Allied Capital Announces First Quarter 2007 Financial Results; Quarterly Dividend of $0.64 Per Share Declared.WASHINGTON, D.C. -- Allied Capital Corporation (NYSE NYSE See: New York Stock Exchange :ALD ALD abbr. adrenoleukodystrophy ALD, n.pr See adrenoleukodystrophy. ALD aldolase. ) today announced first quarter 2007 financial results. Allied Capital will host an investment community conference call today at 10:15 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . Highlights for Q1 2007 * Net income was $0.87 per share, or $133.1 million * Net investment income was $0.26 per share, or $39.5 million * The total of net investment income and net 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. was $0.44 per share, or $67.2 million * Net unrealized appreciation was $0.43 per share, or $65.9 million * First quarter 2007 dividend of $0.63 per share was paid; second quarter dividend of $0.64 per share was declared * Net asset value per share was $19.58 * 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. was $3.0 billion * New investments totaled $170.2 million for the quarter Net income was $133.1 million for the quarter ended March 31, 2007, as compared to $99.6 million for the quarter ended March 31, 2006. The increase in net income for the quarter was primarily due to an increase in the sum of 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. from the portfolio. The company continues to realize significant net gains from its portfolio of investments in middle market private companies. Net income can vary substantially from quarter to quarter. As a result, quarterly comparisons of net income may not be meaningful. For the three months ended March 31, 2007, the company had net realized gains of $27.7 million, including a $20.0 million gain from the sale of its investment in Palm Coast Data, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . For the three months ended March 31, 2006, the company had net realized gains of $432.8 million, including a $433.1 million gain from the sale of its majority equity investment in Advantage Sales and Marketing, Inc. One driver of the increase in net unrealized gains for the first quarter of 2007 was appreciation related to the company's investment in Mercury Air Centers, Inc. of $56.7 million. On April 19, 2007, the company announced that a definitive agreement had been signed to sell the company's majority equity interest in Mercury. Based on the definitive agreement, Mercury will sell for an enterprise value of approximately $427 million, subject to pre- and post-closing adjustments. Allied Capital expects to realize a gain on the equity being sold of approximately $240 million, subject to pre- and post-closing adjustments. At March 31, 2007, the company's investment in Mercury totaled $84.8 million at cost and $301.4 million at value, which included unrealized appreciation of $216.6 million. At December 31, 2006, the company had estimated excess 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. of $397.1 million available for distribution to shareholders in 2007. Given the company's regular quarterly dividend payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. , which for the first quarter of 2007 was $95.8 million, the company expects that substantially all of the 2007 dividend payments will be made from excess 2006 taxable earnings. As a result, most of the taxable income generated from 2007 net investment income and net realized gains will be available for distribution in 2008. In addition to spillover spill·o·ver n. 1. The act or an instance of spilling over. 2. An amount or quantity spilled over. 3. A side effect arising from or as if from an unpredicted source: taxable income, the company has an estimated $220.7 million in deferred taxable income resulting from installment sale Installment sale The sale of an asset in exchange for a specified series of payments (the installments). installment sale A sale in which the buyer is scheduled to make a series of payments over a period of time. gains. These gains may be deferred for tax purposes until the notes or other amounts received from the sale of the related investments are sold or collected in cash. The company believes that the performance of the portfolio and related net realized gains has provided significant visibility into future dividend payments for shareholders. For the three months ended March 31, 2007, net investment income was $39.5 million or $0.26 per share, as compared to $41.3 million or $0.29 per share, for the three months ended March 31, 2006. During the first quarter of 2007, new investments totaled $170.2 million. The company continues to exercise prudence in its investing activities in what is a very competitive market place. The level of first quarter investment activity resulted in lower fee income. Fees and other income were $6.0 million or $0.04 per share for the quarter ended March 31, 2007, as compared to $22.1 million or $0.16 per share for the quarter ended March 31, 2006. The reduction in fee income contributed to a lower net investment income for the quarter. Portfolio and Investment Activity The private finance portfolio totaled $4.4 billion at value, which included loans and debt securities of $3.1 billion and equity securities of $1.3 billion. The weighted average yield on the private finance loans and debt securities was 11.7% at March 31, 2007. Private finance new investments totaled $170.2 million for the first quarter of 2007. Selected investments made included: * $55.0 million to acquire a majority interest in Direct Capital Corporation, a small ticket leasing company; * $19.2 million in additional Class A equity interests of Business Loan Express, LLC, a national non-bank small business lender, to provide capital to BLX BLX Business Line Expert BLX Basic Launch Complex BLX British Legion of Xbox (gaming clan) ; and * $13.9 million to support the acquisition of NetShape Technology Inc., a manufacturer of powder metal and metal injection molded precision components. After principal collections related to investment repayments or sales of $235.5 million, portfolio exits and valuation and other changes during the quarter, the total portfolio at value was $4.5 billion at March 31, 2007. At March 31, 2007, the weighted average yield on the interest-bearing portfolio was 11.6%, as compared to 12.3% at March 31, 2006 and 11.8% at December 31, 2006. Investments funded subsequent to the close of the first quarter, from April 1, through May 4, 2007, totaled approximately $290 million. Portfolio Quality Grade 4 and Grade 5 assets were 5.2% of the total portfolio at value at March 31, 2007, as compared to 4.6% at December 31, 2006. Grade 5 assets at both March 31, 2007 and December 31, 2006, included certain BLX Class B and Class C