Gladstone Investment Corporation Reports Financial Results for the Quarter Ended June 30, 2010
-- Net Investment Income for the quarter ended June 30, 2010 was $4.2
million, or $0.19 per common share.
-- Net Increase in Net Assets Resulting From Operations for the quarter
ended June 30, 2010 was $5.4 million, or $0.24 per common share.
MCLEAN, Va., Aug. 2, 2010 (GLOBE NEWSWIRE) -- Gladstone Investment Corporation (Nasdaq:GAIN) (the "Company") today announced earnings for the first quarter ended June 30, 2010. All per share references are per basic and diluted weighted average common share outstanding, unless otherwise noted.
Net Investment Income for Quarter: Net Investment Income for the quarters ended June 30, 2010 and 2009 was $4.2 million, or $0.19 per common share, and $2.4 million, or $0.11 per common share, respectively, an increase in Net Investment Income of 72.1%, or 72.7% per common share. The increase in Net Investment Income was primarily driven by income recognized during the quarter ended June 30, 2010 from the sale of one of the Company's portfolio companies, A. Stucki Holding Corp. ("A. Stucki"), partially offset by lower interest income resulting from a reduction in the size of the Company's investment portfolio prior to March 31, 2010.
Net Increase (Decrease) in Net Assets Resulting from Operations for Quarter: Net Increase (Decrease) in Net Assets Resulting from Operations for the quarters ended June 30, 2010 and 2009 was $5.4 million, or $0.24 per common share, and ($9.2) million, or ($0.42) per common share, respectively. The increase in the Net Increase in Net Assets Resulting from Operations between the quarter ended June 30, 2010 and the prior year's quarter was primarily due to the net gain on the Company's investment portfolio. The Company recorded a net gain on investments of $1.2 million for the quarter ended June 30, 2010, compared to a net loss of $11.6 million for the prior year period, which was largely impacted by significant devaluations, primarily in the Company's equity holdings of its Control investments.
Estimated Fair Value: The aggregate investment portfolio depreciated during the quarter ended June 30, 2010, primarily due to the reversal of unrealized appreciation associated with the realized gain on the sale of A. Stucki. As of June 30, 2010, the entire portfolio was fair valued at 80.2% of cost, down from 90.9% as of March 31, 2010.
Net Asset Value: Net asset value was $8.86 per actual common share outstanding at June 30, 2010, as compared to $8.74 per actual common share outstanding at March 31, 2010.
Asset Characteristics: Total assets were $290.9 million at June 30, 2010, as compared to $297.2 million at March 31, 2010. At June 30, 2010, the Company had investments in 15 portfolio companies with an aggregate cost basis of $184.8 million and an aggregate fair value of $148.3 million. As of June 30, 2010, the Company's investment portfolio at fair value was comprised of 85.6% in debt securities and 14.4% in equity securities. Additionally, the Company held $119.3 million in cash and cash equivalents at June 30, 2010, including $75.0 million from a short-term loan.
Investment Yield: The annualized weighted average yield on the Company's portfolio, excluding cash and cash equivalents, was 10.3% for the quarter ended June 30, 2010, as compared to 10.0% for the quarter ended June 30, 2009. 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 quarter ended June 30, 2010 resulted primarily from the Company's sales of lower interest-bearing senior syndicated loans prior to March 31, 2010.
Highlights for Quarter: During the quarter ended June 30, 2010, the Company reported the following significant events:
-- A. Stucki Holding Corp. Sale: In June 2010, the Company sold its equity
investment and received full repayment of its debt investment in A.
Stucki. The net cash proceeds to the Company from the sale of its equity
in A. Stucki were $21.7 million, resulting in a realized gain of $17.0
million. In connection with the equity sale, the company accrued and
received cash dividend proceeds of $0.2 million from its preferred stock
investment in A. Stucki. At the same time, the Company received $30.6
million in repayment of its principal, accrued interest and success fees
on the loans to A. Stucki. Additionally, immediately prior to the sale
of A. Stucki, the Company received a special distribution of property
with a fair value of $0.5 million, which was recorded as dividend income
and is reflected as a new control investment, Gladstone Neville Corp.,
on the Company's condensed consolidated schedule of investments as of
June 30, 2010.
-- Credit Facility 2-Year Renewal: Entered into a third amended and
restated credit agreement (the "Facility") providing for a $50.0 million
revolving line of credit arranged by Branch Banking and Trust Company as
administrative agent and Key Equipment Finance Inc. The Facility matures
on April 13, 2012, and if it is not renewed or extended by that date,
all unpaid principal and interest will be due and payable on or before
April 13, 2013. Advances under the Credit Facility will generally bear
interest at the 30 day LIBOR (subject to a minimum rate of 2.0%), plus
4.5% per annum.
