/C O R R E C T I O N -- Gladstone Capital Corporation/
In the news release, Gladstone Capital Corporation Reports Results for the Fourth Quarter and Fiscal Year Ended September 30, 2010, issued 22-Nov-2010 by Gladstone Capital Corporation over PR Newswire, we are advised by the company that in the table "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS," under the 2010 column, "Other expenses" should be "361" rather than "-" as originally issued inadvertently. The complete, corrected release follows:
Gladstone Capital Corporation Reports Results for the Fourth Quarter and Fiscal Year Ended September 30, 2010
- Net Investment Income for the quarter and fiscal year ended September 30, 2010 was $4.4 million, or $0.21 per share, and $17.8 million, or $0.84 per share, respectively
- Net Increase in Net Assets Resulting from Operations for the quarter and fiscal year ended September 30, 2010 was $3.8 million, or $0.18 per share, and $16.4 million, or $0.78 per share, respectively
MCLEAN, Va., Nov. 22, 2010 /PRNewswire-FirstCall/ -- Gladstone Capital Corporation (Nasdaq: GLAD) (the "Company") today announced earnings both for the quarter and fiscal year ended September 30, 2010. All per share references are per basic and diluted weighted average common shares outstanding, unless otherwise noted.
(Logo: https://photos.prnewswire.com/prnh/20101005/GLADSTONECAPITAL )
Net Investment Income for the Quarter: Net Investment Income for the quarter ended September 30, 2010 was $4.4 million, or $0.21 per share, as compared to $4.2 million, or $0.20 per share, for the prior year period, an increase in Net Investment Income of 5% and an increase of 5% per share. Net Investment Income increased primarily due to higher transaction fees received during the three months ended September 30, 2010 than during the prior year period.
Net Investment Income for the Fiscal Year: Net Investment Income for the year ended September 30, 2010 was $17.8 million, or $0.84 per share, as compared to $21.0 million, or $1.00 per share, for the prior year period, a decrease in Net Investment Income of 15% and a decrease of 16% per share. Net Investment Income decreased primarily due to a decline in investment income resulting from the repayment and sale of loans and lower transaction fees received, partially offset by a decline in incentive fees accrued during the year ended September 30, 2010 than during the prior year.
Net Increase in Net Assets Resulting from Operations for the Quarter: Net Increase in Net Assets Resulting from Operations for the quarter ended September 30, 2010 was $3.8 million, or $0.18 per share, as compared to a Net Increase in Net Assets Resulting from Operations of $3.4 million, or $0.16 per share, for the prior year period. The increase in Net Increase in Net Assets Resulting from Operations between the two periods was primarily due to the higher net investment income during the quarter ended September 30, 2010 compared to the prior year period.
Net Increase in Net Assets Resulting from Operations for the Fiscal Year: Net Increase in Net Assets Resulting from Operations for the year ended September 30, 2010 was $16.4 million, or $0.78 per share, as compared to a Net Increase in Net Assets Resulting from Operations of $3.8 million, or $0.18 per share, for the prior year. The increase in Net Increase in Net Assets Resulting from Operations between the two years was primarily due to the lower net loss on the Company's investment portfolio during the year ended September 30, 2010. The Company recorded a net loss on investments, derivatives and borrowings under line of credit of $1.4 million for the year ended September 30, 2010, compared to a net loss of $17.2 million for the prior year.
Estimated Fair Value: The aggregate investment portfolio depreciated during the year ended September 30, 2010. As of September 30, 2010, the entire portfolio was fair valued at 86% of cost, as compared to 88% of cost at September 30, 2009.
Asset Characteristics: Total assets were $270.5 million at September 30, 2010, as compared to $335.9 million at September 30, 2009. Net asset value was $11.85 per share at September 30, 2010 as compared to $11.81 per share at September 30, 2009. At September 30, 2010, the Company had investments in 39 private companies with an aggregate cost basis of $298.2 million and an aggregate fair value of $257.1 million. Average asset risk rating for the non-syndicated loans in the Company's portfolio at September 30, 2010 was 6.1 on a ten point scale as compared to 7.1 at September 30, 2009.
Annualized Yield: The annualized weighted average yield on the Company's portfolio, excluding cash and cash equivalents, was 9.9% for the year ended September 30, 2010, as compared to 9.8% for the prior year. The weighted average yield varies from period to period based on the current stated interest rate on interest-bearing investments and the amounts of loans for which interest is not accruing.
