EXHIBIT 99.1
* Net Investment Income was $5.4 million or $0.26 per common share * Net Decrease in Net Assets Resulting from Operations was ($0.8) million or ($0.04) per common share
MCLEAN, Va., Aug. 3, 2009 (GLOBE NEWSWIRE) -- Gladstone Capital Corp. (Nasdaq:GLAD) (the "Company") today announced earnings for the third quarter ended June 30, 2009. All per share references are per basic and diluted weighted average common shares outstanding, unless otherwise noted.
Net Investment Income for the quarter ended June 30, 2009 was $5.4 million, or $0.26 per share, as compared to $6.7 million, or $0.32 per share, for the quarter ended June 30, 2008, a decrease in Net Investment Income of 19% and a decrease of 19% per share. Net Investment Income for the nine months ended June 30, 2009 was $16.9 million, or $0.80 per share, as compared to $20.4 million, or $1.06 per share, for the nine months ended June 30, 2008, a decrease in Net Investment Income of 17% and a decrease of 25% per share. Net Investment Income decreased primarily due to a decline in investment income resulting from the sale of loans during the quarter, lower transaction fees paid by the portfolio companies (which are credited against base management fees) and the amortization of deferred financing fees incurred in connection with the Company's prior and current credit facility subsequent to June 30, 2008. The per-share results were also adversely impacted by the issuance of additional shares in public offerings during the nine months ended June 30, 2008.
Net Decrease in Net Assets Resulting from Operations for the quarter ended June 30, 2009 was ($0.8) million, or ($0.04) per share, as compared to a Net Increase in Net Assets Resulting from Operations of $2.8 million, or $0.13 per share, for the quarter ended June 30, 2008. The decrease in Net Assets Resulting from Operations between the current and prior year periods was primarily due to the higher net loss on the Company's investment portfolio. The Company recorded net loss on investments of ($6.2) million for the three months ended June 30, 2009, compared to net loss of ($3.9) million for the three months ended June 30, 2008.
Net Increase in Net Assets Resulting from Operations for the nine months ended June 30, 2009 was $0.4 million, or $0.02 per share, as compared to a Net Decrease in Net Assets Resulting from Operations of ($7.2) million, or ($0.37) per share, for the nine months ended June 30, 2008. The increase in Net Assets Resulting from Operations between the current and prior year periods was primarily due to the lower net loss on the Company's investment portfolio. The Company recorded net loss on investments of ($16.5) million for the nine months ended June 30, 2009, compared to net loss of ($27.6) million for the nine months ended June 30, 2008.
Although the aggregate investment portfolio has depreciated, the entire portfolio was fair valued at 86% of cost as of June 30, 2009. The cumulative unrealized depreciation of the Company's investments does not have an impact on its current ability to pay distributions to stockholders, although it may be an indication of future realized losses, which could ultimately reduce the Company's income available for distribution.
Total assets were $344.3 million at June 30, 2009, as compared to $425.7 million at September 30, 2008. Net asset value was $11.86 per actual common share outstanding at June 30, 2009, as compared to $12.89 per actual common share outstanding at September 30, 2008.
The annualized weighted average yield on the Company's portfolio, excluding cash, was 10.4% for the quarter ended June 30, 2009, as compared to 10.1% for the quarter ended June 30, 2008. 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. The increase in the weighted average yield for the current quarter results primarily from the Company's sale of lower interest-bearing senior syndicated loans. The effect of continuing reductions in LIBOR has been mitigated by the presence of a rate floor or fixed rate on most of the non-syndicated loans held in the Company's portfolio as of June 30, 2009.
For the quarter ended June 30, 2009, the Company reported the following significant activity:
* Funded approximately $7.6 million of additional investments to existing portfolio companies; * Received principal repayments of approximately $15.5 million, which included scheduled principal payments and full repayments; * Received proceeds of approximately $39.8 million from the sale of 1 non-syndicated and 15 syndicated loans (which resulted in the Company's exit from 7 portfolio companies) and recorded a corresponding realized net loss of approximately $10.6 million; * Received approximately $123,000 in success fees in connection with the sale of one investment; * Repaid in full the previous credit facility with Deutsche Bank, A.G. and entered into a new credit facility with Key Equipment Finance Company Inc. and Branch Bank and Trust Company for a $127 million line of credit, which matures on May 14, 2010, with a one year amortization period; and * Paid monthly cash distributions of $0.07 per share for each of the months of April, May and June 2009.
At June 30, 2009, the Company had investments in 51 private companies with an aggregate cost basis of $386.1 million and an aggregate fair value of $333.4 million, as noted in the following table.
