UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
ý     Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2016March 31, 2017
o        Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Commission
File Number
 
Exact name of registrant as specified in its charter, address of principal executive
offices, telephone numbers and states or other jurisdictions of incorporation or organization
 
I.R.S. Employer
Identification Number
814-00832 New Mountain Finance Corporation 27-2978010
  
787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware
  
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, smaller reporting company, or an emerging growth company. See definitiondefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and large accelerated filer”“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer ý
 
Accelerated filer o
 
Non-accelerated filer o(Do not check if a smaller reporting company)
 
Smaller reporting company o
Emerging growth company o

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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock.
Description Shares as of NovemberMay 8, 20162017
Common stock, par value $0.01 per share 69,614,85875,571,693
 


Table of Contents

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2016MARCH 31, 2017
TABLE OF CONTENTS
 PAGE
  
  
   
  
 
 
 
 
 
 
   
 
   
 
   
  
  
 

PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
New Mountain Finance Corporation
 
Consolidated Statements of Assets and Liabilities
(in thousands, except shares and per share data)
(unaudited)
September 30, 2016 December 31, 2015March 31, 2017 December 31, 2016
Assets 
  
 
  
Investments at fair value 
  
 
  
Non-controlled/non-affiliated investments (cost of $1,413,930 and $1,438,415, respectively)$1,353,097
 $1,377,515
Non-controlled/affiliated investments (cost of $45,472 and $89,047, respectively)46,684
 87,287
Controlled investments (cost of $105,353 and $41,254, respectively)119,198
 47,422
Total investments at fair value (cost of $1,564,755 and $1,568,716, respectively)1,518,979
 1,512,224
Non-controlled/non-affiliated investments (cost of $1,483,399 and $1,379,603, respectively)$1,458,331
 $1,346,556
Non-controlled/affiliated investments (cost of $164,065 and $54,996, respectively)166,213
 57,440
Controlled investments (cost of $149,587 and $140,579, respectively)162,351
 154,821
Total investments at fair value (cost of $1,797,051 and $1,575,178, respectively)1,786,895
 1,558,817
Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)28,673
 29,704
28,418
 29,218
Cash and cash equivalents49,794
 30,102
37,663
 45,928
Interest and dividend receivable16,654
 13,832
21,714
 17,833
Receivable from unsettled securities sold1,681
 990
Receivable from affiliates845
 360
715
 346
Other assets2,235
 1,924
3,853
 2,886
Total assets$1,617,180
 $1,588,146
$1,880,939
 $1,656,018
Liabilities 
  
 
  
Borrowings      
Holdings Credit Facility$308,913
 $419,313
$376,913
 $333,513
Convertible Notes155,552
 115,000
155,496
 155,523
NMFC Credit Facility122,500
 10,000
SBA-guaranteed debentures121,745
 117,745
121,745
 121,745
Unsecured Notes90,000
 
90,000
 90,000
NMFC Credit Facility42,500
 90,000
Deferred financing costs (net of accumulated amortization of $11,268 and $8,822, respectively)(15,038) (13,992)
Deferred financing costs (net of accumulated amortization of $13,267 and $12,279, respectively)(13,053) (14,041)
Net borrowings703,672
 728,066
853,601
 696,740
Payable for unsettled securities purchased45,690
 5,441
50,551
 2,740
Management fee payable5,781
 5,466
12,110
 5,852
Incentive fee payable5,432
 5,622
9,353
 5,745
Interest payable4,370
 2,343
5,650
 3,172
Payable to affiliates412
 136
Deferred tax liability857
 1,676
279
 1,034
Payable to affiliates567
 564
Other liabilities2,599
 2,060
2,241
 2,037
Total liabilities768,968
 751,238
934,197
 717,456
Commitments and contingencies (See Note 9) 
  
 
  
Net assets 
  
 
  
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued
 

 
Common stock, par value $0.01 per share, 100,000,000 shares authorized, 64,005,387 and 64,005,387 shares issued, respectively, and 63,864,858 and 64,005,387 shares outstanding, respectively640
 640
Common stock, par value $0.01 per share, 100,000,000 shares authorized, 69,821,693 and 69,755,387 shares issued, respectively, and 69,821,693 and 69,717,814 shares outstanding, respectively698
 698
Paid in capital in excess of par899,996
 899,713
1,002,869
 1,001,862
Treasury stock at cost, 140,529 and 0 shares held, respectively(1,707) 
Treasury stock at cost, 0 and 37,573 shares held, respectively
 (460)
Accumulated undistributed net investment income4,197
 4,164
1,800
 2,073
Accumulated undistributed net realized gains on investments3,533
 1,342
Net unrealized (depreciation) appreciation (net of provision for taxes of $857 and $1,676, respectively)(58,447) (68,951)
Accumulated undistributed net realized losses on investments(36,121) (36,947)
Net unrealized (depreciation) appreciation (net of provision for taxes of $279 and $1,034, respectively)(22,504) (28,664)
Total net assets$848,212
 $836,908
$946,742
 $938,562
Total liabilities and net assets$1,617,180
 $1,588,146
$1,880,939
 $1,656,018
Number of shares outstanding63,864,858
 64,005,387
69,821,693
 69,717,814
Net asset value per share$13.28
 $13.08
$13.56
 $13.46

New Mountain Finance Corporation
 
Consolidated Statements of Operations
(in thousands, except shares and per share data)
(unaudited)
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Investment income          
From non-controlled/non-affiliated investments:          
Interest income$34,735
 $31,628
 $106,743
 $97,249
$32,876
 $35,706
Dividend income83
 (509) 175
 (407)51
 
Other income2,557
 1,619
 4,776
 3,496
2,265
 1,222
From non-controlled/affiliated investments:          
Interest income720
 1,594
 3,929
 3,820
647
 1,582
Dividend income1,061
 892
 2,868
 2,701
1,648
 920
Other income284
 1,020
 902
 1,642
298
 313
From controlled investments:          
Interest income462
 517
 1,447
 1,487
475
 502
Dividend income1,919
 673
 3,380
 1,864
5,034
 719
Other income13
 13
 80
 36
13
 12
Total investment income41,834
 37,447
 124,300
 111,888
43,307
 40,976
Expenses          
Incentive fee5,432
 5,034
 16,266
 14,969
5,408
 5,385
Capital gains incentive fee
 (490) 
 
Total incentive fees5,432
 4,544
 16,266
 14,969
Management fee6,883
 6,373
 20,537
 19,039
7,614
 6,836
Interest and other financing expenses7,171
 5,788
 20,544
 16,863
8,376
 6,602
Professional fees723
 808
 2,461
 2,456
850
 877
Administrative expenses586
 647
 2,054
 1,804
708
 839
Other general and administrative expenses390
 370
 1,206
 1,252
466
 432
Total expenses21,185
 18,530
 63,068
 56,383
23,422
 20,971
Less: management fee waived (See Note 5)(1,102) (1,237) (3,662) (3,866)
Less: management and incentive fees waived (See Note 5)(3,156) (1,319)
Less: expenses waived and reimbursed (See Note 5)
 (333) (347) (733)(470) (284)
Net expenses20,083
 16,960
 59,059
 51,784
19,796
 19,368
Net investment income before income taxes21,751
 20,487
 65,241
 60,104
23,511
 21,608
Income tax expense (benefit)22
 (172) 113
 130
Income tax expense80
 41
Net investment income21,729
 20,659
 65,128
 59,974
23,431
 21,567
Net realized gains (losses):       
Net realized gains:   
Non-controlled/non-affiliated investments1,150
 (37) 2,191
 (13,508)826
 176
Net change in unrealized appreciation (depreciation):          
Non-controlled/non-affiliated investments3,837
 (8,360) 2,955
 2,148
7,979
 (14,414)
Non-controlled/affiliated investments109
 313
 84
 1,041
(296) (1,151)
Controlled investments(800) (2,190) 7,677
 4,544
(1,478) 1,179
Securities purchased under collateralized agreements to resell(957) 
 (1,031) 
(800) (30)
Benefit (provision) for taxes11
 (581) 819
 (1,217)
Benefit for taxes755
 724
Net realized and unrealized gains (losses)3,350
 (10,855) 12,695
 (6,992)6,986
 (13,516)
Net increase in net assets resulting from operations$25,079
 $9,804
 $77,823
 $52,982
$30,417
 $8,051
Basic earnings per share$0.39
 $0.17
 $1.22
 $0.91
$0.44
 $0.13
Weighted average shares of common stock outstanding - basic (See Note 11)63,758,062
 58,725,338
 63,843,730
 58,269,543
69,718,968
 63,934,151
Diluted earnings per share$0.37
 $0.17
 $1.14
 $0.86
$0.40
 $0.13
Weighted average shares of common stock outstanding - diluted (See Note 11)71,145,932
 66,002,469
 71,158,044
 65,514,142
79,543,095
 71,211,282
Dividends declared and paid per share$0.34
 $0.34
 $1.02
 $1.02
Distributions declared and paid per share$0.34
 $0.34

New Mountain Finance Corporation
 
Consolidated Statements of Changes in Net Assets
(in thousands, except shares and per share data)
(unaudited)
Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Increase (decrease) in net assets resulting from operations:      
Net investment income$65,128
 $59,974
$23,431
 $21,567
Net realized gains (losses) on investments2,191
 (13,508)
Net realized gains on investments826
 176
Net change in unrealized appreciation (depreciation) of investments10,716
 7,733
6,205
 (14,386)
Net change in unrealized (depreciation) appreciation of securities purchased under collateralized agreements to resell(1,031) 
(800) (30)
Benefit (provision) for taxes819
 (1,217)
Benefit for taxes755
 724
Net increase in net assets resulting from operations77,823
 52,982
30,417
 8,051
Capital transactions      
Net proceeds from shares sold
 79,415
Deferred offering costs38
 (285)
 38
Dividends declared to stockholders from net investment income(65,095) (59,240)
Reinvestment of dividends1,486
 3,655
Distributions declared to stockholders from net investment income(23,704) (21,719)
Reinvestment of distributions1,548
 
Repurchase of shares under repurchase program(2,948) 

 (1,433)
Total net (decrease) increase in net assets resulting from capital transactions(66,519) 23,545
Net increase in net assets11,304
 76,527
Other(81) 
Total net decrease in net assets resulting from capital transactions(22,237) (23,114)
Net increase (decrease) in net assets8,180
 (15,063)
Net assets at the beginning of the period836,908
 802,170
938,562
 836,908
Net assets at the end of the period$848,212
 $878,697
$946,742
 $821,845
      
Capital share activity      
Shares sold
 5,750,000
Shares issued from reinvestment of dividends
 257,497
Shares reissued from repurchase program in connection with reinvestment of dividends107,970
 
Shares issued from the reinvestment of distributions66,306
 
Shares reissued from repurchase program in connection with the reinvestment of distributions37,573
 
Shares repurchased under repurchase program(248,499) 

 (124,950)
Net (decrease) increase in shares outstanding(140,529) 6,007,497
Net increase (decrease) in shares outstanding103,879
 (124,950)



New Mountain Finance Corporation
 
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Cash flows from operating activities      
Net increase in net assets resulting from operations$77,823
 $52,982
$30,417
 $8,051
Adjustments to reconcile net (increase) decrease in net assets resulting from operations to net cash (used in) provided by operating activities:      
Net realized (gains) losses on investments(2,191) 13,508
Net realized gains on investments(826) (176)
Net change in unrealized (appreciation) depreciation of investments(10,716) (7,733)(6,205) 14,386
Net change in unrealized depreciation (appreciation) of securities purchased under collateralized agreements to resell1,031
 
800
 30
Amortization of purchase discount(2,342) (1,787)(747) (769)
Amortization of deferred financing costs2,446
 2,180
988
 774
Amortization of premium on Convertible Notes(27) 
Non-cash investment income(5,101) (4,374)(1,933) (1,664)
(Increase) decrease in operating assets:      
Purchase of investments and delayed draw facilities(336,310) (397,745)(349,477) (27,591)
Proceeds from sales and paydowns of investments352,607
 344,753
133,801
 40,188
Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities86
 157
120
 10
Cash paid for purchase of drawn portion of revolving credit facilities
 (3,227)
Cash paid on drawn revolvers(10,899) (1,160)(3,970) (3,806)
Cash repayments on drawn revolvers8,111
 4,299
1,159
 1,443
Interest and dividend receivable(2,822) (4,156)(3,881) (2,202)
Receivable from unsettled securities sold(691) 
Receivable from affiliates(485) 119
(369) (347)
Receivable from unsettled securities sold
 4,243
Other assets(299) (329)(967) (770)
Increase (decrease) in operating liabilities:      
Payable for unsettled securities purchased40,249
 (24,032)47,811
 2,108
Management fee payable315
 (8)6,258
 5,517
Incentive fee payable(190) 231
3,608
 5,385
Interest payable2,027
 1,367
2,478
 603
Payable to affiliates276
 395
Deferred tax liability(819) 1,217
(755) (724)
Payable to affiliates3
 (688)
Other liabilities311
 (735)298
 283
Net cash flows provided by (used in) operating activities112,835
 (20,918)
Net cash flows (used in) provided by operating activities(141,834) 41,124
Cash flows from financing activities      
Net proceeds from shares sold
 79,415
Dividends paid(63,609) (55,585)
Distributions paid(22,156) (21,719)
Offering costs paid(155) (141)(58) (53)
Proceeds from Holdings Credit Facility128,500
 246,330
165,600
 17,500
Repayment of Holdings Credit Facility(238,900) (328,900)(122,200) (39,300)
Proceeds from Convertible Notes40,552
 
Proceeds from SBA-guaranteed debentures4,000
 66,295
Proceeds from Unsecured Notes90,000
 
Proceeds from NMFC Credit Facility156,500
 101,300
122,500
 10,500
Repayment of NMFC Credit Facility(204,000) (83,800)(10,000) (4,000)
Other(81) 
Deferred financing costs paid(3,083) (2,829)(36) (38)
Repurchase of shares under repurchase program(2,948) 

 (1,433)
Net cash flows (used in) provided by financing activities(93,143) 22,085
Net increase in cash and cash equivalents19,692
 1,167
Net cash flows provided by (used in) financing activities133,569
 (38,543)
Net (decrease) increase in cash and cash equivalents(8,265) 2,581
Cash and cash equivalents at the beginning of the period30,102
 23,445
45,928
 30,102
Cash and cash equivalents at the end of the period$49,794
 $24,612
$37,663
 $32,683
Supplemental disclosure of cash flow information      
Cash interest paid$15,975
 $12,764
$4,570
 $5,031
Income taxes paid11
 151
12
 2
Non-cash operating activities:   
Non-cash activity on investments$167
 $60,652
Non-cash financing activities:      
Value of shares reissued from repurchase program in connection with dividend reinvestment plan$1,486
 $
Value of shares issued in connection with dividend reinvestment plan
 3,655
Value of shares issued in connection with the distribution reinvestment plan$988
 $
Value of shares reissued from repurchase program in connection with the distribution reinvestment plan560
 
Accrual for offering costs576
 739
540
 817
Accrual for deferred financing costs371
 103
63
 90


The accompanying notes are an integral part of these consolidated financial statements.
6

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
Non-Controlled/Non-Affiliated Investments                      
Funded Debt Investments - Australia                
Project Sunshine IV Pty Ltd**                
Media First lien (2) 8.00% (L + 7.00%/M) 9/23/2019 $6,826
 $6,801
 $6,732
 0.79% First lien (2) 8.00% (L + 7.00%/M) 9/23/2019 $4,618
 $4,604
 $4,647
 0.49 %
Total Funded Debt Investments - Australia $6,826
 $6,801
 $6,732
 0.79% $4,618
 $4,604
 $4,647
 0.49 %
Funded Debt Investments - Luxembourg                
Pinnacle Holdco S.à.r.l. / Pinnacle (US) Acquisition Co Limited**                
Software Second lien (2) 10.50% (L + 9.25%/Q) 7/30/2020 $24,630
 $24,356
 $18,349
   First lien (2) 4.75% (L + 3.50%/Q) 7/30/2019 $2,992
 $2,533
 $2,470
  
 Second lien (3) 10.50% (L + 9.25%/Q) 7/30/2020 8,204
 8,330
 6,112
   First lien (3) 4.75% (L + 3.50%/Q) 7/30/2019 1,724
 1,467
 1,422
  
 32,834
 32,686
 24,461
 2.88% Second lien (2) 10.50% (L + 9.25%/Q) 7/30/2020 24,630
 24,368
 17,240
  
 Second lien (3) 10.50% (L + 9.25%/Q) 7/30/2020 8,204
 8,334
 5,743
  
 37,550
 36,702
 26,875
 2.84 %
Total Funded Debt Investments - Luxembourg $32,834
 $32,686
 $24,461
 2.88% $37,550
 $36,702
 $26,875
 2.84 %
Funded Debt Investments - Netherlands                
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC)**                
Software Second lien (3) 10.13% (L + 9.13%/Q) 2/17/2023 $10,000
 $9,353
 $9,550
 1.13% First lien (2) 6.40% (L + 5.25%/Q) 2/18/2022 $16,352
 $16,362
 $16,392
  
 Second lien (3) 10.27% (L + 9.13%/Q) 2/17/2023 29,227
 28,628
 29,245
  
 45,579
 44,990
 45,637
 4.82 %
Total Funded Debt Investments - Netherlands $10,000
 $9,353
 $9,550
 1.13% $45,579
 $44,990
 $45,637
 4.82 %
Funded Debt Investments - United Kingdom                
Air Newco LLC**                
Software Second lien (3) 10.50% (L + 9.50%/Q) 1/31/2023 $32,500
 $31,793
 $30,265
 3.57% Second lien (3) 10.56% (L + 9.50%/Q) 1/31/2023 $37,500
 $36,483
 $34,594
 3.65 %
Total Funded Debt Investments - United Kingdom $32,500
 $31,793
 $30,265
 3.57% $37,500
 $36,483
 $34,594
 3.65 %
Funded Debt Investments - United States                
AmWINS Group, Inc.        
Business Services Second lien (3) 7.75% (L + 6.75%/M) 1/25/2025 $57,000
 $56,789
 $57,748
 6.10 %
AssuredPartners, Inc.        
Business Services Second lien (3) 10.00% (L + 9.00%/M) 10/20/2023 30,200
 29,402
 30,673
  
 Second lien (2) 10.00% (L + 9.00%/M) 10/20/2023 20,000
 19,297
 20,312
  
 50,200
 48,699
 50,985
 5.39 %
TIBCO Software Inc.                
Software First lien (2) 6.50% (L + 5.50%/M) 12/4/2020 $29,550
 $28,459
 $29,221
   First lien (2) 5.50% (L + 4.50%/M) 12/4/2020 29,400
 28,430
 29,745
  
 Subordinated (3) 11.38%/S 12/1/2021 15,000
 14,647
 13,425
   Subordinated (3) 11.38%/S 12/1/2021 15,000
 14,673
 16,650
  
 44,550
 43,106
 42,646
 5.03% 44,400
 43,103
 46,395
 4.90 %
Hill International, Inc.        
Business Services First lien (2) 7.75% (L + 6.75%/M) 9/28/2020 41,650
 41,233
 41,650
 4.91%
Deltek, Inc.        
Software Second lien (3) 9.50% (L + 8.50%/Q) 6/26/2023 21,000
 20,987
 21,289
  
 Second lien (2) 9.50% (L + 8.50%/Q) 6/26/2023 20,000
 19,634
 20,275
  
 41,000
 40,621
 41,564
 4.90%
AssuredPartners, Inc.        
Business Services Second lien (2) 10.00% (L + 9.00%/M) 10/20/2023 20,000
 19,263
 19,925
  
 Second lien (3) 10.00% (L + 9.00%/M) 10/20/2023 20,200
 19,462
 20,124
  
 40,200
 38,725
 40,049
 4.72%
Navex Global, Inc.        
Software First lien (4) 5.98% (L + 4.75%/Q) 11/19/2021 4,574
 4,539
 4,505
  
 First lien (2) 5.98% (L + 4.75%/Q) 11/19/2021 2,589
 2,568
 2,550
  
 Second lien (4) 10.30% (L + 8.75%/Q) 11/18/2022 18,187
 17,978
 17,642
  
 Second lien (3) 10.30% (L + 8.75%/Q) 11/18/2022 15,313
 14,845
 14,853
  
 40,663
 39,930
 39,550
 4.66%
Salient CRGT Inc.        
Federal Services First lien (2) 6.75% (L + 5.75%/M) 2/28/2022 42,500
 41,933
 42,022
 4.44 %

The accompanying notes are an integral part of these consolidated financial statements.
7

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
Kronos Incorporated        
Software Second lien (2) 9.75% (L + 8.50%/Q) 4/30/2020 $32,632
 $32,464
 $33,350
  
 Second lien (3) 9.75% (L + 8.50%/Q) 4/30/2020 4,999
 4,964
 5,109
  
 37,631
 37,428
 38,459
 4.53%
Tenawa Resource Holdings LLC (13)        
Tenawa Resource Management LLC        
Energy First lien (3) 10.50% (Base + 8.00%/Q) 5/12/2019 40,000
 39,894
 38,175
 4.50%
ProQuest LLC        
Business Services Second lien (3) 10.00% (L + 9.00%/M) 12/15/2022 35,000
 34,357
 35,000
 4.13%
Ascend Learning, LLC        
Education Second lien (3) 9.50% (L + 8.50%/Q) 11/30/2020 35,227
 34,877
 34,875
 4.11%
Redbox Automated Retail, LLC        
Consumer Services First lien (2) 8.50% (L + 7.50%/Q) 9/27/2021 35,000
 34,475
 34,475
 4.06%
Valet Waste Holdings, Inc.        
Business Services First lien (2) 8.00% (L + 7.00%/Q) 9/24/2021 29,700
 29,381
 29,700
  
 First lien (3)(11) - Drawn 8.00% (L + 7.00%/Q) 9/24/2021 2,250
 2,222
 2,250
  
 31,950
 31,603
 31,950
 3.77%
PetVet Care Centers LLC        
Consumer Services Second lien (3) 10.25% (L + 9.25%/Q) 6/17/2021 24,000
 23,812
 24,000
  
 Second lien (3) 10.50% (L + 9.50%/Q) 6/17/2021 6,500
 6,441
 6,561
  
 30,500
 30,253
 30,561
 3.60%
VetCor Professional Practices LLC        
Consumer Services First lien (4) 7.25% (L + 6.25%/Q) 4/20/2021 19,355
 19,200
 19,355
  
 First lien (2) 7.25% (L + 6.25%/Q) 4/20/2021 7,813
 7,664
 7,813
  
 First lien (4)(11) - Drawn 7.25% (L + 6.25%/Q) 4/20/2021 2,684
 2,660
 2,684
  
 First lien (4)(11) - Drawn 7.25% (L + 6.25%/Q) 4/20/2021 113
 111
 113
  
 29,965
 29,635
 29,965
 3.53%
CRGT Inc.        
Federal Services First lien (2) 7.50% (L + 6.50%/Q) 12/19/2020 29,720
 29,541
 29,795
 3.51%
Integro Parent Inc.        
Business Services First lien (2) 6.75% (L + 5.75%/Q) 10/31/2022 19,856
 19,500
 19,557
  
 Second lien (3) 10.25% (L + 9.25%/Q) 10/30/2023 10,000
 9,908
 9,650
  
 29,856
 29,408
 29,207
 3.45%
Marketo, Inc.        
Software First lien (3) 10.50% (L + 9.50%/Q) 8/16/2021 26,820
 26,426
 26,418
 3.12%
Ryan, LLC        
Business Services First lien (2) 6.75% (L + 5.75%/M) 8/7/2020 26,250
 25,935
 26,046
 3.07%
DigiCert Holdings, Inc.        
Software First lien (2) 6.00% (L + 5.00%/Q) 10/21/2021 24,813
 24,167
 24,750
 2.92%
Severin Acquisition, LLC                
Software Second lien (4) 9.75% (L + 8.75%/Q) 7/29/2022 15,000
 14,869
 15,000
   Second lien (4) 9.90% (L + 8.75%/Q) 7/29/2022 $15,000
 $14,878
 $15,150
  
 Second lien (4) 9.75% (L + 8.75%/Q) 7/29/2022 4,154
 4,116
 4,154
   Second lien (3) 9.90% (L + 8.75%/Q) 7/29/2022 14,518
 14,341
 14,663
  
 Second lien (4) 10.25% (L + 9.25%/Q) 7/29/2022 3,273
 3,242
 3,305
   Second lien (4) 9.90% (L + 8.75%/Q) 7/29/2022 4,154
 4,119
 4,195
  
 Second lien (3) 10.25% (L + 9.25%/Q) 7/29/2022 1,825
 1,807
 1,843
   Second lien (4) 10.40% (L + 9.25%/Q) 7/29/2022 3,273
 3,244
 3,305
  
 Second lien (4) 10.25% (L + 9.25%/Q) 7/29/2022 300
 297
 303
   Second lien (3) 10.15% (L + 9.00%/Q) 7/29/2022 2,361
 2,339
 2,384
  
 24,552
 24,331
 24,605
 2.90% Second lien (3) 10.40% (L + 9.25%/Q) 7/29/2022 1,825
 1,808
 1,843
  
 Second lien (4) 10.40% (L + 9.25%/Q) 7/29/2022 300
 297
 303
  
 41,431
 41,026
 41,843
 4.42 %
Hill International, Inc.        
Business Services First lien (2) 7.75% (L + 6.75%/M) 9/28/2020 41,438
 41,068
 41,438
 4.38 %
Tenawa Resource Holdings LLC (13)        
Tenawa Resource Management LLC        
Energy First lien (3) 10.50% (Base + 8.00%/Q) 5/12/2019 40,000
 39,913
 39,826
 4.21 %
Kronos Incorporated        
Software Second lien (2) 9.28% (L + 8.25%/Q) 11/1/2024 36,000
 35,470
 37,220
 3.93 %
Ascend Learning, LLC        
Education Second lien (3) 9.52% (L + 8.50%/Q) 11/30/2020 36,727
 36,427
 37,049
 3.91 %
PetVet Care Centers LLC        
Consumer Services Second lien (3) 10.40% (L + 9.25%/Q) 6/17/2021 24,000
 23,828
 24,240
  
 Second lien (3) 10.54% (L + 9.50%/Q) 6/17/2021 6,500
 6,446
 6,565
  
 Second lien (3) 9.65% (L + 8.50%/Q) 6/17/2021 6,000
 5,915
 5,910
  
 36,500
 36,189
 36,715
 3.88 %
Redbox Automated Retail, LLC        
Consumer Services First lien (2) 8.50% (L + 7.50%/M) 9/27/2021 36,573
 36,164
 36,619
 3.87 %
DigiCert Holdings, Inc.        
Software First lien (2) 6.00% (L + 5.00%/M) 10/21/2021 34,662
 34,102
 34,748
 3.67 %
Weston Solutions, Inc.        
Business Services First lien (2) 10.50% (L + 9.50%/M) 12/31/2020 34,286
 34,286
 34,286
 3.62 %
VetCor Professional Practices LLC        
Consumer Services First lien (4) 7.15% (L + 6.00%/Q) 4/20/2021 19,257
 19,118
 19,257
  
 First lien (2) 7.15% (L + 6.00%/Q) 4/20/2021 7,773
 7,639
 7,773
  
 First lien (4) 7.15% (L + 6.00%/Q) 4/20/2021 2,671
 2,649
 2,671
  
 First lien (2) 7.15% (L + 6.00%/Q) 4/20/2021 1,644
 1,613
 1,644
  
 First lien (3)(11) - Drawn 7.15% (L + 6.00%/Q) 4/20/2021 608
 596
 608
  
 First lien (4) 7.15% (L + 6.00%/Q) 4/20/2021 499
 490
 499
  
 32,452
 32,105
 32,452
 3.43 %
Valet Waste Holdings, Inc.        
Business Services First lien (2) 8.00% (L + 7.00%/M) 9/24/2021 29,550
 29,259
 29,550
  
 First lien (3)(11) - Drawn 8.00% (L + 7.00%/M) 9/24/2021 2,250
 2,222
 2,250
  
 31,800
 31,481
 31,800
 3.36 %
Evo Payments International, LLC        
Business Services Second lien (2) 10.00% (L + 9.00%/M) 12/23/2024 25,000
 24,817
 25,250
  
 Second lien (3) 10.00% (L + 9.00%/M) 12/23/2024 5,000
 5,050
 5,050
  
 30,000
 29,867
 30,300
 3.20 %
Integro Parent Inc.        
Business Services First lien (2) 6.80% (L + 5.75%/Q) 10/31/2022 19,756
 19,426
 19,854
  
 Second lien (3) 10.29% (L + 9.25%/Q) 10/30/2023 10,000
 9,913
 9,849
  
 29,756
 29,339
 29,703
 3.14 %

The accompanying notes are an integral part of these consolidated financial statements.
8

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
TW-NHME Holdings Corp. (20)        
National HME, Inc.        
Healthcare Services Second lien (4) 10.40% (L + 9.25%/Q) 7/14/2022 $21,500
 $21,275
 $21,500
  
 Second lien (3) 10.40% (L + 9.25%/Q) 7/14/2022 5,800
 5,729
 5,800
  
 27,300
 27,004
 27,300
 2.88 %
ProQuest LLC        
Business Services Second lien (3) 10.00% (L + 9.00%/M) 12/15/2022 27,020
 26,553
 27,020
 2.85 %
Marketo, Inc.        
Software First lien (3) 10.65% (L + 9.50%/Q) 8/16/2021 26,820
 26,457
 26,595
 2.81 %
Ansira Holdings, Inc.        
Business Services First lien (2) 7.66% (Base + 6.50%/Q) 12/20/2022 26,182
 26,055
 25,985
 2.74 %
nThrive, Inc. (fka Precyse Acquisition Corp.)                
Healthcare Services Second lien (2) 10.75% (L + 9.75%/M) 4/20/2023 $25,000
 $24,580
 $24,562
 2.90% Second lien (2) 10.75% (L + 9.75%/M) 4/20/2023 25,000
 24,604
 25,000
 2.64 %
AAC Holding Corp.                
Education First lien (2) 8.25% (L + 7.25%/M) 9/30/2020 24,432
 24,128
 24,188
 2.85% First lien (2) 9.25% (L + 8.25%/M) 9/30/2020 23,729
 23,465
 23,965
 2.53 %
Pelican Products, Inc.        
Business Products Second lien (3) 9.25% (L + 8.25%/Q) 4/9/2021 15,500
 15,509
 14,648
  
Navex Global, Inc.        
Software Second lien (3) 10.31% (L + 8.75%/Q) 11/18/2022 12,536
 12,211
 12,473
  
 Second lien (2) 9.25% (L + 8.25%/Q) 4/9/2021 10,000
 10,109
 9,450
   Second lien (4) 10.31% (L + 8.75%/Q) 11/18/2022 11,508
 11,383
 11,450
  
 25,500
 25,618
 24,098
 2.84% 24,044
 23,594
 23,923
 2.53 %
EN Engineering, LLC                
Business Services First lien (2) 7.00% (L + 6.00%/Q) 6/30/2021 21,161
 20,985
 21,161
   First lien (2) 7.15% (L + 6.00%/Q) 6/30/2021 21,054
 20,895
 21,054
  
 First lien (2)(11) - Drawn 7.67% (Base + 5.55%/Q) 6/30/2021 2,194
 2,174
 2,194
   First lien (2) 7.97% (Base + 5.56%/Q) 6/30/2021 2,183
 2,165
 2,183
  
 23,355
 23,159
 23,355
 2.75% 23,237
 23,060
 23,237
 2.45 %
KeyPoint Government Solutions, Inc.        
Federal Services First lien (2) 7.75% (L + 6.50%/Q) 11/13/2017 23,277
 23,145
 23,160
 2.73%
TWDiamondback Holdings Corp. (15)                
Diamondback Drugs of Delaware, L.L.C. (TWDiamondback II Holdings LLC)                
Distribution & Logistics First lien (4) 9.75% (L + 8.75%/Q) 11/19/2019 19,895
 19,895
 19,895
   First lien (4) 9.90% (L + 8.75%/Q) 11/19/2019 19,895
 19,895
 19,895
  
 First lien (3) 9.75% (L + 8.75%/Q) 11/19/2019 2,158
 2,158
 2,158
   First lien (3) 9.90% (L + 8.75%/Q) 11/19/2019 2,158
 2,158
 2,158
  
 First lien (4) 9.75% (L + 8.75%/Q) 11/19/2019 605
 605
 605
   First lien (4) 9.90% (L + 8.75%/Q) 11/19/2019 605
 605
 605
  
 22,658
 22,658
 22,658
 2.67% 22,658
 22,658
 22,658
 2.39 %
Ryan, LLC        
Business Services First lien (2) 6.75% (L + 5.75%/M) 8/7/2020 21,930
 21,698
 21,752
 2.30 %
KeyPoint Government Solutions, Inc.        
Federal Services First lien (2) 7.75% (L + 6.50%/M) 11/13/2017 21,544
 21,476
 21,544
 2.28 %
IT'SUGAR LLC        
Retail First lien (4) 11.35% (L + 10.00%/Q) 10/23/2019 20,844
 20,289
 20,844
 2.20 %
Vision Solutions, Inc.                
Software First lien (2) 7.50% (L + 6.50%/Q) 6/16/2022 22,500
 22,284
 22,388
 2.64% First lien (2) 7.64% (L + 6.50%/Q) 6/16/2022 19,632
 19,457
 19,718
 2.08 %
TW-NHME Holdings Corp. (20)        
National HME, Inc.        
Healthcare Services Second lien (4) 10.25% (L + 9.25%/Q) 7/14/2022 21,500
 21,260
 21,500
  
Pelican Products, Inc.        
Business Products Second lien (2) 9.40% (L + 8.25%/Q) 4/9/2021 10,000
 10,079
 9,962
  
 Second lien (3) 10.25% (L + 9.25%/Q) 7/14/2022 500
 494
 500
   Second lien (3) 9.40% (L + 8.25%/Q) 4/9/2021 9,500
 9,503
 9,465
  
 22,000
 21,754
 22,000
 2.59% 19,500
 19,582
 19,427
 2.05 %
Weston Solutions, Inc.        
Business Services Subordinated (4) 16.00%/Q 7/3/2019 20,000
 20,000
 20,600
 2.43%
IT'SUGAR LLC        
Retail First lien (4) 10.50% (L + 9.50%/Q) 10/23/2019 20,843
 20,193
 20,032
 2.36%
Sierra Hamilton LLC / Sierra Hamilton Finance, Inc.                
Energy First lien (2) 12.25%/S 12/15/2018 25,000
 25,000
 18,040
   First lien (2) 12.25%/S (10) 12/15/2018 25,000
 25,000
 14,882
  
 First lien (3) 12.25%/S 12/15/2018 2,660
 2,186
 1,919
   First lien (3) 12.25%/S (10) 12/15/2018 2,660
 2,231
 1,583
  
 27,660
 27,186
 19,959
 2.35% First lien (3) 9.00% (L + 8.00%/M) 6/13/2017 2,239
 2,212
 2,205
  
DCA Investment Holding, LLC        
Healthcare Services First lien (2) 6.25% (L + 5.25%/Q) 7/2/2021 17,676
 17,531
 17,676
  
 First lien (3)(11) - Drawn 7.75% (P + 4.25%/Q) 7/2/2021 2,091
 2,070
 2,091
   29,899
 29,443
 18,670
 1.97 %
 19,767
 19,601
 19,767
 2.33%
Aricent Technologies        
Business Services Second lien (2) 9.50% (L + 8.50%/Q) 4/14/2022 20,000
 19,922
 16,250
  
 Second lien (3) 9.50% (L + 8.50%/Q) 4/14/2022 2,500
 2,234
 2,031
  
 22,500
 22,156
 18,281
 2.16%
First American Payment Systems, L.P.        
Business Services Second lien (2) 10.75% (L + 9.50%/M) 4/12/2019 18,643
 18,468
 18,037
 2.13%

The accompanying notes are an integral part of these consolidated financial statements.
9

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
AgKnowledge Holdings Company, Inc.        
Business Services Second lien (2) 9.25% (L + 8.25%/M) 7/23/2020 $18,500
 $18,386
 $18,324
 1.94 %
DCA Investment Holding, LLC        
Healthcare Services First lien (2) 6.25% (L + 5.25%/M) 7/2/2021 17,587
 17,456
 17,587
  
 First lien (3)(11) - Drawn 8.25% (P + 4.25%/Q) 7/2/2021 513
 507
 513
  
 18,100
 17,963
 18,100
 1.91 %
Project Alpha Intermediate Holding, Inc.                
Software First lien (2) 9.25% (L + 8.25%/Q) 8/22/2022 $18,000
 $17,823
 $17,820
 2.10% First lien (2) 9.25% (L + 8.25%/M) 8/22/2022 17,910
 17,745
 17,988
 1.90 %
iPipeline, Inc. (Internet Pipeline, Inc.)                
Software First lien (4) 8.25% (L + 7.25%/Q) 8/4/2022 17,820
 17,665
 17,820
 2.10% First lien (4) 8.25% (L + 7.25%/M) 8/4/2022 17,730
 17,587
 17,730
 1.87 %
AgKnowledge Holdings Company, Inc.        
Business Services Second lien (2) 9.25% (L + 8.25%/M) 7/23/2020 18,500
 18,372
 17,726
 2.09%
Confie Seguros Holding II Co.        
Consumer Services Second lien (2) 11.50% (P + 8.00%/Q) 5/8/2019 17,457
 17,445
 17,340
 2.05%
YP Holdings LLC / Print Media Holdings LLC (12)        
YP LLC / Print Media LLC        
Media First lien (2) 12.25% (L + 11.00%/M) 6/4/2018 16,285
 16,198
 15,959
 1.88%
Greenway Health, LLC (fka Vitera Healthcare Solutions, LLC)        
American Tire Distributors, Inc.        
Distribution & Logistics Subordinated (3) 10.25%/S 3/1/2022 15,520
 15,233
 15,868
 1.68 %
Netsmart Inc. / Netsmart Technologies, Inc.        
Healthcare Information Technology Second lien (2) 10.55% (L + 9.50%/Q) 10/19/2023 15,000
 14,657
 14,963
 1.58 %
Cvent, Inc.        
Software First lien (2) 6.00% (L + 5.00%/Q) 11/4/2020 1,945
 1,933
 1,890
   First lien (2) 6.00% (L + 5.00%/M) 11/29/2023 5,000
 4,964
 5,075
  
 Second lien (2) 9.25% (L + 8.25%/Q) 11/4/2021 14,000
 13,427
 13,230
   Second lien (3) 11.00% (L + 10.00%/M) 5/29/2024 10,000
 9,854
 9,850
  
 15,945
 15,360
 15,120
 1.78% 15,000
 14,818
 14,925
 1.58 %
Netsmart Inc. / Netsmart Technologies, Inc.        
Healthcare Information Technology Second lien (2) 10.50% (L + 9.50%/M) 10/19/2023 15,000
 14,639
 14,850
 1.75%
Amerijet Holdings, Inc.                
Distribution & Logistics First lien (4) 9.00% (L + 8.00%/M) 7/15/2021 12,696
 12,604
 12,602
   First lien (4) 9.00% (L + 8.00%/M) 7/15/2021 12,375
 12,293
 12,358
  
 First lien (4) 9.00% (L + 8.00%/M) 7/15/2021 2,116
 2,101
 2,100
   First lien (4) 9.00% (L + 8.00%/M) 7/15/2021 2,063
 2,049
 2,060
  
 14,812
 14,705
 14,702
 1.73% 14,438
 14,342
 14,418
 1.52 %
SW Holdings, LLC                
Business Services Second lien (4) 9.75% (L + 8.75%/Q) 12/30/2021 14,265
 14,143
 14,265
 1.68% Second lien (4) 9.75% (L + 8.75%/M) 12/30/2021 14,265
 14,152
 14,265
 1.51 %
YP Holdings LLC / Print Media Holdings LLC (12)        
YP LLC / Print Media LLC        
Media First lien (2) 12.25% (L + 11.00%/M) 6/4/2018 13,740
 13,687
 13,757
 1.45 %
Ministry Brands, LLC        
Software First lien (3) 6.00% (L + 5.00%/M) 12/2/2022 3,015
 3,001
 3,007
  
 First lien (3)(11) - Drawn 6.00% (L + 5.00%/M) 12/2/2022 350
 348
 349
  
 Second lien (3) 10.25% (L + 9.25%/M) 6/2/2023 7,840
 7,783
 7,782
  
 Second lien (3) 10.25% (L + 9.25%/M) 6/2/2023 2,160
 2,144
 2,144
  
 13,365
 13,276
 13,282
 1.40 %
Poseidon Intermediate, LLC                
Software Second lien (2) 9.56% (L + 8.50%/Q) 8/15/2023 13,000
 12,834
 13,000
 1.37 %
Zywave, Inc.        
Software Second lien (2) 9.50% (L + 8.50%/Q) 8/15/2023 13,000
 12,824
 13,000
 1.53% Second lien (4) 10.04% (L + 9.00%/Q) 11/17/2023 11,000
 10,920
 10,918
 1.15 %
QC McKissock Investment, LLC (14)                
McKissock, LLC                
Education First lien (2) 7.50% (L + 6.50%/Q) 8/5/2019 6,479
 6,434
 6,479
   First lien (2) 7.65% (L + 6.50%/Q) 8/5/2019 6,447
 6,409
 6,447
  
 First lien (2) 7.50% (L + 6.50%/Q) 8/5/2019 3,089
 3,070
 3,089
   First lien (2) 7.65% (L + 6.50%/Q) 8/5/2019 3,074
 3,058
 3,074
  
 First lien (2) 7.50% (L + 6.50%/Q) 8/5/2019 997
 990
 997
   First lien (2) 7.65% (L + 6.50%/Q) 8/5/2019 992
 986
 992
  
 10,565
 10,494
 10,565
 1.25% 10,513
 10,453
 10,513
 1.11 %
PowerPlan Holdings, Inc.        
Software Second lien (2) 10.75% (L + 9.75%/M) 2/23/2023 10,000
 9,914
 10,000
 1.18%
FR Arsenal Holdings II Corp.        
Masergy Holdings, Inc.        
Business Services First lien (2) 8.25% (L + 7.25%/M) 9/8/2022 10,000
 9,900
 9,900
 1.17% Second lien (2) 9.50% (L + 8.50%/Q) 12/16/2024 10,000
 9,939
 10,150
 1.07 %
Quest Software US Holdings Inc.                
Software First lien (2) 7.00% (L + 6.00%/Q) 10/31/2023 10,000
 9,850
 9,850
 1.16% First lien (2) 7.00% (L + 6.00%/Q) 10/31/2022 9,975
 9,834
 10,128
 1.07 %
American Tire Distributors, Inc.        
Distribution & Logistics Subordinated (3) 10.25%/S 3/1/2022 9,700
 9,516
 8,876
 1.05%
Harley Marine Services, Inc.        
Distribution & Logistics Second lien (2) 10.50% (L + 9.25%/Q) 12/20/2019 9,000
 8,891
 8,550
 1.01%
J.D. Power and Associates        
Business Services Second lien (3) 9.50% (L + 8.50%/Q) 9/7/2024 7,000
 6,895
 7,105
 0.84%
Permian Tank & Manufacturing, Inc.        
Energy First lien (2) 10.50%/S(8) 1/15/2018 24,357
 24,444
 7,064
 0.83%

The accompanying notes are an integral part of these consolidated financial statements.
10

