Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTER ENDED JUNE 30, 2008

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER: 814-00237

 

GLADSTONE CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

 

MARYLAND

 

54-2040781

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

1521 WESTBRANCH DRIVE, SUITE 200

MCLEAN, VIRGINIA 22102

(Address of principal executive office)

 

(703) 287-5800

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12 b-2 of the Exchange Act.

Large accelerated filer o  Accelerated filer x  Non-accelerated filer o Smaller reporting company o.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x .

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  The number of shares of the issuer’s Common Stock, $0.001 par value, outstanding as of August 4, 2008 was 21,087,574.

 

 

 



Table of Contents

 

GLADSTONE CAPITAL CORPORATION

TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

 

 

Condensed Consolidated Statements of Assets and Liabilities as of June 30, 2008 and September 30, 2007

 

 

Condensed Consolidated Schedules of Investments as of June 30, 2008 and September 30, 2007

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2008 and 2007

 

 

Condensed Consolidated Statements of Changes in Net Assets for the nine months ended June 30, 2008 and 2007

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2008 and 2007

 

 

Financial Highlights for the three and nine months ended June 30, 2008 and 2007

 

 

Notes to Condensed Consolidated Financial Statements

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

Overview

 

 

Results of Operations

 

 

Liquidity and Capital Resources

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

 

 

 

 

Item 4.

Controls and Procedures

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

 

 

 

 

Item 1A.

Risk Factors

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

 

 

 

 

Item 5.

Other Information

 

 

 

 

Item 6.

Exhibits

 

 

 

 

SIGNATURES

 

 



Table of Contents

 

GLADSTONE CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

June 30,

 

September 30,

 

 

 

2008

 

2007

 

ASSETS

 

 

 

 

 

Non-Control/Non-Affiliate investments (Cost 6/30/08: $441,319; 9/30/07: $354,835)

 

$

411,069

 

$

348,921

 

Control investments (Cost 6/30/08: $3,881; 9/30/07: $924)

 

671

 

924

 

Total investments at fair value (Cost 6/30/08: $445,200; 9/30/07 $355,759)

 

411,740

 

349,845

 

Cash and cash equivalents

 

5,426

 

8,839

 

U.S. Treasury bill

 

 

2,484

 

Interest receivable – investments in debt securities

 

3,301

 

2,426

 

Interest receivable – employees (Refer to Note 4)

 

91

 

21

 

Due from custodian

 

6,637

 

3,230

 

Deferred financing fees

 

2,383

 

186

 

Prepaid assets

 

202

 

337

 

Other assets

 

462

 

361

 

TOTAL ASSETS

 

$

430,242

 

$

367,729

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Accounts payable

 

$

8

 

$

6

 

Interest payable

 

522

 

588

 

Fee due to Administrator (Refer to Note 4)

 

285

 

237

 

Fees due to Adviser (Refer to Note 4)

 

468

 

708

 

Borrowings under lines of credit

 

133,090

 

144,440

 

Accrued expenses and deferred liabilities

 

905

 

791

 

Funds held in escrow

 

290

 

 

TOTAL LIABILITIES

 

135,568

 

146,770

 

NET ASSETS

 

$

294,674

 

$

220,959

 

 

 

 

 

 

 

ANALYSIS OF NET ASSETS

 

 

 

 

 

Common stock, $0.001 par value, 50,000,000 shares authorized and 21,087,574 and 14,762,574 shares issued and outstanding at June 30, 2008 and September 30, 2007, respectively

 

$

21

 

$

15

 

Capital in excess of par value

 

341,281

 

235,907

 

Notes receivable – employees (Refer to Note 4)

 

(9,179

)

(9,230

)

Net unrealized depreciation on investments

 

(33,460

)

(5,915

)

Unrealized depreciation on derivative

 

(304

)

(292

)

(Distributions in excess of) accumulated undistributed net investment income

 

(3,685

)

474

 

TOTAL NET ASSETS

 

$

294,674

 

$

220,959

 

NET ASSETS PER SHARE

 

$

13.97

 

$

14.97

 

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

 

2



Table of Contents

 

GLADSTONE CAPITAL CORPORATION

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF JUNE 30, 2008

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

NON-CONTROL/NON-AFFILIATE INVESTMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access Television Network, Inc. (2)

 

