Welcome!

News Feed Item

PennantPark Investment Corporation Announces Financial Results for the Quarter Ended December 31, 2010

NEW YORK, NY -- (Marketwire) -- 02/02/11 -- PennantPark Investment Corporation (NASDAQ: PNNT) today announces financial results for its first fiscal quarter ended December 31, 2010.

HIGHLIGHTS
Quarter Ended December 31, 2010
($ in millions, except per share amounts)

Assets and Liabilities:
Investment portfolio                                                 $704.3
Net assets                                                           $403.4
Net asset value per share                                            $11.14

Credit facility (Cost $255.8)                                        $248.4
SBA debentures                                                       $ 30.0

Yield on debt investments                                              13.4%

Operating Results:
  Net investment income                                              $ 11.2
  Net investment income per share                                    $ 0.31
  Distribution declared per share                                    $ 0.26

Portfolio Activity:
  Purchases of long term investments                                 $ 99.9
  Sales and repayments of long term investments                      $ 85.5

  Number of new portfolio companies invested                              6
  Number of existing portfolio companies invested                         1
  Number of portfolio companies at end of period                         45

Except where the context suggests otherwise, the terms "we," "us," "our," "Company," and "PennantPark Investment" refer to PennantPark Investment Corporation. References to "SBIC LP" and "our SBIC" refer to our wholly owned, consolidated Small Business Investment Company ("SBIC") subsidiary PennantPark SBIC LP and its general partner PennantPark SBIC GP, LLC. References to our portfolio and investments include investments made through our consolidated SBIC subsidiary.

CONFERENCE CALL AT 9:00 A.M. ET ON FEBRUARY 3, 2011

The Company will host a conference call at 9:00 a.m. (Eastern Time) on Thursday, February 3, 2011 to discuss the quarterly financial results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 397-0286 approximately 5-10 minutes prior to the call. International callers should dial (719) 325-4901. All callers should reference PennantPark Investment Corporation. An archived replay of the call will be available through February 17, 2011 by calling (888) 203-1112. International callers please dial (719) 457-0820. For all phone replays, please reference conference ID #6274358.

PORTFOLIO AND INVESTMENT ACTIVITY

As of December 31, 2010, our portfolio totaled $704.3 million and consisted of $277.6 million of senior secured loans, $101.5 million of second lien secured debt, $266.8 million of subordinated debt, and $58.4 million of preferred and common equity investments. This compares to our portfolio as of September 30, 2010, which totaled $664.7 million and consisted of $234.6 million of senior secured loans, $156.7 million of second lien secured debt, $223.9 million of subordinated debt and $49.5 million of preferred and common equity investments.

As of December 31, 2010, our overall portfolio consisted of 45 companies with an average investment size of $15.7 million and a weighted average yield on debt investments of 13.4%, and was invested 40% in senior secured loans, 14% in second lien secured debt, 38% in subordinated debt, and 8% in preferred and common equity investments. This compares to our portfolio as of September 30, 2010, which consisted of 43 companies with an average investment size of $15.5 million, and a weighted average yield on debt investments of 12.7%, which was invested 35% in senior secured loans, 24% in second lien secured debt, 34% in subordinated debt, and 7% in preferred and common equity investments.

For the three months ended December 31, 2010, we invested $99.9 million in six new portfolio companies and one existing portfolio company with a weighted average yield on debt investments of 15.0% (yield on debt investments, excluding value of attached equity, was 14.0%). Sales and repayments of long-term investments for the three months ended December 31, 2010 totaled $85.5 million. This compares to the three months ended December 31, 2009, in which we invested $50.5 million in six new and two existing portfolio companies with a weighted average yield on debt investments of 12.8%. Sales and repayments of long term investments for the three months ended December 31, 2009 totaled $16.8 million.

"We continue to be active," said Arthur Penn, Chairman and Chief Executive Officer. "Our income is growing due to a combination of attractive new investments, long-term cost effective SBIC financing and rotation out of our lower yielding assets."

