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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, 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 242,274,372 shares of the registrant’s common stock outstanding as of August 7, 2015.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

PART I—FINANCIAL INFORMATION

  

ITEM 1.    FINANCIAL STATEMENTS      1   
  

Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014

     1   
  

Unaudited Consolidated Statements of Operations for the three and six months ended June  30, 2015 and 2014

     2   
  

Unaudited Consolidated Statements of Changes in Net Assets for the six months ended June  30, 2015 and 2014

     3   
  

Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014

     4   
  

Consolidated Schedules of Investments as of June 30, 2015 (Unaudited) and December 31, 2014

     5   
  

Notes to Unaudited Consolidated Financial Statements

     23   
ITEM 2.   

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

     57   
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      83   
ITEM 4.    CONTROLS AND PROCEDURES      84   

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      86   
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES      86   
ITEM 4.    MINE SAFETY DISCLOSURES      86   
ITEM 5.    OTHER INFORMATION      86   
ITEM 6.    EXHIBITS      87   
   SIGNATURES      91   


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, 2015
(Unaudited)
     December 31,
2014
 

Assets

     

Investments, at fair value—unaffiliated (amortized cost—$3,918,285 and $4,164,166, respectively)

   $ 3,909,061       $ 4,168,654   

Investments, at fair value—affiliated (amortized cost—$92,063 and $17,931, respectively)

     98,320         14,793   

Cash

     273,749         95,205   

Foreign currency, at fair value (cost—$12,930 and $1,661, respectively)

     13,167         1,639   

Receivable for investments sold and repaid

     7,909         8,976   

Interest receivable

     40,108         51,814   

Deferred financing costs

     14,925         13,097   

Prepaid expenses and other assets

     1,106         708   
  

 

 

    

 

 

 

Total assets

   $ 4,358,345       $ 4,354,886   
  

 

 

    

 

 

 

Liabilities

     

Payable for investments purchased

   $ 995       $ 28,095   

Credit facilities payable

     32,624         188,827   

Unsecured notes payable

     1,000,000         725,000   

Repurchase agreement payable(1)

     800,000         950,000   

Stockholder distributions payable

     53,838         17,885   

Management fees payable

     19,081         19,560   

Accrued capital gains incentive fees(2)

     16,468         21,075   

Subordinated income incentive fees payable(2)

     21,271         13,089   

Administrative services expense payable

     765         1,410   

Interest payable

     21,810         15,850   

Directors’ fees payable

     288         296   

Deferred financing costs payable

     —           473   

Other accrued expenses and liabilities

     1,662         6,340   
  

 

 

    

 

 

 

Total liabilities

     1,968,802         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, 241,702,625 and 240,896,559 shares issued and outstanding, respectively

     242         241   

Capital in excess of par value

     2,266,517         2,258,548   

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

     11,972         33,758   

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

     106,286         68,658   

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

     4,526         5,781   
  

 

 

    

 

 

 

Total stockholders’ equity

     2,389,543         2,366,986   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,358,345       $ 4,354,886   
  

 

 

    

 

 

 

Net asset value per share of common stock at period end

   $ 9.89       $ 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
June 30,
    Six Months Ended
June 30,
 
     2015     2014     2015     2014  

Investment income

        

Interest income—unaffiliated

   $ 115,773      $ 102,096      $ 219,712      $ 206,807   

Interest income—affiliated

     718        —          718        —     

Fee income—unaffiliated

     25,721        18,450        30,417        28,535   

Dividend income—unaffiliated

     5,519        175        5,519        175   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     147,731        120,721        256,366        235,517   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Management fees(1)

     19,103        22,695        38,141        45,066   

Capital gains incentive fees(2)

     (8,355     2,268        (4,607     7,104   

Subordinated income incentive fees(2)

     21,271        15,061        35,176        30,239   

Administrative services expenses

     882        1,189        1,873        2,389   

Stock transfer agent fees

     30        546        110        997   

Accounting and administrative fees

     285        320        561        652   

Interest expense

     19,048        14,129        36,347        26,829   

Directors’ fees

     229        264        456        529   

Listing advisory fees

     —          5,043        —          5,043   

Other general and administrative expenses

     1,714        4,070        3,136        5,656   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     54,207        65,585        111,193        124,504   

Management fee waiver(1)

     —          (2,837     —          (2,837
  

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

     54,207        62,748        111,193        121,667   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     93,524        57,973        145,173        113,850   
  

 

 

   

 

 

   

 

 

   

 

 

 

Realized and unrealized gain/loss

        

Net realized gain (loss) on investments—unaffiliated

     (24,174     6,716        (20,889     20,538   

Net realized gain (loss) on foreign currency

     (1,007     114        (897     95   

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

     (24,301     4,706        (13,712     15,041   

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

     8,050        (299     9,395        (299

Net change in unrealized gain (loss) on foreign currency

     (386     101        3,062        146   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net realized and unrealized gain (loss) on investments

     (41,818     11,338        (23,041     35,521   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 51,706      $ 69,311      $ 122,132      $ 149,371   
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share information—basic and diluted

        

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

   $ 0.21      $ 0.27      $ 0.51      $ 0.58   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

     241,653,069        255,301,300        241,370,252        257,729,988   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 three and six months ended June 30, 2014.

