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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 JUNE 30, 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 239,486,184 shares of common stock outstanding as of August 13, 2014.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

PART I—FINANCIAL INFORMATION

  

ITEM 1.

   FINANCIAL STATEMENTS      1   
   Consolidated Balance Sheets as of June 30, 2014 (Unaudited) and December 31, 2013      1   
  

Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013

     2   
  

Unaudited Consolidated Statements of Changes in Net Assets for the six months ended June  30, 2014 and 2013

     3   
  

Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013

     4   
  

Consolidated Schedules of Investments as of June 30, 2014 (Unaudited) and December 31, 2013

     5   
  

Notes to Unaudited Consolidated Financial Statements

     23   

ITEM 2.

  

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

     56   

ITEM 3.

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      83   

ITEM 4.

   CONTROLS AND PROCEDURES      83   

PART II—OTHER INFORMATION

  

ITEM 1.

   LEGAL PROCEEDINGS      85   

ITEM 1A.

   RISK FACTORS      85   

ITEM 2.

   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS      89   

ITEM 3.

   DEFAULTS UPON SENIOR SECURITIES      89   

ITEM 4.

   MINE SAFETY DISCLOSURES      89   

ITEM 5.

   OTHER INFORMATION      89   

ITEM 6.

   EXHIBITS      89   
   SIGNATURES      94   


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)

 

 

 

     June 30, 2014
(Unaudited)
     December 31,
2013
 

Assets

     

Investments, at fair value—unaffiliated (amortized cost—$4,110,934 and $4,054,085, respectively)

   $ 4,209,471       $ 4,137,581   

Investments, at fair value—affiliated (amortized cost—$17,931 and $0, respectively)

     17,632         —     

Cash

     244,074         227,328   

Receivable for investments sold and repaid

     35,592         26,722   

Interest receivable

     56,362         47,622   

Deferred financing costs

     7,768         5,168   

Prepaid expenses and other assets

     1,465         156   
  

 

 

    

 

 

 

Total assets

   $ 4,572,364       $ 4,444,577   
  

 

 

    

 

 

 

Liabilities

     

Payable for investments purchased

   $ 92,522       $ 23,423   

Credit facilities payable

     965,686         723,682   

Repurchase agreement payable(1)

     950,000         950,000   

Stockholder distributions payable

     17,748         18,671   

Management fees payable

     19,862         22,700   

Accrued capital gains incentive fees(2)

     37,647         32,133   

Subordinated income incentive fees payable(2)

     15,061         14,303   

Administrative services expense payable

     1,686         1,153   

Interest payable

     11,509         10,563   

Directors’ fees payable

     253         254   

Other accrued expenses and liabilities

     2,823         6,703   
  

 

 

    

 

 

 

Total liabilities

     2,114,797         1,803,585   
  

 

 

    

 

 

 

Commitments and contingencies(3)

     

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, 239,026,360 and 259,320,161 shares issued and outstanding, respectively

     239         259   

Capital in excess of par value

     2,246,910         2,466,753   

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

     75,977         55,344   

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

     36,239         35,322   

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

     98,202         83,314   
  

 

 

    

 

 

 

Total stockholders’ equity

     2,457,567         2,640,992   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,572,364       $ 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
June 30,
    Six Months Ended
June 30,
 
    2014     2013     2014     2013  

Investment income

       

Interest income—unaffiliated

  $ 102,096      $ 105,503      $ 206,807      $ 207,717   

Fee income—unaffiliated

    18,450        10,442        28,535        18,206   

Dividend income—unaffiliated

    175        8,404        175        8,470   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    120,721        124,349        235,517        234,393   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

       

Management fees(1)

    22,695        22,615        45,066        44,821   

Capital gains incentive fees(2)

    2,268        (5,423     7,104        927   

Subordinated income incentive fees(2)

    15,061        17,167        30,239        31,395   

Administrative services expenses

    1,189        1,355        2,389        2,791   

Stock transfer agent fees

    546        900        997        1,790   

Accounting and administrative fees

    320        355        652        720   

Interest expense

    14,129        11,876        26,829        24,012   

Directors’ fees

    264        223        529        448   

Listing advisory fees

    5,043        —          5,043        —     

Other general and administrative expenses

    4,070        1,226        5,656        2,705   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    65,585        50,294        124,504        109,609   

Management fee waiver(1)

    (2,837     —          (2,837     —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

    62,748        50,294        121,667        109,609   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    57,973        74,055        113,850        124,784   
 

 

 

   

 

 

   

 

 

   

 

 

 

Realized and unrealized gain/loss

       

Net realized gain (loss) on investments—unaffiliated

    6,716        16,447        20,538        30,618   

Net realized gain (loss) on foreign currency

    114        (39     95        (102

Net change in unrealized appreciation (depreciation) on investments—unaffiliated

    4,706        (43,498     15,041        (25,980

Net change in unrealized appreciation (depreciation) on investments—affiliated

    (299     —          (299     —     

Net change in unrealized gain (loss) on foreign currency

    101        (26     146        95   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total net realized and unrealized gain (loss) on investments

    11,338        (27,116     35,521        4,631   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  $ 69,311      $ 46,939      $ 149,371      $ 129,415   
 

 

 

   

 

 

   

 

 

   

 

 

 

Per share information—basic and diluted

       

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

  $ 0.27      $ 0.18      $ 0.58      $ 0.52   
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

    255,301,300        254,213,036        257,729,988        253,414,392   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) See Note 4 for a discussion of the waiver by FB Income Advisor LLC, the Company’s investment adviser, of certain management fees to which it was otherwise entitled during the applicable period.

