Exhibit 99.1
Press Release for May 12, 2003
HEADLINE: Gladstone Capital reports second quarter financial results for March 31, 2003: Net Increase in Stockholders’ Equity Resulting from Operations in the second quarter was $0.36 per diluted common share, a 160% increase from the prior year’s quarter.
McLean, VA: Gladstone Capital Corp. (NASDAQ: GLAD) announced today that its Net Increase in Stockholders’ Equity Resulting from Operations for the second quarter ended March 31, 2003 was $3,662,015 or $0.36 per diluted common share for the quarter as compared to $1,408,482 or $0.14 per diluted common share for the quarter ended March 31, 2002 for an increase of $2,253,533 or 160%. Total assets were $199,846,757 at the end of March 2003 and $172,922,039 at the end of September 2002.
Net Increase in Stockholders’ Equity Resulting from Operations for the six months ended March 31, 2003 was $6,074,170 or $0.60 per diluted common share as compared to $2,605,462 or $0.26 per diluted common share for the previous six months ended March 31, 2002. This leaves us with an increase of $3,468,708 or 133%.
As for the Net Investment Income for the quarter ended March 31, 2003, we saw an increase from $1,408,482 or $0.14 to $2,919,591 or $0.29 per diluted common share, a 107% increase from the prior year’s quarter.
Net Investment Income for the six months ended March 31, 2003 was $5,331,746 or $0.53 per diluted common share as compared to $2,605,462 or $0.26 per diluted common share for the previous six months ended March 31, 2002. We see an increase of $2,726,284 or 105%.
During the quarter, Gladstone Capital refined its valuations by hiring Standard & Poor’s Loan Evaluation Services to value some of its loan securities. This adds another positive dimension to the task of finding an accurate value for the company’s securities.
Information about investments is on our web site, www.GladstoneCapital.com.
The attached financial statements are without footnotes so readers should obtain Form 10-Q and review the notes as well. We have filed Form 10-Q with the Securities and Exchange Commission (‘SEC’) which can be retrieved at the SEC website at www.SEC.gov or from Gladstone Capitals web site at www.GladstoneCapital.com. A paper copy can be obtained by writing to us at 1616 Anderson Road, McLean, VA 22102.
For further information please contact Skye Breeden or Harry Brill at (703) 286-7000. The company will have a conference call at 11:30am EST, May 13, 2003. Please call 1-800-553-3594 and use the ID code 3555690 and you will be placed on hold until the conference starts. An operator will monitor the call and set a queue for the questions. The replay number will be available at 4:00pm on May 13, 2003 for approximately 30 days. The replay number is 1-888-211-2648 and use ID code 3555690.
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,” “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 for the Fiscal Year Ended September 30, 2002, as filed with the Securities and Exchange Commission on December 11, 2002. 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.
2
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
|
|
|
March 31, |
|
September 30, |
|
||
|
|
|
(Unaudited) |
|
|
|
||
|
ASSETS |
|
|
|
|
|
||
|
Investments at fair value (Cost 3/31/2003: $101,294,476; 9/30/2002: $79,718,354) |
|
$ |
102,036,900 |
|
$ |
79,718,354 |
|
|
Cash and cash equivalents |
|
31,154,246 |
|
51,930,529 |
|
||
|
Cash and cash equivalents pledged as collateral |
|
65,011,213 |
|
39,998,799 |
|
||
|
Interest receivable - investments in debt securities |
|
942,777 |
|
685,274 |
|
||
|
Interest receivable - cash and cash equivalents |
|
969 |
|
4,389 |
|
||
|
Interest receivable - officers |
|
109,737 |
|
109,874 |
|
||
|
Prepaid assets |
|
312,165 |
|
357,955 |
|
||
|
Other assets |
|
278,750 |
|
116,865 |
|
||
|
|
|
|
|
|
|
||
|
TOTAL ASSETS |
|
$ |
199,846,757 |
|
$ |
172,922,039 |
