Saratoga Investment Corporation

05/08/2019 | Press release | Archived content

May 8, 2019 Saratoga Investment Corp. Announces Fiscal Year End and Fourth Quarter 2019 Financial Results

NEW YORK, May 08, 2019 (GLOBE NEWSWIRE) -- Saratoga Investment Corp. (NYSE:SAR) ('Saratoga Investment' or 'the Company'), a business development company, today announced financial results for its 2019 fiscal year end and fourth quarter.

Summary Financial Information

The Company's summarized financial information is as follows:

For the year ended and as of February 28,
2019
For the year ended and as of February 28,
2018
For the year ended and as of February 28,
2017
($ thousands except per share)
AUM 402,020 342,694 292,661
NAV 180,875 143,691 127,295
NAV per share 23.62 22.96 21.97
Investment Income 47,708 38,615 33,157
Net Investment Income per share 2.60 2.11 1.68
Adjusted Net Investment Income per share 2.63 2.27 2.01
Earnings per share 2.63 2.93 1.98
Dividends per share (declared) 2.10 1.94 1.78
Return on Equity - last twelve months 10.6 % 13.2 % 9.0 %
Originations 187,708 107,698 126,935
Repayments 135,265 66,320 121,159
For the quarter ended February 28,
2019
For the quarter ended November 30,
2018
For the quarter ended February 28,
2018
($ thousands except per share)
AUM 402,020 443,812 342,694
NAV 180,875 173,269 143,691
NAV per share 23.62 23.13 22.96
Investment Income 12,984 12,833 10,128
Net Investment Income per share 0.54 0.69 0.53
Adjusted Net Investment Income per share 0.66 0.65 0.60
Earnings per share 1.04 0.49 0.89
Dividends per share (declared) 0.54 0.53 0.50
Return on Equity - last twelve months 10.6 % 10.1 % 13.2 %
- annualized quarter 17.7 % 8.5 % 15.7 %
Originations 29,340 73,732 20,820
Repayments 77,042 23,365 20,742

'Fiscal year 2019 continued the strong performance trend for Saratoga Investment Corp. with significant strengthening of our organizational and capital foundation,' said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. 'We continued to make steady progress growing our high quality asset base while maintaining our industry leadership in key performance metrics and credit quality. We also took important steps to expand our capitalization and liquidity through equity and long-term debt issuances, raising over $90 million in the public capital markets. We increased our quarterly dividend for the 18th consecutive quarter to $0.54 per share, reflecting a 2% year-over-year increase while still overearning the dividend. Year-over-year, NAV grew by 26% and NAV per share by 3%. Our LTM ROE for the year was 10.6% is in the top tier of the BDC industry.'

Michael J. Grisius, President and Chief Investment Officer, added, 'In this fiscal year, our organization originated $167.7 million of new investments, excluding the CLO warehouse - a record amount for us. We continue to see steady year-over-year asset base expansion, with an increase in our investments at fair value of 17% compared to last year, despite some significant repayments in Q4 of $57.0 million, excluding the CLO warehouse. Furthermore, market headwinds have not impaired our exceptional underwriting standards and consistent ability to deploy capital in high quality credits. This continued post quarter-end as we closed investments in three new platforms. 99% of our investments continue to hold our highest quality rating. Our belief remains that successful investing rests on sound judgment and steady, continuous discipline, taken one decision at a time. It is our conviction that our commitment to a long-term strategy and focus on quality will continue to reap positive rewards.'

As of February 28, 2019, Saratoga Investment increased its assets under management ('AUM') to $402.0 million, an increase of 17.3% from $342.7 million as of February 28, 2018, and a decrease of 9.4% from $443.8 million as of November 30, 2018. The annual increase reflects originations of $187.7 million new investments during the year ended February 28, 2019, offset by repayments and amortizations of $135.7 million. These investments and repayments for the year are inclusive of the $29.3 million in originations and $77.0 million in repayments during the quarter ended February 28, 2019. Since Saratoga management has taken over the management of the BDC, $357.8 million of repayments and sales of investments originated by Saratoga have generated a gross unlevered IRR of 13.8%. Saratoga Investment's portfolio has remained strong, with a continued high level of investment quality in loan investments, with 98.6% of its loans at its highest internal rating for this quarter.

As a result, both the year and quarter ended February 28, 2019 benefitted from higher investment income as compared to the prior-year period - investment income increased to $47.7 million for the year ended February 28, 2019, up 23.5% from $38.6 million for the year ended February 28, 2018, and up to $13.0 million from $10.1 million for the same quarterly periods, a 28.2% increase. This increased investment income was generated from an investment base that has grown by 17.3% since last year, partially offset by the weighted average current yield decreasing from 11.1% to 10.7%. In addition, this quarter's investment income was also up 1.2% from $12.8 million for the quarter ended November 30, 2018.

As compared to the year ended February 28, 2018, the investment income increase was offset by (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from increased SBA debentures and the $60.0 million baby bond issuance, (ii) increased base and incentive management fees generated from the management of this larger pool of investments, and (iii) increased total expenses, excluding interest and debt financing expenses, base management fees and incentive fees and income tax benefit, reflecting primarily higher administrator expenses, higher directors fees and expenses and higher professional and general and administrative expenses, partially due to increased Sarbanes-Oxley ('SOX') activities now that the Company has qualified as an accelerated filer. The increased expenses were offset by the recognition of a $1.0 million income tax benefit generated from net operating losses in Saratoga Investment's blocker subsidiaries.

Net investment income on a weighted average per share basis was $2.60 and $0.54 for the year and quarter ended February 28, 2019, respectively. Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income on a weighted average per share basis was $2.63 and $0.66, respectively. This compares to adjusted net investment income per share of $2.27 and $0.60 for the year and quarter ended February 28, 2018, reflecting an increase of $0.36 and $0.06 per share, respectively. This also compares to adjusted net investment income of $0.65 per share for the quarter ended November 30, 2018, an increase of $0.01 per share.

