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EX-4.3 - AMENDED AND RESTATED DISTRIBUTION REINVESTMENT PLAN - FS Investment CORPd352774dex43.htm
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EX-32.2 - SECTION 906 CFO CERTIFICATION - FS Investment CORPd352774dex322.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - FS Investment CORPd352774dex312.htm
EX-32.1 - SECTION 906 CEO CERTIFICATION - FS Investment CORPd352774dex321.htm
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012.

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 814-00757

 

 

FS Investment Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   26-1630040
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

Cira Centre

2929 Arch Street, Suite 675

Philadelphia, Pennsylvania 19104

(Address of principal executive office)

(215) 495-1150

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer     ¨    Accelerated filer     ¨
Non-accelerated filer     x (Do not check if a smaller reporting company)    Smaller reporting company     ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The issuer has 232,670,637 shares of common stock outstanding as of May 14, 2012.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

PART I—FINANCIAL INFORMATION

  

ITEM 1. FINANCIAL STATEMENTS

     1   
  

Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and December 31, 2011

     1   
  

Unaudited Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011

     2   
  

Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2012 and 2011

     3   
  

Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011

     4   
  

Consolidated Schedules of Investments as of March 31, 2012 (Unaudited) and December 31, 2011

     5   
  

Notes to Unaudited Consolidated Financial Statements

     18   

ITEM 2.

  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     46   

ITEM 3.

  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     70   

ITEM 4.

  

CONTROLS AND PROCEDURES

     71   

PART II—OTHER INFORMATION

  

ITEM 1.

  

LEGAL PROCEEDINGS

     72   

ITEM 1A.

  

RISK FACTORS

     72   

ITEM 2.

  

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     72   

ITEM 3.

  

DEFAULTS UPON SENIOR SECURITIES

     72   

ITEM 4.

  

MINE SAFETY DISCLOSURES

     72   

ITEM 5.

  

OTHER INFORMATION

     72   

ITEM 6.

  

EXHIBITS

     73   
  

SIGNATURES

     76   


Table of Contents

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements.

FS Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

     March 31, 2012
(Unaudited)
    December 31, 2011  

Assets

    

Investments, at fair value (amortized cost—$2,204,103 and $1,862,279, respectively)

   $ 2,247,199      $ 1,844,358   

Cash

     315,568        210,714   

Due from counterparty

     126,567        69,684   

Receivable for investments sold and repaid

     3,977        1,404   

Interest receivable

     25,969        16,535   

Receivable for common stock purchased

     115        —     

Deferred financing costs

     1,357        551   

Unrealized gain on total return swap(1)

     2,516        —     

Receivable due on total return swap(1)

     1,807        548   

Prepaid expenses and other assets

     318        431   
  

 

 

   

 

 

 

Total assets

   $ 2,725,393      $ 2,144,225   
  

 

 

   

 

 

 

Liabilities

    

Unrealized loss on total return swap(1)

   $ —        $ 1,996   

Payable for investments purchased

     85,797        64,367   

Credit facility payable

     340,000        340,000   

Repurchase agreement payable(2)

     300,000        214,286   

Stockholder distributions payable

     13,343        10,543   

Management fees payable

     13,145        9,572   

Capital gains incentive fee payable(3)

     14,801        —     

Administrative services expense payable

     883        154   

Interest payable

     3,610        2,525   

Other accrued expenses and liabilities

     3,058        1,890   
  

 

 

   

 

 

 

Total liabilities

     774,637        645,333   
  

 

 

   

 

 

 

Stockholders’ equity

    

Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding

     —          —     

Common stock, $0.001 par value, 450,000,000 shares authorized, 202,841,198 and 160,390,540 shares issued and outstanding, respectively

     203        160   

Capital in excess of par value

     1,923,790        1,517,365   

Accumulated undistributed net realized gains on investments

     1,989        —     

Accumulated undistributed (distributions in excess of) net investment income(4)

     (20,838     1,284   

Net unrealized appreciation (depreciation) on investments and total return swap and gain/loss on foreign currency(1)

     45,612        (19,917
  

 

 

   

 

 

 

Total stockholders’ equity

     1,950,756        1,498,892   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,725,393      $ 2,144,225   
  

 

 

   

 

 

 

Net asset value per common share at period end

   $ 9.62      $ 9.35   

 

(1) See Note 8 for a discussion of the Company’s total return swap agreement.

 

(2) See Note 12 for a discussion of the Company’s repurchase transaction.

 

(3) See Note 2 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fee.

 

(4) See Note 5 for a discussion of the source of distributions paid by the Company.

See notes to unaudited consolidated financial statements.

 

1


Table of Contents

FS Investment Corporation

Unaudited Consolidated Statements of Operations

(in thousands, except share and per share amounts)

 

 

 

     Three Months Ended
March 31,
 
             2012                     2011          

Investment Income

    

Interest income

   $ 50,535      $ 17,924   

Operating expenses

    

Management fees

     12,204        4,761   

Capitals gains incentive fees(1)

     14,801        3,271   

Administrative services expenses

     903        584   

Stock transfer agent fees

     940        295   

Accounting and administrative fees

     421        222   

Interest expense

     5,181        2,193   

Other general and administrative expenses

     1,193        582   
  

 

 

   

 

 

 

Total operating expenses

     35,643        11,908   
  

 

 

   

 

 

 

Net investment income

     14,892        6,016   
  

 

 

   

 

 

 

Realized and unrealized gain/loss

    

Net realized gain (loss) on investments

     (3,102     5,653   

Net realized gain on total return swap(2)

     5,074        —     

Net realized gain on foreign currency transactions

     17        —     

Net change in unrealized appreciation (depreciation) on investments

     61,017        10,393   

Net change in unrealized appreciation (depreciation) on total return swap(2)

     4,512        208   

Net change in unrealized gain/loss on foreign currency

     —          52   
  

 

 

   

 

 

 

Total net realized and unrealized gain/loss on investments

     67,518        16,306   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

   $ 82,410      $ 22,322   
  

 

 

   

 

 

 

Per share information—basic and diluted

    

Net increase in net assets resulting from operations

   $ 0.45      $ 0.45   
  

 

 

   

 

 

 

Weighted average shares outstanding

     180,149,424        50,013,065   
  

 

 

   

 

 

 

 

(1) See Note 2 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fee.

 

(2) See Note 8 for a discussion of the Company’s total return swap agreement.

See notes to unaudited consolidated financial statements.

 

2


Table of Contents

FS Investment Corporation

Unaudited Consolidated Statements of Changes in Net Assets

(in thousands)

 

 

 

     Three Months Ended
March 31,
 
             2012                     2011          

Operations

    

Net investment income

   $ 14,892      $ 6,016   

Net realized gain (loss) on investments, total return swap and foreign currency transactions(1)

     1,989        5,653   

Net change in unrealized appreciation (depreciation) on investments

     61,017        10,393   

Net change in unrealized appreciation (depreciation) on total return swap(1)

     4,512        208   

Net change in unrealized gain/loss on foreign currency

     —          52   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     82,410        22,322   
  

 

 

   

 

 

 

Stockholder distributions(2)

    

Distributions from net investment income

     (37,014     (7,965

Distributions from net realized gain on investments

     —          (1,983
  

 

 

   

 

 

 

Net decrease in net assets resulting from stockholder distributions

     (37,014     (9,948
  

 

 

   

 

 

 

Capital share transactions

    

Issuance of common stock

     394,472        177,328   

Reinvestment of stockholder distributions

     17,206        3,828   

Repurchases of common stock

     (3,695     (955

Offering costs

     (1,515     (1,084
  

 

 

   

 

 

 

Net increase in net assets resulting from capital share transactions

     406,468        179,117   
  

 

 

   

 

 

 

Total increase in net assets

     451,864        191,491   

Net assets at beginning of period

     1,498,892        389,232   
  

 

 

   

 

 

 

Net assets at end of period

   $ 1,950,756      $ 580,723   
  

 

 

   

 

 

 

 

(1) See Note 8 for a discussion of the Company’s total return swap agreement.

 

(2) See Note 5 for a discussion of the source of distributions paid by the Company.

 

See notes to unaudited consolidated financial statements.

 

3


Table of Contents

FS Investment Corporation

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

 

     Three Months Ended
March 31,
 
             2012                     2011          

Cash flows from operating activities

    

Net increase in net assets resulting from operations

   $ 82,410      $ 22,322   

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

    

Purchases of investments

     (561,430     (548,074

Proceeds from sales and repayments of investments

     219,584        398,684   

Net change in unrealized (appreciation) depreciation on investments

     (61,017     (10,393

Net change in unrealized (appreciation) depreciation on total return swap(1)

     (4,512     (208

Net change in unrealized (gain) loss on foreign currency

     —          (52

Net realized (gain) loss on investments

     3,102        (5,653

Accretion of discount

     (3,080     (1,416

Amortization of deferred financing costs

     221        205   

(Increase) decrease in due from counterparty

     (56,883     —     

(Increase) decrease in receivable for investments sold and repaid

     (2,573     (119,865

(Increase) decrease in interest receivable

     (9,434     (4,442

(Increase) decrease in receivable due on total return swap(1)

     (1,259     —     

(Increase) decrease in prepaid expenses and other assets

     113        (60

Increase (decrease) in payable for investments purchased

     21,430        103,487   

Increase (decrease) in management fees payable

     3,573        1,464   

Increase (decrease) in capital gains incentive fee payable

     14,801        1,875   

Increase (decrease) in administrative services fees payable

     729        107   

Increase (decrease) in interest payable

     1,085        210   

Increase (decrease) in other accrued expenses and liabilities

     1,168        568   
  

 

 

   

 

 

 

Net cash used in operating activities

     (351,972     (161,241
  

 

 

   

 

 

 

Cash flows from financing activities

    

Issuance of common stock

     394,357        177,328   

Reinvestment of stockholder distributions

     17,206        3,828   

Repurchases of common stock

     (3,695     (955

Offering costs

     (1,515     (1,084

Payments to investment adviser for offering and organization costs(2)

     —          (641

Stockholder distributions

     (34,214     (8,770

Borrowings under credit facility(3)

     —          40,405   

Borrowings under repurchase agreement(4)

     85,714        —     

Deferred financing costs paid

     (1,027     (212
  

 

 

   

 

 

 

Net cash provided by financing activities

     456,826        209,899   
  

 

 

   

 

 

 

Total increase in cash

     104,854        48,658   

Cash at beginning of period

     210,714        38,790   
  

 

 

   

 

 

 

Cash at end of period

   $ 315,568      $ 87,448   
  

 

 

   

 

 

 

 

(1) See Note 8 for a discussion of the Company’s total return swap agreement.

 

(2) See Note 4 for a discussion of reimbursements paid by the Company to its investment adviser and affiliates.

 

(3) During the three months ended March 31, 2012, the Company paid $2,236 in interest expense on the credit facility.

 

(4) See Note 12 for a discussion of the Company’s repurchase transaction. During the three months ended March 31, 2012, the Company paid $1,639 in interest expense pursuant to the repurchase agreement.

See notes to unaudited consolidated financial statements.

