Allied Capital Announces 2002 Results Quarterly Dividend Increased to $0.57 Per Share.Business Editors WASHINGTON--(BUSINESS WIRE)--Feb. 13, 2003 Allied Capital Corporation (NYSE NYSE See: New York Stock Exchange : ALD ALD abbr. adrenoleukodystrophy ALD, n.pr See adrenoleukodystrophy. ALD aldolase. ) today announced 2002 annual financial results. Highlights for 2002 -- Net income was $2.20 per share, or $228.3 million -- Net investment income was $1.77 per share, or $183.9 million -- Regular quarterly dividends per share increased 9.5% to $2.20 per share; an extra cash dividend of $0.03 per share was paid for 2002 -- Net asset value per share increased 4.8% to $14.22 -- Shareholders' equity increased 14.3% to $1.55 billion -- New investments totaled $506.4 million for 2002, including $153.3 million in the fourth quarter Operating Results For the year ended December December: see month. 31, 2002, Allied Capital reported net income of $228.3 million, or $2.20 per share, a 1.9% increase on a per share basis as compared to net income of $200.7 million, or $2.16 per share, for 2001. For the three months ended December 31, 2002, the company reported net income of $53.4 million, or $0.51 per share, as compared to net income of $42.9 million, or $0.43 per share, for the three months ended December 31, 2001. Net income varies substantially from quarter to quarter primarily due to the recognition of 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. or losses, which vary from quarter to quarter. As a result, quarterly comparisons of net income may not be meaningful. Net investment income before net realized and unrealized gains or losses was $183.9 million, or $1.77 per share for 2002, as compared to net investment income of $179.5 million, or $1.93 per share, for 2001. For the fourth quarter of 2002, net investment income before net realized and unrealized gains or losses totaled $42.4 million, or $0.40 per share, as compared to fourth quarter 2001 net investment income of $53.4 million, or $0.53 per share. Employee and administrative expenses associated with the closing of the company's German office decreased net income and net investment income for the three and twelve months ended December 31, 2002 by $3.0 million, or $0.03 per share. Net realized and unrealized gains totaled $44.4 million, or $0.43 per share, for 2002 as compared to $21.3 million, or $0.23 per share, for 2001. For the year ended December 31, 2002, Allied Capital recognized realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. of $95.5 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 $50.6 million. During 2002, the company invested a total of $506.4 million. After total repayments of $143.2 million, asset sales of $213.5 million and valuation changes during the year, total assets increased to $2.79 billion at December 31, 2002, a 13.6% increase over total assets of $2.46 billion at December 31, 2001. 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 14.3% to $1.55 billion at December 31, 2002 from $1.35 billion at December 31, 2001. Net asset value per share at December 31, 2002 was $14.22, a 4.8% increase over the net asset value per share of $13.57 at December 31, 2001. Cash flow provided by operating activities before new portfolio investments for the year ended December 31, 2002 was $571.7 million and dividends to shareholders for 2002 were $229.9 million. Cash flow provided by operating activities before new portfolio investments for the year ended December 31, 2001 was $330.8 million and dividends to shareholders for 2001 were $186.2 million. For the year ended December 31, 2002, Allied Capital's annual return on average assets was 9.0% and the annual return on average equity was 16.0%. 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, "This was a challenging year for American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of business in general. We remained focused on our primary goal of delivering recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. quarterly dividends, and achieved this goal once again. As we move into 2003, we are seeing increasing private finance investment opportunities as well as several capital gain opportunities within our diverse portfolio." Portfolio Activity for 2002 For 2002, private finance investments totaled $297.2 million and commercial real estate investments totaled $209.2 million. For the fourth quarter of 2002, total new loans and investments were $153.3 million. At December 31, 2002, the overall weighted average yield on the interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid portfolio was 14.0%, as compared to 14.3% at December 31, 2001. Private Finance The private finance portfolio totaled $1.74 billion at December 31, 2002. The debt portion of this portfolio, which totaled $1.15 billion at December 31, 2002, had a weighted average yield of 14.4%, as compared to 14.8% at December 31, 2001. During the fourth quarter of 2002, Allied Capital invested a total of $78.7 million in its private finance business. Significant private finance investments during