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 MARCH 31, 2012
¨ | 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
(Registrants 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 ¨.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
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 | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x .
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. The number of shares of the issuers common stock, $0.001 par value per share, outstanding as of April 30, 2012 was 21,000,160.
GLADSTONE CAPITAL CORPORATION
PART I. | FINANCIAL INFORMATION |
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Item 1. | Financial Statements (Unaudited) |
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3 | ||||||
4 | ||||||
5 | ||||||
Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2012 and 2011 |
6 | |||||
Condensed Consolidated Schedules of Investments as of March 31, 2012 and September 30, 2011 |
7 | |||||
15 | ||||||
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
34 | ||||
34 | ||||||
37 | ||||||
46 | ||||||
Item 3. | 56 | |||||
Item 4. | 57 | |||||
PART II. | ||||||
Item 1. | 57 | |||||
Item 1A. | 57 | |||||
Item 2. | 57 | |||||
Item 3. | 58 | |||||
Item 4. | 58 | |||||
Item 5. | 58 | |||||
Item 6. | 58 | |||||
59 |
2
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
March 31, | September 30, | |||||||
2012 | 2011 | |||||||
ASSETS |
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Investments at fair value |
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Non-Control/Non-Affiliate investments (Cost of $273,931 and $288,266, respectively) |
$ | 246,235 | $ | 257,302 | ||||
Control investments (Cost of $99,029 and $94,549, respectively) |
41,932 | 45,645 | ||||||
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Total investments at fair value (Cost of $372,960 and $382,815, respectively) |
288,167 | 302,947 | ||||||
Cash |
7,693 | 6,732 | ||||||
Restricted cash |
1,225 | | ||||||
Interest receivable investments in debt securities |
3,055 | 3,066 | ||||||
Interest receivable employees(A) |
62 | | ||||||
Due from custodian |
6,530 | 2,547 | ||||||
Deferred financing fees |
3,476 | 650 | ||||||
Other assets |
1,103 | 1,682 | ||||||
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TOTAL ASSETS |
$ | 311,311 | $ | 317,624 | ||||
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LIABILITIES |
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Borrowings at fair value (Cost of $65,800 and $99,400, respectively) |
$ | 65,800 | $ | 100,012 | ||||
Mandatorily redeemable preferred stock, $0.001 par value per share, $25 liquidation preference per share; 4,000,000 and no shares authorized; 1,539,882 and no shares issued and outstanding at March 31, 2012 and September 30, 2011, respectively |
38,497 | | ||||||
Accounts payable and accrued expenses |
495 | 513 | ||||||
Interest payable |
226 | 289 | ||||||
Fees due to Adviser(A) |
2,063 | 1,760 | ||||||
Fee due to Administrator(A) |
211 | 194 | ||||||
Other liabilities |
2,017 | 1,135 | ||||||
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TOTAL LIABILITIES |
$ | 109,309 | $ | 103,903 | ||||
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Commitments and contingencies(B) |
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NET ASSETS |
$ | 202,002 | $ | 213,721 | ||||
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ANALYSIS OF NET ASSETS |
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Common stock, $0.001 par value per share, 46,000,000 and 50,000,000 shares authorized; 21,000,160 and 21,039,242 shares issued and outstanding at March 31, 2012 and September 30, 2011, respectively |
$ | 21 | $ | 21 | ||||
Capital in excess of par value |
326,578 | 326,913 | ||||||
Notes receivable from employees(A) |
(3,522 | ) | (3,858 | ) | ||||
Cumulative net unrealized depreciation of investments |
(84,793 | ) | (79,867 | ) | ||||
Cumulative net unrealized appreciation of borrowings |
| (612 | ) | |||||
Net investment income in excess of distributions |
108 | 108 | ||||||
Accumulated net realized losses |
(36,390 | ) | (28,984 | ) | ||||
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TOTAL NET ASSETS |
$ | 202,002 | $ | 213,721 | ||||
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NET ASSET VALUE PER COMMON SHARE AT END OF PERIOD |
$ | 9.62 | $ | 10.16 | ||||
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(A) | Refer to Note 4Related Party Transactions for additional information. |
(B) | Refer to Note 10Commitments and Contingencies for additional information. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
INVESTMENT INCOME |
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Interest income |
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Non-Control/Non-Affiliate investments |
$ | 7,840 | $ | 5,754 | $ | 15,729 | $ | 12,680 | ||||||||
Control investments |
1,051 | 1,414 | 2,410 | 2,211 | ||||||||||||
Cash |
| | 6 | | ||||||||||||
Notes receivable from employees(A) |
63 | 122 | 130 | 244 | ||||||||||||
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Total interest income |
8,954 | 7,290 | 18,275 | 15,135 | ||||||||||||
Other income |
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Non-Control/Non-Affiliate investments |
2,042 | 483 | 2,042 | 645 | ||||||||||||
Control investments |
| 625 | | 625 | ||||||||||||
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Total other income |
2,042 | 1,108 | 2,042 | 1,270 | ||||||||||||
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Total investment income |
10,996 | 8,398 | 20,317 | 16,405 | ||||||||||||
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EXPENSES |
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Base management fee(A) |
1,538 | 1,365 | 3,094 | 2,712 | ||||||||||||
Incentive fee(A) |
1,304 | 1,102 | 2,339 | 2,261 | ||||||||||||
Administration fee(A) |
209 | 175 | 404 | 361 | ||||||||||||
Interest expense on borrowings |
999 | 478 | 2,138 | 358 | ||||||||||||
Dividend expense on mandatorily redeemable preferred stock |
686 | | 1,120 | | ||||||||||||
Amortization of deferred financing fees |
277 | 368 | 734 | 664 | ||||||||||||
Professional fees |
362 | 201 | 655 | 534 | ||||||||||||
Other general and administrative expenses |
528 | 383 | 773 | 603 | ||||||||||||
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Expenses before credits from Adviser |
5,903 | 4,072 | 11,257 | 7,493 | ||||||||||||
Credits to fees from Adviser(A) |
(123 | ) | (102 | ) | (574 | ) | (154 | ) | ||||||||
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Total expenses net of credits |
5,780 | 3,970 | 10,683 | 7,339 | ||||||||||||
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NET INVESTMENT INCOME |
5,216 | 4,428 | 9,634 | 9,066 | ||||||||||||
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REALIZED AND UNREALIZED GAIN (LOSS) |
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Net realized gain (loss): |
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Non-Control/Non-Affiliate investments |
37 | 161 | (8,212 | ) | 161 | |||||||||||
Control investments |
| (156 | ) | | (156 | ) | ||||||||||
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Total net realized gain (loss) |
37 | 5 | (8,212 | ) | 5 | |||||||||||
Net unrealized (depreciation) appreciation: |
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Non-Control/Non-Affiliate investments |
(3,351 | ) | (3,020 | ) | 3,267 | (8,062 | ) | |||||||||
Control investments |
(3,818 | ) | (10,049 | ) | (8,193 | ) | (7,952 | ) | ||||||||
Borrowings |
313 | 255 | 612 | 693 | ||||||||||||
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Net unrealized depreciation |
(6,856 | ) | (12,814 | ) | (4,314 | ) | (15,321 | ) | ||||||||
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Net realized and unrealized loss |
(6,819 | ) | (12,809 | ) | (12,526 | ) | (15,316 | ) | ||||||||
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ | (1,603 | ) | $ | (8,381 | ) | $ | (2,892 | ) | $ | (6,250 | ) | ||||
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: |
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Basic and Diluted |
$ | (0.08 | ) | $ | (0.40 | ) | $ | (0.14 | ) | $ | (0.30 | ) | ||||
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WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: |
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Basic and Diluted |
21,005,402 | 21,039,242 | 21,022,087 | 21,039,242 |
(A) | Refer to Note 4Related Party Transactions for additional information. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
Six Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
Operations: |
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Net investment income |
$ | 9,634 | $ | 9,066 | ||||
Net realized (loss) gain on investments |
(8,212 | ) | 5 | |||||
Net unrealized depreciation of investments |
(4,926 | ) | (16,014 | ) | ||||
Net unrealized depreciation of borrowings |
612 | 693 | ||||||
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Net decrease in net assets resulting from operations |
(2,892 | ) | (6,250 | ) | ||||
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Distributions: |
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Distributions to common stockholders |
(8,830 | ) | (8,836 | ) | ||||
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Capital transactions: |
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Stock redemption for repayment of principal on employee notes(A) |
(332 | ) | | |||||
Repayment of principal on employee notes(A) |
335 | 1,055 | ||||||
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Net increase in net assets from capital transactions |
3 | 1,055 | ||||||
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Total decrease in net assets |
(11,719 | ) | (14,031 | ) | ||||
Net assets at beginning of period |
213,721 | 249,246 | ||||||
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Net assets at end of period |
$ | 202,002 | $ | 235,215 | ||||
