Gladstone Investment Corporation Reports Financial Results for the Quarter and Fiscal Year Ended March 31, 2010
MCLEAN, Va., May 24, 2010 (GLOBE NEWSWIRE) --
-- Net Investment Income for the quarter and fiscal year ended March 31,
2010 was $2.7 million, or $0.12 per common share, and $10.6 million, or
$0.48 per common share, respectively.
-- Net Increase (Decrease) in Net Assets Resulting From Operations for the
quarter and fiscal year ended March 31, 2010 was $20.6 million, or $0.93
per common share, and ($11.1) million, or ($0.50) per common share,
respectively.
Gladstone Investment Corporation (Nasdaq:GAIN) (the "Company") today announced earnings for the fourth quarter and fiscal year ended March 31, 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 March 31, 2010 and 2009 was $2.7 million, or $0.12 per common share, and $3.0 million, or $0.13 per common share, respectively, a decrease in Net Investment Income of 8.7%, or 7.7% per common share.
Net Investment Income for Fiscal Year: Net Investment Income for the fiscal years ended March 31, 2010 and 2009 was $10.6 million, or $0.48 per common share, and $13.4 million, or $0.62 per common share, respectively, a decrease in Net Investment Income of 20.8%, or 22.6% per common share. The decrease in Net Investment Income was primarily driven by a reduction of the Company's investment portfolio as a result of the sale of the majority of its senior syndicated loans (primarily to pay off its prior line of credit) during the fiscal year ended March 31, 2010, partially offset by decreased interest expense on lower outstanding borrowings when compared to the prior year periods.
Net Increase (Decrease) in Net Assets Resulting from Operations for Quarter: Net Increase (Decrease) in Net Assets Resulting from Operations for the quarters ended March 31, 2010 and 2009 was $20.6 million, or $0.93 per common share, and ($4.0) million, or ($0.18) per common share, respectively. The increase in the Net Increase in Net Assets Resulting from Operations between the quarter ended March 31, 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 $17.8 million for the quarter ended March 31, 2010, compared to net loss of $6.9 million for the prior year period.
Net Decrease in Net Assets Resulting from Operations for Fiscal Year: Net Decrease in Net Assets Resulting from Operations for the fiscal years ended March 31, 2010 and 2009 was $11.1 million, or $0.50 per common share, and $11.4 million, or $0.53 per common share, respectively, a decrease in Net Decrease in Net Assets Resulting from Operations of 3.3%, or 5.7% per common share. Results of Operations for the fiscal years ended March 31, 2010 and 2009 were largely impacted by significant devaluations, primarily in the Company's equity holdings of its Control investments, and realized losses, primarily from the forced sale of the majority of its senior syndicated loans to pay off its prior line of credit in April 2009. The Company recorded net losses (both realized and unrealized) on investments of $21.7 million and $24.8 million for the fiscal years ended March 31, 2010 and 2009, respectively.
Estimated Fair Value: The aggregate investment portfolio appreciated during the fiscal year ended March 31, 2010, primarily due to the reversal of unrealized depreciation associated with the realized losses on the sale of the senior syndicated loans. As of March 31, 2010, the entire portfolio was fair valued at 91% of cost, up slightly from 90% as of March 31, 2009.
Net Asset Value: Net asset value was $8.74 per actual common share outstanding at March 31, 2010, as compared to $9.73 per actual common share outstanding at March 31, 2009.
Asset Characteristics: Total assets were $297.2 million at March 31, 2010, as compared to $326.8 million at March 31, 2009. At March 31, 2010, the Company had investments in 16 portfolio companies with an aggregate cost basis of $227.6 million and an aggregate fair value of $206.9 million. As of March 31, 2010, the Company's investment portfolio at fair value was comprised of 80.0% debt securities and 20.0% equity securities. For the Company's proprietary loans, the weighted average asset risk rating at March 31, 2010 improved to 5.5 on a ten point scale as compared to 5.1 at March 31, 2009.
Investment Yield: The annualized weighted average yield on the Company's portfolio, excluding cash and cash equivalents, was 11.1% and 11.0% for the quarter and fiscal year ended March 31, 2010, respectively, as compared to 7.9% and 8.2% for the quarter and fiscal year ended March 31, 2009, respectively. 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 year ended March 31, 2010 resulted primarily from the Company's sales of lower interest-bearing senior syndicated loans subsequent to March 31, 2009.