 

(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.

See notes to unaudited consolidated financial statements.

 

2


Table of Contents

FS Investment Corporation

Unaudited Consolidated Statements of Changes in Net Assets

(in thousands)

 

 

 

     Six Months Ended
June 30,
 
     2014     2013  

Operations

    

Net investment income (loss)

   $ 113,850      $ 124,784   

Net realized gain (loss) on investments and foreign currency

     20,633        30,516   

Net change in unrealized appreciation (depreciation) on investments

     14,742        (25,980

Net change in unrealized gain (loss) on foreign currency

     146        95   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     149,371        129,415   
  

 

 

   

 

 

 

Stockholder distributions(1)

    

Distributions from net investment income

     (112,933     (75,246

Distributions from net realized gain on investments

     —          (28,049
  

 

 

   

 

 

 

Net decrease in net assets resulting from stockholder distributions

     (112,933     (103,295
  

 

 

   

 

 

 

Capital share transactions(2)

    

Reinvestment of stockholder distributions

     39,040        53,157   

Repurchases of common stock

     (258,903     (19,467
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from capital share transactions

     (219,863     33,690   
  

 

 

   

 

 

 

Total increase (decrease) in net assets

     (183,425     59,810   

Net assets at beginning of period

     2,640,992        2,511,738   
  

 

 

   

 

 

 

Net assets at end of period

   $ 2,457,567      $ 2,571,548   
  

 

 

   

 

 

 

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

   $ 36,239      $ 53,845   
  

 

 

   

 

 

 

 

(1) See Note 5 for a discussion of the sources of distributions paid by the Company.

 

(2) See Note 3 for a discussion of the Company’s capital share transactions.

See notes to unaudited consolidated financial statements.

 

3


Table of Contents

FS Investment Corporation

Unaudited Consolidated Statements of Cash Flows

(in thousands)

 

 

 

     Six Months Ended
June 30,
 
     2014     2013  

Cash flows from operating activities

    

Net increase (decrease) in net assets resulting from operations

   $ 149,371      $ 129,415   

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

    

Purchases of investments

     (1,209,195     (1,329,084

Paid-in-kind interest

     (5,886     (4,009

Proceeds from sales and repayments of investments

     1,175,532        1,306,330   

Net realized (gain) loss on investments

     (20,538     (30,618

Net change in unrealized (appreciation) depreciation on investments

     (14,742     25,980   

Accretion of discount

     (14,693     (22,869

Amortization of deferred financing costs

     1,402        1,388   

(Increase) decrease in receivable for investments sold and repaid

     (8,870     (53,737

(Increase) decrease in interest receivable

     (8,740     2,108   

(Increase) decrease in prepaid expenses and other assets

     (1,309     238   

Increase (decrease) in payable for investments purchased

     69,099        (56,680

Increase (decrease) in management fees payable

     (2,838     1,131   

Increase (decrease) in accrued capital gains incentive fees

     5,514        (10,864

Increase (decrease) in subordinated income incentive fees payable

     758        3,774   

Increase (decrease) in administrative services expense payable

     533        85   

Increase (decrease) in interest payable

     946        (521

Increase (decrease) in directors’ fees payable

     (1     218   

Increase (decrease) in other accrued expenses and liabilities

     (3,880     (746
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     112,463        (38,461
  

 

 

   

 

 

 

Cash flows from financing activities

    

Reinvestment of stockholder distributions

     39,040        53,157   

Repurchases of common stock

     (258,903     (19,467

Stockholder distributions

     (113,856     (102,497

Borrowings under credit facilities(1)

     265,686        13,375   

Repayments under credit facilities(1)

     (23,682     —     

Borrowings under repurchase agreement(2)

     —          135,250   

Deferred financing costs paid

     (4,002     —     
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (95,717     79,818   
  

 

 

   

 

 

 

Total increase (decrease) in cash

     16,746        41,357   

Cash at beginning of period

     227,328        338,895   
  

 

 

   

 

 

 

Cash at end of period

   $ 244,074      $ 380,252   
  

 

 

   

 

 

 

Supplemental disclosure

    

Local and excise taxes paid

   $ 5,100      $ 869   
  

 

 

   

 

 

 

 

(1) See Note 8 for a discussion of the Company’s credit facilities. During the six months ended June 30, 2014 and 2013, the Company paid $8,872 and $12,344, respectively, in interest expense on the credit facilities.