Net investment income yield as a percentage of average net asset value ('Net Investment Income Yield') was 10.5% and 9.2% for the year and quarter ended February 28, 2019, respectively. Adjusted for the incentive fee accrual related to net unrealized capital gains, the Net Investment Income Yield was 10.6% and 11.2%, respectively. In comparison, adjusted Net Investment Income Yield was 10.2% for the year ended February 28, 2018, and 11.2% and 10.7% for the quarters ended November 30, 2018, and February 28, 2018, respectively.

Net Asset Value ('NAV') was $180.9 million as of February 28, 2019, an increase of $37.2 million from $143.7 million as of February 28, 2018, and an increase of $7.6 million from $173.3 million as of November 30, 2018.

  • For the year ended February 28, 2019, $18.3 million of net investment income and $2.0 million of net realized and unrealized gains were earned, offset by $1.8 million of deferred tax expense on net unrealized gains in Saratoga Investment's blocker subsidiaries, and $14.2 million of dividends declared. In addition, $30.8 million of common stock was issued, net of offering costs and $2.2 million of stock dividend distributions were made through the Company's dividend reinvestment plan ('DRIP'). 146,549 shares were sold through the Company's At-the-Market ('ATM') equity offering during the year.

NAV per share was $23.62 as of February 28, 2019, compared to $22.96 as of February 28, 2018, and $23.13 as of November 30, 2018.

  • During the past twelve months, NAV per share increased by $0.66 per share, primarily reflecting (i) the $4.3 million, or $0.57 per share increase in net assets resulting from operations (net of the $2.06 per share dividend paid during fiscal 2019) and (ii) the $0.09 accretive impact of the year's 1,400,127 share issuances, including the equity offering, the ATM and the DRIP. The Company made no purchases of common stock in the open market during the year.

Return on equity for the year ended February 28, 2019, was 10.6%, compared to 13.2% for the comparable period last year.

Earnings per share for the year and quarter ended February 28, 2019, was $2.63 per share and $1.04 per share, respectively, compared to earnings per share of $2.93 per share and $0.89 per share for the year and quarter ended February 28, 2018, respectively, and $0.49 per share for the quarter ended November 30, 2018.

Investment portfolio activity for the year ended February 28, 2019:

  • Cost of investments made during the period: $187.7 million
  • Principal repayments and amortizations during the period: $135.7 million

Investment portfolio activity for the quarter ended February 28, 2019:

  • Cost of investments made during the period: $29.3 million
  • Principal repayments and amortizations during the period: $77.0 million

Additional Financial Information

For the fiscal year ended February 28, 2019, Saratoga Investment reported net investment income of $18.3 million, or $2.60 on a weighted average per share basis, and a net gain on investments of $0.2 million, or $0.03 on a weighted average per share basis, resulting in a net increase in net assets from operations of $18.5 million, or $2.63 on a weighted average per share basis. The $0.2 million net gain on investments was comprised of $4.9 million in net realized gain on investments offset by $2.9 million in net unrealized depreciation on investments and $1.8 million of net deferred tax expense on unrealized appreciation on investments in Saratoga Investment's blocker subsidiaries. The net realized gain primarily relates to the $4.7 million gain on the Company's Health Media Network investment realized in the fourth quarter. The $2.9 million unrealized depreciation primarily reflects (i) a reversal of the previously recognized appreciation following the realization of the Company's Health Media Network investment, (ii) $1.4 million unrealized depreciation on the Company's My Alarm Center investment, (iii) $1.6 million unrealized depreciation on the Company's legacy Elyria investment and (iv) $1.8 million unrealized depreciation on the Company's Roscoe Medical investment. These unrealized depreciations were partially offset by (i) $1.8 million unrealized appreciation on the Company's Easy Ice investment, most notably the participating preferred equity, (ii) $2.1 million unrealized appreciation on the Company's Netreo Holdings investment, and (iii) approximately $1.0 million of unrealized appreciation on each of the Company's Grey Heller, Censis and Vector investments. This compared to the fiscal year ended February 28, 2018, with net investment income of $12.7 million, or $2.11 on a weighted average per share basis, and a net gain on investments of $4.9 million, or $0.82 on a weighted average per share basis, resulting in a net increase in net assets from operations of $17.7 million, or $2.93 on a weighted average per share basis. The $4.9 million net gain on investments consisted of $5.9 million in net realized loss on investments offset by $10.8 million unrealized appreciation.

Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was $18.6 million and $13.7 million for the years ended February 28, 2019, and February 28, 2018, respectively - this is an increase of $4.9 million year-over-year, or 35.9%.

For the quarter ended February 28, 2019, Saratoga Investment reported net investment income of $4.1 million, or $0.54 on a weighted average per share basis, and a net gain on investments of $3.8 million, or $0.50 on a weighted average per share basis, resulting in a net increase in net assets from operations of $7.9 million, or $1.04 on a weighted average per share basis. The $3.8 million net gain on investments was comprised of $4.7 million in net realized gain on investments offset by $0.4 million in net unrealized depreciation on investments and $0.6 million of net deferred tax expense on unrealized appreciation on investments in Saratoga Investment's blocker subsidiaries. The net realized gain relates to the $4.7 million gain on the Company's Health Media Network investment discussed above. The $0.4 million unrealized depreciation primarily reflects (i) a reversal of the previously recognized appreciation following the realization of the Company's Health Media Network investment, and (ii) $1.1 million unrealized depreciation on the Company's Roscoe Medical investment. These unrealized depreciations were partially offset by (i) $1.4 million unrealized appreciation on the Company's Netreo Holdings investment, (ii) $0.6 million unrealized appreciation on the Company's Ohio Medical investment, (iii) $0.6 million unrealized appreciation on Saratoga Investment's CLO equity investment, reflecting fourth quarter performance exceeding projections, and (iv) numerous smaller unrealized appreciations across the portfolio on various investments. This compared to the quarter ended February 28, 2018, with net investment income of $3.3 million, or $0.53 on a weighted average per share basis, and a net gain on investments of $2.2 million, or $0.36 on a weighted average per share basis, resulting in a net increase in net assets from operations of $5.5 million, or $0.89 on a weighted average per share basis. The $2.2 million net gain on investments consisted of $2.4 million unrealized appreciation offset by $0.2 million in net realized loss on investments.

Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was $4.9 million and $3.8 million for the quarters ended February 28, 2019, and February 28, 2018, respectively - this is an increase of $1.2 million year-over-year, or 31.1%.

Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, decreased from $4.8 million for the year ended February 28, 2018 to $4.5 million for the year ended February 28, 2019, and decreased from 1.2% to 1.1% of average total assets. For the quarters ended February 28, 2019, and February 28, 2018, these total expenses decreased from $1.2 million to $1.0 million.

Portfolio and Investment Activity

As of February 28, 2019, the fair value of Saratoga Investment's portfolio was $402.0 million (excluding $62.1 million in cash and cash equivalents), principally invested in 31 portfolio companies and one collateralized loan obligation fund ('CLO'). The overall portfolio composition consisted of 50.5% of first lien term loans, 31.3% of second lien term loans, 8.8% of CLO subordinated notes, 0.5% of unsecured term loans, and 8.9% of equity interests.

For the fiscal year ended February 28, 2019, Saratoga Investment invested $187.7 million in new or existing portfolio companies and had $135.7 million in aggregate amount of exits and repayments, resulting in net investments of $52.0 million for the year. For the quarter ended February 28, 2019, Saratoga Investment invested $29.3 million in new or existing portfolio companies, and had $77.0 million in aggregate amount of exits and repayments, resulting in $47.7 million of net exits and repayments for the quarter.

As of February 28, 2019, the weighted average current yield on Saratoga Investment's portfolio for the twelve months ended was 10.7%, which was comprised of a weighted average current yield of 10.9% on first lien term loans, 11.7% on second lien term loans, 14.6% on CLO subordinated notes, and 3.1% on equity interests.

As of February 28, 2019, 83.7% of Saratoga Investment's portfolio is in floating rate debt, with many of these investments having floors. For all of these investments, the relevant 1-month or 3-month LIBOR rate is currently above the floors. Saratoga Investment has analyzed the potential impact of changes in interest rates on interest income from investments, and assuming that the investments as of February 28, 2019, were to remain constant for a full fiscal year and no actions were taken to alter the existing interest rate terms, a hypothetical change of 1.0% in interest rates would cause a corresponding increase of approximately $2.8 million to interest income.

Liquidity and Capital Resources

As of February 28, 2019, Saratoga Investment had $0.0 million in outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC. At the same time, Saratoga Investment had $150.0 million outstanding of SBA debentures, $134.5 million of Baby Bonds (fair value of $136.3 million) and an aggregate of $62.1 million in cash and cash equivalents.

With the $45.0 million credit facility and the $62.1 million of cash and cash equivalents, Saratoga Investment has a total of $107.1 million of undrawn borrowing capacity and cash and cash equivalents available as of February 28, 2019. The net proceeds from the DRIP and ATM equity program totaled $32.9 million and $3.7 million of equity issuances for the year and quarter ended February 28, 2019, respectively. Saratoga Investment also has the ability to issue additional Baby Bonds through the existing shelf registration statement.

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which Saratoga may offer for sale, from time to time, up to $30.0 million of its common stock through an ATM offering. As of February 28, 2019, the Company sold 494,672 shares for gross proceeds of $11.2 million at an average price of $22.72 for aggregate net proceeds of $11.1 million (net of transaction costs).

On July 13, 2018, Saratoga Investment issued 1,150,000 shares of its common stock priced at $25.00 per share (par value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately $27.4 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not exercised.

On August 28, 2018, Saratoga Investment issued $40.0 million in aggregate principal amount of 6.25% fixed-rate notes due 2025 (the '2025 Notes') for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.25 million and offering costs of approximately $0.3 million. The issuance included the full exercise of the underwriters' option to purchase an additional $5.0 million aggregate principal amount of 2025 Notes within 30 days. Interest on the 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year, beginning November 30, 2018. The 2025 Notes mature on August 31, 2025, and commencing August 28, 2021, may be redeemed in whole or in part, at any time or from time to time, at its option. The 2025 Notes are listed on the NYSE under the trading symbol 'SAF' with a par value of $25.00 per share.

On February 5, 2019, Saratoga Investment completed a re-opening and up-sizing of its existing 2025 Notes by issuing an additional $20.0 million in aggregate principal amount for net proceeds of $19.2 million after deducting underwriting commissions of approximately $0.6 million and discount of $0.2 million. Offering costs incurred were approximately $0.2 million. The issuance included the full exercise of the underwriters' option to purchase an additional $2.5 million aggregate principal amount of 2025 Notes within 30 days. Interest rate, interest payment dates and maturity remain unchanged from the existing 2025 Notes issued in August 2018.

On September 27, 2018, the SBA issued a 'green light' letter inviting Saratoga Investment to file a formal license application for a second SBIC license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting us to issue, subject to SBA approval, up to $175.0 million of additional SBA-guaranteed debentures in addition to the $150.0 million already approved under the Company's first license. Receipt of a green light letter from the SBA does not assure an applicant that the SBA will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would receive an additional license, should one ultimately be granted.

Dividend

During fiscal year 2019, Saratoga Investment declared and paid quarterly cash dividends of $2.06 per share, including $0.50 per share for the quarter ended February 28, 2018, $0.51 per share for the quarter ended May 31, 2018, $0.52 per share for the quarter ended August 31, 2018 and $0.53 per share for the quarter ended November 30, 2018.

