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PennantPark Investment Corp. Reports Operating Results (10-K)

November 14, 2012 | About:
10qk

10qk

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PennantPark Investment Corp. (PNNT) filed Annual Report for the period ended 2012-09-30.

Pennant Park Investment Corporation has a market cap of $594.5 million; its shares were traded at around $10.09 with a P/E ratio of 9.4 and P/S ratio of 6.5. The dividend yield of Pennant Park Investment Corporation stocks is 10.7%.

Highlight of Business Operations:

For the fiscal year ended September 30, 2012, sales and repayments generated proceeds of $201.7 million. For the fiscal years ended September 30, 2011 and 2010, sales and repayments generated proceeds of $304.0 and $145.2 million, respectively.

The carrying value of our selected financial liabilities approximates fair value. We adopted ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value and made an irrevocable election to apply ASC 825-10 to our Credit Facility. We elected to use the fair value option for the Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we incurred up-front fees of $5.4 million which represents transaction costs and expenses related to the amended Credit Facility. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a companys choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statement of Assets and Liabilities and changes in fair value of the Credit Facility are recorded in the Consolidated Statement of Operations. We elected not to apply ASC 825-10 to any other financial assets or liabilities, including the SBA debentures. For the fiscal year ended September 30, 2012 and 2011, our Credit Facility had a net change in unrealized appreciation depreciation of $1.6 million and $11.9 million, respectively. As of September 30, 2012 and 2011, net unrealized depreciation on our Credit Facility totaled $0.5 million and $2.1 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of our Credit Facility in a manner consistent with the valuation process that the board of directors uses to value investments.

Sales and repayments of long-term investments for the fiscal years ended September 30, 2012, 2011 and 2010 totaled $201.7 million, $304.0 million and $145.2 million, respectively, and net realized gains (losses) totaled $(12.8) million, $16.3 million and $(15.4) million, respectively. Net realized losses increased over the prior year due to sales, restructurings, and repayments of our investments.

During the fiscal year ended September 30, 2012, 2011 and 2010, we declared dividends of $1.12, $1.07 and $1.03 per share, respectively, for total dividends of $60.1 million, $46.3 million and $32.3 million, respectively. We monitor available net investment income to determine if a return of capital for taxation purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, a portion of those distributions may be deemed to be a return of capital to our common stockholders. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year.

We adopted ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Credit Facility. We elected to use the fair value option for the Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we incurred and expensed up-front fees of $5.4 million, which represents transaction costs and expenses related to the amended Credit Facility. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a companys choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statement of Assets and Liabilities and changes in fair value of the Credit Facility are recorded in the Consolidated Statement of Operations. We elected not to apply ASC 825-10 to any other financial assets or liabilities, including the SBA debentures. For the years ended September 30, 2012 and 2011, our Credit Facility had a net change in unrealized appreciation of $1.6 million and $11.9 million, respectively. As of September 30, 2012 and 2011, net unrealized depreciation on our Credit Facility totaled $0.5 million and $2.1 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of our Credit Facility in a manner consistent with the valuation process that the board of directors uses to value investments.

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