Service-cable airtime (infomercials)

 

Senior Term Debt (6)
(10.5% Due 3/2009)

 

$

2,078

 

$

1,960

 

 

 

 

 

 

 

 

 

 

 

ACE Expediters, Inc

 

Service - over-the-ground logistics

 

Line of Credit, $850 available (6)
(6.0% Due 1/2011)

 

200

 

197

 

 

 

 

 

Senior Term Debt (6)

 

12,544

 

12,356

 

 

 

 

 

(9.5% Due 1/2012)

 

 

 

 

 

 

 

 

 

Warrants (8)

 

200

 

157

 

 

 

 

 

 

 

 

 

 

 

ActivStyle Acquisition Co. (2)

 

Service-medical products distribution

 

Line of Credit, $1,500 available (6)
(6.7%, Due 7/2009)

 

1,100

 

1,078

 

 

 

 

 

Senior Term Debt (6)

 

4,852

 

4,754

 

 

 

 

 

(8.5%, Due 9/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,435

 

4,302

 

 

 

 

 

(10.5%, Due 9/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allison Publications, LLC (2)

 

Service-publisher of consumer oriented magazines

 

Line of Credit, $4,000 available
(9.0%, Due 9/2010)

 

 

 

 

 

 

 

Senior Term Debt (6)

 

11,070

 

10,615

 

 

 

 

 

(9.0%, Due 9/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anitox Acquisition Company (2)

 

Manufacturing-preservatives for animal feed

 

Line of Credit, $3,000 available (6)
(6.7%, Due 1/2010)

 

2,000

 

1,940

 

 

 

 

 

Senior Term Debt (6)

 

2,550

 

2,473

 

 

 

 

 

(8.5%, Due 1/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

2,750

 

2,626

 

 

 

 

 

(10.5%, Due 1/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Badanco Acquisition Corp.

 

Service-luggage design and distribution

 

Senior Subordinated Term Debt (6)
(11.5%, Due 7/2012)

 

9,506

 

9,150

 

 

 

 

 

 

 

 

 

 

 

BAS Broadcasting

 

Service-radio station operator

 

Senior Term Debt (5)
(11.5%, Due 7/2013)

 

7,300

 

7,300

 

 

 

 

 

Senior Term Debt (3) (5)

 

1,000

 

1,000

 

 

 

 

 

(12.0%, Due 7/2009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bresnan 

 

Service-telecommunications

 

Senior Term Debt (7)

 

3,001

 

2,865

 

Communications,

 

 

 

(5.0%, Due 9/2013)

 

 

 

 

 

LLC

 

 

 

Senior Subordinated Term Debt (7)

 

1,509

 

1,365

 

 

 

 

 

(7.4%, Due 3/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCS, LLC

 

Service-cable tv franchise owner

 

Senior Term Debt (6)
(9.0%, Due 8/2008)

 

3,427

 

3,358

 

 

 

 

 

 

 

 

 

 

 

CHG Companies, Inc. (2)

 

Service-healthcare staffing

 

Letter of Credit (7)
(5.1%, Due 12/2012)

 

400

 

380

 

 

 

 

 

Senior Term Debt (7)

 

1,580

 

1,501

 

 

 

 

 

(4.9%, Due 12/2012)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

500

 

445

 

 

 

 

 

(8.7%, Due 12/2012)

 

 

 

 

 

 

3



Table of Contents

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

Chinese Yellow Pages Company

 

Service-publisher of Chinese language directories

 

Line of Credit, $950 available (6)
(9.0%, Due 9/2010)

 

$

700

 

$

667

 

 

 

 

 

Senior Term Debt (6)

 

748

 

703

 

 

 

 

 

(9.0%, Due 9/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clinton Holdings,

 

Distribution-aluminum sheets

 

Senior Subordinated Term Debt (6)

 

15,500

 

15,422

 

LLC (2)

 

and stainless steel

 

(12.0%, Due 1/2013)

 

 

 

 

 

 

 

 

 

Common Stock Warrants (8)

 

109

 

 

 

 

 

 

 

 

 

 

 

 

CMI Acquisition, LLC

 

Service-recycling

 

Senior Subordinated Term Debt (6)

 

6,435

 

6,121

 

(2)

 

 

 

(10.2%, Due 11/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Media Corporation

