Gladstone Capital Corporation Reports Results for the Fourth Quarter and Fiscal Year Ended September 30, 2007
-- Net Investment Income for the quarter ended September 30, 2007 was $5.7 million, or $0.39 per common share
-- Net Investment Income for the fiscal year ended September 30, 2007 was $22.3 million, or $1.69 per common share
MCLEAN, Va.--(BUSINESS WIRE)--
Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today announced earnings for the quarter and fiscal year ended September 30, 2007. All share references are based on weighted average common shares outstanding, unless otherwise noted. For the fiscal year ended September 30, 2007, there were no options outstanding to dilute outstanding shares.
Net Investment Income for the quarter ended September 30, 2007 increased 15.3% to $5,668,407, as compared to $4,916,268, for the quarter ended September 30, 2006. Net Investment Income for the quarter ended September 30, 2007 was $0.39 per share and $0.42 per share for the quarter ended September 30, 2006. Net Investment Income for the fiscal year ended September 30, 2007 increased 15% to $22,260,556, or $1.69 per share, as compared to $19,350,580, or $1.70 per basic share and $1.67 per diluted share for the fiscal year ended September 30, 2006.
For the quarter ended September 30, 2007, Net Increase in Net Assets Resulting from Operations was $738,951, or $0.05 per share, as compared to $5,063,429, or $0.44 per basic share and $0.43 per diluted share, for the same period one year ago. Net Increase in Net Assets Resulting from Operations for the fiscal year ended September 30, 2007 decreased 46% to $14,952,004, or $1.13 per share, as compared to $24,430,235, or $2.15 per basic share and $2.10 per diluted share, for the fiscal year ended September 30, 2006. The primary difference between the current and prior year periods is the result of net unrealized depreciation and appreciation of the Company's investment portfolio. The Company recorded net unrealized depreciation of $4,888,519 and $7,354,434 for the quarter and fiscal year ended September 30, 2007, respectively, compared to net unrealized appreciation on its investments of $198,735 and $5,968,555 for the quarter and fiscal year ended September 30, 2006, respectively.
Total assets were $367,729,138 at September 30, 2007, as compared to $225,783,215 at September 30, 2006. Net asset value was $220,958,735, or $14.97 per actual common share outstanding, at September 30, 2007 as compared to $172,570,487, or $14.02 per actual common share outstanding, at September 30, 2006.
The annualized weighted average yield on the Company's portfolio was 11.0% and 12.0% for the quarter and fiscal year ended September 30, 2007, respectively, as compared to 13.2% and 12.7% for the quarter and fiscal year ended September 30, 2006, respectively.
For the fiscal year ended September 30, 2007, the Company reported the following activity:
-- Returned 11.3% on average equity outstanding for the year;
-- Purchased a portfolio of media and communication loans for
approximately $63.3 million;
-- Funded approximately $198.4 million of new investments in
addition to the media portfolio;
-- Received principal repayments of $121.8 million, which
included scheduled principal repayments;
-- Received $2.2 million of success fees in connection with the
full repayment of four investments;
-- Received prepayment penalties of approximately $500,000;
-- Converted a non-performing loan of approximately $900,000 into
an equity investment for 100% ownership of the company;
-- Issued 2,550,000 shares of common stock for aggregate net
proceeds of approximately $56.8 million, all of which were
used to repay outstanding borrowings on the Company's line of
credit;
-- Paid monthly cash dividends of $0.14 per common share for each
month in fiscal year 2007, for an annual dividend of $1.68 per
share; and
-- Net Asset Value increased 6.8% from $14.02 to $14.97 per
share.
At September 30, 2007, the Company had investments in debt and equity securities and loans to syndicated loan participants in 56 private companies having an aggregate cost basis of approximately $355.8 million and a fair value of approximately $349.8 million.
Subsequent to September 30, 2007, the Company:
-- Funded approximately $56.2 million in additional new
investment to existing and new portfolio companies;
-- Declared monthly cash dividends of $0.14 per common share for
each of the months of October, November, and December, 2007;
and
-- Completed a public offering in October 2007 of 2,500,000
shares of common stock at a public offering price of $18.70
per share for net proceeds of approximately $43.7 million, all
of which were used to repay outstanding borrowings on the
Company's line of credit. In connection with this offering, in
November, the underwriter exercised its over-allotment option
to purchase an additional 375,000 shares of common stock for
additional net proceeds of approximately $6.6 million.
"Although our fourth quarter was uneventful in terms of production, overall fiscal year 2007 produced double-digit growth, with a 15% increase in Net Investment Income. We are very pleased with our net new production of about $140 million. Our growth during fiscal year 2007 reflects the dedication and hard work of our entire team," said Chip Stelljes, President and Chief Investment Officer. "We are also very excited about the positive start in production for our 2008 fiscal year and are eager to continue to grow our portfolio in the upcoming year."
The financial statements below are without footnotes. We have filed a Form 10-K today for the fiscal year ended September 30, 2007 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 web site 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.
