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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, 2015

 

¨ 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 of Incorporation)  

(I.R.S. Employer

Identification Number)

201 Rouse Boulevard
Philadelphia, Pennsylvania
  19112
(Address of principal executive offices)   (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 definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨ (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.

There were 241,702,625 shares of the registrant’s common stock outstanding as of May 8, 2015.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

PART I—FINANCIAL INFORMATION

  

ITEM 1.

   FINANCIAL STATEMENTS      1   
  

Consolidated Balance Sheets as of March 31, 2015 (Unaudited) and December 31, 2014

     1   
  

Unaudited Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014

     2   
  

Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2015 and 2014

     3   
  

Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014

     4   
  

Consolidated Schedules of Investments as of March 31, 2015 (Unaudited) and December 31, 2014

     5   
  

Notes to Unaudited Consolidated Financial Statements

     22   

ITEM 2.

  

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

     56   

ITEM 3.

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      80   

ITEM 4.

   CONTROLS AND PROCEDURES      81   

PART II—OTHER INFORMATION

  

ITEM 1.

   LEGAL PROCEEDINGS      82   

ITEM 1A.

   RISK FACTORS      82   

ITEM 2.

   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS      82   

ITEM 3.

   DEFAULTS UPON SENIOR SECURITIES      82   

ITEM 4.

   MINE SAFETY DISCLOSURES      82   

ITEM 5.

   OTHER INFORMATION      82   

ITEM 6.

   EXHIBITS      83   
   SIGNATURES      87   


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, 2015
(Unaudited)
    December 31,
2014
 

Assets

   

Investments, at fair value—unaffiliated (amortized cost—$4,130,468 and $4,164,166, respectively)

  $ 4,145,545      $ 4,168,654   

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

    16,138        14,793   

Cash

    83,894        95,205   

Foreign currency, at fair value (cost—$5,657 and $1,661, respectively)

    4,986        1,639   

Receivable for investments sold and repaid

    40,961        8,976   

Interest receivable

    59,245        51,814   

Deferred financing costs

    12,238        13,097   

Prepaid expenses and other assets

    1,345        708   
 

 

 

   

 

 

 

Total assets

  $ 4,364,352      $ 4,354,886   
 

 

 

   

 

 

 

Liabilities

   

Payable for investments purchased

  $ 832      $ 28,095   

Credit facilities payable

    174,005        188,827   

Unsecured notes payable

    725,000        725,000   

Repurchase agreement payable(1)

    950,000        950,000   

Stockholder distributions payable

    53,706        17,885   

Management fees payable

    19,073        19,560   

Accrued capital gains incentive fees(2)

    24,823        21,075   

Subordinated income incentive fees payable(2)

    13,905        13,089   

Administrative services expense payable

    613        1,410   

Interest payable

    14,983        15,850   

Directors’ fees payable

    288        296   

Deferred financing costs payable

    —          473   

Other accrued expenses and liabilities

    1,412        6,340   
 

 

 

   

 

 

 

Total liabilities

    1,978,640        1,987,900   
 

 

 

   

 

 

 

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, 241,101,342 and 240,896,559 shares issued and outstanding, respectively

    241        241   

Capital in excess of par value

    2,260,554        2,258,548   

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

    37,153        33,758   

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

    66,601        68,658   

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

    21,163        5,781   
 

 

 

   

 

 

 

Total stockholders’ equity

    2,385,712        2,366,986   
 

 

 

   

 

 

 

Total liabilities and stockholders’ equity

  $ 4,364,352      $ 4,354,886   
 

 

 

   

 

 

 

Net asset value per share of common stock at period end

  $ 9.90      $ 9.83   

 

(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,
 
     2015      2014  

Investment income

     

Interest income—unaffiliated

   $ 103,939       $ 104,711   

Fee income—unaffiliated

     4,696         10,085   
  

 

 

    

 

 

 

Total investment income

     108,635         114,796   
  

 

 

    

 

 

 

Operating expenses

     

Management fees

     19,038         22,371   

Capital gains incentive fees(1)

     3,748         4,836   

Subordinated income incentive fees(1)

     13,905         15,178   

Administrative services expenses

     991         1,200   

Stock transfer agent fees

     80         451   

Accounting and administrative fees

     276         332   

Interest expense

     17,299         12,700   

Directors’ fees

     227         265   

Other general and administrative expenses

     1,422         1,586   
  

 

 

    

 

 

 

Total operating expenses

     56,986         58,919   
  

 

 

    

 

 

 

Net investment income

     51,649         55,877   
  

 

 

    

 

 

 

Realized and unrealized gain/loss

     

Net realized gain (loss) on investments—unaffiliated

     3,285         13,822   

Net realized gain (loss) on foreign currency

     110         (19

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

     10,589         10,335   

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

     1,345         —     

Net change in unrealized gain (loss) on foreign currency

     3,448         45   
  

 

 

    

 

 

 

Total net realized and unrealized gain (loss) on investments

     18,777         24,183   
  

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 70,426       $ 80,060   
  

 

 

    

 

 

 

Per share information—basic and diluted

     

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

   $ 0.29       $ 0.31   
  

 

 

    

 

 

 

Weighted average shares outstanding

     241,084,292         260,185,661   
  

 

 

    

 

 

 

 

(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,
 
     2015     2014  

Operations

    

Net investment income (loss)

   $ 51,649      $ 55,877   

Net realized gain (loss) on investments and foreign currency

     3,395        13,803   

Net change in unrealized appreciation (depreciation) on investments

     11,934        10,335   

Net change in unrealized gain (loss) on foreign currency

     3,448        45   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     70,426        80,060   
  

 

 

   

 

 

 

Stockholder distributions(1)

    

Distributions from net investment income

     (53,706     (56,237

Distributions from net realized gain on investments

     —          —     
  

 

 

   

 

 

 

Net decrease in net assets resulting from stockholder distributions

     (53,706     (56,237
  

 

 

   

 

 

 

Capital share transactions(2)

    

Reinvestment of stockholder distributions

     2,006        29,257   

Repurchases of common stock

     —          (8,903
  

 

 

   

 

 

 

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

     2,006        20,354   
  

 

 

   

 

 

 

Total increase (decrease) in net assets

     18,726        44,177   

Net assets at beginning of period

     2,366,986        2,640,992   
  

 

 

   

 

 

 

Net assets at end of period

   $ 2,385,712      $ 2,685,169   
  

 

 

   

 

 

 

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

   $ 66,601      $ 34,962   
  

 

 

   

 

 

 

 

(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)

 

 

 

     Three Months Ended
March 31,
 
  
     2015     2014  

Cash flows from operating activities

    

Net increase (decrease) in net assets resulting from operations

   $ 70,426      $ 80,060   

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

    

Purchases of investments

     (191,510     (471,491

Paid-in-kind interest

     (4,994     (2,439

Proceeds from sales and repayments of investments

     237,355        566,115   

Net realized (gain) loss on investments

     (3,285     (13,822

Net change in unrealized (appreciation) depreciation on investments

     (11,934     (10,335

Accretion of discount

     (3,868     (8,074

Amortization of deferred financing costs

     859        582   

(Increase) decrease in receivable for investments sold and repaid

     (31,985     (41,057

(Increase) decrease in interest receivable

     (7,431     (7,705

(Increase) decrease in prepaid expenses and other assets

     (637     (248

Increase (decrease) in payable for investments purchased

     (27,263     898   

Increase (decrease) in management fees payable

     (487     (325

Increase (decrease) in accrued capital gains incentive fees

     3,748        3,246   

Increase (decrease) in subordinated income incentive fees payable

     816        875   

Increase (decrease) in administrative services expense payable

     (797     667   

Increase (decrease) in interest payable

     (867     (261

Increase (decrease) in directors’ fees payable

     (8     —     

Increase (decrease) in other accrued expenses and liabilities

     (4,928     (5,130
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     23,210        91,556   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Issuance of common stock