On February 26, 2019, our board of directors declared a dividend of $0.54 per share for the quarter ended February 28, 2019, which was paid on March 28, 2019. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant the Company's DRIP.

Share Repurchase Plan

In fiscal year 2015, the Company announced the approval of an open market share repurchase plan that allows it to repurchase up to 200,000 shares of its common stock at prices below its NAV as reported in its then most recently published financial statements. During fiscal year 2018, the share repurchase plan was increased to 600,000 shares of common stock, and during fiscal year 2019, this share repurchase plan was extended for another year, through January 2020, at the same level of approval. As of February 28, 2019, the Company purchased 218,491 shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan.

We made no purchases of common stock in the open market during the year ended February 28, 2019.

2019 Fiscal Year End and Fourth Quarter Conference Call/Webcast Information

When: Thursday, May 9, 2018, 10:00 a.m. Eastern Daylight Time (EDT)

Call: Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada).

A replay of the call will be available from 1:00 p.m. EDT on Thursday, May 9, 2019, through 1:00 p.m. ET on Thursday, May 16, 2019, by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 3985768.

Webcast: Interested parties may access a simultaneous webcast of the call and find the FY and Q4 2019 presentation by going to the ?Events & Presentations? section of Saratoga Investment Corp.?s investor relations website, http://ir.saratogainvestmentcorp.com/events-presentations

About Saratoga Investment Corp.

Saratoga Investment is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in senior and unitranche leveraged loans and mezzanine debt, and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors. Saratoga Investment's objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments. Saratoga Investment has elected to be regulated as a business development company under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies. Saratoga Investment owns an SBIC-licensed subsidiary and manages a $500 million collateralized loan obligation ('CLO') fund. It also owns 100% of the Class F-R-2, G-R-2 and subordinated notes of the CLO. The Company's diverse funding sources, combined with a permanent capital base, enable Saratoga Investment to provide a broad range of financing solutions.

Forward-Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release that could cause our actual results to differ materially from those expressed or implied in such statements. Additional information is contained in the filings Saratoga Investment Corp. makes with the SEC. Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Financials

Saratoga Investment Corp.
Consolidated Statements of Assets and Liabilities

February 28,
2019
February 28,
2018
ASSETS
Investments at fair value
Non-control/Non-affiliate investments (amortized cost of $307,136,188 and $281,534,277, respectively) $ 306,511,427 $ 286,061,722
Affiliate investments (amortized cost of $18,514,716 and $18,358,611, respectively) 11,463,081 12,160,564
Control investments (amortized cost of $76,265,189 and $39,797,229, respectively) 84,045,212 44,471,767
Total investments at fair value (amortized cost of $401,916,093 and $339,690,117, respectively) 402,019,720 342,694,053
Cash and cash equivalents 30,799,068 3,927,579
Cash and cash equivalents, reserve accounts 31,295,326 9,849,912
Interest receivable (net of reserve of $647,210 and $1,768,021, respectively) 3,746,604 3,047,125
Due from affiliate 1,673,747 -
Management and incentive fee receivable 542,094 233,024
Other assets 595,543 584,668
Total assets $ 470,672,102 $ 360,336,361
LIABILITIES
Revolving credit facility $ - $ -
Deferred debt financing costs, revolving credit facility (605,189 ) (697,497 )
SBA debentures payable 150,000,000 137,660,000
Deferred debt financing costs, SBA debentures payable (2,396,931 ) (2,611,120 )
2023 Notes payable 74,450,500 74,450,500
Deferred debt financing costs, 2023 notes payable (1,919,620 ) (2,316,370 )
2025 Notes payable 60,000,000 -
Deferred debt financing costs, 2025 notes payable (2,377,551 ) -
Base management and incentive fees payable 6,684,785 5,776,944
Deferred tax liability 739,716 -
Accounts payable and accrued expenses 1,615,443 924,312
Interest and debt fees payable 3,224,671 3,004,354
Directors fees payable 62,000 43,500
Due to manager 319,091 410,371
Total liabilities $ 289,796,915 $ 216,644,994
Commitments and contingencies (See Note 8)
NET ASSETS
Common stock, par value $.001, 100,000,000 common shares authorized, 7,657,156 and 6,257,029 common shares issued and outstanding, respectively $ 7,657 $ 6,257
Capital in excess of par value 203,552,800 188,975,590
Total distributable earnings (loss) (22,685,270 ) (45,290,480 )
Total net assets 180,875,187 143,691,367
Total liabilities and net assets $ 470,672,102 $ 360,336,361
NET ASSET VALUE PER SHARE $ 23.62 $ 22.96
Asset Coverage Ratio 234.5 % 293.0 %

Certain prior year numbers have been adjusted to conform with the SEC final rules on disclosure updates and simplification effective November 5, 2018.

