2012 Adjusted EBITDA***
 $23 MM Q4 2012 Adjusted EBITDA***

*

Includes total assets of American Capital Agency Corp., American Capital Mortgage Investment Corp., European
Capital, American Capital Equity I, American Capital Equity II, ACAS CLO 2007-1, ACAS CLO 2012-1 and ACAS CRE
CDO less ACAS’ investments in the funds.
** Represents third-party earning assets under management from which the associated base management fees are
calculated.
*** Based on non-GAAP financial measures. Adjusted EBITDA reflects adjustments to exclude non-recurring income and
non-cash charges and minority interest as permitted in our debt agreements.

10

Nasdaq: ACAS

AMERICAN CAPITAL ASSET MANAGEMENT, LLC UPDATE - CONTINUED
$828 MM FAIR VALUE

$4.8 B Increase in Earning Assets Under Management in 2012
 $3.8 B equity raised for American Capital Agency (NASDAQ: AGNC)
● Becoming the 2nd largest agency REIT with $10 B market capitalization*

 $0.6 B equity raised for American Capital Mortgage (NASDAQ: MTGE)
 $362 MM ACAS CLO 2012-1, Ltd. Closed in Q3 2012
● Annual management fee of 42 basis points of total assets
● Incentive fee of 20% of net profits, subject to performance hurdles

Outlook
 To grow existing funds
 To raise new funds
 Leveraging our existing cost structure to grow assets under management
● $20 MM, or 10%, of $204 MM of ACAS operating expenses before interest expense, was
reimbursed by our asset management company in 2012

*

Estimated market capitalization as of December 31, 2012.

11

Nasdaq: ACAS

SPONSOR FINANCE AND DIRECT INVESTMENTS UPDATE
$919 MM FAIR VALUE

$87 MM Committed in 6 New Sponsor Finance Investments in Q4 2012
 $76 MM 2nd Lien
 $11 MM Unirate
 $109 MM committed in 8 new Sponsor Finance investments in 2012

$21 MM Net Unrealized Appreciation in Q4 2012
 $98 MM net unrealized appreciation in 2012

Companies had a Modest Aggregate Revenue Increase and Adjusted
EBITDA Increase in the Past 3 Months Year-Over-Year*

Outlook
 Continuing to Pursue UniTranche, Second Lien and Mezzanine Investments

*

For the most recent three months available, or when appropriate, forecast data for portfolio companies held in
both periods and weighted based on fair value.

12

Nasdaq: ACAS

NON-PERFORMING LOANS ANALYSIS
PAST DUE AND NON-ACCRUING LOANS

$110 MM Decrease of Non-accruing Loans at Cost
 $260 MM versus $370 MM in Q3 2012
 Decrease comprised primarily of:
● $118 MM decrease for removal of loans from non-accrual status due to improved portfolio
company performance
● $11 MM decrease from write-offs of non-accruing loans
● $21 MM increase in new non-accruing loans due to weaker performance

$75 MM Decrease of Non-accruing Loans at Fair Value
 $177 MM versus $252 MM in Q3 2012
 Decrease comprised primarily of:
● $111 MM decrease for removal of loans from non-accrual status due to improved portfolio
company performance
● $21 MM increase due to net appreciation of existing non-accruing loans
● $14 MM increase in new non-accruing loans due to weaker performance

Non-Accruing Loans Valued at 68% of Cost
 Our expected recovery rate
 No change from the prior quarter

$54 MM of Accruing Past Due Loans at Cost

13

Nasdaq: ACAS

EUROPEAN CAPITAL UPDATE
ECAS NAV TOTALS €705 MM

€34 MM Increase in NAV from €671 MM NAV at September 30, 2012
 20% annualized increase

€78 MM increase in NAV from €627 MM NAV at December 31, 2011
 12% annual increase

Companies had a Moderate Aggregate Revenue Increase and a Modest
Adjusted EBITDA Increase in the Past 3 Months Year-Over-Year*
 €341 MM of Equity Assets at Fair Value
 €82 MM Realizations in 2012 (€1 MM in Q4 2012)
 €153 MM New Investment Commitments in 2012 (€24 MM in Q4 2012)
 Outlook

 99.5% of ECAS assets are invested in portfolio companies headquartered in
countries with AA rating or better**
 Expect continued portfolio company realizations and opportunities for new
investments
 Continuing to pursue new senior and mezzanine debt investment opportunities
from €10 MM to €40 MM and One Stop Buyouts® up to €400 MM

*
**

For the most recent three months available, or when appropriate, forecasted data for portfolio companies held
in both periods and weighted based on fair value.
Standard & Poor’s rating as of December 31, 2012.

14

Nasdaq: ACAS

ACAS INVESTMENT IN EUROPEAN CAPITAL
$809 MM FAIR VALUE

$700 MM Equity at Fair Value and $109 MM Debt at Fair Value

$153 MM Net Appreciation on ACAS’ Investment in ECAS in 2012
 25% annual increase

$50 MM Net Appreciation on ACAS’ Investment in ECAS in Q4 2012
 27% annualized increase
 $31 MM of net unrealized appreciation
 $19 MM of net unrealized appreciation driven by foreign currency translation
due to a stronger Euro

Fair Value of ACAS’ Investment in ECAS is 75% of ECAS’ NAV at
December 31, 2012 and September 30, 2012
 $231 MM discount to ECAS NAV of $931 MM

$132 MM of Bond Yield Discount on Performing ECAS Debt Assets is not
Included in the Fair Value of ACAS Investment

15

Nasdaq: ACAS

STRUCTURED PRODUCTS UPDATE
$247 MM FAIR VALUE
$9 MM New Investments in Q4 2012 ($9 MM in 2012)
 $247 MM Total Investments in CLOs, CMBS and CDOs at Fair Value



$228 MM in 25 CLOs secured by diverse pool of commercial corporate loans
$18 MM in 15 CMBS secured by diverse pool of commercial mortgage loans
$1 MM in 1 CDO secured by bonds of separate securitizations

Non-investment Grade Tranches with Intention to Hold to Maturity
 Structured Products Represents 5% of Investment Portfolio at Fair
Value
 $17 MM of Interest Income in Q4 2012
 $67 MM of Interest Income in 2012

 $11 MM more than 2011

16

Nasdaq: ACAS

2012 BALANCE SHEET MANAGEMENT UPDATE

Refinanced Secured Debt with a $600 MM Four-year Term Facility
 LIBOR plus 4.25%, with a LIBOR floor of 1.25%
 ~3.5% improvement over cost of prior secured debt and assuming drawing 75% of
new revolving credit facility

Obtained a New Four-year $250 MM Senior Secured Revolving Credit Facility
 LIBOR plus 3.75%


0.1:1.0 Net Debt to Equity as of December 31, 2012
Stock Repurchase Plan
 Approved through December 2013
 $495 MM cumulative repurchases since inception in Q3 2011
● 15% of shares issued at June 30, 2011 repurchased over the past 6 quarters
● $1.09 per share accretive to NAV per share

Per share impact equivalent to $332 MM of additional retained earnings

Optimizing Tax Asset
 Potential to retain future ordinary and capital income as a C Corporation
● $531 MM of net operating loss carryforwards
● $359 MM of net capital loss carryforwards

S&P Credit Rating Upgraded from B to B+

17

Nasdaq: ACAS

DRIVING GROWTH IN NAV PER SHARE
30% ANNUALIZED GROWTH SINCE U.S. GDP TURNED POSITIVE IN Q3 2009

Potential Appreciation of $1.5 B of Equity Assets*
 Through organic growth, add-on acquisitions and continual operational
improvements

Continue to Grow our $828 MM Equity Investment in American Capital Asset
Management
 Expanding existing funds and raising new funds
 Leveraging our existing cost structure to grow assets under management

Potential for Appreciation in ACAS’ $700 MM Equity Investment in ECAS
 $231 MM discount to ECAS NAV
 Additional $132 MM bond yield discount on performing ECAS debt assets if repaid at
cost

Share Repurchase and Dividend Program (Approved through 2013)
 $495 MM cumulative repurchases since inception in Q3 2011
● 15% of shares issued at June 30, 2011 repurchased over the past 6 quarters
● $1.09 per share accretive to NAV per share

Optimizing Tax Asset
 Potential to retain future ordinary and capital income as a C Corporation
● $531 MM of net operating loss carryforwards
● $359 MM of net capital loss carryforwards

*

Excludes equity investment in European Capital and American Capital Asset Management, LLC.

18

Nasdaq: ACAS

IRR BY STATIC POOL AND EXITED INVESTMENTS*
ON A BLEND OF SENIOR DEBT, MEZZANINE DEBT AND EQUITY INVESTMENTS
35%
30%

$25B All Investments

33%

$18B Exited Investments**

25%
20%

20%20%

18%19%

16%
14%

15%
10%

24%

22%

13%
11%
8%

10%
8%

9%
8%

5%
0%

10%
9%

8%
4%
NM NM

Pre-2001

2001

2002

2003

2004

2005

2006

2007

2008

2011

2012

Aggregate

-3%
-5%

-5%
-10%
93.8%

97.6%

86.5%

88.2%

91.8%

52.8%

82.8%

70.3%

48.1%

36.5%

0.5%

72.2%

Investments Exited as a Percent of the Original Static Pool
*

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.
** Includes exited securities of existing portfolio companies.
NM = Not meaningful

19

Nasdaq: ACAS

NET ASSET VALUE AND GROWTH RATE SINCE Q4 2009
38% ANNUALIZED GROWTH RATE SINCE Q4 2009
Net Asset Value per Common Share Outstanding as of Period End

$20
$17.84

$13.87

$15
$10.71

$10

$8.29

$5

$0
2009

2010

2011

2012

20

Nasdaq: ACAS

OUTLOOK

Uncertain Macroeconomic Trends
 However, portfolio operating performance has been moderately positive

We Remain Focused on our Portfolio Companies
 Providing operational and financial support
 High priority to appreciate control companies by funding
● Organic growth
● Add-on acquisitions
● And continual operational improvements

We are Seeking UniTranche, Second Lien and Mezzanine Investments

We are Pursuing American Capital One Stop Buyouts®

We Continue to Repurchase Shares or Pay Dividends
 Depending on our share price relative to NAV per share

We are a Long-term, Patient Investor
 Targeting high exit values

21

®

End of Formal Presentation

© 2012 American Capital. All Rights Reserved.

