Saratoga Investment Corp.
January 14, 2011

Saratoga Investment Corp. Announces Fiscal Third Quarter 2011 Financial Results

NEW YORK, Jan. 14, 2011 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR), a business development company, today announced financial results for the fiscal third quarter ended November 30, 2010.

Operating Results

For the quarter ended November 30, 2010, Saratoga Investment Corp. reported net investment income of $1.9 million, or $0.70 per share, and net gain on investments of $1.4 million, or $0.50 per share, resulting in a net increase in net assets from operations of $3.3 million, or $1.20 per share. Net asset value was $24.95 per share as of November 30, 2010 as compared to $29.71 per share reported as of August 31, 2010. The decrease in reported NAV per share from August 31, 2010 was primarily the result of the dividend of $1.2 million and 596,235 shares of common stock declared on November 12, 2010 and paid on December 29, 2010. In accordance with generally accepted accounting principals, the number of shares outstanding used to calculate NAV per share as of November 30, 2010 was retroactively adjusted to reflect the additional shares issued as a result of the stock dividend. Excluding the effect of the dividend, the NAV per share would have been $30.94 as of November 30, 2010.

"We are pleased to see continued credit market stabilization and general improvement in the overall economy, which has assisted us in realizing parts of our portfolio and reducing debt," said Christian L. Oberbeck, Chief Executive Officer of Saratoga Investment Corp. "We made over $50 million of new portfolio investments in our BDC and CLO this quarter. We continue to focus on generating current income and capital appreciation through investment in the middle market."

Portfolio and Investment Activity

As of November 30, 2010, the value of the Company's investment portfolio was $91.2 million, principally invested in 26 portfolio companies and one $381.4 million collateralized loan obligation fund ("CLO"). The overall portfolio composition consisted of 17.2% first lien term loans, 21.4% second lien term loans, 26.9% senior secured notes, 3.2% unsecured notes, and 25.3% subordinated notes of the CLO.

During the third quarter, Saratoga Investment Corp. invested $1.6 million in a new portfolio company and had $6.7 million in aggregate amount of exits and repayments, resulting in net repayments of $5.1 million for the period at the BDC level.  In the CLO, the company invested $28.5 million in new investments and had $40.2 million in exits.  

As of November 30, 2010, 43.8%, or $27.5 million, of the Company's interest-bearing portfolio was fixed rate debt with a weighted average current coupon of 11.7% and 56.2%, or $35.2 million, of its interest-bearing portfolio was floating rate debt with a weighted average current spread of LIBOR plus 7.2%.

Liquidity and Capital Resources

At November 30, 2010, the Company had $15.8 million in borrowings under its credit facility and an asset coverage ratio of 619%.

At January 7, 2011, the Company had $4.5 million in borrowings under its credit facility.

Dividend

On November 12, 2010, the Company's Board of Directors declared a dividend of $4.40 per share payable on December 29, 2010, to shareholders of record as of November 19, 2010. Shareholders had until December 20, 2010 to elect whether to receive the dividend in cash (up to an aggregate maximum cash amount of approximately $1.2 million or approximately 10% of the total dividend paid) or in shares of common stock. The dividend consisted of $1.2 million in cash and 596,235 shares of common stock or 22% of Saratoga Investment Corp.'s outstanding shares prior to the dividend. The dividend included the balance of the Company's fiscal year 2010 taxable income and a significant portion of the Company's fiscal year 2011 taxable income including a component for the third quarter of fiscal year 2011.  

2011 Fiscal Third Quarter Conference Call/Webcast Information

When:  Tuesday, January 18, 2011 at 10:30 a.m.  Eastern Time (ET)

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 1:30 p.m. ET on Tuesday, January 18, 2011 through 11:59 p.m. ET on Tuesday, January 25, 2011 by dialing (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (outside U.S. and Canada), passcode for both replay numbers: 37331393.

Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.saratogainvestmentcorp.com/events.cfm.

About Saratoga Investment Corp.

Saratoga Investment Corp. is a specialty finance company that invests primarily in leveraged loans and mezzanine debt issued by U.S. middle-market companies, both through direct lending and through participation in loan syndicates. It has elected to be treated as a business development company under the Investment Company Act of 1940. Saratoga Investment Corp. is traded on the New York Stock Exchange under the symbol SAR.

Saratoga Investment Corp.






