- 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.
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
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