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Q1 2010 Shareholder Presentation May 2010

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  • 1. Q1 2010 Sh Shareholder Presentation h ld P i May 5, 2010 © 2010 American Capital. All Rights Reserved. Nasdaq: ACAS
  • 2. Nasdaq: ACAS Safe Harbor Statement Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 This presentation contains statements that, to the extent they are not recitations of historical fact, y constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from those forecast due to the impact of many factors beyond the control of American Capital. All forward looking statements included in this presentation are made only as of the date of this presentation and are subject to change without notice. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in our periodic reports filed with the SEC. Copies are available on the SEC’s website at www.sec.gov. We disclaim any obligation to update our forward looking statements unless required by law. The following slides contain summaries of certain financial and statistical information about American Capital, Ltd. They should be read in conjunction with our periodic reports that are filed from time-to-time with the Securities and Exchange Commission including our annual report on Form 10-K for the year ended December 31, 2009 and our subsequent periodic filings. Historical results discussed in this presentation are not indicative of future results. Additional Information No information contained in this presentation constitutes an offer or invitation to acquire or dispose of any securities or investment advice in any jurisdiction. Any statements included herein regarding earnings enhancement are not a profit forecast and should not be interpreted to mean that American Capital’s future earnings will necessarily match or exceed those of any prior year. Capital s 2
  • 3. Nasdaq: ACAS Q Q1 2010 Financial Summary y $0.17 NOI Per Diluted Share 143% increase from Q4 2009 $(0.27) Net Realized Loss Per Diluted Share $0.65 Net Earnings Per Diluted Share $0.92 net unrealized appreciation per diluted share 31% annualized ROE $8.98 Net Asset Value (“NAV”) Per Share $0.69 increase in NAV per share from Q4 2009 ● 8% increase $2.5 B net asset value $8.31 pro forma NAV per share as adjusted for April 19, 2010 $295 MM equity offering $820 MM Cash Balance $1.2 B cash balance as of April 30, 2010 1.6:1 Debt to Equity $449 MM debt repaid since June 30 2008 30, $3.1 B Debt, Net of Cash 3
  • 4. Nasdaq: ACAS Net Unrealized Appreciation (Depreciation) of Portfolio Investments* oto o est e ts $ In Millions US GDP Net Unrealized Appreciation (Depreciation) of Porfolio Investments* US GDP $1,000 $1 000 10% 5.6% $528 $500 3.0% 5% 3.2% 3.6% 2.1% 2.2% $254 1.2% 1.5% $126 $45 $0 0% ($5) -0.7% -0.7% ($224) ($269) -2.7% -6.4% ($500) ($384) -5% ($532) -5.4% ($554) ($626) ($1,000) ($951) -10% ($1,500) -15% ($1,588) ($1 588) ($2,000) -20% Q1 06 Q1 07 Q1 09 Q1 10 * Excludes unrealized appreciation (deprecation) on derivative agreements, foreign currency translation and the reversal of prior period net unrealized depreciation (appreciation) upon realization. 4
  • 5. Nasdaq: ACAS Q Quarterly Financial Results y $ In Millions Net Earnings (Loss) US GDP US GDP $1,000 $1 000 10% 5.6% 2.2% 3.0% 1.5% $107 $187 $77 $0 0% -0.7% ($70) -0.7% -2.7% -6.4% ($548) ($547) -5.4% ($547) ($1,000) ($813) -10% ($1,684) ($2,000) -20% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 5
  • 6. Nasdaq: ACAS Portfolio Statistics As of March 31, 2010 $5.7 B Portfolio of Investments at Fair Value 10.3% weighted average yield on private finance debt investments* as of March 31, 2010 $164 MM Q1 2010 Revenue from Portfolio Investments 7.0% Non-Accruing Loans at Fair Value $263 MM of $3.8 B total loans at fair value 4.3x Mean Net Debt to Valuation EBITDA** 5.5x Total Net Debt to Valuation EBITDA** 2.2x Interest Coverage Ratio * Reduced for non-accruing loans. ** See slide 20 for definition of Mean and Total Net Debt to Valuation EBITDA 6
  • 7. Nasdaq: ACAS Past Due and Non Accrual Loans $ in Millions Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Current $ 5,115 $ 4,399 $ 4,047 $ 3,572 $ 3,648 0-30 Days Past Due $ 1 $ 1 $ 7 $ 38 $ - 31-60 Days Past Due y - 4 113 - 3 61-90 Days Past Due 7 29 - - - > 90 Days Past Due 28 6 89 50 44 Total Past Due Loans at Cost $ 36 $ 40 $ 209 $ 88 $ 47 Non-Accrual Loans at Cost $ 1,061 $ 996 $ 889 $ 811 $ 671 Total Loans at Cost $ 6,212 $ 5,435 $ 5,145 $ 4,471 $ 4,366 Non Accrual Non-Accrual Loans at Fair Value $ 214 $ 310 $ 285 $ 290 $ 263 Total Loans at Fair Value $ 4,866 $ 4,288 $ 4,117 $ 3,729 $ 3,759 Non-Accrual Loans as a % of Total Loans at Cost 17.1% 18.3% 17.3% 18.1% 15.4% Non-Accrual Loans as a % of Total Loans at Fair Value 4.4% 7.2% 6.9% 7.8% 7.0% 7
  • 8. Nasdaq: ACAS $ $2.1 B of Realizations Since Q2 2008 Q Generated Significant Liquidity Through Realizations Despite the declining economy, capital and M&A markets $ in Millions $600 $520 $463 $476 $400 $246 $200 $163 $125 $79 $0 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 8
  • 9. Nasdaq: ACAS $ $163 MM of Q Realizations Q1 $114 MM Received from Principal Payments and Loan Sales $90 MM in principal prepayments $15 MM in loan syndications and sales $7 MM in scheduled principal amortization p p $2 MM collection of PIK notes and dividends and accreted OID $49 MM Received from the Sale of Equity Investments $107 MM Net Portfolio Realized Losses $8 MM gross portfolio realized gains $115 MM gross portfolio realized losses 9
  • 10. Nasdaq: ACAS Realization Performance(1) Despite Difficult Market Conditions, Assets Have Been Sold at or Near Fair Value 100% Asset Sale Price Relative to Latest Fair Market Value 75% 50% 25% 1.4% 1.1% 0% -1.9% -1.9% -0.6% -0.7% -3.7% -25% -50% -75% -100% Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 ___________________________________ (1) Measure defined as the comparison of the realized asset sale price to the previous period’s fair market value for fully 10 exited debt and equity securities.