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(A) | Refer to Note 4Related Party Transactions for additional information. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
Six Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net decrease in net assets resulting from operations |
$ | (2,892 | ) | $ | (6,250 | ) | ||
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by (used in) operating activities: |
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Purchase of investments |
(29,609 | ) | (52,424 | ) | ||||
Principal repayments on investments |
24,760 | 35,227 | ||||||
Proceeds from sale of investments |
6,459 | 777 | ||||||
Increase in investment balance due to paid-in-kind interest |
| (8 | ) | |||||
Increase in investment balance due to transferred interest |
| (204 | ) | |||||
Net change in premiums, discounts and amortization |
(119 | ) | 776 | |||||
Net realized loss (gain) on investments |
8,363 | (163 | ) | |||||
Net unrealized depreciation of investments |
4,926 | 16,014 | ||||||
Net unrealized depreciation of borrowings |
(612 | ) | (693 | ) | ||||
Increase in restricted cash |
(1,225 | ) | | |||||
Amortization of deferred financing fees |
734 | 664 | ||||||
(Increase) decrease in interest receivable |
(51 | ) | 251 | |||||
Increase in due from custodian |
(3,983 | ) | (1,024 | ) | ||||
Decrease (increase) in other assets |
579 | (9 | ) | |||||
Decrease in accounts payable and accrued expenses |
(18 | ) | (296 | ) | ||||
Decrease in interest payable |
(63 | ) | (573 | ) | ||||
Increase in fees due to Adviser(A) |
303 | 1,118 | ||||||
Increase (decrease) in fee due to Administrator(A) |
17 | (92 | ) | |||||
Increase in other liabilities |
882 | 186 | ||||||
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Net cash provided by (used in) operating activities |
8,451 | (6,723 | ) | |||||
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from borrowings |
32,900 | 50,800 | ||||||
Repayments on borrowings |
(66,500 | ) | (34,400 | ) | ||||
Proceeds from issuance of mandatorily redeemable preferred stock |
38,497 | | ||||||
Deferred financing fees |
(3,560 | ) | (759 | ) | ||||
Distributions paid to common stockholders |
(8,830 | ) | (8,836 | ) | ||||
Receipt of principal on employee notes |
3 | 1,055 | ||||||
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Net cash (used in) provided by financing activities |
(7,490 | ) | 7,860 | |||||
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NET INCREASE IN CASH |
961 | 1,137 | ||||||
CASH, BEGINNING OF PERIOD |
6,732 | 7,734 | ||||||
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CASH, END OF PERIOD |
$ | 7,693 | $ | 8,871 | ||||
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NON-CASH ACTIVITIES(B) |
$ | 332 | $ | | ||||
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(A) | Refer to Note 4Related Party Transactions for additional information. |
(B) | Redemption of 39,082 shares of common stock to reduce the principal balance of an employee loan by $332. Refer to Note 7Common Stock for additional information. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
6
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
AS OF MARCH 31, 2012
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value | |||||||||||
NON-CONTROL/NON-AFFILIATE INVESTMENTS: |
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Non-syndicated Loans: |
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Access Television Network, Inc. |
Service-cable airtime (infomercials) |
Senior Term Debt (14.0%, Due 2/2011) (D) (H) |
$ | 903 | $ | 903 | $ | | ||||||||
Allison Publications, LLC |
Service-publisher of consumer oriented Magazines |
Senior Term Debt (10.5%, Due 9/2012) (D) |
8,164 | 8,171 | 7,674 | |||||||||||
BAS Broadcasting |
Service-radio station operator |
Senior Term Debt (11.5%, Due 7/2013) (D) |
7,465 | 7,465 | 4,106 | |||||||||||
Chinese Yellow Pages Company |
Service-publisher of Chinese language directories |
Line of Credit, $0 available (7.3%, Due 11/2012) (D) |
450 | 450 | 270 | |||||||||||
Senior Term Debt (7.3%, Due 11/2012) (D) |
78 | 78 | 47 | |||||||||||||
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528 | 317 | |||||||||||||||
CMI Acquisition, LLC |
Service-recycling |
Senior Subordinated Term Debt (14.0%, Due 12/2016) (D) |
14,265 | 14,265 | 14,194 | |||||||||||
FedCap Partners, LLC |
Private equity fund |
Class A Membership Units (80 units) (G) |
1,200 | 1,153 | ||||||||||||
Uncalled Capital Commitment ($800) |
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GFRC Holdings, LLC |
Manufacturing-glass-fiber reinforced concrete |
Senior Term Debt (11.5%, Due 12/2013) (D) |
5,324 | 5,324 | 2,928 | |||||||||||
Senior Subordinated Term Debt (14.0%, Due 12/2013) (D) |
6,598 | 6,598 | 3,629 | |||||||||||||
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11,922 | 6,557 | |||||||||||||||
Heartland Communications Group |
Service-radio station operator |
Line of Credit, $0 available (5.0%, Due 3/2013) (D) |
100 | 100 | 35 | |||||||||||
Line of Credit, $55 available (10.0%, Due 3/2013) (D) |
45 | 45 | 16 | |||||||||||||
Senior Term Debt (5.0%, Due 3/2013) (D) |
4,342 | 4,325 | 1,520 | |||||||||||||
Common Stock Warrants (8.8% ownership) (F) (G) |
66 | | ||||||||||||||
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4,536 | 1,571 | |||||||||||||||
International Junior Golf Training Acquisition Company |
Service-golf training |
Line of Credit, $125 available (11.0%, Due 5/2014) (D) |
2,125 | 2,125 | 1,424 | |||||||||||
Senior Term Debt (10.5%, Due 5/2014) (D) |
661 | 661 | 443 | |||||||||||||
Senior Term Debt (12.5%, Due 5/2014) (C)(D) |
2,500 | 2,500 | 1,675 | |||||||||||||
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5,286 | 3,542 | |||||||||||||||
Legend Communications of Wyoming, LLC |
Service-operator of radio stations |
Senior Term Debt (12.0%, Due 6/2013) (D) |
9,203 | 9,203 | 4,785 | |||||||||||
North American Aircraft Services, LLC |
Service - repairs and maintains aircraft fuel tanks and fuel systems |
Line of Credit, $750 available (6.5%, Due 8/2012) (D) |
1,250 | 1,250 | 1,238 | |||||||||||
Senior Term Debt (7.5%, Due 8/2016) (D) |
4,767 | 4,767 | 4,719 | |||||||||||||
Senior Subordinated Term Debt (11.8%, Due 8/2016) (D) |
4,750 | 4,750 | 4,703 | |||||||||||||
Senior Subordinated Term Debt (12.5%, Due 8/2016) (D) |
2,820 | 2,820 | 2,792 | |||||||||||||
Common Stock Warrants (5.8% ownership) (F) (G) |
350 | 608 | ||||||||||||||
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13,937 | 14,060 | |||||||||||||||
Northstar Broadband, LLC |
Service-cable TV franchise owner |
Senior Term Debt (0.7%, Due 12/2012) (D) |
50 | 44 | 42 | |||||||||||
Ohana Media Group |
Service AM/FM radio broadcast |
Senor Term Debt (10.0%, Due 10/2016) (D) |
1,590 | 1,590 | 1,447 | |||||||||||
Precision Acquisition Group Holdings, Inc. |
Manufacturing-consumable components for the Aluminum industry |
Equipment Note (13.0%, Due 3/2013) (D) |
1,000 | 1,000 | 835 | |||||||||||
Senior Term Debt (13.0%, Due 3/2013) (D) |
4,125 | 4,125 | 3,444 | |||||||||||||
Senior Term Debt (13.0%, Due 3/2013) (C) (D) |
4,053 | 4,053 | 3,384 | |||||||||||||
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9,178 | 7,663 | |||||||||||||||
PROFIT Systems Acquisition Co. |
Service-design and develop ERP Software |
Line of Credit, $350 available (11.3%, Due 7/2012) (D) |
| | | |||||||||||
Senior Term Debt (10.5%, Due 7/2014) (C) (D) |
2,850 | 2,850 | 2,708 | |||||||||||||
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2,850 | 2,708 | |||||||||||||||
Reliable Biopharmaceutical Holdings, Inc. |
Manufacturing-pharmaceutical and biochemical intermediates |
Line of Credit, $500 available (9.0%, Due 1/2013) (D) |
3,500 | 3,500 | 3,316 | |||||||||||
Mortgage Note (9.5%, Due 12/2014) (D) |
7,121 | 7,121 | 6,747 | |||||||||||||
Senior Term Debt (12.0%, Due 12/2014) (C) (D) |
11,513 | 11,513 | 10,908 | |||||||||||||
Senior Subordinated Term Debt (12.5%, Due 12/2014) (D) |
6,000 | 6,000 | 5,685 | |||||||||||||
Common Stock Warrants (764 shares) (F) (G) |
209 | 736 | ||||||||||||||
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28,343 | 27,392 | |||||||||||||||
Saunders & Associates |
Manufacturing-equipment provider for frequency control devices |
Line of Credit, $2,500 available (11.3%, Due 5/2013) (D) |
| | | |||||||||||
Senior Term Debt (11.3%, Due 5/2013) (D) |
8,947 | 8,947 | 8,052 | |||||||||||||
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8,947 | 8,052 | |||||||||||||||
Sunburst Media - Louisiana, LLC |
Service-radio station operator |
Senior Term Debt (10.5%, Due 1/2012) (D) |
6,000 | 6,000 | 2,400 | |||||||||||
Thibaut Acquisition Co. |
Service-design and distribute wall Covering |
Line of Credit, $250 available (9.0%, Due 1/2014) (D) |
750 | 750 | 737 | |||||||||||
Senior Term Debt (8.5%, Due 1/2014) (D) |
287 | 287 | 282 | |||||||||||||
Senior Term Debt (12.0%, Due 1/2014) (C) (D) |
3,000 | 3,000 | 2,933 | |||||||||||||
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|
|||||||||||||
4,037 | 3,952 |
7
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
AS OF MARCH 31, 2012
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value | |||||||||||
NON-CONTROL/NON-AFFILIATE INVESTMENTS (Continued): |
||||||||||||||||
Westlake Hardware, Inc. |
Retail-hardware and variety |
Senior Subordinated Term Debt (12.3%, Due 1/2014) (D) |
$ | 12,000 | $ | 12,000 | $ | 11,640 | ||||||||
Senior Subordinated Term Debt (13.5%, Due 1/2014) (D) |
8,000 | 8,000 | 7,700 | |||||||||||||
|
|
|
|
|||||||||||||
20,000 | 19,340 | |||||||||||||||
Westland Technologies, Inc. |
Service-diversified conglomerate |
Line of Credit, $1,000 available (6.5%, Due 4/2012) (D) |
| | | |||||||||||
Senior Term Debt (7.5%, Due 4/2016) (D) |
1,850 | 1,850 | 1,804 | |||||||||||||
Senior Term Debt (12.5%, Due 4/2016) (D) |
4,000 | 4,000 | 3,900 | |||||||||||||
Common Stock Warrants (77,287 shares) (F) (G) |
350 | 279 | ||||||||||||||
|
|
|
|
|||||||||||||
