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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 SEPTEMBER 30, 2013.

 

¨ 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 had 257,448,160 shares of common stock outstanding as of October 29, 2013.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

PART I—FINANCIAL INFORMATION

  
ITEM 1.   

FINANCIAL STATEMENTS

     1   
  

Consolidated Balance Sheets as of September 30, 2013 (Unaudited) and December 31, 2012

     1   
  

Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012

     2   
  

Unaudited Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2013 and 2012

     3   
  

Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012

     4   
  

Consolidated Schedules of Investments as of September 30, 2013 (Unaudited) and December 31, 2012

     5   
  

Notes to Unaudited Consolidated Financial Statements

     26   
ITEM 2.   

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

     52   
ITEM 3.   

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     80   
ITEM 4.   

CONTROLS AND PROCEDURES

     81   

PART II—OTHER INFORMATION

  
ITEM 1.   

LEGAL PROCEEDINGS

     82   
ITEM 1A.   

RISK FACTORS

     82   
ITEM 2.   

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     82   
ITEM 3.   

DEFAULTS UPON SENIOR SECURITIES

     82   
ITEM 4.   

MINE SAFETY DISCLOSURES

     82   
ITEM 5.   

OTHER INFORMATION

     82   
ITEM 6.   

EXHIBITS

     83   
  

SIGNATURES

     88   


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)

 

 

 

     September 30, 2013
(Unaudited)
     December 31,
2012
 

Assets

     

Investments, at fair value (amortized cost—$4,132,160 and $3,825,244, respectively)

   $ 4,200,801       $ 3,934,722   

Cash

     290,439         338,895   

Receivable for investments sold and repaid

     85,341         20,160   

Interest receivable

     51,075         44,711   

Deferred financing costs

     5,757         7,735   

Prepaid expenses and other assets

     172         530   
  

 

 

    

 

 

 

Total assets

   $ 4,633,585       $ 4,346,753   
  

 

 

    

 

 

 

Liabilities

     

Payable for investments purchased

   $ 44,648       $ 79,420   

Credit facilities payable

     986,421         973,046   

Repurchase agreement payable(1)

     906,083         676,667   

Stockholder distributions payable

     17,939         17,003   

Management fees payable

     22,808         21,507   

Accrued capital gains incentive fees(2)

     27,339         39,751   

Subordinated income incentive fees payable(2)

     16,555         13,393   

Administrative services expense payable

     1,361         947   

Interest payable

     10,545         10,242   

Directors’ fees payable

     229         —     

Other accrued expenses and liabilities

     1,967         3,039   
  

 

 

    

 

 

 

Total liabilities

     2,035,895         1,835,015   
  

 

 

    

 

 

 

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, 257,190,300 and 251,890,821 shares issued and outstanding, respectively

     257         252   

Capital in excess of par value

     2,451,662         2,397,826   

Accumulated undistributed net realized gains on investments and gain/loss on foreign currency(3)

     5,014         —     

Accumulated undistributed (distributions in excess of) net investment income(3)

     72,116         4,307   

Net unrealized appreciation (depreciation) on investments and gain/loss on foreign currency

     68,641         109,353   
  

 

 

    

 

 

 

Total stockholders’ equity

     2,597,690         2,511,738   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,633,585       $ 4,346,753   
  

 

 

    

 

 

 

Net asset value per share of common stock at period end

   $ 10.10       $ 9.97   

  

 

(1) See Note 8 for a discussion of the Company’s repurchase transaction.

 

(2) See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fees and subordinated income incentive fees.

 

(3) See Note 5 for a discussion of the sources 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
September 30,
    Nine Months Ended
September 30,
 
    2013     2012     2013     2012  

Investment income

       

Interest income

  $ 109,886      $ 82,011      $ 317,603      $ 191,382   

Fee income

    11,975        2,004        30,181        6,166   

Dividend income

    1,446        —          9,916        56   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    123,307        84,015        357,700        197,604   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

       

Management fees

    22,720        19,021        67,541        46,570   

Capitals gains incentive fees(1)

    (1,548     17,421        (621     33,920   

Subordinated income incentive fees(1)

    16,555        —          47,950        —     

Administrative services expenses

    1,243        1,782        4,034        4,116   

Stock transfer agent fees

    610        910        2,400        2,731   

Accounting and administrative fees

    343        280        1,063        1,126   

Interest expense

    13,098        7,744        37,110        18,271   

Directors’ fees

    241        212        689        633   

Other general and administrative expenses

    2,273        1,889        4,978        4,066   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    55,535        49,259        165,144        111,433   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    67,772        34,756        192,556        86,171   
 

 

 

   

 

 

   

 

 

   

 

 

 

Realized and unrealized gain/loss

       

Net realized gain (loss) on investments

    6,602        10,259        37,220        14,853   

Net realized gain (loss) on total return swap(2)

    —          9,729        —          19,596   

Net realized gain (loss) on foreign currency

    70        521        (32     534   

Net change in unrealized appreciation (depreciation) on investments

    (14,857     69,216        (40,837     126,095   

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

    —          (2,453     —          1,996   

Net change in unrealized gain (loss) on foreign currency

    30        (261     125        —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Total net realized and unrealized gain (loss) on investments

    (8,155     87,011        (3,524     163,074   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  $ 59,617      $ 121,767      $ 189,032      $ 249,245   
 

 

 

   

 

 

   

 

 

   

 

 

 

Per share information—basic and diluted

       

Net increase (decrease) in net assets resulting from operations (Earnings per Share)

  $ 0.23      $ 0.49      $ 0.75      $ 1.13   
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

    256,108,444        248,310,640        254,322,277        219,768,484   
 

 

 

   

 

 

   

 

 

   

 

 

 

  

 

(1) See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fees and subordinated income incentive fees.

 

(2) On August 29, 2012, the Company terminated its total return swap agreement with Citibank, N.A.

See notes to unaudited consolidated financial statements.

 

2


Table of Contents

FS Investment Corporation

Unaudited Consolidated Statements of Changes in Net Assets

(in thousands)

 

 

 

     Nine Months Ended
September 30,
 
     2013     2012  

Operations

    

Net investment income

   $ 192,556      $ 86,171   

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

     37,188        34,983   

Net change in unrealized appreciation (depreciation) on investments

     (40,837     126,095   

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

     —          1,996   

Net change in unrealized gain (loss) on foreign currency

     125        —     
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     189,032        249,245   
  

 

 

   

 

 

 

Stockholder distributions(2)

    

Distributions from net investment income

     (124,747     (128,781

Distributions from net realized gain on investments

     (32,174     (18,296
  

 

 

   

 

 

 

Net decrease in net assets resulting from stockholder distributions

     (156,921     (147,077
  

 

 

   

 

 

 

Capital share transactions

    

Issuance of common stock

     —          803,348   

Reinvestment of stockholder distributions

     80,950        72,417   

Repurchases of common stock

     (27,109     (11,670

Offering costs

     —          (3,234
  

 

 

   

 

 

 

Net increase in net assets resulting from capital share transactions

     53,841        860,861   
  

 

 

   

 

 

 

Total increase in net assets

     85,952        963,029   

Net assets at beginning of period

     2,511,738        1,498,892   
  

 

 

   

 

 

 

Net assets at end of period

   $ 2,597,690      $ 2,461,921   
  

 

 

   

 

 

 

Accumulated undistributed (distributions in excess of) net investment income(2)

   $ 72,116      $ (41,326
  

 

 

   

 

 

 

 

(1) On August 29, 2012, the Company terminated its total return swap agreement with Citibank, N.A.