  • 11. Nasdaq: ACAS Portfolio Statistics Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Control(1) Portfolio Company Assets at Fair Value as a % of 54% 55% 58% 54% 59% 57% Prior Quarter Investments at Fair Value Total Investments at Fair Value to Total Investments at Cost 69% 64% 60% 60% 61% 63% Mean Net Debt to Valuation EBITDA(2) 4.0 40 4.2 42 4.4 44 4.6 46 4.5 45 4.3 43 Total Net Debt to Valuation EBITDA(2) 5.1 5.3 6.5 5.9 5.8 5.5 Average EBITDA Margin 20.4% 20.8% 20.8% 20.5% 20.1% 20.8% Total Senior Debt as a % of Investments at Fair Value 32% 34% 35% 35% 32% 31% Total Subordinated Debt as a % of Investments at Fair Value 37% 37% 35% 35% 35% 35% Total Equity Assets as a % of Investments at Fair Value 29% 27% 28% 27% 30% 31% (1) Includes private finance investments that we control or can gain control of the board of directors of the portfolio company as of the measurement date, including equity securities and those securities held by entities managed by American Capital, LLC on the a fully diluted basis. (2) See slide 20 for definition of Mean and Total Net Debt to Valuation EBITDA. 11
  • 12. Nasdaq: ACAS Appreciation, Depreciation, Gains and Losses pp , p , $ in Millions NET REALIZED GAINS AND LOSSES Q1 2010 Private Finance Portfolio $ (106) Structured Products (1) Foreign Currency (3) Derivative Agreements (16) Net Realized Losses $ (126) Cost Fair NET UNREALIZED APPRECIATION AND DEPRECIATION Value Value Reversal of Prior Period Unrealized Depreciation Upon Realization N/A N/A $ 103 Private Finance Portfolio $ 6,618 $ 5,016 111 European Capital Limited Investment 1,380 1 380 392 50 European Capital Limited Foreign Currency Translation* N/A N/A 69 American Capital Agency Corp. 50 64 (2) American Capital, LLC 75 60 26 Structured Products 890 166 - Foreign Currency Translation** N/A N/A (87) Derivative Agreements - (107) (6) Net Unrealized Appreciation $ 264 TOTAL $ 9,013 $ 5,591 $ 138 * Represents foreign currency translation on the accumulated unrealized depreciation on the investment and is reported as unrealized appreciation of portfolio company investments on our Consolidated Statements of Operations. ** Represents foreign currency translation on the cost basis of our foreign currency denominated assets and liabilities, of which $84 MM relates to European Capital Limited. Reported as unrealized depreciation from foreign currency translation on our Consolidated Statements of Operations. 12
  • 13. Nasdaq: ACAS European Capital Update p p p ECAS Net Asset Value is Approximately $0.8 B as of March 31, 2010 ACAS equity investment is fair valued at $278 MM ● $35 MM increase from Q4 2009 ► $50 MM increase net of $15 MM in foreign currency translation ● Valuation includes significant discount to NAV ► Covenants and t C t d tenor of credit facilities could affect realization of f dit f iliti ld ff t li ti f NAV ► Comparable publicly traded funds currently trading at discount to NAV Credit Facilities are in Compliance $75 MM Bridge Loan Funded by ACAS in March 2010 Used to retire one of four credit facilities, eliminating an ACAS guarantee $60 MM repaid in April 2010 id i A il ECAS Generated Over €200 MM of Portfolio Realizations from November 2009 through April 2010 Proceeds exceeds prior quarter valuations by approximately 6% p q y pp y 13
  • 14. Nasdaq: ACAS IRR by Static Pool and Exited Investments+ All Investments Exited Investments+ 40% 24% 24% 20% 21% 18% 17% 13% 13% 12% 9% 10% 10% 8%9% 8% 7% 3% 5% -1% Pre-2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Aggregate 2005- -3% -3% 2010 -11% Aggregate -20% -50% -75%* -80% Static Pool Investments at Fair Value as % of Total 3/31/10 Portfolio at Fair Value Pre-2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0.4% 0.0% 2.4% 7.3% 6.2% 21.5% 21.9% 29.7% 10.6% 0.0% 0.0% + Includes exited securities of existing portfolio companies. * Not considered meaningful as only $55 MM, or 5.4%, of investments have been exited. 14
  • 15. Nasdaq: ACAS $ $295 MM Equity Issuance in April q y p 58.3 MM Common Shares Issued to Group of Institutional Investors 75% Purchased by Paulson & Co. and Affiliates y Sold at $5.06 per Share 5% discount to closing price Will be Used for General Corporate Purposes, Including the Purposes Company’s Investment and Lending Activities and to Repay Indebtedness Under its Unsecured Debt Obligations 15
  • 16. Nasdaq: ACAS 2010 Outlook and Business Forecast We Believe Recession has Ended and Expect Growth in 2010 Generally asset valuations have stabilized and overall have y improved We Remain Focused on Restructuring our unsecured debt Providing operational, managerial and financial support to our portfolio companies Improving operating efficiencies Restructuring ECAS debt to maximize value We are a Long-term, Patient Investor Getting f i G i fair values on realizations in a tough market l li i i h k 16
  • 17. End of Formal Presentation © 2010 American Capital. All Rights Reserved. 17
  • 18. Static Pool Information © 2010 American Capital. All Rights Reserved. 18
  • 19. Nasdaq: ACAS Static Pool* % of Original Investments Exited g $ In Millions Original Investments and Commitments $8,000 $8 000 Total Exits and Prepayments of Original Investments and Commitments $7,328 $7,000 $6,000 $5,179 $5,000 $4,636 $4,000 $3,277 $3,151 $3 151 $3,000 $2,266 $2,096 $2,000 $1,830 $1,434 $1,065 $998 $962 , $1,083 $1,021 $1,000 $1 000 $757 $376 $353 $55 $0 Pre-2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Static Pool % of Original Investments Exited 93.7% 93.9% 78.7% 75.5% 80.8% 45.2% 63.3% 43.0% 5.4% 0.0% 0.0% * Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. 19
