Hercules Technology Growth Capital, Inc. (NYSE: HTGC), a leader
in customized debt financing for entrepreneurial venture capital
and private equity-backed companies in technology-related markets
including cleantech and life science, announced today its financial
results for the first quarter ended March 31, 2012.
First Quarter 2012 Highlights:
- Originated approximately $101.3 million
in total debt and equity commitments to new and existing portfolio
companies.
- Funded approximately $65.0 million of
debt and equity investments during the first quarter.
- Received approximately $35.5 million in
principal repayments, including $16.5 million of early
principal repayments and $19.0 million in scheduled
principal payments.
- Record total investment income of $22.4
million, an increase of 16.7%, in the first quarter of 2012,
compared to $19.2 million for the first quarter of
2011.
- Increased net investment income, or
“NII”, during the quarter by 16.3% to approximately $11.4 million,
compared to $9.8 million in the first quarter of 2011. Net
investment income per share was $0.24 on 47.0 million outstanding
shares for the first quarter of 2012, compared to $0.23 per share
on 42.7 million outstanding shares in the first quarter of
2011.
- Increased distributable net operating
income, or “DNOI”, by approximately 16.2% to $12.2 million compared
to $10.5 million in the first quarter of 2011. DNOI per share was
$0.26 per share on 47.0 million outstanding shares for the first
quarter of 2012, compared to $0.25 per share on 42.7 million
outstanding shares in the first quarter of 2011.
- Total investment assets increased 56.1%
year over year to approximately $694.5 million as of March 31,
2012, compared to $445.0 million as of March 31, 2011.
- Ended the first quarter with
approximately $178.4 million in available liquidity, including
$48.4 million in cash and $130.0 million in credit facility
availability.
-
Declared a 4.0% increase in the quarterly dividend to $0.24
per share payable on May 25, 2012, to shareholders of record as of
May 18, 2012; the twenty-seventh consecutive dividend since
inception bringing total dividends declared since inception to
$7.16 per share.
- Four of Hercules’ portfolio companies
completed their initial public offering (“IPO”) during the quarter,
one was acquired and one announced its intention to be
acquired.
“We announced a record number of liquidity events for our
portfolio in the first quarter as compared to any quarter since
inception, reflecting our investment team’s success with
identifying trends in the venture capital marketplace and
maximizing value for our shareholders. These liquidity events are a
perfect example of Hercules’ unique business model. Our warrant and
equity portfolio, with investments in over 110 venture backed
companies, two of which have on file with the SEC Form S-1
registration statements to complete their initial public offerings,
one of which is Facebook, provides additional potential value
to our shareholders,” said Manuel A. Henriquez, Hercules'
co-founder, president, chairman and chief executive officer.
Henriquez continued, “We have added significant liquidity to our
balance sheet so far this year, raising both equity and debt
capital to support the strong demand for venture capital
investments in the marketplace. These financing activities provide
us with significant liquidity to grow our investment portfolio
while maintaining our disciplined investment approach. We
believe this should result in strong dividend coverage and growth
in earnings.”
First Quarter Review and Operating Results
Investment Portfolio
As of March 31, 2012, over 99.0% of the Company’s debt
investments were in a senior secured first lien position, and more
than 91.0% of the debt investment portfolio was priced at floating
interest rates or floating interest rates with a Prime or LIBOR
based interest rate floor, well positioned to benefit should market
rates increase.
Hercules entered into commitments to provide debt and equity
financings of approximately $101.3 million to new and existing
portfolio companies.
Debt and equity fundings were approximately $65.0
million to new and existing portfolio companies during the
first quarter. Hercules received approximately $35.5
million of principal repayments, including approximately
$16.5 million of early principal repayments
and approximately $19.0 million in scheduled principal
payments in the first quarter.
