FS KKR Capital Corp. II (FSKR) 10-Q 2020 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                  TO                 

COMMISSION FILE NUMBER: 814-00926

FS KKR Capital Corp. II

(Exact name of registrant as specified in its charter)

Maryland	80-0741103
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

201 Rouse Boulevard
Philadelphia, Pennsylvania	19112
(Address of principal executive offices)	(Zip Code)

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

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☐    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

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

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

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001	FSKR	New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The issuer had 171,868,464,shares of common stock outstanding as of August 7, 2020.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS		1
	Consolidated Balance Sheets as of June 30, 2020 (Unaudited) and December 31, 2019		1
	Unaudited Consolidated Statements of Operations for the three and six months ended June  30, 2020 and 2019		2
	Unaudited Consolidated Statements of Changes in Net Assets for the three and six months ended June  30, 2020 and 2019		3
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019		4
	Consolidated Schedules of Investments as of June 30, 2020 (Unaudited) and December 31, 2019		5
	Notes to Unaudited Consolidated Financial Statements		32
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		71
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		86
ITEM 4.	CONTROLS AND PROCEDURES		88
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS		89
ITEM 1A.	RISK FACTORS		89
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		89
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		89
ITEM 4.	MINE SAFETY DISCLOSURES		89
ITEM 5.	OTHER INFORMATION		89
ITEM 6.	EXHIBITS		90
	SIGNATURES		96

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FS KKR Capital Corp. II

Consolidated Balance Sheets

(in millions, except share and per share amounts)

	June 30, 2020 (Unaudited)			December 31, 2019
Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$7,087 and $8,004 respectively)	$	6,299		$	7,670
Non-controlled/affiliated investments (amortized cost—$428 and $478, respectively)		296			356
Controlled/affiliated investments (amortized cost—$700 and $559, respectively)		686			565
Total investments, at fair value (amortized cost—$8,215 and $9,041, respectively)		7,281			8,591
Cash		289			163
Foreign currency, at fair value (cost—$6 and $4, respectively)		6			4
Collateral held at broker for open interest rate swap contracts		59			44
Due from counterparty		2			45
Receivable for investments sold and repaid		13			23
Income receivable		92			84
Deferred financing costs		13			12
Prepaid expenses and other assets		3			4
Total assets	$	7,758		$	8,970
Liabilities
Payable for investments purchased	$	42		$	37
Debt (net of deferred financing costs of $0 and $0, respectively)(1)		3,382			3,809
Stockholder distributions payable		—			—
Management fees payable		29			35
Subordinated income incentive fees payable(2)		19			11
Administrative services expense payable		2			3
Interest payable		27			30
Unrealized depreciation on foreign currency forward contracts		—			1
Unrealized depreciation on total return swap		2			4
Unrealized depreciation on interest rate swaps		59			29
Other accrued expenses and liabilities		10			15
Total liabilities		3,572			3,974
Commitments and contingencies(3)
Stockholders’ equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 900,000,000 shares authorized, 172,862,454 and 169,594,825 shares issued and outstanding, respectively(4)		—			1
Capital in excess of par value		5,875			5,794
Retained earnings (accumulated deficit)(5)		(1,689	)		(799	)
Total stockholders’ equity		4,186			4,996
Total liabilities and stockholders’ equity	$	7,758		$	8,970
Net asset value per share of common stock at period end	$	24.22		$	29.44

(1) See Note 9 for a discussion of the Company’s financing arrangements.

(2) See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.

(3) See Note 10 for a discussion of the Company’s commitments and contingencies.

(4) As discussed in Note 3, the Company completed a Reverse Stock Split, effective as of June 10, 2020. The outstanding shares and net asset value per common share reflect the Reverse Stock Split on a retroactive basis.

(5) See Note 5 for a discussion of the sources of distributions paid by the Company.

See notes to unaudited consolidated financial statements.

1

FS KKR Capital Corp. II

Unaudited Consolidated Statements of Operations

(in millions, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Investment income
From non-controlled/unaffiliated investments:
Interest income	$	113		$	96		$	258		$	199
Paid-in-kind interest income		10			2			21			4
Fee income		7			6			22			13
Dividend income		—			—			2			0
From non-controlled/affiliated investments:
Interest income		13			6			16			11
Paid-in-kind interest income		5			2			8			5
Fee income		—			—			—			0
From controlled/affiliated investments:
Interest income		—			—			3			—
Paid-in-kind interest income		1			—			1			—
Dividend income		19			—			32			—
Total investment income		168			112			363			232
Operating expenses
Management fees		29			17			62			35
Subordinated income incentive fees(1)		19			9			42			20
Administrative services expenses		1			1			3			2
Stock transfer agent fees		1			—			2			1
Accounting and administrative fees		—			1			1			1
Interest expense(2)		35			25			75			55
Listing advisory fees		7			—			7			—
Other general and administrative expenses		1			1			3			2
Net expenses		93			54			195			116
Net investment income		75			58			168			116
Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated investments		(34	)		(22	)		(251	)		(41	)
Non-controlled/affiliated investments		(109	)		—			(109	)		0
Net realized gain (loss) on total return swap		1			—			(1	)		—
Net realized gain (loss) on foreign currency forward contracts		—			—			0			—
Net realized gain (loss) on interest rate swaps		(4	)		—			(6	)		—
Net realized gain (loss) on foreign currency		—			—			1			0
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated investments		(22	)		6			(451	)		43
Non-controlled/affiliated investments		84			9			(12	)		9
Controlled/affiliated investments		59			—			(21	)		—
Net change in unrealized appreciation (depreciation) on total return swap		(1	)		—			2			—
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		(1	)		—			1			—
Net change in unrealized appreciation (depreciation) on interest rate swaps		—			(6	)		(30	)		(10	)
Net change in unrealized gain (loss) on foreign currency		(26	)		(2	)		23			(3	)
Total net realized and unrealized gain (loss) on investments		(53	)		(15	)		(854	)		(2	)
Net increase (decrease) in net assets resulting from operations	$	22		$	43		$	(686	)	$	114
Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	0.13		$	0.53		$	(4.02	)	$	1.41
Weighted average shares outstanding(3)		171,598,176			81,060,591			170,602,035			81,068,885

(1) See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.

(2) See Note 9 for a discussion of the Company’s financing arrangements.

(3) As discussed in Note 3, the Company completed a Reverse Stock Split, effective as of June 10, 2020. The weighted average shares used in the per share computation of the net increase (decrease) in net assets resulting from operations reflect the Reverse Stock Split on a retroactive basis.

See notes to unaudited consolidated financial statements.

2

FS KKR Capital Corp. II

Unaudited Consolidated Statements of Changes in Net Assets

(in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Operations
Net investment income	$	75		$	58		$	168		$	116
Net realized gain (loss) on investments and foreign currency		(146	)		(22	)		(366	)		(41	)
Net change in unrealized appreciation (depreciation) on investments and interest rate swaps(1)		119			9			(511	)		42
Net change in unrealized gain (loss) on foreign currency		(26	)		(2	)		23			(3	)
Net increase (decrease) in net assets resulting from operations		22			43			(686	)		114
Stockholder distributions(2)
Distributions to stockholders		(102	)		(61	)		(204	)		(122	)
Net decrease in net assets resulting from stockholder distributions		(102	)		(61	)		(204	)		(122	)
Capital share transactions(3)
Reinvestment of stockholder distributions		80			25			80			51
Repurchases of common stock		—			(25	)		—			(52	)
Net increase (decrease) in net assets resulting from capital share transactions		80			—			80			(1	)
Total increase (decrease) in net assets		—			(18	)		(810	)		(9	)
Net assets at beginning of period		4,186			2,576			4,996			2,567
Net assets at end of period	$	4,186		$	2,558		$	4,186		$	2,558

(1) See Note 7 for a discussion of these financial instruments.

(2) See Note 5 for a discussion of the sources of distributions paid by the Company.

(3) See Note 3 for a discussion of the Company’s capital share transactions.

See notes to unaudited consolidated financial statements.

3

FS KKR Capital Corp. II

Unaudited Consolidated Statements of Cash Flows

(in millions)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(686	)	$	114
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(1,499	)		(729	)
Paid-in-kind interest		(35	)		(9	)
Proceeds from sales and repayments of investments		2,010			1,072
Net realized (gain) loss on investments		360			40
Net change in unrealized (appreciation) depreciation on investments		484			(51	)
Net change in unrealized (appreciation) depreciation on total return swap(1)		(2	)		—
Net change in unrealized (appreciation) depreciation on foreign currency forward contracts		(1	)		—
Net change in unrealized (appreciation) depreciation on interest rate swaps		30			10
Accretion of discount		(10	)		(4	)
Amortization of deferred financing costs		3			2
Unrealized (gain) loss on borrowings in foreign currency		(24	)		3
(Increase) decrease in collateral held at broker for open swap contracts		(15	)		—
(Increase) decrease in due from counterparty		43			—
(Increase) decrease in receivable for investments sold and repaid		10			(2	)
(Increase) decrease in income receivable		(8	)		(2	)
(Increase) decrease in receivable on interest rate swaps		—			(1	)
(Increase) decrease in prepaid expenses and other assets		1			—
Increase (decrease) in payable for investments purchased		5			(8	)
Increase (decrease) in management fees payable		(6	)		—
Increase (decrease) in subordinated income incentive fees payable		8			3
Increase (decrease) in administrative services expense payable		(1	)		0
Increase (decrease) in interest rate swap income payable		—			1
Increase (decrease) in interest payable		(3	)		(2	)
Increase (decrease) in other accrued expenses and liabilities		(5	)		(2	)
Net cash provided by (used in) operating activities		659			435
Cash flows from financing activities
Repurchases of common stock		—			(52	)
Stockholder distributions		(124	)		(71	)
Borrowings under financing arrangements(1)		1,446			509
Repayments of financing arrangements(1)		(1,845	)		(653	)
Deferred financing costs paid		(8	)		(2	)
Net cash provided by financing activities		(531	)		(269	)
Total increase (decrease) in cash		128			166
Cash and foreign currency at beginning of period		167			150
Cash and foreign currency at end of period	$	295		$	316
Supplemental disclosure
Non-cash purchase of investments	$	(90	)	$	(21	)
Non-cash sale of investments	$	90		$	21
Distributions reinvested	$	80		$	51
Local and excise taxes paid	$	—		$	2

(1) See Note 9 for a discussion of the Company’s financing arrangements. During the six months ended June 30, 2020 and 2019, the Company paid $75 and $55 respectively, in interest expense on the credit facilities.

See notes to unaudited consolidated financial statements.

4

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)			Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Senior Secured Loans—First Lien—116.0%
5 Arch Income Fund 2, LLC	(r)(t)(u)(x)(y)	Diversified Financials	9.0%				11/18/23	$	100.8	$	100.8	$	88.1
5 Arch Income Fund 2, LLC	(r)(s)(t)(u)	Diversified Financials	9.0%				11/18/23		12.7		12.7		11.1
Accuride Corp	(l)(n)(ab)	Capital Goods	L+525		1.0	%	11/17/23		12.6		10.7		8.1
Acproducts Inc	(l)(o)	Consumer Durables & Apparel	L+650		1.0	%	8/18/25		24.3		24.0		23.4
Advanced Lighting Technologies Inc	(n)(t)(u)(ad)	Materials	L+750		1.0	%	10/4/22		9.0		7.8		7.2
Advantage Sales & Marketing Inc	(n)(ab)	Commercial & Professional Services	L+325		1.0	%	7/23/21		5.7		5.6		5.2
All Systems Holding LLC	(f)(k)(l)(m)(n)(o)(p)	Commercial & Professional Services	L+625		1.0	%	10/31/23		195.0		195.0		190.1
All Systems Holding LLC	(n)	Commercial & Professional Services	L+625		1.0	%	10/31/23		11.5		11.5		11.2
All Systems Holding LLC	(s)	Commercial & Professional Services	L+625		1.0	%	10/31/23		3.0		3.0		2.9
American Tire Distributors Inc	(n)(ab)	Automobiles & Components	L+550, 1.0% PIK (1.0% Max PIK)		1.0	%	9/1/23		2.6		2.5		2.4
American Tire Distributors Inc	(n)(ab)	Automobiles & Components	L+650, 1.5% PIK (1.5% Max PIK)		1.0	%	9/2/24		16.3		14.4		10.9
Apex Group Limited	(n)(r)	Diversified Financials	L+700		1.3	%	6/15/23		2.3		2.2		2.3
Apex Group Limited	(r)(s)	Diversified Financials	L+700		1.3	%	6/15/23		2.3		2.2		2.3
Apex Group Limited	(f)(k)(l)(n)(q)(r)	Diversified Financials	L+700		1.3	%	6/15/25		70.0		69.4		70.0
Apex Group Limited	(n)(r)	Diversified Financials	L+700		1.5	%	6/15/25	£	23.1		29.3		28.6
Arrotex Australia Group Pty Ltd	(n)(r)	Pharmaceuticals, Biotechnology & Life Sciences	B+525		1.0	%	7/10/24	A$	47.8		32.8		32.9
Aspect Software Inc	(n)	Software & Services	8.0% PIK (8.0% Max PIK)				6/30/20	$	0.2		—		0.2
Aspect Software Inc	(s)	Software & Services	L+500		1.0	%	7/15/23		3.3		3.3		3.3
Aspect Software Inc	(l)(n)(p)	Software & Services	L+500		1.0	%	1/15/24		21.1		19.1		19.2
ATX Networks Corp	(n)(o)(r)(ab)	Technology Hardware & Equipment	L+600, 1.0% PIK (1.0% Max PIK)		1.0	%	6/11/21		80.9		78.6		74.0
Belk Inc	(n)(ab)	Retailing	L+675		1.0	%	7/31/25		50.3		42.2		18.4
Berner Food & Beverage LLC	(n)	Food & Staples Retailing	L+875		1.0	%	3/16/22		4.5		4.5		4.6
Borden Dairy Co	(n)(t)(u)	Food, Beverage & Tobacco	L+825		1.0	%	7/6/23		105.0		103.1		16.4
Bugaboo International BV	(n)(r)	Consumer Durables & Apparel	E+775 PIK (E+775 Max PIK)				3/20/25	€	1.6		1.9		1.7
Caprock Midstream LLC	(n)(ab)	Energy	L+475				11/3/25	$	13.5		12.8		8.9
Charles Taylor PLC	(n)(r)	Diversified Financials	L+575				1/24/27	£	19.4		24.7		21.6
Cimarron Energy Inc	(n)	Energy	L+900				6/30/21	$	7.5		7.5		7.4
Constellis Holdings LLC	(n)(ad)	Capital Goods	L+1,000		1.0	%	6/30/21		8.4		8.4		8.4
Constellis Holdings LLC	(n)(ad)	Capital Goods	L+750		1.0	%	3/31/24		15.0		15.0		15.0
CSafe Global	(n)	Capital Goods	L+650				11/1/21		9.1		9.1		9.0
CSafe Global	(f)(k)(l)(n)(p)(q)	Capital Goods	L+650		1.0	%	10/31/23		97.0		97.0		95.6
CSafe Global	(s)	Capital Goods	L+650		1.0	%	10/31/23		6.1		6.1		6.0
CSM Bakery Products	(l)(ab)	Food, Beverage & Tobacco	L+625		1.0	%	1/4/22		6.4		6.2		6.2
CTI Foods Holding Co LLC	(n)	Food, Beverage & Tobacco	L+577, 3.0% PIK (3.0% Max PIK)		1.0	%	5/3/24		0.0		0.0		0.0
Eacom Timber Corp	(n)(r)	Materials	L+650		1.0	%	11/20/23		2.6		2.5		2.4
Eagle Family Foods Inc	(n)	Food, Beverage & Tobacco	L+675		1.0	%	6/14/23		2.9		2.9		2.8
Eagle Family Foods Inc	(s)	Food, Beverage & Tobacco	L+675		1.0	%	6/14/23		5.3		5.2		5.0
Eagle Family Foods Inc	(f)(k)(l)(n)(p)	Food, Beverage & Tobacco	L+675		1.0	%	6/14/24		53.4		52.9		50.7
Eagleclaw Midstream Ventures LLC	(n)(ab)	Energy	L+425		1.0	%	6/24/24		8.9		8.2		6.5
EIF Van Hook Holdings LLC	(n)(ab)	Energy	L+525				9/5/24		2.1		2.1		1.5
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+500				7/23/26		15.5		14.8		12.2

See notes to unaudited consolidated financial statements.

5

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes		Industry	Rate(b)	Floor(b)			Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Empire Today LLC	(f)(k)(l)(n)(o)(p)(q)		Retailing	L+650		1.0	%	11/17/22	$	127.3	$	127.3	$	123.3
Entertainment Benefits Group LLC	(n)		Media & Entertainment	L+575		1.0	%	9/30/24		5.0		5.1		4.5
Entertainment Benefits Group LLC	(s)		Media & Entertainment	L+575		1.0	%	9/30/24		0.9		0.9		0.9
Entertainment Benefits Group LLC	(f)(k)(l)(n)		Media & Entertainment	L+575		1.0	%	9/30/25		32.0		31.6		29.2
Fairway Group Holdings Corp	(n)(t)(u)(ad)		Food & Staples Retailing	12.0% PIK (12.0% Max PIK)				11/27/23		12.0		11.3		1.1
Fairway Group Holdings Corp	(n)(t)(u)(ad)		Food & Staples Retailing	10.0% PIK (10.0% Max PIK)				11/28/23		7.4		5.6		—
Fox Head Inc	(l)(n)(p)		Consumer Durables & Apparel	L+850		1.0	%	9/30/20		36.3		36.3		33.8
Frontline Technologies Group LLC	(n)		Software & Services	L+575		1.0	%	9/18/23		5.3		5.2		5.2
Greystone Equity Member Corp	(n)(r)		Diversified Financials	L+725		3.8	%	4/1/26		164.3		164.3		160.3
Heniff Transportation Systems LLC	(n)		Transportation	L+575		1.0	%	12/3/24		4.0		4.0		3.9
Heniff Transportation Systems LLC	(s)		Transportation	L+575		1.0	%	12/3/24		5.6		5.6		5.4
Heniff Transportation Systems LLC	(f)(k)(l)(n)		Transportation	L+575		1.0	%	12/3/26		75.0		74.8		73.1
HM Dunn Co Inc	(n)(t)(u)(ad)		Capital Goods	L+875 PIK (L+875 Max PIK)		1.0	%	6/30/21		59.4		44.4		15.8
HM Dunn Co Inc	(n)(ad)		Capital Goods	15.0% PIK (15.0% Max PIK)				6/30/21		5.8		5.8		5.8
Hudson Technologies Co	(n)(r)		Commercial & Professional Services	L+1,025		1.0	%	10/10/23		53.9		53.6		28.2
ID Verde	(n)(r)	��	Commercial & Professional Services	E+700				3/29/24	€	0.2		0.2		0.2
ID Verde	(n)(r)		Commercial & Professional Services	L+725				3/29/24	£	0.1		0.1		0.1
ID Verde	(n)(r)		Commercial & Professional Services	E+700				3/29/25	€	0.9		1.1		1.0
ID Verde	(n)(r)		Commercial & Professional Services	L+725				3/29/25	£	0.6		0.8		0.7
Industria Chimica Emiliana Srl	(r)(s)		Pharmaceuticals, Biotechnology & Life Sciences	E+650				6/30/26	€	13.6		14.8		14.6
Industria Chimica Emiliana Srl	(n)(r)		Pharmaceuticals, Biotechnology & Life Sciences	E+650				6/30/26		51.8		55.4		56.0
Industry City TI Lessor LP	(n)(p)		Consumer Services	10.8%, 1.0% PIK (1.0% Max PIK)				6/30/26	$	10.1		10.1		11.0
J S Held LLC	(f)(n)(o)(p)		Insurance	L+600		1.0	%	7/1/25		76.2		75.7		75.1
J S Held LLC	(s)		Insurance	L+600		1.0	%	7/1/25		8.6		8.6		8.4
J S Held LLC	(n)		Insurance	L+600		1.0	%	7/1/25		1.4		1.4		1.4
J S Held LLC	(s)		Insurance	L+600		1.0	%	7/1/25		6.4		6.4		6.3
Jo-Ann Stores Inc	(n)(ab)		Retailing	L+500		1.0	%	10/20/23		13.0		11.8		8.1
Kellermeyer Bergensons Services LLC	(f)(k)(l)(n)(o)(p)(q)		Commercial & Professional Services	L+650		1.0	%	11/7/26		164.1		162.9		159.3
Kellermeyer Bergensons Services LLC	(s)		Commercial & Professional Services	L+650		1.0	%	11/7/26		40.6		40.6		39.4
Kodiak BP LLC	(f)(k)(l)(m)(n)(o)(p)(q)		Capital Goods	L+725		1.0	%	12/1/24		224.0		224.0		224.0
Kodiak BP LLC	(s)		Capital Goods	L+725		1.0	%	12/1/24		8.8		8.8		8.8
LBM Borrower LLC	(l)(ab)		Capital Goods	L+375		1.0	%	8/19/22		2.4		2.3		2.3
Lexitas Inc	(s)		Commercial & Professional Services	L+575		1.0	%	11/14/25		2.9		2.9		2.8
Lexitas Inc	(k)(l)(n)		Commercial & Professional Services	L+575		1.0	%	11/14/25		26.9		26.7		26.0
Lexitas Inc	(s)		Commercial & Professional Services	L+575		1.0	%	11/14/25		4.3		4.3		4.1
Lionbridge Technologies Inc	(f)(k)(p)(q)		Consumer Services	L+625		1.0	%	12/29/25		89.8		89.4		89.0
Lipari Foods LLC	(f)(n)(p)		Food & Staples Retailing	L+588		1.0	%	1/6/25		21.9		21.9		21.3
Lipari Foods LLC	(f)(m)(n)(o)(p)		Food & Staples Retailing	L+588		1.0	%	1/6/25		150.6		149.4		146.2
MB Precision Holdings LLC	(k)(n)(ad)		Capital Goods	L+725, 2.3% PIK (2.3% Max PIK)		1.3	%	7/23/22		22.1		21.8		19.0
Monitronics International Inc	(f)(n)(ab)		Commercial & Professional Services	L+650		1.3	%	3/29/24		39.2		37.4		30.3
Monitronics International Inc	(f)(ab)		Commercial & Professional Services	L+500		1.5	%	7/3/24		1.9		1.9		1.9
Monitronics International Inc	(n)		Commercial & Professional Services	L+500		1.5	%	7/3/24		30.7		30.7		27.2

See notes to unaudited consolidated financial statements.

6

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)		Floor(b)			Maturity	Principal Amount(c)		Amortized Cost			Fair Value(d)
Monitronics International Inc	(s)	Commercial & Professional Services	L+500			1.5	%	7/3/24	$	39.3	$	39.3		$	34.9
Motion Recruitment Partners LLC	(n)(q)	Commercial & Professional Services	L+600			1.0	%	12/20/25		43.7		43.3			38.9
Motion Recruitment Partners LLC	(s)	Commercial & Professional Services	L+600			1.0	%	12/20/25		34.6		34.6			30.7
NCI Inc	(n)	Software & Services	L+500, 2.5% PIK (2.5% Max PIK)			1.0	%	8/15/24		4.2		4.2			3.8
One Call Care Management Inc	(n)(ab)(ad)	Insurance	L+525			1.0	%	11/27/22		2.9		2.5			2.5
P2 Energy Solutions Inc	(n)	Software & Services	L+675			1.0	%	1/31/25		2.7		2.7			2.6
P2 Energy Solutions Inc	(s)	Software & Services	L+675			1.0	%	1/31/25		5.4		5.4			5.2
P2 Energy Solutions Inc	(f)(k)(p)(q)	Software & Services	L+675			1.0	%	1/31/26		135.7		134.1			130.9
Peak 10 Holding Corp	(n)(ab)	Telecommunication Services	L+350					8/1/24		25.5		23.0			20.6
PF Chang’s China Bistro Inc	(n)(ab)	Consumer Services	L+650					3/1/26		14.8		14.7			9.8
Premium Credit Ltd	(n)(r)	Diversified Financials	L+650					1/16/26	£	58.6		74.9			69.7
Pretium Packaging LLC	(f)(k)(l)(p)(q)	Household & Personal Products	L+625			1.0	%	1/15/27	$	110.9		109.9			108.5
Pretium Packaging LLC	(s)	Household & Personal Products	L+625			1.0	%	1/15/27		22.7		22.4			22.1
Production Resource Group LLC	(n)(t)(u)	Media & Entertainment	L+700			1.0	%	8/21/24		381.0		381.0			218.6
Project Marron	(f)(n)(r)	Consumer Services	L+625					7/2/25	C$	28.7		21.9			19.4
Project Marron	(n)(r)	Consumer Services	B+625					7/3/25	A$	36.5		24.0			22.7
Propulsion Acquisition LLC	(f)(l)(m)(n)(p)(q)	Capital Goods	L+600			1.0	%	7/13/21	$	113.9		112.8	��		108.5
PSKW LLC	(l)(m)(o)(p)(q)	Health Care Equipment & Services	L+625			1.0	%	3/9/26		161.3		159.4			157.1
Reliant Rehab Hospital Cincinnati LLC	(f)(l)(o)(p)	Health Care Equipment & Services	L+675					9/2/24		117.5		116.7			110.5
Roadrunner Intermediate Acquisition Co LLC	(l)(m)(o)(q)	Health Care Equipment & Services	L+675			1.0	%	3/15/23		95.0		95.0			94.6
RSC Insurance Brokerage Inc	(f)(k)(l)(n)(o)(p)	Insurance	L+550			1.0	%	11/1/26		94.1		93.3			92.5
RSC Insurance Brokerage Inc	(s)	Insurance	L+550			1.0	%	11/1/26		18.1		18.0			17.8
RSC Insurance Brokerage Inc	(s)	Insurance	L+550			1.0	%	11/1/26		3.7		3.6			3.6
Safe-Guard Products International LLC	(f)(p)(q)	Diversified Financials	L+575					1/27/27		75.9		75.2			71.5
Savers Inc	(f)(n)(o)(p)	Retailing	L+650, 2.8% PIK (2.8% Max PIK)			1.5	%	3/28/24		54.0		53.5			51.1
Savers Inc	(f)(n)	Retailing	L+700, 2.8% PIK (2.8% Max PIK)			1.5	%	3/28/24	C$	75.0		55.3			53.3
Sequa Corp	(n)(ab)	Capital Goods	L+500			1.0	%	11/28/21	$	4.8		4.8			4.4
Sequel Youth & Family Services LLC	(f)(o)(p)	Health Care Equipment & Services	L+700			1.0	%	9/1/23		15.5		15.5			14.6
Sequel Youth & Family Services LLC	(f)(l)(p)	Health Care Equipment & Services	L+800			1.0	%	9/1/23		90.0		90.0			84.9
Sequential Brands Group Inc.	(k)(l)(n)	Consumer Durables & Apparel	L+875					2/7/24		213.9		210.9			193.0
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+550					8/4/25		7.4		7.2			5.4
Sorenson Communications LLC	(f)(k)(m)(n)(q)(ab)	Telecommunication Services	L+650					4/29/24		69.7		67.4			69.1
Staples Canada	(n)(r)	Retailing	C+700			1.0	%	9/12/24	C$	4.2		3.4			3.1
Sungard Availability Services Capital Inc	(n)	Software & Services	L+750			1.0	%	2/3/22	$	3.1		3.0			3.2
Sungard Availability Services Capital Inc	(s)	Software & Services	L+750			1.0	%	2/3/22		1.7		1.6			1.7
Sutherland Global Services Inc	(n)(p)(r)(ab)	Software & Services	L+538			1.0	%	4/23/21		6.0		6.0			5.2
Swift Worldwide Resources Holdco Ltd	(k)(n)(q)	Energy	L+1,100, 1.0% PIK (1.0% Max PIK)			2.5	%	7/20/21		37.5		37.5			37.4
Tangoe LLC	(f)(n)(o)(p)	Software & Services	L+650			1.0	%	11/28/25		102.3		101.5			96.0
Torrid Inc	(f)(k)(l)(n)	Retailing	L+650			1.0	%	12/14/24		39.4		39.0			37.5
Total Safety US Inc	(f)(n)(ab)	Capital Goods	L+600			1.0	%	8/16/25		1.0		0.9			0.9
Trace3 Inc	(f)(k)(l)(n)(o)(p)	Software & Services	L+675	��		1.0	%	8/3/24		162.9		162.9			159.9
Transaction Services Group Ltd	(n)(r)	Consumer Services	B+600					10/15/26	A$	72.7		48.2			46.0

See notes to unaudited consolidated financial statements.

7

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)			Maturity	Principal Amount(c)		Amortized Cost			Fair Value(d)
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	£	7.7	$	9.8		$	8.8
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	$	20.1		20.1			18.4
Truck-Lite Co LLC	(n)	Capital Goods	L+625		1.0	%	12/13/24		4.9		4.8			4.7
Truck-Lite Co LLC	(s)	Capital Goods	L+625		1.0	%	12/13/24		8.8		8.7			8.5
Truck-Lite Co LLC	(f)(k)(n)(o)(p)	Capital Goods	L+625		1.0	%	12/13/26		127.2		126.1			122.7
Truck-Lite Co LLC	(s)	Capital Goods	L+625		1.0	%	12/13/26		18.8		18.6			18.1
Virgin Pulse Inc	(f)(l)(m)(o)(p)	Software & Services	L+650		1.0	%	5/22/25		158.6		157.6			157.5
Warren Resources Inc	(n)(ad)	Energy	L+1,000, 1.0% PIK (1.0% Max PIK)		1.0	%	5/21/21		21.1		21.1			21.1
West Corp	(l)(ab)	Software & Services	L+350		1.0	%	10/10/24		2.9		2.6			2.5
West Corp	(o)(ab)	Software & Services	L+400		1.0	%	10/10/24		14.0		13.1			12.0
Wheels Up Partners LLC	(n)	Transportation	L+855		1.0	%	10/15/21		0.5		0.5			0.5
Wheels Up Partners LLC	(n)	Transportation	L+855		1.0	%	7/15/22		0.3		0.3			0.3
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	6/30/24		1.0		1.0			1.0
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	11/1/24		0.4		0.4			0.4
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	12/21/24		0.2		0.2			0.2
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	12/21/24		0.7		0.7			0.7
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	12/21/24		0.7		0.7			0.7
Zeta Interactive Holdings Corp	(m)(n)(o)(p)(q)	Software & Services	L+750		1.0	%	7/29/22		122.2		122.2			122.2
Zeta Interactive Holdings Corp	(s)	Software & Services	L+750		1.0	%	7/29/22		4.4		4.4			4.4
Total Senior Secured Loans—First Lien											5,672.6			5,137.1
Unfunded Loan Commitments											(282.0	)		(282.0	)
Net Senior Secured Loans—First Lien											5,390.6			4,855.1
Senior Secured Loans—Second Lien—15.1%
Advantage Sales & Marketing Inc	(n)(ab)	Commercial & Professional Services	L+650		1.0	%	7/25/22		8.1		7.1			6.6
American Bath Group LLC	(l)(ab)	Capital Goods	L+975		1.0	%	9/30/24		3.0		2.9			2.7
Ammeraal Beltech Holding BV	(f)(n)(o)(r)	Capital Goods	L+800		1.0	%	9/12/26		51.3		50.4			47.6
Arena Energy LP	(n)(t)(u)	Energy	L+1,200, 4.0% PIK (4.0% Max PIK)		1.0	%	1/24/21		55.0		53.9			7.1
athenahealth Inc	(f)(m)(n)(p)	Health Care Equipment & Services	L+850				2/11/27		129.2		128.1			130.5
BCA Marketplace PLC	(n)(r)	Retailing	L+825				11/22/27	£	30.2		37.3			34.8
Byrider Finance LLC	(n)	Automobiles & Components	L+1,000, 0.5% PIK (0.5% Max PIK)		1.3	%	6/7/22	$	35.9		35.9			35.3
CDS US Intermediate Holdings Inc	(n)(r)(t)(u)	Media & Entertainment	L+825		1.0	%	7/10/23		21.2		19.2			1.1
Chisholm Oil & Gas Operating LLC	(n)(t)(u)	Energy	L+550, 3.0% PIK (3.0% Max PIK)		1.3	%	3/21/24		38.9		38.3			1.9
CommerceHub Inc	(n)	Software & Services	L+775				5/21/26		3.2		3.2			3.2
Constellis Holdings LLC	(f)(n)(ad)	Capital Goods	L+100, 10.0% PIK (10.0% Max PIK)		1.0	%	3/27/25		13.5		13.5			13.5
Emerald Performance Materials LLC	(l)(ab)	Materials	L+775		1.0	%	8/1/22		3.8		3.8			3.7
Excelitas Technologies Corp	(l)(n)(ab)	Technology Hardware & Equipment	L+750		1.0	%	12/1/25		6.6		6.7			6.4
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	11.0% PIK (11.0% Max PIK)				2/24/24		6.7		5.0			—
Gruden Acquisition Inc	(m)(p)(ab)	Transportation	L+850		1.0	%	8/18/23		25.0		24.4			22.3
Invictus	(n)(ab)	Materials	L+675				3/30/26		0.1		0.1			0.1
LBM Borrower LLC	(l)(n)(p)(q)(ab)	Capital Goods	L+925		1.0	%	8/20/23		75.0		72.2			70.5
NEP Broadcasting LLC	(n)(ab)	Media & Entertainment	L+700				10/19/26		5.8		5.6			4.4

See notes to unaudited consolidated financial statements.