 

4


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Senior Secured Loans—First Lien—62.9%

       

1-800 Contacts, Inc., L+395, 3.8% LIBOR Floor, 3/4/15(e)

  Healthcare   $ 5,431      $ 5,226      $ 5,472   

A.P. Plasman Inc., L+850, 1.5% LIBOR Floor, 12/29/16(e)(g)

  Industrials     54,588        53,540        54,860   

Academy, Ltd., L+450, 1.5% LIBOR Floor, 8/3/18(d)

  Consumer Discretionary     4,988        4,942        5,018   

Advance Pierre Foods, Inc., L+525, 1.8% LIBOR Floor, 9/30/16(d)

  Consumer Staples     4,863        4,788        4,872   

Airvana Network Solutions Inc., L+800, 2.0% LIBOR Floor, 3/18/15(e)

  Telecommunication Services     7,243        7,192        6,921   

Airxcel, Inc., L+575, 1.8% LIBOR Floor, 2/23/16

  Consumer Discretionary     2,220        2,198        2,164   

Altegrity, Inc., L+600, 1.8% LIBOR Floor, 2/21/15(d)

  Industrials     5,351        5,297        5,366   

American & Efird Global, LLC, L+900, 1.5% LIBOR Floor, 12/21/16(e)

  Consumer Discretionary     39,700        38,750        39,700   

American Racing & Entertainment, LLC, L+700, 6/30/14(e)

  Consumer Discretionary     15,500        15,500        15,345   

American Racing & Entertainment, LLC B, 9.0%, 6/30/14(e)

  Consumer Discretionary     7,750        7,750        7,673   

American Racing & Entertainment, LLC C, 9.0%, 6/30/14(e)

  Consumer Discretionary     2,200        2,200        2,178   

Amscan Holdings, Inc., L+525, 1.5% LIBOR Floor, 12/2/17(d)

  Consumer Discretionary     8,811        8,800        8,847   

AmWINS Group, Inc., L+250, 6/8/13(d)

  Financials     941        862        932   

Ardent Health Services LLC, L+500, 1.5% LIBOR Floor, 9/15/15(d)

  Healthcare     10,338        10,244        10,320   

Aspect Software, Inc., L+450, 1.8% LIBOR Floor, 5/7/16(d)

  Information Technology     1,960        1,946        1,966   

Asurion Corp., L+950, 1.5% LIBOR Floor, 8/7/19(e)

  Financials     15,000        14,553        15,236   

Attachmate Corp., L+500, 1.5% LIBOR Floor, 4/27/17(d)

  Information Technology     9,750        9,670        9,707   

Audio Visual Services Group, Inc., L+225, 2/28/14(f)

  Information Technology     4,804        4,151        4,168   

Avaya Inc., L+275, 10/24/14(d)

  Information Technology     4,591        4,449        4,456   

Avaya Inc., L+450, 10/26/17(d)

  Information Technology     10,197        9,187        9,871   

Aveta, Inc., L+650, 2.0% LIBOR Floor, 4/4/17(f)

  Healthcare     14,909        14,589        14,589   

Avis Budget Car Rental, LLC, L+500, 1.3% LIBOR Floor, 9/22/18(d)(g)

  Consumer Discretionary     2,846        2,792        2,873   

AZ Chem US Inc., L+575, 1.5% LIBOR Floor, 12/22/17

  Materials     4,591        4,457        4,657   

Barrington Broadcasting Group LLC, L+600, 1.5% LIBOR Floor, 6/14/17

  Consumer Discretionary     2,998        2,912        3,026   

BBB Industries, LLC, L+450, 2.0% LIBOR Floor, 6/28/13

  Consumer Discretionary     8,112        8,032        8,051   

Blackboard Inc., L+600, 1.5% LIBOR Floor, 10/4/18(d)(e)

  Information Technology     40,329        37,298        40,196   

Boyd Gaming Corp., L+475, 1.3% LIBOR Floor, 12/17/15(d)(g)

  Consumer Discretionary     6,140        6,025        6,212   

Brock Holdings III, Inc., L+450, 1.5% LIBOR Floor, 3/14/17(d)

  Industrials     4,803        4,775        4,791   

Carestream Health, Inc., L+350, 1.5% LIBOR Floor, 2/25/17

  Healthcare     9,898        9,857        9,700   

Cast & Crew Payroll, LLC, L+300, 9/22/12

  Industrials     346        340        342   

CCC Information Services Inc., L+400, 1.5% LIBOR Floor, 11/11/15(d)

  Information Technology     1,506        1,495        1,512   

Cenveo Corp., L+475, 1.5% LIBOR Floor, 12/21/16(d)(g)

  Consumer Discretionary     5,458        5,414        5,476   

Ceridian Corp., L+300, 11/9/14(d)

  Industrials     9,298        8,606        8,736   

Chrysler Group LLC, L+475, 1.3% LIBOR Floor, 5/24/17(d)(e)

  Industrials     25,570        23,779        26,020   

Citgo Petroleum Corp., L+700, 2.0% LIBOR Floor, 6/24/17(d)(e)(g)

  Energy     8,818        8,783        9,046   

Clear Channel Capital I, LLC, L+365, 1/29/16

  Consumer Discretionary     11,811        9,146        9,595   

ConvaTec Inc., L+425, 1.5% LIBOR Floor, 12/22/16(d)

  Healthcare     2,285        2,276        2,288   

Corel Corp., L+400, 5/2/12(e)(f)(g)

  Information Technology     2,931        2,905        2,920   

Data Device Corp., L+550, 1.8% LIBOR Floor, 12/23/16(e)

  Industrials     12,125        11,907        11,966   

Datatel, Inc., L+500, 1.3% LIBOR Floor, 7/19/18(d)

  Information Technology     14,400        14,190        14,640   

Decision Resources LLC, L+550, 1.5% LIBOR Floor, 12/6/16(d)

  Healthcare     1,980        1,986        1,921   

Deluxe Entertainment Services Group Inc., L+650, 1.5% LIBOR Floor, 7/3/17

  Consumer Discretionary     15,000        14,419        14,516   

Drumm Investors LLC, L+375, 1.3% LIBOR Floor, 5/4/18

  Healthcare     7,442        6,840        7,052   

Dynegy Power, LLC, L+775, 1.5% LIBOR Floor, 8/5/16(g)

  Energy     7,972        8,168        8,361   

East Cameron Partners, LP, 18.0%, 10/11/12

  Energy     249        249        282   

Eastman Kodak Co., L+750, 1.0% LIBOR Floor, 7/20/13

  Information Technology     4,867        4,773        4,956   

Education Management Holdings LLC, L+700, 1.3% LIBOR Floor, 3/30/18(d)(f)(g)

  Consumer Discretionary     7,000        6,840        7,000   

Electrical Components International, Inc., L+525, 1.5% LIBOR Floor, 2/4/16(f)

  Industrials     235        214        215   

Electrical Components International, Inc., L+525, 1.5% LIBOR Floor, 2/4/17(f)

  Industrials     3,609        3,285        3,294   

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Entercom Radio, LLC, L+500, 1.3% LIBOR Floor, 11/23/18(d)(g)

  Consumer Discretionary   $ 4,308      $ 4,272      $ 4,351   

Equipower Resources Holdings, LLC, L+425, 1.5% LIBOR Floor, 1/26/18

  Utilities     1,572        1,559        1,478   

Fairway Group Acquisition Co., L+600, 1.5% LIBOR Floor, 3/3/17(d)(e)

  Consumer Discretionary     21,538        21,484        21,322   

Fertitta Morton’s Restaurants, Inc., L+725, 1.5% LIBOR Floor, 1/21/17(e)

  Consumer Discretionary     12,500        12,196        12,500   

Fibertech Networks, LLC, L+500, 1.8% LIBOR Floor, 11/30/16

  Telecommunication Services     2,893        2,900        2,907   

First Data Corp., L+275, 9/24/14(d)

  Information Technology     2,454        2,093        2,367   

First Data Corp., L+400, 3/24/18(d)

  Information Technology     9,465        8,159        8,646   

First Reserve Crestwood Holdings LLC, L+850, 2.0% LIBOR Floor, 10/3/16(e)

  Energy     12,571        12,383        12,823   

Fleetgistics Holdings, Inc., L+588, 2.0% LIBOR Floor, 3/23/15

  Industrials     2,477        2,453        2,440   

Florida Gaming Centers, Inc., 15.8%, 4/25/16(e)

  Consumer Discretionary     13,000        12,784        12,610   

Frac Tech International, LLC, L+475, 1.5% LIBOR Floor, 5/6/16(d)

  Energy     4,838        4,726        4,828   

Freescale Semiconductor, Inc., L+425, 12/1/16(d)(g)

  Industrials     1,896        1,789        1,848   

Goodman Global, Inc., L+400, 1.8% LIBOR Floor, 10/28/16(d)

  Consumer Discretionary     1,692        1,679        1,706   

Greeneden U.S. Holdings II, LLC, L+525, 1.5% LIBOR Floor, 1/31/19(d)

  Telecommunication Services     2,414        2,366        2,436   

Gymboree Corp., L+350, 1.5% LIBOR Floor, 2/23/18

  Consumer Discretionary     7,977        7,096        7,577   

Halifax Media Holdings LLC, L+1050, 0.8% LIBOR Floor, 12/31/16(e)(f)

  Consumer Discretionary     17,272        16,941        17,359   

Harbor Freight Tools USA, Inc., L+500, 1.5% LIBOR Floor, 12/22/17(d)

  Consumer Discretionary     9,778        9,697        9,872   

Harland Clarke Holdings Corp., L+250, 6/30/14(d)

  Industrials     10,717        9,481        10,013   

Hawaiian Telcom Communications, Inc., L+575, 1.3% LIBOR Floor, 2/28/17

  Telecommunication Services     12,766        12,577        12,689   

HCR Manor Care, Inc., L+350, 1.5% LIBOR Floor, 4/6/18(e)

  Healthcare     3,140        3,106        3,075   

Hoffmaster Group, Inc., L+550, 1.5% LIBOR Floor, 1/3/18(d)(f)

  Consumer Staples     4,500        4,523        4,509   

Hupah Finance Inc., L+500, 1.3% LIBOR Floor, 1/21/19(d)

  Industrials     9,649        9,461        9,728   

Immucor, Inc., L+575, 1.5% LIBOR Floor, 8/19/18(d)

  Healthcare     7,804        7,517        7,904   

INC Research, LLC, L+575, 1.3% LIBOR Floor, 7/12/18(e)

  Healthcare     11,910        11,583        11,962   

Intelligrated, Inc., L+575, 1.8% LIBOR Floor, 2/18/17(e)

  Information Technology     4,688        4,649        4,688   

Intralinks, Inc., L+425, 1.5% LIBOR Floor, 6/15/14(e)(g)

  Information Technology     1,042        904        1,031   

inVentiv Health, Inc., L+525, 1.5% LIBOR Floor, 5/15/18(d)

  Healthcare     5,073        5,027        4,838   

Ipreo Holdings LLC, L+650, 1.5% LIBOR Floor, 8/7/17(e)

  Information Technology     14,740        14,414        14,518   

Jason Inc., L+625, 2.0% LIBOR Floor, 9/21/14

  Industrials     3,420        3,403        3,415   

KIK Custom Products Inc., L+225, 5/31/14(d)(g)

  Consumer Staples     10,355        9,508        9,247   

Kinetic Concepts, Inc., L+575, 1.3% LIBOR Floor, 5/4/18(d)

  Healthcare     9,365        8,958        9,567   

Klune Industries, Inc., L+700, 2.0% LIBOR Floor, 8/31/17(e)

  Industrials     71,715        70,400        72,566   

La Paloma Generating Co., LLC, L+550, 1.5% LIBOR Floor, 8/25/17(d)

  Energy     8,763        8,471        8,719   

Lantiq Deutschland GmbH, L+700, 2.0% LIBOR Floor, 11/16/15(d)(e)(g)