-- Investment Activity: Funded approximately $0.8 million of additional
investments to existing portfolio companies and received principal
repayments of approximately $39.6 million, which included $38.7 million
of unscheduled principal payments (of which $28.5 million related to the
A. Stucki exit).
-- Short Term Investment: Purchased $85.0 million of short-term U. S.
Treasury securities on June 30, 2010 which matured on July 1, 2010.
-- Distributions: Paid monthly distributions of $0.04 per share for each of
April, May and June 2010.
Comments from President Dave Dullum: "The successful exit from our investment in A. Stucki not only produced significant realized returns, it also was the first liquidity event, since inception, consistent with our investment objectives and our business plan of generating capital gains to enhance the current income components through a combination of debt and equity investments. We believe our portfolio is sound with a good mix of investments. We are also encouraged by the increased activity in new deal opportunities and we are striving to find more good companies to add to our portfolio of investments."
Dividends Declared: Declared monthly cash distributions of $0.04 per common share for each of July, August and September 2010.
Summary Information: The following chart is a summary of some of the information reported above (in thousands of dollars, except per share data and percents):
June 30, 2010 June 30, 2009
------------------- ------------------------
For quarter ended:
Net Investment Income 4,207 2,445
Results of Operation 5,368 (9,190)
Average Yield on
Portfolio 10.31% 10.01%
Total dollars invested 839 650
Total dollars repaid 39,585 6,725
June 30, 2010 March 31, 2010
------------------- ------------------------
As of:
Fair Value as a Percent
of Cost 80.20% 90.88%
Net Asset Value per share 8.86 8.74
Number of Investments 15 16
Total Assets 290,910 297,161
Conference Call for Stockholders: The Company will hold a conference call Tuesday, August 3, 2010 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 3, 2010. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 350972. The 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 GladstoneInvestment.com and investorcalendar.com. The event will be archived and available for replay on the Company's website through October 2, 2010.
Warning: 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, 2010, including the footnotes to the financial statements contained therein. The Company has filed the Form 10-Q today with the SEC, which can be retrieved from the SEC's website at sec.gov or from the Company's website at GladstoneInvestment.com. A paper copy can be obtained free of charge by writing to the Company at 1521 Westbranch Drive, Suite 200, McLean, VA 22102.
For further information contact Investor Relations at 703-287-5893.
The statements in this press release regarding the soundness and mix of the Company's portfolio, the Company's projected investment activities, the Company's ability to grow the portfolio and other such statements 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 effects of current economic instability, the Company's ability to access debt and equity capital and those factors listed under the caption "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2010, as filed with the SEC on May 24, 2010 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, as filed with the SEC on August 2, 2010. The risk factors set forth in the Annual Report on Form 10-K and Form 10-Q 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 INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
June 30, March 31,
2010 2010
--------- ---------
ASSETS
Cash and cash equivalents $ 119,318 $ 87,717
Investments at fair value
Non-Control/Non-Affiliate
investments (Cost of $15,381
and $22,674, respectively) 14,079 20,946
Control investments (Cost of
$122,954 and $152,166,
respectively) 101,574 148,248
Affiliate investments (Cost
of $46,501 and $52,727,
respectively) 32,676 37,664
--------- ---------
Total investments (Cost of
$184,836 and $227,567,
respectively) 148,329 206,858
Interest receivable 842 1,234
Due from Custodian 17,362 935
Deferred financing fees 665 83
Prepaid assets 261 221
Other assets 4,133 113
--------- ---------
TOTAL ASSETS $ 290,910 $ 297,161
========= =========
LIABILITIES
Borrowings at fair value
Short-term loan (Cost of
$75,000) $ 75,000 $ 75,000
Line of credit (Cost of
$16,500 and $27,800,
respectively) 16,500 27,812
--------- ---------
Total borrowings (Cost of
$91,500 and $102,800,
respectively) 91,500 102,812
Accounts payable and accrued
expenses 401 206
Fee due to Administrator 178 149
Fees due to Adviser 1,811 721
Other liabilities 1,314 295
--------- ---------
TOTAL LIABILITIES 95,204 104,183
--------- ---------
NET ASSETS $ 195,706 $ 192,978
========= =========
ANALYSIS OF NET ASSETS:
Common stock, $0.001 par
value, 100,000,000 shares