 

(2) See Note 5 for a discussion of the sources 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)

 

 

 

     Nine Months Ended
September 30,
 
     2013     2012  

Cash flows from operating activities

    

Net increase (decrease) in net assets resulting from operations

   $ 189,032      $ 249,245   

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

    

Purchases of investments

     (2,204,560     (2,837,344

Paid-in-kind interest

     (5,437     (2,432

Proceeds from sales and repayments of investments

     1,974,977        937,138   

Net realized (gain) loss on investments

     (37,220     (14,853

Net change in unrealized (appreciation) depreciation on investments

     40,837        (126,095

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

     —          (1,996

Accretion of discount

     (34,676     (12,674

Amortization of deferred financing costs

     1,978        1,192   

(Increase) decrease in due from counterparty

     —          69,684   

(Increase) decrease in receivable for investments sold and repaid

     (65,181     (97,234

(Increase) decrease in interest receivable

     (6,364     (31,302

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

     —          548   

(Increase) decrease in prepaid expenses and other assets

     358        250   

Increase (decrease) in payable for investments purchased

     (34,772     134,273   

Increase (decrease) in management fees payable

     1,301        9,542   

Increase (decrease) in accrued capital gains incentive fees

     (12,412     33,920   

Increase (decrease) in subordinated income incentive fees payable

     3,162        —     

Increase (decrease) in administrative services expense payable

     414        1,455   

Increase (decrease) in interest payable

     303        3,186   

Increase (decrease) in directors’ fees payable

     229        16   

Increase (decrease) in other accrued expenses and liabilities

     (1,072     412   
  

 

 

   

 

 

 

Net cash used in operating activities

     (189,103     (1,683,069
  

 

 

   

 

 

 

Cash flows from financing activities

    

Issuance of common stock

     —          803,348   

Reinvestment of stockholder distributions

     80,950        72,417   

Repurchases of common stock

     (27,109     (11,670

Offering costs

     —          (3,234

Stockholder distributions

     (155,985     (140,752

Borrowings under credit facilities(2)

     13,375        645,130   

Borrowings under repurchase agreement(3)

     229,416        307,381   

Deferred financing costs paid

     —          (9,088
  

 

 

   

 

 

 

Net cash provided by financing activities

     140,647        1,663,532   
  

 

 

   

 

 

 

Total increase (decrease) in cash

     (48,456     (19,537

Cash at beginning of period

     338,895        210,714   
  

 

 

   

 

 

 

Cash at end of period

   $ 290,439      $ 191,177   
  

 

 

   

 

 

 

Supplemental disclosure

    

Local and excise taxes paid

   $ 1,298      $ 761   
  

 

 

   

 

 

 

  

 

(1) On August 29, 2012, the Company terminated its total return swap agreement with Citibank, N.A.

 

(2) See Note 8 for a discussion of the Company’s credit facilities. During the nine months ended September 30, 2013 and 2012, the Company paid $17,844 and $6,104, respectively, in interest expense on the credit facilities.

 

(3) See Note 8 for a discussion of the Company’s repurchase transaction. During the nine months ended September 30, 2013 and 2012, the Company paid $16,985 and $7,789, respectively, 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 September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

  

Rate

   Floor    Maturity    Principal
Amount(b)
     Amortized
Cost
     Fair
Value(c)
 

Senior Secured Loans—First Lien—82.7%

                       

A.P. Plasman Inc.

  

(f)(h)(j)

  

Capital Goods

  

L+850

   1.5%    12/29/16    $ 50,629       $ 49,913       $ 52,401   

AccentCare, Inc.

  

(d)

  

Health Care Equipment & Services

  

L+500

   1.5%    12/22/16      2,017         1,859         1,251   

Alcatel-Lucent USA Inc.

  

(d)(e)(j)

  

Technology Hardware & Equipment

  

L+475

   1.0%    1/30/19      8,159         8,121         8,232   

Amaya Holdings Corp.

  

(d)(h)(j)

  

Consumer Services

  

L+775

   1.3%    11/5/15      24,063         23,799         24,183   

American Racing and Entertainment, LLC

  

(f)

  

Consumer Services

  

L+700

      6/30/14      14,000         14,000         14,000   

American Racing and Entertainment, LLC

  

(f)

  

Consumer Services

  

9.0%

      6/30/14      7,750         7,750         7,808   

Ardent Medical Services, Inc.

  

(d)(e)

  

Health Care Equipment & Services

  

L+525

   1.5%    5/23/18      8,425         8,350         8,477   

Aspect Software, Inc.

  

(d)

  

Software & Services

  

L+525

   1.8%    5/6/16      6,518         6,376         6,545   

Attachmate Corp.

  

(d)(e)

  

Software & Services

  

L+575

   1.5%    11/22/17      10,617         10,450         10,657   

Audio Visual Services Group, Inc.

  

(d)

  

Technology Hardware & Equipment

  

L+550

   1.3%    11/9/18      3,958         3,970         4,017   

Avaya Inc.

  

(d)(e)

  

Technology Hardware & Equipment

  

L+450

      10/26/17      8,934         8,239         8,020   

Avaya Inc.

  

(d)

  

Technology Hardware & Equipment

  

L+675

   1.3%    3/31/18      14,870         14,938         14,119   

Barrington Broadcasting Group LLC

  

(f)

  

Media

  

L+600

   1.5%    6/14/17      2,323         2,275         2,325   

BlackBrush TexStar L.P.

  

(d)(f)

  

Energy

  

L+650

   1.3%    6/4/19      14,214         14,079         14,427   

Boomerang Tube, LLC

  

(d)(h)

  

Energy

  

L+950

   1.5%    10/11/17      19,122         18,631         18,644   

Burleigh Point, Ltd.

  

(f)(g)(j)

  

Retailing

  

12.0%

      12/31/13      112,000         109,998         114,106   

Bushnell Inc.

  

(d)

  

Consumer Durables & Apparel

  

L+425

   1.5%    8/24/15      7,581         7,403         7,602   

Caesars Entertainment Operating Co.

  

(d)(e)(f)(j)

  

Consumer Services

  

L+425

      1/26/18      19,302         17,057         17,213   

Capital Vision Services, LLC

  

(f)(h)

  

Health Care Equipment & Services

  

L+725

   1.3%    12/3/17      17,067         17,067         17,323   

Capital Vision Services, LLC

     

Health Care Equipment & Services

  

1.0%

      12/3/17      2,804         2,804         2,846   

Cenveo Corp.

  

(d)

  

Commercial & Professional Services

  

L+500

   1.3%    2/13/17      3,949         3,931         3,980   

Citgo Petroleum Corp.

  

(e)(j)

  

Energy

  

L+600

   2.0%    6/24/15      2,661         2,679         2,691   

Citgo Petroleum Corp.

  

(e)(f)(j)

  

Energy

  

L+700

   2.0%    6/23/17      7,593         7,579         7,764   

Clear Channel Communications, Inc.

  

(d)(e)(f)

  

Media

  

L+365

      1/29/16      19,927         16,786         18,824   

Clover Technologies Group, LLC

  

(d)

  

Commercial & Professional Services

  

L+550

   1.3%    5/7/18      6,359         6,329         6,365   

Collective Brands, Inc.

  

(d)(f)

  

Consumer Durables & Apparel

  

L+600

   1.3%    10/9/19      12,814         12,751         12,814   

Corel Corp.

  

(d)(f)(h)(j)

  

Software & Services

  

L+825

      6/7/19      118,500         118,500         119,685   

Corel Corp.

  

(j)

  

Software & Services

  

Prime+725

      6/7/18      10,000         10,000         10,000   

Corner Investment PropCo, LLC

  

(d)(f)(j)

  

Consumer Services

  

L+975

   1.3%    11/2/19      24,000         23,566         24,600   

CoSentry.Net, LLC

  

(g)(h)

  

Software & Services

  

L+800

   1.3%    7/24/19      30,000         30,000         30,000   

Crestwood Holdings LLC

  

(d)

  

Energy

  

L+600

   1.0%    6/19/19      5,803         5,775         5,923   

DAE Aviation Holdings, Inc.

  

(h)(j)

  

Capital Goods

  

L+500

   1.3%    11/2/18      1,876         1,843         1,891   

Dent Wizard International Corp.

  

(d)(f)(g)(h)

  

Commercial & Professional Services

  

L+800

      4/25/19      138,542         137,250         138,542   

Dent Wizard International Corp.

