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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 MARCH 31, 2014.

 

¨ 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)   (Zip Code)

Registrant’s telephone number, including area code: (215) 495-1150

 

 

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 262,282,173 shares of common stock outstanding as of May 14, 2014.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

PART I—FINANCIAL INFORMATION

  

ITEM 1.

   FINANCIAL STATEMENTS      1   
   Consolidated Balance Sheets as of March 31, 2014 (Unaudited) and December 31, 2013      1   
  

Unaudited Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013

     2   
  

Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2014 and 2013

     3   
  

Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013

     4   
  

Consolidated Schedules of Investments as of March 31, 2014 (Unaudited) and December 31, 2013

     5   
   Notes to Unaudited Consolidated Financial Statements      24   

ITEM 2.

  

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

     52   

ITEM 3.

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      75   

ITEM 4.

   CONTROLS AND PROCEDURES      75   

PART II—OTHER INFORMATION

  

ITEM 1.

   LEGAL PROCEEDINGS      77   

ITEM 1A.

   RISK FACTORS      77   

ITEM 2.

   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS      77   

ITEM 3.

   DEFAULTS UPON SENIOR SECURITIES      77   

ITEM 4.

   MINE SAFETY DISCLOSURES      77   

ITEM 5.

   OTHER INFORMATION      77   

ITEM 6.

   EXHIBITS      78   
   SIGNATURES      82   


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, 2014
(Unaudited)
     December 31,
2013
 

Assets

     

Investments, at fair value (amortized cost—$3,983,796 and $4,054,085, respectively)

   $ 4,077,627       $ 4,137,581   

Cash

     297,685         227,328   

Receivable for investments sold and repaid

     67,779         26,722   

Interest receivable

     55,327         47,622   

Deferred financing costs

     4,845         5,168   

Prepaid expenses and other assets

     404         156   
  

 

 

    

 

 

 

Total assets

   $ 4,503,667       $ 4,444,577   
  

 

 

    

 

 

 

Liabilities

     

Payable for investments purchased

   $ 24,321       $ 23,423   

Credit facilities payable

     738,482         723,682   

Repurchase agreement payable(1)

     950,000         950,000   

Stockholder distributions payable

     18,814         18,671   

Management fees payable

     22,375         22,700   

Accrued capital gains incentive fees(2)

     35,379         32,133   

Subordinated income incentive fees payable(2)

     15,178         14,303   

Administrative services expense payable

     1,820         1,153   

Interest payable

     10,302         10,563   

Directors’ fees payable

     254         254   

Other accrued expenses and liabilities

     1,573         6,703   

Commitments and contingencies(3)

     —           —     
  

 

 

    

 

 

 

Total liabilities

     1,818,498         1,803,585   
  

 

 

    

 

 

 

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, 261,301,955 and 259,320,161 shares issued and outstanding, respectively

     261         259   

Capital in excess of par value

     2,487,105         2,466,753   

Accumulated undistributed net realized gains on investments and gain/loss on foreign currency(4)

     69,147         55,344   

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

     34,962         35,322   

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

     93,694         83,314   
  

 

 

    

 

 

 

Total stockholders’ equity

     2,685,169         2,640,992   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,503,667       $ 4,444,577   
  

 

 

    

 

 

 

Net asset value per share of common stock at period end

   $ 10.28       $ 10.18   

 

(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 9 for a discussion of the Company’s commitments and contingencies.

 

(4) 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
March 31,
 
     2014     2013  

Investment income

    

Interest income

   $ 104,711      $ 102,214   

Fee income

     10,085        7,764   

Dividend income

     —          66   
  

 

 

   

 

 

 

Total investment income

     114,796        110,044   
  

 

 

   

 

 

 

Operating expenses

    

Management fees

     22,371        22,206   

Capital gains incentive fees(1)

     4,836        6,350   

Subordinated income incentive fees(1)

     15,178        14,228   

Administrative services expenses

     1,200        1,436   

Stock transfer agent fees

     451        890   

Accounting and administrative fees

     332        365   

Interest expense

     12,700        12,136   

Directors’ fees

     265        225   

Other general and administrative expenses

     1,586        1,479   
  

 

 

   

 

 

 

Total operating expenses

     58,919        59,315   
  

 

 

   

 

 

 

Net investment income

     55,877        50,729   
  

 

 

   

 

 

 

Realized and unrealized gain/loss

    

Net realized gain (loss) on investments

     13,822        14,171   

Net realized gain (loss) on foreign currency

     (19     (63

Net change in unrealized appreciation (depreciation) on investments

     10,335        17,518   

Net change in unrealized gain (loss) on foreign currency

     45        121   
  

 

 

   

 

 

 

Total net realized and unrealized gain (loss) on investments

     24,183        31,747   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 80,060      $ 82,476   
  

 

 

   

 

 

 

Per share information—basic and diluted

    

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

   $ 0.32      $ 0.33   
  

 

 

   

 

 

 

Weighted average shares outstanding

     260,185,661        252,606,873   
  

 

 

   

 

 

 

 

(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.

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,
 
     2014     2013  

Operations

    

Net investment income

   $ 55,877      $ 50,729   

Net realized gain (loss) on investments and foreign currency

     13,803        14,108   

Net change in unrealized appreciation (depreciation) on investments

     10,335        17,518   

Net change in unrealized gain (loss) on foreign currency

     45        121   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     80,060        82,476   
  

 

 

   

 

 

 

Stockholder distributions(1)

    

Distributions from net investment income

     (56,237     (39,543

Distributions from net realized gain on investments

     —          (11,641
  

 

 

   

 

 

 

Net decrease in net assets resulting from stockholder distributions

     (56,237     (51,184
  

 

 

   

 

 

 

Capital share transactions

    

Issuance of common stock

     —          —     

Reinvestment of stockholder distributions

     29,257        26,476   

Repurchases of common stock

     (8,903     (8,830

Offering costs

     —          —     
  

 

 

   

 

 

 

Net increase in net assets resulting from capital share transactions

     20,354        17,646   
  

 

 

   

 

 

 

Total increase in net assets

     44,177        48,938   

Net assets at beginning of period

     2,640,992        2,511,738   
  

 

 

   

 

 

 

Net assets at end of period

   $ 2,685,169      $ 2,560,676   
  

 

 

   

 

 

 

Accumulated undistributed (distributions in excess of) net investment income(1)

   $ 34,962      $ 15,493   
  

 

 

   

 

 

 

 

(1) 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)

 

 

 

     Three Months Ended
March 31,
 
     2014     2013  

Cash flows from operating activities

    

Net increase (decrease) in net assets resulting from operations

   $ 80,060      $ 82,476   

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

    

Purchases of investments

     (471,491     (649,916

Paid-in-kind interest

     (2,439     (1,413

Proceeds from sales and repayments of investments

     566,115        543,817   

Net realized (gain) loss on investments

     (13,822     (14,171

Net change in unrealized (appreciation) depreciation on investments

     (10,335     (17,518

Accretion of discount

     (8,074     (10,106

Amortization of deferred financing costs

     582        805   

(Increase) decrease in receivable for investments sold and repaid

     (41,057     (974

(Increase) decrease in interest receivable

     (7,705     (7,749

(Increase) decrease in prepaid expenses and other assets

     (248     119   

Increase (decrease) in payable for investments purchased

     898        103,188   

Increase (decrease) in management fees payable

     (325     2,835   

Increase (decrease) in accrued capital gains incentive fees

     3,246        (4,583

Increase (decrease) in subordinated income incentive fees payable

     875        2,208   

Increase (decrease) in administrative services expense payable

     667        598   

Increase (decrease) in interest payable

     (261     (753

Increase (decrease) in directors’ fees payable

     —          225   

Increase (decrease) in other accrued expenses and liabilities

     (5,130     (600
  

 