the fourth quarter of 2002 included: -- $10.4 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". in Frozen Specialties, Inc., a leading manufacturer of budget, private-label frozen pizza pizza Food of Neapolitan origin. It consists of a flattened disk of bread dough, typically topped with olive oil, tomatoes, and mozzarella cheese, baked quickly, and served hot. Pizza is eaten throughout Italy, with regional variations in toppings. Pizza came to the U.S. and appetizers for convenience and grocery stores nationwide, -- $15.0 million of subordinated debt and $4 million of equity to acquire Housecall For the online virus scanner, see . Housecalls Housecalls, or house calls, are an act of customer service. In a house call, the supplier goes to the consumer's home, rather than the consumer visiting the supplier's place of business. Medical Resources, Inc., a leading home healthcare organization and -- $29.7 million of senior debt in Powell Powell See Osceola. Plant Farms, Inc., one of the largest suppliers of bedding and flowering plants plants which have stamens and pistils, and produce true seeds; phenogamous plants; - distinguished from See also: Flowering in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . CMBS CMBS See: Commercial Mortgage Backed Securities Investing At December 31, 2002, the company's CMBS portfolio totaled $608.3 million, and had a weighted average yield to maturity of 14.4%, as compared to 14.8% at December 31, 2001. The company invested $64.7 million in two new CMBS transactions during the fourth quarter of 2002. Because the company generally acquires its CMBS investments at significant discounts from the face amounts of the bonds, the unamortized discount on the CMBS portfolio totaled $649.5 million at December 31, 2002. During January January: see month. 2003, the company sold BB+ through B CMBS bonds with a cost basis of $115.7 million, which generated $127.9 million in cash proceeds. This sale resulted in a realized capital gain of $12.2 million. Liquidity and Capital Resources During 2002, Allied Capital raised a total of $86.4 million of new equity in three secondary offerings. The company also raised $86.5 million in a non-transferable rights offering that was completed during the fourth quarter. The company expanded its committed unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. 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 to $527.5 million during 2002, of which $318.0 million was available at December 31, 2002. The company repaid its auction rate reset note reset note A debt security with terms that can be reset on one or more dates during the life of the note. At the time the terms are changed, the holder usually has the right to redeem the security. of $75.0 million in December 2002. At December 31, 2002, the company had a weighted average cost of debt of 6.9%. At December 31, 2002, the company had regulatory asset coverage of 270% and the ratio of debt to equity was 0.65 to 1. 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. 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 that are in workout Workout Informal repayment or loan forgiveness arrangement between a borrower and creditors. workout 1. The process of a debtor's meeting a loan commitment by satisfying altered repayment terms. and for which some loss of current interest is expected, but no loss of principal is expected. Grade 5 is for investments that are in workout and for which some loss of principal is expected and the investment is written 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. . At December 31, 2002, the portfolio of Grade 1 investments totaled $801.0 million, or 32.1% of the total portfolio at value; Grade 2 investments totaled $1.40 billion, or 56.3% of the total portfolio; Grade 3 investments totaled $166.0 million, or 6.7% of the total portfolio; Grade 4 investments totaled $23.6 million, or 1.0% of the total portfolio; and Grade 5 investments totaled $96.8 million, or 3.9% of the total portfolio. Included in Grade 4 and 5 investments are assets totaling $24.1 million that are secured by commercial real estate. For the total investment portfolio, loans and debt securities greater than 90 days past due were $103.1 million at value at December 31, 2002, or 4.1% of the total portfolio. Included in this category are loans and debt securities valued at $26.0 million that are secured by commercial real estate. At December 31, 2002, greater than 30-day delinquencies in the underlying collateral pool related to the CMBS portfolio were 1.0%. Quarterly Dividend Increased to $0.57 Per Share As previously released, on February February: see month. 