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
PowerPlan Holdings, Inc.        
Software Second lien (2) 10.00% (L + 9.00%/M) 2/23/2023 $10,000
 $9,919
 $10,000
 1.06 %
FR Arsenal Holdings II Corp.        
Business Services First lien (2) 8.38% (L + 7.25%/Q) 9/8/2022 9,950
 9,857
 9,851
 1.04 %
WD Wolverine Holdings, LLC        
Healthcare Services First lien (2) 6.65% (L + 5.50%/Q) 8/16/2022 10,000
 9,679
 9,650
 1.02 %
Harley Marine Services, Inc.        
Distribution & Logistics Second lien (2) 10.50% (L + 9.25%/Q) 12/20/2019 9,000
 8,905
 8,640
 0.91 %
Lonestar Intermediate Super Holdings, LLC                
Business Services Subordinated (3) 10.00% (L + 9.00%/M) 8/31/2021 7,000
 6,936
 7,274
 0.77 %
First American Payment Systems, L.P.        
Business Services First lien (2) 6.75% (L + 5.75%/M) 1/5/2024 7,188
 7,118
 7,202
 0.76 %
J.D. Power and Associates        
Business Services Subordinated (3) 10.00% (L + 9.00%/Q) 8/31/2021 $7,000
 $6,931
 $6,969
 0.82% Second lien (3) 9.50% (L + 8.50%/M) 9/7/2024 7,000
 6,900
 7,105
 0.75 %
Sotera Defense Solutions, Inc. (Global Defense Technology & Systems, Inc.)                
Federal Services First lien (2) 9.00% (L + 7.50%/Q) 4/21/2017 6,396
 6,383
 6,140
 0.72% First lien (2) 9.00% (L + 7.50%/Q) 4/21/2017 6,396
 6,394
 6,396
 0.68 %
Solera LLC / Solera Finance, Inc.                
Software Subordinated (3) 10.50%/S 3/1/2024 5,000
 4,763
 5,600
 0.66% Subordinated (3) 10.50%/S 3/1/2024 5,000
 4,773
 5,738
 0.61 %
VF Holding Corp.                
Software Second lien (3) 10.00% (L + 9.00%/Q) 6/28/2024 5,000
 4,951
 4,950
 0.58% Second lien (3) 10.00% (L + 9.00%/M) 6/28/2024 5,000
 4,953
 5,107
 0.54 %
Immucor, Inc.        
ADG, LLC        
Healthcare Services Subordinated (2)(9) 11.13%/S 8/15/2019 5,000
 4,970
 4,738
 0.56% Second lien (3) 10.00% (L + 9.00%/M) 3/28/2024 5,000
 4,928
 4,960
 0.52 %
Vencore, Inc. (fka The SI Organization Inc.)                
Federal Services Second lien (3) 9.75% (L + 8.75%/Q) 5/23/2020 4,000
 3,924
 4,025
 0.48% Second lien (3) 9.90% (L + 8.75%/Q) 5/23/2020 4,000
 3,932
 4,037
 0.43 %
Transtar Holding Company                
Distribution & Logistics Second lien (2) 13.25% (P + 9.75%/Q) (8) 10/9/2019 28,300
 28,011
 2,830
   Second lien (3) 13.75% (P + 9.75%/Q) (10) 10/9/2019 36,112
 3,155
 2,030
  
 Second lien (3) 13.25% (P + 9.75%/Q) (8) 10/9/2019 9,564
 2,889
 956
   Second lien (2) 13.75% (P + 9.75%/Q) (10) 10/9/2019 28,300
 28,011
 1,591
  
 37,864
 30,900
 3,786
 0.45% 64,412
 31,166
 3,621
 0.38 %
Synarc-Biocore Holdings, LLC        
Healthcare Services Second lien (3) 9.25% (L + 8.25%/Q) 3/10/2022 2,500
 2,481
 2,488
 0.29%
York Risk Services Holding Corp.                
Business Services Subordinated (3) 8.50%/S 10/1/2022 3,000
 3,000
 2,348
 0.28% Subordinated (3) 8.50%/S 10/1/2022 3,000
 3,000
 2,820
 0.30 %
Ensemble S Merger Sub, Inc.                
Software Subordinated (3) 9.00%/S 9/30/2023 2,000
 1,937
 2,110
 0.25% Subordinated (3) 9.00%/S 9/30/2023 2,000
 1,941
 2,110
 0.22 %
Education Management Corporation (19)                
Education Management II LLC                
Education First lien (2) 5.50% (L + 4.50%/Q) 7/2/2020 250
 240
 68
   First lien (2) 5.51% (L + 4.50%/Q) 7/2/2020 250
 241
 130
  
 First lien (3) 5.50% (L + 4.50%/Q) 7/2/2020 141
 135
 39
   First lien (3) 5.51% (L + 4.50%/Q) 7/2/2020 141
 136
 73
  
 First lien (2) 8.50% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 459
 405
 25
   First lien (2) 8.51% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 475
 427
 25
  
 First lien (3) 8.50% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 259
 229
 14
   First lien (3) 8.51% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 268
 241
 14
  
 1,109
 1,009
 146
 0.02% 1,134
 1,045
 242
 0.03 %
Total Funded Debt Investments - United States $1,294,057
 $1,271,202
 $1,216,637
 143.44% $1,399,200
 $1,350,628
 $1,331,869
 140.68 %
Total Funded Debt Investments $1,376,217
 $1,351,835
 $1,287,645
 151.81% $1,524,447
 $1,473,407
 $1,443,622
 152.48 %
Equity - United States        
Crowley Holdings Preferred, LLC        
Distribution & Logistics Preferred shares (3)(17) 12.00% (10.00% + 2.00% PIK/Q)*  52,843
 $52,303
 $52,843
 6.23%
Tenawa Resource Holdings LLC (13)        
QID NGL LLC        
Energy Ordinary shares (7)   5,290,997
 5,291
 3,028
 0.36%
TWDiamondback Holdings Corp. (15)        
Distribution & Logistics Preferred shares (4)   200
 2,000
 2,664
 0.31%
TW-NHME Holdings Corp. (20)        
Healthcare Services Preferred shares (4)   100
 1,000
 1,151
  
 Preferred shares (4)   16
 158
 181
  
 Preferred shares (4)   6
 68
 70
  
   1,226
 1,402
 0.16%

The accompanying notes are an integral part of these consolidated financial statements.
11

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
Equity - United States        
Tenawa Resource Holdings LLC (13)        
QID NGL LLC        
Energy Ordinary shares (7)   5,290,997
 $5,291
 $4,922
 0.52 %
TWDiamondback Holdings Corp. (15)        
Distribution & Logistics Preferred shares (4)   200
 2,000
 2,664
 0.28 %
TW-NHME Holdings Corp. (20)        
Healthcare Services Preferred shares (4)   100
 1,000
 1,888
  
 Preferred shares (4)   16
 158
 298
  
 Preferred shares (4)   6
 68
 115
  
   1,226
 2,301
 0.24 %
Ancora Acquisition LLC                
Education Preferred shares (6)   372
 $83
 $393
 0.05% Preferred shares (6)   372
 83
 393
 0.04 %
YP Holdings LLC / Print Media Holdings LLC (12)        
Media Preferred shares (5)   312,730
 313
 313
  
 Membership Interest (5)   53,843
 
 
  
 Membership Interest (5)   53,843
 
 
  
   313
 313
 0.03 %
Education Management Corporation (19)                
Education Preferred shares (2)   3,331
 200
 1
   Preferred shares (2)   3,331
 200
 1
  
 Preferred shares (3)   1,879
 113
 1
   Preferred shares (3)   1,879
 113
 1
  
 Ordinary shares (2)   2,994,065
 100
 18
   Ordinary shares (2)   2,994,065
 100
 24
  
 Ordinary shares (3)   1,688,976
 56
 10
   Ordinary shares (3)   1,688,976
 56
 14
  
   469
 30
 %   469
 40
 0.01 %
Total Shares - United States   $61,372
 $60,360
 7.11%   $9,382
 $10,633
 1.12 %
Total Shares   $9,382
 $10,633
 1.12 %
Warrants - United States                
YP Holdings LLC / Print Media Holdings LLC (12)                
YP Equity Investors LLC        
YP Equity Investors, LLC        
Media Warrants (5)  5/8/2022 5
 $
 $3,628
 0.42% Warrants (5)  5/8/2022 5
 $
 $2,653
 0.28 %
ASP LCG Holdings, Inc.        
Education Warrants (3)  5/5/2026 622
 37
 1,132
 0.12 %
IT'SUGAR LLC                
Retail Warrants (3)  10/23/2025 94,672
 817
 752
 0.09% Warrants (3)  10/23/2025 94,672
 817
 352
 0.04 %
ASP LCG Holdings, Inc.        
Education Warrants (3)  5/5/2026 622
 37
 739
 0.09%
Ancora Acquisition LLC                
Education Warrants (6)  8/12/2020 20
 
 
 % Warrants (6)  8/12/2020 20
 
 
  %
Total Warrants - United States   $854
 $5,119
 0.60%   $854
 $4,137
 0.44 %
Total Funded Investments   $1,414,061
 $1,353,124
 159.52%   $1,483,643
 $1,458,392
 154.04 %
Unfunded Debt Investments - United States                
VetCor Professional Practices LLC        
Consumer Services First lien (3)(11) - Undrawn  4/20/2021 $2,700
 $(27) $
  
 First lien (4)(11) - Undrawn  3/30/2018 387
 (8) 
  
 First lien (2)(11) - Undrawn  6/22/2018 1,644
 (33) 
  
 4,731
 (68) 
 %
DCA Investment Holding, LLC                
Healthcare Services First lien (3)(11) - Undrawn  7/2/2021 9
 
 
 % First lien (3)(11) - Undrawn  7/2/2021 $1,587
 $(16) $
  %
iPipeline, Inc. (Internet Pipeline, Inc.)                
Software First lien (3)(11) - Undrawn  8/4/2021 1,000
 (10) 
 % First lien (3)(11) - Undrawn  8/4/2021 1,000
 (10) 
  %
EN Engineering, LLC        
Business Services First lien (2)(11) - Undrawn  12/30/2016 1,368
 (7) 
 %
Valet Waste Holdings, Inc.        
Business Services First lien (3)(11) - Undrawn  9/24/2021 1,500
 (19) 
 %
Marketo, Inc.        
Software First lien (3)(11) - Undrawn  8/16/2021 1,788
 (27) (27) %
Total Unfunded Debt Investments $10,396
 $(131) $(27) %
Total Non-Controlled/Non-Affiliated Investments   $1,413,930
 $1,353,097
 159.52%

The accompanying notes are an integral part of these consolidated financial statements.
12

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
Non-Controlled/Affiliated Investments(21)        
Valet Waste Holdings, Inc.        
Business Services First lien (3)(11) - Undrawn  9/24/2021 $1,500
 $(19) $
  %
VetCor Professional Practices LLC        
Consumer Services First lien (3)(11) - Undrawn  4/20/2021 2,700
 (27) 
  
 First lien (3)(11) - Undrawn  2/24/2019 5,409
 (108) 
  
 8,109
 (135) 
  %
Weston Solutions, Inc.        
Business Services First lien (3)(11) - Undrawn  12/31/2020 10,000
 
 
  %
Ministry Brands, LLC        
Software First lien (3)(11) - Undrawn  12/2/2022 650
 (3) (2) (0.00 )%
Zywave, Inc.        
Software First lien (3)(11) - Undrawn  11/17/2022 2,000
 (15) (15) (0.00 )%
Marketo, Inc.        
Software First lien (3)(11) - Undrawn  8/16/2021 1,788
 (27) (15) (0.00 )%
Ansira Holdings, Inc.        
Business Services First lien (3)(11) - Undrawn  12/20/2018 3,818
 (19) (29) (0.01)%
Total Unfunded Debt Investments - United States $30,452
 $(244) $(61) (0.01)%
Total Non-Controlled/Non-Affiliated Investments   $1,483,399
 $1,458,331
 154.03 %
Non-Controlled/Affiliated Investments (22)        
Funded Debt Investments - United States                
Edmentum Ultimate Holdings, LLC (16)                
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)        
Education Subordinated (3) 8.50% PIK/Q* 6/9/2020 $4,036
 $4,030
 $4,036
   Second lien (3)(11) - Drawn 5.00%/M 6/9/2020 $3,050
 $3,050
 $3,050
  
 Subordinated (2) 10.00% PIK/Q* 6/9/2020 14,785
 14,785
 12,242
   Subordinated (3) 8.50% PIK/Q* 6/9/2020 4,213
 4,208
 4,213
  
 Subordinated (3) 10.00% PIK/Q* 6/9/2020 3,637
 3,637
 3,012
   Subordinated (2) 10.00% PIK/Q* 6/9/2020 15,551
 15,551
 13,416
  
 22,458
 22,452
 19,290
 2.28% Subordinated (3) 10.00% PIK/Q* 6/9/2020 3,825
 3,825
 3,300
  
 26,639
 26,634
 23,979
 2.53 %
Permian Holdco 1, Inc.        
Permian Holdco 2, Inc.        
Energy Subordinated (3) 14.00% PIK/Q* 10/15/2021 1,810
 1,810
 1,810
 0.19 %
Total Funded Debt Investments - United States $22,458
 $22,452
 $19,290
 2.28% $28,449
 $28,444
 $25,789
 2.72 %
Equity - United States                
HI Technology Corp.        
Business Services Preferred shares (3)(21)   2,768,000
 $105,155
 $105,155
 11.11 %
NMFC Senior Loan Program I LLC**                
Investment Fund Membership interest (3)   
 $23,000
 $23,000
 2.71% Membership interest (3)   
 23,000
 23,000
 2.43 %
Edmentum Ultimate Holdings, LLC (16)        
Education Ordinary shares (3)   123,968
 11
 2,357
  
Permian Holdco 1, Inc.        
Energy Preferred shares (3)(17)   1,436,064
 6,096
 7,898
  
 Ordinary shares (2)   107,143
 9
 2,037
   Ordinary shares (3)   1,366,452
 1,350
 1,638
  
   20
 4,394
 0.52%   7,446
 9,536
 1.01 %
Total Shares - United States   $23,020
 $27,394
 3.23%
Unfunded Debt Investments - United States        
Edmentum Ultimate Holdings, LLC (16)        
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)        
Education Second lien (3)(11) - Undrawn  6/9/2020 $4,881
 $
 $
 %
Total Unfunded Debt Investments $4,881
 $
 $
 %
Total Non-Controlled/Affiliated Investments   $45,472
 $46,684
 5.51%
Controlled Investments(22)        
Funded Debt Investments - United States        
UniTek Global Services, Inc.        
Business Services First lien (2) 8.50% (L + 7.50%/Q) 1/13/2019 $10,846
 $10,846
 $10,846
  
 First lien (2) 9.50% (L + 7.50% + 1.00% PIK/Q)* 1/13/2019 4,772
 4,772
 4,772
  
 Subordinated (2) 15.00% PIK/Q* 7/13/2019 1,663
 1,663
 1,663
  
 Subordinated (3) 15.00% PIK/Q* 7/13/2019 995
 995
 995
  
 18,276
 18,276
 18,276
 2.15%
Total Funded Debt Investments - United States $18,276
 $18,276
 $18,276
 2.15%
Equity - United States        
NMFC Senior Loan Program II LLC**        
Investment Fund Membership interest (3)   
 $47,640
 $47,640
 5.62%
UniTek Global Services, Inc.        
�� Business Services Preferred shares (2)(18)   18,426,531
 16,046
 16,252
  
 Preferred shares (3)(18)   5,092,217
 4,434
 4,491
  
 Ordinary shares (2)   2,096,477
 1,925
 12,566
  
 Ordinary shares (3)   579,366
 532
 3,473
  
   22,937
 36,782
 4.34%

The accompanying notes are an integral part of these consolidated financial statements.
13

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2016March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(10) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
 Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
New Mountain Net Lease Corporation        
Net Lease Ordinary shares (3)   165,000
 $16,500
 $16,500
 1.94%
Edmentum Ultimate Holdings, LLC (16)        
Education Ordinary shares (3)   123,968
 $11
 $1,466
  
 Ordinary shares (2)   107,143
 9
 1,267
  
   20
 2,733
 0.29 %
Total Shares - United States   $87,077
 $100,922
 11.90%   $135,621
 $140,424
 14.84 %
Warrants - United States        
HI Technology Corp.        
Business Services Warrants (3)  5/1/2017 1,384,000
 $
 $
  %
Total Warrants - United States   $
 $
  %
Total Funded Investments   $105,353
 $119,198
 14.05%   $164,065
 $166,213
 17.56 %
Unfunded Debt Investments - United States                
Edmentum Ultimate Holdings, LLC (16)        
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)        
Education Second lien (3)(11) - Undrawn  6/9/2020 $1,830
 $
 $
  %
Permian Holdco 1, Inc.        
Permian Holdco 2, Inc.        
Energy Subordinated (3)(11) - Undrawn  10/15/2021 1,025
 
 
  %
Total Unfunded Debt Investments - United States $2,855
 $
 $
  %
Total Non-Controlled/Affiliated Investments   $164,065
 $166,213
 17.56 %
Controlled Investments (23)        
Funded Debt Investments - United States        
UniTek Global Services, Inc.                
Business Services First lien (3)(11) - Undrawn  1/13/2019 $2,048
 $
 $
   First lien (2) 9.65% (L + 8.50%/Q) 1/13/2019 $10,846
 $10,846
 $10,878
  
 First lien (3)(11) - Undrawn  1/13/2019 758
 
 
   First lien (2) 11.23% (Base + 6.65% + 1.00% PIK/Q)* 1/13/2019 4,796
 4,796
 4,814
  
 2,806
 
 
 % Subordinated (2) 15.00% PIK/Q* 7/13/2019 1,792
 1,792
 1,792
  
Total Unfunded Debt Investments $2,806
 $
 $
 %
Total Controlled Investments   $105,353
 $119,198
 14.05%
Total Investments   $1,564,755
 $1,518,979
 179.08%
 Subordinated (3) 15.00% PIK/Q* 7/13/2019 1,072
 1,072
 1,072
  
 18,506
 18,506
 18,556
 1.96 %
Total Funded Debt Investments - United States $18,506
 $18,506
 $18,556
 1.96 %
Equity - Canada        
NM APP Canada Corp.**        
Net Lease Membership interest (8)   
 $7,345
 $7,345
 0.78 %
Total Shares - Canada   $7,345
 $7,345
 0.78 %
Equity - United States        
NMFC Senior Loan Program II LLC**        
Investment Fund Membership interest (3)   
 $79,400
 $79,400
 8.39 %
UniTek Global Services, Inc.        
Business Services Preferred shares (2)(18)   19,691,311
 17,310
 18,841
  
 Preferred shares (3)(18)   5,441,741
 4,784
 5,207
  
 Ordinary shares (2)   2,096,477
 1,925
 10,355
  
 Ordinary shares (3)   579,366
 532
 2,862
  
   24,551
 37,265
 3.94 %
NM KRLN LLC        
Net Lease Membership interest (8)   
 7,510
 7,510
 0.79 %

The accompanying notes are an integral part of these consolidated financial statements.
14

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
March 31, 2017
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1) Type of Investment Interest Rate(9) Maturity / Expiration Date 
 Principal
 Amount,
 Par Value
 or Shares
  Cost 
 Fair
 Value
 
Percent of Net
Assets
NM DRVT LLC              
Net Lease Membership interest (8)   
 $5,152
 $5,152
 0.54 %
NM APP US LLC              
Net Lease Membership interest (8)   
 5,080
 5,080
 0.54 %
NM JRA LLC              
Net Lease Membership interest (8)   
 2,043
 2,043
 0.21 %
Total Shares - United States         $123,736
 $136,450
 14.41 %
Total Shares         $131,081
 $143,795
 15.19 %
Total Funded Investments         $149,587
 $162,351
 17.15 %
Unfunded Debt Investments - United States              
UniTek Global Services, Inc.              
Business Services First lien (3)(11) - Undrawn  1/13/2019 $2,048
 $
 $
  
  First lien (3)(11) - Undrawn  1/13/2019 758
 
 
  
        2,806
 
 
  %
Total Unfunded Debt Investments - United States       $2,806
 $
 $
  %
Total Controlled Investments         $149,587
 $162,351
 17.15 %
Total Investments         $1,797,051
 $1,786,895
 188.74 %
 
(1)New Mountain Finance Corporation (the “Company”) generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.
(2)
Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Finance Holdings, L.L.C. (“NMF Holdings”) as the Borrower, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian. See Note 7,7. Borrowings, for details.
(3)
Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A. and Stifel Bank & Trust as Lenders. See Note 7,7. Borrowings, for details.
(4)Investment is held in New Mountain Finance SBIC, L.P.
(5)Investment is held in NMF YP Holdings, Inc.
(6)Investment is held in NMF Ancora Holdings, Inc.
(7)Investment is held in NMF QID NGL Holdings, Inc.
(8)
Investment or a portion of the investment is on non-accrual status.  See Note 3, Investments, for details.
held in New Mountain Net Lease Corporation.
(9)Securities are registered under the Securities Act.
(10)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of September 30, 2016.March 31, 2017.
(10)
Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.
(11)Par Value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(12)The Company holds investments in three related entities of YP Holdings LLC/Print Media Holdings LLC. The Company holds preferred equity and membership interests in YP Holdings LLC and membership interests in Print Media Holdings LLC. The preferred equity is entitled to receive cumulative preferential dividends at a rate of 18.0% per annum payable in additional shares. In addition, the Company directly holds warrants to purchase a 4.96% membership interest of YP Equity Investors, LLC (which at closing represented an indirect 1.0% equity interest in YP Holdings LLC) and holds an investment in the Term Loan B loans issued by YP LLC and Print Media LLC, wholly-owned subsidiaries of YP Holdings LLC and Print Media Holdings LLC, respectively.
(13)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC) and holds a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.

The accompanying notes are an integral part of these consolidated financial statements.
15

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
March 31, 2017
(in thousands, except shares)
(unaudited)

(14)The Company holds investments in QC McKissock Investment, LLC and one related entity of QC McKissock Investment, LLC. The Company holds a first lien term loan in QC McKissock Investment, LLC (which at closing represented 71.1% of the ownership in the Series A common units of McKissock Investment Holdings, LLC) and holds a first lien term loan and a delayed draw term loan in McKissock, LLC, a wholly-owned subsidiary of McKissock Investment Holdings, LLC.
(15)The Company holds investments in TWDiamondback Holdings Corp. and one related entity of TWDiamondback Holdings Corp. The Company holds preferred equity in TWDiamondback Holdings Corp. and holds a first lien last out term loan and a delayed draw term loan in Diamondback Drugs of Delaware LLC, a wholly-owned subsidiary of TWDiamondback Holdings Corp.
(16)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes and ordinary equity in Edmentum Ultimate Holdings, LLC and holds a second lien revolver in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(17)The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.
(18)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(19)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds a tranche A first lien term loan and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(20)The Company holds equity investments in TW-NHME Holdings Corp., and holds a second lien term loan investment in National HME, Inc., a wholly-owned subsidiary of TW-NHME Holdings Corp.
(21)The Company holds convertible preferred equity in HI Technology Corp that is accruing dividends at a rate of 15.0% per annum.
(22)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended, due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of March 31, 2017 and December 31, 2016, along with transactions during the three months ended March 31, 2017 in which the issuer was a non-controlled/affiliated investment, is as follows:
Portfolio Company (1) Fair Value at
December 31, 2016
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value at
March 31, 2017
 
Interest
Income
 
Dividend
Income
 
Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc. $23,247
 $3,623
 $
 $
 $(158) $26,712
 $586
 $
 $
HI Technology Corp. 
 105,155
 
 
 
 105,155
 
 417
 
NMFC Senior Loan Program I LLC 23,000
 
 
 
 
 23,000
 
 1,004
 290
Permian Holdco 1, Inc. / Permian Holdco 2, Inc. 11,193
 291
 
 
 (138) 11,346
 61
 227
 8
Total Non-Controlled/Affiliated Investments $57,440
 $109,069
 $
 $
 $(296) $166,213
 $647
 $1,648
 $298
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.

The accompanying notes are an integral part of these consolidated financial statements.
16

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
March 31, 2017
(in thousands, except shares)
(unaudited)


(23)Denotes investments in which the Company is in “Control”, as defined in the Investment Company Act of 1940, as amended, due to owning or holding the power to vote 25.0% or more of the outstanding voting securities of the investment. Fair value as of March 31, 2017 and December 31, 2016, along with transactions during the three months ended March 31, 2017 in which the issuer was a controlled investment, is as follows:
Portfolio Company (1) Fair Value at
December 31, 2016
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net 
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value at
March 31, 2017
 
Interest
Income
 
Dividend
Income
 
Other
Income
New Mountain Net Lease Corporation $27,000
 $
 $(27,000) $
 $
 $
 $
 $
 $
NM APP Canada Corp. 
 7,345
 
 
 
 7,345
 
 274
 
NM APP US LLC 
 5,080
 
 
 
 5,080
 
 142
 
NM DRVT LLC 
 5,152
 
 
 
 5,152
 
 125
 
NM JRA LLC 
 2,043
 
 
 
 2,043
 
 55
 
NM KRLN LLC 
 7,510
 
 
 
 7,510
 
 183
 
NMFC Senior Loan Program II LLC 71,460
 7,940
 
 
 
 79,400
 
 3,434
 
UniTek Global Services, Inc. 56,361
 938
 
 
 (1,478) 55,821
 475
 821
 13
Total Controlled Investments $154,821
 $36,008
 $(27,000) $
 $(1,478) $162,351
 $475
 $5,034
 $13
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
*All or a portion of interest contains PIK interest.
**Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70.00% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of March 31, 2017, 11.8% of the Company’s total assets were non-qualifying assets.

The accompanying notes are an integral part of these consolidated financial statements.
17

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
March 31, 2017
(unaudited)


March 31, 2017
Investment Type
Percent of Total
Investments at Fair Value
First lien42.12%
Second lien36.89%
Subordinated4.26%
Equity and other16.73%
Total investments100.00%
March 31, 2017
Industry Type
Percent of Total
Investments at Fair Value
Business Services34.26%
Software25.66%
Consumer Services5.91%
Investment Fund5.73%
Education5.60%
Healthcare Services4.89%
Energy4.18%
Federal Services4.14%
Distribution & Logistics3.80%
Net Lease1.52%
Media1.19%
Retail1.19%
Business Products1.09%
Healthcare Information Technology0.84%
Total investments100.00%
March 31, 2017
Interest Rate Type
Percent of Total
Investments at Fair Value
Floating rates87.37%
Fixed rates12.63%
Total investments100.00%


The accompanying notes are an integral part of these consolidated financial statements.
18

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments
December 31, 2016
(in thousands, except shares)

Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
Non-Controlled/Non-Affiliated Investments        
  
  
  
Funded Debt Investments - Australia              
   Project Sunshine IV Pty Ltd**              
      Media First lien (2)  8.00% (L + 7.00%/M) 9/23/2019 $6,012
 $5,992
 $6,005
 0.64 %
Total Funded Debt Investments - Australia       $6,012
 $5,992
 $6,005
 0.64 %
Funded Debt Investments - Luxembourg              
   Pinnacle Holdco S.à.r.l. / Pinnacle (US) Acquisition Co Limited**              
      Software Second lien (2)  10.50% (L + 9.25%/Q) 7/30/2020 $24,630
 $24,362
 $18,103
  
  Second lien (3)  10.50% (L + 9.25%/Q) 7/30/2020 8,204
 8,332
 6,030
  
        32,834
 32,694
 24,133
 2.57 %
Total Funded Debt Investments - Luxembourg       $32,834
 $32,694
 $24,133
 2.57 %
Funded Debt Investments - Netherlands              
   Eiger Acquisition B.V. (Eiger Co-Borrower, LLC)**              
      Software Second lien (3)  10.13% (L + 9.13%/Q) 2/17/2023 $10,000
 $9,371
 $9,799
 1.04 %
Total Funded Debt Investments - Netherlands       $10,000
 $9,371
 $9,799
 1.04 %
Funded Debt Investments - United Kingdom              
   Air Newco LLC**              
      Software Second lien (3)  10.50% (L + 9.50%/Q) 1/31/2023 $32,500
 $31,814
 $29,514
 3.14 %
Total Funded Debt Investments - United Kingdom       $32,500
 $31,814
 $29,514
 3.14 %
Funded Debt Investments - United States              
   TIBCO Software Inc.              
      Software First lien (2) 6.50% (L + 5.50%/M) 12/4/2020 $29,475
 $28,444
 $29,634
  
  Subordinated (3) 11.38%/S 12/1/2021 15,000
 14,659
 15,038
  
        44,475
 43,103
 44,672
 4.76 %
   Navex Global, Inc.              
      Software First lien (4) 5.99% (L + 4.75%/Q) 11/19/2021 4,563
 4,530
 4,540
  
  First lien (2) 5.99% (L + 4.75%/Q) 11/19/2021 2,583
 2,563
 2,570
  
  Second lien (4) 10.31% (L + 8.75%/Q) 11/18/2022 18,187
 17,984
 17,823
  
  Second lien (3) 10.31% (L + 8.75%/Q) 11/18/2022 19,813
 19,282
 19,417
  
        45,146
 44,359
 44,350
 4.73 %
   Hill International, Inc.              
      Business Services First lien (2) 7.75% (L + 6.75%/Q) 9/28/2020 41,544
 41,150
 41,543
 4.43 %
   AssuredPartners, Inc.              
      Business Services Second lien (3) 10.00% (L + 9.00%/M) 10/20/2023 20,200
 19,480
 20,394
  
  Second lien (2) 10.00% (L + 9.00%/M) 10/20/2023 20,000
 19,282
 20,192
  
        40,200
 38,762
 40,586
 4.32 %
   Tenawa Resource Holdings LLC (13)              
   Tenawa Resource Management LLC              
      Energy First lien (3) 10.50% (Base + 8.00%/Q) 5/12/2019 40,000
 39,903
 39,825
 4.24 %
   Kronos Incorporated              
      Software Second lien (2) 9.25% (L + 8.25%/Q) 11/1/2024 36,000
 35,458
 37,159
 3.96 %

The accompanying notes are an integral part of these consolidated financial statements.
19

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
   PetVet Care Centers LLC              
      Consumer Services Second lien (3) 10.25% (L + 9.25%/Q) 6/17/2021 $24,000
 $23,820
 $24,240
  
  Second lien (3) 10.50% (L + 9.50%/Q) 6/17/2021 6,500
 6,444
 6,565
  
  Second lien (3) 9.50% (L + 8.50%/Q) 6/17/2021 6,000
 5,910
 5,910
  
        36,500
 36,174
 36,715
 3.91 %
   Ascend Learning, LLC              
      Education Second lien (3) 9.50% (L + 8.50%/Q) 11/30/2020 35,227
 34,895
 34,963
 3.73 %
   Weston Solutions, Inc.              
      Business Services First lien (2) 10.50% (L + 9.50%/M) 12/31/2020 34,821
 34,821
 34,821
 3.71 %
   Redbox Automated Retail, LLC              
      Consumer Services First lien (2) 8.50% (L + 7.50%/Q) 9/27/2021 33,469
 32,987
 32,601
 3.47 %
   Valet Waste Holdings, Inc.              
      Business Services First lien (2) 8.00% (L + 7.00%/Q) 9/24/2021 29,625
 29,320
 29,625
  
  First lien (3)(11) - Drawn 8.00% (L + 7.00%/Q) 9/24/2021 2,250
 2,222
 2,250
  
        31,875
 31,542
 31,875
 3.40 %
   VetCor Professional Practices LLC              
      Consumer Services First lien (4) 7.25% (L + 6.25%/Q) 4/20/2021 19,306
 19,159
 19,306
  
  First lien (2) 7.25% (L + 6.25%/Q) 4/20/2021 7,793
 7,652
 7,793
  
  First lien (4) 7.25% (L + 6.25%/Q) 4/20/2021 2,677
 2,655
 2,677
  
  First lien (4)(11) - Drawn 7.25% (L + 6.25%/Q) 4/20/2021 373
 365
 373
  
        30,149
 29,831
 30,149
 3.21 %
   Integro Parent Inc.              
      Business Services First lien (2) 6.75% (L + 5.75%/Q) 10/31/2022 19,806
 19,463
 19,607
  
  Second lien (3) 10.25% (L + 9.25%/Q) 10/30/2023 10,000
 9,910
 9,750
  
        29,806
 29,373
 29,357
 3.13 %
   ProQuest LLC              
      Business Services Second lien (3) 10.00% (L + 9.00%/M) 12/15/2022 28,700
 28,188
 28,700
 3.06 %
   CRGT Inc.              
      Federal Services First lien (2) 7.50% (L + 6.50%/M) 12/19/2020 27,409
 27,252
 27,478
 2.93 %
   Evo Payments International, LLC              
      Business Services First lien (2) 6.00% (L + 5.00%/M) 12/22/2023 2,500
 2,487
 2,515
  
  Second lien (2) 10.00% (L + 9.00%/M) 12/23/2024 25,000
 24,813
 24,813
  
        27,500
 27,300
 27,328
 2.91 %
   Severin Acquisition, LLC              
      Software Second lien (4) 9.75% (L + 8.75%/Q) 7/29/2022 15,000
 14,873
 15,000
  
  Second lien (4) 9.75% (L + 8.75%/Q) 7/29/2022 4,154
 4,118
 4,154
  
  Second lien (4) 10.25% (L + 9.25%/Q) 7/29/2022 3,273
 3,243
 3,305
  
  Second lien (3) 10.00% (L + 9.00%/Q) 7/29/2022 2,361
 2,338
 2,384
  
  Second lien (3) 10.25% (L + 9.25%/Q) 7/29/2022 1,825
 1,807
 1,843
  
  Second lien (4) 10.25% (L + 9.25%/Q) 7/29/2022 300
 297
 303
  
        26,913
 26,676
 26,989
 2.88 %
   Marketo, Inc.              
      Software First lien (3) 10.50% (L + 9.50%/Q) 8/16/2021 26,820
 26,442
 26,418
 2.81 %
   Ansira Holdings, Inc.              
      Business Services First lien (2) 7.50% (L + 6.50%/Q) 12/20/2022 26,182
 26,051
 26,051
 2.78 %
   Pelican Products, Inc.              
      Business Products Second lien (3) 9.25% (L + 8.25%/Q) 4/9/2021 15,500
 15,506
 15,170
  
  Second lien (2) 9.25% (L + 8.25%/Q) 4/9/2021 10,000
 10,107
 9,788
  
        25,500
 25,613
 24,958
 2.66 %

The accompanying notes are an integral part of these consolidated financial statements.
20

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
   DigiCert Holdings, Inc.              
      Software First lien (2) 6.00% (L + 5.00%/Q) 10/21/2021 $24,750
 $24,134
 $24,719
 2.63 %
   nThrive, Inc. (fka Precyse Acquisition Corp.)              
      Healthcare Services Second lien (2) 10.75% (L + 9.75%/M) 4/20/2023 25,000
 24,593
 24,711
 2.63 %
   AAC Holding Corp.              
      Education First lien (2) 8.25% (L + 7.25%/M) 9/30/2020 23,918
 23,637
 23,918
 2.55 %
   Ryan, LLC              
      Business Services First lien (2) 6.75% (L + 5.75%/M) 8/7/2020 23,927
 23,656
 23,785
 2.53 %
   EN Engineering, LLC              
      Business Services First lien (2) 7.00% (L + 6.00%/Q) 6/30/2021 21,107
 20,940
 21,107
  
  First lien (2) 7.78% (Base + 5.55%/Q) 6/30/2021 2,189
 2,170
 2,189
  
        23,296
 23,110
 23,296
 2.48 %
   TWDiamondback Holdings Corp. (15)              
   Diamondback Drugs of Delaware, L.L.C. (TWDiamondback II Holdings LLC)              
      Distribution & Logistics First lien (4) 9.75% (L + 8.75%/Q) 11/19/2019 19,895
 19,895
 19,895
  
  First lien (3) 9.75% (L + 8.75%/Q) 11/19/2019 2,158
 2,158
 2,158
  
  First lien (4) 9.75% (L + 8.75%/Q) 11/19/2019 605
 605
 605
  
        22,658
 22,658
 22,658
 2.41 %
   Vision Solutions, Inc.              
      Software First lien (2) 7.50% (Base + 6.50%/Q) 6/16/2022 22,359
 22,153
 22,317
 2.38 %
   KeyPoint Government Solutions, Inc.              
      Federal Services First lien (2) 7.75% (L + 6.50%/Q) 11/13/2017 22,411
 22,312
 22,299
 2.38 %
   TW-NHME Holdings Corp. (20)              
   National HME, Inc.              
      Healthcare Services Second lien (4) 10.25% (L + 9.25%/Q) 7/14/2022 21,500
 21,268
 21,500
  
  Second lien (3) 10.25% (L + 9.25%/Q) 7/14/2022 500
 494
 500
  
        22,000
 21,762
 22,000
 2.34 %
   IT'SUGAR LLC              
      Retail First lien (4) 10.50% (L + 9.50%/Q) 10/23/2019 20,790
 20,189
 20,467
 2.18 %
   First American Payment Systems, L.P.              
      Business Services Second lien (2) 10.75% (L + 9.50%/M) 4/12/2019 18,643
 18,483
 18,643
 1.99 %
   DCA Investment Holding, LLC              
      Healthcare Services First lien (2) 6.25% (L + 5.25%/Q) 7/2/2021 17,632
 17,493
 17,632
  
  First lien (3)(11) - Drawn 8.00% (P + 4.25%/Q) 7/2/2021 752
 744
 752
  
        18,384
 18,237
 18,384
 1.96 %
   AgKnowledge Holdings Company, Inc.              
      Business Services Second lien (2) 9.25% (L + 8.25%/M) 7/23/2020 18,500
 18,379
 18,046
 1.92 %
   Project Alpha Intermediate Holding, Inc.              
      Software First lien (2) 9.25% (L + 8.25%/M) 8/22/2022 17,955
 17,784
 17,775
 1.89 %
   iPipeline, Inc. (Internet Pipeline, Inc.)              
      Software First lien (4) 8.25% (L + 7.25%/Q) 8/4/2022 17,775
 17,626
 17,775
 1.89 %
   Sierra Hamilton LLC / Sierra Hamilton Finance, Inc.              
      Energy First lien (2) 12.25%/S (8) 12/15/2018 25,000
 25,000
 16,012
  
  First lien (3) 12.25%/S (8) 12/15/2018 2,660
 2,231
 1,704
  
        27,660
 27,231
 17,716
 1.89 %

The accompanying notes are an integral part of these consolidated financial statements.
21

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
   Greenway Health, LLC (fka Vitera Healthcare Solutions, LLC)              
      Software First lien (2) 6.00% (L + 5.00%/Q) 11/4/2020 $1,891
 $1,880
 $1,865
  
  Second lien (2) 9.25% (L + 8.25%/Q) 11/4/2021 14,000
 13,448
 13,650
  
        15,891
 15,328
 15,515
 1.65 %
   YP Holdings LLC / Print Media Holdings LLC (12)              
   YP LLC / Print Media LLC              
      Media First lien (2) 12.25% (L + 11.00%/M) 6/4/2018 15,267
 15,197
 15,191
 1.62 %
   Netsmart Inc. / Netsmart Technologies, Inc.              
      Healthcare Information Technology Second lien (2) 10.50% (L + 9.50%/Q) 10/19/2023 15,000
 14,648
 14,944
 1.59 %
   Cvent, Inc.              
      Software First lien (3) 6.00% (L + 5.00%/Q) 11/29/2023 5,000
 4,963
 5,064
  
  Second lien (3) 11.00% (L + 10.00%/Q) 5/29/2024 10,000
 9,851
 9,850
  
        15,000
 14,814
 14,914
 1.59 %
   Amerijet Holdings, Inc.              
      Distribution & Logistics First lien (4) 9.00% (L + 8.00%/M) 7/15/2021 12,536
 12,449
 12,442
  
  First lien (4) 9.00% (L + 8.00%/M) 7/15/2021 2,089
 2,075
 2,074
  
        14,625
 14,524
 14,516
 1.55 %
   SW Holdings, LLC              
      Business Services Second lien (4) 9.75% (L + 8.75%/Q) 12/30/2021 14,265
 14,147
 14,265
 1.52 %
   Poseidon Intermediate, LLC              
      Software Second lien (2) 9.50% (L + 8.50%/Q) 8/15/2023 13,000
 12,829
 13,000
 1.39 %
   Zywave, Inc.              
      Software Second lien (4) 10.00% (L + 9.00%/Q) 11/17/2023 11,000
 10,918
 10,918
 1.16 %
   Aricent Technologies              
      Business Services Second lien (2) 9.50% (L + 8.50%/Q) 4/14/2022 12,500
 12,316
 10,719
 1.14 %
   QC McKissock Investment, LLC (14)              
   McKissock, LLC              
      Education First lien (2) 7.50% (L + 6.50%/Q) 8/5/2019 6,463
 6,421
 6,463
  
  First lien (2) 7.50% (L + 6.50%/Q) 8/5/2019 3,081
 3,064
 3,081
  
  First lien (2) 7.50% (L + 6.50%/Q) 8/5/2019 994
 988
 994
  
        10,538
 10,473
 10,538
 1.12 %
   Quest Software US Holdings Inc.              
      Software First lien (2) 7.00% (L + 6.00%/Q) 10/31/2022 10,000
 9,854
 10,152
 1.08 %
   Masergy Holdings, Inc.              
      Business Services Second lien (2) 9.50% (L + 8.50%/Q) 12/16/2024 10,000
 9,938
 10,000
 1.07 %
   PowerPlan Holdings, Inc.              
      Software Second lien (2) 10.00% (L + 9.00%/M) 2/23/2023 10,000
 9,916
 10,000
 1.07 %
   FR Arsenal Holdings II Corp.              
      Business Services First lien (2) 8.25% (L + 7.25%/Q) 9/8/2022 9,975
 9,879
 9,875
 1.05 %
   American Tire Distributors, Inc.              
      Distribution & Logistics Subordinated (3) 10.25%/S 3/1/2022 9,700
 9,523
 9,353
 1.00 %
   Harley Marine Services, Inc.              
      Distribution & Logistics Second lien (2) 10.50% (L + 9.25%/Q) 12/20/2019 9,000
 8,897
 8,640
 0.92 %
   Ministry Brands, LLC              
      Software First lien (3)(11) - Drawn 6.00% (L + 5.00%/Q) 12/2/2022 350
 348
 348
  
  Second lien (3) 10.25% (L + 9.25%/Q) 6/2/2023 7,840
 7,782
 7,781
  
        8,190
 8,130
 8,129
 0.87 %

The accompanying notes are an integral part of these consolidated financial statements.
22

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
   Lonestar Intermediate Super Holdings, LLC              
      Business Services Subordinated (3) 10.00% (L + 9.00%/M) 8/31/2021 $7,000
 $6,934
 $7,210
 0.77 %
   J.D. Power and Associates              
      Business Services Second lien (3) 9.50% (L + 8.50%/Q) 9/7/2024 7,000
 6,898
 7,035
 0.75 %
   Confie Seguros Holding II Co.              
      Consumer Services Second lien (2) 10.25% (L + 9.00%/M) 5/8/2019 6,957
 6,952
 6,919
 0.74 %
   Sotera Defense Solutions, Inc. (Global Defense Technology & Systems, Inc.)              
      Federal Services First lien (2) 9.00% (L + 7.50%/Q) 4/21/2017 6,396
 6,389
 6,300
 0.67 %
   Solera LLC / Solera Finance, Inc.              
      Software Subordinated (3) 10.50%/S 3/1/2024 5,000
 4,768
 5,650
 0.60 %
   VF Holding Corp.              
      Software Second lien (3) 10.00% (L + 9.00%/Q) 6/28/2024 5,000
 4,952
 4,950
 0.53 %
   ADG, LLC              
      Healthcare Services Second lien (3) 10.00% (L + 9.00%/Q) 3/28/2024 5,000
 4,926
 4,925
 0.53 %
   Vencore, Inc. (fka The SI Organization Inc.)              
      Federal Services Second lien (3) 9.75% (L + 8.75%/Q) 5/23/2020 4,000
 3,928
 4,039
 0.43 %
   Transtar Holding Company              
      Distribution & Logistics Second lien (3) 13.50% (P + 9.75%/Q) (8) 10/9/2019 36,112
 3,155
 2,167
  
  Second lien (2) 13.50% (P + 9.75%/Q) (8) 10/9/2019 28,300
 28,011
 1,698
  
        64,412
 31,166
 3,865
 0.41 %
   York Risk Services Holding Corp.              
      Business Services Subordinated (3) 8.50%/S 10/1/2022 3,000
 3,000
 2,520
 0.27 %
   Ensemble S Merger Sub, Inc.              
      Software Subordinated (3) 9.00%/S 9/30/2023 2,000
 1,939
 2,135
 0.23 %
   Education Management Corporation (19)              
   Education Management II LLC              
      Education First lien (2) 5.50% (L + 4.50%/Q) 7/2/2020 250
 239
 61
  
  First lien (3) 5.50% (L + 4.50%/Q) 7/2/2020 141
 136
 35
  
  First lien (2) 8.50% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 467
 416
 22
  
  First lien (3) 8.50% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 263
 235
 12
  
