Exhibit 99.1
Gladstone Investment Corporation Reports Financial Results for the
Second Quarter Ended September 30, 2007
-- Net Investment Income for the quarter ended September 30, 2007 was
$3.0 million, or $0.18 per common share
-- Net Investment Income for the six months ended September 30, 2007 was
$5.9 million, or $0.35 per common share
MCLEAN, Va.--(BUSINESS WIRE)--Oct. 31, 2007--Gladstone Investment Corp.
(NASDAQ:GAIN) (the "Company") today announced earnings for the second quarter
ended September 30, 2007. All per share references are per basic and diluted
weighted average common share outstanding, unless otherwise noted.
Net Investment Income for the quarter ended September 30, 2007 was
$2,994,538, or $0.18 per share, as compared to $2,883,886, or $0.17 per share,
for the quarter ended September 30, 2006. Net Investment Income for the six
months ended September 30, 2007 was $5,883,082, or $0.35 per share, as compared
to $5,465,050, or $0.33 per share, for the six months ended September 30, 2006.
Net Decrease in Net Assets Resulting from Operations for the quarter ended
September 30, 2007 was $4,367,075, or $0.26 per share, as compared to Net
Increase in Net Assets Resulting from Operations of $2,848,044, or $0.17 per
share, for the quarter ended September 30, 2006. The Company recognized a Net
Decrease in Net Assets Resulting from Operations for the three months ended
September 30, 2007 primarily as a result of unrealized depreciation on its
investments during the quarter. During the three months ended September 30,
2007, the Company's loan and investment portfolio was depreciated by
approximately $7.4 million, representing a 2.3% decline in the valuation of the
Company's portfolio value from the June 30, 2007 value. The Company believes
that the depreciation was primarily a result of the recent volatility of the
financial markets, as most of the decline in the valuation of the portfolio
consisted of depreciation of the value of the syndicated loans held by the
Company.
Net Increase in Net Assets Resulting from Operations for the six months
ended September 30, 2007 was $3,903,391, or $0.24 per share, as compared to
$4,125,092, or $0.25 per share, for the six months ended September 30, 2006.
Total assets were $366,833,014 at September 30, 2007 as compared to
$323,590,215 at March 31, 2007. Net asset value was $13.24 per actual common
share outstanding at September 30, 2007, as compared to $13.46 per actual common
share outstanding at March 31, 2007.
The annualized weighted average yield on the Company's portfolio of
investments, excluding cash and cash equivalents, was 9.08% for the three months
ended September 30, 2007 compared to 8.72% for the three months ended September
30, 2006. The annualized weighted average yield on the Company's portfolio for
the six months ended September 30, 2007 was 9.12% compared to 8.44% for the six
months ended September 30, 2006.
During the second quarter ended September 30, 2007, the Company recorded
the following activity:
-- Acquired interests in seven new syndicated loans for approximately
$26.3 million;
-- Acquired interests in five existing syndicated loan participations for
approximately $8.8 million; and
-- Received $10.8 million in the full repayment of one syndicated loan
participation.
At September 30, 2007, the Company held 53 Non-Control/Non-Affiliate
investments, 5 Control investments and 1 Affiliate investment, totaling an
aggregate cost basis of approximately $344 million and a fair value of
approximately $338 million.
Condensed Schedule of Investments
September 30, 2007
Investment Type Cost Fair Value
- ----------------------------------------------------------------------
Total Non-control/Non-Affiliate Investments $209,086,763 $200,851,289
Total Control Investments 116,604,804 118,772,882
Total Affiliate Investments 18,327,058 18,793,931
--------------------------
Total Investments $344,018,625 $338,418,102
==========================
"Since the inception of our fund in September 2005, we have invested over
$495 million, resulting in the full investment of our IPO proceeds as well as
borrowings under our $200 million credit facility. We continue to add
proprietary investments to our portfolio using leverage, thereby increasing
returns to stockholders. We continue to see good opportunities for our company
and expect to close more investments as the year progresses," said Chip
Stelljes, President and Chief Investment Officer.
