Net income for the quarter was $5.4 million or $0.21 a share and that compared to $11.4 million or $0.48 per share for the quarter ended March 31. So, let’s look at net investment income inclusive of the TRS income of $0.30 versus EPS of $0.21, and let me walk you through bridge of the $0.09 differential between the two. There are three principal pieces.
The first is, we had a net realized and unrealized loss of $0.01 on the termination of the total return swap. The last page of the presentation that summarizes the inception to conclusion performance of the total return swap and you can see it was quite a successful investment for BDC generating about $3.9 million of total profit, but we experienced a small net loss not including spread payments during the period from quarter end to termination as loan prices fell modestly from March 31 to the termination date. So that’s one piece, we’ve lost $0.01 on the TRS.
The second piece is net realized and unrealized losses on investments, that constituted about $800,000 for the quarter or about $0.03 a share and that was primarily the result of a write-down on new non-earning asset. We’ll talk more about that later as well.
And finally, we lost $0.05 of share in net realized and unrealized losses on futures contracts designed to hedge interest rate risk associated with unpriced SBIC debentures. So the three pieces are a penny on the swap, $0.03 on changes in the fair value of investments, and $0.05 on the futures hedge.I want to spend a minute on the futures head just to make sure everybody understands it. Firstly, I’d say, despite the net loss on the hedge, we still think it was the right thing to do to put this on. Let me remind you why we did it. So the way the SBIC program works, we draw down new SBIC debentures and pay a temporary rate until this June or September or March of each year.Read the rest of this transcript for free on seekingalpha.com
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