        1,121
 1,026
 130
 0.01 %
Total Funded Debt Investments - United States       $1,339,099
 $1,290,033
 $1,261,394
 134.41 %
Total Funded Debt Investments       $1,420,445
 $1,369,904
 $1,330,845
 141.80 %
Equity - United States              
   Tenawa Resource Holdings LLC (13)              
   QID NGL LLC              
      Energy Ordinary shares (7)   5,290,997
 $5,291
 $6,434
 0.69 %
   TWDiamondback Holdings Corp. (15)              
      Distribution & Logistics Preferred shares (4)   200
 2,000
 2,664
 0.28 %
   TW-NHME Holdings Corp. (20)              
      Healthcare Services Preferred shares (4)   100
 1,000
 1,497
  
  Preferred shares (4)   16
 158
 236
  
  Preferred shares (4)   6
 68
 91
  
          1,226
 1,824
 0.19 %
   Ancora Acquisition LLC              
      Education Preferred shares (6)   372
 83
 393
 0.04 %

The accompanying notes are an integral part of these consolidated financial statements.
23

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
   Education Management Corporation (19)              
      Education Preferred shares (2)   3,331
 $200
 $1
  
  Preferred shares (3)   1,879
 113
 1
  
  Ordinary shares (2)   2,994,065
 100
 18
  
  Ordinary shares (3)   1,688,976
 56
 10
  
          469
 30
  %
Total Shares - United States         $9,069
 $11,345
 1.20 %
Warrants - United States              
   YP Holdings LLC / Print Media Holdings LLC (12)              
   YP Equity Investors LLC              
      Media Warrants (5)  5/8/2022 5
 $
 $2,966
 0.32 %
   IT'SUGAR LLC              
      Retail Warrants (3)  10/23/2025 94,672
 817
 549
 0.06 %
   ASP LCG Holdings, Inc.              
      Education Warrants (3)  5/5/2026 622
 37
 949
 0.10 %
   Ancora Acquisition LLC              
      Education Warrants (6)  8/12/2020 20
 
 
  %
Total Warrants - United States         $854
 $4,464
 0.48 %
Total Funded Investments         $1,379,827
 $1,346,654
 143.48 %
Unfunded Debt Investments - United States              
   Mister Car Wash Holdings, Inc.              
      Consumer Services First lien (3)(11) - Undrawn  12/14/2017 $1,667
 $(13) $8
  %
   DCA Investment Holding, LLC              
      Healthcare Services First lien (3)(11) - Undrawn  7/2/2021 1,348
 (13) 
  %
   iPipeline, Inc. (Internet Pipeline, Inc.)              
      Software First lien (3)(11) - Undrawn  8/4/2021 1,000
 (10) 
  %
   Valet Waste Holdings, Inc.              
      Business Services First lien (3)(11) - Undrawn  9/24/2021 1,500
 (19) 
  %
   VetCor Professional Practices LLC              
      Consumer Services First lien (3)(11) - Undrawn  4/20/2021 2,700
 (27) 
  
  First lien (4)(11) - Undrawn  3/30/2018 127
 (3) 
  
  First lien (2)(11) - Undrawn  6/22/2018 1,644
 (33) 
  
        4,471
 (63) 
  %
   Weston Solutions, Inc.              
      Business Services First lien (3)(11) - Undrawn  12/31/2020 10,000
 
 
  %
   Zywave, Inc.              
      Software First lien (3)(11) - Undrawn  11/17/2022 2,000
 (15) (15)  %
   Ansira Holdings, Inc.              
      Business Services First lien (3)(11) - Undrawn  12/20/2018 3,818
 (19) (19)  %
   Marketo, Inc.              
      Software First lien (3)(11) - Undrawn  8/16/2021 1,788
 (27) (27)  %

The accompanying notes are an integral part of these consolidated financial statements.
24

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
   Ministry Brands, LLC              
      Software First lien (3)(11) - Undrawn  12/2/2022 $650
 $(3) $(3)  
  First lien (3)(11) - Undrawn  12/2/2017 5,169
 (26) (26)  
  Second lien (3)(11) - Undrawn  12/2/2017 2,160
 (16) (16)  
        7,979
 (45) (45) (0.01)%
Total Unfunded Debt Investments - United States       $35,571
 (224) $(98) (0.01)%
Total Non-Controlled/Non-Affiliated Investments         $1,379,603
 $1,346,556
 143.47 %
Non-Controlled/Affiliated Investments(21)              
Funded Debt Investments - United States              
   Edmentum Ultimate Holdings, LLC (16)              
      Education Subordinated (3) 8.50% PIK/Q* 6/9/2020 $4,124
 $4,118
 $4,124
  
  Subordinated (2) 10.00% PIK/Q* 6/9/2020 15,163
 15,163
 12,814
  
  Subordinated (3) 10.00% PIK/Q* 6/9/2020 3,730
 3,730
 3,152
  
        23,017
 23,011
 20,090
 2.14 %
   Permian Holdco 1, Inc. (10)              
   Permian Holdco 2, Inc.              
      Energy Subordinated (3) 14.00% PIK/Q* 10/15/2021 1,749
 1,749
 1,749
 0.19 %
Total Funded Debt Investments - United States       $24,766
 $24,760
 $21,839
 2.33 %
Equity - United States              
   NMFC Senior Loan Program I LLC**              
      Investment Fund Membership interest (3)   
 $23,000
 $23,000
 2.45 %
   Permian Holdco 1, Inc. (10)              
      Energy Preferred shares (3)(17)   1,394,237
 5,866
 7,668
  
  Ordinary shares (3)   1,366,452
 1,350
 1,776
  
          7,216
 9,444
 1.00 %
   Edmentum Ultimate Holdings, LLC (16)              
      Education Ordinary shares (3)   123,968
 11
 1,693
  
  Ordinary shares (2)   107,143
 9
 1,464
  
          20
 3,157
 0.34 %
Total Shares - United States         $30,236
 $35,601
 3.79 %
Unfunded Debt Investments - United States              
   Edmentum Ultimate Holdings, LLC (16)              
   Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)              
      Education Second lien (3)(11) - Undrawn  6/9/2020 $4,881
 $
 $
  %
   Permian Holdco 1, Inc. (10)              
   Permian Holdco 2, Inc.              
      Energy Subordinated (3)(11) - Undrawn  10/15/2021 1,025
 
 
  %
Total Unfunded Debt Investments - United States       $5,906
 $
 $
  %
Total Non-Controlled/Affiliated Investments         $54,996
 $57,440
 6.12 %

The accompanying notes are an integral part of these consolidated financial statements.
25

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


Portfolio Company, Location and Industry(1) 
Type of
Investment
 Interest Rate(9) 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 Cost Fair Value 
Percent of
Net
Assets
Controlled Investments(22)              
Funded Debt Investments - United States              
   UniTek Global Services, Inc.              
      Business Services First lien (2) 8.50% (L + 7.50%/Q) 1/13/2019 $10,846
 $10,846
 $11,063
  
  First lien (2) 9.50% (L + 7.50% + 1.00% PIK/Q)* 1/13/2019 4,784
 4,784
 4,879
  
  Subordinated (2) 15.00% PIK/Q* 7/13/2019 1,726
 1,726
 1,760
  
  Subordinated (3) 15.00% PIK/Q* 7/13/2019 1,032
 1,032
 1,054
  
        18,388
 18,388
 18,756
 2.00 %
Total Funded Debt Investments - United States       $18,388
 $18,388
 $18,756
 2.00 %
Equity - United States              
   NMFC Senior Loan Program II LLC**              
   ��  Investment Fund Membership interest (3)   
 $71,460
 $71,460
 7.61 %
   UniTek Global Services, Inc.              
      Business Services Preferred shares (2)(18)   19,048,426
 16,668
 17,207
  
  Preferred shares (3)(18)   5,264,079
 4,606
 4,755
  
  Ordinary shares (2)   2,096,477
 1,925
 12,256
  
  Ordinary shares (3)   579,366
 532
 3,387
  
          23,731
 37,605
 4.01 %
   New Mountain Net Lease Corporation              
      Net Lease Ordinary shares (3)   270,000
 27,000
 27,000
 2.88 %
Total Shares - United States         $122,191
 $136,065
 14.50 %
Total Funded Investments         $140,579
 $154,821
 16.50 %
Unfunded Debt Investments - United States              
   UniTek Global Services, Inc.              
      Business Services First lien (3)(11) - Undrawn  1/13/2019 $2,048
 $
 $
  
  First lien (3)(11) - Undrawn  1/13/2019 758
 
 
  
        2,806
 
 
  %
Total Unfunded Debt Investments - United States       $2,806
 $
 $
  %
Total Controlled Investments         $140,579
 $154,821
 16.50 %
Total Investments         $1,575,178
 $1,558,817
 166.09 %

(1)New Mountain Finance Corporation (the "Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act.
(2)
Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Finance Holdings, L.L.C. ("NMF Holdings") as the Borrower, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian. See Note 7. Borrowings, for details.
(3)
Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A. and Stifel Bank & Trust as Lenders. See Note 7. Borrowings, for details.
(4)Investment is held in New Mountain Finance SBIC, L.P.
(5)Investment is held in NMF YP Holdings, Inc.
(6)Investment is held in NMF Ancora Holdings, Inc.
(7)Investment is held in NMF QID NGL Holdings, Inc.

The accompanying notes are an integral part of these consolidated financial statements.
26

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


(8)
Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.
(9)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of December 31, 2016.
(10)The Company holds preferred and common equity in Permian Holdco 1, Inc., as well as subordinated notes in Permian Holdco 2, Inc., a wholly-owned subsidiary of Permian Holdco 1, Inc.
(11)Par Value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(12)The Company holds investments in three related entities of YP Holdings LLC/Print Media Holdings LLC. The Company directly holds warrants to purchase a 4.96% membership interest of YP Equity Investors, LLC (which at closing represented an indirect 1.0% equity interest in YP Holdings LLC) and holds an investment in the Term Loan B loans issued by YP LLC and Print Media LLC, wholly-owned subsidiaries of YP Holdings LLC and Print Media Holdings LLC, respectively.
(13)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC) and holds a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.
(14)The Company holds investments in QC McKissock Investment, LLC and one related entity of QC McKissock Investment, LLC. The Company holds a first lien term loan in QC McKissock Investment, LLC (which at closing represented 71.1% of the ownership in the Series A common units of McKissock Investment Holdings, LLC) and holds a first lien term loan and a delayed draw term loan in McKissock, LLC, a wholly-owned subsidiary of McKissock Investment Holdings, LLC.

The accompanying notes are an integral part of these consolidated financial statements.
14

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
September 30, 2016
(in thousands, except shares)
(unaudited)

(15)The Company holds investments in TWDiamondback Holdings Corp. and one related entity of TWDiamondback Holdings Corp. The Company holds preferred equity in TWDiamondback Holdings Corp. and holds a first lien last out term loan and a delayed draw term loan in Diamondback Drugs of Delaware LLC, a wholly-owned subsidiary of TWDiamondback Holdings Corp.
(16)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes and ordinary equity in Edmentum Ultimate Holdings, LLC and holds a second lien revolver in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(17)Total shares reported assumes shares issued for the capitalizationThe Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of payment-in-kind ("PIK") interest.  Actual shares owned total 50,000 as of September 30, 2016.12.0% per annum payable in additional shares.
(18)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(19)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds a tranche A first lien term loan and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(20)The Company holds an equity investmentsinvestment in TW-NHME Holdings Corp., as well asand holds a second lien term loan investment in National HME, Inc., a wholly-owned subsidiary of TW-NHME Holdings Corp.
(21)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended, due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2015 and September 30,December 31, 2016, along with transactions during the nine monthsyear ended September 30,December 31, 2016 in which the issuer was a non-controlled/affiliated investment, is as follows:
Portfolio Company (1) Fair Value
at
December 31, 2015
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value
at
September 30, 2016
 
Interest
Income
 
Dividend
Income
 
Other
Income
 Fair Value at December 31, 2015 
Gross
Additions(A)
 
Gross
Redemptions
(B)
 
Net
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value at December 31, 2016 
Interest
Income
 
Dividend
Income
 
Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc. $22,782
 $5,587
 $(4,002) $
 $(683) $23,684
 $1,686
 $
 $
 $22,782
 $6,147
 $(4,002) $
 $(1,680) $23,247
 $2,254
 $
 $
NMFC Senior Loan Program I LLC 21,914
 
 
 
 1,086
 23,000
 
 2,868
 877
 21,914
 
 
 
 1,086
 23,000
 
 3,728
 1,163
Permian Holdco 1, Inc. / Permian Holdco 2, Inc. 
 8,965
 
 
 2,228
 11,193
 41
 156
 5
Tenawa Resource Holdings LLC 42,591
 16
 (42,288) 
 (319) 
 2,243
 
 25
 42,591
 16
 (42,288) 
 (319) 
 2,243
 
 25
Total Non-Controlled/Affiliated Investments $87,287
 $5,603
 $(46,290) $
 $84
 $46,684
 $3,929
 $2,868
 $902
 $87,287
 $15,128
 $(46,290) $
 $1,315
 $57,440
 $4,538
 $3,884
 $1,193

(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.

The accompanying notes are an integral part of these consolidated financial statements.
15

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
September 30, 2016
(in thousands, except shares)
(unaudited)


(22)Denotes investments in which the Company is in “Control”, as defined in the Investment Company Act of 1940, as amended, due to owning or holding the power to vote 25.0% or more of the outstanding voting securities of the investment. Fair value as of December 31, 2015 and September 30, 2016 along with transactions during the nine months ended September 30, 2016 in which the issuer was a controlled investment is as follows:
Portfolio Company (1) Fair Value
at
December 31, 2015
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net 
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value
at
September 30, 2016
 
Interest
Income
 
Dividend
Income
 
Other
Income
New Mountain Net Lease Corporation $
 $16,500
 $
 $
 $
 $16,500
 $
 $
 $
NMFC Senior Loan Program II LLC 
 47,640
 
 
 
 47,640
 
 1,151
 
UniTek Global Services, Inc. 47,422
 2,558
 (2,599) 
 7,677
 55,058
 1,447
 2,229
 80
Total Controlled Investments $47,422
 $66,698
 $(2,599) $
 $7,677
 $119,198
 $1,447
 $3,380
 $80
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
*All or a portion of interest contains PIK interest.
**Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70.00% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of September 30, 2016, 8.8% of the Company’s total assets were non-qualifying assets.


The accompanying notes are an integral part of these consolidated financial statements.
16

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
September 30, 2016
(unaudited)


September 30, 2016
Investment Type
Percent of Total
Investments at Fair Value
First lien42.71%
Second lien38.83%
Subordinated5.70%
Equity and other12.76%
Total investments100.00%
September 30, 2016
Industry Type
Percent of Total
Investments at Fair Value
Software27.71%
Business Services26.17%
Distribution & Logistics7.51%
Consumer Services7.40%
Education6.23%
Healthcare Services4.93%
Investment Fund4.65%
Energy4.49%
Federal Services4.15%
Media1.73%
Business Products1.59%
Retail1.37%
Net Lease1.09%
Healthcare Information Technology0.98%
Total investments100.00%
September 30, 2016
Interest Rate Type
Percent of Total
Investments at Fair Value
Floating rates88.13%
Fixed rates11.87%
Total investments100.00%


The accompanying notes are an integral part of these consolidated financial statements.
17

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments
December 31, 2015
(in thousands, except shares)

Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
Non-Controlled/Non-Affiliated Investments              
Funded Debt Investments - Australia              
   Project Sunshine IV Pty Ltd**              
      Media First lien (2)  8.00% (L + 7.00%/M) 9/23/2019 $10,800
 $10,752
 $10,314
 1.23 %
Total Funded Debt Investments - Australia       $10,800
 $10,752
 $10,314
 1.23 %
Funded Debt Investments - Luxembourg              
   Pinnacle Holdco S.à.r.l. / Pinnacle (US) Acquisition Co Limited**              
      Software Second lien (2)  10.50% (L + 9.25%/Q) 7/30/2020 $24,630
 $24,339
 $19,581
  
  Second lien (3)  10.50% (L + 9.25%/Q) 7/30/2020 8,204
 8,324
 6,522
  
        32,834
 32,663
 26,103
 3.12 %
Total Funded Debt Investments - Luxembourg       $32,834
 $32,663
 $26,103
 3.12 %
Funded Debt Investments - Netherlands              
   Eiger Acquisition B.V. (Eiger Co-Borrower, LLC)**              
      Software Second lien (3)  10.13% (L + 9.13%/Q) 2/17/2023 $10,000
 $9,303
 $9,049
 1.08 %
Total Funded Debt Investments - Netherlands       $10,000
 $9,303
 $9,049
 1.08 %
Funded Debt Investments - United Kingdom              
   Air Newco LLC**              
      Software Second lien (3)  10.50% (L + 9.50%/Q) 1/31/2023 $32,500
 $31,736
 $31,363
 3.75 %
Total Funded Debt Investments - United Kingdom       $32,500
 $31,736
 $31,363
 3.75 %
Funded Debt Investments - United States              
   Deltek, Inc.              
      Software Second lien (3)  9.50% (L + 8.50%/Q) 6/26/2023 $21,000
 $20,972
 $20,948
  
  Second lien (2)  9.50% (L + 8.50%/Q) 6/26/2023 20,000
 19,619
 19,950
  
        41,000
 40,591
 40,898
 4.89 %
   TIBCO Software Inc.              
      Software First lien (2)  6.50% (L + 5.50%/M) 12/4/2020 29,775
 28,508
 27,021
  
  Subordinated (3)  11.38%/S 12/1/2021 15,000
 14,611
 12,600
  
        44,775
 43,119
 39,621
 4.73 %
   AssuredPartners, Inc.              
      Business Services Second lien (2)  10.00% (L + 9.00%/Q) 10/20/2023 20,000
 19,212
 19,600
  
  Second lien (3)  10.00% (L + 9.00%/Q) 10/20/2023 20,000
 19,212
 19,600
  
        40,000
 38,424
 39,200
 4.68 %
   Kronos Incorporated              
      Software Second lien (2)  9.75% (L + 8.50%/Q) 4/30/2020 32,641
 32,443
 32,546
  
  Second lien (3)  9.75% (L + 8.50%/Q) 4/30/2020 5,000
 4,961
 4,985
  
        37,641
 37,404
 37,531
 4.48 %
   Hill International, Inc.              
      Business Services First lien (2)  7.75% (L + 6.75%/Q) 9/28/2020 37,056
 36,752
 36,779
 4.39 %
   ProQuest LLC              
      Business Services Second lien (3)  10.00% (L + 9.00%/M) 12/15/2022 35,000
 34,302
 34,300
 4.10 %

The accompanying notes are an integral part of these consolidated financial statements.
18

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
   Navex Global, Inc.              
      Software First lien (4)  5.75% (L + 4.75%/Q) 11/19/2021 $4,610
 $4,570
 $4,471
  
  First lien (2)  5.75% (L + 4.75%/Q) 11/19/2021 2,610
 2,587
 2,531
  
  Second lien (4)  9.75% (L + 8.75%/Q) 11/18/2022 17,879
 17,683
 17,343
  
  Second lien (3)  9.75% (L + 8.75%/Q) 11/18/2022 10,121
 10,001
 9,817
  
        35,220
 34,841
 34,162
 4.08 %
   Ascend Learning, LLC              
      Education Second lien (3)  9.50% (L + 8.50%/Q) 11/30/2020 34,727
 34,352
 33,077
 3.95 %
   CRGT Inc.              
      Federal Services First lien (2)  7.50% (L + 6.50%/Q) 12/19/2020 33,261
 33,030
 32,928
 3.93 %
   Physio-Control International, Inc.              
      Healthcare Products Second lien (2)  10.00% (L + 9.00%/Q) 6/5/2023 30,000
 29,426
 27,451
  
  Second lien (3)  10.00% (L + 9.00%/Q) 6/5/2023 4,000
 3,703
 3,660
  
        34,000
 33,129
 31,111
 3.72 %
   Valet Waste Holdings, Inc.              
      Business Services First lien (2)  8.00% (L + 7.00%/Q) 9/24/2021 29,925
 29,564
 29,505
  
  First lien (3)(11) - Drawn  8.00% (L + 7.00%/Q) 9/24/2021 1,500
 1,481
 1,479
  
        31,425
 31,045
 30,984
 3.70 %
   Rocket Software, Inc.              
      Software Second lien (2)  10.25% (L + 8.75%/Q) 2/8/2019 30,875
 30,781
 30,759
 3.68 %
   TASC, Inc.              
      Federal Services First lien (2)  7.00% (L + 6.00%/Q) 5/22/2020 28,314
 28,001
 28,396
  
  Second lien (3)  12.00%/Q 5/21/2021 2,000
 1,964
 2,062
  
        30,314
 29,965
 30,458
 3.64 %
   Pittsburgh Glass Works, LLC (24)              
      Manufacturing First lien (2)  10.13% (L + 9.13%/M) 11/25/2021 30,000
 29,852
 29,850
 3.57 %
   Integro Parent Inc.              
      Business Services First lien (2)  6.75% (L + 5.75%/Q) 10/31/2022 17,370
 17,029
 16,980
  
  First lien (2)  6.75% (L + 5.75%/M) 10/31/2022 2,630
 2,578
 2,570
  
  Second lien (3)  10.25% (L + 9.25%/Q) 10/30/2023 10,000
 9,901
 9,625
  
        30,000
 29,508
 29,175
 3.49 %
   CompassLearning, Inc. (15)              
      Education First lien (2)  8.00% (L + 6.75%/Q) 11/26/2018 30,000
 29,531
 28,471
 3.40 %
   Ryan, LLC              
      Business Services First lien (2)  6.75% (L + 5.75%/M) 8/7/2020 27,300
 26,918
 26,583
 3.18 %
   McGraw-Hill Global Education Holdings, LLC              
      Education First lien (2)(9)  9.75%/S 4/1/2021 24,500
 24,378
 26,093
 3.12 %
   KeyPoint Government Solutions, Inc.              
      Federal Services First lien (2)  7.75% (L + 6.50%/M) 11/13/2017 25,876
 25,636
 25,747
 3.08 %
   DigiCert Holdings, Inc.              
      Software First lien (2)  6.00% (L + 5.00%/Q) 10/21/2021 25,000
 24,268
 24,375
 2.91 %
   Pelican Products, Inc.              
      Business Products Second lien (3)  9.25% (L + 8.25%/Q) 4/9/2021 15,500
 15,519
 14,764
  
  Second lien (2)  9.25% (L + 8.25%/Q) 4/9/2021 10,000
 10,115
 9,524
  
        25,500
 25,634
 24,288
 2.90 %

The accompanying notes are an integral part of these consolidated financial statements.
19

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
   Confie Seguros Holding II Co.              
      Consumer Services Second lien (2)  10.25% (L + 9.00%/M) 5/8/2019 $18,886
 $18,789
 $18,673
  
  Second lien (3)  10.25% (L + 9.00%/M) 5/8/2019 5,571
 5,648
 5,508
  
        24,457
 24,437
 24,181
 2.89 %
   AAC Holding Corp.              
      Education First lien (2)  8.25% (L + 7.25%/M) 9/30/2020 25,000
 24,640
 24,110
 2.88 %
   Transtar Holding Company              
      Distribution & Logistics Second lien (2)  10.00% (L + 8.75%/Q) 10/9/2019 28,300
 27,974
 23,630
 2.82 %
   PetVet Care Centers LLC              
      Consumer Services Second lien (3)  9.75% (L + 8.75%/Q) 6/17/2021 24,000
 23,789
 23,149
 2.77 %
   EN Engineering, L.L.C.              
      Business Services First lien (2)  7.00% (L + 6.00%/Q) 6/30/2021 21,321
 21,121
 20,554
  
  First lien (2)(11) - Drawn  8.50% (P + 5.00%/Q) 6/30/2021 1,223
 1,211
 1,179
  
        22,544
 22,332
 21,733
 2.60 %
   Aricent Technologies              
      Business Services Second lien (2)  9.50% (L + 8.50%/M) 4/14/2022 20,000
 19,881
 19,133
  
  Second lien (3)  9.50% (L + 8.50%/M) 4/14/2022 2,550
 2,558
 2,440
  
        22,550
 22,439
 21,573
 2.58 %
   McGraw-Hill School Education Holdings, LLC              
      Education First lien (2)  6.25% (L + 5.00%/M) 12/18/2019 21,560
 21,408
 21,237
 2.54 %
   VetCor Professional Practices LLC              
      Consumer Services First lien (4)  7.00% (L + 6.00%/Q) 4/20/2021 19,502
 19,324
 19,254
  
  First lien (4)(11) - Drawn  7.00% (L + 6.00%/Q) 4/20/2021 1,753
 1,736
 1,731
  
        21,255
 21,060
 20,985
 2.51 %
   IT'SUGAR LLC              
      Retail First lien (4)  10.50% (L + 9.50%/Q) 10/23/2019 21,000
 20,215
 20,183
 2.41 %
   Weston Solutions, Inc.              
      Business Services Subordinated (4)  16.00%/Q 7/3/2019 20,000
 20,000
 19,430
 2.32 %
   TWDiamondback Holdings Corp. (18)              
   Diamondback Drugs of Delaware, L.L.C. (TWDiamondback II Holdings LLC)              
      Distribution & Logistics First lien (4)  9.75% (L + 8.75%/Q) 11/19/2019 19,895
 19,895
 19,117
 2.28 %
   Severin Acquisition, LLC              
      Software Second lien (4)  9.25% (L + 8.25%/Q) 7/29/2022 15,000
 14,857
 14,272
  
  Second lien (4)  9.75% (L + 8.75%/Q) 7/29/2022 4,154
 4,113
 4,112
  
        19,154
 18,970
 18,384
 2.20 %
   First American Payment Systems, L.P.              
      Business Services Second lien (2)  10.75% (L + 9.50%/M) 4/12/2019 18,643
 18,423
 18,362
 2.20 %
   DCA Investment Holding, LLC              
      Healthcare Services First lien (2)  6.25% (L + 5.25%/Q) 7/2/2021 17,811
 17,645
 17,632
  
  First lien (3)(11) - Drawn  7.75% (P + 4.25%/Q) 7/2/2021 53
 52
 52
  
        17,864
 17,697
 17,684
 2.11 %
   YP Holdings LLC / Print Media Holdings LLC (12)              
   YP LLC / Print Media LLC              
      Media First lien (2)  8.00% (L + 6.75%/M) 6/4/2018 18,320
 18,182
 17,679
 2.11 %

The accompanying notes are an integral part of these consolidated financial statements.
20

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
   iPipeline, Inc. (Internet Pipeline, Inc.)              
      Software First lien (4)  8.25% (L + 7.25%/Q) 8/4/2022 $17,955
 $17,783
 $17,550
 2.10 %
   AgKnowledge Holdings Company, Inc.              
      Business Services Second lien (2)  9.25% (L + 8.25%/M) 7/23/2020 18,500
 18,352
 17,066
 2.04 %
   Vertafore, Inc.              
      Software Second lien (2)  9.75% (L + 8.25%/M) 10/27/2017 13,855
 13,848
 13,844
  
  Second lien (3)  9.75% (L + 8.25%/M) 10/27/2017 2,000
 2,016
 1,999
  
        15,855
 15,864
 15,843
 1.89 %
   GSDM Holdings Corp.              
      Healthcare Services Subordinated (4)  10.00%/M 6/23/2020 15,000
 14,880
 15,000
 1.79 %
   MailSouth, Inc. (d/b/a Mspark)              
      Media First lien (2)  6.75% (L + 5.00%/Q) 12/14/2016 14,998
 14,736
 14,586
 1.74 %
   TW-NHME Holdings Corp. (23)              
   National HME, Inc.              
      Healthcare Services Second lien (4)  10.25% (L + 9.25%/Q) 7/14/2022 14,000
 13,833
 13,825
 1.65 %
   Sierra Hamilton LLC / Sierra Hamilton Finance, Inc.              
      Energy First lien (2)  12.25%/S 12/15/2018 25,000
 25,000
 12,251
  
  First lien (3)  12.25%/S 12/15/2018 2,660
 2,064
 1,302
  
        27,660
 27,064
 13,553
 1.62 %
   Vision Solutions, Inc.              
      Software Second lien (2)  9.50% (L + 8.00%/M) 7/23/2017 14,000
 13,978
 12,740
 1.52 %
   SW Holdings, LLC              
      Business Services Second lien (4)  9.75% (L + 8.75%/Q) 12/30/2021 13,500
 13,373
 12,701
 1.52 %
   Poseidon Intermediate, LLC              
      Software Second lien (2)  9.50% (L + 8.50%/Q) 8/15/2023 13,000
 12,811
 12,427
 1.49 %
   American Tire Distributors, Inc.              
      Distribution & Logistics Subordinated (3)  10.25%/S 3/1/2022 13,000
 12,798
 11,960
 1.43 %
   PowerPlan Holdings, Inc.              
      Software Second lien (2)  10.75% (L + 9.75%/M) 2/23/2023 10,000
 9,907
 9,573
 1.14 %
   Permian Tank & Manufacturing, Inc.              
      Energy First lien (2)  10.50%/S 1/15/2018 24,357
 24,493
 9,377
 1.12 %
   TTM Technologies, Inc.**              
      Business Products First lien (2)  6.00% (L + 5.00%/Q) 5/31/2021 9,980
 9,554
 9,132
 1.09 %
   Smile Brands Group Inc.              
      Healthcare Services First lien (2) 9.00% (L + 6.25% + 1.50% PIK/Q)* 8/16/2019 12,204
 12,091
 8,878
 1.06 %
   Harley Marine Services, Inc.              
      Distribution & Logistics Second lien (2)  10.50% (L + 9.25%/Q) 12/20/2019 9,000
 8,868
 8,865
 1.06 %
   QC McKissock Investment, LLC (17)              
   McKissock, LLC              
      Education First lien (2)  7.50% (L + 6.50%/Q) 8/5/2019 4,875
 4,838
 4,707
  
  First lien (2)  7.50% (L + 6.50%/Q) 8/5/2019 3,148
 3,124
 3,039
  
  First lien (2)(11) - Drawn  7.50% (L + 6.50%/Q) 8/5/2019 1,016
 1,007
 981
  
        9,039
 8,969
 8,727
 1.04 %

The accompanying notes are an integral part of these consolidated financial statements.
21

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
   Greenway Health, LLC (fka Vitera Healthcare Solutions, LLC)              
      Software First lien (2)  6.00% (L + 5.00%/Q) 11/4/2020 $1,960
 $1,946
 $1,877
  
  Second lien (2)  9.25% (L + 8.25%/Q) 11/4/2021 7,000
 6,917
 6,720
  
        8,960
 8,863
 8,597
 1.03 %
   Novitex Acquisition, LLC (fka ARSloane Acquisition, LLC)              
      Business Services First lien (2)  7.50% (L + 6.25%/Q) 7/7/2020 7,242
 7,064
 6,807
 0.81 %
   Sotera Defense Solutions, Inc. (Global Defense Technology & Systems, Inc.)              
      Federal Services First lien (2)  9.00% (L + 7.50%/M) 4/21/2017 6,859
 6,828
 6,344
 0.76 %
   Brock Holdings III, Inc.              
      Industrial Services Second lien (2)  10.00% (L + 8.25%/Q) 3/16/2018 7,000
 6,953
 5,443
 0.65 %
   Packaging Coordinators, Inc. (13)              
      Healthcare Products Second lien (3)  9.00% (L + 8.00%/Q) 8/1/2022 5,000
 4,957
 4,925
 0.59 %
   Immucor, Inc.              
      Healthcare Services Subordinated (2)(9)  11.13%/S 8/15/2019 5,000
 4,963
 4,575
 0.55 %
   GCA Services Group, Inc.              
      Business Services Second lien (3)  9.25% (L + 8.00%/Q) 11/2/2020 4,000
 3,973
 3,950
 0.47 %
   York Risk Services Holding Corp.              
      Business Services Subordinated (3)  8.50%/S 10/1/2022 3,000
 3,000
 2,471
 0.30 %
   Synarc-Biocore Holdings, LLC              
      Healthcare Services Second lien (3)  9.25% (L + 8.25%/Q) 3/10/2022 2,500
 2,479
 2,313
 0.28 %
   Ensemble S Merger Sub, Inc.              
     Software Subordinated (3)  9.00%/S 9/30/2023 2,000
 1,933
 1,940
 0.23 %
   Education Management Corporation (22)              
   Education Management II LLC              
      Education First lien (2)  5.50% (L + 4.50%/Q) 7/2/2020 250
 238
 69
  
  First lien (3)  5.50% (L + 4.50%/Q) 7/2/2020 141
 134
 39
  
  First lien (2)  8.50% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 437
 375
 46
  
  First lien (3)  8.50% (L + 1.00% + 6.50% PIK/Q)* 7/2/2020 247
 212
 26
  
        1,075
 959
 180
 0.02 %
   ATI Acquisition Company (fka Ability Acquisition, Inc.) (14)              
      Education First lien (2)  17.25% (P + 10.00% + 4.00% PIK/Q) (8)* 6/30/2012 - Past Due 1,665
 1,434
 
  
  First lien (2)  17.25% (P + 10.00% + 4.00% PIK/Q) (8)* 6/30/2012 - Past Due 103
 94
 
  
        1,768
 1,528
 
  %
Total Funded Debt Investments - United States       $1,314,464
 $1,297,775
 $1,237,175
 147.83 %
Total Funded Debt Investments       $1,400,598
 $1,382,229
 $1,314,004
 157.01 %
Equity - United Kingdom              
   Packaging Coordinators, Inc. (13)              
   PCI Pharma Holdings UK Limited**              
      Healthcare Products Ordinary shares (2)   19,427
 $578
 $1,612
 0.19 %
Total Shares - United Kingdom         $578
 $1,612
 0.19 %
Equity - United States              
   Crowley Holdings Preferred, LLC              
      Distribution & Logistics Preferred shares (3)(20) 12.00% (10.00% + 2.00% PIK/Q)*  52,058
 $51,518
 $51,911
 6.20 %

The accompanying notes are an integral part of these consolidated financial statements.
22

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
   TWDiamondback Holdings Corp. (18)              
      Distribution & Logistics Preferred shares (4)   200
 $2,000
 $2,000
 0.24 %
   TW-NHME Holdings Corp. (23)              
      Healthcare Services Preferred shares (4)   100
 1,000
 1,000
 0.12 %
   Ancora Acquisition LLC (14)              
      Education Preferred shares (6)   372
 83
 393
 0.05 %
   Education Management Corporation (22)              
      Education Preferred shares (2)   3,331
 200
 10
  
  Preferred shares (3)   1,879
 113
 5
  
  Ordinary shares (2)   2,994,065
 100
 202
  
  Ordinary shares (3)   1,688,976
 56
 114
  
          469
 331
 0.04 %
Total Shares - United States         $55,070
 $55,635
 6.65 %
Total Shares         $55,648
 $57,247
 6.84 %
Warrants - United States              
   YP Holdings LLC / Print Media Holdings LLC (12)              
   YP Equity Investors, LLC              
      Media Warrants (5)  5/8/2022 5
 $
 $5,304
 0.63 %
   IT'SUGAR LLC              
      Retail Warrants (3)  10/23/2025 94,672
 817
 817
 0.10 %
   ASP LCG Holdings, Inc.              
      Education Warrants (3)  5/5/2026 622
 37
 610
 0.07 %
   Ancora Acquisition LLC (14)              
      Education Warrants (6)  8/12/2020 20
 
 
  %
Total Warrants - United States         $854
 $6,731
 0.80 %
Total Funded Investments         $1,438,731
 $1,377,982
 164.65 %
Unfunded Debt Investments - United States              
   DCA Investment Holdings, LLC              
      Healthcare Services First lien (3)(11) - Undrawn  7/2/2021 $2,047
 $(20) $(20)  %
   iPipeline, Inc. (Internet Pipeline, Inc.)              
      Software First lien (3)(11) - Undrawn  8/4/2021 1,000
 (10) (23)  %
   Valet Waste Holdings, Inc.              
      Business Services First lien (3)(11) - Undrawn  9/24/2021 3,000
 (38) (42)  %
   VetCor Professional Practices LLC              
      Consumer Services First lien (3)(11) - Undrawn  4/20/2021 2,700
 (27) (34)  
  First lien (4)(11) - Undrawn  4/20/2021 947
 (9) (12)  
        3,647
 (36) (46) (0.01)%

The accompanying notes are an integral part of these consolidated financial statements.
23

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
   QC McKissock Investment, LLC (17)              
   McKissock, LLC              
      Education First lien (2)(11) - Undrawn  12/31/2015 $1,862
 $(19) $(64) (0.01)%
   MailSouth, Inc. (d/b/a Mspark)              
      Media First lien (3)(11) - Undrawn  12/14/2016 1,900
 (181) (79) (0.01)%
   EN Engineering, L.L.C.              
      Business Services First lien (2)(11) - Undrawn  12/30/2016 2,348
 (12) (85) (0.01)%
   TWDiamondback Holdings Corp. (18)              
   Diamondback Drugs of Delaware, L.L.C. (TWDiamondback II Holdings LLC)              
      Distribution & Logistics First lien (3)(11) - Undrawn  2/16/2016 2,158
 
 (84)  
  First lien (4)(11) - Undrawn  2/16/2016 605
 
 (24)  
        2,763
 
 (108) (0.01)%
Total Unfunded Debt Investments       $18,567
 $(316) $(467) (0.05)%
Total Non-Controlled/Non-Affiliated Investments         $1,438,415
 $1,377,515
 164.60 %
Non-Controlled/Affiliated Investments(25)              
Funded Debt Investments - United States              
   Tenawa Resource Holdings LLC (16)              
   Tenawa Resource Management LLC              
      Energy First lien (3) 10.50% (Base + 8.00%/Q) 5/12/2019 $40,000
 $39,869
 $38,813
 4.64 %
   Edmentum Ultimate Holdings, LLC (19)              
      Education Subordinated (3) 8.50% PIK/Q* 6/9/2020 3,786
 3,778
 3,622
  
  Subordinated (2) 10.00% PIK/Q* 6/9/2020 13,715
 13,715
 10,547
  
  Subordinated (3) 10.00% PIK/Q* 6/9/2020 3,374
 3,374
 2,595
  
        20,875
 20,867
 16,764
 2.00 %
Total Funded Debt Investments - United States       $60,875
 $60,736
 $55,577
 6.64 %
Equity - United States              
   NMFC Senior Loan Program I LLC**              
      Investment Fund Membership interest (3)    $23,000
 $21,914
 2.62 %
   Edmentum Ultimate Holdings, LLC (19)              
      Education Ordinary shares (3)   123,968
 11
 3,341
  
  Ordinary shares (2)   107,143
 9
 2,888
  
          20
 6,229
 0.74 %
   Tenawa Resource Holdings LLC (16)              
   QID NGL LLC              
      Energy Ordinary shares (7)   5,290,997
 5,291
 3,778
 0.45 %
Total Shares - United States         $28,311
 $31,921
 3.81 %

The accompanying notes are an integral part of these consolidated financial statements.
24

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


Portfolio Company, Location and Industry(1) Type of Investment Interest Rate(10) Maturity / Expiration Date  Principal
Amount,
Par Value
or Shares
  Cost  Fair
Value
 Percent of
Net
Assets
Unfunded Debt Investments - United States              
   Edmentum Ultimate Holdings, LLC (19)              
   Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)              
      Education Second lien (3)(11) - Undrawn  6/9/2020 $4,881
 $
 $(211) (0.02)%
Total Unfunded Debt Investments       $4,881
 $
 $(211) (0.02)%
Total Non-Controlled/Affiliated Investments         $89,047
 $87,287
 10.43 %
Controlled Investments(26)              
Funded Debt Investments - United States              
   UniTek Global Services, Inc.              
      Business Services First lien (2)  8.50% (L + 7.50%/Q) 1/13/2019 $6,786
 $6,786
 $6,640
  
  First lien (3)  8.50% (L + 7.50%/Q) 1/13/2019 4,060
 4,060
 3,973
  
  First lien (3) 9.50% (L + 7.50% + 1.00% PIK/Q)* 1/13/2019 7,323
 7,323
 7,257
  
  Subordinated (2) 15.00% PIK/Q* 7/13/2019 1,487
 1,487
 1,417
  
  Subordinated (3) 15.00% PIK/Q* 7/13/2019 890
 890
 848
  
        20,546
 20,546
 20,135
 2.40 %
Total Funded Debt Investments - United States       $20,546
 $20,546
 $20,135
 2.40 %
Equity - United States              
   UniTek Global Services, Inc.              
      Business Services Preferred shares (2)(21)   16,680,037
 $14,299
 $13,870
  
  Preferred shares (3)(21)   4,609,569
 3,952
 3,833
  
  Ordinary shares (2)   2,096,477
 1,925
 7,528
  
  Ordinary shares (3)   579,366
 532
 2,081
  
          20,708
 27,312
 3.26 %
Total Shares - United States         $20,708
 $27,312
 3.26 %
Total Funded Investments         $41,254
 $47,447
 5.66 %
Unfunded Debt Investments - United States              
   UniTek Global Services, Inc.              
      Business Services First lien (3)(11) - Undrawn  1/13/2019 $2,048
 $
 $(18)  
  First lien (3)(11) - Undrawn  1/13/2019 758
 
 (7)  
        2,806
 
 (25)  %
Total Unfunded Debt Investments       $2,806
 $
 $(25)  %
Total Controlled Investments         $41,254
 $47,422
 5.66 %
Total Investments         $1,568,716
 $1,512,224
 180.69 %
(1)New Mountain Finance Corporation (the "Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act.
(2)
Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Finance Holdings, L.L.C. ("NMF Holdings") as the Borrower, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian. See Note 7, Borrowings, for details.
(3)
Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A. and Stifel Bank & Trust as Lenders. See Note 7, Borrowings, for details.

The accompanying notes are an integral part of these consolidated financial statements.
25

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


(4)Investment is held in New Mountain Finance SBIC, L.P.
(5)Investment is held in NMF YP Holdings, Inc.
(6)Investment is held in NMF Ancora Holdings, Inc.
(7)Investment is held in NMF QID NGL Holdings, Inc.
(8)
Investment or a portion of the investment is on non-accrual status. See Note 3, Investments, for details.
(9)Securities are registered under the Securities Act.
(10)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of December 31, 2015.
(11)Par Value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(12)The Company holds investments in three related entities of YP Holdings LLC/Print Media Holdings LLC. The Company directly holds warrants to purchase a 4.96% membership interest of YP Equity Investors, LLC (which at closing represented an indirect 1.0% equity interest in YP Holdings LLC) and holds an investment in the Term Loan B loans issued by YP LLC and Print Media LLC, wholly-owned subsidiaries of YP Holdings LLC and Print Media Holdings LLC, respectively.
(13)The Company holds investments in Packaging Coordinators, Inc. and one related entity of Packaging Coordinators, Inc. The Company has a debt investment in Packaging Coordinators, Inc. and holds ordinary equity in PCI Pharma Holdings UK Limited, a wholly-owned subsidiary of Packaging Coordinators, Inc.
(14)The Company holds investments in ATI Acquisition Company and Ancora Acquisition LLC. The Company has debt investments in ATI Acquisition Company and preferred equity and warrants to purchase units of common membership interests of Ancora Acquisition LLC. The Company received its investments in Ancora Acquisition LLC as a result of its investments in ATI Acquisition Company.
(15)The Company holds an investment in CompassLearning, Inc. that is structured as a first lien last out term loan.
(16)The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 5.25% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC) and holds a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.
(17)The Company holds investments in QC McKissock Investment, LLC and one related entity of QC McKissock Investment, LLC. The Company holds a first lien term loan in QC McKissock Investment, LLC (which at closing represented 71.1% of the ownership in the Series A common units of McKissock Investment Holdings, LLC) and holds a first lien term loan and a delayed draw term loan in McKissock, LLC, a wholly-owned subsidiary of McKissock Investment Holdings, LLC.
(18)The Company holds investments in TWDiamondback Holdings Corp. and one related entity of TWDiamondback Holdings Corp. The Company holds preferred equity in TWDiamondback Holdings Corp. and holds a first lien last out term loan and a delayed draw term loan in Diamondback Drugs of Delaware LLC, a wholly-owned subsidiary of TWDiamondback Holdings Corp.
(19)The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes and ordinary equity in Edmentum Ultimate Holdings, LLC and holds a second lien revolver in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(20)Total shares reported assumes shares issued for the capitalization of payment-in-kind ("PIK"(“PIK”) interest.  Actual shares owned total 50,000 as of December 31, 2015.
(21)The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(22)The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds a tranche A first lien term loan and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(23)The Company holds an equity investment in TW-NHME Holdings Corp., as well as a second lien term loan investment in National HME, Inc., a wholly-owned subsidiary of TW-NHME Holdings Corp.
(24)The Company holds an investment in Pittsburgh Glass Works, LLC that is structured as a first lien last out term loan.