  • 20. Nasdaq: ACAS Credit Quality of Private Finance Portfolio* Q y Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 Mean Net Debt to Valuation EBITDA1 N/A N/A N/A N/A 4.0 40 4.2 42 4.4 44 4.6 46 4.5 45 4.3 43 Total Net Debt to Valuation EBITDA2 N/A N/A N/A N/A 5.1 5.3 6.5 5.9 5.8 5.5 Debt to EBITDA3 5.9 5.9 6.0 6.0 5.9 5.8 6.0 6.3 6.0 5.9 Interest Coverage4 2.0 1.9 1.8 1.9 2.0 2.0 2.1 2.0 2.2 2.2 Debt Service Coverage5 1.7 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.8 1.8 1. Mean Net Debt represents the sum of (i) debt and other liabilities senior to ACAS, (ii) normalization for working capital and (iii) the mean of the total of ACAS’ debt in each portfolio company’s debt capitalization less cash of the portfolio company EBITDA is capitalization, company. defined as the earnings before interest, taxes, depreciation and amortization and other non-recurring charges. The Valuation EBITDA is defined as the EBITDA used to value the current enterprise value of the portfolio company which may be the EBITDA of the most recent twelve months or, when appropriate, the forecasted twelve months. Ratio excludes ACAS’ investments in technology, real estate and financial services companies as well as debt investments valued at liquidation value. 2. Total Net Debt represents the sum of (i) debt and other liabilities senior to ACAS, (ii) normalization for working capital and (iii) the total of ACAS’ debt in each portfolio company’s debt capitalization, less cash of the portfolio company. Ratio excludes ACAS’ p p y p , p p y investments in technology, real estate and financial services companies as well as debt investments valued at liquidation value. 3. Debt represents the sum of (i) total debt senior to ACAS and (ii) the total of ACAS’ debt in each portfolio company’s debt capitalization. EBITDA represents the EBITDA of the most recent twelve months. For portfolio companies with a nominal EBITDA, the Debt to EBITDA calculation is limited to 15 times EBITDA. 4. EBITDA divided by the total cash interest expense of the portfolio company during the most recent twelve month period, or when appropriate as a result of a new debt capital structure, the forecasted twelve months. 5. 5 EBITDA divided by the total scheduled principal amortization and total cash interest expense of the portfolio company during th di id d b th t t l h d l d i i l ti ti dt t l hi t t f th tf li d i the most recent twelve month period, or when appropriate, the forecast twelve months. * Weighted average based on total private financing portfolio assets at fair value 20
  • 21. Nasdaq: ACAS Portfolio Statistics(1) Pre-2001- Pre- 2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2010 2005-2010 Static Static Static Static Static Static Static Static Static Static Static Aggregate Aggregate $ In Millions Pool Pool Pool Pool Pool Pool Pool Pool Pool Pool Pool Portfolio Portfolio IRR - Fair Value - All 7.9% 18.1% 7.9% 20.9% 13.2% 2.9% 7.2% -10.5% -2.5% - - 4.5% -0.9% Investments(2) IRR - Fair Value - Equity 5.8% 5 8% 46.9% 46 9% 11.4% 11 4% 28.7% 28 7% 27.6% 27 6% -8.2% 8 2% 12.7% 12 7% -16.5% 16 5% -9.6% 9 6% - - 2.5% 2 5% -5.0% 5 0% Investments Only(2)(3)(4) IRR - Exited Investments(5) 8.6% 20.2% 9.1% 23.5% 17.0% 23.9% 9.7% -3.3% -74.9% - - 13.0% 11.5% Original Investments $ 1,065 $ 376 $ 962 $ 1,434 $ 2,266 $ 4,636 $ 5,179 $ 7,328 $ 1,021 $ - $ - $24,267 $18,164 and Commitments Total Exits & Prepayments $ 998 $ 353 $ 757 $ 1,083 $ 1,830 $ 2,096 $ 3,277 $ 3,151 $ 55 $ - $ - $13,600 $8,579 of Original Investments and Commitments Total Interest, Dividends $ 386 $ 142 $ 307 $ 365 $ 540 $ 696 $ 785 $ 815 $ 154 $ - $ - $4,190 $2,450 and Fees Collected Total Net Realized (Loss) $ (128) $ (4) $ (90) $ 142 $ 29 $ 293 $ (92) $ (377) $ (50) $ - $ - $(277) $(226) Gain Current Cost of $ 76 $ 23 $ 196 $ 331 $ 471 $ 2,326 $ 1,570 $ 3,221 $ 799 $ - $ - $9,013 $7,916 Investments Current Fair Value of $ 20 $ 2 $ 136 $ 418 $ 351 $ 1,224 $ 1,249 $ 1,691 $ 607 $ - $ - $5,698 $4,771 Investments Current Fair Value of 0.4% 0.0% 2.4% 7.3% 6.2% 21.5% 21.9% 29.7% 10.6% - - 100.0% 83.7% Investments as a % of Total Investments Net Unrealized $ (56) $ (21) $ (60) $ 87 $ (120) $ (1 102) $ (1,102) (321) $ (1 530) $ (1,530) (192) $ - $ - $(3,315) $(3 315) $(3,145) $(3 145) Appreciation (Depreciation) (1) Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. (2) Assumes investments are exited at current fair value. ( ) (3) Excludes investments in Structured Products. (4) Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt. (5) Includes exited securities of existing portfolio companies. 21
  • 22. Nasdaq: ACAS Portfolio Statistics(1) Pre-2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Pre-2001-2010 2005-2010 $ In Millions Static Static Static Static Static Static Static Static Static Static Static Aggregate Aggregate Pool Pool Pool Pool Pool Pool Pool Pool Pool Pool Pool Portfolio Portfolio Non-accrual Loans at Cost N lL tC t $ 18 $ 14 $ 27 $ - $ 39 $ 99 $ 136 $ 334 $ 4 $ - $ - $671 $573 Non-accrual Loans at Fair $ 20 $ 2 $ 20 $ - $ 11 $ 78 $ 58 $ 70 $ 4 $ - $ - $263 $210 Value Equity Interests at Fair $ - $ - $ 1 $ 191 $ 73 $ 554 $ 422 $ 394 $ 138 $ - $ - $1,773 $1,508 Value(3) Debt to EBITDA(6)(7)(8) 7.0 NM 8.1 4.5 6.2 4.6 5.3 6.9 6.3 - - 5.9 5.9 Interest Coverage(6)(8) 1.9 NM 0.9 2.7 2.1 2.4 2.5 2.2 1.4 - - 2.2 2.2 Debt Service Coverage(6)(8) 1.9 NM 0.8 2.5 1.5 1.6 2.0 1.9 1.2 - - 1.8 1.8 Average Age of 37 yrs 25 yrs 50 yrs 40 yrs 45 yrs 29 yrs 31 yrs 28 yrs 25 yrs - - 31 yrs 29 yrs Companies(8) Diluted Ownership 63% 59% 39% 52% 46% 49% 43% 47% 33% - - 45% 44% Percentage(3) (1) Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static made pool year of the original investment. (3) Excludes investments in structured products. (6) These amounts do not include investments in which American Capital owns only equity. (7) For portfolio companies with a nominal EBITDA amount, the portfolio company’s maximum debt leverage is limited to 15 times EBITDA. (8) Excludes investments in Structured Products, managed funds and American Capital, LLC. (9) Sales of the most recent twelve months, or when appropriate the forecasted twelve months. (10) EBITDA of the most recent twelve months, or when appropriate the forecasted twelve months. (11) As a percentage of the company’s total debt investments. 22
