Allied Capital Announces 2000 Results; Net Income Increases 18% for 2000; Net Operating Income Increases 30%.Business Editors WASHINGTON--(BUSINESS WIRE)--Feb. 13, 2001 Allied Capital Corporation (Nasdaq:ALLC ALLC Association for Literary and Linguistic Computing ALLC Allied Capital Corporation (stock symbol) ALLC Army Logistics Leadership Center (Red River Defense Complex, Texarkana, TX) ) today announced 2000 results. Highlights for 2000 -- Net income increased 18% to $143 million, or $1.94 per share -- Net operating income increased 30% to $113 million, or $1.53 per share -- Dividends per share increased 14% to $1.82 per share -- Net asset value increased 19% to $12.11 per share -- Shareholders' equity increased 54% to over $1 billion -- New investments totaled $901.5 million for 2000; $261.2 million for Q4 2000 -- Total return to shareholders of 25% Operating Results For the year ended December 31, 2000, Allied Capital reported net income of $143.1 million, or $1.94 per share, an 18% increase over earnings of $98.6 million, or $1.64 per share, for 1999. For the three months ended December 31, 2000, the company reported net income of $42.3 million, or $0.52 per share, a 6% increase over net income of $30.9 million, or $0.49 per share, for the three months ended December 31, 1999. Net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before net realized and unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. was $112.7 million, or $1.53 per share for 2000, a 30% increase over net operating income of $71.0 million, or $1.18 per share, for 1999. For the fourth quarter of 2000, net operating income before net realized and unrealized gains totaled $34.7 million, or $0.42 per share, a 24% increase over fourth quarter 1999 net operating income of $21.3 million, or $0.34 per share. Total net realized and unrealized gains were $30.4 million, or $0.41 per share, for 2000 as compared to $27.5 million, or $0.46 per share, for 1999. At December 31, 2000, total assets were $1.9 billion, a 44% increase over total assets of $1.3 billion at December 31, 1999. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. increased 54% to $1.0 billion at December 31, 2000 from $667.5 million at December 31, 1999. Net asset value at December 31, 2000 was $12.11 per share, a 19% increase over the net asset value of $10.20 per share at year-end 1999. For the year ended December 31, 2000, Allied Capital's total return to shareholders was 25%, including reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. of dividends and share price appreciation. Bill Walton William Theodore Walton III, better known as Bill Walton (born November 5, 1952), is a former American basketball player and current television sportscaster. He is the father of current Los Angeles Lakers player Luke Walton. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , remarked, "We met all of our objectives in 2000, and delivered strong earnings, dividends and growth in shareholder value. We had a great year and are exceptionally positioned for long term growth. But this is not a business where we can rest on our laurels. We move into 2001 mindful mind·ful adj. Attentive; heedful: always mindful of family responsibilities. See Synonyms at careful. mind of the impact of the slowdown in the U.S. economy and credit tightening by banks and other senior lenders. There are both risks and opportunities in this type of investment climate. On the one hand, we are positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. one of our key strategies for the past several years: building a significant capital base and access to liquidity to take advantage of market inefficiencies that arise when the capital markets become unsettled. However, in this uncertain environment, it is essential that we remain disciplined in selecting new investments and rigorous in our portfolio management processes." Portfolio Activity for 2000 The company invested a total of $901.5 million for 2000, including the $95.2 million acquisition of BLC BLC Boston Library Consortium BLC Bethany Lutheran College (Minnesota) BLC Back Light Compensation (video cameras) BLC Belo Corporation (stock symbol) BLC Broadband Loop Carrier Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Inc., $505.7 million of private finance investments, $124.3 million of purchased CMBS CMBS See: Commercial Mortgage Backed Securities , and $151.6 million in small business loans. The company invested a total of $751.9 million during 1999. For the fourth quarter of 2000, new loans and investments totaled $261.2 million, a 20% increase over 1999 fourth quarter investment activity of $217.9 million. At December 31, 2000, the overall weighted average yield on the company's portfolio was 14.1%, as compared to 13.0% at December 31, 1999. Private Finance The private finance portfolio totaled $1.3 billion at December 31, 2000. The debt portion of this portfolio, which totaled $966.3 million at December 31, 2000, had a weighted average yield of 14.6%. During the fourth quarter, Allied Capital invested a total of $118.1 million in its core private finance business. Significant new financings during Q4 2000 included: -- The Hartz Mountain Company - Allied Capital provided $32 million of subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". and equity to finance the buyout of the leading manufacturer and distributor of pet supplies in the U.S. Founded in 1926, Hartz has emerged as the dominant branded supplier of a full line of pet products under the names Hartz(R), Wardley(R), and L/M L/M low and moderate (income levels) Animal Farms(R). J.W. Childs was the equity sponsor of this $327.5 million buyout. -- SunSource Inc.