8

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)			Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
OEConnection LLC	(f)(p)	Software & Services	L+825				9/25/27	$	42.9	$	42.6	$	41.1
Ontic Engineering & Manufacturing Inc	(f)(n)	Capital Goods	L+850				10/29/27		26.8		26.3		24.8
OPE Inmar Acquisition Inc	(l)(ab)	Software & Services	L+800		1.0%		5/1/25		15.0		15.0		10.0
Paradigm Acquisition Corp	(l)(ab)	Health Care Equipment & Services	L+750				10/26/26		3.7		3.7		3.1
Peak 10 Holding Corp	(n)(t)(u)(ab)	Telecommunication Services	L+725				8/1/25		15.7		13.5		7.0
Polyconcept North America Inc	(n)	Household & Personal Products	L+1,000		1.0%		2/16/24		0.6		0.6		0.5
Pure Fishing Inc	(f)(n)	Consumer Durables & Apparel	L+838		1.0%		12/31/26		45.9		45.5		33.9
Rise Baking Company	(f)(l)(n)	Food, Beverage & Tobacco	L+800		1.0%		8/9/26		17.6		17.5		17.1
Sequa Corp	(n)(ab)	Capital Goods	L+900		1.0%		4/28/22		2.3		2.3		1.7
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+950				8/3/26		6.5		5.9		4.2
Sorenson Communications LLC	(n)(o)(p)	Telecommunication Services	11.5% PIK (11.5% Max PIK)				4/30/25		16.4		16.5		16.4
Sparta Systems Inc	(n)	Software & Services	L+825		1.0%		8/21/25		2.4		2.4		2.1
Sungard Availability Services Capital Inc	(m)(n)	Software & Services	L+400, 2.5% PIK (2.5% Max PIK)		1.0%		11/3/22		12.7		12.7		12.7
Vantage Specialty Chemicals Inc	(n)(ab)	Materials	L+825		1.0%		10/27/25		0.8		0.7		0.5
WireCo WorldGroup Inc	(n)(ab)	Capital Goods	L+900		1.0%		9/30/24		14.1		14.0		10.8
Wittur Holding GmbH	(n)(r)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)				9/23/27	€	55.4		60.7		56.2
Total Senior Secured Loans—Second Lien											787.5		633.8
Other Senior Secured Debt—2.4%
Advanced Lighting Technologies Inc	(n)(t)(u)(ad)	Materials	L+1,700 PIK (L+1,700 Max PIK)		1.0	%	10/4/23		15.8		10.7		—
APTIM Corp	(n)(t)(u)(ab)	Diversified Financials	7.8%				6/15/25		8.2		8.2		3.3
Black Swan Energy Ltd	(n)(r)	Energy	9.0%				1/20/24		4.0		4.0		3.9
Diamond Resorts International Inc	(m)(ab)	Consumer Services	7.8%				9/1/23		4.9		4.9		4.7
FourPoint Energy LLC	(n)(p)(t)(u)	Energy	9.0%				12/31/21		46.3		45.7		25.4
JW Aluminum Co	(h)(n)(p)(ab)(ad)	Materials	10.3%				6/1/26		34.5		34.5		36.0
Lycra	(h)(n)(r)(aa)(ab)	Consumer Durables & Apparel	7.5%				5/1/25		16.4		16.4		11.5
Mood Media Corp	(n)(t)(u)(ad)	Media & Entertainment	14.0% PIK (14.0% Max PIK)				12/31/23		44.5		43.4		1.1
TruckPro LLC	(h)(n)(aa)(ab)	Capital Goods	11.0%				10/15/24		6.4		6.1		6.3
Velvet Energy Ltd	(n)(r)	Energy	9.0%				10/5/23		7.5		7.5		6.6
Total Other Senior Secured Debt											181.4		98.8
Subordinated Debt —4.2%
All Systems Holding LLC	(n)	Commercial & Professional Services	10.0% PIK (10.0% Max PIK)				10/31/22		0.2		0.2		0.2
Ascent Resources Utica Holdings LLC / ARU Finance Corp	(h)(n)(aa)(ab)	Energy	10.0%				4/1/22		26.0		26.0		22.2
athenahealth Inc	(n)	Health Care Equipment & Services	L+1,125 PIK (L+1,125 Max PIK)				2/11/27		77.0		77.0		76.4
Byrider Finance LLC	(n)	Automobiles & Components	20.0% PIK (20.0% Max PIK)				3/31/22		2.6		2.6		2.6
ClubCorp Club Operations Inc	(h)(n)(aa)(ab)	Consumer Services	8.5%				9/15/25		31.8		31.0		25.6
Craftworks Rest & Breweries Group Inc	(n)(t)(u)	Consumer Services	12.0% PIK (12.0% Max PIK)				11/1/24		6.2		6.2		—
Diamond Resorts International Inc	(h)(n)(ab)	Consumer Services	10.8%				9/1/24		4.4		4.5		4.0
Intelsat Jackson Holdings SA	(h)(n)(r)(ab)	Media & Entertainment	5.5%				8/1/23		3.7		3.4		2.1
Kenan Advantage Group Inc	(h)(n)(aa)(ab)	Transportation	7.9%				7/31/23		19.2		17.3		17.0
Quorum Health Corp	(n)(t)(u)(ab)	Health Care Equipment & Services	11.6%				4/15/23		5.0		4.9		0.7
Team Health Inc	(h)(n)(aa)(ab)	Health Care Equipment & Services	6.4%				2/1/25		20.5		18.5		12.0
Vivint Inc	(h)(n)(ab)	Commercial & Professional Services	7.6%				9/1/23		14.3		13.5		13.2
Total Subordinated Debt											205.1		176.0

See notes to unaudited consolidated financial statements.

9

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)			Maturity	Principal Amount(c)/ Shares		Cost		Fair Value(d)
Asset Based Finance —16.2%
801 5th Ave, Seattle, Private Equity	(n)(r)(t)(ae)	Real Estate							7,819,411	$	7.8	$	13.4
801 5th Ave, Seattle, Structure Mezzanine	(n)(r)(ae)	Real Estate	8.0%, 3.0% PIK (3.0% Max PIK)				12/19/29	$	47.1		47.1		47.1
Abacus JV, Private Equity	(n)(r)	Insurance							34,147,572		34.1		38.2
Accelerator Investments Aggregator LP, Private Equity	(n)(r)(t)	Diversified Financials							153,628		0.2		0.1
Altavair AirFinance, Private Equity	(n)(r)	Capital Goods							49,233,596		49.2		51.0
Australis Maritime, Common Stock	(n)(r)(t)	Transportation							19,832,267		19.8		20.3
Avida Holding AB, Common Stock	(n)(r)(t)(ad)	Diversified Financials							519,925		0.1		0.1
Byrider Finance LLC, Sub Note	(n)(ac)	Automobiles & Components	8.7%				2/17/25	$	4.2		4.0		4.0
Global Jet Capital LLC, Preferred Stock	(i)(n)(t)	Commercial & Professional Services							80,065,036		80.1		—
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				1/30/25	$	2.5		2.2		2.3
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				4/30/25	$	15.7		14.2		14.5
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				9/3/25	$	3.2		2.9		3.0
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				9/29/25	$	3.0		2.8		2.8
Global Jet Capital LLC, Structured Mezzanine	(i)(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				12/4/25	$	92.1		83.6		84.9
Global Jet Capital LLC, Structured Mezzanine	(i)(n)(r)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				12/4/25	$	20.5		18.6		18.9
Global Jet Capital LLC, Structured Mezzanine	(i)(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				12/9/25	$	2.1		1.9		2.0
Global Jet Capital LLC, Structured Mezzanine	(i)(n)(r)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				12/9/25	$	16.3		14.8		15.0
Global Jet Capital LLC, Structured Mezzanine	(i)(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				1/29/26	$	7.9		7.2		7.3
Global Jet Capital LLC, Structured Mezzanine	(i)(n)(r)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				1/29/26	$	1.8		1.6		1.6
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				2/17/26	$	21.2		19.3		19.6
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				4/14/26	$	13.1		11.9		12.1
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)				12/2/26	$	22.3		20.3		20.6
Global Lending Services LLC, Private Equity	(n)(r)(t)	Diversified Financials							14,954,588		15.0		15.6
Home Partners JV, Common Stock	(n)(r)(t)	Real Estate							16,434,441		16.4		18.9
Home Partners JV, Private Equity	(n)(r)(t)(ab)	Real Estate							706,596		0.7		0.0
Home Partners JV, Structured Mezzanine	(n)(r)	Real Estate	11.0% PIK (11.0% Max PIK)				3/25/29	$	36.8		36.8		36.8
Home Partners JV, Structured Mezzanine	(r)(s)	Real Estate	11.0% PIK (11.0% Max PIK)				3/25/29	$	19.5		19.5		19.5
Home Partners JV 2, Private Equity	(n)(r)(t)	Real Estate							203,250		0.2		0.2
Home Partners JV 2, Structured Mezzanine	(n)(r)	Real Estate	11.0% PIK (11.0% Max PIK)				3/20/30	$	0.4		0.4		0.4
Home Partners JV 2, Structured Mezzanine	(r)(s)	Real Estate	11.0% PIK (11.0% Max PIK)				3/20/30	$	15.9		15.9		15.9
Kilter Finance, Private Equity	(n)(r)(t)(ae)	Insurance							289,268		0.3		0.3
KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest	(n)(r)	Capital Goods							5,432,797		5.4		6.3
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	8.0%				6/22/22	€	9.3		10.6		10.4
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	8.0%				6/22/22	$	19.5		19.5		19.5
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	12.0%				6/22/22	€	5.9		6.7		6.6
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	12.0%				6/22/22	$	12.4		12.4		12.4
Luxembourg Life Fund—Absolute Return Fund I, 1L Term Loan	(n)(r)	Insurance	L+750		1.5	%	2/27/25	$	8.0		8.0		7.9
NewStar Clarendon 2014-1A Class D	(n)(r)(t)	Diversified Financials					1/25/27	$	8.3		4.7		2.1
Opendoor Labs Inc, 2L Term Loan	(n)(r)	Real Estate	10.0%				1/23/26	$	26.8		26.8		26.8
Opendoor Labs Inc, 2L Term Loan	(r)(s)	Real Estate	10.0%				1/23/26	$	53.6		53.6		53.6
Pretium Partners LLC P1, Structured Mezzanine	(n)(r)	Real Estate	2.8%, 5.3% PIK (5.3% Max PIK)				10/22/26	$	6.5		6.5		6.4
Pretium Partners LLC P2, Structured Mezzanine	(n)(r)	Real Estate	2.0%, 7.5% PIK (7.5% Max PIK)				5/29/25	$	14.8		14.8		14.9

See notes to unaudited consolidated financial statements.

10

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Principal Amount(c)/ Shares		Cost			Fair Value(d)
Prime ST LLC, Private Equity	(n)(r)(t)(ae)	Real Estate					6,635,747	$	6.6		$	2.5
Prime ST LLC, Structured Mezzanine	(n)(r)(ae)	Real Estate	5.0%, 6.0% PIK (6.0% Max PIK)		3/12/30	$	47.2		47.2			47.2
Sofi Lending Corp, Purchase Facility	(n)(r)	Diversified Financials					40,637,805		40.6			41.1
Toorak Capital Funding LLC, Membership Interest	(n)(r)	Real Estate					N/A		18.8			22.5
Total Asset Based Finance									831.1			766.6
Unfunded Commitments									(89.0	)		(89.0	)
Net Asset Based Finance									742.1			677.6
Credit Opportunities Partners, LLC —13.7%
Credit Opportunities Partners, LLC	(n)(r)(ae)	Diversified Financials					590.6		590.6			575.1
Total Credit Opportunities Partners, LLC									590.6			575.1
						Number of Shares		Cost			Fair Value(d)
Equity/Other—6.3%
Abaco Energy Technologies LLC, Common Stock	(n)(t)	Energy					3,055,556		3.1			0.7
Abaco Energy Technologies LLC, Preferred Stock	(n)(t)	Energy					12,734,481		0.6			3.8
Advanced Lighting Technologies Inc, Common Stock	(n)(t)(ad)	Materials					265,747		7.5			—
Advanced Lighting Technologies Inc, Warrant	(n)(t)(ad)	Materials			10/4/27		4,189		0.0			—
All Systems Holding LLC, Common Stock	(n)(t)	Commercial & Professional Services					1,880,308		1.8			2.3
ASG Technologies, Common Stock	(n)(t)(ad)	Software & Services					625,178		13.5			22.2
ASG Technologies, Warrant	(n)(t)(ad)	Software & Services			6/27/22		314,110		9.0			4.3
Aspect Software Inc, Common Stock	(l)(n)(p)(t)	Software & Services					1,148,694		1.9			1.9
Aspect Software Inc, Warrant	(l)(n)(p)(t)	Software & Services			1/15/24		1,146,890		—			—
ATX Networks Corp, Common Stock	(n)(r)(t)	Technology Hardware & Equipment					156,123		0.2			—
AVF Parent LLC, Trade Claim	(n)(t)	Retailing					121,058		—			1.7
Byrider Finance LLC, Common Stock	(n)(t)	Automobiles & Components					1,667		—			—
Catalina Marketing Corp, Common Stock	(n)(t)	Media & Entertainment					6,522		—			—
Chisholm Oil & Gas Operating LLC, Series A Units	(t)(v)(w)(z)	Energy					225,000		0.2			—
Cimarron Energy Inc, Common Stock	(n)(t)	Energy					4,302,293		3.9			0.8
Cimarron Energy Inc, Participation Option	(n)(t)	Energy					25,000,000		1.3			4.5
Constellis Holdings LLC, Private Equity	(f)(n)(t)(ad)	Capital Goods					849,702		18.9			19.8
Crossmark Holdings Inc, Warrant	(n)(t)	Commercial & Professional Services					8,358		—			—
CSafe Global, Common Stock	(n)(t)	Capital Goods					608,700		0.6			0.9
CTI Foods Holding Co LLC, Common Stock	(n)(t)	Food, Beverage & Tobacco					56		0.0			0.0
Empire Today LLC, Common Stock	(n)(t)	Retailing					630		1.9			2.5
Envigo Laboratories Inc, Series A Warrant	(p)(t)	Health Care Equipment & Services			4/29/24		10,924		—			—
Envigo Laboratories Inc, Series B Warrant	(p)(t)	Health Care Equipment & Services			4/29/24		17,515		—			—
Fairway Group Holdings Corp, Common Stock	(n)(t)(ad)	Food & Staples Retailing					103,091		3.3			—
FourPoint Energy LLC, Common Stock, Class C—II—A Units	(t)(v)	Energy					13,000		13.0			0.1

See notes to unaudited consolidated financial statements.

11

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Number of Shares		Cost		Fair Value(d)
FourPoint Energy LLC, Common Stock, Class D Units	(t)(v)	Energy				$	2,437	$	1.6	$	0.0
FourPoint Energy LLC, Common Stock, Class E—II Units	(t)(v)	Energy					29,730		7.4		0.1
FourPoint Energy LLC, Common Stock, Class E—III Units	(t)(v)	Energy					43,875		11.0		0.2
Fox Head Inc, Common Stock	(i)(n)(t)	Consumer Durables & Apparel					10,000,000		10.0		—
Harvey Industries Inc, Common Stock	(n)(t)	Capital Goods					2,666,667		—		2.3
HM Dunn Co Inc, Preferred Stock, Series A	(n)(p)(t)(ad)	Capital Goods					14,786		—		—
HM Dunn Co Inc, Preferred Stock, Series B	(n)(p)(t)(ad)	Capital Goods					14,786		—		—
JHC Acquisition LLC, Common Stock	(n)(t)	Capital Goods					9,517		9.5		6.8
JSS Holdings Ltd, Net Profits Interest	(n)(t)	Capital Goods					54		—		0.5
JW Aluminum Co, Common Stock	(i)(n)(t)(ad)	Materials					631		0.0		—
JW Aluminum Co, Preferred Stock	(i)(n)(ad)	Materials	12.5% PIK (12.5% Max PIK)		2/15/28		6,875		58.6		75.9
MB Precision Holdings LLC, Class A—2 Units	(t)(v)(ad)	Capital Goods					6,655,178		2.3		—
MB Precision Holdings LLC, Preferred Stock	(t)(v)(ad)	Capital Goods					41,778,908		8.8		—
Misys Ltd, Preferred Stock	(n)(r)	Software & Services	L+1,025				2,841		2.8		2.6
Mood Media Corp, Common Stock	(n)(t)(ad)	Media & Entertainment					17,400,835		12.6		—
One Call Care Management Inc, Common Stock	(n)(t)(ad)	Insurance					2,604,293,203		1.8		1.2
One Call Care Management Inc, Preferred Stock A	(n)(t)(ad)	Insurance					277,791		19.3		13.6
One Call Care Management Inc, Preferred Stock B	(n)(ad)	Insurance	9.0% PIK (9.0% Max PIK)		10/25/29		5,729,445		5.8		6.1
Polyconcept North America Inc, Class A—1 Units	(n)(t)	Household & Personal Products					624		0.1		0.0
Professional Plumbing Group Inc, Common Stock	(i)(t)	Materials					3,000,000		3.0		5.7
Ridgeback Resources Inc, Common Stock	(i)(n)(r)(t)	Energy					1,644,464		10.1		5.5
Sequential Brands Group Inc., Common Stock	(i)(n)(ab)	Consumer Durables & Apparel					534,076		7.2		0.1
Sorenson Communications LLC, Common Stock	(i)(n)(t)	Telecommunication Services					43,796		—		32.2
SSC (Lux) Limited S.a r.l., Common Stock	(n)(r)(t)	Health Care Equipment & Services					125,000		2.5		3.8
Sungard Availability Services Capital Inc, Common Stock	(m)(n)(o)(t)	Software & Services					217,659		15.2		8.0
Swift Worldwide Resources Holdco Ltd, Common Stock	(n)(t)	Energy					1,250,000		2.0		0.5
Templar Energy LLC, Common Stock	(i)(t)(v)(w)(ab)	Energy					847,547		7.2		0.1
Templar Energy LLC, Preferred Stock	(i)(n)(t)(ab)	Energy					561,819		5.6		—
Trace3 Inc, Common Stock	(n)(t)	Software & Services					42,486		0.4		1.5
Warren Resources Inc, Common Stock	(n)(t)(ad)	Energy					3,370,272		15.8		5.8
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1	(n)(t)	Software & Services					1,051,348		8.4		11.0
Zeta Interactive Holdings Corp, Preferred Stock, Series F	(n)(t)	Software & Services					956,233		8.4		15.4
Zeta Interactive Holdings Corp, Warrant	(n)(t)	Software & Services			4/20/27		143,435		—		0.1
Total Equity/Other									318.1		264.5
TOTAL INVESTMENTS—173.9%								$	8,215.4		7,280.9
LIABILITIES IN EXCESS OF OTHER ASSETS—73.9%											(3,094.9	)
NET ASSETS—100.0%										$	4,186.0

See notes to unaudited consolidated financial statements.

12

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Interest rate swaps

Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Depreciation
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(19	)	$	(19	)
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.81	%		12/18/2021		—		(8	)		(8	)
ING Capital Markets	$	250		3-Month LIBOR		2.59	%		1/14/2024		—		(22	)		(22	)
ING Capital Markets	$	250		3-Month LIBOR		2.62	%		1/14/2022		—		(10	)		(10	)
										$	—	$	(59	)	$	(59	)

(a) Security may be an obligation of one or more entities affiliated with the named company.

(b) Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of June 30, 2020, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 0.30%, the Euro Interbank Offered Rate, or EURIBOR, was (0.42)%, Candian Dollar Offer Rate, or CDOR was 0.56%, and the Australian Bank Bill Swap Bid Rate, or BBSY, or “B”, was 0.15%, and the U.S. Prime Lending Rate, or Prime, was 3.25%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

(c) Denominated in U.S. dollars unless otherwise noted.

(d) Fair value determined by the Company’s board of directors (see Note 8).

(e) Not used.

(f) Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Ally Bank (see Note 9).

(g) Not used.

(h) Security or portion thereof held within Burholme Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Burholme Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9).

(i) Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(j) Not used.

(k) Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(l) Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(m) Security or portion thereof held within Germantown Funding LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs (see Note 9).

See notes to unaudited consolidated financial statements.

13

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

(n) Security or portion thereof is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(o) Security or portion thereof held within Jefferson Square Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, National Association (see Note 9).

(p) Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, N.A. (see Note 9).

(q) Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Morgan Stanley Senior Funding, Inc. (see Note 9).

(r) The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of June 30, 2020, 74.3% of the Company’s total assets represented qualifying assets.

(s) Security is an unfunded commitment. Reflects the stated spread at the time of commitment, but may not be the actual rate received upon funding.

(t) Security is non-income producing.

(u) Asset is on non-accrual status.

(v) Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.

(w) Security held within FSIC III Investments, Inc., a wholly-owned subsidiary of the Company.

(x) Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(y) Security held within IC III Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(z) Security held within FSIC IV Investments, LLC, a wholly-owned subsidiary of the Company.

(aa) Security or portion thereof held within Burholme Funding LLC has been rehypothecated under Rule 15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). As of June 30, 2020, the fair value of securities rehypothecated by BNPP was $28.

(ab) Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8).

(ac) Position or portion thereof unsettled as of June 30, 2020.

See notes to unaudited consolidated financial statements.

14

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

(ad) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2020, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the six months ended June 30, 2020:

Portfolio Company	Fair Value at December 31, 2019		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at June 30, 2020		Interest Income(3)		PIK Income(3)		Fee Income(3)
Senior Secured Loans—First Lien
Advanced Lighting Technologies Inc	$	5.9	$	—	$	(0.3	)	$	—		$	1.6		$	7.2	$	—	$	—	$	—
Constellis Holdings LLC		—		8.4		—			—			—			8.4		0.2		—		—
Constellis Holdings LLC		—		15.0		—			—			—			15.0		0.3		—		—
Fairway Group Holdings Corp		—		3.0		(3.0	)		—			—			—		0.1		—		—
Fairway Group Holdings Corp		—		6.4		(6.4	)		—			—			—		0.4		—		—
Fairway Group Holdings Corp		6.3		—		(6.3	)		0.1			(0.1	)		—		10.7		—		—
Fairway Group Holdings Corp		6.5		—		—			—			(5.4	)		1.1		—		—		—
Fairway Group Holdings Corp		—		—		—			—			—			—		—		—		—
HM Dunn Co Inc		26.0		—		—			—			(10.2	)		15.8		—		—		—
HM Dunn Co Inc		5.2		2.3		(1.7	)		—			—			5.8		—		0.4		—
MB Precision Holdings LLC		21.4		0.9		(0.1	)		—			(3.2	)		19.0		1.0		0.2		—
One Call Care Management Inc		2.7		—		—			—			(0.2	)		2.5		0.1		—		—
Warren Resources Inc		21.0		0.1		—			—			—			21.1		1.2		0.1		—
Senior Secured Loans—Second Lien
Constellis Holdings LLC		—		13.5		—			—			—			13.5		—		0.7		—
Fairway Group Holdings Corp		—		—		—			—			—			—		—		—		—
Titan Energy LLC		—		—		(0.6	)		(100.1	)		100.7			—		—		—		—
Other Senior Secured Debt
Advanced Lighting Technologies Inc		—		—		—			—			—			—		—		—		—
JW Aluminum Co		36.3		—		—			—			(0.3	)		36.0		1.8		—		—
Mood Media Corp		39.0		3.9		—			—			(41.8	)		1.1		0.5		—		—
Asset Based Finance
Avida Holding AB		—		0.1		—			—			—			0.1		—		—		—
Equity/Other
Advanced Lighting Technologies Inc, Common Stock		—		—		—			—			—			—		—		—		—
Advanced Lighting Technologies Inc, Warrant		—		—		—			—			—			—		—		—		—
ASG Technologies, Common Stock		30.7		—		—			—			(8.5	)		22.2		—		—		—
ASG Technologies, Warrant		8.6		—		—			—			(4.3	)		4.3		—		—		—
Constellis Holdings LLC		—		18.9		—			—			0.9			19.8		—		—		—
Fairway Group Holdings Corp, Common Stock		—		—		—			—			—			—		—		—		—
HM Dunn Co Inc, Preferred Stock, Series A		—		—		—			—			—			—		—		—		—
HM Dunn Co Inc, Preferred Stock, Series B		—		—		—			—			—			—		—		—		—
JW Aluminum Co, Common Stock		—		—		—			—			—			—		—		—		—
JW Aluminum Co, Preferred Stock		104.1		6.0		—			—			(34.2	)		75.9		—		5.8		—
MB Precision Holdings LLC, Class A—2 Units		—		—		—			—			—			—		—		—		—

See notes to unaudited consolidated financial statements.

15

FS KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2020

(in millions, except share amounts)

Portfolio Company	Fair Value at December 31, 2019		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at June 30, 2020		Interest Income(3)		PIK Income(3)		Fee Income(3)
MB Precision Holdings LLC, Preferred Stock	$	5.6	$	—	$	—		$	—		$	(5.6	)	$	—	$	—	$	—	$	—
Mood Media Corp, Common Stock		1.0		—		—			—			(1.0	)		—		—		—		—
One Call Care Management Inc, Common Stock		1.8		—		—			—			(0.6	)		1.2		—		—		—
One Call Care Management Inc, Preferred Stock A		19.3		—		—			—			(5.7	)		13.6		—		—		—
One Call Care Management Inc, Preferred Stock B		5.8		—		—			—			0.3			6.1		—		0.3		—
Titan Energy LLC, Common Stock		—		—		—			(8.6	)		8.6			—		—		—		—
Warren Resources Inc, Common Stock		8.3		—		—			—			(2.5	)		5.8		—		—		—
Total	$	355.5	$	78.5	$	(18.4	)	$	(108.6	)	$	(11.5	)	$	295.5	$	16.3	$	7.5	$	—

(1) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category.

(2) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(3) Interest, PIK and fee income presented for the six months ended June 30, 2020.

(ae) Under the Investment Company Act of 1940, as amended, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2020, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” and deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the six months ended June 30, 2020:

Portfolio Company	Fair Value at December 31, 2019		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at June 30, 2020		Interest Income(3)		PIK Income(3)		Dividend Income(3)
Asset Based Finance
801 5th Ave, Seattle, Structure Mezzanine	$	47.1	$	—	$	—		$	—	$	—		$	47.1	$	2.2	$	0.4	$	—
801 5th Ave, Seattle, Private Equity		7.8		—		—			—		5.6			13.4		—		—		—
Kilter Finance, Private Equity		—		0.3		—			—		—			0.3		—		—		—
Prime ST LLC, Structured Mezzanine		—		47.2		—			—		—			47.2		0.8		0.9		—
Prime ST LLC, Private Equity		—		6.6		—			—		(4.1	)		2.5		—		—		—
Credit Opportunities Partners, LLC
Credit Opportunities Partners, LLC		510.0		87.5		(0.3	)		—		(22.1	)		575.1		—		—		31.5
Total	$	564.9	$	141.6	$	(0.3	)	$	—	$	(20.6	)	$	685.6	$	3.0	$	1.3	$	31.5

(1) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category.

(2) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(3) Interest, PIK and dividend income presented for the six months ended June 30, 2020.

See notes to unaudited consolidated financial statements.

16

FS KKR Capital Corp. II

Consolidated Schedule of Investments

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)		Footnotes		Industry	Rate(b)		Floor	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Senior Secured Loans—First Lien—114.4%
5 Arch Income Fund 2, LLC			(r)(x)(y)	Diversified Financials		10.5%		11/18/23	$	109.5	$	109.6	$	106.0
5 Arch Income Fund 2, LLC			(r)(s)(x)(y)	Diversified Financials		10.5%		11/18/23		112.9		112.9		109.2
ABB CONCISE Optical Group LLC			(n)(ab)	Retailing		L+500	1.0%	6/15/23		3.6		3.6		3.4
Accuride Corp			(n)(ab)	Capital Goods		L+525	1.0%	11/17/23		9.2		7.9		7.3
Advanced Lighting Technologies Inc			(n)(ad)	Materials		L+750	1.0%	10/4/22		9.0		8.1		5.9
Advantage Sales & Marketing Inc			(n)(ab)	Commercial & Professional Services		L+325	1.0%	7/23/21		30.6		29.0		29.7
All Systems Holding LLC			(f)(k)(l)(m)(n)(o)(p)	Commercial & Professional Services		L+625	1.0%	10/31/23		198.3		198.3		200.4
All Systems Holding LLC			(n)	Commercial & Professional Services		L+625	1.0%	10/31/23		4.4		4.4		4.4
All Systems Holding LLC			(s)	Commercial & Professional Services		L+625	1.0%	10/31/23		10.2		10.2		10.3
Alstom SA			(n)(r)(ab)	Transportation		L+450	1.0%	8/29/21		6.2		6.0		5.8
American Tire Distributors Inc	��		(n)(ab)	Automobiles & Components		L+600, 1.0% PIK (1.0% Max PIK)	1.0%	9/1/23		2.6		2.5		2.6
American Tire Distributors Inc			(n)(ab)	Automobiles & Components		L+750	1.0%	9/2/24		16.3		14.5		14.7
Ammeraal Beltech Holding BV			(n)(r)(ab)	Capital Goods		E+375		7/30/25	€	3.3		3.8		3.6
Apex Group Limited			(r)(s)	Diversified Financials		L+700	1.3%	6/15/23	$	4.6		4.5		4.5
Apex Group Limited			(f)(k)(l)(n)(q)(r)	Diversified Financials		L+700	1.3%	6/15/25		70.4		69.7		70.5
Apex Group Limited			(n)(r)	Diversified Financials		L+700	1.5%	6/15/25	£	23.2		29.5		30.9
Arrotex Australia Group Pty Ltd			(n)(r)	Pharmaceuticals, Biotechnology & Life Sciences		B+525	1.0%	7/10/24	A$	47.8		32.8		33.0
Aspect Software Inc			(s)	Software & Services		L+500	1.0%	7/15/23	$	3.3		3.3		3.3
Aspect Software Inc			(l)(n)(p)	Software & Services		L+500	1.0%	1/15/24		21.2		19.0		19.2
ATX Networks Corp			(j)(n)(o)(r)(ab)	Technology Hardware & Equipment		L+600, 1.0% PIK (1.0% Max PIK)	1.0%	6/11/21		48.8		47.8		45.7
AVF Parent LLC			(n)(t)(u)	Retailing		L+925 PIK (L+925 Max PIK)	1.3%	3/1/24		118.9		114.7		37.5
Belk Inc			(n)(ab)	Retailing		L+675	1.0%	7/31/25		54.3		45.1		38.2
Bellatrix Exploration Ltd			(n)(r)	Energy		10.0%		3/31/20		2.0		2.0		2.0
Bellatrix Exploration Ltd			(r)(s)	Energy		10.0%		3/31/20		0.8		0.8		0.8
Berner Food & Beverage LLC			(n)	Food & Staples Retailing		L+875	1.0%	2/2/23		4.3		4.3		4.3
Borden Dairy Co			(n)(t)(u)	Food, Beverage & Tobacco		L+750	1.0%	7/6/23		105.0		103.3		54.3
Brand Energy & Infrastructure Services Inc			(n)(ab)(ac)	Capital Goods		L+425	1.0%	6/21/24		22.2		21.5		22.2
Bugaboo International BV			(n)(r)	Consumer Durables & Apparel		7.8% PIK (7.8% Max PIK)		3/20/25	€	1.5		1.8		1.7
Caprock Midstream LLC			(n)(ab)	Energy		L+475		11/3/25	$	11.7		11.1		10.8
CEPSA Holdco (Matador Bidco)			(n)(r)(ab)	Energy		L+475		10/15/26		4.8		4.8		4.9
CHS/Community Health Systems, Inc.			(g)(h)(k)(n)(r)(aa)(ab)	Health Care Equipment & Services		8.0%		3/15/26		17.6		17.1		18.1
Cimarron Energy Inc			(n)	Energy		10.0%		6/30/21		7.5		7.5		7.5
Compassus LLC			(n)(ab)(ac)	Health Care Equipment & Services		L+500	1.0%	12/31/26		6.8		6.7		6.8
Conservice LLC			(f)(n)(o)(p)	Consumer Services		L+525		11/29/24		59.5		59.0		59.8
Conservice LLC			(s)	Consumer Services		L+525		11/29/24		2.9		2.9		2.9
Conservice LLC			(s)	Consumer Services		L+525		11/29/24		3.4		3.3		3.4
Constellis Holdings LLC			(f)(n)(o)(p)(t)(u)	Capital Goods		L+625	1.0%	4/15/22		92.8		91.8		61.4
CSafe Global			(n)	Capital Goods		L+650	1.0%	11/1/21		5.9		5.9		5.9
CSafe Global			(s)	Capital Goods		L+650	1.0%	11/1/21		3.2		3.2		3.2
CSafe Global			(f)(k)(l)(n)(p)(q)	Capital Goods		L+650	1.0%	10/31/23		86.4		86.5		85.8
CSafe Global			(s)	Capital Goods		L+650	1.0%	10/31/23		18.3		18.3		18.1
CSM Bakery Products			(l)(n)(ab)	Food, Beverage & Tobacco		L+400	1.0%	7/3/20		7.5		7.2		7.3

See notes to unaudited consolidated financial statements.