 

Service-publisher of free weekly newspapers

 

Senior Term Debt (6)
(7.0%, Due 8/2012)

 

2,358

 

2,280

 

 

 

 

 

 

 

 

 

 

 

Country Road

 

Service-telecommunications

 

Senior Subordinated Term Debt (7)

 

5,971

 

5,820

 

Communications LLC

 

 

 

(10.2%, Due 7/2013)

 

 

 

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defiance Acquisition

 

Manufacturing-trucking parts

 

Senior Term Debt (3) (6)

 

6,245

 

5,496

 

Corporation

 

 

 

(11.0%, Due 4/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doe & Ingalls

 

Distributor-specialty chemicals

 

Senior Term Debt (6)

 

3,300

 

3,234

 

Management LLC (2)

 

 

 

(6.0%, Due 11/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,421

 

4,311

 

 

 

 

 

(7.0%, Due 11/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emdeon Business Services, Inc.

 

Service-healthcare technology solutions

 

Senior Term Debt (7)
(4.8%, Due 11/2013)

 

2,365

 

2,239

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

2,011

 

1,860

 

 

 

 

 

(7.8%, Due 5/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Express Courier International, Inc.

 

Service-ground delivery and logistics

 

Line of Credit, $1,200 available (6)
(6.7%, Due 6/2009)

 

900

 

884

 

 

 

 

 

Senior Term Debt (6)

 

3,408

 

3,348

 

 

 

 

 

(9.3%, Due 6/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,644

 

4,539

 

 

 

 

 

(11.3%, Due 6/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finn Corporation

 

Manufacturing-landscape

 

Common Stock Warrants (8)

 

37

 

3,197

 

 

 

equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GFRC Holdings LLC

 

Manufacturing-glass-fiber

 

Line of Credit, $3,000 available (6)

 

 

 

 

 

reinforced concrete

 

(6.7%, Due 12/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

7,362

 

7,252

 

 

 

 

 

(9.8%, Due 12/2012)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (3) (6)

 

6,716

 

6,565

 

 

 

 

 

(12.3%, Due 12/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Materials Technologies, Inc.

 

Manufacturing-steel wool products and metal fibers

 

Senior Term Debt (3) (6)
(13.0%, Due 11/2009)

 

4,830

 

4,492

 

 

 

 

 

 

 

 

 

 

 

GTM Holdings, Inc.

 

Manufacturing-socks

 

Senior Term Debt (7)

 

493

 

420

 

(2)

 

 

 

(5.4%, Due 10/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

500

 

400

 

 

 

 

 

(8.7%, Due 4/2014)

 

 

 

 

 

 

4



Table of Contents

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

Greatwide Logistics Services, Inc.

 

Service - logistics and

 

Senior Term Debt (7)

 

$

3,950

 

$

3,160

 

 

transportation

 

(6.3%, Due 12/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

4,000

 

2,200

 

 

 

 

 

(9.3%, Due 6/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GS Maritime Intermediate Holdings LLC

Service-cargo transport

 

Senior Subordinated Term Debt (7)

 

1,000

 

990

 

 

 

(10.0%, Due 12/2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harrington Holdings, Inc. (2)

 

Service - healthcare products

 

Senior Term Debt (7)

 

2,469

 

2,271

 

 

distribution

 

(4.7%, Due 1/2014)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

5,000

 

4,250

 

 

 

 

 

(8.5%, Due 1/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heartland Communications Group, LLC (2)

 

Service-radio station operator

 

Line of Credit, $500 available (6)

 

105

 

84

 

 

 

(10.0%, Due 12/2008)

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

4,606

 

3,651

 

 

 

 

 

(10.0%, Due 5/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interfilm Holdings, Inc.