Saratoga Investment Corp.
Consolidated Statements of Operations

For the year ended
February 28,
2019
February 28,
2018
February 28,
2017
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments $ 33,329,539 $ 26,648,380 $ 26,167,951
Affiliate investments 963,289 886,948 246,035
Control investments 4,785,044 4,768,534 2,281,397
Payment-in-kind interest income:
Non-control/Non-affiliate investments 780,112 984,305 652,847
Affiliate investments 150,284 80,460 -
Control investments 3,288,902 1,741,334 -
Total interest from investments 43,297,170 35,109,961 29,348,230
Interest from cash and cash equivalents 64,024 27,495 31,151
Management fee income 1,722,180 1,509,317 1,499,001
Incentive fee income 633,232 591,368 -
Other income 1,991,357 1,376,837 2,278,770
Total investment income 47,707,963 38,614,978 33,157,152
OPERATING EXPENSES
Interest and debt financing expenses 13,125,718 10,938,654 9,888,127
Base management fees 6,879,324 5,846,400 4,898,657
Incentive management fees 4,891,004 4,333,983 2,947,543
Professional fees 1,849,424 1,590,798 1,243,400
Administrator expenses 1,895,833 1,645,833 1,366,667
Insurance 253,141 259,571 275,787
Directors fees and expenses 290,500 197,500 235,422
General & administrative 1,224,462 1,058,009 1,121,594
Income tax benefit (1,027,118 ) - -
Excise tax expense (credit) - (14,738 ) 44,770
Other expense 23,466 27,310 19,780
Total operating expenses 29,405,754 25,883,320 22,041,747
Loss on extinguishment of debt - - 1,454,595
NET INVESTMENT INCOME 18,302,209 12,731,658 9,660,810
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments 4,874,305 (5,877,734 ) 12,368,115
Control investments - 166 -
Net realized gain (loss) from investments 4,874,305 (5,877,568 ) 12,368,115
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments (5,152,206 ) 6,178,457 (11,687,337 )
Affiliate investments (853,588 ) 818,323 (3,141 )
Control investments 3,105,485 3,828,275 1,049,034
Net change in unrealized appreciation (depreciation) on investments (2,900,309 ) 10,825,055 (10,641,444 )
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments (1,766,835 ) - -
Net realized and unrealized gain (loss) on investments 207,161 4,947,487 1,726,671
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 18,509,370 $ 17,679,145 $ 11,387,481
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE $ 2.63 $ 2.93 $ 1.98
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 7,046,686 6,024,040 5,740,450

Saratoga Investment Corp.
Consolidated Statements of Operations

For the three months ended
February 28,
2019
February 28,
2018
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments $ 8,628,236 $ 7,168,988
Affiliate investments 242,551 223,833
Control investments 1,444,864 919,247
Payment-in-kind interest income:
Non-control/Non-affiliate investments 158,650 210,723
Affiliate investments 39,386 32,173
Control investments 1,017,543 736,570
Total interest from investments 11,531,230 9,291,534
Interest from cash and cash equivalents 22,619 7,144
Management fee income 592,259 381,233
Incentive fee income 139,386 114,281
Other income 698,664 333,942
Total investment income 12,984,158 10,128,134
OPERATING EXPENSES
Interest and debt financing expenses 3,922,981 2,693,304
Base management fees 1,851,983 1,488,170
Incentive management fees 2,087,220 1,393,633
Professional fees 430,952 410,885
Administrator expenses 500,000 437,500
Insurance 63,225 62,664
Directors fees and expenses 60,000 43,500
General & administrative 316,288 273,938
Income tax benefit (342,598 ) -
Excise tax expense (credit) 270 -
Other expense 2,445 3,893
Total operating expenses 8,892,766 6,807,487
NET INVESTMENT INCOME 4,091,392 3,320,647
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments 4,729,298 (155,685 )
Affiliate investments - -
Control investments - (63,554 )
Net realized gain (loss) from investments 4,729,298 (219,239 )
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments (2,724,083 ) 1,401,934
Affiliate investments 271,652 877,612
Control investments 2,094,551 151,255
Net change in unrealized appreciation (depreciation) on investments (357,880 ) 2,430,801
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments (607,254 ) -
Net realized and unrealized gain (loss) on investments 3,764,164 2,211,562
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,855,556 $ 5,532,209
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE $ 1.04 $ 0.89
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 7,534,235 6,243,896

Saratoga Investment Corp.

Consolidated Schedule of Investments

February 28, 2019

Company Industry Investment Interest Rate/ Maturity Original Acquisition Date Principal/ Number of Shares Cost Fair Value (c) % of Net Assets
Non-control/Non-affiliate investments - 169.5% (b)
Apex Holdings Software Technologies, LLC Business Services First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 9/21/2021 9/21/2016 $ 18,000,000 $ 17,922,851 $ 18,000,000 10.0 %
Apex Holdings Software Technologies, LLC Business Services Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 9/21/2021 10/1/2018 $ 1,000,000 992,183 1,000,000 0.6 %
Avionte Holdings, LLC (h) Business Services Class A Units 1/8/2014 100,000 100,000 635,781 0.4 %
CLEO Communications Holding, LLC Business Services First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash/2.00% PIK, 3/31/2022 3/31/2017 $ 13,514,320 13,437,153 13,514,320 7.5 %
CLEO Communications Holding, LLC Business Services Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.62% Cash/2.00% PIK, 3/31/2022 3/31/2017 $ 12,142,015 12,040,280 12,142,015 6.7 %
Destiny Solutions Inc. (a) Business Services First Lien Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 5/16/2023 5/16/2018 $ 8,500,000 8,426,441 8,489,800 4.7 %
Destiny Solutions Inc. (a), (j) Business Services Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 5/16/2023 5/16/2018 $ - - - 0.0 %
Destiny Solutions Inc. (a), (h), (i) Business Services Limited Partner Interests 5/16/2018 999,000 999,000 1,062,440 0.6 %
Emily Street Enterprises, L.L.C. Business Services Senior Secured Note (3M USD LIBOR+8.50%), 11.12% Cash, 1/23/2020 12/28/2012 $ 3,300,000 3,299,122 3,314,520 1.8 %
Emily Street Enterprises, L.L.C. (h) Business Services Warrant Membership Interests Expires 12/28/2022 12/28/2012 49,318 400,000 505,509 0.3 %
Erwin, Inc. (d) Business Services Second Lien Term Loan (3M USD LIBOR+11.50%), 14.12% Cash/1.00% PIK, 8/28/2021 2/29/2016 $ 15,888,102 15,796,316 15,888,102 8.8 %
FMG Suite Holdings, LLC (d) Business Services Second Lien Term Loan (1M USD LIBOR+8.00%), 10.49% Cash, 11/16/2023 5/16/2018 $ 23,000,000 22,844,123 23,000,000 12.7 %
GDS Holdings US, LLC (d) Business Services First Lien Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 8/23/2023 8/23/2018 $ 7,500,000 7,430,649 7,495,500 4.0 %
GDS Holdings US, LLC (j) Business Services Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 8/23/2023 8/23/2018 $ - - - 0.0 %
GDS Software Holdings, LLC (h) Business Services Common Stock Class A Units 8/23/2018 250,000 250,000 277,139 0.2 %
Identity Automation Systems (h) Business Services Common Stock Class A Units 8/25/2014 232,616 232,616 629,555 0.3 %
Identity Automation Systems (d) Business Services First Lien Term Loan (3M USD LIBOR+9.00%), 11.62% Cash, 3/31/2021 8/25/2014 $ 24,100,000 23,991,294 24,100,000 13.3 %
Knowland Group, LLC Business Services Second Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 5/9/2024 11/9/2018 $ 15,000,000 15,000,000 15,000,000 8.3 %
Microsystems Company Business Services Second Lien Term Loan (3M USD LIBOR+8.25%), 10.87% Cash, 7/1/2022 7/1/2016 $ 18,000,000 17,889,554 17,881,200 9.9 %
National Waste Partners (d) Business Services Second Lien Term Loan 10.00% Cash, 2/13/2022 2/13/2017 $ 9,000,000 8,942,155 8,864,100 4.9 %
Omatic Software, LLC Business Services First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 5/29/2023 5/29/2018 $ 5,500,000 5,451,758 5,537,400 3.1 %
Omatic Software, LLC (j) Business Services Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 5/29/2023 5/29/2018 $ - - - 0.0 %
Passageways, Inc. Business Services First Lien Term Loan (3M USD LIBOR+7.75%), 10.37% Cash, 7/5/2023 7/5/2018 $ 5,000,000 4,955,204 5,063,500 2.8 %
Passageways, Inc. (h) Business Services Series A Preferred Stock 7/5/2018 2,027,205 1,000,000 1,339,705 0.7 %