  Information Technology     11,341        10,953        10,774   

Lawson Software, Inc., L+500, 1.3% LIBOR Floor, 3/16/18(d)(f)

  Information Technology     8,451        8,366        8,366   

Maramont Holdings Corp., L+550, 2.0% LIBOR Floor, 3/10/15(f)

  Consumer Staples     2,624        2,571        2,548   

Maritime Telecommunications Network, Inc., L+600, 1.5% LIBOR Floor, 3/4/16(e)

  Telecommunication Services     7,313        7,224        7,299   

MDA Info Products Ltd., L+550, 1.5% LIBOR Floor, 1/4/17

  Information Technology     4,938        4,879        4,419   

Mosaic US Holdings Inc., L+275, 4/3/13(e)

  Consumer Discretionary     871        763        831   

Natural Products Group, LLC, L+700, 3.0% LIBOR Floor, 3/5/15

  Consumer Discretionary     1,667        1,569        1,579   

NCO Group, Inc., L+500, 2.5% LIBOR Floor, 5/15/13(d)

  Information Technology     7,456        7,434        7,445   

Norit Holding BV, L+525, 1.5% LIBOR Floor, 7/8/17(d)(g)

  Industrials     3,062        3,021        3,073   

NPC International, Inc., L+525, 1.5% LIBOR Floor, 12/28/18(d)

  Consumer Discretionary     4,304        4,218        4,337   

NSH Merger Sub, Inc., L+650, 1.8% LIBOR Floor, 2/3/17(e)

  Healthcare     15,369        15,266        14,485   

OpenLink International, Inc., L+625, 1.5% LIBOR Floor, 10/25/17

  Information Technology     7,299        7,159        7,326   

Ozburn Hessey Holding Co., LLC, L+550, 2.0% LIBOR Floor, 4/8/16(d)

  Industrials     3,504        3,497        3,094   

Pharmaceutical Product Development, Inc., L+500, 1.3% LIBOR Floor, 12/5/18(d)

  Healthcare     12,649        12,466        12,822   

PL Propylene LLC, L+575, 1.3% LIBOR Floor, 3/27/17(d)(g)

  Materials     10,000        9,800        10,025   

Playboy Enterprises, Inc., L+650, 1.8% LIBOR Floor, 3/4/17

  Consumer Discretionary     3,548        3,568        3,512   

Postmedia Network Inc., L+500, 1.3% LIBOR Floor, 7/13/16(d)(g)

  Consumer Discretionary     7,993        8,041        7,978   

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Presidio Inc., L+550, 1.8% LIBOR Floor, 3/31/17(e)

  Industrials   $ 14,617      $ 14,418      $ 14,836   

Princeton Review, Inc., L+550, 1.5% LIBOR Floor, 12/7/14

  Consumer Discretionary     2,283        2,033        2,032   

Protection One, Inc., L+450, 1.3% LIBOR Floor, 3/20/19(d)

  Consumer Discretionary     2,192        2,160        2,179   

Remy International, Inc., L+450, 1.8% LIBOR Floor, 12/17/13(d)(g)

  Consumer Discretionary     3,946        3,860        3,966   

Res-Care, Inc., L+550, 1.8% LIBOR Floor, 12/22/16(e)

  Consumer Discretionary     4,938        4,859        4,938   

Reynolds Group Holdings, Inc., L+325, 1.0% LIBOR Floor, 2/9/18(d)(g)

  Consumer Discretionary     1,964        1,902        1,987   

Reynolds Group Holdings, Inc., L+525, 1.3% LIBOR Floor, 7/31/18(d)(g)

  Consumer Discretionary     9,721        9,632        9,860   

Roundy’s Supermarkets, Inc., L+450, 1.3% LIBOR Floor, 2/13/19(d)(g)

  Consumer Staples     4,196        4,134        4,231   

Sabre, Inc., L+200, 9/30/14

  Consumer Discretionary     5,013        4,383        4,680   

Safety-Kleen Systems Inc., L+375, 1.3% LIBOR Floor, 5/23/15

  Industrials     1,412        1,398        1,410   

Sagittarius Restaurants LLC, L+550, 2.0% LIBOR Floor, 5/18/15(e)

  Consumer Discretionary     2,439        2,420        2,427   

Sarnova, Inc., L+475, 1.5% LIBOR Floor, 4/6/15(f)

  Healthcare     2,922        2,864        2,834   

Sheridan Production Co., LLC, L+550, 2.0% LIBOR Floor, 4/20/17(d)

  Energy     10,237        10,162        10,263   

Shield Finance Co Sarl, L+563, 2.0% LIBOR Floor, 6/15/16(e)(g)

  Information Technology     4,652        4,632        4,687   

Sitel, LLC, L+675, 1/30/17(d)

  Telecommunication Services     5,966        5,713        5,792   

Smile Brands Group Inc., L+525, 1.8% LIBOR Floor, 12/21/17(d)

  Healthcare     5,891        5,818        5,891   

Sorenson Communication, Inc., L+400, 2.0% LIBOR Floor, 8/16/13(d)

  Telecommunication Services     22,849        22,281        22,517   

Spansion, LLC, L+550, 2.0% LIBOR Floor, 2/9/15(d)(g)

  Information Technology     10,226        10,122        10,232   

Sports Authority, Inc., L+600, 1.5% LIBOR Floor, 11/16/17(d)

  Consumer Discretionary     9,885        9,645        9,520   

Sprouts Farmers Markets, LLC, L+475, 1.3% LIBOR Floor, 4/15/17

  Consumer Discretionary     5,250        5,250        4,882   

SRA International, Inc., L+525, 1.3% LIBOR Floor, 7/20/18(d)(e)

  Industrials     18,367        17,562        18,344   

Star West Generation LLC, L+450, 1.5% LIBOR Floor, 5/17/18(d)

  Energy     4,231        4,212        4,192   

Styron Sarl, L+450, 1.5% LIBOR Floor, 6/14/16(d)

  Materials     4,079        4,079        3,736   

Summit Entertainment, LLC, L+550, 1.3% LIBOR Floor, 9/7/16(d)

  Consumer Discretionary     14,540        14,326        14,522   

Surgery Center Holdings, Inc., L+500, 1.5% LIBOR Floor, 2/4/17(d)

  Healthcare     5,722        5,565        5,422   

Surgical Care Affiliates, LLC, L+400, 12/30/17

  Healthcare     4,724        4,169        4,550   

TASC, Inc., L+325, 1.3% LIBOR Floor, 12/18/15

  Industrials     536        512        531   

Texas Competitive Electric Holdings Co. LLC, L+350, 10/10/14

  Utilities     4,000        3,133        2,450   

Texas Competitive Electric Holdings Co. LLC, L+450, 10/10/17(d)

  Utilities     12,867        10,615        7,182   

TI Group Automotive Systems, LLC, L+550, 1.3% LIBOR Floor, 3/19/18(d)

  Industrials     7,826        7,592        7,860   

Toys “R” Us, Inc., L+450, 1.5% LIBOR Floor, 8/17/16(d)

  Consumer Discretionary     6,649        6,620        6,671   

Travelport LLC, L+450, 8/23/15(d)(f)

  Consumer Discretionary     13,789        12,340        12,598   

Twin-Star International, Inc., L+400, 4/24/13(f)

  Consumer Discretionary     7,857        7,700        7,464   

Unifrax I LLC, L+550, 1.5% LIBOR Floor, 11/28/18(d)

  Industrials     14,065        13,793        14,235   

Univar Inc., L+350, 1.5% LIBOR Floor, 4/28/17(d)

  Materials     6,559        6,559        6,579   

Univision Communications Inc., L+425, 9/29/14(d)

  Consumer Discretionary     10,000        8,713        9,290   

Virtual Radiologic Corp., L+550, 1.8% LIBOR Floor, 12/22/16

  Healthcare     3,564        3,493        3,350   

VPG Group Holdings LLC, L+900, 1.0% LIBOR Floor, 10/5/16(e)

  Materials     56,638        55,593        55,788   

W3 Co., L+625, 1.3% LIBOR Floor, 4/28/18

  Industrials     6,983        6,717        6,913   

WASH Multifamily Laundry Systems, LLC, L+500, 3.0% LIBOR Floor, 8/4/14

  Industrials     3,870        3,831        3,845   

Web.com Group, Inc., L+550, 1.5% LIBOR Floor, 10/27/17(d)(e)(g)

  Information Technology     34,329        30,369        34,057   

Willbros Group, Inc., L+750, 2.0% LIBOR Floor, 6/30/14(f)

  Industrials     3,725        3,725        3,725   

Woodstream Corp., L+375, 8/22/14(f)

  Consumer Discretionary     1,530        1,499        1,453   

Woodstream Corp., L+350, 8/22/14(f)

  Consumer Discretionary     705        648        657   

Yell Group Plc, L+300, 7/31/14(g)

  Consumer Discretionary     785        702        251   

Zayo Group LLC, L+550, 1.5% LIBOR Floor, 9/15/16

  Telecommunication Services     7,036        6,873        7,072   
     

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

        1,225,577        1,246,658   

Unfunded Loan Commitments

        (19,486     (19,486
     

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

        1,206,091        1,227,172   

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Senior Secured Loans—Second Lien—21.2%

       

Advance Pierre Foods, Inc., L+950, 1.8% LIBOR Floor, 9/29/17(d)(e)(f)

  Consumer Staples   $ 19,000      $ 19,077      $ 19,174   

Advanced Lighting Technologies, Inc., L+600, 6/1/14

  Industrials     2,500        2,307        2,472   

Advantage Sales & Marketing Inc., L+775, 1.5% LIBOR Floor, 6/17/18(d)

  Industrials     19,244        19,299        19,268   

Alkermes, Inc., L+800, 1.5% LIBOR Floor, 9/16/18(g)

  Healthcare     10,000        9,818        10,400   

American Racing & Entertainment, LLC, 12.0%, 6/30/18

  Consumer Discretionary     16,800        16,159        14,028   

AMN Healthcare Services, Inc., L+1000, 1.8% LIBOR Floor, 9/1/16(e)(g)

  Healthcare     10,000        9,776        10,000   

AmWINS Group, Inc., L+550, 6/8/14(e)

  Financials     1,992        1,776        1,957   

Asurion Corp., L+750, 1.5% LIBOR Floor, 5/24/19(d)

  Financials     27,429        27,304        27,840   

Attachmate Corp., L+800, 1.5% LIBOR Floor, 10/27/17(d)(f)

  Information Technology     19,000        18,747        18,958   

Blackboard Inc., L+1000, 1.5% LIBOR Floor, 10/4/19

  Information Technology     22,000        19,981        20,364   

BNY ConvergEx Group, LLC, L+700, 1.8% LIBOR Floor, 12/17/17(d)

  Information Technology     9,000        9,024        8,955   

Brock Holdings III, Inc., L+825, 1.8% LIBOR Floor, 3/16/18(d)

  Industrials     6,923        6,805        6,776   

Decision Resources LLC, L+850, 1.5% LIBOR Floor, 12/6/17(e)

  Healthcare     3,333        3,304        3,283   

DEI Sales, Inc., L+850, 1.5% LIBOR Floor, 1/15/18(e)

  Consumer Discretionary     46,800        45,951        46,800   

FR Brand Acquisition Corp., L+600, 2/7/15(d)

  Industrials     10,000        9,188        7,892   

FR Brand Acquisition Corp., L+700, 2/7/15(d)

