Exhibit 99.1
Gladstone Capital Reports Results for the Third Quarter Ended
June 30, 2006
MCLEAN, Va.--(BUSINESS WIRE)--Aug. 1, 2006--Gladstone Capital
Corp. (NASDAQ:GLAD):
-- Net Investment Income was $4.79 million or $0.41 per diluted
common share
-- Net Increase in Net Assets was $5.54 million or $0.48 per
diluted common share
Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today
announced earnings for the third quarter and nine months ended June
30, 2006. All per share references are based on fully diluted weighted
average common shares outstanding, unless otherwise noted.
Net Investment Income for the third quarter ended June 30, 2006
was $4,788,082 or $0.41 per share, as compared to $4,372,426 or $0.38
per share for the third quarter ended June 30, 2005, an increase of
7.9% per share. Net Investment Income for the nine months ended June
30, 2006 was $14,434,312 or $1.25 per share, as compared to
$13,481,088 or $1.16 per share for the nine months ended June 30,
2005, an increase of 7.8% per share.
Net Increase in Net Assets Resulting from Operations for the third
quarter ended June 30, 2006 was $5,543,076, or $0.48 per share, as
compared to $3,934,153 or $0.34 per share for the same period one year
ago, an increase of 41.2% per share. Net Increase in Net Assets
Resulting from Operations for the nine months ended June 30, 2006 was
$19,366,806, or $1.68 per share, as compared to $13,154,479 or $1.13
per share for the same period one year ago, an increase of 48.7% per
share.
The Company also recorded net unrealized appreciation on its
investments of $812,991 for the third quarter ended June 30, 2006, as
compared to net unrealized depreciation of $389,229 for the third
quarter ended September 30, 2005. For the nine months ended June 30,
2006, the Company recorded net unrealized appreciation on its
investments of $5,769,820 as compared to net unrealized depreciation
of $298,352 for the nine months ended June 30, 2005.
Total assets were $207.5 million at June 30, 2006, as compared to
$205.8 million at September 30, 2005. Net asset value was $13.95 per
actual common share outstanding at June 30, 2006, 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 June 30, 2006 was 11.7%; there was no paid
in kind interest during the three months. The annualized weighted
average yield on the portfolio for the three months ended June 30,
2005 was 11.4% (without giving effect to paid in kind interest) and
11.8% (after giving effect to paid in kind interest). Beginning April
1, 2006 the Company has no investments with paid in kind interest.
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 $202,296 in stock option expense for
the quarter ended June 30, 2006 and $279,618 for the nine months
ending June 30, 2006.
Third quarter highlights:
-- Closed approximately $39.9 million of new investments;
-- Received principal repayments of $44.4 million, which included
scheduled principal repayments; and
-- Received prepayment penalties and other income of $630,000.
At June 30, 2006, the Company had 29 private company investments
in debt and equity securities with an aggregate cost balance of $201.5
million and a fair value of $202.7 million.
"Our strong third quarter earnings results included a 7.9 % per
share increase in net investment income and an increase of 41.2% per
share for net increase in net assets. Our results were driven by the
continued portfolio strength and our ability to post positive results,
despite additional loan prepayments," said Chip Stelljes, President
and Chief Investment Officer. "We continue to see a steady flow of
investment opportunities and expect to post positive results for our
September 30, 2006 fiscal year end."
Subsequent event highlights:
-- Purchased two syndicated loans for $6.5 million;
-- Extended one loan origination for $5.7 million;
-- Received one full investment repayment for $7.5 million; and
-- Declared monthly cash dividends of $0.14 per common share for
each of the months of July, August and September 2006.
The financial statements below are without footnotes. We have
filed a Form 10-Q today for the third quarter ended June 30, 2006 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, August 2, 2006
at 9:30 am ET to discuss third quarter earnings. Please call (877)
407-9205 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 September 2, 2006. To hear the
replay, please dial (877) 660-6853, access playback account 286 and
use conference ID code 209587.
The live audio broadcast of Gladstone Capital's quarterly
conference call will be available online at www.GladstoneCapital.com
and www.investorcalendar.com. The event will be archived and available
for replay on the Company's website.
