PHILADELPHIA, Aug. 9, 2017 /PRNewswire/ -- FS Investment
Corporation (NYSE: FSIC), a publicly traded business development
company focused on providing customized credit solutions to private
middle market U.S. companies, announced its operating results for
the quarter ended June 30, 2017, that
its board of directors has declared its third quarter 2017 regular
distribution and that its investment adviser has agreed to a
one-year waiver of a portion of the base management fee payable by
FSIC commencing on October 1,
2017.
Financial Highlights for the Quarter Ended June 30, 20171
- Net investment income of $0.19
per share, compared to $0.23 per
share for the quarter ended June 30,
2016
- Adjusted net investment income of $0.19 per share, compared to $0.24 per share for the quarter ended
June 30, 20162
- Total net realized loss of $0.06 per share and total net change in
unrealized depreciation of $0.05 per
share, compared to a total net realized loss of $0.03 per share and a total net change in
unrealized appreciation of $0.37 per
share for the quarter ended June 30,
2016
- Paid cash distributions to stockholders totaling
$0.22275 per
share3
- Total purchases of $298.7
million versus $310.6 million
of sales and repayments
- Net asset value of $9.30 per
share, compared to $9.45 per share as
of March 31, 2017
"FSIC's recent performance is not reflective of our high
standards," said Michael C. Forman,
Chairman and Chief Executive Officer of FSIC. "As we work to
improve performance for our investors amid a persistent
issuer-friendly environment, we're committed to taking actions that
we believe will position FSIC for future success."
Declaration of Regular Distribution for Third Quarter
2017
FSIC's board of directors has declared a regular cash
distribution for the third quarter of $0.22275 per share, which will be paid on or
about October 3, 2017 to stockholders
of record as of the close of business on September 20, 2017. Subject to market conditions,
FSIC's board of directors also currently intends to reduce the
regular cash distribution for the fourth quarter and subsequent
quarters to $0.19 per share and to
make a special distribution in the fourth quarter of 2018 that
equates to the cumulative amount, if any, of net investment income
earned during the twelve months following October 1, 2017 that is in excess of $0.76 per share.
Base Management Fee Waiver
FB Income Advisor, LLC, the investment adviser to FSIC ("FB
Advisor"), has agreed, effective October 1,
2017 and through September 30,
2018, to waive a portion of the base management fee to which
it is entitled under the amended and restated investment advisory
agreement between FB Advisor and FSIC, dated as of July 17, 2014, so that the fee received equals
1.50% of the average value of FSIC's gross assets.
Summary
Consolidated Results
|
|
|
Three Months
Ended
|
(dollars in
thousands, except per share data)
(all per share amounts are basic and
diluted)1
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
Total investment
income
|
$98,695
|
$106,064
|
$110,211
|
Net investment
income
|
46,460
|
52,590
|
56,840
|
Net increase
(decrease) in net assets resulting from operations
|
18,442
|
63,393
|
140,157
|
|
|
|
|
Net investment income
per share
|
$0.19
|
$0.22
|
$0.23
|
Adjusted net
investment income per share2
|
$0.19
|
$0.22
|
$0.24
|
Total net realized
and unrealized gain (loss) per share
|
$(0.11)
|
$0.04
|
$0.34
|
Net increase
(decrease) in net assets resulting from operations (Earnings per
Share)
|
$0.08
|
$0.26
|
$0.58
|
Stockholder
distributions per share3
|
$0.22275
|
$0.22275
|
$0.22275
|
Net asset value per
share at period end
|
$9.30
|
$9.45
|
$9.18
|
Weighted average
shares outstanding
|
245,107,405
|
244,554,969
|
243,435,681
|
Shares outstanding,
end of period
|
245,153,010
|
244,599,661
|
243,488,590
|
|
|
|
|
|
|
(dollar amounts in
thousands)
|
|
|
As
of June 30,
2017
|
As
of December 31,
2016
|
Total fair value of
investments
|
|
|
$3,899,777
|
$3,726,816
|
Total
assets
|
|
|
4,110,120
|
4,110,071
|
Total stockholders'
equity
|
|
|
2,280,704
|
2,297,377
|
Portfolio Highlights as of June
30, 2017
- Total fair value of investments was $3.9
billion.