 

(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,
 
     2015     2014  

Operations

    

Net investment income (loss)

   $ 145,173      $ 113,850   

Net realized gain (loss) on investments and foreign currency

     (21,786     20,633   

Net change in unrealized appreciation (depreciation) on investments

     (4,317     14,742   

Net change in unrealized gain (loss) on foreign currency

     3,062        146   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     122,132        149,371   
  

 

 

   

 

 

 

Stockholder distributions(1)

    

Distributions from net investment income

     (107,545     (112,933

Distributions from net realized gain on investments

     —          —     
  

 

 

   

 

 

 

Net decrease in net assets resulting from stockholder distributions

     (107,545     (112,933
  

 

 

   

 

 

 

Capital share transactions(2)

    

Reinvestment of stockholder distributions

     7,970        39,040   

Repurchases of common stock

     —          (258,903
  

 

 

   

 

 

 

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

     7,970        (219,863
  

 

 

   

 

 

 

Total increase (decrease) in net assets

     22,557        (183,425

Net assets at beginning of period

     2,366,986        2,640,992   
  

 

 

   

 

 

 

Net assets at end of period

   $ 2,389,543      $ 2,457,567   
  

 

 

   

 

 

 

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

   $ 106,286      $ 36,239   
  

 

 

   

 

 

 

 

(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,
 
     2015     2014  

Cash flows from operating activities

    

Net increase (decrease) in net assets resulting from operations

   $ 122,132      $ 149,371   

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

    

Purchases of investments

     (800,306     (1,209,195

Paid-in-kind interest

     (10,818     (5,886

Proceeds from sales and repayments of investments

     984,564        1,175,532   

Net realized (gain) loss on investments

     20,889        (20,538

Net change in unrealized (appreciation) depreciation on investments

     4,317        (14,742

Accretion of discount

     (22,580     (14,693

Amortization of deferred financing costs

     1,804        1,402   

Unrealized (gain)/loss on borrowings in foreign currency

     (2,817     —     

(Increase) decrease in receivable for investments sold and repaid

     1,067        (8,870

(Increase) decrease in interest receivable

     11,706        (8,740

(Increase) decrease in prepaid expenses and other assets

     (398     (1,309

Increase (decrease) in payable for investments purchased

     (27,100     69,099   

Increase (decrease) in management fees payable

     (479     (2,838

Increase (decrease) in accrued capital gains incentive fees

     (4,607     5,514   

Increase (decrease) in subordinated income incentive fees payable

     8,182        758   

Increase (decrease) in administrative services expense payable

     (645     533   

Increase (decrease) in interest payable

     5,960        946   

Increase (decrease) in directors’ fees payable

     (8     (1

Increase (decrease) in other accrued expenses and liabilities

     (4,678     (3,880
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     286,185        112,463   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Reinvestment of stockholder distributions

     7,970        39,040   

Repurchases of common stock

     —          (258,903

Stockholder distributions

     (71,592     (113,856

Borrowings under credit facilities(1)

     114,200        265,686   

Borrowings under unsecured notes(1)

     275,000        —     

Repayments of credit facilities(1)

     (267,586     (23,682

Repayments under repurchase agreement(2)

     (150,000     —     

Deferred financing costs paid

     (4,105     (4,002
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (96,113     (95,717
  

 

 

   

 

 

 

Total increase (decrease) in cash

     190,072        16,746   

Cash and foreign currency at beginning of period

     96,844        227,328   
  

 

 

   

 

 

 

Cash and foreign currency at end of period

   $ 286,916      $ 244,074   
  

 

 

   

 

 

 

Supplemental disclosure

    

Local and excise taxes paid

   $ 5,547      $ 5,100   
  

 

 

   

 

 

 

 

(1) See Note 8 for a discussion of the Company’s credit facilities and unsecured notes. During the six months ended June 30, 2015 and 2014, the Company paid $11,001 and $8,872, 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 six months ended June 30, 2015 and 2014, the Company paid $17,582 and $15,609, 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, 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—77.6%

               

A.P. Plasman Inc.