  • 23. Nasdaq: ACAS Portfolio Statistics(1) Pre-2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Pre-2001-2010 2005-2010 $ I Milli In Millions Static St ti Static St ti Static St ti Static St ti Static St ti Static St ti Static St ti Static St ti Static St ti Static St ti Static St ti Aggregate A t Aggregate A t Pool Pool Pool Pool Pool Pool Pool Pool Pool Pool Pool Portfolio Portfolio Average Sales(8)(9) $ 46 $ 7 $ 46 $ 187 $ 95 $ 122 $ 132 $ 234 $ 98 $ - $ - $159 $166 Average EBITDA(8)(10) $ 4 $ - $ 9 $ 36 $ 23 $ 24 $ 36 $ 40 $ 28 $ - $ - $33 $34 Average EBITDA Margin 8.7% - 19.6% 19.3% 24.2% 19.7% 27.3% 17.1% 28.6% - - 20.8% 20.5% Total Sales(8)(9) $ 70 $ 267 $ 169 $ 1,269 $ 820 $ 1,954 $ 5,854 $ 8,107 $ 1,190 $ - $ - $19,700 $17,105 Total EBITDA(8)(10) $ 6 $ 4 $ 18 $ 179 $ 167 $ 323 $ 896 $ 1,538 $ 234 $ - $ - $3,365 $2,991 % of Senior Loans(8)(11) 86% 21% 57% 61% 41% 38% 37% 62% 26% - - 47% 46% % o Loans with Lien(8)(11) of oa s t e (8)( ) 100% 68% 100% 100% 91% 89% 93% 93% 61% - - 89% 87% (1) Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. (8) Excludes investments in Structured Products, managed funds and American Capital, LLC. (9) Sales of the most recent twelve months, or when appropriate the forecasted twelve months. ( ) (10) EBITDA of the most recent twelve months, or when appropriate the forecasted twelve months. , pp p (11) As a percentage of the company’s total debt investments. 23
  • 24. Corporate Overview p © 2010 American Capital. All Rights Reserved. 24
  • 25. Nasdaq: ACAS American Capital Overview Global Asset Manager $14 B of Capital Resources Under Management as of 3/31/10 $7 B at A t American C it l* i Capital* $7 B externally managed assets** Founded in 1986, IPO in 1997 $24 $ B invested by American Capital since IPO Balance Sheet $6.8 B of assets $2.5 B net asset value 1.6:1 debt to equity Financial Performance Since IPO $30.32 of dividends paid since 1997 IPO at $15.00 per share * Includes American Capital’s investment in its externally managed funds. ** Includes American Capital Agency Corp., American Capital Equity I, American Capital Equity II, ACAS CLO-1 and ACAS CRE CDO 2007-1. European Capital Limited not included. 25
  • 26. Nasdaq: ACAS American Cap ta & Its Funds U de Management e ca Capital ts u ds Under a age e t $34 B Invested** in 521 Portfolio Companies* Since IPO 122 One Stop Buyouts Buyouts™ 229 PE buyouts sponsored by over 145 PE firms 177 direct & other investments Over 252 Portfolio Companies* as of 3/31/10 $60 B of revenues* $10 B EBITDA* $5 MM to $100 MM Investment Size in North America €5 MM to €25 MM Investment Size in Europe * Includes portfolio companies of European Capital Limited. ** Includes investments of European Capital Limited, American Capital Agency Corp., American Capital Equity I, American Capital Equity II and ACAS CLO-1. Excludes investment of ACAS CRE CDO 2007-1. 26
  • 27. Nasdaq: ACAS People and Offices 318 Employees as of March 31, 2010 8 Offices in the U.S., Europe and Asia 26 Investment Teams 95 investment professionals 36 CPAs, Audit and Valuation Professionals (FACT) Unique in our industry 19 P Person OOperations Team ti T One of the largest in our industry 6 CEOs & Presidents 2 COOs 1 CFO 5 Financial VPs and Associates 3 Supply Chain Management Professionals 4 Person Syndication Team 25 Person Legal Team 9 Person Human Resource Team Includes 57 Employees at American Capital, LLC y Primarily in Europe 27
  • 28. Appreciation, Depreciation, Gains and Losses © 2010 American Capital. All Rights Reserved. 28
  • 29. Nasdaq: ACAS Appreciation, Depreciation, Gains and Losses pp , p , $ in Millions NET REALIZED GAINS AND LOSSES Q1 2010 Private Finance Portfolio $ (106) Structured Products (1) Foreign Currency (3) Derivative Agreements (16) Net Realized Losses $ (126) Cost Fair NET UNREALIZED APPRECIATION AND DEPRECIATION Value Value Reversal of Prior Period Unrealized Depreciation Upon Realization N/A N/A $ 103 Private Finance Portfolio $ 6,618 $ 5,016 111 European Capital Limited Investment 1,380 1 380 392 50 European Capital Limited Foreign Currency Translation* N/A N/A 69 American Capital Agency Corp. 50 64 (2) American Capital, LLC 75 60 26 Structured Products 890 166 - Foreign Currency Translation** N/A N/A (87) Derivative Agreements - (107) (6) Net Unrealized Appreciation $ 264 TOTAL $ 9,013 $ 5,591 $ 138 * Represents foreign currency translation on the accumulated unrealized depreciation on the investment and is reported as unrealized appreciation of portfolio company investments on our Consolidated Statements of Operations. ** Represents foreign currency translation on the cost basis of our foreign currency denominated assets and liabilities, of which $84 MM relates to European Capital Limited. Reported as unrealized depreciation from foreign currency translation on our Consolidated Statements of Operations. 29
  • 30. New Investments and Realizations © 2010 American Capital. All Rights Reserved. 30
  • 31. Nasdaq: ACAS $ $163 MM of Q Realizations Q1 $114 MM Received from Principal Payments and Loan Sales $90 MM in principal prepayments $15 MM in loan syndications and sales $7 MM in scheduled principal amortization p p $2 MM collection of PIK notes and dividends and accreted OID $49 MM Received from the Sale of Equity Investments $107 MM Net Portfolio Realized Losses $8 MM gross portfolio realized gains $115 MM gross portfolio realized losses 31
  • 32. Nasdaq: ACAS ACAS Realizations 1997 IPO-to-Date 13% Weighted Avg IRR on Senior and Subordinated Debt, Equity and Structured Products Exits* d St t d P d t E it * 289 realizations ● $13 B of capital committed ● 56% of total capital committed Proceeds exceed prior quarter valuations by less than 1% Inclusive of fees earned 28% Weighted Average IRR on Equity Realizations** Inclusive of fees earned $340 MM of Accrued PIK and Accreted OID Repaid fA d dA t d R id 36% of total accrued PIK and accreted OID * Includes fully exited portfolio companies and exited securities of existing portfolio companies. ** Excludes Structured Products, equity investments that are the result of conversions of debt to equity and equity warrants received with debt fundings. 32