17

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
CTI Foods Holding Co LLC	(n)	Food, Beverage & Tobacco	L+700	1.0%	5/3/24	$	—	$	—	$	—
Diamond Resorts International Inc	(l)(n)(ab)	Consumer Services	L+375	1.0%	9/2/23		46.1		43.9		45.2
Distribution International Inc	(n)(ab)	Retailing	L+575	1.0%	12/15/23		13.1		11.8		12.6
Eacom Timber Corp	(n)(r)	Materials	L+650	1.0%	11/30/23		2.6		2.6		2.5
Eagle Family Foods Inc	(n)	Food, Beverage & Tobacco	L+650	1.0%	6/14/23		1.5		1.4		1.4
Eagle Family Foods Inc	(s)	Food, Beverage & Tobacco	L+650	1.0%	6/14/23		6.7		6.7		6.5
Eagle Family Foods Inc	(f)(k)(l)(n)(p)	Food, Beverage & Tobacco	L+650	1.0%	6/14/24		53.7		53.2		52.0
Eagleclaw Midstream Ventures LLC	(n)(ab)	Energy	L+425	1.0%	6/24/24		5.5		5.1		5.1
EaglePicher Technologies LLC	(n)(ab)(ac)	Capital Goods	L+325		3/8/25		—		—		—
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+500		7/23/26		13.9		13.3		13.0
Empire Today LLC	(f)(k)(l)(n)(o)(p)(q)	Retailing	L+650	1.0%	11/17/22		133.9		133.9		133.6
Entertainment Benefits Group LLC	(n)	Media & Entertainment	L+575	1.0%	9/30/24		1.2		1.2		1.2
Entertainment Benefits Group LLC	(s)	Media & Entertainment	L+575	1.0%	9/30/24		4.7		4.7		4.7
Entertainment Benefits Group LLC	(f)(k)(l)(n)	Media & Entertainment	L+575	1.0%	9/30/25		32.6		32.2		32.3
Fairway Group Holdings Corp	(n)(ad)	Food & Staples Retailing	4.0%, 11.0% PIK (11.0% Max PIK)		8/28/23		6.3		6.2		6.3
Fairway Group Holdings Corp	(n)(ad)	Food & Staples Retailing	12.0% PIK (12.0% Max PIK)		11/27/23		11.3		11.3		6.5
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	10.0% PIK (10.0% Max PIK)		11/28/23		7.2		5.6		—
FHC Health Systems Inc	(n)(ab)	Health Care Equipment & Services	L+400	1.0%	12/23/21		8.7		7.6		8.8
Fox Head Inc	(l)(n)(p)	Consumer Durables & Apparel	L+850	1.0%	12/19/20		36.5		36.5		36.1
Frontline Technologies Group LLC	(n)	Software & Services	L+575	1.0%	9/18/23		5.3		5.3		5.3
FullBeauty Brands Holdings Corp	(n)	Retailing	L+1,000	1.0%	2/7/22		0.7		0.7		0.7
FullBeauty Brands Holdings Corp	(n)(ab)	Retailing	L+900	1.0%	2/7/24		4.0		3.9		1.9
Greystone Equity Member Corp	(n)(r)	Diversified Financials	L+725	3.8%	4/1/26		158.3		158.3		154.3
Greystone Equity Member Corp	(r)(s)	Diversified Financials	L+725	3.8%	4/1/26		5.9		5.9		5.8
Heniff Transportation Systems LLC	(n)	Transportation	L+575	1.0%	12/3/24		0.8		0.8		0.8
Heniff Transportation Systems LLC	(s)	Transportation	L+575	1.0%	12/3/24		8.8		8.8		8.8
Heniff Transportation Systems LLC	(f)(l)	Transportation	L+575	1.0%	12/3/26		45.1		45.1		45.1
Heniff Transportation Systems LLC	(k)(l)(n)	Transportation	L+575	1.0%	12/3/26		30.1		29.8		29.8
HM Dunn Co Inc	(n)(t)(u)(ad)	Capital Goods	L+875 PIK (L+875 Max PIK)	1.0%	6/30/21		56.3		44.4		26.0
HM Dunn Co Inc	(n)(ad)	Capital Goods	15.0% PIK (15.0% Max PIK)		6/30/21		5.2		5.2		5.2
Hudson Technologies Co	(n)(r)	Commercial & Professional Services	L+1,025	1.0%	10/10/23		54.6		54.2		31.1
Icynene Group Ltd	(f)(l)(m)(n)(o)(p)(q)	Materials	L+700	1.0%	11/30/24		117.6		117.6		118.8
ID Verde	(n)(r)	Commercial & Professional Services	E+700		3/29/24	€	0.2		0.2		0.2
ID Verde	(n)(r)	Commercial & Professional Services	E+700		3/29/24	£	0.1		0.1		0.1
ID Verde	(n)(r)	Commercial & Professional Services	E+700		3/29/25	€	0.9		1.1		1.1
ID Verde	(n)(r)	Commercial & Professional Services	L+725		3/29/25	£	0.6		0.8		0.8
Industria Chimica Emiliana Srl	(n)(r)	Pharmaceuticals, Biotechnology & Life Sciences	L+650		6/30/26	€	51.8		55.3		56.8
Industria Chimica Emiliana Srl	(r)(s)	Pharmaceuticals, Biotechnology & Life Sciences	E+650		6/30/26		13.6		14.8		14.8
Industry City TI Lessor LP	(n)(p)	Consumer Services	10.8%, 1.0% PIK (1.0% Max PIK)		6/30/26	$	10.6		10.6		11.5
Ivanti Software Inc	(l)(ab)	Software & Services	L+425	1.0%	1/20/24		7.4		7.3		7.4
J S Held LLC	(f)(n)(o)(p)	Insurance	L+600	1.0%	7/1/25		68.8		68.2		68.8
J S Held LLC	(s)	Insurance	L+600	1.0%	7/1/25		16.4		16.4		16.4
J S Held LLC	(n)	Insurance	L+600	1.0%	7/1/25		1.4		1.4		1.4
J S Held LLC	(s)	Insurance	L+600	1.0%	7/1/25		6.4		6.4		6.4

See notes to unaudited consolidated financial statements.

18

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor		Maturity		Principal Amount(c)		Amortized Cost		Fair Value(d)
JC Penney Corp Inc	(n)(r)(ab)	Retailing	L+425		1.0%		6/23/23	$	3.4	$	3.1	$	3.0
Jo-Ann Stores Inc	(n)(ab)	Retailing	L+500		1.0%		10/20/23		11.2		10.3		7.9
Jostens Inc	(n)(ab)	Consumer Services	L+550				12/19/25		16.0		15.8		16.0
Kellermeyer Bergensons Services LLC	(s)	Commercial & Professional Services	L+650		1.0%		2/5/20		31.1		31.1		30.8
Kellermeyer Bergensons Services LLC	(f)(k)(l)(n)(o)(p)	Commercial & Professional Services	L+650		1.0%		11/7/26		135.2		133.9		133.9
Kellermeyer Bergensons Services LLC	(s)	Commercial & Professional Services	L+650		1.0%		11/7/26		40.6		40.6		40.2
Kodiak BP LLC	(f)(k)(l)(m)(n)(o)(p)	Capital Goods	L+725		1.0%		12/1/24		223.1		223.1		223.0
Kodiak BP LLC	(s)	Capital Goods	L+725		1.0%		12/1/24		10.7		10.7		10.7
Laird PLC	(n)(r)(ab)	Technology Hardware & Equipment	L+450				7/9/25		4.4		4.0		4.4
LBM Borrower LLC	(l)(n)(ab)	Capital Goods	L+375		1.0%		8/20/22		13.7		13.4		13.8
LD Intermediate Holdings Inc	(n)(ab)	Software & Services	L+588		1.0%		12/9/22		31.5		29.8		31.6
Lexitas Inc	(s)	Commercial & Professional Services	L+575		1.0%		11/14/25		2.9		2.9		2.9
Lexitas Inc	(k)(l)(n)	Commercial & Professional Services	L+575		1.0%		11/14/25		22.0		21.8		21.8
Lexitas Inc	(s)	Commercial & Professional Services	L+575		1.0%		11/14/25		9.3		9.3		9.2
Lionbridge Technologies Inc	(f)(k)(l)(p)(q)	Consumer Services	L+625		1.0%		12/27/25		115.3		114.7		114.7
Lipari Foods LLC	(f)(n)	Food & Staples Retailing	L+588		1.0%		1/6/25		22.0		22.0		22.0
Lipari Foods LLC	(s)	Food & Staples Retailing	L+588		1.0%		1/6/25		49.9		49.9		49.9
Lipari Foods LLC	(f)(m)(n)(o)(p)	Food & Staples Retailing	L+588		1.0%		1/6/25		151.0		149.7		150.9
MB Precision Holdings LLC	(k)(n)(ad)	Capital Goods	L+725, 2.3% PIK (2.3% Max PIK)		1.3%		1/23/21		21.5		21.0		21.4
MedAssets Inc	(n)(ab)	Health Care Equipment & Services	L+450		1.0%		10/20/22		0.1		0.1		0.1
MI Windows & Doors Inc	(n)(ab)	Capital Goods	L+550		1.0%		11/6/26		20.0		19.0		20.1
Mitel US Holdings Inc	(n)(ab)	Technology Hardware & Equipment	L+450				11/30/25		0.3		0.3		0.3
Monitronics International Inc	(f)(n)(ab)(ac)	Commercial & Professional Services	L+650		1.3%		3/29/24		36.1		34.8		30.8
Monitronics International Inc	(f)(n)(ab)	Commercial & Professional Services	L+500		1.5%		7/3/24		17.8		17.8		17.8
Monitronics International Inc	(n)(ab)	Commercial & Professional Services	L+500		1.5%		7/3/24		7.7		7.7		7.7
Monitronics International Inc	(s)(ab)	Commercial & Professional Services	L+500		1.5%		7/3/24		62.3		62.3		62.3
Motion Recruitment Partners LLC	(n)	Commercial & Professional Services	L+600		1.0%		12/20/25		43.9		43.5		43.5
Motion Recruitment Partners LLC	(s)	Commercial & Professional Services	L+600		1.0%		12/20/25		7.9		7.9		7.9
Motion Recruitment Partners LLC	(s)	Commercial & Professional Services	L+600		1.0%		12/20/25		34.6		34.6		34.6
Multi-Color Corp	(n)(r)(ab)	Commercial & Professional Services	6.8%				7/15/26		10.4		10.4		11.0
NaviHealth Inc.	(n)(ab)	Health Care Equipment & Services	L+500				8/1/25		24.9		24.2		24.9
NCI Inc	(n)	Software & Services	L+750		1.0%		8/15/24		4.2		4.2		4.1
North Haven Cadence Buyer Inc	(s)	Consumer Services	L+500		1.0%		9/2/21		3.6		3.6		3.6
North Haven Cadence Buyer Inc	(f)(k)(n)(p)	Consumer Services	L+650		1.0%		9/2/22		44.0		44.0		44.0
North Haven Cadence Buyer Inc	(s)	Consumer Services	L+650		1.0%		9/2/22		10.7		10.7		10.7
North Haven Cadence Buyer Inc	(f)(l)(n)(o)(p)	Consumer Services	L+793		1.0%		9/2/22		72.5		72.5		72.5
One Call Care Management Inc	(n)(ab)(ad)	Insurance	L+525		1.0%		11/27/22		2.9		2.5		2.7
Ontic Engineering & Manufacturing Inc	(n)(ab)	Capital Goods	L+475				10/30/26		1.9		1.9		1.9
Ontic Engineering & Manufacturing Inc	(s)(ab)	Capital Goods	L+238				10/31/26		0.3		0.3		0.3
Onvoy LLC	(n)(ab)	Telecommunication Services	L+450		1.0%		2/10/24		0.2		0.1		0.1
P2 Energy Solutions, Inc.	(n)(ab)	Software & Services	L+375		1.0%		10/30/20		2.5		2.4		2.5
PAE Holding Corp	(n)(ab)	Capital Goods	L+550		1.0%		10/20/22		7.3		7.4		7.4
Peak 10 Holding Corp	(k)(n)(ab)	Telecommunication Services	L+350				8/1/24		22.4		20.2		18.7
PF Chang’s China Bistro Inc	(n)(ab)	Consumer Services	L+625				3/1/26		14.9		14.8		12.2

See notes to unaudited consolidated financial statements.

19

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor		Maturity		Principal Amount(c)		Amortized Cost		Fair Value(d)
Power Distribution Inc	(f)(n)	Capital Goods	L+725		1.3%		1/25/23	$	65.1	$	65.1	$	60.6
Production Resource Group LLC	(k)(l)(m)(n)(p)	Media & Entertainment	L+700		1.0%		8/21/24		381.0		381.0		306.2
Project Marron	(n)(r)	Consumer Services	B+625				7/3/25	A$	36.5		23.9		25.7
Project Marron	(f)(n)(r)	Consumer Services	L+625				7/2/25	C$	28.7		21.9		22.4
Propulsion Acquisition LLC	(f)(l)(m)(n)(p)(q)	Capital Goods	L+600		1.0%		7/13/21	$	113.9		112.4		112.9
PSKW LLC	(n)(o)(p)	Health Care Equipment & Services	L+768		1.0%		11/25/21		16.5		16.5		16.5
PSKW LLC	(l)(m)(n)(o)(p)(q)	Health Care Equipment & Services	L+768		1.0%		11/25/21		191.6		191.6		191.6
PSKW LLC	(m)(n)	Health Care Equipment & Services	L+768		1.0%		11/25/21		20.4		20.2		20.4
Qdoba Restaurant Corp	(n)(ab)	Consumer Services	L+700		1.0%		3/21/25		2.0		1.9		2.0
Quorum Health Corp	(n)(ab)	Health Care Equipment & Services	L+675		1.0%		4/29/22		7.6		7.6		7.5
Reliant Rehab Hospital Cincinnati LLC	(f)(n)(o)(p)	Health Care Equipment & Services	L+675		1.0%		9/2/24		118.0		117.1		115.6
Roadrunner Intermediate Acquisition Co LLC	(l)(m)(o)(q)	Health Care Equipment & Services	L+675		1.0%		3/15/23		96.4		96.4		94.7
RSC Insurance Brokerage Inc	(f)(k)(l)(n)(o)(p)	Insurance	L+550		1.0%		11/1/26		90.0		89.1		89.1
RSC Insurance Brokerage Inc	(s)	Insurance	L+550		1.0%		11/1/26		22.7		22.5		22.5
RSC Insurance Brokerage Inc	(s)	Insurance	L+550		1.0%		11/1/26		3.7		3.6		3.6
Safariland LLC	(n)	Capital Goods	L+775		1.1%		11/18/23		2.2		2.2		2.1
Safariland LLC	(f)(k)(l)(n)(p)	Capital Goods	L+775		1.1%		11/18/23		115.7		115.7		109.0
Savers Inc	(f)(n)(o)(p)	Retailing	L+650, 0.8% PIK (0.8% Max PIK)		1.5%		3/28/24		52.7		52.1		52.2
Savers Inc	(f)(n)	Retailing	L+700, 0.8% PIK (0.8% Max PIK)		1.5%		3/28/24	C$	73.1		53.9		57.4
Sequa Corp	(n)(ab)(ac)	Materials	L+500		1.0%		11/28/21	$	30.2		29.8		30.2
Sequel Youth & Family Services LLC	(f)(o)(p)	Health Care Equipment & Services	L+700		1.0%		9/1/23		15.6		15.6		15.6
Sequel Youth & Family Services LLC	(f)(l)(n)(p)	Health Care Equipment & Services	L+800				9/1/23		90.0		90.0		90.1
Sequential Brands Group Inc.	(k)(l)(n)	Consumer Durables & Apparel	L+875				2/7/24		213.9		210.6		210.4
SI Group Inc	(n)(ab)	Materials	L+475				10/15/25		2.0		1.9		2.0
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+550				8/4/25		6.6		6.4		6.5
Smart Foodservice	(n)(ab)	Food & Staples Retailing	L+475				6/20/26		5.8		5.7		5.8
Smart & Final Stores LLC	(m)(n)(ab)	Food & Staples Retailing	L+675				6/20/25		28.0		25.4		27.1
SMART Global Holdings Inc	(r)(s)	Semiconductors & Semiconductor Equipment	L+400				2/9/21		0.1		0.1		0.1
SMART Global Holdings Inc	(n)(r)	Semiconductors & Semiconductor Equipment	L+625		1.0%		8/9/22		3.2		3.2		3.2
Sorenson Communications LLC	(f)(k)(m)(n)(ab)	Telecommunication Services	L+650				4/29/24		78.6		75.8		78.2
Staples Canada	(n)(r)	Retailing	L+700		1.0%		9/12/24	C$	4.4		3.6		3.5
Sungard Availability Services Capital Inc	(n)	Software & Services	L+750		1.0%		2/3/22		2.4		2.3		2.5
Sungard Availability Services Capital Inc	(s)	Software & Services	L+750		1.0%		2/3/22		2.4		2.3		2.5
Sutherland Global Services Inc	(n)(p)(r)(ab)	Software & Services	L+538		1.0%		4/23/21		26.9		26.1		26.7
Swift Worldwide Resources Holdco Ltd	(k)(n)(q)	Energy	9.5% L+150 PIK (L+150 Max PIK)		2.5%		7/20/21		37.6		37.6		37.6
Syncsort Inc	(n)(ab)	Software & Services	L+600		1.0%		8/16/24		9.5		8.7		9.1
Tangoe LLC	(f)(n)(o)(p)	Software & Services	L+650		1.0%		11/28/25		102.7		101.8		102.8
Team Health Inc	(n)(ab)	Health Care Equipment & Services	L+275		1.0%		2/6/24		1.1		1.1		0.9
Torrid Inc	(f)(k)(l)(n)	Retailing	L+675		1.0%		12/14/24		40.0		39.6		40.2
Total Safety US Inc	(f)(n)(ab)	Capital Goods	L+600		1.0%		8/16/25		9.1		8.2		8.6
Trace3 Inc	(f)(k)(l)(n)(o)(p)	Software & Services	L+675		1.0%		8/3/24		169.8		169.8		168.3
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	A$	63.0		41.8		43.4
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	£	7.7		9.8		10.1
Transaction Services Group Ltd	(r)(s)	Consumer Services	L+600				10/15/26	$	26.6		26.6		26.1
Truck-Lite Co LLC	(s)	Automobiles & Components	L+625		1.0%		12/13/24		13.7		13.5		13.5

See notes to unaudited consolidated financial statements.

20

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor	Maturity		Principal Amount(c)		Amortized Cost			Fair Value(d)
Truck-Lite Co LLC	(f)(k)(n)(o)(p)	Automobiles & Components	L+625	1.0%		12/13/26	$	127.9	$	126.7		$	126.6
Truck-Lite Co LLC	(s)	Automobiles & Components	L+625	1.0%		12/13/26		18.8		18.6			18.6
Vertiv Group Corp	(n)(ab)	Technology Hardware & Equipment	L+400	1.0%		11/30/23		16.5		15.7			16.5
Virgin Pulse Inc	(f)(l)(m)(n)(o)(p)	Software & Services	L+650	1.0%		5/22/25		159.4		158.4			159.5
Vivint Inc	(l)(n)(ab)	Commercial & Professional Services	L+500			4/1/24		20.8		20.0			20.8
Warren Resources Inc	(n)(ad)	Energy	L+1,000, 1.0% PIK (1.0% Max PIK)	1.0%		5/22/20		21.0		21.0			21.0
West Corp	(l)(ab)	Software & Services	L+350	1.0%		10/10/24		4.9		4.4			4.1
West Corp	(l)(o)(ab)	Software & Services	L+400	1.0%		10/10/24		19.6		18.1			16.7
Wheels Up Partners LLC	(n)	Transportation	L+855	1.0%		1/26/21		0.6		0.6			0.6
Wheels Up Partners LLC	(n)	Transportation	L+855	1.0%		8/26/21		0.3		0.3			0.3
Wheels Up Partners LLC	(n)	Transportation	L+710	1.0%		6/30/24		1.1		1.1			1.1
Wheels Up Partners LLC	(n)	Transportation	L+710	1.0%		11/1/24		0.4		0.4			0.4
Wheels Up Partners LLC	(n)	Transportation	L+710	1.0%		12/21/24		1.7		1.7			1.7
WireCo WorldGroup Inc	(n)(ab)	Capital Goods	L+500	1.0%		9/29/23		0.1		0.1			0.1
Zeta Interactive Holdings Corp	(m)(n)(o)(p)(q)	Software & Services	L+750	1.0%		7/29/22		122.2		122.2			122.2
Zeta Interactive Holdings Corp	(s)	Software & Services	L+750	1.0%		7/29/22		4.4		4.4			4.4
Total Senior Secured Loans—First Lien										6,596.0			6,295.8
Unfunded Loan Commitments										(578.6	)		(578.6	)
Net Senior Secured Loans—First Lien										6,017.4			5,717.2
Senior Secured Loans—Second Lien—16.2%
Access CIG LLC	(n)(ab)	Software & Services	L+775			2/27/26	$	1.5	$	1.5		$	1.5
Advantage Sales & Marketing Inc	(n)(ab)	Commercial & Professional Services	L+650	1.0%		7/25/22		7.2		6.2			6.5
Albany Molecular Research Inc	(n)(ab)	Pharmaceuticals, Biotechnology & Life Sciences	L+700	1.0%		8/30/25		0.9		0.9			0.9
American Bath Group LLC	(l)(n)(ab)	Capital Goods	L+975	1.0%		9/30/24		10.0		9.6			10.0
Ammeraal Beltech Holding BV	(f)(n)(o)(r)	Capital Goods	L+800			7/27/26		51.3		50.4			49.5
Applied Systems Inc	(n)(ab)	Software & Services	L+700	1.0%		9/19/25		2.6		2.6			2.7
Arena Energy LP	(l)(n)(o)(p)	Energy	L+900, 4.0% PIK (4.0% Max PIK)	1.0%		1/24/21		53.9		53.9			52.4
athenahealth Inc	(f)(m)(n)(p)	Health Care Equipment & Services	L+850			2/11/27		129.2		128.0			131.8
BCA Marketplace PLC	(n)(r)	Retailing	L+825			9/24/27	£	30.2		37.3			39.5
Bellatrix Exploration Ltd	(n)(r)(t)(u)	Energy	8.5%			9/11/23	$	13.5		12.3			4.3
Bellatrix Exploration Ltd	(n)(r)	Energy	8.5%			9/11/23		5.6		5.6			5.6
Byrider Finance LLC	(n)	Automobiles & Components	L+1,000, 0.5% PIK (4.0% Max PIK)	1.3%		6/7/22		35.8		35.8			35.9
CDS US Intermediate Holdings Inc	(l)(n)(r)(ab)	Media & Entertainment	L+825	1.0%		7/10/23		18.0		16.4			15.1
Chisholm Oil & Gas Operating LLC	(n)(p)	Energy	L+550, 3.0% PIK (3.0% Max PIK)	1.3%		3/21/24		38.3		38.0			28.9
CommerceHub Inc	(n)	Software & Services	L+775			5/21/26		3.2		3.1			3.2
Dayton Superior Corp	(n)	Materials	L+700	2.0%		12/3/24		1.7		1.6			1.6
EaglePicher Technologies LLC	(n)(ab)	Capital Goods	L+725			3/8/26		0.4		0.4			0.4
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+900			7/23/27		3.9		3.7			3.7
Emerald Performance Materials LLC	(l)(n)(ab)	Materials	L+775	1.0%		8/1/22		10.0		9.9			9.8
Excelitas Technologies Corp	(l)(n)(ab)	Technology Hardware & Equipment	L+750	1.0%		12/1/25		13.3		13.3			12.9
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	11.0% PIK (11.0% Max PIK)			2/24/24		6.5		5.0			—
Gruden Acquisition Inc	(m)(p)(ab)	Transportation	L+850	1.0%		8/18/23		25.0		24.4			24.8
Invictus	(n)(ab)	Materials	L+675			3/30/26		0.1		0.1			0.1

See notes to unaudited consolidated financial statements.

21

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor	Maturity		Principal Amount(c)		Amortized Cost		Fair Value(d)
LBM Borrower LLC	(l)(n)(p)(q)(ab)	Capital Goods	L+925	1.0%		8/20/23	$	58.6	$	57.6	$	57.8
Misys Ltd	(n)(r)(ab)	Software & Services	L+725	1.0%		6/13/25		7.3		7.2		7.1
NEP Broadcasting LLC	(n)(ab)	Media & Entertainment	L+700			10/19/26		5.6		5.4		5.1
New Arclin US Holding Corp	(n)(r)(ab)	Materials	L+875	1.0%		2/14/25		0.3		0.3		0.3
OEConnection LLC	(f)(n)	Software & Services	L+825			9/25/27		42.9		42.5		42.6
Ontic Engineering & Manufacturing Inc	(f)(n)	Capital Goods	L+850			10/29/27		26.8		26.3		26.3
OPE Inmar Acquisition Inc	(l)(n)(ab)	Software & Services	L+800	1.0%		5/1/25		24.6		24.1		23.1
P2 Energy Solutions, Inc.	(n)(ab)	Software & Services	L+800	1.0%		4/30/21		14.5		14.6		14.2
Paradigm Acquisition Corp	(n)(ab)	Health Care Equipment & Services	L+750			10/26/26		3.7		3.7		3.7
Peak 10 Holding Corp	(n)(ab)	Telecommunication Services	L+725	1.0%		8/1/25		11.9		11.1		7.5
Polyconcept North America Inc	(n)	Household & Personal Products	L+1,000	1.0%		2/16/24		0.6		0.6		0.6
Pure Fishing Inc	(f)(n)	Consumer Durables & Apparel	L+838	1.0%		12/31/26		45.9		45.5		39.6
Rise Baking Company	(f)(l)(n)	Food, Beverage & Tobacco	L+800	1.0%		8/9/26		17.6		17.5		17.3
Sequa Corp	(n)(ab)	Materials	L+900	1.0%		4/28/22		11.5		11.2		11.3
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+950			8/3/26		5.7		5.1		5.5
Sorenson Communications LLC	(n)(o)(p)	Telecommunication Services	11.5% PIK (11.5% Max PIK)			4/30/25		15.4		15.4		15.4
Sparta Systems Inc	(n)	Software & Services	L+825	1.0%		7/27/25		2.4		2.4		2.2
Sungard Availability Services Capital Inc	(m)(n)	Software & Services	L+400, 2.5% PIK (2.5% Max PIK)	1.0%		11/3/22		12.6		12.6		12.6
Titan Energy LLC	(n)(t)(u)(ad)	Energy	L+1,300 PIK (L+1,300 Max PIK)	1.0%		2/23/20		137.2		100.7		—
Transplace	(n)(ab)	Transportation	L+875	1.0%		10/6/25		3.3		3.2		3.1
Vantage Specialty Chemicals Inc	(n)(ab)	Materials	L+825	1.0%		10/27/25		0.8		0.7		0.7
WireCo WorldGroup Inc	(n)(ab)	Capital Goods	L+900	1.0%		9/30/24		12.5		12.5		11.4
Wittur Holding GmbH	(n)(r)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)			9/23/27	€	55.2		60.5		60.2
Total Senior Secured Loans—Second Lien										940.7		808.7
Other Senior Secure Debt—4.6%
Advanced Lighting Technologies Inc	(n)(t)(u)(ad)	Materials	L+1,700 PIK (L+1,700 Max PIK)	1.0%		10/4/23	$	14.4		10.7		—
APTIM Corp	(g)(n)(ab)	Diversified Financials	7.8%			6/15/25		8.2		8.2		4.9
Black Swan Energy Ltd	(n)(r)	Energy	9.0%			1/20/24		4.0		4.0		4.0
Cleaver-Brooks Inc	(n)(ab)	Capital Goods	7.9%			3/1/23		0.3		0.3		0.3
Cornerstone Chemical Co	(n)(ab)	Materials	6.8%			8/15/24		2.7		2.7		2.4
Diamond Resorts International Inc	(m)(ab)	Consumer Services	7.8%			9/1/23		12.0		12.0		12.3
Enterprise Development Authority	(g)(h)(n)(aa)(ab)	Consumer Services	12.0%			7/15/24		8.2		8.5		9.4
FourPoint Energy LLC	(n)(p)	Energy	9.0%			12/31/21		46.3		45.6		44.0
Genesys Telecommunications Laboratories Inc	(g)(h)(n)(aa)(ab)	Technology Hardware & Equipment	10.0%			11/30/24		2.6		2.8		2.8
JC Penney Corp Inc	(g)(h)(n)(r)(aa)(ab)	Retailing	5.7%			6/1/20		0.3		0.3		0.3
JW Aluminum Co	(g)(n)(p)(ab)(ad)	Materials	10.3%			6/1/26		34.5		34.5		36.3
Lycra	(g)(h)(n)(r)(aa)(ab)	Consumer Durables & Apparel	7.5%			5/1/25		16.4		16.4		13.2
Mood Media Corp	(n)(ad)	Media & Entertainment	L+1,400 PIK (L+1,400 Max PIK)			12/31/23		40.6		39.5		39.0
Pattonair Holdings Ltd	(g)(h)(n)(r)(aa)(ab)	Capital Goods	9.0%			11/1/22		16.5		16.9		17.3
TruckPro LLC	(g)(h)(n)(aa)(ab)	Capital Goods	11.0%			10/15/24		7.9		7.4		8.2
Velvet Energy Ltd	(n)(r)	Energy	9.0%			10/5/23		7.5		7.5		7.7
Vivint Inc	(g)(h)(k)(m)(n)(aa)(ab)	Commercial & Professional Services	7.9%			12/1/22		25.5		25.2		25.8
Total Other Senior Secured Debt										242.5		227.9

See notes to unaudited consolidated financial statements.

22

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor	Maturity		Principal Amount(c)		Amortized Cost		Fair Value(d)
Subordinated Debt—9.8%
All Systems Holding LLC	(n)	Commercial & Professional Services	10.0% PIK (10.0% Max PIK)			10/31/22	$	0.3	$	0.3	$	0.3
Ascent Resources Utica Holdings LLC / ARU Finance Corp	(g)(h)(aa)(ab)	Energy	10.0%			4/1/22		26.0		26.0		25.9
athenahealth Inc	(n)	Health Care Equipment & Services	L+1,125 PIK (L+1,125 Max PIK)			2/11/27		72.6		72.6		73.1
Avantor Inc	(g)(m)(n)(o)(ab)	Pharmaceuticals, Biotechnology & Life Sciences	9.0%			10/1/25		85.0		85.6		95.2
Byrider Finance LLC	(n)	Automobiles & Components	20.0% PIK (20.0% Max PIK)			3/31/22		2.3		2.3		2.3
Calumet Specialty Products	(h)(n)(r)(aa)(ab)	Energy	7.8%			4/15/23		10.3		10.3		10.3
ClubCorp Club Operations Inc	(g)(h)(n)(aa)(ab)	Consumer Services	8.5%			9/15/25		31.8		30.9		27.8
Craftworks Rest & Breweries Group Inc	(n)	Consumer Services	12.0% PIK (12.0% Max PIK)			11/1/24		6.2		6.2		4.7
Diamond Resorts International Inc	(g)(h)(aa)(ab)	Consumer Services	10.8%			9/1/24		4.4		4.6		4.6
GFL Environmental Inc	(g)(h)(n)(r)(aa)(ab)	Commercial & Professional Services	8.5%			5/1/27		13.4		13.7		14.7
Intelsat Jackson Holdings SA	(g)(h)(n)(r)(aa)(ab)	Media & Entertainment	5.5%			8/1/23		11.1		10.2		9.5
Kenan Advantage Group Inc	(n)(ab)	Transportation	7.9%			7/31/23		19.2		17.0		18.8
LifePoint Hospitals Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	9.8%			12/1/26		24.8		25.2		28.1
Montage Resources Corp	(h)(n)(r)(aa)(ab)	Energy	8.9%			7/15/23		16.4		16.2		15.1
MultiPlan Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	7.1%			6/1/24		17.1		17.2		16.6
Nouryon (fka Akzo Nobel Specialty Chemicals)	(g)(h)(n)(r)(aa)(ab)	Materials	8.0%			10/1/26		15.3		15.3		16.3
PAREXEL International Corp	(g)(h)(n)(aa)(ab)	Pharmaceuticals, Biotechnology & Life Sciences	6.4%			9/1/25		0.8		0.8		0.8
Plastipak Holdings Inc	(g)(h)(n)(aa)(ab)	Materials	6.3%			10/15/25		2.4		2.2		2.1
Ply Gem Holdings Inc	(g)(h)(n)(aa)(ab)	Capital Goods	8.0%			4/15/26		19.1		18.3		20.0
Quorum Health Corp	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	11.6%			4/15/23		6.0		6.0		5.1
SRS Distribution Inc	(g)(h)(n)(p)(aa)(ab)	Capital Goods	8.3%			7/1/26		28.5		28.2		29.5
Team Health Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	6.4%			2/1/25		20.5		18.3		13.8
Vertiv Group Corp	(g)(h)(aa)(ab)	Technology Hardware & Equipment	9.3%			10/15/24		23.7		23.4		25.6
Vivint Inc	(g)(h)(m)(n)(p)(aa)(ab)	Commercial & Professional Services	8.8%			12/1/20		15.5		15.1		15.5
Vivint Inc	(g)(h)(n)(aa)(ab)	Commercial & Professional Services	7.6%			9/1/23		14.3		13.3		13.5
Total Subordinated Debt										479.2		489.2

See notes to unaudited consolidated financial statements.

