-
Net Investment Income was $3.1 million, or $0.14 per common
share
-
Net Decrease in Net Assets Resulting from Operations was $4.4
million, or $0.20 per common share
Gladstone Investment Corp. (Nasdaq:GAIN) (the "Company") today
announced earnings for the third quarter ended December 31,
2009. All per share references are per basic and diluted
weighted average common share outstanding, unless otherwise noted.
Net Investment Income for the quarter ended December 31, 2009
was $3.1 million, or $0.14 per common share, as compared to $3.6
million, or $0.16 per common share, for the quarter ended December
31, 2008, a decrease in Net Investment Income of 14.3%. Net
Investment Income for the nine months ended December 31, 2009 was
$7.9 million, or $0.36 per common share, as compared to $10.4
million, or $0.49 per common share, for the nine months ended
December 31, 2008, a decrease in Net Investment Income of
24.3%. 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 nine
months ended December 31, 2009, partially offset by decreased
interest expense on lower outstanding borrowings when compared to
the prior year periods.
Net Decrease in Net Assets Resulting from Operations for the
quarter ended December 31, 2009 was $4.4 million, or $0.20 per
common share, as compared to $3.9 million, or $0.18 per common
share, for the quarter ended December 31, 2008, an increase in Net
Decrease in Net Assets Resulting from Operations of 12.2%. Net
Decrease in Net Assets Resulting from Operations for the nine
months ended December 31, 2009 was $31.7 million, or $1.44 per
common share, as compared to $7.5 million, or $0.35 per common
share, for the nine months ended December 31, 2008, an increase in
Net Decrease in Net Assets Resulting from Operations of $24.2
million, and an increase of $1.09 per common share. These
differences for both the three and nine month periods ended
December 31, 2009, as compared to their respective prior year
periods, were due to continuing devaluations, primarily in the
Company's equity holdings of its Control investments. The total net
losses on investments, including all realized and unrealized gains
and losses, for the three and nine month periods ended December 31,
2009 were approximately $7.5 million and $39.6 million,
respectively, as compared to total net losses on investments of
$7.5 million and $17.9 million, respectively, for the three and
nine month periods ended December 31, 2008.
Due to continued depreciation in the Company's investments, the
entire portfolio was fair valued at approximately 83% of its cost
as of December 31, 2009. The net unrealized depreciation of
the Company's investments does not have an impact on its current
ability to pay distributions to stockholders, although it may be an
indication of future realized losses, which could ultimately reduce
the Company's income available for distribution to
stockholders.
Total assets were $278.3 million at December 31, 2009, as
compared to $326.8 million at March 31, 2009. Net asset value
was $7.93 per actual common share outstanding at December 31, 2009,
as compared to $9.73 per actual common share outstanding at March
31, 2009.
The annualized weighted average yield on the Company's
portfolio, excluding cash and cash equivalents, was 10.68% for the
quarter ended December 31, 2009, as compared to 8.76% for the
quarter ended December 31, 2008. 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 being accrued. The increase in the
weighted average yield for the current quarter resulted primarily
from the Company's sale of lower interest-bearing senior syndicated
loans during the nine months ended December 31, 2009. The
effect of continuing reductions in LIBOR has been mitigated by the
presence of a rate floor or fixed rate on most of the remaining
loans held in the Company's portfolio as of December 31, 2009.
During the third quarter ended December 31, 2009, the Company
reported the following significant activity:
-
Completed the sales of one senior syndicated loan and a portion
of another senior syndicated loan. As a result of these sales,
the Company received approximately $5.5 million in aggregate net
proceeds and recorded a corresponding net loss of approximately
$1.3 million. The proceeds from these sales were used to pay
down borrowings on the Company's credit facility;
-
Refinanced its revolving line of credit with Chase Holdings II
Corp. to a third party; the outstanding balance of $3.5 million,
plus accrued interest, was repaid in full, and the proceeds were
used to pay down borrowings on the Company's credit facility.
-
One of the Company's portfolio companies entered into an
agreement with an investment banker to act as an advisor in
assessing strategic investment alternatives;
-
A. Stucki Holding Corp. declared and paid accrued cash dividends
on its preferred stock, of which the Company received approximately
$953,000, and the proceeds were used to pay down borrowings on the
Company's credit facility;
-
Assumed 100% ownership of Mathey Investments, Inc., disbursing
approximately $282,000 to buy out Mathey's previous
stockholders;
-
Purchased $85.0 million of short-term United States Treasury
securities (the "Treasury Securities") from Jefferies &
Company, Inc. ("Jefferies") with $10.0 million in funds drawn on
the Company's credit facility and the proceeds from a $75.0 million
short-term loan from Jefferies, with an effective annual interest
rate of approximately 0.59%, that matured on January 7, 2010 (the
"Short-Term Loan"); and
-
Paid monthly distributions of $0.04 per share for each of the
months of October, November and December 2009.
At December 31, 2009, the Company held four
Non-Control/Non-Affiliate investments, eight Control investments
and four Affiliate investments. Additionally, approximately 50% of
the aggregate fair value of the Company's investment portfolio at
December 31, 2009 was comprised of senior term debt, approximately
37% was senior subordinated term debt and approximately 13% was
preferred and common equity securities, as outlined in the
following table:
|
December 31, 2009
|
(in thousands)
|
Cost
|
Fair Value
|
|
|
Senior Term Debt
|
$103,154
|
$93,161
|
Senior Subordinated Term Debt
|
77,424
|
70,479
|
Preferred & Common Equity Securities
|
45,322
|
23,746
|
Total Investments
|
$225,900
|
$187,386
|
"We will strive to maintain our portfolio mix of mezzanine and
equity investments and hope to grow our overall investment
portfolio over the long term. While we continue to worry about
the economy which is reflected in our limited investment activity
over the past year, we believe there are increased opportunities
for new investments. Our goal continues to be the maintenance and
consistency of our distributions to stockholders," said Dave
Dullum, President.
Subsequent to December 31, 2009:
-
The Company repaid the Short-Term Loan in full and repaid the
amount drawn on the credit facility upon maturity of the Treasury
Securities;
-
The Company declared monthly cash distributions of $0.04 per
common share for each of the months of January, February and March
2010.
The financial statements below are without footnotes so readers
should obtain and carefully review the Company's Form 10-Q for the
quarter ended December 31, 2009, including the footnotes to the
financial statements contained therein. The Company has filed
the Form 10-Q with the Securities and Exchange Commission (the
"SEC") today, which can be retrieved from the SEC's website at
www.sec.gov or from the Company's website at
www.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 Company will hold a conference call Tuesday, February 9,
2010 at 8:30 am EST. Please call (877) 407-8031 to enter the
conference. An operator will monitor the call and set a queue
for questions. A replay of the conference call will be available
through March 9, 2010. To hear the replay, please dial (877)
660-6853, access playback account 286 and use ID code
342045. 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
www.GladstoneInvestment.com and www.investorcalendar.com. The event
will be archived and available for replay on the Company's website
through May 9, 2010.
Gladstone Investment Corporation is an investment company that
seeks to make debt and equity investments in small and medium-sized
private businesses in the U.S. in connection with buyouts and other
recapitalizations. For more information please visit the
Company's website at http://www.GladstoneInvestment.com.
The statements in this press release regarding the Company's
ability to maintain the portfolio mix of investments, to grow the
overall investment portfolio and to continue its current rate of
distributions to stockholders 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 could cause actual
results to differ materially from the forward-looking statements
include, but are not limited to, the duration and potential future
effects of the current economic downturn on the Company and its
portfolio companies, the Company's ability to raise additional
capital, the Company's ability to renew or extend its credit
facility, the Company's ability to maintain its status as a
regulated investment company and the Company's ability to generate
net investment income. Additional 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 also include those
factors listed under the caption "Risk Factors" of the Company's
prospectus as filed with the SEC on October 14, 2009 and the
Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 2009, as filed with the SEC on February 8, 2010. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements.
GLADSTONE INVESTMENT CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES
|
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
|
|
|
|
|
December 31,
|
March 31,
|
|
2009
|
2009
|
|
(Unaudited)
|
|
ASSETS
|
|
|
Cash and cash equivalents
|
$87,872
|
$7,236
|
Investments at fair value
|
|
|
Non-Control/Non-Affiliate investments (Cost of $22,902
and $134,836, respectively)
|
19,404
|
94,740
|
Control investments (Cost of $150,107 and $150,081,
respectively)
|
130,955
|
166,163
|
Affiliate investments (Cost of $52,891 and $64,028,
respectively)
|
37,027
|
53,027
|
Total investments (Cost of $225,900 and $348,945,
respectively)
|
187,386
|
313,930
|
Interest receivable
|
1,373
|
1,500
|
Due from Custodian
|
766
|
2,706
|
Deferred financing fees
|
512
|
1,167
|
Prepaid assets
|
300
|
172
|
Other assets
|
70
|
132
|
TOTAL ASSETS
|
$278,279
|
$326,843
|
|
|
|
LIABILITIES
|
|
|
Accounts payable and accrued expenses
|
$200
|
$1,283
|
Fee due to Administrator
|
156
|
179
|
Fees due to Adviser
|
793
|
187
|
Short-term loan
|
75,000
|
--
|
Borrowings under line of credit at fair value (Cost of
$26,750 and $110,265, respectively)
|
26,883
|
110,265
|
Other liabilities
|
246
|
127
|
TOTAL LIABILITIES
|
103,278
|
112,041
|
NET ASSETS
|
$175,001
|
$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 December 31, 2009 and March31,
2009
|
$22
|
$22
|
Capital in excess of par value
|
264,576
|
257,361
|
Net unrealized depreciation of investment portfolio
|
(38,514)
|
(35,015)
|
Net unrealized depreciation of derivative
|
(34)
|
(53)
|
Net unrealized appreciation of borrowings under line of
credit
|
(133)
|
--
|
Accumulated net investment loss
|
(50,916)
|
(7,513)
|
TOTAL NET ASSETS
|
$175,001
|
$214,802
|
NET ASSETS PER SHARE
|
$7.93
|
$9.73
|
GLADSTONE INVESTMENT CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
|
(UNAUDITED)
|
|
|
Three Months Ended
|
Nine Months Ended
|
|
December 31,
|
December 31,
|
|
2009
|
2008
|
2009
|
2008
|
|
INVESTMENT INCOME
|
|
|
|
|
|
Interest income
|
|
|
|
|
|
Non-Control/Non-Affiliate investments
|
$489
|
$2,339
|
$1,840
|
$6,797
|
|
Control investments
|
2,856
|
3,068
|
8,593
|
8,372
|
|
Affiliate investments
|
1,605
|
1,478
|
4,533
|
3,938
|
|
Cash and cash equivalents
|
1
|
21
|
1
|
67
|
|
Total interest income
|
4,951
|
6,906
|
14,967
|
19,174
|
|
Other income
|
970
|
96
|
1,066
|
682
|
|
Total investment income
|
5,921
|
7,002
|
16,033
|
19,856
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
Loan servicing fee
|
886
|
1,258
|
2,892
|
3,769
|
|
Base management fee
|
113
|
442
|
588
|
1,303
|
|
Incentive fee
|
588
|
--
|
588
|
--
|
|
Administration fee
|
156
|
195
|
527
|
642
|
|
Interest expense
|
385
|
1,823
|
1,640
|
4,009
|
|
Amortization of deferred finance costs
|
436
|
46
|
1,187
|
324
|
|
Professional fees
|
182
|
69
|
502
|
383
|
|
Stockholder related costs
|
49
|
112
|
276
|
413
|
|
Insurance expense
|
71
|
57
|
190
|
165
|
|
Directors' fees
|
48
|
50
|
147
|
145
|
|
Other
|
61
|
57
|
198
|
246
|
|
Expenses before credit from Adviser
|
2,975
|
4,109
|
8,735
|
11,399
|
|
Credit to base management fee
|
(127)
|
(694)
|
(591)
|
(1,964)
|
|
Total expenses net of credit to base management fee
|
2,848
|
3,415
|
8,144
|
9,435
|
|
NET INVESTMENT INCOME
|
3,073
|
3,587
|
7,889
|
10,421
|
|
|
|
|
|
|
|
REALIZED AND UNREALIZED (LOSS) GAIN ON:
|
|
|
|
|
|
Realized loss on sale of Non-Control/Non-Affiliate
investments
|
(1,318)
|
--
|
(35,922)
|
(4,215)
|
|
Realized loss on termination of derivative
|
--
|
--
|
(53)
|
--
|
|
Net unrealized appreciation (depreciation) of
Non-Control/Non-Affiliate investments
|
1,383
|
(6,988)
|
36,597
|
(7,714)
|
|
Net unrealized (depreciation) appreciation of Control
investments
|
(8,853)
|
1,755
|
(35,234)
|
7,728
|
|
Net unrealized appreciation (depreciation) of Affiliate
investments
|
1,257
|
(2,294)
|
(4,862)
|
(13,687)
|
|
Net unrealized (depreciation) appreciation of derivative
|
(7)
|
--
|
19
|
--
|
|
Net unrealized depreciation (appreciation) of borrowings under
line of credit
|
45
|
--
|
(133)
|
--
|
|
Net loss on investments and borrowings under line of credit
|
(7,493)
|
(7,527)
|
(39,588)
|
(17,888)
|
|
|
|
|
|
|
|
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$(4,420)
|
$(3,940)
|
$(31,699)
|
$(7,467)
|
|
|
|
|
|
|
|
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON
SHARE:
|
|
|
|
|
|
Basic and Diluted
|
$(0.20)
|
$(0.18)
|
$(1.44)
|
$(0.35)
|
|
|
|
|
|
|
|
SHARES OF COMMON STOCK OUTSTANDING:
|
|
|
|
|
|
Basic and diluted weighted average shares
|
22,080,133
|
22,080,133
|
22,080,133
|
21,367,871
|
|
GLADSTONE INVESTMENT CORPORATION
|
FINANCIAL HIGHLIGHTS
|
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT
AMOUNTS)
|
(UNAUDITED)
|
|
|
Three Months Ended December 31,
|
Nine Months Ended December 31,
|
|
2009
|
2008
|
2009
|
2008
|
Per Share Data (1)
|
|
|
|
|
Net asset value at beginning of period
|
$8.24
|
$10.57
|
$9.73
|
$12.47
|
|
|
|
|
|
Income from investment operations:
|
|
|
|
|
Net investment income (2)
|
0.14
|
0.16
|
0.36
|
0.49
|
Realized loss on sale of investments (2)
|
(0.06)
|
--
|
(1.63)
|
(0.20)
|
Net unrealized depreciation of investments (2)
|
(0.28)
|
(0.34)
|
(0.16)
|
(0.64)
|
Net unrealized appreciation of borrowings on line of credit
(2)
|
--
|
--
|
(0.01)
|
--
|
Total from investment operations
|
(0.20)
|
(0.18)
|
(1.44)
|
(0.35)
|
|
|
|
|
|
Distributions from:
|
|
|
|
|
Net investment income
|
(0.12)
|
(0.24)
|
(0.36)
|
(0.72)
|
Total distributions (3)
|
(0.12)
|
(0.24)
|
(0.36)
|
(0.72)
|
|
|
|
|
|
Effect of shelf offering:
|
|
|
|
|
Shelf registration offering costs
|
0.01
|
--
|
--
|
(0.03)
|
Effect of distribution of stock rights offering after record
date (4)
|
--
|
--
|
--
|
(1.22)
|
Total effect of shelf offering
|
0.01
|
--
|
--
|
(1.25)
|
|
|
|
|
|
Net asset value at end of period
|
$7.93
|
$10.15
|
$7.93
|
$10.15
|
|
|
|
|
|
Per share market value at beginning of period
|
$4.83
|
$6.81
|
$3.67
|
$9.32
|
Per share market value at end of period
|
4.56
|
4.91
|
4.56
|
4.91
|
Total Return (5)
|
(3.18)%
|
(19.59)%
|
34.06%
|
(41.23)%
|
Shares outstanding at end of period
|
22,080,133
|
22,080,133
|
22,080,133
|
22,080,133
|
|
|
|
|
|
Statement of Assets and Liabilities Data:
|
|
|
|
|
Net assets at end of period
|
$175,001
|
$224,117
|
$175,001
|
$224,117
|
Average net assets (6)
|
179,155
|
229,256
|
194,783
|
232,053
|
|
|
|
|
|
Senior Securities Data:
|
|
|
|
|
Borrowings under line of credit and short-term loan
|
$101,883
|
$117,864
|
$101,883
|
$117,864
|
Asset coverage ratio (7)
|
270%
|
290%
|
270%
|
290%
|
Asset coverage per unit (8)
|
$2,704
|
$2,901
|
$2,704
|
$2,901
|
|
|
|
|
|
Ratios/Supplemental Data:
|
|
|
|
|
Ratio of expenses to average net assets (9), (10)
|
6.64%
|
7.17%
|
5.98%
|
6.55%
|
Ratio of net expenses to average net assets (9), (11)
|
6.36%
|
5.96%
|
5.57%
|
5.42%
|
Ratio of net investment income to average net assets (9)
|
6.86%
|
6.26%
|
5.40%
|
5.99%
|
(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 a ratio of at least 200% of total assets, less
all liabilities and indebtedness not represented by senior
securities, to total borrowings.
|
(8)
|
Asset coverage per unit 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
thousand 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 Corp.
Investor Relations
703-287-5839
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