Golub Capital BDC, Inc. Declares Fiscal Year 2020 First Quarter Distribution of $0.33 Per Share, a Special Distribution of $0.13 Per Share and Announces Fiscal Year 2019 Fourth Quarter Financial Results

SELECTED FINANCIAL HIGHLIGHTS

(in thousands, expect per share data)

September 30, 2019

June 30, 2019

Investment portfolio, at fair value

$

4,292,932

$

1,922,821

Total assets

$

4,394,863

$

2,041,650

Net asset value per share

$

16.76

$

15.95

Quarter Ended

September 30, 2019

June 30, 2019

Net investment income per share

$

0.37

$

0.32

Amortization of purchase premium per share

0.02

$

?

Accrual for (reversal of) capital gain incentive fee per share

(0.06)

$

0.00

*

Adjusted net investment income per share¹

$

0.33

$

0.32

Net realized/unrealized gain (loss) per share

$

(1.39)

$

0.00

*

Unrealized loss resulting from the write down of the purchase premium per share

$

1.43

$

?

Reversal of unrealized loss resulting from the amortization of the purchase premium per share

$

(0.02)

$

?

Adjusted net realized/unrealized gain (loss) per share¹

$

0.02

$

0.00

*

Earnings per share

$

(1.02)

$

0.32

Adjusted earnings per share¹

$

0.35

$

0.32

Net asset value per share

$

16.76

$

15.95

Distributions paid per share

$

0.32

$

0.32

^* Represents a number less than $0.01 per share.

¹

On September 16, 2019, the Company completed its acquisition of Golub Capital Investment Corporation ("GCIC"). The merger was accounted for under the asset acquisition method of accounting in accordance with Accounting Standards Codification 805-50, Business Combinations ? Related Issues. Under asset acquisition accounting, where the consideration paid to GCIC's stockholders exceeded the relative fair values of the assets acquired, the premium paid by the Company was allocated to the cost of the GCIC assets acquired by the Company  pro-rata based on their relative fair value. Immediately following the acquisition of GCIC, the Company recorded its assets at their respective fair values and, as a result, the purchase premium allocated to the cost basis of the GCIC assets acquired was immediately recognized as unrealized depreciation on the Company's Consolidated Statement of Operations. The purchase premium allocated to investments in loan securities acquired from GCIC will amortize over the life of the loans through interest income with a corresponding reversal of the unrealized depreciation on such loans acquired through their ultimate disposition. The purchase premium allocated to investments in equity securities will not amortize over the life of the equity securities through interest income and, assuming no subsequent change to the fair value of the GCIC equity securities acquired and disposition of such equity securities at fair value, the Company will recognize a realized loss with a corresponding reversal of the unrealized depreciation upon disposition of the GCIC equity securities acquired.

As a supplement to U.S. generally accepted accounting principles ("GAAP") financial measures, the Company is providing the following non-GAAP financial measures that it believes are useful for the reasons described below:

?

"Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" ? excludes the amortization of the purchase premium and the accrual for the capital gain incentive fee required under GAAP (including the portion of such accrual that is not payable under the Company's investment advisory agreement) from net investment income calculated in accordance with GAAP.

?

"Adjusted Net Realized and Unrealized Gain/(Loss)" and "Adjusted Net Realized and Unrealized Gain/(Loss) Per Share" ? excludes the unrealized loss resulting from the purchase premium write-down and the corresponding reversal of the unrealized loss from the amortization of the premium from the determination of realized and unrealized gain/(loss) in accordance with GAAP.

?

"Adjusted Net Income" and "Adjusted Earnings Per Share" ? calculates net income and earnings per share based on Adjusted Net Investment Income and Adjusted Net Realized and Unrealized Gain/(Loss).

The Company believes that excluding the financial impact of the purchase premium write down in the above non-GAAP financial measures is useful for investors as it is a non-cash expense/loss resulting from the acquisition of GCIC and is one method the Company uses to measure its financial condition and results of operations. In addition, the Company believes excluding the accrual of the capital gain incentive fee in the above non-GAAP financial measures is useful as it includes the portion of such accrual that is not contractually payable under the terms of the Company's investment advisory agreement with GC Advisors.