A break-down of the total investment portfolio by category,
quarter over quarter, is highlighted below:
(at Fair Value, in $ Millions)
Period Q1 2012
Q4 2011 Change ($)
Change % Interest Earning Debt Investments
Loans $614.6 $585.8 $28.8
4.9%
Non-Interest Earning Equity Equity Investments
$47.9 $37.1 $10.8 29.1%
Warrant Portfolio $32.0 $30.0 $2.0
6.7%
Total Investment Assets $694.5
$652.9 $41.6 6.4%
Unfunded Commitments
As of March 31, 2012, Hercules had unfunded debt commitments of
approximately $125.4 million. Since these commitments may expire
without being drawn upon, unfunded commitments do not necessarily
represent future cash requirements or future earning assets for
Hercules. Approximately $40.1 million of these unfunded commitments
are dependent upon the portfolio company reaching certain
milestones before the Hercules debt commitment would become
available.
Signed Term Sheets
Hercules finished the first quarter of 2012 with approximately
$59.3 million in signed non-binding term sheets with 8 new and
existing companies. These non-binding term sheets generally convert
to contractual commitments in approximately 45 to 60 days from
signing. Non-binding outstanding term sheets are subject to
completion of Hercules’ due diligence and final approval process as
well as negotiation of definitive documentation with the
prospective portfolio companies. It is important to note that not
all non-binding term sheets are expected to close and do not
necessarily represent future cash requirements. Closed commitments
generally fund 70-80% of the committed amount in aggregate over the
life of the commitment.
Portfolio Effective Yield
The effective yield on the Company’s debt portfolio investments
during the quarter was 14.6%, which is down from the fourth quarter
of 2011 yield of 15.6%. Excluding the effect of fee accelerations
that occurred from early payoffs and one-time events, the effective
yield for the first quarter ended 2012 was 13.7%, down
approximately 30 basis points from the adjusted effective yield in
the fourth quarter of 2011 of 14.0%. The effective yield is derived
by dividing total investment income by the weighted average earning
investment portfolio assets outstanding during the quarter which
exclude non-interest earning assets such as warrants and equity
investments.
Existing Warrants Portfolio and Potential Future
Gains
Hercules held warrant positions in approximately 110 portfolio
companies, with a fair value of approximately $32.0 million at
March 31, 2012 up 48.8% as compared to approximately $21.5 million
at March 31, 2011. If exercised, these warrant holdings would
require Hercules to invest an approximate additional $72.4 million.
Warrants may appreciate or depreciate in value depending largely
upon the underlying portfolio company’s performance and overall
market conditions. Of the warrants which have monetized since
inception, Hercules has realized warrant gain multiples in the
range of approximately 1.04x to 8.74x based on the historical rate
of return on our investments. However, our current warrant
positions may not appreciate in value and, in fact, may decline in
value, potentially rendering some of these warrants worthless.
During the quarter, four of Hercules' portfolio companies
completed IPOs including:
- Cempra, Inc. (“CEMP”)
- Annie’s, Inc. (“BNNY”)
- Merrimack Pharmaceuticals, Inc.
(“MACK”)
- Enphase Energy, Inc. (“ENPH”)
As of March 31, 2012, Hercules had warrants or equity
positions in the following three companies which had filed Form S-1
Registration Statements in contemplation of a potential IPO:
- Facebook, Inc.
- WageWorks, Inc.
- BrightSource Energy, Inc.
Subsequent to March 31, 2012, BrightSource Energy, Inc. withdrew
its Registration Statement for its IPO.
There can be no assurances that these companies will complete
their IPOs in a timely manner or at all.
Income Statement
Total investment income in the first quarter of 2012 was
approximately $22.4 million compared to approximately $19.2 million
in the first quarter of 2011. This increase was due to a higher
average balance of interest earning investments outstanding during
the first quarter.
Interest expense and loan fees were approximately $5.0 million
during the first quarter of 2012 as compared to $3.2 million in the
first quarter of 2011. The increase is primarily due to $1.6
million of interest and fee expense incurred on the $75.0
million of senior unsecured convertible notes issued
on April 15, 2011 which include approximately $271,000 of
non cash accretion attributed to the fair value of the conversion
feature. During the quarter, the Company recognized an acceleration
of approximately $457,000 of unamortized fees due to the pay down
of $24.3 million SBA debentures as compared to approximately
$550,000 of similar fee accelerations due to $25.0 million SBA
debentures in the first quarter of 2011.
The Company had a weighted average cost of debt comprised of
interest and fees of approximately 6.8% in the first quarter of
2012 versus 7.7% during the first quarter of 2011. The year over
year decline is attributed to a decline in the weighted average
cost of debt on the Company’s SBA debentures year over year from
7.3% in the first quarter of 2011 to 5.8% in the first quarter of
2012.