Highlights for Quarter: During the quarter ended March 31, 2010, the Company reported the following significant events:
-- Funded approximately $2.4 million of additional investments to existing
portfolio companies;
-- Received principal repayments of approximately $0.7 million, which
included $0.2 million of unscheduled principal payments;
-- Moved closer to exit one of the Company's large investments, although it
is still too early to make any firm predictions about that outcome;
-- Purchased $85.0 million of short-term U.S. Treasury securities on March
30, 2010 which matured on April 1, 2010; and
-- Paid monthly distributions of $0.04 per share for each of January,
February and March 2010.
Comments from President Dave Dullum: "We are encouraged by the increasing demand for mezzanine financing for buyouts in our markets and the outlook for our investment activity. We will continue to be rigorous in our investigation of business opportunities as we grow the portfolio and expand our capabilities to seek to increase distributions to stockholders."
Subsequent to March 31, 2010: Subsequent to March 31, 2010, the Company:
-- 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 may be
expanded up to $125.0 million through the addition of other lenders. The
Facility matures on April 13, 2012, and if it is not renewed or extended
by that date, all 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 rate (subject to a minimum rate of
2.0%), plus 4.5% per annum.
-- Investment Payoff: Received full repayment from its senior syndicated
loan to Interstate FiberNet, Inc. of $6.8 million.
-- Dividends Declared: Declared monthly cash distributions of $0.04 per
common share for each of April, May and June 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):
March 31, 2010 March 31, 2009
------------------ -------------------------
For year ended:
Net Investment Income 10,598 13,388
Results of Operation (11,071) (11,449)
Average Yield on
Portfolio 11.02% 8.22%
Total dollars invested 4,788 53,002
Total dollars repaid 90,240 49,785
For quarter ended:
Net Investment Income 2,709 2,967
Results of Operations 20,629 (3,981)
As of:
Fair Value as a Percent
of Cost 90.90% 89.97%
Net Asset Value per share 8.74 9.73
Number of Investments 16 46
Total Assets 297,161 326,843
Weighted Average Risk
Rating
(on a scale of ten) 5.5 5.1
Conference Call for Stockholders: The Company will hold a conference call Tuesday, May 25, 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 June 24, 2010. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 349214. 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 August 23, 2010.
Warning: The financial statements below are without footnotes, so readers should obtain and carefully review the Company's Annual Report on Form 10-K for the year ended March 31, 2010, including the footnotes to the financial statements contained therein. The Company has filed the Annual Report on Form 10-K 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.
The statements in this press release regarding the increasing demand for mezzanine financing, 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. The risk factors set forth in the Annual Report on Form 10-K 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
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
March 31,
------------------
2010 2009
-------- --------
ASSETS
Cash and cash equivalents $87,717 $7,236
Investments at fair value
Non-Control/Non-Affiliate
investments (Cost of $22,674 and
$134,836,
respectively) 20,946 94,740
Control investments (Cost of
$152,166 and $150,081,
respectively) 148,248 166,163
Affiliate investments (Cost of
$52,727 and $64,028,
respectively) 37,664 53,027
-------- --------
Total investments (Cost of
$227,567 and $348,945,
respectively) 206,858 313,930
Interest receivable 1,234 1,500
Due from Custodian 935 2,706
Deferred financing fees 83 1,167
Prepaid assets 221 172
Other assets 113 132
-------- --------
TOTAL ASSETS $297,161 $326,843
======== ========
LIABILITIES
Borrowings at fair value(1)
Short-term loan (Cost of $75,000
and $0, respectively) $75,000 $ --
Line of credit (Cost of $27,800
and $110,265, respectively) 27,812 110,265
-------- --------
Total borrowings (Cost of
$102,800 and $110,265,
respectively) 102,812 110,265
Accounts payable and accrued
expenses 206 1,283
Fee due to Administrator 149 179
Fees due to Adviser 721 187
Other liabilities 295 127
-------- --------
TOTAL LIABILITIES 104,183 112,041
-------- --------
NET ASSETS $192,978 $214,802
======== ========
ANALYSIS OF NET ASSETS:
Common stock, $0.001 par value,
100,000,000 shares authorized,
22,080,133
shares issued and outstanding at
March 31, 2010 and 2009 $22 $22
Capital in excess of par value 257,206 257,361
Net unrealized depreciation of
investment portfolio (20,710) (35,015)
Net unrealized depreciation of
derivative (39) (53)
Net unrealized appreciation of
borrowings under line of credit (12) --
Accumulated net realized
investment loss (43,489) (7,513)
-------- --------
TOTAL NET ASSETS $192,978 $214,802
======== ========
NET ASSETS PER SHARE $8.74 $9.73
======== ========
(1) Beginning the quarter ended June 30, 2009, the
Company elected to apply ASC 825, "Financial
Investments", which allows for the Company to fair
value its borrowings. The March 31, 2009 borrowing
amounts are at cost.