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
LIABILITIES |
|
|
|
|
|
||
|
Dividends payable |
|
$ |
2,517,961 |
|
$ |
2,115,087 |
|
|
Accrued expenses and deferred liabilities |
|
1,715,561 |
|
944,960 |
|
||
|
Repurchase agreement |
|
63,710,277 |
|
39,198,719 |
|
||
|
|
|
|
|
|
|
||
|
Total Liabilities |
|
$ |
67,943,799 |
|
$ |
42,258,766 |
|
|
|
|
|
|
|
|
||
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
||
|
Common stock, $0.001 par value, 50,000,000 shares authorized and 10,071,844 shares issued and outstanding |
|
$ |
10,072 |
|
$ |
10,072 |
|
|
Capital in excess of par value |
|
140,266,684 |
|
140,266,684 |
|
||
|
Notes receivable - officers |
|
(8,983,796 |
) |
(8,983,796 |
) |
||
|
Net unrealized appreciation on investments |
|
742,424 |
|
— |
|
||
|
Declared distributions in excess of undistributed earnings |
|
(132,426 |
) |
(629,687 |
) |
||
|
|
|
|
|
|
|
||
|
Total Stockholders’ Equity |
|
$ |
131,902,958 |
|
$ |
130,663,273 |
|
|
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
199,846,757 |
|
$ |
172,922,039 |
|
3
GLADSTONE CAPITAL CORPORATION
SCHEDULE OF INVESTMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
|
COMPANY (1) |
|
INDUSTRY |
|
INVESTMENT |
|
COST |
|
FAIR VALUE |
||
|
|
|
|
|
|
|
|
|
|
||
|
America’s Water Heater Rentals, LLC |
|
Water heater rentals and servicing |
|
Senior Term Debt (2) |
|
$ |
12,000,000 |
|
$ |
12,000,000 |
|
|
|
|
|
|
|
|
|
|
||
|
ARI Holdings, Inc. |
|
Manufacturing auto parts |
|
Junior Subordinated Term Debt (3)(4) |
|
8,459,234 |
|
8,448,660 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Coyne International Enterprises Corp. |
|
Industrial services |
|
Senior Term Debt (2)(3)(4) |
|
20,231,286 |
|
20,003,684 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Finn Corporation |
|
Manufacturing landscape equipment |
|
Senior Subordinated Term Debt (4) |
|
10,500,000 |
|
10,500,000 |
||
|
|
|
|
|
Common Stock Warrants for 2% Ownership |
|
37,000 |
|
490,323 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Home Care Supply, Inc. |
|
Medical equipment rental |
|
Senior Term Debt (2)(4)(5) |
|
18,000,000 |
|
18,576,964 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Inca
Metal Products Corp. |
|
Material handling and storage products |
|
Senior Term Debt (2) |
|
5,925,000 |
|
5,925,000 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Kozy Shack Enterprises, Inc. |
|
Food production and sales |
|
Senior Term Debt (2)(4) |
|
4,200,000 |
|
4,205,250 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Marcal Paper Mills, Inc. |
|
Manufacturing paper products |
|
Senior Subordinated Term Debt (2)(4) |
|
7,325,000 |
|
7,270,063 |
||
|
|
|
|
|
First Mortgage Debt (3) |
|
9,116,956 |
|
9,116,956 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Wingstop Restaurants |
|
Restaurant - fast food |
|
Senior Term Debt |
|
2,000,000 |
|
2,000,000 |
||
|
International, Inc. |
|
|
|
Senior Term Debt |
|
3,500,000 |
|
3,500,000 |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
$ |
101,294,476 |
|
$ |
102,036,900 |
(1) We do not “Control,” and are not an “Affiliate” of, any of our portfolio companies, each as defined in the Investment Company Act of 1940, as amended (the “1940 Act”). In general, under the 1940 Act, we would “Control” a portfolio company if we owned 25% or more of its voting securities and would be an “Affiliate” of a portfolio company if we owned 5% or more of its voting securities.
(2) Last Out Tranche of senior debt, meaning if the company is liquidated then the holder of the Last Out Tranche is paid after the senior debt.
(3) Has some paid in kind (PIK) interest. Refer to Note 2 “Summary of Significant Accounting Policies” of Form 10-K for the fiscal year ended September 30, 2002.
(4) Fair value was based on valuation prepared and provided by Standard & Poor’s Loan Evaluation Services.
(5) Includes a success fee with a fair value of $666,964.