     

Commercial & Professional Services

  

L+425

      4/25/19      15,000         15,000         15,000   

Drumm Investors LLC

  

(d)

  

Health Care Equipment & Services

  

L+375

   1.3%    5/4/18      2,920         2,822         2,805   

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

   Rate    Floor    Maturity    Principal
Amount(b)
     Amortized
Cost
     Fair
Value(c)
 

Eastman Kodak Co.

  

(d)(j)

  

Consumer Durables & Apparel

   L+625    1.0%    9/3/19    $ 10,882       $ 10,666       $ 10,825   

Education Management LLC

  

(f)(j)

  

Consumer Services

   L+400       6/1/16      3,946         3,353         3,706   

Education Management LLC

  

(e)(j)

  

Consumer Services

   L+700    1.3%    3/29/18      15,740         15,678         15,478   

ERC Ireland Holdings Ltd.

  

(j)

  

Telecommunication Services

   EURIBOR+300, 1.0% PIK       9/30/17    11,269         11,186         15,224   

FairPoint Communications, Inc.

  

(d)(e)

  

Telecommunication Services

   L+625    1.3%    2/14/19    $ 21,766         21,564         21,967   

Flanders Corp.

  

(f)(h)

  

Capital Goods

   L+950    1.5%    5/14/18      38,393         37,622         39,256   

Fleetgistics Holdings, Inc.

  

(f)

  

Transportation

   L+588    2.0%    3/23/15      1,760         1,751         1,654   

Florida Gaming Centers, Inc.

  

(f)

  

Consumer Services

   16.5%       4/25/16      12,848         12,710         13,105   

Fram Group Holdings Inc.

  

(d)

  

Automobiles & Components

   L+500    1.5%    7/29/17      1,944         1,912         1,913   

Gymboree Corp.

  

(d)

  

Consumer Durables & Apparel

   L+350    1.5%    2/23/18      3,702         3,505         3,587   

Halifax Media Holdings LLC

  

(f)(h)

  

Media

   L+1050    0.8%    6/30/16      4,200         4,132         4,326   

HBC Solutions, Inc.

  

(d)(f)(g)(h)

  

Media

   L+875    1.5%    2/4/18      84,871         84,871         84,871   

Ikaria Acquisition Inc.

  

(d)

  

Pharmaceuticals, Biotechnology & Life Sciences

   L+600    1.3%    7/3/18      5,872         5,787         5,909   

ILC Industries, LLC

  

(d)(h)

  

Capital Goods

   L+650    1.5%    7/11/18      9,865         9,701         9,668   

Infiltrator Systems, Inc.

  

(f)(g)(h)

  

Capital Goods

   L+843    1.3%    6/27/18      170,000         170,000         170,000   

Infiltrator Systems, Inc.

     

Capital Goods

   Prime+625       6/27/18      30,000         30,000         30,000   

Infogroup Inc.

  

(d)

  

Software & Services

   L+600    1.5%    5/25/18      3,004         2,686         2,709   

Insight Equity A.P. X, L.P.

  

(f)(g)(h)

  

Household & Personal Products

   L+850    1.0%    10/26/18      65,000         63,884         66,300   

Intralinks, Inc.

  

(f)(j)

  

Software & Services

   L+425    1.5%    6/15/14      1,025         976         1,025   

inVentiv Health, Inc.

  

(d)

  

Health Care Equipment & Services

   L+600    1.5%    8/4/16      1,066         1,008         1,034   

inVentiv Health, Inc.

  

(e)

  

Health Care Equipment & Services

   L+625    1.5%    5/15/18      2,725         2,707         2,669   

Lantiq Deutschland GmbH

  

(f)(j)

  

Software & Services

   L+900    2.0%    11/16/15      12,105         11,447         11,076   

Larchmont Resources, LLC

  

(d)

  

Energy

   L+725    1.0%    8/7/19      11,115         11,006         11,129   

Leading Edge Aviation Services, Inc.

  

(d)(g)(h)

  

Capital Goods

   L+850    1.5%    4/5/18      26,103         25,683         26,103   

Leading Edge Aviation Services, Inc.

  

(g)

  

Capital Goods

   L+850    1.5%    4/5/18      10,000         10,000         10,000   

Leedsworld Inc.

  

(d)

  

Retailing

   L+450    1.3%    6/27/19      9,791         9,697         9,754   

Maritime Telecommunications Network, Inc.

  

(f)

  

Telecommunication Services

   L+600    1.5%    3/3/16      4,109         4,077         3,636   

McGraw-Hill Global Education Holdings, LLC

  

(d)(e)

  

Media

   L+775    1.3%    3/22/19      20,729         20,146         21,014   

MetoKote Corp.

  

(h)

  

Materials

   L+800    1.3%    9/30/19      20,000         20,000         20,000   

MetoKote Corp.

     

Materials

   L+800    1.3%    9/30/19      3,810         3,810         3,810   

Micronics, Inc.

  

(d)(h)

  

Capital Goods

   L+800    1.3%    3/28/19      22,885         22,458         22,885   

MMI International Ltd.

  

(d)(j)

  

Technology Hardware & Equipment

   L+600    1.3%    11/2/18      10,891         10,580         10,564   

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

   Rate    Floor    Maturity    Principal
Amount(b)
     Amortized
Cost
     Fair
Value(c)
 

MMM Holdings, Inc.

  

(h)

  

Health Care Equipment & Services

   L+825    1.5%    12/12/17    $ 12,430       $ 12,217       $ 12,508   

MModal Inc.

  

(d)

  

Health Care Equipment & Services

   L+625    1.3%    8/15/19      7,182         7,065         7,015   

Mood Media Corp.

  

(d)(j)

  

Media

   L+550    1.5%    5/7/18      3,022         2,996         3,032   

MSO of Puerto Rico, Inc.

  

(h)

  

Health Care Equipment & Services

   L+825    1.5%    12/12/17      9,040         8,886         9,097   

National Mentor Holdings, Inc.

  

(d)

  

Health Care Equipment & Services

   L+525    1.3%    2/9/17      4,942         4,942         5,000   

National Vision, Inc.

  

(d)

  

Health Care Equipment & Services

   L+575    1.3%    8/2/18      4,740         4,749         4,764   

NCO Group, Inc.

  

(e)(h)

  

Software & Services

   L+675    1.3%    4/3/18      11,565         11,379         11,796   

New HB Acquisition, LLC

  

(d)

  

Food, Beverage & Tobacco

   L+550    1.3%    4/9/20      3,896         3,859         4,007   

Nova Wildcat Amerock, LLC

  

(h)

  

Consumer Durables & Apparel

   L+825    1.3%    9/10/19      20,000         20,000         20,000   

Panda Sherman Power, LLC

  

(d)(f)

  

Energy

   L+750    1.5%    9/14/18      9,273         9,200         9,412   

Panda Temple Power, LLC (TLA)

  

(f)

  

Energy

   L+700    1.5%    7/17/18      3,000         3,000         3,066   

Patheon Inc.

  

(d)(j)

  

Pharmaceuticals, Biotechnology & Life Sciences

   L+600    1.3%    12/6/18      10,182         9,905         10,283   

Pelican Products, Inc.

  

(d)

  

Capital Goods

   L+550    1.5%    7/11/18      2,950         2,925         2,948   

Princeton Review, Inc.

  

(g)

  

Consumer Services

   L+550    1.5%    12/7/14      1,097         1,038         905   

Protection One, Inc.

  

(d)

  

Consumer Services

   L+325    1.0%    3/21/19      1,527         1,531         1,537   

PRV Aerospace, LLC

  

(d)

  

Capital Goods

   L+525    1.3%    5/9/18      4,939         4,929         4,961   

RBS Holding Co. LLC

  

(d)

  

Commercial & Professional Services

   L+800    1.5%    3/23/17      9,782         6,183         3,619   

Reddy Ice Holdings, Inc.

  

(d)

  

Food & Staples Retailing

   L+550    1.3%    5/1/19      1,185         1,173         1,183   

Roundy’s Supermarkets, Inc.