6,200 | 5,983 | |||||||||||||||
Winchester Electronics |
Manufacturing-high bandwidth connectors and cables |
Senior Term Debt (6.5%, Due 5/2013) (D) |
1,250 | 1,250 | 1,244 | |||||||||||
Senior Term Debt (7.0%, Due 5/2013) (D) |
1,669 | 1,669 | 1,656 | |||||||||||||
Senior Subordinated Term Debt (13.5%, Due 6/2013) (D) |
9,750 | 9,750 | 9,628 | |||||||||||||
|
|
|
|
|||||||||||||
12,669 | 12,528 | |||||||||||||||
|
|
|
|
|||||||||||||
Subtotal Non-syndicated loans |
$ | 177,274 | $ | 149,466 | ||||||||||||
|
|
|
|
|||||||||||||
Syndicated Loans: |
||||||||||||||||
Airvana Network Solutions, Inc. |
Service-telecommunications |
Senior Term Debt (10.0%, Due 3/2015) (E) |
$ | 3,928 | $ | 3,827 | $ | 3,732 | ||||||||
Allied Security Holdings, LLC |
Service-contract security officer providers |
Senior Subordinated Term Debt (8.5%, Due 2/2018) (E) |
1,000 | 991 | 1,003 | |||||||||||
Allied Specialty Vehicles, Inc. |
Manufacturing-specialty vehicles |
Senior Term Debt (9.5%, Due 2/2016) (E) |
9,900 | 9,735 | 9,702 | |||||||||||
Ameriqual Group, LLC |
Manufacturing-production and distribution of food products |
Senior Term Debt (9.0%, Due 3/2016) (E) |
7,444 | 7,319 | 7,295 | |||||||||||
Applied Systems, Inc. |
Software for property & casualty insurance industry |
Senior Subordinated Term Debt (9.3%, Due 6/2017) (E) |
1,000 | 992 | 998 | |||||||||||
Ascend Learning, LLC |
Service-technology-based learning solutions |
Senior Subordinated Term Debt (11.5%, Due 12/2017) (E) |
1,000 | 974 | 1,010 | |||||||||||
Attachmate Corporate |
Service-develops, implements and supports software |
Senior Subordinated Term Debt (9.5%, Due 2/2017) (E) |
4,000 | 3,965 | 3,990 | |||||||||||
Autoparts Holdings Limited |
Supplier to the light and heavy-duty vehicle after market for replacement parts |
Senior Term Debt (10.5%, Due 1/2018) (E) |
1,000 | 995 | 983 | |||||||||||
Blue Coat Systems, Inc. |
Provider of internet security and network acceleration appliances |
Senior Subordinated Term Debt (11.5%, Due 8/2018) (E) |
8,500 | 8,497 | 8,542 | |||||||||||
Covad Communications Group, Inc. |
Service-telecommunications |
Senior Term Debt (12.0%, Due 11/2015) (E) |
1,750 | 1,722 | 1,741 | |||||||||||
Global Brass and Copper, Inc. |
Manufacturing - steel wool products and metal fibers |
Senior Term Debt (10.3%, Due 8/2015) (E) |
2,953 | 2,886 | 2,993 | |||||||||||
HGI Holding, Inc |
Service - distributor of disposable medical products |
Senior Term Debt (6.8%, Due 10/2016) (E) |
1,757 | 1,725 | 1,757 | |||||||||||
Hubbard Radio, LLC |
Service-radio station operator |
Senior Subordinated Term Debt (8.8%, Due 4/2018) (E) |
500 | 495 | 506 | |||||||||||
Keypoint Government Solutions, Inc. |
Service-security consulting services |
Senior Term Debt (10.0%, Due 12/2015) (E) |
6,912 | 6,884 | 6,912 | |||||||||||
Mood Media Corporation |
Service-media and marketing solutions |
Senior Term Debt (10.3%, Due 11/2018) (E) |
8,000 | 7,926 | 7,480 | |||||||||||
National Surgical Hospitals, Inc. |
Service-physician-partnered surgical facilities |
Senior Term Debt (8.3%, Due 2/2017) (E) |
1,686 | 1,652 | 1,631 | |||||||||||
Sensus USA, Inc. |
Service-provider of utility communication Services |
Senior Term Debt (8.5%, Due 5/2018) (E) |
500 | 495 | 496 | |||||||||||
Springs Window Fashions, LLC |
Manufacturing-window coverings |
Senior Term Debt (11.3%, Due 11/2017) (E) |
7,000 | 6,843 | 6,825 | |||||||||||
SRAM, LLC |
Manufacturing-premium bicycle components |
Senior Term Debt (8.5%, Due 12/2018) (E) |
2,500 | 2,477 | 2,512 | |||||||||||
Targus Group International, Inc. |
Manufacturing-carrying cases and accessories for notebook computers |
Senior Term Debt (11.0%, Due 5/2016) (E) |
9,925 | 9,752 | 9,801 | |||||||||||
Ulterra Drilling Technologies, LP |
Manufacturing-oil field drill bits and slick-slip reduction tools |
Senior Term Debt (9.5%, Due 6/2016) (E) |
1,925 | 1,891 | 1,915 |
8
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
AS OF MARCH 31, 2012
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value | |||||||||||
NON-CONTROL/NON-AFFILIATE INVESTMENTS (Continued): |
||||||||||||||||
Vision Solutions, Inc. |
Service-provider of information availability software |
Senior Term Debt (9.5%, Due 7/2017) (E) |
$ | 11,000 | $ | 10,921 | $ | 10,670 | ||||||||
Wall Street Systems Holdings, Inc. |
Service-software provider |
Senior Term Debt (9.0%, Due 6/2018) (E) |
3,000 | 2,972 | 3,007 | |||||||||||
WP Evenflo Group Holdings, Inc. |
Manufacturing-infant and juvenile Products |
Senior Term Debt (8.0%, Due 2/2013) (E) |
277 | 277 | 270 | |||||||||||
Senior Preferred Equity (333 shares) (F) (G) |
333 | 440 | ||||||||||||||
Junior Preferred Equity (111 shares) (F) (G) |
111 | 155 | ||||||||||||||
Common Stock (1,874 shares) (F) (G) |
| 403 | ||||||||||||||
|
|
|
|
|||||||||||||
721 | 1,268 | |||||||||||||||
|
|
|
|
|||||||||||||
Subtotal - Syndicated loans |
$ | 96,657 | $ | 96,769 | ||||||||||||
|
|
|
|
|||||||||||||
Total Non-Control/Non-Affiliate Investments (represented 85.4% of total investments at fair value) |
$ | 273,931 | $ | 246,235 | ||||||||||||
|
|
|
|
|||||||||||||
CONTROL INVESTMENTS: |
||||||||||||||||
BERTL, Inc. |
Service-web-based evaluator of imaging products |
Line of Credit, $69 available (6.5%, Due 4/2012)(F) (H) (I) |
$ | 1,358 | $ | 1,358 | $ | | ||||||||
Common Stock (100 shares) (F) (G) |
424 | | ||||||||||||||
|
|
|
|
|||||||||||||
1,782 | | |||||||||||||||
Defiance Integrated Technologies, Inc. |
Manufacturing-trucking parts |
Senior Term Debt (11.0%, Due 4/2013) (C) (F) |
7,345 | 7,345 | 7,345 | |||||||||||
Common Stock (15,500 shares) (F) (G) |
1 | 8,696 | ||||||||||||||
|
|
|
|
|||||||||||||
7,346 | 16,041 | |||||||||||||||
Kansas Cable Holdings, Inc. |
Service - cable, internet, voice provider |
Line of Credit, $153 available (10.0%, Due 10/2012) (D) (H) |
672 | 662 | 5 | |||||||||||
Senior Term Debt (10.0%, Due 10/2012) (D) (H) |
1,500 | 1,444 | 11 | |||||||||||||
Senior Term Debt (10.0%, Due 10/2012) (D) (H) |
1,039 | 1,000 | 8 | |||||||||||||
Common Stock (100 shares) (F) (G) |
| | ||||||||||||||
|
|
|
|
|||||||||||||
3,106 | 24 | |||||||||||||||
Lindmark Acquisition, LLC |
Service-advertising |
Senior Subordinated Term Debt (11.0%, Due 10/2012) (D) (H) |
10,000 | 10,000 | 1,300 | |||||||||||
Senior Subordinated Term Debt (13.0%, Due 10/2012) (D) (H) |
2,000 | 2,000 | 260 | |||||||||||||
Senior Subordinated Term Debt (13.0%, Due Upon Demand) (D) (H) |
1,909 | 1,909 | 248 | |||||||||||||
Common Stock (100 shares) (F) (G) |
317 | | ||||||||||||||
|
|
|
|
|||||||||||||
14,226 | 1,808 | |||||||||||||||
LocalTel, LLC |
Service-yellow pages publishing |
Line of credit, $132 available (10.0%, Due 6/2012) (F) (H) |
2,218 | 2,218 | 559 | |||||||||||
Line of Credit, $1,830 available (4.7%, Due 6/2012) (F) (H) |
1,170 | 1,170 | | |||||||||||||
Senior Term Debt (12.5%, Due 2/2012) (F) (H) |
325 | 325 | | |||||||||||||
Senior Term Debt (8.5%, Due 6/2012) (F) (H) |
2,688 | 2,688 | | |||||||||||||
Senior Term Debt (10.5%, Due 6/2012) (C) (F) (H) |
2,750 | 2,750 | | |||||||||||||
Common Stock Warrants (4,000 shares) (F) (G) |
| | ||||||||||||||
|
|
|
|
|||||||||||||
9,151 | 559 | |||||||||||||||
Midwest Metal Distribution, Inc. |
Distribution-aluminum sheets and stainless steel |
Senior Subordinated Term Debt (12.0%, Due 7/2013) (D) |
18,281 | 18,267 | 17,870 | |||||||||||
Common Stock (501 shares) (F) (G) |
138 | | ||||||||||||||
|
|
|
|
|||||||||||||
18,405 | 17,870 | |||||||||||||||
Sunshine Media Holdings |
Service-publisher regional B2B trade magazines |
Line of credit, $498 available (4.8%, Due 8/2014) (D) |
1,502 | 1,502 | 225 | |||||||||||
Senior Term Debt (4.8%, Due 5/2016) (D) |
16,948 | 16,948 | 2,542 | |||||||||||||
Senior Term Debt (5.5%, Due 5/2016) (C) (D) (H) |
10,700 | 10,700 | 1,605 | |||||||||||||
Junior Preferred Equity (11,013 shares) (F) (G) |
4,075 | | ||||||||||||||
Common Stock (934 shares) (F) (G) |
740 | | ||||||||||||||
|
|
|
|
|||||||||||||
33,965 | 4,372 | |||||||||||||||
U.S. Healthcare Communications, Inc. |
Service-magazine publisher/operator |
Line of credit, $131 available (6.0%, Due 12/2010) (F) (H) |
269 | 269 | | |||||||||||
Line of credit, $0 available (6.0%, Due 12/2010) (F) (H) |
450 | 450 | | |||||||||||||
Common Stock (100 shares) (F) (G) |
2,470 | | ||||||||||||||
|
|
|
|
|||||||||||||
3,189 | | |||||||||||||||
Viapack, Inc. |
Manufacturing-polyethylene film |
Line of Credit, $466 available (6.5%, Due 3/2013) (D) |
3,334 | 3,334 | 534 | |||||||||||
Senior Real Estate Term Debt (5.0%, Due 3/2014) (D) |
600 | 600 | 96 | |||||||||||||
Senior Term Debt (6.2%, Due 3/2014) (C) (D) (H) |
3,925 | 3,925 | 628 | |||||||||||||
Preferred Equity (100 shares) (F) (G) |
| | ||||||||||||||
Guarantee ($600) |
||||||||||||||||
|
|
|
|
|||||||||||||
7,859 | 1,258 | |||||||||||||||
|
|
|
|
|||||||||||||
Total Control Investments (represented 14.6% of total investments at fair value) |
$ | 99,029 | $ | 41,932 | ||||||||||||
|
|
|
|
|||||||||||||
Total Investments |
$ | 372,960 | $ | 288,167 | ||||||||||||
|
|
|
|
9
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
AS OF MARCH 31, 2012
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
(A) | Certain of the securities listed in the above schedule are issued by affiliate(s) of the indicated portfolio company. |
(B) | Percentage represents interest rates in effect at March 31, 2012, and due date represents the contractual maturity date. |
(C) | Last Out Tranche (LOT) of senior debt, meaning if the portfolio company is liquidated, the holder of the LOT is paid after the senior debt. |
(D) | Fair value was primarily based on opinions of value submitted by Standard & Poors Securities Evaluations, Inc. |
(E) | Security valued based on the indicative bid price on or near March 31, 2012, offered by the respective syndication agents trading desk or secondary desk. |
(F) | Fair value was primarily based on the total enterprise value of the portfolio company using a liquidity waterfall approach. We also considered discounted cash flow methodologies. |