The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2015
(in thousands, except shares)


(25)Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended, due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2014 and December 31, 2015 along with transactions during the year ended December��31, 2015 in which the issuer was a non-controlled/affiliated investment is as follows:
Portfolio Company (1) Fair Value at December 31, 2014 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value at December 31, 2015 
Interest
Income
 
Dividend
Income
 
Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc. $
 $23,937
 $(3,050) $
 $1,895
 $22,782
 $1,171
 $
 $
NMFC Senior Loan Program I LLC 22,461
 
 
 
 (547) 21,914
 
 3,619
 1,215
Tenawa Resource Holdings LLC 
 44,572
 
 
 (1,981) 42,591
 4,231
 
 750
Total Non-Controlled/Affiliated Investments $22,461
 $68,509
 $(3,050) $
 $(633) $87,287
 $5,402
 $3,619
 $1,965
(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement at fair value of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.


The accompanying notes are an integral part of these consolidated financial statements.
27

Table of Contents
New Mountain Finance Corporation
Consolidated Schedule of Investments (Continued)
December 31, 2016
(in thousands, except shares)


(26)(22)Denotes investments in which the Company is in “Control”, as defined in the Investment Company Act of 1940, as amended, due to owning or holding the power to vote 25.0% or more of the outstanding voting securities of the investment. Fair value as of December 31, 20142015 and December 31, 20152016, along with transactions during the year ended December 31, 20152016 in which the issuer was a controlled investment, is as follows:
Portfolio Company (1) Fair Value at
December 31, 2014
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net 
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value at December 31, 2015 
Interest
Income
 
Dividend
Income
 
Other
Income
 Fair Value at
December 31, 2015
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net 
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 Fair Value at December 31, 2016 
Interest
Income
 
Dividend
Income
 
Other
Income
New Mountain Net Lease Corporation $
 $27,000
 $
 $
 $
 $27,000
 $
 $540
 $
NMFC Senior Loan Program II LLC 
 71,460
 
 
 
 71,460
 
 3,533
 
UniTek Global Services, Inc. $
 $42,780
 $(1,526) $
 $6,168
 $47,422
 $2,007
 $2,559
 $49
 47,422
 3,464
 (2,599) 
 8,074
 56,361
 1,904
 3,023
 558
Total Controlled Investments $
 $42,780
 $(1,526) $
 $6,168
 $47,422
 $2,007
 $2,559
 $49
 $47,422
 $101,924
 $(2,599) $
 $8,074
 $154,821
 $1,904
 $7,096
 $558

(A)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement at fair value of an existing portfolio company into this category from a different category.
(B)Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
*All or a portion of interest contains PIK interest.
**Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70.00% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2015, 6.8%2016, 9.9% of the Company’s total assets were non-qualifying assets.
.
 
 


The accompanying notes are an integral part of these consolidated financial statements.
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New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 20152016



  December 31, 20152016
Investment Type 
Percent of Total
Investments at Fair Value
First lien 44.3144.94%
Second lien 41.7938.76%
Subordinated 5.754.27%
Equity and other 8.1512.03%
Total investments 100.00%
 
  December 31, 20152016
Industry Type 
Percent of Total
Investments at Fair Value
Software24.53%
Business Services 24.3629.64%
Software27.00%
Consumer Services6.82%
Investment Fund6.06%
Education 10.976.04%
Energy4.82%
Healthcare Services4.61%
Distribution & Logistics 7.763.96%
Federal Services 6.313.86%
Consumer ServicesNet Lease 4.52%
Energy4.33%
Healthcare Services4.18%
Media3.16%
Healthcare Products2.491.73%
Business Products 2.211.60%
ManufacturingMedia 1.98%
Investment Fund1.451.55%
Retail 1.391.35%
Industrial ServicesHealthcare Information Technology 0.360.96%
Total investments 100.00%
 
  December 31, 20152016
Interest Rate Type 
Percent of Total
Investments at Fair Value
Floating rates 86.2693.16%
Fixed rates 13.746.84%
Total investments 100.00%


Notes to the Consolidated Financial Statements of
New Mountain Finance Corporation
 
September 30, 2016March 31, 2017
(in thousands, except share data)
(unaudited)
Note 1. Formation and Business Purpose
New Mountain Finance Corporation
New Mountain Finance Corporation (“NMFC” or the “Company”) is a Delaware corporation that was originally incorporated on June 29, 2010.2010 and completed its initial public offering ("IPO") on May 19, 2011. NMFC is a closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). As such, NMFC is obligated to comply with certain regulatory requirements. NMFC has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
On May 19, 2011, NMFC priced its initial public offering (the “IPO”) of 7,272,727 shares of common stock at a public offering price of $13.75 per share. Concurrently with the closing of the Since NMFC’s IPO, and at the public offering price of $13.75 per share,through March 31, 2017, NMFC sold anraised approximately $533,103 in net proceeds from additional 2,172,000 sharesofferings of its common stock to certain executives and employeesstock.
New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”) is a wholly-owned subsidiary of and other individuals affiliated with, New Mountain Capital, L.L.C. ("New Mountain Capital", defined as New Mountain Capital Group, L.L.C. and its affiliates) in a concurrent private placement (the “Concurrent Private Placement”). Additionally, 1,252,964 shares were issued to the partners of New Mountain Guardian Partners, L.P. at that time for their ownership interest in the Predecessor Entities (as defined below). In connection with NMFC’s IPO and through a series of transactions, New Mountain Finance Holdings, L.L.C. (“NMF Holdings” or the “Predecessor Operating Company”) acquired all of the operations of the Predecessor Entities, including all of the assets and liabilities related to such operations.
New Mountain Finance Holdings, L.L.C.
NMF Holdings is a Delaware limited liability company. Until May 8, 2014, NMF Holdings was externally managed and was regulated as a BDC under the 1940 Act. As such, NMF Holdings was obligated to comply with certain regulatory requirements. NMF Holdings was treated as a partnership for United States (“U.S.”) federal income tax purposes for so long as it had at least two members. With the completion of the underwritten secondary offering on February 3, 2014, NMF Holdings’ existence as a partnership for U.S. federal income tax purposes terminated and NMF Holdings became an entity that is disregarded as a separate entity from its owner for U.S. federal tax purposes. For additional information on the Company’s organizational structure prior to May 8, 2014, see “—Restructuring”.
Until May 8, 2014, NMF Holdings was externally managed by New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”). As of May 8, 2014, the Investment Adviser serves as the external investment adviser to NMFC. New Mountain Finance Administration, L.L.C. (the “Administrator”) provides the administrative services necessary for operations. The Investment Adviser and Administrator are wholly-owned subsidiaries of New Mountain Capital. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. NMF Holdings, formerly known asThe Investment Adviser manages the Company's day-to-day operations and provides it with investment advisory and management services. New Mountain Guardian (Leveraged)Finance Administration, L.L.C. (the "Administrator”), L.L.C., was originally formed as a wholly-owned subsidiary of New Mountain Guardian AIV, L.P. (“Guardian AIV”) by New Mountain Capital, in October 2008. Guardian AIV was formed through an allocation of approximately $300.0 million ofprovides the $5.1 billion of commitments supporting New Mountain Partners III, L.P., a private equity fund managed by New Mountain Capital. In February 2009, New Mountain Capital formed a co-investment vehicle, New Mountain Guardian Partners, L.P., comprising $20.4 million of commitments. New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P., together with their respective direct and indirectadministrative services necessary to conduct the Company's day-to-day operations.
The Company’s wholly-owned subsidiaries, are defined as the “Predecessor Entities”.
Prior to December 18, 2014,subsidiary, New Mountain Finance SPV Funding,Holdings, L.L.C. (“NMF SLF”Holdings” or the "Predecessor Operating Company") was, is a Delaware limited liability company. NMF SLF was a wholly-owned subsidiary of NMF Holdings and thus a wholly-owned indirect subsidiary of the Company. NMF SLF was bankruptcy-remote and non-recourse to NMFC. As part of an amendment to the Company’s existing credit facilities with Wells Fargo Bank, National Association, NMF SLF merged with and into NMF Holdings on December 18, 2014. See Note 7, Borrowings, for details.

New Mountain Finance AIV Holdings Corporation
Until April 25, 2014, New Mountain Finance AIV Holdings Corporation (“AIV Holdings”) was a Delaware corporation that was originally incorporated on March 11, 2011. AIV Holdings was dissolved on April 25, 2014. Guardian AIV, a Delaware limited partnership, was AIV Holdings’ sole stockholder. AIV Holdings was a closed-end, non-diversified management investment company that was regulated as a BDC under the 1940 Act. As such, AIV Holdings was obligated to comply with certain regulatory requirements. AIV Holdings was treated, and complied with the requirements to qualify annually, as a RIC under the Code.
Structure
Prior to the Restructuring (as defined below) on May 8, 2014, NMFC and AIV Holdings were holding companies with no direct operations of their own, and their sole asset was their ownership in NMF Holdings. In connection with the IPO, NMFC and AIV Holdings each entered into a joinder agreement with respect to the Limited Liability Company Agreement, as amended and restated (the “Operating Agreement”), of NMF Holdings, pursuant to which NMFC and AIV Holdings were admitted as members of NMF Holdings. NMFC acquired from NMF Holdings, with the gross proceeds of the IPO and the Concurrent Private Placement, common membership units (“units”) of NMF Holdings (the number of units were equal to the number of shares of NMFC’s common stock sold in the IPO and the Concurrent Private Placement). Additionally, NMFC received units of NMF Holdings equal to the number of shares of common stock of NMFC issued to the partners of New Mountain Guardian Partners, L.P. Guardian AIV was the parent of NMF Holdings prior to the IPO and, as a result of the transactions completed in connection with the IPO, obtained units in NMF Holdings. Guardian AIV contributed its units in NMF Holdings to its newly formed subsidiary, AIV Holdings, in exchange for common stock of AIV Holdings. AIV Holdings had the right to exchange all or any portion of its units in NMF Holdings for shares of NMFC’s common stock on a one-for-one basis at any time.
The original structure was designed to generally prevent NMFC from being allocated taxable income with respect to unrecognized gains that existed at the time of the IPO in the Predecessor Entities’whose assets and rather such amounts would be allocated generally to AIV Holdings. The result was that any distributions made to NMFC’s stockholders that were attributable to such gains generally were not treated as taxable dividends but rather as return of capital.
Since NMFC’s IPO, and through September 30, 2016, NMFC raised approximately $454,040 in net proceeds from additional offerings of common stock and issued shares of its common stock valued at approximately $288,416 on behalf of AIV Holdings for exchanged units. NMFC acquired from NMF Holdings units of NMF Holdings equal to the number of shares of NMFC’s common stock sold in the additional offerings. With the completion of the final secondary offering on February 3, 2014, NMFC owned 100.0% of the units of NMF Holdings, which became a wholly-owned subsidiary of NMFC.
Restructuring
As a BDC, AIV Holdings had been subject to the 1940 Act, including certain provisions applicable only to BDCs. Accordingly, and after careful consideration of the 1940 Act requirements applicable to BDCs, the cost of 1940 Act compliance and a thorough assessment of AIV Holdings’ business model, AIV Holdings’ board of directors determined that continuation as a BDC was not in the best interests of AIV Holdings and Guardian AIV. Specifically, given that AIV Holdings was formed for the sole purpose of holding units of NMF Holdings and AIV Holdings had disposed of all of the units of NMF Holdings that it was holding as of February 3, 2014, the board of directors of AIV Holdings approved and declared advisable at an in-person meeting held on March 25, 2014 the withdrawal of AIV Holdings’ election to be regulated as a BDC under the 1940 Act. In addition, the board of directors of AIV Holdings approved and declared advisable for AIV Holdings to terminate its registration under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and to dissolve AIV Holdings under the laws of the State of Delaware.
Upon receipt of the necessary stockholder consent to authorize the board of directors of AIV Holdings to withdraw AIV Holdings’ election to be regulated as a BDC, the withdrawal was filed and became effective upon receipt by the U.S. Securities and Exchange Commission (“SEC”) of AIV Holdings’ notification of withdrawal on Form N-54C on April 15, 2014. The board of directors of AIV Holdings believed that AIV Holdings met the requirements for filing the notification to withdraw its election to be regulated as a BDC, upon the receipt of the necessary stockholder consent. After the notification of withdrawal of AIV Holdings’ BDC election was filed with the SEC, AIV Holdings was no longer subject to the regulatory provisions of the 1940 Act applicable to BDCs generally, including regulations related to insurance, custody, composition of its board of directors, affiliated transactions and any compensation arrangements.
In addition, on April 15, 2014, AIV Holdings filed a Form 15 with the SEC to terminate AIV Holdings’ registration under Section 12(g) of the Exchange Act. After these SEC filings and any other federal or state regulatory or tax filings were made, AIV Holdings proceeded to dissolve under Delaware law by filing a certificate of dissolution in Delaware on April 25, 2014.

Until May 8, 2014, as a BDC, NMF Holdings had been subject to the 1940 Act, including certain provisions applicable only to BDCs. Accordingly, and after careful consideration of the 1940 Act requirements applicable to BDCs, the cost of 1940 Act compliance and a thorough assessment of NMF Holdings’ current business model, NMF Holdings’ board of directors determined at an in-person meeting held on March 25, 2014 that continuation as a BDC was not in the best interests of NMF Holdings.
At the joint annual meeting of the stockholders of NMFC and the sole unit holder of NMF Holdings held on May 6, 2014, the stockholders of NMFC and the sole unit holder of NMF Holdings approved a proposal which authorized the board of directors of NMF Holdings to withdraw NMF Holdings’ election to be regulated as a BDC. Additionally, the stockholders of NMFC approved a new investment advisory and management agreement between NMFC and the Investment Adviser. Upon receipt of the necessary stockholder/unit holder approval to authorize the board of directors of NMF Holdings to withdraw NMF Holdings’ election to be regulated as a BDC, the withdrawal was filed and became effective upon receipt by the SEC of NMF Holdings’ notification of withdrawal on Form N-54C on May 8, 2014.
Effective May 8, 2014, NMF Holdings amended and restated its Operating Agreement such that the board of directors of NMF Holdings was dissolved and NMF Holdings remained a wholly-owned subsidiary of NMFC with the sole purpose of serving as a special purpose vehicle for NMF Holdings’ credit facility, and NMFC assumed all other operating activities previously undertaken by NMF Holdings under the management of the Investment Adviser (collectively, the “Restructuring”). After the Restructuring, all wholly-owned direct and indirect subsidiaries of NMFC are consolidated with NMFC for both 1940 Act and financial statement reporting purposes, subject to any financial statement adjustments required in accordance with accounting principles generally accepted in the United States of America (“GAAP”). NMFC continues to remain a BDC under the 1940 Act.
Also, on May 8, 2014, NMF Holdings filed Form 15 with the SEC to terminate NMF Holdings’ registration under Section 12(g) of the Exchange Act. As a special purpose entity, NMF Holdings is bankruptcy-remote and non-recourse to NMFC. In addition, the assets held at NMF Holdings will continue to be used to secure NMF Holdings’ credit facility.
Current Organization
The Company’s wholly-owned subsidiaries, NMF Ancora Holdings Inc. (“NMF Ancora”), NMF QID NGL Holdings, Inc. (“NMF QID”) and NMF YP Holdings Inc. (“NMF YP”), the Company's wholly-owned subsidiaries, are structured as Delaware entities that serve as tax blocker corporations which hold equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities). The Company consolidates its tax blocker corporations for accounting purposes. The tax blocker corporations are not consolidated for income tax purposes and may incur income tax expense as a result of their ownership of portfolio companies. Additionally, the Company has a wholly-owned subsidiary, New Mountain Finance Servicing, L.L.C. (“NMF Servicing”), that serves as the administrative agent on certain investment transactions. New Mountain Finance SBIC, L.P. (“SBIC LP”), and its general partner, New Mountain Finance SBIC G.P., L.L.C. (“SBIC GP”), were organized in Delaware as a limited partnership and limited liability company, respectively. SBIC LP and SBIC GP are consolidated wholly-owned direct and indirect subsidiaries of the Company. SBIC LP received a license from the United States ("U.S.") Small Business Administration (the “SBA”) to operate as a small business investment company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958, as amended (the “1958 Act”).

The diagram below depicts New Mountain Net Lease Corporation ("NMNLC"), a Maryland corporation, was formed to acquire commercial real properties that are subject to "triple net" leases and intends to qualify as a real estate investment trust, or REIT, within the Company’s organizational structure asmeaning of September 30, 2016.Section 856(a) of the Code.
structurediagrama03.jpg
*Includes partners of New Mountain Guardian Partners, L.P.
**NMFC is the sole limited partner of SBIC LP. NMFC, directly or indirectly through SBIC GP, wholly-owns SBIC LP. NMFC owns 100.0% of SBIC GP which owns 1.0% of SBIC LP. NMFC owns 99.0% of SBIC LP.
The Company’s investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. In some cases, the Company’s investments may also include equity interests. The primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to the Company, SBIC LP’s investment objective is to generate current income and capital appreciation under the investment criteria used by the Company, however, SBIC LP’s investments must be in SBA eligible companies. The Company’s portfolio may be concentrated in a limited number of industries. As of September 30, 2016,March 31, 2017, the Company’s top five industry concentrations were software, business services, distribution & logistics,software, consumer services, investment fund and education.

Note 2. Summary of Significant Accounting Policies
Basis of accounting—The Company’s consolidated financial statements have been prepared in conformity with GAAP.accounting principles generally accepted in the United States of America ("GAAP"). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, (“ASC 946”). NMFC consolidates its wholly-owned direct and indirect subsidiaries: NMF Holdings, NMF Servicing, NMNLC, SBIC LP, SBIC GP, NMF Ancora, NMF QID and NMF YP. Previously, the Company consolidated its wholly-owned indirect subsidiary NMF SLF until it merged with and into NMF Holdings on December 18, 2014. See Note 7, Borrowings, for details.
The Company’s consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition for all periods presented. All intercompany transactions have been eliminated. Revenues are recognized when earned and expenses when incurred. The financial results of the Company’s portfolio investments are not consolidated in the financial statements.
The Company’s interim consolidated financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 6 or 10 of Regulation S-X. Accordingly, the Company’s interim consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31, 2016.

2017.
Investments—The Company applies fair value accounting in accordance with GAAP. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected on the Company’s Consolidated Statements of Assets and Liabilities at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Company’s Consolidated Statements of Operations as “Net change in unrealized appreciation (depreciation) of investments” and realizations on portfolio investments reflected in the Company’s Consolidated Statements of Operations as “Net realized gains (losses) on investments”.
The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, the Company’s board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where its portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. The Company’s quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
(2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.
a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b.For investments other than bonds, the Company looks at the number of quotes readily available and performs the following procedures:
i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained.
ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:

a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b.Preliminary valuation conclusions will then be documented and discussed with the Company’s senior management;
c.If an investment falls into (3) above for four consecutive quarters and if the investment’s par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which the Company does not have a readily available market quotation will be reviewed by an independent valuation firm engaged by the Company’s board of directors; and
d.When deemed appropriate by the Company’s management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.

The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period and the fluctuations could be material.
See Note 3,3. Investments, for further discussion relating to investments.
New Mountain Net Lease Corporation
NMNLC was formed to acquire commercial real properties that are subject to "triple net" leases. NMNLC's investments are disclosed on the Company's Consolidated Schedule of Investments as of March 31, 2017.
Below is certain summarized property information for NMNLC as of March 31, 2017:
    Lease   Total Fair Value as of
Portfolio Company Tenant Expiration Date Location Square Feet March 31, 2017
NM APP Canada Corp. A.P. Plasman, Inc. 9/30/2031 Ontario, Canada 436 $7,345
NM APP US LLC Plasman Corp, LLC / A-Brite LP 9/30/2033 Fort Payne, AL 261 5,080
      Cleveland, OH    
NM DRVT LLC FMH Conveyors, LLC 10/31/2031 Jonesboro, AR 195 5,152
NM JRA LLC J.R. Automation Technologies, LLC 1/31/2031 Holland, MI 88 2,043
NM KRLN LLC Kirlin Group, LLC 6/30/2029 Rockville, MD 95 7,510
          $27,130
Collateralized agreements or repurchase financings—The Company follows the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral, (“ASC 860”) when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the Company held one collateralized agreement to resell with a cost basis of $30,000 and $30,000, respectively, and a carrying value of $28,673$28,418 and $29,704,$29,218, respectively, and collateralized by a second lien bond in Northstar GOM Holdings Group LLC with a fair value of $28,673$28,418 and $29,704,$29,218, respectively. The collateralized agreement to resell is guaranteed by a private hedge fund with the most recently reported assets under management of approximately $690,000 and assets under management of approximately $716,590 as of December 31, 2015.$690,000. Pursuant to the terms of the collateralized agreement, the private hedge fund is obligated to repurchase the collateral from the Company at the par value of the collateralized agreement once called upon by the Company or if the private hedge fund's total assets under management fall below the agreed upon thresholds. The collateralized agreement was called upon by the Company but the counterparty failed to repurchase the collateral at its par value in accordance with the terms of the collateralized agreement. As of September 30, 2016,March 31, 2017, litigation is on-goingon-

going in the state of New York and the Cayman Islands to resolve this matter. The collateralized agreement earned interest at a contractual weighted average rate of 16.0% and 15.0%16.0% per annum as of September 30, 2016March 31, 2017 and December 31, 2015,2016, respectively.
Cash and cash equivalents—Cash and cash equivalents include cash and short-term, highly liquid investments. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near maturity that there is insignificant risk of changes in value. These securities have original maturities of three months or less. The Company did not hold any cash equivalents as of September 30, 2016March 31, 2017 and December 31, 2015.2016.
Revenue recognition
Sales and paydowns of investments:  Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:  Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. The Company has loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible.  The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer.
Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
Non-accrual income:  Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Other income:  Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. The Company may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received

by the Company for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Interest and other financing expenses—Interest and other financing fees are recorded on an accrual basis by the Company. See Note 7,7. Borrowings, for details.
Deferred financing costs—The deferred financing costs of the Company consistsconsist of capitalized expenses related to the origination and amending of the Company’s borrowings. The Company amortizes these costs into expense over the stated life of the related borrowing. See Note 7,7. Borrowings, for details. On January 1, 2016, the Company adopted Accounting Standards Update No. 2015-03, Interest—Imputation of Interest Subtopic 835-30—Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). Upon adoption, the Company revised its presentation of deferred financing costs from an asset to a liability, which is a direct deduction to its debt on the Consolidated Statements of Assets and Liabilities. In addition, the Company retrospectively revised its presentation of $13,992 of deferred financing costs that were previously presented as an asset as of December 31, 2015, which resulted in a decrease to total assets and total liabilities as of December 31, 2015.
Deferred offering costs—The Company's deferred offering costs consist of fees and expenses incurred in connection with equity offerings and the filing of shelf registration statements. Upon the issuance of shares, offering costs are charged as a direct reduction to net assets. Deferred offering costs are included in other assets on the Company's Consolidated Statements of Assets and Liabilities.
Income taxes—The Company has elected to be treated, and intends to comply with the requirements to qualify annually, as a RIC under subchapter M of the Code. As a RIC, the Company is not subject to U.S. federal income tax on the portion of taxable income and gains timely distributed to its stockholders.
To continue to qualify and be subject to tax as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90.0% of its investment company taxable income, as defined by the Code. Since U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes.

Differences between taxable income and the results of operations for financial reporting purposes may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.
For U.S. federal income tax purposes, distributions paid to stockholders of the Company are reported as ordinary income, return of capital, long term capital gains or a combination thereof.
The Company will be subject to a 4.0% nondeductible federal excise tax on certain undistributed income unless the Company distributes, in a timely manner as required by the Code, an amount at least equal to the sum of (1) 98.0% of its respective net ordinary income earned for the calendar year and (2) 98.2% of its respective capital gain net income for the one-year period ending October 31 in the calendar year.
Certain consolidated subsidiaries of the Company are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for income tax purposes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and income tax purposes.
For the three and nine months ended September 30, 2016,March 31, 2017, the Company recognized a total income tax (provision) benefit of approximately $(11) and $706, respectively,$675 for the Company’s consolidated subsidiaries. For the three and nine months ended September 30,March 31, 2017, the Company recorded current income tax expense of approximately $80 and deferred income tax benefit of approximately $755. For the three months ended March 31, 2016, the Company recognized a total benefit for income taxes of approximately $683 for the Company’s consolidated subsidiaries.  For the three months ended March 31, 2016, the Company recorded current income tax expense of approximately $22 and $113, respectively,$41 and deferred income tax benefit of approximately $11 and $819, respectively, which excludes a deferred tax (provision) benefit of $(188) and $34, respectively, attributable to one of the Company's consolidated subsidiaries. For the three and nine months ended September 30, 2015, the Company recognized a total provision for income taxes of approximately $409 and $1,347, respectively, for the Company’s consolidated subsidiaries.  For the three and nine months ended September 30, 2015, the Company recorded current income tax (benefit) expense of approximately $(172) and $130, respectively, and deferred income tax provision of approximately $581 and $1,217, respectively.$724.
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the Company had $857$279 and $1,676,$1,034, respectively, of deferred tax liabilities primarily relating to deferred taxes attributable to certain differences between the computation of income for U.S. federal income tax purposes as compared to GAAP. As of September 30, 2016 and December 31, 2015, the Company had a deferred tax asset of $554 and $520, respectively, attributable to one of the Company’s consolidated subsidiaries primarily related to net operating losses.  The Company has determined that it is more likely than not that the subsidiary will have insufficient taxable income to realize some portion or all of the deferred tax asset.  As such, as of September 30, 2016 and December 31, 2015, a full valuation allowance of $554 and $520, respectively, has been recorded against the deferred tax asset.

The Company has adopted the Income Taxes topic of the Accounting Standards Codification Topic 740 (“ASC 740”). ASC 740 provides guidance for income taxes, including how uncertain income tax positions should be recognized, measured, and disclosed in the financial statements. Based on its analysis, the Company has determined that there were no uncertain income tax positions that do not meet the more likely than not threshold through December 31, 2015.2016. The 2013 through 20152016 tax years remain subject to examination by the U.S. federal, state, and local tax authorities.
DividendsDistributions—Distributions to common stockholders of the Company are recorded on the record date as set by the board of directors. The Company intends to make distributions to its stockholders that will be sufficient to enable the Company to maintain its status as a RIC. The Company intends to distribute approximately all of its adjusted net investment income (see Note 5,5. Agreements) on a quarterly basis and substantially all of its taxable income on an annual basis, except that the Company may retain certain net capital gains for reinvestment.
The Company has adopted a dividend reinvestment plan that provides on behalf of its stockholders for reinvestment of any distributions declared on behalf of its stockholders, unless a stockholder elects to receive cash.
The Company applies the following in implementing the dividend reinvestment plan. If the price at which newly issued shares are to be credited to stockholders’ accounts is equal to or greater than 110.0% of the last determined net asset value of the shares, the Company will use only newly issued shares to implement its dividend reinvestment plan. Under such circumstances, the number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of the Company’s common stock on the New York Stock Exchange (“NYSE”) on the distribution payment date. Market price per share on that date will be the closing price for such shares on the NYSE or, if no sale is reported for such day, the average of their electronically reported bid and ask prices.
If the price at which newly issued shares are to be credited to stockholders’ accounts is less than 110.0% of the last determined net asset value of the shares, the Company will either issue new shares or instruct the plan administrator to purchase shares in the open market to satisfy the additional shares required. Shares purchased in open market transactions by the plan administrator will be allocated to a stockholder based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market. The number of shares of the Company’s common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of the Company’s stockholders have been tabulated.

Share repurchase planprogram—On February 4, 2016, the Company's board of directors authorized a program for the purpose of repurchasing up to $50,000 worth of the Company's common stock. Under the repurchase program, the Company may,was permitted, but iswas not obligated, to repurchase its outstanding common stock in the open market from time to time provided that it compliescomplied with the Company's code of ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act), including certain price, market volume and timing constraints. In addition, any repurchases will bewere conducted in accordance with the 1940 Act. Unless amended or extended byOn December 23, 2016, the Company's board of directors extended the Company's repurchase program and the Company expects the repurchase program to be in place until the earlier of December 31, 20162017 or until $50,000 of the Company'sits outstanding shares of common stock have been repurchased. During the three and nine months ended September 30,March 31, 2017, the Company did not repurchase any shares of the Company's common stock. During the three months ended March 31, 2016, the Company repurchased a total of 0 and 248,499124,950 shares respectively, of the Company's common stock in the open market for $0 and $2,948, respectively,$1,433, including commissions paid.
Earnings per share—The Company’s earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock outstanding during the period of computation. Diluted EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock assuming all potential shares had been issued, and its related net impact to net assets accounted for, and the additional shares of common stock were dilutive. Diluted EPS reflects the potential dilution, using the as-if-converted method for convertible debt, which could occur if all potentially dilutive securities were exercised.
Foreign securities—The accounting records of the Company are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with “Net change in unrealized appreciation (depreciation) of investments” and “Net realized gains (losses) on investments” in the Company’s Consolidated Statements of Operations.
Investments denominated in foreign currencies may be negatively affected by movements in the rate of exchange between the U.S. dollar and such foreign currencies. This movement is beyond the control of the Company and cannot be predicted.

Use of estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Company’s consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in the economic environment, financial markets, and other metrics used in determining these estimates could cause actual results to differ from the estimates used, and the differences could be material.
Dividend income recorded related to distributions received from flow-through investments is an accounting estimate based on the most recent estimate of the tax treatment of the distribution.
Note 3. Investments
At September 30,March 31, 2017, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
��Cost Fair Value
First lien$757,347
 $752,726
Second lien687,952
 659,117
Subordinated74,814
 76,063
Equity and other276,938
 298,989
Total investments$1,797,051
 $1,786,895

Investment Cost and Fair Value by Industry
 Cost Fair Value
Business Services$593,357
 $612,192
Software459,929
 458,442
Consumer Services104,323
 105,786
Investment Fund102,400
 102,400
Education98,633
 100,046
Healthcare Services85,388
 87,311
Energy83,903
 74,764
Federal Services73,735
 73,999
Distribution & Logistics94,304
 67,869
Net Lease27,130
 27,130
Media18,604
 21,370
Retail21,106
 21,196
Business Products19,582
 19,427
Healthcare Information Technology14,657
 14,963
Total investments$1,797,051
 $1,786,895
At December 31, 2016, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
 Cost Fair Value
First lien$673,021
 $648,743
Second lien628,537
 589,827
Subordinated90,874
 86,614
Equity and other172,323
 193,795
Total investments$1,564,755
 $1,518,979
Investment Cost and Fair Value by Industry
 Cost Fair Value
Software$427,175
 $420,899
Business Services385,472
 397,546
Distribution & Logistics140,973
 114,079
Consumer Services111,740
 112,341
Education93,569
 94,620
Healthcare Services74,612
 74,957
Investment Fund70,640
 70,640
Energy96,815
 68,226
Federal Services62,993
 63,120
Media22,999
 26,319
Business Products25,618
 24,098
Retail21,010
 20,784
Net Lease16,500
 16,500
Healthcare Information Technology14,639
 14,850
Total investments$1,564,755
 $1,518,979
At December 31, 2015, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
Cost Fair ValueCost Fair Value
First lien$711,601
 $670,023
$706,140
 $700,580
Second lien656,165
 631,985
638,347
 604,203
Subordinated95,429
 87,005
68,341
 66,559
Equity and other105,521
 123,211
162,350
 187,475
Total investments$1,568,716
 $1,512,224
$1,575,178
 $1,558,817
Investment Cost and Fair Value by Industry
Cost Fair ValueCost Fair Value
Business Services$446,008
 $461,997
Software$384,805
 $370,892
424,965
 420,896
Business Services367,109
 368,409
Consumer Services105,868
 106,392
Investment Fund94,460
 94,460
Education167,222
 165,947
93,651
 94,168
Energy81,390
 75,168
Healthcare Services70,731
 71,844
Distribution & Logistics123,053
 117,375
88,768
 61,696
Federal Services95,459
 95,477
59,881
 60,116
Consumer Services69,250
 68,269
Energy96,717
 65,521
Healthcare Services66,923
 63,255
Net Lease27,000
 27,000
Business Products25,613
 24,958
Media43,489
 47,804
21,189
 24,162
Healthcare Products38,664
 37,648
Business Products35,188
 33,420
Manufacturing29,852
 29,850
Investment Fund23,000
 21,914
Retail21,032
 21,000
21,006
 21,016
Industrial Services6,953
 5,443
Healthcare Information Technology14,648
 14,944
Total investments$1,568,716
 $1,512,224
$1,575,178
 $1,558,817

During the first quarter of 2017, the Company placed its entire first lien notes position in Sierra Hamilton LLC / Sierra Hamilton Finance, Inc. ("Sierra") on non-accrual status due to its ongoing restructuring. As of March 31, 2017, the Company's investment in Sierra placed on non-accrual status represented an aggregate cost basis of $27,231, an aggregate fair value of $16,465 and total unearned interest income of $491 for the three months then ended.
During the third quarter of 2016, the Company placed its entire second lien position in Transtar Holding Company (“Transtar”) on non-accrual status due to its ongoing restructuring. As of September 30, 2016,March 31, 2017, the Company's investment in Transtar had an aggregate cost basis of $30,900,$31,166, an aggregate fair value of $3,786$3,621 and total unearned interest income of $1,598 and $2,440$1,809 for the three and nine months then ended, respectively.ended.
During the second quarter of 2016, the Company placed a portion of its first lien position in Permian Tank & Manufacturing, Inc. (“Permian”) on non-accrual status due to its ongoing restructuring. As of September 30, 2016, the portion of theCompany’s investment in Permian first lien position placed on non-accrual status representedhad an aggregate cost basis of $17,111,$24,444, an aggregate fair value of $4,945$7,064 and total unearned interest income of $448 and $1,273 for the three and nine months then ended. In October 2016, Permian completed a restructuring which resulted in a material modification of the original terms and an extinguishment of the Company’s original investment in Permian. Prior to the extinguishment in October 2016, the Company’s original investment in Permian had an aggregate cost of $25,047, an aggregate fair value of $7,064 and total unearned interest income of $1,422 for the year ended respectively.December 31, 2016. The extinguishment resulted in a realized loss of $17,983.  Post restructuring, the Company’s investments in Permian have been restored to full accrual status. As of March 31, 2017, the Company’s investments in Permian have an aggregate cost basis of$9,256 and an aggregate fair value of $11,346.
During the third quarter of 2016, the Company received notice that there would be no recovery of the oustanding principleoutstanding principal and interest owed on its two super priority first lien positions in ATI Acquisition Company ("ATI"). As of June 30, 2016, the Company’s first lien positions in ATI had an aggregate cost of $1,528 and an aggregate fair value of $0 and no unearned interest income for the period then ended. The Company wrote off its first lien positions in ATI and recognized an aggregate realized loss of $1,528 during the three months ended September 30, 2016. As of September 30, 2016,March 31, 2017, the Company's preferred shares and warrants in Ancora Acquisition LLC, which were received as a result of the Company's first lien positions in ATI, had an aggregate cost basis of $83 and an aggregate fair value of $393.
During the first quarter of 2015, the Company placed a portion of its second lien position in Edmentum, Inc. (“Edmentum”) on non-accrual status due to its ongoing restructuring. As of March 31, 2015, the Company’s investment in Edmentum had an aggregate cost basis of $30,771, an aggregate fair value of $15,575 and total unearned interest income of $438 for the three months then ended. In June 2015, Edmentum completed a restructuring which resulted in a material modification of the original terms and an extinguishment of the Company’s original investment in Edmentum. Prior to the extinguishment in June 2015, the Company’s original investment in Edmentum had an aggregate cost of $31,636, an aggregate fair value of $16,437 and total unearned interest income of $851 for the six months ended June 30, 2015. The extinguishment resulted in a realized loss of $15,199.  Post restructuring, the Company’s investments in Edmentum have been restored to full accrual status.  As of September 30, 2016, the Company’s investments in Edmentum have an aggregate cost basis of $22,472 and an aggregate fair value of $23,684.
During the first quarter of 2015, the Company’s first lien position in Education Management LLC (“EDMC”) was non-income producing as a result of the portfolio company undergoing a restructuring. As of December 31, 2014, the Company’s investment in EDMC had an aggregate cost basis of $2,987, an aggregate fair value of $1,376 and no unearned interest income for the three months then ended.  In January 2015, EDMC completed a restructuring which resulted in a material modification of the original terms and an extinguishment of the Company’s original investment in EDMC. Prior to the extinguishment in January 2015, the Company’s original investment in EDMC had an aggregate cost of $2,987, an aggregate fair value of $1,376 and no unearned interest income for the period then ended. The extinguishment resulted in a realized loss

of $1,611.  Post restructuring, the Company’s investments in EDMC are income producing.  As of September 30, 2016, the Company’s investments in EDMC have an aggregate cost basis of $1,478 and an aggregate fair value of $176.
During the third quarter of 2014, the Company placed a portion of its first lien position in UniTek Global Services, Inc. (“UniTek”) on non-accrual status in anticipation of a voluntary petition for a “Pre-Packaged” Chapter 11 Bankruptcy in the U.S. Bankruptcy Court for the District of Delaware, which was filed on November 3, 2014. As of December 31, 2014, the Company’s investments in UniTek had an aggregate cost basis of $47,357, an aggregate fair value of $35,227 and total unearned interest income of $975 for the year then ended. In January 2015, UniTek emerged from “Pre-Packaged” Chapter 11 Bankruptcy and completed its restructuring.  The restructuring resulted in a material modification of the original terms and an extinguishment of the Company’s original investments in UniTek. Prior to the extinguishment in January 2015, the Company’s original investments in UniTek had an aggregate cost of $52,902, an aggregate fair value of $40,137 and total unearned interest income of $68 for the period then ended. The extinguishment resulted in a realized loss of $12,765.  Post restructuring, the Company’s investments in UniTek have been restored to full accrual status.  As of September 30, 2016, the Company’s investments in UniTek have an aggregate cost basis of $41,213 and an aggregate fair value of $55,058.
As of September 30, 2016,2017, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $13,926$25,103 and $0, respectively. As of September 30, 2016,March 31, 2017, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $4,157.$11,010. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of September 30, 2016.March 31, 2017.
As of December 31, 2015,2016, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $17,576$27,915 and $0, respectively. As of December 31, 2015,2016, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $8,678.$16,368. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of December 31, 2015.2016.
NMFC Senior Loan Program I LLC
NMFC Senior Loan Program I LLC (“SLP I”) was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by the Company. SLP I is structured as a private investment fund, in which all of the investors are qualified purchasers, as such term is defined under the 1940 Act. Transfer of interests in SLP I is subject to restrictions, and as a result, such interests are not readily marketable. SLP I operates under a limited liability company agreement (the “SLP I Agreement”) and will continue in existence until June 10, 2019, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended for up to one year pursuant to certain terms of the SLP I Agreement. SLP I has a three year re-investment period. SLP I invests in senior secured loans issued by companies within the Company’s core industry verticals. These investments are typically broadly syndicated first lien loans.
SLP I is capitalized with $93,000 of capital commitments and $275,000 of debt from a revolving credit facility and is managed by the Company. The Company’s capital commitment is $23,000, representing less than 25.0% ownership, with third party investors representing the remaining capital commitment. As of September 30, 2016,March 31, 2017, SLP I had total investments with an aggregate fair value of approximately $330,272,$351,337, debt outstanding of $241,217$249,117 and capital that had been called and funded of $93,000. As of December 31, 2015,2016, SLP I had total investments with an aggregate fair value of approximately $349,704,$348,672, debt outstanding of $267,617$256,517 and capital that had been called and funded of $93,000. The Company’s investment in SLP I is disclosed on the Company’s Consolidated SchedulesSchedule of Investments as of September 30, 2016March 31, 2017 and December 31, 2015.2016.

The Company, as an investment adviser registered under the Advisers Act, acts as the collateral manager to SLP I and is entitled to receive a management fee for its investment management services provided to SLP I. As a result, SLP I is classified as an affiliate of the Company. No management fee is charged on the Company's investment in SLP I in connection with the administrative services provided to SLP I. For the three and nine months ended September 30,March 31, 2017 and March 31, 2016, the Company earned approximately $284$290 and $877, respectively, in management fees related to SLP I, which is included in other income. For the three and nine months ended September 30, 2015, the Company earned approximately $308 and $905,$300, respectively, in management fees related to SLP I, which is included in other income. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, approximately $284$576 and $311,$286, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three and nine months ended September 30,March 31, 2017 and March 31, 2016, the Company earned approximately $1,061$1,004 and $2,868, respectively, of dividend income related to SLP I, which is included in dividend income. For the three and nine months ended September 30, 2015, the Company earned approximately $892 and $2,701,$920, respectively, of dividend income related to SLP I, which is included in dividend income. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, approximately $1,061$1,098 and $918,$861, respectively, of dividend income related to SLP I was included in interest and dividend receivable.

NMFC Senior Loan Program II LLC
NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between the Company and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from the Company and SkyKnight. SLP II has a three year investment period and will continue in existence until April 12, 2021. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.
SLP II is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. The Company and SkyKnight have committed to provide $79,400 and $20,600 of equity to SLP II, respectively. As of September 30, 2016March 31, 2017, the Company and SkyKnight have contributed $47,640$79,400 and $12,360,$20,600, respectively. The Company’s investment in SLP II is disclosed on the Company’s Consolidated Schedule of Investments as of September 30,March 31, 2017 and December 31, 2016.
On April 12, 2016, SLP II closed its $275,000 revolving credit facility with Wells Fargo Bank, National Association which matures on April 12, 2021 and bears interest at a rate of the London Interbank Offered Rate ("LIBOR") plus 1.75% per annum. As of September 30,March 31, 2017 and December 31, 2016, SLP II had total investments with an aggregate fair value of approximately $231,329$363,710 and $361,719, respectively, and debt outstanding under its credit facility of $158,400.$250,960 and $249,960, respectively.

