Gladstone Investment Corp. (NASDAQ:GAIN): -- Net Investment Income
was $5.88 million or $0.36 per common share -- Net Increase in Net
Assets From Operations was $6.05 million or $0.37 per common share
Gladstone Investment Corp. (NASDAQ:GAIN) (the "Company") today
announced earnings for the period June 22, 2005 (commencement of
operations) to March 31, 2006. All per share references are per
basic and diluted weighted average common share outstanding, unless
otherwise noted. Net Investment Income for the period of June 22,
2005 (commencement of operations) to March 31, 2006 was $5,883,898
or $0.36 per share. For the three months ended March 31, 2006 Net
Investment Income was $2,698,622 or $0.16. Net Increase in Net
Assets Resulting from Operations for the period ended June 22, 2005
(commencement of operations) to March 31, 2006 was $6,054,297 or
$0.37 per share. The Net Increase in Net Assets Resulting from
Operations for the three months ended March 31, 2006 was $2,943,018
or $0.18 per share. Total assets were $230,323,807 at March 31,
2006. Net asset value was $229,841,697 or $13.88 per actual common
share outstanding at March 31, 2006. The weighted average yield on
our portfolio of investments, excluding cash and cash equivalents,
was 7.02% for the period from June 22, 2005 (commencement of
operations). During the period from June 22, 2005 (commencement of
operations) to March 31, 2006 the Company recorded the following
activity: -- Invested $6.5 million in senior debt and common equity
with Hailey Transport Corporation; -- Invested approximately $34.1
million in senior and subordinated debt, preferred and common stock
with Chase II Holdings Corporation; -- Invested approximately $15.3
million in senior and subordinated debt, and common equity with
Quench Holdings Corporation; -- Acquired interests in 19 syndicated
loans for approximately $97.4 million; -- Recorded net unrealized
appreciation on its investments of approximately $113,000; and --
Recognized an aggregate of $57,431 of realized gains related to the
sale of five loan participations. At March 31, 2006, the Company
held nineteen non-control/non-affiliate investments, three control
investments and cash investments, totaling an aggregate cost
balance and fair value of nearly $223 million. -0- *T Condensed
Schedule of Investments March 31, 2006 Investment Type Cost Fair
Value
----------------------------------------------------------------------
Total Non-Control/Non-Affiliate Investments 97,423,004 97,585,972
Total Control Investments 55,846,318 55,796,318 Total cash
equivalents 69,607,086 69,607,086 ------------- ------------- Total
investments and cash equivalents $222,876,408 $222,989,376
------------- ------------- *T "Since the inception of our fund on
June 22, 2005, we have made tremendous strides in building our
solid portfolio. The fourth quarter proved to be significant as we
invested over $55 million, bringing the total invested funds to
70%. Our intent is to increase our buyout investments significantly
by this time next year," said Chip Stelljes, President and Chief
Investment Officer. Subsequent to March 31, 2006, the Company: --
Purchased additional loan participations in existing syndicated
loans of $3.6 million; -- Purchased seven loan participations of
$24.0 million; -- Sold three loan participations for $15.5 million,
realizing an aggregate net loss of approximately $3,000 on the
transactions; and -- The Board of Directors declared its monthly
cash dividends of $0.07 per common share for each of the months of
April, May and June of 2006. Results reported today for investment
income and operating expenses for the period June 22, 2005
(commencement of operations) to March 31, 2006 are not expected to
be indicative of future operating performance. In particular, the
Company expects investment income to increase in future periods, as
a result of the investment of the net proceeds from the initial
public offering and as investments are made in portfolio company
securities that the Company expects will yield a greater return
than the cash and cash equivalents in which the vast majority of
the net proceeds of the Company's initial public offering are
currently invested. The Company will hold a conference call
Wednesday, June 14, 2006 at 9:30 am ET to discuss year end
earnings. Please call (877) 407-9205 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 July 14,