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 ("SEC") on December 13, 2005 and as listed in the
Form 10-Q for the quarter ended June 30, 2006, as filed with the SEC
today. 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 ASSETS & LIABILITIES
(Unaudited)
June 30, September 30,
2006 2005
------------- -------------
ASSETS
Investments at fair value (Cost 6/30/2006:
$201,465,621; 9/30/2005: $205,375,554) $202,706,650 $200,846,763
Cash and cash equivalents 456,314 503,776
Interest receivable - investments in debt
securities 1,132,213 1,406,212
Interest receivable - officers 24,836 27,067
Due from custodian 2,493,924 2,624,074
Due from Adviser 207,960 -
Deferred financing fees 148,762 70,000
Prepaid assets 71,946 177,848
Other assets 230,450 137,354
------------- -------------
TOTAL ASSETS $207,473,055 $205,793,094
============= =============
LIABILITIES
Accounts payable $ 45,342 $ 21,893
Interest payable 188,392 183,707
Fees due to Adviser 181,398 391,322
Borrowings under lines of credit 47,846,000 53,034,064
Accrued expenses and deferred liabilities 225,367 350,665
Funds held in escrow 200,800 200,760
------------- -------------
TOTAL LIABILITIES 48,687,299 54,182,411
------------- -------------
NET ASSETS $158,785,756 $151,610,683
============= =============
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 50,000,000
shares authorized and 11,384,363 and
11,303,510 shares issued and outstanding,
respectively $ 11,385 $ 11,304
Capital in excess of par value 166,240,635 164,610,873
Notes receivable - employees (8,815,818) (8,745,781)
Net unrealized appreciation/(depreciation)
on investments 1,241,029 (4,528,791)
Unrealized depreciation on derivative (188,495) (253,747)
Realized (loss)/gain on sale of
investments (861,695) 42,250
Distributions less than net investment
income 1,158,715 474,575
------------- -------------
TOTAL NET ASSETS $158,785,756 $151,610,683
============= =============
NET ASSETS PER SHARE $ 13.95 $ 13.41
============= =============
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Three Months
Ended Ended
June 30, June 30,
2006 2005
------------ ------------
INVESTMENT INCOME
Interest income - investments $ 5,775,522 $ 5,766,233
Interest income - cash and cash
equivalents 8,178 7,631
Interest income - notes receivable from
employees 108,877 108,065
Prepayment fees and other income 630,239 245,297
------------ ------------
Total investment income 6,522,816 6,127,226
------------ ------------
EXPENSES
Loan servicing 693,965 687,971
Management fee 331,040 358,631
Professional fees 166,405 133,505
Amortization of deferred financing fees 36,036 100,663
Interest expense 702,449 563,336
Stockholder related costs 28,371 16,475
Directors fees 27,500 26,624
Insurance expense 50,589 43,891
Stock option compensation 202,296 -
Other expenses 35,083 64,304
------------ ------------
Expenses before credit from
Gladstone Management 2,273,734 1,995,400
------------ ------------
Credit to management fee for fees
collected by Gladstone Management (539,000) (240,600)
------------ ------------
Total expenses net of credit
to management fee 1,734,734 1,754,800
------------ ------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 4,788,082 4,372,426
------------ ------------
Income tax expense - -
------------ ------------
NET INVESTMENT INCOME 4,788,082 4,372,426
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized loss on sale of investments (100,850) -
Realized gain on settlement of derivative 1,367 -
Unrealized appreciation (depreciation) on
derivative 41,486 (49,044)
Net unrealized appreciation (depreciation)
on investments 812,991 (389,229)
------------ ------------
Net gain (loss) on investments 754,994 (438,273)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 5,543,076 $ 3,934,153
============ ============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 0.49 $ 0.35
============ ============
Diluted $ 0.48 $ 0.34
============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 11,337,291 11,299,010
Diluted 11,570,425 11,578,637
GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Nine Months Nine Months
Ended Ended
June 30, June 30,
2006 2005
------------ ------------
INVESTMENT INCOME
Interest income - investments $18,497,893 $16,671,756
Interest income - cash and cash
equivalents 21,714 29,101
Interest income - notes receivable from
employees 323,003 336,382
Prepayment fees and other income 711,225 1,054,917
------------ ------------
Total investment income 19,553,835 18,092,156
------------ ------------
EXPENSES
Loan servicing 2,144,024 1,804,465
Management fee 952,120 1,075,940
Professional fees 399,758 528,610
Amortization of deferred financing fees 94,572 284,487
Interest expense 2,302,693 1,174,587
Stockholder related costs 273,170 192,785
Directors fees 81,712 77,624
Insurance expense 151,956 134,053
Stock option compensation 279,618 -
Other expenses 151,663 176,939
------------ ------------
Expenses before credit from