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Quarter Ended March
31,
----------------------
2010 2009
---------- ----------
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate
investments $463 $1,595
Control investments 3,144 2,926
Affiliate investments 1,130 1,435
Cash and cash equivalents 1 --
---------- ----------
Total interest income 4,738 5,956
Other income 14 --
---------- ----------
Total investment income 4,752 5,956
---------- ----------
EXPENSES
Loan servicing fee 855 1,233
Base management fee 149 396
Administration fee 149 179
Interest expense 348 1,340
Amortization of deferred
financing fees 431 --
Professional fees 124 148
Stockholder related costs 19 72
Insurance expense 72 57
Directors fees 49 49
Other expenses 82 25
---------- ----------
Expenses before credit from
Adviser 2,278 3,499
Credit to fees from Adviser (235) (510)
---------- ----------
Total expenses net of
credits to fees 2,043 2,989
---------- ----------
NET INVESTMENT INCOME 2,709 2,967
---------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Realized loss on sale of
Non-Control/Non-Affiliate
investments -- (807)
Net unrealized appreciation
(depreciation) of
Non-Control/Non-Affiliate
investments 1,770 (8,704)
Net unrealized appreciation
of Control investments 15,233 1,301
Net unrealized appreciation
of Affiliate investments 801 1,262
Net unrealized depreciation
of derivative (5) --
Net unrealized depreciation
of credit facility 121 --
---------- ----------
Net gain (loss) on
investments and derivative 17,920 (6,948)
---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $20,629 $(3,981)
========== ==========
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
PER COMMON SHARE:
Basic and diluted $0.93 $(0.18)
---------- ----------
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING:
Basic and diluted weighted
average shares 22,080,133 22,080,133
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
Year Ended March 31,
----------------------
2010 2009
---------- ----------
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate
investments $2,393 $8,494
Control investments 11,745 11,306
Affiliate investments 5,677 5,378
Cash and cash equivalents 2 67
---------- ----------
Total interest income 19,817 25,245
Other income 968 567
---------- ----------
Total investment income 20,785 25,812
---------- ----------
EXPENSES
Loan servicing fee 3,747 5,002
Base management fee 737 1,699
Incentive fee 588 --
Administration fee 676 821
Interest expense 1,988 5,349
Amortization of deferred
financing fees 1,618 323
Professional fees 626 532
Stockholder related costs 295 485
Insurance expense 262 222
Directors fees 196 194
Other expenses 280 271
---------- ----------
Expenses before credits
from Adviser 11,013 14,898
Credits to fees from Adviser (826) (2,474)
---------- ----------
Total expenses net of
credits to fees 10,187 12,424
---------- ----------
NET INVESTMENT INCOME 10,598 13,388
---------- ----------
REALIZED AND UNREALIZED (LOSS)
GAIN ON:
Realized loss on sale of
Non-Control/Non-Affiliate
investments (35,923) (5,023)
Realized loss on termination
of derivative (53) --
Net unrealized appreciation
(depreciation) of
Non-Control/Non-Affiliate
investments 38,367 (16,418)
Net unrealized
(depreciation) appreciation
of Control investments (20,001) 9,029
Net unrealized
(depreciation) appreciation
of Affiliate investments (4,061) (12,425)
Net unrealized appreciation
(depreciation) of
derivative 14 --
Net unrealized appreciation
of borrowings (12) --
---------- ----------
Net loss on investments,
derivative and borrowings (21,669) (24,837)
---------- ----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $(11,071) $(11,449)
========== ==========
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS PER
COMMON SHARE:
Basic and diluted $(0.50) $(0.53)
---------- ----------
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING:
Basic and diluted weighted
average shares 22,080,133 21,545,936
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT
DATA)
(UNAUDITED)
Quarter Ended March
31,
----------------------
2010 2009
---------- ----------
Per Share Data (1)
Net asset value at beginning of year $7.93 $10.15
Income from investment operations:
