Operating expenses totaled $2.4 million, including $1.4 million of investment management fees; $0.5 million of interest expense and $0.5 million of other operating expenses. Interest expense included $0.1 million of amortization of debt issuance costs. Investment management fees were equal to an annual rate of 1.75% of average total assets.
The Company’s net investment income totaled $1.9 million and included a current income tax expense of $0.6 million and a deferred income tax expense of $0.4 million.
The Company had net realized gains from investments of $51.6 million, after taking into account a current income tax expense of $19.3 million and a deferred income tax expense of $9.4 million. The majority of the pre-tax gains of $80.3 million are attributable to the sale of IRP, for which the Company realized a gain of $73.9 million. As a result of the IRP sale, the Company expects to utilize all of its federal and state net operating losses and capital loss carry forwards and has therefore incurred a current income tax expense and related liability.
The Company had net unrealized losses of $40.2 million. The net unrealized loss consisted of $63.0 million of unrealized losses from investments and a deferred income tax benefit of $22.8 million. Approximately $66.3 million of these unrealized losses are a result of the reversal of the unrealized gain attributable to IRP that was realized upon the sale of the Company’s investment during the quarter.The Company had an increase in net assets resulting from operations of $13.3 million. This increase is composed of a net investment income of $1.9 million; net realized gains of $51.6 million; and net unrealized loss of $40.2 million, as noted above. NET ASSET VALUE As of May 31, 2011, the Company’s net asset value was $235.4 million or $22.85 per share. This represents an increase of $0.97 per share or 4.4% for the quarter. The Company revised its previously disclosed net asset value of $22.75 per share (announced on June 30, 2011) to reflect a $1.6 million increase to its estimated post-closing adjustment related to the sale of IRP. This change in estimate is based on finalization of certain post-closing adjustments after quarter end. Generally accepted accounting principles require this type of subsequent event to be reflected in the Company’s financial statements as of May 31, 2011.
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