- Core investment strategies4 represented 98% of the
portfolio by fair value as of June 30,
2017, including 88% from direct originations and 10% from
opportunistic investments. Broadly syndicated/other investments
represented the remaining 2% of the portfolio by fair value.
- Gross portfolio yield prior to leverage (based on amortized
cost and excluding non-income producing assets)5 was
10.4%, compared to 10.2% as of March
31, 2017.
- Total commitments to direct originations (including unfunded
commitments) made during the second quarter of 2017 was
$197.1 million in 13 companies, 10 of
which were existing portfolio companies.
- Approximately 0.0% of investments were on non-accrual based on
fair value.6
Total Portfolio
Activity
|
|
|
|
Three Months
Ended
|
|
(dollar amounts in
thousands)
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
|
Purchases
|
$298,682
|
$539,689
|
$389,802
|
|
Sales and
redemptions
|
(310,569)
|
(364,308)
|
(413,039)
|
|
Net portfolio
activity
|
$(11,887)
|
$175,381
|
$(23,237)
|
|
|
|
Portfolio
Data
|
As of June
30, 2017
|
As of
December, 2016
|
|
Total fair value of
investments
|
$3,899,777
|
$3,726,816
|
|
Number of Portfolio
Companies
|
107
|
102
|
|
Average Annual EBITDA
of Portfolio Companies
|
$88,600
|
$100,000
|
|
Weighted Average
Purchase Price of Debt Investments
(as a % of
par)
|
97.2%
|
98.6%
|
|
% of Investments on
Non-Accrual
(based on fair
value)6
|
0.0%
|
0.2%
|
|
|
|
|
Asset Class
(based on fair value)
|
|
|
Senior Secured Loans
— First Lien
|
60%
|
52%
|
|
Senior Secured Loans
— Second Lien
|
7%
|
16%
|
|
Senior Secured
Bonds
|
4%
|
4%
|
|
Subordinated
Debt
|
15%
|
12%
|
|
Collateralized
Securities
|
1%
|
2%
|
|
Equity/Other
|
13%
|
14%
|
|
|
|
|
Portfolio
Composition by Strategy (based on fair
value)4
|
|
|
Direct
Originations
|
88%
|
88%
|
|
Opportunistic
|
10%
|
9%
|
|
Broadly
Syndicated/Other
|
2%
|
3%
|
|
|
|
|
Interest Rate
Type (based on fair value)
|
|
|
% Variable
Rate
|
66.5%
|
67.0%
|
|
% Fixed
Rate
|
20.6%
|
19.4%
|
|
% Income Producing
Equity/Other Investments
|
2.5%
|
2.7%
|
|
% Non-Income
Producing Equity/Other Investments
|
10.4%
|
10.9%
|
|
|
|
|
Yields (based
on amortized cost)5
|
|
|
Gross Portfolio Yield
Prior to Leverage
|
9.4%
|
9.1%
|
|
Gross Portfolio Yield
Prior to Leverage — Excluding Non-Income Producing
Assets
|
10.4%
|
10.1%
|
|
Direct Origination
Activity
|
|
|
Three Months
Ended
|
(dollar amounts in
thousands)
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
Total
Commitments
(including unfunded
commitments)
|
$197,084
|
$429,407
|
$398,896
|
Exited Investments
(including partial paydowns)
|
(218,280)
|
(322,068)
|
(386,600)
|
Net Direct
Originations
|
$(21,196)
|
$107,339
|
$12,296
|
Direct
Originations Portfolio Data
|
As of June 30,
2017
|
As of December 31,
2016
|
Total Fair Value of
Direct Originations
|
$3,443,288
|
$3,264,395
|
Number of Portfolio
Companies
|
74
|
67
|
Average Annual EBITDA
of Portfolio Companies
|
$68,800
|
$64,600
|
Average Leverage
Through Tranche of Portfolio Companies —
Excluding
Equity/Other and Collateralized Securities
|
4.7x
|
4.8x
|
% of Investments on
Non-Accrual (based on fair value)6
|
—
|
0.1%
|
|
|
|
|
|
Three Months
Ended
|
New Direct
Originations by Asset Class (including unfunded
commitments)
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
Senior Secured Loans
— First Lien
|
97%
|
81%
|
76%
|
