Ares Capital Corporation Declares Third Quarter 2014 Dividend of $0.38 Per Share and Announces June 30, 2014 Financial Results

  Ares Capital Corporation Declares Third Quarter 2014 Dividend of $0.38 Per
  Share and Announces June 30, 2014 Financial Results

THIRD QUARTER 2014 DIVIDEND DECLARED

Business Wire

NEW YORK -- August 5, 2014

Ares Capital Corporation (“Ares Capital”) (NASDAQ:ARCC) announced that its
Board of Directors has declared a third quarter dividend of $0.38 per share,
payable on September30, 2014 to stockholders of record as of September15,
2014.

JUNE 30, 2014 FINANCIAL RESULTS

Ares Capital also announced financial results for its second quarter ended
June30, 2014.

HIGHLIGHTS

Financial

                                                   
                               Q2-14                    Q2-13
  (in millions, except per     Total      Per          Total     Per
  share data)                  Amount      Share(1)     Amount      Share(1)
  Core EPS (2)                             $  0.34                  $  0.38
  Net investment income        $ 92.0      $  0.31      $ 93.6      $  0.35
  Net realized gains           $ (48.5 )  $  (0.16 )  $ 8.6       $  0.03
  (losses)
  Net unrealized gains         $ 99.3      $  0.33      $ 31.3      $  0.12
  GAAP net income              $ 142.8     $  0.48      $ 133.5     $  0.50
  Dividends declared and                   $  0.38                  $  0.38
  payable
                                                                             

                                                    
                          As of June 30,                  As of December 31,
  (in millions,
  except per share        2014          2013            2013
  data)
  Portfolio
  investments at fair     $  8,067.9     $  6,815.0     $       7,632.9
  value
  Total assets            $   8,560.2     $   7,130.8     $        8,141.5
  Stockholders’           $   4,933.6     $   4,348.0     $        4,904.4
  equity
  Net assets per          $   16.52       $   16.21       $        16.46
  share
                                                                             

(1)All per share amounts are basic and diluted.
(2)Basic and diluted Core EPS is a non-GAAP financial measure. Core EPS is
the net per share increase (decrease) in stockholders’ equity resulting from
operations less realized and unrealized gains and losses, any capital gains
incentive fees attributable to such net realized and unrealized gains and
losses and any income taxes related to such realized gains and losses. Basic
and diluted GAAP EPS is the most directly comparable GAAP financial measure.
Ares Capital believes that Core EPS provides useful information to investors
regarding financial performance because it is one method Ares Capital uses to
measure its financial condition and results of operations. The presentation of
this additional information is not meant to be considered in isolation or as a
substitute for financial results prepared in accordance with GAAP.
Reconciliations of basic and diluted Core EPS to the most directly comparable
GAAP financial measure are set forth in Schedule 1 hereto.

Portfolio Activity

                                          
  (dollar amounts in millions)               Q2-14       Q2-13       Q4-13
  Portfolio Activity During the Period:
  Gross commitments                          $ 1,018.9   $ 1,203.2
  Exits of commitments                       $ 767.3     $ 394.7
                                                                             
  Portfolio as of the End of the Period:
  Number of portfolio company investments    202         164         193
  Weighted average yield of debt and other
  income producing securities:
  At amortized cost(4)                       10.1      % 10.8      % 10.4  %
  At fair value(5)                           10.0      % 10.7      % 10.4  %
  Weighted average yield on total
  investments:
  At amortized cost(6)                       9.2       % 9.8       % 9.4   %
  At fair value(7)                           9.0       % 9.6       % 9.3   %
                                                                             

(4) Computed as (a)annual stated interest rate or yield earned plus the net
annual amortization of original issue discount and market discount or premium
earned on accruing debt and other income producing securities, divided by
(b)total accruing debt and other income producing securities at amortized
cost.
(5) Computed as (a)annual stated interest rate or yield earned plus the net
annual amortization of original issue discount and market discount or premium
earned on accruing debt and other income producing securities, divided by
(b)total accruing debt and other income producing securities at fair value.
(6) Computed as (a)annual stated interest rate or yield earned plus the net
annual amortization of original issue discount and market discount or premium
earned on accruing debt and other income producing securities, divided by
(b)total investments at amortized cost.
(7) Computed as (a)annual stated interest rate or yield earned plus the net
annual amortization of original issue discount and market discount or premium
earned on accruing debt and other income producing securities, divided by
(b)total investments at fair value.