2006. To hear the replay, please dial (877) 660-6853, access
playback account 286 and use ID code 204165. The online replay will
be available approximately two hours after the call concludes. The
live audio broadcast of Gladstone Investment's quarterly conference
call will be available online at www.GladstoneInvestment.com and
www.investorcalendar.com. The online replay will follow shortly
after the call. Gladstone Investment Corporation is an investment
company that seeks to make debt and equity investments in small and
mid-sized private businesses in the U.S. in connection with
acquisitions, changes in control and recapitalizations. For more
information please visit our website at
http://www.GladstoneInvestment.com. For further information contact
our Investor Relations Manager, Kelly Sargent at 703-287-5835. This
press release may include statements that may constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements
with regard to the future performance of the Company. Words such as
"believes," "expects," "anticipates," "estimated," "approximately"
"projects" and "future" or similar expressions are intended to
identify 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, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking
statements include, among others, those factors listed under the
caption "Risk factors" of the Company's Form 10-K dated March 31,
2006, as filed with the Securities and Exchange Commission on June
13, 2006. 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. -0- *T GLADSTONE
INVESTMENT CORPORATION STATEMENT OF OPERATIONS (UNAUDITED) For the
period June 22, 2005 (Commencement of Operations) to March 31, 2006
---------------- INVESTMENT INCOME Interest income
Non-Control/Non-Affiliate investments $2,450,906 Control
investments 255,059 Cash and cash equivalents 4,434,706
---------------- Total interest income 7,140,671 Fee income -
Control investments 230,000 Other income 185 ---------------- Total
investment income 7,370,856 ---------------- EXPENSES
Administration fee 288,471 Base management fee 360,771 Directors
fees 160,000 Insurance expense 184,642 Professional fees 163,369
Stockholder related costs 89,563 Organizational costs 7,002
Interest expense 378 Taxes and licenses 195,270 General and
administrative expenses 37,492 ---------------- Total expenses
1,486,958 ---------------- NET INVESTMENT INCOME 5,883,898
---------------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on sale of Non-Control/Non-Affiliate investments
57,431 Net unrealized appreciation of investment portfolio 112,968
---------------- Net gain on investments 170,399 ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,054,297
================ NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE: Basic and Diluted $0.37
================ SHARES OF COMMON STOCK OUTSTANDING: Basic and
diluted weighted average shares 16,391,589 GLADSTONE INVESTMENT
CORPORATION STATEMENT OF OPERATIONS (UNAUDITED) Quarter Ended March
31, 2006 -------------- INVESTMENT INCOME Interest income
Non-Control/Non-Affiliate investments 1,466,449 Control investments
255,059 Cash and cash equivalents 1,242,687 -------------- Total
interest income 2,964,195 Fee income - Control investments 230,000
Other income 185 -------------- Total investment income 3,194,380
-------------- EXPENSES Administration fee 110,002 Base management
fee 3,141 Directors fees 57,000 Insurance expense 72,612
Professional fees 27,497 Stockholder related costs 21,662
Organizational costs - Interest expense - Taxes and licenses
188,684 General and administrative expenses 15,160 --------------
Total expenses 495,758 -------------- NET INVESTMENT INCOME
2,698,622 -------------- REALIZED AND UNREALIZED GAIN ON
INVESTMENTS Realized gain on sale of Non-Control/Non-Affiliate
investments 19,375 Net unrealized appreciation of investment
portfolio 225,021 -------------- Net gain on investments 244,396
-------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$2,943,018 ============== NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE: Basic and Diluted $0.18 ==============
SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted weighted
average shares 16,560,100 GLADSTONE INVESTMENT CORPORATION
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) March 31, March 31,