 

(2) See Note 8 for a discussion of the Company’s repurchase transaction. During the six months ended June 30, 2014 and 2013, the Company paid $15,609 and $10,801, 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 June 30, 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—93.3%

                

A.P. Plasman Inc.

  (e)(g)(i)(l)   Capital Goods   L+850   1.5%    12/29/16   $ 66,398      $ 65,684      $ 66,896   

AccentCare, Inc.

  (e)   Health Care Equipment & Services   L+500   1.5%    12/22/16     2,017        1,891        1,377   

American Pacific Corp.

  (e)   Materials   L+600   1.0%    2/1/19     4,988        4,952        5,062   

American Racing and Entertainment, LLC

  (g)   Consumer Services   L+700      7/1/15     13,250        13,250        13,250   

American Racing and Entertainment, LLC

  (g)   Consumer Services   9.0%      7/1/15     7,750        7,750        7,818   

American Racing and Entertainment, LLC

  (g)   Consumer Services   L+800      7/1/18     2,150        2,150        2,180   

American Racing and Entertainment, LLC

  (g)(q)   Consumer Services   L+800      7/1/18     4,350        4,350        4,410   

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     6,271        6,169        6,341   

Attachmate Corp.

  (e)   Software & Services   L+575   1.5%    11/22/17     5,381        5,308        5,437   

Azure Midstream Energy LLC

  (e)   Energy   L+550   1.0%    11/15/18     4,388        4,328        4,434   

BlackBrush TexStar L.P.

  (e)(g)   Energy   L+650   1.3%    6/4/19     16,333        16,217        16,511   

Boomerang Tube, LLC

  (e)(i)   Energy   L+950   1.5%    10/11/17     18,367        17,962        16,714   

BPA Laboratories, Inc.

  (e)   Pharmaceuticals, Biotechnology & Life Sciences   2.5%      7/3/17     682        619        631   

Cadillac Jack, Inc.

  (e)(g)(i)(l)   Consumer Services   L+850   1.0%    5/15/19     74,825        73,573        74,825   

Caesars Entertainment Operating Co.

  (f)(g)(l)   Consumer Services   L+425      1/26/18     13,351        12,390        12,355   

Caesars Entertainment Operating Co.

  (g)(l)   Consumer Services   L+525      1/28/18     2,500        2,381        2,338   

Caesars Entertainment Operating Co.

  (f)(g)(h)(j)(k)(l)   Consumer Services   L+875   1.0%    3/1/17     85,020        84,382        84,020   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(g)(j)   Consumer Services   L+600   1.0%    10/11/20     72,542        68,515        73,109   

Capital Vision Services, LLC

  (g)(i)(j)   Health Care Equipment & Services   L+725   1.3%    12/3/17     23,452        23,452        23,452   

Capital Vision Services, LLC

  (g)(q)   Health Care Equipment & Services   L+725   1.3%    12/3/17     935        935        935   

Cengage Learning, Inc.

  (e)   Media   L+600   1.0%    3/6/20     6,740        6,707        6,825   

Citgo Petroleum Corp.

  (g)(j)   Energy   L+700   2.0%    6/23/17     7,526        7,514        7,652   

Clear Channel Communications, Inc.

  (e)(g)   Media   L+365      1/29/16     16,079        14,237        15,996   

Corel Corp.

  (e)(g)(h)(i)(j)(l)   Software & Services   L+825      6/7/19     160,000        160,000        160,000   

Corel Corp.

  (j)(l)   Software & Services   Prime+725      6/7/18     5,000        5,000        5,000   

Corel Corp.

  (j)(l)(q)   Software & Services   Prime+725      6/7/18     5,000        5,000        5,000   

Corner Investment PropCo, LLC

  (e)(g)(j)   Consumer Services   L+975   1.3%    11/2/19     44,750        44,926        46,093   

CoSentry.Net, LLC

  (e)(i)(j)   Software & Services   L+800   1.3%    12/31/19     54,228        54,228        55,041   

Crestwood Holdings LLC

  (e)   Energy   L+600   1.0%    6/19/19     5,593        5,569        5,692   

Dent Wizard International Corp.

  (e)(g)(i)(j)   Commercial & Professional Services   L+800      4/25/19     134,729        133,627        135,908   

Dent Wizard International Corp.

  (j)(q)   Commercial & Professional Services   Prime+325      4/25/19     5,000        5,000        5,000   

Eastman Kodak Co.

  (e)   Consumer Durables & Apparel   L+625   1.0%    9/3/19     10,800        10,608        10,989   

EnergySolutions, LLC

  (e)   Energy   L+575   1.0%    5/29/20     4,364        4,277        4,420   

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

ERC Ireland Holdings Ltd.