Total operating expenses excluding interest expense and loan
fees for the first quarter of 2012 was $6.0 million as compared to
$6.2 million for the first quarter of 2011. The decrease is
primarily due to year over year decreases of approximately $191,000
and $134,000 in auditing fees and workout related expenses,
respectively.
Hercules recognized net realized gains of approximately $2.8
million on the portfolio in the first quarter. The Company recorded
$2.2 million and $1.3 million of realized gains from the sale of
equity in BARRX Medical, Inc. and Aegerion Pharmaceuticals, Inc.,
respectively. These gains were partially offset by realized losses
of approximately $460,000 from the sale of common stock in two of
our public portfolio companies and due to a complete write off of a
warrant in one private portfolio company that has a cost basis of
approximately $355,000.
Cumulative net realized losses on investments since October 2004
to date total $47.2 million, on a GAAP basis. When compared to
total commitments of approximately $2.8 billion over the same
period, the net realized loss represents approximately 1.7% of
total commitments, or an annualized loss rate of approximately 22
basis points.
During the first quarter of 2012, the Company recorded
approximately $2.8 million of net unrealized appreciation from its
loans, warrant and equity investments. Approximately $2.7 million
and $1.6 million is attributed to net unrealized appreciation on
equity and warrants, respectively, due to enterprise valuation
appreciation for various portfolio companies, offset by
approximately $1.5 million due to unrealized depreciation on our
debt investments related to fluctuations in current market interest
rates.
NII – Net Investment Income
NII for the first quarter of 2012 was approximately $11.4
million, compared to $9.8 million in the first quarter of 2011,
representing an increase of approximately 16.3%. The increase was
primarily attributed to higher interest and fees earned from debt
investments as previously highlighted. NII per share for the first
quarter of 2012 was $0.24 based on 47.0 million basic shares
outstanding, compared to $0.23 based on 42.7 million basic shares
outstanding in the first quarter 2011.
DNOI - Distributable Net Operating Income
DNOI for the first quarter was approximately $12.2 million or
$0.26 per share, as compared to $10.5 million or $0.25 per share in
the first quarter of 2011. DNOI measures Hercules’ operating
performance exclusive of employee stock compensation, which
represents expense to the Company but does not require settlement
in cash. DNOI does include paid-in-kind, or “PIK”, and back-end
fees that generally are not payable in cash on a regular basis but
rather at investment maturity. Hercules believes disclosing DNOI
and the related per share measures are useful and appropriate
supplements and not alternatives to GAAP measures for net operating
income, net income, earnings per share and cash flows from
operating activities.
Dividends
The Board of Directors has declared and raised a first quarter
cash dividend of $0.24 per share, up $0.01, an increase
of approximately 4.0%. The dividend will be payable on May 25,
2012, to shareholders of record as of May 18, 2012. This
dividend would represent the Company’s twenty-seventh consecutive
dividend declaration since its initial public offering, bringing
the total cumulative dividend declared to date to $7.16 per
share.
Hercules’ Board of Directors maintains a variable dividend
policy with the objective of distributing four quarterly
distributions in an amount that approximates 90 - 100% of our
taxable quarterly income or potential annual income for a
particular year. In addition, at the end of the year, we may also
pay an additional special dividend or fifth dividend; such that we
may distribute approximately all of our annual taxable income in
the year it was earned, while maintaining the option to spill over
our excess taxable income.
The determination of the tax attributes of the Company's
distributions is made annually as of the end of the Company's
fiscal year based upon its taxable income for the full year and
distributions paid for the full year. Therefore, a determination
made on a quarterly basis may not be representative of the actual
tax attributes of its distributions for a full year.
Share Repurchases
In February 2012, the Board of Directors approved extending
Hercules’ share repurchase program through August 2012. During the
first quarter of 2012 the Company did not repurchase shares of its
common stock.
Liquidity and Capital Resources
The Company ended the first quarter with
approximately $178.4 million in available liquidity, including
$48.4 million in cash and $130.0 million in credit facilities.