The following table is a listing of the individual loans in SLP II's portfolio as of September 30, 2016:March 31, 2017:
Portfolio Company and Type of InvestmentIndustryInterest Rate (1)Maturity Date Principal Amount or Par Value Cost
Fair
Value (2)
 Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
First lien:        
ADMI Corp. (aka Aspen Dental)Healthcare Services 5.25% (L + 4.25%)4/29/2022$1,990
$1,985
$2,004
ADG, LLC Healthcare Services  5.75% (L + 4.75%) 9/28/2023 $17,164
 $17,002
 $17,078
ADMI Corp. Healthcare Services  4.80% (L + 3.75%) 4/29/2022 4,426
 4,426
 4,482
AssuredPartners, Inc.Business Services 5.75% (L + 4.75%)10/21/20228,891
8,891
8,954
 Business Services  5.25% (L + 4.25%) 10/21/2022 14,970
 14,956
 15,108
Beaver-Visitec International Holdings, Inc.Healthcare Products 6.00% (L + 5.00%)8/21/202315,000
14,851
14,963
 Healthcare Products  6.15% (L + 5.00%) 8/21/2023 14,925
 14,786
 14,925
Coinstar, LLCConsumer Services 5.25% (L + 4.25%)9/27/20235,000
4,975
5,044
 Consumer Services  5.25% (L + 4.25%) 9/27/2023 4,975
 4,952
 5,029
Cvent, Inc.Software 6.00% (L + 5.00%)6/16/202310,000
9,900
10,025
 Software  6.00% (L + 5.00%) 11/29/2023 10,000
 9,904
 10,150
DigiCert Holdings, Inc.Software 6.00% (L + 5.00%)10/21/202114,937
14,847
14,900
 Software  6.00% (L + 5.00%) 10/21/2021 14,862
 14,780
 14,899
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC) Software  6.40% (L + 5.25%) 2/18/2022 14,962
 14,814
 14,999
Emerald 2 LimitedBusiness Services 5.00% (L + 4.00%)5/14/20211,277
1,203
1,194
 Business Services  5.15% (L + 4.00%) 5/14/2021 1,277
 1,210
 1,226
Engility Corporation (fka TASC, Inc.)Federal Services 5.75% (L + 4.75%)8/14/202314,118
14,048
14,268
 Federal Services  4.75% (L + 3.75%) 8/14/2023 3,373
 3,357
 3,396
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC)Software 6.25% (L + 5.25%)2/18/202210,534
10,370
10,218
Evo Payments International, LLC Business Services  6.00% (L + 5.00%) 12/22/2023 17,500
 17,415
 17,705
Explorer Holdings, Inc.Healthcare Services 6.00% (L + 5.00%)5/2/20234,988
4,940
5,034
 Healthcare Services  6.03% (L + 5.00%) 5/2/2023 4,963
 4,918
 5,018
GOBP Holdings Inc.Retail 5.00% (L + 4.00%)10/21/202115,243
15,094
15,222
Globallogic Holdings Inc. Business Services  5.65% (L + 4.50%) 6/20/2022 9,750
 9,674
 9,890
Greenway Health, LLC Software  5.75% (L + 4.75%) 2/16/2024 15,000
 14,926
 15,122
Hyperion Insurance Group LimitedBusiness Services 5.50% (L + 4.50%)4/29/20229,913
9,746
9,727
 Business Services  5.50% (L + 4.50%) 4/29/2022 14,364
 14,152
 14,488
J.D. Power and AssociatesBusiness Services 5.25% (L + 4.25%)9/7/202310,000
9,950
10,100
 Business Services  5.25% (L + 4.25%) 9/7/2023 9,950
 9,903
 10,025
Kronos Incorporated Software  5.03% (L + 4.00%) 11/1/2023 9,975
 9,928
 10,044
Masergy Holdings, Inc. Business Services  5.50% (L + 4.50%) 12/15/2023 7,481
 7,445
 7,556
McGraw-Hill Global Education Holdings, LLCEducation 5.00% (L + 4.00%)5/4/20229,975
9,928
10,040
 Education  5.00% (L + 4.00%) 5/4/2022 9,925
 9,882
 9,836
Ministry Brands, LLC Software  6.00% (L + 5.00%) 12/2/2022 7,827
 7,789
 7,804
Ministry Brands, LLC Software  6.00% (L + 5.00%) 12/2/2022 2,154
 2,143
 2,148
Mister Car Wash Holdings, Inc. Consumer Services  5.25% (L + 4.25%) 8/20/2021 8,291
 8,232
 8,358
Mister Car Wash Holdings, Inc. Consumer Services  5.25% (L + 4.25%) 8/20/2021 1,662
 1,681
 1,676
Navex Global, Inc.Software 5.98% (L + 4.75%)11/19/202114,967
14,742
14,743
 Software  5.25% (L + 4.25%) 11/19/2021 14,894
 14,690
 14,950
Netsmart Technologies, Inc.Healthcare I.T. 5.75% (L + 4.75%)4/19/20237,980
7,904
8,027
Precyse Acquisition Corp.Healthcare Services 6.50% (L + 5.50%)10/20/20229,975
9,833
10,062
nThrive, Inc. (fka Precyse Acquisition Corp.) Healthcare Services  6.50% (L + 5.50%) 10/20/2022 9,925
 9,794
 10,012
Poseidon Intermediate, LLC Software  5.25% (L + 4.25%) 8/15/2022 13,478
 13,478
 13,641
Quest Software US Holdings Inc.Software 7.00% (L + 6.00%)10/31/202210,000
9,850
9,850
 Software  7.00% (L + 6.00%) 10/31/2022 9,975
 9,834
 10,128
Salient CRGT Inc. Federal Services  6.75% (L + 5.75%) 2/28/2022 15,000
 14,852
 14,831
Severin Acquisition, LLC Software  5.90% (L + 4.75%) 7/30/2021 15,000
 14,927
 14,925
SolarWinds Holdings, Inc.Software 5.50% (L + 4.50%)2/3/202315,725
15,735
15,890
 Software  4.50% (L + 3.50%) 2/3/2023 14,963
 14,971
 14,997
TTM Technologies, Inc.Business Products 5.25% (L + 4.25%)5/31/202115,000
14,872
15,215
 Business Products  5.25% (L + 4.25%) 5/31/2021 6,048
 6,037
 6,154
University Support Services LLC (St. George's University Scholastic Services LLC) Education  6.40% (L + 5.25%) 7/6/2022 1,979
 1,979
 2,009
Vencore, Inc. (fka SI Organization, Inc., The)Federal Services 5.75% (L + 4.75%)11/23/201910,829
10,807
10,877
 Federal Services  5.90% (L + 4.75%) 11/23/2019 10,772
 10,753
 10,944
VF Holding Corp.Software 4.75% (L + 3.75%)6/30/20235,000
4,976
5,022
Vision Solutions, Inc.Software 7.50% (L + 6.50%)6/16/202210,000
9,904
9,950
 Software  7.64% (L + 6.50%) 6/16/2022 8,725
 8,647
 8,763
Vivid Seats LLC Business Services  6.75% (L + 5.75%) 10/12/2022 4,000
 3,925
 4,025
Zywave, Inc. Software  6.15% (L + 5.00%) 11/17/2022 17,456
 17,373
 17,369
 $231,342
$229,351
$231,329
 $361,991
 $359,535
 $363,710
 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2016.March 31, 2017.
(2)
Represents the fair value in accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). The Company's board of directors does not determine the fair value of the investments held by SLP II.

Below

The following table is certain summarized financial information fora listing of the individual loans in SLP IIII's portfolio as of September 30, 2016 and for the three and nine months ended September 30,December 31, 2016:
Selected Balance Sheet Information:September 30, 2016
Investments at fair value (cost of $229,351)$231,329
Receivable from unsettled securities sold15,993
Cash and other assets3,511
Total assets$250,833
  
Credit facility$158,400
Deferred financing costs(2,716)
Payable for unsettled securities purchased28,705
Distribution payable1,450
Other liabilities3,108
Total liabilities188,947
  
Members' capital$61,886
Total liabilities and members' capital$250,833
 Three Months Ended Nine Months Ended
Selected Statement of Operations Information:September 30, 2016 September 30, 2016(1)
Interest income$2,698
 $3,326
Other income114
 163
Total investment income2,812
 3,489
    
Interest and other financing expenses1,398
 1,931
Other expenses134
 463
Total expenses1,532
 2,394
Net investment income1,280
 1,095
    
Net realized gains on investments229
 263
Net change in unrealized appreciation (depreciation) of investments1,863
 1,978
Net increase in members' capital$3,372
 $3,336
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
First lien:            
ADG, LLC Healthcare Services  5.75% (L + 4.75%) 9/28/2023 $17,207
 $17,040
 $17,121
AssuredPartners, Inc. Business Services  5.25% (L + 4.25%) 10/21/2022 11,862
 11,847
 12,058
Beaver-Visitec International Holdings, Inc. Healthcare Products  6.00% (L + 5.00%) 8/21/2023 14,962
 14,819
 14,963
Coinstar, LLC Consumer Services  5.25% (L + 4.25%) 9/27/2023 4,987
 4,963
 5,054
Cvent, Inc. Software  6.00% (L + 5.00%) 11/29/2023 10,000
 9,901
 10,125
DigiCert Holdings, Inc. Software  6.00% (L + 5.00%) 10/21/2021 14,900
 14,814
 14,881
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC) Software  6.25% (L + 5.25%) 2/18/2022 10,507
 10,350
 10,402
Emerald 2 Limited Business Services  5.00% (L + 4.00%) 5/14/2021 1,277
 1,206
 1,174
Engility Corporation (fka TASC, Inc.) Federal Services  5.81% (Base + 4.72%) 8/14/2023 13,860
 13,793
 14,080
Evo Payments International, LLC Business Services  6.00% (L + 5.00%) 12/22/2023 17,500
 17,413
 17,602
Explorer Holdings, Inc. Healthcare Services  6.00% (L + 5.00%) 5/2/2023 4,975
 4,929
 5,028
Globallogic Holdings Inc. Business Services  5.50% (L + 4.50%) 6/20/2022 10,000
 9,900
 10,013
GOBP Holdings Inc. Retail  5.00% (L + 4.00%) 10/21/2021 14,955
 14,816
 14,985
Hyperion Insurance Group Limited Business Services  5.50% (L + 4.50%) 4/29/2022 14,401
 14,179
 14,476
J.D. Power and Associates Business Services  5.25% (L + 4.25%) 9/7/2023 9,975
 9,927
 10,075
Kronos Incorporated Software  5.00% (L + 4.00%) 11/1/2023 10,000
 9,951
 10,105
Masergy Holdings, Inc. Business Services  5.50% (L + 4.50%) 12/15/2023 7,500
 7,463
 7,563
McGraw-Hill Global Education Holdings, LLC Education  5.00% (L + 4.00%) 5/4/2022 9,950
 9,905
 9,971
Ministry Brands, LLC Software  6.00% (L + 5.00%) 12/2/2022 7,846
 7,807
 7,807
Mister Car Wash Holdings, Inc. Consumer Services  5.25% (L + 4.25%) 8/20/2021 8,312
 8,250
 8,354
Navex Global, Inc. Software  5.99% (L + 4.75%) 11/19/2021 14,933
 14,718
 14,858
nThrive, Inc. (fka Precyse Acquisition Corp.) Healthcare Services  6.50% (L + 5.50%) 10/20/2022 9,950
 9,813
 10,083
Poseidon Intermediate, LLC Software  5.25% (L + 4.25%) 8/15/2022 14,962
 14,962
 15,055
Quest Software US Holdings Inc. Software  7.00% (L + 6.00%) 10/31/2022 10,000
 9,853
 10,153
Rocket Software, Inc. Software  5.25% (L + 4.25%) 10/14/2023 14,962
 14,817
 15,129
SolarWinds Holdings, Inc. Software  5.50% (L + 4.50%) 2/3/2023 14,688
 14,697
 14,852
TTM Technologies, Inc. Business Products  5.25% (L + 4.25%) 5/31/2021 13,548
 13,444
 13,599
Vencore, Inc. (fka SI Organization, Inc., The) Federal Services  5.75% (L + 4.75%) 11/23/2019 10,801
 10,780
 10,942
Vision Solutions, Inc. Software  7.50% (Base + 6.50%) 6/16/2022 9,938
 9,845
 9,919
Vivid Seats LLC Business Services  6.75% (L + 5.75%) 10/12/2022 4,000
 3,922
 3,985
WD Wolverine Holdings, LLC Healthcare Services  6.50% (L + 5.50%) 10/17/2023 10,200
 9,900
 9,894
Zywave, Inc. Software  6.00% (L + 5.00%) 11/17/2022 17,500
 17,414
 17,413
        $360,458
 $357,438
 $361,719
 
(1)ForAll interest is payable in cash unless otherwise indicated. A majority of the nine months ended September 30, 2016, amounts reported relatevariable rate debt investments bear interest at a rate that may be determined by reference to the period fromLIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2016.
(2)Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP II.


Below is certain summarized financial information for SLP II as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and March 31, 2016:
Selected Balance Sheet Information:March 31, 2017 December 31, 2016
Investments at fair value (cost of $359,535 and $357,438, respectively)$363,710
 $361,719
Receivable from unsettled securities sold1,876
 1,007
Cash and other assets6,440
 10,138
Total assets$372,026
 $372,864
    
Credit facility$250,960
 $249,960
Deferred financing costs(2,418) (2,565)
Payable for unsettled securities purchased11,165
 24,862
Distribution payable4,325
 3,000
Other liabilities3,684
 3,350
Total liabilities267,716
 278,607
    
Members' capital$104,310
 $94,257
Total liabilities and members' capital$372,026
 $372,864
 Three Months Ended
Selected Statement of Operations Information:March 31, 2017 March 31, 2016(1)
Interest income$5,173
 $
Other income214
 
Total investment income5,387
 
    
Interest and other financing expenses1,849
 
Other expenses162
 
Total expenses2,011
 
Net investment income3,376
 
    
Net realized gains on investments1,108
 
Net change in unrealized (depreciation) appreciation of investments(106) 
Net increase in members' capital$4,378
 $
(1)SLP II commenced operations on April 12, 2016 (commencement of operations) to September 30, 2016.
For the three and nine months ended September 30, 2016,March 31, 2017, the Company earned approximately $1,151 and $1,151, respectively,$3,434 of dividend income related to SLP II, which is included in dividend income. As of September 30,March 31, 2017 and December 31, 2016, approximately $1,151$3,434 and $2,382, respectively, of dividend income related to SLP II was included in interest and dividend receivable.
The Company has determined that SLP II is an investment company under ASC 946,946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation, concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP II.
New Mountain Net Lease Corporation
New Mountain Net Lease Corporation ("NMNLC") was formed as a Maryland corporation on April 18, 2016 and commenced operations on August 12, 2016. NMNLC was formed to acquire commercial real properties that are subject to "triple net" leases and to qualify as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code. NMNLC is as an operating company that will actively manage the properties and negotiate long term leases. It is intended to further add value by renovating, rehabilitating, developing, re-tenanting or re-positioning such properties over time. The Company has determined that NMNLC is not an investment company under ASC 946 and in accordance with such guidance

the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Accordingly, NMNLC is a wholly-owned non-consolidated portfolio company of the Company.
Unconsolidated Significant Subsidiaries
In accordance with Regulation S-X Rule 10-01(b)(1), the Company evaluates its unconsolidated controlled portfolio companies as significant subsidiaries under this rule.
As of September 30, 2016,March 31, 2017, the Company did not have any significant unconsolidated subsidiaries under Regulation S-X Rule 10-01(b)(1).

Investment risk factors
First and second lien debt that the Company invests in is entirely, or almost entirely, rated below investment grade or may be unrated. Debt investments rated below investment grade are often referred to as “leveraged loans”, “high yield” or “junk” debt investments, and may be considered “high risk” compared to debt investments that are rated investment grade. These debt investments are considered speculative because of the credit risk of the issuers. Such issuers are considered more likely than investment grade issuers to default on their payments of interest and principal, and such risk of default could reduce the net asset value and income distributions of the Company. In addition, some of the Company’s debt investments will not fully amortize during their lifetime, which could result in a loss or a substantial amount of unpaid principal and interest due upon maturity. First and second lien debt may also lose significant market value before a default occurs. Furthermore, an active trading market may not exist for these first and second lien debt investments. This illiquidity may make it more difficult to value the debt.
Subordinated debt is generally subject to similar risks as those associated with first and second lien debt, except that such debt is subordinated in payment and/or lower in lien priority. Subordinated debt is subject to the additional risk that the cash flow of the borrower and the property securing the debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured and unsecured obligations of the borrower.
The Company may directly invest in the equity of private companies or, in some cases, equity investments could be made in connection with a debt investment. Equity investments may or may not fluctuate in value resulting in recognized realized gains or losses upon disposition.
Note 4. Fair Value
Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. The hierarchy classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and the Company has the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by ASC 820, the Company, to the extent that it holds such investments, does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.

The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period. Reclassifications impacting the fair value hierarchy are reported as transfers in/out of the respective leveling categories as of the beginning of the quarterperiod in which the reclassifications occur.

The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of September 30, 2016:March 31, 2017:
Total Level I Level II Level IIITotal Level I Level II Level III
First lien$648,743
 $
 $191,393
 $457,350
$752,726
 $
 $225,758
 $526,968
Second lien589,827
 
 302,339
 287,488
659,117
 
 311,598
 347,519
Subordinated86,614
 
 44,066
 42,548
76,063
 
 50,460
 25,603
Equity and other193,795
 28
 2
 193,765
298,989
 38
 2
 298,949
Total investments$1,518,979
 $28
 $537,800
 $981,151
$1,786,895
 $38
 $587,818
 $1,199,039
The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of December 31, 2015:2016:
Total Level I Level II Level IIITotal Level I Level II Level III
First lien$670,023
 $
 $329,133
 $340,890
$700,580
 $
 $169,979
 $530,601
Second lien631,985
 
 449,227
 182,758
604,203
 
 280,026
 324,177
Subordinated87,005
 
 33,546
 53,459
66,559
 
 41,906
 24,653
Equity and other123,211
 316
 15
 122,880
187,475
 28
 
 187,447
Total investments$1,512,224
 $316
 $811,921
 $699,987
$1,558,817
 $28
 $491,911
 $1,066,878
The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended September 30, 2016,March 31, 2017, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2016:March 31, 2017:
Total First Lien Second Lien Subordinated Equity and otherTotal First Lien Second Lien Subordinated Equity and other
Fair value, June 30, 2016$820,742
 $331,531
 $288,137
 $41,734
 $159,340
Fair value, December 31, 2016$1,066,878
 $530,601
 $324,177
 $24,653
 $187,447
Total gains or losses included in earnings: 
  
  
  
  
 
  
  
  
  
Net realized gains (losses) on investments888
 (1,122) 42
 
 1,968
Net realized gains on investments311
 19
 292
 
 
Net change in unrealized (depreciation) appreciation(7,697) (246) (5,245) 171
 (2,377)(964) 139
 1,770
 211
 (3,084)
Purchases, including capitalized PIK and revolver fundings 124,859
 73,280
 13,556
 643
 37,380
196,404
 37,058
 44,020
 739
 114,587
Proceeds from sales and paydowns of investments(45,409) (33,861) (9,002) 
 (2,546)(50,061) (34,425) (15,636) 
 
Transfers into Level III(1)87,768
 87,768
 
 
 
44,352
 19,608
 24,744
 
 
Fair Value, September 30, 2016$981,151
 $457,350
 $287,488
 $42,548
 $193,765
Transfers out of Level III(1)(57,881) (26,032) (31,848) 
 (1)
Fair Value, March 31, 2017$1,199,039
 $526,968
 $347,519
 $25,603
 $298,949
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:$(7,020) $(1,562) $(5,203) $171
 $(426)$(744) $359
 $1,770
 $211
 $(3,084)
 
(1)As of September 30, 2016,March 31, 2017, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the quarterperiod in which the reclassification occurred.

    

The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended September 30, 2015, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2015:
 Total First Lien Second Lien Subordinated Equity and other
Fair value, June 30, 2015$423,307
 $199,465
 $67,867
 $55,292
 $100,683
Total gains or losses included in earnings: 
  
  
  
  
Net realized gains on investments274
 12
 
 
 262
Net change in unrealized (depreciation) appreciation(963) 468
 (720) (390) (321)
Purchases, including capitalized PIK and revolver fundings171,195
 111,289
 41,481
 282
 18,143
Proceeds from sales and paydowns of investments(1)(6,011) (1,480) (3,050) (924) (557)
Transfers into Level III(1)15,079
 15,079
 
 
 
Transfers out of Level III(1)(27,607) (27,607) 
 
 
Fair Value, September 30, 2015$575,274
 $297,226
 $105,578
 $54,260
 $118,210
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:$(1,256) $468
 $(720) $(390) $(614)
(1)As of September 30, 2015, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the quarter in which the reclassification occurred.
The following table summarizes the changes in fair value of Level III portfolio investments for the nine months ended September 30,March 31, 2016, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30,March 31, 2016:
Total First Lien Second Lien Subordinated Equity and otherTotal First Lien Second Lien Subordinated Equity and other
Fair value, December 31, 2015$699,987
 $340,890
 $182,758
 $53,459
 $122,880
$699,987
 $340,890
 $182,758
 $53,459
 $122,880
Total gains or losses included in earnings: 
  
  
  
  
 
  
  
  
  
Net realized gains (losses) on investments2,396
 (582) 891
 119
 1,968
Net change in unrealized appreciation (depreciation)1,808
 6,433
 (10,813) 2,104
 4,084
Net realized gains on investments147
 28
 
 119
 
Net change in unrealized (depreciation)
appreciation
(1,903) 1,977
 (5,294) 1,557
 (143)
Purchases, including capitalized PIK and revolver fundings 266,509
 112,351
 84,913
 1,866
 67,379
23,468
 2,629
 19,094
 609
 1,136
Proceeds from sales and paydowns of investments(145,166) (84,451) (43,169) (15,000) (2,546)(17,069) (2,069) 
 (15,000) 
Transfers into Level III(1)179,931
 107,023
 72,908
 
 
36,035
 
 36,035
 
 
Transfers out of Level III(1)(24,314) (24,314) 
 
 
Fair Value, September 30, 2016$981,151
 $457,350
 $287,488
 $42,548
 $193,765
Fair Value, March 31, 2016$740,665
 $343,455
 $232,593
 $40,744
 $123,873
Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:$(1,923) $3,621
 $(12,887) $2,224
 $5,119
$(1,783) $1,977
 $(5,294) $1,677
 $(143)
 
(1)As of September 30,March 31, 2016, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the quarter in which the reclassification occurred.


The following table summarizes the changes in fair value of Level III portfolio investments for the nine months ended September 30, 2015, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at September 30, 2015:
 Total First Lien Second Lien Subordinated Equity and other
Fair value, December 31, 2014$419,681
 $169,180
 $134,406
 $35,470
 $80,625
Total gains or losses included in earnings: 
  
  
  
  
Net realized (losses) gains on investments(12,742) (10,907) (14,542) 
 12,707
Net change in unrealized appreciation (depreciation)20,820
 10,375
 13,217
 (3,395) 623
Purchases, including capitalized PIK and revolver fundings(1)296,488
 156,793
 77,724
 23,109
 38,862
Proceeds from sales and paydowns of investments(1)(164,778) (44,020) (105,227) (924) (14,607)
Transfers into Level III(2)43,412
 43,412
 
 
 
Transfers out of Level III(2)(27,607) (27,607) 
 
 
Fair Value, September 30, 2015$575,274
 $297,226
 $105,578
 $54,260
 $118,210
Unrealized appreciation (depreciation) for the period relating to those Level III assets that were still held by the Company at the end of the period:$8,196
 $(282) $(741) $(3,395) $12,614
(1)Includes reorganizations and restructurings.
(2)As of September 30, 2015, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the quarter in which the reclassification occurred.
Except as noted in the tables above, there were no other transfers in or out of Level I, II, or III during the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016. Transfers into Level III occur as quotations obtained through pricing services are not deemed representative of fair value as of the balance sheet date and such assets are internally valued. As quotations obtained through pricing services are substantiated through additional market sources, investments are transferred out of Level III. In addition, transfers out of Level III and transfers into Level III occur based on the increase or decrease in the availability of certain observable inputs.
The Company invests in revolving credit facilities. These investments are categorized as Level III investments as these assets are not actively traded and their fair values are often implied by the term loans of the respective portfolio companies.
The Company generally uses the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. The Company typically determines the fair value of its performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company’s performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:  Prior to investment, as part of its due diligence process, the Company evaluates the overall performance and financial stability of the portfolio company. Post investment, the Company analyzes each portfolio company’s current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. The Company also attempts to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of its original investment thesis. This analysis is specific to each portfolio company. The Company leverages the knowledge gained from its original due diligence process, augmented by this subsequent monitoring, to continually refine its outlook for each of its portfolio companies and ultimately form the valuation of its investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private valuation.
For debt investments, the Company may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of the Company’s debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, the Company may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value.

After enterprise value coverage is demonstrated for the Company’s debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.

Market Based Approach:  The Company may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company EBITDA multiples to the portfolio company’s latest twelve month (“LTM”) EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of September 30, 2016March 31, 2017 and December 31, 2015,2016, the Company used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of its portfolio companies. The Company believes this was athese were reasonable rangeranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach: The Company also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security’s contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’s expected maturity date. These cash flows are discounted at a rate established utilizing a yield calibration approach, which incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2016March 31, 2017 and December 31, 2015,2016, the Company used the discount ranges set forth in the table below to value investments in its portfolio companies.
The unobservable inputs used in the fair value measurement of the Company's Level III investments as of September 30, 2016March 31, 2017 were as follows:
      Range       Range
TypeFair Value as of September 30, 2016 Approach Unobservable Input Low High Weighted
Average
 Fair Value as of March 31, 2017 Approach Unobservable Input Low High Weighted
Average
First lien$374,615
 Market & income approach EBITDA multiple 2.0x
 16.0x
 9.8x
 $421,182
 Market & income approach EBITDA multiple 2.0x
 16.0x
 10.0x
  Revenue multiple 1.4x
 8.0x
 4.5x
   Revenue multiple 0.5x
 8.0x
 3.1x
 
 Discount rate 7.0% 30.0% 10.6%  
 Discount rate 6.8% 15.0% 10.0%
72,835
 Market quote Broker quote N/A
 N/A
 N/A
 97,185
 Market quote Broker quote N/A
 N/A
 N/A
9,900
 Other N/A(1) N/A
 N/A
 N/A
 8,601
 Other N/A(1) N/A
 N/A
 N/A
Second lien156,719
 Market & income approach EBITDA multiple 7.5x
 16.0x
 12.1x
 230,258
 Market & income approach EBITDA multiple 7.0x
 17.0x
 12.0x
  Revenue multiple 5.3x
 6.2x
 5.8x
 
 Discount rate 8.3% 12.8% 11.0%
 
 Discount rate 10.0% 11.6% 10.9% 84,395
 Market quote Broker quote N/A
 N/A
 N/A
130,769
 Market quote Broker quote N/A
 N/A
 N/A
 32,866
 Other N/A(1) N/A
 N/A
 N/A
Subordinated42,548
 Market & income approach EBITDA multiple 4.5x
 8.5x
 7.5x
 25,603
 Market & income approach EBITDA multiple 4.0x
 8.5x
 7.3x
  Revenue multiple 0.5x
 0.6x
 0.6x
   Revenue multiple 0.5x
 1.0x
 0.8x
 
 Discount rate 10.0% 17.2% 14.1%  
 Discount rate 8.3% 15.1% 13.2%
Equity and other175,774
 Market & income approach EBITDA multiple 2.5x
 12.5x
 6.9x
 165,180
 Market & income approach EBITDA multiple 2.5x
 13.0x
 5.9x
  Revenue multiple 1.1x
 1.7x
 1.4x
   Revenue multiple 0.5x
 1.0x
 0.8x
 
 Discount rate 8.0% 19.5% 14.1%  
 Discount rate 8.0% 18.5% 14.7%
1,491
 Black Scholes analysis Expected life in years 9.1
 9.5
 9.3
 1,484
 Black Scholes analysis Expected life in years 8.6
 9.0
 8.9
 
   Volatility 27.4% 35.0% 31.2%  
   Volatility 43.3% 58.3% 54.8%
 
   Discount rate 1.7% 1.7% 1.7%  
   Discount rate 2.6% 2.6% 2.6%
16,500
 Other N/A(1) N/A
 N/A
 N/A
 132,285
 Other N/A(1) N/A
 N/A
 N/A
$981,151
      
  
  
 $1,199,039
      
  
  
 
 
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.

The unobservable inputs used in the fair value measurement of the Company's Level III investments as of December 31, 20152016 were as follows:
      Range       Range
TypeFair Value as of December 31, 2015 Approach Unobservable Input Low High 
Weighted
Average
 Fair Value as of December 31, 2016 Approach Unobservable Input Low High 
Weighted
Average
First lien$292,507
 Market & income approach EBITDA multiple 4.5x
 15.5x
 10.0x
 $417,464
 Market & income approach EBITDA multiple 2.0x
 15.0x
 10.2x
 
 Revenue multiple 0.5x
 8.0x
 3.0x
 
 Discount rate 7.3% 13.9% 11.0%   Discount rate 7.2% 12.3% 9.7%
30,719
 Market quote Broker quote N/A
 N/A
 N/A
 86,801
 Market quote Broker quote N/A
 N/A
 N/A
17,664
 Other N/A(1) N/A
(1)N/A
(1)N/A
(1)26,336
 Other N/A(1) N/A
 N/A
 N/A
Second lien88,977
 Market & income approach EBITDA multiple 6.5x
 16.0x
 12.3x
 191,419
 Market & income approach EBITDA multiple 5.3x
 16.0x
 11.7x
 
 Discount rate 10.0% 14.2% 12.7%  
 Discount rate 8.7% 13.0% 11.3%
41,544
 Market quote Broker quote N/A
 N/A
 N/A
 96,315
 Market quote Broker quote N/A
 N/A
 N/A
52,237
 Other N/A(1) N/A
(1)N/A
(1)N/A
(1)36,443
 Other N/A(1) N/A
 N/A
 N/A
Subordinated38,459
 Market & income approach EBITDA multiple 4.5x
 9.0x
 7.6x
 24,653
 Market & income approach EBITDA multiple 4.5x
 8.5x
 7.1x
 
 Discount rate 10.0% 19.4% 17.7%  
 Revenue multiple 0.5x
 1.0x
 0.8x
15,000
 Other N/A(1) N/A
(1)N/A
(1)N/A
(1)

 
 Discount rate 8.7% 15.8% 13.6%
Equity and other121,453
 Market & income approach EBITDA multiple 2.5x
 12.0x
 6.3x
 158,947
 Market & income approach EBITDA multiple 2.5x
 13.0x
 5.9x
 
 Discount rate 8.0% 21.3% 14.6%  
 Revenue multiple 0.5x
 1.0x
 0.8x
1,427
 Black Scholes analysis Expected life in years 9.8
 10.3
 10.0
   Discount rate 8.0% 18.9% 14.5%
 
   Volatility 27.0% 30.3% 28.9% 1,498
 Black Scholes analysis Expected life in years 8.8
 9.3
 9.1
 
   Discount rate 2.1% 2.1% 2.1%  
   Volatility 32.2% 43.8% 36.4%
$699,987
      
  
  
  
   Discount rate 2.5% 2.5% 2.5%
2
 Market quote Broker quote N/A
 N/A
 N/A
27,000
 Other N/A(1) N/A
 N/A
 N/A
$1,066,878
      
  
  
 
 
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
Based on a comparison to similar BDC credit facilities, the terms and conditions of the Holdings Credit Facility and the NMFC Credit Facility (as defined in Note 7,7. Borrowings) are representative of market. The carrying values of the Holdings Credit Facility and NMFC Credit Facility approximate fair value as of September 30, 2016,March 31, 2017, as the facilities are continually monitored and examined by both the borrower and the lender. The carrying value of the SBA-guaranteed debentures and Unsecured Notes (as defined in Note 7. Borrowings) approximate fair value as of September 30, 2016March 31, 2017 based on a comparison of market interest rates for the Company’s borrowings and similar entities. On September 30, 2016, additional Unsecured Notes (as defined in Note 7, Borrowings) were issued and, as such, the carrying value approximates fair value as of September 30, 2016. The fair value of the Holdings Credit Facility, NMFC Credit Facility, SBA-guaranteed debentures and Unsecured Notes are considered Level III. The fair value of the Convertible Notes (as defined in Note 7,7. Borrowings) as of September 30, 2016March 31, 2017 was $159,131,$160,102, which was based on quoted prices and considered Level II. See Note 7,7. Borrowings, for details. The carrying value of the collateralized agreement approximates fair value as of September 30, 2016March 31, 2017 and is considered Level III. The fair value of other financial assets and liabilities approximates their carrying value based on the short-term nature of these items.
Fair value risk factors—The Company seeks investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the Company’s portfolio companies conduct their operations, as well as general economic and political conditions, may have a significant negative impact on the operations and profitability of the Company’s investments and/or on the fair value of the Company’s investments. The Company’s investments are subject to the risk of non-payment of scheduled interest or principal, resulting in a reduction in income to the Company and their corresponding fair valuations. Also, there may be risk associated with the concentration of investments in one geographic region or in certain industries. These events are beyond the control of the Company and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.

Note 5. Agreements
NMF HoldingsThe Company entered into an investment advisory and management agreement, as amended and restated, with the Investment Adviser on May 19, 2011. Until May 8, 2014, under the investment advisory and management agreement, the Investment Adviser managed the day-to-day operations of, and provided investment advisory services to, NMF Holdings. For providing these services, the Investment Adviser received a fee from NMF Holdings, consisting of two components—a base management fee and an incentive fee.
On May 6, 2014, the stockholders of NMFC approved a new investment advisory and management agreement (the “Investment Management Agreement”) with the Investment Adviser which became effective on May 8, 2014 and was most recently re-approved by the Company's board of directors on February 3, 2016.8, 2017. Under the Investment Management Agreement, the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and an incentive fee.
Pursuant to the Investment Management Agreement, the base management fee is calculated at an annual rate of 1.75% of the Company’s gross assets, which equals the Company’s total assets on the Consolidated Statements of Assets and Liabilities, less (i) the borrowings under the SLF Credit Facility (as defined in Note 7, Borrowings)below) and (ii) cash and cash equivalents. The base management fee is payable quarterly in arrears, and is calculated based on the average value of the Company’s gross assets, which equals the Company’s total assets, as determined in accordance with GAAP, less the borrowings under the SLF Credit Facility and cash and cash equivalents at the end of each of the two most recently completed calendar quarters, and appropriately adjusted on a pro rata basis for any equity capital raises or repurchases during the current calendar quarter. The Company has not invested, and currently is not invested, in derivatives. To the extent the Company invests in derivatives in the future, the Company will use the actual value of the derivatives, as reported on the Consolidated Statements of Assets and Liabilities, for purposes of calculating its base management fee.
Since the IPO, the base management fee calculation has deducted the borrowings under the SLFNew Mountain Finance SPV Funding, L.L.C. Loan an Security Agreement, as amended and restated, dated October 27, 2010 (the "SLF Credit Facility.Facility"). The SLF Credit Facility had historically consisted of primarily lower yielding assets at higher advance rates. As part of an amendment to the Company’s existing credit facilities with Wells Fargo Bank, National Association, the SLF Credit Facility merged with the PredecessorNMF Holdings Credit FacilityLoan and Security Agreement, as amended and restated, dated May 19, 2011, and into the Holdings Credit Facility on December 18, 2014 (as defined in Note 7,7. Borrowings). The amendment merged the credit facilities and combined the amount of borrowings previously available. Post credit facility merger and to be consistent with the methodology since the IPO, the Investment Adviser will continue to waive management fees on the leverage associated with those assets that share the same underlying yield characteristics with investments leveraged under the legacy SLF Credit Facility, which as of September 30,March 31, 2017 and March 31, 2016 approximated $322,346 and September 30, 2015 approximated $234,048 and $313,681,$297,871, respectively. The Investment Adviser cannot recoup management fees that the Investment Adviser has previously waived. For the three and nine months ended September 30,March 31, 2017 and March 31, 2016, management fees waived were approximately $1,102$1,356 and $3,662, respectively. For the three and nine months ended September 30, 2015, management fees waived were approximately $1,237 and $3,866,$1,319, respectively.
The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20.0% of the Company’s “Pre-Incentive Fee Adjusted Net Investment Income” for the immediately preceding quarter, subject to a “preferred return”, or “hurdle”, and a “catch-up” feature. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, upfront, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under an administration agreement, as amended and restated (the “Administration Agreement”), with the Administrator, and any interest expense and distributions paid on any issued and outstanding preferred stock (of which there are none as of September 30, 2016)March 31, 2017), but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
Under GAAP, NMFC’s IPO did not step-up the cost basis of the Predecessor Operating Company’s existing investments to fair market value at the IPO date. Since the total value of the Predecessor Operating Company’s investments at the time of the IPO was greater than the investments’ cost basis, a larger amount of amortization of purchase or original issue discount, as well as different amounts in realized gain and unrealized appreciation, may be recognized under GAAP in each period than if the step-up had occurred. This will remain until such predecessor investments are sold, repaid or mature in the future. The Company tracks the transferred (or fair market) value of each of its investments as of the time of the IPO and, for purposes of the incentive fee calculation, adjusts Pre-Incentive Fee Net Investment Income to reflect the amortization of purchase or original issue discount on the Company’s investments as if each investment was purchased at the date of the IPO, or stepped up to fair market value. This is defined as “Pre-Incentive Fee Adjusted Net Investment Income”. The Company also uses the transferred (or fair market) value of each of its investments as of the time of the IPO to adjust capital gains (“Adjusted

Realized Capital Gains”) or losses (“Adjusted Realized Capital Losses”) and unrealized capital appreciation (“Adjusted Unrealized Capital Appreciation”) and unrealized capital depreciation (“Adjusted Unrealized Capital Depreciation”).

Pre-Incentive Fee Adjusted Net Investment Income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 2.0% per quarter (8.0% annualized), subject to a “catch-up” provision measured as of the end of each calendar quarter. The hurdle rate is appropriately pro-rated for any partial periods. The calculation of the Company’s incentive fee with respect to the Pre-Incentive Fee Adjusted Net Investment Income for each quarter is as follows:
No incentive fee is payable to the Investment Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Adjusted Net Investment Income does not exceed the hurdle rate of 2.0% (the “preferred return” or “hurdle”).
100.0% of the Company’s Pre-Incentive Fee Adjusted Net Investment Income with respect to that portion of such Pre-Incentive Fee Adjusted Net Investment Income, if any, that exceeds the hurdle rate but is less than or equal to 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser. This portion of the Company’s Pre-Incentive Fee Adjusted Net Investment Income (which exceeds the hurdle rate but is less than or equal to 2.5%) is referred to as the “catch-up”. The catch-up provision is intended to provide the Investment Adviser with an incentive fee of 20.0% on all of the Company’s Pre-Incentive Fee Adjusted Net Investment Income as if a hurdle rate did not apply when the Company’s Pre-Incentive Fee Adjusted Net Investment Income exceeds 2.5% in any calendar quarter.
20.0% of the amount of the Company’s Pre-Incentive Fee Adjusted Net Investment Income, if any, that exceeds 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser once the hurdle is reached and the catch-up is achieved.
For the three months ended March 31, 2017 and March 31, 2016, incentive fees waived were approximately $1,800 and $0, respectively. The Investment Adviser cannot recoup incentive fees that the Investment Adviser has previously waived.
The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement) and will equal 20.0% of the Company’s Adjusted Realized Capital Gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all Adjusted Realized Capital Losses and Adjusted Unrealized Capital Depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fee.
In accordance with GAAP, the Company accrues a hypothetical capital gains incentive fee based upon the cumulative net Adjusted Realized Capital Gains and Adjusted Realized Capital Losses and the cumulative net Adjusted Unrealized Capital Appreciation and Adjusted Unrealized Capital Depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on actual Adjusted Realized Capital Gains computed net of all Adjusted Realized Capital Losses and Adjusted Unrealized Capital Depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value.
The following table summarizes the management fees and incentive fees incurred by the Company for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Management fee$6,883
 $6,373
 $20,537
 $19,039
$7,614
 $6,836
Less: management fee waiver(1,102) (1,237) (3,662) (3,866)(1,356) (1,319)
Total management fee5,781
 5,136
 16,875
 15,173
6,258
 5,517
Incentive fee, excluding accrued capital gains incentive fees$5,432
 $5,034
 $16,266
 $14,969
$5,408
 $5,385
Less: incentive fee waiver(1,800) 
Total incentive fee3,608
 5,385
Accrued capital gains incentive fees(1)$
 $(490) $
 $
$
 $
 
(1)As of September 30,March 31, 2017 and March 31, 2016, and September 30, 2015, no actual capital gains incentive fee was owed under the Investment Management Agreement by the Company, as cumulative net Adjusted Realized Capital Gains did not exceed cumulative Adjusted Unrealized Capital Depreciation.

The Company’s Consolidated Statements of Operations below are adjusted as if the step-up in cost basis to fair market value had occurred at the IPO date, May 19, 2011.
The following Consolidated Statement of Operations for the three and nine months ended September 30, 2016March 31, 2017 is adjusted to reflect this step-up to fair market value.
Three Months Ended
September 30, 2016
 Stepped-up
Cost Basis
Adjustments
 Adjusted Three
Months Ended
September 30, 2016
Three Months Ended
March 31, 2017
 Stepped-up
Cost Basis
Adjustments
 Adjusted
Three Months Ended
March 31, 2017
Investment income 
  
  
 
  
  
Interest income(1)$35,917
 $(1) $35,916
$33,998
 $
(7)$33,998
Dividend income(2)3,063
 
 3,063
6,733
 
 6,733
Other income2,854
 
 2,854
2,576
 
 2,576
Total investment income(3)41,834
 (1) 41,833
43,307
 
 43,307
Total expenses pre-incentive fee(4)14,673
 
 14,673
16,268
 
 16,268
Pre-Incentive Fee Net Investment Income27,161
 (1) 27,160
27,039
 
 27,039
Incentive fee(5)5,432
 
 5,432
3,608
 
 3,608
Post-Incentive Fee Net Investment Income21,729
 (1) 21,728
23,431
 
 23,431
Net realized gains (losses) on investments(6)1,150
 (27) 1,123
Net realized gains on investments(6)826
 
 826
Net change in unrealized appreciation (depreciation) of investments(6)3,146
 28
 3,174
6,205
 
(7)6,205
Net change in unrealized (depreciation) appreciation of securities purchased under collateralized agreements to resell(957) 
 (957)(800) 
 (800)
Benefit for taxes11
 
 11
755
 
 755
Net increase in net assets resulting from operations$25,079
   $25,079
$30,417
   $30,417
 
(1)Includes $947$868 in PIK interest from investments.
(2)Includes $768$1,477 in PIK and non-cash dividends from investments.
(3)Includes income from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(4)Includes expense waivers and reimbursements of $470 and management fee waivers of $1,102. There were no expense waivers and reimbursements for the three months ended September 30, 2016.$1,356.
(5)For the three months ended September 30, 2016,March 31, 2017, the Company incurred total incentive fees of $5,432,$3,608, net of the incentive fee waiver of $1,800, of which none was related to the capital gains incentive fee accrual on a hypothetical liquidation basis.
(6)Includes net realized gains and losses on investments and net change in unrealized appreciation (depreciation) of investments from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(7)For the three months ended March 31, 2017, the adjustment was less than $1.


The following Consolidated Statement of Operations for the three months ended March 31, 2016 is adjusted to reflect this step-up to fair market value.
Nine Months Ended
September 30, 2016
 Stepped-up
Cost Basis
Adjustments
 Adjusted
Nine Months Ended
September 30, 2016
Three Months Ended
March 31, 2016
 Stepped-up
Cost Basis
Adjustments
 Adjusted
Three Months Ended
March 31, 2016
Investment income 
  
  
 
  
  
Interest income(1)$112,119
 $(65) $112,054
$37,790
 $(29) $37,761
Dividend income(2)6,423
 
 6,423
1,639
 
 1,639
Other income5,758
 
 5,758
1,547
 
 1,547
Total investment income(3)124,300
 (65) 124,235
40,976
 (29) 40,947
Total expenses pre-incentive fee(4)42,906
 
 42,906
14,024
 
 14,024
Pre-Incentive Fee Net Investment Income81,394
 (65) 81,329
26,952
 (29) 26,923
Incentive fee(5)16,266
 
 16,266
5,385
 
 5,385
Post-Incentive Fee Net Investment Income65,128
 (65) 65,063
21,567
 (29) 21,538
Net realized gains (losses) on investments(6)2,191
 (151) 2,040
176
 (38) 138
Net change in unrealized appreciation (depreciation) of investments(6)10,716
 216
 10,932
Net change in unrealized (depreciation) appreciation of investments(6)(14,386) 67
 (14,319)
Net change in unrealized (depreciation) appreciation of securities purchased under collateralized agreements to resell(1,031) 
 (1,031)(30) 
 (30)
Benefit for taxes819
 
 819
724
 
 724
Net increase in net assets resulting from operations$77,823
   $77,823
$8,051
   $8,051
 
(1)Includes $2,850$953 in PIK interest from investments.
(2)Includes $2,229$719 in PIK dividends from investments.
(3)Includes income from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(4)Includes expense waivers and reimbursements of $347$284 and management fee waivers of $3,662.$1,319.
(5)For the ninethree months ended September 30,March 31, 2016, the Company incurred total incentive fees of $16,266,$5,385, of which none was related to the capital gains incentive fee accrual on a hypothetical liquidation basis.
(6)Includes net realized gains and losses on investments and net change in unrealized appreciation (depreciation) of investments from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.

The following Consolidated Statement of Operations for the three and nine months ended September 30, 2015 is adjusted to reflect this step-up to fair market value.
 Three Months Ended
September 30, 2015
 Stepped-up
Cost Basis
Adjustments
 Adjusted
Three Months Ended
September 30, 2015
Investment income 
  
  
Interest income(1)$33,739
 $(33) $33,706
Dividend income(2)1,056
 
 1,056
Other income2,652
 
 2,652
Total investment income(3)37,447
 (33) 37,414
Total net expenses pre-incentive fee(4)12,244
 
 12,244
Pre-Incentive Fee Net Investment Income25,203
 (33) 25,170
Incentive fee(5)4,544
 
 4,544
Post-Incentive Fee Net Investment Income20,659
 (33) 20,626
Net realized losses on investments(6)(37) (22) (59)
Net change in unrealized (depreciation) appreciation of investments(6)(10,237) 55
 (10,182)
Provision for taxes(581) 
 (581)
Net increase in net assets resulting from operations$9,804
   $9,804
(1)Includes $856 in PIK interest from investments.
(2)Includes $673 in PIK dividends from investments.
(3)Includes income from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(4)Includes expense waivers and reimbursements of $333 and management fee waivers of $1,237.
(5)For the three months ended September 30, 2015, the Company incurred total incentive fees of $4,544, of which $(490) is related to a decrease of the capital gains incentive fee accrual on a hypothetical liquidation basis.
(6)Includes net change in unrealized appreciation (depreciation) of investments from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.