  Industrials     3,000        2,856        2,400   

Fram Group Holdings Inc., L+900, 1.5% LIBOR Floor, 1/29/18(d)

  Industrials     7,000        6,968        6,899   

Goodman Global, Inc., L+700, 2.0% LIBOR Floor, 10/27/17(d)

  Consumer Discretionary     4,455        4,383        4,545   

Hubbard Radio, LLC, L+725, 1.5% LIBOR Floor, 4/27/18(d)

  Telecommunication Services     1,429        1,416        1,452   

JHCI Holdings, Inc., L+550, 12/19/14(d)

  Industrials     6,000        5,612        5,280   

JW Aluminum Co., L+675, 12/15/13(e)

  Materials     20,714        15,516        15,588   

Kronos Inc., L+575, 6/11/15(d)

  Industrials     3,000        2,978        2,919   

Mood Media Corp., L+875, 1.5% LIBOR Floor, 11/6/18(e)(g)

  Consumer Discretionary     20,000        19,844        19,040   

Paw Luxco II Sarl, EURIBOR+950, 1/29/19(g)

  Consumer Discretionary   20,000        23,455        22,824   

Pregis Corp., L+1000, 1.5% LIBOR Floor, 3/23/18(e)

  Industrials   $ 45,000        44,100        44,100   

Sedgwick CMS Holdings Inc., L+750, 1.5% LIBOR Floor, 5/30/17

  Industrials     500        500        499   

Sensus USA Inc., L+725, 1.3% LIBOR Floor, 5/9/18(d)

  Industrials     8,571        8,578        8,571   

Southern Pacific Resource Corp., L+850, 2.0% LIBOR Floor, 12/22/15(d)(e)(g)

  Energy     13,798        13,647        13,929   

SRAM, LLC, L+750, 1.5% LIBOR Floor, 12/7/18

  Consumer Discretionary     5,000        4,958        5,053   

TPF Generation Holdings, LLC, L+425, 12/15/14(d)

  Energy     8,170        7,636        7,954   

Vertafore, Inc., L+825, 1.5% LIBOR Floor, 10/19/17(d)(f)

  Information Technology     14,750        14,698        14,861   

Web.com Group, Inc., L+950, 1.5% LIBOR Floor, 10/27/18(g)

  Information Technology     4,700        4,041        4,385   

Wm. Bolthouse Farms, Inc., L+750, 2.0% LIBOR Floor, 8/11/16(d)

  Consumer Staples     14,029        14,109        14,128   
     

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

        413,811        412,594   
     

 

 

   

 

 

 

Senior Secured Bonds—7.6%

       

Allen Systems Group, Inc., 10.5%, 11/15/16(e)

  Information Technology     8,723        8,797        7,763   

Aspect Software, Inc., 10.6%, 5/15/17(d)

  Information Technology     4,000        4,000        4,303   

Avaya Inc., 7.0%, 4/1/19(d)

  Information Technology     1,500        1,500        1,511   

BakerCorp. International Inc., 8.3%, 6/1/19(e)

  Industrials     5,000        5,000        5,150   

Chester Downs & Marina, LLC, 9.3%, 1/15/20(d)

  Consumer Discretionary     3,750        3,787        3,978   

Eastman Kodak Co., 10.6%, 3/15/19(e)

  Information Technology     7,500        7,413        6,493   

First Data Corp., 8.9%, 8/15/20(d)(e)

  Information Technology     6,300        6,345        6,803   

Grifols, SA, 8.3%, 2/1/18(d)(g)

  Healthcare     2,500        2,500        2,712   

HOA Restaurant Group, LLC, 11.3%, 4/1/17(e)

  Consumer Discretionary     14,100        14,133        13,554   

Hughes Satellite Systems Corp., 6.5%, 6/15/19(d)(g)

  Telecommunication Services     2,000        2,000        2,091   

Ineos Finance Plc, 8.4%, 2/15/19(d)(g)

  Materials     3,000        3,000        3,188   

Nexstar Broadcasting Group, Inc., 8.9%, 4/15/17(d)(g)

  Telecommunication Services     5,000        4,975        5,355   

Paetec Holdings Corp., 8.9%, 6/30/17(d)(g)

  Telecommunication Services     4,680        4,789        5,122   

 

See notes to unaudited consolidated financial statements.

 

8


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Palace Entertainment Holdings, LLC, 8.9%, 4/15/17(d)

  Consumer Discretionary   $ 2,400      $ 2,400      $ 2,502   

Reynolds Group Holdings, Inc., 7.1%, 4/15/19(d)(g)

  Consumer Discretionary     3,000        3,133        3,141   

Roofing Supply Group LLC, 8.6%, 12/1/17(d)

  Industrials     720        720        767   

Speedy Cash Intermediate Holdings Corp., 10.8%, 10/15/18(e)

  Financials     16,000        16,186        16,515   

Symbion, Inc., 8.0%, 6/15/16(d)(e)

  Healthcare     15,460        15,263        15,383   

Taminco Global Chemical Corp., 9.8%, 3/31/20(e)(g)

  Industrials     2,750        2,750        2,826   

Texas Competitive Electric Holdings Co. LLC, 11.5%, 10/1/20(e)

  Utilities     10,000        9,911        6,641   

Titlemax, Inc., 13.3%, 7/15/15(e)

  Industrials     14,500        15,318        16,022   

United Refining, Co., 10.5%, 2/28/18(e)

  Energy     1,185        1,147        1,223   

Univision Communications Inc., 6.9%, 5/15/19

  Telecommunication Services     6,800        6,750        6,897   

UPCB Finance VI Ltd., 6.9%, 1/15/22(d)(g)

  Consumer Discretionary     7,000        7,000        7,228   

UR Financing Escrow Corp., 5.8%, 7/15/18(g)

  Industrials     1,500        1,500        1,539   
     

 

 

   

 

 

 

Total Senior Secured Bonds

        150,317        148,707   
     

 

 

   

 

 

 

Subordinated Debt—15.6%

       

Advantage Sales & Marketing Inc., 13.0%, 12/23/18

  Industrials     10,000        9,804        9,850   

Alpha Natural Resources, Inc., 6.3%, 6/1/21(g)

  Materials     4,000        4,000        3,616   

AMC Networks Inc., 7.8%, 7/15/21(g)

  Telecommunication Services     2,900        2,900        3,248   

Aurora Diagnostics, LLC, 10.8%, 1/15/18

  Healthcare     8,000        8,000        8,000   

Bresnan Broadband Holdings LLC, 8.0%, 12/15/18(d)(g)

  Telecommunication Services     5,000        5,000        5,200   

Burlington Coat Factory Holdings Inc., 10.0%, 2/15/19(d)

  Consumer Discretionary     7,334        6,868        7,663   

Calumet Lubricants Co., LP, 9.4%, 5/1/19(g)

  Energy     5,800        5,800        6,022   

Cincinnati Bell Inc., 8.4%, 10/15/20(d)(g)

  Telecommunication Services     11,000        10,846        11,098   

Commscope Inc., 8.3%, 1/15/19(d)

  Telecommunication Services     4,000        4,000        4,236   

Cumulus Media Inc., 7.8%, 5/1/19(g)

  Consumer Discretionary     5,000        4,409        4,732   

Del Monte Foods Co., 7.6%, 2/15/19(d)

  Consumer Staples     7,500        7,234        7,504   

Entercom Radio, LLC, 10.5%, 12/1/19(d)(g)

  Consumer Discretionary     13,500        13,348        14,514   

Gymboree Corp., 9.1%, 12/1/18

  Consumer Discretionary     4,000        3,214        3,695   

Harland Clarke Holdings Corp., 9.5%, 5/15/15

  Industrials     2,689        2,368        2,242   

Hughes Satellite Systems Corp., 7.6%, 6/15/21(d)(g)

  Telecommunication Services     1,310        1,310        1,404   

Infiltrator Systems, Inc., 12.0%, 2.0% PIK, 3/11/18

  Industrials     62,619        61,439        63,246   

Ipreo Holdings LLC, 11.5%, 8/15/18(e)

  Information Technology     15,000        14,932        14,850   

J.Crew Group, Inc., 8.1%, 3/1/19

  Consumer Discretionary     1,200        1,200        1,224   

JBS USA LLC, 8.3%, 2/1/20(d)(g)

  Consumer Staples     3,000        2,957        3,086   

Kinetic Concepts, Inc., 10.5%, 11/1/18(e)

  Healthcare     14,660        13,821        15,448   

Lone Pine Resources Canada Inc., 10.4%, 2/15/17(g)

  Energy     5,000        4,929        5,174   

Monitronics International, Inc., 9.1%, 4/1/20(d)(g)

  Consumer Discretionary     2,250        2,250        2,283   

NCO Group, Inc., L+488, 11/15/13(e)

  Information Technology     7,000        6,549        7,021   

Pharmaceutical Product Development, Inc., 9.5%, 12/1/19

  Healthcare     2,900        2,900        3,146   

Post Holdings, Inc., 7.4%, 2/15/22(d)(g)

  Consumer Staples     1,500        1,500        1,577   

Prestige Brands Holdings, Inc., 8.1%, 2/1/20(d)(g)

  Consumer Discretionary     4,500        4,500        4,892   

Quicksilver Resources Inc., 7.1%, 4/1/16(d)(g)

  Energy     1,000        872        926   

Samson Investment Co., 9.8%, 2/15/20(e)

  Energy     10,000        10,000        10,169   

Sensata Technologies, Inc., 6.5%, 5/15/19(g)

  Information Technology     2,000        2,000        2,098   

Symmetry Medical Inc., 12.0%, 2.0% PIK, 12/29/17(g)

  Healthcare     32,668        31,720        32,668   

ThermaSys Corp., 10.0%, 2.5% PIK, 12/31/16

  Industrials     35,500        34,806        35,677   

Univar Inc., 12.0%, 6/30/18(e)

  Materials     3,000        2,964        3,090   

UR Financing Escrow Corp., 7.4%, 5/15/20

  Industrials     5,000        5,000        5,136   
     

 

 

   

 

 

 

Total Subordinated Debt

        293,440        304,735   
     

 

 

   

 

 

 

 

See notes to unaudited consolidated financial statements.

