American Capital Ltd. Net Operating Income Falls By 69%

Continuing the difficult run, American Capital saw its net operating income fall to $16 million, well below the $52 million in the fourth quarter.

May 7, 2014 at 5:35PM

American Capital (NASDAQ:ACAS) announced its operating income before taxes stood at $16 million, or $0.06 per share in the first quarter of 2014, a decline of 69% relative to the $52 million recognized in the fourth quarter of 2013. In addition its net operating income was down more than 75% relative to the first quarter of 2013, when it stood at $68 million. 

The biggest reason behind the drop was significant decreases in both of its sources of revenue. Fee income at American Capital was cut in half, to $13 million, from the fourth quarter to the first quarter. In addition, its interest and dividend income fell by 23%, from $92 million to $71 million.

However, the company did note its net earnings stood at $70 million, well above the loss of $182 million seen in the fourth quarter of 2013. In the fourth quarter, American Capital saw its investments depreciate on an unrealized basis by $261 million, which resulted in its overall loss.

In addition, American Capital announced Goldman Sachs was retained as a financial advisor as it evaluated whether or not to separate its asset management business from its investment assets, which was announced in March.

"We have made progress evaluating our corporate structure," noted the CEO of American Capital, Malon Wilkus, in the announcement. "In addition to engaging Goldman Sachs, our Board of Directors suspended our Share Repurchase and Dividend Program, as we evaluate the capital requirements of our alternatives."

Even despite the lessened net operating income, in total, American Capital did see its net asset value per share rise to $19.29, representing a gain of 7%.

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