As of September 30, 2019

As of June 30, 2019

Investments

Percentage of

Investments

Percentage of

Investment

at Fair Value

Total

at Fair Value

Total

Type

(In thousands)

Investments

(In thousands)

Investments

Senior secured

$

589,340

13.7

%

$

264,915

13.8

%

One stop

3,474,116

80.9

%

1,529,670

79.5

Junior debt^*

19,842

0.5

%

11,099

0.6

LLC equity interests in SLF and GCIC SLF

123,644

2.0

%

71,742

3.7

Equity

85,990

2.9

45,395

2.4

Total

$

4,292,932

100.0

%

$

1,922,821

100.0

%

^*

Junior debt is comprised of  subordinated debt and second lien loans.

For the three months ended September 30, 2019

New Investment

Commitments

Percentage of

(In thousands)

Commitments

Senior secured

$

13,155

10.1

%

One stop

112,759

86.5

Junior debt^*

?

?

Equity

4,450

3.4

Total new investment commitments

$

130,364

100.0

%

^*

Junior debt is comprised of  subordinated debt and second lien loans.

Internal Performance Ratings

5

Involves the least amount of risk in our portfolio. The borrower is performing above expectations, and the trends and risk factors are generally favorable.

4

Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is generally performing as expected, and the risk factors are neutral to favorable.

3

Involves a borrower performing below expectations and indicates that the loan's risk has increased somewhat since origination. The borrower may be out of compliance with debt covenants; however, loan payments are generally not past due.

2

Involves a borrower performing materially below expectations and indicates that the loan's risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 180 days past due).

1

Involves a borrower performing substantially below expectations and indicates that the loan's risk has substantially increased since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 1 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

September 30, 2019

June 30, 2019

Internal

Investments

Percentage of

Investments

Percentage of

Performance

at Fair Value

Total

at Fair Value

Total

(In thousands)

Investments

(In thousands)

Investments

5

$

115,318

2.7

%

$

71,110

3.7

%

4

3,787,809

88.2

1,653,286

86.0

3

337,358

7.9

178,225

9.3

2

52,434

1.2

20,189

1.0

1

13

0.0

*

11

0.0*

Total

$

4,292,932

100.0

%

$

1,922,821

100.0

%

*

Represents an amount less than 0.1%.

¹    

On September 16, 2019, the Company completed its acquisition of GCIC. The merger was accounted for under the asset acquisition method of accounting in accordance with Accounting Standards Codification 805-50, Business Combinations ? Related Issues. Under asset acquisition accounting, where the consideration paid to GCIC's stockholders exceeded the relative fair values of the assets acquired, the premium paid by the Company was allocated to the cost of the GCIC assets acquired by the Company  pro-rata based on their relative fair value. Immediately following the acquisition of GCIC, the Company recorded its assets at their respective fair values and, as a result, the purchase premium allocated to the cost basis of the GCIC assets acquired was immediately recognized as unrealized depreciation on the Company's Consolidated Statement of Operations. The purchase premium allocated to investments in loan securities will amortize over the life of the loans through interest income with a corresponding reversal of the unrealized depreciation on the GCIC loans acquired through their ultimate disposition. The purchase premium allocated to investments in equity securities will not amortize over the life of the equity securities through interest income and, assuming no subsequent change to the fair value of the GCIC equity securities acquired and disposition of such equity securities at fair value, the Company will recognize a realized loss with a corresponding reversal of the unrealized depreciation upon disposition of the GCIC equity securities acquired.

As a supplement to U.S. generally accepted accounting principles ("GAAP") financial measures, the Company is providing the following non-GAAP financial measures that it believes are useful for the reasons described below:

?

"Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" ? excludes the amortization of the purchase premium and the accrual for the capital gain incentive fee required under GAAP (including the portion of such accrual that is not payable under the Company's investment advisory agreement) from net investment income calculated in accordance with GAAP.

?

"Adjusted Net Realized and Unrealized Gain/(Loss)" and "Adjusted Net Realized and Unrealized Gain/(Loss) Per Share" ? excludes the unrealized loss resulting from the purchase premium write-down and the corresponding reversal of the unrealized loss from the amortization of the premium from the determination of realized and unrealized gain/(loss) in accordance with GAAP.