Senior Secured Loans
— Second Lien
|
—
|
1%
|
6%
|
Senior Secured
Bonds
|
1%
|
2%
|
2%
|
Subordinated
Debt
|
—
|
15%
|
3%
|
Collateralized
Securities
|
—
|
—
|
—
|
Equity/Other
|
2%
|
1%
|
13%
|
Average New Direct
Origination Commitment Amount
|
$15,160
|
$35,784
|
$49,862
|
Weighted Average
Maturity for New Direct Originations
|
12/17/2022
|
3/2/2023
|
7/21/2020
|
Gross Portfolio Yield
Prior to Leverage (based on amortized cost) of New Direct
Originations Funded during Period5
|
9.6%
|
9.8%
|
9.1%
|
Gross Portfolio Yield
Prior to Leverage (based on amortized cost) of New Direct
Originations Funded during Period —
Excluding Non-Income
Producing Assets5
|
9.7%
|
10.0%
|
10.8%
|
Gross Portfolio Yield
Prior to Leverage (based on amortized cost) of Direct Originations
Exited during Period5
|
9.9%
|
9.1%
|
10.3%
|
|
|
|
|
|
|
Leverage and Liquidity as of June 30, 2017
- Debt to equity ratio of 75%, based on $1.72 billion in total debt outstanding and
stockholders' equity of $2.28
billion. FSIC's weighted average effective interest rate
(including the effect of non-usage fees) was 4.18%
- Cash and foreign currency of approximately $142.7 million and availability under its
financing arrangements of $267.6
million, subject to borrowing base and other
limitations
- Twenty unfunded debt investments with aggregate unfunded
commitments of $166.8 million and two
unfunded equity commitments with aggregate unfunded commitments of
$311 thousand
Conference Call Information
FSIC will host a conference call at 10:00
a.m. (Eastern Time) on Thursday,
August 10, 2017, to discuss its second quarter financial
results. All interested parties are welcome to participate. You can
access the conference call by dialing (877) 443-2408 and using the
conference ID 44291376 approximately 10 minutes prior to the call.
The conference call will also be webcast, which can be accessed
from the Investor Relations section of FSIC's website at
www.fsinvestmentcorp.com under Presentations and
Reports.
A replay of the call will be available for a period of 30 days
following the call by visiting the Investor Relations section of
FSIC's website at www.fsinvestmentcorp.com under
Presentations and Reports.
Supplemental Information
An investor presentation of financial information will be made
available prior to the call in the Investor Relations section of
FSIC's website at www.fsinvestmentcorp.com under
Presentations and Reports.
About FS Investment Corporation
FS Investment Corporation (NYSE: FSIC) is a publicly traded
business development company ("BDC") focused on providing
customized credit solutions to private middle market U.S.
companies. FSIC seeks to invest primarily in the senior secured
debt and, to a lesser extent, the subordinated debt of private
middle market companies to achieve the best risk-adjusted returns
for its investors. In connection with its debt investments, FSIC
may receive equity interests such as warrants or options.
FSIC is advised by FB Income Advisor, LLC, an affiliate of FS
Investments, and is sub-advised by GSO / Blackstone Debt Funds
Management LLC, an affiliate of GSO Capital Partners ("GSO"). GSO,
with approximately $94.5 billion in
assets under management as of June 30,
2017, is the credit platform of Blackstone, one of the
world's leading managers of alternative investments. For more
information, please visit www.fsinvestmentcorp.com.