22

Nasdaq: ACAS

OVERVIEW OF AMERICAN CAPITAL
GLOBAL PRIVATE FINANCE INVESTOR & ASSET MANAGER*

Founded in 1986
 IPO in 1997

Leading Manager of and Investor in Alternative Assets
 $18.6 B of Earning Assets under Management and on Balance Sheet as of
December 31, 2012

$6.3 B internally managed at American Capital**
$12.3 B externally managed by fee based asset manager in 5 private and 2 public funds

 $117 B of total assets under management (including levered assets)***

8 offices and 340 employees in the U.S. and Europe.
Chicago
Dallas

Boston
New York
Bethesda, MD
Annapolis

Corporate Headquarters
*
**
***

London
Paris

American Capital Office

Includes assets managed by American Capital Asset Management, LLC, a wholly-owned portfolio company.
Includes total assets for American Capital less American Capital's investment in the funds.
Includes assets managed by American Capital Asset Management, LLC, a wholly-owned portfolio company, less American Capital’s
investments in the funds.

23

Nasdaq: ACAS

EARNING ASSETS UNDER MANAGEMENT
$ in Billions

$20

$18.6

$15

$13.8

$13.5

$2.3
$9.6
$1.0

$10

$12.3
$9.6
$1.8

$8.5

$9.0

$7.6

$1.9

$2.9

$6.6

$6.1

$5.9

$6.3

2009

2010

2011

2012

$11.5

$5

$8.6

$7.8

$0
2006

2007

2008

American Capital Total Assets*
*
**

Earning Assets Under Management**

Includes total assets for American Capital less American Capital's investment in the funds.
Represents third-party earning assets under management from which the associated base management fees
are calculated. Includes American Capital Agency Corp., American Capital Mortgage Investment Corp, American
Capital Equity I, American Capital Equity II, ACAS CLO 2007-1, ACAS CLO 2012-1, ACAS CLO-2 and ACAS CRE
CDO.

24

Nasdaq: ACAS

ASSETS UNDER MANAGEMENT
$ in Billions

$120

$116.8

$110
$100
$90
$80
$68.1

$70
$60
$50
$40
$30

$22.6

$20

$16.3
$10.6

$10
$0

$0.2

$0.4

$0.6

$0.9

$1.3

$2.1

$3.5

$5.5

$0.3

1997

1998

1999

2000

2001

2002

2003

2004

2005

American Capital Assets

2006

2007

$12.8 $14.0

2008

2009

2010

2011

2012

Externally Managed Assets*

* Includes total assets of American Capital Agency Corp., American Capital Mortgage Investment Corp., European
Capital, American Capital Equity I, American Capital Equity II, ACAS CLO 2007-1, ACAS CLO 2012-1 and ACAS
CRE CDO less ACAS’ investments in the funds.

25

Nasdaq: ACAS

OUR COMPETITIVE ADVANTAGE
340 EMPLOYEES*

31 Investment Teams (Including those at American Capital Asset
Management, LLC)
 100 investment professionals

34 Audit and Valuation Professionals (FACT)
 Unique in our industry

15 Person Operations Team





One of the largest in our industry
8 former CEOs & Presidents
1 former COO
1 former CFO
5 Financial VPs and Associates
4 Supply Chain Management Professionals

5 Person Syndication Team

23 Person Legal Team

8 Person Human Resource Team

*

Includes 84 Employees at American Capital Asset Management, LLC, a wholly-owned portfolio company

26

Nasdaq: ACAS

BUSINESS LINES

Operating
Companies*
$2.5 B FV

Sponsor Finance &
Direct Investments
$919 MM FV

Method of Investing
• One Stop Buyouts®
• One Stop Financing
• Equity
• Mezzanine
• 2nd Lien
• Syndicated Senior
• Real Estate Financing
• UniTranche and UniRate

Method of Investing

Types of Investments
• Recapitalizations
• Growth Financings
• Add-on Financings

Types of Investments
• Recapitalizations
• Growth Financings
• Add-on Financings

Sector Specialization
• Health Care Products &
Services
• Consumer Products &
Services
• Commercial Services
• Industrial
• Software & Technology
• Energy
• Special Situations

Sector Specialization
• Health Care Products &
Services
• Consumer Products &
Services
• Commercial Services
• Industrial
• Software & Technology
• Energy
• Special Situations






Equity
Mezzanine
2nd Lien
Syndicated Senior
Real Estate Financing
UniTranche and UniRate

American Capital
Asset Management
$828 MM FV
Types of Investments
• Agency Securities
• RMBS
• Non-Agency Mortgage
Securities
• Residential Mortgage
Securities
• Commercial Mortgage
Securities
• CLO

European Capital
$809 MM FV
Method of Investing
• One Stop Buyouts®
• One Stop Financing
• Equity
• Mezzanine
• 2nd Lien
• Syndicated Senior
• Real Estate Financing
• UniTranche and UniRate

Structured
Products
$247 MM FV
Types of Investments
• CMBS
• CLO
• CDO

Types of Investments
• Recapitalizations
• Growth Financings
• Add-on Financings

* Represents our investments in One Stop Buyouts®, excluding American Capital Asset Management, LLC.

27

Nasdaq: ACAS

TOTAL OPERATING REVENUE AND FAIR VALUE BY BUSINESS LINE
$ in Millions
Operating Companies*
Sponsor Finance, Direct and Other
Managed Funds (including MTGE, ECAS, etc.)

$180
100%

$2
$17

90%
$38

80%

American Capital Asset Management, LLC
Structured Products

$5,265

$809
$247
$919

70%
$26

60%

$828
50%
40%
30%

$97

20%

$2,462

10%
0%
Q4 2012
Revenue
*

Q4 2012
Fair Value

Includes our investments in One Stop Buyouts® less our investment in American Capital Asset Management, LLC.

28

Nasdaq: ACAS

AMERICAN CAPITAL ASSETS
BY BUSINESS LINE AT FAIR VALUE
$ in Millions

$6,319
$583

9%, Deferred Tax Assets & Other Non-Investment
Assets

$471
$247

7%, Cash, Cash Equivalents and Restricted Cash
4%, Structured Products

$809
13%, European Capital

$919
$828

15%, Sponsor Finance & Direct Investments
13%, American Capital Asset Management, LLC
39%, Operating Companies*

$2,462

*

Includes our investments in One Stop Buyouts® less our investment in American Capital Asset Management, LLC.

29

Nasdaq: ACAS

AMERICAN CAPITAL ASSETS
BY TYPE OF SECURITY AT FAIR VALUE
$ in Millions

$6,319

9% Non-Investment Assets

$583
$471
$843

$1,114
$247
$700

$1,194
$90
$1,077

8% Cash, Cash Equivalents and Restricted Cash
13% Senior Debt & Revolving Credit Facilities
18% Mezzanine Debt
4% Structured Products
11% Equity in European Capital
19% Preferred Equity
1% Warrants
17% Common Equity

30

Nasdaq: ACAS

INDUSTRY DIVERSIFICATION*
INVESTMENTS AT FAIR VALUE BASED ON GLOBAL INDUSTRY CLASSIFICATION
STANDARD
Other, 12%
Energy Equipment and
Services, 2%

Capital Markets, 20%

Building Products, 2%
Real Estate and Real Estate
Investment Trusts, 2%
Diversified Consumer
Services, 2%
Computers and Peripherals,
2%
Electronic Equipment,
Instruments and
Components, 2%

Life Sciences Tools and
Services, 7%

Food Products, 3%
Auto Components, 3%
Electrical Equipment, 6%
Internet and Catalog Retail,
3%
Health Care Equipment and
Supplies, 4%

Health Care Providers and
Services, 5%

Construction and
Engineering, 4%

Commercial Services and
Supplies, 5%

Professional Services, 4%
Hotels, Restaurants and
Leisure, 4%

*

Aerospace and Defense, 4%
Pharmaceuticals, 4%

European Capital, CLOs and CDOs are excluded from industry diversification break-out. CMBS are included in
Real Estate and Real Estate Investment Trusts grouping.

31

®

Private Finance
(Operating Companies, Sponsor Finance & Direct Investments)

© 2012 American Capital. All Rights Reserved.

32

Nasdaq: ACAS

PRIVATE FINANCE BUSINESS*

$21 B Invested in over 370 Portfolio Companies Since IPO**
 $11 B in over 115 One Stop Buyouts®
 $8 B in over 150 PE buyouts sponsored by 147 PE firms
 $2 B in over 105 direct & all other investments

12% IRR on $16 B of Exited Investments in Private Finance* Portfolio
Over 14 Years of:
 Senior debt
 Mezzanine debt
 Equity

27% IRR on Exits of Equity Investments in Private Finance* Portfolio

*
**

Excludes European Capital, Structured Products, American Capital Agency Corp., American Capital Mortgage
Investment Corp. and American Capital Asset Management, LLC.
Includes investments and portfolio companies of American Capital Equity I and II.