Highlights for the Fiscal Year: For the year ended September 30, 2010, the Company reported the following significant events:
-- Began making new loans and investments after more than one year of
liquidating investments and paid down the Company's line of credit
facility. Established a backlog of new investment opportunities to
review for investing in fiscal year 2011;
-- Funded approximately $10.6 million of three new investments and $12.6
million of additional investments to existing portfolio companies, for
an aggregate of $23.2 million;
-- Received principal repayments of approximately $82.6 million, which
included scheduled principal payments and full repayment from eight
companies;
-- Received proceeds of approximately $3.1 million from the sale of three
portfolio companies and recorded a corresponding realized net loss of
approximately $4.2 million;
-- Wrote off approximately $2.9 million of an investment and recorded a
corresponding realized net loss of approximately $2.9 million;
-- Received approximately $1.9 million in success fees in connection with
the payoff and refinancing of seven investments;
-- Entered into a fourth amended and restated credit facility with Key
Equipment Finance Company Inc., Branch Bank and Trust Company and ING
Capital LLC for a $127 million line of credit (the "Credit Facility"),
which matures on March 15, 2012, with a one year amortization period;
-- Entered into an equity distribution agreement with BB&T Capital Markets
(the "Agent"), under which the Company may, from time to time, issue and
sell through the Agent, up to 2,000,000 shares of the Company's common
stock; and
-- Paid monthly cash distributions to stockholders of $0.07 per share for
each of the months of October 2009 through September 2010.
Comments from President and Chief Investment Officer Chip Stelljes: "During the quarter, we invested $10 million in one new investment and received proceeds from repayments of approximately $25.6 million, including the successful realization of two investments. With the currently outstanding balance on our $127 million line of credit of only $19.6 million, we are actively reviewing new investment opportunities, and we believe that we will be able to increase our new investment activity over the next twelve months."
Subsequent to September 30, 2010, the Company:
-- Funded approximately $8.4 million of investments, which included $7
million for three new syndicated loans;
-- Received approximately $1.8 million from scheduled and unscheduled loan
repayments;
-- Amended the Credit Facility on November 22, 2010 (the "Amendment Date").
Prior to the Amendment Date, advances under the Credit Facility bore
interest at the 30-day London Interbank Offered Rate ("LIBOR") subject
to a minimum rate of 2.0%, plus 4.5% per annum, with a commitment fee of
0.5% per annum on undrawn amounts. As of the Amendment Date, advances
under the Credit Facility bear interest at LIBOR subject to a minimum
rate of 1.5%, plus 3.75% per annum, with a commitment fee of 0.5% per
annum on undrawn amounts when the facility is drawn more than 50.0% and
1.0% per annum on undrawn amounts when the facility is drawn less than
50.0%. In addition, effective as of the Amendment Date, the Company is
no longer obligated to pay an annual minimum earnings shortfall fee to
the committed lenders, which was calculated as the difference between
the weighted average of borrowings outstanding under the Credit Facility
and 50.0% of the commitment amount of the Credit Facility, multiplied by
4.5% per annum, less commitment fees paid during the year. As of the
Amendment Date, the Company paid $665,000, which represented the
entirety of the minimum earnings shortfall fee; and
-- Declared monthly cash distributions to stockholders of $0.07 per common
share for each of the months of October, November and December 2010.
Conference Call for Stockholders: The Company will hold a conference call on Tuesday, November 23, 2010 at 8:30 am EST. Please call (800) 860-2442 to enter the conference. An operator will monitor the call and set a queue for the questions. A replay of the conference call will be available through December 23, 2010. To hear the replay, please dial (877) 344-7529 and access playback conference number 445299. The replay will be available approximately two hours after the call concludes.
The live audio broadcast of the Company's quarterly conference call will be available online at www.GladstoneCapital.com. The event will be archived and available for replay on the Company's website through January 22, 2011.
Warning: The financial statements below are without footnotes so readers should obtain and carefully review the Company's Form 10-K for the year ended September 30, 2010, including the footnotes to the financial statements contained therein. The Company has filed the Form 10-K today with the Securities and Exchange Commission (the "SEC"), which can be retrieved from the SEC's website at www.sec.gov or from the Company's website at www.GladstoneCapital.com. A paper copy can be obtained free of charge by writing to the Company at 1521 Westbranch Drive, Suite 200, McLean, VA 22102.