Subsequent to September 30, 2007, the Company:
-- Invested approximately $17.1 million in senior and subordinated debt,
redeemable preferred stock and warrants to purchase common stock of
Danco Machine DPMS, Inc.;
-- Invested approximately $20.4 million in senior debt, subordinated
debt, redeemable preferred stock and common stock of Cavert Wire
Company, Inc.;
-- Received $9.8 million in the full repayment of two syndicated loan
participations;
-- Received $9.9 million in the sale of two loan participations,
recognizing a net loss of approximately $0.1 million on the
transactions;
-- Declared monthly cash dividends of $0.08 per common share for each of
the months of October, November and December of 2007; and
-- Renewed its $200 million credit facility with Deutsche Bank, A.G.
through October 16, 2008.
The Company will hold a conference call on Thursday, November 1, 2007 at
8:30 am ET to discuss fiscal second quarter earnings. Please call (877) 407-8031
to enter the conference. An operator will monitor the call and set a queue for
the questions.
A replay of the conference call will be available through December 1, 2007.
To hear the replay, please dial (877) 660-6853, access playback account 286 and
use ID code 258982. The replay will be available approximately two hours after
the call concludes.
The live audio broadcast of Gladstone Investment's quarterly conference
call will be available online at www.GladstoneInvestment.com and
www.investorcalendar.com. The online replay will follow shortly after the call
and will be available for replay on the Company's website.
Gladstone Investment Corporation is a publicly traded business development
company that seeks to make debt and equity investments in small and mid-sized
businesses in the United States in connection with acquisitions, changes in
control and recapitalizations. Additional information can be found at
http://www.GladstoneInvestment.com.
For further information, contact Kerry Finnegan at 703-287-5893.
This press release may include statements that may constitute
"forward-looking statements," including statements with regard to the future
performance of the Company. Words such as "should," "believes," "feel,"
"expects," "projects," "strive," "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 Quarterly Report on Form 10-Q, as filed with the Securities and
Exchange Commission on October 31, 2007. 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 INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Three months ended
September 30, 2007 September 30, 2006
------------------ ------------------
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate
investments $ 4,079,994 $ 2,387,375
Control investments 2,612,412 1,256,303
Affiliate investments 374,887 -
Cash and cash equivalents 60,419 569,580
------------------ ------------------
Total interest income 7,127,712 4,213,258
Other income 28,457 670
------------------ ------------------
Total investment income 7,156,169 4,213,928
------------------ ------------------
EXPENSES
Base management fee 452,630 861,893
Loan servicing fee 1,259,651 -
Administration fee 227,767 124,861
Interest expense 2,023,075 -
Amortization of deferred
finance costs 216,363 -
Stockholder related costs 157,340 65,100
Professional fees 110,255 88,040
Insurance expense 73,129 67,626
Directors fees 67,472 56,250
Taxes and licenses 41,325 41,337
General and administrative
expenses 35,343 24,935
------------------ ------------------
Expenses before credit
from Adviser 4,664,350 1,330,042
------------------ ------------------
Credits to base management fee (502,719) -
------------------ ------------------
Total expenses net of
credit to base management
fee 4,161,631 1,330,042
------------------ ------------------
NET INVESTMENT INCOME 2,994,538 2,883,886
------------------ ------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized loss on sale of Non-
Control/Non-Affiliate
investments (3,431) (1,934)
Net unrealized (depreciation)
appreciation of Non-
Control/Non-Affiliate
investments (7,307,700) 2,927
Net unrealized appreciation
(depreciation) of Control
Investments 180,090 (36,835)
Net unrealized depreciation of
Affiliate Investments (230,572) -
------------------ ------------------
Net loss on investments (7,361,613) (35,842)
------------------ ------------------