     —          —     

Reinvestment of stockholder distributions

     2,006        29,257   

Repurchases of common stock

     —          (8,903

Stockholder distributions

     (17,885     (56,094

Borrowings under credit facilities(1)

     24,200        14,800   

Borrowings under unsecured notes(1)

     —          —     

Repayments of credit facilities(1)

     (39,022     —     

Borrowings under repurchase agreement(2)

     —          —     

Deferred financing costs paid

     (473     (259
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (31,174     (21,199
  

 

 

   

 

 

 

Total increase (decrease) in cash

     (7,964     70,357   

Cash and foreign currency at beginning of period

     96,844        227,328   
  

 

 

   

 

 

 

Cash and foreign currency at end of period

   $ 88,880      $ 297,685   
  

 

 

   

 

 

 

Supplemental disclosure

    

Local and excise taxes paid

   $ 5,546      $ 5,100   
  

 

 

   

 

 

 

 

(1) See Note 8 for a discussion of the Company’s credit facilities and unsecured notes. During the three months ended March 31, 2015 and 2014, the Company paid $9,416 and $4,488, respectively, in interest expense on the credit facilities and unsecured notes.

 

(2) See Note 8 for a discussion of the Company’s repurchase transaction. During the three months ended March 31, 2015 and 2014, the Company paid $7,891 and $7,891, 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, 2015

(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—92.1%

                

A.P. Plasman Inc.

  (f)(g)(h)(j)   Capital Goods   L+775   1.0%    12/29/19   $ 136,959        $136,959        $137,986   

A.P. Plasman Inc.

  (h)(j)(o)   Capital Goods   L+775   1.0%    12/29/19     36,919        36,919        37,196   

AccentCare, Inc.

  (h)   Health Care Equipment & Services   L+500   1.5%    12/22/16     1,954        1,868        1,865   

Allen Systems Group, Inc.

  (f)(h)(l)   Software & Services   L+1,425   1.0%    12/14/17     1,539        1,724        1,746   

Allen Systems Group, Inc.

  (f)(h)(l)   Software & Services   L+1,625   1.0%    12/14/17     36,832        41,251        41,796   

Altus Power America, Inc.

  (h)   Energy   L+750   1.5%    10/10/21     899        899        908   

Altus Power America, Inc.

  (h)(o)   Energy   L+750   1.5%    10/10/21     2,226        2,226        2,248   

American Racing and Entertainment, LLC

  (f)   Consumer Services   11.0%      7/1/15     7,750        7,750        7,779   

American Racing and Entertainment, LLC

  (f)   Consumer Services   L+900      7/1/15     12,250        12,250        12,281   

American Racing and Entertainment, LLC

  (f)   Consumer Services   L+1000   1.0%    7/1/18     6,500        6,500        6,524   

AP Exhaust Acquisition, LLC

  (h)   Automobiles & Components   L+775   1.5%    1/16/21     14,595        14,595        14,303   

Aspect Software, Inc.

  (h)   Software & Services   L+550   1.8%    5/7/16     1,168        1,156        1,167   

Azure Midstream Energy LLC

  (h)   Energy   L+650   1.0%    11/15/18     263        260        251   

BenefitMall Holdings, Inc.

  (h)   Commercial & Professional Services   L+725   1.0%    11/24/20     14,963        14,963        15,112   

BenefitMall Holdings, Inc.

  (h)(o)   Commercial & Professional Services   L+725   1.0%    11/24/20     5,455        5,455        5,509   

Boomerang Tube, LLC

  (h)(l)(p)   Energy   L+950   1.5%    10/11/17     17,864        17,531        10,272   

Cadillac Jack, Inc.

  (f)(h)(j)   Consumer Services   L+850   1.0%    5/15/19     74,263        73,196        77,233   

Caesars Entertainment Operating Co., Inc.

  (e)(f)(j)(l)   Consumer Services   L+575      3/1/17     12,621        11,878        11,566   

Caesars Entertainment Operating Co., Inc.

  (f)(j)(l)   Consumer Services   L+675      3/1/17     2,363        2,273        2,178   

Caesars Entertainment Operating Co., Inc.

  (e)(f)(g)(h)(j)(l)   Consumer Services   L+875   1.0%    1/28/18     84,594        84,070        77,446   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(h)   Consumer Services   L+600   1.0%    10/11/20     71,996        68,360        68,306   

Corel Corp.

  (f)(g)(h)(j)   Software & Services   L+825      6/7/19     149,127        149,127        151,363   

Corel Corp.

  (h)(j)(o)   Software & Services   Prime+725      6/7/18     10,000        10,000        10,000   

Corner Investment PropCo, LLC

  (f)(h)   Consumer Services   L+975   1.3%    11/2/19     44,611        44,757        44,555   

CoSentry.Net, LLC

  (f)(h)   Software & Services   L+800   1.3%    12/31/19     57,799        57,799        58,955   

Crestwood Holdings LLC

  (h)   Energy   L+600   1.0%    6/19/19     5,382        5,363        5,096   

Dent Wizard International Corp.

  (f)(h)   Commercial & Professional Services   L+869   1.0%    2/5/20     88,866        88,866        88,866   

Dent Wizard International Corp.

  (h)(o)   Commercial & Professional Services   L+425   1.0%    2/5/20     2,317        2,317        2,317   

Eastman Kodak Co.

  (h)   Consumer Durables & Apparel   L+625   1.0%    9/3/19     10,718        10,554        10,732   

Flanders Corp.

  (f)   Capital Goods   L+950   1.5%    5/14/18     35,493        34,947        35,892   

Fronton Holdings, LLC

  (f)   Consumer Services   15.0%      4/30/19     3,736        3,703        3,736   

H.M. Dunn Company, Inc.

  (h)   Capital Goods   Prime+711      3/26/21     1,000        1,000        1,000   

H.M. Dunn Company, Inc.

  (h)(o)   Capital Goods   Prime+711      3/26/21     357        357        357   

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

HBC Solutions, Inc.

  (f)(g)(h)   Media   L+875   1.5%   2/4/18   $ 83,797      $ 83,797      $ 84,216   

Industrial Group Intermediate Holdings, LLC

  (h)   Materials   L+800   1.3%   5/31/20     13,858        13,858        13,858   

Industry City TI Lessor, L.P.

  (h)   Consumer Services   5.0%, 5.3% PIK
(5.3% Max PIK)
    6/30/26     25,215        25,215        25,215   

Infiltrator Systems, Inc.

  (f)(g)(h)   Capital Goods   L+778   1.3%   10/31/19     226,000        225,869        226,000   

Lantiq Deutschland GmbH

  (f)(h)(j)   Software & Services   L+900   2.0%   11/16/15     7,968        7,832        7,928   

Larchmont Resources, LLC

  (h)   Energy   L+725   1.0%   8/7/19     4,377        4,343        3,997   

Leading Edge Aviation Services, Inc.

  (f)(g)(h)   Capital Goods   L+875   1.5%   6/30/19     33,280        32,990        33,113   

LEAS Acquisition Co Ltd.

  (h)(j)   Capital Goods   L+875   1.5%   6/30/19   28,875        39,531        30,864   

LEAS Acquisition Co Ltd.

  (g)(j)   Capital Goods   L+875   1.5%   6/30/19   $ 10,491        10,491        10,439   

MB Precision Holdings LLC

  (h)   Capital Goods   L+725   1.3%   1/23/20     13,331        13,331        13,065   

Micronics, Inc.

  (f)(h)   Capital Goods   L+800   1.3%   3/28/19     58,581        58,266        58,581   

Micronics, Inc.

