Exhibit 99.1
Gladstone Capital Reports Financial Results for the Nine Months Ended
June 30, 2004. Net Increase in Stockholders' Equity Per Share
Increased 14% Compared to the Nine Months Ended June 2003.
MCLEAN, Va., Aug. 10 /PRNewswire-FirstCall/ -- Gladstone Capital Corp.
(Nasdaq: GLAD) announced earnings for the quarter ended June 30, 2004 today.
Net Increase in Stockholders' Equity Resulting from Operations for the three
months ended June 30, 2004 was $5,609,893, or $0.54 per diluted weighted
average common share, compared to $2,370,899, or $0.23 per diluted weighted
average common share for the three months ended June 30, 2003, an increase of
$3,238,994, or 137%. On a diluted weighted average common share basis there
was a 135% increase.
For the nine months ended June 30, 2004, Net Increase in Stockholders'
Equity Resulting from Operations was $9,819,550, or $0.95 per diluted weighted
average common share, compared to $8,445,069, or $0.83 per diluted weighted
average common share for the nine months ended June 30, 2003, an increase of
$1,374,481, or 16%. On a diluted weighted average common share basis there
was a 14% increase.
Net Investment Income for the three months ended June 30, 2004 was
$4,595,988, or $0.45 per diluted weighted average common share, compared to
the three months ended June 30, 2003 of $3,115,736, or $0.30 per diluted
weighted average common share, an increase of $1,480,252, or 48%. Net
Investment Income for the nine months ended June 30, 2004 was $10,656,182, or
$1.03 per diluted weighted average common share, compared to the nine months
ended June 30, 2003 of $8,447,482, or $0.83 per diluted weighted average
common share. This was an increase of $2,208,700 or 26%.
The Company pays its dividend based on taxable income which is close to
Net Investment Income. The Company is currently paying a monthly dividend of
$0.12 per share ($0.36 per quarter). Total assets were $220,533,798 at June
30, 2004 and $214,566,663 at September 30, 2003.
"In the third quarter, the Company added five new investments with an
aggregate investment amount of $42.7 million. These new investments bring the
total number of private companies in our portfolio to seventeen. During the
third quarter, Home Care Supply, Inc. repaid its entire loan of $18.0 million
and Wingstop Restaurants International, Inc. repaid its outstanding loan
obligation of approximately $5.4 million. Both companies paid conditional
interest and prepayment fees in the aggregate amount of approximately $1.9
million. Also the Company increased its position by $1.0 million in Mistras
Holdings, Inc., and provided MedAssets, Inc., with an additional $2.5 million
for the quarter ended June 30, 2004. We believe that the third quarter showed
positive growth in our potential in the marketplace. We feel good about our
achievements thus far and are working diligently to continue our successes for
our shareholders and employees. Our goal is to continue making good
investments so that we can increase our monthly dividend for shareholders,"
said a spokesperson for the Company.
The Company will have a conference call at 10:30 am EDT, August 11, 2004.
Please call 866-244-4742 and use the ID code 902555 and you will be placed on
hold until the conference starts. An operator will monitor the call and set a
queue for the questions. To hear the replay please dial 888-266-2081 and use
the ID code 902555 to access the call. The replay number will be available
for approximately 30 days. For further information please contact Harry Brill,
Chief Financial Officer or Skye Breeden, Director of Shareholder Relations at
703-286-7000.
The financial statements below are without footnotes so readers should
obtain and carefully review our Form 10-Q for the period ended June 30, 2004,
including the footnotes to the financial statements contained therein. We
have filed the Form 10-Q today with the Securities and Exchange Commission
("SEC") and the Form 10-Q can be retrieved at the SEC website at
http://www.SEC.gov or the website for Gladstone Capital at
http://www.GladstoneCapital.com.