  • 33. Nasdaq: ACAS $ $84 MM of Q 2010 New Investments* Q1 By Use of Funds $75 MM for Recapitalization in 2 Portfolio Companies** $1 MM for Growth and Working Capital in 1 Portfolio Company 1% 89% 10% $8 MM for 5 Distressed Portfolio Companies * New investments reported on committed amounts at origination. **Includes $75 MM for bridge loan financing to European Capital Limited to refinance its debt obligations, of which $60 MM was repaid subsequent to 3/31/10 33
  • 34. Nasdaq: ACAS ACAS Current Investments At Cost Common Preferred Warrants Equity in Managed Funds Sub Debt CLO CMBS Senior Senior >= LIBOR+650 LIBOR 650 Senior < LIBOR+650 Revolver 100% 2% 2% 2% 2% 2% 2% 2% 2% 2% 5% 2% 3% 2% 2% 2% 2% 5% 5% 6% 7% 6% 5% 12% 7% 17% 14% 17% 15% 14% 16% 16% 20% 13% 14% 19% 16% 17% 22% 19% 19% 13% 11% 14% 13% 14% 75% 3% 14% 12% 16% 14% 14% 13% 7% 7% 1% 5% 5% 5% 7% 7% 7% 7% 7% 3% 3% 1% 1% 6% 3% 5% 6% 6% 7% 2% 2% 2% 3% 7% 3% 3% 2% 2% 3% 2% 3% 25% 25% 35% 30% 29% 25% 25% 50% 28% 25% 23% 24% 24% 26% 30% 29% 29% 24% 9% 13% 14% 14% 4% 5% 6% 9% 9% 13% 5% 4% 8% 8% 11% 10% 9% 4% 8% % 2% 1% 1% 9% 1% 6% 25% 3% 2% 1% 1% 1% 1% 1% 1% 3% 18% 19% 20% 19% 18% 18% 17% 17% 16% 18% 19% 16% 17% 16% 16% 16% 15% 7% 6% 5% 7% 7% 7% 6% 6% 6% 7% 8% 8% 8% 7% 0% 5% 4% 5% Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 34
  • 35. Nasdaq: ACAS ACAS Current Investments At Fair Value Common Preferred Warrants Equity in Managed Funds Sub Debt CLO CMBS Senior Senior >= LIBOR+650 Senior < LIBOR+650 Revolving Re ol ing Credit Facility Facilit 100% 2% 2% 2% 2% 2% 2% 1% 2% 2% 5% 2% 4% 4% 3% 3% 2% 5% 5% 7% 12% 13% 13% 8% 8% 9% 8% 16% 16% 14% 18% 15% 16% 13% 15% 13% 14% 25% 5% 21% 22% 11% 14% 13% 22% 23% 23% 75% 14% 11% 16% 14% 14% 14% 1% 3% 1% 4% 7% 4% 2% 1% 4% 3% 4% 3% 1% 1% 1% 2% 2% 6% 6% 1% 3% 1% 1% 2% 3% 2% 2% 2% 1% 1% 2% 2% 2% 1% 33% 22% 24% 28% 27% 22% 21% 24% 50% 26% 26% 27% 37% 35% 35% 37% 34% 35% 9% 8% 5% 6% 9% 8% 4% 3% 1% 10% 6% 5% 5% 9% 9% 3% 2% 10% 4% 1% 4% 2% 5% 2% 1% 2% 25% 4% 4% 18% 18% 20% 1% 1% 1% 1% 1% 1% 19% 19% 15% 19% 17% 18% 18% 15% 15% 18% 19% 18% 19% 19% 12% 13% 12% 12% 9% 9% 9% 8% 6% 7% 6% 6% 6% 0% 6% 7% 6% 5% Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 35
  • 36. Nasdaq: ACAS Industry Diversification y $5.7 Billion Total Investments at Fair Value Global Industry Classification Standard (GICS) Other, 11.5% Commercial Services and Capital Markets, 1.5% Supplies, 10.8% Leisure Equipment and L i E i t d Products, 1.7% Diversified Consumer Electrical Equipment, 6.3% Services, 2.0% Construction and Engineering, 2.0% Food Products, 2.1% Household Durables, 5.9% Computers and Peripherals, 2.2% Building Products, 2.3% Internet and Catalog Retail, Electronic Equipment, 5.4% Instruments and Components, 2.4% Pharmaceuticals, 2.8% Hotels, Restaurants and Leisure, 5.0% Professional Services 2 8% Services, 2.8% Diversified Financial IT Services, 4.9% Services, 3.0% Life Sciences Tools and Health Care Providers and Services, 3.0% Services, 4.6% Real E t t R l Estate and Real Estate dR lE t t Health Care Equipment and Investment Trusts, 3.9% Supplies, 3.2% Auto Components, 3.8% Software, 3.4% Internet Software and Services, 3.5% European Capital Limited, CLOs and CDOs are excluded from industry diversification break-out. CMBS and ACAS CRE CDO are included in Real Estate and Real Estate Investment Trusts grouping. 36
  • 37. Nasdaq: ACAS $31 MM ACAS Average Investment Size Size* 0.5% of Total ACAS Assets $ in Millions Average I A Investment t t Average Investment as a % of Total Assets $60 1.00% $53 $52 $50 $50 $47 $44 $43 $43 $44 $44 0.75% $40 $40 $38 $33 $32 $30 $30 $31 $30 $29 0.50% $20 0.25% 0 25% $10 $0 0.00% Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 * Investments at Fair Value 37
  • 38. Nasdaq: ACAS LTM Realizations as a % of Prior Year Assets American Capital Controls 57% of Investments, thus Controls Timing of Exits*** $ in Billions LTM Amortization, Prepayments and Exits* $6.0 100% LTM Investment Turnover Rate** Quarterly Investment Turnover Rate** $5.0 4.9 4.5 4.5 4.4 75% $4.0 $4 0 3.8 38 60% 57% 57% 57% 55% 56% 3.4 3.1 $3.0 2.9 50% 43% 42% 36% 38% 2.2 2.0 31% $2.0 $2 0 1.5 1.5 20% 1.3 1.1 1.2 25% 14% 1.0 1.0 15% 18% $1.0 20% 10% 10% 12% 13% 14% 11% 7% 9% 8% 7% 7% 5% 5% 5% $0.0 $0 0 3% 1% 2% 3% 0% Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 Total Investments at Fair Value as of December 31 (in millions): 2006 2007 2008 2009 Q1 2010 $8,056 $10,924 $7,418 $5,575 $5,598 * Excludes repayments of bridge notes and accrued PIK interest from European Capital Limited. ** Based on total investments at fair value at the beginning of the respective period. *** Includes private finance investments that we control or can gain control of the board of directors of the portfolio company as of the measurement date, including equity securities and those securities held by entities managed by American Capital, LLC on the a fully diluted basis. 38
  • 39. Nasdaq: ACAS Realizations as a % of Prior Quarter Assets Q Realizations $ in millions Net Realized Gain (Loss) on Portfolio Company Investments* $800 Realizations as a % of Prior Quarter Investment Assets at Fair Value R li ti fP i Q t I t tA t tF i V l 10% 8% $600 $520 $463 7% $476 5% $400 5% $246 3% 3% $200 $163 $125 $79 $73 2% $0 1% 0% ($32) ($79) ($47) ($107) -$200 ($308) ($282) -$400 -5% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Total Investments at Fair Value (in millions): Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 $9,095 $7,418 $6,839 $6,185 $5,893 $5,575 $5,698 * Excluding taxes on realized net gain, foreign currency transactions and derivative agreements. 39