 Nine Months Ended
September 30, 2015
 Stepped-up
Cost Basis
Adjustments
 Adjusted
Nine Months Ended
September 30, 2015
Investment income 
  
  
Interest income(1)$102,556
 $(99) $102,457
Dividend income(2)4,158
 
 4,158
Other income5,174
 
 5,174
Total investment income(3)111,888
 (99) 111,789
Total net expenses pre-incentive fee(4)36,945
 
 36,945
Pre-Incentive Fee Net Investment Income74,943
 (99) 74,844
Incentive fee(5)14,969
 
 14,969
Post-Incentive Fee Net Investment Income59,974
 (99) 59,875
Net realized losses on investments(6)(13,508) (69) (13,577)
Net change in unrealized appreciation (depreciation) of investments(6)7,733
 168
 7,901
Provision for taxes(1,217) 
 (1,217)
Net increase in net assets resulting from operations$52,982
   $52,982
(1)Includes $3,002 in PIK interest from investments.
(2)Includes $1,864 in PIK dividends from investments.
(3)Includes income from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(4)Includes expense waivers and reimbursements of $733 and management fee waivers of $3,866.
(5)For the nine months ended September 30, 2015, the Company incurred total incentive fees of $14,969, of which $0 is related to capital gains incentive fees on a hypothetical liquidation basis.
(6)Includes net change in unrealized appreciation (depreciation) of investments from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
The Company has entered into an Administration Agreement with the Administrator under which the Administrator provides administrative services. The Administrator performs, or oversees the performance of, the Company’s consolidated financial records, prepares reports filed with the SEC,Securities and Exchange Commission (the "SEC"), generally monitors the payment of the Company’s expenses and watches the performance of administrative and professional services rendered by others. The Company will reimburse the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to the Company under the Administration Agreement. Pursuant to the Administration Agreement and further restricted by the Company, the Administrator may, in its own discretion, submit to the Company for reimbursement some or all of the expenses that the Administrator has incurred on behalf of the Company during any quarterly period. As a result, the amount of expenses for which the Company will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to the Company for reimbursement in the future. However, it is expected that the Administrator will continue to support part of the expense burden of the Company in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and nine months ended September 30,March 31, 2017 and March 31, 2016, approximately $332$412 and $1,263,$568, respectively, of indirect administrative expenses were included in administrative expenses of which $0$412 and $347, respectively, of indirect administrative expenses were waived by the Administrator. For the three and nine months ended September 30, 2015, approximately $333 and $1,057, respectively, of indirect administrative expenses were included in administrative expenses of which $333 and $733,$284, respectively, of indirect administrative expenses were waived by the Administrator. As of September 30, 2016March 31, 2017 and December 31, 2015, approximately $332 and $374, respectively, of2016, no indirect administrative expenses were included in payable to affiliates as the expenses were payable to the Administrator.affiliates.

The Company, the Investment Adviser and the Administrator have also entered into a Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator, a non-exclusive, royalty-free license to use the “New Mountain” and the “New Mountain Finance” names. Under the Trademark License Agreement, as amended, subject to certain conditions, the Company, the Investment Adviser and the Administrator will have a right to use the “New Mountain” and “New Mountain Finance” names, for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Company. Other than with respect to this limited license, the Company, the Investment Adviser and the Administrator will have no legal right to the “New Mountain” or the “New Mountain Finance” names.

Note 6. Related Parties
The Company has entered into a number of business relationships with affiliated or related parties.
The Company has entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.
The Company has entered into an Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges office space for the Company and provides office equipment and administrative services necessary to conduct their respective day-to-day operations pursuant to the Administration Agreement. The Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to the Company under the Administration Agreement which includes the fees and expenses associated with performing administrative, finance and compliance functions, and the compensation of the Company’s chief financial officer and chief compliance officer and their respective staffs.
The Company, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator, a non-exclusive, royalty-free license to use the name “New Mountain” and “New Mountain Finance”.
The Company has adopted a formal code of ethics that governs the conduct of its officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act, the Delaware General Corporation Law and the Delaware Limited Liability Company Act.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, to the Company’s investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for the Company or for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that the Company should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff and consistent with the Investment Adviser’s allocation procedures.
Concurrently On September 12, 2016, the Company filed an exemptive application with the IPO, NMFC sold an additional 2,172,000 shares ofSEC to permit the Company to co-invest with funds or entities managed by the Investment Adviser or its common stockaffiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. Any such order, if granted by the SEC, will be subject to certain executivesterms and employees of, and other individuals affiliated with, New Mountain Capital inconditions. Furthermore, there is no assurance when, or if, this application for exemptive relief will be granted by the Concurrent Private Placement.SEC.
Note 7. Borrowings
Holdings Credit Facility—On December 18, 2014 the Company entered into the Second Amended and Restated Loan and Security Agreement (the “Holdings Credit Facility”), among the Company, as the Collateral Manager, NMF Holdings as the Borrower, Wells Fargo Securities, LLC as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian, which is structured as a revolving credit facility and matures on December 18, 2019.
Immediately prior to amending the Holdings Credit Facility, NMF SLF merged with and into NMF Holdings. The Holdings Credit Facility effectively amended and restated the Predecessor Holdings Credit Facility (as defined below), merged with the SLF Credit Facility (as defined below), and combined the amount of borrowings previously available.
The maximum amount of revolving borrowings available under the Holdings Credit Facility is $495,000, which is the aggregate of the $280,000 previously available under the Predecessor Holdings Credit Facility (as defined below) and the $215,000 previously available under the SLF Credit Facility (as defined below).$495,000. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Securities, LLC. The Holdings Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires the Company to maintain a minimum asset coverage ratio. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.

Effective January 1, 2016, the Holdings Credit Facility bears interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.50% per annum for all other investments. Previously, the Holdings Credit Facility bore interest at a rate of LIBOR plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.75% per annum for all other

investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Interest expense$2,243
 $2,346
 $7,237
 $7,697
$2,709
 $2,643
Non-usage fee$223
 $182
 $531
 $389
$184
 $125
Amortization of financing costs$406
 $406
 $1,209
 $1,205
$397
 $402
Weighted average interest rate2.8% 2.6% 2.7% 2.6%3.1% 2.6%
Effective interest rate3.6% 3.3% 3.4% 3.2%3.9% 3.2%
Average debt outstanding$318,368
 $350,521
 $353,577
 $391,037
$346,033
 $394,710
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance on the Holdings Credit Facility was $308,913$376,913 and $419,313,$333,513, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.
Prior to December 18, 2014, the Loan and Security Agreement, as amended and restated, dated May 19, 2011 (the “Predecessor Holdings Credit Facility”) among NMF Holdings as the Borrower and Collateral Administrator, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, was structured as a revolving credit facility and would mature on October 27, 2016. NMF Holdings became a party to the Predecessor Holdings Credit Facility upon the IPO of NMFC. The Predecessor Holdings Credit Facility amended and restated the credit facility of the Predecessor Entities (the “Predecessor Credit Facility”).
The maximum amount of revolving borrowings available under the Predecessor Holdings Credit Facility was $280,000. Until December 18, 2014, NMF Holdings was permitted to borrow up to 45.0% or 25.0% of the purchase price of pledged first lien or non-first lien debt securities, respectively, and up to 70.0% and 45.0% of the purchase price of specified first lien debt securities and specified non-first lien debt securities, respectively, subject to approval by Wells Fargo Bank, National Association. The Predecessor Holdings Credit Facility was amended and restated on May 6, 2014 and as a result, it was non-recourse to the Company and was collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Predecessor Holdings Credit Facility were capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Predecessor Holdings Credit Facility. The Predecessor Holdings Credit Facility contained certain customary affirmative and negative covenants and events of default, including the occurrence of a change in control. In addition, the Predecessor Holdings Credit Facility required the Company to maintain a minimum asset coverage ratio. However, the covenants were generally not tied to mark to market fluctuations in the prices of NMF Holdings’ investments, but rather to the performance of the underlying portfolio companies.
The Predecessor Holdings Credit Facility bore interest at a rate of LIBOR plus 2.75% per annum and charged a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
NMF SLF’s Loan and Security Agreement, as amended and restated, dated October 27, 2010 (the “SLF Credit Facility”) among NMF SLF as the Borrower, NMF Holdings as the Collateral Administrator, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, was structured as a revolving credit facility and was set to mature on October 27, 2016. The maximum amount of revolving borrowings available under the SLF Credit Facility was $215,000. The SLF Credit Facility was non-recourse to the Company and secured by all assets of NMF SLF on an investment by investment basis. All fees associated with the origination or upsizing of the SLF Credit Facility were capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the SLF Credit Facility. The SLF Credit Facility contained certain customary affirmative and negative covenants and events of default, including the occurrence of a change in control. The covenants were generally not tied to mark to market fluctuations in the prices of NMF SLF’s investments, but rather to the performance of the underlying portfolio companies. NMF SLF was not restricted from the purchase or sale of loans with an affiliate. Therefore, specified loans could be moved as collateral between the Holdings Credit Facility and the SLF Credit Facility. The SLF Credit Facility merged with the Holdings Credit Facility on December 18, 2014.

Until December 18, 2014, the SLF Credit Facility permitted borrowings of up to 70.0% of the purchase price of pledged first lien debt securities and up to 25.0% of the purchase price of specified second lien loans, of which, up to 25.0% of the aggregate outstanding loan balance of all pledged debt securities in the SLF Credit Facility was allowed to be derived from second lien loans, subject to approval by Wells Fargo Bank, National Association.
The SLF Credit Facility bore interest at a rate of LIBOR plus 2.00% per annum for first lien loans and LIBOR plus 2.75% per annum for second lien loans. A non-usage fee was paid, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, as amended, dated June 4, 2014 (together with the related guarantee and security agreement, the “NMFC Credit Facility”), among the Company as the Borrower, Goldman Sachs Bank USA as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A. and Stifel Bank & Trust as Lenders, is structured as a senior secured revolving credit facility and matures on June 4, 2019. The NMFC Credit Facility is guaranteed by certain domestic subsidiaries of the Company and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.
As of September 30, 2016,March 31, 2017, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $122,500. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to asset coverage and liquidity and other maintenance covenants.
The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).
The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Interest expense$684
 $547
 $1,911
 $1,213
$290
 $686
Non-usage fee$32
 $15
 $78
 $74
$82
 $3
Amortization of financing costs$98
 $89
 $279
 $271
$96
 $89
Weighted average interest rate3.0% 2.7% 3.0% 2.7%3.3% 2.9%
Effective interest rate3.6% 3.2% 3.6% 3.5%5.5% 3.4%
Average debt outstanding$89,375
 $79,451
 $84,996
 $59,598
$34,661
 $92,830
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance on the NMFC Credit Facility was $42,500$122,500 and $90,000,$10,000, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.

Convertible Notes—On June 3, 2014, the Company closed a private offering of $115,000 aggregate principal amount of unsecured convertible notes (the “Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “Indenture”). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of the first anniversary, June 3, 2015, of the Convertible Notes, the restrictions under Rule 144A under the Securities Act were removed, allowing the Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, the Company closed a public offering of an additional $40,250 aggregate principal amount of the Convertible Notes. These additional Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115,000 aggregate principal amount of Convertible Notes that the Company issued on June 3, 2014.
The Convertible Notes bear interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014. The Convertible Notes will mature on June 15, 2019 unless earlier converted or repurchased at the holder’s option.

The following table summarizes certain key terms related to the convertible features of the Company’s Convertible Notes as of September 30, 2016.March 31, 2017.
September 30, 2016March 31, 2017
Initial conversion premium12.5%12.5%
Initial conversion rate(1)62.7746
62.7746
Initial conversion price$15.93
$15.93
Conversion premium at September 30, 201611.7%
Conversion rate at September 30, 2016(1)(2)63.2794
Conversion price at September 30, 2016(2)(3)$15.80
Conversion premium at March 31, 201711.7%
Conversion rate at March 31, 2017(1)(2)63.2794
Conversion price at March 31, 2017(2)(3)$15.80
Last conversion price calculation dateJune 3, 2016
June 3, 2016
 
(1)Conversion rates denominated in shares of common stock per $1 principal amount of the Convertible Notes converted.
(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)The conversion price in effect at September 30, 2016March 31, 2017 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.
The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividendsdistributions in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends,distributions, are subject to a conversion price floor of $14.05 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 71.1893 per $1 principal amount of the Convertible Notes. The Company has determined that the embedded conversion option in the Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
The Convertible Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles. As reflected in Note 11,11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.
The Company may not redeem the Convertible Notes prior to maturity. No sinking fund is provided for the Convertible Notes. In addition, if certain corporate events occur, holders of the Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.
The Indenture contains certain covenants, including covenants requiring the Company to provide financial information to the holders of the Convertible Note and the Trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the Indenture.

The following table summarizes the interest expense, and amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Interest expense$1,443
 $1,438
 $4,318
 $4,313
$1,941
 $1,438
Amortization of financing costs$188
 $187
 $559
 $556
$293
 $185
Amortization of premium$(27) $
Effective interest rate5.6% 5.6% 5.7% 5.7%5.8% 5.7%
Average debt outstanding$115,438
 $115,000
 $115,147
 $115,000
$155,250
 $115,000
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance on the Convertible Notes was $155,250 and $115,000,$155,250, respectively, and NMFC was in compliance with the terms of the Indenture on such dates.

Unsecured Notes—On May 6, 2016, the Company issued $50,000 in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, the Company entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40,000 in aggregate principal amount of Unsecured Notes to institutional investors in a private placement. The NPA provides for future issuances of Unsecured Notes in separate series or tranches. The Unsecured Notes are equal in priority with the Company’s other unsecured indebtedness, including the Company’s Convertible Notes.
The Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year, startingwhich commenced on November 15, 2016. This interest rate is subject to increase in the event that: (i) subject to certain exceptions, the Unsecured Notes or the Company cease to have an investment grade rating or (ii) the aggregate amount of the Company’s unsecured debt falls below $150,000.  In each such event, the Company has the option to offer to prepay the Unsecured Notes at par, in which case holders of the Unsecured Notes who accept the offer would not receive the increased interest rate. In addition, the Company is obligated to offer to prepay the Unsecured Notes at par if the Investment Adviser, or an affiliate thereof, ceases to be the Company’s investment adviser or if certain change in control events occur with respect to the Investment Adviser. 
The NPA contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, an option to offer to prepay all or a portion of the Unsecured Notes at par (plus a make-whole amount, if applicable), affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC under the 1940 Act and a RIC under the Internal Revenue Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.
The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015(1) September 30, 2016(2) September 30, 2015(1)March 31, 2017 March 31, 2016(1)
Interest expense$670
 $
 $1,076
 $
$1,195
 $
Amortization of financing costs$62
 $
 $99
 $
$101
 $
Effective interest rate5.8% % 5.8% %5.8% %
Average debt outstanding$50,435
 $
 $50,270
 $
$90,000
 $
 
(1)Not applicable, as the Unsecured Notes were issued on May 6, 2016.
(2)For the nine months ended September 30, 2016, amounts reported relate to the period from May 6, 2016 (issuance of the Unsecured Notes) to September 30, 2016.
As of September 30, 2016,March 31, 2017, the outstanding balance on the Unsecured Notes was $90,000 and the Company was in compliance with the terms of the NPA.

SBA-guaranteed debentures—On August 1, 2014, SBIC LP received an SBIC license from the SBA.
The SBIC license allows SBIC LP to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to the Company, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC LP over the Company’s stockholders in the event SBIC LP is liquidated or the SBA exercises remedies upon an event of default.
The maximum amount of borrowings available under current SBA regulations for a single licensee is $150,000 as long as the licensee has at least $75,000 in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing.

As of September 30, 2016March 31, 2017 and December 31, 2015,2016, SBIC LP had regulatory capital of approximately $72,402$75,000 and $72,402,$75,000, respectively, and SBA-guaranteed debentures outstanding of $121,745 and $117,745,$121,745, respectively. The SBA-guaranteed debentures incur upfront fees of 3.425%, which consists of a 1.00% commitment fee and a 2.425% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. The following table summarizes the Company’s SBA-guaranteed debentures as of September 30, 2016.March 31, 2017.
Issuance Date Maturity Date Debenture Amount Interest Rate SBA Annual Charge Maturity Date Debenture Amount Interest Rate SBA Annual Charge
Fixed SBA-guaranteed debentures:    
  
  
    
  
  
March 25, 2015 March 1, 2025 $37,500
 2.517% 0.355% March 1, 2025 $37,500
 2.517% 0.355%
September 23, 2015 September 1, 2025 37,500
 2.829% 0.355% September 1, 2025 37,500
 2.829% 0.355%
September 23, 2015 September 1, 2025 28,795
 2.829% 0.742% September 1, 2025 28,795
 2.829% 0.742%
March 23, 2016 March 1, 2026 13,950
 2.507% 0.742% March 1, 2026 13,950
 2.507% 0.742%
September 21, 2016 September 1, 2026 4,000
 2.501% 0.742% September 1, 2026 4,000
 2.051% 0.742%
Total SBA-guaranteed debentures   $121,745
  
  
   $121,745
  
  
Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.
The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Interest expense$964
 $455
 $2,784
 $848
$953
 $883
Amortization of financing costs$103
 $78
 $300
 $148
$101
 $98
Weighted average interest rate3.1% 1.9% 3.1% 1.9%3.2% 3.0%
Effective interest rate3.5% 2.3% 3.5% 2.2%3.5% 3.4%
Average debt outstanding$121,745
 $92,723
 $119,172
 $59,315
$121,745
 $117,745
The SBIC program is designed to stimulate the flow of private investor capital into eligible small businesses, as defined by the SBA. Under SBA regulations, SBIC LP is subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in small businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to the Company. SBIC LP is subject to an annual periodic examination by an SBA examiner to determine SBIC LP’s compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, SBIC LP was in compliance with SBA regulatory requirements.
Leverage risk factors—The Company utilizes and may utilize leverage to the maximum extent permitted by the law for investment and other general business purposes. The Company’s lenders will have fixed dollar claims on certain assets that are superior to the claims of the Company’s common stockholders, and the Company would expect such lenders to seek recovery against these assets in the event of a default. The use of leverage also magnifies the potential for gain or loss on

amounts invested. Leverage may magnify interest rate risk (particularly on the Company’s fixed-rate investments), which is the risk that the prices of portfolio investments will fall or rise if market interest rates for those types of securities rise or fall. As a result, leverage may cause greater changes in the Company’s net asset value. Similarly, leverage may cause a sharper decline in the Company’s income than if the Company had not borrowed. Such a decline could negatively affect the Company’s ability to make dividend paymentsdistributions to its stockholders. Leverage is generally considered a speculative investment technique. The Company’s ability to service any debt incurred will depend largely on financial performance and will be subject to prevailing economic conditions and competitive pressures.

Note 8. Regulation
The Company has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a RIC under Subchapter M of the Code. In order to continue to qualify and be subject to tax as a RIC, among other things, the Company is required to timely distribute to its stockholders at least 90.0% of investment company taxable income, as defined by the Code, for each year. The Company, among other things, intends to make and will continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal, state, and local income taxes (excluding excise taxes which may be imposed under the Code).
Additionally, as a BDC, the Company must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70.0% of its total assets are qualifying assets (with certain limited exceptions). In addition, the Company must offer to make available to all eligible portfolio companies managerial assistance.
Note 9. Commitments and Contingencies
In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company may also enter into future funding commitments such as revolving credit facilities, bridge financing commitments or delayed draw commitments. As of September 30,March 31, 2017, the Company had unfunded commitments on revolving credit facilities of $25,103, no outstanding bridge financing commitments and other future funding commitments of $11,010. As of December 31, 2016, the Company had unfunded commitments on revolving credit facilities of $13,926,$27,915, no outstanding bridge financing commitments and other future funding commitments of $4,157. As of December 31, 2015, the Company had unfunded commitments on revolving credit facilities of $17,576, no outstanding bridge financing commitments and other future funding commitments of $8,678.$16,368. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s respective Consolidated SchedulesSchedule of Investments.
The Company also has revolving borrowings available under the Holdings Credit Facility and the NMFC Credit Facility as of September 30, 2016March 31, 2017 and December 31, 2015.2016. See Note 7,7. Borrowings, for details.
The Company may from time to time enter into financing commitment letters. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the Company had no commitment letters to purchase debt investments in the aggregate par amount of $2,200$0 and $0,$14,818, respectively, which could require funding in the future.
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the Company had unfunded commitments related to an equity investment in SLP II of $31,760$0 and $0,$7,940, respectively, which may be funded at the Company's discretion.
Note 10. Net Assets
The table below illustrates the effect of certain transactions on the net asset accounts of the Company:
 Common Stock Treasury Stock 
Paid in
Capital in
 
Accumulated Undistributed
Net Investment
 
Accumulated
Undistributed 
Net Realized 
 
Net 
Unrealized
(Depreciation)
 Total
 Shares Par Amount at Cost Excess of Par Income Gains (Losses) Appreciation Net Assets
Balance at December 31, 201564,005,387
 $640
 $
 $899,713
 $4,164
 $1,342
 $(68,951) $836,908
Issuances of common stock
 
 
 
 
 
 
 
Repurchases of common stock(248,499) 
 (2,948) 
 
 
 
 (2,948)
Reissuance of common stock107,970
 
 1,241
 245
 
 
 
 1,486
Deferred offering costs
 
 
 38
 
 
 
 38
Dividends declared
 
 
 
 (65,095) 
 
 (65,095)
Net increase (decrease) in net assets resulting from operations
 
 
 
 65,128
 2,191
 10,504
 77,823
Balance at September 30, 201663,864,858
 $640
 $(1,707) $899,996
 $4,197
 $3,533
 $(58,447) $848,212
 Common Stock Treasury Stock 
Paid in
Capital in
 
Accumulated Undistributed
Net Investment
 
Accumulated
Undistributed 
Net Realized 
 
Net 
Unrealized
(Depreciation)
 Total
 Shares Par Amount at Cost Excess of Par Income (Losses) Gains Appreciation Net Assets
Balance at December 31, 201669,717,814
 $698
 $(460) $1,001,862
 $2,073
 $(36,947) $(28,664) $938,562
Issuances of common stock66,306
 
 
 988
 
 
 
 988
Reissuance of common stock37,573
 
 460
 100
 
 
 
 560
Other
 
 
 (81) 
 
 
 (81)
Distributions declared
 
 
 
 (23,704) 
 
 (23,704)
Net increase (decrease) in net assets resulting from operations
 
 
 
 23,431
 826
 6,160
 30,417
Balance at March 31, 201769,821,693
 $698
 $
 $1,002,869
 $1,800
 $(36,121) $(22,504) $946,742

Note 11. Earnings Per Share
The following information sets forth the computation of basic and diluted net increase in the Company’s net assets per share resulting from operations for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015:March 31, 2016:
Three Months Ended Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Earnings per share—basic 
  
  
  
 
  
Numerator for basic earnings per share:$25,079
 $9,804
 $77,823
 $52,982
$30,417
 $8,051
Denominator for basic weighted average share:63,758,062
 58,725,338
 63,843,730
 58,269,543
69,718,968
 63,934,151
Basic earnings per share:$0.39
 $0.17
 $1.22
 $0.91
$0.44
 $0.13
Earnings per share—diluted(1)     
  
 
  
Numerator for increase in net assets per share$25,079
 $9,804
 $77,823
 $52,982
$30,417
 $8,051
Adjustment for interest on Convertible Notes and incentive fees, net1,154
 1,150
 3,454
 3,450
1,553
 1,150
Numerator for diluted earnings per share:$26,233
 $10,954
 $81,277
 $56,432
$31,970
 $9,201
Denominator for basic weighted average share63,758,062
 58,725,338
 63,843,730
 58,269,543
69,718,968
 63,934,151
Adjustment for dilutive effect of Convertible Notes7,387,870
 7,277,131
 7,314,314
 7,244,599
9,824,127
 7,277,131
Denominator for diluted weighted average share71,145,932
 66,002,469
 71,158,044
 65,514,142
79,543,095
 71,211,282
Diluted earnings per share$0.37
 $0.17
 $1.14
 $0.86
$0.40
 $0.13
 
(1)In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive.

Note 12. Financial Highlights
The following information sets forth the Company's financial highlights for the ninethree months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
Nine Months EndedThree Months Ended
September 30, 2016 September 30, 2015March 31, 2017 March 31, 2016
Per share data(1): 
  
 
  
Net asset value, January 1, 2016 and January 1, 2015, respectively$13.08
 $13.83
Net asset value, January 1, 2017 and January 1, 2016, respectively$13.46
 $13.08
Net investment income1.02
 1.03
0.34
 0.34
Net realized and unrealized gains (losses)0.20
 (0.11)0.10
 (0.21)
Total net increase1.22
 0.92
0.44
 0.13
Dividends declared to stockholders from net investment income(1.02) (1.02)
Net asset value, September 30, 2016 and September 30, 2015, respectively$13.28
 $13.73
Per share market value, September 30, 2016 and September 30, 2015, respectively$13.76
 $13.59
Distributions declared to stockholders from net investment income(0.34) (0.34)
Net asset value, March 31, 2017 and March 31, 2016, respectively$13.56
 $12.87
Per share market value, March 31, 2017 and March 31, 2016, respectively$14.90
 $12.64
Total return based on market value(2)14.07% (2.35)%8.09% (0.31)%
Total return based on net asset value(3)9.68% 6.76 %3.25% 0.99 %
Shares outstanding at end of period63,864,858
 64,005,387
69,821,693
 63,880,437
Average weighted shares outstanding for the period63,843,730
 58,269,543
69,718,968
 63,934,151
Average net assets for the period$837,887
 $831,423
$946,651
 $822,010
Ratio to average net assets: 
  
 
  
Net investment income10.38% 9.64 %10.04% 10.55 %
Total expenses, before waivers/reimbursements10.07% 9.09 %10.07% 10.28 %
Total expenses, net of waivers/reimbursements9.43% 8.35 %8.52% 9.50 %
Average debt outstanding—Holdings Credit Facility$353,577
 $391,037
$346,033
 $394,710
Average debt outstanding—Convertible Notes155,250
 115,000
Average debt outstanding—SBA-guaranteed debentures119,172
 59,315
121,745
 117,745
Average debt outstanding—Convertible Notes115,147
 115,000
Average debt outstanding—Unsecured Notes90,000
 
Average debt outstanding—NMFC Credit Facility84,996
 59,598
34,661
 92,830
Average debt outstanding—Unsecured Notes(4)50,270
 
Asset coverage ratio(5)(4)242.09% 254.69 %227.10% 234.95 %
Portfolio turnover22.38% 24.67 %7.50% 1.85 %
 
(1)Per share data is based on weighted average shares outstanding for the respective period (except for dividendsdistributions declared to stockholders which is based on actual rate per share).
(2)Total return is calculated assuming a purchase of common stock at the opening of the first day of the year and a sale on the closing of the last business day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at prices obtained under the Company’s dividend reinvestment plan.
(3)Total return is calculated assuming a purchase at net asset value on the opening of the first day of the year and a sale at net asset value on the last day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at the net asset value on the last day of the respective quarter.
(4)For the nine months ended September 30, 2016, average debt outstanding represents the period from May 6, 2016 (issuance of the Unsecured Notes) to September 30, 2016.
(5)On November 5, 2014, the Company received exemptive relief from the SEC allowing the Company to modify the asset coverage requirement to exclude the SBA-guaranteed debentures from this calculation.

Note 13. Recent Accounting Standards Updates
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern Subtopic 205-40—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation Topic 810—Amendments to the Consolidation Analysis (“ASU 2015-02”), which modifies the consolidation analysis in determining if limited partnerships or similar type entities fall under the variable interest model or voting interest model, particularly those that have fee arrangements and related party relationships. ASU 2015-02 was effective for all public entities for interim and annual reporting periods beginning after December 15, 2015. On January 1, 2016, the Company adopted ASU 2015-02. The adoption did not have an impact on the Company's consolidated financial statements and disclosures.
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest—Imputation of Interest Subtopic 835-30—Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. Under ASU 2015-03, an entity presents such costs on the statement of assets and liabilities as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense.  The new standard was effective for all public entities for interim and annual reporting periods beginning after December 15, 2015. On January 1, 2016, the Company adopted ASU 2015-03. Upon adoption, the Company revised its presentation of deferred financing costs from an asset to a liability, which is a direct deduction to its debt on the Consolidated Statements of Assets and Liabilities. In addition, the Company retrospectively revised its presentation of $13,992 of deferred financing costs that were previously presented as an asset as of December 31, 2015, which resulted in a decrease to total assets and total liabilities as of December 31, 2015.
In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall Subtopic 825-10—Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial assets and liabilities. ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The new guidance must be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of ASU 2016-01. The Company is in the process of evaluating the impact that this guidance will have on the Company’s consolidated financial statements and disclosures.
Note 14. Subsequent Events
On October 28, 2016,April 7, 2017, the Company completed a public offering of 5,750,0005,000,000 shares of its common stock (including 750,000 shares of common stock that were issued pursuant to the full exercise of the option granted to the underwriters to purchase additional shares) at a public offering price of $13.50$14.60 per share. The Investment Adviser paid all of the underwriters' sales load and an additional supplemental payment of $0.25 per share, which reflects the difference betweenOn April 13, 2017, in connection with the public offering, pricethe underwriters completed a purchase of $13.50 per share andan additional 750,000 shares of the Company’s common stock with the exercise of the overallotment option to purchase up to an additional 750,000 shares of the Company’s common stock. The Company received total net proceeds of $13.75 per share. All payments made by$81,478 in connection with the Investment Adviser are not subject to reimbursement by us. The Company received net proceeds from this offering of approximately $79,063.offering.
On NovemberMay 4, 2016,2017, the Company’s board of directors declared a fourthsecond quarter 20162017 distribution of $0.34 per share payable on December 29, 2016June 30, 2017 to holders of record as of December 15, 2016.June 16, 2017.


deloittelogoa11.jpg
 
Deloitte & Touche LLP
 
30 Rockefeller Plaza
New York, NY 10112
USA
 
Tel:    212 436 2000
Fax:   212 436 5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
New Mountain Finance Corporation
New York, New York

We have reviewed the accompanying consolidated statement of assets and liabilities of New Mountain Finance Corporation and subsidiaries (the “Company”), including the consolidated schedule of investments, as of September 30, 2016,March 31, 2017, and the related consolidated statements of operations, for the three and nine month periods ended September 30, 2016 and 2015, and changes in net assets, and cash flows for the nine monththree-month periods ended September 30, 2016March 31, 2017 and 2015.2016. These interim financial statements are the responsibility of the management of New Mountain Finance Corporation.Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of assets and liabilities of New Mountain Finance Corporation and subsidiaries as of December 31, 2015,2016, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated February 29, 2016,28, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities as of December 31, 2015,2016, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities from which it has been derived.


/s/ DELOITTE & TOUCHE LLP

NovemberMay 8, 20162017




Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information in management's discussion and analysis of financial condition and results of operations relates to New Mountain Finance Corporation, including its wholly-owned direct and indirect subsidiaries (collectively, "we", "us", "our", "NMFC" or the "Company").
The following analysis of our financial condition and results of operations should be read in conjunction with our financial data and our financial statements and the notes thereto contained elsewhere in this report.
Forward-Looking Statements
The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this report. Some of the statements in this report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:
statements concerning the impact of a protracted decline in the liquidity of credit markets;
the general economy, including interest and inflation rates, and its impact on the industries in which we invest;
our future operating results, our business prospects and the adequacy of our cash resources and working capital;
the ability of our portfolio companies to achieve their objectives;
our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of our investments;
the ability of New Mountain Finance Advisers BDC, L.L.C. (the "Investment Adviser") or its affiliates to attract and retain highly talented professionals;
actual and potential conflicts of interest with the Investment Adviser and New Mountain Capital L.L.C. ("New Mountain Capital", defined as New Mountain Capital Group, L.L.C. and its affiliates); and
the risk factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2015.2016.
Forward-looking statements are identified by their use of such terms and phrases such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “project”, “seek”, “should”, “target”, “will”, “would” or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2015.2016.
We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the United States Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
New Mountain Finance Corporation
We are a Delaware corporation that was originally incorporated on June 29, 2010.2010 and completed our initial public offering ("IPO") on May 19, 2011. We are a closed-end, non-diversified management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). As such, we are obligated to comply with certain regulatory requirements. We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act").

On May 19, 2011, we priced our initial public offering (the "IPO") of 7,272,727 shares of common stock at a public offering price of $13.75 per share. Concurrently with the closing of the IPO and at the public offering price of $13.75 per share, we sold an additional 2,172,000 shares of our common stock to certain executives and employees of, and other individuals affiliated with, New Mountain Capital in a concurrent private placement (the "Concurrent Private Placement"). Additionally, 1,252,964 shares were issued to the partners of New Mountain Guardian Partners, L.P. at that time for their ownership interest in the Predecessor Entities (as defined below). In connection with Since our IPO, and through a seriesMarch 31, 2017, we raised approximately $533.1 million in net proceeds from additional offerings of transactions, New Mountain Finance Holdings, L.L.C. ("NMF Holdings" or the "Predecessor Operating Company") acquired all of the operations of the Predecessor Entities, including all of the assets and liabilities related to such operations.common stock.
New Mountain Finance Holdings, L.L.C.
NMF Holdings is a Delaware limited liability company. Until May 8, 2014, NMF Holdings was externally managed and was regulated as a BDC under the 1940 Act. As such, NMF Holdings was obligated to comply with certain regulatory requirements. NMF Holdings was treated as a partnership for United States (“U.S.”) federal income tax purposes for so long as it had at least two members. With the completion of the underwritten secondary offering on February 3, 2014, NMF Holdings’ existence as a partnership for U.S. federal income tax purposes terminated and NMF Holdings became an entity that is disregarded as a separate entity from its owner for U.S. federal tax purposes. For additional information on our organizational structure prior to May 8, 2014, see “—Restructuring”.
Until May 8, 2014, NMF Holdings was externally managed by the Investment Adviser. As of May 8, 2014, the Investment Adviser serves as our external investment adviser. New Mountain Finance Administration, L.L.C. (the "Administrator") provides the administrative services necessary for operations. The Investment Adviser and Administrator areis a wholly-owned subsidiariessubsidiary of New Mountain Capital. New Mountain Capital is a firm with a track record of investing in the middle market and with assets under management totaling more thanof approximately $15.0 billion(1), which includes total assets held by us. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. NMF Holdings, formerly known asThe Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. New Mountain Guardian (Leveraged)Finance Administration, L.L.C. (the "Administrator”), L.L.C., was originally formed as a wholly-owned subsidiary of New Mountain Guardian AIV, L.P. ("Guardian AIV") by New Mountain Capital, in October 2008. Guardian AIV was formed through an allocation of approximately $300.0 million ofprovides the $5.1 billion of commitments supporting New Mountain Partners III, L.P., a private equity fund managed by New Mountain Capital. In February 2009, New Mountain Capital formed a co-investment vehicle, New Mountain Guardian Partners, L.P., comprising $20.4 million of commitments. New Mountain Guardian (Leveraged), L.L.C. and New Mountain Guardian Partners, L.P., together with their respective direct and indirectadministrative services necessary to conduct our day-to-day operations.
Our wholly-owned subsidiaries, are defined as the "Predecessor Entities".
Prior to December 18, 2014,subsidiary, New Mountain Finance SPV Funding,Holdings, L.L.C. ("(“NMF SLF"Holdings” or the "Predecessor Operating Company") was, is a Delaware limited liability company. NMF SLF was a wholly-owned subsidiary of NMF Holdings and thus our wholly-owned indirect subsidiary. NMF SLF was bankruptcy-remote and non-recourse to us. As part of an amendment to our existing credit facilities with Wells Fargo Bank, National Association, NMF SLF merged with and into NMF Holdings on December 18, 2014. See "—Borrowings" for additional information on our credit facilities.
New Mountain Finance AIV Holdings Corporation
Until April 25, 2014, New Mountain Finance AIV Holdings Corporation ("AIV Holdings") was a Delaware corporation that was originally incorporated on March 11, 2011. AIV Holdings was dissolved on April 25, 2014. Guardian AIV, a Delaware limited partnership, was AIV Holdings' sole stockholder. AIV Holdings was a closed-end, non-diversified management investment company that was regulated as a BDC under the 1940 Act. As such, AIV Holdings was obligated to comply with certain regulatory requirements. AIV Holdings was treated, and complied with the requirements to qualify annually, as a RIC under the Code.
(1)Includes amounts committed, not all of which have been drawn down and invested to date, as of September 30, 2016.


Structure
Prior to the Restructuring (as defined below) on May 8, 2014, NMFC and AIV Holdings were holding companies with no direct operations of their own, and their sole asset was their ownership in NMF Holdings. In connection with the IPO, NMFC and AIV Holdings each entered into a joinder agreement with respect to the Limited Liability Company Agreement, as amended and restated (the "Operating Agreement"), of NMF Holdings, pursuant to which NMFC and AIV Holdings were admitted as members of NMF Holdings. NMFC acquired from NMF Holdings, with the gross proceeds of the IPO and the Concurrent Private Placement, common membership units ("units") of NMF Holdings (the number of units were equal to the number of shares of NMFC's common stock sold in the IPO and the Concurrent Private Placement). Additionally, NMFC received units of NMF Holdings equal to the number of shares of common stock of NMFC issued to the partners of New Mountain Guardian Partners, L.P. Guardian AIV was the parent of NMF Holdings prior to the IPO and, as a result of the transactions completed in connection with the IPO, obtained units in NMF Holdings. Guardian AIV contributed its units in NMF Holdings to AIV Holdings in exchange for common stock of AIV Holdings. AIV Holdings had the right to exchange all or any portion of its units in NMF Holdings for shares of NMFC's common stock on a one-for-one basis at any time.
The original structure was designed to generally prevent NMFC and its stockholders from being allocated taxable income with respect to unrecognized gains that existed at the time of the IPO in the Predecessor Entities'whose assets and rather such amounts would be allocated generally to AIV Holdings. The result was that any distributions made to NMFC's stockholders that were attributable to such gains generally were not treated as taxable dividends but rather as return of capital.
Since our IPO, and through September 30, 2016, we raised approximately $454.0 million in net proceeds from additional offerings of common stock and issued shares of common stock valued at approximately $288.4 million on behalf of AIV Holdings for exchanged units. We acquired from NMF Holdings units of NMF Holdings equal to the number of shares of our common stock sold in additional offerings. With the completion of the final secondary offering on February 3, 2014, we owned 100.0% of the units of NMF Holdings, which became our wholly-owned subsidiary.
Restructuring
As a BDC, AIV Holdings had been subject to the 1940 Act, including certain provisions applicable only to BDCs. Accordingly, and after careful consideration of the 1940 Act requirements applicable to BDCs, the cost of 1940 Act compliance and a thorough assessment of AIV Holdings' business model, AIV Holdings' board of directors determined that continuation as a BDC was not in the best interests of AIV Holdings and Guardian AIV. Specifically, given that AIV Holdings was formed for the sole purpose of holding units of NMF Holdings and AIV Holdings had disposed of all of the units of NMF Holdings that it was holding as of February 3, 2014, the board of directors of AIV Holdings approved and declared advisable at an in-person meeting held on March 25, 2014 the withdrawal of AIV Holdings' election to be regulated as a BDC under the 1940 Act. In addition, the board of directors of AIV Holdings approved and declared advisable for AIV Holdings to terminate its registration under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and to dissolve AIV Holdings under the laws of the State of Delaware.
Upon receipt of the necessary stockholder consent to authorize the board of directors of AIV Holdings to withdraw AIV Holdings' election to be regulated as a BDC, the withdrawal was filed and became effective upon receipt by the SEC of AIV Holdings' notification of withdrawal on Form N-54C on April 15, 2014. The board of directors of AIV Holdings believed that AIV Holdings met the requirements for filing the notification to withdraw its election to be regulated as a BDC, upon the receipt of the necessary stockholder consent. After the notification of withdrawal of AIV Holdings' BDC election was filed with the SEC, AIV Holdings was no longer subject to the regulatory provisions of the 1940 Act applicable to BDCs generally, including regulations related to insurance, custody, composition of its board of directors, affiliated transactions and any compensation arrangements.
In addition, on April 15, 2014, AIV Holdings filed a Form 15 with the SEC to terminate AIV Holdings' registration under Section 12(g) of the Exchange Act. After these SEC filings and any other federal or state regulatory or tax filings were made, AIV Holdings proceeded to dissolve under Delaware law by filing a certificate of dissolution in Delaware on April 25, 2014.
Until May 8, 2014, as a BDC, NMF Holdings had been subject to the 1940 Act, including certain provisions applicable only to BDCs. Accordingly, and after careful consideration of the 1940 Act requirements applicable to BDCs, the cost of 1940 Act compliance and a thorough assessment of NMF Holdings' current business model, NMF Holdings' board of directors determined at an in-person meeting held on March 25, 2014 that continuation as a BDC was not in the best interests of NMF Holdings.
At the joint annual meeting of the stockholders of NMFC and the sole unit holder of NMF Holdings held on May 6, 2014, the stockholders of NMFC and the sole unit holder of NMF Holdings approved a proposal which authorized the board of directors of NMF Holdings to withdraw NMF Holdings' election to be regulated as a BDC. Additionally, the stockholders of NMFC approved a new investment advisory and management agreement between NMFC and the Investment Adviser. Upon

receipt of the necessary stockholder/unit holder approval to authorize the board of directors of NMF Holdings to withdraw NMF Holdings' election to be regulated as a BDC, the withdrawal was filed and became effective upon receipt by the SEC of NMF Holdings' notification of withdrawal on Form N-54C on May 8, 2014.
Effective May 8, 2014, NMF Holdings amended and restated its Operating Agreement such that the board of directors of NMF Holdings was dissolved and NMF Holdings remained a wholly-owned subsidiary of NMFC with the sole purpose of serving as a special purpose vehicle for NMF Holdings' credit facility, and NMFC assumed all other operating activities previously undertaken by NMF Holdings under the management of the Investment Adviser (collectively, the "Restructuring"). After the Restructuring, all wholly-owned direct and indirect subsidiaries of NMFC are consolidated with NMFC for both 1940 Act and financial statement reporting purposes, subject to any financial statement adjustments required in accordance with accounting principles generally accepted in the United States of America ("GAAP"). NMFC continues to remain a BDC regulated under the 1940 Act.
Also, on May 8, 2014, NMF Holdings filed Form 15 with the SEC to terminate NMF Holdings' registration under Section 12(g) of the Exchange Act. As a special purpose entity, NMF Holdings is bankruptcy-remote and non-recourse to NMFC. In addition, the assets held at NMF Holdings will continue to be used to secure NMF Holdings'Holdings’ credit facility.
Current Organization
Our wholly-owned subsidiaries, NMF Ancora Holdings Inc. (“NMF Ancora”), NMF QID NGL Holdings, Inc. (“NMF QID”) and NMF YP Holdings Inc. (“NMF YP”), our wholly-owned subsidiaries, are structured as Delaware entities that serve as tax blocker corporations which hold equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities). We consolidate our tax blocker corporations for accounting purposes. The tax blocker corporations are not consolidated for income tax purposes and may incur income tax expense as a result of their ownership of the portfolio companies. Additionally, our wholly-owned subsidiary, New Mountain Finance Servicing, L.L.C. (“NMF Servicing”), serves as the administrative agent on certain investment transactions. New Mountain Finance SBIC, L.P. (“SBIC LP”), and its general partner, New Mountain Finance SBIC G.P., L.L.C. (“SBIC GP”), were organized in Delaware as a limited partnership and limited liability company, respectively. SBIC LP and SBIC GP are our consolidated wholly-owned direct and indirect subsidiaries. SBIC LP received a license from the United States ("U.S.") Small Business Administration (the “SBA”) to operate as a small business investment company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958, as amended (the “1958 Act”).
The diagram below depicts our organizational structure New Mountain Net Lease Corporation ("NMNLC"), a Maryland corporation, was formed to acquire commercial real properties that are subject to "triple net" leases and intends to qualify as a real estate investment trust, or REIT, within the meaning of September 30, 2016.Section 856(a) of the Code.
structurediagram2a03.jpg 
*Includes partners of New Mountain Guardian Partners, L.P.
**NMFC is the sole limited partner of SBIC LP. NMFC, directly or indirectly through SBIC GP, wholly-owns SBIC LP. NMFC owns 100.0% of SBIC GP which owns 1.0% of SBIC LP. NMFC owns 99.0% of SBIC LP.
Our investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. In some cases, our investments may also include equity interests. TheOur primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to us, SBIC LP's investment objective is to generate current

income and capital appreciation under our investment criteria. However, SBIC LP's investments must be in SBA eligible companies. Our portfolio may be concentrated in a limited number of industries. As of September 30, 2016,March 31, 2017, our top five industry concentrations were software, business services, distribution & logistics,software, consumer services, investment fund and education.
As of September 30, 2016,March 31, 2017, our net asset value was $848.2$946.7 million and our portfolio had a fair value of approximately $1,519.0$1,786.9 million in 7477 portfolio companies, with a weighted average Yield to Maturity at Cost ("Yield to Maturity at Cost") of approximately 10.4%11.1%. This Yield to Maturity at Cost ("Yield to Maturity at Cost") calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. This calculation excludes the impact of existing leverage. Yield to Maturity at Cost uses the London Interbank Offered Rate ("LIBOR") curves at each quarter's end date. The actual yield to maturity may be higher or lower due to the future selection of the LIBOR contracts by the individual companies in our portfolio or other factors.
(1) Includes amounts committed, not all of which have been drawn down and invested to-date, as of March 31, 2017, as well as amounts called and returned since inception.
Recent Developments
On October 28, 2016,April 7, 2017, we completed a public offering of 5,750,0005,000,000 shares of our common stock (including 750,000 shares of common stock that were issued pursuant to the full exercise of the option granted to the underwriters to purchase additional shares) at a public offering price of $13.50$14.60 per share. The Investment Adviser paid all of the underwriters' sales load and an additional supplemental payment of $0.25 per share, which reflects the difference betweenOn April 13, 2017, in connection with the public offering, pricethe underwriters completed a purchase of $13.50 per share andan additional 750,000 shares of our common stock with the exercise of the overallotment option to purchase up to an additional 750,000 shares of our common stock. The Company received total net proceeds of $13.75 per share. All payments made byapproximately $81.5 million in connection with the Investment Adviser are not subject to reimbursement by us. We received net proceeds from this offering of approximately $79.1 million.offering.
On NovemberMay 4, 2016,2017, our board of directors declared a fourthsecond quarter 20162017 distribution of $0.34 per share payable on December 29, 2016June 30, 2017 to holders of record as of December 15, 2016.June 16, 2017.

Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAPaccounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.
Basis of Accounting
We consolidate our wholly-owned direct and indirect subsidiaries: NMF Holdings, NMF Servicing, NMNLC, SBIC LP, SBIC GP, NMF Ancora, NMF QID and NMF YP. Previously, we consolidated our wholly-owned indirect subsidiary NMF SLF until it merged with and into NMF Holdings on December 18, 2014. See"—Borrowings" for additional information on our credit facilities. We are an investment company following accounting and reporting guidance as described in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, ("ASC 946").
Valuation and Leveling of Portfolio Investments
At all times consistent with GAAP and the 1940 Act, we conduct a valuation of assets, which impacts our net asset value.
We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
(2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.
a.Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and

b.For investments other than bonds, we look at the number of quotes readily available and perform the following procedures:
i.Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained;
ii.Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:
a.Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b.Preliminary valuation conclusions will then be documented and discussed with our senior management;
c.If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and

d.When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period and the fluctuations could be material.
GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period. Reclassifications impacting the fair value hierarchy are reported as transfers in/out of the respective leveling categories as of the beginning of the quarterperiod in which the reclassifications occur.
The following table summarizes the levels in the fair value hierarchy that our portfolio investments fall into as of September 30, 2016:March 31, 2017:
(in thousands) Total Level I Level II Level III Total Level I Level II Level III
First lien $648,743
 $
 $191,393
 $457,350
 $752,726
 $
 $225,758
 $526,968
Second lien 589,827
 
 302,339
 287,488
 659,117
 
 311,598
 347,519
Subordinated 86,614
 
 44,066
 42,548
 76,063
 
 50,460
 25,603
Equity and other 193,795
 28
 2
 193,765
 298,989
 38
 2
 298,949
Total investments $1,518,979
 $28
 $537,800
 $981,151
 $1,786,895
 $38
 $587,818
 $1,199,039

We generally use the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company's performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:  Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation.
For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value.
After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:  We may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA multiples to the portfolio company's latest twelve month ("LTM") EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the

investment. In applying the market based approach as of September 30, 2016,March 31, 2017, we used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of our portfolio companies. We believe this was athese were reasonable rangeranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach:  We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment's expected maturity date. These cash flows are discounted at a rate established utilizing a yield calibration approach, which incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of September 30, 2016,March 31, 2017, we used the discount ranges set forth in the table below to value investments in our portfolio companies.

The unobservable inputs used in the fair value measurement of our Level III investments as of September 30, 2016March 31, 2017 were as follows:
(in thousands)      Range       Range 
TypeFair Value as of September 30, 2016 Approach Unobservable Input Low High Weighted
Average
 Fair Value as of March 31, 2017 Approach Unobservable Input Low High Weighted
Average
 
First lien$374,615
 Market & income approach EBITDA multiple 2.0x
 16.0x
 9.8x
 $421,182
 Market & income approach EBITDA multiple 2.0x
 16.0x
 10.0x
 
  Revenue multiple 1.4x
 8.0x
 4.5x
   Revenue multiple 0.5x
 8.0x
 3.1x
 
 
 Discount rate 7.0% 30.0% 10.6%  
 Discount rate 6.8% 15.0% 10.0% 
72,835
 Market quote Broker quote N/A
 N/A
 N/A
 97,185
 Market quote Broker quote N/A
 N/A
 N/A
 
9,900
 Other N/A(1) N/A
 N/A
 N/A
 8,601
 Other N/A(1) N/A
 N/A
 N/A
 
Second lien156,719
 Market & income approach EBITDA multiple 7.5x
 16.0x
 12.1x
 230,258
 Market & income approach EBITDA multiple 7.0x
 17.0x
 12.0x
 
  Revenue multiple 5.3x
 6.2x
 5.8x
 
 
 Discount rate 8.3% 12.8% 11.0% 
 
 Discount rate 10.0% 11.6% 10.9% 84,395
 Market quote Broker quote N/A
 N/A
 N/A
 
130,769
 Market quote Broker quote N/A
 N/A
 N/A
 32,866
 Other N/A(1) N/A
 N/A
 N/A
 
Subordinated42,548
 Market & income approach EBITDA multiple 4.5x
 8.5x
 7.5x
 25,603
 Market & income approach EBITDA multiple 4.0x
 8.5x
 7.3x
 
  Revenue multiple 0.5x
 0.6x
 0.6x
   Revenue multiple 0.5x
 1.0x
 0.8x
 
 
 Discount rate 10.0% 17.2% 14.1%  
 Discount rate 8.3% 15.1% 13.2% 
Equity and other175,774
 Market & income approach EBITDA multiple 2.5x
 12.5x
 6.9x
 165,180
 Market & income approach EBITDA multiple 2.5x
 13.0x
 5.9x
 
  Revenue multiple 1.1x
 1.7x
 1.4x
   Revenue multiple 0.5x
 1.0x
 0.8x
 
 
 Discount rate 8.0% 19.5% 14.1%  
 Discount rate 8.0% 18.5% 14.7% 
1,491
 Black Scholes analysis Expected life in years 9.1
 9.5
 9.3
 1,484
 Black Scholes analysis Expected life in years 8.6
 9.0
 8.9
 
 
   Volatility 27.4% 35.0% 31.2%  
   Volatility 43.3% 58.3% 54.8% 
 
   Discount rate 1.7% 1.7% 1.7%  
   Discount rate 2.6% 2.6% 2.6% 
16,500
 Other N/A(1) N/A
 N/A
 N/A
 132,285
 Other N/A(1) N/A
 N/A
 N/A
 
$981,151
      
  
  
 $1,199,039
      
  
  
 
 
 
(1)Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
NMFC Senior Loan Program I LLC
NMFC Senior Loan Program I LLC ("SLP I") was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by us. SLP I is structured as a private investment fund, in which all of the investors are qualified purchasers, as such term is defined under the 1940 Act. Transfer of interests in SLP I is subject to restrictions, and as a result, such interests are not readily marketable. SLP I operates under a limited liability company agreement (the "SLP I Agreement") and will continue in existence until June 10, 2019, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended for up to one year pursuant to certain terms of the SLP I Agreement. SLP I has a three year re-investment period. SLP I invests in senior secured loans issued by companies within our core industry verticals. These investments are typically broadly syndicated first lien loans.

SLP I is capitalized with $93.0 million of capital commitments and $275.0 million of debt from a revolving credit facility and is managed by us. Our capital commitment is $23.0 million, representing less than 25.0% ownership, with third party investors representing the remaining capital commitment. As of September 30, 2016,March 31, 2017, SLP I had total investments with an aggregate fair value of approximately $330.3$351.3 million, debt outstanding of $241.2$249.1 million and capital that had been called and funded of $93.0 million. As of December 31, 2015,2016, SLP I had total investments with an aggregate fair value of approximately $349.7$348.7 million, debt outstanding of $267.6$256.5 million and capital that had been called and funded of $93.0 million. Our investment in SLP I is disclosed on our Consolidated SchedulesSchedule of Investments as of September 30, 2016March 31, 2017 and December 31, 2015.2016.

We, as an investment adviser registered under the Advisers Act, act as the collateral manager to SLP I and are entitled to receive a management fee for our investment management services provided to SLP I. As a result, SLP I is classified as our affiliate. No management fee is charged on our investment in SLP I in connection with the administrative services provided to SLP I. For the three and nine months ended September 30,March 31, 2017 and March 31, 2016, we earned approximately $0.3 million and $0.9 million, respectively, in management fees related to SLP I, which is included in other income. For the three and nine months ended September 30, 2015, we earned approximately $0.3 million and $0.9 million, respectively, in management fees related to SLP I, which is included in other income. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, approximately $0.3$0.6 million and $0.3 million, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three and nine months ended September 30,March 31, 2017 and March 31, 2016, we earned approximately $1.1$1.0 million and $2.9 million, respectively, of dividend income related to SLP I, which is included in dividend income. For the three and nine months ended September 30, 2015, we earned approximately $0.9 million and $2.7 million, respectively, of dividend income related to SLP I, which is included in dividend income. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, approximately $1.1 million and $0.9 million, respectively, of dividend income related to SLP I was included in interest and dividend receivable.
NMFC Senior Loan Program II LLC
NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between us and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from us and SkyKnight. SLP II has a three year investment period and will continue in existence until April 12, 2021. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.
SLP II is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. We and SkyKnight have committed to provide $79.4 million and $20.6 million of equity to SLP II, respectively. As of September 30, 2016,March 31, 2017, we and SkyKnight have contributed $47.6$79.4 million and $12.4$20.6 million, respectively. Our investment in SLP II is disclosed on our Consolidated Schedule of Investments as of September 30,March 31, 2017 and December 31, 2016.
On April 12, 2016, SLP II closed its $275.0 million revolving credit facility with Wells Fargo Bank, National Association which matures on April 12, 2021 and bears interest at a rate of LIBOR plus 1.75% per annum. As of September 30,March 31, 2017 and December 31, 2016, SLP II had total investments with an aggregate fair value of approximately $231.3$363.7 million and $361.7 million, respectively, and debt outstanding under its credit facility of $158.4 million.$251.0 million and $250.0 million, respectively.

The following table is a listing of the individual loans in SLP II's portfolio as of September 30, 2016:March 31, 2017:
Portfolio Company and Type of InvestmentIndustryInterest Rate (1)Maturity Date Principal Amount or Par Value Cost
Fair
Value (2)
 Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
First lien: (in thousands) (in thousands) (in thousands) (in thousands)
ADMI Corp. (aka Aspen Dental)Healthcare Services 5.25% (L + 4.25%)4/29/2022$1,990
$1,985
$2,004
ADG, LLC Healthcare Services  5.75% (L + 4.75%) 9/28/2023 $17,164
 $17,002
 $17,078
ADMI Corp. Healthcare Services  4.80% (L + 3.75%) 4/29/2022 4,426
 4,426
 4,482
AssuredPartners, Inc.Business Services 5.75% (L + 4.75%)10/21/20228,891
8,891
8,954
 Business Services  5.25% (L + 4.25%) 10/21/2022 14,970
 14,956
 15,108
Beaver-Visitec International Holdings, Inc.Healthcare Products 6.00% (L + 5.00%)8/21/202315,000
14,851
14,963
 Healthcare Products  6.15% (L + 5.00%) 8/21/2023 14,925
 14,786
 14,925
Coinstar, LLCConsumer Services 5.25% (L + 4.25%)9/27/20235,000
4,975
5,044
 Consumer Services  5.25% (L + 4.25%) 9/27/2023 4,975
 4,952
 5,029
Cvent, Inc.Software 6.00% (L + 5.00%)6/16/202310,000
9,900
10,025
 Software  6.00% (L + 5.00%) 11/29/2023 10,000
 9,904
 10,150
DigiCert Holdings, Inc.Software 6.00% (L + 5.00%)10/21/202114,937
14,847
14,900
 Software  6.00% (L + 5.00%) 10/21/2021 14,862
 14,780
 14,899
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC) Software  6.40% (L + 5.25%) 2/18/2022 14,962
 14,814
 14,999
Emerald 2 LimitedBusiness Services 5.00% (L + 4.00%)5/14/20211,277
1,203
1,194
 Business Services  5.15% (L + 4.00%) 5/14/2021 1,277
 1,210
 1,226
Engility Corporation (fka TASC, Inc.)Federal Services 5.75% (L + 4.75%)8/14/202314,118
14,048
14,268
 Federal Services  4.75% (L + 3.75%) 8/14/2023 3,373
 3,357
 3,396
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC)Software 6.25% (L + 5.25%)2/18/202210,534
10,370
10,218
Evo Payments International, LLC Business Services  6.00% (L + 5.00%) 12/22/2023 17,500
 17,415
 17,705
Explorer Holdings, Inc.Healthcare Services 6.00% (L + 5.00%)5/2/20234,988
4,940
5,034
 Healthcare Services  6.03% (L + 5.00%) 5/2/2023 4,963
 4,918
 5,018
GOBP Holdings Inc.Retail 5.00% (L + 4.00%)10/21/202115,243
15,094
15,222
Globallogic Holdings Inc. Business Services  5.65% (L + 4.50%) 6/20/2022 9,750
 9,674
 9,890
Greenway Health, LLC Software  5.75% (L + 4.75%) 2/16/2024 15,000
 14,926
 15,122
Hyperion Insurance Group LimitedBusiness Services 5.50% (L + 4.50%)4/29/20229,913
9,746
9,727
 Business Services  5.50% (L + 4.50%) 4/29/2022 14,364
 14,152
 14,488
J.D. Power and AssociatesBusiness Services 5.25% (L + 4.25%)9/7/202310,000
9,950
10,100
 Business Services  5.25% (L + 4.25%) 9/7/2023 9,950
 9,903
 10,025
Kronos Incorporated Software  5.03% (L + 4.00%) 11/1/2023 9,975
 9,928
 10,044
Masergy Holdings, Inc. Business Services  5.50% (L + 4.50%) 12/15/2023 7,481
 7,445
 7,556
McGraw-Hill Global Education Holdings, LLCEducation 5.00% (L + 4.00%)5/4/20229,975
9,928
10,040
 Education  5.00% (L + 4.00%) 5/4/2022 9,925
 9,882
 9,836
Ministry Brands, LLC Software  6.00% (L + 5.00%) 12/2/2022 7,827
 7,789
 7,804
Ministry Brands, LLC Software  6.00% (L + 5.00%) 12/2/2022 2,154
 2,143
 2,148
Mister Car Wash Holdings, Inc. Consumer Services  5.25% (L + 4.25%) 8/20/2021 8,291
 8,232
 8,358
Mister Car Wash Holdings, Inc. Consumer Services  5.25% (L + 4.25%) 8/20/2021 1,662
 1,681
 1,676
Navex Global, Inc.Software 5.98% (L + 4.75%)11/19/202114,967
14,742
14,743
 Software  5.25% (L + 4.25%) 11/19/2021 14,894
 14,690
 14,950
Netsmart Technologies, Inc.Healthcare I.T. 5.75% (L + 4.75%)4/19/20237,980
7,904
8,027
Precyse Acquisition Corp.Healthcare Services 6.50% (L + 5.50%)10/20/20229,975
9,833
10,062
nThrive, Inc. (fka Precyse Acquisition Corp.) Healthcare Services  6.50% (L + 5.50%) 10/20/2022 9,925
 9,794
 10,012
Poseidon Intermediate, LLC Software  5.25% (L + 4.25%) 8/15/2022 13,478
 13,478
 13,641
Quest Software US Holdings Inc.Software 7.00% (L + 6.00%)10/31/202210,000
9,850
9,850
 Software  7.00% (L + 6.00%) 10/31/2022 9,975
 9,834
 10,128
Salient CRGT Inc. Federal Services  6.75% (L + 5.75%) 2/28/2022 15,000
 14,852
 14,831
Severin Acquisition, LLC Software  5.90% (L + 4.75%) 7/30/2021 15,000
 14,927
 14,925
SolarWinds Holdings, Inc.Software 5.50% (L + 4.50%)2/3/202315,725
15,735
15,890
 Software  4.50% (L + 3.50%) 2/3/2023 14,963
 14,971
 14,997
TTM Technologies, Inc.Business Products 5.25% (L + 4.25%)5/31/202115,000
14,872
15,215
 Business Products  5.25% (L + 4.25%) 5/31/2021 6,048
 6,037
 6,154
University Support Services LLC (St. George's University Scholastic Services LLC) Education  6.40% (L + 5.25%) 7/6/2022 1,979
 1,979
 2,009
Vencore, Inc. (fka SI Organization, Inc., The)Federal Services 5.75% (L + 4.75%)11/23/201910,829
10,807
10,877
 Federal Services  5.90% (L + 4.75%) 11/23/2019 10,772
 10,753
 10,944
VF Holding Corp.Software 4.75% (L + 3.75%)6/30/20235,000
4,976
5,022
Vision Solutions, Inc.Software 7.50% (L + 6.50%)6/16/202210,000
9,904
9,950
 Software  7.64% (L + 6.50%) 6/16/2022 8,725
 8,647
 8,763
Vivid Seats LLC Business Services  6.75% (L + 5.75%) 10/12/2022 4,000
 3,925
 4,025
Zywave, Inc. Software  6.15% (L + 5.00%) 11/17/2022 17,456
 17,373
 17,369
 $231,342
$229,351
$231,329
 $361,991
 $359,535
 $363,710
 
(1)All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of September 30, 2016.March 31, 2017.
(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.
    

BelowThe following table is certain summarized financial information fora listing of the individual loans in SLP IIII's portfolio as of September 30, 2016 and for the three and nine months ended September 30,December 31, 2016:
Selected Balance Sheet Information (in thousands):September 30, 2016
Investments at fair value (cost of $229,351)$231,329
Receivable from unsettled securities sold15,993
Cash and other assets3,511
Total assets$250,833
  
Credit facility$158,400
Deferred financing costs(2,716)
Payable for unsettled securities purchased28,705
Distribution payable1,450
Other liabilities3,108
Total liabilities188,947
  
Members' capital$61,886
Total liabilities and members' capital$250,833
 Three Months Ended Nine Months Ended
Selected Statement of Operations Information (in thousands):September 30, 2016 September 30, 2016(1)
Interest income$2,698
 $3,326
Other income114
 163
Total investment income2,812
 3,489
    
Interest and other financing expenses1,398
 1,931
Other expenses134
 463
Total expenses1,532
 2,394
Net investment income1,280
 1,095
    
Net realized gains on investments229
 263
Net change in unrealized appreciation (depreciation) of investments1,863
 1,978
Net increase in members' capital$3,372
 $3,336
Portfolio Company and Type of Investment Industry Interest Rate (1) Maturity Date  Principal Amount or Par Value  Cost Fair
Value (2)
First lien:       (in thousands) (in thousands) (in thousands)
ADG, LLC Healthcare Services  5.75% (L + 4.75%) 9/28/2023 $17,207
 $17,040
 $17,121
AssuredPartners, Inc. Business Services  5.25% (L + 4.25%) 10/21/2022 11,862
 11,847
 12,058
Beaver-Visitec International Holdings, Inc. Healthcare Products  6.00% (L + 5.00%) 8/21/2023 14,962
 14,819
 14,963
Coinstar, LLC Consumer Services  5.25% (L + 4.25%) 9/27/2023 4,987
 4,963
 5,054
Cvent, Inc. Software  6.00% (L + 5.00%) 11/29/2023 10,000
 9,901
 10,125
DigiCert Holdings, Inc. Software  6.00% (L + 5.00%) 10/21/2021 14,900
 14,814
 14,881
Eiger Acquisition B.V. (Eiger Co-Borrower, LLC) Software  6.25% (L + 5.25%) 2/18/2022 10,507
 10,350
 10,402
Emerald 2 Limited Business Services  5.00% (L + 4.00%) 5/14/2021 1,277
 1,206
 1,174
Engility Corporation (fka TASC, Inc.) Federal Services  5.81% (Base + 4.72%) 8/14/2023 13,860
 13,793
 14,080
Evo Payments International, LLC Business Services  6.00% (L + 5.00%) 12/22/2023 17,500
 17,413
 17,602
Explorer Holdings, Inc. Healthcare Services  6.00% (L + 5.00%) 5/2/2023 4,975
 4,929
 5,028
Globallogic Holdings Inc. Business Services  5.50% (L + 4.50%) 6/20/2022 10,000
 9,900
 10,013
GOBP Holdings Inc. Retail  5.00% (L + 4.00%) 10/21/2021 14,955
 14,816
 14,985
Hyperion Insurance Group Limited Business Services  5.50% (L + 4.50%) 4/29/2022 14,401
 14,179
 14,476
J.D. Power and Associates Business Services  5.25% (L + 4.25%) 9/7/2023 9,975
 9,927
 10,075
Kronos Incorporated Software  5.00% (L + 4.00%) 11/1/2023 10,000
 9,951
 10,105
Masergy Holdings, Inc. Business Services  5.50% (L + 4.50%) 12/15/2023 7,500
 7,463
 7,563
McGraw-Hill Global Education Holdings, LLC Education  5.00% (L + 4.00%) 5/4/2022 9,950
 9,905
 9,971
Ministry Brands, LLC Software  6.00% (L + 5.00%) 12/2/2022 7,846
 7,807
 7,807
Mister Car Wash Holdings, Inc. Consumer Services  5.25% (L + 4.25%) 8/20/2021 8,312
 8,250
 8,354
Navex Global, Inc. Software  5.99% (L + 4.75%) 11/19/2021 14,933
 14,718
 14,858
nThrive, Inc. (fka Precyse Acquisition Corp.) Healthcare Services  6.50% (L + 5.50%) 10/20/2022 9,950
 9,813
 10,083
Poseidon Intermediate, LLC Software  5.25% (L + 4.25%) 8/15/2022 14,962
 14,962
 15,055
Quest Software US Holdings Inc. Software  7.00% (L + 6.00%) 10/31/2022 10,000
 9,853
 10,153
Rocket Software, Inc. Software  5.25% (L + 4.25%) 10/14/2023 14,962
 14,817
 15,129
SolarWinds Holdings, Inc. Software  5.50% (L + 4.50%) 2/3/2023 14,688
 14,697
 14,852
TTM Technologies, Inc. Business Products  5.25% (L + 4.25%) 5/31/2021 13,548
 13,444
 13,599
Vencore, Inc. (fka SI Organization, Inc., The) Federal Services  5.75% (L + 4.75%) 11/23/2019 10,801
 10,780
 10,942
Vision Solutions, Inc. Software  7.50% (Base + 6.50%) 6/16/2022 9,938
 9,845
 9,919
Vivid Seats LLC Business Services  6.75% (L + 5.75%) 10/12/2022 4,000
 3,922
 3,985
WD Wolverine Holdings, LLC Healthcare Services  6.50% (L + 5.50%) 10/17/2023 10,200
 9,900
 9,894
Zywave, Inc. Software  6.00% (L + 5.00%) 11/17/2022 17,500
 17,414
 17,413
        $360,458
 $357,438
 $361,719
 
(1)ForAll interest is payable in cash unless otherwise indicated. A majority of the nine months ended September 30, 2016, amounts reported relatevariable rate debt investments bear interest at a rate that may be determined by reference to the period fromLIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2016.
(2)Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.


Below is certain summarized financial information for SLP II as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and March 31, 2016:
Selected Balance Sheet Information:March 31, 2017 December 31, 2016
 (in thousands) (in thousands)
Investments at fair value (cost of $359,535 and $357,438, respectively)$363,710
 $361,719
Receivable from unsettled securities sold1,876
 1,007
Cash and other assets6,440
 10,138
Total assets$372,026
 $372,864
    
Credit facility$250,960
 $249,960
Deferred financing costs(2,418) (2,565)
Payable for unsettled securities purchased11,165
 24,862
Distribution payable4,325
 3,000
Other liabilities3,684
 3,350
Total liabilities267,716
 278,607
    
Members' capital$104,310
 $94,257
Total liabilities and members' capital$372,026
 $372,864
 Three Months Ended
Selected Statement of Operations Information:March 31, 2017 March 31, 2016(1)
 (in thousands) (in thousands)
Interest income$5,173
 $
Other income214
 
Total investment income5,387
 
    
Interest and other financing expenses1,849
 
Other expenses162
 
Total expenses2,011
 
Net investment income3,376
 
    
Net realized gains on investments1,108
 
Net change in unrealized (depreciation) appreciation of investments(106) 
Net increase in members' capital$4,378
 $
(1)SLP II commenced operations on April 12, 2016 (commencement of operations) to September 30, 2016.
For the three and nine months ended September 30, 2016,March 31, 2017, we earned approximately $1.2$3.4 million and $1.2 million, respectively, of dividend income related to SLP II, which is included in dividend income. As of September 30,March 31, 2017 and December 31, 2016, approximately $1.2$3.4 million and $2.4 million, respectively, of dividend income related to SLP II was included in interest and dividend receivable.
We have determined that SLP II is an investment company under ASC 946,946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation, concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP II.

New Mountain Net Lease Corporation
     New Mountain Net Lease Corporation ("NMNLC") was formed as a Maryland corporation on April 18, 2016 and commenced operations on August 12, 2016. NMNLC was formed to acquire commercial real properties that are subject to "triple net" leases and to qualifyleases. NMNLC's investments are disclosed on our Consolidated Schedule of Investments as a real estate investment trust, or REIT, within the meaning of Section 856(a)March 31, 2017.
Below is certain summarized property information for NMNLC as of the Code. NMNLC is as an operating company that will actively manage the properties and negotiate long term leases. It is intended to further add value by renovating, rehabilitating, developing, re-tenanting or re-positioning such properties over time. We have determined that NMNLC is not an investment company under ASC 946 and in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Accordingly, NMNLC is a wholly-owned non-consolidated portfolio company of NMFC.March 31, 2017:
    Lease   Total Fair Value as of
Portfolio Company Tenant Expiration Date Location Square Feet March 31, 2017
        (in thousands) (in thousands)
NM APP Canada Corp. A.P. Plasman, Inc. 9/30/2031 Ontario, Canada 436 $7,345
NM APP US LLC Plasman Corp, LLC / A-Brite LP 9/30/2033 Fort Payne, AL 261 5,080
      Cleveland, OH    
NM DRVT LLC FMH Conveyors, LLC 10/31/2031 Jonesboro, AR 195 5,152
NM JRA LLC J.R. Automation Technologies, LLC 1/31/2031 Holland, MI 88 2,043
NM KRLN LLC Kirlin Group, LLC 6/30/2029 Rockville, MD 95 7,510
          $27,130
Collateralized agreements or repurchase financings
We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral, (“ASC 860”) when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a carrying value of $28.7$28.4 million and $29.7$29.2 million, respectively, and collateralized by a second lien bond in Northstar GOM Holdings Group LLC with a fair value of $28.7$28.4 million and $29.7$29.2 million, respectively. The collateralized agreement to resell is guaranteed by a private hedge fund with the most recently reported assets under management of approximately $690.0 million and assets under management of approximately $716.6 million as of December 31, 2015.million. Pursuant to the terms of the collateralized agreement, the private hedge fund is obligated to repurchase the collateral from us at the par value of the collateralized agreement once called upon by us or if the private hedge fund's total assets under management fall below the agreed upon thresholds. The collateralized agreement was called upon by us but the counterparty failed to repurchase the collateral at its par value in accordance with the terms of the collateralized agreement. As of September 30, 2016,March 31, 2017, litigation is on-going in the state of New York and the Cayman Islands to resolve this matter. The collateralized agreement earned interest at a contractual weighted average rate of 16.0% and 15.0%16.0% per annum as of September 30, 2016March 31, 2017 and December 31, 2015,2016, respectively.
Revenue Recognition
Sales and paydowns of investments:  Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:  Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and generally due at maturity or when redeemed by the issuer.
Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
Non-accrual income:  Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.

Other income:  Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received for providing

such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Monitoring of Portfolio Investments
We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy.
We use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio. We use a four-level numeric rating scale as follows:
Investment Rating 1—Investment is performing materially above expectations;
Investment Rating 2—Investment is performing materially in-line with expectations. All new loans are rated 2 at initial purchase;
Investment Rating 3—Investment is performing materially below expectations and while significant loss is not expected, the risk of loss has increased materially since the original investment; and
Investment Rating 4—Investment is performing substantially below expectations and risks have increased substantially since the original investment. Payments may be delinquent. There is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit.
The following table shows the distribution of our investments on the 1 to 4 investment rating scale at fair value as of September 30, 2016:March 31, 2017:
(in millions) As of September 30, 2016 As of March 31, 2017
Investment Rating Par Value(1) Percent Fair Value Percent Par Value(1) Percent Fair Value Percent
Investment Rating 1 $174.2
 12.2% $227.4
 15.0% $172.5
 10.7% $173.2
 9.7%
Investment Rating 2 1,169.8
 81.5% 1,260.2
 82.9% 1,305.4
 81.3% 1,566.3
 87.7%
Investment Rating 3 36.1
 2.5% 22.3
 1.5% 37.5
 2.3% 26.9
 1.5%
Investment Rating 4 54.9
 3.8% 9.1
 0.6% 92.1
 5.7% 20.5
 1.1%
 $1,435.0
 100.0% $1,519.0
 100.0% $1,607.5
 100.0% $1,786.9
 100.0%
 
(1)Excludes shares and warrants.
As of September 30, 2016,March 31, 2017, all investments in our portfolio had an Investment Rating of 1 or 2 with the exception of fivefour portfolio companies. As of September 30, 2016, threeMarch 31, 2017, one portfolio companies had an Investment Rating of 3 and three portfolio companies had an Investment Rating of 4, which includes one portfolio company that had a portion4.
During the first quarter of 2017, we placed our entire first lien notes position in Sierra Hamilton LLC / Sierra Hamilton Finance, Inc. ("Sierra") on non-accrual status due to its ongoing restructuring. As of March 31, 2017, our investment included in Investment RatingSierra placed on non-accrual status represented an aggregate cost basis of 3$27.2 million, an aggregate fair value of $16.5 million and a portion included in Investment Ratingtotal unearned interest income of 4.$0.5 million for the three months then ended.
During the third quarter of 2016, we placed our entire second lien position in Transtar Holding Company (“Transtar”) on non-accrual status due to its ongoing restructuring. As of September 30, 2016,March 31, 2017, our investment in Transtar had an aggregate cost basis of $30.9$31.2 million, an aggregate fair value of $3.8$3.6 million and total unearned interest income of approximately $1.6 million and $2.4$1.8 million for the three and nine months then ended, respectively.ended.

During the second quarter of 2016, we placed a portion of our first lien position in Permian Tank & Manufacturing, Inc. (“Permian”) on non-accrual status due to its ongoing restructuring. As of September 30, 2016, the portion of theour investment in Permian first lien position placed on non-accrual status representedhad an aggregate cost basis of $17.1$24.4 million, an aggregate fair value of $4.9$7.1 million and total unearned interest income of approximately $0.4 million and $1.3 million for the three and nine months then ended. In October 2016, Permian completed a restructuring which resulted in a material modification of the original terms and an extinguishment of our original investment in Permian. Prior to the extinguishment in October 2016, our original investment in Permian had an aggregate cost of $25.0 million, an aggregate fair value of $7.1 million and total unearned interest income of $1.4 million for the year ended respectively.December 31, 2016. The extinguishment resulted in a realized loss of $17.9 million. Post restructuring, our investments in Permian have been restored to full accrual status. As of March 31, 2017, our investments in Permian have an aggregate cost basis of $9.3 million and an aggregate fair value of $11.3 million.
During the third quarter of 2016, we received notice that there would be no recovery of the outstanding principle and interest owed on our two super priority first lien positions in ATI Acquisition Company ("ATI"). As of June 30, 2016, our first lien positions in ATI had an aggregate cost of $1.5 million and an aggregate fair value of $0 and no unearned interest income for the period then ended. We wrote off our first lien positions in ATI and recognized an aggregate realized loss of $1.5 million during the three months ended September 30, 2016. As of September 30, 2016,March 31, 2017, our preferred shares and warrants in Ancora Acquisition LLC, which were received as a result of our first lien positions in ATI, had an aggregate cost basis of $0.1 million and an aggregate fair value of $0.4 million.

Portfolio and Investment Activity
The fair value of our investments was approximately $1,519.0$1,786.9 million in 7477 portfolio companies at September 30, 2016March 31, 2017 and approximately $1,512.2$1,558.8 million in 7578 portfolio companies at December 31, 2015.2016.
The following table shows our portfolio and investment activity for the ninethree months ended September 30, 2016March 31, 2017 and September 30, 2015:March 31, 2016:
  Nine Months Ended
(in millions) September 30, 2016 September 30, 2015
New investments in 32 and 26 portfolio companies, respectively $336.2
 $400.8
Debt repayments in existing portfolio companies 310.3
 271.6
Sales of securities in 7 and 14 portfolio companies, respectively 42.3
 73.2
Change in unrealized appreciation on 61 and 39 portfolio companies, respectively 50.1
 45.9
Change in unrealized depreciation on 24 and 47 portfolio companies, respectively (39.4) (38.2)
  Three Months Ended
(in millions) March 31, 2017 March 31, 2016
New investments in 24 and 7 portfolio companies, respectively $349.4
 $27.6
Debt repayments in existing portfolio companies 99.1
 24.4
Sales of securities in 8 and 1 portfolio companies, respectively 34.7
 15.8
Change in unrealized appreciation on 42 and 37 portfolio companies, respectively 13.3
 19.6
Change in unrealized depreciation on 32 and 38 portfolio companies, respectively (7.1) (34.0)
At September 30,March 31, 2017 and March 31, 2016, and September 30, 2015, our weighted average Yield to Maturity at Cost was approximately 10.4%11.1% and 10.4%, respectively.
Recent Accounting Standards Updates
See Item 1.—Financial Statements—Note 13. Recent Accounting Standards for details on recent accounting standards updates.
Results of Operations
Under GAAP, our IPO did not step-up the cost basis of the Predecessor Operating Company's existing investments to fair market value at the IPO date. Since the total value of the Predecessor Operating Company's investments at the time of the IPO was greater than the investments' cost basis, a larger amount of amortization of purchase or original issue discount, and different amounts in realized gain and unrealized appreciation, may be recognized under GAAP in each period than if the step-up had occurred. This will remain until such predecessor investments are sold, repaid or mature in the future. We track the transferred (or fair market) value of each of the Predecessor Operating Company's investments as of the time of the IPO and, for purposes of the incentive fee calculation, adjusts income as if each investment was purchased at the date of the IPO (or stepped up to fair market value). The respective "Adjusted Net Investment Income" (defined as net investment income adjusted to reflect income as if the cost basis of investments held at the IPO date had stepped-up to fair market value as of the IPO date) is used in calculating both the incentive fee and dividend payments. See Item 1.—Financial Statements—Note 5. Agreements for additional details.
    

The following table for the three months ended September 30, 2016March 31, 2017 is adjusted to reflect the step-up to fair market value and the allocation of the incentive fees related to hypothetical capital gains out of the adjusted post-incentive fee net investment income.
(in thousands) Three Months
Ended
September 30, 2016
 
Stepped-up
Cost Basis
Adjustments
 
Incentive Fee
Adjustments(1)
 Adjusted Three
Months Ended
September 30, 2016
 Three Months Ended
March 31, 2017
 
Stepped-up
Cost Basis
Adjustments
 
Incentive Fee
Adjustments(1)
 Adjusted Three Months Ended
March 31, 2017
Investment income  
  
  
  
  
  
  
  
Interest income $35,917
 $(1) $
 $35,916
 $33,998
 $
(2)$
 $33,998
Dividend income 3,063
 
 
 3,063
 6,733
 
 
 6,733
Other income 2,854
 
 
 2,854
 2,576
 
 
 2,576
Total investment income(2)(3) 41,834
 (1) 
 41,833
 43,307
 
 
 43,307
Total expenses pre-incentive fee(3)(4) 14,673
 
 
 14,673
 16,268
 
 
 16,268
Pre-Incentive Fee Net Investment Income 27,161
 (1) 
 27,160
 27,039
 
 
 27,039
Incentive fee 5,432
 
 
 5,432
 3,608
 
 
 3,675
Post-Incentive Fee Net Investment Income 21,729
 (1)   21,728
 23,431
 
 
 23,431
Net realized gains (losses) on investments(4) 1,150
 (27) 
 1,123
Net realized gains on investments(5) 826
 
 
 826
Net change in unrealized appreciation (depreciation) of investments(4)(5) 3,146
 28
 
 3,174
 6,205
 
(2)
 6,205
Net change in unrealized (depreciation) appreciation of securities purchased under collateralized agreements to resell (957) 
 
 (957) (800) 
 
 (800)
Benefit for taxes 11
 
 
 11
 755
 
 
 755
Capital gains incentive fees 
 
 
 
 
 
 
 
Net increase in net assets resulting from operations $25,079
     $25,079
 $30,417
     $30,417
 
(1)For the three months ended September 30, 2016,March 31, 2017, we incurred total incentive fees of $5.4$3.6 million, net of the incentive fee waiver of $1.8 million, of which none was related to the capital gains incentive fee accrual on a hypothetical liquidation basis.
(2)For the three months ended March 31, 2017, the adjustment was less than $1 thousand.
(3)Includes income from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(3)(4)Includes expense waivers and reimbursements of $0.5 million and management fee waivers of $1.1$1.4 million. There was no expense waivers and reimbursements for the three months ended September 30, 2016.
(4)(5)Includes net realized gains and losses on investments and net change in unrealized appreciation (depreciation) of investments from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
For the three months ended September 30, 2016,March 31, 2017, we had a less than $1.0a $1 thousand adjustment to interest income for amortization and a decrease of approximately $27.0less than $1 thousand to net realized gains and an increase of approximately $28.0 thousandadjustment to net change in unrealized appreciation to adjust for the stepped-up cost basis of the transferred investments as discussed above. For the three months ended September 30, 2016,March 31, 2017, total adjusted investment income of $41.8$43.3 million consisted of approximately $33.8$32.3 million in cash interest from investments, approximately $0.9 million in PIK interest from investments, approximately $0.4$0.1 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $0.8$0.7 million, approximately $2.3$5.2 million in cash dividends from investments, $0.7$1.5 million in PIK and non-cash dividends from investments and approximately $2.9$2.6 million in other income. Our Adjusted Net Investment Income was $21.7$23.4 million for the three months ended September 30, 2016.March 31, 2017.
In accordance with GAAP, for the three months ended September 30, 2016,March 31, 2017, we did not have an accrual for hypothetical capital gains incentive fee based upon the cumulative net Adjusted Realized Capital Gains and Adjusted Realized Capital Losses and the cumulative net Adjusted Unrealized Capital Appreciation and Adjusted Unrealized Capital Depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on actual Adjusted Realized Capital Gains computed net of all Adjusted Realized Capital Losses and Adjusted Unrealized Capital Depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value. As of September 30, 2016, no actual capital gains incentive fee was owed under the Investment Management Agreement, as cumulative net Adjusted Realized Gains did not exceed cumulative Adjusted Unrealized Depreciation.

The following table for the nine months ended September 30, 2016 is adjusted to reflect the step-up to fair market value and the allocation of the incentive fees related to hypothetical capital gains out of the adjusted post-incentive fee net investment income.
(in thousands) Nine Months Ended
September 30, 2016
 
Stepped-up
Cost Basis
Adjustments
 
Incentive Fee
Adjustments(1)
 Adjusted Nine Months Ended
September 30, 2016
Investment income  
  
  
  
Interest income $112,119
 $(65) $
 $112,054
Dividend income 6,423
 
 
 6,423
Other income 5,758
 
 
 5,758
Total investment income(2) 124,300
 (65) 
 124,235
Total expenses pre-incentive fee(3) 42,906
 
 
 42,906
Pre-Incentive Fee Net Investment Income 81,394
 (65) 
 81,329
Incentive fee 16,266
 
 
 16,266
Post-Incentive Fee Net Investment Income 65,128
 (65) 
 65,063
Net realized gains (losses) on investments(4) 2,191
 (151) 
 2,040
Net change in unrealized appreciation (depreciation) of investments(4) 10,716
 216
 
 10,932
Net change in unrealized (depreciation) appreciation of securities purchased under collateralized agreements to resell (1,031) 
 
 (1,031)
Benefit for taxes 819
 
 
 819
Capital gains incentive fees 
 
 
 
Net increase in net assets resulting from operations $77,823
     $77,823
(1)For the nine months ended September 30, 2016, we incurred total incentive fees of $16.3 million, of which none was related to the capital gains incentive fee accrual on a hypothetical liquidation basis.
(2)Includes income from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
(3)Includes expense waivers and reimbursements of $0.3 million and management fee waivers of $3.7 million.
(4)Includes net realized gains and losses on investments and net change in unrealized appreciation (depreciation) of investments from non-controlled/non-affiliated investments, non-controlled/affiliated investments and controlled investments.
For the nine months ended September 30, 2016, we had approximately $0.1 million adjustment to interest income for amortization, a decrease of approximately $0.2 million to net realized gains and an increase of approximately $0.2 million to net change in unrealized appreciation to adjust for the stepped-up cost basis of the transferred investments as discussed above. For the nine months ended September 30, 2016, total adjusted investment income of $124.2 million consisted of approximately $103.0 million in cash interest from investments, approximately $2.8 million in PIK interest from investments, approximately $3.9 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $2.3 million, approximately $4.2 million in cash dividends from investments, $2.2 million in PIK dividends from investments and approximately $5.8 million in other income. Our Adjusted Net Investment Income was $65.1 million for the nine months ended September 30, 2016.
In accordance with GAAP, for the nine months ended September 30, 2016, we did not have an accrual for hypothetical capital gains incentive fee based upon the cumulative net Adjusted Realized Capital Gains and Adjusted Realized Capital Losses and the cumulative net Adjusted Unrealized Capital Appreciation and Adjusted Unrealized Capital Depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on actual Adjusted Realized Capital Gains computed net of all Adjusted Realized Capital Losses and Adjusted Unrealized Capital Depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value. As of September 30, 2016,March 31, 2017, no actual capital gains incentive fee was owed under the Investment Management Agreement, as cumulative net Adjusted Realized Gains did not exceed cumulative Adjusted Unrealized Depreciation.