Gladstone Capital will host a conference call at 8:30 a.m. EST, December 4, 2007. Please call 877-407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions. The replay number will be available two hours after the call for approximately 30 days. To hear the replay, please dial 877-660-6853 and use Access Code 286 and ID code 262854.
For further information contact Investor Relations at 703-287-5893.
This press release may include statements that may constitute "forward-looking statements," including statements with regard to the future performance of the Company. Words such as "should," "believes," "feel," "expects," "projects," "strive," "goals," 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, 2007, as filed with the Securities and Exchange Commission on December 3, 2007. 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
CONSOLIDATED STATEMENTS OF ASSETS & LIABILITIES
(Unaudited)
September 30, September 30,
2007 2006
------------- -------------
ASSETS
Non-Control/Non-Affiliate Investments
(Cost 9/30/2007: $354,835,652; 9/30/2006:
$216,202,986) $348,920,982 $217,642,750
Control investments (Cost 9/30/2007:
$923,548) 923,548 -
------------- -------------
Total investments at fair value (Cost
9/30/07: $355,759,200; 9/30/06
$216,202,986) 349,844,530 217,642,750
Cash and cash equivalents 8,838,658 731,744
U.S. Treasury bill 2,484,464 -
Interest receivable - investments in debt
securities 2,425,555 1,394,942
Interest receivable - employees 21,417 37,396
Due from custodian 3,230,385 3,587,152
Deferred financing fees 186,270 145,691
Prepaid assets 337,106 226,747
Due from employees - 1,803,283
Other assets 360,753 213,510
------------- -------------
TOTAL ASSETS $367,729,138 $225,783,215
============= =============
LIABILITIES
Accounts payable $ 6,013 $ 4,072
Interest payable 587,514 247,530
Administration fee due to Administrator 237,510 -
Fees due to Adviser 708,517 240,363
Borrowings under lines of credit 144,440,000 49,993,000
Withholding taxes payable - 1,803,283
Accrued expenses and deferred liabilities 790,849 721,287
Funds held in escrow - 203,193
------------- -------------
TOTAL LIABILITIES 146,770,403 53,212,728
------------- -------------
NET ASSETS $220,958,735 $172,570,487
============= =============
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000
shares authorized and 14,762,574 and
12,305,008 shares issued and outstanding,
respectively $ 14,763 $ 12,305
Capital in excess of par value 235,906,665 181,572,776
Notes receivable - employees (9,230,502) (10,248,308)
Net unrealized (depreciation) appreciation
on investments (5,914,670) 1,439,764
Unrealized depreciation on derivative (291,686) (253,716)
Accumulated undistributed net investment
income 474,165 47,666
------------- -------------
TOTAL NET ASSETS $220,958,735 $172,570,487
============= =============
NET ASSETS PER SHARE $ 14.97 $ 14.02
============= =============
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
2007 2006
------------- -------------
INVESTMENT INCOME
Interest income - investments $ 10,348,191 $ 7,148,853
Interest income - cash and cash
equivalents 77,306 16,667
Interest income - notes receivable from
employees 122,247 118,338
Prepayment fees and other income 60,000 62,153
------------- -------------
Total investment income 10,607,744 7,346,011
------------- -------------
EXPENSES
Interest expense 2,532,103 935,922
Loan servicing 1,246,981 763,851
Base Management fee 595,974 328,520
Incentive fee 1,133,681 -
Administration fee 237,510 -
Professional fees 154,360 148,568
Amortization of deferred financing fees 68,598 45,571
Stockholder related costs 26,285 30,539
Directors fees 66,250 34,500
Insurance expense 57,539 54,598
Stock option compensation - 5,700
Other expenses 108,621 333,059
------------- -------------
Expenses before credit from Adviser 6,227,902 2,680,828
------------- -------------
Credit to base management and incentive
fees from Adviser (1,288,565) (302,765)
------------- -------------
Total expenses net of credit to base
management and incentive fees 4,939,337 2,378,063
------------- -------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 5,668,407 4,967,948
------------- -------------
Income tax expense - 51,680
------------- -------------
NET INVESTMENT INCOME 5,668,407 4,916,268
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized loss on sale of investments (37,004) -
Realized gain on settlement of
derivative 8,160 13,647
Unrealized depreciation on derivative (12,093) (65,221)
Net unrealized (depreciation)
appreciation on investments (4,888,519) 198,735
------------- -------------
Net gain (loss) on investments (4,929,456) 147,161
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 738,951 $ 5,063,429
============= =============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 0.05 $ 0.44
============= =============
Diluted $ 0.05 $ 0.43
============= =============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 14,589,754 11,573,200
Diluted 14,589,754 11,767,902
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Year Ended September 30,
2007 2006
------------- -------------
INVESTMENT INCOME
Interest income - investments $ 35,412,893 $ 25,646,746
Interest income - cash and cash
equivalents 255,489 38,381
Interest income - notes receivable from
employees 526,164 441,341
Prepayment fees and other income 491,973 773,378
------------- -------------
Total investment income 36,686,519 26,899,846
------------- -------------
EXPENSES
Interest expense 7,225,628 3,238,615
Loan servicing 3,624,390 2,907,875
Base Management fee 2,402,049 1,284,414
