Exhibit 99.1
Gladstone Capital Reports First Quarter Financial
Results for December 31, 2003
MCLEAN, Va., Feb. 17 /PRNewswire-FirstCall/ -- Gladstone Capital Corp.
(Nasdaq: GLAD) announced today that its Net Increase in Stockholders' Equity
Resulting from Operations for the first quarter ended December 31, 2003 was
$1,381,074 or $0.13 per diluted common share as compared to $2,412,154 or
$0.24 per diluted common share for the quarter ended December 31, 2002, a
decrease of 46%. The decrease was due to unrealized depreciation. The Net
Investment Income for the quarter ended December 31, 2003, increased from
$2,412,154 or $0.24 per diluted common share to $2,938,636 or $0.28 per
diluted common share, a $526,482 or 22% increase from the prior year's
quarter. The Company pays its dividends based on Net Investment Income.
Total assets were $224,211,301 at December 31, 2003 and $214,566,663 at
September 30, 2003.
"The depreciation of several loans was the primary reason for the change
in stockholders' value this quarter. To date, all of our loans are current.
The Company pays dividends from its Net Investment Income," said a
spokesperson for the Company. "While loan production has been slow, we expect
2004 to be a good year."
For further information please contact Skye Breeden or Harry Brill at
703-286-7000. The company will have a conference call at 9:30 a.m. EST,
February 18, 2004. Please call 1-877-625-9185 and use the ID code 390377 and
you will be placed on hold until the conference starts. An operator will
monitor the call and set a queue for the questions. The replay number will be
available for approximately 30 days. The replay number is 1-888-266-2081 and
use ID code 390377 to access the call.
The attached financial statements are without footnotes so readers should
obtain our Form 10-Q for the period ended December 31, 2003 and review the
notes as well. We have filed this Form 10-Q with the Securities and Exchange
Commission ('SEC') which can be retrieved at the SEC website at www.SEC.gov or
from Gladstone Capitals web site at www.GladstoneCapital.com. A paper copy
can be obtained by writing to us at 1616 Anderson Road, McLean, VA 22102.
This press release may include statements that may constitute "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements with regard to the future performance of the
Company. Words such as "believes," "expects," "projects" and "future" or
similar expressions are intended to identify forward-looking statements.
These forward-looking statements inherently involve certain risks and
uncertainties, although they are based on the Company's current plans that are
believed to be reasonable as of the date of this press release. Factors that
may cause the Company's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such forward-
looking statements include, among others, those factors listed under the
caption "Risk factors" of the Company's Form 10-K for the Fiscal Year Ended
September 30, 2003, as filed with the Securities and Exchange Commission on
December 11, 2003. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, September 30,
2003 2003
(Unaudited) (Audited)
ASSETS
Investments at fair value
(Cost 12/31/2003: $120,663,277;
9/30/2003: $109,529,893) $118,883,375 $109,307,553
Cash and cash equivalents 7,252,566 21,143,972
Cash and cash equivalents pledged as
collateral 95,001,094 80,022,249
Interest receivable -- investments in
debt securities 1,043,095 1,041,943
Interest receivable -- cash and cash
equivalents 1,302 955
Interest receivable -- officers 19,543 108,657
Due from custodian 37,500 1,207,000
Prepaid assets 1,473,355 1,479,815
Other assets 499,471 254,519
TOTAL ASSETS $224,211,301 $214,566,663
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $91,052 $23,247
Dividends payable - 3,327,009
Accrued expenses and
deferred liabilities 2,059,550 1,965,025
Repurchase agreement 93,101,000 78,449,000
Total Liabilities $95,251,602 $83,764,281
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value,
50,000,000 shares
authorized and 10,081,844 and
10,071,844 shares issued
and outstanding, respectively $10,082 $10,082
Capital in excess of par value 140,416,674 140,416,674
Notes receivable -- officers (8,882,688) (8,985,940)
Net unrealized depreciation on
investments (1,779,902) (222,340)
Undistributed/(overdistributed)
net investment income (804,467) (416,094)
Total Stockholders' Equity $128,959,699 $130,802,382
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $224,211,301 $214,566,663
GLADSTONE CAPITAL CORPORATION
SCHEDULE OF INVESTMENTS
AS OF SEPTEMBER 30, 2003
(UNAUDITED)
COMPANY(1) INDUSTRY INVESTMENT COST FAIR VALUE
America's Water heater Senior Term
Water Heater rentals Debt(2)(4) $12,000,000 $12,000,000
Rentals, and
LLC servicing
ARI Holdings, Manufacturing Senior Term
Inc. auto parts Debt(2)(3)(4) 3,547,683 3,543,248
Senior Term
Debt(2) 1,425,000 1,423,219
Burt's Bees, Personal and Senior Term
Inc. household Debt 1,000,000 1,005,000
products
Coyne Industrial Senior Term
International services Debt
Enterprises (2)(3)(4) 15,499,837 15,325,464
Corp.