4
GLADSTONE CAPITAL CORPORATION
SCHEDULE OF INVESTMENTS
AS OF SEPTEMBER 30, 2002
|
COMPANY (1) |
|
INDUSTRY |
|
INVESTMENT |
|
COST |
|
FAIR VALUE |
||
|
|
|
|
|
|
|
|
|
|
||
|
ARI Holdings, Inc. |
|
Manufacturing auto parts |
|
Junior Subordinated Term Debt (3) |
|
$ |
8,250,803 |
|
$ |
8,250,803 |
|
|
|
|
|
|
|
|
|
|
||
|
Coyne International Enterprises Corp. |
|
Industrial services |
|
Senior Term Debt (2)(3) |
|
16,054,268 |
|
16,054,268 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Finn Corporation |
|
Manufacturing landscape equipment |
|
Senior Subordinated Term Debt |
|
10,500,000 |
|
10,500,000 |
||
|
|
|
|
|
Common Stock Warrants for 2% Ownership |
|
37,000 |
|
37,000 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Home Care Supply, Inc. |
|
Medical equipment rental |
|
Senior Term Debt (2) |
|
18,000,000 |
|
18,000,000 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Inca Metal Products Corp. |
|
Material handling and storage products |
|
Senior Term Debt (2) |
|
6,000,000 |
|
6,000,000 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Kozy Shack Enterprises, Inc. |
|
Food production and sales |
|
Senior Term Debt (2) |
|
4,300,000 |
|
4,300,000 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Marcal Paper Mills, Inc. |
|
Manufacturing paper products |
|
Senior Subordinated Term Debt (2) |
|
7,500,000 |
|
7,500,000 |
||
|
|
|
|
|
First Mortgage Debt (3) |
|
9,076,283 |
|
9,076,283 |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
$ |
79,718,354 |
|
$ |
79,718,354 |
(1) We do not “Control,” and are not an “Affiliate” of, any of our portfolio companies, each as defined in the Investment Company Act of 1940, as amended (the “1940 Act”). In general, under the 1940 Act, we would “Control” a portfolio company if we owned 25% or more of its voting securities and would be an “Affiliate” of a portfolio company if we owned 5% or more of its voting securities.
(2) Last Out Tranche of senior debt, meaning if the company is liquidated then the holder of the Last Out Tranche is paid after the senior debt.
(3) Has some paid in kind (PIK) interest. Refer to Note 2 “Summary of Significant Accounting Policies” of Form 10-K for the fiscal year ended September 30, 2002.
5
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
|
|
|
Three Months |
|
Three Months |
|
||
|
INVESTMENT INCOME |
|
|
|
|
|
||
|
Interest income - investments |
|
$ |
3,275,962 |
|
$ |
1,596,970 |
|
|
Interest income - cash and cash equivalents |
|
113,338 |
|
368,570 |
|
||
|
Interest income - notes receivable from officers |
|
109,737 |
|
107,409 |
|
||
|
Managerial assistance fees |
|
358,000 |
|
29,102 |
|
||
|
Other income |
|
2,256 |
|
47,500 |
|
||
|
Total Investment Income |
|
$ |
3,859,293 |
|
$ |
2,149,551 |
|
|
|
|
|
|
|
|
||
|
EXPENSES |
|
|
|
|
|
||
|
Salaries and benefits |
|
$ |
477,861 |
|
$ |
327,158 |
|
|
Rent |
|
54,525 |
|
36,227 |
|
||
|
Professional fees |
|
86,577 |
|
114,061 |
|
||
|
Directors fees |
|
20,857 |
|
5,000 |
|
||
|
Insurance |
|
73,686 |
|
50,329 |
|
||
|
Stockholder related costs |
|
74,342 |
|
62,045 |
|
||
|
General and administrative |
|
151,854 |
|
146,249 |
|
||
|
Total Expenses |
|
$ |
939,702 |
|
$ |
741,069 |
|
|
|
|
|
|
|
|
||
|
NET INVESTMENT INCOME |
|
$ |
2,919,591 |
|
$ |
1,408,482 |
|
|
|
|
|
|
|
|
||
|
Net unrealized appreciation on investments |
|
742,424 |
|
— |
|
||
|
|
|
|
|
|
|
||
|
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS |
|
$ |
3,662,015 |
|
$ |
1,408,482 |
|
|
|
|
|
|
|
|
||
|
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS PER COMMON SHARE |
|
|
|
|
|
||
|
Basic |
|
$ |
0.36 |
|
$ |
0.14 |
|
|
Diluted |
|
$ |
0.36 |
|
$ |
0.14 |
|
|
|
|
|
|
|
|
||
|
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING |
|
|
|
|
|
||
|
Basic |
|
10,071,844 |
|
10,060,178 |
|
||
|
Diluted |
|
10,100,062 |
|
10,160,417 |
|
||
6
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
|
|
|
Six Months |
|
Six Months |
|
||
|
INVESTMENT INCOME |
|
|
|
|
|
||
|
Interest income - investments |
|
$ |
6,203,625 |
|
$ |