June 30, 2009
--------------------
Cost Fair Value
--------- ---------
(in thousands)
Senior Term Debt $ 242,373 $ 213,330
Senior Subordinated Term Debt 138,277 115,026
Preferred & Common Equity Securities 5,478 2,677
--------- ---------
Total Investments $ 386,128 $ 331,033
========= =========
"Times remain difficult given the economy and lending environment," said Chip Stelljes, President and Chief Investment Officer. "We expect the majority of the portfolio to continue paying as agreed, although we are working hard with our portfolio companies on their performance as we move through this difficult economic and financial cycle. We are seeing some strengthening in the secondary loan market although loans continue to trade at significant discounts to original cost. Even though the values generally remained stable this quarter, we still believe the valuations are more reflective of the overall poor market for loans rather than our specific portfolio."
Subsequent to June 30, 2009, the Company: * Funded approximately $230,000 of additional investments to existing portfolio companies; * Received approximately $8.6 million of repayments, including scheduled amortizations and repayments and syndicated loan sales; * Renewed its Advisory Agreement with the Adviser and Administration Agreement with the Administrator through August 31, 2010; * Sold a syndicated loan with a cost value of approximately $8.0 million at June 30, 2009, for $6.4 million in net proceeds; and * Declared monthly cash distributions of $0.07 per common share for each of the months of July, August and September 2009.
The financial statements below are without footnotes so readers should obtain and carefully review the Company's Form 10-Q for the quarter ended June 30, 2009, including the footnotes to the financial statements contained therein. The Company has filed the Form 10-Q 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 us at 1521 Westbranch Drive, Suite 200, McLean, VA 22102.
The Company will hold a conference call Tuesday, August 4, 2009 at 8:30 am EDT. Please call (877) 407-8031 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 September 4, 2009. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 328283. The replay will be available approximately two hours after the call concludes.
The live audio broadcast of Gladstone Capital's quarterly conference call will be available online at www.GladstoneCapital.com and www.investorcalendar.com. The event will be archived and available for replay on the Company's website through November 4, 2009.
The statements in this press release regarding the longer-term prospects of and expected continued current payments from the Company's portfolio companies and the state of the secondary loan markets 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, and those factors listed under the caption "Risk Factors" of the Company's Form 10-K for the fiscal year ended September 30, 2008, as filed with the SEC on December 2, 2008 and the Company's Quarterly Reports on Form 10-Q for the quarters ended December 31, 2008 and March 31, 2009 as filed with the SEC on February 3, 2009 and May 5, 2009, respectively. The risk factors set forth in the Form 10-K and Form 10-Qs 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)
June 30, Sept. 30,
2009 2008
--------- ---------
ASSETS
Non-Control/Non-Affiliate investments (Cost
6/30/09: $357,896; 9/30/08: $448,356) $ 317,501 $ 407,153
Control investments (Cost 6/30/09: $28,232;
9/30/08: $12,514) 13,532 780
--------- ---------
Total investments at fair value (Cost 6/30/09:
$386,128; 9/30/08: $460,870) 331,033 407,933
Cash 4,566 6,493
Interest receivable - investments in
debt securities 3,669 3,588
Interest receivable - employees 117 91
Due from custodian 1,631 4,544
Deferred financing fees 1,761 1,905
Prepaid assets 216 306
Other assets 1,340 838
--------- ---------
TOTAL ASSETS $ 344,333 $ 425,698
========= =========
LIABILITIES
Accounts payable $ 6 $ 8
Interest payable 429 646
Fee due to Administrator 218 247
Due to Adviser 700 457
Borrowings under line of credit 91,700 151,030
Accrued expenses and deferred liabilities 1,119 1,328
Funds held in escrow 165 234
--------- ---------
TOTAL LIABILITIES 94,337 153,950
--------- ---------
NET ASSETS $ 249,996 $ 271,748
========= =========
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000
shares authorized and 21,087,574 shares issued
and outstanding at June 30, 2009 and
September 30, 2008 $ 21 $ 21
Capital in excess of par value 334,140 334,143
Notes receivable - employees (9,170) (9,175)
Net unrealized depreciation on investments (55,096) (52,937)
Unrealized depreciation on derivative -- (304)
Distributions in excess of net investment income (19,899) --
--------- ---------
TOTAL NET ASSETS $ 249,996 $ 271,748
========= =========
NET ASSETS PER SHARE $ 11.86 $ 12.89
========= =========
GLADSTONE CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
INVESTMENT INCOME
Interest income -
Non-Control/
Non-Affiliate
investments $ 9,726 $ 11,220 $ 31,716 $ 33,454
Interest income -
Control