Finn Manufacturing Senior
Corporation landscape Subordinated
equipment Term Debt(4) 10,500,000 9,121,875
Common
Stock
Warrants
for 2%
Ownership 37,000 435,649
Fugate & Imaging Senior Term
Associates, supplies Debt(4) 3,325,000 3,325,000
Inc. Senior Term
Debt(4) 1,666,666 1,666,666
GQM Designer and Senior Term
Acquisition assembler Debt 7,500,000 7,500,000
Corp. of quilting Senior Term
d/b/a machines Debt 7,000,000 7,000,000
Gammill, and
Inc. accessories
Home Care Medical Senior Term
Supply, Inc. equipment Debt
rental (2)(4)(5) 18,000,000 18,494,100
Inca Metal Material Senior Term
Products handling Debt(2)(4) 2,500,000 2,246,875
Corp. and
Kingway storage
Acquisition, products
Inc.
Clymer
Acquisitions,
Inc.
Marcal Paper Manufacturing Senior
Mills, Inc. paper Subordinated
products Term Debt
(2)(4) 6,975,000 6,155,438
First
Mortgage
Debt(3) 9,187,091 9,187,091
Mistras Nondestructive Senior Term
Holdings, testing Debt (2) 10,000,000 9,987,500
Inc. instruments, Senior Term
systems and Debt (2) 5,000,000 4,993,750
services
Wingstop Restaurant -- Senior Term
Restaurants fast food Debt (4) 3,500,000 3,482,500
International, Senior Term
Inc. Debt (4) 2,000,000 1,990,000
$120,663,277 $118,883,375
(1) We do not "Control," and are not an "Affiliate" of, any of our
portfolio companies, each as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). In general, under the 1940 Act, we
would "Control" a portfolio company if we owned 25% or more of its
voting securities and would be an "Affiliate" of a portfolio company
if we owned 5% or more of its voting securities.
(2) Last Out Tranche of senior debt, meaning if the company is liquidated
then the holder of the Last Out Tranche is paid after the senior debt.
(3) Has some paid in kind (PIK) interest. Refer to Note 2 "Summary of
Significant Accounting Policies" of Form 10-K for the fiscal year
ended September 30, 2003.
(4) Fair value was based on valuation prepared and provided by Standard &
Poor's Loan Evaluation Services.
(5) Includes a success fee with a fair value of $473,400.
GLADSTONE CAPITAL CORPORATION
SCHEDULE OF INVESTMENTS
AS OF SEPTEMBER 30, 2003
(UNAUDITED)
COMPANY(1) INDUSTRY INVESTMENT COST FAIR VALUE
America's Water heater Senior Term
Water Heater rentals and Debt(2)(4) $12,000,000 $12,000,000
Rentals, LLC servicing
ARI Holdings, Manufacturing Senior Term
Inc. auto parts Debt(2)(3) 3,511,667 3,511,667
Senior Term
Debt(2) 1,500,000 1,500,000
Coyne
International Industrial Senior Term
Enterprises services Debt(2)(3)(4) 15,421,740 15,306,077
Corp.
Finn Manufacturing Senior
Corporation landscape Subordinated
equipment Term Debt(4) 10,500,000 10,421,250
Common Stock
Warrants for
2% Ownership 37,000 431,111
Fugate & Imaging Senior Term
Associates, Inc. supplies Debt(4) 3,412,500 3,412,500
Senior Term
Debt(4) 1,833,333 1,833,333
Home Care Medical Senior Term
Supply, Inc. equipment Debt(2)(4)(5) 18,000,000 18,428,400
rental
Inca Metal Material Senior Term
Products Corp. handling Debt(2)(4) 5,775,000 4,995,375
Kingway and storage
Acquisition, products
Inc.
Clymer
Acquisitions,
Inc.