33

Nasdaq: ACAS

ONE STOP BUYOUTS®
Count

$8.5 B* in 107 One Stop Buyouts®
$0.8 B* in 34 Add-on Acquisitions
$0.2 B* in 5 Investments in American Capital Asset Management, LLC

30

25

23
1

20

19
17

15

4

15

4

10

5

2

20
1

2

9
17

2

6

6

5

5

1
6

6

4

6

13

17

13

15

2

7

7

2

4

1999

2000

One Stop Buyouts®
*

2001

2002

2003

2004

2005

Add-on Financing for Acquisitions

Committed amounts at origination.

2006

2007

3

3

3

1
1

2

3

2

2008

2009

2010

2011

2012

0
1998

5

4

Investments in American Capital Asset Management, LLC

34

Nasdaq: ACAS

One Stop Buyout® Portfolio Company IRRs
$11.5 B INVESTED OF WHICH $9.5 B EXITED AS OF DECEMBER 31, 2012
Senior Debt

Mezzanine Debt

Equity Investments

All Investments

35%

30%

28%

25%

20%

18%
15%
14%

15%
12%
10%

12%

9%

9%

5%

0%

$11.5 B* Active and Exited One Stop Buyout®
Since Inception
*
**

®

$9.8 B** Exited One Stop Buyout Since Inception

Invested capital of Active and Exited One Stop Buyouts®
Realizations of Exited Securities of One Stop Buyouts®

35

®

American Capital Asset
Management, LLC

© 2012 American Capital. All Rights Reserved.

36

Nasdaq: ACAS

AMERICAN CAPITAL ASSET MANAGEMENT, LLC*
$12 B OF EARNING AUM, $117 B AUM INCLUDING LEVERED ASSETS**
5 PRIVATE & 2 PUBLIC FUNDS
PRIVATE FINANCE
American Capital Equity I
• Private equity fund
• $584 MM of AUM
• 2% management fees
• Up to a 30% incentive fee***
American Capital Equity II
• Private equity fund
• $254 MM of AUM
• 2% management fees
• Up to a 35% incentive fee***
European Capital
• Private equity fund
• $1.6 B of AUM
• Wholly-owned by American
Capital

REAL ESTATE
American Capital Agency
Corp.
• Publicly traded (NASDAQ:
AGNC)
• $100.5 B of AUM
• 1.25% management fees
generally based on $10.9 B
of shareholders’ equity of
AGNC
American Capital Mortgage
Investment Corp.
• Publicly traded (NASDAQ:
MTGE)
• $7.7 B of AUM
• 1.50% management fees
generally based on $0.9 B of
shareholders’ equity of
MTGE

STRUCTURED FUNDS
ACAS CLO 2007-1
• CLO of broadly syndicated
middle market leveraged
corporate debt investments
• $390 MM of AUM
• 0.68% management fees
• 20% incentive fee***
ACAS CLO 2012-1
• CLO of broadly syndicated
commercial loans
• $350 MM of AUM
• 0.42% management fees
• 20% incentive fee***

*

Assets managed by American Capital Asset Management, LLC, a wholly-owned portfolio company of American
Capital.
** Total assets of funds under management less American Capital’s investment in the funds.
*** Subject to performance hurdles.

37

®

European Capital

© 2012 American Capital. All Rights Reserved.

38

Nasdaq: ACAS

EUROPEAN CAPITAL OVERVIEW

Founded in 2005
Private Finance Investments
 One Stop Buyouts®
 Sponsor Finance


Wholly-Owned by American Capital, Ltd.
Offices in London and Paris
 49 Employees

$5 B Invested in 105 Portfolio Companies Since Inception
 $1.4 B in 9 One Stop Buyouts®
 $2.9 B in 90 Private Equity buyouts
 $0.3 B in 6 direct and all other investments

3% IRR on $5 B of Investments Over 6 Years of:
 Senior debt
 Mezzanine debt
 Equity

7% IRR on $3 B of Exited Investments* in Over 6 Years of:
 Senior debt
 Mezzanine debt
 Equity

*

Excludes investments in Structured Products.

39

Nasdaq: ACAS

GEOGRAPHIC DIVERSIFICATION*
99.5% OF PORTFOLIO COMPANIES HEADQUARTERED
COUNTRIES RATED AA OR BETTER

IN
FRANCE (AA+)
$518MM
35%
UNITED KINGDOM (AAA)
$616 MM
42%
GERMANY (AAA)
$147MM
10%
LUXEMBOURG (AAA)
$78 MM
5%
NORWAY (AAA)
$57 MM
4%
SWEDEN (AAA)
$19 MM
1%
BELGIUM (AA)
$12 MM
1%
SPAIN (BBB-)
$7 MM
<1%
USA (AA+)
$6 MM
<1%

*

Country based on location of invested entity. Excludes CLO investments. Based on Standard & Poor’s ratings
as of December 31, 2012. Assumed foreign exchange rate of 1.32 USD/EUR as of December 31, 2012.

40

®

Structured Products
(Commercial Senior Debt CLOs, CDOs & CMBS)

© 2012 American Capital. All Rights Reserved.

41

Nasdaq: ACAS

STRUCTURED PRODUCTS UPDATE
$247 MM FAIR VALUE
$9 MM New Investments in Q4 2012 ($9 MM in 2012)
 $247 MM Total Investments in CLOs, CMBS and CDOs at Fair Value



$228 MM in 25 CLOs secured by diverse pool of commercial corporate loans
$18 MM in 15 CMBS secured by diverse pool of commercial mortgage loans
$1 MM in 1 CDO secured by bonds of separate securitizations

Non-investment Grade Tranches with Intention to Hold to Maturity
 Structured Products Represents 5% of Investment Portfolio at Fair
Value
 $17 MM of Interest Income in Q4 2012
 $67 MM of Interest Income in 2012

42

®

Additional Financial
Information

© 2012 American Capital. All Rights Reserved.

43

Nasdaq: ACAS

BALANCE SHEETS
2010

($ in Millions, except per share data and financial metrics)

Assets
Investments at Fair Value
Cash and Cash Equivalents
Restricted Cash and Cash Equivalents
Deferred Tax Asset, Net
Other Assets
Total Assets
Liabilities and Shareholders' Equity
BLT Securitizations
Secured Debt
Unsecured Debt
Other Liabilities
Total Liabilities
Shareholders’ Equity
Total Liabilities and Shareholders' Equity
Net Asset Value per Share
Ratios
Debt-to-Equity
Net Debt-to-Equity
Average Cost of Debt
Price-to-Book

$

$
$

$
$
$

December 31,
2011

5,475
269
185
155
6,084

$

1,248
1,000
11
157
2,416
3,668
6,084
10.71

$

0.6:1
0.5:1
4.0%
0.71 X

$

$
$
$

2012

5,130
204
80
428
119
5,961

$

665
575
11
147
1,398
4,563
5,961
13.87

$

0.3:1
0.2:1
4.3%
0.49 X

2012 vs. 2011
$
%

$

$
$
$

5,265
331
140
455
128
6,319

$

178
597
115
890
5,429
6,319
17.84

$

0.1:1
0.1:1
4.5%
0.67 X

$

$
$
$

135
127
60
27
9
358

3%
62%
75%
6%
8%
6%

(487)
22
(11)
(32)
(508)
866
358
3.97

-73%
4%
-100%
-22%
-36%
19%
6%
29%

N/A
N/A
0.2%
N/A

N/A
N/A
5%
N/A

44

Nasdaq: ACAS

DEFERRED TAX ASSET

Upon Becoming a Taxable C Corp in Q2 2011, ACAS Recognized
Deferred Tax Assets and Liabilities

Valuation Allowance Needed if it is More Likely than Not that a Deferred
Tax Asset Will Not be Realized
 Must be able to forecast sufficient taxable income of the appropriate
character (ordinary versus capital)

(in millions)
Ordinary Deferred Tax Asset
Valuation Allowance
Net Ordinary Deferred Tax Asset
Capital Deferred Tax Asset
Valuation Allowance
Net Capital Deferred Tax Asset
Total Net Deferred Tax Asset

December 31, 2011

December 31, 2012

$428

$455

--

--

$428

$455

841

397

(841)

(397)

--

--

$428

$455

45

Nasdaq: ACAS

QUARTERLY INCOME STATEMENTS
$ in Millions

Q4 2011

Total Operating Income

$

160

Q1 2012
$

149

Q2 2012
$

163

Q3 2012
$

154

Q4 2012
$

180

Total Operating Expense(1)

55

52

50

49

53

Interest Expense

21

16

16

15

12

Net Operating Income before Income Taxes

84

81

97

90

115

145

(32)

97

(19)

(32)

Tax Benefit (Provision)
Net Operating Income

$

Loss on Extinguishment of Debt, Net of Tax

229

$

49

$

194

$

71

$

83

-

-

-

(3)

-

Net Realized (Loss) Gain, Net of Tax

(92)

(107)

(182)

4

15

Net Unrealized Appreciation, Net of Tax

457

638

225

124

25

Net Earnings
Diluted NOI per Common Share
Diluted Net Earnings per Common Share

$

594
$0.67
$1.73

$

580
$0.14
$1.71

$

237
$0.58
$0.71

(1) Salaries, benefits and stock-based compensation and general and administrative expenses.

