Exhibit 99.1
Gladstone Capital Corporation Reports First Quarter Results for 2006
MCLEAN, Va.--(BUSINESS WIRE)--Feb. 7, 2006--Gladstone Capital Corp.
(NASDAQ:GLAD):
-- Net Investment Income was $4.4 million or $0.38 per diluted common
share
-- Net Increase in Net Assets was $8.2 million or $0.71 per diluted
common share
Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today announced
earnings for the first quarter ended December 31, 2005. All share references are
based on weighted average common shares outstanding, unless otherwise noted.
Net Investment Income for the first quarter ended December 31, 2005 was
$4,442,414, or $0.39 per basic share and $0.38 per diluted share, as compared to
$4,677,404, or $0.41 per basic share and $0.40 per diluted share for the first
quarter ended December 31, 2004.
Net Increase in Net Assets Resulting from Operations for the first quarter
ended December 31, 2005 was $8,233,349, or $0.73 per basic share and $0.71 per
diluted share, as compared to $4,944,948 or $0.44 per basic share and $0.43 per
diluted share for the same period one year ago.
The Company also recorded net unrealized appreciation on its investments of
$4,972,422 for the first quarter ended December 31, 2005, as compared to net
unrealized appreciation of $282,605 for the first quarter ended December 31,
2004.
Total assets were $212,106,143 at December 31, 2005, as compared to
$205,793,094 at September 30, 2005. Net asset value was $13.74 per actual common
share outstanding, at December 31, 2005 as compared to $13.41 per actual common
share outstanding, at September 30, 2005.
The annualized weighted average yield on the Company's portfolio for the
three months ended December 31, 2005 was 12.6% (without giving effect to paid in
kind interest) and 12.6% (after giving effect to PIK interest) as compared to
14.7% and 15.0% respectively for the same quarter one year ago.
On October 1, 2005 the Company began recording stock option expense for
stock-based awards, in accordance with Statement of Financial Accounting
Standards No. 123(R) Share-Based Payment. Accordingly, the Company recorded
$43,257 in stock option expense for the quarter ended December 31, 2005.
For the quarter ended December 31, 2005, the Company:
-- Recorded loans of nearly $26.7 million to four companies;
-- Received principal repayments of $38.7 million, which included
scheduled principal repayments;
-- Sold loan investments at a loss of approximately $1.2 million; and
-- Received prepayment penalties of approximately $67 thousand.
At December 31, 2005, the Company had investments in debt securities in 27
private companies having an aggregate cost balance of $192.2 million and a fair
value of $192.6 million.
"First quarter 2006 was mixed as we expected. Repayments and prepayments
exceeded new originations; however, by removing several companies from our
portfolio, including two which resulted in a loss, we were able to greatly
improve the portfolio's value quality as is reflected in the portfolio's
appreciation during the quarter. We continue to believe that we are making
conservative decisions as we build and prune the portfolio, decisions that we
anticipate will reward shareholders over the long term," said Chip Stelljes,
President and Chief Investment Officer.
Subsequent to December 31, 2005, the Company:
-- Extended $30.0 million of loans to four companies; and
-- The Board of Directors declared on January 10, 2006, its monthly cash
dividends of $0.135 per common share for each of the months of
January, February and March of 2006.
The financial statements below are without footnotes. We have filed a Form
10-Q today for the first quarter ended December 31, 2005 with the Securities and
Exchange Commission (the "SEC"), which can be retrieved from the SEC's website
at www.SEC.gov or from the Company's web site at www.GladstoneCapital.com. A
paper copy can be obtained free of charge by writing to us at 1521 Westbranch
Drive, Suite 200, McLean, VA 22102.
The Company will hold a conference call Wednesday, February 8, 2006 at 9:30
am EDT to discuss first quarter earnings. Please call (877) 407-8214 to enter
the conference. An operator will monitor the call and set a queue for the
questions.
The conference call replay will be available two hours after the call and
will be available through March 8, 2006. To hear the replay, please dial (877)
660-6853 and access playback account 286 and ID code 190141.
The live audio broadcast of Gladstone Capital's quarterly conference call
will be available online at www.GladstoneCapital.com and
www.investorcalendar.com. The online replay will follow shortly after the call.
For further information contact our Investor Relations Manager, Kelly
Sargent at 703-287-5835.