RESULTS OF OPERATIONS

Set forth below are the results of operations for the three months ended December 31, 2010 and 2009.

Investment Income

Investment income for the three months ended December 31, 2010 was $20.0 million and was primarily attributable to $7.3 million from senior secured loans, $3.2 million from second lien secured debt investments and $7.4 million from subordinated debt investments. This compares to investment income for the three months ended December 31, 2009, which was $13.6 million, and was primarily attributable to $3.5 million from senior secured loans, $3.2 million from second lien secured debt investments and $5.4 million from subordinated debt investments. The remaining investment income for the three months ended December 31, 2010 and 2009 was primarily attributed to interest income from net accretion of discount and amortization of premium. The increase in investment income compared with the same period in the prior year is due to the growth of our portfolio and by rotation out of our lower yielding investments.

Expenses

Expenses for the three months ended December 31, 2010, totaled $8.8 million. Base management fee for the same period totaled $3.5 million, performance-based incentive fee totaled $2.8 million, credit facility and SBA debentures related expenses totaled $1.1 million, general and administrative expenses totaled $1.3 million, and excise taxes totaled $0.1 million. This compares to expenses for the three months ended December 31, 2009, which totaled $6.4 million. Base management fee for the same period totaled $2.5 million, performance-based incentive fee totaled $1.8 million, credit facility related expenses totaled $0.8 million, general and administrative expenses totaled $1.1 million and excise taxes totaled $0.1 million. The increase in expenses is due to the growth of the portfolio and net investment income.

Net Investment Income

Net investment income totaled $11.2 million, or $0.31 per share, for the three months ended December 31, 2010, and $7.2 million, or $0.28 per share, for the three months ended December 31, 2009.

Net Realized Gains or Losses

Sales and repayments of long-term investments for the three months ended December 31, 2010 totaled $85.5 million and realized gains totaled $2.3 million due to sales and repayments of our debt investments. This compares to sales and repayments of long-term investments that totaled $16.8 million and net realized losses that totaled $16.6 million for the three months ended December 31, 2009.

Net Unrealized Appreciation or Depreciation on Investments and Credit Facility

For the three months ended December 31, 2010 and 2009, our investments had a net change in unrealized appreciation of $18.7 million and $23.9 million, respectively. The decrease in the net change in unrealized appreciation compared to the prior year is the result of the changes in the leveraged credit markets. On December 31, 2010 and September 30, 2010, net unrealized appreciation on investments totaled $26.7 million and $8.0 million, respectively.

For the three months ended December 31, 2010 and 2009, our long-term credit facility had a net change in unrealized appreciation of $6.6 million and $5.8 million, respectively. Net change in unrealized appreciation on our credit facility over the prior year is the result of it approaching maturity. On December 31, 2010 and September 30, 2010, net unrealized depreciation on our long-term credit facility totaled $7.4 million and $14.0 million, respectively.

Net Increase in Net Assets Resulting from Operations

Net increase in net assets resulting from operations totaled $25.5 million, or $0.71 per share, for the three months ended December 31, 2010. This compares to a net increase in net assets resulting from operations which totaled $8.7 million, or $0.34 per share, for the three months ended December 31, 2009. This increase in net assets from operations is due to the continued growth in net investment income as a result of growing our portfolio offset by the appreciation in the value of our credit facility as it approaches maturity.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are derived from our credit facility, SBA debentures and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and other operating expenses we incur. We used, and expect to continue to use, these capital resources as well as proceeds from the rotation out of our portfolio and from public and private offerings of securities to finance our investment objectives.

On December 31, 2010, we had $255.8 million in outstanding borrowings, with a fair market value of $248.4 million, with a weighted average interest rate at that time of 1.28%, exclusive of the fee on the undrawn commitment of 0.20%, and $44.2 million remaining unused under our senior secured revolving credit facility maturing in June 2012.