 

9


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair Value(c)  

Collateralized Securities—3.8%

       

Apidos CDO IV Class E, L+360, 10/27/18(g)

  Financials   $ 2,000      $ 1,143      $ 1,384   

Ares 2007 CLO 11A Class E, L+600, 10/11/21(g)

  Financials     4,775        3,131        3,700   

Ares 2007 CLO 12X Class E, L+575, 11/25/20(g)

  Financials     2,252        1,790        1,879   

Blue Mountain CLO III Class E, L+355, 3/17/21(g)

  Financials     2,000        935        1,303   

Carlyle Azure CLO Class Income, 18.6%, 5/27/20(g)

  Financials     28,000        15,830        16,890   

Franklin CLO 6A Class E, L+425, 8/9/19(g)

  Financials     1,919        1,202        1,390   

Galaxy VII CLO Class Subord., 22.3%, 10/13/18(g)

  Financials     2,000        1,222        1,662   

Lightpoint CLO 2006 V Class D, L+365, 8/5/19(g)

  Financials     6,500        3,285        4,341   

Lightpoint CLO 2007 VII Class D, L+400, 5/15/21(g)

  Financials     4,000        2,302        2,676   

Mountain View CLO II Class Pref., 26.2%, 1/12/21(g)

  Financials     9,225        5,663        7,555   

Octagon CDO 2007 1A Class Income, 48.0%, 8/25/21(g)

  Financials     4,000        2,281        4,184   

Octagon CLO 2006 10A Class Income, 35.3%, 10/18/20(g)

  Financials     4,375        2,956        4,165   

Rampart CLO 2007 1A Class Subord., 25.5%, 10/25/21(g)

  Financials     10,000        6,629        8,896   

Stone Tower CLO VI Class Subord., 31.9%, 4/17/21(g)

  Financials     5,000        3,152        5,193   

Trimaran CLO IV Ltd. Class Pref., 16.6%, 12/1/17(g)

  Financials     12,500        7,801        8,743   
     

 

 

   

 

 

 

Total Collateralized Securities

          59,322          73,961   
     

 

 

   

 

 

 

 

        Number of
Shares
    Amortized
Cost
    Fair  Value(c)  

Equity/Other—4.1%(h)

       

Aquilex Corp., Common Equity, Class A Shares(e)(i)

  Energy     15,128      $ 2,266      $ 3,135   

Aquilex Corp., Common Equity, Class B Shares(e)(i)

  Energy     32,637        4,889        6,762   

East Cameron Partners, LP, Common Equity(i)

  Energy     14,757        100        —     

East Cameron Partners, LP, Preferred Equity(i)

  Energy     887        600        38   

Florida Gaming Centers, Inc., Strike: $0.01, Warrants(i)

  Consumer Discretionary     71        0        868   

Florida Gaming Corp., Strike: $25.00, Warrants(i)

  Consumer Discretionary     226,635        0        1   

Ipreo Holdings LLC, Common Equity(i)

  Information Technology     1,000,000        1,000        950   

JW Aluminum Co., Common Equity(i)

  Materials     37,500        3,225        —     

Klune Industries, Inc., Preferred Equity(i)

  Industrials     53,945        1,500        1,618   

Milagro Holdings, LLC, Common Equity(i)

  Energy     12,057        50        —     

Milagro Holdings, LLC, Preferred Equity(i)

  Energy     283,947        11,181        9,683   

Plains Offshore Operations Inc., Preferred Equity(e)

  Energy     513,335        49,589        49,872   

Plains Offshore Operations Inc., Strike: $20.00, Warrants(e)(i)

  Energy     1,013,444        1,722        1,723   

ThermaSys Corp., Common Equity(i)

  Industrials     24,998        0        380   

ThermaSys Corp., Preferred Equity(i)

  Industrials     24,998        2,500        2,500   

VPG Group Holdings LLC, Class A-2 Units(i)

  Materials     2,500,000        2,500        2,500   
     

 

 

   

 

 

 

Total Equity/Other

        81,122        80,030   
     

 

 

   

 

 

 

TOTAL INVESTMENTS—115.2%

      $ 2,204,103        2,247,199   
     

 

 

   

LIABILITIES IN EXCESS OF OTHER ASSETS—(15.2%)

          (296,443
       

 

 

 

NET ASSETS—100.0%

        $ 1,950,756   
       

 

 

 

Total Return Swap

      Notional
Amount
          Unrealized
Appreciation
 

Citibank TRS Facility (Note 8)(g)

    $ 491,581        $ 2,516   
       

 

 

 

 

(a) Security may be an obligation of one or more entities affiliated with the named company.

 

See notes to unaudited consolidated financial statements.

 

10


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments

As of March 31, 2012

(in thousands, except share amounts)

 

 

 

(b) Denominated in U.S. dollars unless otherwise noted.

 

(c) Fair value determined by the Company’s board of directors (see Note 7).

 

(d) Security or portion thereof held within Broad Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Notes 10 and 11).

 

(e) Security or portion thereof held within Locust Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the Class A Notes issued to Race Street Funding LLC pursuant to an indenture with Citibank, N.A., as trustee (see Note 12).

 

(f) Position or portion thereof unsettled as of March 31, 2012.

 

(g) The investment is not a qualifying asset under the Investment Company Act of 1940, as amended. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of March 31, 2012, 80.2% of the Company’s total assets represent qualifying assets. In addition, as described in Note 8, the Company also calculates its compliance with the qualifying asset test on a “look through” basis by disregarding the value of the total return swap itself and treating each loan underlying the total return swap as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 79.3% of the Company’s total assets are qualifying assets as of March 31, 2012.

 

(h) Listed investments may be treated as debt for GAAP or tax purposes.

 

(i) Security is non-income producing.

See notes to unaudited consolidated financial statements.

 

11


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2011

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Senior Secured Loans—First Lien—68.3%

       

1-800 Contacts, Inc., L+395, 3.8% LIBOR Floor, 3/4/15(e)

  Healthcare   $ 5,446      $ 5,236      $ 5,406   

A.P. Plasman Inc., L+850, 1.5% LIBOR Floor, 12/29/16(e)(g)

  Industrials     55,000        53,902        53,900   

Academy, Ltd., L+450, 1.5% LIBOR Floor, 8/3/18(d)

  Consumer Discretionary     5,000        4,953        4,961   

Advance Pierre Foods, Inc., L+525, 1.8% LIBOR Floor, 9/30/16(d)

  Consumer Staples     4,875        4,797        4,870   

Airvana Network Solutions Inc., L+800, 2.0% LIBOR Floor, 3/18/15(e)(f)

  Telecommunication Services     5,077        5,000        5,093   

Altegrity, Inc., L+600, 1.8% LIBOR Floor, 2/21/15(d)

  Industrials     5,860        5,795        5,831   

American & Efird Global, LLC, L+900, 1.5% LIBOR Floor, 12/21/16(e)

  Consumer Discretionary     40,000        39,005        39,000   

American Racing & Entertainment, LLC, 7.8%, 6/30/14(e)

  Consumer Discretionary     25,800        25,800        25,491   

Amscan Holdings, Inc., L+525, 1.5% LIBOR Floor, 12/2/17(d)

  Consumer Discretionary     8,834        8,822        8,803   

AmWINS Group, Inc., L+250, 6/8/13(d)

  Financials     941        847        917   

Ardent Health Services LLC, L+500, 1.5% LIBOR Floor, 9/15/15(d)

  Healthcare     10,364        10,264        10,293   

Aspect Software, Inc., L+450, 1.8% LIBOR Floor, 5/7/16(d)

  Information Technology     1,965        1,951        1,964   

Attachmate Corp., L+500, 1.5% LIBOR Floor, 4/27/17(d)

  Information Technology     9,875        9,789        9,689   

Avaya Inc., L+275, 10/24/14(d)

  Information Technology     2,608        2,498        2,500   

Avaya Inc., L+450, 10/26/17(d)

  Information Technology     8,224        7,275        7,515   

Avis Budget Car Rental, LLC, L+500, 1.3% LIBOR Floor, 9/22/18(d)(g)

  Consumer Discretionary     7,222        7,081        7,279   

AZ Chem US Inc., L+575, 1.5% LIBOR Floor, 12/22/17(f)

  Materials     5,000        4,850        4,992   

Barrington Broadcasting Group LLC, L+600, 1.5% LIBOR Floor, 6/14/17

  Consumer Discretionary     3,125        3,032        3,117   

BJ’s Wholesale Club, Inc., L+575, 1.3% LIBOR Floor, 9/29/18(d)

  Consumer Discretionary     18,000        17,117        18,079   

Blackboard Inc., L+600, 1.5% LIBOR Floor, 10/4/18(d)(e)

  Information Technology     40,385        37,252        38,391   

Boyd Gaming Corp., L+475, 1.3% LIBOR Floor, 12/17/15(d)(g)

  Consumer Discretionary     6,218        6,096        6,162   

Brock Holdings III, Inc., L+450, 1.5% LIBOR Floor, 3/14/17(d)

  Industrials     4,963        4,932        4,829   

Canwest LP, L+500, 1.3% LIBOR Floor, 7/23/16(d)(g)

  Consumer Discretionary     6,182        6,226        6,096   

Carestream Health, Inc., L+350, 1.5% LIBOR Floor, 2/25/17

  Healthcare     9,924        9,880        8,946   

CCC Information Services Inc., L+400, 1.5% LIBOR Floor, 11/11/15(d)

  Information Technology     1,562        1,550        1,563   

Cenveo Corp., L+475, 1.5% LIBOR Floor, 12/21/16(d)(g)

  Consumer Discretionary     6,249        6,197        6,185   

Ceridian Corp., L+300, 11/9/14(d)

  Industrials     9,346        8,593        8,449   

Chrysler Group LLC, L+475, 1.3% LIBOR Floor, 5/24/17(d)(e)

  Industrials     25,634        23,769        24,327   

Citgo Petroleum Corp., L+700, 2.0% LIBOR Floor, 6/24/17(d)(e)(g)

  Energy     8,840        8,804        9,036   

Clear Channel Capital I, LLC, L+365, 1/29/16(f)

  Consumer Discretionary     10,000        7,544        7,428   

ConvaTec Inc., L+425, 1.5% LIBOR Floor, 12/22/16(d)

  Healthcare     2,291        2,282        2,276   

Corel Corp., L+400, 5/2/12(e)(g)

  Information Technology     1,234        1,204        1,203   

Custom Building Products, Inc., L+400, 1.8% LIBOR Floor, 3/1/15(d)

  Materials     2,318        2,303        2,275   

Data Device Corp., L+550, 1.8% LIBOR Floor, 12/23/16(e)

  Industrials     12,293        12,062        11,955   

Datatel, Inc., L+500, 1.3% LIBOR Floor, 7/19/18(d)(f)

  Information Technology     14,400        14,184        14,423   

Decision Resources LLC, L+550, 1.5% LIBOR Floor, 12/6/16(d)

  Healthcare     1,985        1,992        1,906   

Del Monte Foods Co., L+300, 1.5% LIBOR Floor, 3/8/18

  Consumer Staples     898        830        855   

Deluxe Entertainment Services Group Inc., L+650, 1.5% LIBOR Floor, 7/3/17(f)

  Consumer Discretionary     15,000        14,400        14,447   

Drumm Investors LLC, L+375, 1.3% LIBOR Floor, 5/4/18

  Healthcare     7,462        6,838        6,544   

Dynegy Power, LLC, L+775, 1.5% LIBOR Floor, 8/5/16(f)(g)

  Energy     2,993        3,060        3,040   

East Cameron Partners, LP, 18.0%, 10/11/12

  Energy     249        249        254   

Entercom Radio, LLC, L+500, 1.3% LIBOR Floor, 11/23/18

  Consumer Discretionary     2,410        2,362        2,410   

Equipower Resources Holdings, LLC, L+425, 1.5% LIBOR Floor, 1/26/18

  Utilities     1,572        1,558        1,493   

Fairway Group Acquisition Co., L+600, 1.5% LIBOR Floor, 3/3/17(d)(e)

  Consumer Discretionary     21,592        21,537        20,985   

First Data Corp., L+275, 9/24/14(d)

  Information Technology     3,442        3,111        3,143   

First Data Corp., L+400, 3/24/18(d)

  Information Technology     9,465        8,117        7,953   

First Reserve Crestwood Holdings LLC, L+850, 2.0% LIBOR Floor, 10/3/16(e)

  Energy     6,052        6,043        6,158   

Florida Gaming Centers, Inc., 15.8%, 4/25/16(e)

  Consumer Discretionary     13,000        12,773        12,480   

Frac Tech International, LLC, L+475, 1.5% LIBOR Floor, 5/6/16(d)

  Energy     4,838        4,719        4,781   

 

See notes to unaudited consolidated financial statements.

