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FOR IMMEDIATE RELEASE:
May 4, 1998
AMERICAN CAPITAL STRATEGIES REPORTS FIRST QUARTER OPERATING INCOME OF $0.27 PER SHARE UP 30% FROM PREVIOUS QUARTER
Bethesda, MD., -- May 4 /PRNewswire/ -- American Capital Strategies, Ltd. , announced today the results for the quarter ended March 31, 1998, its second complete quarter of operations as a public company. Net operating income was $2,949,000 or $0.27 per share on total operating income of $3,292,000 compared to net operating income of $2,270,000 and total operating income of $2,797,000 for the quarter ended December 31, 1997. Net operating income increased 30% for the quarter.
During the quarter, ACAS completed four financings totaling $29,715,000 composed of purchases of $22,260,000 of senior debt, subordinated debt and preferred stock at a weighted average interest and dividend rate of 17.8%, $5,240,000 of warrants and $2,215,000 of common stock. ACAS also declared and paid a $0.25 dividend during the quarter.
American Capital Strategies' President Malon Wilkus commented, ``We are very pleased with the first quarter results. We invested $29.7 million in four excellent companies; two buyouts, one add-on acquisition and a stock purchase in an existing portfolio company. We have continued to add staff and build our pipeline of financing opportunities. The results of these efforts are reflected in the fact that we invested $9 million more in this quarter compared to our first quarter as a public company. We see the second quarter shaping up to exceed our results for this quarter.''
John Erickson, CFO stated, ``We are making excellent progress towards fully deploying the proceeds from our IPO and building the company's balance sheet. The yields on our invested capital are very strong and our strategy of covering overhead and expenses with transaction fees continues to work for us.''
Financial highlights for the quarter are as follows:
AMERICAN CAPITAL STRATEGIES, LTD.
UNAUDITED FINANCIAL HIGHLIGHTS
(Three Months Ended March 31, 1998) |
| Total operating income |
$3,292,000 |
| Total operating expenses |
$444,000 |
| Operating income before equity in earnings of unconsolidated operating subsidiary |
$2,848,000 |
| Equity in earnings of unconsolidated operating subsidiary |
$101,000 |
| Net operating income |
$2,949,000 |
| Change in unrealized appreciation of investments |
$28,000 |
| Net increase in shareholders' equity resulting from operations |
$2,977,000 |
| Common stock outstanding |
$11,068,757 |
| Operating income per share |
$0.27 |
| Total assets |
$151,025,000 |
| Total shareholders' equity |
$150,856,000 |
| Net asset value per share |
$13.63 |
| Dividends per share |
$0.25 |
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ACAS has elected to be regulated as a Business Development Company under the Investment Company Act of 1940, as amended. On October 1, 1997, ACAS elected to be taxed as a Regulated Investment Company (RIC) pursuant to subchapter M of the Internal Revenue Code. As contemplated by these transactions, ACAS materially changed its business plan and format from structuring and arranging financing for buyout transactions on a fee for services bases to primarily being a lender to and investor in small and medium sized companies. As a result of the changes, ACAS's predominant source of operating income has changed from financial performance and advisory fees to interest and dividends and fees earned from investing the company's assets in debt and equity of small to medium sized businesses and short term government securities.
The results of ACS Capital Investments Corporation (CIC), a subsidiary of ACAS, were consolidated in the financial statements of ACAS through September 30, 1997. As of October 1, 1997, CIC has not been consolidated with ACAS and is accounted for under the equity method due to the change in ACAS' business format. As a result of these changes, the ACAS financial statements for periods through September 30, 1997 are not comparable with the financial statements for periods commencing after October 1, 1997.
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