23

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor	Maturity	Principal Amount(c)/ Number of Shares		Cost			Fair Value(d)
Asset Based Finance—9.7%
801 5th Ave, Seattle, Structure Mezzanine	(n)(r)(ae)	Real Estate	8.0%, 0.0% PIK (3.0% Max PIK)		12/19/29	$	47.1	$	47.1		$	47.1
801 5th Ave, Seattle, Private Equity	(n)(r)(t)(ae)	Real Estate					7,819,411		7.8			7.8
Abacus JV, Private Equity	(n)(r)	Insurance					31,301,941		31.3			31.3
Accelerator Investments Aggregator LP, Private Equity	(n)(r)(t)	Diversified Financials					153,628		0.2			0.2
Altavair Air Finance, Private Equity	(n)(r)	Capital Goods					10,964,023		11.0			11.2
Australis Maritime, Common Stock	(n)(r)(t)	Transportation					10,790,511		10.8			10.8
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		1/30/25	$	2.3		2.1			2.3
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		4/30/25	$	14.6		13.6			14.6
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		9/3/25	$	3.0		2.8			3.0
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		9/29/25	$	2.8		2.6			2.8
Global Jet Capital LLC, Structured Mezzanine	(i)(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		12/4/25	$	85.4		79.6			85.4
Global Jet Capital LLC, Structured Mezzanine	(i)(n)(r)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		12/4/25	$	19.0		17.7			19.0
Global Jet Capital LLC, Structured Mezzanine	(i)(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		12/9/25	$	2.0		1.8			2.0
Global Jet Capital LLC, Structured Mezzanine	(i)(n)(r)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		12/9/25	$	15.1		14.1			15.1
Global Jet Capital LLC, Structured Mezzanine	(i)(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		1/29/26	$	7.3		6.8			7.3
Global Jet Capital LLC, Structured Mezzanine	(i)(n)(r)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		1/29/26	$	1.6		1.5			1.6
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		2/17/26	$	19.7		18.3			19.7
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		4/14/26	$	12.2		11.4			12.2
Global Jet Capital LLC, Structured Mezzanine	(n)	Commercial & Professional Services	15.0% PIK (15.0% Max PIK)		12/2/26	$	20.7		19.3			20.7
Global Jet Capital LLC, Preferred Stock	(i)(n)(t)	Commercial & Professional Services					76,447,526		76.4			9.6
Global Lending Services LLC, Private Equity	(n)(r)(t)	Diversified Financials					8,092,505		8.1			8.1
Home Partners JV, Structured Mezzanine	(n)(r)	Real Estate	11.0% PIK (11.0% Max PIK)		3/25/29	$	30.1		30.1			30.1
Home Partners JV, Structured Mezzanine	(r)(s)	Real Estate	11.0% PIK (11.0% Max PIK)		3/25/29	$	22.3		22.3			22.3
Home Partners JV, Common Stock	(n)(r)(t)	Real Estate					15,059,448		15.1			16.0
Home Partners JV, Private Equity	(n)(r)(t)(ab)	Real Estate					706,596		0.7			0.1
KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest	(n)(r)	Capital Goods					5,432,797		5.4			6.4
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	8.0%		6/22/22	€	9.3		10.6			10.4
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	8.0%		6/22/22	$	19.5		19.5			19.5
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	12.0%		6/22/22	€	5.9		6.7			6.6
Lenovo Group Ltd, Structured Mezzanine	(n)(r)	Technology Hardware & Equipment	12.0%		6/22/22	$	12.4		12.4			12.4
NewStar Clarendon 2014-1A Class D	(n)(r)(t)	Diversified Financials			1/25/27	$	8.3		4.6			3.3
Pretium Partners LLC P1, Structured Mezzanine	(n)(r)	Real Estate	2.8%, 5.3% PIK (5.3% Max PIK)		10/22/26	$	6.5		6.5			6.5
Pretium Partners LLC P2, Structured Mezzanine	(n)(r)	Real Estate	2.0%, 7.5% PIK (7.5% Max PIK)		5/29/25	$	14.3		14.3			14.4
Sofi Lending Corp, 2019-C R1	(n)(r)	Diversified Financials			11/16/48	$	26.7		15.1			15.2
Toorak Capital Funding LLC, Membership Interest	(n)(r)	Diversified Financials					N/A		9.9			12.6
Total Asset Based Finance									557.5			507.6
Unfunded Loan Commitments									(22.3	)		(22.3	)
Net Asset Based Finance									535.2			485.3

See notes to unaudited consolidated financial statements.

24

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor	Maturity	Principal Amount(c)/ Number of Shares		Cost		Fair Value(d)
Credit Opportunities Partners, LLC—10.2%
Credit Opportunities Partners, LLC	(n)(r)(ae)	Diversified Financials				$	503.1	$	503.4	$	510.0
Total Credit Opportunities Partners, LLC									503.4		510.0
Equity/Other—7.1%(e)
Abaco Energy Technologies LLC, Preferred Stock	(n)(t)	Energy					12,734,481		0.6		5.3
Abaco Energy Technologies LLC, Common Stock	(n)(t)	Energy					3,055,556		3.1		1.0
Advanced Lighting Technologies Inc, Common Stock	(n)(t)(ad)	Materials					265,747		7.5		—
Advanced Lighting Technologies Inc, Warrant	(n)(t)(ad)	Materials			10/4/27		4,189		—		—
All Systems Holding LLC, Common Stock	(n)(t)	Commercial & Professional Services					1,880,308		1.8		2.5
ASG Technologies, Common Stock	(n)(t)(ad)	Software & Services					625,178		13.5		30.7
ASG Technologies, Warrant	(n)(t)(ad)	Software & Services			6/27/22		314,110		9.0		8.6
Aspect Software Inc, Common Stock	(l)(n)(p)(t)	Software & Services					1,148,694		1.9		2.0
Aspect Software Inc, Warrant	(l)(n)(p)(t)	Software & Services			1/15/24		1,146,890		—		—
ATX Networks Corp, Common Stock	(n)(r)(t)	Technology Hardware & Equipment					83,488		0.1		0.1
Bellatrix Exploration Ltd, Warrant	(n)(r)(t)	Energy			9/11/23		382,476		—		—
Byrider Finance LLC, Common Stock	(n)(t)	Automobiles & Components					1,667		—		—
Catalina Marketing Corp, Common Stock	(n)(t)	Media & Entertainment					6,522		—		—
Chisholm Oil & Gas Operating LLC, Series A Units	(t)(v)(w)(z)	Energy					225,000		0.2		—
Cimarron Energy Inc, Common Stock	(n)(t)	Energy					4,302,293		3.9		0.3
Cimarron Energy Inc, Participation Option	(n)(t)	Energy					25,000,000		1.3		1.6
Crossmark Holdings Inc, Warrant	(n)(t)	Commercial & Professional Services					8,358		—		—
CSafe Global, Common Stock	(n)(t)	Capital Goods					608,700		0.6		1.0
CTI Foods Holding Co LLC, Common Stock	(n)(t)	Food, Beverage & Tobacco					56		—		—
Dayton Superior Corp, Common Stock	(n)(t)	Materials					14,552		0.9		0.9
Dayton Superior Corp, Warrants	(n)(t)	Materials			12/2/21		3,675		—		—
Empire Today LLC, Common Stock	(n)(t)	Retailing					630		1.9		3.5
Envigo Laboratories Inc, Series A Warrant	(p)(t)	Health Care Equipment & Services			4/29/24		10,924		—		—
Envigo Laboratories Inc, Series B Warrant	(p)(t)	Health Care Equipment & Services			4/29/24		17,515		—		—
Fairway Group Holdings Corp, Common Stock	(n)(t)(ad)	Food & Staples Retailing					103,091		3.3		—
FourPoint Energy LLC, Common Stock, Class C—II—A Units	(t)(v)	Energy					13,000		13.0		1.4
FourPoint Energy LLC, Common Stock, Class D Units	(t)(v)	Energy					2,437		1.6		0.3
FourPoint Energy LLC, Common Stock, Class E—II Units	(t)(v)	Energy					29,730		7.4		3.1
FourPoint Energy LLC, Common Stock, Class E—III Units	(t)(v)	Energy					43,875		11.0		4.6
Fox Head Inc, Common Stock	(i)(n)(t)	Consumer Durables & Apparel					10,000,000		10.0		0.9
FullBeauty Brands Holdings Corp, Common Stock	(n)(t)	Retailing					20,297		0.1		—
Harvey Industries Inc, Common Stock	(n)(t)	Capital Goods					2,666,667		2.7		6.7
HM Dunn Co Inc, Preferred Stock, Series A	(n)(p)(t)(ad)	Capital Goods					14,786		—		—
HM Dunn Co Inc, Preferred Stock, Series B	(n)(p)(t)(ad)	Capital Goods					14,786		—		—
JHC Acquisition LLC, Common Stock	(n)(t)	Capital Goods					9,517		9.5		15.5
JSS Holdings Ltd, Net Profits Interest	(n)(t)	Capital Goods					54		—		1.6

See notes to unaudited consolidated financial statements.

25

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company(a)	Footnotes		Industry	Rate(b)		Floor	Maturity		Principal Amount(c)/ Number of Shares		Cost		Fair Value(d)
JW Aluminum Co, Common Stock		(i)(n)(t)(ad)	Materials						$	631	$	—	$	—
JW Aluminum Co, Preferred Stock		(i)(n)(ad)	Materials		12.5% PIK			2/15/28		6,875		52.6		104.1
MB Precision Holdings LLC, Class A—2 Units		(t)(v)(ad)	Capital Goods							6,655,178		2.3		—
MB Precision Holdings LLC, Preferred Stock		(t)(v)(ad)	Capital Goods							41,778,909		8.8		5.6
Misys Ltd, Preferred Stock		(n)(r)(t)	Software & Services		L+1,025					2,841		2.8		2.8
Mood Media Corp, Common Stock		(n)(t)(ad)	Media & Entertainment							17,400,835		12.6		1.0
North Haven Cadence Buyer Inc, Common Stock		(n)(t)	Consumer Services							3,958,333		4.0		8.5
One Call Care Management Inc, Common Stock		(n)(t)(ad)	Insurance							2,604,293,203		1.8		1.8
One Call Care Management Inc, Preferred Stock A		(n)(t)(ad)	Insurance							277,791		19.3		19.3
One Call Care Management Inc, Preferred Stock B		(n)(ad)	Insurance		9.0% PIK (9.0% Max PIK)			10/25/29		5,729,445		5.8		5.8
Polyconcept North America Inc, Class A—1 Units		(n)(t)	Household & Personal Products							624		0.1		0.1
Power Distribution Inc, Common Stock		(n)(t)	Capital Goods							4,530,006		3.9		1.8
Professional Plumbing Group Inc, Common Stock		(i)(t)	Materials							3,000,000		3.0		9.0
Ridgeback Resources Inc, Common Stock		(i)(n)(r)(t)	Energy							1,644,464		10.1		8.7
Sequential Brands Group Inc., Common Stock		(i)(n)(t)(ab)	Consumer Durables & Apparel							534,076		7.2		0.2
Sorenson Communications LLC, Common Stock		(i)(n)(t)	Telecommunication Services							43,796		—		33.6
SSC (Lux) Limited S.a r.l., Common Stock		(n)(r)(t)	Health Care Equipment & Services							125,000		2.5		3.9
Sungard Availability Services Capital Inc, Common Stock		(m)(n)(o)(t)	Software & Services							217,659		15.2		14.2
Sunnova Energy International Inc, Common Stock		(n)(t)(ab)	Energy							487,528		5.5		5.4
Swift Worldwide Resources Holdco Ltd, Common Stock		(n)(t)	Energy							1,250,000		2.0		0.5
Templar Energy LLC, Common Stock		(i)(t)(v)(w)(ab)	Energy							847,547		7.2		0.1
Templar Energy LLC, Preferred Stock		(i)(n)(t)(ab)	Energy							561,819		5.6		—
Titan Energy LLC, Common Stock		(i)(n)(t)(ab)(ad)	Energy							272,778		8.6		—
Trace3 Inc, Common Stock		(n)(t)	Software & Services							42,486		0.4		1.5
VICI Properties Inc, Common Stock		(n)(t)(ab)	Consumer Services							66,020		1.2		1.7
Warren Resources Inc, Common Stock		(n)(t)(ad)	Energy							3,370,272		15.8		8.3
White Star Petroleum LLC, Common Stock		(t)(v)(w)	Energy							3,351,997		2.8		—
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1		(n)(t)	Software & Services							1,051,348		8.4		12.0
Zeta Interactive Holdings Corp, Preferred Stock, Series F		(n)(t)	Software & Services							956,233		8.4		10.9
Zeta Interactive Holdings Corp, Warrant		(n)(t)	Software & Services					4/20/27		143,435		—		0.4
Total Equity/Other												322.8		352.8
TOTAL INVESTMENTS—172.0%											$	9,010.7		8,561.0
LIABILITIES IN EXCESS OF OTHER ASSETS—(72.0%)														(3,565.0	)
NET ASSETS—100.0%													$	4,996.0
											Notional		Unrealized
Total Return Swap											Amount		Depreciation
Citibank TRS Facility (Note 9)												93.5		(4.4	)

See notes to unaudited consolidated financial statements.

26

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Foreign currency forward contracts

Foreign Currency	Settlement Date		Counterparty		Amount and Transaction			US$ Value at Settlement Date		US$ Value at December 31, 2019		Unrealized Appreciation (Depreciation)
AUD		1/14/2020		ING Capital LLC		A$	4.8 Sold	$	3.3		3.4		(0.1	)
AUD		1/14/2020		ING Capital LLC		A$	1.9 Sold		1.3		1.3		—
AUD		1/14/2020		ING Capital LLC		A$	0.3 Sold		0.2		0.2		—
AUD		4/8/2020		ING Capital LLC		A$	6.8 Sold		4.6		4.8		(0.2	)
CAD		1/14/2020		JP Morgan Chase Bank		C$	5.7 Sold		4.3		4.4		(0.1	)
CAD		1/14/2020		ING Capital LLC		C$	1.5 Sold		1.2		1.2		—
CAD		1/14/2020		ING Capital LLC		C$	3.9 Sold		3.0		3.0		—
EUR		1/14/2020		ING Capital LLC		€	1.0 Sold		1.1		1.1		—
EUR		1/14/2020		ING Capital LLC		€	0.8 Sold		0.9		0.9		—
EUR		4/8/2020		ING Capital LLC		€	5.6 Sold		6.3		6.3		—
EUR		7/17/2023		JP Morgan Chase Bank		€	0.1 Sold		0.1		0.1		—
GBP		1/14/2020		ING Capital LLC		£	2.9 Sold		3.6		3.9		(0.3	)
GBP		1/14/2020		ING Capital LLC		£	3.3 Sold		4.1		4.4		(0.3	)
GBP		4/8/2020		ING Capital LLC		£	0.4 Sold		0.5		0.5		—
Total								$	34.5	$	35.5	$	(1.0	)

Interest rate swaps

Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Depreciation
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(9	)	$	(9	)
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.81	%		12/18/2021		—		(5	)		(5	)
ING Capital LLC	$	250		3-Month LIBOR		2.59	%		1/14/2024		—		(8	)		(8	)
ING Capital LLC	$	250		3-Month LIBOR		2.62	%		1/14/2022		—		(7	)		(7	)
										$—		$(29)			$(29)

(a) Security may be an obligation of one or more entities affiliated with the named company.

(b) Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2019, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.91%, the Euro Interbank Offered Rate, or EURIBOR, was (0.38)%, Candian Dollar Offer Rate, or CDOR was 2.08%, and the Australian Bank Bill Swap Bid Rate, or BBSY, or “B”, was 0.92%, and the U.S. Prime Lending Rate, or Prime, was 4.75%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

(c) Denominated in U.S. dollars unless otherwise noted.

(d) Fair value determined by the Company’s board of directors (see Note 8).

See notes to unaudited consolidated financial statements.

27

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

(e) Listed investments may be treated as debt for GAAP or tax purposes.

(f) Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Ally Bank (see Note 9).

(g) Security or portion thereof held within Broomall Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Broomall Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9).

(h) Security or portion thereof held within Burholme Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Burholme Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9).

(i) Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(j) Security or portion thereof held within Cooper River LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Citibank, N.A. (see Note 9).

(k) Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(l) Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(m) Security or portion thereof held within Germantown Funding LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs (see Note 9).

(n) Security or portion thereof is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(o) Security or portion thereof held within Jefferson Square Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, National Association (see Note 9).

(p) Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, N.A. (see Note 9).

(q) Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Morgan Stanley Senior Funding, Inc. (see Note 9).

(r) The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2019, 79.5% of the Company’s total assets represented qualifying assets. In addition, the Company also calculates its compliance with the qualifying asset test on a “look through” basis by disregarding the value of the Company’s total return swap and treating each loan underlying the total return swap as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 79.6% of the Company’s total assets represented qualifying assets as of December 31, 2019.

(s) Security is an unfunded commitment. Reflects the stated spread at the time of commitment, but may not be the actual rate received upon funding.

(t) Security is non-income producing.

(u) Asset is on non-accrual status.

(v) Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.

(w) Security held within FSIC III Investments, Inc., a wholly-owned subsidiary of the Company.

(x) Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.

See notes to unaudited consolidated financial statements.

28

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

(y) Security held within IC III Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(z) Security held within FSIC IV Investments, LLC, a wholly-owned subsidiary of the Company.

(aa) Security or portion thereof held within Burholme Funding LLC has been rehypothecated under Rule 15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). As of December 31, 2019, the fair value of securities rehypothecated by BNPP was $123.

(ab) Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8).

(ac) Position or portion thereof unsettled as of December 31, 2019.

(ad) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the year ended December 31, 2019:

Portfolio Company	Fair Value at December 31, 2018		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2019		Interest Income(3)		PIK Income(3)		Fee Income(3)
Senior Secured Loans—First Lien
Advanced Lighting Technologies Inc	$	9.1	$	0.2	$	—		$	—		$	(3.4	)	$	5.9	$	0.9	$	—	$	—
Fairway Group Holdings Corp(4)		—		6.2		—			—			0.1			6.3		0.4		0.4		—
Fairway Group Holdings Corp(4)		—		11.3		—			—			(4.8	)		6.5		0.6		0.6		—
Fairway Group Holdings Corp(4)		—		5.6		—			—			(5.6	)		—		—		—		—
HM Dunn Co Inc		7.1		5.8		—			—			13.1			26.0		—		—		—
HM Dunn Co Inc		—		5.2		—			—			—			5.2		0.2		0.1		—
MB Precision Holdings LLC		21.3		1.2		(0.8	)		0.2			(0.5	)		21.4		2.6		0.5		—
One Call Care Management Inc		—		5.8		(8.2	)		4.9			0.2			2.7		0.2		—		—
Warren Resources Inc		14.7		6.3		—			—			—			21.0		2.1		0.1		—
Senior Secured Loans—Second Lien
Fairway Group Holdings Corp(4)		—		5.0		—			—			(5.0	)		—		—		—		—
One Call Care Management Inc(4)		—		13.2		(5.4	)		(7.8	)		—			—		1.6		0.5		—
Titan Energy LLC(4)		—		100.7		—			—			(100.7	)		—		—		—		—
Other Senior Secured Debt
Advanced Lighting Technologies Inc		3.6		—		—			—			(3.6	)		—		—		—		—
JW Aluminum Co		32.9		1.5		—			—			1.9			36.3		3.4		—		—
Mood Media Corp		28.5		11.1		—			—			(0.6	)		39.0		5.5		1.1		—
Equity/Other
Advanced Lighting Technologies Inc, Common Stock		—		—		—			—			—			—		—		—		—
Advanced Lighting Technologies Inc, Warrant		—		—		—			—			—			—		—		—		—
Advanced Lighting Technologies Inc, Warrant		—		—		—			—			—			—		—		—		—
ASG Technologies, Common Stock		31.7		—		—			—			(1.0	)		30.7		—		—		—
ASG Technologies, Warrant		7.4		1.8		—			—			(0.6	)		8.6		—		—		—
Fairway Group Holdings Corp, Common Stock(4)		—		3.3		—			—			(3.3	)		—		—		—		—

See notes to unaudited consolidated financial statements.

29

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

Portfolio Company	Fair Value at December 31, 2018		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2019		Interest Income(3)		PIK Income(3)		Fee Income(3)
HM Dunn Co Inc, Preferred Stock, Series A	$	—	$	—	$	—		$	—		$	—		$	—	$	—	$	—	$	—
HM Dunn Co Inc, Preferred Stock, Series B		—		—		—			—			—			—		—		—		—
JW Aluminum Co, Common Stock		—		—		—			—			—			—		—		—		—
JW Aluminum Co, Preferred Stock		43.9		20.6		—			—			39.6			104.1		7.7		7.4		—
MB Precision Holdings LLC, Class A—2 Units		—		—		—			—			—			—		—		—		—
MB Precision Holdings LLC, Preferred Stock		5.8		0.2		—			—			(0.4	)		5.6		—		—		—
Mood Media Corp, Common Stock		15.8		—		—			—			(14.8	)		1.0		—		—		—
One Call Care Management Inc, Common Stock		—		1.8		—			—			—			1.8		—		—		—
One Call Care Management Inc, Preferred Stock A		—		19.3		—			—			—			19.3		—		—		—
One Call Care Management Inc, Preferred Stock B		—		5.8		—			—			—			5.8		0.1		—		—
Titan Energy LLC, Common Stock(4)		—		8.6		—			—			(8.6	)		—		—		—		—
Warren Resources Inc, Common Stock		5.6		4.7		—			—			(2.0	)		8.3		—		—		—
Total	$	227.4	$	245.2	$	(14.4	)	$	(2.7	)	$	(100.0	)	$	355.5	$	25.3	$	10.7	$	—

(1) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category.

(2) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(3) Interest, PIK and fee income presented for the year ended December 31, 2019.

(4) The Company held this investment as of December 31, 2018 but it was not deemed to be an “affiliated person” of the portfolio company as December 31, 2018. Transfers in or out have been presented at amortized cost.

(ae) Under the Investment Company Act of 1940, as amended, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” and deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the year ended December 31, 2019:

Portfolio Company	Fair Value at December 31, 2018		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at December 31, 2019		Interest Income(3)		PIK Income(3)		Fee Income(3)
Asset Based Finance
801 5th Ave, Seattle, Structure Mezzanine	$	—	$	47.1	$	—	$	—	$	—	$	47.1	$	0.2	$	—	$	—
801 5th Ave, Seattle, Private Equity		—		7.8		—		—		—		7.8		—		—		—
Credit Opportunities Partners, LLC
Credit Opportunities Partners, LLC		—		503.4		—		—		6.6		510.0		—		—		—
Total	$	—	$	558.3	$	—	$	—	$	6.6	$	564.9	$	0.2	$	—	$	—

See notes to unaudited consolidated financial statements.

30

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

(1) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category.

(2) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(3) Interest, PIK and fee income presented for the year ended December 31, 2019.

See notes to unaudited consolidated financial statements.

31

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements

(in millions, except share and per share amounts)

Note 1. Principal Business and Organization

FS KKR Capital Corp. II (NYSE: FSKR), or the Company, was incorporated under the general corporation laws of the State of Maryland on July 13, 2011 and formally commenced investment operations on June 18, 2012. The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, the Company has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of June 30, 2020, the Company had various wholly-owned subsidiaries, including special-purpose financing subsidiaries and subsidiaries through which it holds interests in portfolio companies. The unaudited consolidated financial statements include both the Company’s accounts and the accounts of its wholly-owned subsidiaries as of June 30, 2020. All significant intercompany transactions have been eliminated in consolidation. Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state income taxes.

The Company’s investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Company’s portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle-market U.S. companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private U.S. companies. In addition, a portion of the Company’s portfolio may be comprised of equity and equity-related securities, corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps.

The Company is externally managed by FS/KKR Advisor, LLC, or the Advisor, pursuant to an investment advisory agreement, dated as of December 18, 2019, or the investment advisory agreement. On April 9, 2018, GSO/Blackstone Debt Funds Management LLC, or GDFM, resigned as the investment sub-adviser to the Company and terminated the investment sub-advisory agreement, or the investment sub-advisory agreement, between FSIC II Advisor, LLC, or FSIC II Advisor, and GDFM, effective April 9, 2018. In connection with GDFM’s resignation as the investment sub-adviser to the Company, on April 9, 2018, the Company entered into an investment advisory and administrative services agreement, or the prior investment advisory and administrative services agreement, with the Advisor. The prior investment advisory and administrative services agreement replaced an investment advisory and administrative services agreement, dated February 8, 2012, or the FSIC II Advisor investment advisory and administrative services agreement, by and between the Company and FSIC II Advisor.

On December 18, 2019, the Company completed its acquisitions, or the Mergers, of FS Investment Corporation III, or FSIC III, FS Investment Corporation IV, or FSIC IV, and Corporate Capital Trust II, or CCT II, pursuant to that certain Agreement and Plan of Merger, or the Merger Agreement, dated as of May 31, 2019, by and among the Company, FSIC III, FSIC IV, CCT II, NT Acquisition 1, Inc., a former wholly-owned subsidiary of the Company, or Merger Sub 1, NT Acquisition 2, Inc., a former wholly-owned subsidiary of the Company, or Merger Sub 2, NT Acquisition 3, Inc., a former wholly-owned subsidiary of the Company, or Merger Sub 3, and the Advisor.

On June 10, 2020, the Company filed Articles of Amendment to its Articles of Incorporation, or the Reverse Stock Split Amendment, with the State Department of Assessments and Taxation of the State of Maryland to effect a 4 to 1 reverse split of the Company’s shares of common stock, or the Reverse Stock Split. The Reverse Stock Split became effective in accordance with the terms of the Reverse Stock Split Amendment on June 10, 2020. A summary of the Company’s weighted average number of shares of common stock outstanding and earnings per share after adjusting for the Reverse Stock Split is as follows:

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Weighted average number of shares of common stock outstanding (as reported)		324,242,365		324,275,540
Weighted average number of shares of common stock outstanding (pro-forma)		81,060,591		81,068,885
Net investment income per share (as reported)	$	0.18	$	0.36
Net investment income per share (pro forma)	$	0.72	$	1.43
Earnings per share (as reported)	$	0.13	$	0.35
Earnings per share (pro-forma)	$	0.53	$	1.41

32

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of and for the year ended December 31, 2019 included in the Company’s annual report on Form 10-K for the year ended December 31, 2019. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The December 31, 2019 consolidated balance sheet and consolidated schedule of investments are derived from the Company’s audited consolidated financial statements as of and for the year ended December 31, 2019. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Financial Accounting Standards Boards, or the FASB, Accounting Standards Codification Topic 946, Financial Services—Investment Companies.

Use of Estimates: The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Capital Gains Incentive Fee: Pursuant to the terms of the investment advisory agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory agreement). This fee equals 20.0% of the Company’s incentive fee capital gains, which shall equal each of FSIC III, FSIC IV, CCT II and the Company’s realized capital gains (without duplication) on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation (without duplication) on a cumulative basis, less the aggregate amount of any capital gain incentive fees previously paid by FSIC III, FSIC IV, CCT II and the Company. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fees as if it were due and payable as of the end of such period.

The Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to the Advisor if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though the Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Subordinated Income Incentive Fee: Pursuant to the terms of the investment advisory agreement, the Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income under the investment advisory agreement, which is calculated and payable quarterly in arrears, equals 20.0% of the Company’s “pre-incentive fee net investment income” for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on the value of the Company’s net assets, equal to 1.75% per quarter, or an annualized hurdle rate of 7.0%. As a result, the Advisor will not earn this incentive fee for any quarter until the Company’s pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.75%. Once the Company’s pre-incentive fee net investment income in any quarter exceeds the hurdle rate, the Advisor will be entitled to a “catch-up” fee equal to the amount of the pre-incentive fee net investment income in excess of the hurdle rate, until the Company’s pre-incentive fee net investment income for such quarter equals 2.1875%, or 8.75% annually, of net assets. Thereafter, the Advisor will be entitled to receive 20.0% of the pre-incentive fee net investment income.

Commencing with the ninth full calendar quarter following the closing of the Mergers, the subordinated incentive fee on income is subject to a cap equal to (i) 20.0% of the “per share pre-incentive fee return” for the then-current calendar quarter and the eleven calendar quarters (or fewer number of calendar quarters) preceding the then-current calendar quarter (commencing with the first full calendar quarter following the Mergers) minus the cumulative “per share incentive fees” accrued and/or payable for the eleven calendar quarters (or fewer number of calendar quarters) preceding the then-current calendar quarter (commencing

33

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

with the first full calendar quarter following the Mergers) multiplied by (ii) the weighted average number of shares outstanding during the calendar quarter (or any portion thereof) for which the subordinated incentive fee on income is being calculated.

Reclassifications: Certain amounts in the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2019 and the audited consolidated financial statements as of and for the year ended December 31, 2019 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2020.

Revenue Recognition: Security transactions are accounted for on the trade date. The Company records interest income on an accrual basis to the extent that it expects to collect such amounts. The Company records dividend income on the ex-dividend date. Distributions received from limited liability company (“LLC”) and limited partnership (“LP”) investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. The Company’s policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected. The Company considers many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Company will receive any previously accrued interest, then the accrued interest income will be written-off. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on the Company’s judgment.

Loan origination fees, original issue discount and market discount are capitalized and the Company amortizes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. Structuring and other non-recurring upfront fees are recorded as fee income when earned. For the six months ended June 30, 2020, the Company recognized $9 in structuring fee revenue. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.

Derivative Instruments: The Company’s derivative instruments include foreign currency forward contracts and interest rate swaps. The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements. Derivative contracts entered into by the Company are not designated as hedging instruments, and as a result, the Company presents changes in fair value through net change in unrealized appreciation (depreciation) on derivative instruments in the consolidated statements of operations. Realized gains and losses of the derivative instruments are included in net realized gains (losses) on derivative instruments in the consolidated statements of operations.

Recent Accounting Pronouncements: In August 2018 FASB issued Accounting Standards Update 2018-13, Fair Value Measurement—Disclosures Framework—Changes to Disclosure Requirements of Fair Value Measurement (Topic 820), or ASU 2018-13. ASU 2018-13 introduces new fair value disclosure requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company implemented ASU 2018-13 during the six months ended June 30, 2020, and it did not have a significant impact on the Company’s disclosure over fair value.

34

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 3. Share Transactions

Below is a summary of transactions with respect to shares of the Company’s common stock during the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
	2020				2019
	Shares		Amount		Shares(1)			Amount
Reinvestment of Distributions		3,203,560	$	80		1,577,606		$	51
Fractional Share Round Up		64,069		—		—			—
Share Repurchase Program		—		—		(1,622,157	)		(52	)
Net Proceeds from Share Transactions		3,267,629	$	80		(44,551	)	$	(1	)

(1) The number of shares repurchased has been retroactively adjusted to reflect the Reverse Stock Split as discussed below.

In connection with the listing, or the Listing, of its shares of common stock on the New York Stock Exchange, or the NYSE, the Company terminated its previous distribution reinvestment plan, or the old DRP. The final distribution reinvestment under the old DRP was made in connection with the regular quarterly cash distribution paid on June 8, 2020 to stockholders of record as of the close of business on June 8, 2020. On June 17, 2020, the Company adopted a new distribution reinvestment plan, or the new DRP, which became effective as of, and will first apply to the reinvestment of cash distributions paid on or after, June 17, 2020. For additional information regarding the terms of the new DRP, see Note 5.

Acquisitions of FSIC III, FSIC IV and CCT II

In accordance with the terms of the Merger Agreement, at the time of the transactions contemplated by the Merger Agreement, (i) each outstanding share of FSIC III common stock was converted into the right to receive 0.9804 shares of the Company’s common stock, (ii) each outstanding share of beneficial interest of CCT II was converted into the right to receive 1.1319 shares of the Company’s common stock and (iii) each outstanding share of FSIC IV common stock was converted into the right to receive 1.3634 shares of the Company’s common stock. As a result, the Company issued an aggregate of approximately 289,084,117 shares of its common stock to former FSIC III stockholders, 14,031,781 shares of its common stock to former CCT II shareholders and 43,668,803 shares of its common stock to former FSIC IV stockholders.

Reverse Stock Split

As a result of the Reverse Stock Split, which was effective on June 10, 2020, every four shares of the Company’s common stock issued and outstanding were automatically combined into one share of the Company’s common stock, and the number of outstanding shares of the Company’s common stock was reduced from approximately 691.2 million to approximately 172.8 million as of June 10, 2020. The Reverse Stock Split did not modify the rights or preferences of the Company’s common stock. The Company also filed a separate Articles of Amendment to its Articles of Incorporation with the State Department of Assessments and Taxation of the State of Maryland to provide that there would be no change in the par value of $0.001 per share as a result of the Reverse Stock Split.

Listing and Fractional Shares

The Company’s shares of common stock were listed and commenced trading on the NYSE on June 17, 2020. The Company eliminated any outstanding fractional shares of its common stock in connection with the Listing, as permitted by the Maryland General Corporation Law. The Company eliminated all outstanding fractional shares by rounding up the number of fractional shares held by each of the Company’s stockholders to the nearest whole number of shares as of June 15, 2020 As a result of the fractional share round up, the number of outstanding shares was increased by 64,069 shares.

35

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 3. Share Transactions (continued)

Quarterly Share Repurchase Program

Historically, the Company conducted quarterly tender offers pursuant to a share repurchase program. The Company’s board of directors suspended the share repurchase program in connection with the execution of the Merger Agreement. The Listing has provided liquidity to the Company’s stockholders, and therefore the Company does not expect to implement a new quarterly share repurchase program in the future.

Historically, the Company limited the number of shares of common stock to be repurchased during any calendar year to the lesser of (i) the number of shares of common stock that the Company could repurchase with the proceeds it received from the issuance of shares of common stock under the old DRP and (ii) 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter. On May 8, 2017, the board of directors of the Company amended the share repurchase program. As amended, the Company limits the maximum number of shares of common stock to be repurchased for any repurchase offer to the greater of (A) the number of shares of common stock that the Company can repurchase with the proceeds it has received from the sale of shares of common stock under the old DRP during the twelve-month period ending on the date the applicable repurchase offer expires (less the amount of proceeds used to repurchase shares of common stock on each previous repurchase date for repurchase offers conducted during such twelve-month period) (the Company refers to this limitation as the twelve-month repurchase limitation) and (B) the number of shares of common stock that the Company can repurchase with the proceeds it received from the sale of shares of common stock under the old DRP during the three-month period ending on the date the applicable repurchase offer expires (the Company refers to this limitation as the three-month repurchase limitation). In addition to this limitation, the maximum number of shares of common stock to be repurchased for any repurchase offer would also be limited to 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter. As a result, the maximum number of shares of common stock to be repurchased for any repurchase offer would not exceed the lesser of (i) 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter, and (ii) whichever is greater of the twelve-month repurchase limitation described in clause (A) above and the three-month repurchase limitation described in clause (B) above.

Under the Company’s former quarterly share repurchase program, the Company offered to repurchase shares of common stock at a price equal to the price at which shares of common stock were issued pursuant to the old DRP on the distribution date coinciding with the applicable share repurchase date. The price at which shares of common stock were issued under the old DRP was determined by the Company’s board of directors or a committee thereof, in its sole discretion, and would be (i) not less than the net asset value per share of the Company’s common stock as determined in good faith by the Company’s board of directors or a committee thereof, in its sole discretion, immediately prior to the payment date of the distribution and (ii) not more than 2.5% greater than the net asset value per share as of such date.

36

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 3. Share Transactions (continued)

The following table provides information concerning the Company’s repurchases of shares of common stock pursuant to its former quarterly share repurchase program during the six months ended June 30, 2020 and 2019:

For the Three Months Ended	Repurchase Date		Shares Repurchased(1)		Percentage of Shares Tendered That Were Repurchased			Percentage of Outstanding Shares Repurchased as of the Repurchase Date			Repurchase Price Per Share(1)		Aggregate Consideration for Repurchased Shares
Fiscal 2019
December 31, 2018		January 2, 2019		824,264		16.7	%		1.01	%	$	32.200	$	27
March 31, 2019		April 1, 2019		797,893		14.2	%		0.98	%	$	32.200		25
Total				1,622,157									$	52
Fiscal 2020
December 31, 2019(2)				—		—			—			—		—
March 31, 2020(2)				—		—			—			—		—
Total				—										—

(1) Shares repurchased have been adjusted to reflect the 4 to 1 reverse stock split as discussed in Note 3.