- Allied Capital invested $30 million of subordinated debt to provide growth capital and to retire senior debt. The company is organized into two primary businesses - The Hillman Hillman was a famous British automobile marque, manufactured by the Rootes Group. It was based in Ryton-on-Dunsmore, near Coventry, England, from 1907 to 1976. Before 1907 the company had built bicycles. Group, including its Axxess Technologies subsidiary, which is the leading provider of merchandising services and small hardware items primarily to hardware stores and home centers, and SunSource Technology Services, a leading engineering services provider and distributor of fluid power products and related technologies to manufacturers. -- Aspen aspen, in botany aspen: see willow. Aspen, city, United States Aspen (ăs`pən), city (1990 pop. 5,049), alt. 7,850 ft (2,390 m), seat of Pitkin co., S central Colo. Pet Products, Inc. - Allied Capital provided $16 million in subordinated debt, preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and common stock to finance the buyout of this leading supplier of highly designed, innovative pet supply and accessory products. BancBoston Capital, Inc. and Ascendant Capital, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control were the equity sponsors for this $73 million buyout transaction. -- American Homecare Supply - Allied Capital provided acquisition financing of $7.5 million in subordinated debt with warrants to finance this leading provider of home medical equipment and respiratory therapy respiratory therapy Medical profession concerned with assisting the respiratory function of individuals who have severe lung disorders. Practices include suctioning to clear secretions from the airway, use of aerosol mists (sometimes medicated) or gases to ease breathing, products. Kohlberg & Co. was the equity sponsor of this $67.5 million transaction. -- Staffing Partners Holding Company - Allied Capital provided $7.1 million of subordinated debt, preferred stock, and common stock to fund the buyout of this temporary staffing services provider. Madison Investment Partners and Nobska Group, LLC were also equity investors in this $26 million transaction. -- MortgageRamp.com - Allied Capital invested $4 million of equity capital in this online commercial mortgage origination company. Allied Capital's investment was part of a $50 million financing led by Banc of America Mortgage Capital Corporation and Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank . MortgageRamp.com is majority owned by GMAC GMAC General Motors Acceptance Corporation GMAC Graduate Management Admission Council GMAC Give Me A Call GMAC Genetic Manipulation Advisory Committee GMAC Genetic Modification Advisory Committee (Singapore) GMAC Give Me A Chance . Allied Capital's new portfolio company, Business Loan Express, Inc., is a technology-enabled small business lender on the MortgageRamp.com web site. For the year ended December 31, 2000, Allied Capital recognized re0alized gains of $28.6 million and realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. of $13.1 million. The company reversed previously recorded unrealized depreciation of $12.0 million when these losses were realized. Acquisition of BLC Financial Services, Inc. and Formation of Business Loan Express, Inc. In addition to the company's core private finance investment activity, Allied Capital acquired 95% of BLC Financial Services, Inc. in a "going private" buyout transaction for $95.2 million. Allied Capital issued approximately 4.1 million shares, or $86.1 million of new equity, and paid $9.1 million in cash to acquire BLC. The new portfolio company has changed its name to Business Loan Express, Inc. ("BLX BLX Business Line Expert BLX Basic Launch Complex BLX British Legion of Xbox (gaming clan) "). As part of the transaction, Allied Capital recapitalized its Allied Capital Express operations as an independently managed private portfolio company and merged it into BLX. Upon completion of the merger, Allied Capital's investment in BLX totaled $204 million and consists of $75 million of 25% subordinated debt, $25 million of preferred stock, and $104 million of common stock. In addition, Allied Capital has entered into a management contract with BLX to provide management services, including certain technology and transition services. Allied