SECOND QUARTER 2014 OPERATING RESULTS

For the quarter ended June30, 2014, Ares Capital reported GAAP net income of
$142.8 million or $0.48 per share (basic and diluted), Core EPS(2)of $0.34
per share (basic and diluted), net investment income of $92.0 million, or
$0.31 per share (basic and diluted), and net realized and unrealized gains of
$50.8 million or $0.17 per share (basic and diluted).

Net income can vary substantially from period to period due to various
factors, including the level of new investment commitments, the recognition of
realized gains and losses and unrealized appreciation and depreciation. As a
result, quarterly comparisons of net income may not be meaningful.

As of June30, 2014, total assets were $8.6 billion, stockholders’ equity was
$4.9 billion and net asset value per share was $16.52.

In the second quarter of 2014, Ares Capital made $1,018.9 million in new
commitments, including commitments to 12 new portfolio companies, ten existing
portfolio companies and seven additional portfolio companies through the
Senior Secured Loan Fund LLC, which operates using the name “Senior Secured
Loan Program” (the “SSLP”) through which Ares Capital co-invests with GE
Global Sponsor Finance LLC and General Electric Capital Corporation (together,
“GE”) to fund first lien senior secured loans. Of these new commitments, 27
were sponsored transactions. As of June30, 2014, 137 separate private equity
sponsors were represented in Ares Capital’s portfolio. Of the $1,018.9 million
in new commitments made during the second quarter of 2014, 51% were in first
lien senior secured debt, 28% were in second lien senior secured loans, 20%
were in subordinated certificates of the SSLP to make co-investments with GE
in first lien senior secured loans through the SSLP, and 1% were in other
equity securities. Of these commitments, 96% were in floating rate debt
securities, of which 79% contained interest rate floors and the remaining 21%
were in the subordinated certificates of the SSLP to make co-investments with
GE in floating rate first lien senior secured loans through the SSLP, all of
which contained interest rate floors. Ares Capital may seek to syndicate a
portion of these new investment commitments, although there can be no
assurance that Ares Capital will be able to do so.

During the second quarter of 2014, significant new commitments included:

  *$205 million in the subordinated certificates of the SSLP to make
    co-investments with GE in first lien senior secured loans to seven
    portfolio companies in a variety of industries;
  *$137 million in first lien senior secured revolving, delayed draw and term
    loans of an archery and bow hunting accessories provider;
  *$80 million in a second lien senior secured term loan of a provider of
    rain and cold weather consumer products;
  *$73 million in first lien senior secured revolving and term loans of an
    education services provider to the medical sector;
  *$68 million in first lien and second lien senior secured term loans of a
    heating, ventilation and air conditioning services provider;
  *$60 million in a first lien senior secured revolving loan of an
    asset-based financial services company;
  *$60 million in a second lien senior secured term loan of a distributor of
    emergency medical service and respiratory products;
  *$45 million in a second lien senior secured term loan of a dental supplies
    and equipment manufacturer;
  *$40 million in first lien senior secured revolving, delayed draw and term
    loans of a provider of repair services to the industrial end market;
  *$40 million in a second lien senior secured term loan of a flashlight
    manufacturer; and
  *$32 million in a first lien senior secured delayed draw term loan of a
    liquefied natural gas export provider.

Also during the second quarter of 2014, Ares Capital exited approximately
$767.3 million of investment commitments.

The fair value of Ares Capital’s portfolio investments at June30, 2014 was
$8.1 billion, including $7.2 billion in accruing debt and other income
producing securities. The total portfolio investments at fair value were
comprised of approximately 44% of first lien senior secured loans, 16% of
second lien senior secured loans, 24% of subordinated certificates of the SSLP
(the proceeds of which were applied to co-investments with GE in first lien
senior secured loans through the SSLP), 5% of senior subordinated debt
securities, 3% of preferred equity securities and 8% of other equity and other
securities. As of June30, 2014, the weighted average yield of debt and other
income producing securities in the portfolio at fair value was 10.0%(3)(10.1%
at amortized cost(4)), the weighted average yield on total investments in the
portfolio at fair value was 9.0%(5)(9.2% at amortized cost(6)), and 81% of
the total investments at fair value were in floating rate securities.