  • 40. Credit Quality y © 2010 American Capital. All Rights Reserved. 40
  • 41. Nasdaq: ACAS Past Due and Non Accrual Loans $ in Millions Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Current $ 5,115 $ 4,399 $ 4,047 $ 3,572 $ 3,648 0-30 Days Past Due $ 1 $ 1 $ 7 $ 38 $ - 31-60 Days Past Due y - 4 113 - 3 61-90 Days Past Due 7 29 - - - > 90 Days Past Due 28 6 89 50 44 Total Past Due Loans at Cost $ 36 $ 40 $ 209 $ 88 $ 47 Non-Accrual Loans at Cost $ 1,061 $ 996 $ 889 $ 811 $ 671 Total Loans at Cost $ 6,212 $ 5,435 $ 5,145 $ 4,471 $ 4,366 Non Accrual Non-Accrual Loans at Fair Value $ 214 $ 310 $ 285 $ 290 $ 263 Total Loans at Fair Value $ 4,866 $ 4,288 $ 4,117 $ 3,729 $ 3,759 Non-Accrual Loans as a % of Total Loans at Cost 17.1% 18.3% 17.3% 18.1% 15.4% Non-Accrual Loans as a % of Total Loans at Fair Value 4.4% 7.2% 6.9% 7.8% 7.0% 41
  • 42. Nasdaq: ACAS Non-Accrual Loans 20% Non-Accrual Loans as a % of Total Loans at Cost 18.3% 18.1% Non-Accrual Loans as a % of Total Loans at Fair Value 17.1% % 17.3% 15% 15.4% 13.2% 10% 9.2% 8.8% 9.0% 9 0% 7.9% 7.7% 7.8% 7.2% 7.0% 7.8% 7.7% 6.6% 6.2% 6.9% 6.5% 5.7% 5.4% 5.2% 4.8% 5.0% 4.4% 5% 4.9% 4 9% 4.3% 4.1% 4.0% 3.9% 3 9% 3.5% 3 5% 3.8% 3 8% 3.6% 3.9% 3 6% 3 9% 2.9% 4.0% 4.2% 3.6% 3.7% 3.6% 3.5% 3.4% 2.4% 2.0% 2.4% 2.1% 2.1% 2.7% 2.2% 2.3% 1.4% 1.7%1.4% 2.1% 1.9% 1.2% 0.9% 1.6% 1.6% 1.2% 1.5% 1.5% 1.2% 1.5% 1.5% 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 02 03 04 05 06 07 08 09 10 42
  • 43. Financial Highlights g g © 2010 American Capital. All Rights Reserved. 43
  • 44. Nasdaq: ACAS First Quarter Income Statements Q 2006 2007 2008 2009 2010 ($ in Millions) Total Operating Income $ 173 $ 250 $ 292 $ 195 $ 164 Total Operating Expense(1) 38 76 79 79 58 Interest Expense 36 62 63 52 57 (Provision) Benefit for Income Taxes (6) 2 1 - - Net Operating Income 93 114 151 64 49 Net Gain on Extinguishment of Debt - - - 12 - Net Realized Gain (Loss) 44 13 33 (131) (126) Unrealized Appreciation ( p (Depreciation) ) 24 7 (997) (492) 264 Cumulative Effect of Accounting Change, Net of Income Tax 1 - - - - Net Increase (Decrease) in Net Assets from Operations $ 162 $ 134 $( (813) ) $( (547) ) $ 187 (1) Salaries, benefits and stock-based compensation and general and administrative expenses. 44
  • 45. Nasdaq: ACAS Balance Sheet Highlights g g Q1 10 vs. Q1 09 Change ($ in Millions, except per share data and financial metrics) Q1 09 Q4 09 Q1 10 $ % Assets Cash and Cash Equivalents $88 $835 $820 $732 832% Debt Investments $4,866 $ , $3,729 $ , $3,759 $ , $(1,107) $( , ) -23% Equity Investments $1,830 $1,679 $1,773 $(57) -3% Structured Products $143 $167 $166 $23 16% Total Investments at Fair Value $6,839 $5,575 $5,698 $(1,141) -17% Liabilities Total Debt Outstanding $4,377 $4,142 $4,026 $(351) -8% % Secured / % Unsecured 47% / 53% 43% / 57% 42% / 58% NA NA Equity Shareholders Shareholders’ Equity $2,654 $2 654 $2,329 $2 329 $2,526 $2 526 $(128) -5% Net Asset Value per Share $12.32 $8.29 $8.98 $(3.34) -27% Ratios Debt-to-Equity 1.6:1 1.8:1 1.6:1 NA NA Price-to-Book Price to Book 0.1 01X 0.3 03X 0.6 06X NA NA 45
  • 46. Nasdaq: ACAS Operating Income - Quarterly p g Q y 16% Decrease over Q1 2009 $ in Millions $400 Fee income Interest and dividend income $354 $350 $326 $310 $78 $300 $42 $292 $77 $278 $34 $263 $244 $250 $27 $250 $231 $24 $212 $42 $44 $218 $51 $16 $195 $200 $193 $173 $55 $16 $17 $169 $164 $13 $14 $ 50 $150 $42 $276 $ $140 $268 $258 $13 $249 $239 $251 $100 $202 $206 $202 $180 $179 $176 $157 $156 $150 $131 $127 $50 $0 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 Annual Operating Income Totals 2006 2007 2008 2009 YTD 2010 $860 $1,240 $1,051 $697 $164 46
  • 47. Nasdaq: ACAS Equity Interests at Fair Value q y Structured to Grow at 18% – 30% IRRs $ in Millions $ , $5,000 Warrants $4,762 $4 762 Preferred $4,433 $4,375 Common $3,975 $4,000 $3,790 $3,045 $3,118 $3,000 $2,852 $2,766 $2,610 $2,051 , $2,120 $2,000 $1,830 $1,722 $1,679 $1,773 $1,580 $1,000 $0 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 47
  • 48. Nasdaq: ACAS Net Operating Income Per Diluted Share p g $1.00 $0.91 $0.90 $0.81 $0.81 $0.80 $0.77 $0.77 $0.76 $0.77 $0.73 $0.71 $0.74 $0.60 $0.40 $0.31 $0 31 $0.21 $0.20 $0.17 $0.12 $0.09 $0.07 $0.00 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 Annual NOI per Diluted Share Totals* 2006 2007 2008 2009 YTD 2010 $3.10 $3.36 $2.42 $0.56 $0.17 * May not equal the sum of the 4 quarters due to changes in the weighted shares outstanding 48
  • 49. Nasdaq: ACAS Net Realized Earnings (Loss) Per Diluted Share Net Earnings (Loss) Less Net Appreciation & Depreciation $1.50 $1.42 $1.13 $1.13 $1.13 $1.18 $1.13 $0.97 $0.98 $0.95 $1.00 $0.81 $0.72 $0.50 $0.00 ($0.01) ($0.13) ($0.27) ($0.27) -$0.50 -$1.00 ($1.00) -$1.50 ($1.41) -$2 00 $2.00 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 Annual Net Realized Earnings (Loss) per Diluted Share* 2006 2007 2008 2009 YTD 2010 $4.37 $4.57 $2.58 $(2.81) $(0.27) * May not equal the sum of the 4 quarters due to changes in the weighted shares outstanding 49
  • 50. Nasdaq: ACAS Net Unrealized Appreciation (Depreciation) of Portfolio Investments* oto o est e ts $ in Millions $1,000 $528 $500 $192 $254 $160 $126 $40 $12 $45 $0 ($5) ($224) ($269) ($500) ($384) ($532) ($554) ($626) ($1,000) ($951) ($1,500) ($1,588) ($2,000) Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 * Excludes unrealized appreciation (deprecation) on derivative agreements, foreign currency translation and the reversal of prior period net unrealized depreciation (appreciation) upon realization. 50
  • 51. Nasdaq: ACAS Net Earnings (Loss) g ( ) $ in Millions $1,000 $788 $700 $400 $290 $312 $162 $187 $132 $134 $21 $77 $107 $100 $200 -$200 ($70) ($243) -$500 ($548) ($547)($547) -$800 ($813) $1 100 -$1,100 -$1,400 -$1,700 ($1,684) -$2,000 $2 000 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 Annual Net Earnings (Loss) 2006 2007 2008 2009 YTD 2010 $896 $700 $(3,115) $(910) $187 51