equity interests totaling $74.8 million or 1.7% of the total portfolio at value. Loans on non-accrual increased to $285.9 million or 6.4% of the total portfolio at value at March 31, 2007, from $238.8 million or 5.3% of the total portfolio at value at December 31, 2006. The company's $19.2 million additional investment in BLX Class A equity interests made during the quarter contributed to the increase in non-accruals. The company made its additional investment in BLX with the expectation that the investment would not accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. interest. Investment in BLX Class A equity interests on non-accrual totaled $85.8 million or 1.9% of the total portfolio at value at March 31, 2007, and $66.6 million or 1.5% of the total portfolio at value at December 31, 2006. Liquidity and Capital Resources During the first quarter of 2007, the company completed the sale of 3.3 million shares of common stock for net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). , after the underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. discount and estimated offering expenses, of $93.8 million. Also during the first quarter of 2007, the company completed the public issuance of $200 million of unsecured 40-year notes. The notes will mature on April 15, 2047, and have a fixed interest rate of 6.875%. On April 2, 2007, the company sold an additional $30 million of these notes pursuant to an over-allotment option. The notes are listed on the NYSE under the trading symbol Trading symbol See: Ticker symbol AFC (1) (Application Foundation Classes) A class library from Microsoft that provides an application framework and graphics, graphical user interface (GUI) and multimedia routines for Java programmers. . At March 31, 2007, the company had a liquidity portfolio totaling $205.0 million, which included money market and other securities. The company also had cash and other investments in money market and other securities not included in the liquidity portfolio of $66.5 million. The company had outstanding 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. of $1.9 billion and no outstanding borrowings on its revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. . The company had availability under its revolving line of credit of $888.0 million, net of amounts committed for standby standby Medtalk adjective Referring to the immediate availability of a certain specialist–anesthesiologist, surgeon, who can be deployed in a medical emergency. Cf Concurrent. letters of credit of $34.5 million issued under the credit facility. At March 31, 2007, the company had a weighted average cost of debt of 6.5% and its regulatory asset coverage was 257%. The company is required to maintain regulatory asset coverage of at least 200%. Quarterly Dividend of $0.64 Per Share Declared As previously released on April 24, 2007, the company declared its 175th consecutive quarterly dividend of $0.64 per share for the second quarter of 2007. [TABLE OMITTED] The company's dividend is paid from taxable income. It is estimated that 30% of the distributions made for 2007 will be generated from ordinary taxable income and 70% will be generated from taxable net long-term capital gains Long-term capital gain A profit on the sale of a security or mutual fund share that has been held for more than one year. . This allocation is only an estimate and should not be relied upon for tax reporting purposes. The Board determines the dividend based on estimates of annual taxable income, which differ from book income due to changes in unrealized appreciation and depreciation and due to temporary and permanent differences in income and expense recognition, and the amount of taxable income carried over from the prior year for distribution in the current year. Webcast/ Conference Call at 10:15 a.m. EDT on Tuesday, May 8, 2007 The company will host a webcast/conference call at 10:15 a.m. (Eastern Time) on Tuesday, May 8, 2007, to discuss the results for the quarter. PLEASE VISIT THE PRESENTATIONS & REPORTS SECTION OF THE INVESTOR RESOURCES PORTION OF THE COMPANY'S WEBSITE FOR A SLIDE PRESENTATION THAT COMPLEMENTS TODAY'S CONFERENCE CALL. 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. International callers should dial (706) 645-0106. All callers should reference the passcode "Allied Capital." An archived replay of the event will be available through May 22, 2007, by calling (800) 642-1687 (international callers please dial (706) 645-9291). Please reference passcode "6332526." An archived replay will also be available on our website. 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 Corporation, a leading business development company with total assets of $5 billion, has paid regular, quarterly cash dividends to shareholders since 1963. Since its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. in 1960, Allied Capital has provided long-term 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. to thousands of middle market companies. Allied Capital invests in the American entrepreneurial economy by providing capital to companies seeking a long-term financial partner and access to managerial resources often unavailable to smaller companies. In serving its shareholders, Allied Capital helps build middle market businesses and support American jobs. At March 31, 2007, the company's private finance portfolio included investments in 144 companies that generate aggregate revenues of over $13 billion and employ more than 90,000 people. Allied Capital provides flexible, competitive debt and equity capital for management and sponsor-led buyouts, recapitalizations, acquisitions and growth of middle market companies. Allied Capital's seamless, one-stop financing capabilities include first and second lien A Second lien financing is a form of financing secured on a second ranking basis by (more or less) the same security, which secures the first ranking financing. The first lien lenders and the second lien lenders agree that, in the event of a security enforcement or bankruptcy, the senior loans, unitranche debt, junior or 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. Headquartered in Washington, DC, Allied Capital offers shareholders the opportunity to participate in the private equity industry through an investment in the Company's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Stock Exchange-listed stock, which is traded under the symbol ALD. For more information, please visit 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 Allied Capital's filings with the Securities and Exchange Commission. This press release should be read in conjunction with the Company's recent SEC filings. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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