$

196
$0.22
$0.60

$

123
$0.26
$0.38

46

Nasdaq: ACAS

ANNUAL INCOME STATEMENTS
$ in Millions

2010

Total Operating Revenue
Total Operating Expense

$

(1)

Interest Expense
Debt Refinancing Costs
Net Operating Income before Income Taxes

600

$

Loss on Extinguishment of Debt, Net of Tax
Net Realized Loss, Net of Tax
Net Unrealized Appreciation, Net of Tax

$

591

2012
$

646

$

55

9%

198

198

204

6

3%

177

90

59

(31)

-34%

21

-

-

-

-

204

303

383

80

26%

-

145

14

(131)

-90%

(51)

-11%

Tax Benefit
Net Operating Income

2011

2012 vs. 2011
$
%

204

$

448

-

-

(576)

(310)

1,370

Net Earnings

$

998

Diluted NOI per Common Share
Diluted Net Earnings per Common Share

$ 0.62
$ 3.02

$

397

$

(3)

(3) -100%

(270)

40

-13%

176

21%

836

1,012

974

$ 1,136

$

162

17%

$ 1.26
$ 2.74

$ 1.20
$ 3.44

$ (0.06)
$ 0.70

-5%
26%

$

(1) Salaries, benefits and stock-based compensation and general and administrative expenses.

47

Nasdaq: ACAS

OPERATING REVENUE - QUARTERLY
Q4

Q3

Q4

Q4 12 vs. Q3 12

2011
$ 78
14
92

2012
$ 61
(10)
51

2012
$ 66
13
79

Interest Income on Structured Products Investments

15

19

17

(2)

-11%

Dividend Income on Equity Investments
Impact of Non-accrual Adjustments
Reported Dividend Income on Equity Investments

18
14
32

36
9
45

38
2
40

2
(7)
(5)

6%
-78%
-11%

Dividend Income - American Capital Asset Management, LLC

10

26

21

(5)

-19%

Fee and Other Income
Total Operating Revenue

11
$ 160

13
$ 154

23
$ 180

$

10
26

77%
17%

Effective Interest Rate on Debt Investments

12.5%

9.6%

15.1%

5.5%

57%

5.5%

8.6%

7.9%

-0.7%

-8%

($ in Millions)

Interest Income on Debt Investments
Impact of Non-accrual Adjustments
Reported Interest Income on Debt Investments

Effective Dividend Yield on Equity Investments(1)

$
$

(1) Excludes our equity investments in American Capital Asset Management, LLC and European Capital.

5
23
28

%
8%
-230%
55%

48

Nasdaq: ACAS

OPERATING REVENUE - ANNUAL

($ in Millions)

Interest Income on Debt Investments
Impact of Non-accrual Adjustments
Reported Interest Income on Debt Investments

2010
$ 441
(7)
434

2011
$ 348
2
350

2012
$ 268
6
274

2012 vs. 2011
$
%
$ (80)
-23%
4
200%
(76)
-22%

Interest Income on Structured Products Investments

52

56

67

11

20%

Dividend Income on Equity Investments
Impact of Non-accrual Adjustments
Reported Dividend Income on Equity Investments

69
(11)
58

70
36
106

124
37
161

54
1
55

77%
3%
52%

-

30

83

53

177%

56
600

49
591

61
646

12
$ 55

24%
9%

Dividend Income - American Capital Asset Management, LLC
Fee and Other Income
Total Operating Revenue

$

Effective Interest Rate on Debt Investments

10.5%

11.0%

11.9%

0.9%

8%

2.5%

4.7%

7.6%

2.9%

62%

Effective Dividend Yield on Equity Investments

(1)

$

$

(1) Excludes our equity investments in American Capital Asset Management, LLC and European Capital.

49

Nasdaq: ACAS

TOTAL OPERATING REVENUE BY BUSINESS LINE
Operating Companies*
Sponsor Finance, Direct and Other
Managed Funds (including MTGE, ECAS, etc.)

12%

6%

3%
9%

American Capital Asset Management, LLC
Structured Products

1%

2%

9%

10%

27%

20%

9%

16%

12%
11%
32%
33%
33%
3%
4%
4%

40%

2008

*

53%

54%

2010

2011

45%

2009

52%

2012

Includes our investments in One Stop Buyouts® less our investment in American Capital Asset Management, LLC.

50

Nasdaq: ACAS

LOWEST OPERATING EXPENSES
AS A % OF NET ASSET VALUE VS. TOP 5 BDCS(1)

($ in Millions)

ACAS

BDC

BDC

BDC

BDC

BDC

#1

#2

#3

#4

#5

Net Asset Value(2)
Operating Expenses(3)(4)
As a % of Net Asset Value(2)

$ 5,376 $ 3,909 $ 1,715 $ 1,883 $ 878 $ 904
$ 142 $ 113 $
69 $
55 $
31 $
33
2.6%
2.9%
4.0%
2.9%
3.5%
3.7%

Operating Expenses(3) and Stock-based or
Incentive Compensation(4)
As a % of Net Asset Value(2)

$

Total Investments(2) at Fair Value
Equity Investments as a % of Total Investments

$ 5,309 $ 5,936 $ 2,676 $ 2,664 $ 1,171 $ 1,288
57.6%
33.6%
8.8%
6.5%
17.1%
3.6%

Net Earnings Return on Net Asset Value(5)
(1)
(2)
(3)
(4)
(5)

187 $ 226 $ 109 $ 113 $
50 $
55
3.5%
5.8%
6.4%
6.0%
5.7%
6.1%

29.9%

11.5%

14.1%

10.5%

16.4%

8.8%

Based on estimated market capitalization data as of December 31, 2012.
As of September 30, 2012.
For ACAS, includes expense reimbursements received from American Capital Asset Management, LLC classified as operating revenue in its financial statements and
excludes stock-based compensation. For externally managed BDCs, incentive management fees are excluded. Excludes interest expense.
For the last twelve months ended September 30, 2012.
Calculated as Net Earnings return for the last twelve months ended September 30, 2012.

51

Nasdaq: ACAS

OPERATING EXPENSE RATIO*
ACAS OPERATING EXPENSES TO ACAS EQUITY AT PERIOD END
8.0%
7.4%

6.0%
5.4%

5.2%
4.4%

4.0%

3.5%

3.8%

4.1%

3.8% 3.6% 3.9%

3.6%

3.8%
2.9%

2.0%

2.6%

2.1%

2.0%

0.0%
97

*

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

Operating Expenses of ACAS excluding interest expense, expense reimbursement from American Capital Asset
Management, LLC, debt refinancing costs and stock based compensation divided by total shareholders’ equity
of ACAS.

52

Nasdaq: ACAS

$5.8 B OF REALIZATIONS SINCE JUNE 30, 2008
$ in Millions

$634

$600
$520
$463

$474

$476

$396

$400

$356

$351

$332

$305
$269

$246

$200

$163
$125

$261
$180
$136

$79

$0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012

53

Nasdaq: ACAS

REALIZATION PERFORMANCE*
ASSETS HAVE GENERALLY BEEN SOLD NEAR FAIR VALUE

Asset Sale Price Relative to Prior Quarter’s Fair Market Value
100%

These Realizations were on
Average 1.7% Greater than Prior
Quarter’s Valuations

75%
50%

18.1%

25%
1.4%

7.7%

1.1%

0%
-1.9% -1.9%

-0.6% -0.7% -3.7%

2.8%
-2.9%

1.6%
-0.1%

0.5%

6.0% 2.4% 2.2%

-0.4%

-25%
-50%
-75%
-100%
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012
*

Measure defined as the comparison of the realized asset exit price to the previous period’s fair market value for
fully exited debt and equity securities.

54

Nasdaq: ACAS

CASH REALIZATIONS
Q4 2012

$505 MM Received from Principal Payments



$403 MM in principal prepayments
$93 MM collection of accrued PIK notes, PIK dividends and accreted OID
$6 MM in scheduled principal amortization
$3 MM in loan syndications and sales

$129 MM Received from the Sale of Equity Investments

2012

$1,224 MM Received from Principal Payments



$938 MM in principal prepayments
$242 MM collection of accrued PIK notes, PIK dividends and accreted OID
$41 MM in scheduled principal amortization
$3 MM in loan syndications and sales

$274 MM Received from the Sale of Equity Investments

55

Nasdaq: ACAS

REALIZATIONS AND NEW INVESTMENT* ANALYSIS
REALIZATION MIX VS NEW INVESTMENT MIX
$ in Millions

Debt Investments
$3,857

$3,000

Equity Investments

29%

$1,118

$2,000
$1,261
$2,739

71%

$1,000

$338

27%

$923

73%

$0
Realizations

New Investments

1/1/2010 – 12/31/2012
*

New investments reported on committed amounts at origination.

56

Nasdaq: ACAS

NEW INVESTMENTS* - ANNUALLY
$ in Millions

$900
$800
$700

New Portfolio Companies
Add-On Investments Excluding Investments in American Capital Asset
Management, LLC and European Capital
Investments in American Capital Asset Management, LLC and European
Capital

$719
$166

$600
$500

$143

$400

$317

$300

$234

$40

$200

$410

$109

$100

$236
$234

$109
$41

$0
2009

*

2010

2011

2012

New investments reported on committed amounts at origination. Restructuring of existing portfolio companies
into new portfolio companies included in Add-on investments.