  (f)(g)(h)(j)   Capital Goods   L+775     1.0%      12/29/19   $ 172,731      $ 172,731      $ 175,754   

AccentCare, Inc.

  (h)   Health Care Equipment & Services   L+500     1.5%      12/22/16     1,891        1,809        1,833   

Allen Systems Group, Inc.

  (f)(h)(t)   Software & Services   L+790, 1.2% PIK
(1.2% Max PIK)
    1.0%      4/30/20     37,710        37,710        37,710   

Altus Power America, Inc.

  (h)   Energy   L+750     1.5%      10/10/21     1,024        1,024        1,035   

Altus Power America, Inc.

  (h)(o)   Energy   L+750     1.5%      10/10/21     2,101        2,101        2,122   

American Racing and Entertainment, LLC

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

American Racing and Entertainment, LLC

  (f)   Consumer Services   L+800     1.0%      7/1/18     6,500        6,500        6,654   

AP Exhaust Acquisition, LLC

  (h)   Automobiles & Components   L+775     1.5%      1/16/21     14,595        14,595        14,449   

Aspect Software, Inc.

  (h)   Software & Services   L+550     1.8%      5/7/16     1,164        1,156        1,156   

Atlas Aerospace LLC

  (h)   Capital Goods   L+807     1.0%      5/8/19     20,000        20,000        20,000   

Atlas Aerospace LLC

  (h)(o)   Capital Goods   L+750     1.0%      5/8/19     7,619        7,619        7,619   

BenefitMall Holdings, Inc.

  (h)   Commercial & Professional Services   L+725     1.0%      11/24/20     14,925        14,925        15,074   

BenefitMall Holdings, Inc.

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

Blue Coat Holdings, Inc.

  (h)(o)   Technology Hardware & Equipment   L+350     1.0%      5/20/20     2,136        2,136        2,118   

Blueprint Sub, Inc.

  (f)   Software & Services   L+750     1.0%      5/7/21     20,000        20,000        20,034   

Blueprint Sub, Inc.

  (h)(o)   Software & Services   L+750     1.0%      5/7/21     4,211        4,211        4,218   

Blueprint Sub, Inc.

  (h)(o)   Software & Services   L+450     1.0%      5/7/21     1,053        1,053        1,053   

Cadence Aerospace Finance, Inc.

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

Caesars Entertainment Operating Co., Inc.

  (e)(f)(j)(l)   Consumer Services   L+575     3/1/17     12,621        12,044        10,932   

Caesars Entertainment Operating Co., Inc.

  (f)(j)(l)   Consumer Services   L+675     3/1/17     2,363        2,283        2,061   

Caesars Entertainment Operating Co., Inc.

  (e)(f)(g)(h)(j)(l)   Consumer Services   L+875     1.0%      3/1/17     84,594        84,105        71,271   

Caesars Entertainment Resort Properties, LLC

  (e)(f)(h)   Consumer Services   L+600     1.0%      10/11/20     54,735        52,066        49,945   

Corel Corp.

  (f)(g)(h)(j)   Software & Services   L+825     6/7/19     137,204        137,204        139,262   

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     44,464        44,601        44,464   

CoSentry.Net, LLC

  (f)(h)   Software & Services   L+800     1.3%      12/31/19     60,894        60,894        61,579   

Crestwood Holdings LLC

  (h)   Energy   L+600     1.0%      6/19/19     5,309        5,289        5,268   

Eastman Kodak Co.

  (h)   Consumer Durables & Apparel   L+625     1.0%      9/3/19     10,691        10,526        10,724   

Flanders Corp.

  (f)(h)   Capital Goods   L+950     1.5%      5/14/18     34,993        34,490        35,561   

Fronton Holdings, LLC

  (f)   Consumer Services   15.0%     4/30/19     3,736        3,705        3,736   

Greystone Bridge VIII LLC

  (h)(j)   Real Estate   L+1050     5/1/20     1,422        1,422        1,422   

Greystone Bridge VIII LLC

  (h)(j)(o)   Real Estate   L+1050     5/1/20     2,578        2,578        2,578   

 

See notes to unaudited consolidated financial statements.

 

5


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

H.M. Dunn Company, Inc.

  (h)   Capital Goods   L+810     1.0%      3/26/21   $ 1,000      $ 1,000      $ 1,010   

H.M. Dunn Company, Inc.

  (h)(o)   Capital Goods   L+725     1.0%      3/26/21     357        357        361   

Imagine Communications Corp.