About FS Investments
FS Investments is a leading asset manager dedicated to helping
individuals, financial professionals and institutions design better
portfolios. The firm provides access to alternative sources of
income and growth and focuses on setting industry standards for
investor protection, education and transparency.
FS Investments is headquartered in Philadelphia, PA with offices in Orlando, FL and Washington, DC. The firm had more than
$20 billion in assets under
management as of June 30, 2017.
Visit www.fsinvestments.com to learn more.
Forward-Looking Statements and Important Disclosure
Notice
This announcement may contain certain forward-looking
statements, including statements with regard to future events or
the future performance or operations of FSIC. Words such as
"believes," "expects," "projects," and "future" or similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. Certain
factors could cause actual results to differ materially from those
projected in these forward-looking statements. Factors that could
cause actual results to differ materially include changes in the
economy, risks associated with possible disruption in FSIC's
operations or the economy generally due to terrorism or natural
disasters, future changes in laws or regulations and conditions in
FSIC's operating area, and the price at which shares of FSIC's
common stock trade on the New York Stock Exchange. Some of these
factors are enumerated in the filings FSIC makes with the SEC. FSIC
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
The press release above contains summaries of certain financial
and statistical information about FSIC. The information contained
in this press release is summary information that is intended to be
considered in the context of FSIC's SEC filings and other public
announcements that FSIC may make, by press release or otherwise,
from time to time. FSIC undertakes no duty or obligation to update
or revise the information contained in this press release. In
addition, information related to past performance, while helpful as
an evaluative tool, is not necessarily indicative of future
results, the achievement of which cannot be assured. Investors
should not view the past performance of FSIC, or information about
the market, as indicative of FSIC's future results.
Individual investors and endowments may have different
investment horizons, liquidity needs and risk tolerances. In
addition, fees that may be incurred by an investor in a fund
sponsored by FS Investments may be different than fees incurred by
an endowment investing in similar assets as those in which the
funds invest.
Other Information
The information in this press release is summary information
only and should be read in conjunction with FSIC's quarterly report
on Form 10-Q for the quarterly period ended June 30, 2017, which FSIC filed with the U.S.
Securities and Exchange Commission (the "SEC") on August 9, 2017, as well as FSIC's other reports
filed with the SEC. A copy of FSIC's quarterly report on Form 10-Q
for the quarterly period ended June 30,
2017 and FSIC's other reports filed with the SEC can be
found on FSIC's website at www.fsinvestmentcorp.com and the
SEC's website at www.sec.gov.
Certain Information About Distributions
The determination of the tax attributes of FSIC's distributions
is made annually as of the end of its fiscal year based upon its
taxable income and distributions paid, in each case, for the full
year. Therefore, a determination as to the tax attributes of the
distributions made on a quarterly basis may not be representative
of the actual tax attributes for a full year. FSIC intends to
update stockholders quarterly with an estimated percentage of its
distributions that resulted from taxable ordinary income. The
actual tax characteristics of distributions to stockholders will be
reported to stockholders annually on Form 1099-DIV.
The timing and amount of any future distributions on FSIC's
shares of common stock are subject to applicable legal restrictions
and the sole discretion of its board of directors. There can be no
assurance as to the amount or timing of any such future
distributions, including the special distribution referenced
herein.
FSIC may fund its cash distributions to stockholders from any
sources of funds legally available to it, including proceeds from
the sale of shares of FSIC's common stock, borrowings, net
investment income from operations, capital gains proceeds from the
sale of assets, non-capital gains proceeds from the sale of assets
and dividends or other distributions paid to it on account of
preferred and common equity investments in portfolio companies.
FSIC has not established limits on the amount of funds it may use
from available sources to make distributions. There can be no
assurance that FSIC will be able to pay distributions at a specific
rate or at all.