As of December 31, 2010, we had committed to SBIC LP $50.0 million, funded it with equity capital of $50.0 million, had SBA debentures outstanding of $30.0 million with a weighted average interest rate at the time of 0.96%, exclusive of 3.43% of upfront fees, and had $70 million remaining unused borrowing capacity subject to customary regulatory requirements. Of the $30.0 million of SBA debentures outstanding, $0.5 million is fixed for 10-years with a rate of 3.50% (inclusive of the SBA annual fee) and $29.5 million is temporary financing currently bearing a weighted average rate of 0.92% that will reset to a market-driven rate in March 2011 and will remain fixed thereafter for 10 years.

As of December 31, 2010, we had approximately $60 million of assets bearing a coupon of 9% or lower. We will seek to rotate these assets into new, higher yielding investments over time.

On February 1, 2011, our stockholders approved a proposal that authorizes us to sell shares of our common stock below the then current net asset value per share of our common stock in one or more offerings for a period of 12 months. Any decision to sell shares below the then current net asset value per share of our common stock in one or more offerings is subject to the determination by our board of directors that such issuance and sale is in our and our stockholders' best interests. Any sale or other issuance of shares of our common stock at a price below net asset value per share has resulted and will continue to result in an immediate dilution to our stockholders' interest in our common stock and a reduction of our net asset value per share.

During the three months ended December 31, 2010, we generated operating cash flows primarily from interest earned on debt investments and sales and repayments of investments, and our primary use of funds from operations during the same period consisted of investments in portfolio companies, payments of fees and other operating expenses we incurred. Our operating activities used cash of $27.3 million for the three months ended December 31, 2010, and our financing activities provided cash of $28.5 million for the same period, primarily from net borrowings under our credit facility and SBA debentures.

During the three months ended December 31, 2009, we generated operating cash flows primarily from interest earned on debt investments, and our primary use of funds from operations during the same period consisted of investments in portfolio companies, payments of fees and other operating expenses we incurred. Our operating activities used cash of $45.1 million for the three months ended December 31, 2009, and our financing activities provided cash of $18.9 million for the same period, primarily from proceeds on issuance of common stock and net borrowings on our credit facility.

DISTRIBUTIONS

During the three months ended December 31, 2010 and 2009, we declared distributions of $0.26 and $0.25 per share, respectively, for total distributions of $9.4 million and $6.5 million, respectively. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year.

RECENT DEVELOPMENTS

On February 1, 2011, we utilized the accordion feature of our credit facility and expanded the credit facility by $15.0 million, bringing our total credit facility availability to $315.0 million. On February 2, 2011, we announced that we increased our quarterly dividend to $0.27 per share, with a record date of March 15, 2011 and a payable date of April 1, 2011.

AVAILABLE INFORMATION

The Company makes available on its website its report on Form 10-Q filed with the Securities Exchange Commission and stockholders may find the report on www.pennantpark.com.

      PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES


                                             December 31,
                                                 2010        September 30,
                                              (unaudited)         2010
                                            --------------  ---------------
Assets
Investments at fair value
  Non-controlled, non-affiliated
   investments, at fair value (cost--
   $651,948,035 and $631,280,755,
   respectively)                            $  680,710,779  $   641,290,626
  Non-controlled, affiliated investments,
   at fair value (cost--$17,641,671 and
   $17,427,648, respectively)                   15,557,531       15,433,680
  Controlled, affiliated investments, at
   fair value (cost--$8,000,100 and
   $8,000,100, respectively)                     8,000,100        8,000,100
                                            --------------  ---------------
  Total of Investments, at fair value
   (cost--$677,589,806 and $656,708,503,
   respectively)                               704,268,410      664,724,406
Cash and cash equivalents                        3,022,137        1,814,451
Interest receivable                              7,357,002       12,814,096
Receivables for investments sold                        --       30,254,774
Prepaid expenses and other assets                2,671,701        1,886,119
                                            --------------  ---------------
      Total assets                             717,319,253      711,493,846
                                            ==============  ===============
Liabilities
Distributions payable                            9,418,227        9,401,281
Payable for investments purchased                       --       52,785,000
Unfunded investments                            18,580,431       22,203,434
Credit facility payable (cost--$255,800,000
 and $233,100,000, respectively)               248,445,750      219,141,125
SBA debentures payable (cost--$30,000,000
 and $14,500,000, respectively)                 30,000,000       14,500,000
Interest payable on credit facility and SBA
 debentures                                        267,310          215,135
Management fee payable                           3,498,594        3,286,816
Performance-based incentive fee payable          2,792,994        2,239,011
Accrued other expenses                             924,985        1,146,821
                                            --------------  ---------------
      Total liabilities                        313,928,291      324,918,623
                                            ==============  ===============
Net Assets
Common stock, par value $0.001 per share,
 100,000,000 shares authorized, 36,223,950
 and 36,158,772 shares issued and
 outstanding, respectively                          36,224           36,159
Paid-in capital in excess of par               429,267,895      428,675,184
Undistributed net investment income              3,672,171        1,800,646
Accumulated net realized loss on
 investments                                   (63,618,182)     (65,911,544)
Net unrealized appreciation on investments      26,678,604        8,015,903
Net unrealized depreciation on credit
 facility                                        7,354,250       13,958,875
                                            --------------  ---------------
      Total net assets                      $  403,390,962  $   386,575,223
                                            ==============  ===============
      Total liabilities and net assets      $  717,319,253  $   711,493,846
                                            ==============  ===============
Net asset value per share                   $        11.14  $         10.69
                                            ==============  ===============



            PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                                           Three Months Ended December 31,
                                         ----------------------------------
                                               2010              2009
                                         ----------------  ----------------
Investment income:
From non-controlled, non-affiliated
 investments:
  Interest                               $     18,559,165  $     12,951,233
  Other                                           846,584           319,603
From non-controlled, affiliated
 investments:
  Interest                                        363,432           327,649
From controlled, affiliated investments:
  Interest                                        210,000                --
                                         ----------------  ----------------
  Total investment income                      19,979,181        13,598,485
                                         ----------------  ----------------

Expenses:
  Base management fee                           3,498,594         2,524,653
  Performance-based incentive fee               2,792,994         1,809,380
  Interest and expenses on the credit
   facility and SBA debentures                  1,135,427           818,683
  Administrative services expenses                579,055           557,504
  Other general and administrative
   expenses                                       683,359           543,415
                                         ----------------  ----------------
  Expenses before taxes                         8,689,429         6,253,635
                                         ----------------  ----------------
  Excise tax                                      118,967           106,962
                                         ----------------  ----------------
  Total expenses                                8,808,396         6,360,597
                                         ----------------  ----------------
  Net investment income                        11,170,785         7,237,888
                                         ----------------  ----------------
Realized and unrealized gain (loss) on
 investments and credit facility:
Net realized gain (loss) on non-
 controlled, non-affiliated investments         2,293,362       (16,603,865)
Net change in unrealized appreciation
 (depreciation) on:
  Non-controlled, non-affiliated
   investments                                 18,752,873        24,093,662
  Non-controlled, affiliated investments          (90,172)         (212,524)
  Credit facility unrealized
   (appreciation)                              (6,604,625)       (5,838,914)
                                         ----------------  ----------------
  Net change in unrealized appreciation        12,058,076        18,042,224
                                         ----------------  ----------------
Net realized and unrealized gain from
 investments and credit facility               14,351,438         1,438,359
                                         ----------------  ----------------
Net increase in net assets resulting
 from operations                         $     25,522,223  $      8,676,247
                                         ================  ================
Net increase in net assets resulting
 from operations per common share        $           0.71  $           0.34
Net investment income per common share   $           0.31  $           0.28

ABOUT PENNANTPARK INVESTMENT CORPORATION

PennantPark Investment Corporation is a business development company which principally invests in U.S. middle-market private companies in the form of senior secured loans, mezzanine debt and equity investments. From time to time, we may also invest in public companies whose securities are thinly traded. PennantPark Investment Corporation is managed by PennantPark Investment Advisers, LLC.