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $ (4,367,075) $ 2,848,044
================== ==================
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS PER COMMON SHARE:
Basic and Diluted $ (0.26) $ 0.17
================== ==================
SHARES OF COMMON STOCK
OUTSTANDING:
Basic and diluted weighted
average shares 16,560,100 16,560,100
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six months ended Six months ended
September 30, 2007 September 30, 2006
------------------ ------------------
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate
investments $ 7,328,549 $ 4,351,855
Control investments 5,177,404 2,446,605
Affiliate investments 801,450 -
Cash and cash equivalents 114,111 1,277,920
------------------ ------------------
Total interest income 13,421,514 8,076,380
Other income 34,584 986
------------------ ------------------
Total investment income 13,456,098 8,077,366
------------------ ------------------
EXPENSES
Base management fee 812,319 1,663,202
Loan servicing fee 2,454,069 -
Administration fee 435,581 240,250
Interest expense 3,437,337 -
Amortization of deferred
finance costs 426,203 -
Professional fees 265,921 167,788
Stockholder related costs 195,229 158,866
Insurance expense 136,070 140,237
Directors fees 122,272 99,500
Taxes and licenses 83,132 98,444
General and administrative
expenses 91,477 44,029
------------------ ------------------
Expenses before credit
from Adviser 8,459,610 2,612,316
------------------ ------------------
Credits to base management fee (886,594) -
------------------ ------------------
Total expenses net of
credit to base management
fee 7,573,016 2,612,316
------------------ ------------------
NET INVESTMENT INCOME 5,883,082 5,465,050
------------------ ------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized (loss) gain on sale
of Non-Control/Non-Affiliate
investments (51,678) 1,339
Net unrealized depreciation of
Non-Control/Non-Affiliate
investments (7,836,345) (1,136,784)
Net unrealized appreciation
(depreciation) of Control
Investments 5,453,959 (204,513)
Net unrealized appreciation of
Affiliate Investments 454,373 -
------------------ ------------------
Net loss on investments (1,979,691) (1,339,958)
------------------ ------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,903,391 $ 4,125,092
================== ==================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS PER
COMMON SHARE:
Basic and Diluted $ 0.24 $ 0.25
================== ==================
SHARES OF COMMON STOCK
OUTSTANDING:
Basic and diluted weighted
average shares 16,560,100 16,560,100
GLADSTONE INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(UNAUDITED)
September 30, March 31,
2007 2007
------------- -------------
ASSETS
Non-Control/Non-Affiliate investments
(Cost 9/30/07:$209,086,763;
3/31/07:$138,567,741) $200,851,289 $138,168,612
Control investments (Cost 9/30/07:
$116,604,804; 3/31/07: $116,302,372) 118,772,882 113,016,491
Affiliate investments (Cost 9/30/07:
$18,327,058; 3/31/07: $19,750,000) 18,793,931 19,762,500
------------- -------------
Total investments at fair value (Cost
9/30/07: $344,018,625; 3/31/07:
$274,620,113) 338,418,102 270,947,603
Cash and cash equivalents 23,189,457 37,788,941
Interest receivable 2,001,035 1,306,090
Prepaid insurance 164,724 83,819
Deferred finance costs 224,042 627,960
Due from Custodian 2,436,682 12,694,985
Due from Adviser - 20,383
Other assets 398,972 120,434
------------- -------------
TOTAL ASSETS $366,833,014 $323,590,215
============= =============
LIABILITIES
Due to Administrator $ 227,767 $ 162,244
Due to Adviser 227,687 -
Borrowings under line of credit 146,050,000 100,000,000
Accrued expenses 1,019,264 523,698
Other liabilities 69,949 85,764
------------- -------------
Total Liabilities 147,594,667 100,771,706
------------- -------------
NET ASSETS $219,238,347 $222,818,509
============= =============
ANALYSIS OF NET ASSETS:
Common stock, $0.001 par value,
100,000,000 shares authorized and
16,560,100 shares issued and outstanding $ 16,560 $ 16,560
Capital in excess of par value 230,065,064 230,096,572
Net unrealized depreciation of investment
portfolio (5,600,523) (3,672,510)
Distributions in excess of net investment
income (5,242,754) (3,622,113)
------------- -------------
Total Net Assets $219,238,347 $222,818,509