Contact Information:
Investors
Chris Condelles
christopher.condelles@fsinvestments.com
267-439-4365
Dominic Mammarella
dominic.mammarella@fsinvestments.com
215-220-4280
Media
Marc Yaklofsky / Kate Beers
media@fsinvestments.com
215-495-1174
Income
Statement
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Investment
income
|
|
|
|
|
|
|
|
|
From
non-controlled/unaffiliated investments:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
82,516
|
|
|
$
|
92,319
|
|
|
$
|
162,235
|
|
|
$
|
191,771
|
|
Fee income
|
|
9,546
|
|
|
15,335
|
|
|
29,076
|
|
|
16,977
|
|
From
non-controlled/affiliated investments:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
4,052
|
|
|
1,112
|
|
|
8,342
|
|
|
2,079
|
|
Fee income
|
|
2
|
|
|
633
|
|
|
31
|
|
|
633
|
|
Dividend
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
224
|
|
From
controlled/affiliated investments:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
2,579
|
|
|
812
|
|
|
5,075
|
|
|
1,590
|
|
Total investment
income
|
|
98,695
|
|
|
110,211
|
|
|
204,759
|
|
|
213,274
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Management
fees
|
|
18,367
|
|
|
17,574
|
|
|
36,734
|
|
|
35,386
|
|
Subordinated income
incentive fees
|
|
11,617
|
|
|
14,210
|
|
|
24,764
|
|
|
26,695
|
|
Administrative
services expenses
|
|
742
|
|
|
900
|
|
|
1,476
|
|
|
2,096
|
|
Accounting and
administrative fees
|
|
255
|
|
|
235
|
|
|
520
|
|
|
463
|
|
Interest
expense
|
|
19,617
|
|
|
18,064
|
|
|
39,056
|
|
|
36,958
|
|
Directors'
fees
|
|
274
|
|
|
274
|
|
|
545
|
|
|
503
|
|
Other general and
administrative expenses
|
|
1,363
|
|
|
2,114
|
|
|
2,614
|
|
|
4,395
|
|
Total operating
expenses
|
|
52,235
|
|
|
53,371
|
|
|
105,709
|
|
|
106,496
|
|
Net investment
income
|
|
46,460
|
|
|
56,840
|
|
|
99,050
|
|
|
106,778
|
|
|
|
|
|
|
|
|
|
|
Realized and
unrealized gain/loss
|
|
|
|
|
|
|
|
|
Net realized gain
(loss) on investments:
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(14,147)
|
|
|
(7,648)
|
|
|
(62,594)
|
|
|
(21,427)
|
|
Non-controlled/affiliated investments
|
|
—
|
|
|
—
|
|
|
305
|
|
|
—
|
|
Controlled/affiliated
investments
|
|
—
|
|
|
—
|
|
|
(52,879)
|
|
|
—
|
|
Net realized gain
(loss) on foreign currency
|
|
61
|
|
|
94
|
|
|
184
|
|
|
178
|
|
Net change in
unrealized appreciation (depreciation) on investments:
|
|
|
|
|
|
|
|
|
Non-controlled/unaffiliated investments
|
|
(9,458)
|
|
|
86,922
|
|
|
119,802
|
|
|
32,219
|
|
Non-controlled/affiliated investments
|
|
(5,602)
|
|
|
1,919
|
|
|
(17,930)
|
|
|
8,286
|
|
Controlled/affiliated
investments
|
|
4,132
|
|
|
705
|
|
|
(367)
|
|
|
2,338
|
|
Net change in
unrealized appreciation (depreciation) on secured
borrowing
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
Net change in
unrealized gain (loss) on foreign currency
|
|
(3,004)
|
|
|
1,325
|
|
|
(3,726)
|
|
|
(312)
|
|
Total net realized and
unrealized gain (loss)
|
|
(28,018)
|
|
|
83,317
|
|
|
(17,215)
|
|
|
21,282
|
|
Net increase
(decrease) in net assets resulting from operations
|
|
$
|
18,442
|
|
|
$
|
140,157
|
|
|
$
|
81,835
|
|
|
$
|
128,060
|
|
|
|
|
|
|
|
|
|
|
Per share
information—basic and diluted
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in net assets resulting from operations (Earnings per
Share)
|
|
$
|
0.08
|
|
|
$
|
0.58
|
|
|
$
|
0.33
|
|
|
$
|
0.53
|
|
Weighted average
shares outstanding
|
|
245,107,405
|
|
|
243,435,681
|
|
|
244,832,713
|
|
|
243,141,349
|
|