  (f)(h)(o)   Capital Goods   L+800   1.3%   3/28/19     19,500        19,500        19,500   

MMM Holdings, Inc.

  (h)   Health Care Equipment & Services   L+825   1.5%   12/12/17     8,685        8,583        7,034   

MModal LLC

  (h)   Health Care Equipment & Services   L+775   1.3%   1/31/20     4,322        4,303        4,002   

MSO of Puerto Rico, Inc.

  (h)   Health Care Equipment & Services   L+825   1.5%   12/12/17     6,314        6,239        5,114   

New Star Metals Inc.

  (f)(h)   Capital Goods   L+800   1.3%   3/20/20     36,475        36,475        36,475   

Nova Wildcat Amerock, LLC

  (h)   Consumer Durables & Apparel   L+941   1.3%   9/10/19     17,895        17,895        17,895   

PHRC License, LLC

  (g)(h)   Consumer Services   L+900   1.5%   8/14/20     45,000        45,000        45,000   

Polymer Additives, Inc.

  (h)   Materials   L+838   1.0%   12/20/21     10,511        10,511        10,564   

Production Resource Group, LLC

  (h)   Media   L+750   1.0%   7/23/19     32,500        32,500        32,338   

PRV Aerospace, LLC

  (h)   Capital Goods   L+525   1.3%   5/9/18     79        79        78   

Reddy Ice Corp.

  (h)   Food & Staples Retailing   L+550   1.3%   5/1/19     1,167        1,158        1,033   

Safariland, LLC

  (f)(h)   Capital Goods   L+800   1.3%   9/20/19     155,000        155,000        157,325   

Shell Topco L.P.

  (h)   Materials   L+750   1.5%   9/28/18     30,000        29,717        30,375   

Smile Brands Group Inc.

  (h)   Health Care Equipment & Services   L+625   1.3%   8/16/19     20,192        19,845        18,375   

Sorenson Communications, Inc.

  (e)(f)(h)   Telecommunication Services   L+575   2.3%   4/30/20     93,265        92,861        92,799   

Southcross Holdings Borrower LP

  (h)   Energy   L+500   1.0%   8/4/21     315        314        300   

Stallion Oilfield Holdings, Inc.

  (h)   Energy   L+675   1.3%   6/19/18     4,798        4,765        3,502   

SunGard Availability Services Capital, Inc.

  (e)   Software & Services   L+500   1.0%   3/29/19     4,962        4,632        4,350   

Sunnova Asset Portfolio 5 Holdings, LLC

  (h)   Energy   12.0% PIK

(12.0% Max PIK)

    11/14/21     2,663        2,663        2,690   

Sunnova Asset Portfolio 5 Holdings, LLC

  (h)(o)   Energy   12.0% PIK
(12.0% Max PIK)
    11/14/21     2,400        2,400        2,424   

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Swiss Watch International, Inc.

  (f)(h)   Consumer Durables & Apparel   L+725   1.3%   11/8/18   $ 46,625      $ 46,011      $ 44,294   

The Sports Authority, Inc.

  (h)   Consumer Durables & Apparel   L+600   1.5%   11/16/17     6,318        6,322        5,528   

U.S. Xpress Enterprises, Inc.

  (f)(g)   Transportation   L+875, 1.8% PIK
(1.8% Max PIK)
  1.5%   5/30/19     74,625        74,625        75,744   

Vertellus Performance Chemicals LLC

  (g)(h)   Materials   Prime+850     1/30/20     38,000        38,000        38,006   

Virtual Radiologic Corp.

  (h)   Health Care Equipment & Services   L+550   1.8%   12/22/16     3,447        3,419        2,835   

VPG Group Holdings LLC

  (f)(h)   Materials   L+900   1.0%   10/4/16     77,445        77,077        77,541   

Waste Pro USA, Inc.

  (f)(g)   Commercial & Professional Services   L+750   1.0%   10/15/20     86,672        86,672        87,538   

Waste Pro USA, Inc.

  (h)(o)   Commercial & Professional Services   L+750   1.0%   10/15/20     9,444        9,444        9,539   
             

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                2,302,406        2,286,015   

Unfunded Loan Commitments

                (88,618     (88,618
             

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                2,213,788        2,197,397   
             

 

 

   

 

 

 

Senior Secured Loans—Second Lien—29.2%

             

AdvancePierre Foods, Inc.

  (e)(f)(g)   Food & Staples Retailing   L+825   1.3%   10/10/17     17,556        17,392        17,687   

Affordable Care, Inc.

  (f)(g)(h)   Health Care Equipment & Services   L+925   1.3%   12/26/19     34,314        33,998        33,971   

Alison US LLC

  (h)(j)   Capital Goods   L+850   1.0%   8/29/22     4,444        4,278        4,030   

American Energy—Utica, LLC

  (f)   Energy   L+950   1.5%   9/30/18     136,186        136,186        135,846   

American Racing and Entertainment, LLC

  (g)   Consumer Services   14.0%     7/1/18     16,800        16,403        16,842   

Brasa (Holdings) Inc.

  (f)   Consumer Services   L+950   1.5%   1/20/20     6,211        6,037        6,227   

Brock Holdings III, Inc.

  (h)   Energy   L+825   1.8%   3/16/18     6,923        6,860        6,560   

Byrider Finance, LLC

  (g)(h)   Automobiles & Components   L+1000   1.3%   8/22/20     10,000        10,000        10,000   

Compuware Corp.

  (e)(h)   Software & Services   L+825   1.0%   12/15/22     5,000        4,363        4,658   

DEI Sales, Inc.

  (f)(g)   Commercial & Professional Services   L+900   1.5%   1/15/18     57,500        57,013        54,481   

Eastman Kodak Co.

  (f)(g)   Consumer Durables & Apparel   L+950   1.3%   9/3/20     50,000        48,952        49,979   

FullBeauty Brands, Inc.

  (f)(g)(h)   Consumer Durables & Apparel   L+800   1.3%   7/31/20     165,000        165,000        164,175   

Nielsen & Bainbridge, LLC

  (h)   Consumer Services   L+925   1.0%   8/15/21     15,000        14,794        14,775   

Paw Luxco II Sarl

  (g)(j)   Consumer Durables & Apparel   EURIBOR+950     1/29/19   16,364        20,281        15,096   

PSAV Acquisition Corp.

  (f)(h)   Technology Hardware & Equipment   L+825   1.0%   1/24/22   $ 80,000        78,924        80,500   

Sequential Brands Group, Inc.

  (f)(j)   Consumer Durables & Apparel   L+800   1.0%   8/15/20     25,000        25,000        25,000   

Stadium Management Corp.

  (f)   Consumer Services   L+825   1.0%   2/27/21     57,500        57,500        57,788   
             

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

                702,981        697,615   
             

 

 

   

 

 

 

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Senior Secured Bonds—15.1%

              

Advanced Lighting Technologies, Inc.

  (f)(g)   Materials   10.5%      6/1/19   $ 78,500      $ 77,190      $ 54,950   

Allen Systems Group, Inc.

  (f)(g)(h)(l)(p)   Software & Services   10.5%      11/15/16     38,448        31,201        11,342   

Aspect Software, Inc.

  (e)   Software & Services   10.6%      5/15/17     6,000        5,992        5,250   

Avaya Inc.

  (e)(f)(g)   Technology Hardware & Equipment   10.5%      3/1/21     39,250        36,283        33,559   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(g)   Consumer Services   11.0%      10/1/21     60,138        59,868        52,621   

FourPoint Energy, LLC

  (f)(g)   Energy   8.0%      12/31/20     70,875        67,916        63,433   

FourPoint Energy, LLC

  (f)(g)(o)   Energy   8.0%      12/31/20     27,563        27,425        24,668   

Global A&T Electronics Ltd.