Chief Executive Officer Kipp deVeer commented, “We reported strong second
quarter GAAP earnings, driving growth in our net asset value after paying our
regular quarterly dividend of $0.38 per share. Our portfolio continues to
perform well with positive credit statistics and meaningful net investment
gains. We are off to a strong start in the third quarter with $390 million of
net investment commitments made and a backlog and pipeline of $890 million.
While the market remains competitive, our national origination platform
provides us with a broad set of investment opportunities, allowing us to
remain highly selective.”

PORTFOLIO QUALITY

Ares Capital Management LLC, Ares Capital’s investment adviser, employs an
investment rating system to categorize Ares Capital’s investments. In addition
to various risk management and monitoring tools, Ares Capital’s investment
adviser grades the credit risk of all investments on a scale of 1 to 4 no less
frequently than quarterly. This system is intended primarily to reflect the
underlying risk of a portfolio investment relative to Ares Capital’s initial
cost basis in respect of such portfolio investment (i.e., at the time of
origination or acquisition), although it may also take into account under
certain circumstances the performance of the portfolio company’s business, the
collateral coverage of the investment and other relevant factors. Under this
system, investments with a grade of 4 involve the least amount of risk to Ares
Capital’s initial cost basis. The trends and risk factors for this investment
since origination or acquisition are generally favorable, which may include
the performance of the portfolio company or a potential exit. Investments
graded 3 involve a level of risk to Ares Capital’s initial cost basis that is
similar to the risk to Ares Capital’s initial cost basis at the time of
origination or acquisition. This portfolio company is generally performing as
expected and the risk factors to Ares Capital’s ability to ultimately recoup
the cost of Ares Capital’s investment are neutral to favorable. All
investments or acquired investments in new portfolio companies are initially
assessed a grade of 3. Investments graded 2 indicate that the risk to Ares
Capital’s ability to recoup the initial cost basis of such investment has
increased materially since origination or acquisition, including as a result
of factors such as declining performance and non-compliance with debt
covenants; however, payments are generally not more than 120days past due. An
investment grade of 1 indicates that the risk to Ares Capital’s ability to
recoup the initial cost basis of such investment has substantially increased
since origination or acquisition, and the portfolio company likely has
materially declining performance. For debt investments with an investment
grade of 1, most or all of the debt covenants are out of compliance and
payments are substantially delinquent. For investments graded 1, it is
anticipated that Ares Capital will not recoup Ares Capital’s initial cost
basis and may realize a substantial loss of Ares Capital’s initial cost basis
upon exit. For investments graded 1 or 2, Ares Capital’s investment adviser
enhances its level of scrutiny over the monitoring of such portfolio company.
The grade of a portfolio investment may be reduced or increased over time.

As of June30, 2014, the weighted average grade of the investments in Ares
Capital’s portfolio at fair value was 3.1 and loans on non-accrual status
represented 1.9% of total investments at amortized cost (or 1.2% at fair
value).

LIQUIDITY AND CAPITAL RESOURCES

As of June30, 2014, Ares Capital had $223.2 million in cash and cash
equivalents and $3.4 billion in aggregate principal amount of debt outstanding
($3.4 billion in carrying value). Subject to leverage and borrowing base
restrictions, Ares Capital had approximately $1.8 billion available for
additional borrowings under its existing credit facilities as of June30,
2014.

In May2014, Ares Capital and Ares Capital CP Funding LLC (“Ares Capital CP”)
entered into an amendment to Ares Capital CP’s revolving funding facility (the
“Revolving Funding Facility”). The amendment, among other things, (1)extended
the reinvestment period from April18, 2015 to May14, 2017, (2)extended the
stated maturity date from April18, 2017 to May14, 2019 and (3)reduced the
range of commitment fees paid depending on the size of the unused portion of
the Revolving Funding Facility from between 0.50% and 1.75% per annum to 0.50%
and 1.50% per annum. Commitments under the amended Revolving Funding Facility
were reduced from the pre-amendment commitments of $620 million to $540
million.