 

12


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2011

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Freescale Semiconductor, Inc., L+425, 12/1/16(d)(g)

  Industrials   $ 1,896      $ 1,785      $ 1,819   

Goodman Global, Inc., L+400, 1.8% LIBOR Floor, 10/28/16(d)

  Consumer Discretionary     1,692        1,679        1,696   

Gymboree Corp., L+350, 1.5% LIBOR Floor, 2/23/18

  Consumer Discretionary     7,997        7,098        7,140   

Harbor Freight Tools USA, Inc., L+500, 1.5% LIBOR Floor, 12/22/17(d)

  Consumer Discretionary     9,778        9,694        9,750   

Harland Clarke Holdings Corp., L+250, 6/30/14(d)(f)(g)

  Industrials     6,824        5,876        5,795   

HCR Manor Care, Inc., L+350, 1.5% LIBOR Floor, 4/6/18(e)

  Healthcare     3,148        3,112        2,895   

Hupah Finance Inc., L+500, 1.3% LIBOR Floor, 1/21/19(d)

  Industrials     9,649        9,456        9,625   

Immucor, Inc. , L+575, 1.5% LIBOR Floor, 8/19/18(d)

  Healthcare     7,824        7,525        7,886   

INC Research, LLC, L+575, 1.3% LIBOR Floor, 7/12/18(e)

  Healthcare     11,970        11,629        11,731   

Intelligrated, Inc., L+575, 1.8% LIBOR Floor, 2/18/17(e)

  Information Technology     4,750        4,709        4,726   

Intralinks, Inc., L+425, 1.5% LIBOR Floor, 6/15/14(e)(g)

  Information Technology     1,045        894        1,013   

inVentiv Health, Inc., L+525, 1.5% LIBOR Floor, 8/4/18(d)

  Healthcare     5,073        5,025        4,870   

Ipreo Holdings LLC, L+650, 1.5% LIBOR Floor, 8/7/17(e)

  Information Technology     14,642        14,306        14,312   

J.Crew Group, Inc., L+350, 1.3% LIBOR Floor, 3/7/18

  Consumer Discretionary     3,990        3,499        3,758   

KIK Custom Products Inc., L+225, 5/31/14(d)(g)

  Consumer Staples     10,382        9,446        8,898   

Kinetic Concepts, Inc., L+575, 1.3% LIBOR Floor, 5/4/18(d)

  Healthcare     14,388        13,750        14,538   

Klune Industries, Inc., L+700, 2.0% LIBOR Floor, 8/31/17(e)

  Industrials     71,858        70,492        72,426   

La Paloma Generating Co., LLC, L+550, 1.5% LIBOR Floor, 8/25/17

  Energy     5,785        5,511        5,657   

Lantiq Deutschland GmbH, L+700, 2.0% LIBOR Floor, 11/16/15(d)(e)(g)

  Information Technology     10,707        10,682        9,369   

Maritime Telecommunications Network, Inc., L+600, 1.5% LIBOR Floor, 3/4/16(e)

  Telecommunication Services     7,359        7,265        7,327   

MDA Info Products Ltd., L+550, 1.5% LIBOR Floor, 1/4/17

  Information Technology     4,950        4,888        4,216   

Mood Media Corp., L+550, 1.5% LIBOR Floor, 5/4/18(d)(g)

  Consumer Discretionary     3,658        3,625        3,405   

Mosaic US Holdings Inc., L+275, 4/3/13(e)

  Consumer Discretionary     873        744        829   

NCO Group, Inc., L+500, 2.5% LIBOR Floor, 5/15/13(d)

  Information Technology     7,480        7,454        7,420   

Norit Holding BV, L+525, 1.5% LIBOR Floor, 7/8/17(d)(g)

  Industrials     3,069        3,027        3,100   

NPC International, Inc., L+525, 1.5% LIBOR Floor, 12/28/18(d)

  Consumer Discretionary     4,304        4,218        4,320   

NSH Merger Sub, Inc., L+650, 1.8% LIBOR Floor, 2/3/17(e)

  Healthcare     15,401        15,298        14,978   

OpenLink International, Inc., L+625, 1.5% LIBOR Floor, 10/25/17

  Information Technology     7,317        7,173        7,345   

Ozburn Hessey Holding Co., LLC, L+550, 2.0% LIBOR Floor, 4/8/16(d)

  Industrials     3,504        3,498        3,097   

Pharmaceutical Product Development, Inc., L+500, 1.3% LIBOR Floor, 12/5/18(d)

  Healthcare     12,681        12,492        12,623   

Playboy Enterprises, Inc., L+650, 1.8% LIBOR Floor, 3/4/17

  Consumer Discretionary     5,557        5,567        5,334   

Presidio Inc., L+550, 1.8% LIBOR Floor, 3/31/17(e)(f)

  Industrials     13,250        13,046        13,124   

Protection One, Inc., L+425, 1.8% LIBOR Floor, 6/4/16(d)

  Consumer Discretionary     2,239        2,214        2,228   

Remy International, Inc., L+450, 1.8% LIBOR Floor, 12/17/13(d)(g)

  Consumer Discretionary     4,052        3,959        4,005   

Res-Care, Inc., L+550, 1.8% LIBOR Floor, 12/22/16(e)

  Consumer Discretionary     4,950        4,867        4,727   

Reynolds Group Holdings, Inc., L+325, 1.0% LIBOR Floor, 2/9/18(d)(g)

  Consumer Discretionary     1,969        1,905        1,961   

Reynolds Group Holdings, Inc., L+525, 1.3% LIBOR Floor, 7/31/18(d)(g)

  Consumer Discretionary     9,746        9,654        9,707   

Sagittarius Restaurants LLC, L+550, 2.0% LIBOR Floor, 5/18/15(e)

  Consumer Discretionary     2,592        2,571        2,576   

Sealed Air Corp., L+375, 1.0% LIBOR Floor, 10/3/18(d)(g)

  Industrials     6,425        6,301        6,498   

Sheridan Production Co., LLC, L+550, 2.0% LIBOR Floor, 4/20/17(d)

  Energy     10,342        10,262        10,362   

Shield Finance Co. Sarl, L+563, 2.0% LIBOR Floor, 6/15/16(e)(g)

  Information Technology     4,664        4,642        4,664   

Sitel, LLC, L+675, 1/30/17(d)

  Telecommunication Services     5,966        5,705        5,691   

Smile Brands Group Inc., L+525, 1.8% LIBOR Floor, 12/21/17(d)

  Healthcare     5,906        5,830        5,896   

Sorenson Communication, Inc., L+400, 2.0% LIBOR Floor, 8/16/13(d)

  Telecommunication Services     14,289        13,889        13,832   

Spansion, LLC, L+550, 2.0% LIBOR Floor, 2/9/15(d)(g)

  Information Technology     10,818        10,705        10,696   

Sports Authority, Inc., L+600, 1.5% LIBOR Floor, 11/16/17(d)

  Consumer Discretionary     9,910        9,668        9,588   

Sprouts Farmers Markets, LLC, L+475, 1.3% LIBOR Floor, 4/15/17

  Consumer Discretionary     5,250        5,250        4,804   

SRA International, Inc., L+525, 1.3% LIBOR Floor, 7/20/18(d)(e)

  Industrials     17,522        16,694        16,588   

Star West Generation LLC, L+450, 1.5% LIBOR Floor, 5/17/18(d)

  Energy     4,231        4,211        4,167   

Styron Sarl, L+450, 1.5% LIBOR Floor, 6/14/16(d)

  Materials     4,089        4,089        3,553   

 

See notes to unaudited consolidated financial statements.

 

13


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2011

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Summit Entertainment, LLC, L+600, 1.5% LIBOR Floor, 8/28/16(d)

  Consumer Discretionary   $ 13,523      $ 13,359      $ 13,388   

Summit Materials Companies I, LLC, L+500, 1.5% LIBOR Floor, 12/31/15(d)

  Materials     3,960        3,891        3,935   

Surgery Center Holdings, Inc., L+500, 1.5% LIBOR Floor, 2/4/17(d)

  Healthcare     993        1,005        926   

TASC, Inc., L+325, 1.3% LIBOR Floor, 12/18/15

  Industrials     537        512        536   

Telcordia Technologies Inc., L+500, 1.8% LIBOR Floor, 4/30/16(d)

  Telecommunication Services     8,748        8,766        8,748   

Texas Competitive Electric Holdings Co. LLC, L+350, 10/10/14

  Utilities     4,000        3,069        2,804   

Texas Competitive Electric Holdings Co. LLC, L+450, 10/10/17(d)

  Utilities     12,867        10,540        8,180   

TNS, Inc., L+400, 2.0% LIBOR Floor, 11/18/15(d)(g)

  Telecommunication Services     1,247        1,247        1,243   

Toys”R”Us, Inc., L+450, 1.5% LIBOR Floor, 8/17/16(d)

  Consumer Discretionary     6,666        6,635        6,593   

Unifrax I LLC, L+550, 1.5% LIBOR Floor, 11/28/18(d)

  Industrials     14,100        13,819        14,171   

Univar Inc., L+350, 1.5% LIBOR Floor, 4/28/17(d)

  Materials     6,575        6,575        6,357   

Univision Communications Inc., L+425, 9/29/14(d)

  Consumer Discretionary     10,000        8,661        8,932   

VPG Group Holdings LLC, L+900, 1.0% LIBOR Floor, 10/5/16(e)

  Materials     57,068        55,971        56,213   

W3 Co., L+625, 1.3% LIBOR Floor, 4/28/18

  Industrials     7,000        6,725        6,755   

Web.com Group, Inc., L+550, 1.5% LIBOR Floor, 10/27/17(d)(e)(g)

  Information Technology     35,000        30,867        32,244   

Yell Group Plc, L+300, 7/31/14(g)

  Consumer Discretionary     785        695        221   

Zayo Group LLC, L+550, 1.5% LIBOR Floor, 9/15/16

  Telecommunication Services     6,000        5,822        5,981   
     

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

        1,043,519        1,043,485   

Unfunded Loan Commitments

        (20,302     (20,302
     

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

        1,023,217        1,023,183   

Senior Secured Loans—Second Lien—25.9%

       

Advance Pierre Foods, Inc., L+950, 1.8% LIBOR Floor, 9/29/17(d)(e)

  Consumer Staples     17,000        17,040        16,958   

Advantage Sales & Marketing Inc., L+775, 1.5% LIBOR Floor, 6/17/18(d)

  Industrials     19,244        19,301        18,931   

Alkermes, Inc., L+800, 1.5% LIBOR Floor, 9/16/18(g)

  Healthcare     10,000        9,811        9,900   

American Racing & Entertainment, LLC, 12.0%, 6/30/18

  Consumer Discretionary     16,800        16,136        13,356   

AMN Healthcare Services, Inc., L+1000, 1.8% LIBOR Floor, 9/1/16(e)(g)

  Healthcare     10,000        9,764        9,500   

AmWINS Group, Inc., L+550, 6/8/14(e)

  Financials     1,992        1,755        1,891   

Aquilex Holdings LLC, L+950, 1.5% LIBOR Floor, 2/3/12

  Energy     1,048        1,020        1,284   

Asurion Corp., L+750, 1.5% LIBOR Floor, 5/24/19(d)

  Financials     27,429        27,301        27,096   

Attachmate Corp., L+800, 1.5% LIBOR Floor, 10/27/17(d)