  (h)(j)   Technology Hardware & Equipment   10.0%      2/1/19     9,000        9,000        8,854   

JW Aluminum Co.

  (f)(g)(h)   Materials   11.5%, 1.0% PIK
(1.0% Max PIK)
     11/15/17     66,297        65,852        66,297   

Logan’s Roadhouse, Inc.

  (e)(g)   Consumer Services   10.8%      10/15/17     56,294        47,532        42,572   

Sorenson Communications, Inc.

  (g)   Telecommunication Services   9.0%      10/31/20     19,898        19,174        19,251   

Speedy Cash Intermediate Holdings Corp.

  (f)   Diversified Financials   10.8%      5/15/18     5,000        5,065        4,778   
              

 

 

   

 

 

 

Total Senior Secured Bonds

                 452,498        387,575   

Unfunded Bond Commitments

                 (27,425     (27,425
              

 

 

   

 

 

 

Net Senior Secured Bonds

                 425,073        360,150   
              

 

 

   

 

 

 

Subordinated Debt—19.1%

                

Alta Mesa Holdings, LP

  (e)   Energy   9.6%      10/15/18     11,165        11,091        8,541   

Aurora Diagnostics, LLC

  (f)(g)   Pharmaceuticals, Biotechnology & Life Sciences   10.8%      1/15/18     18,065        18,094        16,224   

Brooklyn Basketball Holdings, LLC

  (g)(h)   Consumer Services   L+800      10/25/19     19,873        19,873        19,773   

Cadillac Jack, Inc.

  (g)(j)   Consumer Services   6.0%, 7.0% PIK
(7.0% Max PIK)
     5/15/20     53,183        37,953        63,022   

Comstock Resources, Inc.

  (f)(j)   Energy   9.5%      6/15/20     7,500        7,239        3,216   

EV Energy Partners, L.P.

  (g)   Energy   8.0%      4/15/19     1,225        1,068        1,124   

Flanders Corp.

  (f)(g)   Capital Goods   13.8% PIK
(13.8% Max PIK)
     5/14/18     23,121        23,001        20,578   

Flanders Corp.

  (g)(h)   Capital Goods   17.5% PIK
(17.5% Max PIK)
     5/14/18     22,554        21,173        22,554   

Global Jet Capital Inc.

  (h)   Commercial & Professional Services   15.0%, 0.0% PIK
(15.0% Max PIK)
     1/30/25     401        401        401   

HBC Solutions, Inc.

  (h)   Media   12.5% PIK
(12.5% Max PIK)
     8/4/18     312        312        312   

HBC Solutions, Inc.

  (h)(o)   Media   12.5% PIK
(12.5% Max PIK)
     8/4/18     150        150        150   

 

See notes to unaudited consolidated financial statements.

 

8


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Jupiter Resources Inc.

  (e)(g)(j)   Energy   8.5%      10/1/22   $ 6,425      $ 5,330      $ 5,301   

KODA Distribution Group, Inc.

  (f)   Materials   11.3%      9/30/19     35,000        34,431        35,044   

Lightstream Resources Ltd.

  (g)(j)   Energy   8.6%      2/1/20     1,650        1,302        1,196   

Mood Media Corp.

  (e)(f)(g)(j)   Media   9.3%      10/15/20     43,135        42,160        37,204   

NewStar Financial, Inc.

  (f)(h)(j)   Diversified Financials   8.3%, 0.0% PIK
(8.8% Max PIK)
     12/4/24     50,000        35,176        37,750   

P.F. Chang’s China Bistro, Inc.

  (e)   Consumer Services   10.3%      6/30/20     1,390        1,383        1,449   

RKI Exploration & Production, LLC

  (e)(g)   Energy   8.5%      8/1/21     8,150        8,150        7,763   

Samson Investment Co.

  (e)(f)(g)(h)   Energy   9.8%      2/15/20     14,200        13,406        3,976   

SandRidge Energy, Inc.

  (e)(h)(j)   Energy   8.8%      1/15/20     7,500        6,361        5,081   

Sequel Industrial Products Holdings, LLC

  (g)   Energy   12.0%, 2.5% PIK
(2.5% Max PIK)
     9/30/19     7,000        6,915        7,175   

Sorenson Communications, Inc.

  (g)   Telecommunication Services   13.0%      10/31/21     15,122        14,126        15,122   

Talos Production LLC

  (g)   Energy   9.8%      2/15/18     1,500        1,373        1,238   

ThermaSys Corp.

  (f)(g)   Capital Goods   9.0%, 1.8% PIK
(5.0% Max PIK)
     5/3/20     133,891        133,891        135,230   

VPG Group Holdings LLC

  (f)   Materials   11.0%, 2.0% PIK
(2.0% Max PIK)
     7/15/19     5,168        5,168        5,265   

Warren Resources, Inc.

  (g)   Energy   9.0%      8/1/22     1,000        714        593   
              

 

 

   

 

 

 

Total Subordinated Debt

                 450,241        455,282   

Unfunded Debt Commitments

                 (150     (150
              

 

 

   

 

 

 

Net Subordinated Debt

                 450,091        455,132   
              

 

 

   

 

 

 

Collateralized Securities—4.6%

                

ACASC 2013-2A B Class B

  (g)(h)(j)   Diversified Financials   8.8%      10/15/23     30,500        24,596        22,452   

Dryden CDO 23A Class Subord.

  (h)(j)   Diversified Financials   21.1%      7/17/23     10,000        5,456        7,429   

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

  (g)(j)   Diversified Financials   14.3%      12/20/21     16,740        16,663        16,991   

NewStar Clarendon 2014-1A Class D

  (h)(j)   Diversified Financials   L+435      1/25/27     1,560        1,461        1,458   

NewStar Clarendon 2014-1A Class Subord. B

  (h)(j)   Diversified Financials   12.5%      1/25/27     17,900        17,713        17,632   

Rampart CLO 2007 1A Class Subord.

  (h)(j)   Diversified Financials   26.8%      10/25/21     10,000        2,775        5,094   

Stone Tower CLO VI Class Subord.

  (g)(j)   Diversified Financials   35.5%      4/17/21     5,000        2,035        3,612   

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

  (h)(j)   Diversified Financials   12.1%      1/15/24     42,504        32,800        35,955   
              

 

 

   

 

 

 

Total Collateralized Securities

                 103,499        110,623   
              

 

 

   

 

 

 

 

See notes to unaudited consolidated financial statements.

 

9


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

  Number of
Shares
    Amortized
Cost
    Fair
Value(d)
 

Equity/Other—14.3%(k)

         

Altus Power America Holdings, LLC, Preferred Equity

  (h)(l)   Energy            299,758      $ 300      $ 480   

Amaya Gaming Group Inc., Warrants

  (h)(j)(l)   Consumer Services            2,000,000        16,832        33,340   

American Energy Appalachia Holdings, LLC, Common Equity

  (h)(l)(m)   Energy            10,192,939        9,700        10,193   

AP Exhaust Holdings, LLC, Common Equity

  (h)(l)(n)   Automobiles & Components            811        811        600   

Aquilex Corp., Common Equity, Class A Shares

  (f)   Energy            15,128        1,088        4,295   

Aquilex Corp., Common Equity, Class B Shares

  (f)(g)   Energy            32,637        1,690        9,266   

Burleigh Point, Ltd., Warrants

  (h)(j)(l)   Retailing            17,256,081        1,898        3,451   

CoSentry.Net, LLC, Preferred Equity

  (g)(l)   Software & Services            2,632        2,500        5,461   

Eastman Kodak Co., Common Equity

  (f)(h)(l)   Consumer Durables & Apparel            61,859        1,202        1,175   

ERC Ireland Holdings Ltd., Common Equity

  (g)(h)(j)(l)   Telecommunication Services            53,356        7,542        9,028   