 

   

 

 

 

Net cash provided by operating activities

     91,556        28,488   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Issuance of common stock

     —          —     

Reinvestment of stockholder distributions

     29,257        26,476   

Repurchases of common stock

     (8,903     (8,830

Offering costs

     —          —     

Stockholder distributions

     (56,094     (51,066

Borrowings under credit facilities(1)

     14,800        5,600   

Borrowings under repurchase agreement(2)

     —          23,333   

Deferred financing costs paid

     (259     —     
  

 

 

   

 

 

 

Net cash used in financing activities

     (21,199     (4,487
  

 

 

   

 

 

 

Total increase (decrease) in cash

     70,357        24,001   

Cash at beginning of period

     227,328        338,895   
  

 

 

   

 

 

 

Cash at end of period

   $ 297,685      $ 362,896   
  

 

 

   

 

 

 

Supplemental disclosure

    

Local and excise taxes paid

   $ 5,100      $ 821   
  

 

 

   

 

 

 

 

(1) See Note 8 for a discussion of the Company’s credit facilities. During the three months ended March 31, 2014 and 2013, the Company paid $4,488 and $6,934, respectively, in interest expense on the credit facilities.

 

(2) See Note 8 for a discussion of the Company’s repurchase transaction. During the three months ended March 31, 2014 and 2013, the Company paid $7,891 and $5,150, 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 March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Senior Secured Loans—First Lien—76.4%

                

A.P. Plasman Inc.

  (g)(i)(k)   Capital Goods   L+850   1.5%    12/29/16   $ 49,254      $ 48,650      $ 50,362   

AccentCare, Inc.

  (e)   Health Care Equipment & Services   L+500   1.5%    12/22/16     2,017        1,880        1,261   

American Pacific Corp.

  (e)(j)   Materials   L+600   1.0%    2/1/19     5,000        4,963        5,075   

American Racing and Entertainment, LLC

  (g)   Consumer Services   L+700      6/30/14     13,250        13,250        13,283   

American Racing and Entertainment, LLC

  (g)   Consumer Services   9.0%      6/30/14     7,750        7,750        7,847   

AP Exhaust Acquisition, LLC

  (i)   Automobiles & Components   L+775   1.5%    1/16/21     15,000        15,000        15,000   

Aspect Software, Inc.

  (e)   Software & Services   L+550   1.8%    5/7/16     6,353        6,238        6,449   

Attachmate Corp.

  (e)   Software & Services   L+575   1.5%    11/22/17     5,381        5,304        5,428   

Avaya Inc.

  (e)   Technology Hardware & Equipment   L+450      10/26/17     4,401        4,150        4,305   

Azure Midstream Energy LLC

  (e)   Energy   L+550   1.0%    11/15/18     4,444        4,381        4,494   

BlackBrush TexStar L.P.

  (e)(g)   Energy   L+650   1.3%    6/4/19     14,143        14,020        14,306   

Boomerang Tube, LLC

  (e)(i)   Energy   L+950   1.5%    10/11/17     18,619        18,185        18,153   

Cadillac Jack, Inc.

  (g)(i)(k)   Consumer Services   L+700   1.0%    12/20/17     34,913        34,587        35,174   

Caesars Entertainment Operating Co.

  (f)(g)(k)   Consumer Services   L+425      1/26/18     13,351        12,334        12,441   

Caesars Entertainment Operating Co.

  (g)(k)   Consumer Services   L+525      1/28/18     2,500        2,375        2,360   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(g)   Consumer Services   L+600   1.0%    10/11/20     72,725        68,570        73,783   

Capital Vision Services, LLC

  (g)(i)   Health Care Equipment & Services   L+725   1.3%    12/3/17     22,575        22,575        22,575   

Capital Vision Services, LLC

  (g)(p)   Health Care Equipment & Services   L+725   1.3%    12/3/17     1,869        1,869        1,869   

Cengage Learning, Inc.

  (e)(f)(j)   Media   L+600   1.0%    3/6/20     6,757        6,723        6,843   

Citgo Petroleum Corp.

    Energy   L+600   2.0%    6/24/15     2,411        2,423        2,432   

Citgo Petroleum Corp.

  (g)   Energy   L+700   2.0%    6/23/17     7,549        7,536        7,668   

Clear Channel Communications, Inc.

  (e)(g)   Media   L+365      1/29/16     16,079        14,002        15,915   

Clover Technologies Group, LLC

  (e)   Commercial & Professional Services   L+550   1.3%    5/7/18     6,196        6,170        6,209   

Corel Corp.

  (e)(g)(i)(k)   Software & Services   L+825      6/7/19     108,833        108,833        110,466   

Corel Corp.

  (k)   Software & Services   PRIME+725      6/7/18     10,000        10,000        10,000   

Corner Investment PropCo, LLC

  (e)(g)   Consumer Services   L+975   1.3%    11/2/19     44,750        44,937        46,093   

CoSentry.Net, LLC

  (e)(i)   Software & Services   L+800   1.3%    12/31/19     54,364        54,364        54,907   

Crestwood Holdings LLC

  (e)   Energy   L+600   1.0%    6/19/19     5,665        5,640        5,774   

Dent Wizard International Corp.

  (e)(g)(i)   Commercial & Professional Services   L+800      4/25/19     135,542        134,372        136,896   

Dent Wizard International Corp.

  (p)   Commercial & Professional Services   PRIME+325      4/25/19     14,500        14,500        14,500   

Dent Wizard International Corp.

    Commercial & Professional Services   PRIME+325      4/25/19     500        500        500   

Eastman Kodak Co.

  (e)   Consumer Durables & Apparel   L+625   1.0%    9/3/19     10,827        10,627        10,996   

Education Management LLC

  (g)(k)   Consumer Services   L+400      6/1/16     3,924        3,435        3,456   

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Education Management LLC

  (k)   Consumer Services   L+700   1.3%    3/30/18   $ 15,653      $ 15,599      $ 14,812   

ERC Ireland Holdings Ltd.

  (h)(j)(k)   Telecommunication Services   EURIBOR+450      9/30/19   15,327        15,200        20,431   

Extreme Reach, Inc.

  (e)   Media   L+575   1.0%    1/24/20   $ 4,138        4,077        4,241   

FairPoint Communications, Inc.

  (e)(k)   Telecommunication Services   L+625   1.3%    2/14/19     12,994        12,882        13,427   

Flanders Corp.

  (g)(i)   Capital Goods   L+950   1.5%    5/14/18     37,493        36,813        38,149   

Florida Gaming Centers, Inc.

  (g)   Consumer Services   16.5%      4/25/16     13,144        13,030        13,406   

FR Utility Services LLC

  (e)   Energy   L+575   1.0%    10/18/19     6,465        6,405        6,506   

Fram Group Holdings Inc.

  (e)   Automobiles & Components   L+500   1.5%    7/29/17     1,341        1,323        1,346   

Harlan Sprague Dawley, Inc.

  (e)   Pharmaceuticals, Biotechnology & Life Sciences   L+550      7/11/14     1,275        1,192        916   

HBC Solutions, Inc.

  (e)(g)(i)   Media   L+875   1.5%    2/4/18     81,371        81,371        81,778   

ILC Industries, LLC

  (e)(i)   Capital Goods   L+650   1.5%    7/11/18     9,436        9,293        9,448   

Infiltrator Systems, Inc.