Saratoga Investment Corp.
Consolidated Schedule of Investments
February 28, 2019

Company Industry Investment Interest Rate/ Maturity Original Acquisition Date Principal/ Number of Shares Cost Fair Value (c) % of Net Assets
Vector Controls Holding Co., LLC (d) Business Services First Lien Term Loan 11.50% (9.75% Cash/1.75% PIK), 3/6/2022 3/6/2013 $ 9,311,956 9,310,703 9,371,929 5.2 %
Vector Controls Holding Co., LLC (h) Business Services Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027 5/31/2015 343 - 2,210,149 1.2 %
Total Business Services 190,711,402 195,322,664 108.0 %
Targus Holdings, Inc. (h) Consumer Products Common Stock 12/31/2009 210,456 1,713,605 505,094 0.3 %
Total Consumer Products 1,713,605 505,094 0.3 %
My Alarm Center, LLC (k) Consumer Services Preferred Equity Class A Units 8.00% PIK 7/14/2017 2,227 2,357,879 1,112,543 0.6 %
My Alarm Center, LLC (h) Consumer Services Preferred Equity Class B Units 7/14/2017 1,797 1,796,880 - 0.0 %
My Alarm Center, LLC Consumer Services Preferred Equity Class Z Units 25.00% PIK 9/12/2018 676 655,987 2,053,514 1.1 %
My Alarm Center, LLC (h) Consumer Services Common Stock 7/14/2017 96,224 - - 0.0 %
Total Consumer Services 4,810,746 3,166,057 1.7 %
C2 Educational Systems (d) Education First Lien Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 5/31/2020 5/31/2017 $ 16,000,000 15,929,485 16,032,000 8.9 %
Kev Software Inc. (a), Education First Lien Term Loan (1M USD LIBOR+8.63%), 11.12% Cash, 9/13/2023 9/13/2018 $ 21,446,929 21,273,211 21,438,351 11.9 %
M/C Acquisition Corp., L.L.C. (h) Education Class A Common Stock 6/22/2009 544,761 30,241 - 0.0 %
M/C Acquisition Corp., L.L.C. (k) Education First Lien Term Loan 1.00% Cash, 3/31/2020 8/10/2004 $ 2,315,090 1,189,177 6,260 0.0 %
Texas Teachers of Tomorrow, LLC (h), (i) Education Common Stock 12/2/2015 750,000 750,000 792,165 0.4 %
Texas Teachers of Tomorrow, LLC Education Second Lien Term Loan (3M USD LIBOR+9.75%), 12.37% Cash, 6/2/2021 12/2/2015 $ 10,000,000 9,952,251 9,807,000 5.4 %
Total Education 49,124,365 48,075,776 26.6 %
TMAC Acquisition Co., LLC (k) Food and Beverage Unsecured Term Loan 8.00% PIK, 9/01/2023 3/1/2018 $ 2,216,427 2,216,427 2,100,286 1.2 %
Total Food and Beverage 2,216,427 2,100,286 1.2 %
Axiom Parent Holdings, LLC (h) Healthcare Services Common Stock Class A Units 6/19/2018 400,000 400,000 402,990 0.2 %
Axiom Purchaser, Inc. (d) Healthcare Services First Lien Term Loan (3M USD LIBOR+6.00%), 8.62% Cash, 6/19/2023 6/19/2018 $ 10,000,000 9,923,962 10,020,000 5.5 %
Axiom Purchaser, Inc. (j) Healthcare Services Delayed Draw Term Loan (3M USD LIBOR+6.00%), 8.62% Cash, 6/19/2023 6/19/2018 $ - - - 0.0 %
Censis Technologies, Inc. Healthcare Services First Lien Term Loan B (1M USD LIBOR+8.30%), 10.79% Cash, 9/27/2023 7/25/2014 $ 19,950,000 19,877,861 19,991,895 11.1 %
Censis Technologies, Inc. (h), (i) Healthcare Services Limited Partner Interests 7/25/2014 999 999,000 2,387,705 1.3 %
ComForCare Health Care Healthcare Services First Lien Term Loan (3M USD LIBOR+7.50%), 10.12% Cash, 1/31/2022 1/31/2017 $ 15,000,000 14,898,535 15,096,000 8.3 %
Ohio Medical, LLC (h) Healthcare Services Common Stock 1/15/2016 5,000 500,000 208,250 0.1 %
Ohio Medical, LLC Healthcare Services Senior Subordinated Note 12.00% Cash, 7/15/2021 1/15/2016 $ 7,300,000 7,263,114 6,735,710 3.8 %
Roscoe Medical, Inc. (h) Healthcare Services Common Stock 3/26/2014 5,081 508,077 - 0.0 %
Roscoe Medical, Inc. (k) Healthcare Services Second Lien Term Loan 11.25% Cash, 3/28/2021 3/26/2014 $ 4,200,000 4,189,094 2,499,000 1.4 %
Total Healthcare Services 58,559,643 57,341,550 31.7 %
Sub Total Non-control/Non-affiliate investments 307,136,188 306,511,427 169.5 %