  (f)(g)(h)   Media   L+825     1.0%      4/29/20     107,289        107,289        107,289   

Imagine Communications Corp.

  (h)(o)   Media   L+825     1.0%      4/29/20     30,000        30,000        30,000   

Industrial Group Intermediate Holdings, LLC

  (h)   Materials   L+800     1.3%      5/31/20     13,595        13,595        13,595   

Industry City TI Lessor, L.P.

  (h)   Consumer Services   5.0%, 5.3% PIK
(5.3% Max PIK)
    6/30/26     25,553        25,553        25,936   

JW Aluminum Co.

  (h)   Materials   L+750     1.0%      5/6/17     1,000        1,000        1,000   

Latham Pool Products, Inc.

  (f)   Capital Goods   L+775     1.0%      6/29/21     70,000        70,000        70,000   

Leading Edge Aviation Services, Inc.

  (f)(g)(h)   Capital Goods   L+875     1.5%      6/30/19     32,847        32,583        32,847   

LEAS Acquisition Co Ltd.

  (h)(j)   Capital Goods   L+875     1.5%      6/30/19   28,500        39,018        31,787   

LEAS Acquisition Co Ltd.

  (g)(j)   Capital Goods   L+875     1.5%      6/30/19   $ 10,355        10,355        10,355   

MB Precision Holdings LLC

  (h)   Capital Goods   L+725     1.3%      1/23/20     13,298        13,298        13,165   

Micronics, Inc.

  (f)(h)   Capital Goods   L+800     1.3%      3/28/19     58,434        58,120        58,434   

Micronics, Inc.

  (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     8,414        8,321        6,716   

MModal LLC

  (h)   Health Care Equipment & Services   L+775     1.3%      1/31/20     4,322        4,304        3,983   

MSO of Puerto Rico, Inc.

  (h)   Health Care Equipment & Services   L+825     1.5%      12/12/17     6,117        6,050        4,882   

New Star Metals Inc.

  (f)(h)   Capital Goods   L+800     1.3%      3/20/20     36,375        36,375        36,375   

Nobel Learning Communities, Inc.

  (h)   Consumer Services   L+846     1.0%      4/27/21     1,056        1,056        1,062   

Nobel Learning Communities, Inc.

  (h)(o)   Consumer Services   L+450     1.0%      4/27/20     140        140        140   

Nova Wildcat Amerock, LLC

  (h)   Consumer Durables & Apparel   L+3.21, 5.5% PIK
(5.5% Max PIK)
    1.3%      9/10/19     18,346        18,346        16,695   

PHRC License, LLC

  (g)(h)   Consumer Services   L+900     1.5%      8/14/20     44,822        44,822        44,822   

Polymer Additives, Inc.

  (h)   Materials   L+838     1.0%      12/20/21     10,511        10,511        10,643   

Reddy Ice Corp.

  (h)   Food, Beverage & Tobacco   L+550     1.3%      5/1/19     1,164        1,156        1,038   

Safariland, LLC

  (f)(h)   Capital Goods   L+800     1.3%      9/20/19     153,338        153,338        155,638   

Shell Topco L.P.

  (h)   Materials   L+750     1.5%      9/28/18     30,000        29,720        30,150   

Smile Brands Group Inc.

  (h)   Health Care Equipment & Services   L+625     1.3%      8/16/19     20,141        19,811        13,897   

Sorenson Communications, Inc.

  (e)(f)(h)   Telecommunication Services   L+575     2.3%      4/30/20     93,030        92,643        93,728   

Southcross Holdings Borrower LP

  (h)   Energy   L+500     1.0%      8/4/21     314        313        306   

Spencer Gifts LLC

  (h)(i)   Retailing   L+425     1.0%      7/16/21     1,000        995        1,001   

Sports Authority, Inc.

  (h)   Consumer Durables & Apparel   L+600     1.5%      11/16/17     6,318        6,321        5,501   

Stallion Oilfield Holdings, Inc.

  (h)   Energy   L+675     1.3%      6/19/18     4,785        4,753        3,938   

 

See notes to unaudited consolidated financial statements.

 

6


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

SunGard Availability Services Capital, Inc.

  (e)   Software & Services   L+500   1.0%   3/29/19   $ 4,424      $ 4,142      $ 4,082   

Sunnova Asset Portfolio 5 Holdings, LLC

  (h)   Energy   12.0% PIK

(12.0% Max PIK)

    11/14/21     4,144        4,144        4,186   

Sunnova Asset Portfolio 5 Holdings, LLC

  (h)(o)   Energy   12.0% PIK

(12.0% Max PIK)

    11/14/21     3,068        3,068        3,099   

Swiss Watch International, Inc.

