-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nn+vmgwBUtZOI/GOyl4ve9SWq7YmBqwpt89OJfUxs7Itp4JbXwg9vhNDHf1DrRYj lDjXW7vtOqWYh9fiHLKm0A== 0001157523-03-001179.txt : 20030422 0001157523-03-001179.hdr.sgml : 20030422 20030422092221 ACCESSION NUMBER: 0001157523-03-001179 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030422 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED CAPITAL CORP CENTRAL INDEX KEY: 0000003906 IRS NUMBER: 521081052 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 811-02708 FILM NUMBER: 03657563 BUSINESS ADDRESS: STREET 1: 1919 PENNSYLVANIA AVENUE NW CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2023311112 MAIL ADDRESS: STREET 1: 1919 PENNSYLVANIA AVENUE NW STREET 2: 1666 K STREET NW CITY: WASHINGTON STATE: DC ZIP: 20006 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED LENDING CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED CAPITAL LENDING CORP DATE OF NAME CHANGE: 19931116 8-K 1 a4380187.txt ALLIED CAPITAL 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 22, 2003 ALLIED CAPITAL CORPORATION (Exact name of registrant as specified in its charter) Maryland 0-22832 52-1081052 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 1919 Pennsylvania Avenue, N.W. Washington D.C. 20006 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (202) 331-1112 Item 7. Financial Statements and Exhibits (a) Not applicable. (b) Not applicable. (c) Exhibits. Exhibit No. Description ---------- ----------- 99.1 Press release dated April 22, 2003 Item 9. Regulation FD Disclosure. In accordance with interim guidance of the Securities and Exchange Commission, this disclosure pursuant to Item 12 of Form 8-K is made under Item 9. On April 22, 2003, Allied Capital Corporation issued a press release announcing its financial results for the quarter ended March 31, 2003. The text of the press release is included as an exhibit to this Form 8-K. Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and herein is deemed to be furnished and shall not be deemed to be filed. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: April 22, 2003 ALLIED CAPITAL CORPORATION By: /s/ Penni F. Roll ------------------- Penni F. Roll Chief Financial Officer 3 PAGE> EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated April 22, 2003 4 EX-99 3 a4380187ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Allied Capital Announces First Quarter 2003 Financial Results; Quarterly Dividend of $0.57 Per Share Declared WASHINGTON--(BUSINESS WIRE)--April 22, 2003--Allied Capital Corporation (NYSE: ALD) today announced first quarter 2003 financial results. Highlights for Q1 2003 -- Net investment income was $0.39 per share, or $42.7 million -- Net realized gains were $0.44 per share, or $48.3 million -- The total of net investment income and net realized gains was $0.83 per share, or $91.0 million -- Net unrealized losses (including the reversal of unrealized gains) were $0.65 per share or $71.1 million -- Net income was $0.18 per share, or $19.9 million -- Regular quarterly dividend of $0.57 per share paid; second quarter dividend of $0.57 per share declared -- Net asset value per share was $14.05 per share -- Shareholders' equity increased 3% to $1.59 billion -- Debt to equity ratio declined to 0.54 to 1 -- New investments totaled $269.0 million for the quarter Operating Results For the three months ended March 31, 2003, Allied Capital reported net investment income of $0.39 per share. Net realized gains were $0.44 per share, and the sum of net investment income and net realized gains was $0.83 per share. Net investment income and net realized gains for the quarter ended March 31, 2002 were $0.62 per share. Net investment income and net realized gains are the primary components of the company's annual taxable income that is used to pay dividends to shareholders. Net income for the quarter ended March 31, 2003 was $0.18 per share after recording net unrealized losses of $0.65 per share. Net income for the quarter ended March 31, 2002 was $0.55 per share. Net income can vary substantially from quarter to quarter primarily due to the recognition of realized and unrealized gains or losses, which vary from quarter to quarter. As a result, quarterly comparisons of net income may not be meaningful. Changes in unrealized appreciation and depreciation have no impact on the company's taxable income. Net investment income for the quarter was lower by an estimated $0.02 per share because the company chose to sell certain CMBS bonds in order to realize significant appreciation that had accumulated in these investments. Total net realized gains from the sale of CMBS investments were $24.6 million or $0.22 per share. In addition, the company realized net gains of $23.7 million or $0.22 per share from the exit of private finance portfolio investments. Net unrealized losses of $71.1 million or $0.65 per share were the result of the following: the reversal of previously recorded unrealized appreciation on assets that were sold for gains, the reversal of previously recorded appreciation on assets where these assets have declined in value, and other changes in values in the portfolio. In conjunction with the realization of $48.3 million in net gains, the company reversed net unrealized gains