Saratoga Investment Corp.
Consolidated Schedule of Investments
February 28, 2019

Company Industry Investment Interest Rate/ Maturity Original Acquisition Date Principal/ Number of Shares Cost Fair Value (c) % of Net Assets
Affiliate investments - 6.4% (b)
GreyHeller LLC (f) Business Services First Lien Term Loan (3M USD LIBOR+11.00%), 13.62% Cash, 11/16/2021 11/17/2016 $ 7,000,000 6,956,976 7,140,000 4.0 %
GreyHeller LLC (f), (h) Business Services Series A Preferred Units 11/17/2016 850,000 850,000 1,496,169 0.8 %
Total Business Services 7,806,976 8,636,169 4.8 %
Elyria Foundry Company, L.L.C. (f), (h) Metals Common Stock 7/30/2010 60,000 9,685,028 1,804,200 1.0 %
Elyria Foundry Company, L.L.C. (d), (f) Metals Second Lien Term Loan 15.00% PIK, 8/10/2022 7/30/2010 $ 1,022,712 1,022,712 1,022,712 0.6 %
Total Metals 10,707,740 2,826,912 1.6 %
Sub Total Affiliate investments 18,514,716 11,463,081 6.4 %
Control investments - 46.5% (b)
Easy Ice, LLC (g) Business Services Preferred Equity 10.00% PIK 2/3/2017 5,080,000 9,683,612 13,357,444 7.4 %
Easy Ice, LLC (d), (g) Business Services Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023 3/29/2013 $ 21,184,063 21,126,021 21,268,799 11.8 %
Easy Ice Masters, LLC (d), (g) Business Services Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023 10/31/2018 $ 3,804,244 3,768,025 3,819,461 2.1 %
Netreo Holdings, LLC (g) Business Services First Lien Term Loan (3M USD LIBOR +6.25%), 9.00% Cash/2.00% PIK, 7/3/2023 7/3/2018 $ 5,067,057 5,021,133 5,092,899 2.8 %
Netreo Holdings, LLC (g), (h) Business Services Common Stock Class A Unit 7/3/2018 3,150,000 3,150,000 5,179,101 2.9 %
Total Business Services 42,748,791 48,717,704 27.0 %
Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g) Structured Finance Securities Other/Structured Finance Securities 16.67%, 1/20/2030 1/22/2008 $ 69,500,000 23,516,398 25,393,508 14.0 %
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Note (a), (g) Structured Finance Securities Other/Structured Finance Securities (3M USD LIBOR+8.75%), 11.37%, 1/20/2030 12/14/2018 $ 2,500,000 2,500,000 2,483,500 1.4 %
Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Note (a), (g) Structured Finance Securities Other/Structured Finance Securities (3M USD LIBOR+10.00%), 12.62%, 1/20/2030 12/14/2018 $ 7,500,000 7,500,000 7,450,500 4.1 %
Total Structured Finance Securities 33,516,398 35,327,508 19.5 %
Sub Total Control investments 76,265,189 84,045,212 46.5 %
TOTAL INVESTMENTS - 222.4% (b) $ 401,916,093 $ 402,019,720 222.4 %
Number of Shares Cost Fair Value % of Net Assets
Cash and cash equivalents and cash and cash equivalents, reserve accounts - 34.3% (b)
U.S. Bank Money Market (l) 62,094,394 $ 62,094,394 $ 62,094,394 34.3 %
Total cash and cash equivalents and cash and cash equivalents, reserve accounts 62,094,394 $ 62,094,394 $ 62,094,394 34.3 %

(a) Represents a non-qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. As of February 28, 2019, non-qualifying assets represent 16.5% of the Company's portfolio at fair value. As a BDC, the Company can only invest 30% of its portfolio in non-qualifying assets.
(b) Percentages are based on net assets of $180,875,187 as of February 28, 2019.
(c) Because there is no readily available market value for these investments, the fair values of these investments were determined using significant unobservable inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy.
(d) These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility.
(e) This investment does not have a stated interest rate that is payable thereon. As a result, the 16.67% interest rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment.
(f) As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and 25.0% of the voting securities. Transactions during the year ended February 28, 2019 in which the issuer was an Affiliate are as follows:

Company Purchases Sales Total Interest from Investments Management and Incentive Fee Income Net Realized Gain (Loss) from Investments Net Change in Unrealized Appreciation (Depreciation)
GreyHeller LLC $ - $ - $ 963,289 $ - $ - $ 776,012
Elyria Foundry Company, L.L.C. - - 150,284 - - (1,629,600 )
Total $ - $ - $ 1,113,573 $ - $ - $ (853,588 )