  (f)(h)   Consumer Durables & Apparel   L+725   1.3%   11/8/18     46,250        45,681        39,544   

U.S. Xpress Enterprises, Inc.

  (f)(g)   Transportation   L+1,050, 0.0% PIK
(1.8% Max PIK)
  1.5%   5/30/19     68,269        68,269        69,293   

Vertellus Performance Chemicals LLC

  (g)(h)   Materials   L+950   1.0%   1/30/20     38,000        38,000        38,022   

VPG Group Holdings LLC

  (f)(h)   Materials   L+900   1.0%   10/4/16     75,695        75,387        75,695   

Warren Resources, Inc.

  (g)(h)   Energy   L+850   1.0%   5/22/20     3,157        3,157        3,157   

Warren Resources, Inc.

  (h)(o)   Energy   L+850   1.0%   5/22/20     431        431        431   

Waste Pro USA, Inc.

  (f)(g)(h)   Commercial & Professional Services   L+750   1.0%   10/15/20     86,454        86,454        87,751   

Waste Pro USA, Inc.

  (h)(o)   Commercial & Professional Services   L+750   1.0%   10/15/20     9,444        9,444        9,586   
             

 

 

   

 

 

 

Total Senior Secured Loans—First Lien

                1,980,880        1,953,609   

Unfunded Loan Commitments

                (98,093     (98,093
             

 

 

   

 

 

 

Net Senior Secured Loans—First Lien

                1,882,787        1,855,516   
             

 

 

   

 

 

 

Senior Secured Loans—Second Lien—35.3%

               

AdvancePierre Foods, Inc.

  (e)(f)(g)   Food & Staples Retailing   L+825   1.3%   10/10/17     17,556        17,405        17,841   

Affordable Care, Inc.

  (f)(g)(h)   Health Care Equipment & Services   L+925   1.3%   12/26/19     34,314        33,996        33,971   

Alison US LLC

  (h)(j)   Capital Goods   L+850   1.0%   8/29/22     4,444        4,276        3,556   

American Racing and Entertainment, LLC

  (g)   Consumer Services   12.0%     7/1/18     16,800        16,426        16,905   

Ascent Resources—Utica, LLC

  (f)(g)(h)   Energy   L+950, 2.0% PIK
(2.0% Max PIK)
  1.5%   9/30/18     181,375        180,480        177,747   

Brock Holdings III, Inc.

  (h)   Energy   L+825   1.8%   3/16/18     6,923        6,864        6,741   

Byrider Finance, LLC

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

Compuware Corp.

  (e)   Software & Services   L+825   1.0%   12/15/22     5,000        4,382        4,679   

DEI Sales, Inc.

  (f)(g)   Commercial & Professional Services   L+900   1.5%   1/15/18     57,500        57,048        53,331   

Eastman Kodak Co.

  (f)(g)   Consumer Durables & Apparel   L+950   1.3%   9/3/20     50,000        48,963        49,969   

FullBeauty Brands, Inc.

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

National Surgical Hospitals, Inc.

  (f)   Health Care Equipment & Services   L+900   1.0%   6/1/23     30,000        30,000        30,111   

 

See notes to unaudited consolidated financial statements.

 

7


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Nielsen & Bainbridge, LLC

  (h)   Consumer Services   L+925   1.0%   8/15/21   $ 16,675      $ 16,438      $ 16,425   

Paw Luxco II Sarl

  (g)(j)   Consumer Durables & Apparel   EURIBOR+950     1/29/19   16,364        20,363        14,814   

PSAV Acquisition Corp.

  (f)(h)   Technology Hardware & Equipment   L+825   1.0%   1/24/22   $ 80,000        78,952        80,500   

Sequential Brands Group, Inc.

  (f)(j)   Consumer Durables & Apparel   L+900   1.0%   4/8/21     44,500        44,500        44,945   

Spencer Gifts LLC

  (f)(h)   Retailing   L+825     6/29/22     60,000        59,700        59,700   

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

                852,293        844,023   
             

 

 

   

 

 

 

Senior Secured Bonds—14.8%

               

Advanced Lighting Technologies, Inc.

  (g)(h)   Materials   10.5%     6/1/19     78,500        77,260        49,063   

Aspect Software, Inc.

  (e)(g)   Software & Services   10.6%     5/15/17     8,500        8,400        8,203   

Avaya Inc.