(2) The Company suspended its share repurchase program on May 31, 2019.

May 2020 Share Repurchase Program

In May 2020, the Company’s board of directors authorized a stock repurchase program. Under the program, the Company is permitted to repurchase up to $100 in the aggregate of its outstanding common stock in the open market at prices below the then-current net asset value per share. The timing, manner, price and amount of any share repurchases was determined by the Company based upon the evaluation of economic and market conditions, the Company’s stock price, applicable legal and regulatory requirements and other factors. The program is expected to be in effect for one year from the effective date, unless extended, or until the aggregate repurchase amount that has been approved by the Company’s board of directors has been expended, or the plan otherwise terminates pursuant to its terms. The program does not require the Company to repurchase any specific number of shares and the Company cannot assure stockholders that any shares will be repurchased under the program. The program may be suspended, extended, modified or discontinued at any time.

During the period from July 1, 2020 to July 31, 2020, the Company repurchased 743,749 shares of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions paid) of $14.16 (totaling $11).

Note 4. Related Party Transactions

Compensation of the Investment Adviser

Pursuant to the investment advisory agreement, the Advisor is entitled to a base management fee calculated at an annual rate of 1.50% of the average weekly value of the Company’s gross assets excluding cash and cash equivalents (gross assets equal the total assets of the Company as set forth on the Company’s consolidated balance sheets), which base management fee is reduced from 1.50% to 1.00% on all assets financed using leverage over 1.0x debt-to-equity, and an incentive fee based on the Company’s performance. The base management fee is payable quarterly in arrears. All or any part of the base management fee not taken as to any quarter will be deferred without interest and may be taken in such other quarter as the Advisor determines. The prior investment advisory and administrative services agreement had substantially similar terms, except that cash and cash equivalents were not excluded from gross assets. See Note 2 for a discussion of the capital gains and subordinated income incentive fees that the Advisor may be entitled to under the investment advisory agreement.

On December 18, 2019, the Company entered into an administration agreement with the Advisor, or the administration agreement. Pursuant to the administration agreement, the Advisor oversees the Company’s day-to-day operations, including the

37

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 4. Related Party Transactions (continued)

provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other administrative services. The Advisor also performs, or oversees the performance of, the Company’s corporate operations and required administrative services, which includes being responsible for the financial records that the Company is required to maintain and preparing reports for the Company’s stockholders and reports filed with the U.S. Securities and Exchange Commission, or the SEC. In addition, the Advisor assists the Company in calculating its net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to the Company’s stockholders, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others.

Pursuant to the administration agreement, the Company reimburses the Advisor for expenses necessary to perform services related to its administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings, L.P., which does business as FS Investments, or FS Investments, and KKR Credit Advisors (US), LLC, or KKR Credit, providing administrative services to the Company on behalf of the Advisor. The Company reimburses the Advisor no less than quarterly for all costs and expenses incurred by the Advisor in performing its obligations and providing personnel and facilities under the administration agreement. The Advisor allocates the cost of such services to the Company based on factors such as total assets, revenues, time allocations and/or other reasonable metrics. The Company’s board of directors reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed allocation of administrative expenses among the Company and certain affiliates of the Advisor. The Company’s board of directors then assesses the reasonableness of such reimbursements for expenses allocated to it based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party service providers known to be available. In addition, the Company’s board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Company’s board of directors compares the total amount paid to the Advisor for such services as a percentage of the Company’s net assets to the same ratio as reported by other comparable BDCs. The administrative services provisions of the FSIC II Advisor investment advisory and administrative services agreement and the prior investment advisory and administrative services agreement were substantially similar to the administration agreement.

The following table describes the fees and expenses accrued under the investment advisory agreement, the administration agreement, the prior investment advisory and administrative services agreement and the FSIC II Advisor investment advisory and administrative services agreement, as applicable, during the three and six months ended June 30, 2020 and 2019:

			Three Months Ended June 30,				Six Months Ended June 30,
Related Party	Source Agreement	Description	2020		2019		2020		2019
The Advisor	Investment advisory agreement and prior investment advisory and administrative services agreement	Base Management Fee(1)	$	29	$	17	$	62	$	35
The Advisor	Investment advisory agreement and prior investment advisory and administrative services agreement	Subordinated Incentive Fee on Income(2)	$	19	$	9	$	42	$	20
The Advisor	Administration agreement and prior investment advisory and administrative services agreement	Administrative Services Expenses(3)	$	1	$	1	$	3	$	2

(1) During the six months ended June 30, 2020 and 2019, $68 and $35, respectively, in base management fees were paid to the Advisor. As of June 30, 2020, $29 in base management fees were payable to the Advisor.

(2) During the six months ended June 30, 2020 and 2019, $34 and $17, respectively, of subordinated incentive fees on income were paid to the Advisor. As of June 30, 2020, a subordinated incentive fee on income of $19 was payable to the Advisor.

(3) During the six months ended June 30, 2020 and 2019, $2 and $1, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by the Advisor and the remainder related to other reimbursable expenses, including reimbursement of fees related to transactional expenses for prospective investments, including fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as “broken deal” costs. Broken deal costs were $0.5 and $0.2 for the six months ended June 30, 2020 and 2019, respectively. The Company paid $4 and $1 in administrative services expenses to the Advisor during the six months ended June 30, 2020 and 2019, respectively.

38

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 4. Related Party Transactions (continued)

Potential Conflicts of Interest

The members of the senior management and investment teams of the Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Company does, or of investment vehicles managed by the same personnel. For example, the Advisor is the investment adviser to FS KKR Capital Corp., and the officers, managers and other personnel of the Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or KKR Credit. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Company’s best interests or in the best interest of the Company’s stockholders. The Company’s investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For additional information regarding potential conflicts of interest, see the Company’s annual report on Form 10-K for the year ended December 31, 2019.

Exemptive Relief

As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, BDCs generally are not permitted to co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs are permitted to, and may, simultaneously co-invest in transactions where price is the only negotiated term.

In an order dated June 4, 2013, or the FS Order, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of its former investment adviser, including FS Energy and Power Fund, FS KKR Capital Corp., and any future BDCs that are advised by its former investment adviser or its affiliated investment advisers. However, in connection with the investment advisory relationship with the Advisor, and in an effort to mitigate potential future conflicts of interest, the Company’s board of directors authorized and directed that the Company (i) withdraw from the FS Order, except with respect to any transaction in which the Company participated in reliance on the FS Order prior to April 9, 2018, and (ii) rely on an exemptive relief order, dated April 3, 2018, that permits the Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions, including investments originated and directly negotiated by the Advisor or KKR Credit, with certain affiliates of the Advisor.

Affiliated Purchaser Program

As previously disclosed, certain affiliates of the owners of the Advisor committed $100 to a $350 investment vehicle that may invest from time to time in shares of the Company. In June 2020, that investment vehicle entered into a written trading plan with a third party broker in accordance with Rule 10b5-1 and Rule 10b-18 promulgated under the Exchange Act to facilitate the purchase of shares of the Company’s common stock pursuant to the terms and conditions of such plan. The Company is not a party to the plan or any transaction with the investment vehicle.

Note 5. Distributions

The following table reflects the cash distributions per share that the Company declared and paid on its common stock during the six months ended June 30, 2020 and 2019:

	Distribution
For the Three Months Ended	Per  Share(1)		Amount
Fiscal 2019
March 31, 2019	$	0.7540	$	61
June 30, 2019		0.7540		61
Total	$	1.5080	$	122
Fiscal 2020
March 31, 2020	$	0.6000	$	102
June 30, 2020		0.6000		102
Total	$	1.2000	$	204

(1) The amount of each per share distribution has been retroactively adjusted to reflect the Reverse Stock Split as discussed above in Note 3.

39

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 5. Distributions (continued)

On August 10, 2020, the Company’s board of directors declared a regular quarterly cash distribution of $0.55 per share, which will be paid on or about October 1, 2020 to stockholders of record as of the close of business on September 16, 2020. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of the Company’s board of directors.

Prior to the Listing, the Company had adopted an “opt in” old DRP for its stockholders. As a result, if the Company made a cash distribution, its stockholders would receive the distribution in cash unless they specifically “opted in” to the old DRP so as to have their cash distributions reinvested in additional shares of the Company’s common stock. In connection with the Listing, the Company terminated its old DRP. The final distribution reinvestment under the old DRP was made in connection with the regular quarterly cash distribution paid on June 8, 2020 to stockholders of record as of the close of business on June 8, 2020. On June 17, 2020, the Company adopted the new DRP, which became effective as of, and will first apply to the reinvestment of cash distributions paid on or after, June 17, 2020.

Pursuant to the new DRP, the Company will reinvest all cash dividends or distributions declared by the Company’s board of directors on behalf of stockholders who do not elect to receive their distributions in cash. As a result, if the Company’s board of directors declares a distribution, then stockholders who have not elected to “opt out” of the new DRP will have their distributions automatically reinvested in additional shares of the Company’s common stock.

With respect to each distribution pursuant to the new DRP, the Company reserves the right to either issue new shares of common stock or purchase shares of common stock in the open market in connection with implementation of the new DRP. Unless the Company, in its sole discretion, otherwise directs the plan administrator, (A) if the per share market price (as defined in the new DRP) is equal to or greater than the estimated net asset value per share (rounded up to the nearest whole cent) of the Company’s common stock on the payment date for the distribution, then the Company will issue shares of common stock at the greater of (i) net asset value per share of common stock or (ii) 95% of the market price; or (B) if the market price is less than the net asset value per share, then, in the sole discretion of the Company, (i) shares of common stock will be purchased in open market transactions for the accounts of participants to the extent practicable, or (ii) the Company will issue shares of common stock at net asset value per share. Pursuant to the terms of the new DRP, the number of shares of common stock to be issued to a participant will be determined by dividing the total dollar amount of the distribution payable to a participant by the price per share at which the Company issues such shares; provided, however, that shares purchased in open market transactions by the plan administrator will be allocated to a participant based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market.

If a stockholder receives distributions in the form of common stock pursuant to the new DRP, such stockholder generally will be subject to the same federal, state and local tax consequences as if it elected to receive distributions in cash. If the Company’s common stock is trading at or below net asset value, a stockholder receiving distributions in the form of additional common stock will be treated as receiving a distribution in the amount of cash that they would have received if they had elected to receive the distribution in cash. If the Company’s common stock is trading above net asset value, a stockholder receiving distributions in the form of additional common stock will be treated as receiving a distribution in the amount of the fair market value of the Company’s common stock. The stockholder’s basis for determining gain or loss upon the sale of common stock received in a distribution will be equal to the total dollar amount of the distribution payable to the stockholder. Any stock received in a distribution will have a holding period for tax purposes commencing on the day following the day on which the shares of common stock are credited to the stockholder’s account.

The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of the Company’s common stock, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, gains from interest rate swaps, non-capital gains proceeds from the sale of assets and dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies. The Company has not established limits on the amount of funds it may use from available sources to make distributions. During certain periods, the Company’s distributions may exceed its earnings. As a result, it is possible that a portion of the distributions the Company makes may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from the Company’s investment activities. Each year a statement on Form 1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income, paid from net capital

40

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 5. Distributions (continued)

gains on the sale of securities, and/or a return of capital, which is a nontaxable distribution) will be mailed to the Company’s stockholders. There can be no assurance that the Company will be able to pay distributions at a specific rate or at all.

The following table reflects the sources of the cash distributions on a tax basis that the Company paid on its common stock during the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
	2020					2019
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Return of capital	$	—		—		$	—		—
Net investment income(1)		204		100	%		122		100	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			—		—
Total	$	204		100	%	$	122		100	%

(1) During the six months ended June 30, 2020 and 2019, 89.3% and 94.1%, respectively, of the Company’s gross investment income was attributable to cash income earned, 2.4% and 1.9%, respectively, was attributable to non-cash accretion of discount and 8.3% and 4.0%, respectively, was attributable to paid-in-kind, or PIK, interest.

The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company’s distributions for a full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form 1099-DIV.

Net capital losses incurred for tax years beginning after December 22, 2010, may be carried forward indefinitely, and their character is retained as short-term or long-term losses. As of June 30, 2020, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $38 and $719, respectively. $191 of such losses were carried over from the target companies due to the Merger, and $246 of such losses were carried over from losses generated by the Company prior to the Merger. Because of the loss limitation rules of the Code, some of the tax basis losses may be limited in their use. Any unused balances resulting from such limitations may be carried forward into future years indefinitely.

As of June 30, 2020 and December 31, 2019, the gross unrealized appreciation was $174 and $276, respectively. As of June 30, 2020 and December 31, 2019, the gross unrealized depreciation was $1,123 and $687, respectively.

The aggregate cost of the Company’s investments for U.S. federal income tax purposes totaled $8,391 and $9,167 as of June 30, 2020 and December 31, 2019, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(1,110) and $(609) as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, the Company had a deferred tax asset of $16 resulting from net operating losses and capital losses of the Company’s wholly-owned taxable subsidiaries. As of June 30, 2020, the wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net operating losses, therefore the deferred tax asset was offset by a valuation allowance of $16. For the six months ended June 30, 2020, the Company did not record a provision for taxes related to its wholly-owned taxable subsidiaries.

41

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio

The following table summarizes the composition of the Company’s investment portfolio at cost and fair value as of June 30, 2020 and December 31, 2019:

	June 30, 2020 (Unaudited)							December 31, 2019
	Amortized Cost(1)		Fair Value		Percentage of  Portfolio			Amortized Cost(1)		Fair Value		Percentage of  Portfolio
Senior Secured Loans—First Lien	$	5,391	$	4,855		66.7	%	$	6,017	$	5,717		66.6	%
Senior Secured Loans—Second Lien		787		634		8.7	%		941		809		9.4	%
Other Senior Secured Debt		181		99		1.4	%		243		228		2.7	%
Subordinated Debt		205		176		2.4	%		479		489		5.7	%
Asset Based Finance		742		678		9.3	%		535		485		5.6	%
Credit Opportunities Partners, LLC		591		575		7.9	%		503		510		5.9	%
Equity/Other		318		264		3.6	%		323		353		4.1	%
Total	$	8,215	$	7,281		100.0	%	$	9,041	$	8,591		100.0	%

The following table summarizes the composition of the Company’s investment portfolio at cost and fair value as of June 30, 2020 and December 31, 2019 to include, on a look-through basis, the investments underlying the TRS, as disclosed in Note 9 to our unaudited financial statements included herein. The investments underlying the TRS had a notional amount and market value of $0 and $0, and $94 and $89, respectively, as of June 30, 2020 and December 31, 2019:

	June 30, 2020 (Unaudited)							December 31, 2019
	Amortized Cost(1)		Fair Value		Percentage of  Portfolio			Amortized Cost(1)		Fair Value		Percentage of  Portfolio
Senior Secured Loans—First Lien	$	5,391	$	4,855		66.7	%	$	6,090	$	5,788		66.7	%
Senior Secured Loans—Second Lien		787		634		8.7	%		961		827		9.5	%
Other Senior Secured Debt		181		99		1.4	%		243		228		2.6	%
Subordinated Debt		205		176		2.4	%		479		489		5.6	%
Asset Based Finance		742		678		9.3	%		535		485		5.6	%
Credit Opportunities Partners, LLC		591		575		7.9	%		503		510		5.9	%
Equity/Other		318		264		3.6	%		324		353		4.1	%
Total	$	8,215	$	7,281		100.0	%	$	9,135	$	8,680		100.0	%

(1) Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

In general, under the 1940 Act, the Company would be presumed to “control” a portfolio company if it owned more than 25% of its voting securities or it had the power to exercise control over the management or policies of such portfolio company, and would be an “affiliated person” of a portfolio company if it owned 5% or more of its voting securities.

As of June 30, 2020, the Company held investments in four portfolio companies of which it is deemed to “control”. As of June 30, 2020, the Company held investments in eleven portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control.” For additional information with respect to such portfolio companies, see footnotes (ad) and (ae) to the unaudited consolidated schedule of investments as of June 30, 2020 in this quarterly report on Form 10-Q.

As of December 31, 2019, the Company held investments in two portfolio companies of which it is deemed to “control”. As of December 31, 2019, the Company held investments in ten portfolio companies of which it was deemed to be an “affiliated person” but was not deemed to “control.” For additional information with respect to such portfolio companies, see footnotes (ad) and (ae) to the consolidated schedule of investments as of December 31, 2019 in this quarterly report on Form 10-Q.

42

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

The Company’s investment portfolio may contain loans and other unfunded arrangements that are in the form of lines of credit, revolving credit facilities, delayed draw credit facilities or other investments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of June 30, 2020, the Company had unfunded debt investments with aggregate unfunded commitments of $371.0, unfunded equity/other commitments of $246.8, and unfunded commitments of $284.4 of Credit Opportunities Partners, LLC. As of December 31, 2019, the Company had unfunded debt investments with aggregate unfunded commitments of $600.9, unfunded equity/other commitments of $258.0 and unfunded commitments of $21.9 of Credit Opportunities Partners, LLC. The Company maintains sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise. For additional details regarding the Company’s unfunded debt investments, see the Company’s unaudited consolidated schedule of investments as of June 30, 2020 and audited consolidated schedule of investments as of December 31, 2019.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of June 30, 2020 and December 31, 2019:

	June 30, 2020 (Unaudited)					December 31, 2019
Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Automobiles & Components	$	55		0.8	%	$	182		2.1	%
Capital Goods		965		13.2	%		1,139		13.3	%
Commercial & Professional Services		747		10.3	%		861		10.0	%
Consumer Durables & Apparel		298		4.1	%		302		3.5	%
Consumer Services		259		3.5	%		548		6.4	%
Credit Opportunities Partners, LLC		575		7.9	%		510		5.9	%
Diversified Financials		573		7.9	%		402		4.7	%
Energy		172		2.4	%		328		3.8	%
Food & Staples Retailing		173		2.4	%		223		2.6	%
Food, Beverage & Tobacco		93		1.3	%		132		1.5	%
Health Care Equipment & Services		688		9.4	%		888		10.3	%
Household & Personal Products		109		1.5	%		1		0.0	%
Insurance		238		3.3	%		220		2.6	%
Materials		132		1.8	%		354		4.1	%
Media & Entertainment		261		3.6	%		409		4.8	%
Pharmaceuticals, Biotechnology & Life Sciences		89		1.2	%		187		2.2	%
Real Estate		237		3.2	%		122		1.4	%
Retailing		334		4.6	%		435		5.1	%
Semiconductors & Semiconductor Equipment		—		—			3		0.0	%
Software & Services		856		11.8	%		874		10.2	%
Technology Hardware & Equipment		142		1.9	%		174		2.0	%
Telecommunication Services		145		2.0	%		154		1.8	%
Transportation		140		1.9	%		143		1.7	%
Total	$	7,281		100.0	%	$	8,591		100.0	%

Credit Opportunities Partners, LLC

On September 30, 2019, Credit Opportunities Partners, LLC, or COP, a joint venture between the Company and South Carolina Retirement Systems Group Trust, or SCRS, was formed pursuant to the terms of a limited liability company agreement between the Company and SCRS, or the COP Agreement. The COP Agreement requires the Company and SCRS to provide capital to COP of up to $1,000 in the aggregate where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed capital. Pursuant to the terms of the COP Agreement, the Company and SCRS each have 50% voting control of

43

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

COP and are required to agree on all investment decisions as well as certain other significant actions for COP. COP invests its capital in a range of investments, including senior secured loans (both first lien and second lien) to middle market companies, broadly syndicated loans, equity, warrants and other investments. As administrative agent of COP, the Company performs certain day-to-day management responsibilities on behalf of COP and is entitled to a fee of 0.25% of COP’s assets under administration, calculated and payable quarterly in arrears. As of June 30, 2020, the Company and SCRS have funded approximately $675.0 to COP, of which $590.6 was from the Company.

On May 15, 2017, Green Creek LLC, or Green Creek, then a wholly-owned special-purpose financing subsidiary of the Company, entered into a revolving credit facility with Goldman Sachs Bank, or Goldman Sachs, as lender, sole lead arranger and administrative agent, and Wells Fargo Bank, National Association, or Wells Fargo, as collateral administrator and collateral agent. On December 19, 2019, the Company contributed all of its outstanding equity in Green Creek to COP. As a result, Green Creek became a wholly-owned special-purpose financing subsidiary of COP. Concurrently, Green Creek amended and restated its revolving credit facility, or the Green Creek Credit Facility.

The Green Creek Credit Facility provides for borrowings in U.S. dollars, and certain agreed upon foreign currencies, in an aggregate principal amount up to $500 on a committed basis. The end of the reinvestment period and the maturity date for the Green Creek Credit Facility are November 15, 2020 and December 15, 2020, respectively. U.S. dollar borrowings bear interest at the rate of three-month LIBOR (subject to a 0% floor) plus 2.50% per annum. Foreign currency borrowings bear interest at the rate of the relevant reference rate (subject to a 0% floor) plus the spread applicable to the specified currency. During the reinvestment period, Green Creek is subject to unused fees in an amount equal to the sum of (i) 2.50% per annum on the average daily unborrowed portion of the facility amount up to 85% of the facility amount, or the Green Creek Minimum Utilization Amount, plus (ii) 0.50% per annum on the average daily unborrowed portion of the facility amount above the Green Creek Minimum Utilization Amount. Borrowings under the Green Creek Credit Facility are secured by a first priority security interest in substantially all of the assets of Green Creek, including its portfolio of assets. As of June 30, 2020, total outstanding borrowings under the Green Creek Credit Facility were $425.9.

On March 11, 2020, Big Cedar Creek LLC, or Big Cedar Creek, a wholly-owned special-purpose financing subsidiary of COP, entered into a revolving credit facility, or the Big Cedar Creek Credit Facility, with BNP Paribas, as lender and administrative agent, each of the lenders from time to time party thereto, COP, as equityholder and servicer, and Wells Fargo, as collateral agent. The Big Cedar Creek Credit Facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an aggregate principal amount up to $300 on a committed basis. The end of the reinvestment period and the maturity date for the Big Cedar Creek Credit Facility are March 11, 2023 and March 11, 2025, respectively. Under the Big Cedar Creek Credit Facility, borrowings bear interest at the rate of LIBOR (or the relevant reference rate for any foreign currency borrowings) (subject to a 0% floor) plus a spread of (i) during the reinvestment period, 1.85% to 2.55% per annum, and (ii) after the reinvestment period, 2.00% to 2.65% per annum, in each case, determined based on the currency of the borrowing and the composition of the collateral portfolio. During the reinvestment period, Big Cedar Creek is subject to an unused fee ranging from 0.375% to 1.00% per annum on the average daily unborrowed portion of the facility amount below 85% of the facility amount. Borrowings under the Big Cedar Creek Credit Facility are secured by a first priority security interest in substantially all of the assets of Big Cedar Creek, including its portfolio of assets. As of June 30, 2020, total outstanding borrowings under the Big Cedar Creek Credit Facility were $85.0. COP was in compliance with all covenants required by its financing arrangements as of June 30, 2020 and December 31, 2019.

During the six months ended June 30, 2020, the Company sold investments with a cost of $303.5 for proceeds of $252.6 to COP and recognized a net realized gain (loss) of $(50.9) in connection with the transactions. As of June 30, 2020, $3.0 of these sales to COP are included in receivable for investments sold in the consolidated statements of assets and liabilities.

As of June 30, 2020, COP had total investments with a fair value of $1,106.3. As of June 30, 2020, COP had no investments on non-accrual status.

44

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Below is a summary of COP’s portfolio, followed by a listing of the individual loans in COP’s portfolio as of June 30, 2020 and December 31, 2019:

	As of
	June 30, 2020			December 31, 2019
Total debt investments(1)	$	1,072.7		$	899.4
Weighted average current interest rate on debt investments(2)		9.81	%		9.2	%
Number of portfolio companies in COP		66			37
Largest investment in a single portfolio company(1)	$	69.6		$	69.3

(1) Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

(2) Computed as the (a) annual stated interest rate on accruing debt, divided by (b) total debt at par amount.

45

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Credit Opportunities Partners, LLC Portfolio

As of June 30, 2020 (Unaudited) (in millions)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Senior Secured Loans—First Lien—103.4%
ABB CONCISE Optical Group LLC	(i)	Retailing	L+500	1.0%	6/15/23	$	3.6	$	2.8	$	3.0
Alstom SA	(i)	Transportation	L+450	1.0%	8/29/21		6.1		4.7		4.7
Ammeraal Beltech Holding BV	(i)	Capital Goods	E+375		7/30/25	€	4.8		4.4		5.0
Apex Group Limited	(e)(i)	Diversified Financials	L+700	1.3%	6/15/25	$	28.8		28.9		28.8
Apex Group Limited	(e)(i)	Diversified Financials	L+700	1.5%	6/15/25	£	22.1		29.0		27.3
Arrotex Australia Group Pty Ltd	(e)(i)	Pharmaceuticals, Biotechnology & Life Sciences	B+525	1.0%	7/10/24	A$	47.3		32.0		32.5
Brand Energy & Infrastructure Services Inc	(j)	Capital Goods	L+425	1.0%	6/21/24	$	23.5		17.9		21.6
Cambium Learning Group Inc	(i)	Consumer Services	L+450		12/18/25		45.3		43.6		43.4
CSM Bakery Products	(i)	Food, Beverage & Tobacco	L+625	1.0%	1/4/22		7.8		7.4		7.5
Diamond Resorts International Inc	(i)	Consumer Services	L+375	1.0%	9/2/23		13.9		13.6		12.3
Distribution International Inc	(i)	Retailing	L+575	1.0%	12/15/23		14.0		11.6		11.5
Eagleclaw Midstream Ventures LLC	(i)	Energy	L+425	1.0%	6/24/24		11.3		10.5		8.2
EaglePicher Technologies LLC	(j)	Capital Goods	L+325		3/8/25		0.0		0.0		0.0
EIF Van Hook Holdings LLC	(i)	Energy	L+525		9/5/24		7.0		6.7		4.9
Electronics For Imaging Inc	(i)	Technology Hardware & Equipment	L+500		7/23/26		15.4		14.5		12.1
Entertainment Benefits Group LLC	(e)(i)	Media & Entertainment	L+575	1.0%	9/30/25		2.5		2.5		2.3
Fox Head Inc	(e)(i)	Consumer Durables & Apparel	L+850	1.0%	9/30/20		20.3		20.1		18.9

46

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Industria Chimica Emiliana Srl	(e)(i)	Pharmaceuticals, Biotechnology & Life Sciences	E+650		6/30/26	€	51.4	$	55.9	$	55.5
Jostens Inc	(i)	Consumer Services	L+550		12/19/25	$	3.5		2.7		3.4
Laird PLC	(i)	Technology Hardware & Equipment	L+450		7/9/25		4.3		3.7		3.9
LBM Borrower LLC	(j)	Capital Goods	L+375	1.0%	8/19/22		8.4		7.2		8.3
LD Intermediate Holdings Inc	(j)	Software & Services	L+588	1.0%	12/9/22		30.6		25.5		29.4
Lipari Foods LLC	(e)(i)	Food & Staples Retailing	L+588	1.0%	1/6/25		44.1		44.1		42.8
Lipari Foods LLC	(e)(i)	Food & Staples Retailing	L+588	1.0%	1/6/25		22.4		22.3		21.7
MedAssets Inc		Health Care Equipment & Services	L+450	1.0%	10/20/22		5.7		4.9		4.7
MI Windows and Doors Inc	(i)	Capital Goods	L+550	1.0%	11/6/26		5.0		4.2		4.8
Monitronics International Inc	(i)	Commercial & Professional Services	L+500	1.5%	7/3/24		33.5		29.8		32.3
Ontic Engineering & Manufacturing Inc	(j)	Capital Goods	L+475		10/31/26		2.2		1.8		2.1
Onvoy LLC	(i)	Telecommunication Services	L+450	1.0%	2/10/24		0.2		0.1		0.1
Parts Town LLC	(e)(i)	Retailing	L+550	1.0%	10/15/25		24.9		24.8		23.7
Qdoba Restaurant Corp		Consumer Services	L+700	1.0%	3/21/25		2.0		1.7		1.7
Sequa Corp	(i)(j)	Capital Goods	L+500	1.0%	11/28/21		33.8		30.0		31.1
Smart & Final Stores LLC	(i)(j)	Food & Staples Retailing	L+675		6/20/25		25.3		23.9		24.9
Staples Canada	(e)(i)	Retailing	C+700	1.0%	9/12/24	C$	46.6		35.8		34.3
Sutherland Global Services Inc	(i)	Software & Services	L+538	1.0%	4/23/21	$	25.1		20.9		21.5
Syncsort Inc	(i)	Software & Services	L+600	1.0%	8/16/24		10.6		8.5		10.4
Total Safety US Inc	(i)	Capital Goods	L+600	1.0%	8/16/25		7.9		6.4		6.9
Trace3 Inc	(e)(i)	Software & Services	L+675	1.0%	8/3/24		32.9		32.7		32.3
Transaction Services Group Ltd	(e)(i)	Consumer Services	B+600		10/15/26	A$	62.5		42.0		39.5
WireCo WorldGroup Inc	(i)	Capital Goods	L+500	1.0%	9/29/23	$	0.1		0.1		0.1
Total Senior Secured Loans—First Lien									679.2		679.4

47

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Senior Secured Loans—Second Lien—41.4%
Access CIG LLC	(j)	Commercial & Professional Services	L+775		2/27/26	$	1.9	$	1.6	$	1.7
Albany Molecular Research Inc	(j)	Pharmaceuticals, Biotechnology & Life Sciences	L+700	1.0%	8/30/25		0.9		0.7		0.9
American Bath Group LLC	(i)	Capital Goods	L+975	1.0%	9/30/24		10.0		9.1		9.2
Ammeraal Beltech Holding BV	(e)(i)	Capital Goods	L+800	1.0%	9/12/26		52.3		50.6		48.6
BCA Marketplace PLC	(e)(i)	Retailing	L+825		11/22/27	£	29.9		38.7		34.5
EaglePicher Technologies LLC	(j)	Capital Goods	L+725		3/8/26	$	0.4		0.4		0.4
Emerald Performance Materials LLC	(i)	Materials	L+775	1.0%	8/1/22		4.1		3.5		4.0
Excelitas Technologies Corp	(j)	Technology Hardware & Equipment	L+750	1.0%	12/1/25		7.5		5.8		7.2
LBM Borrower LLC	(i)(j)	Capital Goods	L+925	1.0%	8/20/23		14.9		14.4		14.0
Misys Ltd	(i)	Software & Services	L+725	1.0%	6/13/25		12.5		10.6		10.9
New Arclin US Holding Corp	(j)	Materials	L+875	1.0%	2/14/25		0.3		0.2		0.2
OPE Inmar Acquisition Inc	(i)	Software & Services	L+800	1.0%	5/1/25		9.6		7.2		6.4
Paradigm Acquisition Corp		Health Care Equipment & Services	L+750		10/26/26		0.5		0.4		0.4
Pure Fishing Inc	(e)(i)	Consumer Durables & Apparel	L+838	1.0%	12/31/26		46.8		40.8		34.5
Rise Baking Company	(e)(i)	Food, Beverage & Tobacco	L+800	1.0%	8/9/26		18.0		17.7		17.4
Sequa Corp	(i)	Capital Goods	L+900	1.0%	4/28/22		18.9		15.7		13.8
Transplace	(i)	Transportation	L+875	1.0%	10/6/25		3.3		2.4		2.7
Wittur Holding GmbH	(e)(i)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)		9/23/27	€	64.5		69.6		65.4
Total Senior Secured Loans—Second Lien									289.4		272.2

48

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Other Senior Secured Debt—2.5%
Velvet Energy Ltd	(e)(i)	Energy	9.0%		10/5/23	$	15.0	$	15.3	$	13.3
Vivint Inc	(i)	Commercial & Professional Services	7.9%		12/1/22		3.0		3.0		3.0
Total Other Senior Secured Debt									18.3		16.3
Subordinated Debt—9.1%
Ascent Resources Utica Holdings LLC / ARU Finance Corp	(i)	Energy	10.0%		4/1/22		26.0		25.9		22.3
Diamond Resorts International Inc	(i)	Consumer Services	10.8%		9/1/24		3.0		3.0		2.8
GFL Environmental Inc	(i)	Commercial & Professional Services	8.5%		5/1/27		5.3		5.8		5.8
LifePoint Hospitals Inc	(i)	Health Care Equipment & Services	9.8%		12/1/26		10.7		9.4		11.0
MultiPlan Inc	(i)	Health Care Equipment & Services	7.1%		6/1/24		7.1		5.7		6.6
Plastipak Holdings Inc	(i)	Materials	6.3%		10/15/25		1.0		0.7		0.9
Ply Gem Holdings Inc	(i)	Capital Goods	8.0%		4/15/26		0.2		0.2		0.2
SRS Distribution Inc	(i)	Capital Goods	8.3%		7/1/26		5.7		4.4		5.8
Vivint Inc	(i)	Commercial & Professional Services	7.6%		9/1/23		5.0		4.4		4.6
Total Subordinated Debt									59.5		60.0
Asset Based Finance—3.7%
NewStar Clarendon 2014-1A Class D	(e)(h)(i)	Diversified Financials			1/25/27	$	12.1		4.8		3.1
Pretium Partners LLC P1, Structured Mezzanine	(e)(i)	Real Estate	2.8%, 5.3% PIK (5.3% Max PIK)		10/22/26	$	6.8		6.8		6.6
Pretium Partners LLC P2, Structured Mezzanine	(e)(i)	Real Estate	2.0%, 7.5% PIK (7.5% Max PIK)		5/29/25	$	14.6		14.7		14.8
Total Asset Based Finance									26.3		24.5

49

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Equity/Other—8.2%
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock	(e)(h)(k)	Energy					13,556	$	3.6	$	3.2
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim	(e)(h)(k)	Energy					115,178,571		30.5		27.1
SSC (Lux) Limited S.a r.l., Common Stock	(e)(h)(i)	Health Care Equipment & Services					261,364		8.1		8.0
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1	(e)(h)(i)	Software & Services					620,025		7.1		6.5
Zeta Interactive Holdings Corp, Preferred Stock, Series F	(e)(h)(i)	Software & Services					563,932		6.4		9.1
Zeta Interactive Holdings Corp, Warrant	(e)(h)(i)	Software & Services			4/20/27		84,590		0.2		0.0
Total Equity/Other									55.9		53.9
TOTAL INVESTMENTS—168.3%									1,128.6		1,106.3
DERIVATIVE INSTRUMENTS —(0.5%)
Foreign currency forward contracts										$	(3.4	)

(a) Security may be an obligation of one or more entities affiliated with the named company.