In January 2012, Hercules completed a follow-on public
offering of 5.0 million shares of common stock for gross proceeds
of approximately $48.0 million.
As of March 31, 2012, Hercules did not have any outstanding
borrowings under the Wells Fargo credit facility. Hercules has
a committed credit facility with Wells Fargo for
approximately $75.0 million in initial credit capacity
under a $300.0 million accordion credit facility.
Additional lenders may be added to the facility over time to reach
up to an aggregate of $300.0 million. We expect to continue
discussions with various other potential lenders to join the Wells
facility; however, there can be no assurances that additional
lenders will join the facility.
As of March 31, 2012, Hercules did not have any outstanding
borrowings under the Union Bank/RBC credit facility.
Hercules has access to $55.0 million under the Union Bank
facility. Union Bank and RBC Capital Markets have made
commitments of $30.0 million and $25.0 million,
respectively.
Pricing at March 31, 2012 under the Wells
Fargo and Union Bank credit facilities are LIBOR+3.25% with a
floor of 5.0%, and LIBOR+2.25% with a floor of 4.0%,
respectively.
At March 31, 2012, Hercules had approximately $200.7
million in outstanding debentures under the SBIC program, as
part of its total potential maximum debentures of $225.0
million allowed under the SBIC program. In February 2012,
Hercules repaid $24.3 million of SBA debentures under its
first license, priced at 6.63%, including annual fees. In April
2012, Hercules submitted a request to the SBA to borrow the $24.3
million under a new capital commitment under its second SBIC
license, subject to SBA approval. Based on the pricing from the
last sale of SBA debentures in March 2012 of 2.766%, Hercules could
potentially reduce its cost of debentures by approximately 2.5% to
3.0% on the new $24.3 million commitment upon draw down. There can
be no assurances that the SBA will approve our new capital
commitment request, what the pricing will be or whether we will
draw on any possible commitment.
As of March 31, 2012, the Company's asset coverage ratio,
under our regulatory requirements as a BDC was 1,009%, excluding
SBIC debentures as a result of exemptive relief from the SEC
which allows us to exclude all SBA leverage from our asset coverage
ratio, and 274.5% when including our SBIC debentures. Based on
Hercules' existing stockholders' equity coupled with the Company's
ability to exclude all if its SBA leverage from its 200% asset
coverage ratio requirement, the Company has the potential capacity
on its balance sheet to leverage up to in excess of $700.0
million. However, Hercules does not currently have access to credit
facilities to leverage the portfolio to the fullest capacity. There
are no assurances that we may be able to find additional lenders to
extend or provide additional credit facilities to fully utilize the
Company's available borrowing capacity or expand its existing
credit facilities.
At March 31, 2012, the Company's debt to equity leverage
ratio, excluding all SBA leverage was 14.5%. The same ratio
including our SBIC debentures is approximately 55.9% at the
end of the first quarter of 2012.
Net Asset Value
At March 31, 2012, the Company’s net assets were approximately
$485.4 million, up 20.4% as compared to $403.2 million as of March
31, 2011.
As of March 31, 2012, net asset value per share was $9.76 on
49.7 million outstanding shares, compared to $9.20 on 43.8 million
outstanding shares and $9.83 on 43.4 million shares as of March 31,
2011 and December 31, 2011, respectively. This slight decrease in
the first quarter of 2012 is primarily attributable to the issuance
of shares as a result of employee stock option exercises and
restricted stock grants.
Portfolio Asset Quality and Diversification
As of March 31, 2012, grading of the debt portfolio at fair
value, excluding warrants and equity investments, was as
follows:
Grade 1 $124.8 million or 20.3% of the total portfolio
Grade 2 $349.9 million or 56.9% of the total portfolio
Grade 3 $129.2 million or 21.0% of the total portfolio
Grade 4 $10.1 million or 1.7% of the total portfolio
Grade 5 $0.7 million or 0.1% of the total portfolio
At March 31, 2012, the weighted average loan grade of the
portfolio was 2.08 on a scale of 1 to 5, with 1 being the highest
quality, compared with 2.01 as of December 31, 2011. Hercules’
policy is to generally adjust the grading down on its portfolio
companies as they approach the need for additional equity
capital.