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 "should," "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, 2005, as filed with the Securities and Exchange Commission
on December 13, 2005. 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 STATEMENTS OF OPERATIONS
(Unaudited) Three Months Three Months
Ended Ended
December 31, December 31,
2005 2004
------------ ------------
INVESTMENT INCOME
Interest income - investments $ 5,847,107 $ 5,707,343
Interest income - cash and cash
equivalents 8,912 16,340
Interest income - notes receivable from
employees 107,093 114,718
Prepayment fees and other income 67,207 240,000
------------ ------------
Total investment income 6,030,319 6,078,401
------------ ------------
EXPENSES
Loan servicing 715,415 530,952
Management fee 268,701 327,302
Professional fees 122,466 238,722
Amortization of deferred financing fees 26,250 91,912
Interest expense 652,078 171,730
Stockholder related costs 128,935 71,769
Directors fees 24,000 27,000
Insurance expense 50,777 46,272
Stock option compensation 43,257 -
General and administrative expenses 55,789 43,160
------------ ------------
Expenses before credit from Gladstone
Management 2,087,668 1,548,819
------------ ------------
Credit to management fee for fees
collected by Gladstone Management (550,000) (286,500)
------------ ------------
Total expenses net of credit to
management fee 1,537,668 1,262,319
------------ ------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 4,492,651 4,816,082
------------ ------------
Income tax expense 50,237 138,678
------------ ------------
NET INVESTMENT INCOME 4,442,414 4,677,404
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized (loss) gain on sale of
investments (1,180,595) 9,750
Unrealized depreciation on derivative (892) (24,811)
Net unrealized appreciation on investments 4,972,422 282,605
------------ ------------
Net unrealized gain on investments 3,790,935 267,544
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 8,233,349 $ 4,944,948
============ ============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 0.73 $ 0.44
============ ============
Diluted $ 0.71 $ 0.43
============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 11,306,510 11,278,510
Diluted 11,573,620 11,615,796
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS &
LIABILITIES
(Unaudited)
December 31, September 30,
2005 2005
------------- -------------
ASSETS
Investments at fair value (Cost
12/31/2005:$192,181,728; 9/30/2005:
$205,375,554) $192,625,362 $200,846,763
Cash and cash equivalents 15,393,252 503,776
Interest receivable - investments in debt
securities 958,365 1,406,212
Interest receivable - officers 17,150 27,067
Due from custodian 2,413,120 2,624,074
Due from affiliate 300,638 -
Deferred financing fees 43,750 70,000
Prepaid assets 197,125 177,848
Other assets 157,381 137,354
------------- -------------
TOTAL ASSETS $212,106,143 $205,793,094
============= =============
LIABILITIES
Accounts payable $ 10,784 $ 21,893
Interest payable 189,390 183,707
Fees due to affiliate 210,109 391,322
Borrowings under lines of credit 55,723,723 53,034,064
Accrued expenses and deferred liabilities 352,962 350,665
Funds held in escrow 202,164 200,760
------------- -------------
Total Liabilities 56,689,132 54,182,411
------------- -------------
Net Assets $155,417,011 $151,610,683
============= =============
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000
shares authorized and 11,308,510 and
11,303,510 shares issued and outstanding,
respectively $ 11,309 $ 11,304
Capital in excess of par value 164,740,025 164,610,873
Notes receivable - officers (8,722,687) (8,745,781)
Net unrealized appreciation/(depreciation)
on investments 443,631 (4,528,791)
Unrealized depreciation on derivative (254,639) (253,747)
Realized (loss)/gain on sale of
investments (1,138,345) 42,250
Distributions less than net investment
income 337,717 474,575
------------- -------------
Total Net Assets $155,417,011 $151,610,683
============= =============
Net Assets Per Share $ 13.74 $ 13.41
============= =============
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(UNAUDITED)
Three Months Ended December 31,
2005 2004
--------------- ---------------
Per Share Data (1)
- ------------------
Net asset value at beginning of
period $ 13.41 $ 13.50
--------------- ---------------
Income from investment operations:
Net investment income (2) 0.39 0.41
Realized (loss)/gain on sale of
investments (2) (0.10) -
Net unrealized gain on
investments (2) 0.44 0.03
Net unrealized (loss) on
derivatives (2) - -
--------------- ---------------
Total from investment operations 0.73 0.44
--------------- ---------------
Less distributions:
Distributions from net investment
income (0.41) (0.36)
--------------- ---------------
Total distributions (0.41) (0.36)
--------------- ---------------
Issuance of common stock under stock
option plan 0.01 -
Offering costs - (0.01)
Repayment of principal on notes
receivable - 0.01
--------------- ---------------
Net asset value at end of period $ 13.74 $ 13.58
=============== ===============
Per share market value at beginning
of period $ 22.55 $ 22.71
Per share market value at end of
period 21.38 23.70
Total Return (3)(4) -3.44% 5.94%
Shares outstanding at end of period 11,308,510 11,278,510
Ratios/Supplemental Data
------------------------
Net assets at end of period $ 155,417,011 $ 153,150,107
Average net assets $ 150,961,590 $ 151,429,917
Ratio of expenses to average net
assets - annualized (5) 5.66% 4.46%
Ratio of net expenses to average net
assets - annualized (6) 4.21% 3.70%
Ratio of net investment income to
average net assets - annualized 11.77% 12.36%
(1) Basic per share data.
(2) Based on weighted average basic per share data.
(3) Total return equals the increase of the ending market value over
the beginning market value plus monthly dividends divided by the
monthly beginning market value, assuming monthly dividend
reinvestment.
(4) Amounts were not annualized.
(5) Ratio of expenses to average net assets is computed using expenses
before credit from Gladstone Management and including income tax
expense.
(6) Ratio of net expenses to average net assets is computed using
total expenses net of credits to management fee and including
income tax expense.
CONTACT: Gladstone Capital Corporation
Kelly Sargent, 703-287-5835