Balance
Sheet
|
|
June 30,
2017
|
|
|
|
|
(Unaudited)
|
|
December 31,
2016
|
Assets
|
|
|
|
|
Investments, at fair
value
|
|
|
|
|
Non-controlled/unaffiliated investments (amortized
cost—$3,468,803 and $3,509,899, respectively)
|
|
$
|
3,519,657
|
|
|
$
|
3,440,951
|
|
Non-controlled/affiliated investments (amortized
cost—$263,084 and $153,167, respectively)
|
|
294,782
|
|
|
202,795
|
|
Controlled/affiliated
investments (amortized cost—$83,509 and $80,874,
respectively)
|
|
85,338
|
|
|
83,070
|
|
Total investments, at
fair value (amortized cost—$3,815,396 and $3,743,940,
respectively)
|
|
3,899,777
|
|
|
3,726,816
|
|
Cash
|
|
141,387
|
|
|
264,594
|
|
Foreign currency, at
fair value (cost—$1,195 and $4, respectively)
|
|
1,321
|
|
|
4
|
|
Receivable for
investments sold and repaid
|
|
30,555
|
|
|
75,921
|
|
Income
receivable
|
|
28,609
|
|
|
36,106
|
|
Deferred financing
costs
|
|
7,708
|
|
|
5,828
|
|
Prepaid expenses and
other assets
|
|
763
|
|
|
802
|
|
Total
assets
|
|
$
|
4,110,120
|
|
|
$
|
4,110,071
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Payable for
investments purchased
|
|
$
|
10,800
|
|
|
$
|
5,748
|
|
Credit facilities
payable
|
|
634,914
|
|
|
619,932
|
|
Unsecured notes
payable (net of deferred financing costs of $1,724 and $1,884,
respectively)
|
|
1,071,983
|
|
|
1,070,701
|
|
Secured borrowing, at
fair value (amortized proceeds of $2,834 and $2,831,
respectively)
|
|
2,893
|
|
|
2,880
|
|
Stockholder
distributions payable
|
|
54,607
|
|
|
54,364
|
|
Management fees
payable
|
|
18,367
|
|
|
18,022
|
|
Subordinated income
incentive fees payable
|
|
11,617
|
|
|
12,885
|
|
Administrative
services expense payable
|
|
559
|
|
|
516
|
|
Interest
payable
|
|
22,288
|
|
|
20,144
|
|
Directors' fees
payable
|
|
266
|
|
|
281
|
|
Other accrued
expenses and liabilities
|
|
1,122
|
|
|
7,221
|
|
Total
liabilities
|
|
1,829,416
|
|
|
1,812,694
|
|
Commitments and
contingencies
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Preferred stock,
$0.001 par value, 50,000,000 shares authorized, none issued and
outstanding
|
|
—
|
|
|
—
|
|
Common stock, $0.001
par value, 450,000,000 shares authorized, 245,153,010 and
244,063,357 shares issued and outstanding, respectively
|
|
245
|
|
|
244
|
|
Capital in excess of
par value
|
|
2,271,623
|
|
|
2,261,040
|
|
Accumulated
undistributed net realized gain/loss on investments and gain/loss
on foreign currency
|
|
(219,258)
|
|
|
(104,274)
|
|
Accumulated
undistributed (distributions in excess of) net investment
income
|
|
137,984
|
|
|
148,026
|
|
Net unrealized
appreciation (depreciation) on investments and secured borrowing
and unrealized gain/loss on foreign currency
|
|
90,110
|
|
|
(7,659)
|
|
Total
stockholders' equity
|
|
2,280,704
|
|
|
2,297,377
|
|
Total
liabilities and stockholders' equity
|
|
$
|
4,110,120
|
|
|
$
|
4,110,071
|
|
Net asset value per
share of common stock at period end
|
|
$
|
9.30
|
|
|
$
|
9.41
|
|
Non-GAAP Financial Measures
This press release contains certain financial measures that have
not been prepared in accordance with generally accepted accounting
principles in the United States
("GAAP"). FSIC uses these non-GAAP financial measures internally in
analyzing financial results and believes that the use of these
non-GAAP financial measures is useful to investors as an additional
tool to evaluate ongoing results and trends and in comparing FSIC's
financial results with other BDCs.