57

Nasdaq: ACAS

$527 MM OF Q4 2012 NEW INVESTMENTS*
BY USE OF FUNDS
$29 MM for
Recapitalization in 3
Portfolio Companies**,
5%

$10 MM for Acquisitions $6 MM for Growth and
in 2 Portfolio
Working Capital in a
Companies,
Portfolio Company,
2%
1%

$5 MM for Working
Capital in Distressed
Situations in a Portfolio
Company,
1%

$30 MM for Investment
in American Capital
Asset Management,
LLC,
6%
$9 MM for a CLO
Investment,
2%
$50 MM for Investment
in European Capital,
9%

$87 MM for 6 Sponsor
Finance Investments,
17%

*
**

New investments reported on committed amounts at origination.
Recapitalization occurred in non-distressed portfolio companies

$301 MM for 2 One Stop
Buyout® Investments,
57%

58

Nasdaq: ACAS

$719 MM OF 2012 NEW INVESTMENTS*
BY USE OF FUNDS
$22 MM for Growth and
Working Capital in 3
Portfolio Companies,
3%
$22 MM for Working

$19 MM for Acquisitions
in 3 Portfolio
Companies,
3%

Capital in Distressed
Situations in 4 Portfolio
Companies,
3%
$71 MM for
Recapitalization in 5
Portfolio Companies**,
10%
$301 MM for 2 One Stop
Buyout® Investments,
42%

$116 MM for Investment
in American Capital
Asset Management,
LLC,
16%

$9 MM for a CLO
Investment,
1%
$50 MM for Investment
in European Capital,
7%
*
**

New investments reported on committed amounts at origination.
Recapitalization occurred in non-distressed portfolio companies

$109 MM for 8 Sponsor
Finance Investments,
15%

59

Nasdaq: ACAS

$38 MM AVERAGE INVESTMENT SIZE*
0.6% OF TOTAL ACAS ASSETS
$ in Millions
Average Investment

Average Investment as a % of Total Assets

$60

1.00%

$50
0.75%
$39

$40
$33

$32

$30

$33
$30

$29

$30

$33

$34

$36

$37
$35

$38

$39

$38

$34

$31

0.50%

$20
0.25%

$10
$0

0.00%

Q4 08

Q4 09

*

Investments at Fair Value.

Q4 10

Q4 11

Q4 12

60

®

Historical Income Statement
Information

© 2012 American Capital. All Rights Reserved.

61

Nasdaq: ACAS

OPERATING REVENUE - QUARTERLY
13% INCREASE FROM Q4 2011
$ in Millions

$300

Fee income

Interest and dividend income

$250
$218
$16
$195

$200

$193
$17

$16

$169
$13

$150

$180
$164
$14

$140
$13

$159
$151
$13

$142
$17

$143
$10

$13

$160
$11

$142
$11

$163
$149

$12

$23

$12

$13

$130

$154

$13

$100

$202
$179

$176
$156
$127

$150

$138

$125

$133

$146

$131

$117

$149

$136

$151

$142

$157

$50

$0
Q4 08
Q4 09
Annual Operating Revenue Totals

2008
$1,051

2009
$697

Q4 10

Q4 11

2010
$600

2011
$591

Q4 12

2012
$646

62

Nasdaq: ACAS

OPERATING REVENUE - ANNUAL
9% INCREASE FROM 2011
$ in Millions

$1,500

Fee income

Interest and dividend income

$1,240

$1,200
$241

$1,051
$101

$900

$860

$191

$697
$59

$600
$999

$300

$646
$600

$591

$54

$48

$546

$543

2010

2011

$60

$950

$669

$638

$586

$0
2006

2007

2008

2009

2012

63

Nasdaq: ACAS

NET OPERATING INCOME BEFORE INCOME TAXES PER DILUTED
SHARE
$0.45
$0.42

$0.36
$0.31

$0.30

$0.29
$0.27
$0.24 $0.24

$0.23
$0.19
$0.17

$0.20

$0.19

$0.17

$0.15
$0.12
$0.09
$0.04

$0.03

$0.00

Q4 08

Q4 09

Q4 10

Q4 11

Q4 12

2010
$0.62

2011
$0.85

2012
$1.16

Annual Pre-Tax NOI per Diluted Share*

2008
$2.60
*

2009
$0.48

May not equal the sum of the 4 quarters or YTD due to changes in the weighted shares outstanding.

64

Nasdaq: ACAS

NET OPERATING INCOME PER DILUTED SHARE
$0.75
$0.67*

$0.60

$0.58 *

$0.45

$0.31

$0.30

$0.26 *
$0.23

$0.21
$0.17

$0.15

$0.17

$0.19

$0.22*
$0.20 $0.19
$0.14*

$0.12
$0.09
$0.07

$0.09

$0.00

Q4 08

Q4 09

Q4 10

Q4 11

Q4 12

2010
$0.62

2011
$1.26

2012
$1.20

Annual NOI per Diluted Share**

2008
$2.42
*
**

2009
$0.56

Includes tax benefit (provision).
May not equal the sum of the 4 quarters or YTD due to changes in the weighted shares outstanding.

65

Nasdaq: ACAS

NET REALIZED EARNINGS (LOSS) PER DILUTED SHARE
NET EARNINGS (LOSS) LESS NET APPRECIATION (DEPRECIATION)
$0.50

$0.40
$0.31

$0.28
$0.22

$0.00

$0.22
$0.04

$0.01
($0.01)

($0.03)
($0.13)

($0.17)
($0.27)

($0.27)

-$0.50

($0.49)

($0.87)

-$1.00

($1.00)

($1.41)

-$1.50

Q4
08

Q4
09

Q4
10

Q4
11

Q4
12

2009
$(2.81)

2010
$(1.12)

2011
$0.39

2012
$0.38

Annual Net Realized Earnings (Loss) per Diluted Share*

2008
$2.58
*

May not equal the sum of the 4 quarters or YTD due to changes in the weighted shares outstanding.

66

Nasdaq: ACAS

NET REALIZED GAIN, (LOSS), APPRECIATION (DEPRECIATION)
$ in Millions
$531

$500
$45

$88

$138

$365

$314 $351 $339

$252
$90

$43

$128

$40

$-

$(500)
$(529)

$(624)$(567)

$(1,000)

$(1,500)
$(1,728)

$(2,000)

Q4
08

Q4
09

Q4
10

Q4
11

Q4
12

Annual Net Realized Gain, (Loss), Appreciation, and (Depreciation)

2008
$(3,608)

2009
$(1,057)

2010
$794

2011
$526

2012
$742
67

Nasdaq: ACAS

NET EARNINGS (LOSS)
$ in Millions

Net Earnings (Loss)

US GDP

US GDP

$1,000

10%
$594 $580
4.1%
$381 $434 $410
3.1%
2.4%
2.5%
2.6%
2.3%
2.2%
2.0% $237
1.5%
1.3%
1.3% $196 $123
0.1%
$77 $107 $187 $281 $149
4.0%

$500
$0

-0.1%

-0.3%
-5.3%

($500)

0%
-5%

($464)

($547) ($547)

5%

-8.9%

($1,000)

-10%

($1,500)

-15%
($1,684)

($2,000)

-20%
Q4
08

Q4
09

Q4
10

Q4
11

Q4
12

2010
$998

2011
$974

2012
$1,136

Annual Net Earnings (Loss)

2008
$(3,115)

2009
$(910)

68

Nasdaq: ACAS

NET EARNINGS (LOSS) PER DILUTED SHARE
$1.73 $1.71

$1.50
$0.30 $0.38

$0.65 $0.84

$1.08 $1.21 $1.13

$0.71 $0.60

$0.43

$0.38

-$0.50
($1.34)

-$2.50
($2.65)

($2.52)

-$4.50

-$6.50

-$8.50 ($8.13)

Q4
08

Q4
09

Q4
10

Q4
11

2009
$(3.77)

2010
$3.02

2011
$2.74

Annual Net Earnings (Loss) per Diluted Share Totals*

2008
$(15.29)
*

May not equal the sum of the 4 quarters or YTD due to changes in the weighted shares outstanding.

Q4
12
2012
$3.44
69

®

Portfolio Company Statistics

© 2012 American Capital. All Rights Reserved.

70

Nasdaq: ACAS

PORTFOLIO STATISTICS
REALIZATIONS HAD LITTLE IMPACT ON PORTFOLIO ATTRIBUTES

2007

2008

2009

2010

2011

2012

Majority Owned Portfolio Company(2) Investments at
Fair Value as a % of Total Investments at Fair Value

49%

54%

59%

60%

65%

64%

Total Investments at Fair Value to Total Investments
at Cost

102%

69%

61%

71%

76%

90%

Mean Net Debt to Adjusted EBITDA(1)

4.3

4.0

4.5

4.1

3.9

4.5

Total Net Debt to Adjusted EBITDA(1)

5.3

5.1

5.8

5.1

5.0

5.7

Total Senior Debt as a % of Investments at Fair Value

33%

37%

33%

24%

21%

16%

Total Subordinated Debt as a % of Investments at Fair
Value

21%

32%

34%

33%

29%

21%

Total Equity Assets as a % of Investments at Fair
Value

40%

29%

30%

40%

47%

58%

(1) See “Credit Quality of Private Finance Portfolio” slide for definition of Mean and Total Net Debt to Adjusted EBITDA.
(2) Majority Owned Portfolio Company (“MOPC”) investments represent 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. Excludes our investment in European Capital.