  • 52. Nasdaq: ACAS Net Earnings (Loss) Per Diluted Share g ( ) $5.00 $4.68 $3.00 $2.16 $2.10 $1.34 $0.92 $0.86 $0.65 $1.00 $0.30 $0.38 $0.11 ($0.34) -$1.00 ($1.27) -$3.00 ($2.63) ($2.65) ($2.52) ($4.16) -$5.00 -$7.00 ($8.13) ($8 13) -$9.00 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 Annual Net Earnings per Diluted Share Totals* 2006 2007 2008 2009 YTD 2010 $6.55 $3.96 $(15.29) $(3.77) $0.65 * May not equal the sum of the 4 quarters due to changes in the weighted shares outstanding 52
  • 53. Nasdaq: ACAS $ $8.98 Net Asset Value p Share per $0.69 or 8% increase over December 31, 2009 Per Share $40 0.6x 0 6 Price to Book* * $36 $35 $35 $33 $30 $30 $29 $28 $28 $28 $27 $25 $24 $25 $20 $15 $15 $12 $10 $9 $8 $9 $8 $5 Q1 Q1 Q1 Q1 Q1 06 07 08 09 10 * Based on ACAS stock price and NAV as of March 31, 2010 53
  • 54. Nasdaq: ACAS Historical Price to Book Multiple p 0.7x Price to Book at April 30, 2010 Price to book at period end Average Since IPO 2.0X 2 0X 1. 9 1.8 1. 7 1. 71.7 1.7 1. 7 1. 7 1.6 1. 6 1.6 1.6 1. 6 1. 61.6 1.6 1.5 1. 5 1.5 1. 5 1.5X 1 5X 1. 41.4 1 4 1. 4 1. 1. 41.4 1.4 1.4 1.4 1.4 1. 3 1.3 1.3 1.3x 1. 2 1. 2 1.2 1. 2 1. 2 1.2 1.2 1.0 1. 0 1.0X 0 .9 9 0 .6 0.5X 0 .40 . 4 0 .3 0 . 20 . 2 0.0X Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 98 99 00 01 02 03 04 05 06 07 08 09 10 54
  • 55. Nasdaq: ACAS Unprecedented Volatility of 2008 has Subsided VIX Index Peaked at 80.86 in November 2008 and was 17.59 on March 31, 2010 VIX Closing Price 90 VIX Closing Price VIX 15 Year Historical Average 80 70 60 50 40 30 20 10 0 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 -9 -9 -9 -9 -9 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -1 pr pr pr pr pr pr pr pr pr pr pr pr pr pr pr pr A A A A A A A A A A A A A A A A Daily closing price of VIX Index from 4/13/95 to 4/15/10. The Chicago Board Options Exchange SPX Volatility Index reflects a market estimate of future volatility, based on the weighted average of the implied volatilities for a wide range of strikes. 1st & 2nd month expirations are used until 8 days from expiration, then the 2nd and 3rd are used. Source: Capital IQ 55
  • 56. Collateralized Loan Obligations and Commercial Mortgage Backed Securities © 2010 American Capital. All Rights Reserved. 56
  • 57. Nasdaq: ACAS CLOs and CMBS Commercial Collateralized Loan Obligation (CLO) Investments 2% of total investments at fair value Collateral comprised mostly of commercial loans ● Assets generally performing as underwritten Commercial Mortgage Backed Securities (CMBS) Investments 1% of total investments at fair value Includes investment in commercial real estate CDO (CRE CDO) secured by CMBS bonds Collateral comprised of commercial mortgage loans ● Current projected cumulative losses are greater than originally underwritten ● Current projected losses are expected to occur earlier than originally underwritten ● While actual realized amount of principal losses of mortgage collateral have not been substantial, significant cashflow shortfalls are occurring due to increased special servicing fees and interest shortfalls from appraisal reductions 57
  • 58. Nasdaq: ACAS St uctu ed oduct Cas Structured Product Cash Flows Versus Fair Value o s e sus a a ue In millions Annualized Quarterly Cash Flows Fair Value $990 $1,000 $900 $833 $800 $716 $700 $660 $600 $500 $463 $386 $400 $322 $300 $182 $186 $174 $196 $200 $143 $167 $166 $121 $134 $134 $122 $86 $111 $ 00 $100 $69 $83 $85 $100 $39 $31 $0 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Multiple 12.1x 11.5x 8.6x 5.5x 2.4x 2.5x 2.9x 1.5x 1.3x 1.7x 2.3x 4.3x 5.4x 58
  • 59. Nasdaq: ACAS CMBS Spreads p Q1 2010 Spreads Tightened at the AAA Level for the 4 Straight Quarter but Credit Bonds remain wide due to mounting credit concerns Cash Spread s 8K BBB 7K 6K 5K AA ads Sprea 4K 3K 2K 1K 0K AAA N UG G E TT AG : u s e r N a m e = n u & l p o l t N a m e = n u l Jul-08 Oct-08 Jan-0 9 A pr-09 Jul-09 Oct-09 Jan-1 0 A pr-10 Time Source: Barclays Capital Live 59
  • 60. Nasdaq: ACAS CMBS Portfolio Yield Curve Average CMBS Portfolio Yield Curve Qtr-over-Qtr Q107 Q307 105% Q108 Q308 80% Q109 Q209 55% Q309 30% Q409 Q110 5% BBB- BB+ BB BB- B+ B B- The curves above (Q1 2007 through Q1 2010) are based upon quarterly valuation marks used to determine the fair value of the ACAS CMBS portfolio. The CMBS portfolio values are determined primarily by ACAS internal valuation model (or ACAS discounted cash flow model) with consideration given to marks provided by various market participants and values implied by transactions in identical and similar bonds. The valuation method uses three different methods to derive value: 1) discounted ) cash flow method, 2) comparable trades data points in the market, and 3) dealer provided marks. Each valuation is then appropriately weighted taking into consideration the accuracy and availability of data points and their relevance to the specific bond. 60
  • 61. Market Share © 2010 American Capital. All Rights Reserved. 61
  • 62. Nasdaq: ACAS Private Equity and Mezzanine Partnerships Annual Capital Raised p $ in Billions $292.5 $10.8 $280 $5.0 $261.7 $2.6 $232.5 $26.0 $240 $6.9 $25.2 $200 $ 6 $176.7 $7.5 $7.0 $160 $276.7 $120 $95.3 $95 3 $233.1 $233 1 $1.4 $200.4 $70.9 $78.1 $69.5 $5.8 $80 $0.5 $59.6 $4.9 $162.2 $50.3 $2.0 $47.2 $3.3 $1.6 $47.0 $8.2 $3.0 $28.8 $0.5 $1.2 $5.4 $1.2 $35.7 $3.2 $3 2 $5.3 $5 3 $88.1 $3.0 $3.1 $40 $0.3 $67.1 $4.2 $65.0 $64.5 $10.9 $2.9 $43.8 $52.6 $43.5 $42.8 $0.6 $25.6 $28.4 $1.5 $0 $8.8 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 Private Equity Partnerships Mezzanine Partnerships BDCs Actual* *Includes equity and debt raises as well as repayment of capital. Sources: Buyouts Newsletter; Citigroup; American Capital Analysis 62