  (e)(f)(g)   Technology Hardware & Equipment   10.5%     3/1/21     49,800        45,292        41,334   

Caesars Entertainment Resort Properties, LLC

  (e)(f)   Consumer Services   11.0%     10/1/21     29,248        28,978        24,568   

FourPoint Energy, LLC

  (f)(g)   Energy   8.0%     12/31/20     74,813        71,923        68,453   

FourPoint Energy, LLC

  (g)(o)   Energy   8.0%     12/31/20     23,625        23,507        21,617   

Global A&T Electronics Ltd.

  (h)(j)   Technology Hardware & Equipment   10.0%     2/1/19     12,000        11,928        11,325   

JW Aluminum Co.

  (f)(g)(h)   Materials   11.5%, 1.0% PIK
(1.0% Max PIK)
    11/15/17     70,462        70,169        73,280   

Logan’s Roadhouse, Inc.

  (e)(g)   Consumer Services   10.8%     10/15/17     56,294        48,187        41,869   

SandRidge Energy, Inc.

  (h)(j)   Energy   8.8%     6/1/20     19,500        19,454        17,465   

Sorenson Communications, Inc.

  (g)   Telecommunication Services   9.0%     10/31/20     19,898        19,200        19,798   
             

 

 

   

 

 

 

Total Senior Secured Bonds

                424,298        376,975   

Unfunded Bond Commitments

                (23,507     (23,507
             

 

 

   

 

 

 

Net Senior Secured Bonds

                400,791        353,468   
             

 

 

   

 

 

 

Subordinated Debt—19.5%

             

Alta Mesa Holdings, LP

  (e)   Energy   9.6%     10/15/18     11,165        11,093        8,765   

Aurora Diagnostics, LLC

  (f)(g)   Pharmaceuticals, Biotechnology & Life Sciences   10.8%     1/15/18     18,065        18,094        16,123   

Bellatrix Exploration Ltd.

  (h)(j)   Energy   8.5%     5/15/20     5,000        4,902        4,725   

Blue Coat Holdings, Inc.

  (h)   Technology Hardware & Equipment   8.4%     6/1/23     25,000        25,000        25,469   

Brooklyn Basketball Holdings, LLC

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

CEC Entertainment, Inc.

  (g)   Consumer Services   8.0%     2/15/22     5,000        5,012        4,988   

Ceridian Corp.

  (g)(h)   Software & Services   11.0%     3/15/21     8,300        8,796        8,819   

 

See notes to unaudited consolidated financial statements.

 

8


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Comstock Resources, Inc.

  (f)(h)   Energy   9.5%     6/15/20   $ 7,500      $ 7,250      $ 3,206   

EV Energy Partners, L.P.

  (g)(j)   Energy   8.0%     4/15/19     265        234        247   

Flanders Corp.

  (f)(g)   Capital Goods   13.8% PIK
(13.8% Max PIK)
    5/14/18     23,934        23,821        21,780   

Flanders Corp.

  (g)(h)   Capital Goods   17.5% PIK
(17.5% Max PIK)
    5/14/18     23,566        22,214        23,802   

Global Jet Capital Holdings, LP

  (h)   Commercial & Professional Services   15.0%, 0.0% PIK
(15.0% Max PIK)
    1/30/25     620        620        620   

Global Jet Capital Holdings, LP

  (h)   Commercial & Professional Services   15.0%, 0.0% PIK
(15.0% Max PIK)
    4/30/25     4,826        4,826        4,826   

Imagine Communications Corp.

  (h)   Media   12.5% PIK
(12.5% Max PIK)
    8/4/18     486        486        486   

Jupiter Resources Inc.

  (e)(g)(j)   Energy   8.5%     10/1/22     6,425        5,351        5,437   

KODA Distribution Group, Inc.

  (f)   Materials   11.3%     9/30/19     49,500        48,676        49,500   

Lightstream Resources Ltd.

  (g)(j)   Energy   8.6%     2/1/20     1,650        1,315        1,076   

Mood Media Corp.

  (e)(g)(h)(j)   Media   9.3%     10/15/20     43,135        42,188        36,988   

Navistar International Corp.

  (g)(j)   Transportation   8.3%     11/1/21     8,345        8,152        7,980   

NewStar Financial, Inc.

  (h)(j)   Diversified Financials   8.3%, 0.0% PIK
(8.8% Max PIK)
    12/4/24     50,000        35,361        38,500   

P.F. Chang’s China Bistro, Inc.

  (e)(g)   Consumer Services   10.3%     6/30/20     6,433        6,621        6,658   

Samson Investment Co.

  (e)(g)(h)(p)(l)   Energy   9.8%     2/15/20     14,200        13,406        746   

SandRidge Energy, Inc.