7, 2003, the company increased its regular quarterly dividend to $0.57 per share for the first quarter of 2003. This dividend will represent the company's 158th consecutive quarterly dividend. The dividend is payable as follows: Record date March 14, 2003 Payable date March 28, 2003 For 2002, the company paid regular quarterly dividends of $2.20 per share, a 9.5% increase over total dividends of $2.01 per share in 2001. An extra cash dividend of $0.03 was paid for 2002. The company's dividend is paid from taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . The Board determines the dividend based on annual estimates of taxable income, which differs from book income due to both temporary and permanent differences in income and expense recognition. Changes in unrealized appreciation and depreciation have no impact on the company's taxable income. Webcast/ Conference Call at 10:15 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on February 13, 2003 The company will host a webcast/ conference call at 10:15 a.m. Eastern today to discuss fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2002 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) 689-4612 approximately 15 minutes prior to the call; please reference the passcode "Allied Capital." International callers should dial (706) 645-0106. An archived replay of the event will be available on our web site through February 27, 2003 by calling (800) 642-1687 and referencing passcode "7422447". International callers, please dial (706) 645-9291 to access the replay. 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. About Allied Capital Allied Capital is the nation's largest business development company and provides 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. and equity investment capital primarily to support the expansion of private companies in a variety of industries. The company also participates in the real estate capital markets as an investor in non-investment grade 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 Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , 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,
-----------------------
(unaudited)
(In thousands, except per share amounts) 2002 2001
-----------------------
ASSETS
Portfolio at Value:
Private finance $1,743,215 $1,595,072
Commercial real estate finance 744,952 734,518
----------- -----------
Total Portfolio at Value 2,488,167 2,329,590
Other assets 294,966 130,234
Cash and cash equivalents 11,186 889
----------- -----------
Total Assets $2,794,319 $2,460,713
=========== ===========
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities:
Debt $998,450 $1,020,806
Accounts payable and other liabilities 242,798 80,784
----------- -----------
Total Liabilities 1,241,248 1,101,590
Preferred stock 7,000 7,000
Shareholders' Equity:
Common stock 11 10
Additional paid-in capital 1,547,183 1,352,688
Notes receivable from sale of common stock (24,704) (26,028)
Net unrealized appreciation 39,411 39,981
Distributions in excess of earnings (15,830) (14,528)
----------- -----------
Total Shareholders' Equity 1,546,071 1,352,123
----------- -----------
Total Liabilities and
Shareholders' Equity $2,794,319 $2,460,713
=========== ===========
Net asset value per common share $14.22 $13.57
Actual shares outstanding at end of period 108,698 99,607
3 Months Ended 12 Months Ended
December 31 December 31
(In thousands, except per -------------------- -------------------
share amounts) (unaudited) (unaudited)
Interest and Related
Portfolio Income: 2002 2001 2002 2001
---------- --------- --------- ---------
Interest and dividends $68,753 $66,742 $264,042 $240,464
Premiums from loan
dispositions 725 434 2,776 2,504
Fees and other income 8,537 15,490 43,110 46,142
---------- --------- --------- ---------
Total Interest
and Related Portfolio
Income 78,015 82,666 309,928 289,110
---------- --------- --------- ---------
Expenses:
Interest 18,029 17,130 70,443 65,104
Employee (1) 8,664 7,387 33,126 29,656
Administrative (1) 8,591 5,133 21,504 15,299
---------- --------- --------- ---------
Total Operating
Expenses 35,284 29,650 125,073 110,059
---------- --------- --------- ---------
Net Investment Income Before
Income Tax Expense and
Net Realized and Unrealized
Gains (Losses) 42,731 53,016 184,855 179,051
Income Tax Expense
(Benefit) 330 (412) 930 (412)
---------- --------- --------- ---------
Net Investment Income Before
Net Realized and Unrealized
Gains (Losses) 42,401 53,428 183,925 179,463
Net Realized and Unrealized
Gains (Losses):
Net realized gains
(losses) (12,135) (7,678) 44,937 661
Net unrealized gains
(losses) 23,090 (2,860) (571) 20,603
---------- --------- -------------------
Total Net Realized
and Unrealized
Gains (Losses) 10,955 (10,538) 44,366 21,264
---------- --------- --------- ---------
Net Income $53,356 $42,890 $228,291 $200,727
========== ========= ========= =========
Net Investment Income per
share -- diluted $0.40 $0.53 $1.77 $1.93
Earnings per share --diluted $0.51 $0.43 $2.20 $2.16
Weighted average shares
outstanding -- diluted 105,077 100,052 103,574 93,003
(1) Employee and administrative expenses for the three and twelve
months ended December 31, 2002 include costs associated with the
closing of the company's German office of $3.0 million, or $0.03
per share.
Certain reclassifications have been made to the 2001 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 2002 financial statement presentation. |
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