In May2014, Ares Capital increased total commitments under its revolving
credit facility by $80 million from $1,170 million to $1,250 million.

SECOND QUARTER 2014 DIVIDEND

For the three months ended June30, 2014, Ares Capital declared on May6, 2014
a dividend of $0.38 per share for a total of approximately $113.3 million. The
record date for the dividend was June16, 2014 and the dividend was paid on
June30, 2014.

RECENT DEVELOPMENTS

In July2014, Ares Capital completed a public equity offering (the “July2014
Offering”) pursuant to which Ares Capital sold 15,525,000 shares of common
stock (including 2,025,000 shares pursuant to the exercise in full by the
underwriters of their option to purchase additional shares) at a price of
$16.63 per share to the participating underwriters. Total proceeds from the
July2014 Offering, net of estimated offering expenses payable by Ares
Capital, were approximately $257.7 million. Ares Capital used the net proceeds
of the July2014 Offering to repay certain outstanding indebtedness under its
debt facilities and for general corporate purposes, which included investing
in portfolio companies in accordance with its investment objective.

From July1, 2014 through July31, 2014, Ares Capital made new investment
commitments of $492million, of which $451million were funded. Of these new
commitments, 54% were in first lien senior secured loans, 43% were in second
lien senior secured loans, 2% were investments in subordinated certificates of
the SSLP to make co-investments with GE in first lien senior secured loans
through the SSLP and 1% were in other equity securities. Of the $492million
of new investment commitments, 97% were floating rate, 2% were fixed rate and
1% were non-interest bearing. The weighted average yield of debt and other
income producing securities funded during the period at amortized cost was
8.1%. Ares Capital may seek to syndicate a portion of these new investment
commitments, although there can be no assurance that Ares Capital will be able
to do so.

From July1, 2014 through July31, 2014, Ares Capital exited $102million of
investment commitments. Of these investment commitments, 44% were second lien
senior secured loans, 28% were first lien senior secured loans, 17% were
investments in subordinated certificates of the SSLP, 6% were preferred equity
securities and 5% were other equity securities. Of the $102million of exited
investment commitments, 80% were floating rate, 11% were non-interest bearing,
8% were fixed rate and 1% were on non-accrual status. The weighted average
yield of debt and other income producing securities exited or repaid during
the period at amortized cost was 10.0%. On the $102million of investment
commitments exited from July1, 2014 through July31, 2014, Ares Capital
recognized total net realized gains of approximately $5million.

In addition, as of July31, 2014, Ares Capital had an investment backlog and
pipeline of approximately $390million and $500million, respectively.
Investment backlog includes transactions approved by Ares Capital’s investment
adviser’s investment committee and/or for which a formal mandate, letter of
intent or signed commitment has been issued, and therefore Ares Capital
believes are likely to close. Investment pipeline includes transactions where
due diligence and analysis are in process, but no formal mandate, letter of
intent or signed commitment has been issued. The consummation of any of the
investments in this backlog and pipeline depends upon, among other things, one
or more of the following: satisfactory completion of Ares Capital’s due
diligence investigation of the prospective portfolio company, Ares Capital’s
acceptance of the terms and structure of such investment and the execution and
delivery of satisfactory transaction documentation. In addition, Ares Capital
may syndicate a portion of these investments and certain of these investments
may result in the repayment of existing investments. Ares Capital cannot
assure you that Ares Capital will make any of these investments or that Ares
Capital will syndicate any portion of these investments.

WEBCAST / CONFERENCE CALL

Ares Capital will host a webcast/conference call on Tuesday, August5, 2014,
at 12:00p.m. (ET) to discuss its financial results for the second quarter
ended June30, 2014. PLEASE VISIT ARES CAPITAL’S WEBCAST LINK LOCATED ON THE
HOME PAGE OF THE INVESTOR RESOURCES SECTIONOF ARES CAPITAL’S WEBSITE FOR A
SLIDE PRESENTATION THAT COMPLEMENTS THE EARNINGS CONFERENCE CALL.