Kozy Shack Food Senior Term
Enterprises, production Debt(2)(4) 900,000 909,000
Inc. and sales
Marcal Paper Manufacturing Senior
Mills, Inc. paper products Subordinated
Term Debt(2)(4) 6,975,000 6,922,687
First Mortgage
Debt(3) 9,163,653 9,163,653
Mistras Nondestructive Senior Term
Holdings, testing Debt(2) 10,000,000 10,000,000
Inc. instruments, Senior Term
systems and Debt (2) 5,000,000 5,000,000
services
Wingstop Restaurant - Senior Term
Restaurants fast food Debt(4) 3,500,000 3,482,500
International, Senior Term
Inc. Debt(4) 2,000,000 1,990,000
$109,529,893 $109,307,553
(1) We do not "Control," and are not an "Affiliate" of, any of our
portfolio companies, each as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). In general, under the 1940 Act, we
would "Control" a portfolio company if we owned 25% or more of its
voting securities and would be an "Affiliate" of a portfolio company
if we owned 5% or more of its voting securities.
(2) Last Out Tranche of senior debt, meaning if the company is liquidated
then the holder of the Last Out Tranche is paid after the senior debt.
(3) Has some paid in kind (PIK) interest. Refer to Note 2 "Summary of
Significant Accounting Policies" of Form 10-K for the fiscal year
ended September 30, 2003.
(4) Fair value was based on valuation prepared and provided by Standard &
Poor's Loan Evaluation Services.
(5) Includes a success fee with a fair value of $473,400.
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED) Three Months Three Months
Ended Ended
December 31, December 31,
2003 2002
INVESTMENT INCOME
Interest income -- investments $3,539,696 $2,927,663
Interest income -- cash and cash
equivalents 48,621 198,166
Interest income -- notes receivable
from officers 108,632 109,603
Managerial assistance fees 255,000 -
Other income 16,000 -
Total Investment Income $3,967,949 $3,235,432
EXPENSES
Salaries and benefits $390,707 $433,240
Rent 37,760 54,620
Professional fees 177,658 114,690
Directors fees 24,333 13,500
Insurance 74,011 71,154
Stockholder related costs 52,660 11,565
Financing fees 144,996 -
General and administrative 127,188 124,509
Total Expenses $1,029,313 $823,278
NET INVESTMENT INCOME $2,938,636 $2,412,154
Net unrealized depreciation on
investments (1,557,562) -
NET INCREASE IN STOCKHOLDERS' EQUITY
RESULTING FROM OPERATIONS $1,381,074 $2,412,154
NET INCREASE IN STOCKHOLDERS' EQUITY
RESULTING FROM OPERATIONS PER
COMMON SHARE
Basic $0.14 $0.24
Diluted $0.13 $0.24
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING
Basic 10,081,844 10,071,844
Diluted 10,333,529 10,124,197
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(UNAUDITED)
Three Months Three Months
Ended Ended
December 31, December 31,
2003 2002
Per Share Data(1)
Net asset value at beginning of period $12.97 $12.97
Net investment income 0.29 0.24
Net unrealized (loss)/gain on investments (0.15) -
Distributions from net investment income (0.33) (0.23)
Repayment of principal on notes receivable 0.01 -
Net asset value at end of period $12.79 $12.98
Per share market value at beginning of period $19.45 $16.88
Per share market value at end of period 22.35 16.47
Total return(2)(3) 16.71% -1.07%
Shares outstanding at end of period 10,081,844 10,071,844
Ratios/Supplemental Data
Net assets at end of period $128,959,699 $130,758,904
Average net assets $129,002,039 $131,563,142
Ratio of operating expenses to
average net assets -- annualized 3.19% 0.63%
Ratio of net investment income to
average net assets -- annualized 9.11% 1.83%
(1) Basic per share data.
(2) Amounts were not annualized for the results of the three month periods
ended December 31, 2003 and December 31, 2002.
(3) Total return equals the increase of the ending market value over the
beginning market value plus distributions divided by the beginning
market value.
SOURCE Gladstone Capital Corp.
-0- 02/17/2004
/CONTACT: Skye Breeden or Harry Brill of Gladstone Capital Corp.,
+1-703-286-7000/
/Web site: http://www.gladstonecapital.com/
(GLAD)
CO: Gladstone Capital Corp.
ST: Virginia
IN: FIN
SU: ERN CCA