authorized, 22,080,133 shares
issued and outstanding at
June 30, 2010 and March 31,
2010 $ 22 $ 22
Capital in excess of par value 257,216 257,206
Net unrealized depreciation of
investment portfolio (36,507) (20,710)
Net unrealized depreciation of
derivatives (69) (39)
Net unrealized appreciation of
borrowings -- (12)
Accumulated net realized
investment loss (24,956) (43,489)
--------- ---------
TOTAL NET ASSETS $ 195,706 $ 192,978
========= =========
NET ASSETS PER SHARE $ 8.86 $ 8.74
========= =========
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
June 30,
----------------------
2010 2009
---------- ----------
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate
investments $ 405 $ 1,112
Control investments 3,019 2.779
Affiliate investments 1,082 1.278
Cash and cash equivalents 1 --
---------- ----------
Total interest income 4,507 5,169
Other income 2,741 --
---------- ----------
Total investment income 7,248 5,169
---------- ----------
EXPENSES
Loan servicing fee 824 1,068
Base management fee 200 313
Incentive fee 1,052 --
Administration fee 178 173
Interest expense 274 702
Amortization of deferred financing
fees 164 314
Professional fees 124 201
Stockholder related costs 104 82
Insurance expense 72 57
Directors fees 50 51
Other expenses 118 64
---------- ----------
Expenses before credits from
Adviser 3,160 3,025
Credits to fees from Adviser(1) (119) (301)
---------- ----------
Total expenses net of credits to
fees 3,041 2,724
---------- ----------
NET INVESTMENT INCOME 4,207 2,445
---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON:
Realized gain (loss) on sale of
investments 16,976 (34,605)
Realized loss on termination of
derivative -- (53)
Net unrealized appreciation of
Non-Control/Non-Affiliate
investments 426 36,728
Net unrealized depreciation of
Control investments (17,461) (11,481)
Net unrealized appreciation
(depreciation) of Affiliate
investments 1,237 (2,266)
Net unrealized (depreciation)
appreciation of derivatives (29) 42
Net unrealized depreciation of
borrowings 12 --
---------- ----------
Net gain (loss) on investments,
derivatives and borrowings 1,161 (11,635)
---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 5,368 $ (9,190)
========== ==========
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS
PER COMMON SHARE:
Basic and diluted $ 0.24 $ (0.42)
---------- ----------
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING:
Basic and diluted weighted
average shares 22,080,133 22,080,133
GLADSTONE INVESTMENT CORPORATION
CONDENSED CONSOLIDATED FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)
(UNAUDITED)
Three Months Ended
June 30,
----------------------
2010 2009
---------- ----------
Per Share Data (1)
Net asset value at beginning of period $ 8.74 $ 9.73
Income from investment operations
Net investment income(2) 0.19 0.11
Realized gain (loss) on sale of
investments(2) 0.77 (1.57)
Net unrealized (depreciation) appreciation
of investments(2) (0.72) 1.04
---------- ----------
Total from investment operations 0.24 (0.42)
---------- ----------
Distributions from:
Net investment income (0.12) (0.12)
---------- ----------
Total distributions(3) (0.12) (0.12)
---------- ----------
Net asset value at end of period $ 8.86 $ 9.19
========== ==========
Per share market value at beginning of
period $ 6.01 $ 3.82
Per share market value at end of period 5.83 4.83
Total return(4) (0.99)% 35.24%
Shares outstanding at end of period 22,080,133 22,080,133
Statement of Assets and Liabilities Data:
Net assets at end of period $ 195,706 $ 202,930
Average net assets(5) 193,094 210,188
Senior Securities Data:
Total borrowings $ 91,500 $ 111,940
Asset coverage ratio(6) 301% 280%
Average coverage per unit(7) $ 3,006 $ 2,798
Ratios/Supplemental Data:
Ratio of expenses to average net assets(8),
(9) 6.55% 5.76%
Ratio of net expenses to average net
assets(8), (10) 6.3% 5.18%
Ratio of net investment income to average
net assets(8) 8.71% 4.65%
(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 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
the Company's dividend reinvestment plan.
(5) Calculated using the average of the balance of net assets at
the end of each month of the reporting period.
(6) As a business development company, the Company is generally
required to maintain an asset coverage ratio of at least 200% of
total consolidated assets, less all liabilities and indebtedness
not represented by senior securities, to total borrowings and
guaranty commitments.
(7) Asset coverage per unit is the asset coverage ratio expressed
in terms of dollar amounts per one thousand of indebtedness.
(8) Amounts are annualized.
(9) Ratio of expenses to average net assets is computed using
expenses before credits from the Adviser.
(10) Ratio of net expenses to average net assets is computed using
total expenses net of credits to the management fee.
CONTACT: Gladstone Investment Corporation
Investor Relations
703-287-5893
Released August 2, 2010