investments 754 16 1,256 45
Interest income -
Cash -- 38 11 285
Interest income -
Notes receivable
from employees 118 118 352 354
Prepayment fees
and other income -- 28 -- 34
----------- ----------- ----------- -----------
Total investment
income 10,598 11,420 33,335 34,172
----------- ----------- ----------- -----------
EXPENSES
Interest expense 1,811 1,771 6,288 5,982
Loan servicing fee 1,410 1,598 4,559 4,541
Base management
fee 457 529 1,374 1,664
Incentive fee 1,060 1,340 3,326 4,089
Administration fee 218 285 656 737
Professional fees 266 167 784 706
Amortization of
deferred
financing fees 808 572 2,253 830
Stockholder
related costs 33 34 317 292
Directors fees 55 52 151 163
Insurance expense 69 57 192 170
Other expenses 89 103 230 263
----------- ----------- ----------- -----------
Expenses before
credit from
Adviser 6,276 6,508 20,130 19,437
----------- ----------- ----------- -----------
Credit to base
management and
incentive fees
from Adviser (1,113) (1,785) (3,667) (5,708)
----------- ----------- ----------- -----------
Total expenses
net of credit to
base management
and incentive
fees 5,163 4,723 16,463 13,729
----------- ----------- ----------- -----------
NET INVESTMENT
INCOME 5,435 6,697 16,872 20,443
----------- ----------- ----------- -----------
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS AND
DERIVATIVE:
Net realized loss
on investments (10,594) (86) (14,325) (86)
Realized (loss)
gain on
settlement of
derivative -- -- (304) 6
Unrealized
appreciation
(depreciation) on
derivative -- -- 304 (12)
Net unrealized
appreciation
(depreciation) on
investments 4,371 (3,802) (2,158) (27,545)
----------- ----------- ----------- -----------
Net loss on
investments (6,223) (3,888) (16,483) (27,637)
NET (DECREASE)
INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS $ (788) $ 2,809 $ 289 $ (7,194)
=========== =========== =========== ===========
NET (DECREASE)
INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS
PER COMMON SHARE:
Basic and
Diluted $ (0.04) $ 0.13 $ 0.02 $ (0.37)
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OF COMMON
STOCK OUTSTANDING:
Basic and
Diluted 21,087,574 21,087,574 21,087,574 19,237,203
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)
(UNAUDITED)
Three months ended Nine months ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Per Share Data (1)
------------------
Net asset value
at beginning of
period $ 12.10 $ 14.27 $ 12.89 $ 14.97
----------- ----------- ----------- -----------
Income from
investment
operations:
Net investment
income (2) 0.26 0.32 0.80 1.06
Net realized
loss on
investments (2) (0.50) -- (0.68) --
Realized loss on
settlement of
derivative (2) -- -- (0.01) --
Unrealized
appreciation on
derivative (2) -- -- 0.01 --
Net unrealized
appreciation
(depreciation)
on investments
(2) 0.21 (0.19) (0.10) (1.43)
----------- ----------- ----------- -----------
Total from
investment
operations (0.03) (0.13) 0.02 (0.37)
----------- ----------- ----------- -----------
Distributions to
stockholders (3) (0.21) (0.42) (1.05) (1.26)
Issuance of common
stock under
shelf offering -- -- -- 0.68
Offering costs -- (0.01) -- (0.05)
----------- ----------- ----------- -----------
Net asset value
at end of period $ 11.86 $ 13.97 $ 11.86 $ 13.97
=========== =========== =========== ===========
Per share market
value at
beginning of
period $ 6.26 $ 18.71 $ 15.24 $ 19.52
Per share market
value at end
of period $ 7.53 $ 15.24 $ 7.53 $ 15.24
Total return
(4)(5) 23.88% -16.53% -43.15% -16.15%
Shares outstanding
at end of period 21,087,574 21,087,574 21,087,574 21,087,574
Statement of
Assets and
Liabilities Data:
------------------
Net assets at end
of period $ 249,997 $ 294,674 $ 249,997 $ 294,674
Average net
assets (6) $ 253,130 $ 295,405 $ 254,886 $ 284,641
Senior Securities
Data:
-----------------
Borrowings under
line of credit $ 91,700 $ 133,090 $ 91,700 $ 133,090
Asset coverage
ratio (7)(8) 373% 321% 373% 321%
Asset coverage
per unit (8) $ 3,726 $ 3,214 $ 3,726 $ 3,214
Ratios/
Supplemental
Data:
-------------
Ratio of expenses
to average net
assets
-annualized (9) 9.92% 8.81% 10.53% 9.10%
Ratio of net
expenses to
average net
assets-annualized
(10) 8.16% 6.40% 8.61% 6.43%
Ratio of net
investment income
to average net
assets-annualized 8.59% 9.07% 8.83% 9.58%
(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) Amounts were not annualized.
(6) Average net assets are computed using the average of the balance
of net assets at the end of each month of the reporting period.
(7) As a business development company, the Company is generally
required to maintain a ratio of at least 200% of total assets,
less all liabilities and indebtedness not represented by senior
securities, to total borrowings.
(8) 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.
Asset coverage per unit is the asset coverage ratio expressed in
terms of dollar amounts per $1,000 of indebtedness.
(9) 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.
(10) 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.
CONTACT: Gladstone Capital Corporation
Investor Relations
703-287-5893