(g) As defined in the Investment Company Act, we 'Control' this portfolio company because we own more than 25% of the portfolio company's outstanding voting securities. Transactions during the year ended February 28, 2019 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Company Purchases Sales Total Interest from Investments Management and Incentive Fee Income Net Realized Gain (Loss) from Investments Net Change in Unrealized Appreciation (Depreciation)
Easy Ice, LLC $ 1,684,448 $ - $ 3,424,369 $ - $ - $ 1,720,004
Easy Ice Masters, LLC 3,629,682 - 161,468 - - 51,436
Netreo Holdings, LLC 8,100,000 - 374,843 - - 2,100,867
Saratoga Investment Corp. CLO 2013-1, Ltd. 14,268,609 (48,083 ) 2,922,372 2,355,412 - (701,722 )
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F Note - (4,500,000 ) 412,069 - - 900
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes 2,500,000 - 61,761 - - (16,500 )
Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes 7,500,000 - 205,333 - - (49,500 )
Saratoga Investment Corp. CLO 2013-1 Warehouse, Ltd. 20,000,000 (20,000,000 ) 511,731 - - -
Total $ 57,682,739 $ (24,548,083 ) $ 8,073,946 $ 2,355,412 $ - $ 3,105,485

(h) Non-income producing at February 28, 2019.
(i) Includes securities issued by an affiliate of the Company.
(j) All or a portion of this investment has an unfunded commitment as of February 28, 2019.
(k) As of February 28, 2019, the investment was on non-accrual status. The fair value of these investments was approximately $5.7 million, which represented 1.4% of the Company's portfolio.
(l) Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Company's consolidated statements of assets and liabilities as of February 28, 2019.

LIBOR - London Interbank Offered Rate

1M USD LIBOR - The 1 month USD LIBOR rate as of February 28, 2019 was 2.49%.
3M USD LIBOR - The 3 month USD LIBOR rate as of February 28, 2019 was 2.62%.
PIK - Payment-in-Kind

Supplemental Information Regarding Adjusted Net Investment Income, Adjusted Net Investment Income Yield and Adjusted Net Investment Income per share

On a supplemental basis, we provide information relating to adjusted net investment income, adjusted net investment income yield, and adjusted net investment income per share, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, net investment income, net investment income yield, and net investment income per share. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or reversal attributable to unrealized gains. The management agreement with Saratoga Investment's advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses for such year. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income, adjusted net investment income yield, and adjusted net income per share is a useful indicator of operations exclusive of any capital gains incentive fee expense or reversal attributable to unrealized gains. In addition, for fiscal 2017, adjusted net investment income also excludes the loss on extinguishment of Saratoga Investment's 2020 Notes, and the interest expense related to the 2020 Notes during the call notice period while the 2023 Notes were already issued and outstanding. Both these expenses are directly attributable to the issuance of the 2023 Notes and the subsequent repayment of the 2020 Notes, and are deemed to be non-recurring in nature and not representative of the operations of Saratoga Investment. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. The following table provides a reconciliation of net investment income to adjusted net investment income, net investment income yield to adjusted net investment income yield, and net investment income per share to adjusted net investment income per share for the years and quarters ended February 28, 2019 and February 28, 2018, and the year ended February 28, 2017.

For the years ended
February 28
2019 2018 2017
Net Investment Income $ 18,302,209 $ 12,731,658 $ 9,660,810
Changes in accrued capital gains incentive fee expense/ reversal 251,090 919,806 133,937
Loss on extinguishment of debt - - 1,454,595
Interest on 2020 notes during call period(3) - - 268,895
Adjusted net investment income 18,553,299 13,651,464 11,518,237
Net investment income yield 10.5 % 9.5 % 7.6 %
Changes in accrued capital gains incentive fee expense/ reversal 0.1 % 0.7 % 0.1 %
Loss on extinguishment of debt - - 1.2 %
Interest on 2020 notes during call period(3) - - 0.2 %
Adjusted net investment income yield (1) 10.6 % 10.2 % 9.1 %
Net investment income per share $ 2.60 $ 2.11 $ 1.68
Changes in accrued capital gains incentive fee expense/ reversal 0.03 0.16 0.03
Loss on extinguishment of debt - - 0.25
Interest on 2020 notes during call period(3) - - 0.05
Adjusted net investment income per share (2) $ 2.63 $ 2.27 $ 2.01


(1) Adjusted net investment income is calculated as adjusted net investment income divided by average net asset value.
(2) Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.
(3) Interest on 2020 notes during call period is presented net of the incentive fee accrual

For the quarters ended
February 28
2019 2018
Net Investment Income $ 4,091,392 $ 3,320,647
Changes in accrued capital gains incentive fee expense/ reversal 851,151 450,502
Loss on extinguishment of debt - -
Interest on 2020 notes during call period(3) - -
Adjusted net investment income 4,942,543 3,771,149
Net investment income yield 9.2 % 9.4 %
Changes in accrued capital gains incentive fee expense/ reversal 2.0 % 1.3 %
Loss on extinguishment of debt - -
Interest on 2020 notes during call period(3) - -
Adjusted net investment income yield (1) 11.2 % 10.7 %
Net investment income per share $ 0.54 $ 0.53
Changes in accrued capital gains incentive fee expense/ reversal 0.12 0.07
Loss on extinguishment of debt - -
Interest on 2020 notes during call period(3) - -
Adjusted net investment income per share (2) $ 0.66 $ 0.60


(1) Adjusted net investment income is calculated as adjusted net investment income divided by average net asset value.
(2) Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.
(3) Interest on 2020 notes during call period is presented net of the incentive fee accrual

Contact: Henri Steenkamp
Saratoga Investment Corp.
212-906-7800

Roland Tomforde
Broadgate Consultants
212-232-2222

Source: Saratoga Investment Corp