  (h)(j)(l)   Telecommunication Services   EURIBOR+450      9/30/19   10,306      $ 11,174      $ 13,835   

Extreme Reach, Inc.

  (e)   Media   L+575   1.0%    1/24/20   $ 4,128        4,070        4,184   

FairPoint Communications, Inc.

  (e)(l)   Telecommunication Services   L+625   1.3%    2/14/19     12,961        12,854        13,450   

Flanders Corp.

  (g)(i)   Capital Goods   L+950   1.5%    5/14/18     36,993        36,355        37,455   

FR Utility Services LLC

  (j)(k)   Energy   L+575   1.0%    10/18/19     7,818        7,760        7,906   

Fram Group Holdings Inc.

  (e)   Automobiles & Components   L+500   1.5%    7/29/17     1,339        1,323        1,345   

Fronton Holdings, LLC

  (g)   Consumer Services   15.0%      4/30/19     3,736        3,699        3,736   

HBC Solutions, Inc.

  (e)(g)(h)(j)   Media   L+875   1.5%    2/4/18     86,371        86,371        86,803   

ILC Industries, LLC

  (e)(i)   Capital Goods   L+650   1.5%    7/11/18     9,317        9,183        9,340   

Industrial Group Intermediate Holdings, LLC

  (i)   Materials   L+800   1.3%    5/31/20     13,965        13,965        13,965   

Industry City TI Lessor, L.P.

  (g)   Real Estate   10.3%      6/30/26     24,250        24,250        24,250   

Infiltrator Systems, Inc.

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

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

  (g)(h)(i)(j)   Household & Personal Products   L+850   1.0%    10/26/18     65,000        64,030        65,000   

Intralinks, Inc.

  (e)(g)(l)   Software & Services   L+525   2.0%    2/24/19     14,963        14,822        14,981   

inVentiv Health, Inc.

  (j)   Health Care Equipment & Services   L+625   1.5%    5/15/18     2,725        2,709        2,732   

Lantiq Deutschland GmbH

  (g)(j)(l)   Software & Services   L+900   2.0%    11/16/15     12,425        11,984        12,363   

Larchmont Resources, LLC

  (e)   Energy   L+725   1.0%    8/7/19     11,031        10,934        11,280   

Leading Edge Aviation Services, Inc.

  (e)(g)(h)(i)   Capital Goods   L+875   1.5%    6/30/19     31,076        30,714        31,076   

Leading Edge Aviation Services, Inc.

  (h)(q)   Capital Goods   L+875   1.5%    6/30/19     3,500        3,500        3,500   

LEAS Acquisition Co Ltd.

  (h)(l)   Capital Goods   L+875   1.5%    6/30/19     10,900        10,900        10,900   

LEAS Acquisition Co Ltd.

  (j)(l)   Capital Goods   L+875   1.5%    6/30/19   30,000        41,071        41,071   

Leedsworld Inc.

  (e)   Retailing   L+475   1.3%    6/28/19   $ 9,672        9,592        9,648   

Maritime Telecommunications Network, Inc.

  (g)   Telecommunication Services   L+600   1.5%    3/4/16     3,772        3,751        3,489   

MB Precision Holdings LLC

  (i)   Capital Goods   L+725   1.3%    1/23/20     13,433        13,433        13,433   

Micronics, Inc.

  (e)(i)   Capital Goods   L+800   1.3%    3/28/19     22,365        21,992        22,365   

MMI International Ltd.

  (e)(l)   Technology Hardware & Equipment   L+600   1.3%    11/20/18     5,988        5,841        5,929   

MMM Holdings, Inc.

  (i)(j)   Health Care Equipment & Services   L+825   1.5%    12/12/17     9,498        9,360        9,581   

MModal Inc.

  (e)(n)   Health Care Equipment & Services   Prime+575      8/16/19     6,740        6,641        5,342   

MModal Inc.

  (j)(q)   Health Care Equipment & Services   L+795   1.5%    8/28/14     1,236        1,236        1,230   

Mood Media Corp.

  (e)(l)   Media   L+600   1.0%    5/1/19     7,719        7,668        7,743   

MSO of Puerto Rico, Inc.

  (i)(j)   Health Care Equipment & Services   L+825   1.5%    12/12/17     6,905        6,805        6,966   

New Star Metals Inc.

  (e)(g)(j)   Capital Goods   L+800   1.3%    3/20/20     36,775        36,775        36,775   

Nova Wildcat Amerock, LLC

  (i)(j)   Consumer Durables & Apparel   L+814   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        9,209        9,522   

Panda Temple Power, LLC (TLA)

  (g)   Energy   L+700   1.5%    7/17/18     3,000        3,000        3,075   

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 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.

  (j)   Consumer Services   L+550   1.5%    12/7/14   $ 958      $ 936      $ 886   

PRV Aerospace, LLC

  (e)   Capital Goods   L+525   1.3%    5/9/18     4,844        4,835        4,856   

Reddy Ice Holdings, Inc.