 

Service-slitter and distributor of

 

Senior Term Debt (6)

 

5,000

 

4,856

 

 

plastic films

 

(10.5%, Due 10/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Junior Golf Training Acquisition Company

 

Service-golf training

 

Line of Credit, $1,500 available (6)

 

1,400

 

1,355

 

 

 

(9.0%, Due 5/2010)

 

 

 

 

 

 

 

Senior Term Debt (6)

 

2,650

 

2,564

 

 

 

 

 

(6.7%, Due 5/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

2,500

 

2,400

 

 

 

 

 

(10.5%, Due 5/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It’s Just Lunch International, LLC

 

Service-dating service

 

Line of Credit, $750 available (6)

 

550

 

303

 

 

 

(6.5%, Due 6/2009)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

3,300

 

1,815

 

 

 

 

 

(6.7%, Due 6/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6) (9)

 

500

 

275

 

 

 

 

 

(10.5%, Due 6/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John Henry Holdings, Inc. (2)

 

Manufacturing-packaging

 

Senior Subordinated Term Debt (7)

 

8,000

 

7,760

 

 

products

 

(11.6%, Due 6/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kinetek Acquisition Corp.

 

Manufacturing-custom

 

Senior Term Debt (7)

 

1,482

 

1,359

 

 

 

engineered motors & controls

 

(5.3%, Due 11/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

1,508

 

1,275

 

 

 

 

 

(8.0%, Due 5/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KMBQ Corporation

 

Service-AM/FM radio

 

Line of Credit, $200 available (6)

 

153

 

143

 

 

 

broadcaster

 

(10.0%, Due 3/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

1,794

 

1,663

 

 

 

 

 

(10.0%, Due 3/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legend Communications of Wyoming LLC

 

Service-operator of radio stations

 

Line of Credit, $500 available (5)

 

200

 

200

 

 

 

(11.0%, Due 6/2011)

 

 

 

 

 

 

 

 

Senior Term Debt (5)

 

9,250

 

9,250

 

 

 

 

 

(11.0%, Due 6/2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lindmark Outdoor

 

Service-advertising

 

Senior Subordinated Term Debt (6)

 

10,000

 

9,350

 

Advertising LLC

 

 

 

(11.0%, Due 10/2012)

 

 

 

 

 

 

5



Table of Contents

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

LocalTel, Inc.

 

Service-yellow pages

 

Line of Credit, $3,000 available

 

$

1,170

 

$

234

 

 

 

publishing

 

(6) (10)

 

 

 

 

 

 

 

 

 

(non-accrual, Due 6/2009)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6) (10)

 

2,688

 

538

 

 

 

 

 

(non-accrual, Due 6/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6) (10)

 

2,750

 

550

 

 

 

 

 

(non-accrual, Due 6/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meteor Holding

 

Manufacturing-bar code

 

Senior Term Debt (7)

 

2,330

 

2,330

 

Corporation (2)

 

scanning and data capture

 

(7.0%, Due 12/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

1,500

 

1,500

 

 

 

 

 

(10.3%, Due 12/2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-Ag Media LLC

 

Service-dairy magazine

 

Senior Term Debt (6)

 

2,203

 

2,121

 

(2)

 

publisher/ information database

 

(9.0%, Due 12/2009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Newhall

 

Service-distributor of personal

 

Line of Credit, $4,000 available (6)

 

1,100

 

1,064

 

Holdings, Inc. (2)

 

care products and supplements

 

(6.0%, Due 5/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

4,320

 

4,190

 

 

 

 

 

(8.3%, Due 5/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,500

 

4,343

 

 

 

 

 

(11.3%, Due 5/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern

 

Manufacturing-veneer and

 

Senior Subordinated Term Debt (6)

 

7,000

 

6,440

 

Contours, Inc. (2)

 

laminate components

 

(10.0%, Due 5/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pinnacle Treatment

 

Service-Addiction treatment

 

Line of Credit, $500 available (6)

 

 

 

Centers, Inc.

 

centers

 

(6.7%, Due 12/2009)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

3,750

 

3,600

 

 

 

 

 

(8.5%, Due 12/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

7,500

 

7,163

 

 

 

 

 

(10.5%, Due 12/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Precision Acquisition

 

Manufacturing-consumable

 

Equipment Note, $1,500 available (6)

 

1,000

 

999

 

Group

 

components for the aluminum

 

(8.5%, Due 10/2011)

 

 

 

 

 

Holdings, Inc. (2)

 

industry

 

Senior Term Debt (6)

 

4,875

 

4,869

 

 

 

 

 

(8.5%, Due 10/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,179

 

4,174

 

 

 

 

 

(11.5%, Due 10/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFITSystems

 

Service-design and develop

 

Line of Credit, $1,250 available (6)

 

 

 

Acquisition Co. (2)

 

ERP software

 

(6.7%, Due 7/2009)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

2,350

 

2,233

 

 

 

 

 

(8.5%, Due 7/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

2,900

 

2,733

 

 

 

 

 

(10.5%, Due 7/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Puerto Rico Cable

 

Service-telecommunications

 

Senior Subordinated Term Debt (7)

 

7,192

 

5,713

 

Acquisition

 

 

 

(10.3%, Due 1/2012)

 

 

 

 

 

Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RCS Management

 

Service-healthcare supplies

 

Senior Term Debt (3) (6)

 

2,938

 

2,805

 

Holding Co.