Hercules’ portfolio diversification as of March 31, 2012 was as
follows:
- 19.8% in drug discovery companies
- 12.7% in Internet consumer &
business services companies
- 11.8% in clean technologies
- 8.4% in drug delivery companies
- 7.1% in media/content/info
companies
- 6.3% in software companies
- 5.6% in specialty pharmaceutical
companies
- 5.3% in healthcare services, other
- 4.9% in communications and networking
companies
- 4.7% in information services
companies
- 2.7% in consumer and business products
companies
- 2.7% in therapeutics companies
- 2.0% in medical device and
equipment
- 1.9% in semiconductor companies
- 1.8% in surgical devices companies
- 1.2% in biotechnology tools
companies
- 1.0% in diagnostic companies
- 0.1% in electronic & computer
hardware companies
Subsequent Events
1.
As of May 8, 2012, Hercules has:
a.
Closed commitments of approximately $46.5
million to new and existing portfolio companies, and funded
approximately $22.8 million since the close of the first
quarter.
b.
Pending commitments (signed non-binding
term sheets) of approximately $129.7 million.
The table below summarizes our year-to-date closed and pending
commitments as follows:
Closed Commitments and Pending Commitments (in millions)
Q1-12 Closed Commitments $101.3 Q2-12 Closed Commitments (as of May
8, 2012) $46.5
Total 2012 Closed Commitments(a)
$147.8 Pending Commitments (as of May 8, 2012)(b) $129.7
Total $277.5
Notes:
a.
Not all Closed Commitments result in
future cash requirements. Commitments generally fund over the two
succeeding quarters from close.
b.
Not all pending commitments (signed
non-binding term sheets) are expected to close and do not
necessarily represent any future cash requirements.
2.
On April 7, 2012, the Company closed an
underwritten public offering of $43.0 million in aggregate
principal amount of 7.0% senior unsecured notes due 2019. The notes
will mature on April 30, 2019, and may be redeemed in whole or in
part at any time or from time to time at the Company's option on or
after April 30, 2015. The notes will bear interest at a rate of
7.0% per year payable quarterly on January 30, April 30, July 30,
and October 30, of each year, beginning July 30, 2012. The Company
has also granted the underwriters a 30-day option to purchase up to
an additional $6.45 million in aggregate principal amount of notes
to cover overallotments, if any. The Notes began trading on New
York Stock Exchange (the "NYSE") under the ticker symbol "HTGZ" on
April 30, 2012.
3.
In April 2012, Hercules sold its entire
warrant investments held in portfolio company Annie’s, Inc. (NYSE:
BNNY) to realize a net gain of approximately $2.3-$2.4 million
resulting in a 4.2 times warrant gain multiple, representing an
internal rate of return of approximately 28.0% on Hercules' total
investments in Annie’s, Inc.
4.
In April 2012, Hercules’ portfolio company
NEXX Systems, Inc, reached a definitive agreement to be acquired by
Tokyo Electron. In connection with the sale, Hercules expects to
realize a net gain of approximately $5.2 million for the sale of
its warrant and equity investments.
5.
In April 2012, Hercules received full
repayment of its $24.2 million term loan with Pacira
Pharmaceuticals, Inc. (NASDAQ: PCRX), its $5.6 million term loan
with PolyMedix, Inc. (OTC BB: PYMX.OB) and $8.5 million in term
loan investments with other portfolio companies.
6.
In April 2012, the Company transferred the
listing of its common stock from the NASDAQ Global Select Market
("NASDAQ") to NYSE and began trading its common stock on the NYSE
on April 30, 2012 under its ticker symbol “HTGC”.
Conference Call
Hercules has scheduled its 2012 first quarter financial results
conference call for May 8, 2012 at 2:00 p.m. PST (5:00 p.m. EST).
To listen to the call, please dial 877-304-8957 or 408-427-3709
approximately 10 minutes prior to the start of the call. A taped
replay will be made available approximately three hours after the
conclusion of the call and will remain available for seven days. To
access the replay, please dial 855-859-2056 or 404-537-3406 and
enter the passcode 70085940.
About Hercules Technology Growth Capital, Inc.:
Hercules Technology Growth Capital (NYSE: HTGC), is a NYSE
traded specialty finance firm providing customized loans to public
and private technology-related companies, including clean
technology, life science and select lower middle market technology
companies at all stages of development. Since inception, Hercules
has committed more than $2.8 billion to over 200 companies and is
the lender of choice for entrepreneurs, venture capital and private
equity firms seeking ideal, customized growth capital financing at
all stages of a company’s development to accelerate business growth
and reach the next critical milestone.
Companies interested in learning more about financing
opportunities should contact info@htgc.com, or call
650-289-3060.
Forward-Looking Statements:
The information disclosed in this release is made as of the date
hereof and reflects Hercules most current assessment of its
historical financial performance. Actual financial results filed
with the Securities and Exchange Commission may differ from those
contained herein due to timing delays between the date of this
release and confirmation of final audit results. These
forward-looking statements are not guarantees of future performance
and are subject to uncertainties and other factors that could cause
actual results to differ materially from those expressed in the
forward-looking statements including, without limitation, the
risks, uncertainties, including the uncertainties surrounding the
current market volatility, and other factors we identify from time
to time in our filings with the Securities and Exchange Commission.
Although we believe that the assumptions on which these
forward-looking statements are based are reasonable, any of those
assumptions could prove to be inaccurate and, as a result, the
forward-looking statements based on those assumptions also could be
incorrect. You should not place undue reliance on these
forward-looking statements. The forward-looking statements
contained in this release are made as of the date hereof, and
Hercules assumes no obligation to update the forward-looking
statements for subsequent events.
HERCULES TECHNOLOGY GROWTH CAPITAL, INC. CONSOLIDATED
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
(dollars in thousands, except per share data)
March 31,
2012
December 31, (unaudited)
2011 Assets Investments: Non-affiliate
investments (cost of $681,242 and $642,038) $ 692,695 $ 651,843
Affiliate investments (cost of $3,254 and $3,236) 1,094 - Control
investments (cost of $10,889 and $11,266 respectively) 675
1,027 Total investments, at value (cost
of $695,385 and $656,540 respectively) 694,464 652,870 Cash and
cash equivalents 48,433 64,474 Interest receivable 5,962 5,820
Other assets 14,507 24,230 Total
assets $ 763,366 $ 747,394
Liabilities Accounts payable and accrued liabilities $ 6,545
$ 10,813 Wells Fargo Securitization Loan - 10,187 Long-term
Liabilities (Convertible Debt) 70,624 70,353 Long-term SBA
Debentures 200,750 225,000 Total
liabilities 277,919 316,353
Net assets consist of:
Common stock, par value 50 44 Capital in excess of par value
532,952 484,244 Unrealized depreciation on investments (578 )
(3,431 ) Accumulated realized loss on investments (40,165 ) (43,042
) Distributions in excess of investment income (6,812 )
(6,774 )
Total net assets
$ 485,447 $ 431,041
Total liabilities and net
assets
$ 763,366 $ 747,394
Shares of common
stock outstanding ($0.001 par value, 100,000,000 authorized)
49,721 43,853
Net asset value per share
$ 9.76 $ 9.83
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data) Three
Months Ended March 31, 2012 2011
Investment Income: Interest income
Non Control/Non Affiliate investments
$ 20,281 $ 16,456
Affiliate investments
6 - Control investments 13 - Total interest
income 20,300 16,456 Fees
Non Control/Non Affiliate investments
2,067 2,695 Total fees 2,067
2,695 Total operating income 22,367 19,151 Operating
expenses: Interest 3,896 2,233 Loan fees 1,076 934 General and
administrative 1,817 2,206 Employee Compensation: Compensation and
benefits 3,395 3,253 Stock-based compensation 808 721
Total employee compensation 4,203 3,974
Total operating expenses 10,992 9,347 Net
investment income 11,375 9,804
Net realized (losses) gains on
investments
Non Control/Non Affiliate investments
2,877 4,370 Total net realized (loss)gain on
investments 2,877 4,370 Net increase
(decrease) in unrealized appreciation on investments
Non Control/Non Affiliate investments
1,751 (14,315 )
Affiliate investments
1,076 (1,037 ) Control investments 26 - Total
net unrealized (depreciation) appreciation on investments
2,853 (15,352 ) Total net realized (unrealized) gain
5,730 (10,982 ) Net increase (decrease) in net assets
resulting from operations $ 17,105 $ (1,178 ) Net investment income
before provision for income taxes and investment gains and losses
per common share: Basic $ 0.24 $ 0.23 Net increase in net
assets resulting from operations per common share Basic $ 0.36 $
(0.03 ) Diluted $ 0.36 $ (0.03 ) Weighted average shares
outstanding Basic 47,018 42,737 Diluted
47,210 42,737
HERCULES TECHNOLOGY GROWTH CAPITAL,
INC.