Flanders Corp., Common Equity

  (g)(i)(l)   Capital Goods            6,829,973        7,183        6,830   

FourPoint Energy, LLC, Common Equity, Class C Units

  (h)(l)(n)   Energy            21,000        21,000        26,250   

FourPoint Energy, LLC, Common Equity, Class D Units

  (h)(l)(n)   Energy            3,937        2,601        4,980   

Fronton Investor Holdings, LLC, Class B Units

  (h)(l)(n)(t)   Consumer Services            14,943        17,931        16,138   

Global Jet Capital Holdings, LP, Preferred Equity

  (h)(l)   Commercial & Professional Services            171,832        172        172   

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

  (h)(l)   Media            28,285        3,027        4,107   

Industrial Group Intermediate Holdings, LLC, Common Equity

  (h)(l)(n)   Materials            347,107        347        538   

JW Aluminum Co., Common Equity

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

Leading Edge Aviation Services, Inc., Common Equity

  (g)(l)   Capital Goods            4,401        464        102   

Leading Edge Aviation Services, Inc., Preferred Equity

  (g)(l)   Capital Goods            1,303        1,303        1,303   

MB Precision Investment Holdings LLC, Class A-2 Units

  (g)(l)   Capital Goods            490,213        490        417   

Micronics, Inc., Common Equity

  (h)(l)   Capital Goods            53,073        553        1,008   

Micronics, Inc., Preferred Equity

  (h)(l)   Capital Goods            55        553        657   

Milagro Holdings, LLC, Common Equity

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

Milagro Holdings, LLC, Preferred Equity

  (h)(l)   Energy            283,947        11,180        —     

MModal LLC, Common Equity

  (h)(l)   Health Care Equipment & Services            56,529        933        763   

New Star Metals Inc., Common Equity

  (h)   Capital Goods            741,082        750        963   

NewStar Financial, Inc., Warrants

  (h)(j)(l)(r)   Diversified Financials            3,000,000        15,058        16,800   

Plains Offshore Operations Inc., Preferred Equity

  (f)(g)   Energy            52,666        62,677        77,335   

Plains Offshore Operations Inc., Warrants

  (f)(g)(l)   Energy            1,067,481        1,722        5,337   

PSAV Holdings LLC, Common Equity

  (g)(l)   Technology Hardware & Equipment            10,000        10,000        17,500   

Safariland, LLC, Common Equity

  (g)(l)   Capital Goods            25,000        2,500        8,748   

Safariland, LLC, Preferred Equity

  (g)   Capital Goods            2,042        22,654        22,806   

 

See notes to unaudited consolidated financial statements.

 

10


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

  Number of
Shares
    Amortized
Cost
    Fair
Value(d)
 

Safariland, LLC, Warrants

  (g)(l)   Capital Goods            4,536      $ 473      $ 1,587   

Sequel Industrial Products Holdings, LLC, Common Equity

  (g)(h)(l)   Energy            33,306        3,400        9,069   

Sequel Industrial Products Holdings, LLC, Preferred Equity

  (g)(h)   Energy            8,000        10,325        10,334   

Sequel Industrial Products Holdings, LLC, Warrants

  (g)(l)(q)   Energy            1,293        1        196   

Sequel Industrial Products Holdings, LLC, Warrants

  (h)(l)(q)   Energy            19,388        12        3,341   

Sorenson Communications, Inc., Common Equity

  (g)(l)   Telecommunication Services            46,163        —          22,925   

ThermaSys Corp., Common Equity

  (g)(l)   Capital Goods            51,813        1        52   

ThermaSys Corp., Preferred Equity

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

VPG Group Holdings LLC, Class A-2 Units

  (g)(l)   Materials            3,637,500        3,638        3,638   
              

 

 

   

 

 

 

Total Equity/Other

                 252,967        346,366   
              

 

 

   

Unfunded Contingent Warrant Commitment

  (s)                  (5,600

Net Equity/Other

                   340,766   
              

 

 

   

 

 

 

TOTAL INVESTMENTS—174.4%

               $ 4,148,399        4,161,683   
              

 

 

   

LIABILITIES IN EXCESS OF OTHER ASSETS—(74.4%)

                   (1,775,971
                

 

 

 

NET ASSETS—100%

                 $ 2,385,712   
                

 

 

 

 

(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, 2015, the three-month London Interbank Offered Rate, or LIBOR, was 0.27%, the Euro Interbank Offered Rate, or EURIBOR, was 0.02% 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 Broad Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Note 8).

 

(f) Security or portion thereof held within Locust Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the Class A Notes issued to Race Street Funding LLC pursuant to an indenture with Citibank, N.A., as trustee (see Note 8).

 

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

 

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

 

(i) Position or portion thereof unsettled as of March 31, 2015.

 

See notes to unaudited consolidated financial statements.

 

11


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2015

(in thousands, except share amounts)

 

 

 

(j) The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. 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, 2015, 78.6% of the Company’s total assets represented qualifying assets.

 

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

 

(l) Security is non-income producing.

 

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

 

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

 

(o) Security is an unfunded loan commitment.

 

(p) Asset is on non-accrual status.

 

(q) Warrants expire on September 28, 2022 and May 10, 2022 and the strike prices are $121.00 and $100.00 per share, respectively.

 

(r) Includes 1,000,000 NewStar Financial, Inc., or NewStar, warrants, which is the maximum number of warrants that the Company will forfeit in the event that the Company declines to fund additional subordinated debt investments in NewStar in an amount not to exceed $25,000, upon the request of NewStar.

 

(s) Represents the maximum number of NewStar warrants that the Company will forfeit in the event that the Company declines to fund additional subordinated debt investments in NewStar in an amount not to exceed $25,000, upon the request of NewStar.

 

(t) Under the 1940 Act, 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. As of March 31, 2015, the Company held one investment in a portfolio company of which it is deemed to be an “affiliated person” but would not be deemed to “control”. The following table presents certain financial information with respect to such portfolio company for the three months ended March 31, 2015:

 

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

     —           —           —           —           —         $ 1,345   

 

See notes to unaudited consolidated financial statements.

 

12


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments

As of December 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—93.2%

               

A.P. Plasman Inc.

  (f)(g)(h)(i)(k)   Capital Goods   L+775   1.0%   12/29/19   $ 137,875      $ 137,875      $ 137,875   

A.P. Plasman Inc.

  (i)(k)(p)   Capital Goods   L+775   1.0%   12/29/19     36,919        36,919        36,919   

AccentCare, Inc.

  (i)   Health Care Equipment & Services   L+500   1.5%   12/22/16     1,954        1,855        1,712   

Allen Systems Group, Inc.

  (f)(i)   Software & Services   L+1,425   1.0%   12/14/17     1,539        1,718        1,897   

Allen Systems Group, Inc.

  (f)(i)   Software & Services   L+1,625   1.0%   12/14/17     36,832        41,114        45,410   

Altus Power America, Inc.

  (i)   Energy   L+750   1.5%   10/10/21     762        762        762   

Altus Power America, Inc.

  (i)(p)   Energy   L+750   1.5%   10/10/21     2,363        2,363        2,363   

American Racing and Entertainment, LLC

  (f)   Consumer Services   L+700     7/1/15     12,500        12,500        12,484   

American Racing and Entertainment, LLC

  (f)   Consumer Services   9.0%     7/1/15     7,750        7,750        7,769   

American Racing and Entertainment, LLC

  (f)   Consumer Services   L+800   1.0%   7/1/18     5,495        5,495        5,516   

American Racing and Entertainment, LLC

  (f)(p)   Consumer Services   L+800   1.0%   7/1/18     1,005        1,005        1,009   

AP Exhaust Acquisition, LLC

  (h)   Automobiles & Components   L+775   1.5%   1/16/21     14,595        14,595        14,157   

Aspect Software, Inc.