Results of Operations for the Three Months Ended September 30,March 31, 2017 and March 31, 2016 and September 30, 2015
Revenue
 Three Months Ended Percentage Three Months Ended Percentage 
(in thousands) September 30, 2016 September 30, 2015 Change March 31, 2017 March 31, 2016 Change 
Interest income $35,917
 $33,739
 6% $33,998
 $37,790
 (10)% 
Dividend income 3,063
 1,056
 190% 6,733
 1,639
 NM
*
Other income 2,854
 2,652
 8% 2,576
 1,547
 67 % 
Total investment income $41,834
 $37,447
 12% $43,307
 $40,976
 6 % 
*    Not meaningful.
Our total investment income increased by approximately $4.4$2.3 million for the three months ended September 30, 2016March 31, 2017 as compared to the three months ended September 30, 2015.March 31, 2016. The 12%6% increase in total investment income primarily results from an increase in interestdividend income of approximately $2.2$5.1 million from the three months ended September 30, 2015 to the three months ended September 30, 2016, which is attributable to larger invested balances, driven by proceeds from our May 2016 unsecured notes offering, our use of leverage from our revolving credit facilities and SBA-guaranteed debentures to originate new investments, and prepayment fees received associated with the early repayment of two portfolio companies held as of June 30, 2016. Dividend income increased during the three months ended September 30, 2016March 31, 2017 as compared to the three months ended September 30, 2015, whichMarch 31, 2016. The increase is primarily due to distributions from our investments in SLP I, and SLP II and NMNLC and PIK and non-cash dividend income from onethree equity position.positions. Other income during the three months ended September 30, 2016,March 31, 2017, which represents fees that are generally non-recurring in nature, was primarily attributable to structuring, upfront, amendment, consent and commitment fees received from ninetwelve different portfolio companies and management fees from a non-controlled affiliated portfolio company. Interest income decreased by approximately $3.8 million from the three months ended March 31, 2016 to the three months ended March 31, 2017, which is attributable to lower prepayment fees received associated with the early repayment of portfolio companies held as of December 31, 2016 and the timing of portfolio originations that were concentrated in the latter half of the quarter.
Operating Expenses
 Three Months Ended Percentage  Three Months Ended Percentage 
(in thousands) September 30, 2016 September 30, 2015 Change  March 31, 2017 March 31, 2016 Change 
Management fee $6,883
 $6,373
  
  $7,614
 $6,836
  
 
Less: management fee waiver (1,102) (1,237)  
  (1,356) (1,319)  
 
Total management fee 5,781
 5,136
 13 %  6,258
 5,517
 13 % 
Incentive fee 5,432
 5,034
 8 %  5,408
 5,385
   
Less: incentive fee waiver (1,800) 
   
Total incentive fee 3,608
 5,385
 (33)% 
Capital gains incentive fee(1) 
 (490) NM
* 
 
 NM
*
Interest and other financing expenses 7,171
 5,788
 24 %  8,376
 6,602
 27 % 
Professional fees 723
 808
 (11)%  850
 877
 (3)% 
Administrative expenses 586
 647
 (9)%  708
 839
 (16)% 
Other general and administrative expenses 390
 370
 5 %  466
 432
 8 % 
Total expenses 20,083
 17,293
 16 %  20,266
 19,652
 3 % 
Less: expenses waived and reimbursed 
 (333) NM
* (470) (284) 65 % 
Net expenses before income taxes 20,083
 16,960
 18 %  19,796
 19,368
 2 % 
Income tax expense (benefit) 22
 (172) (113)% 
Income tax expense 80
 41
 95 % 
Net expenses after income taxes $20,105
 $16,788
 20 %  $19,876
 $19,409
 2 % 
 
(1)Capital gains incentive fee accrual assumes a hypothetical liquidation basis.
*    Not meaningful.
Our total net operating expenses increased by approximately $3.3$0.5 million for the three months ended September 30, 2016March 31, 2017 as compared to the three months ended September 30, 2015.March 31, 2016. Our management fee increased by approximately $0.6$0.7 million, net of a management fee waiver, and incentive fees increased by approximately $0.4 million for the three months ended September 30, 2016March 31, 2017 as compared to the three months ended September 30, 2015.March 31, 2016. The increase in management fee and incentive feefees from the three months ended September 30, 2015March 31, 2016 to the three months ended September 30, 2016March 31, 2017 was attributable to larger invested balances, driven by the proceeds fromOctober 2016 primary offering of our common stock, our May 2016 and

September 2016 unsecured notes offeringissuances and our September 2016 convertible notes issuance and our use of leverage from our revolving credit facilities and SBA-guaranteed debentures to originate new investments.

Our incentive fees decreased by approximately $1.8 million, net of an incentive fee waiver, for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016, which was attributable to an incentive fee waiver by the Investment Adviser for the three months ended March 31, 2017 of approximately $1.8 million.
Interest and other financing expenses increased by approximately $1.4$1.8 million during the three months ended September 30,March 31, 2017 as compared to the three months ended March 31, 2016, primarily due to our May 2016issuance of our unsecured notes offeringand additional issuance of our convertible notes and higher drawn balances on theour SBA-guaranteed debentures and NMFC Credit Facility (as defined below) and SBA-guaranteed debentures.. Our total professional fees, total administrative expenses and total other general and administrative expenses remained relatively flat for the three months ended September 30, 2016March 31, 2017 as compared to the three months ended September 30, 2015.March 31, 2016.
Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)
 Three Months Ended Percentage  Three Months Ended Percentage 
(in thousands) September 30, 2016 September 30, 2015 Change  March 31, 2017 March 31, 2016 Change 
Net realized gains (losses) on investments $1,150
 $(37) NM*
Net realized gains on investments $826
 $176
 NM
*
Net change in unrealized appreciation (depreciation) of investments 3,146
 (10,237) NM* 6,205
 (14,386) NM
*
Net change in unrealized (depreciation) appreciation securities purchased under collateralized agreements to resell (957) 
 NM* (800) (30) NM
*
Benefit (provision) for taxes 11
 (581) NM*
Benefit for taxes 755
 724
 4% 
Net realized and unrealized gains (losses) $3,350
 $(10,855) NM* $6,986
 $(13,516) NM
*
 
*Not meaningful.
Our net realized and unrealized gains resulted in a net gain of approximately $3.4$7.0 million for the three months ended September 30, 2016March 31, 2017 compared to net realized gains and unrealized losses resulting in a net loss of approximately $10.9$13.5 million for the same period in 2015.2016. We look at net realized and unrealized gains or losses together as movement in unrealized appreciation or depreciation can be the result of realizations. The net gain for the three months ended September 30, 2016March 31, 2017 was primarily driven by the overall increase in the market prices of our investments during the period, but also includes a further mark down of our investment in one portfolio company that was placed on non-accrual. The net loss for the three months ended September 30, 2015 was primarily driven by the overall decrease in the market prices of our investments during the period. The benefit for income taxes was attributable to three equity investments that are held as of September 30, 2016 and September 30, 2015March 31, 2017 in three of our corporate subsidiaries.
Results of Operations The net loss for the Nine Months Ended September 30, 2016 and September 30, 2015
Revenue
  Nine Months Ended Percentage
(in thousands) September 30, 2016 September 30, 2015 Change
Interest income $112,119
 $102,556
 9%
Dividend income 6,423
 4,158
 54%
Other income 5,758
 5,174
 11%
Total investment income $124,300
 $111,888
 11%
Our total investment income increased by approximately $12.4 million for the ninethree months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The 11% increase in total investment income primarily results from an increase in interest income of approximately $9.6 million from the nine months ended September 30, 2015 to the nine months ended September 30, 2016, which is attributable to larger invested balances, driven by the proceeds from our May 2016 unsecured notes offering, our use of leverage from our revolving credit facilities and SBA-guaranteed debentures to originate new investments, and prepayment fees received associated with the early repayment of six portfolio companies held as of DecemberMarch 31, 2015. Dividend income increased during the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015, which is primarily due to distributions from our investments in SLP I and SLP II and PIK dividend income from an equity position. Other income during the nine months ended September 30, 2016, which represents fees that are generally non-recurring in nature, was primarily attributable to structuring, upfront, amendment, consent and commitment fees received from nineteen different portfolio companies and management fees from a non-controlled affiliated portfolio company.

Operating Expenses
  Nine Months Ended Percentage 
(in thousands) September 30, 2016 September 30, 2015 Change 
Management fee $20,537
 $19,039
  
 
Less: management fee waiver (3,662) (3,866)  
 
Total management fee 16,875
 15,173
 11 % 
Incentive fee 16,266
 14,969
 9 % 
Capital gains incentive fee(1) 
 
 NM
*
Interest and other financing expenses 20,544
 16,863
 22 % 
Professional fees 2,461
 2,456
  % 
Administrative expenses 2,054
 1,804
 14 % 
Other general and administrative expenses 1,206
 1,252
 (4)% 
Total expenses 59,406
 52,517
 13 % 
Less: expenses waived and reimbursed (347) (733) (53)% 
Net expenses before income taxes 59,059
 51,784
 14 % 
Income tax expense 113
 130
 (13)% 
Net expenses after income taxes $59,172
 $51,914
 14 % 
(1)Capital gains incentive fee accrual assumes a hypothetical liquidation basis.
*    Not meaningful.
Our total net operating expenses increased by approximately $7.3 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. Our management fee increased by approximately $1.7 million, net of a management fee waiver, and incentive fees increased by approximately $1.3 million for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. The increase in management fee and incentive fee from the nine months ended September 30, 2015 to the nine months ended September 30, 2016 was attributable to larger invested balances, driven by the proceeds from our May 2016 unsecured notes offering, and our use of leverage from our revolving credit facilities and SBA-guaranteed debentures to originate new investments.
Interest and other financing expenses increased by approximately $3.7 million during the nine months ended September 30, 2016, primarily due to our May 2016 unsecured notes offering and higher drawn balances on the NMFC Credit Facility (as defined below) and SBA-guaranteed debentures. Our total professional fees, total administrative expenses and total other general and administrative expenses remained relatively flat for the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015.
Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)
  Nine Months Ended Percentage 
(in thousands) September 30, 2016 September 30, 2015 Change 
Net realized gains (losses) on investments $2,191
 $(13,508) NM
*
Net change in unrealized appreciation (depreciation) of investments 10,716
 7,733
 39% 
Net change in unrealized (depreciation) appreciation securities purchased under collateralized agreements to resell (1,031) 
 NM
*
Benefit (provision) for taxes 819
 (1,217) NM
*
Net realized and unrealized gains (losses) $12,695
 $(6,992) NM
*
*Not meaningful.
Our net realized and unrealized gains resulted in a net gain of approximately $12.7 million for the nine months ended September 30, 2016 compared to net realized losses and unrealized gains resulting in a net loss of approximately $7.0 million for the same period in 2015. We look at net realized and unrealized gains or losses together as movement in unrealized appreciation or depreciation can be the result of realizations. The net gain for the nine months ended September 30, 2016 was primarily driven by the overall increasedecrease in the market prices of our investments during the period, but also includes a further

mark down of our investment in one portfolio company that was placed on non-accrual. The benefit for income taxes was attributable to three equity investments that are held as of September 30, 2016 in three of our corporate subsidiaries.
The net loss for the nine months ended September 30, 2015 was primarily driven by $29.7 million of realized losses on investments resulting from the modification of terms on three portfolio companies that were accounted for as extinguishments. These losses were partially offset by sales or repayments of investments with fair values in excess of December 31, 2014 valuations, resulting in net realized gains being greater than the reversal of the cumulative net unrealized gains for those investments, which included the sale of two portfolio companies resulting in realized gains of approximately $14.2 million.period.
Liquidity and Capital Resources
The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.
Since our IPO, and through September 30, 2016,March 31, 2017, we raised approximately $454.0$533.1 million in net proceeds from additional offerings of common stock and issued shares valued at approximately $288.4 million on behalf of AIV Holdings for exchanged units. We acquired from the Predecessor Operating Company units of the Predecessor Operating Company equal to the number of shares of our common stock sold in the additional offerings.stock.
Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 200.0% after such borrowing.
At September 30, 2016March 31, 2017 and December 31, 2015,2016, we had cash and cash equivalents of approximately $49.8$37.7 million and $30.1$45.9 million, respectively. Our cash (used in) provided by (used in) operating activities during the ninethree months ended September 30,March 31, 2017 and March 31, 2016 and September 30, 2015 was approximately $112.8$(141.8) million and $(20.9)$41.1 million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and other activities.

Borrowings
Holdings Credit Facility—On December 18, 2014 we entered into the Second Amended and Restated Loan and Security Agreement (the "Holdings Credit Facility"), among us, as the Collateral Manager, NMF Holdings as the Borrower, Wells Fargo Securities, LLC as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian, which is structured as a revolving credit facility and matures on December 18, 2019.
Immediately prior to amending the Holdings Credit Facility, NMF SLF merged with and into NMF Holdings. The Holdings Credit Facility effectively amended and restated the Predecessor Holdings Credit Facility (as defined below), merged with the SLF Credit Facility (as defined below), and combined the amount of borrowings previously available.
The maximum amount of revolving borrowings available under the Holdings Credit Facility is $495.0 million, which is the aggregate of the $280.0 million previously available under the Predecessor Holdings Credit Facility (as defined below) and the $215.0 million previously available under the SLF Credit Facility (as defined below).million. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Securities, LLC. The Holdings Credit Facility is non-recourse to us and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires us to maintain a minimum asset coverage ratio. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.
Effective January 1, 2016, the Holdings Credit Facility bears interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.50% per annum for all other investments. Previously, the Holdings Credit Facility bore interest at a rate of LIBOR plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.75% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
 Three Months Ended Nine Months Ended Three Months Ended
(in millions) September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 March 31, 2017 March 31, 2016
Interest expense $2.2
 $2.3
 $7.2
 $7.7
 $2.7
 $2.6
Non-usage fee $0.2
 $0.2
 $0.5
 $0.4
 $0.2
 $0.1
Amortization of financing costs $0.4
 $0.4
 $1.2
 $1.2
 $0.4
 $0.4
Weighted average interest rate 2.8% 2.6% 2.7% 2.6% 3.1% 2.6%
Effective interest rate 3.6% 3.3% 3.4% 3.2% 3.9% 3.2%
Average debt outstanding $318.4
 $350.5
 $353.6
 $391.0
 $346.0
 $394.7
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance on the Holdings Credit Facility was $308.9$376.9 million and $419.3$333.5 million, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.
Prior to December 18, 2014, the Loan and Security Agreement, as amended and restated, dated May 19, 2011 (the "Predecessor Holdings Credit Facility") among NMF Holdings as the Borrower and Collateral Administrator, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, was structured as a revolving credit facility and would mature on October 27, 2016.
The maximum amount of revolving borrowings available under the Predecessor Holdings Credit Facility was $280.0 million. Until December 18, 2014, NMF Holdings was permitted to borrow up to 45.0% or 25.0% of the purchase price of pledged first lien or non-first lien debt securities, respectively, and up to 70.0% and 45.0% of the purchase price of specified first lien debt securities and specified non-first lien debt securities, respectively, subject to approval by Wells Fargo Bank, National Association. The Predecessor Holdings Credit Facility was amended and restated on May 6, 2014 and as a result, it was non-recourse to us and was collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Predecessor Holdings Credit Facility were capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Predecessor Holdings Credit Facility. The Predecessor Holdings Credit Facility contained certain customary affirmative and negative covenants and events of default, including the occurrence of a change in control. In addition, the Predecessor Holdings Credit Facility required us to maintain a minimum asset coverage ratio. However, the covenants were generally not tied to mark to market fluctuations in the prices of NMF Holdings' investments, but rather to the performance of the underlying portfolio companies.
The Predecessor Holdings Credit Facility bore interest at a rate of LIBOR plus 2.75% per annum and charged a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
NMF SLF's Loan and Security Agreement, as amended and restated, dated October 27, 2010 (the "SLF Credit Facility") among NMF SLF as the Borrower, NMF Holdings as the Collateral Administrator, Wells Fargo Securities, LLC as the Administrative Agent, and Wells Fargo Bank, National Association, as the Collateral Custodian, was structured as a revolving credit facility and was set to mature on October 27, 2016. The maximum amount of revolving borrowings available under the SLF Credit Facility was $215.0 million. The SLF Credit Facility was non-recourse to us and secured by all assets of NMF SLF on an investment by investment basis. All fees associated with the origination or upsizing of the SLF Credit Facility were capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the SLF Credit Facility. The SLF Credit Facility contained certain customary affirmative and negative covenants and events of default, including the occurrence of a change in control. The covenants were generally not tied to mark to market fluctuations in the prices of the NMF SLF's investments, but rather to the performance of the underlying portfolio companies. NMF SLF was not restricted from the purchase or sale of loans with an affiliate. Therefore, specified first lien loans could be moved as collateral between the Holdings Credit Facility and the SLF Credit Facility. The SLF Credit Facility merged with the Holdings Credit Facility on December 18, 2014.
Until December 18, 2014, the SLF Credit Facility permitted borrowings of up to 70.0% of the purchase price of pledged first lien debt securities and up to 25.0% of the purchase price of specified second lien loans, of which, up to 25.0% of the aggregate outstanding loan balance of all pledged debt securities in the SLF Credit Facility was allowed to be derived from second lien loans, subject to approval by Wells Fargo Bank, National Association.

The SLF Credit Facility bore interest at a rate of LIBOR plus 2.00% per annum for first lien loans and LIBOR plus 2.75% per annum for second lien loans. A non-usage fee was paid, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, as amended, dated June 4, 2014 (together with the related guarantee and security agreement, the "NMFC Credit Facility"), among us as the Borrower, Goldman Sachs Bank USA as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A. and Stifel Bank & Trust as Lenders, is structured as a senior secured revolving credit facility and matures on June 4, 2019. The NMFC Credit Facility is guaranteed by certain of our domestic subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.
As of September 30, 2016,March 31, 2017, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $122.5 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment as outlined in the Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to asset coverage and liquidity and other maintenance covenants.
The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).

The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
 Three Months Ended Nine Months Ended  Three Months Ended 
(in millions) September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015  March 31, 2017 March 31, 2016 
Interest expense $0.7
 $0.5
 $1.9
 $1.2
  $0.3
 $0.7
 
Non-usage fee $0.1
 $
(1)$0.1
 $0.1
  $0.1
 $
(1)
Amortization of financing costs $0.1
 $0.1
 $0.3
 $0.3
  $0.1
 $0.1
 
Weighted average interest rate 3.0% 2.7% 3.0% 2.7%  3.3% 2.9% 
Effective interest rate 3.6% 3.2% 3.6% 3.5%  5.5% 3.4% 
Average debt outstanding $89.4
 $79.5
 $85.0
 $59.6
  $34.7
 $92.8
 
 
(1)For the three months ended September 30, 2015,March 31, 2016, the total non-usage fee was less than $50 thousand.
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance on the NMFC Credit Facility was $42.5$122.5 million and $90.0$10.0 million, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.
Convertible Notes—On June 3, 2014, we closed a private offering of $115.0 million aggregate principal amount of unsecured convertible notes (the "Convertible Notes"), pursuant to an indenture, dated June 3, 2014 (the "Indenture"). The Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of the first anniversary, June 3, 2015, of the Convertible Notes, the restrictions under Rule 144A under the Securities Act were removed, allowing the Convertible Notes to be eligible and freely tradeabletradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, we closed a public offering of an additional $40.3 million aggregate principal amount of the Convertible Notes. These additional Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of Convertible Notes that the Companywe issued on June 3, 2014.
The Convertible Notes bear interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014. The Convertible Notes will mature on June 15, 2019 unless earlier converted or repurchased at the holder's option.

The following table summarizes certain key terms related to the convertible features of our Convertible Notes as of September 30, 2016.March 31, 2017.
September 30, 2016March 31, 2017
Initial conversion premium12.5%12.5%
Initial conversion rate(1)62.7746
62.7746
Initial conversion price$15.93
$15.93
Conversion premium at September 30, 201611.7%
Conversion rate at September 30, 2016(1)(2)63.2794
Conversion price at September 30, 2016(2)(3)$15.80
Conversion premium at March 31, 201711.7%
Conversion rate at March 31, 2017(1)(2)63.2794
Conversion price at March 31, 2017(2)(3)$15.80
Last conversion price calculation dateJune 3, 2016
June 3, 2016
 
(1)Conversion rates denominated in shares of common stock per $1.0 thousand principal amount of the Convertible Notes converted.
(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)The conversion price in effect at September 30, 2016March 31, 2017 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.

The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividendsdistributions in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends,distributions, are subject to a conversion price floor of $14.05 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 71.1893 per $1.0 thousand principal amount of the Convertible Notes. We have determined that the embedded conversion option in the Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
The Convertible Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles. The issuance is considered part of the if-converted method for calculation of diluted earnings per share.
We may not redeem the Convertible Notes prior to maturity. No sinking fund is provided for the Convertible Notes. In addition, if certain corporate events occur, holders of the Convertible Notes may require us to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.
The Indenture contains certain covenants, including covenants requiring us to provide financial information to the holders of the Convertible Note and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act.Act of 1934, as amended (the "Exchange Act"). These covenants are subject to limitations and exceptions that are described in the Indenture.
The following table summarizes the interest expense, and amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
 Three Months Ended Nine Months Ended Three Months Ended
(in millions) September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 March 31, 2017 March 31, 2016
Interest expense $1.4
 $1.4
 $4.3
 $4.3
 $1.9
 $1.4
Amortization of financing costs $0.2
 $0.2
 $0.6
 $0.6
 $0.3
 $0.2
Amortization of premium $
(1)$
Effective interest rate 5.6% 5.6% 5.7% 5.7% 5.8% 5.7%
Average debt outstanding $115.4
 $115.0
 $115.1
 $115.0
 $155.3
 $115.0
(1)For the three months ended March 31, 2017, the total amortization of premium was less than $50 thousand.
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance on the Convertible Notes was $155.3 million and $115.0$155.3 million, respectively, and NMFC was in compliance with the terms of the Indenture.

Indenture on such dates.
Unsecured Notes—On May 6, 2016, we issued $50.0 million in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, we entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40.0 million in aggregate principal amount of Unsecured Notes to institutional investors in a private placement. The NPA provides for future issuances of Unsecured Notes in separate series or tranches. The Unsecured Notes are equal in priority with our other unsecured indebtedness, including our Convertible Notes.
The Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year, startingwhich commenced on November 15, 2016. This interest rate is subject to increase in the event that: (i) subject to certain exceptions, the Unsecured Notes or we cease to have an investment grade rating or (ii) the aggregate amount of our unsecured debt falls below $150.0 million.  In each such event, we have the option to offer to prepay the Unsecured Notes at par, in which case holders of the Unsecured Notes who accept the offer would not receive the increased interest rate. In addition, we are obligated to offer to prepay the Unsecured Notes at par if the Investment Adviser, or an affiliate thereof, ceases to be our investment adviser or if certain change in control events occur with respect to the Investment Adviser. 

The NPA contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, an option to offer to prepay all or a portion of the Unsecured Notes at par (plus a make-whole amount, if applicable), affirmative and negative covenants such as information reporting, maintenance of our status as a BDC under the 1940 Act and a RIC under the Internal Revenue Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under our other indebtedness or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.
The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
 Three Months Ended Nine Months Ended Three Months Ended
(in millions) September 30, 2016 September 30, 2015(1) September 30, 2016(2) September 30, 2015(1) March 31, 2017 March 31, 2016(1)
Interest expense $0.7
 $
 $1.1
 $
 $1.2
 $
Amortization of financing costs $0.1
 $
 $0.1
 $
 $0.1
 $
Effective interest rate 5.8% % 5.8% % 5.8% %
Average debt outstanding $50.4
 $
 $50.3
 $
 $90.0
 $
 
(1)Not applicable, as the Unsecured Notes were issued on May 6, 2016.
(2)For the nine months ended September 30, 2016, amounts reported relate to the period from May 6, 2016 (issuance of the Unsecured Notes) to September 30, 2016.
As of September 30,March 31, 2017 and December 31, 2016, the outstanding balance on the Unsecured Notes was $90.0 million and $90.0 million, respectively, and we were in compliance with the terms of the NPA.
SBA-guaranteed debentures—On August 1, 2014, SBIC LP received an SBIC license from the SBA.
The SBIC license allows SBIC LP to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to us, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC LP over our stockholders in the event SBIC LP is liquidated or the SBA exercises remedies upon an event of default.
The maximum amount of borrowings available under current SBA regulations for a single licensee is $150.0 million as long as the licensee has at least $75.0 million in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing.

As of September 30, 2016March 31, 2017 and December 31, 2015,2016, SBIC LP had regulatory capital of $72.4$75.0 million and $72.4$75.0 million, respectively, and SBA-guaranteed debentures outstanding of $121.7 million and $117.7$121.7 million, respectively. The SBA-guaranteed debentures incur upfront fees of 3.425%, which consists of a 1.00% commitment fee and a 2.425% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. The following table summarizes our fixed-rate SBA-guaranteed debentures as of September 30, 2016.March 31, 2017.
(in millions)            
Issuance Date Maturity Date Debenture Amount Interest Rate SBA Annual Charge Maturity Date Debenture Amount Interest Rate SBA Annual Charge
Fixed SBA-guaranteed debentures:    
  
  
    
  
  
March 25, 2015 March 1, 2025 $37.5
 2.517% 0.355% March 1, 2025 $37.5
 2.517% 0.355%
September 23, 2015 September 1, 2025 37.5
 2.829% 0.355% September 1, 2025 37.5
 2.829% 0.355%
September 23, 2015 September 1, 2025 28.8
 2.829% 0.742% September 1, 2025 28.8
 2.829% 0.742%
March 23, 2016 March 1, 2026 13.9
 2.507% 0.742% March 1, 2026 13.9
 2.507% 0.742%
September 21, 2016 September 1, 2026 4.0
 2.501% 0.742% September 1, 2026 4.0
 2.051% 0.742%
Total SBA-guaranteed debentures   $121.7
  
  
   $121.7
  
  
Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.

The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.March 31, 2016.
 Three Months Ended Nine Months Ended Three Months Ended
(in millions) September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 March 31, 2017 March 31, 2016
Interest expense $1.0
 $0.4
 $2.8
 $0.8
 $1.0
 $0.9
Amortization of financing costs $0.1
 $0.1
 $0.3
 $0.1
 $0.1
 $0.1
Weighted average interest rate 3.1% 1.9% 3.1% 1.9% 3.2% 3.0%
Effective interest rate 3.5% 2.3% 3.5% 2.2% 3.5% 3.4%
Average debt outstanding $121.7
 $92.7
 $119.2
 $59.3
 $121.7
 $117.7
The SBIC program is designed to stimulate the flow of private investor capital into eligible small businesses, as defined by the SBA. Under SBA regulations, SBIC LP is subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in small businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to us. SBIC LP is subject to an annual periodic examination by an SBA examiner to determine SBIC LP's compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, SBIC LP was in compliance with SBA regulatory requirements.
Off-Balance Sheet Arrangements
We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, we had outstanding commitments to third parties to fund investments totaling $18.1$36.1 million and $26.3$44.3 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.
We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, we had commitment letters to purchase debt investments in an aggregate par amount of $2.2$0 and $14.8 million, and $0, respectively. As of September 30, 2016March 31, 2017 and December 31, 2015,2016, we had not entered into any bridge financing commitments which could require funding in the future.
As of September 30, 2016March 31, 2017 and December 31, 2015,2016, we had unfunded commitments related to our equity investment in SLP II of $31.8$0 and $7.9 million, and $0, respectively, which may be funded at our discretion.

Contractual Obligations
A summary of our significant contractual payment obligations as of September 30, 2016March 31, 2017 is as follows:
 
Contractual Obligations Payments
Due by Period (in millions)
 Contractual Obligations Payments Due by Period
 Total 
Less than
1 Year
 1 - 3 Years 3 - 5 Years 
More than
5 Years
(in millions) Total 
Less than
1 Year
 1 - 3 Years 3 - 5 Years 
More than
5 Years
Holdings Credit Facility(1) $308.9
 $
 $
 $308.9
 $
 $376.9
 $
 $376.9
 $
 $
Convertible Notes(2) 155.3
 
 155.3
 
 
 155.3
 
 155.3
 
 
SBA-guaranteed debentures(3) 121.7
 
 
 
 121.7
Unsecured Notes(4) 90.0
 
 
 90.0
 
NMFC Credit Facility(5) 42.5
 
 42.5
 
 
NMFC Credit Facility(3) 122.5
 
 122.5
 
 
SBA-guaranteed debentures(4) 121.7
 
 
 
 121.7
Unsecured Notes(5) 90.0
 
 
 90.0
 
Total Contractual Obligations $718.4
 $
 $197.8
 $398.9
 $121.7
 $866.4
 $
 $654.7
 $90.0
 $121.7
 
(1)Under the terms of the $495.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($308.9376.9 million as of September 30, 2016)March 31, 2017) must be repaid on or before December 18, 2019. As of September 30, 2016,March 31, 2017, there was approximately $186.1$118.1 million of possible capacity remaining under the Holdings Credit Facility.
(2)The $155.3 million Convertible Notes will mature on June 15, 2019 unless earlier converted or repurchased at the holder’s option.

(3)Under the terms of the $122.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($122.5 million as of March 31, 2017) must be repaid on or before June 4, 2019. As of March 31, 2017, there was no capacity remaining under the NMFC Credit Facility.
(4)Our SBA-guaranteed debentures will begin to mature on March 1, 2025.
(4)(5)The $90.0 million Unsecured Notes will mature on May 15, 2021 unless earlier repurchased.
(5)Under the terms of the $122.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($42.5 million as of September 30, 2016) must be repaid on or before June 4, 2019. As of September 30, 2016, there was approximately $80.0 million of possible capacity remaining under the NMFC Credit Facility.
We have entered into the Investment Management Agreement with the Investment Adviser in accordance with the 1940 Act. Under the Investment Management Agreement, the Investment Adviser has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee and (2) an incentive fee based on our performance.
We have also entered into an Administration Agreement with the Administrator. Under the Administration Agreement, the Administrator has agreed to arrange office space for us and provide office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct our respective day-to-day operations. The Administrator has also agreed to perform, or oversee the performance of, our financial records, our reports to stockholders and reports filed with the SEC.
If any of the contractual obligations discussed above are terminated, our costs under any new agreements that are entered into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and the Administration Agreement.

Distributions and Dividends
Distributions declared and paid to stockholders for the ninethree months ended September 30, 2016March 31, 2017 totaled approximately $65.1$23.7 million.
The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our board of directors for the nine months ended September 30, 2016two most recent fiscal years and the years ended December 31, 2015 and December 31, 2014:current fiscal year to date:
Fiscal Year Ended Date Declared Record Date Payment Date 
Per Share
Amount
   Date Declared Record Date Payment Date 
Per Share
Amount
 
December 31, 2017         
First Quarter February 23, 2017 March 17, 2017 March 31, 2017 $0.34
 
       $0.34
 
December 31, 2016                 
 
Fourth Quarter November 4, 2016 December 15, 2016 December 29, 2016 $0.34
 
Third Quarter August 2, 2016 September 16, 2016 September 30, 2016 $0.34
  August 2, 2016 September 16, 2016 September 30, 2016 0.34
 
Second Quarter May 3, 2016 June 16, 2016 June 30, 2016 0.34
  May 3, 2016 June 16, 2016 June 30, 2016 0.34
 
First Quarter February 22, 2016 March 17, 2016 March 31, 2016 0.34
  February 22, 2016 March 17, 2016 March 31, 2016 0.34
 
       $1.02
        $1.36
 
December 31, 2015        
          
 
Fourth Quarter November 3, 2015 December 16, 2015 December 30, 2015 $0.34
  November 3, 2015 December 16, 2015 December 30, 2015 $0.34
 
Third Quarter August 4, 2015 September 16, 2015 September 30, 2015 0.34
  August 4, 2015 September 16, 2015 September 30, 2015 0.34
 
Second Quarter May 5, 2015 June 16, 2015 June 30, 2015 0.34
   May 5, 2015 June 16, 2015 June 30, 2015 0.34
 
First Quarter February 23, 2015 March 17, 2015 March 31, 2015 0.34
   February 23, 2015 March 17, 2015 March 31, 2015 0.34
 
       $1.36
         $1.36
 
December 31, 2014        
  
Fourth Quarter November 4, 2014 December 16, 2014 December 30, 2014 $0.34
  
Third Quarter August 5, 2014 September 16, 2014 September 30, 2014 0.34
  
Third Quarter July 30, 2014 August 20, 2014 September 3, 2014 0.12
 (1)
Second Quarter May 6, 2014 June 16, 2014 June 30, 2014 0.34
  
First Quarter March 4, 2014 March 17, 2014 March 31, 2014 0.34
  
       $1.48
  
(1)Special dividend related to estimated realized capital gains attributable to the Predecessor Operating Company's warrant investments in Learning Care Group (US), Inc.
Tax characteristics of all distributions paid are reported to stockholders on Form 1099 after the end of the calendar year. For the years ended December 31, 20152016 and December 31, 2014,2015, total distributions were $81.0$88.8 million and $77.6$81.0 million, respectively, of which the distributions were comprised of approximately 99.96%89.46% and 96.16%99.96%, respectively, of ordinary income, 0.00% and 3.55%0.00%, respectively, of long-term capital gains and approximately 0.04%10.54% and 0.29%0.04%, respectively, of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors.
We intend to pay quarterly distributions to our stockholders in amounts sufficient to maintain our status as a RIC. We intend to distribute approximately all of our Adjusted Net Investment Income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.

We maintain an "opt out" dividend reinvestment plan on behalf of our common stockholders, pursuant to which each of our stockholders' cash distributions will be automatically reinvested in additional shares of common stock, unless the stockholder elects to receive cash. See Item 1— Financial Statements—Note 2. Summary of Significant Accounting Policies for additional details regarding our dividend reinvestment plan.
Related Parties
We have entered into a number of business relationships with affiliated or related parties, including the following:
We have entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.

We have entered into an Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our office space and provides office equipment and administrative services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our Chief Financial Officerchief financial officer and Chief Compliance Officerchief compliance officer and their respective staffs. Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period. As a result, the amount of expenses for which we will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to us for reimbursement in the future. However, it is expected that the Administrator will continue to support part of our expense burden in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three and nine months ended September 30, 2016March 31, 2017 approximately $0.3$0.4 million and $1.3 million, respectively, of indirect administrative expenses were included in administrative expenses, of which $0 and $0.3approximately $0.4 million respectively, of indirect administrative expenses were waived by the Administrator. As of September 30, 2016, approximately $0.3 million ofMarch 31, 2017, no indirect administrative expenses were included in payable to affiliates as the expenses were payable to the Administrator.affiliates.
We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator, a non-exclusive, royalty-free license to use the name "New Mountain" and "New Mountain Finance".
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act, the Delaware General Corporation Law and the Delaware Limited Liability Company Act.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, to our investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser's allocation procedures.
Concurrently On September 12, 2016, we filed an exemptive application with the IPO, we sold an additional 2,172,000 shares of our common stockSEC to permit us to co-invest with funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. Any such order, if granted by the SEC, will be subject to certain executivesterms and employees of, and other individuals affiliated with, New Mountain Capital inconditions. Furthermore, there is no assurance when, or if, this application for exemptive relief will be granted by the Concurrent Private Placement.SEC.

Item 3.Quantitative and Qualitative Disclosures About Market Risk
We are subject to certain financial market risks, such as interest rate fluctuations. During the ninethree months ended September 30, 2016,March 31, 2017, certain of the loans held in our portfolio have floating interest rates. As of September 30, 2016,March 31, 2017, approximately 88.7%87.0% of investments at fair value (excluding investments on non-accrual, unfunded debt investments and non-interest bearing equity investments) represent floating-rate investments with a LIBOR floor (includes investments bearing prime interest rate contracts) and approximately 11.3%13.0% of investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit facilities are also subject to floating interest rates and are currently paid based on one-month floating LIBOR rates.
The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase by 100, 200 or 300 basis points, or decrease by 25 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on September 30, 2016.March 31, 2017. Interest expense is calculated based on the terms of our outstanding revolving credit facilities and convertible notes. For our floating rate credit facilities, we use the outstanding balance as of September 30, 2016.March 31, 2017. Interest expense on our floating rate credit facilities is calculated using the interest rate as of September 30, 2016,March 31, 2017, adjusted for the hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of September 30, 2016.March 31, 2017. These hypothetical calculations are based on a model of the investments in our portfolio, held as of September 30, 2016,March 31, 2017, and are only adjusted for assumed changes in the underlying base interest rates.
Actual results could differ significantly from those estimated in the table.
Change in Interest Rates 
Estimated
Percentage
Change in Interest
Income Net of
Interest Expense (unaudited)
   
Estimated
Percentage
Change in Interest
Income Net of
Interest Expense (unaudited)
  
-25 Basis Points 0.75% (1) 0.73% (1)
Base Interest Rate %  % 
+100 Basis Points 4.83%  6.89% 
+200 Basis Points 12.94%  14.12% 
+300 Basis Points 21.28%  21.36% 
 
(1)Limited to the lesser of the September 30, 2016March 31, 2017 LIBOR rates or a decrease of 25 basis points.
We were not exposed to any foreign currency exchange risks as of September 30, 2016.


Item 4.Controls and Procedures
(a)
Evaluation of Disclosure Controls and Procedures 
As of September 30, 2016March 31, 2017 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Act of 1934, as amended). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic United States Securities and Exchange Commission filings is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
(b)Changes in Internal Controls Over Financial Reporting
Management has not identified any change in our internal control over financial reporting that occurred during the quarter ended September 30, 2016March 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION
The terms “we”, “us”, “our” and the “Company” refers to New Mountain Finance Corporation and its consolidated subsidiaries.
Item 1.Legal Proceedings
We, and our consolidated subsidiaries, the Investment Adviser and the Administrator are not currently subject to any material pending legal proceedings threatened against us as of September 30, 2016.March 31, 2017. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2016, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. There have been no material changes during the ninethree months ended September 30, 2016March 31, 2017 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015.2016.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
We did not engage in unregistered sales of equity securities during the quarter ended September 30, 2016.March 31, 2017.
Issuer Purchases of Equity Securities
Dividend Reinvestment Plan
During the quarter ended September 30, 2016, as a part of our dividend reinvestment plan for our common stockholders, our dividend reinvestment plan administrator purchased 109,592 sharesMarch 31, 2017, we did not purchase any of our common stock for $1.4 million in the open market in order to satisfy the reinvestment portion of our distribution. The following table outlines purchases by our dividend reinvestment plan administrator of our common stock for this purpose during the quarter ended September 30, 2016.
(in thousands, except shares and per share data) Total Number of Weighted Average Price Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under
Period Shares Purchased Paid Per Share or Programs the Plans or Programs
July 2016 109,592
 $13.19
 
 $
August 2016 
 
 
 
September 2016 
 
 
 
Total 109,592
 $13.19
 
  
market.
Stock Repurchase Program
On February 4, 2016, our board of directors authorized a program for the purpose of repurchasing up to $50.0 million worth of our common stock. Under the repurchase program, we may,were permitted, but arewere not obligated to, repurchase our outstanding common stock in the open market from time to time, provided that we complycomplied with our code of ethics and the guidelines specified in Rule 10b-18 of the Exchange Act, including certain price, market volume and timing constraints. In addition, any repurchases will bewere conducted in accordance with the 1940 Act. Unless amended or extended byOn December 23, 2016, our board of directors extended our repurchase program and we expect the repurchase program to be in place until the earlier of December 31, 20162017 or until $50.0 million of our outstanding shares of common stock have been repurchased. We did not repurchase any shares of our common stock under the repurchase program during the quarter ended September 30, 2016.March 31, 2017.

Item 3.
Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.

Item 5.Other Information
None.


Item 6.Exhibits
(a)Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the United States Securities and Exchange Commission:
Exhibit
Number
 Description
3.1(a)
 Amended and Restated Certificate of Incorporation of New Mountain Finance Corporation(2)
   
3.1(b)
 Certificate of Change of Registered Agent and/or Registered Office of New Mountain Finance Corporation(3)
   
3.2
 Amended and Restated Bylaws of New Mountain Finance Corporation(2)
   
4.1
 Form of Stock Certificate of New Mountain Finance Corporation(1)
   
4.2
 Indenture by and between New Mountain Finance Corporation, as Issuer, and U.S. Bank National Association, as Trustee, dated June 3, 2014(7)
   
4.3
 Form of Global Note 5.00% Convertible Note Due 2019 (included as part of Exhibit 4.2)(7)
   
10.1
 Second Amended and Restated Loan and Security Agreement, dated as of December 18, 2014, by and among New Mountain Finance Corporation, as the collateral manager, New Mountain Finance Holdings, L.L.C., as the borrower, Wells Fargo Securities, LLC, as administrative agent, and Wells Fargo, National Association, as lender and custodian(9)
   
10.2
 Form of Variable Funding Note of New Mountain Finance Holdings, L.L.C., as the Borrower(1)
   
10.3
 Form of Amended and Restated Account Control Agreement among New Mountain Finance Holdings, L.L.C., Wells Fargo Securities, LLC as the Administrative Agent and Wells Fargo Bank, National Association, as Securities Intermediary(1)
   
10.4
 Form of Senior Secured Revolving Credit Agreement, by and between New Mountain Finance Corporation, as Borrower, and Goldman Sachs Bank USA, as Administrative Agent and Syndication Agent, dated June 4, 2014(8)
   
10.5
 Form of Guarantee and Security Agreement dated June 4, 2014, among New Mountain Finance Corporation, as Borrower, and Goldman Sachs Bank USA, as Administrative Agent(8)
   
10.6
 Amendment No. 1, dated December 29, 2014, to the Senior Secured Revolving Credit Agreement dated June 4, 2014, by and among New Mountain Finance Corporation, as Borrower, and Goldman Bank USA, as Administrative Agent and Syndication Agent(10)
   
10.7
 Amendment No. 2, dated June 26, 2015, to the Senior Secured Revolving Credit Agreement dated June 4, 2014, by and among New Mountain Finance Corporation, as Borrower, and Goldman Bank USA, as Administrative Agent and Issuing Bank(12)
   
10.8
 Commitment Increase Agreement, dated March 23, 2016, to the Senior Secured Revolving Credit Agreement dated June 4, 2014, by and among New Mountain Finance Corporation, as Borrower, and Goldman Sachs Bank USA, as Administrative Agent and Issuing Bank(13)
   
10.9
 Commitment Increase Agreement, dated May 4, 2016, to the Senior Secured Revolving Credit Agreement dated June 4, 2014, by and among New Mountain Finance Corporation, as Borrower, and Goldman Sachs Bank USA, as Administrative Agent and Issuing Bank(14)
   
10.10
 Investment Advisory and Management Agreement by and between New Mountain Finance Corporation and New Mountain Finance Advisers BDC, LLC(6)
   
10.11
 Form of Safekeeping Agreement among New Mountain Finance Holdings, L.L.C., Wells Fargo Securities, LLC as the Administrative Agent and Wells Fargo Bank, National Association, as Safekeeping Agent(1)
   
10.12
 Custody Agreement by and between New Mountain Finance Corporation and U.S. Bank National Association(5)
   
10.13
 Second Amended and Restated Administration Agreement(11)
   
10.14
 Form of Trademark License Agreement(1)
   
10.15
 Amendment No. 1 to Trademark License Agreement(4)
   
10.16
 Form of Indemnification Agreement by and between New Mountain Finance Corporation and each director(1)
   

Exhibit
Number
 Description
10.17
 Dividend Reinvestment Plan(2)
   
10.18
 Limited Liability Company Agreement of NMFC Senior Loan Program II LLC, dated March 9, 2016(14)
   
10.19
 Form of Amended and Restated Note Purchase Agreement relating to 5.313% Notes due 2021, dated September 30, 2016, by and between New Mountain Finance Corporation and the purchasers party thereto(15)
   
11.1
 Computation of Per Share Earnings for New Mountain Finance Corporation (included in the notes to the financial statements contained in this report)
   
31.1
 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
   
31.2
 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
   
32.1
 Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
   
32.2
 Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
 
(1)Previously filed in connection with New Mountain Finance Holdings, L.L.C.’s registration statement on Form N-2 Pre-Effective Amendment No. 3 (File Nos. 333-168280 and 333-172503) filed on May 9, 2011.
(2)Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on August 11, 2011.
(3)Previously filed in connection with New Mountain Finance Corporation and New Mountain Finance AIV Holdings Corporation report on Form 8-K filed on August 25, 2011.
(4)Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on November 14, 2011.
(5)Previously filed in connection with New Mountain Finance Corporation’s registration statement on Form N-2 Post-Effective Amendment No. 2 (File Nos. 333-189706 and 333-189707) filed on April 11, 2014.
(6)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on May 8, 2014.
(7)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on June 4, 2014.
(8)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on June 10, 2014.
(9)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on December 23, 2014.
(10)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on January 5, 2015.
(11)Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on May 5, 2015.
(12)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on June 30, 2015.
(13)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on March 29, 2016.
(14)Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on May 4, 2016.
(15)Previously filed in connection with New Mountain Finance Corporation’s report on Form 8-K filed on October 3, 2016.

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on NovemberMay 8, 20162017.
 NEW MOUNTAIN FINANCE CORPORATION
  
 By:/s/ ROBERT A. HAMWEE
  Robert A. Hamwee
  Chief Executive Officer
  (Principal Executive Officer)
  
 By:/s/ SHIRAZ Y. KAJEE
  Shiraz Y. Kajee
  Chief Financial Officer and Treasurer
  (Principal Financial and Accounting Officer)

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