  (e)(h)(j)   Energy   8.8%     1/15/20     5,280        4,480        2,891   

Sequel Industrial Products Holdings, LLC

  (g)   Energy   12.0%, 2.5% PIK
(2.5% Max PIK)
    5/10/18     7,000        6,918        7,175   

Sorenson Communications, Inc.

  (g)   Telecommunication Services   13.0%     10/31/21     15,122        14,152        15,652   

SunGard Availability Services Capital, Inc.

  (g)(h)   Software & Services   8.8%     4/1/22     10,750        7,954        7,874   

ThermaSys Corp.

  (f)(g)   Capital Goods   9.0%, 1.8% PIK
(5.0% Max PIK)
    5/3/20     134,477        134,477        135,822   

VPG Group Holdings LLC

  (f)   Materials   11.0%, 2.0% PIK
(2.0% Max PIK)
    7/15/19     5,194        5,194        5,181   
             

 

 

   

 

 

 

Total Subordinated Debt

                486,466        465,209   

 

See notes to unaudited consolidated financial statements.

 

9


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

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

Collateralized Securities—4.6%

               

ACASC 2013-2A Class B

  (g)(h)(j)   Diversified Financials   9.4%     10/15/23   $ 30,500      $ 23,408      $ 22,592   

Dryden CDO 23A Class Subord.

  (h)(j)   Diversified Financials   25.0%     7/17/23     10,000        5,161        6,991   

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

  (g)(j)   Diversified Financials   14.2%     12/20/21     16,740        16,679        16,489   

NewStar Clarendon 2014-1A Class D

  (h)(j)   Diversified Financials   L+435     1/25/27     1,560        1,461        1,482   

NewStar Clarendon 2014-1A Class Subord. B

  (h)(j)   Diversified Financials   12.5%     1/25/27     17,900        17,713        17,566   

Rampart CLO 2007 1A Class Subord.

  (h)(j)   Diversified Financials   31.4%     10/25/21     10,000        2,637        4,756   

Stone Tower CLO VI Class Subord.

  (g)(j)   Diversified Financials   42.0%     4/17/21     5,000        1,913        3,274   

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

  (h)(j)   Diversified Financials   13.7%     1/15/24     42,504        32,304        35,629   
             

 

 

   

 

 

 

Total Collateralized Securities

                101,276        108,779   

 

See notes to unaudited consolidated financial statements.

 

10


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

  Number of
Shares
    Amortized
Cost
    Fair
Value(d)
 

Equity/Other—15.9%(k)

               

Allen Systems Group, Inc., Common Equity

  (h)(l)(t)   Software & Services           1,689,767      $ 36,422      $ 41,484   

Altus Power America Holdings, LLC, Preferred Equity

  (h)(l)   Energy           341,425        341        597   

Amaya Gaming Group Inc., Warrants

  (h)(j)(l)   Consumer Services           2,000,000        16,832        40,640   

AP Exhaust Holdings, LLC, Common Equity

  (h)(l)(n)   Automobiles & Components           811        811        709   

Aquilex Corp., Common Equity, Class A Shares

  (f)   Energy           15,128        1,088        5,036   

Aquilex Corp., Common Equity, Class B Shares

  (f)(g)   Energy           32,637        1,690        10,865   

Ascent Resources Utica Holdings, LLC, Common Equity

  (h)(l)(m)   Energy           10,192,939        9,700        8,154   

Burleigh Point, Ltd., Warrants

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

CoSentry.Net, LLC, Preferred Equity

  (g)(l)   Software & Services           2,632        2,500        4,514   

Eastman Kodak Co., Common Equity

  (f)(h)(l)   Consumer Durables & Apparel           61,859        1,202        1,039   

ERC Ireland Holdings Ltd., Common Equity

  (g)(h)(j)(l)   Telecommunication Services           1,429        297        339   

Flanders Corp., Common Equity

  (g)(l)   Capital Goods           6,829,973        7,183        7,513   

FourPoint Energy, LLC, Common Equity, Class C Units

  (h)(l)(n)   Energy           21,000        21,000        26,040   

FourPoint Energy, LLC, Common Equity, Class D Units

  (h)(l)(n)   Energy           3,937        2,601        4,941   

Fronton Investor Holdings, LLC, Class B Units

  (h)(l)(n)(t)   Consumer Services           14,943        17,931        19,126   

Global Jet Capital Holdings, LP, Preferred Equity

  (h)(l)   Commercial & Professional Services           2,333,842        2,334        2,341   