FORWARD-LOOKING STATEMENTS

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

We may use words such as "anticipates," "believes," "expects," "intends," "will," "should," "may" and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements unless required by law.

CONTACT:
Aviv Efrat
PennantPark Investment Corporation
Reception: (212) 905-1000
www.pennantpark.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
NHK, Japan Broadcasting, will feature the upcoming @ThingsExpo Silicon Valley in a special 'Internet of Things' and smart technology documentary that will be filmed on the expo floor between November 3 to 5, 2015, in Santa Clara. NHK is the sole public TV network in Japan equivalent to the BBC in the UK and the largest in Asia with many award-winning science and technology programs. Japanese TV is producing a documentary about IoT and Smart technology and will be covering @ThingsExpo Silicon Val...
Join IBM November 2 at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how to go beyond multi-speed it to bring agility to traditional enterprise applications. Technology innovation is the driving force behind modern business and enterprises must respond by increasing the speed and efficiency of software delivery. The challenge is that existing enterprise applications are expensive to develop and difficult to modernize. This often results in what Gartner calls ...
Translating agile methodology into real-world best practices within the modern software factory has driven widespread DevOps adoption, yet much work remains to expand workflows and tooling across the enterprise. As models evolve from pockets of experimentation into wholescale organizational reinvention, practitioners find themselves challenged to incorporate the culture and architecture necessary to support DevOps at scale. In his session at @DevOpsSummit at 20th Cloud Expo, Anand Akela, Senior...
@GonzalezCarmen has been ranked the Number One Influencer and @ThingsExpo has been named the Number One Brand in the “M2M 2016: Top 100 Influencers and Brands” by Analytic. Onalytica analyzed tweets over the last 6 months mentioning the keywords M2M OR “Machine to Machine.” They then identified the top 100 most influential brands and individuals leading the discussion on Twitter.
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
The age of Digital Disruption is evolving into the next era – Digital Cohesion, an age in which applications securely self-assemble and deliver predictive services that continuously adapt to user behavior. Information from devices, sensors and applications around us will drive services seamlessly across mobile and fixed devices/infrastructure. This evolution is happening now in software defined services and secure networking. Four key drivers – Performance, Economics, Interoperability and Trust ...
NHK, Japan Broadcasting, will feature the upcoming @ThingsExpo Silicon Valley in a special 'Internet of Things' and smart technology documentary that will be filmed on the expo floor between November 3 to 5, 2015, in Santa Clara. NHK is the sole public TV network in Japan equivalent to the BBC in the UK and the largest in Asia with many award-winning science and technology programs. Japanese TV is producing a documentary about IoT and Smart technology and will be covering @ThingsExpo Silicon Val...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
SYS-CON Events announced today that Twistlock, the leading provider of cloud container security solutions, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Twistlock is the industry's first enterprise security suite for container security. Twistlock's technology addresses risks on the host and within the application of the container, enabling enterprises to consistently enforce security policies, monitor...
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
Automation is enabling enterprises to design, deploy, and manage more complex, hybrid cloud environments. Yet the people who manage these environments must be trained in and understanding these environments better than ever before. A new era of analytics and cognitive computing is adding intelligence, but also more complexity, to these cloud environments. How smart is your cloud? How smart should it be? In this power panel at 20th Cloud Expo, moderated by Conference Chair Roger Strukhoff, pane...
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Building a cross-cloud operational model can be a daunting task. Per-cloud silos are not the answer, but neither is a fully generic abstraction plane that strips out capabilities unique to a particular provider. In his session at 20th Cloud Expo, Chris Wolf, VP & Chief Technology Officer, Global Field & Industry at VMware, will discuss how successful organizations approach cloud operations and management, with insights into where operations should be centralized and when it’s best to decentraliz...
In recent years, containers have taken the world by storm. Companies of all sizes and industries have realized the massive benefits of containers, such as unprecedented mobility, higher hardware utilization, and increased flexibility and agility; however, many containers today are non-persistent. Containers without persistence miss out on many benefits, and in many cases simply pass the responsibility of persistence onto other infrastructure, adding additional complexity.