(G) | Security is non-income producing. |
(H) | Debt security is on non-accrual status. |
(I) | In April 2012, we amended the terms of the security extending the maturity date. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
10
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2011
(DOLLAR AMOUNTS IN THOUSANDS)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value |
|||||||||||
NON-CONTROL/NON-AFFILIATE INVESTMENTS: |
||||||||||||||||
Non-syndicated Loans: |
||||||||||||||||
Access Television Network, Inc. |
Service-cable airtime (infomercials) |
Senior Term Debt (14.0%, Due 2/2011) (D) (H) |
$ | 903 | $ | 903 | $ | 45 | ||||||||
Allison Publications, LLC |
Service-publisher of consumer oriented magazines |
Senior Term Debt (10.5%, Due 9/2012) (D) |
8,463 | 8,478 | 7,861 | |||||||||||
BAS Broadcasting |
Service-radio station operator |
Senior Term Debt (11.5%, Due 7/2013) (D) |
7,465 | 7,465 | 6,233 | |||||||||||
Chinese Yellow Pages Company |
Service-publisher of Chinese language directories |
Line of Credit, $250 available (7.3%, Due 11/2011) (D) |
450 | 450 | 338 | |||||||||||
Senior Term Debt (7.3%, Due 11/2011) (D) |
168 | 168 | 126 | |||||||||||||
|
|
|
|
|||||||||||||
618 | 464 | |||||||||||||||
CMI Acquisition, LLC |
Service-recycling |
Senior Subordinated Term Debt (13.0%, Due 12/2016) (D) |
14,265 | 14,265 | 14,336 | |||||||||||
FedCap Partners, LLC |
Private equity fund |
Class A Membership Units (80 units) (G) |
1,200 | 1,153 | ||||||||||||
Uncalled Capital Commitment ($800) |
||||||||||||||||
GFRC Holdings, LLC |
Manufacturing-glass-fiber reinforced concrete |
Senior Term Debt (11.5%, Due 12/2012) (D) |
5,617 | 5,617 | 4,719 | |||||||||||
Senior Subordinated Term Debt (14.0%, Due 12/2012) (D) |
6,615 | 6,615 | 5,557 | |||||||||||||
|
|
|
|
|||||||||||||
12,232 | 10,276 | |||||||||||||||
Global Materials Technologies, Inc. |
Manufacturing-steel wool products and metal fibers |
Senior Term Debt (13.0%, Due 6/2012) (C) (D) |
2,635 | 2,635 | 2,212 | |||||||||||
Heartland Communications Group |
Service-radio station operator |
Line of Credit, $0 available (5.0%, Due 3/2013) (D) |
100 | 100 | 41 | |||||||||||
Line of Credit, $0 available (10.0%, Due 3/2013) (D) |
100 | 100 | 41 | |||||||||||||
Senior Term Debt (5.0%, Due 3/2013) (D) |
4,342 | 4,316 | 1,780 | |||||||||||||
Common Stock Warrants (8.8% ownership) (F) (G) |
66 | | ||||||||||||||
|
|
|
|
|||||||||||||
4,582 | 1,862 | |||||||||||||||
International Junior Golf Training Acquisition Company |
Service-golf training |
Line of Credit, $0 available (11.0%, Due 5/2012) (D) |
1,500 | 1,500 | 1,275 | |||||||||||
Senior Term Debt (10.5%, Due 5/2012) (D) |
861 | 861 | 732 | |||||||||||||
Senior Term Debt (12.5%, Due 5/2012) (C)(D) |
2,500 | 2,500 | 2,125 | |||||||||||||
|
|
|
|
|||||||||||||
4,861 | 4,132 | |||||||||||||||
KMBQ Corporation |
Service-AM/FM radio broadcaster |
Line of Credit, $42 available (12.3%, Due 7/2010) (D) (H) |
162 | 158 | 76 | |||||||||||
Senior Term Debt (12.3%, Due 7/2010) (D) (H) |
2,081 | 2,038 | 984 | |||||||||||||
|
|
|
|
|||||||||||||
2,196 | 1,060 | |||||||||||||||
Legend Communications of Wyoming, LLC |
Service-operator of radio stations |
Senior Term Debt (12.0%, Due 6/2013) (D) |
9,745 | 9,745 | 5,408 | |||||||||||
Senior Term Debt (16.0%, Due 7/2011) (D) |
220 | 220 | 123 | |||||||||||||
|
|
|
|
|||||||||||||
9,965 | 5,531 | |||||||||||||||
Newhall Holdings, Inc. |
Service-distributor of personal care products and supplements |
Line of Credit, $0 available (8.0%, Due 12/2012) (D) (H) |
1,985 | 1,985 | 98 | |||||||||||
Senior Term Debt (8.5%, Due 12/2012) (D) (H) |
1,870 | 1,870 | 94 | |||||||||||||
Senior Term Debt (3.5%, Due 12/2012) (C) (D) (H) |
2,000 | 2,000 | 100 | |||||||||||||
Senior Term Debt (3.5%, Due 12/2012) (C) (D) (H) |
4,648 | 4,648 | 232 | |||||||||||||
Preferred Equity (1,000,000 shares) (F) (G) (H) |
| | ||||||||||||||
Common Stock (688,500 shares) (F) (G) |
| | ||||||||||||||
|
|
|
|
|||||||||||||
10,503 | 524 | |||||||||||||||
North American Aircraft Services LLC |
Service - repairs and maintains aircraft fuel tanks and fuel systems |
Line of Credit, $1,500 available (6.5%, Due 8/2012) (D) |
500 | 500 | 500 | |||||||||||
Senior Term Debt (7.5%, Due 8/2016) (D) |
3,250 | 3,250 | 3,250 | |||||||||||||
Senior Subordinated Term Debt (11.8%, Due 8/2016) (D) |
4,750 | 4,750 | 4,750 | |||||||||||||
Common Stock Warrants (4.8% ownership) (F) (G) |
350 | 350 | ||||||||||||||
|
|
|
|
|||||||||||||
8,850 | 8,850 | |||||||||||||||
Northern Contours, Inc. |
Manufacturing-veneer and laminate components |
Senior Subordinated Term Debt (13.0%, Due 9/2012) (D) |
6,128 | 6,128 | 5,684 | |||||||||||
Northstar Broadband, LLC |
Service-cable TV franchise owner |
Senior Term Debt (0.7%, Due 12/2012) (D) |
80 | 70 | 64 | |||||||||||
Precision Acquisition Group Holdings, Inc. |
Manufacturing-consumable components for the aluminum industry |
Equipment Note (13.0%, Due 11/2011) (D) |
1,000 | 1,000 | 948 | |||||||||||
Senior Term Debt (13.0%, Due 11/2011) (D) |
4,125 | 4,125 | 3,908 | |||||||||||||
Senior Term Debt (13.0%, Due 11/2011) (C) (D) |
4,053 | 4,053 | 3,840 | |||||||||||||
|
|
|
|
|||||||||||||
9,178 | 8,696 | |||||||||||||||
PROFIT Systems Acquisition Co. |
Service-design and develop ERP software |
Line of Credit, $350 available (11.25%, Due 7/2012) (D) |
| | | |||||||||||
Senior Term Debt (10.5%, Due 7/2014) (C) (D) |
3,150 | 3,150 | 3,024 | |||||||||||||
|
|
|
|
|||||||||||||
3,150 | 3,024 |
11
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
AS OF SEPTEMBER 30, 2011
(DOLLAR AMOUNTS IN THOUSANDS)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value | |||||||||||
NON-CONTROL/NON-AFFILIATE INVESTMENTS (Continued): |
||||||||||||||||
RCS Management Holding Co. |
Service-healthcare supplies |
Senior Term Debt (9.5%, Due 1/2013) (D) |
$ | 1,438 | $ | 1,438 | $ | 1,367 | ||||||||
Senior Term Debt (11.5%, Due 1/2013) (C) (D) |
3,060 | 3,060 | 2,907 | |||||||||||||
|
|
|
|
|||||||||||||
4,498 | 4,274 | |||||||||||||||
Reliable Biopharmaceutical Holdings, Inc. |
Manufacturing-pharmaceutical and biochemical intermediates |
Line of Credit, $2,800 available (9.0%, Due 1/2013) (D) |
1,200 | 1,200 | 1,176 | |||||||||||
Mortgage Note (9.5%, Due 12/2014) (D) |
7,168 | 7,168 | 7,025 | |||||||||||||
Senior Term Debt (12.0%, Due 12/2014) (C)(D) |
11,573 | 11,573 | 10,906 | |||||||||||||
Senior Subordinated Term Debt (12.5%, Due 12/2014) (D) |
6,000 | 6,000 | 5,655 | |||||||||||||
Common Stock Warrants (764 shares) (F) (G) |
209 | 534 | ||||||||||||||
|
|
|
|
|||||||||||||
26,150 | 25,296 | |||||||||||||||
Saunders & Associates |
Manufacturing-equipment provider for frequency control devices |
Line of Credit, $2,500 available (11.3%, Due 5/2013) (D) |
| | | |||||||||||
Senior Term Debt (11.3%, Due 5/2013) (D) |
8,947 | 8,947 | 8,913 | |||||||||||||
|
|
|
|
|||||||||||||
8,947 | 8,913 | |||||||||||||||
Sunburst Media - Louisiana, LLC |
Service-radio station operator |
Senior Term Debt (10.5%, Due 12/2011) (D) |
6,100 | 6,103 | 3,964 | |||||||||||
Thibaut Acquisition Co. |
Service-design and distribute wall covering |
Line of Credit, $400 available (9.0%, Due 1/2014) (D) |
600 | 600 | 585 | |||||||||||
Senior Term Debt (8.5%, Due 1/2014) (D) |
550 | 550 | 536 | |||||||||||||
Senior Term Debt (12.0%, Due 1/2014) (C) (D) |
3,000 | 3,000 | 2,910 | |||||||||||||
|
|
|
|
|||||||||||||
4,150 | 4,031 | |||||||||||||||
Westlake Hardware, Inc. |
Retail-hardware and variety |
Senior Subordinated Term Debt (12.3%, Due 1/2014) (D) |
12,000 | 12,000 | 11,640 | |||||||||||
Senior Subordinated Term Debt (13.5%, Due 1/2014) (D) |
8,000 | 8,000 | 7,700 | |||||||||||||
|
|
|
|
|||||||||||||
20,000 | 19,340 | |||||||||||||||
Westland Technologies, Inc. |
Service-diversified conglomerate |
Line of Credit, $1,000 available (6.5%, Due 4/2012) (D) |
| | | |||||||||||
Senior Term Debt (7.5%, Due 4/2016) (D) |
2,000 | 2,000 | 1,995 | |||||||||||||
Senior Term Debt (12.5%, Due 4/2016) (D) |
4,000 | 4,000 | 3,990 | |||||||||||||
Common Stock Warrants (77,287 shares) (F) (G) |
350 | 307 | ||||||||||||||
|
|
|
|
|||||||||||||
6,350 | 6,292 | |||||||||||||||
Winchester Electronics |
Manufacturing-high bandwidth connectors and cables |
Senior Term Debt (5.2%, Due 5/2012) (D) |
1,250 | 1,250 | 1,238 | |||||||||||
Senior Term Debt (5.7%, Due 5/2013) (D) |
1,677 | 1,677 | 1,656 | |||||||||||||
Senior Subordinated Term Debt (14.0%, Due 6/2013) (D) |
9,800 | 9,800 | 9,628 | |||||||||||||
|
|
|
|
|||||||||||||
12,727 | 12,522 | |||||||||||||||
|
|
|
|
|||||||||||||
Subtotal Non-syndicated loans |
$ | 196,204 | $ | 166,639 | ||||||||||||
|
|
|
|
|||||||||||||
Syndicated Loans: |
||||||||||||||||
Airvana Network Solutions, Inc. |
Service-telecommunications |
Senior Term Debt (10.0%, Due 3/2015) (E) |
$ | 6,048 | $ | 5,912 | $ | 6,048 | ||||||||
Allied Security Holdings, LLC |
Service-contract security officer providers |
Senior Subordinated Term Debt (8.5%, Due 2/2018) (E) |
1,000 | 991 | 965 | |||||||||||
Allied Specialty Vehicles, Inc. |
Manufacturing-specialty vehicles |
Senior Term Debt (9.5%, Due 2/2016) (E) |
9,950 | 9,767 | 9,751 | |||||||||||
Ameriqual Group, LLC |
Manufacturing-production and distribution of food products |
Senior Term Debt (9.0%, Due 3/2016) (E) |
7,481 | 7,344 | 7,332 | |||||||||||
Applied Systems, Inc. |
Software for property & casualty insurance industry |
Senior Subordinated Term Debt (9.3%, Due 6/2017) (E) |
1,000 | 991 | 990 | |||||||||||
Ascend Learning, LLC |
Service-technology-based learning solutions |
Senior Subordinated Term Debt (11.53%, Due 12/2017) (E) |
1,000 | 972 | 980 | |||||||||||
Attachmate Corporate |
Service-develops, implements and supports software |
Senior Subordinated Term Debt (9.5%, Due 2/2017) (E) |
4,000 | 3,962 | 3,810 | |||||||||||
Autoparts Holdings Limited |
Supplier to the light and heavy-duty vehicle after market for replacement parts |