Imagine Communications Corp., Common Equity, Class A Units

  (h)(l)   Media           33,034        3,783        4,962   

Industrial Group Intermediate Holdings, LLC, Common Equity

  (h)(l)(n)   Materials           347,107        347        590   

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        111   

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        466   

Micronics, Inc., Common Equity

  (h)(l)   Capital Goods           53,073        553        1,030   

Micronics, Inc., Preferred Equity

  (h)(l)   Capital Goods           55        553        673   

Milagro Holdings, LLC, Common Equity

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

Milagro Holdings, LLC, Preferred Equity

  (h)(l)   Energy           283,947        11,181        —     

MModal LLC, Common Equity

  (h)(l)   Health Care Equipment & Services           56,529        933        855   

New Star Metals Inc., Common Equity

  (h)   Capital Goods           741,082        750        889   

NewStar Financial, Inc., Warrants

  (h)(j)(l)(r)   Diversified Financials           3,000,000        15,058        15,330   

Plains Offshore Operations Inc., Preferred Equity

  (f)(g)   Energy           52,666        63,685        73,256   

Plains Offshore Operations Inc., Warrants

  (f)(g)(l)   Energy           1,067,481        1,722        2,989   

PSAV Holdings LLC, Common Equity

  (g)   Technology Hardware & Equipment           10,000        10,000        18,000   

Safariland, LLC, Common Equity

  (g)(l)   Capital Goods           25,000        2,500        9,770   

 

See notes to unaudited consolidated financial statements.

 

11


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

Portfolio Company(a)

  Footnotes  

Industry

  Number of
Shares
    Amortized
Cost
    Fair
Value(d)
 

Safariland, LLC, Preferred Equity

  (g)   Capital Goods           2,042      $ 23,031      $ 23,271   

Safariland, LLC, Warrants

  (g)(l)   Capital Goods           4,536        473        1,773   

Sequel Industrial Products Holdings, LLC, Common Equity

  (g)(h)(l)   Energy           33,306        3,400        9,136   

Sequel Industrial Products Holdings, LLC, Preferred Equity

  (g)(h)   Energy           8,000        10,571        10,579   

Sequel Industrial Products Holdings, LLC, Warrants

  (h)(l)(q)   Energy           1,293        1        198   

Sequel Industrial Products Holdings, LLC, Warrants

  (g)(l)(q)   Energy           19,388        12        3,379   

Sorenson Communications, Inc., Common Equity

  (g)(l)   Telecommunication Services           46,163        —          22,537   

ThermaSys Corp., Common Equity

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

ThermaSys Corp., Preferred Equity

  (g)   Capital Goods           51,813        5,181        4,508   

VPG Group Holdings LLC, Class A-2 Units

  (g)(l)   Materials           3,637,500        3,638        3,274   
             

 

 

   

 

 

 

Total Equity/Other

                286,735        385,496   
             

 

 

   

Unfunded Contingent Warrant Commitment

  (s)                 (5,110

Net Equity/Other

                $ 380,386   
             

 

 

   

 

 

 

TOTAL INVESTMENTS—167.7%

              $ 4,010,348        4,007,381   
             

 

 

   

LIABILITIES IN EXCESS OF OTHER ASSETS—(67.7%)

                  (1,617,838
               

 

 

 

NET ASSETS—100%

                $ 2,389,543   
               

 

 

 

 

(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, 2015, the three-month London Interbank Offered Rate, or LIBOR, was 0.28%, the Euro Interbank Offered Rate, or EURIBOR, was (0.01)% 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).

 

See notes to unaudited consolidated financial statements.

 

12


Table of Contents

FS Investment Corporation

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2015

(in thousands, except share amounts)

 

 

 

(i) Position or portion thereof unsettled as of June 30, 2015.

 

(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 June 30, 2015, 81.3% of the Company’s total assets represented qualifying assets.

 

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

 

(l) Security is non-income producing.

 

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

 

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

 

(o) Security is an unfunded 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 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, 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 June 30, 2015, the Company held investments in two portfolio companies 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 companies for the six months ended June 30, 2015:

 

Portfolio Company

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

Senior Secured Loans—First Lien

                 

Allen Systems Group, Inc.

   $ 37,634         —         $ 718         —           —           —     

Equity/Other

                 

Allen Systems Group, Inc., Common Equity

   $ 36,422         —           —           —           —         $ 5,062   

Fronton Investor Holdings, LLC, Class B Units

     —           —           —           —           —         $ 4,333   

 

See notes to unaudited consolidated financial statements.

 

13


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   

 

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)
 

HBC Solutions, Inc.

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

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   

 

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)
 

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   

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   

 

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)
 

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   

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   

 

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)
 

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   

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   

 

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

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

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   
             

 

 

   

 

 

 

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.

 

19


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