  

(d)(j)

  

Food & Staples Retailing

   L+450    1.3%    2/13/19      2,754         2,640         2,704   

Safariland, LLC

  

(d)(f)(h)

  

Capital Goods

   L+800    1.3%    9/20/19      158,400         158,400         158,400   

SESAC Holdings Inc.

  

(d)

  

Media

   L+475    1.3%    2/7/19      3,503         3,471         3,527   

Shell Topco L.P.

  

(d)(h)

  

Energy

   L+750    1.5%    9/28/18      33,000         32,576         33,495   

Sirius Computer Solutions, Inc.

  

(d)

  

Software & Services

   L+575    1.3%    11/30/18      8,558         8,482         8,697   

Six3 Systems, Inc.

  

(d)

  

Software & Services

   L+575    1.3%    10/4/19      4,639         4,599         4,732   

Smarte Carte, Inc.

  

(d)(f)(h)

  

Commercial & Professional Services

   L+650    1.3%    11/30/17      58,713         58,125         59,593   

Smile Brands Group Inc.

  

(d)(e)(h)

  

Health Care Equipment & Services

   L+625    1.3%    8/15/19      30,550         29,873         30,178   

Sorenson Communication, Inc.

  

(d)(e)(f)(h)

  

Telecommunication Services

   L+825    1.3%    10/31/14      65,877         65,876         66,600   

Sports Authority, Inc.

  

(d)(e)(f)

  

Consumer Durables & Apparel

   L+600    1.5%    11/16/17      22,247         22,090         22,386   

Stallion Oilfield Holdings, Inc.

  

(d)

  

Energy

   L+675    1.3%    6/19/18      4,988         4,940         5,040   

Swiss Watch International, Inc.

  

(d)(f)(h)

  

Consumer Durables & Apparel

   L+725    1.3%    11/8/18      48,875         48,025         49,364   

Technicolor SA

  

(d)(e)(j)

  

Media

   L+600    1.3%    7/10/20      34,314         33,302         33,674   

Tervita Corp.

  

(d)(j)

  

Commercial & Professional Services

   L+500    1.3%    5/15/18      8,055         7,982         7,898   

Therakos, Inc.

  

(d)(f)

  

Pharmaceuticals, Biotechnology & Life Sciences

   L+625    1.3%    12/27/17      27,128         26,528         27,179   

ThermaSys Corp.

  

(d)

  

Capital Goods

   L+400    1.3%    5/3/19      9,938         9,843         9,925   

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

 

Rate

  Floor    Maturity    Principal
Amount(b)
     Amortized
Cost
    Fair
Value(c)
 

Totes Isotoner Corp.

  

(d)

  

Consumer Durables & Apparel

 

L+575

  1.5%    7/7/17    $ 6,656       $ 6,574      $ 6,687   

Toys “R” Us-Delaware, Inc.

  

(e)

  

Consumer Durables & Apparel

 

L+450

  1.5%    9/1/16      1,524         1,529        1,486   

TravelCLICK, Inc.

  

(d)

  

Consumer Services

 

L+450

  1.3%    3/16/16      7,796         7,726        7,835   

Tri-Northern Acquisition, Inc.

  

(f)(h)

  

Retailing

 

L+800

  1.3%    7/1/19      54,863         54,863        54,863   

Tri-Northern Acquisition, Inc.

  

(f)

  

Retailing

 

L+800

  1.3%    7/1/19      11,379         11,379        11,379   

Virtual Radiologic Corp.

  

(g)

  

Health Care Equipment & Services

 

Prime+450

     12/22/16      3,501         3,451        2,258   

Vision Solutions, Inc.

  

(d)

  

Software & Services

 

L+450

  1.5%    7/22/16      6,463         6,426        6,479   

VPG Group Holdings LLC

  

(d)(f)(h)

  

Materials

 

L+900

  1.0%    10/4/16      64,945         64,228        65,919   

Willbros Group, Inc.

  

(h)(j)

  

Energy

 

L+975

  1.3%    8/7/19      16,000         15,445        16,104   
                  

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                     2,190,843        2,221,812   

Unfunded Loan Commitments

                     (72,743     (72,743
                  

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                     2,118,100        2,149,069   
                  

 

 

   

 

 

 

Senior Secured Loans—Second Lien—35.2%

                    

Advance Pierre Foods, Inc.

  

(e)(f)(g)

  

Food & Staples Retailing

 

L+825

  1.3%    10/10/17      22,556         22,235        23,007   

Advantage Sales & Marketing Inc.

  

(e)

  

Commercial & Professional Services

 

L+725

  1.0%    6/12/18      14,844         14,844        15,071   

Affordable Care, Inc.

  

(d)(e)(f)(g)(h)

  

Health Care Equipment & Services

 

L+925

  1.3%    12/26/19      40,000         39,471        40,000   

Alliance Laundry Systems LLC

  

(e)

  

Capital Goods

 

L+825

  1.3%    12/10/19      2,012         1,994        2,034   

American Energy—Utica, LLC

  

(f)

  

Energy

 

L+950

  1.5%    9/30/18      75,000         75,000        75,000   

American Racing and Entertainment, LLC

  

(g)

  

Consumer Services

 

12.0%

     7/1/18      16,800         16,281        16,968   

Attachmate Corp.

  

(e)(f)

  

Software & Services

 

L+950

  1.5%    11/22/18      28,218         27,466        27,913   

Audio Visual Services Group, Inc.

  

(d)(f)(g)

  

Technology Hardware & Equipment

 

L+950

  1.3%    5/9/18      52,885         51,931        52,884   

BJ’s Wholesale Club, Inc.

  

(e)(f)

  

Food & Staples Retailing

 

L+850

  1.3%    3/26/20      8,298         8,223        8,492   

Blackboard Inc.

  

(f)(g)

  

Software & Services

 

L+1000

  1.5%    4/4/19      22,000         20,262        22,660   

Brand Energy & Infrastructure Services, Inc.

  

(e)(g)

  

Energy

 

L+975

  1.3%    10/23/19      36,000         34,613        36,930   

Brasa (Holdings) Inc.

  

(f)

  

Consumer Services

 

L+950

  1.5%    1/20/20      11,180         10,799        11,348   

Brock Holdings III, Inc.

  

(e)(g)

  

Energy

 

L+825

  1.8%    3/16/18      7,756         7,673        7,882   

Camp International Holding Co.

  

(d)

  

Capital Goods

 

L+875

  1.3%    11/29/19      6,207         6,099        6,351   

CHG Buyer Corp.

  

(d)

  

Health Care Equipment & Services

 

L+775

  1.3%    11/19/20      5,787         5,680        5,917   

Consolidated Precision Products Corp.

  

(d)(e)(h)

  

Capital Goods

 

L+925

  1.3%    6/28/20      15,000         14,857        15,516   

Crossmark Holdings, Inc.

  

(e)

  

Commercial & Professional Services

 

L+750

  1.3%    12/21/20      7,778         7,705        7,778   

DEI Sales, Inc.

  

(f)(g)

  

Commercial & Professional Services

 

L+900

  1.5%    1/15/18      57,500         56,820        57,716   

Eastman Kodak Co.

  

(f)(j)

  

Consumer Durables & Apparel

 

L+950

  1.3%    7/31/20      50,000         48,761        50,719   

EZE Software Group LLC

  

(e)

  

Software & Services

 

L+750

  1.3%    2/22/21      2,381         2,359        2,420   

 

See notes to unaudited consolidated financial statements.

 

8


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

 

Footnotes

 

Industry

  Rate   Floor   Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Fram Group Holdings Inc.

 

(e)

 

Automobiles & Components

  L+900   1.5%   1/29/18   $ 2,000      $ 1,993      $ 1,943   

ILC Industries, LLC

 

(f)(g)

 

Capital Goods

  L+1000   1.5%   6/14/19     27,976        27,057        26,297   

Keystone Automotive Operations, Inc.

 

(f)

 

Automobiles & Components

  L+950   1.3%   8/15/20     44,500        43,623        44,278   

Kronos Inc.

 

(e)(f)

 

Software & Services

  L+850   1.3%   4/30/20     21,769        21,570        22,599   

LM U.S. Member LLC

 

(g)

 

Transportation

  L+825   1.3%   10/19/20     9,375        9,245        9,516   

OSP Group, Inc.

 

(d)(f)(g)(h)

 

Consumer Durables & Apparel

  L+900   1.3%   7/31/20     105,000        105,000        106,575   

Paw Luxco II Sarl

 

(j)

 

Consumer Durables & Apparel

  EURIBOR+950     1/29/19   20,000        24,107        24,293   

Pelican Products, Inc.

 

(d)

 

Capital Goods

  L+1000   1.5%   6/14/19   $ 6,667        6,551        6,700   

Pregis Corp.

 

(f)(g)

 

Capital Goods

  L+1000   1.5%   3/23/18     50,000        49,244        50,000   

Quikrete Holdings, Inc.

 

(f)(i)

 

Capital Goods

  L+600   1.0%   3/26/21     3,922        3,882        4,002   

Ranpak Corp.

 

(g)

 

Commercial & Professional Services

  L+725   1.3%   4/8/20     11,324        11,215        11,607   

Sensus USA Inc.

 

(d)(e)

 

Capital Goods

  L+725   1.3%   5/9/18     8,571        8,577        8,427   

SESAC Holdings Inc.

 

(f)

 

Media

  L+875   1.3%   7/12/19     3,000        2,959        3,075   

Smart & Final Inc.

 

(g)

 

Food & Staples Retailing

  L+925   1.3%   11/16/20     4,595        4,466        4,679   

Stadium Management Corp.

 

(f)

 

Consumer Services

  L+950   1.3%   12/7/18     23,529        23,146        23,618   

TravelCLICK, Inc.

 

(f)(g)

 

Consumer Services

  L+850   1.3%   3/26/18     34,925        34,606        35,798   

TriZetto Group, Inc.

 

(g)

 

Software & Services

  L+725   1.3%   3/28/19     8,372        8,261        7,263   

Vertafore, Inc.

 

(e)

 

Software & Services

  L+825   1.5%   10/27/17     14,750        14,709        15,054   

Wall Street Systems Holdings, Inc.

 

(d)

 

Software & Services

  L+800   1.3%   10/25/20     7,000        6,874        7,059   

WildHorse Resources, LLC

   

Energy

  L+625   1.3%   12/13/18     15,407        15,112        15,214   
             

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

                895,270        914,603   
             

 

 

   

 

 

 

Senior Secured Bonds—14.6%

               

Advanced Lighting Technologies, Inc.

 

(f)(g)

 

Materials

  10.5%     6/1/19     78,500        76,850        64,763   

Allen Systems Group, Inc.

 

(f)(g)

 

Software & Services

  10.5%     11/15/16     38,448        29,934        23,357   

Aspect Software, Inc.

 

(e)

 

Software & Services

  10.6%     5/15/17     4,000        4,000        4,000   

Avaya Inc.

 

(e)(f)(g)

 

Technology Hardware & Equipment

  7.0%     4/1/19     23,500        21,955        22,031   

Avaya Inc.

 

(e)

 

Technology Hardware & Equipment

  9.0%     4/1/19     5,000        5,000        4,850   

Caesars Entertainment Resort Properties, LLC

 

(e)(f)(i)(j)

 

Consumer Services

  11.0%     10/1/21     35,000        35,000        35,000   

Chassix, Inc.

 

(e)

 

Automobiles & Components

  9.3%     8/1/18     5,000        5,070        5,313   

Chester Downs & Marina, LLC

 

(e)

 

Consumer Services

  9.3%     2/1/20     3,750        3,781        3,761   

Clear Channel Communications, Inc.

 

(d)(e)

 

Media

  9.0%     12/15/19     2,073        1,843        2,049   

Edgen Murray Corp.

 

(e)(j)

 

Capital Goods

  8.8%     11/1/20     1,400        1,391        1,428   

Energy Future Intermediate Holding Co. LLC

 

(f)

 

Utilities

  11.8%     3/1/22     14,250        14,657        16,102   

 

See notes to unaudited consolidated financial statements.

 

9


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

 

Footnotes

 

Industry

  Rate   Floor   Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

FairPoint Communications, Inc.

 

(e)(f)

 

Telecommunication Services

  8.8%     8/15/19   $ 22,750      $ 22,750      $ 23,033   

Global A&T Electronics Ltd.

 

(e)(j)

 

Technology Hardware & Equipment

  10.0%     2/1/19     9,000        9,000        7,772   

HOA Restaurant Group, LLC

 

(f)

 

Consumer Services

  11.3%     4/1/17     14,100        14,116        14,370   

JW Aluminum Co.

 

(f)

 

Materials

  11.5%     11/15/17     20,000        19,676        20,125   

KeHE Distributors, LLC

 

(e)

 

Food, Beverage & Tobacco

  7.6%     8/15/21     6,200        6,200        6,355   

Kinetic Concepts, Inc.

 

(f)

 

Health Care Equipment & Services

  10.5%     11/1/18     11,660        11,129        12,954   

Logan’s Roadhouse Inc.

 

(e)

 

Consumer Services

  10.8%     10/15/17     3,994        3,775        3,696   

Neff Rental LLC

 

(f)

 

Capital Goods

  9.6%     5/15/16     7,352        7,619        7,848   

Ryerson Inc.

 

(e)

 

Capital Goods

  9.0%     10/15/17     3,100        3,100        3,223   

Sorenson Communication, Inc.

 

(g)

 

Telecommunication Services

  10.5%     2/1/15     39,000        35,366        28,280   

Speedy Cash Intermediate Holdings Corp.

 

(e)(f)

 

Diversified Financials

  10.8%     5/15/18     19,000        19,310        19,924   

Tervita Corp.

 

(e)(j)

 

Commercial & Professional Services

  8.0%     11/15/18     3,250        3,250        3,274   

Texas Competitive Electric Holdings Co. LLC

 

(f)

 

Utilities

  11.5%     10/1/20     10,000        9,921        6,969   

Titlemax, Inc.

 

(d)(e)

 

Diversified Financials

  8.5%     9/5/18     15,000        15,000        15,713   

Travelport LLC

 

(g)

 

Consumer Services

  4.0%, 4.4% PIK     12/1/16     23,552        19,433        23,743   
             

 

 

   

 

 

 

Total Senior Secured Bonds

                399,126        379,933   
             

 

 

   

 

 

 

Subordinated Debt—18.5%

               

Alta Mesa Holdings, L.P.

 

(e)

 

Energy

  9.6%     10/15/18     16,700        16,573        17,744   

Asurion, LLC

 

(f)

 

Insurance

  L+950   1.5%   8/16/19     15,000        14,618        15,713   

Aurora Diagnostics, LLC

 

(f)(g)

 

Pharmaceuticals, Biotechnology & Life Sciences

  10.8%     1/15/18     18,065        18,108        11,381   

BMC Software Finance, Inc.

 

(e)

 

Software & Services

  8.1%     7/15/21     6,500        6,500        6,784   

Comstock Resources, Inc.

 

(e)(f)(j)

 

Energy

  9.5%     6/15/20     21,000        20,121        22,926   

CrownRock, L.P.

 

(e)(f)

 

Energy

  7.1%     4/15/21     25,000        25,000        24,847   

Cumulus Media Inc.

 

(f)(j)

 

Media

  7.8%     5/1/19     5,000        4,502        5,200   

Entercom Radio, LLC

 

(e)(j)

 

Media

  10.5%     12/1/19     13,500        13,369        15,323   

Flanders Corp.

 

(f)(g)

 

Capital Goods

  10.0%, 3.8% PIK     5/14/18     15,832        15,667        16,248   

Harland Clarke Holdings Corp.

 

(g)

 

Commercial & Professional Services

  9.5%     5/15/15     2,193        2,039        2,197   

Hub International Ltd.

 

(e)(i)

 

Insurance

  7.9%     10/1/21     2,250        2,250        2,256   

Ipreo Holdings LLC

 

(f)

 

Software & Services

  11.8%     8/15/18     10,000        9,964        10,550   

Kinetic Concepts, Inc.

 

(e)(f)(g)

 

Health Care Equipment & Services

  12.5%     11/1/19     24,700        23,559        25,935   

KODA Distribution Group, Inc.

 

(f)

 

Materials

  11.3%     9/30/19     32,500        31,850        31,850   

MModal Inc.

 

(e)(g)

 

Health Care Equipment & Services

  10.8%     8/15/20     2,418        2,373        1,934   

Monitronics International, Inc.

 

(e)(j)

 

Consumer Services

  9.1%     4/1/20     2,250        2,250        2,357   

 

See notes to unaudited consolidated financial statements.

 

10


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

 

Footnotes

 

Industry

  Rate   Floor   Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Mood Media Corp.

  (e)(f)(g)(i)(j)   Media   9.3%     10/15/20   $ 25,400      $ 25,293      $ 21,717   

QR Energy, L.P.

  (e)(j)   Energy   9.3%     8/1/20     3,250        3,209        3,327   

Resolute Energy Corp.

  (e)(j)   Energy   8.5%     5/1/20     8,500        8,594        8,764   

RKI Exploration & Production, LLC

  (e)   Energy   8.5%     8/1/21     10,900        10,900        11,012   

Samson Investment Co.

  (e)(f)   Energy   9.8%     2/15/20     19,420        19,614        20,701   

SandRidge Energy, Inc.

  (e)(j)   Energy   8.1%     10/15/22     7,000        7,000        7,132   

Sequel Industrial Products Holdings, LLC

  (g)   Energy   12.0%, 2.5% PIK     5/10/18     15,792        15,539        16,108   

Sidewinder Drilling Inc.

  (f)(g)   Capital Goods   9.8%     11/15/19     8,000        8,000        7,811   

Symmetry Medical Inc.

  (g)(j)   Health Care Equipment & Services   12.0%, 2.0% PIK     12/29/17     33,675        32,903        35,191   

ThermaSys Corp.

  (f)(g)   Capital Goods   9.0%, 1.8% PIK     5/3/20     130,373        130,373        129,721   

VPG Group Holdings LLC

  (f)   Materials   11.0%, 2.0% PIK     7/15/19     5,000        5,000        5,000   
             

 

 

   

 

 

 

Total Subordinated Debt

                475,168        479,729   
             

 

 

   

 

 

 

Collateralized Securities—4.7%

               

ACASC 2013-2A B

  (g)   Diversified Financials   12.6%     10/15/23     30,500        30,475        30,500   

Apidos CDO IV Class E

  (g)(j)   Diversified Financials   L+360     10/27/18     2,000        1,276        1,870   

Ares 2007 CLO 11A Class E

  (g)(j)   Diversified Financials   L+600     10/11/21     4,775        3,296        4,725   

Ares 2007 CLO 12X Class E

  (g)(j)   Diversified Financials   L+575     11/25/20     2,252        1,851        2,246   

Carlyle Azure CLO Class Income

  (j)   Diversified Financials   19.3%     5/27/20     28,000        11,646        14,818   

Dryden CDO 23A Class Subord.

  (j)   Diversified Financials   21.4%     7/17/23     10,000        6,403        7,651   

Lightpoint CLO 2006 V Class D

  (g)(j)   Diversified Financials   L+365     8/5/19     6,500        3,683        6,002   

Rampart CLO 2007 1A Class Subord.

  (j)   Diversified Financials   31.9%     10/25/21     10,000        4,159        7,693   

Stone Tower CLO VI Class Subord.

  (g)(j)   Diversified Financials   33.7%     4/17/21     5,000        3,184        5,278   

Wind River CLO Ltd. 2012-1A Class Subord. B

  (j)   Diversified Financials   11.0%     1/15/24     42,504        39,883        41,434   
             

 

 

   

 

 

 

Total Collateralized Securities

                105,856        122,217   
             

 

 

   

 

 

 
                        Number of
Shares
    Amortized
Cost
    Fair
Value(c)
 

Equity/Other—6.0%(k)

               

American Energy Ohio Holdings, LLC, Common Equity

  (l)(m)   Energy           5,070,590        5,071        5,071   

Aquilex Corp., Common Equity, Class A Shares

  (f)   Energy           15,128        1,087        2,702   

Aquilex Corp., Common Equity, Class B Shares

  (f)(g)   Energy           32,637        2,346        5,829   

Burleigh Point, Ltd., Warrants

  (j)(l)   Retailing           17,256,081        1,898        3,279   

Eastman Kodak Co., Common Equity

  (f)(j)(l)   Consumer Durables & Apparel           61,859        1,202        1,546   

 

See notes to unaudited consolidated financial statements.

 

11


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

                  Number of
Shares
     Amortized
Cost
     Fair
Value(c)
 

ERC Ireland Holdings Ltd., Common Equity

   (j)(l)    Telecommunication Services               21,099       $ —         $ —     

ERC Ireland Holdings Ltd., Warrants

   (j)(l)    Telecommunication Services               4,943         —           —     

Flanders Corp., Common Equity

   (g)(l)    Capital Goods               5,000,000         5,000         9,500   

Florida Gaming Centers, Inc., Warrants

   (g)(l)    Consumer Services               71         —           3,071   

Florida Gaming Corp., Warrants

   (g)(l)    Consumer Services               226,635         —           —     

HBC Solutions, Inc., Common Equity, Class A Units

   (l)    Media               26,984         3,051         3,206   

Ipreo Holdings LLC, Common Equity

   (g)(l)    Software & Services               1,000,000         1,000         1,950   

JW Aluminum Co., Common Equity

   (g)(l)    Materials               37,500         3,225         —     

Leading Edge Aviation Services, Inc., Common Equity

   (g)(l)    Capital Goods               4,181         418         388   

Leading Edge Aviation Services, Inc., Preferred Equity

   (g)(l)    Capital Goods               1,177         1,177         1,177   

Micronics, Inc., Common Equity

   (l)    Capital Goods               50,000         500         470   

Micronics, Inc., Preferred Equity

   (l)    Capital Goods               50         500         500   

Milagro Holdings, LLC, Common Equity

   (g)(l)    Energy               12,057         50         —     

Milagro Holdings, LLC, Preferred Equity

   (l)    Energy               283,947         11,180         3,155   

Plains Offshore Operations Inc., Preferred Equity

   (f)(g)    Energy               50,000         54,495         61,505   

Plains Offshore Operations Inc., Warrants

   (f)(g)(l)    Energy               1,013,444         1,722         2,939   

Safariland, LLC, Common Equity

   (g)(l)    Capital Goods               25,000         2,500         4,665   

Safariland, LLC, Preferred Equity

   (g)    Capital Goods               1,021         20,547         20,327   

Safariland, LLC, Warrants

   (g)(l)    Capital Goods               2,263         473         846   

Sequel Industrial Products Holdings, LLC, Common Equity

   (g)(l)    Energy               3,330,600         3,400         6,661   

Sequel Industrial Products Holdings, LLC, Preferred Equity

   (g)(l)    Energy               8,000,000         8,965         8,976   

Sequel Industrial Products Holdings, LLC, Warrants

   (g)(l)    Energy               20,681         13         41   

ThermaSys Corp., Common Equity

   (g)(l)    Capital Goods               51,813         1           

ThermaSys Corp., Preferred Equity

   (g)    Capital Goods               51,813         5,181         3,808   

VPG Group Holdings LLC, Class A-2 Units

   (g)(l)    Materials               2,500,000         3,638         3,638   
                    

 

 

    

 

 

 

Total Equity/Other

                       138,640         155,250   
                    

 

 

    

 

 

 

TOTAL INVESTMENTS—161.7%

                     $ 4,132,160         4,200,801   
                    

 

 

    

LIABILITIES IN EXCESS OF OTHER ASSETS—(61.7%)

                          (1,603,111
                       

 

 

 

NET ASSETS—100%

                        $ 2,597,690   
                       

 

 

 

 

See notes to unaudited consolidated financial statements.

 

12


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of September 30, 2013

(in thousands, except share amounts)

 

 

 

 

(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 Arch Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Citibank, N.A. (see Note 8).

 

(e) 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 Note 8).

 

(f) 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 8).

 

(g) Security or portion thereof held within Race Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the repurchase agreement with JPMorgan Chase Bank, N.A., London Branch (see Note 8).

 

(h) Security or portion thereof held within Walnut Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Wells Fargo Bank, National Association (see Note 8).

 

(i) Position or portion thereof unsettled as of September 30, 2013.

 

(j) 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 September 30, 2013, 81.3% of the Company’s total assets represented qualifying assets.

 

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

 

(l) Security is non-income producing.

 

(m) Security held within IC American Energy Investments, Inc., a wholly-owned subsidiary of the Company.

 

See notes to unaudited consolidated financial statements.

 

13


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes   Industry   Rate   Floor   Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Senior Secured Loans—First Lien—77.5%

               

A.P. Plasman Inc.

  (f)(h)(j)   Capital Goods   L+850   1.5%   12/29/16   $ 53,350      $ 52,456      $ 54,150   

AccentCare, Inc.

  (d)   Health Care Equipment & Services   L+500   1.5%   12/22/16     2,017        1,828        1,573   

Advantage Sales & Marketing Inc.

  (d)   Commercial & Professional Services   L+375   1.5%   12/18/17     4,550        4,544        4,592   

Airvana Network Solutions Inc.

  (f)   Telecommunication Services   L+800   2.0%   3/25/15     3,685        3,677        3,702   

AlixPartners, LLP

  (d)(f)   Diversified Financials   L+525   1.3%   6/28/19     9,950        9,878        10,092   

Alkermes, Inc.

  (d)(j)   Pharmaceuticals, Biotechnology & Life Sciences   L+350   1.0%   9/18/19     4,200        4,159        4,247   

Allied Security Holdings, LLC

  (d)   Commercial & Professional Services   L+400   1.3%   2/3/17     3,851        3,833        3,880   

Altegrity, Inc.

  (d)(e)   Commercial & Professional Services   L+600   1.8%   2/20/15     5,121        5,115        5,125   

Amaya Holdings Corp.

  (d)(h)   Consumer Services   L+775   1.3%   11/5/15     25,000        24,642        25,000   

American & Efird Global, LLC

  (f)(h)   Consumer Durables & Apparel   L+900   1.5%   12/21/16     43,400        42,486        44,051   

American Racing and Entertainment, LLC Term Loan A

  (f)   Consumer Services   L+700     6/30/14     14,500        14,500        14,500   

American Racing and Entertainment, LLC Term Loan B

  (f)   Consumer Services   9.0%     6/30/14     7,750        7,750        7,789   

American Racing and Entertainment, LLC Term Loan C

  (f)   Consumer Services   9.0%     6/30/14     750        750        754   

Applied Systems, Inc.

  (d)   Software & Services   L+400   1.5%   12/8/16     3,506        3,490        3,536   

Ardent Medical Services, Inc.

  (d)(e)   Health Care Equipment & Services   L+500   1.5%   9/15/15     13,248        13,164        13,314   

Ardent Medical Services, Inc.

  (d)(e)(i)   Health Care Equipment & Services   L+525   1.5%   5/23/18     8,488        8,403        8,589   

Aspect Software, Inc.

  (d)   Software & Services   L+525   1.8%   5/7/16     6,765        6,581        6,824   

Attachmate Corp.

  (d)(e)   Software & Services   L+575   1.5%   11/22/17     11,421        11,213        11,547   

Avaya Inc.

  (d)   Technology Hardware & Equipment   L+275     10/24/14     1,973        1,944        1,939   

Avaya Inc.

  (d)(e)   Technology Hardware & Equipment   L+450     10/26/17     9,012        8,208        7,976   

AZ Chem U.S. Inc.

  (h)(i)   Materials   L+575   1.5%   12/22/17     4,545        4,451        4,611   

Barbri, Inc.

  (d)   Consumer Services   L+450   1.5%   6/16/17     3,227        3,219        3,233   

Barrington Broadcasting Group LLC

  (f)   Media   L+600   1.5%   6/14/17     2,889        2,816        2,917   

BBB Industries, LLC

  (f)   Automobiles & Components   L+450   2.0%   6/27/14     8,025        7,993        7,945   

BJ’s Wholesale Club, Inc.

  (d)(e)   Food & Staples Retailing   L+450   1.3%   9/26/19     14,000        13,864        14,204   

Blackboard Inc.

  (d)(f)(h)   Software & Services   L+600   1.5%   10/4/18     18,307        17,142        18,536   

Boomerang Tube, LLC

  (d)(h)   Energy   L+950   1.5%   10/11/17     24,688        23,971        24,379   

Brasa (Holdings) Inc.

  (d)   Consumer Services   L+625   1.3%   7/19/19     5,819        5,749        5,877   

Bushnell Inc.

  (d)   Consumer Durables & Apparel   L+425   1.5%   8/24/15     7,581        7,342        7,584   

Caesars Entertainment Operating Co.

  (d)(e)(f)(j)   Consumer Services   L+425     1/26/18     19,166        16,718        16,624   

Cannery Casino Resorts, LLC

  (d)   Consumer Services   L+475   1.3%   10/2/18     3,990        3,951        4,008   

Capital Vision Services, LLC

  (f)(h)   Health Care Equipment & Services   Prime+625   1.3%   12/3/17     17,196        17,196        17,196   

Capital Vision Services, LLC

    Health Care Equipment & Services   L+100     12/3/17     2,804        2,804        2,804   

CCM Merger, Inc.

  (d)   Consumer Services   L+475   1.3%   3/1/17     4,746        4,694        4,766   

Cengage Learning Acquisitions, Inc.

  (d)(i)   Consumer Durables & Apparel   L+225     7/3/14     3,117        2,618        2,471   

 

See notes to unaudited consolidated financial statements.

 

14


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes   Industry   Rate   Floor   Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Chrysler Group LLC

  (d)(e)(f)(h)   Automobiles & Components   L+475   1.3%   5/24/17   $ 22,444      $ 21,726      $ 22,952   

Citgo Petroleum Corp.

  (e)(j)   Energy   L+600   2.0%   6/24/15     3,036        3,066        3,062   

Citgo Petroleum Corp.

  (e)(f)(j)   Energy   L+700   2.0%   6/23/17     7,661        7,643        7,779   

Clear Channel Communications, Inc.

  (d)(e)(f)(i)   Media   L+365     1/29/16     27,557        22,354        22,842   

Collective Brands, Inc.

  (f)   Consumer Durables & Apparel   L+600   1.3%   10/9/19     10,820        10,662        10,968   

CompuCom Systems, Inc.

  (d)   Software & Services   L+525   1.3%   10/4/18     3,448        3,415        3,472   

The Container Store, Inc.

  (d)(e)   Consumer Durables & Apparel   L+500   1.3%   4/5/19     13,065        13,001        13,187   

Corel Corp.

  (d)(j)   Software & Services   L+700     5/2/14     9,400        9,352        9,447   

Corner Investment PropCo, LLC

  (d)(f)(j)   Consumer Services   L+975   1.3%   11/1/19     24,000        23,532        23,730   

Crestwood Holdings LLC

  (f)   Energy   L+825   1.5%   3/26/18     16,689        16,603        17,050   

DAE Aviation Holdings, Inc.

  (h)   Capital Goods   L+500   1.3%   10/29/18     6,825        6,690        6,927   

DAE Aviation Holdings, Inc.

  (h)   Capital Goods   L+500   1.3%   11/2/18     3,094        3,033        3,140   

Del Monte Foods Co.