The statements in this press release regarding the timing and ability of the Company to increase its investment activities are "forward-looking statements." These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results to differ from these forward-looking statements include, among others, the duration and potential future effects of the current economic downturn on its portfolio companies and on the senior loan market, the Company's ability to access debt and equity capital and those factors listed under the caption "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as filed with the SEC on November 22, 2010. The risk factors set forth in the Company's Annual Report on Form 10-K under the caption "Risk Factors" are specifically incorporated by reference into this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS & LIABILITIES
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
September 30, September 30,
2010 2009
ASSETS
Non-Control/Non-Affiliate investments (Cost of
$244,140 and $312,043, respectively) $ 223,737 $ 286,997
Control investments (Cost of $54,076 and $52,350,
respectively) 33,372 33,972
Total investments at fair value (Cost of $298,216
and $364,393, respectively) 257,109 320,969
Cash 7,734 5,276
Interest receivable – investments in debt
securities 2,648 3,048
Interest receivable – employees 104 85
Due from custodian 255 3,059
Due from Adviser - 69
Deferred financing fees 1,266 1,230
Prepaid assets 799 341
Receivables from portfolio companies, less
allowance for uncollectible receivables of $322
and $0 at September 30, 2010 and 2009,
respectively 289 1,528
Other assets 314 305
TOTAL ASSETS $ 270,518 $ 335,910
LIABILITIES
Accounts payable $ - $ 67
Interest payable 693 378
Fee due to Administrator) 267 216
Fees due to Adviser 673 834
Borrowings under line of credit (Cost of $16,800
and $83,000, respectively) 17,940 83,350
Accrued expenses and deferred liabilities 1,426 1,800
Funds held in escrow 273 189
TOTAL LIABILITIES 21,272 86,834
COMMITMENTS AND CONTINGENCIES
NET ASSETS $ 249,246 $ 249,076
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000 shares
authorized and 21,039,242 and 21,087,574 shares
issued and outstanding at September 30, 2010 and
2009, respectively $ 21 $ 21
Capital in excess of par value 326,935 328,203
Notes receivable – employees (7,103) (9,019)
Net unrealized depreciation on investments (41,108) (43,425)
Net unrealized appreciation on borrowings under
line of credit (1,140) (350)
Overdistributed net investment income (1,103) -
Accumulated Net Realized Losses (27,256) (26,354)
TOTAL NET ASSETS $ 249,246 $ 249,076
NET ASSETS PER SHARE $ 11.85 $ 11.81
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three months ended September 30
2010 2009
INVESTMENT INCOME
Interest income
Investments $ 7,695 $ 8,997
Notes receivable from employees 107 116
Total interest income 7,802 9,113
Other income 149 170
Total investment income 7,951 9,283
EXPENSES
Loan servicing fee 812 1,061
Base management fee 554 631
Incentive fee 222 -
Administration fee 267 216
Interest expense 828 1,661
Amortization of deferred financing fees 309 531
Professional fees 469 802
Other expenses 361 235
Expenses before credit from Adviser 3,822 5,137
Credit to base management and incentive fees
from Adviser (299) (13)
Total expenses net of credit to base management
and incentive fees 3,523 5,124
NET INVESTMENT INCOME 4,428 4,159
REALIZED AND UNREALIZED LOSS ON INVESTMENTS,
DERIVATIVE AND BORROWINGS UNDER LINE OF CREDIT:
Net realized loss on investments - (12,086)
Net unrealized (depreciation) appreciation on
investments (1,209) 11,671
Net unrealized depreciation (appreciation) on
borrowings under line of credit 616 (350)
Net loss on investments and borrowings under
line of credit (593) (765)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 3,835 $ 3,394
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic and Diluted $ 0.18 $ 0.16
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic and Diluted 21,039,242 21,087,574
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Year ended September 30,
2010 2009 2008
INVESTMENT INCOME
Interest income
Investments $ 32,583 $ 41,680 $ 43,798
Cash 1 11 335
Notes receivable from employees 437 468 471
Total interest income 33,021 42,159 44,604
Other income 2,518 459 1,121
Total investment income 35,539 42,618 45,725
EXPENSES