  Information Technology     17,000        16,726        16,235   

Blackboard Inc., L+1000, 1.5% LIBOR Floor, 10/4/19

  Information Technology     15,000        13,518        13,500   

BNY ConvergEx Group, LLC, L+700, 1.8% LIBOR Floor, 12/17/17(d)

  Information Technology     9,000        9,025        8,640   

Brock Holdings III, Inc., L+825, 1.8% LIBOR Floor, 3/16/18(d)

  Industrials     6,923        6,800        6,387   

Datatel, Inc., L+725, 1.5% LIBOR Floor, 2/18/18(d)(f)

  Information Technology     20,783        20,782        20,809   

Decision Resources LLC, L+850, 1.5% LIBOR Floor, 12/6/17(e)

  Healthcare     3,333        3,303        3,283   

DEI Sales, Inc., L+850, 1.5% LIBOR Floor, 7/11/17(e)

  Consumer Discretionary     46,800        45,924        46,331   

Deluxe Entertainment Services Group Inc., L+900, 2.0% LIBOR Floor, 5/11/13(e)

  Consumer Discretionary     12,500        12,099        12,406   

FR Brand Acquisition Corp., L+600, 2/7/15(d)

  Industrials     10,000        9,132        7,206   

FR Brand Acquisition Corp., L+700, 2/7/15(d)

  Industrials     3,000        2,845        2,153   

Fram Group Holdings Inc., L+900, 1.5% LIBOR Floor, 1/29/18(d)

  Industrials     7,000        6,967        6,772   

Goodman Global, Inc., L+700, 2.0% LIBOR Floor, 10/27/17(d)

  Consumer Discretionary     4,455        4,380        4,484   

Hubbard Radio, LLC, L+725, 1.5% LIBOR Floor, 4/29/18(d)

  Telecommunication Services     1,429        1,416        1,421   

JHCI Holdings, Inc., L+550, 12/19/14(d)

  Industrials     6,000        5,580        5,003   

JW Aluminum Co., L+675, 12/15/13(e)

  Materials     20,714        14,984        14,500   

Kronos Inc., L+575, 6/11/15(d)

  Industrials     3,000        2,936        2,888   

Mood Media Corp., L+875, 1.5% LIBOR Floor, 11/6/18(e)(g)

  Consumer Discretionary     15,000        14,943        13,894   

Paw Luxco II Sarl, EURIBOR+950, 1/29/19(g)

  Consumer Discretionary    20,000        23,353        23,089   

Roundy’s Supermarkets, Inc., L+800, 2.0% LIBOR Floor, 4/16/16(d)

  Consumer Staples   $ 15,000        15,079        15,047   

Sedgwick CMS Holdings, Inc., L+750, 1.5% LIBOR Floor, 5/30/17

  Industrials     500        500        495   

 

See notes to unaudited consolidated financial statements.

 

14


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2011

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Sensus USA Inc., L+725, 1.3% LIBOR Floor, 5/9/18(d)

  Industrials   $ 8,571      $ 8,579      $ 8,443   

Southern Pacific Resource Corp., L+850, 2.0% LIBOR Floor, 12/22/15(d)(e)(g)

  Energy     13,833        13,674        13,915   

SRAM, LLC, L+750, 1.5% LIBOR Floor, 12/7/18

  Consumer Discretionary     5,000        4,954        5,050   

TPF Generation Holdings, LLC, L+425, 12/15/14(d)

  Energy     8,170        7,592        7,721   

Vertafore, Inc., L+825, 1.5% LIBOR Floor, 10/19/17(d)

  Information Technology     12,000        11,913        11,715   

Web.com Group, Inc., L+950, 1.5% LIBOR Floor, 10/27/18(g)

  Information Technology     4,700        4,021        4,207   

Wm. Bolthouse Farms, Inc., L+750, 2.0% LIBOR Floor, 8/11/16(d)

  Consumer Staples     14,028        14,113        13,998   
     

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

        397,266        388,508   

Senior Secured Bonds—8.2%

       

Allen Systems Group, Inc., 10.5%, 11/15/16(e)

  Information Technology     8,722        8,801        7,458   

Aspect Software, Inc., 10.6%, 5/15/17(d)

  Information Technology     4,000        4,000        4,167   

Avaya Inc., 7.0%, 4/1/19(d)

  Information Technology     1,500        1,500        1,444   

BakerCorp. International Inc., 8.3%, 6/1/19(e)

  Industrials     5,000        5,000        4,759   

Connacher Oil & Gas Ltd., 8.5%, 8/1/19(e)(g)

  Energy     5,600        5,600        5,085   

Eastman Kodak Co., 10.6%, 3/15/19(e)(g)

  Information Technology     7,500        7,408        5,788   

First Data Corp., 8.9%, 8/15/20(d)(e)

  Information Technology     6,300        6,346        6,395   

Grifols, SA, 8.3%, 2/1/18(d)(g)

  Healthcare     2,500        2,500        2,639   

HOA Restaurant Group, LLC, 11.3%, 4/1/17(e)

  Consumer Discretionary     14,100        14,132        12,942   

Hughes Satellite Systems Corp., 6.5%, 6/15/19(d)(g)

  Telecommunication Services     2,000        2,000        2,085   

Kabel BW, 7.5%, 3/15/19(d)(g)

  Telecommunication Services     665        665        709   

Nexstar Broadcasting Group, Inc., 8.9%, 4/15/17(d)(g)

  Telecommunication Services     5,000        4,973        5,163   

Paetec Holdings Corp., 8.9%, 6/30/17(d)(g)

  Telecommunication Services     4,680        4,798        5,104   

Palace Entertainment Holdings, LLC, 8.9%, 4/15/17(d)

  Consumer Discretionary     2,400        2,400        2,368   

Roofing Supply Group LLC, 8.6%, 12/1/17(d)

  Industrials     720        720        737   

Speedy Cash Intermediate Holdings Corp., 10.8%, 10/15/18(e)

  Financials     16,000        16,193        16,259   

Symbion, Inc., 8.0%, 6/15/16(d)(e)

  Healthcare     15,460        15,255        14,436   

Texas Competitive Electric Holdings Co. LLC, 11.5%, 10/1/20(e)

  Utilities     10,000        9,910        8,369   

Titlemax, Inc., 13.3%, 7/15/15(e)

  Industrials     14,500        15,401        15,735   

United Refining, Co., 10.5%, 2/28/18(e)

  Energy     1,185        1,146        1,116   
     

 

 

   

 

 

 

Total Senior Secured Bonds

        128,748        122,758   

Subordinated Debt—15.1%

       

Advantage Sales & Marketing Inc., 13.0%, 12/23/18(f)

  Industrials     10,000        9,800        9,800   

Alpha Natural Resources, Inc., 6.3%, 6/1/21(g)

  Materials     4,000        4,000        3,892   

AMC Networks Inc., 7.8%, 7/15/21(g)

  Consumer Discretionary     2,900        2,900        3,169   

Aquilex Corp., 11.1%, 12/15/16(e)(h)

  Energy     10,000        9,738        4,105   

Aurora Diagnostics, LLC, 10.8%, 1/15/18

  Healthcare     8,000        8,000        8,004   

Bresnan Broadband Holdings LLC, 8.0%, 12/15/18(d)(g)

  Telecommunication Services     5,000        5,000        5,247   

Burlington Coat Factory Holdings Inc., 10.0%, 2/15/19

  Consumer Discretionary     4,334        3,994        4,255   

Calumet Lubricants Co., LP, 9.4%, 5/1/19(g)

  Energy     5,800        5,800        5,663   

Cincinnati Bell Inc., 8.4%, 10/15/20(d)(g)

  Telecommunication Services     11,000        10,843        11,052   

Commscope Inc., 8.3%, 1/15/19(d)

  Telecommunication Services     4,000        4,000        4,010   

Cumulus Media Inc., 7.8%, 5/1/19(g)

  Consumer Discretionary     5,000        4,394        4,466   

Del Monte Foods Co., 7.6%, 2/15/19(d)

  Consumer Staples     4,500        4,235        4,336   

Entercom Radio, LLC, 10.5%, 12/1/19(d)(g)

  Consumer Discretionary     13,500        13,347        13,542   

Gymboree Corp., 9.1%, 12/1/18

  Consumer Discretionary     2,000        1,533        1,775   

Harland Clarke Holdings Corp., 9.5%, 5/15/15(g)

  Industrials     2,689        2,347        1,954   

Hughes Satellite Systems Corp., 7.6%, 6/15/21(d)(g)

  Telecommunication Services     1,310        1,310        1,376   

Infiltrator Systems, Inc., 12.0%, 2.0% PIK, 3/11/18

  Industrials     47,000        46,089        47,000   

Ipreo Holdings LLC, 11.5%, 8/15/18(e)

  Information Technology     15,000        14,929        14,850   

 

See notes to unaudited consolidated financial statements.

 

15


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2011

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

J.Crew Group, Inc., 8.1%, 3/1/19

  Consumer Discretionary   $ 1,200      $ 1,200      $ 1,153   

Kinetic Concepts, Inc., 10.5%, 11/1/18(e)

  Healthcare     14,660        13,798        14,468   

N.E.W. Customer Service Cos., Inc., L+750, 2.0% LIBOR Floor, 3/22/17(d)

  Industrials     9,200        8,834        8,004   

NCO Group Inc., L+488, 11/15/13(e)

  Information Technology     7,000        6,485        6,805   

Pharmaceutical Product Development Inc., 9.5%, 12/1/19

  Healthcare     2,900        2,900        3,038   

Quicksilver Resources Inc., 7.1%, 4/1/16(d)(g)

  Energy     1,000        865        1,000   

Sealed Air Corp., 8.4%, 9/15/21(d)(g)

  Industrials     2,667        2,667        2,949   

Sensata Technologies, Inc., 6.5%, 5/15/19(g)

  Information Technology     2,000        2,000        2,009   

Symmetry Medical Inc., 12.0%, 2.0% PIK, 12/29/17(g)

  Healthcare     32,500        31,526        31,525   

Univar Inc., 12.0%, 6/30/18(e)

  Materials     3,000        2,964        3,045   

WCA Waste Corp., 7.5%, 6/15/19

  Industrials     3,930        3,930        3,987   
     

 

 

   

 

 

 

Total Subordinated Debt

        229,428        226,479   

Collateralized Securities—4.6%

       

Apidos CDO IV Class E, L+360, 10/27/18(g)

  Financials     2,000        1,123        1,240   

Ares 2007 CLO 11A Class E, L+600, 10/11/21(g)

  Financials     4,775        3,109        3,206   

Ares 2007 CLO 12X Class E, L+575, 11/25/20(g)

  Financials     2,252        1,750        1,563   

Base CLO I Class E, EURIBOR+500, 10/17/18(g)

  Financials   1,500        1,002        1,221   

Blue Mountain CLO III Class E, L+355, 3/17/21(g)

  Financials   $ 2,000        921        1,162   

Carlyle Azure CLO Class Income, 21.3%, 5/27/20(g)

  Financials     28,000        16,645        15,360   

Franklin CLO 6A Class E, L+425, 8/9/19(g)

  Financials     1,919        1,188        1,195   

Galaxy VII CLO Class Subord., 20.2%, 10/13/18(g)

  Financials     2,000        1,341        1,518   

Lightpoint CLO 2006 V Class D, L+365, 8/5/19(g)

  Financials     6,500        3,226        3,870   

Lightpoint CLO 2007 VII Class D, L+400, 5/15/21(g)

  Financials     4,000        2,277        2,366   

Mountain View CLO II Class Pref., 25.9%, 1/12/21(g)

  Financials     9,225        6,082        6,574   

Octagon CDO 2007 1A Class Income, 43.9%, 8/25/21(g)

  Financials     4,000        2,440        3,889   

Octagon CLO 2006 10A Class Income, 35.3%, 10/18/20(g)

  Financials     4,375        3,112        4,183   

Rampart CLO 2007 1A Class Subord., 21.9%, 10/25/21(g)

  Financials     10,000        7,146        8,233   

Stone Tower CLO VI Class Subord., 22.4%, 4/17/21(g)

  Financials     5,000        3,793        4,801   

Trimaran CLO IV Ltd. Class Pref., 16.6%, 12/1/17(g)

  Financials     12,500        8,309        7,985   
     

 

 

   

 

 

 

Total Collateralized Securities

        63,464        68,366   

 

See notes to unaudited consolidated financial statements.