?

"Adjusted Net Income" and "Adjusted Earnings Per Share" ? calculates net income and earnings per share based on Adjusted Net Investment Income and Adjusted Net Realized and Unrealized Gain/(Loss).

The Company believes that excluding the financial impact of the purchase premium write down in the above non-GAAP financial measures is useful for investors as it is a non-cash expense/loss resulting from the acquisition of GCIC and is one method the Company uses to measure its financial condition and results of operations. In addition, the Company believes excluding the accrual of the capital gain incentive fee in the above non-GAAP financial measures is useful as it includes the portion of such accrual that is not contractually payable under the terms of the Company's investment advisory agreement with GC Advisors.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share and per share data)

September 30, 2019

June 30, 2019

Assets

(audited)

(unaudited)

Investments, at fair value (cost of $4,391,770 and $1,919,841, respectively)

$

4,292,932

$

1,922,821

Cash and cash equivalents

6,463

8,158

Unrestricted foreign currencies (cost of $54 and $685, respectively)

54

685

Restricted cash and cash equivalents

76,370

101,541

Restricted foreign currencies (cost of $1,321 and $270, respectively)

1,321

270

Interest receivable

16,790

6,648

Other assets

933

1,527

Total Assets

$

4,394,863

$

2,041,650

Liabilities

Debt

$

2,124,392

$

1,047,136

Less unamortized debt issuance costs

4,939

4,780

Debt less unamortized debt issuance costs

2,119,453

1,042,356

Other short-term borrowings (proceeds of $0 and $3,605, respectively)

?

3,501

Unrealized depreciation on forward currency contracts

115

?

Interest payable

13,380

9,480

Management and incentive fees payable

12,884

14,563

Accounts payable and accrued expenses

25,970

3,050

Payable for open trades

?

366

Accrued trustee fees

207

114

Total Liabilities

2,172,009

1,073,430

Net Assets

Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2019 and June 30, 2019

?

?

Common stock, par value $0.001 per share, 200,000,000 shares authorized, 132,658,200 issued and outstanding as of September 30, 2019; 100,000,000 shares authorized, 60,715,908 shares issued and outstanding as of June 30, 2019.

133

61

Paid in capital in excess of par

2,310,610

958,681

Distributable earnings

(87,889)

9,478

Total Net Assets

2,222,854

968,220

Total Liabilities and Total Net Assets

$

4,394,863

$

2,041,650

Number of common shares outstanding

132,658,200

60,715,908

Net asset value per common share

$

16.76

$

15.95

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except share and per share data)

Three months ended

September 30, 2019

June 30, 2019

(unaudited)

(unaudited)

Investment income

Interest income

$

48,788

$

41,522

GCIC acquisition purchase price premium amortization

(1,381)

?

Dividend income

1,451

59

Fee income

119

524

Total investment income

48,977

42,105

Expenses

Interest and other debt financing expenses

12,262

10,849

Base management fee

8,164

6,675

Incentive fee

324

3,529

Professional fees

655

727

Administrative service fee

639

681

General and administrative expenses

140

238

Total expenses

22,184

22,699

Net investment income

26,793

19,406

Net gain (loss) on investment transactions

Net realized gain (loss) from:

Investments

(99)

(717)

Foreign currency transactions

195

17

Net realized gain (loss) in investment transactions

96

(700)

Net change in unrealized appreciation (depreciation) from:

Investments

(101,816)

686

Translation of assets and liabilities in foreign currencies

788

(192)

Forward currency contracts

133

?

Net change in unrealized appreciation (depreciation) on investment transactions

(100,895)

?

494

Net gain (loss) on investments

(100,799)

(206)

Net increase in net assets resulting from operations

$

(74,006)

$

19,200

Per Common Share Data

Basic and diluted earnings per common share

$

(1.02)

$

0.32

Dividends and distributions declared per common share

$

0.32

$

0.32

Basic and diluted weighted average common shares outstanding

72,426,221

60,591,639