All interested parties are invited to participate via telephone or the live
webcast, which will be hosted on a webcast link located on the Home pageof
the Investor Resources section of Ares Capital’s website at
http://www.arescapitalcorp.com. Please visit the website to test your
connection before the webcast. Domestic callers can access the conference call
by dialing (888) 317-6003. International callers can access the conference
call by dialing +1 (412) 317-6061. All callers will need to enter the
Participant Elite Entry Number 9496315 followed by the # sign and reference
“Ares Capital Corporation” once connected with the operator. All callers are
asked to dial in 10-15 minutes prior to the call so that name and company
information can be collected. For interested parties, an archived replay of
the call will be available approximately one hour after the end of the call
through August18, 2014 at 5:00p.m. (Eastern Time) to domestic callers by
dialing (877) 344-7529 and to international callers by dialing +1 (412)
317-0088. For all replays, please reference conference number 10048348. An
archived replay will also be available on a webcast link located on the Home
pageof the Investor Resources section of Ares Capital’s website.

ABOUT ARES CAPITAL CORPORATION

Ares Capital is a leading specialty finance company that provides one-stop
debt and equity financing solutions to the U.S. middle market. Ares Capital
originates and invests in senior secured loans, mezzanine debt and, to a
lesser extent, equity investments through its national direct origination
platform. Ares Capital’s investment objective is to generate both current
income and capital appreciation through debt and equity investments primarily
in private companies. Ares Capital has elected to be regulated as a business
development company, and is externally managed by a subsidiary of Ares
Management, L.P. (“Ares Management”) (NYSE:ARES). Ares Management is a
publicly traded, leading global alternative asset manager with approximately
$77 billion of assets under management as of March31, 2014. For more
information, visit www.arescapitalcorp.com. However, the contents of such
website are not and should not be deemed to be incorporated by reference
herein.

FORWARD-LOOKING STATEMENTS

Statements included herein or on the webcast/conference call may constitute
“forward-looking statements,” which relate to future events or Ares Capital’s
future performance or financial condition. These statements are not guarantees
of future performance, condition or results and involve a number of risks and
uncertainties. Actual results and conditions may differ materially from those
in the forward-looking statements as a result of a number of factors,
including those described from time to time in Ares Capital’s filings with the
Securities and Exchange Commission. Ares Capital Corporation undertakes no
duty to update any forward-looking statements made herein or on the
webcast/conference call.

AVAILABLE INFORMATION

Ares Capital Corporation’s filings with the Securities and Exchange
Commission, press releases, earnings releases and other financial information
are available on its website at http://www.arescapitalcorp.com. The
information on Ares Capital’s website is not and should not be deemed to be
incorporated by reference herein.

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except per share data)

                                  
                                       As of
                                       June 30, 2014    December 31, 2013
                                       (unaudited)
  ASSETS
  Total investments at fair
  value (amortized cost of             $  8,067,942      $    7,632,897
  $7,880,204 and $7,537,403,
  respectively)
  Cash and cash equivalents            223,154           149,629
  Interest receivable                  153,077           123,981
  Receivable for open trades           963               128,566
  Other assets                         115,083           106,431
  Total assets                         $  8,560,219      $    8,141,504
  LIABILITIES
  Debt                                 $  3,357,415      $    2,986,275
  Base management fees payable         30,731            29,270
  Income based fees payable            25,540            29,001
  Capital gains incentive fees         74,615            80,937
  payable
  Accounts payable and other           76,271            68,649
  liabilities
  Interest and facility fees           44,527            42,828
  payable
  Payable for open trades              17,476            100
  Total liabilities                    3,626,575         3,237,060
  STOCKHOLDERS’ EQUITY
  Common stock, par value $0.001
  per share, 500,000 common
  shares authorized, 298,583           299               298
  and 297,971 common shares
  issued and outstanding,
  respectively
  Capital in excess of par value       4,993,323         4,982,477
  Accumulated overdistributed          (45,928       )   (8,785            )
  net investment income
  Accumulated net realized loss
  on investments, foreign
  currency transactions,               (201,512      )   (165,040          )
  extinguishment of debt and
  other assets
  Net unrealized gain on
  investments and foreign              187,462           95,494
  currency transactions
  Total stockholders’ equity           4,933,644         4,904,444
  Total liabilities and                $  8,560,219      $    8,141,504
  stockholders’ equity
  NET ASSETS PER SHARE                 $  16.52          $    16.46
                                                                             