  (e)   Food & Staples Retailing   L+550   1.3%    5/1/19     1,176        1,165        1,152   

Safariland, LLC

  (e)(g)(i)(j)   Capital Goods   L+800   1.3%    9/20/19     153,600        153,600        156,672   

Shell Topco L.P.

  (e)(i)   Energy   L+750   1.5%    9/28/18     33,000        32,630        33,825   

Sirius Computer Solutions, Inc.

  (e)   Software & Services   L+575   1.3%    12/7/18     7,519        7,461        7,632   

Smile Brands Group Inc.

  (e)(j)   Health Care Equipment & Services   L+625   1.3%    8/15/19     25,359        24,863        24,725   

Sorenson Communications, Inc.

  (e)(f)(g)(i)(j)   Telecommunication Services   L+575   2.3%    4/30/20     93,970        93,513        96,378   

Sports Authority, Inc.

  (e)   Consumer Durables & Apparel   L+600   1.5%    11/16/17     7,818        7,817        7,839   

Stallion Oilfield Holdings, Inc.

  (e)   Energy   L+675   1.3%    6/19/18     4,835        4,795        4,914   

Swiss Watch International, Inc.

  (e)(g)(i)   Consumer Durables & Apparel   L+725   1.3%    11/8/18     47,750        47,026        47,273   

Therakos, Inc.

  (e)(g)   Pharmaceuticals, Biotechnology & Life Sciences   L+625   1.3%    12/27/17     26,396        25,911        26,594   

ThermaSys Corp.

  (e)   Capital Goods   L+400   1.3%    5/3/19     4,750        4,711        4,747   

Tri-Northern Acquisition, Inc.

  (g)(i)   Retailing   L+800   1.3%    7/1/19     54,450        54,450        55,267   

Tri-Northern Acquisition, Inc.

  (j)(q)   Retailing   L+800   1.3%    7/1/19     11,379        11,379        11,550   

U.S. Xpress Enterprises, Inc.

  (g)(h)   Transportation   L+850, 1.5% PIK
(1.5% Max PIK)
  1.5%    5/30/19     75,000        75,000        75,000   

Virtual Radiologic Corp.

  (j)   Health Care Equipment & Services   L+550   1.8%    12/22/16     3,502        3,463        2,556   

VPG Group Holdings LLC

  (e)(g)(i)   Materials   L+900   1.0%    10/4/16     81,820        81,270        82,638   

Willbros Group, Inc.

  (i)(j)(l)   Energy   L+975   1.3%    8/7/19     14,134        13,688        14,399   
              

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                 2,293,435        2,323,884   

Unfunded Loan Commitments

                 (31,400     (31,400
              

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                 2,262,035        2,292,484   
              

 

 

   

 

 

 

Senior Secured Loans—Second Lien—31.8%

                

Advance Pierre Foods, Inc.

  (f)(g)(h)(j)   Food & Staples Retailing   L+825   1.3%    10/10/17     22,556        22,282        21,907   

Affordable Care, Inc.

  (e)(g)(h)(j)   Health Care Equipment & Services   L+925   1.3%    12/26/19     40,000        39,536        40,000   

Alison US LLC

  (j)(k)(l)   Utilities   L+850   1.0%    6/17/22     4,444        4,267        4,350   

American Energy—Utica, LLC

  (g)   Energy   L+400, 5.5% PIK
(5.5% Max PIK)
  1.5%    9/30/18     77,808        77,808        78,975   

American Energy—Utica, LLC

  (h)   Energy   L+400, 5.5% PIK
(5.5% Max PIK)
  1.5%    9/30/18     52,833        52,833        53,625   

American Racing and Entertainment, LLC

  (h)   Consumer Services   12.0%      7/1/18     16,800        16,339        16,842   

Attachmate Corp.

  (g)(j)   Software & Services   L+950   1.5%    11/22/18     31,218        30,523        31,687   

BPA Laboratories, Inc.

  (e)   Pharmaceuticals, Biotechnology & Life Sciences   2.5%      7/3/17     593        456        494   

Brasa (Holdings) Inc.

  (g)   Consumer Services   L+950   1.5%    1/20/20     6,211        6,019        6,308   

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Brock Holdings III, Inc.

  (j)   Energy   L+825   1.8%    3/16/18   $ 6,923      $ 6,847      $ 7,001   

CHG Buyer Corp.

  (e)   Health Care Equipment & Services   L+775   1.3%    11/19/20     5,158        5,070        5,263   

Consolidated Precision Products Corp.

  (g)   Capital Goods   L+775   1.0%    4/30/21     16,750        16,672        16,949   

DEI Sales, Inc.

  (g)(h)   Commercial & Professional Services   L+900   1.5%    1/15/18     57,500        56,913        57,716   

Eastman Kodak Co.

  (g)(h)   Consumer Durables & Apparel   L+950   1.3%    9/3/20     50,000        48,852        51,094   

Fram Group Holdings Inc.