Consolidated Statements of Assets and Liabilities





As of


November 30, 2010


February 28, 2010



(unaudited)



ASSETS









Investments at fair value





Non-control/non-affiliate investments (amortized cost of $95,792,289 and $117,678,275, respectively)

$                        68,176,984


$                     72,674,847


Control investments (cost of $28,414,863 and $29,233,097, respectively)

23,037,967


16,698,303


Total investments at fair value (amortized cost of $124,207,152 and $146,911,372, respectively)

91,214,951


89,373,150

Cash and cash equivalents

4,571,926


3,352,434

Cash and cash equivalents, securitization accounts

3,407,260


225,424

Outstanding interest rate cap at fair value (cost of $131,000 and $131,000, respectively)

22,352


42,147

Interest receivable, (net of reserve of $579,291 and $2,120,309, respectively)

2,017,807


3,473,961

Deferred credit facility financing costs, net

1,805,799


-

Management fee receivable

231,838


327,928

Other assets

266,245


140,272







Total assets

$                      103,538,178


$                     96,935,316






LIABILITIES




Revolving credit facility

$                        15,750,000


$                     36,992,222

Payable for unsettled trades

1,614,000


-

Dividend payable

1,179,800


-

Management and incentive fees payable

1,868,744


3,071,093

Accounts payable and accrued expenses

885,297


1,111,081

Interest and credit facility fees payable

152,448


267,166

Due to manager

310,000


15,602


Total liabilities

$                        21,760,289


$                     41,457,164






NET ASSETS




Common stock, par value $.001 and $.001 per share, respectively, 100,000,000 common shares





authorized, 3,277,077 and 1,694,011* common shares issued and outstanding, respectively

$                                 3,277


$                              1,694

Capital in excess of par value

153,768,680


128,339,497

Distribution in excess of net investment income

(10,223,021)


(2,846,135)

Accumulated net realized loss from investments and derivatives

(28,670,200)


(12,389,830)

Net unrealized depreciation on investments and derivatives

(33,100,847)


(57,627,074)


Total Net Assets

81,777,889


55,478,152






Total liabilities and Net Assets

$                      103,538,178


$                     96,935,316






NET ASSET VALUE PER SHARE*

$                                 24.95


$                              32.75






*Net Asset Value per share  and end of period shares outstanding for the year ended February 28, 2010 has been adjusted to reflect a one-for-ten reverse stock split in August 2010.


See accompanying notes to consolidated financial statements.



Saratoga Investment Corp.










Consolidated Statements of Operations












For the three months ended
November 30


For the nine months ended
November 30



2010


2009


2010


2009



(unaudited)


(unaudited)


(unaudited)


(unaudited)

INVESTMENT INCOME








Interest from investments









Non-control/Non-affiliate investments

$                         3,639,216


$                         2,593,082


$                         7,006,161


$                         8,566,587


Control investments

941,281


368,374


2,410,803


1,686,088


    Total interest income

4,580,497


2,961,456


9,416,964


10,252,675

Interest from cash and cash equivalents

2,460


2,752


3,642


22,934

Management fee income

508,674


511,236


1,523,530


1,549,167

Other income

-


54,699


71,192


155,111


Total investment income

5,091,631


3,530,143


11,015,328


11,979,887










EXPENSES








Interest and credit facility financing expenses

618,810


1,126,162


2,188,078


3,174,603

Base management fees

424,044


462,755


1,258,875


1,515,813

Professional fees

381,096


714,789


3,138,221


1,396,567

Administrator expenses

240,000


171,861


568,562


515,583

Incentive management fees

1,173,144


-


1,173,144


322,183

Insurance

170,684


220,059


536,934


649,535

Directors fees and expenses

48,000


71,989


320,844


217,125

General & administrative

100,961


65,298


306,558


191,223


Expenses before expense waiver and reimbursement

3,156,739


2,832,913


9,491,216


7,982,632

Expense reimbursement

-


(171,861)


(258,562)


(515,583)

Waiver of deferred incentive management fees

-


-


(2,636,146)


-


Total expenses net of expense waiver and reimbursement

3,156,739


2,661,052


6,596,508


7,467,049











NET INVESTMENT INCOME

1,934,892


869,091


4,418,820


4,512,838










REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:








Net realized loss from investments

(13,731,107)


(549,864)


(16,280,370)


(1,579,812)

Net unrealized appreciation/(depreciation) on investments

15,107,701


8,825,100


24,546,024


(4,562,979)

Net unrealized appreciation/(depreciation) on derivatives

(1,366)


(16,754)


(19,797)


33,080


Net gain/(loss) on investments

1,375,228


8,258,482


8,245,857


(6,109,711)










NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$                         3,310,120


$                         9,127,573


$                       12,664,677


$                       (1,596,873)










WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE*

$                                  1.20


$                                10.08


$                                  5.86


$                                (1.87)










WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED*

2,752,914


905,171


2,162,832


854,298










*Earnings per share and Weighted average shares outstanding for the three and nine months ended November 30, 2009 have been adjusted to reflect a one-for-ten reverse stock split in August 2010.


See accompanying notes to consolidated financial statements.



Contact: Richard Petrocelli

Saratoga Investment Corp.

212-906-7800


Roland Tomforde

Broadgate Consultants

212-232-2222



SOURCE Saratoga Investment Corp.

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