Net investment income(2) 0.12 0.13
Realized loss on sale of
investments(2) -- (0.03)
Net unrealized appreciation
(depreciation) of investments(2) 0.81 (0.28)
---------- ----------
Total from investment operations 0.93 (0.18)
---------- ----------
Distributions from:
Net investment income (0.12) (0.13)
Tax return on capital -- (0.11)
---------- ----------
Total distributions(3) (0.12) (0.24)
Net asset value at end of period $8.74 $9.73
========== ==========
Per share market value at beginning
of period $4.66 $4.89
Per share market value at end of
period 5.98 3.82
Total return(4) 31.24% (17.39)%
Shares outstanding at end of period 22,080,133 22,080,133
Statement of Assets and Liabilities
Data:
Net assets at end of period $192,978 $214,802
Average net assets(5) 180,099 218,259
Senior Securities Data:
Total borrowings $102,812 $110,265
Asset coverage ratio(6) 281% 293%
Average coverage per unit(7) $2,814 $2,930
Ratios/Supplemental Data:
Ratio of expenses to average net
assets(8)(9) 5.06% 6.41%
Ratio of net expenses to average net
assets(8)(10) 4.54% 5.48%
Ratio of net investment income to
average net assets(8) 6.02% 5.44%
(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 distributions reinvested in accordance with the terms of our distribution reinvestment plan. (5) Calculated using the average of the ending monthly net assets for the respective periods. (6) As a business development company, the Company is generally required to maintain a ratio of at least 200% of total assets to total borrowings. (7) 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 expressed in terms of dollar amounts per $1,000 of indebtedness. (8) Amounts are annualized. (9) Ratio of expenses to average net assets is computed using expenses before credit from the Adviser. (10) Ratio of net expenses to average net assets is computed using total expenses net of credits to the management fee.
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT
DATA)
(UNAUDITED)
Year Ended March 31,
----------------------
2010 2009
---------- ----------
Per Share Data (1)
Net asset value at beginning of year $9.73 $12.47
Income from investment operations
Net investment income(2) 0.48 0.62
Realized loss on sale of
investments(2) (1.63) (0.23)
Net unrealized depreciation of
investments(2) 0.65 (0.92)
---------- ----------
Total from investment operations (0.50) (0.53)
---------- ----------
Distributions from:
Net investment income (0.48) (0.62)
Tax return on capital -- (0.34)
---------- ----------
Total distributions(3) (0.48) (0.96)
Shelf registration offering costs (0.01) (0.03)
Effect on distribution of rights
offering after record date(4) -- (1.22)
---------- ----------
Net asset value at end of year $8.74 $9.73
========== ==========
Per share market value at beginning
of year $3.67 $9.32
Per share market value at end of year 5.98 3.82
Total return(5) 79.80% (51.65)%
Shares outstanding at end of year 22,080,133 22,080,133
Statement of Assets and Liabilities
Data:
Net assets at end of year $192,978 $214,802
Average net assets(6) 191,112 230,738
Senior Securities Data:
Total borrowings $102,812 $110,265
Asset coverage ratio(7) 281% 293%
Average coverage per unit(8) $2,814 $2,930
Ratios/Supplemental Data:
Ratio of expenses to average net
assets(9)(10) 5.76% 6.46%
Ratio of net expenses to average net
assets(9)(11) 5.33% 5.38%
Ratio of net investment income to
average net assets(9) 5.55% 5.80%
(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) The effect of distributions from the stock rights offering after the record date represents the effect on net asset value of issuing additional shares after the record date of a distribution. (5) 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 our dividend reinvestment plan. (6) Calculated 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 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. (8) Asset coverage per unit is the asset coverage ratio expressed in terms of dollar amounts per $1,000 of indebtedness. (9) Amounts are annualized. (10) Ratio of expenses to average net assets is computed using expenses before credits from the Adviser. (11) 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 May 24, 2010