71

Nasdaq: ACAS

CREDIT QUALITY OF PRIVATE FINANCE PORTFOLIO*
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2010 2011 2011 2011 2011 2012 2012 2012 2012
Mean Net Debt to Adjusted EBITDA(1)

4.1

4.2

4.1

4.0

3.9

4.3

4.2

4.2

4.5

Total Net Debt to Adjusted EBITDA(2)

5.1

5.4

5.2

5.1

5.0

5.3

5.2

5.3

5.7

Interest Coverage(3)(5)

2.5

2.3

2.4

2.5

2.6

2.3

2.6

3.3

1.9

Debt Service Coverage(4)(5)

2.1

2.0

1.9

2.0

2.0

1.7

1.7

1.7

1.5

(1)

(2)

(3)
(4)
(5)

Mean Net Debt represents the sum of (i) debt and other liabilities senior to ACAS, (ii) normalization for working capital and (iii) the
mean of the total of ACAS’ debt in each portfolio company’s debt capitalization, less cash of the portfolio company. EBITDA is
defined as the earnings before interest, taxes, depreciation and amortization and other non-recurring charges. The Adjusted
EBITDA is defined as the EBITDA used to value the current enterprise value of the portfolio company which may be the EBITDA of
the most recent twelve months or, when appropriate, the forecasted twelve months. Ratio excludes ACAS’ investments in
technology, real estate and financial services companies as well as debt investments valued at liquidation value.
Total Net Debt represents the sum of (i) debt and other liabilities senior to ACAS, (ii) normalization for working capital and (iii) the
total of ACAS’ debt in each portfolio company’s debt capitalization, less cash of the portfolio company. Ratio excludes ACAS’
investments in technology, real estate and financial services companies as well as debt investments valued at liquidation value.
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.
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.
Excludes investments in which we own only equity, Structured Products and Managed Funds.

*

Weighted average based on total private financing portfolio assets at fair value. Private Finance Portfolio
excludes European Capital, Structured Products and American Capital Asset Management, LLC.

72

Nasdaq: ACAS

NON-PERFORMING LOANS ANALYSIS
$ in Millions
Current

Q4 11

Q1 12

Q2 12

Q3 12

Q4 12

$ 2,304

$ 2,001

$ 1,728

$ 1,744

$ 1,709

0 - 30 Days Past Due

16

5

-

-

-

31 - 60 Days Past Due

3

14

-

-

-

61 - 90 Days Past Due

-

-

-

-

-

> 90 Days Past Due

3

3

9

9

54

Total Past Due Loans at Cost

$

22

$

22

$

9

$

9

$

54

Non-Accrual Loans at Cost

$

419

$

356

$

402

$

370

$

260

Total Loans at Cost

$ 2,745

$ 2,379

$ 2,139

$ 2,123

$ 2,023

Non-Accrual Loans at Fair Value

$

$

$

$

$

Total Loans at Fair Value

$ 2,518

$ 2,190

$ 1,971

$ 2,016

$ 1,957

15.3%

15.0%

18.8%

17.4%

12.9%

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

8.7%

8.1%

12.3%

12.5%

9.0%

Non-Accrual Loans at Fair Value as a % of Non-Accrual
Loans at Cost

52.3%

50.0%

60.4%

68.1%

68.1%

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

219

178

243

252

177

73

Nasdaq: ACAS

NON-PERFORMING LOANS ANALYSIS - CONTINUED
PAST DUE AND NON-ACCRUING LOANS

$110 MM Decrease of Non-accruing Loans at Cost
 $260 MM versus $370 MM in Q3 2012
 Decrease comprised primarily of:
● $118 MM decrease for removal of loans from non-accrual status due to improved portfolio
company performance
● $11 MM decrease from write-offs of non-accruing loans
● $21 MM increase in new non-accruing loans due to weaker performance

$75 MM Decrease of Non-accruing Loans at Fair Value
 $177 MM versus $252 MM in Q3 2012
 Decrease comprised primarily of:
● $111 MM decrease for removal of loans from non-accrual status due to improved portfolio
company performance
● $21 MM increase due to net appreciation of existing non-accruing loans
● $14 MM increase in new non-accruing loans due to weaker performance

Non-Accruing Loans Valued at 68% of Cost
 Our expected recovery rate
 No change from the prior quarter

$54 MM of Accruing Past Due Loans at Cost

74

Nasdaq: ACAS

NON-PERFORMING LOANS ANALYSIS - CONTINUED
Non-Accrual Loans as a % of Total Loans at Cost
Non-Accrual Loans as a % of Total Loans at Fair Value

20%

18.3%

19.6%
18.8%

19.3%
18.8%

18.6%

18.1%
17.4%

17.1%
17.3%

16.5%
16.7%
15.4%
15.3%

15%

15.0%
13.2%
12.5%
12.9%
12.3%

10%
9.2%

9.0%

9.0%
8.5%

7.7%

7.8%
6.6%
5.4%
4.3%
3.5%

4.1%
4.0%

3.9%
2.0%

5.0%
4.8%
4.2%
4.0%
3.9%
3.8%
3.7%
3.6%
3.6%
3.5%3.6% 3.4%

2.4%
1.9%

2.2%
1.6%

1.6%

1.2%1.2%

1.2%

9.0%
8.1%

7.7%
6.6%

5.2%
4.4%
2.9%
2.1%

1.7%
1.4%1.5%
1.4% 1.5%

8.7%

7.8% 7.8%

6.2%

5.7%

5%

7.8%
7.0%
7.2%
6.9%

2.1% 2.4%
1.5%

1.5%

0.9%

0%
Q4
03

Q4
04

Q4
05

Q4
06

Q4
07

Q4
08

Q4
09

Q4
10

Q4
11

Q4
12

75

Nasdaq: ACAS

APPRECIATION, DEPRECIATION, GAINS AND LOSSES
Cost
Basis

($ in Millions)
NET UNREALIZED APPRECIATION AND DEPRECIATION
Operating Companies*

$

Fair
Value

Q4 2012

2,885

$ 2,462

Sponsored Finance, Direct and Other Portfolio

1,047

919

21

98

European Capital Investment

1,376

809

31

146

149

828

-

329

-

-

-

12

Structured Products

385

247

5

47

Foreign Currency Translation**

N/A

N/A

20

8

--

(27)

3

62

N/A

N/A

-

296

5,842

$ 5,238

61

$ 1,094

(36)

(82)

$

25

$ 1,012

$

9

American Capital Asset Management, LLC
American Capital Mortgage Investment Corp.

Derivative Agreements
Reversal of Prior Period Unrealized Depreciation on $6 MM of
Realized Gains for Q4 2012 and $357 MM of Realized Losses in FY 2012
Subtotal

$

$

$

Tax Provision
Subtotal

(19)

2012
$

96

NET REALIZED GAINS AND LOSSES
Investment Portfolio
Derivative Agreements and Foreign Currency Transactions
Tax Benefit
Subtotal
TOTAL

$

(271)

(3)

(86)

9

87

$

15

$

40

$
$

(270)
742

*

Includes our investments in One Stop Buyouts® less our investment in American Capital Asset Management, LLC.
** The Q4 2012 and 2012 Foreign currency translation includes, respectively:
1- $16 MM and $19 MM unrealized depreciation of foreign currency translation on the accumulated unrealized depreciation on the
investment of European Capital which is reported in net unrealized appreciation of investments on our Consolidated Statements of
Operations.
2 - $35 MM and $26 MM and unrealized appreciation of foreign currency translation on the cost basis of European Capital which is reported
in net unrealized appreciation from foreign currency translation on our Consolidated Statement of Operations.
3 - $1 MM and $1 MM appreciation of other foreign currency denominated assets and liabilities which is reported in net unrealized
appreciation from foreign currency translation on our Consolidated Statements of Operations.

76

Nasdaq: ACAS

NUMBER OF PORTFOLIO COMPANIES
296

300

284

250

67

73

256

225

69

222
203

37

200

62
51
149
8

150

217

100
117

3

15

1997

1998

36

46

55

1999

2000

2001

69

2002

58

223

188

50
0

197

187

141

160

152

2010

2011

139

86

2003

2004

ACAS Portfolio Companies

2005

2006

2007

2008

2009

2012

ECAS Portfolio Companies

77

®

Static Pool Information

© 2012 American Capital. All Rights Reserved.

78

Nasdaq: ACAS

IRR BY STATIC POOL AND EXITED INVESTMENTS*
ON A BLEND OF SENIOR DEBT, MEZZANINE DEBT AND EQUITY INVESTMENTS
35%
30%

$25B All Investments

33%

$18B Exited Investments**

25%
20%

20%20%

18%19%

16%
14%

15%
10%

24%

22%

13%
11%
8%

10%
8%

9%
8%

5%
0%

10%
9%

8%
4%
NM NM

Pre-2001

2001

2002

2003

2004

2005

2006

2007

2008

2011

2012

Aggregate

-3%
-5%

-5%
-10%
93.8%

97.6%

86.5%

88.2%

91.8%

52.8%

82.8%

70.3%

48.1%

36.5%

0.5%

72.2%

Investments Exited as a Percent of the Original Static Pool
*

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.
** Includes exited securities of existing portfolio companies.
NM = Not meaningful

79

Nasdaq: ACAS

IRR BY STATIC POOL* HAS IMPROVED DRAMATICALLY FROM
ITS Q2 2009 LOW POINT

ON A BLEND OF SENIOR DEBT, MEZZANINE DEBT AND EQUITY INVESTMENTS
Q2 2009 All Investments, at Low Point
21%
20%

20%

18%18%
13%14%

10%

Q4 2012 All Investments

8% 8%

13%

7% 8%

11%
8%

7%

9%

3%

0%
-3%

-3%

-10%
-15%

-16%

-20%
Pre-2001
93.8%

2001

2002

2003

2004

2005

2006

97.6%

86.5%

88.2%

91.8%

52.8%

82.8%

2007
70.3%

2008 Aggregate**
48.1%

72.2%

Investments Exited as a Percent of the Original Static Pool
*

**

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. The 2011 and 2012 Static Pool years were excluded as these investments did not exist as of Q2 2009.
Consists of the investments made from the time of our IPO through the quarter ended December 31, 2012.