  (d)   Food, Beverage & Tobacco   L+300   1.5%   3/8/18     2,876        2,832        2,886   

Drumm Investors LLC

  (d)(f)   Health Care Equipment & Services   L+375   1.3%   5/4/18     8,542        8,021        8,037   

Dynegy Inc.

  (f)   Energy   L+775   1.5%   8/5/16     6,096        6,225        6,393   

Eastman Kodak Co.

  (g)   Consumer Durables & Apparel   L+750   1.0%   7/19/13     7,232        7,181        7,252   

Education Management LLC

  (f)(j)   Consumer Services   L+400     6/1/16     3,978        3,233        3,257   

Education Management LLC

  (e)(j)   Consumer Services   L+700   1.3%   3/29/18     15,870        15,796        13,271   

Electrical Components International, Inc.

  (f)   Capital Goods   L+525   1.5%   2/4/16     235        218        236   

Electrical Components International, Inc.

  (g)   Capital Goods   L+525   1.5%   2/4/17     3,573        3,295        3,582   

EquiPower Resources Holdings, LLC

  (d)   Utilities   L+425   1.3%   12/21/18     4,975        4,996        5,054   

ERC Ireland Holdings Ltd.

  (i)(j)   Telecommunication Services   EURIBOR+300, 1.0% PIK     9/30/17   11,173        10,733        11,896   

Fairway Group Acquisition Co.

  (d)(f)(h)   Food & Staples Retailing   L+675   1.5%   8/17/18   $ 25,325        25,037        25,578   

Flanders Corp.

  (f)(h)   Capital Goods   L+950   1.5%   5/16/18     38,993        38,104        39,188   

Fleetgistics Holdings, Inc.

  (f)   Transportation   L+588   2.0%   3/23/15     2,026        2,011        1,783   

Flexera Software, Inc.

  (d)   Software & Services   L+625   1.3%   9/29/17     2,925        2,923        2,948   

Florida Gaming Centers, Inc.

  (f)   Consumer Services   15.8%     4/25/16     12,517        12,343        12,455   

Fram Group Holdings Inc.

  (d)   Automobiles & Components   L+500   1.5%   7/29/17     1,990        1,952        1,992   

FREIF North American Power I LLC

  (d)   Energy   L+450   1.5%   3/29/19     3,073        3,080        3,111   

FREIF North American Power I LLC

  (d)   Energy   L+450   1.5%   3/29/19     880        882        891   

Generac Power Systems, Inc.

  (d)(j)   Capital Goods   L+500   1.3%   5/30/18     3,563        3,630        3,653   

Generic Drug Holdings, Inc.

  (d)   Retailing   L+475   1.3%   9/28/19     2,728        2,701        2,753   

Genesys Telecom Holdings, U.S., Inc.

  (d)   Telecommunication Services   L+525   1.5%   1/31/19     1,711        1,724        1,730   

Gymboree Corp.

  (d)   Consumer Durables & Apparel   L+350   1.5%   2/23/18     3,702        3,477        3,420   

 

See notes to unaudited consolidated financial statements.

 

15


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes   Industry   Rate   Floor     Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

Halifax Media Holdings LLC

  (f)(h)   Media   L+1050     0.8%      6/30/16   $ 16,068      $ 15,748      $ 15,907   

Hamilton Lane Advisors, LLC

  (d)   Diversified Financials   L+500     1.5%      2/23/18     2,730        2,717        2,750   

Harbor Freight Tools USA, Inc.

  (d)   Consumer Durables & Apparel   L+425     1.3%      11/14/17     4,365        4,364        4,424   

HarbourVest Partners L.P.

  (d)   Diversified Financials   L+375     1.0%      11/21/17     5,752        5,724        5,781   

Harland Clarke Holdings Corp.

  (f)   Commercial & Professional Services   L+250     6/30/14     6,334        5,741        6,135   

Hawaiian Telcom Communications, Inc.

  (d)(f)(h)   Telecommunication Services   L+575     1.3%      2/28/17     16,979        16,864        17,335   

Hupah Finance Inc.

  (d)(e)   Capital Goods   L+500     1.3%      1/21/19     11,333        11,275        11,475   

Hyland Software, Inc.

  (d)   Software & Services   L+425     1.3%      10/25/19     4,918        4,918        4,939   

IASIS Healthcare LLC

  (d)   Health Care Equipment & Services   L+375     1.3%      5/3/18     1,453        1,427        1,459   

Ikaria Acquisition Inc.

  (d)   Pharmaceuticals, Biotechnology & Life Sciences   L+650     1.3%      9/18/17     3,967        3,948        3,992   

ILC Industries, LLC

  (d)(h)   Capital Goods   L+600     1.5%      7/11/18     10,131        9,941        10,038   

Immucor, Inc.

  (d)   Health Care Equipment & Services   L+450     1.3%      8/17/18     3,873        3,882        3,929   

INC Research, LLC

  (d)(f)   Health Care Equipment & Services   L+575     1.3%      7/12/18     16,788        16,522        16,913   

INEOS Finance Plc

  (d)(e)(f)(j)   Materials   L+525     1.3%      5/4/18     18,914        18,713        19,145   

Infogroup Inc.

  (d)   Software & Services   L+425     1.5%      5/25/18     3,338        2,940        3,004   

Insight Equity A.P. X, L.P.

  (f)(g)(h)   Household & Personal Products   L+850     1.0%      10/26/18     65,000        63,736        65,000   

Intelsat Jackson Holdings SA

  (d)(j)   Telecommunication Services   L+325     1.3%      4/2/18     2,963        2,962        2,993   

Intralinks, Inc.

  (f)(j)   Software & Services   L+425     1.5%      6/15/14     1,033        938        1,034   

inVentiv Health, Inc.

  (d)   Health Care Equipment & Services   L+500     1.5%      8/4/16     1,066        997        1,040   

inVentiv Health, Inc.

  (e)   Health Care Equipment & Services   L+525     1.5%      5/15/18     2,725        2,704        2,671   

Ipreo Holdings LLC

  (d)(f)   Software & Services   L+525     1.3%      8/7/17     8,968        8,861        9,024   

Jason Inc. (TLA)

  (g)   Capital Goods   L+625     2.0%      9/21/14     2,403        2,395        2,399   

Jason Inc. (TLB)

  (g)   Capital Goods   L+625     2.0%      9/21/14     971        968        973   

JHCI Acquisition, Inc.

  (d)   Transportation   L+250     6/19/14     2,304        2,192        2,070   

KIK Custom Products Inc.

  (e)(j)   Household & Personal Products   L+225     6/2/14     10,274        9,693        9,657   

Kronos Inc.

  (d)   Commercial & Professional Services   L+425     1.3%      10/25/19     4,500        4,478        4,560   

La Paloma Generating Co., LLC

  (e)(f)   Energy   L+550     1.5%      8/25/17     8,697        8,445        8,686   

Lantiq Deutschland GmbH

  (f)(j)   Software & Services   L+900     2.0%      11/16/15     12,105        11,241        11,076   

Leading Edge Aviation Services, Inc.

  (d)(g)(h)   Capital Goods   L+850     1.5%      4/5/18     36,301        35,651        35,212   

Maritime Telecommunications Network, Inc.

  (f)   Telecommunication Services   L+600     1.5%      3/3/16     5,169        5,117        5,159   

MMM Holdings, Inc.

    Health Care Equipment & Services   L+825     1.5%      12/12/17     13,509        13,240        13,527   

Mood Media Corp.

  (d)(j)   Media   L+550     1.5%      5/7/18     3,045        3,016        3,054   

MSO of Puerto Rico, Inc.

    Health Care Equipment & Services   L+825     1.5%      12/12/17     9,825        9,629        9,838   

National Mentor Holdings, Inc.

  (d)   Health Care Equipment & Services   L+525     1.3%      2/9/17     7,980        7,980        7,985   

 

See notes to unaudited consolidated financial statements.

 

16


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2012

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes   Industry   Rate   Floor     Maturity   Principal
Amount(b)
    Amortized
Cost
    Fair
Value(c)
 

National Vision, Inc.

  (d)   <