  (i)   Software & Services   L+550   1.8%   5/7/16     1,172        1,158        1,149   

Azure Midstream Energy LLC

  (i)   Energy   L+550   1.0%   11/15/18     327        323        294   

BenefitMall Holdings, Inc.

  (h)   Commercial & Professional Services   L+725   1.0%   11/24/20     15,000        15,000        15,000   

BenefitMall Holdings, Inc.

  (i)(p)   Commercial & Professional Services   L+725   1.0%   11/24/20     5,455        5,455        5,455   

Boomerang Tube, LLC

  (i)   Energy   L+950   1.5%   10/11/17     17,864        17,521        15,497   

Cadillac Jack, Inc.

  (f)(h)(i)(k)   Consumer Services   L+850   1.0%   5/15/19     74,450        73,320        76,590   

Caesars Entertainment Operating Co., Inc.

  (e)(f)(k)   Consumer Services   L+575     3/1/17     12,621        11,822        11,073   

Caesars Entertainment Operating Co., Inc.

  (f)(k)   Consumer Services   L+675     3/1/17     2,363        2,266        2,077   

Caesars Entertainment Operating Co., Inc.

  (e)(f)(g)(i)(k)   Consumer Services   L+875   1.0%   1/28/18     84,594        84,032        73,738   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(i)   Consumer Services   L+600   1.0%   10/11/20     72,178        68,410        67,727   

Corel Corp.

  (f)(g)(h)(i)(k)   Software & Services   L+825     6/7/19     151,063        151,063        151,063   

Corel Corp.

  (i)(k)(p)   Software & Services   Prime+725     6/7/18     10,000        10,000        10,000   

Corner Investment PropCo, LLC

  (f)(i)   Consumer Services   L+975   1.3%   11/2/19     44,723        44,878        44,500   

CoSentry.Net, LLC

  (f)(h)(i)   Software & Services   L+800   1.3%   12/31/19     57,945        57,945        58,235   

Crestwood Holdings LLC

  (i)   Energy   L+600   1.0%   6/19/19     5,452        5,432        5,176   

Dent Wizard International Corp.

  (f)(h)(i)   Commercial & Professional Services   L+800     4/25/19     123,165        122,252        125,320   

Dent Wizard International Corp.

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

Eastman Kodak Co.

  (i)   Consumer Durables & Apparel   L+625   1.0%   9/3/19     10,745        10,572        10,777   

Flanders Corp.

  (f)(h)   Capital Goods   L+950   1.5%   5/14/18     35,993        35,444        36,218   

Fronton Holdings, LLC

  (f)   Consumer Services   15.0%     4/30/19     3,736        3,703        3,736   

HBC Solutions, Inc.

  (f)(g)(i)   Media   L+875   1.5%   2/4/18     84,990        84,990        84,990   

 

See notes to unaudited consolidated financial statements.

 

13


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Industrial Group Intermediate Holdings, LLC

  (h)   Materials   L+800     1.3%      5/31/20   $ 13,894      $ 13,894      $ 13,894   

Industry City TI Lessor, L.P.

  (i)   Consumer Services   5.0%, 5.3% PIK

(5.3% Max PIK)

    6/30/26     24,885        24,885        24,512   

Infiltrator Systems, Inc.

  (f)(g)(h)(i)   Capital Goods   L+841     1.3%      6/27/18     226,000        225,860        224,870   

Intralinks, Inc.

  (f)(i)(k)   Software & Services   L+525     2.0%      2/24/19     9,900        9,817        9,776   

Lantiq Deutschland GmbH

  (f)(i)(k)   Software & Services   L+900     2.0%      11/16/15     7,968        7,781        7,928   

Larchmont Resources, LLC

  (h)   Energy   L+725     1.0%      8/7/19     5,988        5,940        5,824   

Leading Edge Aviation Services, Inc.

  (f)(g)(h)(i)   Capital Goods   L+875     1.5%      6/30/19     33,799        33,485        33,292   

LEAS Acquisition Co Ltd.

  (i)(k)   Capital Goods   L+875     1.5%      6/30/19   29,250        40,045        34,864   

LEAS Acquisition Co Ltd.

  (g)(k)   Capital Goods   L+875     1.5%      6/30/19   $ 10,628        10,628        10,468   

Maritime Telecommunications Network, Inc.

  (f)   Telecommunication Services   L+600     1.5%      3/4/16     3,242        3,230        3,161   

MB Precision Holdings LLC

  (h)   Capital Goods   L+725     1.3%      1/23/20     13,365        13,365        13,231   

Micronics, Inc.

  (f)(h)(i)   Capital Goods   L+800     1.3%      3/28/19     43,228        42,893        43,228   

MMM Holdings, Inc.

  (h)(i)   Health Care Equipment & Services   L+825     1.5%      12/12/17     8,956        8,841        8,687   

MModal Inc.

  (i)   Health Care Equipment & Services   L+775     1.3%      1/31/20     4,322        4,302        4,241   

Mood Media Corp.

  (i)(k)   Media   L+600     1.0%      5/1/19     698        692        685   

MSO of Puerto Rico, Inc.

  (h)(i)   Health Care Equipment & Services   L+825     1.5%      12/12/17     6,511        6,427        6,316   

New Star Metals Inc.

  (f)(h)(i)   Capital Goods   L+800     1.3%      3/20/20     36,575        36,575        36,575   

Nova Wildcat Amerock, LLC

  (h)(i)   Consumer Durables & Apparel   L+798     1.3%      9/10/19     20,000        20,000        19,600   

Panda Sherman Power, LLC

  (f)   Energy   L+750     1.5%      9/14/18     496        500        493   

Panda Temple Power, LLC (TLA)

  (f)   Energy   L+700     1.5%      7/17/18     2,583        2,582        2,619   

PHRC License, LLC

  (g)(h)(i)   Consumer Services   L+900     1.5%      8/14/20     45,000        45,000        44,550   

Polymer Additives, Inc.

  (i)   Materials   L+838     1.0%      12/20/21     10,511        10,510        10,511   

Production Resource Group, LLC

  (h)(i)   Media   L+750     1.0%      7/23/19     32,500        32,500        32,663   

PRV Aerospace, LLC

  (i)   Capital Goods   L+525     1.3%      5/9/18     80        80        79   

Reddy Ice Holdings, Inc.

  (i)   Food & Staples Retailing   L+550     1.3%      5/1/19     1,170        1,160        1,032   

Safariland, LLC

  (f)(h)(i)   Capital Goods   L+800     1.3%      9/20/19     150,400        150,400        152,656   

Shell Topco L.P.

  (h)(i)   Materials   L+750     1.5%      9/28/18     30,000        29,698        30,525   

Smile Brands Group Inc.

  (i)   Health Care Equipment & Services   L+625     1.3%      8/16/19     20,243        19,878        19,383   

Sorenson Communications, Inc.

  (e)(f)(h)(i)   Telecommunication Services   L+575     2.3%      4/30/20     93,500        93,081        94,435   

Southcross Holdings Borrower LP

  (i)   Energy   L+500     1.0%      8/4/21     316        314        283   

Sports Authority, Inc.

  (h)   Consumer Durables & Apparel   L+600     1.5%      11/16/17     6,318        6,321        5,607   

Stallion Oilfield Holdings, Inc.

  (h)   Energy   L+675     1.3%      6/19/18     4,810        4,775        4,119   

SunGard Availability Services Capital, Inc.

  (e)   Software & Services   L+500     1.0%      3/29/19     4,975        4,623        4,455   

 

See notes to unaudited consolidated financial statements.

 

14


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Sunnova Asset Portfolio 5 Holdings, LLC.