80

Nasdaq: ACAS

Static Pool Portfolio Statistics - Aggregate(1)
Pre- 2001
Static
Pool

2001
Static
Pool

2002
Static
Pool

2003
Static
Pool

2004
Static
Pool

2005
Static
Pool

2006
Static
Pool

2007
Static
Pool

2008
Static
Pool

2011
Static
Pool

2012
Static
Pool

Pre-2001-2012
Static Pools
Aggregate

IRR at Fair Value of All
Investments(2)

8.1 %

18.1 %

7.6 %

20.4 %

13.6 %

12.7 %

10.8 %

(3.0)%

7.9 %

23.5 %

NM

8.8 %

IRR of Exited Investments(3)

9.2 %

18.6 %

9.7 %

20.0 %

15.8 %

22.1 %

8.4 %

(5.2)%

3.7 %

32.5 %

NM

10.2 %

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

6.2 %

46.4 %

11.2 %

27.6 %

26.2 %

11.5 %

14.9 %

(7.5)%

19.8 %

30.8 %

NM

11.1 %

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

10.9 %

46.4 %

21.4 %

36.7 %

45.8 %

50.2 %

11.5 %

9.5 %

35.3 %

35.1 %

N/A

26.6 %

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

1.9 %

17.1 %

9.9 %

18.9 %

16.0 %

28.4 %

13.0 %

2.7 %

15.4 %

—%

NM

13.7 %

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

10.0 %

N/A

(2.6)%

17.6 %

5.6 %

24.3 %

11.9 %

0.4 %

15.5 %

—%

NM

11.3 %

IRR of Exited One Stop Buyout®
Investments(3)

1.4 %

17.1 %

14.7 %

16.3 %

21.4 %

30.8 %

11.9 %

14.8 %

13.9 %

N/A

N/A

15.2 %

Committed Investments(7)

$1,065

$376

$966

$1,437

$2,267

$4,943

$5,297

$7,501

$1,045

$137

$419

$25,453

Total Exits and Prepayments of
Committed Investments(7)

$999

$367

$836

$1,267

$2,081

$2,611

$4,384

$5,275

$503

$50

$2

$18,375

Total Interest, Dividends and
Fees Collected

$400

$143

$344

$448

$702

$1,259

$1,375

$1,358

$355

$19

$12

$6,415

($135)

($23)

($118)

$143

$18

$375

($305)

($1,137)

($104)

$10

$—

($1,276)

Current Cost of Investments

$75

$4

$110

$166

$218

$2,038

$682

$1,850

$355

$60

$284

$5,842

Current Fair Value of
Investments

$27

$—

$62

$343

$145

$2,147

$792

$1,096

$320

$61

$272

$5,265

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

0.5 %

—%

1.2 %

6.5 %

2.7 %

40.8 %

15.0 %

20.8 %

6.1 %

1.2 %

5.2 %

100.0 %

Net Unrealized (Depreciation)
Appreciation

($48)

($4)

($48)

$177

($73)

$109

$110

($754)

($35)

$1

($12)

($577)

$ In Millions

Total Net Realized (Loss) Gain
on Investments

See “Static Pool Portfolio Statistics – Footnote Legend” slide for footnote disclosures

81

Nasdaq: ACAS

Static Pool Portfolio Statistics - Aggregate(1)
Pre-2001
Static
Pool

2001
Static
Pool

2002
Static
Pool

2003
Static
Pool

2004
Static
Pool

2005
Static
Pool

2006
Static
Pool

2007
Static
Pool

2008
Static
Pool

2011
Static
Pool

2012
Static
Pool

Pre-2001-2012
Static Pools
Aggregate

Non-Accruing Loans at Cost

$—

$—

$47

$—

$10

$58

$48

$75

$22

$—

$—

$260

Non-Accruing Loans at Fair Value

$—

$—

$22

$—

$6

$53

$16

$49

$31

$—

$—

$177

Equity Interest at Fair Value(4)

$—

$—

$—

$305

$82

$1,743

$411

$348

$96

$5

$71

$3,061

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

6.5

N/A

13.2

2.8

3.4

1.8

4.5

6.4

6.4

5.1

4.6

4.3

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

1.9

N/A

1.2

3.4

3.9

0.9

2.7

1.9

2.3

1.9

3.0

1.9

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

1.8

N/A

1.2

3.1

3.5

0.6

1.7

1.7

2.1

1.6

2.4

1.5

Average Age of
Companies(13)(16)

43 yrs

N/A

29 yrs

41 yrs

40 yrs

17 yrs

37 yrs

29 yrs

19 yrs

26 yrs

19 yrs

26 yrs

Diluted Ownership
Percentage(4)(17)

62 %

—%

—%

56 %

73 %

49 %

48 %

61 %

58 %

26 %

90 %

53 %

Average Revenue(13)(14)(16)

$48

$—

$42

$220

$47

$162

$154

$189

$87

$168

$190

$162

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

$5

$—

$8

$48

$13

$65

$41

$32

$21

$45

$47

$44

Total Revenue(13)(14)

$81

$225

$78

$1,513

$243

$1,319

$3,043

$4,553

$1,209

$354

$2,913

$15,531

Total Adjusted EBITDA(8)(13)

$7

$2

$10

$204

$40

$296

$431

$628

$213

$108

$576

$2,515

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

75 %

—%

77 %

—%

39 %

32 %

31 %

51 %

29 %

27 %

69 %

43 %

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

100 %

—%

100 %

100 %

100 %

84 %

90 %

85 %

67 %

27 %

100 %

67 %

$ In Millions

See “Static Pool Portfolio Statistics – Footnote Legend” slide for footnote disclosures

82

Nasdaq: ACAS

STATIC POOL PORTFOLIO STATISTICS – MAJORITY OWNED
PORTFOLIO COMPANIES(6)
AS OF AND FOR THE LTM ENDED DECEMBER 31, 2012
$ In Millions
Total Number of Majority Owned Portfolio Companies

Pre-2001-2012
Static Pools
Aggregate
45

Total Revenue(14)

$3,299

Total Gross Profit(14)

$1,691

Total Adjusted EBITDA(8)

$768

Total Capital Expenditures(14)

$118

Total Current ACAS Investments in Majority Owned Portfolio Companies at Fair Value

$3,384

Total Current ACAS Investments in Majority Owned Portfolio Companies at Cost Basis

$3,178

Total Current ACAS Debt Investments in Majority Owned Portfolio Companies at Fair Value

$1,207

Total Current ACAS Debt Investments in Majority Owned Portfolio Companies at Cost Basis

$1,260

Diluted Ownership Percentage of ACAS in Majority Owned Portfolio Companies(17)

72 %

Total Cash(18)

$212

Total Assets(18)

$4,506

Total Debt(18)

$3,895

Total Third-party Debt at Cost(18)

$2,164

Total Shareholders’ Equity(18)(19)

$3,075

See “Static Pool Portfolio Statistics – Footnote Legend” slide for footnote disclosures

83

Nasdaq: ACAS

STATIC POOL PORTFOLIO STATISTICS – FOOTNOTE LEGEND
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) Assumes investments are exited at current fair value.
(3) Includes fully exited investments of existing portfolio companies.
(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) Majority Owned Portfolio Company (“MOPC”) investments represent portfolio company investments in which American Capital,
or it affiliates, have a fully diluted ownership percentage of 50% or more or have over 50% board representation at the portfolio
company. 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 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.

84

®

Stock Performance

© 2012 American Capital. All Rights Reserved.

85

Nasdaq: ACAS

BOOK VALUE & DIVIDENDS RETURN: ACAS VS. S&P 500 AND
S&P 500 FINANCIALS SECTOR
% CHANGE IN BOOK VALUE, INCLUDING DIVIDENDS SINCE IPO
400%

ACAS IRR of 254% as of December 31, 2012

ACAS*

350%

S&P 500**

300%

S&P 500 Financials Sector**

250%
200%
150%
100%
50%
0%
-50%
-100%
Q4
97

Q4
98

*
**

Q4
99

Q4
00

Q4
01

Q4
02

Q4
03

Q4
04

Q4
05

Q4
06

Treats the stock portion of the 2009 dividend as a cash dividend.
Source: Capital IQ. Assumes dividends are not reinvested.

Q4
07

Q4
08

Q4
09

Q4
10

Q4
11

Q4
12

86

Nasdaq: ACAS

BOOK VALUE & DIVIDENDS RETURNS: ACAS VS INDICES
SINCE AUGUST 1997 IPO, AS OF DECEMBER 31, 2012
Annual
Return

18%

ACAS
Book Value*

16%
14%
12%
10%
16.5%

8%
6%

Dow Jones 30
Industrials**

S&P 500**

4%
2%

3.0%

0%

S&P 500
Financials
Sector**
-0.8%

3.6%

NASDAQ
Composite**

4.6%

-2%
*
**

Treats the stock portion of the 2009 dividend as a cash dividend. NAV used for inception to date return based
on the NAV as of 8/29/97.
Source: Capital IQ. Assumes dividends are not reinvested.

87

Nasdaq: ACAS

BOOK VALUE & DIVIDENDS RETURNS THRU Q4 2012
81% OF THE TIME PERIODS ACAS OUTPERFORMED THE S&P 500
Annual Return

60%

ACAS*
S&P 500**

50%
40%
29%

30%
20%

17%

17%

18%

17%

15%

16%

29%

29%

17%
13%

14%
12%
9%

10%

6%

5%
3%

0%

3%

1%

0%

1%

2%

3%

2%

4%

2%

-20%

6%

0%
-3%

-10%

9%

-1%
-9%

8/29/97 - 1/1/98 - 1/1/99 - 1/1/00 - 1/1/01 - 1/1/02 - 1/1/03 - 1/1/04 - 1/1/05 - 1/1/06 - 1/1/07 - 1/1/08 - 1/1/09 - 1/1/10 - 1/1/11 - 1/1/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12

Note: All periods are annualized.
* Treats the stock portion of the 2009 dividend as a cash dividend. NAV used for inception to date return based
on the NAV as of 8/29/97.
** Source: Capital IQ. Assumes dividends are not reinvested.