 

 

 

(8.5%, Due 1/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (4) (6)

 

3,060

 

2,869

 

 

 

 

 

(10.5%, Due 1/2011)

 

 

 

 

 

 

6



Table of Contents

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

RedPrairie

 

Service-design and develop

 

Senior Term Debt (7)

 

$

4,412

 

$

4,148

 

Holding, Inc. (2)

 

supply chain software

 

(5.7%, Due 7/2012)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

3,000

 

2,580

 

 

 

 

 

(9.3%, Due 1/2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reliable

 

Manufacturing-pharmaceutical

 

Line of Credit, $5,000 available (6)

 

1,200

 

1,176

 

Biopharmaceutical

 

and biochemical intermediates

 

(6.0%, Due 10/2010)

 

 

 

 

 

Holdings, Inc.

 

 

 

Mortgage Note (6)

 

7,422

 

7,311

 

 

 

 

 

(9.5%, Due 10/2014)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

1,800

 

1,773

 

 

 

 

 

(9.0%, Due 10/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

11,963

 

11,694

 

 

 

 

 

(11.0%, Due 10/2012)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (6)

 

6,000

 

5,663

 

 

 

 

 

(12.0%, Due 10/2013)

 

 

 

 

 

 

 

 

 

Common Stock Warrants (8)

 

209

 

 

 

 

 

 

 

 

 

 

 

 

RiskMetrics Group

 

Service - develop risk and

 

Senior Term Debt (7)

 

1,937

 

1,874

 

Holdings,

 

wealth management solutions

 

(4.8%, Due 1/2014)

 

 

 

 

 

LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Saunders &

 

Manufacturing-equipment

 

Line of Credit, $2,500 available (5)

 

 

 

Associates

 

provider for frequency control

 

(7.0%, Due 5/2009)

 

 

 

 

 

 

 

devices

 

Senior Term Debt (5)

 

11,000

 

10,973

 

 

 

 

 

(9.8%, Due 5/2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCI Cable, Inc.

 

Service-cable, internet, voice

 

Senior Term Debt (6)

 

2,717

 

1,897

 

 

 

provider

 

(11.0%, Due 10/2008)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunburst Media -

 

Service-radio station operator

 

Senior Term Debt (6)

 

7,862

 

7,020

 

Louisiana, LLC

 

 

 

(9.5%, Due 6/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunshine Media

 

Service-publisher regional B2B

 

Line of Credit, $3,000 available (6)

 

700

 

661

 

Holdings

 

trade magazines

 

(9.0%, Due 5/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

17,000

 

16,108

 

 

 

 

 

(9.0%, Due 5/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

10,000

 

9,300

 

 

 

 

 

(11.5%, Due 5/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thibaut Acquisition

 

Service-design and disbribute

 

Line of Credit, $2,000 available (6)

 

2,000

 

1,920

 

Co.

 

wall covering

 

(7.0%, Due 1/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

2,188

 

2,100

 

 

 

 

 

(7.0%, Due 1/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

3,000

 

2,820

 

 

 

 

 

(10.5%, Due 1/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Viapack, Inc. (2)

 

Manufacturing-polyethylene

 

Senior Real Estate Term Debt

 

875

 

840

 

 

 

film

 

(7.0%, Due 3/2011)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,117

 

3,922

 

 

 

 

 

(11.3%, Due 3/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Visual Edge

 

Service-office equipment

 

Senior Subordinated Term Debt (6)

 

5,000

 

3,000

 

Technology, Inc. (2)

 

distribution

 

(11.5%, Due 8/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wesco Holdings, Inc.