  (i)   Energy   12.0% PIK

(12.0% Max PIK)

    11/14/21   $ 1,803      $ 1,803      $ 1,803   

Sunnova Asset Portfolio 5 Holdings, LLC.

  (i)(p)   Energy   12.0% PIK

(12.0% Max PIK)

    11/14/21     3,200        3,200        3,200   

Swiss Watch International, Inc.

  (f)(h)(i)   Consumer Durables & Apparel   L+725     1.3%      11/8/18     47,000        46,359        45,355   

U.S. Xpress Enterprises, Inc.

  (f)(g)   Transportation   L+850, 1.5% PIK

(1.5% Max PIK)

    1.5%      5/30/19     74,813        74,813        74,813   

Virtual Radiologic Corp.

  (i)   Health Care Equipment & Services   L+550     1.8%      12/22/16     3,484        3,452        2,645   

VPG Group Holdings LLC

  (f)(h)(i)   Materials   L+900     1.0%      10/4/16     79,195        78,764        79,393   

Waste Pro USA, Inc.

  (f)(g)(h)   Commercial & Professional Services   L+750     1.0%      10/15/20     86,889        86,889        86,889   

Waste Pro USA, Inc.

  (i)(p)   Commercial & Professional Services   L+750     1.0%      10/15/20     9,444        9,444        9,444   
             

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                2,289,343        2,279,592   

Unfunded Loan Commitments

                (73,386     (73,386
             

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                2,215,957        2,206,206   
             

 

 

   

 

 

 

Senior Secured Loans—Second Lien—29.9%

               

Advance Pierre Foods, Inc.

  (e)(f)(g)   Food & Staples Retailing   L+825     1.3%      10/10/17     17,556        17,379        17,292   

Affordable Care, Inc.

  (f)(g)(i)   Health Care Equipment & Services   L+925     1.3%      12/26/19     44,314        43,893        43,871   

Alison US LLC

  (i)(k)   Capital Goods   L+850     1.0%      8/29/22     4,444        4,273        4,161   

American Energy—Utica, LLC

  (f)   Energy   L+400, 5.5% PIK

(5.5% Max PIK)

    1.5%      9/30/18     79,987        79,987        78,387   

American Energy—Utica, LLC

  (g)   Energy   L+400, 5.5% PIK

(5.5% Max PIK)

    1.5%      9/30/18     54,324        54,324        53,238   

American Racing and Entertainment, LLC

  (g)   Consumer Services   12.0%     7/1/18     16,800        16,380        16,800   

BPA Laboratories, Inc.

  (i)   Pharmaceuticals, Biotechnology & Life Sciences   2.5%     7/3/17     593        475        526   

Brasa (Holdings) Inc.

  (f)   Consumer Services   L+950     1.5%      1/20/20     6,211        6,031        6,149   

Brock Holdings III, Inc.

  (i)   Energy   L+825     1.8%      3/16/18     6,923        6,855        5,573   

Byrider Finance, LLC

  (g)(i)   Automobiles & Components   L+1000     1.3%      8/22/20     10,000        10,000        10,000   

Compuware Corp.

  (e)(i)(j)   Software & Services   L+825     1.0%      12/9/22     10,000        8,700        9,250   

Consolidated Precision Products Corp.

  (f)   Capital Goods   L+775     1.0%      4/30/21     10,925        10,877        10,434   

DEI Sales, Inc.

  (f)(g)   Commercial & Professional Services   L+900     1.5%      1/15/18     57,500        56,978        55,991   

Eastman Kodak Co.

  (f)(g)   Consumer Durables & Apparel   L+950     1.3%      9/3/20     50,000        48,918        50,000   

Nielsen & Bainbridge, LLC

  (i)   Consumer Services   L+925     1.0%      8/15/21     15,000        14,786        14,775   

 

See notes to unaudited consolidated financial statements.

 

15


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

OSP Group, Inc.

  (f)(g)(i)   Consumer Durables & Apparel   L+800     1.3%      7/31/20   $ 145,000      $ 145,000      $ 144,275   

Paw Luxco II Sarl

  (g)(k)   Consumer Durables & Apparel   EURIBOR+950     1/29/19   16,364        20,200        17,203   

Pelican Products, Inc.

  (i)   Capital Goods   L+825     1.0%      4/9/21   $ 4,222        4,194        4,169   

PSAV Acquisition Corp.

  (f)(i)   Technology Hardware & Equipment   L+825     1.0%      1/24/22     80,000        78,898        80,500   

Sensus USA Inc.

  (i)   Capital Goods   L+725     1.3%      5/9/18     3,000        3,027        2,873   

Sequential Brands Group, Inc.

  (f)   Consumer Durables & Apparel   L+800     1.0%      8/15/20     25,000        25,000        25,000   

Stadium Management Corp.

  (f)   Consumer Services   L+825     1.0%      2/15/22     57,500        57,500        57,788   
             

 

 

   

 

 

 

Total Senior Secured Loans—Second Lien

                713,675        708,255   
             

 

 

   

 

 

 

Senior Secured Bonds—15.2%

               

Advanced Lighting Technologies, Inc.

  (f)(g)   Materials   10.5%     6/1/19     78,500        77,139        52,203   

Allen Systems Group, Inc.

  (f)(g)(i)(m)(q)   Software & Services   10.5%     11/15/16     38,448        31,201        13,457   

Aspect Software, Inc.

  (e)   Software & Services   10.6%     5/15/17     6,000        5,991        5,700   

Avaya Inc.

  (e)(f)(g)   Technology Hardware & Equipment   10.5%     3/1/21     39,250        36,194        33,853   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(g)   Consumer Services   11.0%     10/1/21     60,138        59,854        55,026   

FourPoint Energy, LLC

  (f)(g)   Energy   8.0%     12/31/20     70,875        67,690        62,370   

FourPoint Energy, LLC

  (f)(g)(p)   Energy   8.0%     12/31/20     27,563        27,563        24,255   

Global A&T Electronics Ltd.

  (i)(k)   Technology Hardware & Equipment   10.0%     2/1/19     9,000        9,000        8,118   

JW Aluminum Co.

  (f)(g)(i)   Materials   11.5%, 1.0% PIK

(1.0% Max PIK)

    11/15/17     66,297        65,818        66,297   

Logan’s Roadhouse Inc.

  (e)(g)   Consumer Services   10.8%     10/15/17     56,294        46,855        41,728   

Sorenson Communications, Inc.

  (g)   Telecommunication Services   9.0%     10/31/20     19,898        19,158        18,903   

Speedy Cash Intermediate Holdings Corp.

  (f)   Diversified Financials   10.8%     5/15/18     5,000        5,061        4,928   
             

 

 

   

 

 

 

Total Senior Secured Bonds

                451,524        386,838   

Unfunded Bond Commitments

                (27,563     (27,563
             

 

 

   

 

 

 

Net Senior Secured Bonds

                423,961        359,275   
             

 

 

   

 

 

 

Subordinated Debt—19.6%

               

Alta Mesa Holdings, L.P.

  (e)   Energy   9.6%     10/15/18     11,165        11,084        9,468   

Aurora Diagnostics, LLC

  (f)(g)   Pharmaceuticals, Biotechnology & Life Sciences   10.8%     1/15/18     18,065        18,099        15,717   

Brooklyn Basketball Holdings, LLC

  (g)(i)   Consumer Services   L+800     10/15/19     19,873        19,873        19,674   

Cadillac Jack, Inc.

  (g)(k)   Consumer Services   6.0%, 7.0% PIK

(7.0% Max PIK)

    5/15/20     52,268        36,561        54,947   

Comstock Resources, Inc.

  (f)(k)   Energy   9.5%     6/15/20     7,500        7,232        5,063   

 

See notes to unaudited consolidated financial statements.

 

16


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Flanders Corp.