of $42.8 million or $0.39 per share. The company recorded additional unrealized losses of $14.0 million or $0.13 per share to reverse previously recorded unrealized gains on portfolio companies where values had declined during the quarter. The company also recorded additional net unrealized losses of $14.3 million or $0.13 per share due to changes in values of other portfolio investments. The sum of these three components of net unrealized losses, $42.8 million, $14.0 million and $14.3 million, totaled $71.1 million for the quarter. During the quarter, the company invested a total of $269.0 million. After total repayments of $76.0 million, asset sales of $244.1 million and valuation and other changes during the quarter, total assets were $2.59 billion at March 31, 2003. Shareholders' equity increased 3% to $1.59 billion at March 31, 2003 from $1.55 billion at December 31, 2002. Net asset value per share was $14.05 at March 31, 2003. Bill Walton, Chairman and CEO, remarked, "We made good progress in the first quarter towards achieving our 2003 dividend payments to shareholders. The early gains harvest of $0.44 per share combined with our net investment income positions the company to continue our record of consistent regular quarterly dividends. The economy continues to be weak, and we have seen weakness in certain portfolio companies. However, there also continues to be strong appreciation in the portfolio, and overall we are weathering this difficult recession well. Cash flow from the portfolio remains strong, our leverage is very modest, and we are well positioned to invest as the pace of buyout activity increases throughout the year." Portfolio Activity for Q1 2003 New private finance investments totaled $110.1 million and commercial real estate investments totaled $158.9 million for the quarter. At March 31, 2003, the overall weighted average yield on the interest-bearing portfolio was 14.0%, which was unchanged from December 31, 2002. Private Finance The private finance portfolio totaled $1.74 billion at March 31, 2003. The debt portion of this portfolio, which totaled $1.10 billion at March 31, 2003, had a weighted average yield of 14.0% as compared to 14.4% at December 31, 2002. During the first quarter of 2003, Allied Capital invested a total of $110.1 million in its private finance business. Significant private finance investments during the first quarter of 2003 included: -- $25 million in a short-term line of credit and $25 million of preferred equity to Business Loan Express, LLC, the country's second largest lender specializing in originating, selling, and servicing loans under the SBA's Section 7(a) Guaranteed Loan Program, in connection with BLX's acquisition of $128 million in assets from Amresco Independence Funding; -- $30 million of senior secured debt to Resun Leasing, Inc., a provider of modular space solutions; -- $10 million of senior secured debt with warrants to HealthMarket Inc., a provider of health plan alternatives for small and mid-sized businesses; and -- $5 million of subordinated debt and $1 million of preferred and common stock to Sidarus Holdings, Inc., a provider of information technology services and solutions to the U.S. government in key areas of homeland security and national defense. CMBS Investing At March 31, 2003, the company's CMBS and CDO portfolio totaled $498.5 million, and had a weighted average yield to maturity of 15.4%, as compared to 14.4% at December 31, 2002. The company invested a total of $40.8 million in two new CMBS transactions, and $118.1 million in a CDO transaction during the first quarter of 2003. Because the company generally acquires its CMBS investments at significant discounts from the face amounts of the bonds, the unamortized discount on the CMBS bond portfolio totaled $518.0 million at March 31, 2003. During the first quarter of 2003, the company sold BB+ through B rated CMBS bonds with a cost basis of $244.1 million for cash proceeds of $275.1 million, resulting in realized gains of $24.6 million, net of realized losses on related hedges of $6.4 million. The company sold the bonds with an overall yield of 11.9%, in order to realize the significant appreciated value that had accumulated in these investments due to declining Treasury yields and narrowing spreads in the CMBS market. In addition, the company chose to sell the bonds in order to reinvest the capital into higher yielding assets. The sale of these bonds lowered the level of recurring net investment income in the first quarter by an estimated $0.02 per share. Liquidity and Capital Resources During the quarter ended March 31, 2003, Allied Capital raised a total of $82.4 million in new equity in two transactions. Outstanding borrowings on the company's unsecured revolving line of credit at March 31, 2003 were $61.8 million. Subsequent to quarter-end, the company renewed the revolving credit facility for an additional two years, with the option to extend for a third year. The committed amount under the new facility is $462.5 million. At March 31, 2003, the company had a weighted average cost of debt of 7.6%. The company's regulatory asset coverage was 307% and the ratio of debt to equity was 0.54 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 with