  • 63. Nasdaq: ACAS Average Purchase Price by Sponsors of Middle Market LBO Loans Sponsors for Deals with EBITDA ≤ $50 MM* 12.0x Purchase Price Breakdown Senior Debt/EBITDA Sub Debt/EBITDA Equity/EBITDA Others 10.0x 9.3x 8.5x 8.3x 8.5x 8.1x 8 1x 8.0x 7.6x 7.5x 7.1x 6.9x 7.0x 7.2x 6.7x 5.9x 6.0x 4.0x 2.0x N/A** 0.0x 19 9 7 19 9 8 19 9 9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q 1 10 * Prior to 2003, media/telecom/energy/utility deals were excluded. After 2003, all outliers are excluded, regardless of industry. **Due to the limited number of transactions and amount of transaction data available for 2009, S&P has not reported this metric. Source: Standard & Poor’s Leveraged Commentary & Data 63
  • 64. Nasdaq: ACAS Investment Partners Senior (101) ABN AMRO Bank of Texas Credit Suisse AIG Barclays y Deerfield Aladdin Capital Blackstone Denali Alcentra BNP Paribas Deutsche Bank Allied Capital Calyon Dymas Capital Mgmt. Allied I i h B k Alli d Irish Bank Capital S C it l Source Finance Fi Emporia Capital E i C it l American Financial Cedarview Capital Fifth Third Bank Angelo Gordon Churchill Financial FirstLight Financial Ares Management CIBC World Markets Freeport Financial Avenue Capital CIFC GE Antares Capital Aviva CIT GMAC Commercial Finance Babson Citigroup Goldentree Asset Management Bank of America Citizens Bank Goldman Sachs Specialty Lending Bank of Ireland Clinton Group Golub Associates Bank of Montreal Collineo Greenwich Street Capital Bank of New York Columbus Nova GSO Bank of Nova Scotia Comerica Guggenheim Partners 64
  • 65. Nasdaq: ACAS Investment Partners Senior Continued Gulfstream Asset Management McDonnell Investments Silicon Valley Bank Harris Bank Merrill Lynch Capital Stone Castle Highland Capital Monroe Capital Stone Tower HP Financial Morgan Stanley Strategic Value Partners Huntington National Bank National City Bank Texas Capital Bank ING Financial Services NewStar Financial Tricadia Israel Discount Bank Oaktree UBS Securities Jefferies Babson Orchard First Source Union Bank of California JPMorgan Chase g ORIX Financial US Bancorp p Key Bank Pangaea Asset Management Van Kampen LaSalle Bank PNC Bank Wachovia Levine Leichtman Capital Rabo Bank Wells Fargo Lightpoint C it l Li ht i t Capital RBC C t Centura Wells F W ll Fargo Foothill F thill Loomis Sayles Regions West LB M&I Bank Sandelman Partners Wilmington Trust M&T Bank Siemens Financial Z Capital Madison Capital Sigma Investments 65
  • 66. Nasdaq: ACAS Investment Partners Mezzanine (16) AIG Churchill ESOP Partners Royal Bank of Scotland AIG Global Investment Group Credit Agricole Indosuez Stratford Capital Partners Albion Alliance Albi Alli John Hancock J h H k TIAA-CREF TIAA CREF Allied Capital LFPI Gestion Unicredit Audax Mezzanine Fund Mass Mutual Life Insurance Co. BNP Paribas Reliastar Equity (146) 3i Audax Private Equity Booth Creek Management 21 Centrale Partners Aura Capital Group Brentwood Associates ABN AMRO Capital Auriga Partners Bridgepoint Capital ABRY Partners Austin Ventures Bruckman, Rosser, Sherrill & Co. Accel-KKR Axa Private Equity Caltius Equity Partners Advent International Bain Capital Cambridge Capital Alchemy Partners Baird Capital Partners Candover Partners Ltd. Allianz Capital Partners Barclays Private Equity CapVest Equity Partners Apax Partners BC Partners Capzanine Arcapita Beecken Petty O’Keefe & Company Carlyle Group Argan Capital g p Behrman Capital p Carousel Capital p Astorg Partners Blue Capital Management Castle Harlan 66
  • 67. Nasdaq: ACAS Investment Partners Equity Continued Celerity Partners Crimson Investment Friend Skoler & Co. Centre Partners C t P t CVC Capital Partners C it l P t Frontenac Company F t C Cerberus Capital Management DFW Capital George K. Baum Capital Partners Charles River Capital Partners Diamond Castle Holdings Glide Buy Out Partners Charterhouse Capital Partners Ch h C i lP Doughty H D h Hanson & C Co. Goense Bounds & P G B d Partners Charterhouse Group International Duke Street Capital Golden Gate Capital Chequers El Dorado Ventures Goldman Sachs Capital Partners Churchill Equity Electra Partners Europe Graham Partners Cinven Limited Engles Urso Follmer Great Hill Partners Clear Creek Capital EQT Growth Capital Partners ClearLight Partners Exeter Capital Partners GTCR Golder Rauner, LLC Code Hennessy & Simmons Exponent Private Equity H.I.G. Capital Compass Group Fenway Partners Halpern, Denny & Co. Cortec Group Financiere Agache Harbour Group 67
  • 68. Nasdaq: ACAS Investment Partners Equity Continued Harvest Partners Lincolnshire Management Palladium Equity Partners ICV Capital Partners C it l P t Lion C it l Li Capital Parthenon Capital P th C it l Industrial Opportunity Partners Littlejohn & Company Permira Institutional Venture Partners MML Capital Partners Radius Partners Investcorp International Inc. Monterey Capital Partners Red Diamond Capital Keystone Holdings Morgenthaler Partners Redpoint Ventures Kohlberg & Co. Nordic Capital RFE Investments Kohlberg Kravis Roberts & Co. Northwest Equity Partners Richard L. Scott Investments KRG Capital Partners Oak Hill Capital Management, Inc. Riverside Partners Lake Capital Odyssey Investment Partners Roark Capital Group Laminar Direct Capital Olympus Partners Sagard LBO France One Equity Partners SAP Ventures LGV Capital Onex Public Markets Group Sentinel Capital Partners Liberty Partners Paine & Partners Shoreview Industries 68
  • 69. Nasdaq: ACAS Investment Partners Equity Continued Sorenson Capital TMB Industries Westbury Capital Partners Stephens Group, Inc. Trident Capital Weston Presidio Capital Sterling Investment Partners Trivest Partners Wimbledon Partners Sterling Ventures U.S. Renewables Group Wind Point Partners StoneCreek Capital Vestar Capital Partners Windjammer Capital Investors Stratford Capital Partners Warburg Pincus Wingate Partners Thayer Capital Partners Weinburg Capital Partners The Blackstone Group Welsh, Carson, Anderson & Stowe Thoma Cressey Bravo WENDEL Investissement Thompson Street Capital Partners Westar Capital 69