Loan servicing fee 3,412 5,620 6,117
Base management fee 2,673 2,005 2,212
Incentive fee 1,823 3,326 5,311
Administration fee 807 872 985
Interest expense 4,390 7,949 8,284
Amortization of deferred financing fees 1,490 2,778 1,534
Professional fees 2,101 1,586 911
Compensation expense 245 - -
Other expenses 1,259 1,131 1,215
Expenses before credit from Adviser 18,200 25,267 26,569
Credit to fees from Adviser (420) (3,680) (7,397)
Total expenses net of credit to credits to
fees 17,780 21,587 19,172
NET INVESTMENT INCOME 17,759 21,031 26,553
REALIZED AND UNREALIZED LOSS ON:
Net realized loss on investments (2,893) (26,411) (787)
Net unrealized appreciation (depreciation)
on investments 2,317 9,513 (47,023)
Realized (loss) gain on settlement of
derivative - (304) 7
Net unrealized appreciation (depreciation)
on derivative - 304 (12)
Net unrealized appreciation on borrowings
under line of credit (789) (350) -
Net loss on investments, derivative and
borrowings under line of credit (1,365) (17,248) (47,815)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 16,394 $ 3,783 $ (21,262)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS PER COMMON SHARE
Basic and Diluted $ 0.78 $ 0.18 $ (1.08)
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING
Basic and Diluted 21,060,351 21,087,574 19,699,796
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)
(UNAUDITED)
Three months ended September 30,
2010 2009
Per Share Data: (1)
Net asset value at beginning of period $ 11.81 $ 11.86
Income from investment operations(2)
Net investment income 0.21 0.20
Net realized loss on the sale of investments - (0.57)
Net unrealized (depreciation) appreciation on
investments (0.06) 0.55
Net unrealized appreciation on borrowings
under line of credit 0.03 (0.02)
Total from investment operations 0.18 0.16
Distributions to stockholders from(2)(3) (0.21) (0.21)
Capital share transactions:
Repayment of principal on notes receivable 0.07 -
Total from capital share transactions 0.07 -
Net asset value at end of period $ 11.85 $ 11.81
Per share market value at beginning of period $ 10.81 $ 7.53
Per share market value at end of period $ 11.27 $ 8.93
Total return (4) 6.22% 21.48%
Shares outstanding at end of period 21,039,242 21,087,574
Statement of Assets and Liabilities Data:
Net assets at end of period $249,246 $249,076
Average net assets(5) $248,424 $248,606
Senior Securities Data:
Borrowing under line of credit $ 17,940 $ 83,350
Asset coverage ratio (6)(7) 1,419% 396%
Average coverage per unit (7) $ 14,187 $ 3,963
Ratios/Supplemental Data:
Ratio of expenses to average net assets (8) 6.15% 8.27%
Ratio of net expenses to average net assets
(9) 5.67% 8.24%
Ratio of net investment income to average net
assets 7.13% 6.69%
(1) Based on actual shares outstanding at the end of the corresponding period.
(2) Based on weighted average basic per share data.
(3) Distributions are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under accounting principles generally accepted in the United States of America.
(4) Total return equals the change in the ending market value of the Company's common stock from the beginning of the period taking into account distributions reinvested in accordance with the terms of the Company's dividend reinvestment plan. Total return does not take into account distributions that may be characterized as a return of capital.
(5) Average net assets are computed using the average of the balance of net assets at the end of each month of the reporting period.
(6) As a business development company, the Company is generally required to maintain a ratio of at least 200% of total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to total borrowings and guaranty commitments.
(7) Asset coverage ratio is the ratio of the carrying value of the Company's total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness (including interest payable and guarantees). Asset coverage per unit is the asset coverage ratio expressed in terms of dollar amounts per one thousand dollars of indebtedness.
(8) Ratio of expenses to average net assets is computed using expenses before credits from Adviser to the base management and incentive fees and including income tax expense.
(9) Ratio of net expenses to average net assets is computed using total expenses net of credits from Adviser to the base management and incentive fees and including income tax expense.