  (g)(h)(i)   Capital Goods   L+825   1.3%    6/27/18     200,000        200,000        201,000   

Infogroup Inc.

  (e)   Software & Services   L+650   1.5%    5/25/18     675        610        590   

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

  (g)(h)(i)   Household & Personal Products   L+850   1.0%    10/26/18     65,000        63,984        66,300   

Intralinks, Inc.

  (e)(g)(i)(k)   Software & Services   L+525   2.0%    2/24/19     15,000        14,853        14,850   

inVentiv Health, Inc.

    Health Care Equipment & Services   L+625   1.5%    5/15/18     2,725        2,709        2,721   

Lantiq Deutschland GmbH

  (g)(k)   Software & Services   L+900   2.0%    11/16/15     12,105        11,592        12,045   

Larchmont Resources, LLC

  (e)   Energy   L+725   1.0%    8/7/19     11,059        10,958        11,280   

Leading Edge Aviation Services, Inc.

  (e)(i)   Capital Goods   L+850   1.5%    4/5/18     37,682        37,130        38,059   

Leading Edge Aviation Services, Inc.

  (g)(h)(p)   Capital Goods   L+850   1.5%    4/5/18     6,250        6,250        6,313   

Leedsworld Inc.

  (e)   Retailing   L+475   1.3%    6/28/19     9,725        9,640        9,725   

Maritime Telecommunications Network, Inc.

  (g)   Telecommunication Services   L+600   1.5%    3/4/16     4,053        4,029        3,526   

MB Precision Holdings LLC

  (i)   Capital Goods   L+725   1.3%    1/23/20     13,466        13,467        13,466   

MetoKote Corp.

  (i)   Materials   L+800   1.3%    9/30/19     19,950        19,950        20,349   

MetoKote Corp.

  (p)   Materials   L+800   1.3%    9/30/19     3,810        3,810        3,886   

Micronics, Inc.

  (e)(i)   Capital Goods   L+800   1.3%    3/28/19     22,422        22,034        22,422   

MMI International Ltd.

  (e)(k)   Technology Hardware & Equipment   L+600   1.3%    11/20/18     10,332        10,065        10,307   

MMM Holdings, Inc.

  (i)   Health Care Equipment & Services   L+825   1.5%    12/12/17     9,769        9,619        9,843   

MModal Inc.

  (e)(m)   Health Care Equipment & Services   PRIME+575      8/16/19     6,740        6,641        5,357   

Mood Media Corp.

  (e)(k)   Media   L+550   1.5%    5/7/18     3,007        2,983        3,041   

MSO of Puerto Rico, Inc.

  (i)   Health Care Equipment & Services   L+825   1.5%    12/12/17     7,103        6,994        7,156   

New HB Acquisition, LLC

  (e)   Food, Beverage & Tobacco   L+550   1.3%    4/9/20     3,896        3,862        4,057   

New Star Metals Inc.

  (e)(g)   Capital Goods   L+800   1.3%    3/20/20     40,000        40,000        40,000   

Nova Wildcat Amerock, LLC

  (i)   Consumer Durables & Apparel   L+825   1.3%    9/10/19     20,000        20,000        20,000   

Panda Sherman Power, LLC

  (e)(g)   Energy   L+750   1.5%    9/14/18     9,273        9,206        9,551   

Panda Temple Power, LLC (TLA)

  (g)   Energy   L+700   1.5%    7/17/18     3,000        3,000        3,081   

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Princeton Review, Inc.

    Consumer Services   L+550   1.5%    12/7/14   $ 1,000      $ 967      $ 825   

PRV Aerospace, LLC

  (e)   Capital Goods   L+525   1.3%    5/9/18     4,856        4,847        4,871   

RBS Holding Co. LLC

  (e)   Commercial & Professional Services   L+800   1.5%    3/23/17     9,819        6,229        5,008   

Reddy Ice Holdings, Inc.

  (e)   Food & Staples Retailing   L+550   1.3%    5/1/19     1,179        1,168        1,173   

Safariland, LLC

  (e)(g)(i)   Capital Goods   L+800   1.3%    9/20/19     155,200        155,200        158,304   

Shell Topco L.P.

  (e)(i)   Energy   L+750   1.5%    9/28/18     33,000        32,612        33,825   

Sirius Computer Solutions, Inc.

  (e)   Software & Services   L+575   1.3%    12/7/18     7,519        7,458        7,651   

Smile Brands Group Inc.

  (e)(f)(i)   Health Care Equipment & Services   L+625   1.3%    8/15/19     30,397        29,777        30,542   

Sorenson Communication, Inc.

  (e)(f)(g)(i)   Telecommunication Services   L+1025   1.3%    10/31/14     65,711        65,711        66,122   

Sports Authority, Inc.

  (e)(g)   Consumer Durables & Apparel   L+600   1.5%    11/16/17     22,133        21,993        22,188   

Stallion Oilfield Holdings, Inc.

  (e)   Energy   L+675   1.3%    6/19/18     4,848        4,806        4,966   

Swiss Watch International, Inc.

  (e)(g)(i)   Consumer Durables & Apparel   L+725   1.3%    11/8/18     48,125        47,359        48,606   

Technicolor SA

  (e)(k)   Media   L+600   1.3%    7/10/20     33,456        32,537        34,035   

Tervita Corp.

  (e)(k)   Commercial & Professional Services   L+500   1.3%    5/15/18     8,014        7,948        7,962   

Therakos, Inc.

  (e)(g)   Pharmaceuticals, Biotechnology & Life Sciences   L+625   1.3%    12/27/17     26,992        26,460        27,239   

ThermaSys Corp.

  (e)   Capital Goods   L+400   1.3%    5/3/19     9,813        9,727        9,813   

Totes Isotoner Corp.

  (e)   Consumer Durables & Apparel   L+575   1.5%    7/7/17     6,596        6,524        6,634   

Tri-Northern Acquisition, Inc.

  (g)(i)   Retailing   L+800   1.3%    7/1/19     54,588        54,589        54,588   

Tri-Northern Acquisition, Inc.

  (p)   Retailing   L+800   1.3%    7/1/19     11,379        11,379        11,379   

Virtual Radiologic Corp.

    Health Care Equipment & Services   L+550   1.8%    12/22/16     3,483        3,440        2,146   

VPG Group Holdings LLC

  (e)(g)(i)   Materials   L+900   1.0%    10/4/16     63,195        62,590        64,143   

Willbros Group, Inc.

  (i)(k)   Energy   L+975   1.3%    8/7/19     15,774        15,259        15,977   
              

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                 2,049,294        2,088,202   

Unfunded Loan Commitments

                 (37,808     (37,808
              

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                 2,011,486        2,050,394   
              

 

 

   

 

 

 

Senior Secured Loans—Second Lien—33.9%

                

Advance Pierre Foods, Inc.

  (f)(g)(h)   Food & Staples Retailing   L+825   1.3%    10/10/17     22,556        22,266        22,048   

Advantage Sales & Marketing Inc.

  (f)   Commercial & Professional Services   L+725   1.0%    6/12/18     14,844        14,844        15,127   

Affordable Care, Inc.