plan. Grade 3 is for investments that require closer monitoring; however, no loss of investment return or principal is expected. Grade 4 is for investments that are in workout and for which some loss of current investment return 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. At March 31, 2003, the portfolio of Grade 1 investments totaled $762.2 million, or 32.1% of the total portfolio at value; Grade 2 investments totaled $1.35 billion, or 56.6% of the total portfolio; Grade 3 investments totaled $133.3 million, or 5.6% of the total portfolio; Grade 4 investments totaled $23.1 million, or 1.0% of the total portfolio; and Grade 5 investments totaled $112.0 million, or 4.7% of the total portfolio. Included in Grade 4 and 5 investments are assets totaling $27.2 million that are secured by commercial real estate. During the quarter the total portfolio declined by $111.2 million in size, yet portfolio grade categories remained relatively constant. For the total investment portfolio, loans and debt securities greater than 90 days past due were $99.6 million at value at March 31, 2003, or 4.2% of the total portfolio. Included in this category are loans and debt securities valued at $36.2 million that are secured by commercial real estate. At March 31, 2003, 0.93% of the loans in the underlying collateral pool for the CMBS bonds was over 30 days delinquent or was classified as real estate owned. Quarterly Dividend of $0.57 Per Share Declared As previously released on April 17, 2003, the company declared a regular quarterly dividend of $0.57 per share for the second quarter of 2003. This dividend represents the company's 159th consecutive quarterly dividend. The dividend is payable as follows: Record date June 13, 2003 Payable date June 27, 2003 The company's dividend is paid from taxable income. 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 on April 22, 2003 The company will host a webcast/ conference call at 10:15 a.m. (EST) today to discuss first quarter 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 by calling (800) 642-1687 and referencing passcode "9440173". 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 at (888) 818-5298. About Allied Capital Allied Capital is the nation's largest business development company and provides long-term debt and equity investment capital to support the expansion of 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. 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 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 in the company's periodic filings with the Securities and Exchange Commission. (in thousands, except per share At March 31, At December 31, amounts) 2003 2002 ---------------------------------- (unaudited) ASSETS Portfolio at value: Private finance $1,742,084 $1,743,215 Commercial real estate finance 634,853 744,952 ---------------------------------- Total portfolio at value 2,376,937 2,488,167 Other assets 106,031 100,221 Deposits of proceeds from sales of borrowed Treasury securities 99,425 194,745 Cash and cash equivalents 8,104 11,186 ---------------------------------- Total assets $2,590,497 $2,794,319 ================================== LIABILITIES and SHAREHOLDERS' EQUITY Liabilities: Debt $855,950 $998,450 Obligations to replenish borrowed Treasury securities 100,339 197,027 Accounts payable and other liabilities 38,915 45,771 ---------------------------------- Total liabilities 995,204 1,241,248 Preferred stock 7,000 7,000 Shareholders' Equity: Common stock 11 11 Additional paid-in-capital 1,631,745 1,547,183 Notes receivable from sale of common stock (23,890) (24,704) Net unrealized appreciation (depreciation) on portfolio (31,725) 39,411 Undistributed (distributions in excess of) earnings 12,152 (15,830) ---------------------------------- Total shareholders' equity 1,588,293 1,546,071 ---------------------------------- Total liabilities and shareholders' equity $2,590,497 $2,794,319 ================================== Net asset value per common share $14.05 $14.22 Common shares outstanding 113,056 108,698 For the Three Months Ended March 31 ------------------------ (In thousands, except per share amounts) (unaudited) Interest and Related Portfolio Income: 2003 2002 ------------------------ Interest and dividends $65,521 $64,973 Premiums from loan dispositions 1,121 1,613 Fees and other income 6,488 15,805 ------------------------ Total interest and related portfolio income 73,130 82,391 ------------------------ Expenses: Interest 17,922 17,469 Employee 8,121 8,035 Administrative 4,417 3,018 ------------------------ Total operating expenses 30,460 28,522 ------------------------ Net investment income before net realized and unrealized gains 42,670 53,869 Net Realized and Unrealized Gains (Losses): Net realized gains 48,339 9,605 Net unrealized losses (71,136) (7,513) ------------------------ Total net realized and unrealized gains (losses) (22,797) 2,092 ------------------------ Net income $19,873 $55,961 ======================== Diluted net investment income per common share $0.39 $0.53 Diluted earnings per common share $0.18 $0.55 Weighted average common shares outstanding -- diluted 110,098 102,364 CONTACT: Allied Capital, Washington Suzanne Sparrow, 202/973-6326 -----END PRIVACY-ENHANCED MESSAGE-----