  (j)   Automobiles & Components   L+900   1.5%    1/29/18     2,000        1,994        1,910   

ILC Industries, LLC

  (g)(h)   Capital Goods   L+1000   1.5%    7/11/19     27,976        27,143        27,556   

Kronos Inc.

  (g)   Software & Services   L+850   1.3%    4/30/20     25,025        24,810        26,120   

OSP Group, Inc.

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

Paw Luxco II Sarl

  (h)(l)   Consumer Durables & Apparel   EURIBOR+950      1/29/19   16,364        20,023        21,226   

Pelican Products, Inc.

  (e)   Capital Goods   L+825   1.0%    4/9/21   $ 6,667        6,618        6,767   

PSAV Acquisition Corp.

  (g)(j)   Technology Hardware & Equipment   L+825   1.0%    1/24/22     80,000        78,846        81,600   

Sensus USA Inc.

  (e)   Capital Goods   L+725   1.3%    5/9/18     3,000        3,030        3,019   

Stadium Management Corp.

  (g)   Consumer Services   L+825   1.0%    2/15/22     57,500        57,500        58,506   

Travelport LLC

  (h)   Consumer Services   4.0%, 4.4% PIK
(4.4% Max PIK)
     12/1/16     14,567        12,578        14,749   
              

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

                 761,959        780,839   
              

 

 

   

 

 

 

Senior Secured Bonds—14.9%

              

Advanced Lighting Technologies, Inc.

  (g)(h)   Materials   10.5%      6/1/19     78,500        77,023        56,913   

Allen Systems Group, Inc.

  (g)(h)(j)(n)(r)   Software & Services   10.5%      11/15/16     38,448        31,201        20,377   

Aspect Software, Inc.

  (f)   Software & Services   10.6%      5/15/17     4,000        4,000        4,225   

Avaya Inc.

  (g)   Technology Hardware & Equipment   7.0%      4/1/19     10,000        9,396        10,038   

Avaya Inc.

  (f)   Technology Hardware & Equipment   9.0%      4/1/19     5,000        5,000        5,206   

Caesars Entertainment Resort Properties, LLC

  (f)(g)   Consumer Services   11.0%      10/1/21     54,598        54,300        58,988   

FairPoint Communications, Inc.

  (f)(l)   Telecommunication Services   8.8%      8/15/19     16,750        16,750        18,090   

FourPoint Energy, LLC

  (h)   Energy   8.5%      12/31/20     23,625        20,661        20,436   

Global A&T Electronics Ltd.

  (j)(l)   Technology Hardware & Equipment   10.0%      2/1/19     9,000        9,000        7,763   

HOA Restaurant Group, LLC

  (g)   Consumer Services   11.3%      4/1/17     14,100        14,103        14,911   

JW Aluminum Co.

  (g)(h)(j)   Materials   11.5%      11/15/17     63,297        62,766        64,800   

Kinetic Concepts, Inc.

  (g)   Health Care Equipment & Services   10.5%      11/1/18     11,660        11,187        13,260   

Logan’s Roadhouse Inc.

  (f)(h)(k)   Consumer Services   10.8%      10/15/17     53,494        43,494        43,731   

Ryerson Inc.

  (f)   Capital Goods   9.0%      10/15/17     3,100        3,100        3,329   

Sorenson Communications, Inc.

  (h)   Telecommunication Services   9.0%      10/31/20     19,898        19,112        18,207   

 

See notes to unaudited consolidated financial statements.

 

8


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Speedy Cash Intermediate Holdings Corp.

  (g)   Diversified Financials   10.8%      5/15/18   $ 5,000      $ 5,072      $ 5,105   
              

 

 

   

 

 

 

Total Senior Secured Bonds

                 386,165        365,379   
              

 

 

   

 

 

 

Subordinated Debt—17.3%

              

Alta Mesa Holdings, L.P.

  (f)   Energy   9.6%      10/15/18     11,700        11,606        12,379   

Aurora Diagnostics, LLC

  (g)(h)   Pharmaceuticals, Biotechnology & Life Sciences   10.8%      1/15/18     18,065        18,104        15,310   

Avaya Inc.

  (f)(h)   Technology Hardware & Equipment   10.5%      3/1/21     23,400        22,099        21,674   

Cadillac Jack, Inc.

  (h)(l)   Consumer Services   6.0%, 7.0% PIK
(7.0% Max PIK)
     5/15/20     50,447        33,837        44,394   

Comstock Resources, Inc.

  (g)(l)   Energy   9.5%      6/15/20     7,500        7,214        8,574   

Flanders Corp.

  (g)(h)   Capital Goods   10.0%, 3.8% PIK
(3.8% Max PIK)
     5/14/18     20,974        20,833        20,922   

Ipreo Holdings LLC

  (g)   Software & Services   11.8%      8/15/18     10,000        9,969        10,100   

Kinetic Concepts, Inc.