Capital's investment in BLX is included in the company's private finance portfolio. BLX is a non-bank small business lender licensed as a participant in the SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government 7(a) Guaranteed Loan Program. The company is headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , has 22 offices throughout the country and is an SBA-designated Preferred Lender in 64 markets. CMBS Investing As part of the company's strategy to maximize its return on equity capital, during the fourth quarter, the company liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. approximately $98.7 million of CMBS bonds rated BB+, BB and BB-. These bonds had an effective yield of 11%, and were sold for $102.5 million, resulting in a premium to amortized cost. The sale of these bonds increased the company's overall liquidity and raised the yield on the company's remaining purchased CMBS portfolio to 15.4%, after assuming a 1% loss on the entire underlying mortgage loan pool. In order to maintain a balanced portfolio, the company made no additional purchases of non-investment grade CMBS during the fourth quarter of 2000. At December 31, 2000, the company's purchased CMBS portfolio totaled $311.3 million. The credit characteristics of the underlying loan portfolios remained strong and had an average underwritten LTV LTV See: Loan-to-value ratio of 71%, and an average underwritten debt service coverage ratio The debt service coverage ratio (DSCR), or debt service ratio, is the ratio of net operating income to debt payments on a piece of investment real estate. It is a popular benchmark used in the measurement of an income-producing property’s ability to produce of 1.31 times. The company has purchased its CMBS investments at an average discount of 50% from the face amount of the bonds. The unamortized discount on the CMBS portfolio at December 31,2000 totaled $366.7 million. Liquidity and Capital Resources During 2000, Allied Capital increased its capital base through new equity issuances In financial markets, an Equity Issuance is the sale of new equity or "stocks" by a firm to investors. Equity Issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to totaling $250.9 million. In addition, the company obtained $200 million of additional unsecured long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. financing. The company also expanded its unsecured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility by $77 million to a total commitment level of $417 million. At December 31, 2000, the company had a weighted average cost of debt of 8.3%. There are no significant maturities of long-term debt until 2003. In addition to the new equity issuances, the company increased its equity capital base by $86 million as a result of the stock issued to complete the BLX transaction. At December 31, 2000, the company had regulatory asset coverage ratio Asset Coverage Ratio A test that determines a company's ability to cover debt obligations with its assets after all liabilities have been satisfied. It is calculated as the following: of 245%. The company is required to maintain regulatory asset coverage of at least 200%. Portfolio Quality Allied Capital employs a grading system to monitor the quality of its portfolio. Grade 1 is for those investments from which a capital gain is expected. Grade 2 is for investments performing in accordance with plan. Grade 3 is for investments that require closer monitoring; however, no loss of interest or principal is expected. Grade 4 is for investments for which some loss of contractually due interest is expected, but no loss of principal is expected. Grade 5 is for investments for which full loss of interest and some loss of principal is expected, and the loan is marked down to net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. . Credit quality within the portfolio remains consistent with prior periods. At December 31, 2000, the portfolio of Grade 1 investments totaled $208.3 million, or 12% of the total portfolio at value; Grade 2 investments totaled $1,461.7 million, or 82% of the total portfolio; Grade 3 investments totaled $15.4 million, or 1% of the total portfolio; Grade 4 investments totaled $76.0 million, or 4% of the total portfolio; and Grade 5 investments totaled $26.6 million, or 1% of the total portfolio. Included in Grade 4 and 5 investments are assets totaling $20.5 million that are secured by commercial real estate. For the total investment portfolio, loans greater than 120 days delinquent were $56.4 million at value at December 31, 2000, or 3% of the total portfolio. Included in this category are loans valued at $13.3 million that are fully secured by commercial real estate. Loans greater than 120 days delinquent generally do not accrue interest. At December 31, 2000, delinquencies in the CMBS portfolio related to the underlying collateral pool were negligible. 150th Consecutive Quarterly Dividend of $0.49 Per Share Declared As previously released, on February 1, 2001, the company increased its regular quarterly dividend to $0.49 per share for the first quarter of 2001. The regular quarterly dividend had previously been $0.46 per share. The dividend is payable as follows:
Record date March 16, 2001
Payable date March 30, 2001
Webcast/ Conference Call at 10:15 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on February 13, 2001 The company will host a webcast/ conference call at 10:15 a.m. Eastern today to discuss fourth quarter and year-end 2000 financial results. All interested parties are welcome to attend the live webcast, which will be hosted through our web site at www.alliedcapital.com. Please visit the web site to test your connection before the call. You can also access the conference call by dialing 888/748-9804 approximately 15 minutes prior to the call; please reference the passcode "Allied Capital." International callers should dial 712/271-3410. For complete information about the webcast/ conference call and the replay, please visit our web site or call Allied Capital Investor Relations Investor relations The process by which the corporation communicates with its investors. at 888/818-5298. An archived replay of the event will be available on our web site. About Allied Capital Allied Capital is the country's largest business development company, and provides long-term investment capital to support the expansion of growing companies nationwide. The company provides mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. debt and equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. , and also participates in the real estate capital markets as an investor in commercial mortgage-backed securities Commercial mortgage-backed securities (CMBS) are a type of bond commonly issued in American security markets. They are a type of Mortgage-backed security which are backed by mortgages on commercial rather than residential real estate. . The company is headquartered in Washington, DC. For more information, please visit the web site at www.alliedcapital.com, call Allied Capital Investor Relations toll-free at 888/818-5298 or e-mail us at ir@alliedcapital.com. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated This term is often used in law as equivalent to mentioned specifically, designated, or expressly named or granted; as in speaking of enumerated governmental powers, items of property, or articles in a tariff schedule. in the company's periodic filings with the Securities and Exchange Commission.
At December 31,
ASSETS (In thousands, except per
share amounts)
Portfolio at Value: 2000 1999
---------- ----------
Private finance $1,282,467 $ 647,040
Commercial real estate finance 505,534 520,029
Small business finance --- 61,428
---------- ----------
Total Portfolio at Value 1,788,001 1,228,497
Cash and cash equivalents 2,449 18,155
Other assets 63,367 43,386
---------- ----------
Total Assets $1,853,817 $1,290,038
========== ==========
LIABILITES and SHAREHOLDERS' EQUITY
Liabilities:
Debt $ 786,648 $ 592,850
Other liabilities 30,477 22,675
---------- ----------
817,125 615,525
Preferred stock issued to SBA 7,000 7,000
Common shareholders' equity 1,029,692 667,513
---------- ----------
Total Liabilities and
Shareholders' Equity $1,853,817 $1,290,038
========== ==========
Net asset value per common share $12.11 $10.20
Common shares outstanding at end
of year 85,057 65,414
3 Months Ended 12 Months Ended
December 31 December 31
(In thousands, except per share amounts)
Interest and Portfolio
Related Income 2000 1999 2000 1999
-------- -------- -------- --------
Interest and
dividend income $ 51,762 $ 35,396 $182,307 $121,112
Net premiums
from loan
dispositions 5,386 5,252 16,138 14,284
Investment
advisory fees
and other
income 4,587 1,630 13,144 5,744
-------- -------- -------- --------
Total
Interest and
Related
Portfolio
Income 61,735 42,278 211,589 141,140
-------- -------- -------- --------
Expenses:
Interest 15,767 10,687 57,412 34,860
Employee 5,133 4,833 19,842 16,136
Administrative 4,724 3,874 15,435 12,350
-------- -------- -------- --------
Total
Operating
Expenses 25,624 19,394 92,689 63,346
-------- -------- -------- --------
Formula and cut
off awards 1,386 1,565 6,183 6,753
-------- -------- -------- --------
Net Operating
Income Before
Net
Realized and
Unrealized
Gains 34,725 21,319 112,717 71,041
Net Realized and
Unrealized Gains:
Net realized
gains (losses) (7,572) 8,943 15,523 25,391
Net unrealized
gains 15,128 663 14,861 2,138
-------- -------- -------- --------
Total Net
Realized and
Unrealized
Gains 7,556 9,606 30,384 27,529
-------- -------- -------- --------
Net Income $ 42,281 $ 30,925 $143,101 $ 98,570
======== ======== ======== ========
Diluted earnings
per share $ 0.52 $ 0.49 $ 1.94 $ 1.64
Weighted average
shares
outstanding -
diluted 81,612 63,141 73,472 60,044
Certain reclassifications have been made to the 1999 balances to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the 2000 financial statement presentation. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion