UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

 THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): May 10, 2018

 

FS Investment Corporation

 

(Exact name of Registrant as specified in its charter)

 

Maryland 814-00757 26-1630040
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
     
201 Rouse Boulevard    
Philadelphia, Pennsylvania   19112
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (215) 495-1150

 

None

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐    Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐ 

 

 

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On May 10, 2018, FS Investment Corporation (the “Company”) issued a press release (the “Press Release”) providing an overview of its operating results for the quarter ended March 31, 2018.

 

A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 7.01.

Regulation FD Disclosure.  

 

On May 10, 2018, in the Press Release, the Company announced a regular cash distribution of $0.19 per share, which will be paid on or about July 3, 2018 to stockholders of record as of the close of business on June 20, 2018.

 

The Company will make available under the “Presentations and Reports” page within the “Investor Relations” section of the Company’s website (www.fsinvestmentcorp.com) a presentation providing an overview of the Company’s operating results for the quarter ended March 31, 2018 in advance of its previously announced May 11, 2018 conference call.

 

Forward-Looking Statements

 

This Current Report on Form 8-K may contain certain forward-looking statements, including statements with regard to future events or the future performance or operation of the Company. Words such as “believes,” “expects,” “projects” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism or natural disasters, future changes in laws or regulations and conditions in the Company’s operating area, and the price at which shares of common stock may trade on the New York Stock Exchange. Some of these factors are enumerated in the filings the Company makes with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)        Exhibits.

 

EXHIBIT 

NUMBER

 

DESCRIPTION

99.1

 

Press Release, dated May 10, 2018. 

 

 

 

 

SIGNATURE

 

 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

   
  FS Investment Corporation
   
Date: May 10, 2018   By: /s/ Stephen S. Sypherd
      Stephen S. Sypherd
      Vice President
         

 

 

 

 

EXHIBIT INDEX

 

EXHIBIT 

NUMBER

 

DESCRIPTION

99.1

 

Press Release, dated May 10, 2018. 

 

 

 

 

Exhibit 99.1

 

 

FSIC Reports First Quarter 2018 Financial Results and

 Declares Regular Distribution for Second Quarter

 

PHILADELPHIA, PA, May 10, 2018 – FS Investment Corporation (NYSE: FSIC), a publicly traded business development company focused on providing customized credit solutions to private middle market U.S. companies, announced its operating results for the quarter ended March 31, 2018, and that its board of directors has declared its second quarter 2018 regular distribution.

 

Financial Highlights for the Quarter Ended March 31, 20181

 

Net investment income of $0.21 per share, compared to $0.22 per share for the quarter ended March 31, 2017

 

Adjusted net investment income of $0.21 per share, compared to $0.22 per share for the quarter ended March 31, 20172

 

Total net realized loss of $0.02 per share and total net change in unrealized depreciation of $0.13 per share, compared to a total net realized loss of $0.41 per share and a total net change in unrealized appreciation of $0.45 per share for the quarter ended March 31, 2017

 

Paid cash distributions to stockholders totaling $0.19 per share3

 

Total purchases of $116.0 million versus $216.0 million of sales and repayments

 

Net asset value of $9.16 per share, compared to $9.30 per share as of December 31, 2017

 

“We are pleased with the progress we made during the first quarter to transition the management of our franchise to the new joint adviser we’ve established with KKR,” said Michael Forman, Chairman and Chief Executive Officer of FSIC. “Now that the transition is complete, we are collectively focused on serving the needs of our existing borrowers, sourcing attractive new investment opportunities and delivering consistent and strong performance for our investors.”

 

Declaration of Regular Distribution for Second Quarter 2018

 

FSIC’s board of directors has declared a regular cash distribution for the second quarter of $0.19 per share, which will be paid on or about July 3, 2018 to stockholders of record as of the close of business on June 20, 2018.

 

1 

 

 

Summary Consolidated Results

 

   Three Months Ended 
(dollars in thousands, except per share data)
(all per share amounts are basic and diluted)1
  March 31, 2018   December 31, 2017   March 31, 2017 
Total investment income  $101,018   $110,861   $106,064 
Net investment income   50,547    54,061    52,590 
Net increase (decrease) in net assets resulting from operations   12,925    14,754    63,393 
                
Net investment income per share  $0.21   $0.22   $0.22 
Adjusted net investment income per share2  $0.21   $0.24   $0.22 
Total net realized and unrealized gain (loss) per share  $(0.15)  $(0.16)  $0.04 
Net increase (decrease) in net assets resulting from operations (Earnings per Share)  $0.05   $0.06   $0.26 
Stockholder distributions per share3  $0.19000   $0.19000   $0.22275 
Net asset value per share at period end  $9.16   $9.30   $9.45 
Weighted average shares outstanding   245,713,188    245,725,416    244,554,969 
Shares outstanding, end of period   245,587,856    245,725,416    244,599,661 

 

(dollar amounts in thousands) 

As of
March 31, 2018 

  

As of
March 31, 2017 

 
Total fair value of investments  $3,804,014   $3,924,168 
Total assets   4,057,505    4,286,351 
Total stockholders’ equity   2,249,962    2,311,635 

 

Portfolio Highlights as of March 31, 2018

 

Total fair value of investments was $3.8 billion.

 

Core investment strategies4 represented 100% of the portfolio by fair value as of March 31, 2018, including 92% from direct originations and 8% from opportunistic investments. Broadly syndicated/other investments represented less than 1% of the portfolio by fair value.

 

Gross portfolio yield prior to leverage (based on amortized cost and excluding non-income producing assets)5 was 10.9%, compared to 10.5% as of December 31, 2017.

 

Total commitments to direct originations (including unfunded commitments) made during the first quarter of 2018 was $79.6 million in 6 companies, all of which were existing portfolio companies.

 

Approximately 0.0% of investments were on non-accrual based on fair value.6

 

2 

 

 

Total Portfolio Activity

 

   Three Months Ended 
(dollar amounts in thousands)  March 31, 2018   December 31, 2017   March 31, 2017 
Purchases  $115,990   $262,562   $539,689 
Sales and redemptions   (215,945)   (234,638)   (364,308)
Net portfolio activity  $(99,955)  $27,924   $175,381 
                

Portfolio Data  As of March 31, 2018   As of March 31, 2017 
Total fair value of investments  $3,804,014   $3,924,168 
Number of Portfolio Companies   94    108 
Average Annual EBITDA of Portfolio Companies  $82,400   $86,100 
Weighted Average Purchase Price of Debt Investments 
(as a % of par)
 99.6%   97.2%

% of Investments on Non-Accrual
(based on fair value)6 

   0.0%   0.0%
           
Asset Class (based on fair value)          
Senior Secured Loans — First Lien   65%   57%
Senior Secured Loans — Second Lien   4%   9%
Senior Secured Bonds   4%   4%
Subordinated Debt   13%   15%
Collateralized Securities   1%   2%
Equity/Other   13%   13%
           
Portfolio Composition by Strategy (based on fair value)4          
Direct Originations   92%   87%
Opportunistic   8%   10%
Broadly Syndicated/Other   0%   3%
           
Interest Rate Type (based on fair value)          
% Variable Rate   69.2%   65.5%
% Fixed Rate   18.4%   21.8%
% Income Producing Equity/Other Investments   2.3%   2.7%
% Non-Income Producing Equity/Other Investments   10.1%   10.0%
           
Yields (based on amortized cost)5          
Gross Portfolio Yield Prior to Leverage   10.0%   9.3%
Gross Portfolio Yield Prior to Leverage — Excluding Non-Income Producing Assets   10.9%   10.2%

 

3 

 

 

Direct Origination Activity

   Three Months Ended 
(dollar amounts in thousands)  March 31, 2018   December 31, 2017   March 31, 2017 
Total Commitments
(including unfunded commitments)
  $79,590   $220,159   $429,407 
Exited Investments (including partial paydowns)   (186,236)   (159,678)   (322,068)
Net Direct Originations  $(106,646)  $60,481   $107,339 

 

Direct Originations Portfolio Data  As of March 31, 2018   As of March 31, 2017 
Total Fair Value of Direct Originations  $3,495,945   $3,430,320 
Number of Portfolio Companies   72    73 
Average Annual EBITDA of Portfolio Companies  $70,200   $64,700 
Average Leverage Through Tranche of Portfolio Companies —
Excluding Equity/Other and Collateralized Securities
   5.1x   4.5x
% of Investments on Non-Accrual (based on fair value)6   0.0%    

 

   Three Months Ended 
New Direct Originations by Asset Class
(including unfunded commitments)
  March 31, 2018   December 31, 2017   March 31, 2017 
Senior Secured Loans — First Lien   90%   74%   81%
Senior Secured Loans — Second Lien   5%   7%   1%
Senior Secured Bonds       11%   2%
Subordinated Debt   1%       15%
Collateralized Securities            
Equity/Other   4%   8%   1%
                
Average New Direct Origination Commitment Amount  $13,265   $16,935   $35,784 
Weighted Average Maturity for New Direct Originations   9/15/2023    10/8/2023    3/2/2023 
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct Originations Funded during Period5   10.9%   8.6%   9.8%

Gross Portfolio Yield Prior to Leverage (based on amortized cost) of New Direct Originations Funded during Period —

Excluding Non-Income Producing Assets5  

   10.9%   9.3%   10.0%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Exited during Period5   10.6%   8.9%   9.1%

 

Leverage and Liquidity as of March 31, 2018

 

Debt to equity ratio of 77%, based on $1.72 billion in total debt outstanding and stockholders’ equity of $2.25 billion. FSIC’s weighted average effective interest rate (including the effect of non-usage fees) was 4.31%
Cash and foreign currency of approximately $215.1 million and availability under its financing arrangements of $260.4 million, subject to borrowing base and other limitations
Nineteen unfunded debt investments with aggregate unfunded commitments of $133.3 million and two unfunded equity commitments with aggregate unfunded commitments of $299 thousand

 

4 

 

 

Conference Call Information

 

FSIC will host a conference call at 10:00 a.m. (Eastern Time) on Friday, May 11, 2018, to discuss its first quarter financial results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 443-2408 and using the conference ID 6081268 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed from the Investor Relations section of FSIC’s website at www.fsinvestmentcorp.com under Presentations and Reports.

 

A replay of the call will be available for a period of 30 days following the call by visiting the Investor Relations section of FSIC’s website at www.fsinvestmentcorp.com under Presentations and Reports. 

 

Supplemental Information

 

An investor presentation of financial information will be made available prior to the call in the Investor Relations section of FSIC’s website at www.fsinvestmentcorp.com under Presentations and Reports.

 

About FS Investment Corporation

 

FS Investment Corporation (NYSE: FSIC) is a publicly traded business development company (“BDC”) focused on providing customized credit solutions to private middle market U.S. companies. FSIC seeks to invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market companies to achieve the best risk-adjusted returns for its investors. FSIC is advised by FS/KKR Advisor, LLC. For more information, please visit www.fsinvestmentcorp.com.

 

About FS/KKR Advisor, LLC

 

FS/KKR Advisor, LLC (“FS/KKR”) is a partnership between FS Investments and KKR Credit that serves as the investment adviser to six BDCs with approximately $18 billion in assets under management as of December 31, 2017. The BDCs managed by FS/KKR include FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV, Corporate Capital Trust, Inc. and Corporate Capital Trust II.

 

FS/KKR seeks to leverage the size of its platform, differentiated origination capabilities and expertise in capital markets to maximize returns and preserve capital for investors.

 

FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth and focuses on setting industry standards for investor protection, education and transparency. FS Investments is headquartered in Philadelphia, PA with offices in New York, NY, Orlando, FL and Washington, DC. Visit www.fsinvestments.com to learn more.

 

KKR Credit is a subsidiary of KKR & Co. LP, a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic manager partnerships that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.

 

Forward-Looking Statements and Important Disclosure Notice

 

This announcement may contain certain forward-looking statements, including statements with regard to future events or the future performance or operations of FSIC. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in FSIC’s operations or the economy generally due to terrorism or natural disasters, future changes in laws or regulations and conditions in FSIC’s operating area, and the price at which shares of FSIC’s common stock trade on the New York Stock Exchange. Some of these factors are enumerated in the filings FSIC makes with the SEC. FSIC undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

5 

 

 

The press release above contains summaries of certain financial and statistical information about FSIC. The information contained in this press release is summary information that is intended to be considered in the context of FSIC’s SEC filings and other public announcements that FSIC may make, by press release or otherwise, from time to time. FSIC undertakes no duty or obligation to update or revise the information contained in this press release. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSIC, or information about the market, as indicative of FSIC’s future results.

 

Other Information

 

The information in this press release is summary information only and should be read in conjunction with FSIC’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2018, which FSIC filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 10, 2018, as well as FSIC’s other reports filed with the SEC. A copy of FSIC’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2018 and FSIC’s other reports filed with the SEC can be found on FSIC’s website at www.fsinvestmentcorp.com and the SEC’s website at www.sec.gov.

 

Certain Information About Distributions

 

The determination of the tax attributes of FSIC’s distributions is made annually as of the end of its fiscal year based upon its taxable income and distributions paid, in each case, for the full year. Therefore, a determination as to the tax attributes of the distributions made on a quarterly basis may not be representative of the actual tax attributes for a full year. FSIC intends to update stockholders quarterly with an estimated percentage of its distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions to stockholders will be reported to stockholders annually on Form 1099-DIV.

 

The timing and amount of any future distributions on FSIC’s shares of common stock are subject to applicable legal restrictions and the sole discretion of its board of directors. There can be no assurance as to the amount or timing of any such future distributions, including the special distribution referenced herein.

 

FSIC may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of FSIC’s common stock, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets and dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies. FSIC has not established limits on the amount of funds it may use from available sources to make distributions. There can be no assurance that FSIC will be able to pay distributions at a specific rate or at all.

 

Contact Information:

 

Investors

 

Marc Yaklofsky 

marc.yaklofsky@fsinvestments.com 

215-309-6763

 

Media

 

Kate Beers

media@fsinvestments.com 

215-495-1174

 

6 

 

 

Income Statement  Three Months Ended 
   March 31, 
   2018   2017 
Investment income          
From non-controlled/unaffiliated investments:          
Interest income  $75,269   $72,838 
Paid-in-kind interest income   8,448    6,881 
Fee income   2,453    19,530 
Dividend income   7,355     
From non-controlled/affiliated investments:          
Interest income   1,428    3,684 
Paid-in-kind interest income   3,147    606 
Fee income       29 
From controlled/affiliated investments:          
Interest income   1,120    1,502 
Paid-in-kind interest income   1,798    994 
Total investment income   101,018    106,064 
           
Operating expenses          
Management fees   17,854    18,367 
Subordinated income incentive fees   11,999    13,147 
Administrative services expenses   734    734 
Accounting and administrative fees   254    265 
Interest expense   20,053    19,439 
Directors’ fees   496    271 
Other general and administrative expenses   1,632    1,251 
Total operating expenses   53,022    53,474 
Management fee waiver   (2,551)    
Net expenses   50,471    53,474 
Net investment income   50,547    52,590 
           
Realized and unrealized gain/loss          
Net realized gain (loss) on investments:          
Non-controlled/unaffiliated investments   (4,351)   (48,447)
Non-controlled/affiliated investments   8    305 
Controlled/affiliated investments       (52,879)
Net realized gain (loss) on foreign currency   61    123 
Net change in unrealized appreciation (depreciation) on investments:          
Non-controlled/unaffiliated investments   (17,501)   129,260 
Non-controlled/affiliated investments   (5,530)   (12,328)
Controlled/affiliated investments   (9,707)   (4,499)
Net change in unrealized appreciation (depreciation) on secured borrowing       (10)
Net change in unrealized gain (loss) on foreign currency   (602)   (722)
Total net realized and unrealized gain (loss)  $(37,622)  $10,803 
Net increase (decrease) in net assets resulting from operations  $12,925   $63,393 
           
Per share information—basic and diluted          
Net increase (decrease) in net assets resulting from operations (Earnings per Share)  $0.05   $0.26 
Weighted average shares outstanding   245,713,188    244,554,969 

 

7 

 

 

Balance Sheet      
   March 31, 2018
(Unaudited)
    December 31, 2017 
Assets        
Investments, at fair value          
Non-controlled/unaffiliated investments (amortized cost—$3,434,363 and $3,532,517, respectively)  $3,485,256   $3,600,911 
Non-controlled/affiliated investments (amortized cost—$201,717 and $197,468, respectively)   228,774    230,055 
Controlled/affiliated investments (amortized cost—$91,284 and $86,861, respectively)   89,984    95,268 
Total investments, at fair value (amortized cost—$3,727,364 and $3,816,846, respectively)   3,804,014    3,926,234 
Cash   209,609    134,932 
Foreign currency, at fair value (cost—$5,291 and $3,685, respectively)   5,448    3,810 
Receivable for investments sold and repaid   1,195    3,477 
Income receivable   32,352    30,668 
Deferred financing costs   3,212    3,459 
Prepaid expenses and other assets   1,675    1,695 
Total assets  $4,057,505   $4,104,275 
           
Liabilities          
Payable for investments purchased  $101   $1,978 
Credit facilities payable (net of deferred financing costs of $2,903 and $3,179, respectively)   639,205    638,571 
Unsecured notes payable (net of deferred financing costs of $1,245 and $1,402, respectively)   1,074,160    1,073,445 
Stockholder distributions payable   46,683    46,704 
Management fees payable   15,303    15,450 
Subordinated income incentive fees payable   11,999    12,871 
Administrative services expense payable   542    294 
Interest payable   18,190    22,851 
Directors’ fees payable   490    276 
Other accrued expenses and liabilities   870    7,112 
Total liabilities   1,807,543    1,819,552 
Commitments and contingencies        
           
Stockholders’ equity          
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding        
Common stock, $0.001 par value, 450,000,000 shares authorized, 245,587,856 and 245,725,416 shares issued and outstanding, respectively   246    246 
Capital in excess of par value   2,271,588    2,272,591 
Accumulated undistributed net realized gain/loss on investments and gain/loss on foreign currency   (249,570)   (245,288)
Accumulated undistributed (distributions in excess of) net investment income   147,926    144,062 
Net unrealized appreciation (depreciation) on investments and secured borrowing and unrealized gain/loss on foreign currency   79,772    113,112 
Total stockholders’ equity   2,249,962    2,284,723 
Total liabilities and stockholders’ equity  $4,057,505   $4,104,275 
Net asset value per share of common stock at period end  $9.16   $9.30 

 

8 

 

 

Non-GAAP Financial Measures

 

This press release contains certain financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). FSIC uses these non-GAAP financial measures internally in analyzing financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing FSIC’s financial results with other BDCs.

 

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with FSIC’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures has been provided in this press release, and investors are encouraged to review the reconciliation.

 

Reconciliation of Non-GAAP Financial Measures1

 

   Three Months Ended 
   March 31, 2018   December 31, 2017   March 31, 2017 
GAAP net investment income per share  $0.21   $0.22   $0.22 
Plus capital gains incentive fees per share            
Plus excise taxes per share       0.02     
Plus one-time expenses per share            
Adjusted net investment income per share2  $0.21   $0.24   $0.22 

 

1)

Per share data was derived by using the weighted average shares of FSIC’s common stock outstanding during the applicable period. Per share numbers may not sum due to rounding. 

   
2)

Adjusted net investment income is a non-GAAP financial measure. Adjusted net investment income is presented for all periods as GAAP net investment income excluding (i) the accrual for the capital gains incentive fee for realized and unrealized gains; (ii) excise taxes; and (iii) certain non-recurring operating expenses that are one-time in nature and are not representative of ongoing operating expenses incurred during FSIC’s normal course of business (referred to herein as one-time expenses). FSIC uses this non-GAAP financial measure internally in analyzing financial results and believes that the use of this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing its financial results with other business development companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. A reconciliation of GAAP net investment income to adjusted net investment income can be found above.

   
3) The per share data for distributions reflects the amount of distributions paid per share of our common stock to stockholders of record during each applicable period.
 
4)

See FSIC’s quarterly report on Form 10-Q for the three months ended March 31, 2018 for a description of FSIC’s investment strategies. 

   
5)

Gross portfolio yield represents the expected annualized yield of FSIC’s investment portfolio based on the composition of the portfolio as of the applicable date. FSIC’s estimated gross portfolio yield may be higher than an investor’s yield on an investment in shares of FSIC’s common stock because it does not reflect sales commissions or charges that may be incurred in connection with the purchase or sale of such shares, or operating expenses that may be incurred by FSIC. FSIC’s estimated gross portfolio yield does not represent an actual investment return to stockholders, is subject to change and, in the future, may be greater or less than the rates set forth herein.

   

6)

 

Interest income is recorded on an accrual basis. See FSIC’s quarterly report on Form 10-Q for the three months ended March 31, 2018 for a description of FSIC’s revenue recognition policy. 

 

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