Senior Term Debt (10.5%, Due 1/2018) (E) |
1,000 | 995 | 978 | |||||||||||
Covad Communications Group, Inc. |
Service-telecommunications |
Senior Term Debt (12.0%, Due 11/2015) (E) |
1,850 | 1,818 | 1,795 | |||||||||||
Ernest Health, Inc. |
Service-post-acute care services |
Senior Term Debt (10.3%, Due 5/2017) (E) |
2,000 | 1,971 | 1930 | |||||||||||
Global Brass and Copper, Inc. |
Manufacturing - steel wool products and metal fibers |
Senior Term Debt (10.3%, Due 8/2015) (E) |
2,969 | 2,893 | 3,054 | |||||||||||
HGI Holding, Inc |
Service - distributor of disposable medical products |
Senior Term Debt (6.8%, Due 10/2016) (E) |
1,757 | 1,723 | 1,687 | |||||||||||
Hubbard Radio, LLC |
Service-radio station operator |
Senior Subordinated Term Debt (8.8%, Due 4/2018) (E) |
500 | 495 | 488 | |||||||||||
Keypoint Government Solutions, Inc. |
Service-security consulting services |
Senior Term Debt (10.0%, Due 12/2015) (E) |
6,948 | 6,916 | 6,670 |
12
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
AS OF SEPTEMBER 30, 2011
(DOLLAR AMOUNTS IN THOUSANDS)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value | |||||||||||
NON-CONTROL/NON-AFFILIATE INVESTMENTS (Continued): |
||||||||||||||||
Mood Media Corporation |
Service-media and marketing solutions |
Senior Term Debt (10.3%, Due 11/2018) (E) |
$ | 8,000 | $ | 7,923 | $ | 7,370 | ||||||||
National Surgical Hospitals, Inc. |
Service-physician-partnered surgical facilities |
Senior Term Debt (8.3%, Due 2/2017) (E) |
1,694 | 1,658 | 1,627 | |||||||||||
Sensus USA, Inc. |
Service-provider of utility communication services |
Senior Term Debt (8.5%, Due 5/2018) (E) |
500 | 495 | 483 | |||||||||||
Springs Window Fashions, LLC |
Manufacturing-window coverings |
Senior Term Debt (11.3%, Due 11/2017) (E) |
5,000 | 4,855 | 4,750 | |||||||||||
SRAM, LLC |
Manufacturing-premium bicycle components |
Senior Term Debt (8.5%, Due 12/2018) (E) |
2,500 | 2,476 | 2,475 | |||||||||||
Targus Group International, Inc. |
Manufacturing-carrying cases and accessories for notebook computers |
Senior Term Debt (11.0%, Due 5/2016) (E) |
9,975 | 9,785 | 9,626 | |||||||||||
Ulterra Drilling Technologies, LP |
Manufacturing-oil field drill bits and slick-slip reduction tools |
Senior Term Debt (9.5%, Due 6/2016) (E) |
1,975 | 1,937 | 1,916 | |||||||||||
Vision Solutions, Inc. |
Service-provider of information availability software |
Senior Term Debt (9.5%, Due 7/2017) (E) |
11,000 | 10,915 | 10,560 | |||||||||||
Wall Street Systems Holdings, Inc. |
Service-software provider |
Senior Term Debt (9.0%, Due 6/2018) (E) |
3,000 | 2,971 | 2,880 | |||||||||||
WP Evenflo Group Holdings Inc. |
Manufacturing-infant and juvenile products |
Senior Term Debt (8.0%, Due 2/2013) (E) |
1,853 | 1,853 | 1,723 | |||||||||||
Senior Preferred Equity (333 shares) (F) (G) |
333 | 419 | ||||||||||||||
Junior Preferred Equity (111 shares) (F) (G) |
111 | 146 | ||||||||||||||
Common Stock (1,874 shares) (F) (G) |
| 210 | ||||||||||||||
|
|
|
|
|||||||||||||
2,297 | 2,498 | |||||||||||||||
|
|
|
|
|||||||||||||
Subtotal - Syndicated loans |
$ | 92,062 | $ | 90,663 | ||||||||||||
|
|
|
|
|||||||||||||
Total Non-Control/Non-Affiliate Investments (represented 84.9% of total investments at fair value) |
$ | 288,266 | $ | 257,302 | ||||||||||||
|
|
|
|
|||||||||||||
CONTROL INVESTMENTS: |
||||||||||||||||
BERTL, Inc. |
Service-web-based evaluator of imaging products |
Line of Credit, $6 available (6.4%, Due 10/2011)(F) (H) |
$ | 1,427 | $ | 1,355 | $ | | ||||||||
Common Stock (100 shares) (F) (G) |
424 | | ||||||||||||||
|
|
|
|
|||||||||||||
1779 | | |||||||||||||||
Defiance Integrated Technologies, Inc. |
Manufacturing-trucking parts |
Senior Term Debt (11.0%, Due 4/2013) (C) (F) |
7,505 | 7,505 | 7,505 | |||||||||||
Common Stock (15,500 shares) (F) (G) |
1 | 7,534 | ||||||||||||||
|
|
|
|
|||||||||||||
7,506 | 15,039 | |||||||||||||||
Kansas Cable Holdings, Inc. |
Service - cable, internet, voice provider |
Line of Credit, $179 available (10.0%, Due 10/2012) (D) (H) |
346 | 337 | 14 | |||||||||||
Senior Term Debt (10.0%, Due 10/2012) (D) (H) |
1,500 | 1,444 | 60 | |||||||||||||
Senior Term Debt (10.0%, Due 10/2012) (D) (H) |
1,039 | 1,000 | 42 | |||||||||||||
Common Stock (100 shares) (F) (G) |
| | ||||||||||||||
|
|
|
|
|||||||||||||
2,781 | 116 | |||||||||||||||
Lindmark Acquisition, LLC |
Service-advertising |
Senior Subordinated Term Debt (11.0%, Due 10/2012)(D)(H) |
10,000 | 10,000 | 2,000 | |||||||||||
Senior Subordinated Term Debt (13.0%, Due 10/2012)(D)(H) |
2,000 | 2,000 | 400 | |||||||||||||
Senior Subordinated Term Debt (13.0%, Due Upon Demand) (D) (H) |
1,908 | 1,908 | 383 | |||||||||||||
Common Stock (100 shares) (F) (G) |
317 | | ||||||||||||||
|
|
|
|
|||||||||||||
14,225 | 2,783 | |||||||||||||||
LocalTel, LLC |
Service-yellow pages publishing |
Line of credit, $2 available (10.0%, Due 12/2011) (F) (H) |
1,848 | 1,848 | 734 | |||||||||||
Line of Credit, $1,830 available (4.7%, Due 6/2012) (F) (H) |
1,170 | 1,170 | | |||||||||||||
Senior Term Debt (12.5%, Due 2/2012) (F) (H) |
325 | 325 | | |||||||||||||
Senior Term Debt (8.5%, Due 6/2012) (F) (H) |
2,688 | 2,688 | | |||||||||||||
Senior Term Debt (10.5%, Due 6/2012) (C) (F) (H) |
2,750 | 2,750 | | |||||||||||||
Common Stock Warrants (4,000 shares) (F) (G) |
| | ||||||||||||||
|
|
|
|
|||||||||||||
8,781 | 734 | |||||||||||||||
Midwest Metal Distribution, Inc. |
Distribution-aluminum sheets and stainless steel |
Senior Subordinated Term Debt (12.0%, Due 7/2013) (D) |
18,281 | 18,262 | 17,184 | |||||||||||
Common Stock (501 shares) (F) (G) |
138 | | ||||||||||||||
|
|
|
|
|||||||||||||
18,400 | 17,184 | |||||||||||||||
Sunshine Media Holdings |
Service-publisher regional B2B trade magazines |
Line of credit, $1,100 available (10.5%, Due 8/2014) (D) |
900 | 900 | 270 | |||||||||||
Senior Term Debt (10.5%, Due 5/2016) (D) |
16,948 | 16,948 | 5,084 | |||||||||||||
Senior Term Debt (5.0%, Due 5/2016) (C) (D) |
10,700 | 10,700 | 3,210 | |||||||||||||
Junior Preferred Equity (6,689 shares) (F) (G) |
2,475 | | ||||||||||||||
Common Stock (934 shares) (F) (G) |
740 | | ||||||||||||||
|
|
|
|
|||||||||||||
31,763 | 8,564 |
13
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
AS OF SEPTEMBER 30, 2011
(DOLLAR AMOUNTS IN THOUSANDS)
Company(A) |
Industry |
Investment(B) |
Principal | Cost | Fair Value | |||||||||||
CONTROL INVESTMENTS (Continued): |
||||||||||||||||
U.S. Healthcare Communications, Inc. |
Service-magazine publisher/operator |
Line of credit, $131 available (6.0%, Due 12/2010) (F) (H) |
$ | 269 | $ | 269 | $ | | ||||||||
Line of credit, $0 available (6.0%, Due 12/2010) (F) (H) |
450 | 450 | | |||||||||||||
Common Stock (100 shares) (F) (G) |
2,470 | | ||||||||||||||
|
|
|
|
|||||||||||||
3,189 | | |||||||||||||||
Viapack, Inc. |
Manufacturing-polyethylene film |
Line of Credit, $900 available (10.0%, Due 3/2013) (D) |
1,600 | 1,600 | 320 | |||||||||||
Senior Real Estate Term Debt (10.0%, Due 3/2014) (D) |
600 | 600 | 120 | |||||||||||||
Senior Term Debt (13.0%, Due 3/2014) (C) (D) |
3,925 | 3,925 | 785 | |||||||||||||
Preferred Equity (100 shares) (F) (G) |
| | ||||||||||||||
|
|
|
|
|||||||||||||
6,125 | 1,225 | |||||||||||||||
|
|
|
|
|||||||||||||
Total Control Investments (represented 15.1% of total investments at fair value) |
$ | 94,549 | $ | 45,645 | ||||||||||||
|
|
|
|
|||||||||||||
Total Investments (I) |
$ | 382,815 | $ | 302,947 | ||||||||||||
|
|
|
|
(A) | Certain of the securities listed in the above schedule are issued by affiliate(s) of the indicated portfolio company. |
(B) | Percentage represents interest rates in effect at September 30, 2011, and due date represents the contractual maturity date. |
(C) | Last Out Tranche (LOT) of senior debt, meaning if the portfolio company is liquidated, the holder of the LOT is paid after the senior debt. |
(D) | Fair value was primarily based on opinions of value submitted by Standard & Poors Securities Evaluations, Inc. |
(E) | Security valued based on the indicative bid price on or near September 30, 2011, offered by the respective syndication agents trading desk or secondary desk. |
(F) | Fair value was primarily based on the total enterprise value of the portfolio company using a liquidity waterfall approach. We also considered discounted cash flow methodologies. |
(G) | Security is non-income producing. |
(H) | Debt security is on non-accrual status. |
(I) | For the year ended September 30, 2011, cumulative gross unrealized depreciation for federal income tax purposes is $88,670 and cumulative gross unrealized appreciation for federal income tax purposes is $8,566. For the year ended September 30, 2011, cumulative net unrealized depreciation is $80,104 based on a tax cost of $383,052. |
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
14
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2012
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA AND AS OTHERWISE INDICATED)
NOTE 1. ORGANIZATION
Gladstone Capital Corporation was incorporated under the General Corporation Laws of the State of Maryland on May 30, 2001 and completed an initial public offering on August 23, 2001. The terms we, our, and us all refer to Gladstone Capital Corporation and its consolidated subsidiaries. We are a closed-end, non-diversified management investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, we have elected to be treated for tax purposes as a regulated investment company (RIC) under the Internal Revenue Code of 1986, as amended (the Code). Our investment objective is to achieve a high level of current income by investing in debt securities, consisting primarily of senior notes, senior subordinated notes and junior subordinated notes, with a particular focus on senior notes, of established private businesses in the United States (U.S) that are substantially owned by leveraged buyout funds, individual investors or are family-owned businesses. In addition, we may acquire existing loans that meet this profile from other funds.