  (e)(g)(h)   Health Care Equipment & Services   L+925   1.3%    12/26/19     40,000        39,514        40,200   

Alliance Laundry Systems LLC

  (h)   Capital Goods   L+825   1.3%    12/10/19     2,012        1,995        2,042   

American Energy—Utica, LLC

  (g)   Energy   L+400, 5.5% PIK
(5.5% Max PIK)
  1.5%    9/30/18     76,741        76,741        76,741   

American Energy—Utica, LLC

  (h)(p)   Energy   L+400, 5.5% PIK
(5.5% Max PIK)
  1.5%    9/30/18     52,833        52,833        52,833   

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

American Racing and Entertainment, LLC

  (h)   Consumer Services   12.0%      7/1/18   $ 16,800      $ 16,319      $ 16,842   

Asurion, LLC

  (f)(j)   Insurance   L+750   1.0%    3/3/21     3,191        3,144        3,305   

Attachmate Corp.

  (f)(g)   Software & Services   L+950   1.5%    11/22/18     31,218        30,494        31,238   

Brasa (Holdings) Inc.

  (g)   Consumer Services   L+950   1.5%    1/20/20     11,180        10,823        11,320   

Brock Holdings III, Inc.

  (f)(h)   Energy   L+825   1.8%    3/16/18     7,756        7,682        7,878   

Camp International Holding Co.

  (e)   Capital Goods   L+725   1.0%    11/29/19     6,207        6,297        6,343   

CHG Buyer Corp.

  (e)   Health Care Equipment & Services   L+775   1.3%    11/19/20     5,158        5,067        5,248   

Consolidated Precision Products Corp.

  (g)   Capital Goods   L+775   1.0%    4/30/21     16,750        16,670        17,022   

DAE Aviation Holdings, Inc.

  (e)(f)(h)(k)   Capital Goods   L+675   1.0%    7/30/19     5,750        5,693        5,861   

DEI Sales, Inc.

  (g)(h)   Commercial & Professional Services   L+900   1.5%    1/15/18     57,500        56,881        57,284   

Eastman Kodak Co.

  (g)(h)   Consumer Durables & Apparel   L+950   1.3%    9/3/20     50,000        48,821        50,406   

EZE Software Group LLC

  (f)   Software & Services   L+725   1.3%    4/5/21     2,381        2,360        2,419   

Fram Group Holdings Inc.

    Automobiles & Components   L+900   1.5%    1/29/18     2,000        1,994        1,890   

Ikaria Acquisition Inc.

  (f)   Pharmaceuticals, Biotechnology & Life Sciences   L+775   1.0%    2/14/22     5,000        4,963        5,088   

ILC Industries, LLC

  (g)(h)   Capital Goods   L+1000   1.5%    7/11/19     27,976        27,114        27,696   

Kronos Inc.

  (f)(g)   Software & Services   L+850   1.3%    4/30/20     27,239        26,998        28,396   

LM U.S. Member LLC

  (h)   Transportation   L+825   1.3%    10/26/20     9,375        9,252        9,539   

OSP Group, Inc.

  (e)(g)(h)   Consumer Durables & Apparel   L+800   1.3%    7/31/20     145,000        145,000        147,175   

P2 Upstream Acquisition Co.

  (h)   Energy   L+800   1.0%    4/30/21     4,091        4,052        4,175   

Paw Luxco II Sarl

  (h)(k)   Consumer Durables & Apparel   EURIBOR+950      1/29/19   16,364        19,933        20,830   

Pelican Products, Inc.

  (e)   Capital Goods   L+1000   1.5%    6/14/19   $ 6,667        6,558        6,700   

Pregis Corp.

  (g)(h)   Capital Goods   L+1000   1.5%    3/23/18     50,000        49,320        50,250   

PSAV Acquisition Corp.

  (g)   Technology Hardware & Equipment   L+825   1.0%    1/24/22     80,000        78,822        81,600   

Ranpak Corp.

  (h)   Commercial & Professional Services   L+725   1.3%    4/23/20     3,324        3,294        3,402   

Sensus USA Inc.

  (e)(f)   Capital Goods   L+725   1.3%    5/9/18     8,571        8,576        8,632   

SESAC Holdings Inc.

  (g)   Media   L+875   1.3%    7/12/19     3,000        2,962        3,064   

Stadium Management Corp.

  (g)   Consumer Services   L+825   1.0%    2/15/22     57,500        57,500        58,794   

TravelCLICK, Inc.

  (g)(h)   Consumer Services   L+850   1.3%    3/26/18     34,925        34,635        35,711   

Travelport LLC

  (h)   Consumer Services   4.0%, 4.4% PIK
(4.4% Max PIK)
     12/1/16     24,036        20,426        24,717   

Vertafore, Inc.

    Software & Services   L+825   1.5%    10/27/17     14,750        14,713        15,026   

 

See notes to unaudited consolidated financial statements.

 

8


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Wall Street Systems Holdings, Inc.

  (e)   Software & Services   L+800   1.3%    10/25/20   $ 7,000      $ 6,881      $ 7,074   
              

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

                 941,437        963,916   

Unfunded Loan Commitments

                 (52,833     (52,833
              

 

 

   

 

 

 

Net Senior Secured Loans—Second Lien

                 888,604        911,083   
              

 

 

   

 

 

 

Senior Secured Bonds—15.0%

                

Advanced Lighting Technologies, Inc.

  (g)(h)   Materials   10.5%      6/1/19     78,500        76,958        58,483   

Allen Systems Group, Inc.

  (g)(h)   Software & Services   10.5%      11/15/16     38,448        30,907        21,723   

Aspect Software, Inc.

  (f)   Software & Services   10.6%      5/15/17     4,000        4,000        4,230   

Avaya Inc.

  (g)   Technology Hardware & Equipment   7.0%      4/1/19     15,000        14,022        15,000   

Avaya Inc.

  (f)   Technology Hardware & Equipment   9.0%      4/1/19     5,000        5,000        5,225   

Caesars Entertainment Operating Co.

  (g)(k)   Consumer Services   9.0%      2/15/20     20,000        19,094        18,031   

Caesars Entertainment Resort Properties, LLC

  (f)(g)   Consumer Services   11.0%      10/1/21     54,598        54,301        57,540   

FairPoint Communications, Inc.

  (f)(g)(k)   Telecommunication Services   8.8%      8/15/19     16,750        16,750        17,943   

FourPoint Energy, LLC

  (h)   Energy   8.5%      12/31/20     15,750        12,878        12,915   

Global A&T Electronics Ltd.

  (k)   Technology Hardware & Equipment   10.0%      2/1/19     9,000        9,000        7,470   

HOA Restaurant Group, LLC

  (g)   Consumer Services   11.3%      4/1/17     14,100        14,110        14,876   

JW Aluminum Co.

  (f)(g)(h)   Materials   11.5%      11/15/17     63,297        62,735        63,376   

Kinetic Concepts, Inc.

  (g)   Health Care Equipment & Services   10.5%      11/1/18     11,660        11,168        13,422   

Logan’s Roadhouse Inc.

  (h)   Consumer Services   10.8%      10/15/17     38,494        30,769        29,737   

Neff Rental LLC

  (g)   Capital Goods   9.6%      5/15/16     7,352        7,573        7,710   

Ryerson Inc.

  (f)   Capital Goods   9.0%      10/15/17     3,100        3,100        3,360   

SFX Entertainment, Inc.

  (h)(k)   Consumer Services   9.6%      2/1/19     10,500        10,500        11,064   

Sorenson Communication, Inc.

  (h)(m)   Telecommunication Services   10.5%      2/1/15     39,000        36,624        35,112   

Speedy Cash Intermediate Holdings Corp.

  (g)   Diversified Financials   10.8%      5/15/18     5,000        5,077        5,215   
              

 

 

   

 

 

 

Total Senior Secured Bonds

                 424,566        402,432   
              

 

 

   

 

 

 

Subordinated Debt—14.2%

              

Alta Mesa Holdings, L.P.

  (f)   Energy   9.6%      10/15/18     11,700        11,605        12,623   

Aurora Diagnostics, LLC

  (g)(h)   Pharmaceuticals, Biotechnology & Life Sciences   10.8%      1/15/18     18,065        18,104        14,362   

Avaya Inc.

  (f)(h)   Technology Hardware & Equipment   10.5%      3/1/21     20,400        19,228        19,023   

Comstock Resources, Inc.

  (g)(k)   Energy   9.5%      6/15/20     7,500        7,204        8,582   

Flanders Corp.

  (g)(h)   Capital Goods   10.0%, 3.8% PIK
(3.8% Max PIK)
     5/14/18     20,794        20,646        20,794   

Ipreo Holdings LLC

  (g)   Software & Services   11.8%      8/15/18     10,000        9,967        10,238   

 

See notes to unaudited consolidated financial statements.

 

9


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Kinetic Concepts, Inc.

  (f)(g)(h)   Health Care Equipment & Services   12.5%      11/1/19   $ 24,700      $ 23,622      $ 28,752   

KODA Distribution Group, Inc.

  (g)   Materials   11.3%      9/30/19     35,000        34,355        35,700   

Monitronics International, Inc.

  (f)(k)   Consumer Services   9.1%      4/1/20     2,250        2,250        2,416   

Mood Media Corp.

  (f)(g)(h)(k)   Media   9.3%      10/15/20     43,135        42,039        41,410   

QR Energy, L.P.

  (f)(k)   Energy   9.3%      8/1/20     3,250        3,211        3,512   

RKI Exploration & Production, LLC

  (f)   Energy   8.5%      8/1/21     10,900        10,900        11,827   

Samson Investment Co.

  (g)   Energy   9.8%      2/15/20     10,000        10,000        10,926   

Sequel Industrial Products Holdings, LLC

  (h)   Energy   12.0%, 2.5% PIK
(2.5% Max PIK)
     5/10/18     15,792        15,563        16,187   

Sidewinder Drilling Inc.

  (g)(h)   Capital Goods   9.8%      11/15/19     8,000        8,000        7,927   

ThermaSys Corp.

  (g)(h)   Capital Goods   9.0%, 1.8% PIK
(5.0% Max PIK)
     5/3/20     131,542        131,542        132,857   

VPG Group Holdings LLC

  (g)   Materials   11.0%, 2.0% PIK
(2.0% Max PIK)
     7/15/19     5,056        5,056        5,258   
              

 

 

   

 

 

 

Total Subordinated Debt

                 373,292        382,394   
              

 

 

   

 

 

 

Collateralized Securities—5.0%

              

ACASC 2013-2A B

  (h)(k)   Diversified Financials   12.6%      10/15/23     30,500        29,573        31,002   

Apidos CDO IV Class E

  (h)(k)   Diversified Financials   L+360      10/27/18     2,000        1,327        1,949   

Ares 2007 CLO 11A Class E

  (h)(k)   Diversified Financials   L+600      10/11/21     4,775        3,359        4,767   

Carlyle Azure CLO Class Income

  (k)   Diversified Financials   14.8%      5/27/20     28,000        11,253        13,967   

Dryden CDO 23A Class Subord.

  (k)   Diversified Financials   17.8%      7/17/23     10,000        6,252        7,472   

JPMorgan Chase Bank, N.A. Credit-Linked Notes

  (h)(k)   Diversified Financials   11.2%      12/20/21     16,740        16,633        16,740   

Lightpoint CLO 2006 V Class D

  (h)(k)   Diversified Financials   L+365      8/5/19     6,500        3,836        6,218   

Rampart CLO 2007 1A Class Subord.

  (k)   Diversified Financials   34.9%      10/25/21     10,000        3,413        7,348   

Stone Tower CLO VI Class Subord.

  (h)(k)   Diversified Financials   39.8%      4/17/21     5,000        2,772        4,824   

Wind River CLO Ltd. 2012 1A Class Sub B

  (k)   Diversified Financials   14.2%      1/15/24     42,504        37,277        40,845   
              

 

 

   

 

 

 

Total Collateralized Securities

                 115,695        135,132   
              

 

 

   

 

 

 

 

See notes to unaudited consolidated financial statements.

 

10


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

  

 

  

 

  

 

   Number of
Shares
     Amortized
Cost
     Fair
Value(d)
 

Equity/Other—7.3%(l)

                       

American Energy Ohio Holdings, LLC, Common Equity

   (m)(n)    Energy               7,387,008       $ 7,387       $ 7,387   

AP Exhaust Holdings, LLC, Common Equity

   (m)(o)    Automobiles & Components               811         811         811   

Aquilex Corp., Common Equity, Class A Shares

   (g)    Energy               15,128         1,087         3,493   

Aquilex Corp., Common Equity, Class B Shares

   (g)(h)    Energy               32,637         1,690         7,536   

Burleigh Point, Ltd., Warrants

   (k)(m)    Retailing               17,256,081         1,898         5,004   

CoSentry.Net, LLC, Preferred Equity

   (h)(m)    Software & Services               2,632         2,500         2,478   

Eastman Kodak Co., Common Equity

   (g)(m)    Consumer Durables & Apparel               61,859         1,202         2,060   

ERC Ireland Holdings Ltd., Common Equity

   (h)(j)(k)(m)    Telecommunication Services               35,111         4,731         7,002   

ERC Ireland Holdings Ltd., Warrants

   (j)(k)(m)    Telecommunication Services               15,809         2,288         3,153   

Flanders Corp., Common Equity

   (h)(m)    Capital Goods               5,000,000         5,000         8,500   

Florida Gaming Centers, Inc., Warrants

   (h)(m)    Consumer Services               71         —           3,015   

Florida Gaming Corp., Warrants

   (h)(m)    Consumer Services               226,635         —           —     

FourPoint Energy, LLC, Common Equity

   (m)(o)    Energy               3,937         2,601         3,937   

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

   (m)    Media               26,984         3,051         3,314   

Ipreo Holdings LLC, Common Equity

   (h)(m)    Software & Services               1,000,000         1,000         2,450   

JW Aluminum Co., Common Equity

   (h)(m)    Materials               37,500         3,225         —     

Leading Edge Aviation Services, Inc., Common Equity

   (h)(m)    Capital Goods               4,401         464         787   

Leading Edge Aviation Services, Inc., Preferred Equity

   (h)(m)    Capital Goods               1,303         1,303         1,303   

MB Precision Holdings LLC, Common Equity

   (h)(m)    Capital Goods               450,000         450         450   

Micronics, Inc., Common Equity

   (m)    Capital Goods               50,000         500         475   

Micronics, Inc., Preferred Equity

   (m)    Capital Goods               50         500         500   

Milagro Holdings, LLC, Common Equity

   (h)(m)    Energy               12,057         50         —     

Milagro Holdings, LLC, Preferred Equity

   (m)    Energy               283,947         11,180         1,579   

New Star Metals Inc., Common Equity

   (m)    Capital Goods               750,000         750         750   

Plains Offshore Operations Inc., Preferred Equity

   (g)(h)    Energy               50,000         58,931         63,983   

Plains Offshore Operations Inc., Warrants

   (g)(h)(m)    Energy               1,013,444         1,722         2,989   

PSAV Holdings LLC, Common Equity

   (h)(m)    Technology Hardware & Equipment               10,000,000         10,000         10,000   

Safariland, LLC, Common Equity

   (h)(m)    Capital Goods               25,000         2,500         6,128   

Safariland, LLC, Preferred Equity

   (h)    Capital Goods               2,042         21,228         21,379   

Safariland, LLC, Warrants

   (h)(m)    Capital Goods               4,536         473         1,112   

Sequel Industrial Products Holdings, LLC, Common Equity

   (h)(m)    Energy               3,330,600         3,400         6,994   

Sequel Industrial Products Holdings, LLC, Preferred Equity

   (h)(m)    Energy               8,000,000         9,398         9,408   

Sequel Industrial Products Holdings, LLC, Warrants

   (h)(m)    Energy               20,681         13         43   

 

See notes to unaudited consolidated financial statements.

 

11


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  

Footnotes

  

Industry

  

 

  

 

  

 

   Number of
Shares
     Amortized
Cost
     Fair
Value(d)
 

ThermaSys Corp., Common Equity

   (h)(m)    Capital Goods               51,813       $ 1       $ —     

ThermaSys Corp., Preferred Equity

   (h)    Capital Goods               51,813         5,181         4,171   

VPG Group Holdings LLC, Class A-2 Units

   (h)(m)    Materials               2,500,000         3,638         4,001   
                    

 

 

    

 

 

 

Total Equity/Other

                       170,153         196,192   
                    

 

 

    

 

 

 

TOTAL INVESTMENTS—151.8%

                     $ 3,983,796         4,077,627   
                    

 

 

    

LIABILITIES IN EXCESS OF OTHER ASSETS—(51.8%)

                       (1,392,458
                       

 

 

 

NET ASSETS—100%

                     $ 2,685,169   
                       

 

 

 

 

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

 

(b) Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2014, the three-month London Interbank Offered Rate, or LIBOR, was 0.23%, the Euro Interbank Offered Rate, or EURIBOR, was 0.31% and the U.S. Prime Lending Rate, or Prime, was 3.25%.

 

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

 

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

 

(e) 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).

 

(f) 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).

 

(g) 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).

 

(h) 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).

 

(i) 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).

 

(j) Position or portion thereof unsettled as of March 31, 2014.

 

(k) 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, 2014, 85.4% of the Company’s total assets represented qualifying assets.

 

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

 

(m) Security is non-income producing.

 

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

 

(o) Security held within FSIC Investments, Inc., a wholly-owned subsidiary of the Company.

 

(p) Security is an unfunded loan commitment.

 

See notes to unaudited consolidated financial statements.

 

12


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 31, 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—80.4%

               

A.P. Plasman Inc.

  (f)(h)(j)   Capital Goods   L+850     1.5   12/29/16   $ 49,941      $ 49,282      $ 51,502   

AccentCare, Inc.

  (d)   Health Care Equipment & Services   L+500     1.5   12/22/16     2,017        1,869        1,052   

Alcatel-Lucent USA Inc.

  (d)(j)   Technology Hardware & Equipment   L+475     1.0   1/30/19     4,069        4,051        4,094   

American Racing and Entertainment, LLC

  (f)   Consumer Services   L+700     6/30/14     13,500        13,500        13,500   

American Racing and Entertainment, LLC

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

Aspect Software, Inc.

  (d)   Software & Services   L+525     1.8   5/6/16     6,436        6,307        6,470   

Attachmate Corp.

  (d)(e)   Software & Services   L+575     1.5   11/22/17     10,311        10,157        10,523   

Audio Visual Services Group, Inc.

  (d)   Technology Hardware & Equipment   L+550     1.3   11/9/18     3,948        3,959        3,977   

Avaya Inc.

  (d)(e)(i)   Technology Hardware & Equipment   L+450     10/26/17     9,905        9,184        9,717   

Avaya Inc.

  (d)   Technology Hardware & Equipment   L+675     1.3   3/31/18     14,827        14,891        15,072   

Azure Midstream Energy LLC

  (d)   Energy   L+550     1.0   11/15/18     4,500        4,434        4,534   

BlackBrush TexStar L.P.

  (d)(f)   Energy   L+650     1.3   6/4/19     14,179        14,049        14,311   

Boomerang Tube, LLC

  (d)(h)   Energy   L+950     1.5   10/11/17     18,870        18,408        18,210   

Cadillac Jack, Inc.

  (f)(h)(j)   Consumer Services   L+700     1.0   12/20/17     35,000        34,655        34,650   

Caesars Entertainment Operating Co.

  (e)(f)(j)   Consumer Services   L+425     1/26/18     16,351        15,017        15,513   

Caesars Entertainment Operating Co.

  (f)(j)   Consumer Services   L+525     1/28/18     2,500        2,369        2,394   

Caesars Entertainment Resort Properties, LLC

  (d)(e)(f)   Consumer Services   L+600     1.0   10/1/20     72,907        68,627        72,679   

Capital Vision Services, LLC

  (f)(h)   Health Care Equipment & Services   L+725     1.3   12/3/17     19,828        19,828        19,977   

Cenveo Corp.

  (d)   Commercial & Professional Services   L+500     1.3   2/13/17     3,628        3,613        3,658   

Citgo Petroleum Corp.

  (e)   Energy   L+600     2.0   6/24/15     2,536        2,551        2,561   

Citgo Petroleum Corp.

  (e)(f)   Energy   L+700     2.0   6/23/17     7,571        7,557        7,666   

Clear Channel Communications, Inc.

  (d)(f)   Media   L+365     1/29/16     16,079        13,772        15,604   

Clover Technologies Group, LLC

  (d)   Commercial & Professional Services   L+550     1.3   5/7/18     6,277        6,249        6,277   

Collective Brands, Inc.

  (d)(f)   Consumer Durables & Apparel   L+600     1.3   10/9/19     12,782        12,721        12,845   

Corel Corp.

  (d)(f)(h)(j)   Software & Services   L+825     6/7/19     117,000        117,000        117,878   

Corel Corp.

  (j)   Software & Services   L+825     6/7/18     10,000        10,000        10,000   

Corner Investment PropCo, LLC

  (d)(f)(i)   Consumer Services   L+975     1.3   11/2/19     25,750        25,363        26,265   

 

See notes to unaudited consolidated financial statements.

 

13


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

CoSentry.Net, LLC

  (d)(g)(h)   Software & Services   L+800     1.3   12/31/19   $ 54,500      $ 54,500      $ 54,500   

Crestwood Holdings LLC

  (d)   Energy   L+600     1.0   6/19/19     5,735        5,709        5,907   

Dent Wizard International Corp.

  (d)(f)(g)(h)   Commercial & Professional Services   L+800     4/25/19     136,354        135,127        139,081   

Dent Wizard International Corp.

    Commercial & Professional Services   L+425     4/25/19     15,000        15,000        15,000   

Eastman Kodak Co.

  (d)   Consumer Durables & Apparel   L+625     1.0   9/3/19     10,855        10,647        10,844   

Education Management LLC

  (f)(j)   Consumer Services   L+400     6/1/16     3,935        3,393        3,788   

Education Management LLC

  (e)(j)   Consumer Services   L+700     1.3   3/30/18     15,697        15,638        15,771   

ERC Ireland Holdings Ltd.

  (g)(i)(j)   Telecommunication Services   EURIBOR+300, 1.0% PIK     9/30/17   22,006        27,607        36,063   

FairPoint Communications, Inc.

  (d)(e)(j)   Telecommunication Services   L+625     1.3   2/14/19   $ 21,711        21,517        22,487   

Flanders Corp.

  (f)(h)   Capital Goods   L+950     1.5   5/14/18     37,793        37,069        38,548   

Florida Gaming Centers, Inc.

  (f)(l)   Consumer Services   16.5%     4/25/16     13,144        13,017        13,407   

FR Utility Services LLC

  (d)   Energy   L+575     1.0   10/18/19     6,481        6,418        6,481   

Fram Group Holdings Inc.

  (d)   Automobiles & Components   L+500     1.5   7/29/17     1,344        1,325        1,335   

Harlan Sprague Dawley, Inc.

  (d)   Pharmaceuticals, Biotechnology & Life Sciences   L+550     7/11/14     1,276        1,154        1,148   

HBC Solutions, Inc.

  (d)(f)(g)(h)   Media   L+875     1.5   2/4/18     81,371        81,371        81,371   

Ikaria Acquisition Inc.

  (d)   Pharmaceuticals, Biotechnology & Life Sciences   L+600     1.3   7/3/18     5,798        5,718        5,841   

ILC Industries, LLC

  (d)(h)   Capital Goods   L+650     1.5   7/11/18     9,746        9,592        9,770   

Infiltrator Systems, Inc.

  (f)   Capital Goods   L+825     1.3   6/27/18     30,000        30,000        30,150   

Infiltrator Systems, Inc.

  (f)(g)(h)   Capital Goods   L+825     1.3   6/27/18     170,000        170,000        170,850   

Infogroup Inc.

  (d)   Software & Services   L+650     1.5   5/25/18     3,004        2,699        2,456   

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

  (f)(g)(h)   Household & Personal Products   L+850     1.0   10/26/18     65,000        63,934        66,300   

Intralinks, Inc.

  (f)(j)   Software & Services   L+450     1.5   6/15/14     1,022        989        1,022   

inVentiv Health, Inc.

  (e)   Health Care Equipment & Services   L+625     1.5   5/15/18     2,725        2,708        2,702   

Lantiq Deutschland GmbH

  (f)(j)   Software & Services   L+900     2.0   11/16/15     12,105        11,519        11,742   

Larchmont Resources, LLC

  (d)   Energy   L+725     1.0   8/7/19     11,087        10,982        11,294   

Leading Edge Aviation Services, Inc.

  (d)(f)(g)(h)   Capital Goods   L+850     1.5   4/5/18     35,787        35,206        35,787   

Leading Edge Aviation Services, Inc.

  (f)(g)   Capital Goods   L+850     1.5   4/5/18     8,250        8,250        8,250   

Leedsworld Inc.

  (d)   Retailing   L+475     1.3   6/28/19     9,750        9,661        9,787   

 

See notes to unaudited consolidated financial statements.

 

14


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Maritime Telecommunications Network, Inc.

  (f)   Telecommunication Services   L+600     1.5   3/4/16   $ 4,109      $ 4,080      $ 3,575   

McGraw-Hill Global Education Holdings, LLC

  (d)(e)   Media   L+775     1.3   3/22/19     18,594        18,089        18,969   

MetoKote Corp.

  (h)   Materials   L+800     1.3   9/30/19     20,000        20,000        20,200   

MetoKote Corp.

    Materials   L+800     1.3   9/30/19     3,810        3,810        3,848   

Micronics, Inc.

  (d)(h)   Capital Goods   L+800     1.3   3/28/19     22,529        22,124        22,529   

MMI International Ltd.

  (d)(j)   Technology Hardware & Equipment   L+600     1.3   11/20/18     10,612        10,323        10,340   

MMM Holdings, Inc.

  (h)   Health Care Equipment & Services   L+825     1.5   12/12/17     10,040        9,877        10,120   

MModal Inc.

  (d)   Health Care Equipment & Services   L+650     1.3   8/16/19     7,182        7,070        6,190   

Mood Media Corp.

  (d)(j)   Media   L+550     1.5   5/7/18     3,014        2,990        3,028   

MSO of Puerto Rico, Inc.

  (h)   Health Care Equipment & Services   L+825     1.5   12/12/17     7,302        7,184        7,360   

National Mentor Holdings, Inc.

  (d)   Health Care Equipment & Services   L+525     1.3   2/9/17     4,929        4,929        4,970   

National Vision, Inc.

  (d)   Health Care Equipment & Services   L+575     1.3   8/2/18     4,672        4,680        4,686   

New HB Acquisition, LLC

  (d)   Food, Beverage & Tobacco   L+550     1.3   4/9/20     3,896        3,860        4,042   

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        9,203        9,551   

Panda Temple Power, LLC (TLA)

  (f)   Energy   L+700     1.5   7/17/18     3,000        3,000        3,081   

Patheon Inc.

  (d)(j)   Pharmaceuticals, Biotechnology & Life Sciences   L+600     1.3   12/14/18     10,156        9,892        10,275   

Princeton Review, Inc.

  (g)   Consumer Services   L+550     1.5   12/7/14     1,041        996        859   

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     9,788        6,198        4,943   

Reddy Ice Holdings, Inc.

  (d)   Food & Staples Retailing   L+550     1.3   5/1/19     1,182        1,170        1,181   

Safariland, LLC

  (d)(f)(h)   Capital Goods   L+800     1.3   9/20/19     156,800        156,800        158,368   

Shell Topco L.P.

  (d)(h)   Energy   L+750     1.5   9/28/18     33,000        32,594        33,908   

Sirius Computer Solutions, Inc.

  (d)   Software & Services   L+575     1.3   12/7/18     8,096        8,027        8,228   

Smarte Carte, Inc.

  (d)(f)(h)   Commercial & Professional Services   L+650     1.3   11/30/17     57,950        57,403        58,819   

Smile Brands Group Inc.

  (d)(e)(h)   Health Care Equipment & Services   L+625     1.3   8/15/19     30,474        29,825        30,131   

Sorenson Communication, Inc.

  (d)(e)(f)(h)   Telecommunication Services   L+825     1.3   10/31/14     65,711        65,711        66,697   

Sports Authority, Inc.

  (d)(f)   Consumer Durables & Apparel   L+600     1.5   11/16/17     22,190        22,041        22,162   

Stallion Oilfield Holdings, Inc.

  (d)   Energy   L+675     1.3   6/19/18     4,975        4,929        5,087   

Swiss Watch International, Inc.

  (d)(f)(h)   Consumer Durables & Apparel   L+725     1.3   11/8/18     48,500        47,692        48,985   

 

See notes to unaudited consolidated financial statements.

 

15


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Technicolor SA

  (d)(e)(j)   Media   L+600     1.3   7/10/20   $ 33,885      $ 32,921      $ 34,254   

Tervita Corp.

  (d)(j)   Commercial & Professional Services   L+500     1.3   5/15/18     8,035        7,965        8,083   

Therakos, Inc.

  (d)(f)   Pharmaceuticals, Biotechnology & Life Sciences   L+625     1.3   12/27/17     27,060        26,494        27,162   

ThermaSys Corp.

  (d)   Capital Goods   L+400     1.3   5/3/19     9,875        9,785        9,768   

Totes Isotoner Corp.

  (d)   Consumer Durables & Apparel   L+575     1.5   7/7/17     6,622        6,546        6,660   

Toys “R” Us-Delaware, Inc.

  (e)   Consumer Durables & Apparel   L+450     1.5   9/1/16     1,520        1,524        1,379   

TravelCLICK, Inc.