============= =============
Net assets per share $ 13.24 $ 13.46
============= =============
GLADSTONE INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS
(UNAUDITED)
Three months ended Three months ended
September 30, 2007 September 30, 2006
------------------ ------------------
Per Share Data (1)
- --------------------------------
Balance at beginning of period $ 13.73 $ 13.75
Income from investment
operations:
Net investment income (2) 0.18 0.17
Realized loss on sale of
investments (2) - -
Net unrealized depreciation of
investments (2) (0.44) -
------------------ ------------------
Total from investment operations (0.26) 0.17
------------------ ------------------
Distributions (0.23) (0.21)
------------------ ------------------
Net asset value at end of period $ 13.24 $ 13.71
================== ==================
Per share market value at
beginning of period $ 14.21 $ 14.82
Per share market value at end of
period 12.84 14.60
Total Return (3) -8.04% -0.04%
Shares outstanding at end of
period 16,560,100 16,560,100
Ratios/Supplemental Data
- --------------------------------
Net assets at end of period $ 219,238,347 $ 226,978,416
Average net assets (4) $ 223,254,321 $ 226,140,157
Ratio of expenses to average net
assets (5) (6) 8.36% 2.35%
Ratio of net expenses to average
net assets (5) (7) 7.46% 2.35%
Ratio of net investment income
to average net assets (5) 5.37% 5.10%
(1) Based on actual shares outstanding at the end of the corresponding
period.
(2) Based on weighted average basic per share data.
(3) Total return equals the change in the market value of the Company's
common stock from the beginning of the period taking into account dividends
reinvested in accordance with the terms of our dividend reinvestment plan. Total
return does not take into account dividends that may be characterized as a
return of capital.
(4) Calculated using the average of the ending monthly net assets for the
respective periods.
(5) Amounts are annualized.
(6) Ratio of expenses to average net assets is computed using expenses
before credit from the Adviser.
(7) Ratio of net expenses to average net assets is computed using total
expenses net of credits to the management fee.
GLADSTONE INVESTMENT CORPORATION
FINANCIAL HIGHLIGHTS
(UNAUDITED)
Six months ended Six months ended
September 30, September 30,
2007 2006
---------------- ----------------
Per Share Data (1)
- ------------------------------------
Balance at beginning of period $ 13.46 $ 13.88
Income from investment operations:
Net investment income (2) 0.35 0.33
Realized (loss) gain on sale of
investments (2) - -
Net unrealized depreciation of
investments (2) (0.12) (0.08)
---------------- ----------------
Total from investment operations 0.23 0.25
---------------- ----------------
Distributions (0.45) (0.42)
---------------- ----------------
Net asset value at end of period $ 13.24 $ 13.71
================ ================
Per share market value at beginning
of period $ 14.87 $ 14.90
Per share market value at end of
period 12.84 14.60
Total Return (3) -10.73% 0.87%
Shares outstanding at end of period 16,560,100 16,560,100
Ratios/Supplemental Data
- ------------------------------------
Net assets at end of period $ 219,238,347 $ 226,978,416
Average net assets (4) $ 223,091,437 $ 226,929,612
Ratio of expenses to average net
assets (5) (6) 7.58% 2.30%
Ratio of net expenses to average net
assets (5) (7) 6.79% 2.30%
Ratio of net investment income to
average net assets (5) 5.27% 4.82%
(1) Based on actual shares outstanding at the end of the corresponding
period.
(2) Based on weighted average basic per share data.
(3) Total return equals the change in the market value of the Company's
common stock from the beginning of the period taking into account dividends
reinvested in accordance with the terms of our dividend reinvestment plan. Total
return does not take into account dividends that may be characterized as a
return of capital.
(4) Calculated using the average of the ending monthly net assets for the
respective periods.
(5) Amounts are annualized.
(6) Ratio of expenses to average net assets is computed using expenses
before credit from the Adviser.
(7) Ratio of net expenses to average net assets is computed using total
expenses net of credits to the management fee.
CONTACT: Gladstone Investment Corp.
Kerry Finnegan, 703-287-5893