Gladstone Management 6,831,286 5,449,490
------------ ------------
Credit to management fee for fees
collected by Gladstone Management (1,762,000) (977,100)
------------ ------------
Total expenses net of credit
to management fee 5,069,286 4,472,390
------------ ------------
NET INVESTMENT INCOME BEFORE INCOME TAXES 14,484,549 13,619,766
------------ ------------
Income tax expense 50,237 138,678
------------ ------------
NET INVESTMENT INCOME 14,434,312 13,481,088
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on sale of
investments (903,945) 29,750
Realized gain on settlement of derivative 1,367 -
Unrealized appreciation (depreciation) on
derivative 65,252 (58,007)
Net unrealized appreciation (depreciation)
on investments 5,769,820 (298,352)
------------ ------------
Net gain (loss) on investments 4,932,494 (326,609)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $19,366,806 $13,154,479
============ ============
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic $ 1.71 $ 1.17
============ ============
Diluted $ 1.68 $ 1.13
============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic 11,317,437 11,288,784
Diluted 11,549,054 11,602,986
GLADSTONE CAPITAL CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended June 30,
2006 2005
------------- -------------
Per Share Data (1)
- ------------------
Net asset value at beginning of period $ 13.84 $ 13.64
------------- -------------
Income from investment operations:
Net investment income (2) 0.42 0.39
Realized (loss) gain on sale of
investments (2) (0.01) -
Realized gain on settlement of
derivative (2) - -
Net unrealized gain (loss) on
investments (2) 0.07 (0.03)
Net unrealized gain on derivatives (2) 0.01 -
------------- -------------
Total from investment operations 0.49 0.36
------------- -------------
Less distributions:
Distributions from net investment
income (0.41) (0.39)
------------- -------------
Total distributions (0.41) (0.39)
------------- -------------
Issuance of common stock under stock
option plan 0.10 -
Repayment of principal on notes
receivable 0.01 -
Dilutive effect of share issuance (0.08) -
------------- -------------
Net asset value at end of period $ 13.95 $ 13.61
============= =============
Per share market value at beginning of
period $ 21.55 $ 21.22
Per share market value at end of period 21.39 23.40
Total return (3)(4) 1.11% 12.19%
Shares outstanding at end of period 11,384,363 11,303,510
Ratios/Supplemental Data
------------------------
Net assets at end of period $158,785,756 $153,805,834
Average net assets (5) $156,053,816 $152,484,868
Ratio of expenses to average net assets
- annualized (6) 5.83% 5.23%
Ratio of net expenses to average net
assets - annualized (7) 4.45% 4.60%
Ratio of net investment income to
average net assets - annualized 12.27% 11.47%
Nine Months Ended June 30,
2006 2005
------------- -------------
Per Share Data (1)
- ------------------
Net asset value at beginning of period $ 13.41 $ 13.50
------------- -------------
Income from investment operations:
Net investment income (2) 1.28 1.19
Realized (loss) gain on sale of
investments (2) (0.08) -
Realized gain on settlement of
derivative (2) - -
Net unrealized gain (loss) on
investments (2) 0.51 (0.03)
Net unrealized gain (loss) on
derivatives (2) - (0.01)
------------- -------------
Total from investment operations 1.71 1.15
------------- -------------
Less distributions:
Distributions from net investment
income (1.22) (1.11)
------------- -------------
Total distributions (1.22) (1.11)
------------- -------------
Issuance of common stock under stock
option plan 0.10 0.02
Repayment of principal on notes
receivable 0.01 0.07
Offering costs - (0.01)
Dilutive effect of share issuance (0.06) (0.01)
------------- -------------
Net asset value at end of period $ 13.95 $ 13.61
============= =============
Per share market value at beginning of
period $ 22.55 $ 22.71
Per share market value at end of period 21.39 23.40
Total return (3)(4) 0.35% 8.08%
Shares outstanding at end of period 11,384,363 11,303,510
Ratios/Supplemental Data
------------------------
Net assets at end of period $158,785,756 $153,805,834
Average net assets (5) $153,804,303 $152,067,700
Ratio of expenses to average net assets
- annualized (6) 5.97% 4.90%
Ratio of net expenses to average net
assets - annualized (7) 4.44% 4.04%
Ratio of net investment income to
average net assets - annualized 12.51% 11.82%
(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) Average net assets are computed by taking the average balance of
net assets at the end of each month of the reporting period.
(6) Ratio of expenses to average net assets is computed using expenses
before credit from Gladstone Management and including income tax
expense.
(7) Ratio of net expenses to average net assets is computed using
total expenses net of credits from Gladstone Management and
including income tax expense.
CONTACT: Gladstone Capital Corp.
Kelly Sargent, 703-287-5835