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)
(UNAUDITED)
Year Ended September 30,
2010 2009 2008 2007 2006
Per Share Data (1)
Net asset value at
beginning of period $ 11.81 $ 12.89 $ 14.97 $ 14.02 $ 13.41
Income from
investment
operations(2)
Net investment
income 0.84 1.00 1.35 1.69 1.70
Net realized loss on
the sale of
investments (0.14) (1.25) (0.04) - (0.08)
Realized loss on
settlement of
derivative - (0.01) - - -
Net unrealized
appreciation on
derivative - 0.01 - - -
Net unrealized
appreciation
(depreciation) on
investments 0.11 0.45 (2.39) (0.56) 0.53
Net unrealized
appreciation on
borrowings under
line of credit (0.03) (0.02) - - -
Total from
investment
operations 0.78 0.18 (1.08) 1.13 2.15
Distributions to
stockholders from(2)
(3)
Net investment
income (0.80) (0.99) (1.31) (1.48) (1.64)
Gains - - (0.01) - -
Tax return on
capital (0.04) (0.27) (0.36) (0.20) -
Total distributions (0.84) (1.26) (1.68) (1.68) (1.64)
Capital share
transactions
Issuance of common
stock under shelf
offering - - 0.72 1.55 -
Issuance of common
stock under stock
option plan - - - - 1.19
Offering costs - - (0.04) (0.05) -
Repayment of
principal on notes
receivable 0.07 - - 0.06 0.02
Conversion of
recourse to
non-recourse notes (0.02)
Reclassification of
principal on
employee note 0.02
Stock compensation
expense - - - - 0.02
Stock surrendered to
settle withholding
tax obligation - - - (0.06) -
Dilutive effect of
common stock
issuance - - - - (1.13)
Anti-dilutive effect
of common stock
reduction 0.03 - - - -
Total from capital
share transactions 0.10 - 0.68 1.50 0.10
Net asset value at
end of period $ 11.85 $ 11.81 $ 12.89 $ 14.97 $ 14.02
Per share market
value at beginning
of period $ 8.93 $ 15.24 $ 19.52 $ 22.01 $ 22.55
Per share market
value at end of
period $ 11.27 $ 8.93 $ 15.24 $ 19.52 $ 22.01
Total return (4) 37.46% (30.94)% (13.90)% (4.40%) 5.21%
Shares outstanding
at end of period 21,039,242 21,087,574 21,087,574 14,762,574 12,305,008
Statement of Assets
and Liabilities Data
Net assets at end of
period $249,246 $249,076 $271,748 $220,959 $172,570
Average net assets
(5) $249,968 $253,316 $284,304 $189,732 $155,868
Senior Securities
Data
Borrowing under line
of credit $ 17,940 $ 83,350 $151,030 $144,440 $49,993
Asset coverage ratio
(6)(7) 1,419% 396% 279% 252% 443%
Average coverage per
unit (7) $ 14,187 $ 3,963 $ 2,792 $ 2,524 $ 4,435
Ratios/Supplemental
Data
Ratio of expenses to
average net assets
(8) 7.28% 9.97% 9.34% 10.75% 6.16%
Ratio of net
expenses to average
net assets (9) 7.11% 8.52% 6.74% 7.60% 4.84%
Ratio of net
investment income to
average net assets 7.10% 8.30% 9.34% 11.73% 12.42%
(1) Based on actual shares outstanding at the end of the corresponding period.
(2) Based on weighted average basic per share data.
(3) Distributions are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under accounting principles generally accepted in the United States of America.
(4) Total return equals the change in the ending market value of the Company's common stock from the beginning of the period taking into account distributions reinvested in accordance with the terms of the Company's dividend reinvestment plan. Total return does not take into account distributions that may be characterized as a return of capital.
(5) Average net assets are computed using the average of the balance of net assets at the end of each month of the reporting period.
(6) As a business development company, the Company is generally required to maintain a ratio of at least 200% of total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to total borrowings and guaranty commitments.
(7) Asset coverage ratio is the ratio of the carrying value of the Company's total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness (including interest payable and guarantees). Asset coverage per unit is the asset coverage ratio expressed in terms of dollar amounts per one thousand dollars of indebtedness.
(8) Ratio of expenses to average net assets is computed using expenses before credits from Adviser to the base management and incentive fees and including income tax expense.
(9) Ratio of net expenses to average net assets is computed using total expenses net of credits from Adviser to the base management and incentive fees and including income tax expense.
SOURCE Gladstone Capital Corporation
Released November 22, 2010