Non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for comparable GAAP financial
measures, and should be read only in conjunction with FSIC's
consolidated financial statements prepared in accordance with GAAP.
A reconciliation of non-GAAP financial measures to the most
directly comparable GAAP measures has been provided in this press
release, and investors are encouraged to review the
reconciliation.
Reconciliation of
Non-GAAP Financial Measures1
|
|
|
Three Months Ended
|
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
GAAP net investment
income per share
|
$0.19
|
$0.22
|
$0.23
|
Plus capital gains
incentive fees per share
|
—
|
—
|
—
|
Plus excise taxes per
share
|
—
|
—
|
—
|
Plus one-time
expenses per share
|
—
|
—
|
0.00
|
Adjusted net
investment income per share2
|
$0.19
|
$0.22
|
$0.24
|
|
|
1) Per share data was derived by using the weighted
average shares of FSIC's common stock outstanding during the
applicable period. Per share numbers may not sum due to
rounding.
|
|
2) Adjusted net investment income is a non-GAAP
financial measure. Adjusted net investment income is presented for
all periods as GAAP net investment income excluding (i) the accrual
for the capital gains incentive fee for realized and unrealized
gains; (ii) excise taxes; and (iii) certain non-recurring operating
expenses that are one-time in nature and are not representative of
ongoing operating expenses incurred during FSIC's normal course of
business (referred to herein as one-time expenses). FSIC uses this
non-GAAP financial measure internally in analyzing financial
results and believes that the use of this non-GAAP financial
measure is useful to investors as an additional tool to evaluate
ongoing results and trends and in comparing its financial results
with other business development companies. The presentation of this
additional information is not meant to be considered in isolation
or as a substitute for financial results prepared in accordance
with GAAP. A reconciliation of GAAP net investment income to
adjusted net investment income can be found
above.
|
|
3) The per share data for distributions reflects the
amount of distributions paid per share of our common stock to
stockholders of record during each applicable
period.
|
|
4) See FSIC's quarterly report on Form 10-Q for the
three months ended June 30, 2017 for a description of FSIC's
investment strategies.
|
|
5) Gross portfolio yield represents the expected
annualized yield of FSIC's investment portfolio based on the
composition of the portfolio as of the applicable date. FSIC's
estimated gross portfolio yield may be higher than an investor's
yield on an investment in shares of FSIC's common stock because it
does not reflect sales commissions or charges that may be incurred
in connection with the purchase or sale of such shares, or
operating expenses that may be incurred by FSIC. FSIC's estimated
gross portfolio yield does not represent an actual investment
return to stockholders, is subject to change and, in the future,
may be greater or less than the rates set forth
herein.
|
|
6) Interest income is recorded on an accrual basis. See
FSIC's quarterly report on Form 10-Q for the three months ended
June 30, 2017 for a description of FSIC's revenue recognition
policy.
|
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SOURCE FS Investment Corporation