  (f)(g)   Health Care Equipment & Services   12.5%      11/1/19     15,000        14,203        17,269   

KODA Distribution Group, Inc.

  (g)   Materials   11.3%      9/30/19     35,000        34,383        35,700   

Monitronics International, Inc.

  (f)(l)   Consumer Services   9.1%      4/1/20     2,250        2,250        2,408   

Mood Media Corp.

  (f)(g)(h)(l)   Media   9.3%      10/15/20     43,135        42,063        38,720   

QR Energy, L.P.

  (f)(l)   Energy   9.3%      8/1/20     3,250        3,213        3,575   

RKI Exploration & Production, LLC

  (f)   Energy   8.5%      8/1/21     10,900        10,900        11,894   

Samson Investment Co.

  (g)   Energy   9.8%      2/15/20     10,000        10,000        10,622   

Sequel Industrial Products Holdings, LLC

  (h)   Energy   12.0%, 2.5% PIK
(2.5% Max PIK)
     5/10/18     15,792        15,575        16,187   

Sidewinder Drilling Inc.

  (g)   Capital Goods   9.8%      11/15/19     5,000        5,000        5,113   

Sorenson Communications, Inc.

  (h)   Telecommunication Services   13.0%      10/31/21     15,122        14,070        13,875   

ThermaSys Corp.

  (g)(h)   Capital Goods   9.0%, 1.8% PIK
(5.0% Max PIK)
     5/3/20     132,117        132,117        132,778   

VPG Group Holdings LLC

  (g)   Materials   11.0%, 2.0% PIK
(2.0% Max PIK)
     7/15/19     5,090        5,090        5,293   
              

 

 

   

 

 

 

Total Subordinated Debt

                 412,526        426,787   
              

 

 

   

 

 

 

Collateralized Securities—4.6%

                

ACASC 2013-2A B

  (h)(j)(l)   Diversified Financials   10.6%      10/15/23     30,500        28,410        28,356   

Dryden CDO 23A Class Subord.

  (j)(l)   Diversified Financials   9.8%      7/17/23     10,000        6,045        8,403   

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

  (h)(l)   Diversified Financials   11.2%      12/20/21     16,740        16,563        17,493   

Lightpoint CLO 2006 V Class D

  (h)(l)   Diversified Financials   L+365      8/5/19     6,500        3,917        6,238   

 

See notes to unaudited consolidated financial statements.

 

9


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Rampart CLO 2007 1A Class Subord.

  (j)(l)   Diversified Financials   29.4%      10/25/21   $ 10,000      $ 3,282      $ 7,089   

Stone Tower CLO VI Class Subord.

  (h)(l)   Diversified Financials   29.1%      4/17/21     5,000        2,545        4,593   

Wind River CLO Ltd. 2012 1A Class Sub B

  (j)(l)   Diversified Financials   11.4%      1/15/24     42,504        35,879        41,073   
              

 

 

   

 

 

 

Total Collateralized Securities

                 96,641        113,245   
              

 

 

   

 

 

 
                         Number of
Shares
    Amortized
Cost
    Fair
Value(d)
 

Equity/Other—10.1%(m)

                

Amaya Gaming Group Inc., Warrants

  (j)(l)(n)   Consumer Services            2,000,000      $ 16,832      $ 27,560   

American Energy Ohio Holdings, LLC, Common Equity

  (j)(n)(o)   Energy            9,700,000        9,700        9,700   

AP Exhaust Holdings, LLC, Common Equity

  (j)(n)(p)   Automobiles & Components            811        811        924   

Aquilex Corp., Common Equity, Class A Shares

  (g)   Energy            15,128        1,087        4,115   

Aquilex Corp., Common Equity, Class B Shares

  (g)(h)   Energy            32,637        1,690        8,877   

BPA Laboratories, Inc., Series A Warrants

  (e)(n)   Pharmaceuticals, Biotechnology & Life Sciences            1,979        —          —     

BPA Laboratories, Inc., Series B Warrants

  (e)(n)   Pharmaceuticals, Biotechnology & Life Sciences            3,173        —          —     

Burleigh Point, Ltd., Warrants

  (j)(l)(n)   Retailing            17,256,081        1,898        4,487   

CoSentry.Net, LLC, Preferred Equity

  (h)(n)   Software & Services            2,632        2,500        3,027   

Eastman Kodak Co., Common Equity

  (g)(j)(n)   Consumer Durables & Apparel            61,859        1,202        1,514   

ERC Ireland Holdings Ltd., Common Equity

  (h)(j)(k)(l)(n)   Telecommunication Services            37,547        5,219        8,332   

ERC Ireland Holdings Ltd., Warrants

  (j)(k)(l)(n)   Telecommunication Services            15,809        2,288        3,508   