1,926,627 |
|
|
Interest income - cash and cash equivalents |
|
311,504 |
|
1,009,085 |
|
||
|
Interest income - notes receivable from officers |
|
219,341 |
|
214,827 |
|
||
|
Managerial assistance fees |
|
358,000 |
|
640,911 |
|
||
|
Other income |
|
2,256 |
|
47,500 |
|
||
|
Total Investment Income |
|
$ |
7,094,726 |
|
$ |
3,838,950 |
|
|
|
|
|
|
|
|
||
|
EXPENSES |
|
|
|
|
|
||
|
Salaries and benefits |
|
$ |
911,101 |
|
$ |
604,342 |
|
|
Rent |
|
109,145 |
|
47,280 |
|
||
|
Professional fees |
|
201,267 |
|
215,482 |
|
||
|
Directors fees |
|
34,357 |
|
7,000 |
|
||
|
Insurance |
|
144,841 |
|
97,664 |
|
||
|
Stockholder related costs |
|
111,432 |
|
71,262 |
|
||
|
General and administrative |
|
250,837 |
|
190,458 |
|
||
|
Total Expenses |
|
$ |
1,762,980 |
|
$ |
1,233,488 |
|
|
|
|
|
|
|
|
||
|
NET INVESTMENT INCOME |
|
$ |
5,331,746 |
|
$ |
2,605,462 |
|
|
|
|
|
|
|
|
||
|
Net unrealized appreciation on investments |
|
742,424 |
|
— |
|
||
|
|
|
|
|
|
|
||
|
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS |
|
$ |
6,074,170 |
|
$ |
2,605,462 |
|
|
|
|
|
|
|
|
||
|
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS PER COMMON SHARE |
|
|
|
|
|
||
|
Basic |
|
$ |
0.60 |
|
$ |
0.26 |
|
|
Diluted |
|
$ |
0.60 |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
||
|
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING |
|
|
|
|
|
||
|
Basic |
|
10,071,844 |
|
10,060,178 |
|
||
|
Diluted |
|
10,112,129 |
|
10,153,223 |
|
||
7
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(UNAUDITED)
|
|
|
Three Months |
|
Three Months |
|
||
|
Per Share Data (1) |
|
|
|
|
|
||
|
Net asset value at beinning of period |
|
$ |
12.98 |
|
$ |
12.98 |
|
|
Net investment income |
|
0.29 |
|
0.14 |
|
||
|
Net unrealized gain on investments |
|
0.07 |
|
— |
|
||
|
Distributions from net investment income |
|
(0.25 |
) |
(0.21 |
) |
||
|
Net asset value at end of period |
|
$ |
13.09 |
|
$ |
12.91 |
|
|
|
|
|
|
|
|
||
|
Per share market value at beginning of period |
|
$ |
16.47 |
|
$ |
18.69 |
|
|
Per share market value at end of period |
|
16.18 |
|
17.80 |
|
||
|
Total return (2)(3) |
|
-0.24 |
% |
-3.64 |
% |
||
|
Shares outstanding at end of period |
|
10,071,844 |
|
10,060,178 |
|
||
|
|
|
|
|
|
|
||
|
Ratios/Supplemental Data |
|
|
|
|
|
||
|
Net assets at end of period |
|
$ |
131,902,958 |
|
$ |
129,881,097 |
|
|
Average net assets |
|
$ |
132,125,265 |
|
$ |
130,819,578 |
|
|
Ratio of operating expenses to average net assets - annualized |
|
2.85 |
% |
2.28 |
% |
||
|
Ratio of net investment income to average net assets - annualized |
|
11.09 |
% |
4.32 |
% |
||
|
|
|
Six Months |
|
Six Months |
|
||
|
Per Share Data (1) |
|
|
|
|
|
||
|
Net asset value at beinning of period |
|
$ |
12.97 |
|
$ |
13.05 |
|
|
Net investment income |
|
0.53 |
|
0.26 |
|
||
|
Net unrealized gain on investments |
|
0.07 |
|
— |
|
||
|
Distributions from net investment income |
|
(0.48 |
) |
(0.39 |
) |
||
|
Offering costs |
|
— |
|
(0.01 |
) |
||
|
Net asset value at end of period |
|
$ |
13.09 |
|
$ |
12.91 |
|
|
|
|
|
|
|
|
||
|
Per share market value at beginning of period |
|
$ |
16.88 |
|
$ |
16.14 |
|
|
Per share market value at end of period |
|
16.18 |
|
17.80 |
|
||
|
Total return (2)(3) |
|
-1.30 |
% |
12.70 |
% |
||
|
Shares outstanding at end of period |
|
10,071,844 |
|
10,060,178 |
|
||
|
|
|
|
|
|
|
||
|
Ratios/Supplemental Data |
|
|
|
|
|
||
|
Net assets at end of period |
|
$ |
131,902,958 |
|
$ |
129,881,097 |
|
|
Average net assets |
|
$ |
131,844,204 |
|
$ |
131,052,167 |
|
|
Ratio of operating expenses to average net assets - annualized |
|
2.67 |
% |
1.88 |
% |
||
|
Ratio of net investment income to average net assets - annualized |
|
9.21 |
% |
1.99 |
% |
||
(1) Basic per share data.
(2) Amounts were not annualized for the results of the three and six month periods ended March 31, 2003 and March 31, 2002.
(3) Total return equals the increase of the ending market value over the beginning market value plus dividends divided by the beginning market value.
8