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," "feel," "expects," "projects," "goals,"
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
June 30, September 30,
2004 2003
(Unaudited)
ASSETS
Investments at fair value (Cost
6/30/2004: $158,318,500;
9/30/2003: $109,529,893) $ 157,247,029 $ 109,307,553
Cash and cash equivalents 4,895,459 21,143,972
Cash and cash equivalents
pledged as collateral 55,006,917 80,022,249
Interest receivable - investments
in debt securities 789,623 1,041,943
Interest receivable - cash
and cash equivalents 170 955
Interest receivable - officers 22,868 108,657
Due from custodian 627,672 1,207,000
Prepaid assets 1,512,345 1,479,815
Other assets 431,715 254,519
TOTAL ASSETS $ 220,533,798 $ 214,566,663
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 146,132 $ 23,247
Dividends payable - 3,327,009
Borrowings under lines of credit 33,520,666 -
Accrued expenses and deferred
liabilities 2,289,829 1,965,025
Repurchase agreement 53,908,596 78,449,000
Total Liabilities $ 89,865,223 $ 83,764,281
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value,
50,000,000 shares authorized
and 10,113,444 and 10,081,844
shares issued and outstanding,
respectively $10,114 $10,082
Capital in excess of par value 140,852,913 140,416,674
Notes receivable - officers (9,232,698) (8,985,940)
Net unrealized depreciation on
investments (1,071,472) (222,340)
Undistributed/(overdistributed)
net investment income 109,718 (416,094)
Total Stockholders' Equity $ 130,668,575 $ 130,802,382
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 220,533,798 $ 214,566,663
GLADSTONE CAPITAL CORPORATION
SCHEDULE OF INVESTMENTS
AS OF JUNE 30, 2004
(UNAUDITED)
COMPANY(1) INDUSTRY INVESTMENT COST FAIR VALUE
A and G, Inc. Activewear Senior Term
(d/b/a Alstyle) products Debt(2) $12,250,000 $12,250,000
America's Water Household Senior Term
Heater Rentals appliances Debt(3)(5)(7) 12,000,000 12,720,000
rental
ARI Holdings, Manufacturing Senior Term
Inc. - auto parts Debt(5) 1,283,891 1,277,472
Second Lien
Term Debt(5) 3,620,033 3,570,257
Bear Creek Premium Second Lien
Corporation horticultural Term Debt(6) 6,000,000 6,090,000
and food
products
Benetech, Inc. Dust management Senior Term
systems for the Debt 3,250,000 3,250,000
coal and Senior Term
electric Debt(2) 3,250,000 3,250,000
utility
industries
Burt's Bees, Personal & Senior Term
Inc. household Debt(6) 983,333 995,625
products
Coyne Industrial Senior Term
International services Debt(2)(4)(5) 15,658,088 15,501,507
Enterprises
Finn Manufacturing - Senior
Corporation landscape Subordinated
equipment Term Debt(5) 10,500,000 9,240,000
Common Stock
Warrants 37,000 492,284
Fugate and Aggregator & Senior Term
Associates, Reseller - Debt(5) 1,333,332 1,329,999
Inc. (d/b/a Printer Senior Term
ERS Imaging) Cartridges, Debt(2)(5) 3,150,000 3,134,250
etc.
Gammill, Inc. Designer and Senior Term
assembler of Debt(5) 4,835,256 4,853,388
quilting Senior Term
machines and Debt(2)(5) 4,750,000 4,767,813
accessories
Inca Metal Material Senior Term
Products handling Debt(2)(5) 2,446,733 2,189,826
Corporation and storage
Kingway products
Acquisition,
Inc.
Clymer
Acquisition,
Inc.
Maidenform, Intimate apparel Second Lien
Inc. Term Debt(6) 10,003,705 10,012,500
Marcal Paper Manufacturing - Senior
Mills, Inc. paper products Subordinated
Term Debt(5) 6,800,000 6,205,000
First Mortgage
Loan 9,231,598 9,231,598
MD Beauty, Inc. Cosmetic and Second Lien
skin care Term Debt 8,000,000 8,000,000
products
MedAssets, Inc. Pharmaceuticals Senior Term
and healthcare Debt(6) 1,938,015 1,933,392
GPO Second Lien
Term Debt(6) 6,503,516 6,565,000
Mistras Nondestructive Senior Term
Holdings Corp. testing Debt(2)(5) 10,000,000 9,925,000
instruments, Senior Term
systems Debt(2)(5) 5,000,000 4,950,000
and services Senior Term
Debt (2)(5) 1,000,000 1,000,000
Woven Custom electrical Senior Term
Electronics cable assemblies Debt(2)(5) 2,494,000 2,497,118
Corporation Senior Term
Debt (3)(5) 12,000,000 12,015,000
Total: $158,318,500 $157,247,029
(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) 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,
however the debt is junior to another Last Out Tranche.
(4) 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.
(5) Fair value was based on valuation prepared and provided by Standard &
Poor's Loan Evaluation Services.
(6) Marketable securities are valued based on the bid price, as of June
30, 2004, from the respective originating syndication agent's trading
desk.
(7) Includes a success fee with a fair value of $600,000 and no cost
basis.
GLADSTONE CAPITAL CORPORATION
SCHEDULE OF INVESTMENTS
AS OF SEPTEMBER 30, 2003
(UNAUDITED)
COMPANY(1) INDUSTRY INVESTMENT COST FAIR VALUE
America's Water Water heater Senior Term
Heater Rentals, rentals and Debt(2)(4) $12,000,000 $12,000,000
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 Industrial Senior Term
International services Debt(2)(3)(4) 15,421,740 15,306,077
Enterprises
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, supplies Debt(4) 3,412,500 3,412,500
Inc. 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 and Debt(2)(4) 5,775,000 4,995,375
Kingway storage
Acquisition, products
Inc.
Clymer
Acquisitions,
Inc.
Kozy Shack Food production Senior Term
Enterprises, and sales Debt(2)(4) 900,000 909,000
Inc.