 

Service-aerospace parts and

 

Senior Term Debt (7)

 

2,452

 

2,346

 

(2)

 

distribution

 

(5.1%, Due 9/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

2,268

 

2,199

 

 

 

 

 

(8.6%, Due 3/2014)

 

 

 

 

 

 

7



Table of Contents

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

West Coast Yellow

 

Service-directory publisher

 

Senior Term Debt (6) (10)

 

$

1,555

 

$

616

 

Pages, Inc.

 

 

 

(non-accrual, Due 8/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westlake

 

Retail-hardware and variety

 

Senior Subordinated Term Debt (6)

 

15,000

 

14,325

 

Hardware, Inc. (2)

 

 

 

(9.0%, Due 1/2011)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (6)

 

10,000

 

9,400

 

 

 

 

 

(10.3%, Due 1/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Winchester

 

Manufacturing-high bandwidth

 

Senior Term Debt (6)

 

1,980

 

1,918

 

Electronics

 

connectors and cables

 

(6.2%, Due 5/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (6)

 

9,975

 

9,576

 

 

 

 

 

(12.0%, Due 4/2013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WP Evenflo Group

 

Manufacturing-infant and

 

Senior Term Debt (7)

 

1,910

 

1,595

 

Holdings Inc. (2)

 

juvenile products

 

(5.1%, Due 2/2013)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (7)

 

2,000

 

1,600

 

 

 

 

 

(8.6%, Due 2/2014)

 

 

 

 

 

Total Non-Control/Non-Affiliate Investments

 

 

 

$

441,319

 

$

411,069

 

 

 

 

 

 

 

 

 

 

 

CONTROL INVESTMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BERTL, Inc.

 

Service-web-based evaluator

 

Line of Credit, $700 available (11)

 

$

726

 

$

 

 

 

of digital imaging products

 

(8.7%, Due 10/2009)

 

 

 

 

 

 

 

 

 

Common Stock (8)

 

424

 

 

 

 

 

 

 

 

 

 

 

 

U.S. HealthCare, Inc.

 

Service-magazine publisher/

 

Line of credit, $200 available (10)

 

30

 

30

 

 

 

operator

 

(non-accrual, Due 3/2010)

 

 

 

 

 

 

 

 

 

Line of credit, $450 available (10)

 

231

 

231

 

 

 

 

 

(non-accrual, Due 3/2010)

 

 

 

 

 

 

 

 

 

Common Stock (8)

 

2,470

 

410

 

 

 

 

 

 

 

 

 

 

 

Total Control Investments

 

 

 

$

3,881

 

$

671

 

 

 

 

 

 

 

 

 

 

 

Total Investments

 

 

 

 

 

$

445,200

 

$

411,740

 

 


(1)  Percentage represents interest rates in effect at June 30, 2008 and due date represents the contractual maturity date.

(2)  Certain of the listed securities are issued by affiliate(s) of the indicated portfolio company.

(3)  Last Out Tranche of senior debt, meaning if the company is liquidated then the holder of the Last Out Tranche is paid after the senior debt.

(4)  Last Out Tranche of senior debt, meaning if the company is liquidated then the holder of the Last Out Tranche is paid after the senior debt, however, the debt is also junior to another Last Out Tranche.

(5)  Investment valued at cost due to recent acquisition.

(6)  Fair value was based on opinions of value submitted by Standard & Poor’s Securities Evaluations, Inc.

(7)  Marketable securities, such as syndicated loans, are valued based on the indicative bid price, on or near June 30, 2008, offered by the respective originating syndication agent’s trading desk, or secondary desk.

(8)  Security is non-income producing.

(9) It’s Just Lunch may borrow an additional $1,750 of the senior term debt facility, subject to certain conditions including Gladstone Capital’s approval. Borrowings of $500 were outstanding at June 30, 2008.

(10) LocalTel, West Coast Yellow Pages and U.S. Healthcare are currently past due on interest payments and are on non-accrual.

(11) BERTL line of credit was overdrawn by $26 as of June 30, 2008.  The Company is currently restructuring the line of credit.  BERTL interest is currently being capitalized as Paid in Kind (“PIK”) interest.  Please refer to Note 2 “Summary of Significant Accounting Policies.”