Flanders Corp., Common Equity

  (h)(n)   Capital Goods            5,000,000        5,000        6,500   

FourPoint Energy, LLC, Common Equity

  (j)(n)(p)   Energy            3,937        2,601        3,937   

Fronton Investor Holdings, LLC, Class B Units

  (j)(n)(s)   Consumer Services            14,943        17,931        17,632   

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

  (j)(n)   Media            26,984        3,051        3,281   

Industrial Group Intermediate Holdings, LLC, Common Equity

  (j)(n)(p)   Materials            347,107        347        347   

Ipreo Holdings LLC, Common Equity

  (h)(n)   Software & Services            1,000,000        1,000        3,100   

JW Aluminum Co., Common Equity

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

Leading Edge Aviation Services, Inc., Common Equity

  (h)(n)   Capital Goods            4,401        464        68   

Leading Edge Aviation Services, Inc., Preferred Equity

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

MB Precision Holdings LLC, Common Equity

  (h)(n)   Capital Goods            450,000        450        495   

Micronics, Inc., Common Equity

  (j)(n)   Capital Goods            50,000        500        475   

Micronics, Inc., Preferred Equity

  (j)(n)   Capital Goods            50        500        500   

Milagro Holdings, LLC, Common Equity

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

Milagro Holdings, LLC, Preferred Equity

  (j)(n)   Energy            283,947        11,180        1,579   

New Star Metals Inc., Common Equity

  (j)(n)   Capital Goods            750,000        750        825   

Plains Offshore Operations Inc., Preferred Equity

  (g)(h)   Energy            50,000        59,831        65,456   

Plains Offshore Operations Inc., Warrants

  (g)(h)(n)   Energy            1,013,444        1,722        2,775   

 

See notes to unaudited consolidated financial statements.

 

10


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

  Number  of
Shares
    Amortized
Cost
    Fair
Value(d)
 

PSAV Holdings LLC, Common Equity

  (h)(n)   Technology Hardware & Equipment            10,000,000      $ 10,000      $ 11,000   

Safariland, LLC, Common Equity

  (h)(n)   Capital Goods            25,000        2,500        6,735   

Safariland, LLC, Preferred Equity

  (h)   Capital Goods            2,042        21,578        21,701   

Safariland, LLC, Warrants

  (h)(n)   Capital Goods            4,536        473        1,222   

Sequel Industrial Products Holdings, LLC, Common Equity

  (h)(j)(n)   Energy            3,330,600        3,400        7,327   

Sequel Industrial Products Holdings, LLC, Preferred Equity

  (h)(j)(n)   Energy            8,000,000        9,623        9,631   

Sequel Industrial Products Holdings, LLC, Warrants

  (h)(j)(n)   Energy            20,681        13        45   

Sorenson Communications, Inc., Common Equity

  (h)(n)   Telecommunication Services            46,163        —          2,193   

ThermaSys Corp., Common Equity

  (h)(n)   Capital Goods            51,813        1        —     

ThermaSys Corp., Preferred Equity

  (h)   Capital Goods            51,813        5,181        4,197   

VPG Group Holdings LLC, Class A-2 Units

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

 

 

   

 

 

 

Total Equity/Other

                 209,539        248,369   
              

 

 

   

 

 

 

TOTAL INVESTMENTS—172.0%

               $ 4,128,865        4,227,103   
              

 

 

   

LIABILITIES IN EXCESS OF OTHER ASSETS—(72.0%)

                 (1,769,536
                

 

 

 

NET ASSETS—100%

               $ 2,457,567   
                

 

 

 

 

(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 June 30, 2014, the three-month London Interbank Offered Rate, or LIBOR, was 0.23%, the Euro Interbank Offered Rate, or EURIBOR, was 0.21% 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).

 

 

See notes to unaudited consolidated financial statements.

 

11


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2014

(in thousands, except share amounts)

 

 

 

(j) Security or portion thereof is pledged as collateral supporting the amounts outstanding under the revolving credit facility with ING Capital LLC (see Note 8).

 

(k) Position or portion thereof unsettled as of June 30, 2014.

 

(l) 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 June 30, 2014, 81.3% of the Company’s total assets represented qualifying assets.

 

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

 

(n) Security is non-income producing.

 

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

 

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

 

(q) Security is an unfunded loan commitment.

 

(r) Security was on non-accrual status as of June 30, 2014.

 

(s) Under the Investment Company Act of 1940, as amended, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns 25% or more of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. During the six months ended June 30, 2014, the Company made an investment in and, in connection with such investment is deemed to be an “affiliated person” of (but would not be deemed to “control”), the following portfolio company:

 

Portfolio Company

   Purchases      Sales and
Repayments
     Interest Income      Fee Income      Net Realized Gain (Loss)      Net Change in Unrealized Appreciation
(Depreciation)
 

Equity/Other

                 

Fronton Investor Holdings, LLC, Class B Units

   $ 17,931                                       $ (299

 

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   

 

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)
 

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   

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   

 

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)
 

Brock Holdings III, Inc.

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

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   

Vertafore, Inc.

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

 

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)
 

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%