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, Inc. testing Debt(2) 10,000,000 10,000,000
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
Total: $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
June 30, June 30,
2004 2003
INVESTMENT INCOME
Interest income - investments $ 5,700,139 $ 3,684,284
Interest income - cash and
cash equivalents 15,268 79,073
Interest income - notes
receivable from officers 112,528 109,737
Managerial assistance fees 399,375 125,000
Other income 482,500 61,650
Total Investment Income $ 6,709,810 $ 4,059,744
EXPENSES
Salaries and benefits 1,253,073 493,901
Rent 34,873 54,899
Professional fees 59,279 101,211
Directors fees 28,000 20,290
Insurance 63,369 71,883
Stockholder related costs 10,643 12,227
Financing fees 185,855 62,355
Interest 133,735 -
Loss on derivative 114,376 -
General and administrative 230,619 127,242
Total Expenses $ 2,113,822 $ 944,008
NET INVESTMENT INCOME $ 4,595,988 $ 3,115,736
Net unrealized appreciation
(depreciation) on investments 1,013,905 (744,837)
NET INCREASE IN STOCKHOLDERS'
EQUITY RESULTING FROM OPERATIONS $ 5,609,893 $ 2,370,899
NET INCREASE IN STOCKHOLDERS'
EQUITY RESULTING FROM OPERATIONS
PER COMMON SHARE
Basic $ 0.56 $ 0.24
Diluted $ 0.54 $ 0.23
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING
Basic 10,105,270 10,071,844
Diluted 10,301,390 10,256,790
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED) Nine Months Nine Months
Ended Ended
June 30, June 30,
2004 2003
INVESTMENT INCOME
Interest income - investments $ 13,118,652 $ 9,887,909
Interest income - cash and cash
equivalents 81,223 390,577
Interest income - notes
receivable from officers 330,698 329,078
Managerial assistance fees 1,010,606 483,000
Other income 504,500 63,906
Total Investment Income $ 15,045,679 $ 11,154,470
EXPENSES
Salaries and benefits 2,063,549 1,405,002
Rent 106,597 164,044
Professional fees 519,229 302,478
Directors fees 85,210 54,647
Insurance 200,654 216,724
Stockholder related costs 130,623 123,659
Financing fees 479,890 62,355
Interest 158,337 -
Loss on derivative 114,376 -
General and administrative 531,032 378,079
Total Expenses $ 4,389,497 $ 2,706,988
NET INVESTMENT INCOME $ 10,656,182 $ 8,447,482
Realized gain on sale of investment 12,500 -
Net unrealized (depreciation)
appreciation on investments (849,132) (2,413)
NET INCREASE IN STOCKHOLDERS'
EQUITY RESULTING FROM OPERATIONS $ 9,819,550 $ 8,445,069
NET INCREASE IN STOCKHOLDERS'
EQUITY RESULTING FROM OPERATIONS
PER COMMON SHARE
Basic $ 0.97 $ 0.84
Diluted $ 0.95 $ 0.83
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING
Basic 10,091,576 10,071,844
Diluted 10,336,733 10,160,350
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(UNAUDITED)
Three Months Three Months
Ended Ended
June 30, June 30,
2004 2003
Per Share Data (1)
Net asset value at beginning of period $ 12.71 $ 13.09
Net investment income 0.45 0.31
Realized gain on sale of investment - -
Net unrealized gain/(loss) on investments 0.10 (0.07)
Issuance of common stock under stock
option plan (0.01) -
Distributions from net investment income (0.34) (0.29)
Repayment of principal on notes receivable - -
Net asset value at end of period $ 12.91 $ 13.04
Per share market value at beginning
of period $ 22.41 $ 16.18
Per share market value at end of period 20.15 20.48
Total Return (2)(3) -5.73% 28.37%
Shares outstanding at end of period 10,113,444 10,071,844
Ratios/Supplemental Data
Net assets at end of period $ 130,668,575 $ 131,353,022
Average net assets $ 128,285,309 $ 132,823,516
Ratio of operating expenses to average
net assets - annualized 6.59% 2.86%
Ratio of net investment income to average
net assets - annualized 14.33% 7.18%
Nine Months Nine Months
Ended Ended
June 30, June 30,
2004 2003
Per Share Data (1)
Net asset value at beginning of period $ 12.97 $ 12.97
Net investment income 1.06 0.84
Realized gain on sale of investment - -
Net unrealized loss on investments (0.08) -
Issuance of common stock under stock
option plan (0.04) -
Distributions from net investment income (1.01) (0.77)
Repayment of principal on notes receivable 0.01 -
Net asset value at end of period $ 12.91 $ 13.04
Per share market value at beginning
of period $ 19.45 $ 16.88
Per share market value at end of period 20.15 20.48
Total Return (2)(3) 8.61% 25.89%
Shares outstanding at end of period 10,113,444 10,071,844
Ratios/Supplemental Data
Net assets at end of period $ 130,668,575 $ 131,353,022
Average net assets $ 128,269,663 $ 132,170,641
Ratio of operating expenses to average
net assets - annualized 4.56% 2.74%
Ratio of net investment income to average
net assets - annualized 11.08% 8.54%
(1) Basic per share data.
(2) Amounts were not annualized for the results of the three and nine
month periods ended June 30, 2004 and June 30, 2003.
(3) Total return equals the increase of the ending market value over the
beginning market value plus monthly distributions divided by the
monthly beginning market value.
SOURCE Gladstone Capital Corp.
-0- 08/10/2004
/CONTACT: Harry Brill, Chief Financial Officer, or Skye Breeden, Director
of Shareholder Relations, 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