Gladstone Business Loan, LLC (Business Loan), a wholly-owned subsidiary of ours, was established on February 3, 2003 for the sole purpose of owning our portfolio of investments in connection with our line of credit.
Gladstone Financial Corporation (Gladstone Financial), a wholly-owned subsidiary of ours, was established on November 21, 2006 for the purpose of holding a license to operate as a Specialized Small Business Investment Company. Gladstone Financial (previously known as Gladstone SSBIC Corporation) acquired this license in February 2007. The license enables us, through this subsidiary, to make investments in accordance with the United States Small Business Administration guidelines for specialized small business investment companies.
The financial statements of the subsidiaries are consolidated with those of ours.
We are externally managed by Gladstone Management Corporation (the Adviser), an affiliate of ours.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements and Basis of Presentation
We prepare our interim financial statements in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X under the Securities Act of 1933, as amended (the Securities Act). Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The accompanying condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Under Article 6 of Regulation S-X under the Securities Act, and the authoritative accounting guidance provided by the AICPA Audit and Accounting Guide for Investment Companies, we are not permitted to consolidate any portfolio company investments, including those in which we have a controlling interest. In our opinion, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of financial statements for the interim periods have been included. The results of operations for the three and six months ended March 31, 2012, are not necessarily indicative of results that ultimately may be achieved for the year. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended September 30, 2011, as filed with the Securities and Exchange Commission (the SEC) on November 14, 2011.
Our fiscal year-end Condensed Consolidated Statement of Assets and Liabilities was derived from audited financial statements, but does not include all disclosures required by GAAP.
Reclassifications
Certain amounts in the prior periods financial statements have been reclassified to conform to the presentation for the three and six month periods ended March 31, 2012, with no effect to net decrease in net assets resulting from operations.
15
Investment Valuation Policy
We carry our investments at fair value to the extent that market quotations are readily available and reliable and otherwise at fair value as determined in good faith by our board of directors (the Board of Directors). In determining the fair value of our investments, the Adviser has established an investment valuation policy (the Policy). The Policy has been approved by our Board of Directors, and each quarter our Board of Directors reviews whether the Adviser has applied the Policy consistently and votes whether to accept the recommended valuation of our investment portfolio. Such determination of fair values may involve subjective judgments and estimates.
We use generally accepted valuation techniques to value our portfolio unless we have specific information about the value of an investment to determine otherwise. From time to time, we may accept an appraisal of a business in which we hold securities. These appraisals are expensive and occur infrequently, but provide a third-party valuation opinion that may differ in results, techniques and scope used to value our investments. When we obtain these specific third-party appraisals, we use estimates of value provided by such appraisals and our own assumptions, including estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date, to value our investments.
The Policy, summarized below, applies to publicly traded securities, securities for which a limited market exists and securities for which no market exists.
Publicly traded securities: We determine the value of publicly traded securities based on the closing price for the security on the exchange or securities market on which it is listed and primarily traded on the valuation date. To the extent that we own restricted securities that are not freely tradable, but for which a public market otherwise exists, we will use the market value of that security adjusted for any decrease in value resulting from the restrictive feature.
Securities for which a limited market exists: We value securities that are not traded on an established secondary securities market, but for which a limited market for the security exists, such as certain participations in, or assignments of, syndicated loans, at the quoted bid price, which are non-binding. In valuing these assets, we assess trading activity in an asset class and evaluate variances in prices and other market insights to determine if any available quoted prices are reliable. In general, if we conclude that quotes based on active markets or trading activity may be relied upon, firm bid prices are requested; however, if firm bid prices are unavailable, we base the value of the security upon the indicative bid price (IBP) offered by the respective originating syndication agents trading desk, or secondary desk, on or near the valuation date. To the extent that we use the IBP as a basis for valuing the security, the Adviser may take further steps to consider additional information to validate that price in accordance with the Policy.
In the event these limited markets become illiquid to a degree that market prices are no longer readily available, we will value our syndicated loans using alternative methods, such as estimated net present values of the future cash flows or discounted cash flows (DCF). The use of a DCF methodology follows that prescribed by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, which provides guidance on the use of a reporting entitys own assumptions about future cash flows and risk-adjusted discount rates when relevant observable inputs, such as quotes in active markets, are not available. When relevant observable market data does not exist, an alternative outlined in ASC 820 is the valuation of investments based on DCF. For the purposes of using DCF to provide fair value estimates, we consider multiple inputs, such as a risk-adjusted discount rate that incorporates adjustments that market participants would make, both for nonperformance and liquidity risks. As such, we develop a modified discount rate approach that incorporates risk premiums including, among other things, increased probability of default, higher loss given default or increased liquidity risk. The DCF valuations applied to the syndicated loans provide an estimate of what we believe a market participant would pay to purchase a syndicated loan in an active market, thereby establishing a fair value. We will apply the DCF methodology in illiquid markets until quoted prices are available or are deemed reliable based on trading activity.
As of March 31, 2012 and September 30, 2011, we determined that the indicative bid prices were reliable indicators of fair value for our syndicate investments. However, because of the private nature of this marketplace (meaning actual transactions are not publicly reported); we determined that these valuation inputs were classified as Level 3 within the fair value hierarchy as defined in ASC 820.
Securities for which no market exists: The valuation methodology for securities for which no market exists falls into four categories: (A) portfolio investments comprised solely of debt securities; (B) portfolio investments in controlled companies comprised of a bundle of securities, which can include debt and equity securities; (C) portfolio investments in non-controlled companies comprised of a bundle of investments, which can include debt and equity securities; and (D) portfolio investments comprised of non-publicly traded, non-control equity securities of other funds.
16
(A) | Portfolio investments comprised solely of debt securities: Debt securities that are not publicly traded on an established securities market, or for which a limited market does not exist (Non-Public Debt Securities), and that are issued by portfolio companies in which we have no equity or equity-like securities, are fair valued utilizing opinions of value submitted to us by Standard & Poors Securities Evaluations, Inc. (SPSE). We may also submit paid-in-kind (PIK) interest to SPSE for its evaluation when it is determined that PIK interest is likely to be received. |
(B) | Portfolio investments in controlled companies comprised of a bundle of investments, which can include debt and equity securities: The fair value of these investments is determined based on the total enterprise value (TEV) of the portfolio company, or issuer, utilizing a liquidity waterfall approach under ASC 820 for our Non-Public Debt Securities and equity or equity-like securities (e.g., preferred equity, common equity or other equity-like securities) that are purchased together as part of a package, where we have control or could gain control through an option or warrant security; both the debt and equity securities of the portfolio investment would exit in the mergers and acquisitions market as the principal market, generally through a sale of the portfolio company. We manage our risk related to these investments at the aggregated issuer level and generally exit the debt and equity securities together. Applying the liquidity waterfall approach to all of the investments of an issuer, we first calculate the TEV of the issuer by incorporating some or all of the following factors: |
| the issuers ability to make payments; |
| the earnings of the issuer; |
| recent sales to third parties of similar securities; |
| the comparison to publicly traded securities; and |
| DCF or other pertinent factors. |
In gathering the sales to third parties of similar securities, we may reference industry statistics and use outside experts. TEV is only an estimate of value and may not be the value received in an actual sale. Once we have estimated the TEV of the issuer, we will subtract the value of all the debt securities of the issuer, which are valued at the contractual principal balance. Fair values of these debt securities are discounted for any shortfall of TEV over the total debt outstanding for the issuer. Once the values for all outstanding senior securities, which include all the debt securities, have been subtracted from the TEV of the issuer, the remaining amount, if any, is used to determine the value of the issuers equity or equity-like securities. If, in the Advisers judgment, the liquidity waterfall approach does not accurately reflect the value of the debt component, the Adviser may recommend that we use a valuation by SPSE, or, if that is unavailable, a DCF valuation technique.
(C) | Portfolio investments in non-controlled companies comprised of a bundle of investments, which can include debt and equity securities: We value Non-Public Debt Securities that are purchased together with equity or equity-like securities from the same portfolio company, or issuer, for which we do not control or cannot gain control as of the measurement date, using a hypothetical secondary market as our principal market. In accordance with ASC 820 (as amended by the FASBs Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS), (ASU 2011-04), we have defined our unit of account at the investment level (either debt or equity) and as such determine our fair value of these non-control investments assuming the sale of an individual security using the standalone premise of value. As such, we estimate the fair value of the debt component using estimates of value provided by SPSE and our own assumptions in the absence of observable market data, including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date. For equity or equity-like securities of investments for which we do not control or cannot gain control as of the measurement date, we estimate the fair value of the equity based on factors such as the overall value of the issuer, the relative fair value of other units of account, including debt, or other relative value approaches. Consideration is also given to capital structure and other contractual obligations that may impact the fair value of the equity. Furthermore, we may utilize comparable values of similar companies, recent investments and indices with similar structures and risk characteristics or DCF valuation techniques and, in the absence of other observable market data, our own assumptions. |
(D) | Portfolio investments comprised of non-publicly traded, non-control equity securities of other funds: We generally value any uninvested capital of the non-control fund at par value and values any invested capital at the value provided by the non-control fund. |
Due to the uncertainty inherent in the valuation process, such estimates of fair value may differ significantly and materially from the values that would have been obtained had a ready market for the securities existed. Additionally, changes in the market
17
environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned. There is no single standard for determining fair value in good faith, as fair value depends upon circumstances of each individual case. In general, fair value is the amount that we might reasonably expect to receive upon the current sale of the security in an orderly transaction between market participants at the measurement date.
Refer to Note 3Investments for additional information regarding fair value measurements and our application of ASC 820.