88

Nasdaq: ACAS

BOOK VALUE & DIVIDENDS RETURNS THRU Q4 2012
94% OF THE TIME PERIODS ACAS OUTPERFORMED THE S&P 500
FINANCIALS SECTOR
Annual Return

60%

ACAS*
S&P 500 Financials Sector**

50%
40%

29%

30%
20%

17%

17%

18%

15%

17%

16%

14%
9%

7%
6%

4%
-1%

-2%

-2%

-3%

-5%

-4%

1%

-6%

-7%

-9%
-13%

8/29/97 12/31/12

1/1/98 12/31/12

1/1/99 12/31/12

1/1/00 12/31/12

1/1/01 12/31/12

1/1/02 12/31/12

1/1/03 12/31/12

5%

-3%

-3%

-10%
-20%

29%
26%

17%

10%
0%

29%

1/1/04 12/31/12

1/1/05 12/31/12

1/1/06 12/31/12

1/1/07 12/31/12

-9%
-11%

1/1/08 12/31/12

1/1/09 12/31/12

1/1/10 12/31/12

1/1/11 12/31/12

1/1/12 12/31/12

Note: All periods are annualized.
* Treats the stock portion of the 2009 dividend as a cash dividend. NAV used for inception to date return based
on the NAV as of 8/29/97.
** Source: Capital IQ. Assumes dividends are not reinvested.

89

Nasdaq: ACAS

BOOK VALUE & DIVIDENDS RETURNS BY CALENDAR YEAR
75% OF THE YEARS ACAS OUTPERFORMED THE S&P 500
Annual Return

60%

ACAS*
S&P 500**

40%

38%

37%
32%

25%

29%

26%

27%

26%
14%

11%

10%

29%

13%

13%

9%

6%

5%

30%

23%

21%

20%

20%

36%
32%

4%

3%

0%

0%
-10%
-13%

-20%
-23%

-40%

-38%
-41%
-44%

-60%

8/29/97 12/31/97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Note: All periods are annualized.
* Treats the stock portion of the 2009 dividend as a cash dividend. NAV used for inception to date return based
on the NAV as of 8/29/97.
** Source: Capital IQ. Assumes dividends are not reinvested.

90

Nasdaq: ACAS

BOOK VALUE & DIVIDENDS RETURNS BY CALENDAR YEAR
81% OF THE YEARS ACAS OUTPERFORMED THE S&P 500 FINANCIALS
SECTOR
Annual Return

ACAS*

60%
50%

S&P 500 Financials Sector**

40%

38%

37%
32%
28%

36%
32%

29%
26%

23%
21%

20%
11%
10%
5%

16%
10%

2%

30%

15%
11%

8%

6%

29%
26%

4%

0%
-11%

-20%

-16%

-18%

-21%

-40%

-41%
-44%

-60%

-57%
8/29/97 12/31/97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Note: All periods are annualized.
* Treats the stock portion of the 2009 dividend as a cash dividend. NAV used for inception to date return based
on the NAV as of 8/29/97.
** Source: Capital IQ. Assumes dividends are not reinvested.

91

Nasdaq: ACAS

STOCK PRICE & DIVIDENDS RETURNS: ACAS VS. S&P 500
AND S&P 500 FINANCIALS SECTOR
% CHANGE IN SHARE PRICE, INCLUDING DIVIDENDS SINCE 8/29/97

ACAS IRR of 182% as of December 31, 2012

400%
ACAS - Since IPO*

350%

S&P 500**

300%

S&P 500 Financials Sector**

250%
200%
150%
100%
50%
0%
-50%
-100%
Q4
97

Q4
98
*
**

Q4
99

Q4
00

Q4
01

Q4
02

Q4
03

Q4
04

Q4
05

Q4
06

Q4
07

Q4
08

Q4
09

Q4
10

Assumes dividends are not reinvested. Treats the stock portion of the 2009 dividend as a cash dividend.
Source: Capital IQ. Assumes dividends are not reinvested.

Q4
11

Q4
12

92

Nasdaq: ACAS

STOCK PRICE & DIVIDENDS RETURNS: ACAS VS INDICES
SINCE AUGUST 1997 IPO, AS OF DECEMBER 31, 2012
Annual
Return

ACAS
Stock Price *

14%
12%
10%
8%
14.0%

6%
4%

Dow Jones 30
Industrials**

S&P 500**

2%

3.0%

0%

S&P 500
Financials
Sector**
-0.8%

3.6%

NASDAQ
Composite**

4.6%

-2%
*
**

Assumes dividends are not reinvested. Treats the stock portion of the 2009 dividend as a cash dividend.
Source: Capital IQ. Assumes dividends are not reinvested.

93

Nasdaq: ACAS

STOCK PRICE & DIVIDENDS RETURNS BY YEAR OF INVESTMENT
THRU 12/31/12
69% OF THE TIME PERIODS ACAS OUTPERFORMED THE S&P 500
Annual Return

150%
130%

ACAS*
S&P 500**

110%
90%
78%
70%

70%
50%

50%

26%

30%
14%

10%

3%

11%
3%

13%
1%

12%
8%
0%

6%
1%

3% 2%

7%
5%

0%3%

2%

2%

13%
9%

0%

6%

-1%

-10%

-5%
-9%
-17%

-30%

-16%

8/29/97 - 1/1/98 - 1/1/99 - 1/1/00 - 1/1/01 - 1/1/02 - 1/1/03 - 1/1/04 - 1/1/05 - 1/1/06 - 1/1/07 - 1/1/08 - 1/1/09 - 1/1/10 - 1/1/11 - 1/1/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12

Note: All periods are annualized.
* Assumes dividends are not reinvested. Treats the stock portion of the 2009 dividend as a cash dividend.
** Source: Capital IQ. Assumes dividends are not reinvested.

94

Nasdaq: ACAS

STOCK PRICE & DIVIDENDS RETURNS BY YEAR OF INVESTMENT
THRU 12/31/12

81% OF THE TIME PERIODS ACAS OUTPERFORMED THE S&P 500
FINANCIALS SECTOR
Annual Return

150%
ACAS*
S&P 500 Financials Sector**

130%
110%
90%

78%
70%

70%
50%

50%
30%

26%
14%

10%
-10%
-30%

-1%

11%

-2%

13%

-2%

8%
-3%

6%
-5%

3%
-4%

7%

7%

5%
1%

0%
-3%

-6%

26%

-5%-7% -9% -9%

-13%
-17%

-11%
-16%

8/29/97 - 1/1/98 - 1/1/99 - 1/1/00 - 1/1/01 - 1/1/02 - 1/1/03 - 1/1/04 - 1/1/05 - 1/1/06 - 1/1/07 - 1/1/08 - 1/1/09 - 1/1/10 - 1/1/11 - 1/1/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12 12/31/12

Note: All periods are annualized.
* Assumes dividends are not reinvested. Treats the stock portion of the 2009 dividend as a cash dividend.
** Source: Capital IQ. Assumes dividends are not reinvested.

95

Nasdaq: ACAS

STOCK PRICE & DIVIDENDS RETURNS BY CALENDAR YEAR
69% OF THE YEARS ACAS OUTPERFORMED THE S&P 500
Annual
Return
210%

210%
ACAS*
S&P 500**

150%

90%

78%

81%
53%
43%

30%

25%

27%

20%

38%
21%

26% 23%

22%

9%

3%
-10%

-13%

-30%

18%

23%
10%

14%

3%

4%

-15%
-23%

13%

13%
0%
-11%

-21%
-38%

-90%

-86%
8/29/97 12/31/97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Note: All periods are annualized.
* Assumes dividends are not reinvested. Treats the stock portion of the 2009 dividend as a cash dividend.
** Source: Capital IQ. Assumes dividends are not reinvested.

2011

2012

96

Nasdaq: ACAS

STOCK PRICE & DIVIDENDS RETURNS BY CALENDAR YEAR
69% OF THE YEARS ACAS OUTPERFORMED THE S&P 500 FINANCIALS
SECTOR
Annual Return
210%

210%
ACAS*
S&P 500 Financials Sector**

150%

90%

78%

81%
53%

50%

43%
10%
3%

38%
23%
21%

30%

28%

22%

2%

23%
8%

18%
4%

16%

-11%
-15%-16%

-30%

26%
15%
10%

11%

-11%
-18%

-21%
-21%

-57%

-90%

-86%
8/29/97 12/31/97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Note: All periods are annualized.
* Assumes dividends are not reinvested. Treats the stock portion of the 2009 dividend as a cash dividend.
** Source: Capital IQ. Assumes dividends are not reinvested.

2012

97

Nasdaq: ACAS

HISTORICAL PRICE TO BOOK MULTIPLE
Average Since IPO
2.0X

1.9
1.8
1.7

1.71.7 1.7 1.7
1.6
1.6

1.5X

Price to book at period end

1.41.4 1.4 1.4
1.3 1.3
1.2

1.51.5
1.41.4

1.61.6 1.61.6
1.6
1.5
1.5
1.4
1.4
1.4 1.4

1.3

1.0X

0.5X

1.2

1.2

1.21.2 1.2
1.0

1.2x

1.0
0.9
0.80.8
0.70.7
0.7
0.6 0.6 0.6
0.6 0.6
0.5
0.5
0.40.4
0.3
0.20.2

0.0X

98

Sign up to vote on this title
UsefulNot useful