NON GAAP FINANCIAL MEASURES
(in thousands, except per share
data)
Three Months Ended March 31, 2012
2011 Reconciliation of Adjusted NII
to Net Investment Income Net Investment Income $ 11,375 $ 9,804
Dividends paid on unvested restricted shares (1) (276 )
(158 ) Net investment income, net of dividends paid on
unvested restricted shares $ 11,098 $ 9,646 Net investment
income before investment gains and losses per common share: (2)
Basic $ 0.24 $ 0.23 Adjusted net investment
income before investment gains and losses per common share: (3)
Basic $ 0.24 $ 0.23 Weighted average shares
outstanding Basic 47,018 42,737
(1) Unvested restricted shares as of the dividend record date in
the first quarter of 2012 and 2011 was approximately 1,200,000 and
488,000 respectively (2) Net investment income per share is
calculated as the ratio of income and losses allocated to common
shareholders divided by shares outstanding. (3) Adjusted net
income per share is calculated as Net investment income per share,
adding dividends paid on unvested restricted shares to the amounts
of income and losses allocated to common shareholders.
Adjusted net investment income per basic and diluted share,
”Adjusted NII” consists of GAAP net investment income, excluding
the impact of dividends paid on unvested restricted common stock
divided by the weighted average basic and fully diluted share
outstanding for the period under measurement. For reporting
purposes, Hercules calculates net investment income per share and
change in net assets per share on a basic and fully diluted basis
by applying the two-class method, under GAAP. This GAAP method
excludes unvested restricted shares and the pro rata earnings
associated with the shares from per share calculations.
Hercules believes that providing Adjusted NII affords investors
a view of results that may be more easily compared to other
companies and enables investors to consider the Company’s results
on both a GAAP and Adjusted basis. Adjusted NII should not be
considered as an alternative to, as an independent indicator of the
Company’s operating performance, or as a substitute for Net
Investment Income per basic and diluted share (each computed in
accordance with GAAP). Instead, Adjusted NII should be reviewed in
connection with Hercules’ consolidated financial statements, to
help analyze how the Company is performing. Investors should use
Non-GAAP measures only in conjunction with its reported GAAP
results.
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
NON GAAP FINANCIAL MEASURES
(in thousands, except per share
data)
Three Months Ended March 31, Reconciliation of
DNOI to Net investment income 2012
2011 Net investment income $ 11,375 $ 9,804 Stock-based
compensation 826 721 DNOI $ 12,200 $ 10,525
DNOI per share-weighted average common shares Basic $ 0.26 $ 0.25
Weighted average shares outstanding Basic 47,018
42,737
Distributable Net Operating Income, “DNOI” represents net
investment income as determined in accordance with U.S. generally
accepted accounting principles, or GAAP, adjusted for amortization
of employee restricted stock awards and stock options. Hercules
views DNOI and the related per share measures as useful and
appropriate supplements to net operating income, net income,
earnings per share and cash flows from operating activities. These
measures serve as an additional measure of Hercules’ operating
performance exclusive of employee restricted stock amortization,
which represents expenses of the Company but does not require
settlement in cash. DNOI does include paid-in-kind, or PIK,
interest and back end fee income which are generally not payable in
cash on a regular basis, but rather at investment maturity or when
declared. DNOI should not be considered as an alternative to net
operating income, net income, earnings per share and cash flows
from operating activities (each computed in accordance with GAAP).
Instead, DNOI should be reviewed in connection with net operating
income, net income (loss), earnings (loss) per share and cash flows
from operating activities in Hercules’ consolidated financial
statements, to help analyze how Hercules’ business is
performing.
Hercules Capital (NYSE:HTGC)
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