(b) Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of June 30, 2020, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 0.30% , the Euro Interbank Offered Rate, or EURIBOR or “E”, was (0.42)%, the Australian Bank Bill Swap Bid Rate, or BBSY or “B”, was 0.15% and the Canadian Dollar Offer Rate, or CDOR or “C”, was 0.56%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.

(c) Denominated in U.S. dollars unless otherwise noted.

50

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

(d) Fair value determined by the Company’s board of directors. See Note 8.

(e) Investments classified as Level 3.

(f) Not used.

(g) Not used.

(h) Security is non-income producing.

(i) Security or portion thereof held within Green Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Goldman Sachs Bank.

(j) Security or portion thereof held within Big Cedar Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with BNP Paribas.

(k) Security held within IC II American Energy Investments, Inc., a wholly-owned subsidiary of the Company.

Credit Opportunities Partners, LLC Portfolio

As of December 31, 2019 (in millions)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)			Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Senior Secured Loans—First Lien—93.9%
Ammeraal Beltech Holding BV		Capital Goods	E + 375				7/30/25	€	1.5	$	1.6	$	1.6
Apex Group Limited	(e)	Diversified Financials	L+700		1.5	%	6/15/25	£	22.2		29.2		29.6
Apex Group Limited	(e)	Diversified Financials	L+700		1.3	%	6/15/25	$	29.0		29.0		29.0
Arrotex Australia Group Pty Ltd	(e)	Pharmaceuticals, Biotechnology & Life Sciences	B+525		1.0	%	7/10/24	A$	47.3		31.9		32.7
ATX Networks Corp.		Technology Hardware & Equipment	L+600, 1.0% PIK (1.0% Max PIK)		1.0	%	6/11/21	$	25.9		24.4		24.3
Conservice LLC	(e)	Consumer Services	L+525				11/29/24		8.7		8.8		8.8
CSM Bakery Products		Food, Beverage & Tobacco	L+400		1.0	%	7/3/20		5.0		5.2		4.8
Diamond Resorts International Inc		Consumer Services	L+375		1.0	%	9/2/23		13.9		13.7		13.7
Eagleclaw Midstream Ventures LLC		Energy	L+425		1.0	%	6/24/24		11.3		10.4		10.5
EIF Van Hook Holdings LLC		Energy	L+525				9/5/24		7.1		6.8		6.8
Electronics For Imaging Inc		Technology Hardware & Equipment	L+500				7/23/26		15.5		14.4		14.4
Entertainment Benefits Group LLC	(e)	Media & Entertainment	L+575		1.0	%	9/30/25	$	2.5	$	2.5	$	2.5
Fox Head Inc	(e)	Consumer Durables & Apparel	L+850		1.0	%	12/19/20		20.4		20.1		20.1

51

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)			Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Industria Chimica Emiliana Srl	(e)	Pharmaceuticals, Biotechnology & Life Sciences	L+650				6/30/26	€	51.4		55.9		56.2
Lipari Foods LLC	(e)	Food & Staples Retailing	L+588		1.0	%	1/6/25	$	66.6		66.6		66.6
Monitronics International Inc		Commercial & Professional Services	L+500		1.5	%	7/3/24		17.7		17.7		17.7
Parts Town LLC	(e)	Retailing	L+550		1.0	%	10/15/25		25.0		24.9		24.9
Sequa Corp		Materials	L+500		1.0	%	11/28/21		17.8		17.9		17.9
Smart & Final Stores LLC		Food & Staples Retailing	L+675				6/20/25		17.7		17.1		17.1
Staples Canada	(e)	Retailing	L+700		1.0	%	9/12/24	C$	49.0		37.8		38.7
Trace3 Inc	(e)	Software & Services	L+675		1.0	%	8/3/24	$	34.3		34.0		34.0
Transaction Services Group Ltd	(e)	Consumer Services	L+600				10/15/26	A$	62.5		42.0		43.0
Vertiv Group Corp		Technology Hardware & Equipment	L+400		1.0	%	11/30/23	$	13.7		13.7		13.7
Vivint Inc		Commercial & Professional Services	L+500				4/1/24		18.4		18.3		18.4
Total Senior Secured Loans—First Lien											543.9		547.0
Senior Secured Loans—Second Lien—41.8%
Ammeraal Beltech Holding BV	(e)	Capital Goods	L+800				7/27/26		52.3		50.5		50.5
BCA Marketplace PLC	(e)	Retailing	L+825				9/24/27	£	29.9		38.6		39.2
Electronics For Imaging Inc		Technology Hardware & Equipment	L+900				7/23/27	$	3.9		3.7		3.7
LBM Borrower, LLC		Capital Goods	L+925		1.0	%	8/20/23		10.0		9.9		9.9
Misys Ltd		Software & Services	L+725		1.0	%	6/13/25		4.7		4.6		4.6
Pure Fishing Inc	(e)	Consumer Durables & Apparel	L+838		1.0	%	12/31/26		46.8		40.4		40.4
Rise Baking Company	(e)	Food, Beverage & Tobacco	L+800		1.0	%	8/9/26		18.0		17.7		17.7
Sequa Corp		Materials	L+900		1.0	%	4/28/22		7.5		7.4		7.4
Wittur Holding GmbH	(e)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)				9/23/27	€	64.3		69.3		70.0
Total Senior Secured Loans—Second Lien											242.1		243.4
Other Senior Secured Debt—4.1%
Velvet Energy Ltd	(e)	Energy	9.0%				10/5/23	$	15.0	$	15.3	$	15.3
Vivint Inc		Commercial & Professional Services	7.9%				12/1/22		3.9		3.9		4.0

52

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
Vivint Inc		Commercial & Professional Services	7.6%		9/1/23		5.0		4.4		4.7
Total Other Senior Secured Debt									23.6		24.0
Subordinated Debt—11.1%
Ascent Resources Utica Holdings LLC / ARU Finance Corp		Energy	10.0%		4/1/22		26.0		25.8		26.0
Diamond Resorts International Inc		Consumer Services	10.8%		9/1/24		3.0		3.0		3.2
GFL Environmental Inc		Commercial & Professional Services	8.5%		5/1/27		8.8		9.7		9.7
Vertiv Group Corp.		Technology Hardware & Equipment	9.3%		10/15/24		16.6		17.8		17.8
Vivint Inc		Commercial & Professional Services	8.8%		12/1/20	$	7.8	$	7.5	$	7.8
Total Subordinated Debt									63.8		64.5
Asset Based Finance—4.4%
NewStar Clarendon 2014-1A Class D	(e)	Diversified Financials			1/25/27	$	12.1		4.9		4.8
Pretium Partners LLC P1, Structured Mezzanine	(e)	Real Estate	2.8%, 5.3% PIK (5.3% Max PIK)		10/22/26	$	6.8		6.8		6.8
Pretium Partners LLC P2, Structured Mezzanine	(e)	Real Estate	2.0%, 7.5%PIK (7.5% Max PIK)		5/29/25	$	14.1		14.3		14.3
Total Asset Based Finance									26.0		25.9
Equity/Other—9.6%
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock	(e)	Energy					13,556		3.6		3.6
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim	(e)	Energy					115,178,571		30.5		30.5
ATX Networks Corp, Common Stock	(e)	Technology Hardware & Equipment					72,635		0.1		0.1

53

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Company(a)	Footnotes	Industry	Interest Rate(b)	Base Rate Floor(b)	Maturity Date	No. Shares/ Principal Amount(c)		Cost		Fair Value(d)
SSC (Lux) Limited S.a r.l., Common Stock	(e)	Health Care Equipment & Services					261,364		8.1		8.1
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1	(e)	Software & Services					620,025		7.1		7.1
Zeta Interactive Holdings Corp, Preferred Stock, Series F	(e)	Software & Services					563,932		6.4		6.4
Zeta Interactive Holdings Corp, Warrant	(e)	Software & Services			4/20/27		84,590		0.2		0.2
Total Equity/Other									56.0		56.0
TOTAL INVESTMENTS—164.9%									955.4		960.8

(a) Security may be an obligation of one or more entities affiliated with the named company.

(b) Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2019, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.91%, the Euro Interbank Offered Rate, or EURIBOR or “E”, was (0.38)% and the Australian Bank Bill Swap Bid Rate, or BBSY or “B”, was 0.92%,. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.

(c) Denominated in U.S. dollars unless otherwise noted.

(d) Fair value determined by the Company’s board of directors. See Note 8.

(e) Investments classified as Level 3.

Below is selected balance sheet information for COP as of June 30, 2020 and December 31, 2019:

	As of
	June 30, 2020		December 31, 2019
Selected Balance Sheet Information
Investments at fair value	$	1,106.3	$	960.8
Cash and other assets		118.0		98.7
Total assets		1,224.3		1,059.5
Debt		510.9		475.0
Other liabilities		56.2		1.7
Total liabilities		567.1		476.7
Member’s equity	$	657.2	$	582.8

54

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Below is selected statement of operations information for COP for the three and six months ended June 30, 2020:

	Three Months Ended		Six Months Ended
	June 30, 2020		June 30, 2020
Selected Statement of Operations Information
Total investment income	$	28.0	$	50.3
Expenses
Interest expense		4.0		9.3
Administrative services		0.8		1.5
Custody and administrative fees		0.0		0.0
Other		0.2		0.3
Total expenses		5.0		11.1
Net investment income		23.0		39.2
Net realized and unrealized losses		63.6		(28.8	)
Net increase in net assets resulting from operations	$	86.6	$	10.4

Note 7. Financial Instruments

The following is a summary of the fair value and location of the Company’s derivative instruments in the consolidated balance sheets held as of June 30, 2020 and December 31, 2019:

		Fair Value
Derivative Instrument	Statement Location	June 30, 2020 (Unaudited)			December 31, 2019
Interest rate swaps	Unrealized depreciation on interest rate swaps		(59	)		(29	)
Foreign currency forward contracts	Unrealized depreciation on foreign currency forward contracts		—			(1	)
Total		$	(59	)	$	(30	)

Net realized and unrealized gains and losses on derivative instruments recorded by the Company for the three and six months ended June 30, 2020 and 2019 are in the following locations in the consolidated statements of operations:

		Net Realized  Gains (Losses)					Net Realized  Gains (Losses)
		Three Months Ended June 30,					Six Months Ended June 30,
Derivative Instrument	Statement Location	2020			2019		2020			2019
Interest Rate Swaps	Net realized gains (losses) on interest rate swaps	$	(4	)	$	—	$	(6	)	$	—
Foreign currency forward contracts	Net realized gains (losses) on foreign currency forward contracts		—			—		0			—
Total		$	(4	)	$	—	$	(6	)	$	—

55

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 7. Financial Instruments (continued)

		Net Unrealized Gains  (Losses)						Net Unrealized Gains  (Losses)
		Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument	Statement Location	2020			2019			2020			2019
Interest Rate Swaps	Net change in unrealized appreciation (depreciation) on interest rate swaps	$	—		$	(6	)	$	(30	)	$	(10	)
Foreign currency forward contracts	Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		(1	)		—			1			—
Total		$	(1	)	$	(6	)	$	(29	)	$	(10	)

Offsetting of Derivative Instruments

The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties. The Company’s unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the condensed consolidated statements of assets and liabilities. The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of June 30, 2020 and December 31, 2019:

As of June 30, 2020 (Unaudited)
Counterparty	Derivative Assets Subject to Master Netting Agreement		Derivatives Available for Offset		Non-cash Collateral Received(1)		Cash  Collateral Received(1)		Net Amount  of Derivative Assets(2)
JP Morgan Chase Bank	$	—	$	—	$	—	$	—	$	—
ING Capital Markets		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—

Counterparty	Derivative Liabilities Subject to Master Netting Agreement		Derivatives Available for Offset		Non-cash Collateral Pledged(1)		Cash  Collateral Pledged(1)		Net Amount of Derivative Liabilities(3)
JP Morgan Chase Bank	$	27	$	—	$	—	$	27	$	—
ING Capital Markets		32		—		—		32		—
Total	$	59	$	—	$	—	$	59	$	—

As of December 31, 2019
Counterparty	Derivative Assets Subject to Master Netting Agreement		Derivatives Available for Offset		Non-cash Collateral Received(1)		Cash Collateral Received(1)		Net Amount of Derivative Assets(2)
JP Morgan Chase Bank	$	0	$	—	$	—	$	—	$	0
ING Capital Markets		0		—		—		—		0
Total	$	0	$	—	$	—	$	—	$	0

56

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 7. Financial Instruments (continued)

Counterparty	Derivative Liabilities Subject to Master Netting    Agreement			Derivatives Available for Offset		Non-cash Collateral   Pledged(1)		Cash Collateral Pledged(1)		Net Amount of Derivative Liabilities(3)
JP Morgan Chase Bank	$	(14	)	$	0	$	—	$	14	$	—
ING Capital Markets		(16	)		0		—		15		(1	)
Total	$	(30	)	$	—	$	—	$	29	$	(1	)

(1) In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization.

(2) Net amount of derivative assets represents the net amount due from the counterparty to the Company in the event of default.

(3) Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default.

Interest Rate Swaps

Interest rate swap contracts are privately negotiated agreements between the Company and a counterparty. Pursuant to interest rate swap agreements, the Company makes fixed-rate payments to a counterparty in exchange for payments on a floating benchmark interest rate. Payments received or made are recorded as realized gains or losses. During the term of the outstanding swap agreement, changes in the underlying value of the swap are recorded as unrealized gains or losses. The value of the swap is determined by changes in the relationship between two rates of interest. The Company is exposed to credit loss in the event of non-performance by the swap counterparty. Risk may also arise from movements in interest rates. The Company attempts to limit counterparty risk by dealing only with well-known counterparties.

The average notional balance for interest rate swaps during the six months ended June 30, 2020 and June 30, 2019 was $900 and $350, respectively.

As of June 30, 2020 and December 31, 2019, the Company’s open interest rate swaps were as follows:

As of June 30, 2020 (Unaudited)
Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Appreciation (Depreciation)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(19	)	$	(19	)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.81	%		12/18/2021		—		(8	)		(8	)
ING Capital Markets		$250		3-Month LIBOR		2.59	%		1/14/2024		—		(22	)		(22	)
ING Capital Markets		$250		3-Month LIBOR		2.62	%		1/14/2022		—		(10	)		(10	)
										$	—	$	(59	)	$	(59	)

As of December 31, 2019
Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Appreciation (Depreciation)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(9	)	$	(9	)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.81	%		12/18/2021		—		(5	)		(5	)
ING Capital Markets		$250		3-Month LIBOR		2.59	%		1/14/2024		—		(8	)		(8	)
ING Capital Markets		$250		3-Month LIBOR		2.62	%		1/14/2022		—		(7	)		(7	)
										$	—	$	(29	)	$	(29	)

57

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 7. Financial Instruments (continued)

Foreign Currency Forward Contracts

The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit counterparty risk by only dealing with well-known counterparties.

The average notional balance for foreign currency forward contracts during the six months ended June 30, 2020 and 2019 was $8 and $0, respectively.

As of December 31, 2019, the Company’s open foreign currency forward contracts were as follows:

As of December 31, 2019
Foreign Currency	Settlement Date		Counterparty		Amount and Transaction		US$ Value at Settlement Date		US$ Value at December 31, 2019		Unrealized Appreciation (Depreciation)
AUD		1/14/2020		ING Capital LLC	A$	4.8 Sold	$	3.3		3.4		(0.1	)
AUD		1/14/2020		ING Capital LLC	A$	1.9 Sold		1.3		1.3		—
AUD		1/14/2020		ING Capital LLC	A$	0.3 Sold		0.2		0.2		—
AUD		4/8/2020		ING Capital LLC	A$	6.8 Sold		4.6		4.8		(0.2	)
CAD		1/14/2020		JP Morgan Chase Bank	C$	5.7 Sold		4.3		4.4		(0.1	)
CAD		1/14/2020		ING Capital LLC	C$	1.5 Sold		1.2		1.2		—
CAD		1/14/2020		ING Capital LLC	C$	3.9 Sold		3.0		3.0		—
EUR		1/14/2020		ING Capital LLC	€	1.0 Sold		1.1		1.1		—
EUR		1/14/2020		ING Capital LLC	€	0.8 Sold		0.9		0.9		—
EUR		4/8/2020		ING Capital LLC	€	5.6 Sold		6.3		6.3		—
EUR		7/17/2023		JP Morgan Chase Bank	€	0.1 Sold		0.1		0.1		—
GBP		1/14/2020		ING Capital LLC	£	2.9 Sold		3.6		3.9		(0.3	)
GBP		1/14/2020		ING Capital LLC	£	3.3 Sold		4.1		4.4		(0.3	)
GBP		4/8/2020		ING Capital LLC	£	0.4 Sold		0.5		0.5		—
Total							$	34.5	$	35.5	$	(1.0	)

Note 8. Fair Value of Financial Instruments

Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes valuation techniques that maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Company classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance:

Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities.

58

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

Level 2: Inputs that are quoted prices for similar assets or liabilities in active markets.

Level 3: Inputs that are unobservable for an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of June 30, 2020 and December 31, 2019, the Company’s investments were categorized as follows in the fair value hierarchy:

	June 30, 2020 (Unaudited)					December 31, 2019
Valuation Inputs	Investments		Total Return Swap			Investments		Total Return Swap
Level 1—Price quotations in active markets	$	—	$	—		$	7	$	—
Level 2—Significant other observable inputs		642		—			1,594		—
Level 3—Significant unobservable inputs		6,064		(2	)		6,480		(4	)
Investments measured at net asset value(1)		575		—			510		—
Total	$	7,281	$	(2	)	$	8,591	$	(4	)

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

In addition, the Company had interest rate swaps and foreign currency forward contracts, as described in Note 7, which were categorized as Level 2 in the fair value hierarchy as of June 30, 2020 and December 31, 2019.

The Company’s investments consist primarily of debt investments that were acquired directly from the issuer. Debt investments, for which broker quotes are not available, are valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, the borrower’s ability to adequately service its debt, prevailing interest rates for like investments, expected cash flows, call features, anticipated repayments and other relevant terms of the investments. Except as described below, all of the Company’s equity/other investments are also valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. An investment that is newly issued and purchased near the date of the financial statements is valued at cost if the Company’s board of directors determines that the cost of such investment is the best indication of its fair value. Such investments described above are typically classified as Level 3 within the fair value hierarchy. Investments that are traded on an active public market are valued at their closing price as of the date of the financial statements and are classified as Level 1 within the fair value hierarchy. Except as described above, the Company typically values its other investments and interest rate swaps by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which are provided by independent third-party pricing services and screened for validity by such services and are typically classified as Level 2 within the fair value hierarchy.

The Company periodically benchmarks the bid and ask prices it receives from the third-party pricing services and/or dealers and independent valuation firms as applicable, against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management in purchasing and selling these investments, the Company believes that these prices are reliable indicators of fair value. The valuation committee and the board of directors reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with the Company’s valuation policy.

59

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

The following is a reconciliation for the six months ended June 30, 2020 and 2019 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:

	For the Six Months Ended June 30, 2020
	Senior  Secured Loans—First Lien			Senior Secured Loans—Second Lien			Other Senior Secured Debt			Subordinated Debt			Asset Based Finance			Equity/ Other			Total
Fair value at beginning of period	$	4,905		$	570		$	95		$	80		$	485		$	345		$	6,480
Accretion of discount (amortization of premium)		4			0			0			0			0			0			4
Net realized gain (loss)		(189	)		(118	)		—			—			1			6			(300	)
Net change in unrealized appreciation (depreciation)		(177	)		(5	)		(61	)		(5	)		(15	)		(91	)		(354	)
Purchases		1,016			18			—			—			238			19			1,291
Paid-in-kind interest		5			1			3			5			15			6			35
Sales and repayments		(1,046	)		(2	)		—			—			(46	)		(21	)		(1,115	)
Net transfers in or out of Level 3		8			15			—			—			—			—			23
Fair value at end of period	$	4,526		$	479		$	37		$	80		$	678		$	264		$	6,064
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(285	)	$	(94	)	$	(61	)	$	(5	)	$	(15	)	$	(91	)	$	(551	)

	For the Six Months Ended June 30, 2019
	Senior  Secured Loans—First Lien			Senior Secured Loans—Second Lien			Other Senior Secured Debt			Subordinated Debt		Asset Based Finance			Equity/ Other			Total
Fair value at beginning of period	$	2,828		$	212		$	95		$	6	$	48		$	263		$	3,452
Accretion of discount (amortization of premium)		2			0			0			0		0			0			2
Net realized gain (loss)		(2	)		—			—			—		0			(10	)		(12	)
Net change in unrealized appreciation (depreciation)		(3	)		(10	)		(2	)		1		(2	)		22			6
Purchases		388			76			15			33		49			5			566
Paid-in-kind interest		2			1			1			—		1			4			9
Sales and repayments		(798	)		(6	)		(1	)		—		(2	)		(4	)		(811	)
Net transfers in or out of Level 3		2			—			—			—		—			—			2
Fair value at end of period	$	2,419		$	273		$	108		$	40	$	94		$	280		$	3,214
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(6	)	$	(10	)	$	(3	)	$	—	$	(2	)	$	15		$	(6	)

60

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of June 30, 2020 and December 31, 2019 were as follows:

Type of Investment	Fair Value at June 30, 2020 (Unaudited)(1)		Valuation Technique(2)	Unobservable Input		Range (Weighted Average)(3)	Impact to Valuation from an Increase in Input(4)
Senior Debt	$	4,569	Discounted Cash Flow		Discount Rate	6.5% - 23.7% (9.2%)		Decrease
		465	Waterfall		EBITDA Multiple	0.1x - 13.9x (7.4x)		Increase
		7	Option Pricing Model		Equity Illiquidity Discount	60.0% - 60.0% (60.0%)		Decrease
		1	Other
Subordinated Debt		80	Discounted Cash Flow		Discount Rate	12.5% - 20.0% (12.7%)		Decrease
		0	Waterfall		EBITDA Multiple	10.0x - 10.0x (10.0x)		Increase
Asset Based Finance		350	Discounted Cash Flow		Discount Rate	4.3% - 14.7% (8.3%)		Decrease
		288	Waterfall		EBITDA Multiple	1.0x - 11.9x (1.5x)		Increase
		38	Other
		2	Indicative Dealer Quotes			25.8% - 25.8% (25.8%)		Increase
		0	Cost
Equity/Other		233	Waterfall		EBITDA Multiple	1.7x - 12.5x (7.5x)		Increase
		27	Option Pricing Model		Equity Illiquidity Discount	55.0% - 55.0% (55.0%)		Decrease
		2	Discounted Cash Flow		Discount Rate	14.7% - 14.7% (14.7%)		Decrease
		2	Other
Total	$	6,064

(1) Certain investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value.

(2) For the assets and investments that have more than one valuation technique, the Company may rely on the stated techniques individually or in the aggregate based on a weight ascribed to each valuation technique, ranging from 0—100%. Indicative dealer quotes obtained for valuation purposes are reviewed by the Company relative to other valuation techniques.

(3) Weighted average amounts are based on the estimated fair values.

(4) This column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements.

(5) Fair value based on expected outcome of proposed corporate transactions and/or other factors.

Type of Investment	Fair Value at December 31, 2019			Valuation Technique(1)	Unobservable Input		Range (Weighted Average)	Impact to Valuation from an Increase in Input(2)
Senior Debt	$	4,816		Discounted Cash Flow		Discount Rate	6.4% - 27.5% (9.9%)		Decrease
		362		Cost
		257		Waterfall		EBITDA Multiple	0.1x - 8.5x (5.5x)		Increase
		135		Other(3)
Subordinated Debt		80		Discounted Cash Flow		Discount Rate	9.3% - 20.8% (13.9%)		Decrease
Asset Based Finance		229		Waterfall		EBITDA Multiple	1.0x - 13.0x (1.4x)		Increase
		105		Cost
		102		Discounted Cash Flow		Discount Rate	7.8% - 12.9% (9.8%)		Decrease
		46		Other(3)
		3		Indicative Dealer Quotes			61.0% - 61.0% (61.0%)		Increase
Equity/Other		314		Waterfall		EBITDA Multiple	0.5x - 14.0x (7.7x)		Increase
		29		Other(3)
		2		Option Pricing Model		Equity Illiquidity Discount	30.0% - 30.0% (30.0%)		Decrease
Total	$	6,480
Total Return Swap	$	(4	)	Indicative Dealer Quotes			0.0% - 100.6% (70.0%)		Increase

61

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

(1) Investments using a market quotes valuation technique were primarily valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by independent third-party pricing services and screened for validity by such services. Investments valued using an EBITDA multiple or a revenue multiple pursuant to the market comparables valuation technique may be conducted using an enterprise valuation waterfall analysis.

(2) Represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements.

(3) Fair value based on expected outcome of proposed corporate transactions and/or other factors.

Note 9. Financing Arrangements

Prior to June 18, 2020, in accordance with the 1940 Act, the Company was allowed to borrow amounts such that its asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such borrowing. Effective June 19, 2020, the Company’s asset coverage requirement applicable to senior securities was reduced from 200% to 150%. As of June 30, 2020, the aggregate amount outstanding of the senior securities issued by the Company was $3,386. As of June 30, 2020, the Company’s asset coverage was 224%.

The following tables present summary information with respect to the Company’s outstanding financing arrangements as of June 30, 2020 and December 31, 2019. For additional information regarding these financing arrangements, see the notes to the Company’s audited consolidated financial statements contained in its annual report on Form 10-K for the year ended December 31, 2019. Any significant changes to the Company’s financing arrangements during the six months ended June 30, 2020 are discussed below.

	As of June 30, 2020 (Unaudited)
Arrangement	Type of Arrangement	Rate	Amount Outstanding			Amount Available		Maturity Date
Senior Secured Revolving Credit Facility(1)	Revolving Credit Facility	L+1.75% - 2.00%(2)	$	748	(4)	$	1,017		November 7, 2024
Germantown Credit Facility(1)	Term Loan Credit Facility	L+2.50%(2)		300			—		December 15, 2020
Darby Creek Credit Facility(1)	Revolving Credit Facility	L+1.95%(2)		195			55		February 26, 2024
Dunlap Credit Facility(1)	Revolving Credit Facility	L+2.00%(2)		360			140		February 26, 2024
Jefferson Square Credit Facility(1)	Revolving Credit Facility	L+2.50%(2)		320			80		July 15, 2022
Juniata River Credit Facility(1)	Revolving Credit Facility	L+2.45%(2)		680			170		October 11, 2021
Burholme Prime Brokerage Facility(1)	Prime Brokerage Facility	L+1.25%		30			1		December 26,  2020(5)
Ambler Credit Facility(1)	Revolving Credit Facility	L+2.25%(2)		118			82		November 22, 2024
Meadowbrook Run Credit Facility(1)	Revolving Credit Facility	L+2.25%(2)		160			140		November 22, 2024
4.250% Notes due 2025(6)	Unsecured Notes	4.250%		475			—		February 14, 2025
Total			$	3,386		$	1,685
Cheltenham Total Return Swap	Total Return Swap	L+1.60%	$	—		$	—		N/A(7)

(1) The carrying amount outstanding under the facility approximates its fair value.

(2) LIBOR is subject to a 0% floor.

(3) The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.

(4) Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €126 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.12 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $114 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.73 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $158 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.69 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £142 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.24 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars.

(5) The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of June 30, 2020, neither party had provided notice of its intent to terminate the facility.

62

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 9. Financing Arrangements (continued)

(6) As of June 30, 2020, the fair value of the 4.250% notes was approximately $427. The valuation is considered a Level 2 valuation within the fair value hierarchy.

(7) Cheltenham Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past February 19, 2020 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Cheltenham Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.

	As of December 31, 2019
Arrangement(2)	Type of Arrangement	Rate	Amount Outstanding			Amount Available		Maturity Date
Senior Secured Revolving Credit Facility	Revolving Credit Facility	L+2.00% - 2.25%(1)(3)	$	1,516	(4)	$	159		November 7, 2024
Germantown Credit Facility	Term Loan Credit Facility	L+2.50%(1)		300			—		December 15, 2020
Darby Creek Credit Facility	Revolving Credit Facility	L+1.95%(1)		215			35		February 26, 2024
Dunlap Credit Facility	Revolving Credit Facility	L+2.00%(1)		405			95		February 26, 2024
Jefferson Square Credit Facility	Revolving Credit Facility	L+2.50%(1)		370			30		July 15, 2022
Juniata River Credit Facility	Revolving Credit Facility	L+2.45%(1)		730			120		October 11, 2021
Burholme Prime Brokerage Facility	Prime Brokerage Facility	L+1.25%		100			—		September  26, 2020(5)
Broomall Prime Brokerage Facility	Prime Brokerage Facility	L+1.25%		38			12		December 26,  2020(6)
Ambler Credit Facility	Revolving Credit Facility	L+2.25%(1)		85			115		November 22, 2024
Meadowbrook Run Credit Facility	Revolving Credit Facility	L+2.25%(1)		50			250		November 22, 2024
Total			$	3,809		$	816
Center City Total Return Swap	Total Return Swap	L+1.55%	$	—		$	—		N/A(7)
Cheltenham Total Return Swap	Total Return Swap	L+1.60%	$	94		$	81		N/A(8)

(1) LIBOR is subject to a 0% floor.

(2) The carrying amount outstanding under the facility approximates its fair value.

(3) The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.

(4) Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €232 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.12 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $151 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.77 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $238 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.70 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £112 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.33 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars.

(5) The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of December 31, 2019, neither party had provided notice of its intent to terminate the facility.

(6) The Broomall Prime Brokerage Facility generally is terminable upon 270 days’ notice by either party. As of December 31, 2019, neither party had provided notice of its intent to terminate the facility.

(7) Center City Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past September 30, 2019 nor terminated the TRS on that date. The TRS was terminated effective June 30, 2020. Center City Funding did not pay any termination fee as a result of the orderly winddown and ultimate termination of the TRS.

(8) Cheltenham Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past February 19, 2020 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Cheltenham Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.

63

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 9. Financing Arrangements (continued)

For the three and six months ended June 30, 2020 and 2019, the components of total interest expense for the Company’s financing arrangements were as follows:

	Three Months Ended June 30,
	2020						2019
Arrangement(1)	Direct Interest Expense(2)		Amortization of Deferred Financing Costs and Discount		Total Interest Expense		Direct Interest Expense(2)		Amortization of Deferred Financing Costs and Discount		Total Interest Expense
Green Creek Credit Facility	$	—	$	—	$	—	$	6	$	0	$	6
Germantown Credit Facility		3		—		3		—		—		—
Cooper River Credit Facility		—		—		—		1		0		1
Darby Creek Credit Facility		2		0		2		3		0		3
Dunlap Credit Facility		3		—		3		—		—		—
Jefferson Square Credit Facility		3		—		3		—		—		—
Juniata River Credit Facility		7		—		7		10		0		10
Senior Secured Revolving Credit Facility		7		1		8		4		1		5
Burholme Prime Brokerage Facility		1		—		1		—		—		—
Broomall Prime Brokerage Facility		0		—		0		—		—		—
Ambler Credit Facility		1		0		1		—		—		—
Meadowbrook Run Credit Facility		2		0		2		—		—		—
4.250% Notes due 2025		5		0		5		—		—		—
Total	$	34	$	1	$	35	$	24	$	1	$	25

	Six Months Ended June 30,
	2020						2019
Arrangement(1)	Direct Interest Expense(2)		Amortization of Deferred Financing Costs and Discount		Total Interest Expense		Direct Interest Expense(2)		Amortization of Deferred Financing Costs and Discount		Total Interest Expense
Green Creek Credit Facility	$	—	$	—	$	—	$	13	$	0	$	13
Germantown Credit Facility		6		—		6		—		—		—
Cooper River Credit Facility		—		—		—		3		0		3
Darby Creek Credit Facility		4		0		4		5		0		5
Dunlap Credit Facility		7		—		7		—		—		—
Jefferson Square Credit Facility		7		—		7		—		—		—
Juniata River Credit Facility		15		1		16		22		1		23
Senior Secured Revolving Credit Facility		18		1		19		10		1		11
Burholme Prime Brokerage Facility		2		—		2		—		—		—
Broomall Prime Brokerage Facility		0		—		0		—		—		—
Ambler Credit Facility		2		0		2		—		—		—
Meadowbrook Run Credit Facility		4		0		4		—		—		—
4.250% Notes due 2025		8		0		8		—		—		—
Total	$	73	$	2	$	75	$	53	$	2	$	55

(1) Borrowings of each of the Company’s wholly owned, special-purpose financing subsidiaries are considered borrowings of the Company for purposes of complying with the asset coverage requirements applicable to BDCs under the 1940 Act.

(2) Direct interest expense includes the effect of non-usage fees.

64

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 9. Financing Arrangements (continued)

The Company’s average borrowings and weighted average interest rate, including the effect of non-usage fees, for the six months ended June 30, 2020 were $3,854 and 3.71%, respectively. As of June 30, 2020, the Company’s weighted average effective interest rate on borrowings, including the effect of non-usage fees, was 3.54%.

The Company’s average borrowings and weighted average interest rate, including the effect of non-usage fees, for the six months ended June 30, 2019 were $2,018 and 5.23%, respectively. As of June 30, 2019, the Company’s weighted average effective interest rate on borrowings, including the effect of non-usage fees, was 5.21%.

Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar financing arrangements. The Company was in compliance with all covenants required by its financing arrangements as of June 30, 2020 and December 31, 2019.

Senior Secured Revolving Credit Facility

On March 3, 2020, the Company entered into a Commitment Increase Agreement in connection with its senior secured revolving credit facility, or as amended and restated, the Senior Secured Revolving Credit Facility, with FS KKR Capital Corp., as an additional borrower, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto, which, among other things, increased the total facility amount from $3,890 to $3,980 and increased the sublimit of the total facility amount available for the Company to borrow from $1,675 to $1,765.

On May 5, 2020, the Company entered into that certain Amendment No. 1 to Amended and Restated Senior Secured Revolving Credit Agreement, or the Amendment, to the Senior Secured Revolving Credit Facility, with FS KKR Capital Corp., JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto to, among other things, (i) reset the minimum shareholders’ equity test as the greater of (a) 30% of the total assets as at the last day of such fiscal quarter and (b) $2,720.9 plus 37.5% of net equity proceeds after April 15, 2021, (ii) remove the 0.9091 multiplier previously applicable to its borrowing base, and (iii) reduce its asset coverage ratio test (for so long as it remains a borrower that has not yet listed on a nationally recognized securities exchange in the United States) from a minimum of 200% to a minimum of 175%.

Broomall Funding Prime Brokerage Facility

On June 22, 2020, Broomall Funding LLC, or Broomall Funding, a wholly-owned financing subsidiary of the Company, repaid in full and terminated its committed facility arrangement, or as subsequently amended, the Broomall Prime Brokerage Facility, with BNP Paribas Prime Brokerage International, Ltd., or BNPP.

4.250% Notes due 2025

On February 14, 2020, the Company issued $475 aggregate principal amount of 4.250% notes due 2025, or the Unsecured Notes. The Unsecured Notes will mature on February 14, 2025 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the applicable redemption price set forth in the indenture governing the Unsecured Notes. The Unsecured Notes bear interest at a rate of 4.250% per year, payable semi-annually.

The Unsecured Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The Unsecured Notes contain certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940,

65

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 9. Financing Arrangements (continued)

as amended, whether or not it is subject to those requirements, and to provide financial information to the holders of the Unsecured Notes if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the indenture governing the Unsecured Notes.

In addition, on the occurrence of a “change of control repurchase event,” as defined in the indenture governing the Unsecured Notes, the Company will generally be required to make an offer to purchase the outstanding Unsecured Notes at a price equal to 100% of the principal amount of such Unsecured Notes plus accrued and unpaid interest to the repurchase date.

Center City Funding Total Return Swap

Effective June 30, 2020, the Company’s wholly-owned financing subsidiary, Center City Funding LLC, or Center City Funding, terminated its total return swap, or TRS, for a portfolio of primarily senior secured floating rate loans with Citibank, N.A., or Citibank. Center City Funding did not pay any termination fee as a result of the termination of the TRS.

For the six months ended June 30, 2020, transactions in the TRS resulted in net realized gain (loss) on total return swap of $0 and net change unrealized appreciation (depreciation) on total return swap of $0 which are reflected in the Company’s consolidated statements of operations.

Cheltenham Funding Total Return Swap

Counterparty	Description	Termination Date	Value as of June 30, 2020
Citibank	A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate.	Prior to February 19, 2020 Citibank and Cheltenham Funding mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Cheltenham Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.	$	(2	)

On January 19, 2016, the Company’s wholly-owned financing subsidiary, Cheltenham Funding LLC, or Cheltenham Funding, entered into a TRS for a portfolio of primarily senior secured floating rate loans with Citibank, which has subsequently been amended.

As of June 30, 2020, the fair value of the TRS was $(2) which is reflected in the Company’s consolidated balance sheets as unrealized appreciation (depreciation) on total return swap. As of June 30, 2020, the receivable due on the TRS was $0 which is reflected within other accrued expenses and liabilities on the Company’s consolidated balance sheets. As of June 30, 2020, all assets held within the TRS were sold.

As of June 30, 2020, the Company posted $2 in cash collateral held by Citibank (of which only $2 and was required to be posted). The cash collateral held by Citibank is reflected in the Company’s consolidated balance sheets as due from counterparty. The Company does not offset collateral posted in relation to the TRS with any unrealized appreciation (depreciation) outstanding on the consolidated balance sheets as of June 30, 2020.

For the six months ended June 30, 2020, transactions in the TRS resulted in net realized gain (loss) on total return swap of $(1) and net change unrealized appreciation (depreciation) on total return swap of $3 which are reflected in the Company’s consolidated statements of operations.

66

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 10. Commitments and Contingencies

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. The Advisor has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.

Unfunded commitments to provide funds to portfolio companies are not recorded in the Company’s consolidated balance sheets. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company has sufficient liquidity to fund these commitments. As of June 30, 2020, the Company’s unfunded commitments consisted of the following:

Category/Company(1)	Commitment Amount
Senior Secured Loans—First Lien
5 Arch Income Fund 2, LLC	$	12.7
All Systems Holding LLC		3.0
Apex Group Limited		2.2
Aspect Software Inc		3.3
CSafe Global		6.1
Eagle Family Foods Inc		5.2
Entertainment Benefits Group LLC		0.9
Heniff Transportation Systems LLC		5.6
Industria Chimica Emiliana Srl		14.8
J S Held LLC		8.6
J S Held LLC		6.4
Kellermeyer Bergensons Services LLC		40.6
Kodiak BP LLC		8.8
Lexitas Inc		2.9
Lexitas Inc		4.3
Monitronics International Inc		39.3
Motion Recruitment Partners LLC		34.6
P2 Energy Solutions Inc		5.4
Pretium Packaging LLC		22.4
RSC Insurance Brokerage Inc		18.0
RSC Insurance Brokerage Inc		3.6
Sungard Availability Services Capital Inc		1.6
Truck-Lite Co LLC		8.7
Truck-Lite Co LLC		18.6
Zeta Interactive Holdings Corp		4.4
Asset Based Finance
Home Partners JV, Structured Mezzanine		19.5
Home Partners JV 2, Structured Mezzanine		15.9
Opendoor Labs Inc, 2L Term Loan		53.6
Total	$	371.0
Unfunded Asset Based Finance / Other commitments	$	246.8

(1) May be commitments to one or more entities affiliated with the named company.

67

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 10. Commitments and Contingencies (continued)

As of June 30, 2020, the Company’s debt commitments are comprised of $97.6 revolving credit facilities and $273.4 of delayed draw term loans, which generally are used for acquisitions or capital expenditures and are subject to certain performance tests. Such unfunded debt commitments have a fair value representing unrealized appreciation (depreciation) of $(13.7). The Company’s unfunded Asset Based Finance/Other commitments generally require certain conditions to be met or actual approval from the Advisor prior to funding.

As of June 30, 2020, the Company also has an unfunded commitment to provide $284.4 of capital to COP. The capital commitment can be satisfied with contributions of cash and/or investments. The capital commitments cannot be drawn without an affirmative vote by both the Company’s and SCRS’s representatives on COP’s board of managers.

While the Company does not expect to fund all of its unfunded commitments, there can be no assurance that it will not be required to do so.

In the normal course of business, the Company may enter into guarantees on behalf of portfolio companies. Under such arrangements, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. The Company has no such guarantees outstanding at June 30, 2020 and December 31, 2019.

Note 11. Financial Highlights

The following is a schedule of financial highlights of the Company for the six months ended June 30, 2020 and the year ended December 31, 2019:

	Six Months Ended June 30, 2020 (Unaudited)			Year Ended December 31, 2019
Per Share Data:(1)
Net asset value, beginning of period	$	29.44		$	31.45
Results of operations(2)
Net investment income		0.98			2.80
Net realized gain (loss) and unrealized appreciation (depreciation)		(5.00	)		(1.67	)
Net increase (decrease) in net assets resulting from operations		(4.02	)		1.13
Stockholder distributions(3)
Distributions from net investment income		(1.20	)		(3.02	)
Net decrease in net assets resulting from stockholder distributions		(1.20	)		(3.02	)
Capital share transactions
Issuance of common stock(4)		—			—
Repurchases of common stock(5)		—			—
Deduction of deferred costs(6)		—			(0.12	)
Net increase (decrease) in net assets resulting from capital share transactions		—			(0.12	)
Net asset value, end of period	$	24.22		$	29.44
Per share market value, end of period	$	12.89			—
Shares outstanding, end of period		172,862,454			169,594,825
Total return based on net asset value(7)		(13.65	)%		2.96	%
Total return based on market value(8)		(9.86	)%		—

68

FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 11. Financial Highlights (continued)

	Six Months Ended June 30, 2020 (Unaudited)			Year Ended December 31, 2019
Ratio/Supplemental Data:
Net assets, end of period	$	4,186		$	4,996
Ratio of net investment income to average net assets(9)		7.38	%		9.07	%
Ratio of operating expenses and excise taxes to average net assets(9)		8.56	%		8.46	%
Ratio of net operating expenses and excise taxes to average net assets(9)		8.56	%		8.46	%
Portfolio turnover(10)		18.86	%		53.43	%
Total amount of senior securities outstanding, exclusive of treasury securities	$	3,386		$	3,809
Asset coverage per unit(11)		2.24			2.31

(1) The share information utilized to determine per share data has been retroactively adjusted to reflect the Reverse Stock Split discussed in Note 3. Per share data may be rounded in order to recompute the ending net asset value per share.

(2) The per share data was derived by using the weighted average shares outstanding during the applicable period.

(3) The per share data for distributions reflect the actual amount of distributions paid per share during the applicable period.

(4) The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at a price that is greater than the net asset value per share results in an increase in net asset value per share.

(5) The per share impact of the Company’s distribution reinvestment plan is a reduction to net asset value of less than $0.01 per share during the period.

(6) As a result of the purchase price allocation for the Mergers, the Company permanently wrote off approximately $18 of deferred costs and prepaid assets from FSIC III, FSIC IV and CCT II’s balance sheets.

(7) The total return based on net asset value for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share that were declared during the applicable period and dividing the total by the net asset value per share at the beginning of the period. Total return based on net asset value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of the Company’s common stock. The historical calculation of total return based on net asset value in the table should not be considered a representation of the Company’s future total return based on net asset value, which may be greater or less than the return shown in the table due to a number of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s investment portfolio during the applicable period and do not represent an actual return to stockholders.

(8) The total return based on market value for the six months ended June 30, 2020 was calculated by taking the closing price of the Company’s shares on the NYSE on June 30, 2020, adding the cash distributions per share that were declared during the period and dividing the total by $14.30, the closing price of the Company’s shares on the NYSE on June 17, 2020 (the first day the shares began trading on the NYSE). Total return based on market value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of the Company’s common stock. The historical calculation of total return based on market value in the table should not be considered a representation of the Company’s future total return based on market value, which may be greater or less than the return shown in the table due to a number of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets, general economic conditions and fluctuations in per share market value. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods.

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FS KKR Capital Corp. II

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 11. Financial Highlights (continued)

(9) Weighted average net assets during the applicable period are used for this calculation. Ratios for the six months ended June 30, 2020 are annualized. Annualized ratios for the six months ended June 30, 2020 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2020. The following is a schedule of supplemental ratios for the six months ended June 30, 2020 and the year ended December 31, 2019:

	Six Months Ended June 30, 2020 (Unaudited)			Year Ended December 31, 2019
Ratio of subordinated income incentive fees to average net assets		1.84	%		1.11	%
Ratio of interest expense to average net assets		3.29	%		4.04	%
Ratio of excise taxes to average net assets		—			0.04	%

(10) Portfolio turnover for the six months ended June 30, 2020 is not annualized.

(11) Asset coverage per unit is the ratio of the carrying value of the Company’s total consolidated assets, less liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Note 12. Subsequent Events

On July 31, 2020, Germantown Funding LLC, or Germantown Funding, a wholly-owned special-purpose financing subsidiary of the Company, permanently prepaid a portion of its term loan credit facility, or as subsequently amended, the Germantown Credit Facility, with Goldman Sachs Bank USA, or Goldman Sachs, as lender, sole lead arranger, administrative agent and calculation agent, and Wells Fargo Bank, National Association, or Wells Fargo, as collateral agent and collateral administrator. The prepayment permanently reduced the facility amount from $300 to $175.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (in millions, except share and per share amounts)

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In this report, “we,” “us,” “our” and the “Company” refer to FS KKR Capital Corp. II and the “Advisor” refers to FS/KKR Advisor, LLC.

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

• our future operating results;

• our business prospects and the prospects of the companies in which we may invest, including our and their ability to achieve our respective objectives as a result of the current COVID-19 pandemic;

• the impact of the investments that we expect to make;

• the ability of our portfolio companies to achieve their objectives;

• our current and expected financings and investments;

• receiving and maintaining corporate credit ratings and changes in the general interest rate environment;

• the adequacy of our cash resources, financing sources and working capital;

• the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;

• our contractual arrangements and relationships with third parties;

• actual and potential conflicts of interest with the Advisor, FS Investments, KKR Credit or any of their respective affiliates;

• the dependence of our future success on the general economy and its effect on the industries in which we may invest;

• general economic and political trends and other external factors, including the current COVID-19 pandemic and related disruptions caused thereby;

• our use of financial leverage;

• the ability of the Advisor to locate suitable investments for us and to monitor and administer our investments;

• the ability of the Advisor or its affiliates to attract and retain highly talented professionals;

• our ability to maintain our qualification as a RIC and as a BDC;

• the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the rules and regulations issued thereunder;

• the effect of changes to tax legislation on us and the portfolio companies in which we may invest and our and their tax position; and

• the tax status of the enterprises in which we may invest.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. Factors that could cause actual results to differ materially include:

• changes in the economy;

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• risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or pandemics;

• future changes in laws or regulations and conditions in our operating areas; and

• the price at which shares of our common stock may trade on the New York Stock Exchange, or NYSE.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Overview

We were incorporated under the general corporation laws of the State of Maryland on July 13, 2011 and formally commenced investment operations on June 18, 2012. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. In March 2014, we closed our continuous public offering of shares of common stock to new investors.

On June 17, 2020, shares of our common stock began trading on the NYSE under the ticker symbol “FSKR”. The Listing accomplished our goal of providing our stockholders with greatly enhanced liquidity.

We are externally managed by the Advisor pursuant to an investment advisory agreement, or the investment advisory agreement, and supervised by our board of directors, a majority of whom are independent.

Our investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. We seek to meet our investment objectives by:

• utilizing the experience and expertise of the management team of the Advisor;

• employing a defensive investment approach focused on long-term credit performance and principal protection;

• focusing primarily on debt investments in a broad array of private U.S. companies, including middle-market companies, which we define as companies with annual EBITDA of $25 million to $100 million at the time of investment;

• investing primarily in established, stable enterprises with positive cash flows; and

• maintaining rigorous portfolio monitoring in an attempt to anticipate and pre-empt negative credit events within our portfolio, such as an event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company.

We pursue our investment objective by investing primarily in the debt of middle market U.S. companies with a focus on originated transactions sourced through the network of the Advisor and its affiliates. We define direct originations as any investment where the Company’s investment adviser, sub-adviser or their affiliates had negotiated the terms of the transaction beyond just the price, which, for example, may include negotiating financial covenants, maturity dates or interest rate terms. These directly originated transactions include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club, or similar transactions. These direct originations include investments originated by our former investment adviser, our former investment sub-adviser or their affiliates.

Our portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle market U.S. companies and, to a lesser extent, subordinated loans and certain-asset based financing loans of private U.S. companies. Although we do not expect a significant portion of our portfolio to be comprised of subordinated loans, there is no limit on the amount of such loans in which we may invest. We may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the “over-the-counter” market or directly from our target companies as primary market or directly originated investments. In connection with our debt investments, we may on occasion receive equity interests such as warrants or options as additional consideration. We may also purchase or

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otherwise acquire interests in the form of common or preferred equity or equity-related securities, such as rights and warrants that may be converted into or exchanged for common stock or other equity or the cash value of common stock or other equity, including through a co-investment with a financial sponsor or possibly the restructuring of, an investment. In addition, a portion of our portfolio may be comprised of corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps. The Advisor will seek to tailor our investment focus as market conditions evolve. Depending on market conditions, we may increase or decrease our exposure to less senior portions of the capital structures of our portfolio companies or otherwise make opportunistic investments, such as where the market price of loans, bonds or other securities reflects a lower value than deemed warranted by the Advisor’s fundamental analysis. Such investment opportunities may occur due to general dislocations in the markets, a misunderstanding by the market of a particular company or an industry being out of favor with the broader investment community and may include event driven investments, anchor orders and structured products. The senior secured loans, second lien secured loans and senior secured bonds in which we invest generally have stated terms of three to seven years and subordinated debt investments that we make generally have stated terms of up to ten years, but the expected average life of such securities is generally three to four years. However, we may invest in loans and securities with any maturity or duration. Our debt investments may be rated by a NRSRO and, in such case, generally will carry a rating below investment grade (rated lower than “Baa3” by Moody’s, or lower than “BBB-” by S&P). We may invest without limit in debt or other securities of any rating, as well as debt or other securities that have not been rated by a NRSRO.

Acquisitions of FS Investment Corporation III, FS Investment Corporation IV and Corporate Capital Trust II

On December 18, 2019, we completed the Mergers. Pursuant to the Merger Agreement, (i) Merger Sub 1 merged with and into FSIC III, with FSIC III continuing as the surviving company, and, immediately thereafter, FSIC III merged with and into the Company, with the Company continuing as the surviving company, (ii) Merger Sub 2 merged with and into CCT II, with CCT II continuing as the surviving company, and, immediately thereafter, CCT II merged with and into the Company, with the Company continuing as the surviving company, and (iii) Merger Sub 3 merged with and into FSIC IV, with FSIC IV continuing as the surviving company, and, immediately thereafter, FSIC IV merged with and into the Company, with the Company continuing as the surviving company. In accordance with the terms of the Merger Agreement, upon the closing of the transactions contemplated by the Merger Agreement, (i) each outstanding share of FSIC III common stock was converted into the right to receive 0.9804 shares of our common stock, (ii) each outstanding share of beneficial interest of CCT II was converted into the right to receive 1.1319 shares of our common stock and (iii) each outstanding share of FSIC IV common stock was converted into the right to receive 1.3634 shares of our common stock. As a result, we issued an aggregate of approximately 289,084,117 share of our common stock to former FSIC III stockholders, 14,031,781 shares of our common stock to former CCT II stockholders and 43,668,803 shares of our common stock to former FSIC IV stockholders. Following the consummation of the Mergers, we entered into the investment advisory agreement, which replaced the prior investment advisory and administrative services agreement.

Revenues

The principal measure of our financial performance is net increase in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net unrealized appreciation or depreciation on investments and net unrealized gain or loss on foreign currency. Net investment income is the difference between our income from interest, dividends, fees and other investment income and our operating and other expenses. Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions. Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations. Net unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments. Net unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations.

We principally generate revenues in the form of interest income on the debt investments we hold. In addition, we generate revenues in the form of non-recurring commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees. We may also generate revenues in the form of dividends and other distributions on the equity or other securities we hold.

Expenses

Our primary operating expenses include the payment of management and incentive fees and other expenses under the investment advisory agreement and the administration agreement, interest expense from financing arrangements and other

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indebtedness, and other expenses necessary for our operations. The management and incentive fees compensate the Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

The Advisor oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other administrative services. The Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports for our stockholders and reports filed with the SEC. In addition, the Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Pursuant to the administration agreement, we reimburse the Advisor for expenses necessary to perform services related to our administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain personnel of FS Investments and KKR Credit providing administrative services to us on behalf of the Advisor. We reimburse the Advisor no less than quarterly for all costs and expenses incurred by the Advisor in performing its obligations and providing personnel and facilities under the administration agreement. The Advisor allocates the cost of such services to us based on factors such as total assets, revenues, time allocations and/or other reasonable metrics. Our board of directors reviews the methodology employed in determining how the expenses are allocated to us and the proposed allocation of administrative expenses among us and certain affiliates of the Advisor. Our board of directors then assesses the reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of directors compares the total amount paid to the Advisor for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs.

We bear all other expenses of our operations and transactions, including all other expenses incurred by the Advisor in performing services for us and administrative personnel paid by the Advisor, to the extent they are not controlling persons of the Advisor or any of its affiliates, subject to the limitations included in the investment advisory agreement and the administration agreement.

In addition, we have contracted with State Street Bank and Trust Company to provide various accounting and administrative services, including, but not limited to, preparing preliminary financial information for review by the Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing with respect to RIC compliance.

COVID-19 Developments

The rapid spread of the COVID-19 pandemic, and associated impacts on the U.S. and global economies, has negatively impacted, and is likely to continue to negatively impact, the business operations of some of our portfolio companies. We cannot at this time fully predict the impact of COVID-19 on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our portfolio companies’ operating results or our own results of operations or financial condition. We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress. These developments could result in a decrease in the value of our investments.

COVID-19 has already had adverse effects on our investment income and we expect that such adverse effects will continue for some time. These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments. In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas. These market disruptions and illiquidity are likely to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions caused by COVID-19 can also be expected to increase our funding costs and limit our access to the capital markets. These events have limited our investment originations, which is likely to continue for the immediate future, and have also had a material negative impact on our operating results.

We will continue to carefully monitor the impact of the COVID-19 pandemic on our business and the business of our portfolio companies. Because the full effects of the COVID-19 pandemic are not capable of being known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows. We do, however, expect that it will continue to have a negative impact on our business and the financial condition of our portfolio companies.

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Portfolio Investment Activity for the Three and Six Months Ended June 30, 2020 and for the Year Ended December 31, 2019

Total Portfolio Activity

The following tables present certain selected information regarding our portfolio investment activity for the three and six months ended June 30, 2020 and the year ended December 31, 2019:

Net Investment Activity	For the Three Months Ended June 30, 2020			For the Six Months Ended June 30, 2020
Purchases	$	182		$	1,499
Sales and Repayments		(367	)		(2,010	)
Net Portfolio Activity	$	(185	)	$	(511	)

	For the Three Months Ended June 30, 2020					For the Six Months Ended June 30, 2020
New Investment Activity by Asset Class(1)	Purchases		Percentage			Purchases		Percentage
Senior Secured Loans—First Lien	$	23		13	%	$	1,103		74	%
Senior Secured Loans—Second Lien		14		8	%		50		3	%
Other Senior Secured Debt		—		—			—		—
Subordinated Debt		—		—			3		—
Asset Based Finance		39		21	%		237		16	%
Credit Opportunities Partners, LLC		87		48	%		87		6	%
Equity/Other		19		10	%		19		1	%
Total	$	182		100	%	$	1,499		100	%

The following table summarizes the composition of our investment portfolio at cost and fair value as of June 30, 2020 and December 31, 2019:

	June 30, 2020 (Unaudited)							December 31, 2019
	Amortized Cost(1)		Fair Value		Percentage of Portfolio			Amortized Cost(1)		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	5,391	$	4,855		67	%	$	6,017	$	5,717		67	%
Senior Secured Loans—Second Lien		787		634		9	%		941		809		9	%
Other Senior Secured Debt		181		99		1	%		243		228		3	%
Subordinated Debt		205		176		2	%		479		489		5	%
Asset Based Finance		742		678		9	%		535		485		6	%
Credit Opportunities Partners, LLC		591		575		8	%		503		510		6	%
Equity/Other		318		264		4	%		323		353		4	%
Total	$	8,215	$	7,281		100	%	$	9,041	$	8,591		100	%

The following table summarizes the composition of the Company’s investment portfolio at cost and fair value as of June 30, 2020 and December 31, 2019 to include, on a look-through basis, the investments underlying the TRS, as disclosed in Note 9 to our unaudited financial statements included herein. The investments underlying the TRS had a notional amount and market value of $0 and $0, and $94 and $89, respectively, as of June 30, 2020 and December 31, 2019:

	June 30, 2020 (Unaudited)							December 31, 2019
	Amortized Cost(1)		Fair Value		Percentage of Portfolio			Amortized Cost(1)		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	5,391	$	4,855		67	%	$	6,090	$	5,788		67	%
Senior Secured Loans—Second Lien		787		634		9	%		961		827		10	%
Other Senior Secured Debt		181		99		1	%		243		228		3	%
Subordinated Debt		205		176		2	%		479		489		5	%
Asset Based Finance		742		678		9	%		535		485		5	%
Credit Opportunities Partners, LLC		591		575		8	%		503		510		6	%
Equity/Other		318		264		4	%		324		353		4	%
Total	$	8,215	$	7,281		100	%	$	9,135	$	8,680		100	%

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(1) Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

The following table presents certain selected information regarding the composition of our investment portfolio as of June 30, 2020 and December 31, 2019:

	June 30, 2020			December 31, 2019
Number of Portfolio Companies		164			213
% Variable Rate Debt Investments (based on fair value)(1)(2)		71.1	%		72.9	%
% Fixed Rate Debt Investments (based on fair value)(1)(2)		9.9	%		14.7	%
% Other Income Producing Investments (based on fair value)(3)		10.1	%		6.9	%
% Non-Income Producing Investments (based on fair value)(2)		3.5	%		3.4	%
% of Investments on Non-Accrual (based on fair value)		5.4	%		2.1	%
Weighted Average Annual Yield on Accruing Debt Investments(2)(4)		8.7	%		9.5	%
Weighted Average Annual Yield on All Debt Investments(5)		7.4	%		8.8	%

(1) “Debt Investments” means investments that pay or are expected to pay a stated interest rate, stated dividend rate or other similar stated return.

(2) Does not include investments on non-accrual status.

(3) “Other Income Producing Investments” means investments that pay or are expected to pay interest, dividends or other income to the Company on an ongoing basis but do not have a stated interest rate, stated dividend rate or other similar stated return.

(4) The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

(5) The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

For the six months ended June 30, 2020, our total return based on net asset value was (13.65)% and our total return based on market value was (9.86)%. For the year ended December 31, 2019, our total return based on net asset value was 2.96%. See footnotes 7 and 8 to the financial highlights table included in Note 11 to our unaudited consolidated financial statements included herein for information regarding the calculation of our total return based on net asset value and total return based on market value, respectively.

Direct Originations

The following table presents certain selected information regarding our direct originations as of June 30, 2020 and December 31, 2019:

Characteristics of All Direct Originations Held in Portfolio	June 30, 2020			December 31, 2019
Number of Portfolio Companies		111			110
% of Investments on Non-Accrual (based on fair value)		5.9	%		2.5	%
Total Cost of Direct Originations	$	7,127		$	7,161
Total Fair Value of Direct Originations	$	6,421		$	6,713
% of Total Investments, at Fair Value		88.2	%		78.1	%
Weighted Average Annual Yield on Accruing Debt Investments(1)		8.5	%		9.3	%
Weighted Average Annual Yield on All Debt Investments(2)		7.4	%		8.5	%

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(1) The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

(2) The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

Portfolio Composition by Industry Classification

See Note 6 to our unaudited consolidated financial statements included herein for additional information regarding the composition of our investment portfolio by industry classification.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of June 30, 2020 and December 31, 2019:

	June 30, 2020 (Unaudited)					December 31, 2019
Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Automobiles & Components	$	55		0.8	%	$	182		2.1	%
Capital Goods		965		13.2	%		1,139		13.3	%
Commercial & Professional Services		747		10.3	%		861		10.0	%
Consumer Durables & Apparel		298		4.1	%		302		3.5	%
Consumer Services		259		3.5	%		548		6.4	%
Credit Opportunities Partners, LLC		575		7.9	%		510		5.9	%
Diversified Financials		573		7.9	%		402		4.7	%
Energy		172		2.4	%		328		3.8	%
Food & Staples Retailing		173		2.4	%		223		2.6	%
Food, Beverage & Tobacco		93		1.3	%		132		1.5	%
Health Care Equipment & Services		688		9.4	%		888		10.3	%
Household & Personal Products		109		1.5	%		1		0.0	%
Insurance		238		3.3	%		220		2.6	%
Materials		132		1.8	%		354		4.1	%
Media & Entertainment		261		3.6	%		409		4.8	%
Pharmaceuticals, Biotechnology & Life Sciences		89		1.2	%		187		2.2	%
Real Estate		237		3.2	%		122		1.4	%
Retailing		334		4.6	%		435		5.1	%
Semiconductors & Semiconductor Equipment		—		—			3		0.0	%
Software & Services		856		11.8	%		874		10.2	%
Technology Hardware & Equipment		142		1.9	%		174		2.0	%
Telecommunication Services		145		2.0	%		154		1.8	%
Transportation		140		1.9	%		143		1.7	%
Total	$	7,281		100.0	%	$	8,591		100.0	%

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Portfolio Asset Quality

In addition to various risk management and monitoring tools, the Advisor uses an investment rating system to characterize and monitor the expected level of returns on each investment in our portfolio. The Advisor uses an investment rating scale of 1 to 4. The following is a description of the conditions associated with each investment rating:

Investment Rating	Summary Description
1	Performing investment-generally executing in accordance with plan and there are no concerns about the portfolio company’s performance or ability to meet covenant requirements.
2	Performing investment-no concern about repayment of both interest and our cost basis but company’s recent performance or trends in the industry require closer monitoring.
3	Underperforming investment-some loss of interest or dividend possible, but still expecting a positive return on investment.
4	Underperforming investment-concerns about the recoverability of principal or interest.

The following table shows the distribution of our investments on the 1 to 4 investment rating scale at fair value as of June 30, 2020 and December 31, 2019:

	June 30, 2020					December 31, 2019
Investment Rating	Fair Value		Percentage of Portfolio			Fair Value		Percentage  of Portfolio
1	$	4,172		57	%	$	5,299		62	%
2		2,108		29	%		2,624		30	%
3		430		6	%		356		4	%
4		571		8	%		312		4	%
Total	$	7,281		100	%	$	8,591		100	%

The amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment values.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2020 and 2019

Revenues

Our investment income for the three and six months ended June 30, 2020 and 2019 was as follows:

	Three Months Ended June 30,										Six Months Ended June 30,
	2020					2019					2020					2019
	Amount		Percentage of Total Income			Amount		Percentage of Total Income			Amount		Percentage of Total Income			Amount		Percentage of Total Income
Interest income	$	126		75	%	$	102		90	%	$	277		76	%	$	210		90	%
Paid-in-kind interest income		16		10	%		4		4	%		30		8	%		9		4	%
Fee income		7		4	%		6		6	%		22		6	%		13		6	%
Dividend income		19		11	%		—		0	%		34		10	%		0		0	%
Total investment income(1)	$	168		100	%	$	112		100	%	$	363		100	%	$	232		100	%

(1) For the three months ended June 30, 2020 and 2019, such revenues represent $148 and $105, respectively, of cash income earned as well as $20 and $7, respectively, in non-cash portions relating to accretion of discount and PIK interest. For the six months ended June 30, 2020 and 2019, such revenues represent $324 and $218, respectively, of cash income earned as well as $39 and $14, respectively, in non-cash portions relating to accretion of discount and PIK interest. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

The level of interest income we receive is generally related to the balance of income-producing investments, multiplied by the weighted average yield of our investments. Fee income is transaction based and typically consists of prepayment fees and

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structuring fees. As such, fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees.

The increase in interest and fee income during the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019 can primarily be attributed to the increase in assets resulting from the Mergers.

The increase in dividend income during the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019 was primarily due to dividends paid in respect to our investment in Credit Opportunities Partners, LLC.

Expenses

Our operating expenses for the three and six months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Management fees	$	29	$	17	$	62	$	35
Subordinated income incentive fees		19		9		42		20
Administrative services expenses		1		1		3		2
Stock transfer agent fees		1		—		2		1
Accounting and administrative fees		—		1		1		1
Interest expense		35		25		75		55
Other		8		1		10		2
Total operating expenses	$	93	$	54	$	195	$	116

The following table reflects selected expense ratios as a percent of average net assets for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Ratio of operating expenses to average net assets		2.21	%		2.11	%		4.28	%		4.52	%
Ratio of incentive fees and interest expense to average net assets(1)		1.28	%		1.35	%		2.57	%		2.93	%
Ratio of net operating expenses, excluding certain expenses, to average net assets		0.93	%		0.76	%		1.71	%		1.59	%

(1) Ratio data may be rounded in order to recompute the ending ratio of net operating expenses, excluding certain expenses, to average net assets.

Incentive fees and interest expense, among other things, may increase or decrease our expense ratios relative to comparative periods depending on portfolio performance and changes in amounts outstanding under our financing arrangements and benchmark interest rates such as LIBOR, among other factors.

Net Investment Income

Our net investment income totaled $75 ($0.44 per share) and $58 ($0.72 per share) for the three months ended June 30, 2020 and 2019, respectively. The increase in net investment income for the three months ended June 30, 2020 can be attributed to the increase in investment income discussed above.

Our net investment income totaled $168 ($0.98 per share) and $116 ($1.43 per share) for the six months ended June 30, 2020 and 2019, respectively. The increase in net investment income for the six months ended June 30, 2020 can be attributed to the increase in investment income discussed above.

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Net Realized Gains or Losses

Our net realized gains (losses) on investments and foreign currency for the three and six months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended  June 30,						Six Months Ended  June 30,
	2020			2019			2020			2019
Net realized gain (loss) on investments(1)	$	(143	)	$	(22	)	$	(360	)	$	(41	)
Net realized gain (loss) on total return swap		1			—			(1	)		—
Net realized gain (loss) on foreign currency forward contracts		—			—			0			—
Net realized gain (loss) on interest rate swaps		(4	)		—			(6	)		—
Net realized gain (loss) on foreign currency		—			—			1			0
Total net realized gain (loss)	$	(146	)	$	(22	)	$	(366	)	$	(41	)

(1) We sold investments and received principal repayments, respectively, of $116 and $181 during the three months ended June 30, 2020 and $30 and $839 during the three months ended June 30, 2019. We sold investments and received principal repayments, respectively, of $1,069 and $941 during the six months ended June 30, 2020 and $145 and $927 during the six months ended June 30, 2019.