Interest Income Recognition
Interest income, adjusted for amortization of premiums and acquisition costs, the accretion of discounts and the amortization of amendment fees, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes 90 days or more past due, or if our qualitative assessment indicates that the debtor is unable to service its debt or other obligations, we will place the loan on non-accrual status and cease recognizing interest income on that loan until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, we remain contractually entitled to this interest. Interest payments received on non-accrual loans may be recognized as income or applied to the cost basis, depending upon managements judgment. Generally, non-accrual loans are restored to accrual status when past due principal and interest are paid and, in managements judgment, are likely to remain current, or due to a restructuring such that the interest income is deemed to be collectable. At March 31, 2012, eight portfolio companies were either fully or partially on non-accrual with an aggregate debt cost basis of $43.8 million, or 12.1% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $4.6 million, or 1.7% of the fair value of all debt investments in our portfolio. At September 30, 2011, eight portfolio companies were on non-accrual with an aggregate debt cost basis of $41.1 million, or 11.0% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $5.3 million, or 1.8% of the fair value of all debt investments in our portfolio.
As of March 31, 2012 and September 30, 2011, we had 27 original issue discount (OID) loans, primarily from the syndicated loans in our portfolio. We recorded OID income of $74 and $0.2 million for the three and six months ended March 31, 2012, respectively, as compared to $29 and $53 for the three and six months ended March 31, 2011. The unamortized balance of OID investments as of March 31, 2012 and September 30, 2011 totaled $1.4 million and $1.5 million, respectively.
As of March 31, 2012 and September 30, 2011, we had no investments that bore PIK interest. PIK interest, computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income. To maintain our status as a RIC, this non-cash source of income must be paid out to common stockholders in the form of distributions, even though we have not yet collected the cash. We recorded no PIK income during the three and six months ended March 31, 2012, respectively, as compared to $4 and $8 for the three and six months ended March, 31, 2011, respectively.
We also transfer past due interest to the principal balance as stipulated in certain loan amendments with portfolio companies. There were no such transfers during the three and six months ended March 31, 2012. We transferred past due interest to the principal balance of $0.2 million for both the three and six months ended March 31, 2011, respectively.
Other Income Recognition
We record success fees upon receipt. Success fees are typically contractually due upon a change of control in a portfolio company and are recorded in other income in our accompanying Condensed Consolidated Statements of Operations. We recorded $2.0 million of success fess during the six months ended March 31, 2012, which resulted from our exit of Global Materials Technologies, Inc and RCS Management Holding Co. We recorded $0.6 million of success fees during the six months ended March 31, 2011, which resulted from our exits of Pinnacle Treatment Centers, Inc. and Interfilm Holdings, Inc.
Recent Accounting Pronouncements
In May 2011, the FASB issued ASU 2011-04 which results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and IFRS. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011, and as such we have adopted this ASU beginning with our quarter ended March 31, 2012. We have increased our disclosures related to Level 3 fair value measurement, in addition to other required disclosures. There were no related impacts on our financial position or results of operations.
18
NOTE 3. INVESTMENTS
ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. ASC 820 provides a consistent definition of fair value that focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.
| Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; |
| Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active or inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are in those markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers; and |
| Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the asset or liability and can include our own assumptions based upon the best available information. |
We transfer investments in and out of Level 1, 2 and 3 securities as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. During the six months ended March 31, 2012 and 2011, there were no transfers in or out of Level 3.
The following table presents the investments carried at fair value as of March 31, 2012 and September 30, 2011, by caption on our accompanying Condensed Consolidated Statements of Assets and Liabilities and by security type, all of which are valued using Level 3 inputs:
Total Recurring Fair Value Measurements Reported in Condensed Consolidated Statements of Assets and Liabilities Using Significant Unobservable Inputs (Level 3) |
||||||||
March 31, 2012 | September 30, 2011 | |||||||
Non-Control/Non-Affiliate Investments |
||||||||
Senior term debt |
$ | 166,442 | $ | 182,002 | ||||
Senior subordinated term debt |
76,019 | 72,182 | ||||||
Preferred equity |
595 | 566 | ||||||
Common equity/equivalents |
3,179 | 2,552 | ||||||
|
|
|
|
|||||
Total Non-Control/Non-Affiliate Investments |
$ | 246,235 | $ | 257,302 | ||||
|
|
|
|
|||||
Control Investments |
||||||||
Senior term debt |
$ | 13,558 | $ | 18,143 | ||||
Senior subordinated term debt |
19,678 | 19,966 | ||||||
Common equity/equivalents |
8,696 | 7,536 | ||||||
|
|
|
|
|||||
Total Control Investments |
$ | 41,932 | $ | 45,645 | ||||
|
|
|
|
|||||
Total Investments at Fair Value |
$ | 288,167 | $ | 302,947 | ||||
|
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|
|
19
In accordance with ASU 2011-04, the following table provides quantitative information about our Level 3 fair value measurements of our investments as of March 31, 2012. In addition to the techniques and inputs noted in the table below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The below table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted average calculations in the table below are based on the principal balances for all debt related calculations and on the cost basis for all equity related calculations for the particular input.
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||
Fair Value as of March 31, 2012 |
Valuation Methodologies |
Unobservable Input |
Range /
Weighted Average |
|||||||||
Non-syndicated debt only investments |
$ | 99,306 | SPSE (A) | EBITDA (B) | ($310) - $14,058 / $4,976 | |||||||
Risk Ratings (C) | 2.0 - 10.0 / 6.3 | |||||||||||
Syndicated debt only investments |
95,503 | Market Quotes | IBP (D) | 93.5% - 101.4% / 98.3% | ||||||||
Bundled debt and equity investments |
92,205 | SPSE (A) | EBITDA (B) | |
($1,595) - $6,406 / $3,087 |
| ||||||
Risk Ratings (C) | 3.0 - 6.0 / 4.6 | |||||||||||
TEV | EBITDA multiples (B) | 4.6 - 9.7 / 5.9 | ||||||||||
EBITDA (B) | |
($1,595) - $25,026 / $2,921 |
| |||||||||
Other Investments |
1,153 | |||||||||||
|
|
|||||||||||
Total Fair Value for Level 3 Investments |
$ | 288,167 | ||||||||||
|
|
(A) | SPSE makes an independent assessment of the data we submit to them (which includes the financial and operational performance, as well as our internally assessed risk ratings of the portfolio companies see footnote (C) below) and its own independent data to form an opinion as to what they consider to be the market values for our securities. With regard to its work, SPSE has stated that the data submitted to us is regarded as proprietary in nature. |
(B) | Earnings before interest expense, taxes, depreciation and amortization (EBITDA) is an unobservable input which is generally based on the most recently available trailing twelve month financial statements submitted to us from the portfolio companies. EBITDA multiples, indexed in accordance with our valuation policy, represent our estimation of where market participants might price these investments. For our bundled debt and equity investments, the EBITDA and EBITDA multiples impact the TEV fair value determination and the value of the issuers debt, equity, or equity-like securities are valued in accordance with our liquidity waterfall approach. |
(C) | As part of our valuation procedures, we risk rate all of our investments in debt securities. We use the Nationally Recognized Statistical Rating Organizations risk rating system for generally all of syndicated loans and a proprietary risk rating system for all other debt securities. Our risk rating system uses a scale of 0 to 10, with 10 being the lowest probability of default. The risk rating system covers both qualitative and quantitative aspects of the portfolio company business and the securities we hold. |
(D) | We generally base the value of our syndicated debt securities on the IBP offered by the respective originating syndication agents trading desk, or secondary desk, on or near the valuation date. These bid prices are non-binding and are generally based on the underlying company performance and security characteristics, as well as other market conditions and credit risk factors. |
In general, included in the internally assessed TEV model used to value our proprietary debt and equity investments, the significant unobservable inputs are the portfolio companys EBITDA and EBITDA multiples. All other factors holding constant, increases (decreases) in the EBITDA and/or the EBITDA multiples inputs would result in a higher (lower) fair value measurement. Per our valuation policy, we generally use an indexed EBITDA multiple. EBITDA and EBITDA multiple inputs do not have to directionally correlate since EBITDA is a company performance metric and EBITDA multiples can be influenced by market, industry, size and other factors.
Changes in Level 3 Fair Value Measurements of Investments
The following tables provide the changes in fair value, broken out by security type, during the three and six-month periods ending March 31, 2012 and 2011 for all investments for which we determine fair value using unobservable (Level 3) factors. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, such determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (that is, components that are actively quoted and can be validated to external sources). In these cases, we categorize all of the inputs as the lowest level input within the hierarchy. Accordingly, the gains and losses in the tables below include changes in fair value, due in part to observable factors that are part of the valuation methodology.