  (d)   Consumer Services   L+450     1.3   3/16/16     7,776        7,712        7,854   

Tri-Northern Acquisition, Inc.

  (f)(h)   Retailing   L+800     1.3   7/1/19     54,725        54,725        54,725   

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   L+550     1.8   12/22/16     3,492        3,446        2,060   

VPG Group Holdings LLC

  (d)(f)(h)   Materials   L+900     1.0   10/4/16     64,070        63,409        65,031   

Willbros Group, Inc.

  (h)(j)   Energy   L+975     1.3   8/5/19     15,960        15,422        16,199   
             

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                2,128,667        2,172,047   

Unfunded Loan Commitments

                (48,439     (48,439
             

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                2,080,228        2,123,608   
             

 

 

   

 

 

 

Senior Secured Loans—Second Lien—34.0%

               

Advance Pierre Foods, Inc.

  (e)(f)(g)   Food & Staples Retailing   L+825     1.3   10/10/17     22,556        22,250        21,879   

Advantage Sales & Marketing Inc.

  (e)   Commercial & Professional Services   L+725     1.0   6/12/18     14,844        14,844        15,081   

Affordable Care, Inc.

  (d)(f)(g)(h)   Health Care Equipment & Services   L+925     1.3   12/26/19     40,000        39,493        40,200   

Alliance Laundry Systems LLC

    Capital Goods   L+825     1.3   12/10/19     2,012        1,994        2,041   

American Energy—Utica, LLC

  (f)   Energy   L+475,
4.75%
PIK
    1.5   9/30/18     75,689        75,689        75,689   

American Racing and Entertainment, LLC

  (g)   Consumer Services   12.0%     7/1/18     16,800        16,299        16,821   

Attachmate Corp.

  (e)(f)(i)   Software & Services   L+950     1.5   11/22/18     31,218        30,464        30,646   

Audio Visual Services Group, Inc.

  (d)(f)(g)   Technology Hardware & Equipment   L+950     1.3   5/9/18     52,885        51,962        54,603   

Brasa (Holdings) Inc.

  (f)   Consumer Services   L+950     1.5   1/20/20     11,180        10,813        11,292   

Brock Holdings III, Inc.

  (e)(g)   Energy   L+825     1.8   3/16/18     7,756        7,678        7,902   

 

See notes to unaudited consolidated financial statements.

 

16


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Camp International Holding Co.

  (d)   Capital Goods   L+725     1.0   11/29/19   $ 6,207      $ 6,301      $ 6,343   

CHG Buyer Corp.

  (d)   Health Care Equipment & Services   L+775     1.3   11/19/20     5,158        5,065        5,248   

Consolidated Precision Products Corp.

  (f)   Capital Goods   L+775     1.0   4/30/21     16,750        16,669        17,085   

Crossmark Holdings, Inc.

    Commercial & Professional Services   L+750     1.3   12/21/20     7,778        7,707        7,749   

DEI Sales, Inc.

  (f)(g)   Commercial & Professional Services   L+900     1.5   1/15/18     57,500        56,850        57,284   

Eastman Kodak Co.

  (f)   Consumer Durables & Apparel   L+950     1.3   9/3/20     50,000        48,791        50,438   

EZE Software Group LLC

  (e)   Software & Services   L+725     1.3   4/5/21     2,381        2,359        2,427   

Fram Group Holdings Inc.

  (e)   Automobiles & Components   L+900     1.5   1/29/18     2,000        1,993        1,907   

ILC Industries, LLC

  (f)(g)   Capital Goods   L+1000     1.5   7/11/19     27,976        27,085        26,857   

Keystone Automotive Operations, Inc.

  (f)   Automobiles & Components   L+950     1.3   8/15/20     44,500        43,644        46,169   

Kronos Inc.

  (e)(f)   Software & Services   L+850     1.3   4/30/20     27,290        27,042        28,297   

LM U.S. Member LLC

  (g)   Transportation   L+825     1.3   10/26/20     9,375        9,248        9,510   

Mitchell International, Inc.

  (g)   Software & Services   L+750     1.0   10/11/21     15,000        14,854        15,258   

OSP Group, Inc.

  (d)(f)(g)(h)   Consumer Durables & Apparel   L+850     1.3   7/31/20     105,000        105,000        106,575   

P2 Upstream Acquisition Co.

  (g)   Energy   L+800     1.0   5/1/20     4,091        4,051        4,173   

Paw Luxco II Sarl

  (j)   Consumer Durables & Apparel   EURIBOR+950     1/29/19   20,000        24,230        24,882   

Pelican Products, Inc.

  (d)   Capital Goods   L+1000     1.5   6/14/19   $ 6,667        6,555        6,700   

Pregis Corp.

  (f)(g)   Capital Goods   L+1000     1.5   3/23/18     50,000        49,283        50,250   

Ranpak Corp.

  (g)   Commercial & Professional Services   L+725     1.3   4/23/20     11,324        11,218        11,663   

Sensus USA Inc.

  (d)(e)   Capital Goods   L+725     1.3   5/9/18     8,571        8,576        8,571   

SESAC Holdings Inc.

  (f)   Media   L+875     1.3   7/12/19     3,000        2,961        3,075   

Stadium Management Corp.

  (f)   Consumer Services   L+950     1.3   12/7/18     23,529        23,163        23,647   

TNT Crane & Rigging, Inc.

    Energy   L+900     1.0   11/27/21     1,500        1,381        1,448   

TravelCLICK, Inc.

  (f)(g)   Consumer Services   L+850     1.3   3/26/18     34,925        34,620        35,973   

Travelport LLC

  (g)   Consumer Services   4.0%, 4.4% PIK     12/1/16     24,036        20,167        24,546   

TriZetto Group, Inc.

  (g)   Software & Services   L+725     1.3   3/28/19     8,372        8,265        8,037   

 

See notes to unaudited consolidated financial statements.

 

17


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2013

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Vertafore, Inc.

  (e)   Software & Services   L+825     1.5   10/27/17   $ 14,750      $ 14,711      $ 15,027   

Wall Street Systems Holdings, Inc.

  (d)   Software & Services   L+800     1.3   10/25/20     7,000        6,878        7,068   

WildHorse Resources, LLC

  (f)   Energy   L+625     1.3   12/13/18     15,407        15,123        15,484   
             

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

                875,276        897,845   
             

 

 

   

 

 

 

Senior Secured Bonds—14.6%

               

Advanced Lighting Technologies, Inc.

  (f)(g)   Materials   10.5%     6/1/19     78,500        76,913        56,520   

Allen Systems Group, Inc.

  (f)(g)   Software & Services   10.5%     11/15/16     38,448        30,409        21,723   

Aspect Software, Inc.

  (e)   Software & Services   10.6%     5/15/17     4,000        4,000        4,075   

Avaya Inc.

  (e)(f)(g)   Technology Hardware & Equipment   7.0%     4/1/19     23,500        22,008        23,148   

Avaya Inc.

  (e)   Technology Hardware & Equipment   9.0%     4/1/19     5,000        5,000        5,250   

Blackboard Inc.

    Software & Services   7.8%     11/15/19     6,500        6,500        6,486   

Caesars Entertainment Operating Co.

  (f)(i)(j)   Consumer Services   9.0%     2/15/20     20,000        19,066        19,481   

Caesars Entertainment Resort Properties, LLC

  (e)(f)   Consumer Services   11.0%     10/1/21     54,598        54,288        56,398   

Chassix, Inc.

    Automobiles & Components   9.3%