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)

                                                
                       For the three months ended      For the six months ended
                       June 30,                        June 30,
                       2014           2013            2014           2013
                       (unaudited)     (unaudited)     (unaudited)     (unaudited)
  INVESTMENT
  INCOME:
  Interest
  income from          $  176,150      $  157,969      $  349,674      $  302,146
  investments
  Capital
  structuring          21,732          24,149          42,630          30,140
  service fees
  Dividend             16,749          15,778          47,475          47,867
  income
  Management and       6,078           4,993           12,030          9,491
  other fees
  Other income         4,218           3,234           12,837          11,534
  Total
  investment           224,927         206,123         464,646         401,178
  income
                                                                                   
  EXPENSES:
  Interest and
  credit               53,151          40,261          105,644         79,608
  facility fees
  Base
  management           30,731          24,902          60,815          48,120
  fees
  Income based         25,540          25,390          53,858          49,226
  fees
  Capital gains        10,168          7,984           11,103          4,233
  incentive fees
  Administrative       2,813           2,606           6,556           5,198
  fees
  Other general
  and                  7,610           7,484           14,040          14,396
  administrative
  Total expenses       130,013         108,627         252,016         200,781
  NET INVESTMENT
  INCOME BEFORE        94,914          97,496          212,630         200,397
  INCOME TAXES
  Income tax
  expense,             2,923           3,919           8,303           7,723
  including
  excise tax
  NET INVESTMENT       91,991          93,577          204,327         192,674
  INCOME
  NET REALIZED
  AND UNREALIZED
  GAINS (LOSSES)
  ON INVESTMENTS
  AND FOREIGN
  CURRENCY
  TRANSACTIONS:
  Net realized         (48,517     )   8,648           (36,400     )   20,326
  gains (losses)
  Net unrealized       99,357          31,273          91,968          840
  gains
  Net realized
  and unrealized
  gains on
  investments          50,840          39,921          55,568          21,166
  and foreign
  currency
  transactions
  REALIZED
  LOSSES ON            —               —               (72         )   —
  EXTINGUISHMENT
  OF DEBT
  NET INCREASE
  IN
  STOCKHOLDERS’        $  142,831      $  133,498      $  259,823      $  213,840
  EQUITY
  RESULTING FROM
  OPERATIONS
  BASIC AND
  DILUTED              $  0.48         $  0.50         $  0.87         $  0.83
  EARNINGS PER
  COMMON SHARE
  WEIGHTED
  AVERAGE SHARES
  OF COMMON
  STOCK                298,270         266,174         298,122         257,464
  OUTSTANDING -
  BASIC AND
  DILUTED
                                                                                   

                                  SCHEDULE 1

 Reconciliations of basic and diluted Core EPS to basic and diluted GAAP EPS

Reconciliations of basic and diluted Core EPS to basic and diluted GAAP EPS,
the most directly comparable GAAP financial measure, for the three months
ended June30, 2014 and 2013 are provided below.

                                   
                                       For the three months ended June 30,
                                       2014                  2013
                                       (unaudited)            (unaudited)
  Basic and diluted Core EPS(1)        $      0.34            $    0.38
  Net realized and unrealized          0.17                   0.15
  gains
  Capital gains incentive fees
  attributed to net realized and       (0.03            )     (0.03        )
  unrealized gains and losses
  Income tax expense related to        —                      —
  realized gains and losses
  Basic and diluted GAAP EPS           $      0.48            $    0.50
                                                                             

(1) Basic and diluted Core EPS is a non-GAAP financial measure. Core EPS is
the net per share increase (decrease) in stockholders’ equity resulting from
operations less realized and unrealized gains and losses, any capital gains
incentive fees attributable to such net realized and unrealized gains and
losses and any income taxes related to such realized gains and losses. Basic
and diluted GAAP EPS is the most directly comparable GAAP financial measure.
Ares Capital believes that Core EPS provides useful information to investors
regarding financial performance because it is one method Ares Capital uses to
measure its financial condition and results of operations. The presentation of
this additional information is not meant to be considered in isolation or as a
substitute for financial results prepared in accordance with GAAP.

Contact:

Ares Capital Corporation
Carl G. Drake
Jana Markowicz
888-818-5298
 
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