2006 2005 ------------- ------------- ASSETS
Non-Control/Non-Affiliate investments (Cost 3/31/06: $97,423,004)
$97,585,972 $- Control investments (Cost 3/31/06: $55,846,318)
55,796,318 - ------------- ------------- Total investments at fair
value (Cost 3/31/06: $153,269,322) 153,382,290 - Cash and cash
equivalents 75,672,605 3,636 Interest receivable 761,388 - Prepaid
insurance 99,874 - Deferred offering costs - 47,864 Due from
Adviser 234,551 - Other assets 173,099 - -------------
------------- TOTAL ASSETS $230,323,807 $51,500 =============
============= LIABILITIES Administration fee payable to Gladstone
Administration $110,002 $- Loan payable to affiliate - 50,000
Accrued expenses 367,031 - Other liabilities 5,077 - -------------
------------- Total Liabilities 482,110 50,000 -------------
------------- NET ASSETS $229,841,697 $1,500 =============
============= ANALYSIS OF NET ASSETS: Common stock, $0.001 par
value, 100,000,000 shares authorized and 16,560,100 and 100 shares
issued and outstanding, respectively $16,560 $- Capital in excess
of par value 230,229,279 1,500 Net unrealized appreciation of
investment portfolio 112,968 - Distributions in excess of net
investment income (517,110) - ------------- ------------- Total Net
Assets $229,841,697 $1,500 ============= ============= Net assets
per share $13.88 $15.00 ============= ============= GLADSTONE
INVESTMENT CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) For the
period June 22, 2005 (Commencement of Operations) to March 31, 2006
---------------- Per Share Data (1) ------------------ Balance at
beginning of period $- Net proceeds from initial public offering
(2) 13.95 ---------------- Offering costs (0.05) Income from
investment operations: Net investment income (3) 0.36 Realized gain
on sale of investments (3) 0.00 Net unrealized appreciation of
investments (3) 0.01 ---------------- Total from investment
operations 0.37 ---------------- Distributions (0.39)
---------------- Net asset value at end of period $13.88
================ Per share market value at beginning of period
$15.00 Per share market value at end of period 15.10 Total Return
(4) 3.39% Shares outstanding at end of period 16,560,100
Ratios/Supplemental Data ------------------------ Net assets at end
of period $229,841,697 Average net assets (5) $226,875,738 Ratio of
expenses to average net assets (6) 0.66% Ratio of net investment
income to average net assets (6) 2.59% (1) Based on actual shares
outstanding. (2) Net of initial underwriting discount of $1.05 per
share. (3) Based on weighted average basic per share data. (4)
Total return equals the change in the market value of the Company's
common stock from the beginning of the period taking into account
dividends reinvested in accordance with the terms of our dividend
reinvestment program. (5) Average net assets calculated from June
22, 2005 (commencement of operations) to March 31, 2006. (6)
Amounts are not annualized. GLADSTONE INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS (UNAUDITED) Quarter Ended March 31, 2006
---------------- Per Share Data (1) ------------------ Balance at
beginning of period $13.91 Net proceeds from initial public
offering - ---------------- Offering costs - Income from investment
operations: Net investment income 0.17 Realized gain on sale of
investments 0.00 Net unrealized appreciation of investments 0.01
---------------- Total from investment operations 0.18
---------------- Distributions (0.21) ---------------- Net asset
value at end of period $13.88 ================ Per share market
value at beginning of period $13.59 Per share market value at end
of period 15.10 Total Return (2) 12.68% Shares outstanding at end
of period 16,560,100 Ratios/Supplemental Data
------------------------ Net assets at end of period $229,841,697
Average net assets (3) $229,400,219 Ratio of expenses to average
net assets (4) 0.86% Ratio of net investment income to average net
assets (4) 3.11% (1) Based on actual shares outstanding. (2) Total
return equals the change in the market value of the Company's
common stock from the beginning of the period taking into account
dividends reinvested in accordance with the terms of our dividend
reinvestment program. (3) Average net assets calculated from
January 1, 2006 to March 31, 2006. (4) Amounts are annualized. *T
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