20
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Periods ended March 31, 2012:
Three months ended March 31, 2012: | Senior Term Debt |
Senior Subordinated Term Debt |
Preferred Equity |
Common Equity/ Equivalents |
Total | |||||||||||||||
Fair value as of December 31, 2011 |
$ | 192,821 | $ | 88,004 | $ | 581 | $ | 11,440 | $ | 292,846 | ||||||||||
Total gains or losses |
||||||||||||||||||||
Net realized gain (a) |
37 | | | | 37 | |||||||||||||||
Net unrealized (depreciation) appreciation (b) |
(6,292 | ) | (784 | ) | (986 | ) | 435 | (7,627 | ) | |||||||||||
Reversal of prior period net depreciation on realization (b) |
458 | | | | 458 | |||||||||||||||
New investments, repayments and settlements (c) |
||||||||||||||||||||
Issuances/originations |
8,858 | 8,500 | 1,000 | | 18,358 | |||||||||||||||
Settlements/repayments |
(13,912 | ) | (23 | ) | | | (13,935 | ) | ||||||||||||
Sales |
(1,970 | ) | | | | (1,970 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fair value as of March 31, 2012 |
$ | 180,000 | $ | 95,697 | $ | 595 | $ | 11,875 | $ | 288,167 | ||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||
Six months ended March 31, 2012: | Senior Term Debt |
Senior Subordinated Term Debt |
Preferred Equity |
Common Equity/ Equivalents |
Total | |||||||||||||||
Fair value as of September 30, 2011 |
$ | 200,145 | $ | 92,148 | $ | 566 | $ | 10,088 | $ | 302,947 | ||||||||||
Total gains or losses |
||||||||||||||||||||
Net realized loss (a) |
(8,363 | ) | | | | (8,363 | ) | |||||||||||||
Net unrealized (depreciation) appreciation (b) |
(15,128 | ) | (2,028 | ) | (1,572 | ) | 1,787 | (16,941 | ) | |||||||||||
Reversal of prior period net depreciation on realization (b) |
11,571 | 444 | | | 12,015 | |||||||||||||||
New investments, repayments and settlements (c) |
||||||||||||||||||||
Issuances/originations |
16,688 | 11,320 | 1,601 | | 29,609 | |||||||||||||||
Settlements/repayments |
(18,454 | ) | (6,187 | ) | | | (24,641 | ) | ||||||||||||
Sales |
(6,459 | ) | | | | (6,459 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fair value as of March 31, 2012 |
$ | 180,000 | $ | 95,697 | $ | 595 | $ | 11,875 | $ | 288,167 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Periods ended March 31, 2011:
|
||||||||||||||||||||
Three months ended March 31, 2011: | Senior Term Debt |
Senior Subordinated Term Debt |
Preferred Equity |
Common Equity/ Equivalents |
Total | |||||||||||||||
Fair value as of December 31, 2010 |
$ | 169,882 | $ | 76,999 | $ | 523 | $ | 5,101 | $ | 252,505 | ||||||||||
Total gains or losses |
||||||||||||||||||||
Net realized gain (loss) (a) |
177 | (14 | ) | | | 163 | ||||||||||||||
Net unrealized (depreciation) appreciation (b) |
(11,268 | ) | (1,364 | ) | (361 | ) | 134 | (12,859 | ) | |||||||||||
Reversal of prior period net appreciation on realization (b) |
(210 | ) | | | | (210 | ) | |||||||||||||
New investments, repayments and settlements (c) |
||||||||||||||||||||
Issuances/originations |
37,544 | 1,038 | 375 | 1,880 | 40,837 | |||||||||||||||
Settlements/repayments |
(22,523 | ) | (60 | ) | | | (22,583 | ) | ||||||||||||
Sales |
| | | (740 | ) | (740 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fair value as of March 31, 2011 |
$ | 173,602 | $ | 76,599 | $ | 537 | $ | 6,375 | $ | 257,113 | ||||||||||
|
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|
|
|
|
|
|
|
|
|||||||||||
Six months ended March 31, 2011: | Senior Term Debt |
Senior Subordinated Term Debt |
Preferred Equity |
Common Equity/ Equivalents |
Total | |||||||||||||||
Fair value as of September 30, 2010 |
$ | 172,596 | $ | 81,899 | $ | 386 | $ | 2,228 | $ | 257,109 | ||||||||||
Total gains or losses |
||||||||||||||||||||
Net realized gain (loss) (a) |
177 | (14 | ) | | | 163 | ||||||||||||||
Net unrealized (depreciation) appreciation (b) |
(17,218 | ) | (1,839 | ) | (224 | ) | 2,974 | (16,307 | ) | |||||||||||
Reversal of prior period net (appreciation) depreciation on realization (b) |
(191 | ) | 731 | | (247 | ) | 293 |
21
Six months ended March 31, 2011: | Senior Term Debt |
Senior Subordinated Term Debt |
Preferred Equity |
Common Equity/ Equivalents |
Total | |||||||||||||||
New investments, repayments and settlements (c) |
||||||||||||||||||||
Issuances/originations |
46,942 | 3,122 | 375 | 2,197 | 52,636 | |||||||||||||||
Settlements/repayments |
(28,704 | ) | (7,300 | ) | | | (36,004 | ) | ||||||||||||
Sales |
| | | (777 | ) | (777 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fair value as of March 31, 2011 |
$ | 173,602 | $ | 76,599 | $ | 537 | $ | 6,375 | $ | 257,113 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(a) | Included in net realized gain (loss) on Non-Control/Non-Affiliate and Control investments on our accompanying Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2012 and 2011. |
(b) | Included in net unrealized depreciation on Non-Control/Non-Affiliate and Control investments on our accompanying Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2012 and 2011. |
(c) | Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts, premiums and closing fees as well as decreases in the cost basis of investments resulting from principal repayments or sales. |
Non-Control/Non-Affiliate Investments
As of March 31, 2012 and September 30, 2011, we held 46 and 50 Non-Control/Non-Affiliate investments in the aggregate fair value of $246.2 million and $257.3 million, respectively. Of these, we had a total of 24 syndicate loans in the aggregate fair value of $96.8 million and $90.7 million, as of March 31, 2012 and September 30, 2011, respectively. During the six months ended March 31, 2012, we added two new Non-Control/Non-Affiliate investments, with an aggregate fair value of $10.0 million at March 31, 2012, and four Non-Control/Non-Affiliate investments paid off early, for which we received aggregate principal payments of $14.9 million. Additionally, we funded $11.4 million to existing Non-Control/Non-Affiliate portfolio companies during the six months ended March 31, 2012. The following sales and restructures of Non-Control/Non-Affiliate investments occurred during the six months ended March 31, 2012:
| KMBQ Corporation In November 2011, we invested $1.6 million in Ohana Media Group (Ohana) to facilitate its purchase of certain of KMBQ Corporations (KMBQ) assets out of receivership. In connection with this transaction, we received net proceeds of $1.2 million and recorded a realized loss during the three months ended December 31, 2011 totaling $1.0 million. Ohana replaced KMBQ on our Condensed Consolidated Schedule of Investments as a Non-Control/Non-Affiliate investment at December 31, 2011. |
| Newhall Holdings, Inc. In December 2011, we sold our investments in Newhall Holdings, Inc. (Newhall) for net proceeds of $3.3 million, which resulted in a realized loss of $7.4 million recorded in the three months ended December 31, 2011. |
Control Investments
As of March 31, 2012 and September 30, 2011, we held nine Control investments in the aggregate fair value of $41.9 million and $45.6 million, respectively. During the six months ended March 31, 2012, five Control investments made draws on their lines of credit, totaling $4.6 million. We did not exit any Control investments during the six months ended March 31, 2012. The following restructures of Control investments occurred during the six months ended March 31, 2012:
| Sunshine Media Holdings - Effective October 1, 2011, we restructured Sunshine Media Holdings (Sunshine) by reducing the interest rates on its line of credit, senior term debt and LOT senior term debt to preserve capital at the portfolio company to further enable Sunshine to invest in new and existing initiatives. In addition, we funded $1.6 million through additional preferred equity investments and $2.1 million through additional line of credit draws to Sunshine for the six months ended March 31, 2012. We placed our investment in Sunshines LOT senior term debt on non-accrual status effective January 1, 2012. |
| Viapack, Inc. - Effective January 1, 2012, we restructured our investment in Viapack, Inc. (Viapack), by reducing the interest rates on its line of credit, senior real estate term debt and senior term debt to preserve capital at the portfolio company to enable it to invest in existing initiatives. In addition, we funded $1.8 million to Viapack through additional draws on its line of credit for the six months ended March 31, 2012. We placed our investment in Viapacks LOT senior term debt on non-accrual status effective January 1, 2012. |
22
Investment Concentrations
As of March 31, 2012, our investment portfolio consisted of loans to 55 companies located in 26 states across 23 different industries with an aggregate fair value of $288.2 million. As of March 31, 2012, there were 24 syndicated investments totaling $96.7 million at cost and $96.8 million at fair value, or 25.9% and 33.6% of the total aggregate portfolio, respectively.
The following table outlines our investments by security type as of March 31, 2012 and September 30, 2011:
March 31, 2012 | September 30, 2011 | |||||||||||||||||||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||||||||||||||||||
Senior term debt |
$ | 249,904 | 67.0 | % | $ | 180,000 | 62.5 | % | $ | 266,491 | 69.6 | % | $ | 200,145 | 66.1 | % | ||||||||||||||||
Senior subordinated term debt |
112,272 | 30.1 | 95,697 | 33.2 | 107,140 | 28.0 | 92,148 | 30.4 | ||||||||||||||||||||||||
Common equity/equivalents |
6,264 | 1.7 | 11,875 | 4.1 | 7,999 | 2.1 | 10,088 | 3.3 | ||||||||||||||||||||||||
Preferred equity |
4,520 | 1.2 | 595 | 0.2 | 1,185 | 0.3 | 566 | 0.2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total investments |
$ | 372,960 | 100.0 | % | $ | 288,167 | 100.0 | % | $ | 382,815 | 100.0 | % | $ | 302,947 | 100.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at fair value consisted of the following industry classifications at March 31, 2012 and September 30, 2011:
March 31, 2012 | September 30, 2011 | |||||||||||||||
Industry Classification |
Fair Value | Percentage of Total Investments |
Fair Value | Percentage of Total Investments |
||||||||||||
Electronics |
$ | 53,484 | 18.6 | % | $ | 45,752 | 15.1 | % | ||||||||
Mining, steel, iron & non-precious metals |
32,063 | 11.1 | 33,734 | 11.1 | ||||||||||||
Healthcare, education & childcare |
30,034 | 10.4 | 34,106 | 11.3 | ||||||||||||
Automobile |
26,725 | 9.3 | 25,768 | 8.5 | ||||||||||||
Broadcast (TV & radio) |
20,420 | 7.1 | 28,194 | 9.3 | ||||||||||||
Retail stores |
19,340 | 6.7 | 19,340 | 6.4 | ||||||||||||
Aerospace & defense |
15,212 | 5.3 | 10,003 | 3.3 | ||||||||||||
Printing & publishing |
12,923 | 4.5 | 17,623 | 5.8 | ||||||||||||
Textiles & leather |
9,801 | 3.4 | 9,626 | 3.2 | ||||||||||||
Personal & non-durable consumer products |
8,582 | 3.0 | 6,962 | 2.3 | ||||||||||||
Personal, food and miscellaneous services |
7,915 | 2.7 | 7,635 | 2.5 | ||||||||||||
Machinery |
7,664 | 2.7 | 8,696 | 2.9 | ||||||||||||
Beverage, food & tobacco |
7,295 | 2.5 | 7,332 | 2.4 | ||||||||||||
Diversified/conglomerate manufacturing |
7,251 | 2.5 | 8,790 | 2.9 | ||||||||||||
Buildings & real estate |
6,557 | 2.3 | 10,275 | 3.4 | ||||||||||||
Leisure, amusement, movies & entertainment |
6,054 | 2.1 | 6,607 | 2.2 | ||||||||||||
Diversified/conglomerate service |
3,990 | 1.4 | 3,810 | 1.3 | ||||||||||||
Home & office furnishings |
3,952 | 1.4 | 9,715 | 3.2 | ||||||||||||
Diversified natural resources, precious metals & minerals |
2,993 | 1.0 | 3,054 | 1.0 | ||||||||||||
Other (A) |
5,912 | 2.0 | 5,925 | 1.9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total investments |
$ | 288,167 | 100.0 | % | $ | 302,947 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
(A) | No individual industry within this category exceeds 1%. |
The investments at fair value were included in the following geographic regions of the U.S. at March 31, 2012 and September 30, 2011:
March 31, 2012 | September 30, 2011 | |||||||||||||||
Geographic Region |
Fair Value | Percent
of Total Investments |
Fair Value | Percentage
of Total Investments |
||||||||||||
Midwest |
$ | 133,425 | 46.3 | % | $ | 144,292 | 47.6 | % | ||||||||
West |
76,264 | 26.5 | 70,862 | 23.4 | ||||||||||||
South |
45,234 | 15.7 | 52,265 | 17.3 | ||||||||||||
Northeast |
25,764 | 8.9 | 28,158 | 9.3 | ||||||||||||
Other non U.S. |
7,480 | 2.6 | 7,370 | 2.4 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments |
$ | 288,167 | 100.0 | % | $ | 302,947 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
The geographic region reflects the location of the headquarters of our portfolio companies. A portfolio company may have a number of other business locations in other geographic regions.
23
Investment Principal Repayments
The following table summarizes the contractual principal repayments and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, at March 31, 2012:
Amount | ||||||
For the remaining six months ending September 30: |
2012 |
$ | 30,816 | |||
For the fiscal year ending September 30: |
2013 |
106,242 | ||||
2014 |
51,190 | |||||
2015 |
31,517 | |||||
2016 |
75,867 | |||||
Thereafter |
67,925 | |||||
|
|
|||||
Total contractual repayments |
$ | 363,557 | ||||
Investments in equity securities |
10,784 | |||||