MVC Capital, Inc. (NYSE: MVC), a publicly traded business development company that makes private equity and debt investments, today announced its financial results for the first quarter ended January 31, 2011.
As of January 31, 2011, the Company's net assets were approximately $415.9 million or $17.33 per share. This compares with net assets of approximately $425.0 million, or $17.71 per share, at the beginning of the quarter and $428.7 million, or $17.64 per share, at the end of the same period last year. During the quarter, the Valuation Committee, which is comprised of three independent directors, adjusted the fair values of seven portfolio companies, resulting in a net decrease of approximately $9.9 million or $0.41 per share. In arriving at these determinations and consistent with the Company's valuation procedures and ASC 820, the Valuation Committee took into account a variety of factors, including the performance of the portfolio companies, the impact of changes in market multiples within certain sectors and fluctuations in currency valuations.
In the first quarter of 2011, the Company earned approximately $3.4 million in interest and dividend income and approximately $1.1 million in fee and other income, representing a decrease in total operating income of approximately $3.3 million as compared to the same quarter in 2010. The primary reasons for the decline in total operating income were due to the prepayment of investments that provide current income, reserves against non-performing loans as well as the reduction in dividend income received from exited portfolio companies.
The Company also reported net operating income of approximately $1.8 million for the first quarter, as compared to net operating income of $2.9 million for the same quarter in 2010. The Company decreased the provision for incentive compensation by approximately $1.6 million during the quarter, as compared to an increase of approximately $1.0 million during the same quarter in 2010, as a result of unrealized depreciation within the portfolio. The Company continued cost containment measures, which enabled reductions across certain operating expense items. In addition to an existing voluntary expense waiver, the Company’s investment adviser has also voluntarily agreed that any assets of the Company that are invested in exchange traded funds would not be subject to the base management fee.