Net Change in Unrealized Appreciation (Depreciation)

Our net change in unrealized appreciation (depreciation) on investments and interest rate swaps and unrealized gain (loss) on foreign currency for the three and six months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended  June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net change in unrealized appreciation (depreciation) on investments	$	121		$	15		$	(484	)	$	52
Net change in unrealized appreciation (depreciation) on total return swap		(1	)		—			2			—
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		(1	)		—			1			—
Net change in unrealized appreciation (depreciation) on interest rate swaps		—			(6	)		(30	)		(10	)
Net change in unrealized gain (loss) on foreign currency		(26	)		(2	)		23			(3	)
Total net change in unrealized appreciation (depreciation)	$	93		$	7		$	(488	)	$	39

During the three and six months ended June 30, 2020, the net change in unrealized appreciation (depreciation) was driven primarily by mark to market declines across the portfolio resulting from uncertainty related to the current COVID-19 pandemic.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended June 30, 2020 and 2019, the net increase in net assets resulting from operations was $22 ($0.13 per share) and $43 ($0.53 per share), respectively.

For the six months ended June 30, 2020, the net decrease in net assets resulting from operations was $(686) ($(4.02) per share) compared to a net increase in net assets resulting from operations of $114 ($1.41 per share) during the six months ended June 30, 2019.

This “Results of Operations” section should be read in conjunction with the “COVID-19 Developments” above.

Financial Condition, Liquidity and Capital Resources

Overview

On June 17, 2020, shares of our common stock began trading on the NYSE under the ticker symbol “FSKR”. The Listing accomplished our goal of providing our stockholders with greatly enhanced liquidity.

As of June 30, 2020, we had $295 in cash and foreign currency, which we and our wholly-owned financing subsidiaries held in custodial accounts, and $1,685 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of June 30, 2020, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of June 30, 2020, we had unfunded debt investments with aggregate unfunded commitments

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of $371.0, unfunded equity/other commitments of $246.8, and unfunded commitments of $284.4 of Credit Opportunities Partners, LLC. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. To seek to enhance our returns, we also employ leverage as market conditions permit and at the discretion of the Advisor, but in no event will leverage employed exceed the maximum amount permitted by the 1940 Act. Prior to June 18, 2020, in accordance with the 1940 Act, we were allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such borrowing. Effective June 19, 2020, our asset coverage requirement applicable to senior securities was reduced from 200% to 150%. As of June 30, 2020, the aggregate amount outstanding of the senior securities issued by us was $3,386 billion. As of June 30, 2020, our asset coverage was 224%. See “—Financing Arrangements.”

Prior to investing in securities of portfolio companies, we invest the cash received from fees, interest and dividends earned from our investments and principal repayments and proceeds from sales of our investments primarily in cash, cash equivalents, including money market funds, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.

This “Financial Condition, Liquidity and Capital Resources” section should be read in conjunction with “COVID-19 Developments” above.

Financing Arrangements

The following table presents summary information with respect to our outstanding financing arrangements as of June 30, 2020:

Arrangement(1)	Type of Arrangement	Rate(1)	Amount Outstanding			Amount Available		Maturity Date
Senior Secured Revolving Credit Facility(2)	Revolving Credit Facility	L+2.00% -  2.25%(3)	$	748	(4)	$	1,017	November 7, 2024
Germantown Credit Facility(2)	Term Loan Credit Facility	L+2.50%		300			—	December 15, 2020
Darby Creek Credit Facility(2)	Revolving Credit Facility	L+1.95%		195			55	February 26, 2024
Dunlap Credit Facility(2)	Revolving Credit Facility	L+2.00%		360			140	February 26, 2024
Jefferson Square Credit Facility(2)	Revolving Credit Facility	L+2.50%		320			80	July 15, 2022
Juniata River Credit Facility(2)	Revolving Credit Facility	L+2.45%		680			170	October 11, 2021
Burholme Prime Brokerage Facility(2)	Prime Brokerage Facility	L+1.25%		30			1	December 26,  2020(5)
Ambler Credit Facility(2)	Revolving Credit Facility	L+2.25%		118			82	November 22, 2024
Meadowbrook Run Credit Facility(2)	Revolving Credit Facility	L+2.25%		160			140	November 22, 2024
4.250% Notes due 2025(6)	Unsecured Notes	4.250%		475			—	February 14, 2025
Total				3,386			1,685
Cheltenham Total Return Swap	Total Return Swap	L+1.60%	$	—		$	—	N/A(7)

(1) LIBOR is subject to a 0% floor.

(2) The carrying amount outstanding under the facility approximates its fair value.

(3) The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.

(4) Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €126 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.12 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $114 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.73 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $158 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.69 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £142 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.24 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars.

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(5) The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of June 30, 2020, neither party had provided notice of its intent to terminate the facility.

(6) As of June 30, 2020, the fair value of the 4.250% notes was approximately $427. The valuation is considered a Level 2 valuation within the fair value hierarchy.

(7) Cheltenham Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past February 19, 2020 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Cheltenham Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.

See Note 9 to our unaudited consolidated financial statements included herein for additional information regarding our financing arrangements.

RIC Status and Distributions

We have elected to be subject to tax as a RIC under Subchapter M of the Code. In order to qualify for RIC tax treatment, we must, among other things, make distributions of an amount at least equal to 90% of our investment company taxable income, determined without regard to any deduction for distributions paid, each tax year. As long as the distributions are declared by the later of the fifteenth day of the ninth month following the close of a tax year or the due date of the tax return for such tax year, including extensions, distributions paid up to twelve months after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. We intend to make sufficient distributions to our stockholders to qualify for and maintain our RIC tax status each tax year. We are also subject to a 4% nondeductible federal excise tax on certain undistributed income unless we make distributions in a timely manner to our stockholders generally of an amount at least equal to the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains in excess of capital losses, or “capital gain net income” (adjusted for certain ordinary losses), for the one-year period ending October 31 of that calendar year and (3) any net ordinary income and capital gain net income for the preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. Any distribution declared by us during October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our stockholders, on December 31 of the calendar year in which the distribution was declared. We can offer no assurance that we will achieve results that will permit us to pay any cash distributions. If we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

Subject to applicable legal restrictions and the sole discretion of our board of directors, we intend to authorize, declare and pay regular cash distributions on a quarterly basis. We will calculate each stockholder’s specific distribution amount for the period using record and declaration dates and each stockholder’s distributions will begin to accrue on the date that shares of our common stock are issued to such stockholder. From time to time, we may also pay special interim distributions in the form of cash or shares of our common stock at the discretion of our board of directors.

During certain periods, our distributions may exceed our earnings. As a result, it is possible that a portion of the distributions we make may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from our investment activities. Each year a statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our stockholders. No portion of the distributions paid during the six months ended June 30, 2020 or 2019 represented a return of capital.

We intend to continue to make our regular distributions in the form of cash, out of assets legally available for distribution, except for those stockholders who receive their distributions in the form of shares of our common stock under our distribution reinvestment plan. Any distributions reinvested under the plan will nevertheless remain taxable to a U.S. stockholder.

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The following table reflects the cash distributions per share that we have declared on our common stock during the six months ended June 30, 2020 and 2019:

	Distribution
For the Three Months Ended	Per  Share(1)		Amount
Fiscal 2019
March 31, 2019	$	0.7540	$	61
June 30, 2019		0.7540		61
Total	$	1.5080	$	122
Fiscal 2020
March 31, 2020	$	0.6000	$	102
June 30, 2020		0.6000		102
Total	$	1.2000	$	204

(1) The amount of each per share distribution has been retroactively adjusted to reflect the Reverse Stock Split as discussed above in Note 3 to our unaudited consolidated financial statements included herein.

See Note 5 to our unaudited consolidated financial statements included herein for additional information regarding our distributions.

Recent Developments

On July 31, 2020, Germantown Funding permanently prepaid a portion of the Germantown Credit Facility. For additional discussion of the partial prepayment, see Note 12 to our unaudited consolidated financial statements included herein.

Critical Accounting Policies

Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our most significant accounting policies in “Note 2. Summary of Significant Accounting Policies” in our consolidated financial statements. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. We have identified one of our accounting policies, valuation of portfolio investments, as critical because it involves significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and assumptions could have a material impact on our reported results of operations or financial condition. As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those discussed below.

Valuation of Portfolio Investments

We determine the net asset value of our investment portfolio each quarter. Securities are valued at fair value as determined in good faith by our board of directors. In connection with that determination, the Advisor provides our board of directors with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by independent third-party valuation services.

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or ASC Topic 820, issued by the FASB, clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market

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participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

• our quarterly fair valuation process begins by the Advisor providing financial and operating information with respect to each portfolio company or investment to our independent third-party valuation service providers;

• our independent third-party valuation service providers review this information, along with other public and private information, and provide the Advisor with a valuation range for each portfolio company or investment;

• the Advisor then discusses the independent third-party valuation service providers’ valuation ranges and provides the valuation committee of the board of directors, or the valuation committee, with a valuation recommendation for each investment, along with supporting materials;

• preliminary valuations are then discussed with the valuation committee;

• our valuation committee reviews the preliminary valuations and the Advisor, together with our independent third-party valuation service providers and, if applicable, supplements the preliminary valuations to reflect any comments provided by the valuation committee;

• following the completion of its review, our valuation committee recommends that our board of directors approves the fair valuations determined by the valuation committee; and

• our board of directors discusses the valuations and determines the fair value of each such investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of the Advisor, the valuation committee and our independent third-party valuation service providers.

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements. In making its determination of fair value, our board of directors may use any approved independent third-party pricing or valuation services. However, our board of directors is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information obtained from the Advisor or any approved independent third-party valuation or pricing service that our board of directors deems to be reliable in determining fair value under the circumstances. Below is a description of factors that the Advisor, any approved independent third party valuation services and our board of directors may consider when determining the fair value of our investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments.

For convertible debt securities, fair value generally approximates the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.

Our equity interests in portfolio companies for which there is no liquid public market are valued at fair value. Our board of directors, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.

The Advisor, any approved independent third-party valuation services and our board of directors may also consider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-

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party investments in the portfolio companies or industry practices in determining fair value. The Advisor, any approved independent third-party valuation services and our board of directors may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of directors, in consultation with the Advisor and any approved independent third party valuation services, if applicable, may consider relevant in assessing fair value. Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security.

When we receive warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Our board of directors subsequently values these warrants or other equity securities received at their fair value.

The fair values of our investments are determined in good faith by our board of directors. Our board of directors is responsible for the valuation of our portfolio investments at fair value as determined in good faith pursuant to our valuation policy and consistently applied valuation process. Our board of directors has delegated day-to-day responsibility for implementing our valuation policy to the Advisor, and has authorized the Advisor to utilize independent third-party valuation and pricing services that have been approved by our board of directors. The valuation committee is responsible for overseeing the Advisor’s implementation of the valuation process.

See Note 8 to our unaudited consolidated financial statements included herein for additional information regarding the fair value of our financial instruments.

Contractual Obligations

We have entered into agreements with the Advisor to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory agreement are equal to (a) an annual base management fee based on the average weekly value of our gross assets (excluding cash and cash equivalents) and (b) an incentive fee based on our performance. The Advisor is reimbursed for administrative expenses incurred on our behalf. See Note 4 to our unaudited consolidated financial statements included herein for a discussion of these agreements and for the amount of fees and expenses accrued under these agreements during the three and six months ended June 30, 2020 and 2019.

A summary of our significant contractual payment obligations for the repayment of outstanding indebtedness at June 30, 2020 is as follows:

	Payments Due By Period
	Maturity Date(1)	Total	Less than 1 year		1-3 years		3-5 years	More than  5 years
Senior Secured Revolving Credit Facility(2)	November 7, 2024	$748		—		—	$748	—
Germantown Credit Facility(3)	December 15, 2020	$300	$	300		—	—	—
Darby Creek Credit Facility(4)	February 26, 2024	$195		—		—	$195	—
Dunlap Credit Facility(5)	February 26, 2024	$360		—		—	$360	—
Jefferson Square Credit Facility(6)	July 15, 2022	$320		—	$	320	—	—
Juniata River Credit Facility(7)	October 11, 2021	$680		—	$	680	—	—
Burholme Prime Brokerage Facility(8)	December 26, 2020	$30	$	30		—	—	—
Ambler Credit Facility(9)	November 22, 2024	$118		—		—	$118	—
Meadowbrook Run Credit Facility(10)	November 22, 2024	$160		—		—	$160	—
4.250% Notes due 2025	February 14, 2025	$475		—		—	$475	—

(1) Amounts outstanding under the financing arrangements will mature, and all accrued and unpaid interest thereunder will be due and payable, on the maturity date.

(2) At June 30, 2020, $1,017 remained unused under the Senior Secured Revolving Credit Facility. Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €126 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.12 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $114 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.73 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $158 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.69 as of June 30, 2020 to reflect

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total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £142 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.24 as of June 30, 2020 to reflect total amount outstanding in U.S. dollars.

(3) At June 30, 2020, no amounts remained unused under the financing arrangement.

(4) At June 30, 2020, $55 remained unused under the Darby Creek Credit Facility.

(5) At June 30, 2020, $140 remained unused under the Dunlap Credit Facility.

(6) At June 30, 2020, $80 remained unused under the Jefferson Square Credit Facility.

(7) At June 30, 2020, $170 remained unused under the Juniata River Credit Facility.

(8) At June 30, 2020, $1 remained unused under the Burholme Prime Brokerage Facility.

(9) At June 30, 2020, $82 remained unused under the Ambler Credit Facility.

(10) At June 30, 2020, $140 remained unused under the Meadowbrook Run Credit Facility.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are subject to financial market risks, including changes in interest rates. As of June 30, 2020, 71.1% of our portfolio investments (based on fair value) were debt investments paying variable interest rates and 9.9% were debt investments paying fixed interest rates, while 10.1% were other income producing investments, 3.5% consisted of non-income producing investments and the remaining 5.4% consisted of investments on non-accrual status. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed the hurdle rate applicable to the subordinated incentive fee on income, and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to the Advisor with respect to our increased pre-incentive fee net investment income. In recent weeks, the U.S. Federal Reserve and other central banks have reduced certain interest rates in response to the COVID-19 pandemic and market conditions. A prolonged reduction in interest rates may reduce our net investment income.

Subject to the requirements of the 1940 Act, we may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. Although hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates. As of June 30, 2020, we have four pay-fixed, receive-floating interest rate swaps which we pay an annual fixed rate of 2.59% to 2.81% and receive three-month LIBOR on an aggregate notional amount of $900 million. The interest rate swaps have quarterly settlement payments.

Pursuant to the terms of all of our financing arrangements, borrowings are at a floating rate based on LIBOR. To the extent that any present or future credit facilities, total return swap agreements or other financing arrangements that we or any of our subsidiaries enter into are based on a floating interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we or our subsidiaries have such debt outstanding or financing arrangements in effect, our interest expense would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.

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The following table shows the effect over a twelve month period of changes in interest rates on our interest income, interest expense and net interest income, assuming no changes in the composition of our investment portfolio, including the accrual status of our investments, and our financing arrangements in effect as of June 30, 2020 (dollar amounts are presented in millions):

Basis Point Change in Interest Rates	Increase (Decrease) in Interest Income(1)			Increase (Decrease) in Interest Expense			Increase (Decrease)  in Net Interest Income			Percentage Change in  Net Interest Income
Down 30 basis points	$	(2	)	$	(9	)	$	7			1.5	%
No change		—			—			—			—
Up 100 basis points	$	23		$	29		$	(6	)		(1.4	%)
Up 300 basis points	$	129		$	87		$	42			9.3	%
Up 500 basis points	$	238		$	145		$	93			20.8	%

(1) Assumes no defaults or prepayments by portfolio companies over the next twelve months.

We expect that our long-term investments will be financed primarily with equity and debt. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.

Foreign Currency Risk

From time to time, we may make investments that are denominated in a foreign currency that are subject to the effects of exchange rate movements between the foreign currency of each such investment and the U.S. dollar, which may affect future fair values and cash flows, as well as amounts translated into U.S. dollars for inclusion in our consolidated financial statements.

The table below presents the effect that a 10% immediate, unfavorable change in the foreign currency exchange rates (i.e. strengthening of the U.S. dollar) would have on the fair value of our investments denominated in foreign currencies as of June 30, 2020, by foreign currency, all other valuation assumptions remaining constant. In addition, the table below presents the par value of our investments denominated in foreign currencies and the notional amount of foreign currency forward contracts in local currency in place as of June 30, 2020 to hedge against foreign currency risks.

	Investments Denominated in Foreign Currencies As of June 30, 2020								Hedges As of June 30, 2020
	Cost in Local Currency		Cost in US$		Fair Value		Reduction in Fair Value as of June 30, 2020 if 10% Adverse Change in Exchange Rate(1)		Net Foreign Currency Hedge Amount in Local Currency		Net Foreign Currency Hedge Amount in U.S. Dollars
Australian Dollars	A$	152.7	$	105.0	$	101.6	$	10.2		—		—
British Pound Sterling	£	138.7		178.9		164.8		16.5		—		—
Canadian Dollars	C$	120.7		90.7		81.3		8.1		—		—
Euros	€	135.8		136.8		132.0		13.2		—		—
Swedish Kronor		0.6kr		0.1		0.1		—		—		—
Total			$	511.5	$	479.8	$	48.0				—

(1) Excludes effect, if any, of any foreign currency hedges.

We may use derivative instruments from time to time, including foreign currency forward contracts, to manage the impact of fluctuations in foreign currency exchange rates. In addition, we have the ability to borrow in foreign currencies under our Senior Secured Revolving Credit Facility, which provides a natural hedge with regard to changes in exchange rates between the foreign currencies and the U.S. dollar and reduces our exposure to foreign exchange rate differences. We are typically a net receiver of these foreign currencies as related to our international investment positions, and, as a result, our investments denominated in foreign currencies, to the extent not hedged, benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar.

As of June 30, 2020, there were no foreign currency forward contracts outstanding. As of June 30, 2020, we had outstanding borrowings denominated in foreign currencies of €126, CAD $114, £142 and A$158 under our Senior Secured Revolving Credit Facility.

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In addition, we may have risk regarding portfolio valuation. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments.”

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020.

Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act) that occurred during the three-month period ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material adverse effect upon our financial condition or results of operations.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors that appeared under Item 1A. “Risk Factors” in our most recent Annual Report on Form 10-K. There are no material changes from the risk factors included within our most recent Annual Report on Form 10-K other than the risks described below.

We have obtained the approval of our stockholders to issue shares of our common stock at prices below the then-current net asset value per share of our common stock, and any such issuance could materially dilute our stockholders’ interest in our common stock and reduce our net asset value per share.

We have obtained the approval of our stockholders to issue shares of our common stock at prices below the then-current net asset value of our common stock, subject to certain conditions, during the twelve-month period concluding on June 27, 2021. Any sale or other issuance of shares of our common stock at a price below net asset value per share would result in an immediate dilution to our common stock and a reduction of our net asset value per share. This dilution would occur as a result of a proportionately greater decrease in a stockholder’s interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. Such dilutive effects may be material.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In May 2020, the Company’s board of directors authorized a stock repurchase program, or the May 2020 Share Repurchase Program. Under the May 2020 Share Repurchase Program, the Company is permitted to repurchase up to $100 in the aggregate of its outstanding common stock in the open market at prices below the then-current net asset value per share. The timing, manner, price and amount of any share repurchases was determined by the Company based upon the evaluation of economic and market conditions, the Company’s stock price, applicable legal and regulatory requirements and other factors. The May 2020 Share Repurchase Program is expected to be in effect for one year from the effective date, unless extended, or until the aggregate repurchase amount that has been approved by the Company’s board of directors has been expended, or the plan otherwise terminates pursuant to its terms. The May 2020 Share Repurchase Program does not require the Company to repurchase any specific number of shares and the Company cannot assure stockholders that any shares will be repurchased under the program. The May 2020 Share Repurchase Program may be suspended, extended, modified or discontinued at any time.

As previously disclosed, certain affiliates of the owners of the Advisor committed $100 to a $350 investment vehicle that may invest from time to time in shares of the Company. In June 2020, that investment vehicle entered into a written trading plan with a third party broker in accordance with Rule 10b5-1 and Rule 10b-18 promulgated under the Exchange Act, or the Affiliated Purchaser Program, to facilitate the purchase of shares of our common stock pursuant to the terms and conditions of such plan. The Affiliated Purchaser Program provides for the purchase of up to $100 worth of shares of our common stock, subject to the limitations provided therein.

During the period from July 1, 2020 to July 31, 2020, in the aggregate, the May 2020 Share Repurchase Program and the Affiliated Purchaser Program, repurchased or purchased, as applicable, 3,082,501 shares of our common stock at an average price per share (inclusive of commissions paid) of $14.14 (totaling $44).

Item 3. Defaults upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.

2.1	Agreement and Plan of Merger, dated as of May  31, 2019, by and among FS Investment Corporation II, Corporate Capital Trust II, FS Investment Corporation III, FS Investment Corporation IV, NT Acquisition 1, Inc., NT Acquisition 2, Inc., NT Acquisition 3, Inc. and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 3, 2019.)
3.1	Second Articles of Amendment and Restatement of the Company. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 18, 2019.)
3.2	Articles of Amendment. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on December 18, 2019.)
3.3	Articles of Amendment. (Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on December 18, 2019.)
3.4	Articles of Amendment. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 10, 2020.)
3.5	Articles of Amendment. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on June 10, 2020.)
3.6	Fourth Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 17, 2020.)
4.1	Amended and Restated Distribution Reinvestment Plan of the Company, effective as of March  26, 2014. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 24, 2014.)
4.2	Second Amended and Restated Distribution Reinvestment Plan of the Company, effective as of June  17, 2020. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 17, 2020.)
4.3	Indenture, dated as of February  14, 2020, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February  14, 2020.)
4.4	First Supplemental Indenture, dated as of February  14, 2020, relating to the 4.250% Notes due 2025, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 14, 2020.)
4.5	Form of 4.250% Notes due 2025. (Included as Exhibit A to the First Supplemental Indenture in Exhibit 4.3). (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 14, 2020.)
10.1	Amended and Restated Investment Advisory Agreement, dated as of December  18, 2019, by and between the Company and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 18, 2019.)
10.2	Administration Agreement, dated as of December  18, 2019, by and between the Company and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 18, 2019.)
10.3	Custodian Agreement, dated as of February  8, 2012, by and between the Company and State Street Bank and Trust Company. (Incorporated by reference to Exhibit (j) filed with Pre-Effective Amendment No.  3 to the Company’s registration statement on Form N-2 (File No. 333-175654) filed on February 10, 2012.)
10.4	Loan Financing and Servicing Agreement, dated as of February  20, 2014, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on February 25, 2014.)
10.5	Amendment No.  1 to Loan Financing and Servicing Agreement, dated as of January  12, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K filed on March 25, 2016.)

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10.6	Amendment No.  2 to Loan Financing and Servicing Agreement, dated as of February  3, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K filed on March 25, 2016.)
10.7	Amendment No.  3 to Loan Financing and Servicing Agreement, dated as of May  7, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K filed on March 25, 2016.)
10.8	Amendment No.  4 to Loan Financing and Servicing Agreement, dated as of October  8, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K filed on March 25, 2016.)
10.9	Amendment No.  6 to Loan Financing and Servicing Agreement, dated as of August  19, 2016, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 22, 2016.)
10.10	Amendment No.  7 to Loan Financing and Servicing Agreement, dated as of February  15, 2019, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-K filed on March 19, 2019.)
10.11	Omnibus Amendment, dated as of February  20, 2019, between Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 25, 2019.)
10.12	Amended and Restated Loan and Security Agreement, dated as of March  13, 2019, by and between Juniata River LLC, as borrower, JPMorgan Chase Bank, National Association, as administrative agent, the lenders party thereto, and Wells Fargo Bank, National Association, as collateral administrator, collateral agent and securities intermediary. (Incorporated by reference to Exhibit 10.20 to the Company’s Quarterly Report on Form 10-K filed on March 19, 2019.)
10.13	First Amendment to Amended and Restated Loan Agreement, dated as of October  11, 2019, among Juniata River LLC, JPMorgan Chase Bank, National Association, as lender and Administrative Agent, Wells Fargo Bank, National Association, as Collateral Agent, Collateral Administrator and Securities Intermediary, and FS Investment Corporation II, as Investment Manager. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 15, 2019.)
10.14	Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 7, 2019, by and among FS KKR Capital Corp., FS Investment Corporation II, and FS Investment Corporation III, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders, documentation agents, joint bookrunners, and joint lead arrangers party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 13, 2019.)
10.15	Commitment Increase Letter, dated as of March  3, 2020, among BNP Paribas, ING Capital LLC, the Company, FS KKR Capital Corp. and JPMorgan Chase Bank, N.A., as administrative agent. (Incorporated by reference to Exhibit 10.15 to the Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2020.)
10.16	Amendment No.  1 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May  5, 2020, by and among the Company, FS KKR Capital Corp., JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 8, 2020.)

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10.17	Credit Agreement, dated as of July  10, 2019, among Germantown Funding LLC, Goldman Sachs Bank USA, as lender, sole lead arranger, administrative agent and calculation agent, and Wells Fargo Bank, National Association, as collateral agent and collateral administrator.  (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on July 16, 2019).
10.18	Amendment No. 1 to Credit Agreement, dated as of December  13, 2019, among Germantown Funding LLC, as borrower, FS Investment Corporation III, as equity owner and investment manager, Goldman Sachs Bank USA, as sole lead arranger, sole lender, and administrative agent, and Wells Fargo Bank, National Association, as collateral administrator and collateral agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on December 17, 2019).
10.19	Loan Financing and Servicing Agreement, dated as of December  2, 2014, by and among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on December 8, 2014).
10.20	Amendment No. 1 to Loan Financing and Servicing Agreement, dated as of February  24, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on March 2, 2015).
10.21	Amendment No. 2 to Loan Financing and Servicing Agreement, dated as of March  24, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on March 26, 2015).
10.22	Amendment No.  3 to Loan Financing and Servicing Agreement, dated as of August  25, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.29 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 11, 2016).
10.23	Amendment No. 4 to Loan Financing and Servicing Agreement, dated as of September  22, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on September 24, 2015).
10.24	Amendment No.  5 to Loan Financing and Servicing Agreement, dated as of October  8, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.31 to FS Investment Corporation III’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed on March 11, 2016).
10.25	Amendment No. 7 to Loan Financing and Servicing Agreement, dated as of January  12, 2017, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, each lender party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to the FS Investment Corporation III’s Current Report on Form 8-K filed on January 19, 2017).
10.26	Amendment No. 8 to Loan Financing and Servicing Agreement, dated as of April  5, 2017, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, each lender party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian.  (Incorporated by reference to Exhibit 10.37 to FS Investment Corporation III’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 filed on May 10, 2017).
10.27	Amendment No. 9 to Loan Financing and Servicing Agreement, dated as of March  12, 2018, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent (formerly administrative agent), each lender party thereto, and Wells Fargo, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on March 15, 2018).
10.28	Amendment No.  10 to Loan Financing and Servicing Agreement, dated as of June  20, 2018, among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent (formerly administrative agent), each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.48 to FS Investment Corporation III’s Quarterly Report on Form 10-Q filed on August 14, 2018).

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10.29	Waiver, Assignment and Amendment No.  11 to Loan Financing and Servicing Agreement, dated as of September  17, 2018, among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent (formerly administrative agent), each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.46 to FS Investment Corporation III’s Quarterly Report on Form 10-Q filed on November 14, 2018).
10.30	Amendment No.  12 to Loan Financing and Servicing Agreement, dated as of December  21, 2018, among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.43 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 19, 2019).
10.31	Omnibus Amendment, dated as of February  19, 2019, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on February 25, 2019).
10.32	Second Amended and Restated Loan and Security Agreement, dated as of March 4, 2019, by and between Jefferson Square Funding LLC, as borrower, JPMorgan Chase Bank, National Association, as administrative agent, the lenders party thereto, and Wells Fargo Bank, National Association, as collateral administrator, collateral agent and securities intermediary party thereto. (Incorporated by reference to Exhibit 10.49 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 19, 2019).
10.33	Committed Facility Agreement, dated as of October  17, 2014, by and between Burholme Funding LLC and BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on October 23, 2014).
10.34	U.S. PB Agreement, dated as of October  17, 2014, by and between Burholme Funding LLC and BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities. (Incorporated by reference to Exhibit 10.2 to FS Investment Corporation III’s Current Report on Form 8-K filed on October 23, 2014).
10.35	Special Custody and Pledge Agreement, dated as of October  17, 2014, by and among Burholme Funding LLC, BNP  Paribas Prime Brokerage, Inc. and State Street Bank and Trust Company, as custodian. (Incorporated by reference to Exhibit 10.3 to FS Investment Corporation III’s Current Report on Form  8-K filed on October 23, 2014).
10.36	First Amendment Agreement, dated as of March  11, 2015, to the Committed Facility Agreement, dated as of October  17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities, and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on March 13, 2015).
10.37	Second Amendment Agreement, dated as of October  21, 2015, to the Committed Facility Agreement, dated as of October  17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.21 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 11, 2016).
10.38	Third Amendment Agreement, dated as of March  16, 2016, to the Committed Facility Agreement, dated as of October  17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.23 to FS Investment Corporation III’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016 filed on November 14, 2016).
10.39	Fourth Amendment Agreement, dated as of August  29, 2016, to the Committed Facility Agreement, dated as of October  17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on September 2, 2016).
10.40	Fifth Amendment Agreement, dated as of November  15, 2016, to the Committed Facility Agreement, dated as of October  17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.34 to FS Investment Corporation III’s Current Report on Form 8-K filed on November 21, 2016).

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10.41	Sixth Amendment Agreement, dated as of May  29, 2018, to the Committed Facility Agreement, dated as of October  17, 2014, between BNP Paribas Prime Brokerage International, Ltd. And Burholme Funding LLC. (Incorporated by reference to Exhibit 10.34 to the Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2018).
10.42	Seventh Amendment Agreement, dated as of June 12, 2019, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage International, Ltd. and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on June 17, 2019).
10.43	Committed Facility Agreement, dated and effective as of March  1, 2017, by and between Broomall Funding LLC and BNP Paribas Prime Brokerage International, Ltd. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation IV’s Current Report on Form 8-K filed on February 15, 2017).
10.44	U.S. PB Agreement, dated and effective as of March  1, 2017, by and between Broomall Funding LLC and BNP Paribas Prime Brokerage International, Ltd., on behalf of itself and as agent for the BNPP Entities. (Incorporated by reference to Exhibit  10.2 to FS Investment Corporation IV’s Current Report on Form 8-K filed on February 15, 2017).
10.45	First Amendment Agreement, dated as of May  29, 2018, to the Committed Facility Agreement, dated as of March 1, 2017, between BNP Paribas Prime Brokerage International, Ltd. and Broomall Funding LLC. (Incorporated by reference to Exhibit  10.32 to FS Investment Corporation IV’s Quarterly Report on Form 10-Q filed on August 14, 2018).
10.46	Second Amendment Agreement, dated as of December  31, 2018, to the Committed Facility Agreement, dated as of March 1, 2017, between BNP Paribas Prime Brokerage International, Ltd. and Broomall Funding LLC. (Incorporated by reference to Exhibit  10.28 to FS Investment Corporation IV’s Annual Report on Form 10-K filed on March 18, 2019).
10.47	Loan and Security Agreement, dated as of November  22, 2019, by and among Ambler Funding LLC, as borrower, Ally Bank, as administrative agent and arranger, Wells Fargo Bank, N.A., as collateral administrator and collateral custodian, and the lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation IV’s Current Report on Form 8-K filed on November 26, 2019).
10.48	Loan and Servicing Agreement, dated as of November  22, 2019, by and among Meadowbrook Run LLC, as borrower, Morgan Stanley Senior Funding, Inc., as administrative agent, Wells Fargo Bank, N.A., as collateral agent, account bank and collateral custodian, and the lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to Company’s Current Report on Form 8-K filed on November 29, 2019).
10.49	First Amendment to Loan and Servicing Agreement and Omnibus Amendment to Transaction Documents, dated as of March 3, 2020, by and among Meadowbrook Run LLC, as borrower, Morgan Stanley Senior Funding, Inc., as lender and administrative agent, and the Company, as servicer. (Incorporated by reference to Exhibit 10.49 to the Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2020.)
10.50*	Second Amendment to Loan and Servicing Agreement, dated as of June  16, 2020, by and among Meadowbrook Run LLC, as borrower, the Company, as servicer, Morgan Stanley Bank, N.A., as lender, and Morgan Stanley Senior Funding, Inc., as administrative agent.
10.51	ISDA 2002 Master Agreement, together with the Schedule thereto and Credit Support Annex to such Schedule, each dated as of January 19, 2016, by and between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation IV’s Current Report on Form 8-K filed on January 22, 2016).
10.52	Amended and Restated Paragraph 13 of the Credit Support Annex, dated as of September  5, 2017, by and between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit (k)(6) to Post-Effective Amendment No. 9 to FS Investment Corporation IV’s registration statement on Form N-2 (File No. 333-204239) filed on October 18, 2017).
10.53	Thirteenth Amended and Restated Confirmation Letter Agreement, dated as of December 19, 2019, by and between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 the Company’s Current Report on Form 8-K filed on December 26, 2019).
10.54	Schedule to the ISDA 2002 Master Agreement, amended and restated as of June  28, 2019, between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.2 to FS Investment Corporation IV’s Current Report on Form 8-K filed on July  5, 2019).

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10.55	Guarantee, dated as of January  19, 2016, by FS Investment Corporation IV in favor of Citibank, N.A.(Incorporated by reference to Exhibit  10.4 to FS Investment Corporation IV’s Current Report on Form 8-K filed on January 22, 2016).
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section  1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized on August 10, 2020.

FS KKR CAPITAL CORP. II
By:	/s/ Michael C. Forman
	Michael C. Forman Chief Executive Officer (Principal Executive Officer)
By:	/s/ Steven Lilly
	Steven Lilly Chief Financial Officer (Principal Financial Officer)
By:	/s/ William Goebel
	William Goebel
	Chief Accounting Officer

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