Incentive fee 4,607,688 -
Administration fee 719,256 -
Professional fees 522,970 548,326
Amortization of deferred financing fees 267,231 140,143
Stockholder related costs 216,736 303,709
Directors fees 233,720 116,212
Insurance expense 248,877 206,554
Stock option compensation - 285,318
Other expenses 328,143 484,722
------------- -------------
Expenses before credit from Adviser 20,396,688 9,515,888
------------- -------------
Credit to base management and incentive
fees from Adviser (5,970,725) (2,068,539)
------------- -------------
Total expenses net of credit to base
management and incentive fees 14,425,963 7,447,349
------------- -------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 22,260,556 19,452,497
------------- -------------
Income tax expense - 101,917
------------- -------------
NET INVESTMENT INCOME 22,260,556 19,350,580
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on sale of
investments 44,494 (903,945)
Realized gain on settlement of
derivative 39,358 15,014
Unrealized (depreciation) appreciation
on derivative (37,970) 31
Net unrealized (depreciation)
appreciation on investments (7,354,434) 5,968,555
------------- -------------
Net gain (loss) on investments (7,308,552) 5,079,655
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 14,952,004 $ 24,430,235
============= =============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 1.13 $ 2.15
============= =============
Diluted $ 1.13 $ 2.10
============= =============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 13,173,822 11,381,378
Diluted 13,173,822 11,615,922
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended
September 30,
2007 2006
------------- -------------
Per Share Data (1)
------------------------------------------
Net asset value at beginning of period $ 15.11 $ 13.95
------------- -------------
Income from investment operations:
Net investment income (2) 0.39 0.42
Net unrealized (depreciation)
appreciation on investments (2) (0.34) 0.02
Net unrealized depreciation on
derivative (2) - (0.01)
------------- -------------
Total from investment operations 0.05 0.43
------------- -------------
Less distributions:
Distributions to stockholders (2)(3) (0.42) (0.42)
------------- -------------
Total distributions (0.42) (0.42)
------------- -------------
Issuance of common stock under shelf
offering 0.21 -
Issuance of common stock under stock
option plan - 1.10
Offering costs (0.02) -
Repayment of principal on notes
receivable 0.04 -
Dilutive effect of share issuance - (1.04)
------------- -------------
Net asset value at end of period $ 14.97 $ 14.02
============= =============
Per share market value at beginning of
period $ 21.46 $ 21.39
Per share market value at end of period 19.52 22.01
Total return-not annualized (4) -7.11% 4.85%
Shares outstanding at end of period 14,762,574 12,305,008
Ratios/Supplemental Data
------------------------------------------
Net assets at end of period $220,958,735 $172,570,487
Average net assets (5) $221,546,022 $162,057,242
Ratio of expenses to average net
assets-annualized (6) 11.24% 6.71%
Ratio of net expenses to average net
assets-annualized (7) 8.92% 6.00%
Ratio of net investment income to
average net assets-annualized 10.23% 12.13%
Year Ended September 30,
2007 2006
------------- -------------
Per Share Data (1)
------------------------------------------
Net asset value at beginning of period $ 14.02 $ 13.41
------------- -------------
Income from investment operations:
Net investment income (2) 1.69 1.70
Realized gain (loss) on sale of
investments (2) - (0.08)
Net unrealized (depreciation)
appreciation on investments (2) (0.56) 0.53
------------- -------------
Total from investment operations 1.13 2.15
------------- -------------
Less distributions:
Distributions to stockholders (2)(3) (1.68) (1.64)
------------- -------------
Total distributions (1.68) (1.64)
------------- -------------
Issuance of common stock under shelf
offering 1.55 -
Issuance of common stock under stock
option plan - 1.19
Offering costs (0.05) -
Stock compensation expense - 0.02
Repayment of principal on notes
receivable 0.06 0.02
Stock surrendered to settle withholding
tax obligation (0.06) -
Dilutive effect of share issuance - (1.13)
------------- -------------
Net asset value at end of period $ 14.97 $ 14.02
============= =============
Per share market value at beginning of
period $ 22.01 $ 22.55
Per share market value at end of period $ 19.52 $ 22.01
Total return (4) -4.40% 5.21%
Shares outstanding at end of period 14,762,574 12,305,008
Ratios/Supplemental Data
------------------------------------------
Net assets at end of period $220,958,735 $172,570,487
Average net assets (5) $189,731,888 $155,867,538
Ratio of expenses to average net assets
(6) 10.75% 6.16%
Ratio of net expenses to average net
assets (7) 7.60% 4.84%
Ratio of net investment income to
average net assets 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 dividends reinvested in accordance with the terms of
our dividend reinvestment plan. Total return does not take into
account dividends that may be characterized as a return of
capital.
(5) Average net assets are computed using the average balance of net
assets at the end of each reporting month.
(6) Ratio of expenses to average net assets is computed using expenses
before credit from Gladstone Management and including income tax
expense.
(7) Ratio of net expenses to average net assets is computed using
total expenses net of credits to management fee and including
income tax expense.
Source: Gladstone Capital Corp.
Released December 3, 2007