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

 

8



Table of Contents

 

GLADSTONE CAPITAL CORPORATION

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF SEPTEMBER 30, 2007

(DOLLAR AMOUNTS IN THOUSANDS)

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

NON-CONTROL/NON-AFFILIATE INVESTMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access Television

 

Service-cable airtime

 

Line of Credit, $500 available

 

$

 

$

 

Network, Inc. (2)

 

(infomercials)

 

(11.8% Due 3/2009)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

2,616

 

2,558

 

 

 

 

 

(11.8% Due 3/2009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ActivStyle Acquisition

 

Service-medical products

 

Line of Credit, $1,500 available (6)

 

600

 

597

 

Co. (2)

 

distribution

 

(10.0%, Due 7/2009)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

5,245

 

5,219

 

 

 

 

 

(10.0%, Due 9/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

4,435

 

4,407

 

 

 

 

 

(12.6%, Due 9/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allison Publications,

 

Service-publisher of consumer

 

Senior Term Debt (6)

 

7,884

 

7,780

 

LLC (2)

 

oriented magazines

 

(9.8%, Due 12/2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anitox Acquisition

 

Manufacturing-preservatives for

 

Senior Real Estate Term Debt

 

3,110

 

3,060

 

Company (2)

 

animal feed

 

(8.8%, Due 1/2012)

 

 

 

 

 

 

 

 

 

Line of Credit, $3,000 available

 

 

 

 

 

 

 

(10.0%, Due 1/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

2,750

 

2,736

 

 

 

 

 

(10.0%, Due 1/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (3) (6)

 

2,750

 

2,736

 

 

 

 

 

(12.3%, Due 1/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Badanco Acquisition

 

Service-luggage design and

 

Senior Subordinated Term Debt (6)

 

9,653

 

9,628

 

Corp.

 

distribution

 

(12.4%, Due 7/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bresnan

 

Service-telecommunications

 

Senior Term Debt (7)

 

3,002

 

2,910

 

Communications,

 

 

 

(7.4%, Due 9/2013)

 

 

 

 

 

LLC

 

 

 

Senior Subordinated Term Debt (7)

 

1,510

 

1,485

 

 

 

 

 

(9.9%, Due 3/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCS, LLC

 

Service-cable tv franchise owner

 

Senior Term Debt (6)

 

3,433

 

3,416

 

 

 

 

 

(11.8%, Due 10/2007)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHG Companies, Inc.

 

Service-healthcare staffing

 

Letter of Credit (6) (7)

 

400

 

385

 

(2)

 

 

 

(7.1%, Due 12/2012)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6) (7)

 

1,588

 

1,528

 

 

 

 

 

(7.9%, Due 12/2012)

 

 

 

 

 

 

 

 

 

Senior Subordinated Term Debt (6) (7)

 

500

 

480

 

 

 

 

 

(11.9%, Due 12/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chinese Yellow

 

Service-publisher of Chinese

 

Line of Credit, $950 available (6)

 

230

 

229

 

Pages Company

 

language directories

 

(11.8%, Due 9/2010)

 

 

 

 

 

 

 

 

 

Senior Term Debt (6)

 

1,071

 

1,051

 

 

 

 

 

(11.8%, Due 9/2010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clinton Holdings,

 

Distribution-aluminum sheets

 

Senior Subordinated Term Debt

 

15,500

 

15,500

 

LLC (2)

 

and stainless steel

 

(13.0%, Due 1/2013)

 

 

 

 

 

 

 

 

 

Common Stock Warrants (8)

 

109

 

223

 

 

9



Table of Contents

 

Company

 

Industry

 

Investment (1)

 

Cost

 

Fair Value

 

CMI Acquisition, LLC

 

Service-recycling

 

Senior Subordinated Term Debt (6)

 

$

6,500

 

$

6,451

 

(2)

 

 

 

(12.4%, Due 11/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Media

 

Service-publisher of free weekly

 

Senior Term Debt (6)

 

2,511

 

2,482

 

Corporation

 

newspapers

 

(9.8%, Due 8/2012)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Country Road

 

Service-telecommunications

 

Senior Subordinated Term Debt (6) (7)

 

5,967

 

5,880

 

Communications LLC

 

 

 

(13.1%, Due 7/2013)

 

 

 

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defiance Acquisition

 

Manufacturing-trucking parts

 

Senior Term Debt (3) (6)

 

6,325

 

6,246

 

Corporation

 

 

 

(13.8%, Due 4/2010)