 

16


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2011

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Industry   Number of
Shares
    Amortized
Cost
    Fair
Value(c)
 

Equity/Other—1.0%

       

East Cameron Partners, LP, Common Equity(h)

  Energy     14,757      $ 600      $ —     

East Cameron Partners, LP, Preferred Equity(h)

  Energy     887        100        24   

Florida Gaming Centers, Inc., Strike: $0.01, Warrants(h)

  Consumer Discretionary     71        —          798   

Florida Gaming Corp., Strike: $25.00, Warrants(h)

  Consumer Discretionary     226,635        —          1   

Ipreo Holdings LLC, Common Equity(h)

  Information Technology     1,000,000        1,000        950   

JW Aluminum Co., Common Equity(h)

  Materials     37,500        3,225        —     

Klune Industries, Inc., Preferred Equity(h)

  Industrials     52,101        1,500        1,563   

Milagro Holdings, LLC, Common Equity(h)

  Energy     12,057        50        —     

Milagro Holdings, LLC, Preferred Equity(h)

  Energy     283,947        11,181        9,228   

VPG Group Holdings LLC, Class A-2 Units(h)

  Materials     2,500,000        2,500        2,500   
     

 

 

   

 

 

 

Total Equity/Other

        20,156        15,064   
     

 

 

   

 

 

 

TOTAL INVESTMENTS—123.1%

      $ 1,862,279        1,844,358   
     

 

 

   

LIABILITIES IN EXCESS OF OTHER ASSETS—(23.1%)

          (345,466
       

 

 

 

NET ASSETS—100%

        $ 1,498,892   
       

 

 

 

Total Return Swap

      Notional
Amount
          Unrealized
Depreciation
 

Citibank TRS Facility (Note 8)(g)

    $ 298,498        $ (1,996
       

 

 

 

 

(a) Security may be an obligation of one or more entities affiliated with the named company.

 

(b) Denominated in U.S. dollars unless otherwise noted.

 

(c) Fair value determined by the Company’s board of directors (see Note 7).

 

(d) Security or portion thereof held within Broad Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Notes 10 and 11).

 

(e) Security or portion thereof held within Locust Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the Class A Notes issued to Race Street Funding LLC pursuant to an indenture with Citibank, N.A., as trustee (see Note 12).

 

(f) Position or portion thereof unsettled as of December 31, 2011.

 

(g) The investment is not a qualifying asset under the Investment Company Act of 1940, as amended. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets.

 

(h) Security is non-income producing.

See notes to unaudited consolidated financial statements.

 

17


Table of Contents

FS Investment Corporation

Notes to Unaudited Consolidated Financial Statements

(in thousands, except share and per share amounts)

 

 

Note 1. Principal Business and Organization

FS Investment Corporation, or the Company, was incorporated under the general corporation laws of the State of Maryland on December 21, 2007 and formally commenced operations on January 2, 2009. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be treated for federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of March 31, 2012, the Company had four wholly-owned financing subsidiaries, Broad Street Funding LLC, or Broad Street, which was established on February 2, 2010, Arch Street Funding LLC, or Arch Street, which was established on March 1, 2011, Locust Street Funding LLC, or Locust Street, which was established on July 5, 2011, and Race Street Funding LLC, or Race Street, which was established on July 5, 2011. The consolidated financial statements include both the Company’s accounts and the accounts of its wholly-owned financing subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Since commencing its continuous public offering and through May 14, 2012, the Company has sold 234,018,906 shares (as adjusted for stock distributions) of common stock for gross proceeds of $2,461,756. As of May 14, 2012, the Company had raised total gross proceeds of $2,462,756, including approximately $1,000 contributed by the principals of the Company’s investment adviser in February 2008. During the three months ended March 31, 2012 and 2011, the Company sold 42,836,184 and 18,759,131 shares for gross proceeds of $452,338 and $199,296 at an average price per share of $10.56 and $10.62, respectively. The gross proceeds received during the three months ended March 31, 2012 and 2011 include reinvested stockholder distributions of $17,206 and $3,828, respectively, for which the Company issued 1,792,143 and 376,330 shares of common stock, respectively. During the period from April 1, 2012 to May 14, 2012, the Company sold 30,241,254 shares of common stock for gross proceeds of $322,159 at an average price per share of $10.65.

The proceeds from the issuance of common stock as presented on the Company’s consolidated statements of changes in net assets and consolidated statements of cash flows are presented net of selling commissions and dealer manager fees of $40,660 and $18,140 for the three months ended March 31, 2012 and 2011, respectively.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited financial statements as of and for the year ended December 31, 2011 included in the Company’s annual report on Form 10-K. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The December 31, 2011 balance sheet and schedule of investments are derived from the 2011 audited financial statements. The Company has evaluated the impact of subsequent events through the date the consolidated financial statements were issued and filed with the Securities and Exchange Commission, or the SEC.

 

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FS Investment Corporation

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

 

 

 

Note 2. Summary of Significant Accounting Policies (continued)

 

Use of Estimates: The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Many of the amounts have been rounded, and all amounts are in thousands, except share and per share amounts.

Reclassifications: Certain amounts in the 2011 financial statements have been reclassified to conform to the classifications used to prepare the 2012 financial statements. These reclassifications had no material impact on the Company’s consolidated financial position, results of operations or cash flows as previously reported.

Capital Gains Incentive Fee: Pursuant to the terms of the investment advisory and administrative services agreement the Company entered into with FB Income Advisor, LLC, or FB Advisor, the incentive fee on capital gains earned on liquidated investments of the Company’s portfolio during operations prior to a liquidation of the Company is determined and payable in arrears as of the end of each calendar year. Such fee will equal 20.0% of the Company’s incentive fee capital gains (i.e., the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

While the investment advisory and administrative services agreement with FB Advisor neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants, or AICPA, Technical Practice Aid for investment companies, commencing during the quarter ended December 31, 2010, the Company changed its methodology for accruing for this incentive fee to include unrealized gains in the calculation of the capital gains incentive fee expense and related capital gains incentive fee payable. This accrual reflects the incentive fees that would be payable to FB Advisor if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though FB Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized. During the three months ended March 31, 2012, the Company accrued a capital gains incentive fee of $14,801 based on the performance of its portfolio, of which $14,719 was based on unrealized gains and $82 was based on realized gains. During the three months ended March 31, 2011, the Company accrued $3,271 in capital gains incentive fees based on the performance of its portfolio during such period, of which $2,142 was based on unrealized gains and $1,129 was based on realized gains. As of March 31, 2012, the Company had accrued $14,801 in capital gains incentive fees.

Note 3. Recently Issued Accounting Standards

In May 2011, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This guidance represents the converged guidance of the FASB and the International Accounting Standards Board, or collectively, the Accounting Boards, on fair value measurement. The collective efforts of the Accounting Boards reflected in this guidance have resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value” and enhanced disclosure requirements for investments that do not have readily determinable fair values. The Accounting Boards have concluded the common

 

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FS Investment Corporation

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

 

 

 

Note 3. Recently Issued Accounting Standards (continued)

 

requirements will result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and International Financial Reporting Standards. The amendments to the FASB codification in this guidance are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. The Company has implemented this guidance and it did not have a material impact on its consolidated financial statements, except for enhanced disclosures around fair value measurements.

Note 4. Related Party Transactions

The Company has entered into an investment advisory and administrative services agreement with FB Advisor. Pursuant to the investment advisory and administrative services agreement, FB Advisor is entitled to an annual base management fee of 2.0% of the average value of the Company’s gross assets and an incentive fee based on the Company’s performance.

The incentive fee consists of three parts. The first part, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears and equals 20.0% of “pre-incentive fee net investment income” for the immediately preceding quarter and is subordinated to a preferred return on adjusted capital, as defined in the Company’s investment advisory and administrative services agreement, equal to 2.0% per quarter, or an annualized rate of 8.0%. The second part of the incentive fee, which is referred to as the incentive fee on capital gains during operations, is an incentive fee on capital gains earned on liquidated investments from the Company’s portfolio during operations prior to a liquidation of the Company and is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory and administrative services agreement). This fee equals 20.0% of the Company’s incentive fee capital gains, which equals the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. The third part of the incentive fee, which is referred to as the subordinated liquidation incentive fee, equals 20.0% of the net proceeds from a liquidation of the Company in excess of adjusted capital, as calculated immediately prior to liquidation.

The Company commenced accruing fees under the investment advisory and administrative services agreement on January 2, 2009, upon the commencement of the Company’s operations. During the three months ended March 31, 2012 and 2011, FB Advisor earned $12,204 and $4,761, respectively, in base management fees. Management fees are paid on a quarterly basis in arrears. The Company paid $8,631 and $3,297, respectively, of these fees during the three months ended March 31, 2012 and 2011. As of March 31, 2012, there was $13,145 in management fees payable to FB Advisor.

The Company accrues for the capital gains incentive fee, which, if earned, is paid annually. The Company accrues the incentive fee based on net realized and unrealized gains, however, under the terms of the investment advisory and administrative services agreement, the fee payable to FB Advisor is based on realized gains and no such fee is payable with respect to unrealized gains unless and until such gains are actually realized. During the three months ended March 31, 2012, the Company accrued a capital gains incentive fee of $14,801 based on the performance of its portfolio, of which $14,719 was based on unrealized gains and $82 was based on realized gains. During the three months ended March 31, 2011, the Company accrued $3,271 in capital gains incentive fees based on the performance of its portfolio during such period, of which $2,142 was based on unrealized gains

 

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FS Investment Corporation

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

 

 

 

Note 4. Related Party Transactions (continued)

 

and $1,129 was based on realized gains. As of March 31, 2012, the Company had accrued $14,801 in capital gains incentive fees.

The Company also reimburses FB Advisor for expenses necessary for its performance of services related to administering and operating the Company, provided that such reimbursement is equal to the lower of FB Advisor’s actual costs or the amount that the Company would be required to pay for comparable services in the same geographic location, and provided further that such costs are reasonably allocated to the Company on the basis of assets, revenues, time records or other reasonable methods. During the three months ended March 31, 2012 and 2011, the Company incurred administrative services expenses of $903 and $584, respectively, attributable to FB Advisor. Of these expenses, for the three months ended March 31, 2012 and 2011, $740 and $578, respectively, related to the allocation of costs of administrative personnel for services provided to the Company by employees of FB Advisor and the remainder related to other reimbursable expenses. The Company paid FB Advisor $174 and $477, respectively, for the services rendered under this arrangement during the three months ended March 31, 2012 and 2011. As of March 31, 2012, there was $883 in administrative services expenses payable to FB Advisor. </