  (f)(g)   Capital Goods   13.8% PIK

(13.8% Max PIK)

    5/14/18   $ 22,344      $ 22,217      $ 19,495   

Flanders Corp.

  (g)(i)   Capital Goods   17.5% PIK

(17.5% Max PIK)

    5/14/18     21,595        20,227        21,325   

Global Jet Capital, Inc.

  (i)   Commercial & Professional Services   8.0% PIK

(8.0% Max PIK)

    1/30/15     313        313        313   

HBC Solutions, Inc.

  (i)   Media   12.5% PIK

(12.5% Max PIK)

    8/4/18     303        303        303   

HBC Solutions, Inc.

  (i)(p)   Media   12.5% PIK

(12.5% Max PIK)

    8/4/18     150        150        150   

Jupiter Resources, Inc.

  (e)(g)(k)   Energy   8.5%     10/1/22     6,425        5,306        4,819   

Kinetic Concepts, Inc.

  (e)(f)   Health Care Equipment & Services   12.5%     11/1/19     15,000        14,256        16,500   

KODA Distribution Group, Inc.

  (f)   Materials   11.3%     9/30/19     35,000        34,440        35,000   

Lightstream Resources, Ltd.

  (g)(k)   Energy   8.6%     2/1/20     1,650        1,290        1,163   

Mood Media Corp.

  (e)(f)(g)(k)   Media   9.3%     10/15/20     43,135        42,124        35,263   

NewStar Financial, Inc.

  (f)(i)(k)   Diversified Financials   8.3%, 0.0% PIK

(8.8% Max PIK)

    12/4/24     50,000        34,997        37,500   

P.F. Chang’s China Bistro, Inc.

  (e)   Consumer Services   10.3%     6/30/20     1,390        1,384        1,397   

RKI Exploration & Production, LLC

  (e)(g)   Energy   8.5%     8/1/21     12,550        12,362        10,229   

Samson Investment Co.

  (e)(f)(g)(i)   Energy   9.8%     2/15/20     14,200        13,397        5,964   

Sandridge Energy, Inc.

  (e)(i)(k)   Energy   8.8%     1/5/20     7,500        6,321        5,119   

Sequel Industrial Products Holdings, LLC

  (g)   Energy   12.0%, 2.5% PIK

(2.5% Max PIK)

    5/10/18     7,000        6,909        7,245   

Sidewinder Drilling Inc.

  (f)   Energy   9.8%     11/15/19     4,328        4,328        2,532   

Sorenson Communications, Inc.

  (g)   Telecommunication Services   13.0%     10/31/21     15,122        14,112        15,425   

Talos Production, LLC

  (g)   Energy   9.8%     2/15/18     1,500        1,364        1,358   

ThermaSys Corp.

  (f)(g)   Capital Goods   9.0%, 1.8% PIK

(5.0% Max PIK)

    5/3/20     133,295        133,295        132,628   

VPG Group Holdings LLC

  (f)   Materials   11.0%, 2.0% PIK

(2.0% Max PIK)

    7/15/19     5,142        5,142        5,232   

Warren Resources, Inc.

  (g)   Energy   9.0%     8/1/22     1,000        709        625   
             

 

 

   

 

 

 

Total Subordinated Debt

                467,795        464,454   

Unfunded Debt Commitments

                (150     (150
             

 

 

   

 

 

 

Net Subordinated Debt

                467,645        464,304   
             

 

 

   

 

 

 

 

See notes to unaudited consolidated financial statements.

 

17


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Collateralized Securities—5.2%

               

ACASC 2013-2A B

  (g)(i)(k)   Diversified Financials   8.1%     10/15/23   $ 30,500      $ 25,488      $ 25,338   

Dryden CDO 23A Class Subord.

  (i)(k)   Diversified Financials   19.1%     7/17/23     10,000        5,810        7,967   

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

  (g)(k)   Diversified Financials   14.3%     12/20/21     16,740        16,594        17,284   

Lightpoint CLO 2006 V Class D

  (g)(k)   Diversified Financials   L+365     8/5/19     6,500        4,087        6,361   

NewStar Clarendon 2014-1A Class D

  (i)(j)(k)   Diversified Financials   L+435     1/25/27     1,560        1,461        1,461   

NewStar Clarendon 2014-1A Sub B

  (i)(j)(k)   Diversified Financials   12.5%     1/25/27     17,900        17,713        17,713   

Rampart CLO 2007 1A Class Subord.

  (i)(k)   Diversified Financials   24.2%     10/25/21     10,000        2,943        4,997   

Stone Tower CLO VI Class Subord.

  (g)(k)   Diversified Financials   32.6%     4/17/21     5,000        2,225        3,936   

Wind River CLO Ltd. 2012 1A Class Sub B

  (i)(k)   Diversified Financials   18.8%     1/15/24     42,504        34,041        38,863   
             

 

 

   

 

 

 

Total Collateralized Securities

                110,362        123,920   
             

 

 

   

 

 

 

 

See notes to unaudited consolidated financial statements.

 

18


Table of Contents

FS Investment Corporation

Consolidated Schedule of Investments (continued)

As of December 31, 2014

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

              Number  of
Shares
    Amortized
Cost
    Fair
Value(d)
 

Equity/Other—13.6%(l)

               

Altus Power America, Inc., Preferred Equity

  (i)(m)   Energy           253,925      $ 254      $ 254   

Amaya Gaming Group Inc., Warrants

  (i)(k)(m)   Consumer Services           2,000,000        16,832        35,180   

American Energy Appalachia Holdings, LLC

  (i)(m)(n)   Energy           9,700,000        9,700        9,700   

AP Exhaust Holdings, LLC, Common Equity

  (i)(m)(o)   Automobiles & Components           811        811        580   

Aquilex Corp., Common Equity, Class A Shares

  (f)   Energy           15,128        1,088        4,295   

Aquilex Corp., Common Equity, Class B Shares

  (f)(g)   Energy           32,637        1,690        9,266   

BPA Laboratories, Inc., Series A Warrants

  (i)(m)   Pharmaceuticals, Biotechnology & Life Sciences           1,979        —          —     

BPA Laboratories, Inc., Series B Warrants

  (i)(m)   Pharmaceuticals, Biotechnology & Life Sciences           3,173        —          —     

Burleigh Point, Ltd., Warrants

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

CoSentry.Net, LLC, Preferred Equity

  (g)(m)   Software & Services           2,632        2,500        4,185   

Eastman Kodak Co., Common Equity

  (f)(i)(m)   Consumer Durables & Apparel           61,859        1,202        1,343   

ERC Ireland Holdings Ltd., Common Equity

  (g)(i)(j)(k)(m)   Telecommunication Services           37,547        5,219        5,950   

ERC Ireland Holdings Ltd., Warrants

  (i)(k)(m)   Telecommunication Services           15,809        2,288        2,505   

Flanders Corp., Common Equity

  (g)(m)   Capital Goods           6,177,490        6,531        1,853   

FourPoint Energy, LLC, Class C Units

  (i)(m)(o)   Energy           21,000        21,000        26,775   

FourPoint Energy, LLC, Class D Units

  (i)(m)(o)   Energy           3,937        2,601        5,059   

Fronton Investor Holdings, LLC, Class B Units

  (i)(m)(o)(s)   Consumer Services           14,943        17,931        14,793   

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

  (i)(m)   Media           26,774        3,027        3,539   

Industrial Group Intermediate Holdings, LLC, Common Equity

  (i)(m)(o)   Materials           347,107        347        486   

JW Aluminum Co., Common Equity

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

Leading Edge Aviation Services, Inc., Common Equity

  (g)(m)   Capital Goods           4,401        464        92   

Leading Edge Aviation Services, Inc., Preferred Equity

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

MB Precision Investment Holdings LLC, Class A-2 Units