American Capital Ltd Earnings Call Nuggets: Increased Interest and Dividend Income and ACAM

American Capital Ltd (NASDAQ:ACAS) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Increased Interest and Dividend Income

Richard Shane – JPMorgan: What are the significant trends on the quarter was the reversal on the nonaccruals which was a very positive step? The other thing we noticed that there was a step up in interest and dividend income. I am wondering if they were related to the nonaccruals any sort of one-time true ups that we should understand, just as we’re modeling things going forward?

Pete Deoudes – Director, Equity Capital Markets: Let me ask the Wilkus if he would.

John Erickson – President, Structured Finance and CFO: To give the recent detail for the number.

Malon Wilkus – Chairman and CEO: Yeah. We actually have a slide in the presentation. If you go to Slide 49, that shows the impact of the nonaccrual adjustments for the quarter. So, on the interest income side, there was about $30 million positive benefit during the quarter and on the dividend income side, there is about a $2 million positive impact for the quarter related to non-accruals adjustment from prior period, out of – you recall out of period adjustments.

Richard Shane – JPMorgan: Got it. I’m looking in the slide now. I didn’t catch that. That’s very helpful.


Jasper Burch – Macquarie: On ACAM, the asset management franchise, in the past, you guys have said there are portion of the valuation of the fair values based on forward growth expectations and I was wondering if you could break out one sort of how much of the fair value is contingent on future AUM growth, and then two how that assumption has changed sequentially?

Malon Wilkus – Chairman and CEO: That we can’t break that out. We don’t have that detail in front of us and honestly I don’t think we would break that out even if we had it in front of us for you. Every quarter we do – this is true for all of our portfolio companies, every quarter we assess the forecast in the cash flows going forward in doing one component of our valuation which is typically a discounted cash flow analysis and we asses that we reforecast of the next five years typically.

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