(NYSE:KED) Kayne Anderson Energy Development Company (the “Company”) today announced its financial results for the quarter and fiscal year ended November 30, 2012. HIGHLIGHTS
- Net asset value: $23.74 per share; up 3.2% for fiscal 2012
- Distribution of $0.43 per share for the fourth quarter; increased 10.3% in fiscal 2012
- Net investment income for fiscal 2012: $0.8 million
- Net realized gains for fiscal 2012: $9.9 million
- Net unrealized gains for fiscal 2012: $13.6 million
The Company had a net change in unrealized losses of $1.4 million. The net change consisted of $2.2 million of unrealized losses from investments and a deferred income tax benefit of $0.8 million.
The Company had an increase in net assets resulting from operations of $2.8 million. This increase was comprised of net investment income of $0.4 million; net realized gains of $3.8 million; and net unrealized losses of $1.4 million, as noted above. RESULTS OF OPERATIONS – FISCAL YEAR ENDED NOVEMBER 30, 2012 Investment income totaled $10.8 million for the fiscal year and consisted primarily of net dividends and distributions and interest income on our debt investments. The Company received $21.8 million of dividends and distributions, of which $17.0 million was treated as a return of capital. Return of capital was increased by $1.5 million during the fiscal year due to 2011 tax reporting information that we received in fiscal 2012. Interest income was $6.0 million, of which $1.7 million was paid-in-kind interest from ProPetro. The Company received $0.9 million of paid-in-kind dividends during the year, which are not included in investment income, but are reflected as an unrealized gain and $1.8 million of non-cash distributions from VantaCore that is included in investment income. Operating expenses totaled $9.6 million, including $6.0 million of investment management fees; $2.3 million of interest expense and $1.3 million of other operating expenses. Interest expense included $0.4 million of amortization of debt issuance costs. The Company’s net investment income totaled $0.8 million and included a deferred income tax expense of $0.3 million and current income tax expense of $0.1 million. The Company had net realized gains from investments of $9.9 million, after taking into account a deferred income tax expense of $4.1 million and a current income tax expense of $1.5 million. The realized gains included a $4.5 million gain from the redemption of the Company’s Class D Preferred Unit investment in Direct Fuels.The Company had a net change in unrealized gains of $13.6 million. The net change consisted of $21.4 million of unrealized gains from investments and a deferred income tax expense of $7.8 million.
The Company had an increase in net assets resulting from operations of $24.3 million. This increase was comprised of net investment income of $0.8 million; net realized gains of $9.9 million; and net unrealized gains of $13.6 million, as noted above. NET ASSET VALUE As of November 30, 2012, the Company’s net asset value was $247.0 million or $23.74 per share. PORTFOLIO As of November 30, 2012, the Company had long-term investments of $335.6 million, of which approximately 59% were public MLPs and other public equity securities, 26% were private MLPs and other private equity securities and 15% were debt securities. The Company’s long-term investments consisted of 51 portfolio companies. UPDATES ON PRIVATE PORTFOLIO COMPANIES Updates on the Company’s private portfolio companies are available on the Company’s website at www.kaynefunds.com/ked/portfolio-companies/. LIQUIDITY AND CAPITAL RESOURCES As of November 30, 2012, the Company had $72.0 million of borrowings under its credit facility (at an interest rate of 2.21%), which represented 55.1% of its borrowing base of $130.8 million (60.8% of its borrowing base attributable to quoted securities). At the same date, the Company’s asset coverage ratio under the Investment Company Act of 1940 was 443%. The maximum amount that the Company can borrow under its credit facility is limited to the lesser of the commitment amount of $85.0 million or its borrowing base. As of January 24, 2013, the Company had $72.0 million borrowed under its credit facility and had $1.2 million in cash. Outstanding borrowings represented 50.9% of the borrowing base of $141.4 million (56.9% of its borrowing base attributable to quoted securities). DISTRIBUTION On January 17, 2013, the Company declared a distribution of $0.43 per share for the quarter ended November 30, 2012, which will be paid on February 1, 2013 to stockholders of record on January 28, 2013.GUIDANCE
As a result of investment activity after November 30, 2012, the Company’s guidance is based on its portfolio as of January 24, 2013. The Company estimates its portfolio will generate dividends, distributions, and interest income of approximately $7.0 million in the next quarter. The estimate includes distributions of $0.76 million per quarter from VantaCore, which is based on only the cash distributions the Company expects to receive, on average, over the next four quarters of $0.285 per common and preferred A unit and $0.383 per preferred B unit. The Company’s guidance does not include $0.47 million of non-cash distributions that the Company expects to receive on VantaCore’s common and preferred A units. The Company’s guidance does not reflect any changes in cash distributions made by MLPs or changes in interest rates based on the movement in LIBOR rates since November 30, 2012.Portfolio Category | AmountInvested($ in millions) | Average AnnualYield(1)(2) | ||||
Private MLPs(3) | $ 79 | 10.6% | ||||
Public MLPs and Other Public Equity | 234 | 6.5 | ||||
Debt Investments(4)(5) | 38 | 11.9 | ||||
(1) Average yields include return of capital distributions. Return of capital distributions are reported as areduction to gross dividends and distributions to arrive at net investment income reported under generally acceptedaccounting principles. | ||||||
(2) Average yields for Public MLPs and Other Public Equity are based on the most recently declared distributionsas of November 30, 2012. Amounts invested for Private MLPs are based on November 30, 2012 valuations. | ||||||
(3) The amount invested excludes the Company’s equity investment in ProPetro (valued at $7.8 million as ofNovember 30, 2012), which does not pay a dividend. | ||||||
(4) The average yield includes straight-line amortization of the purchase price discounts/premiums through theexpected maturity. | ||||||
(5) The amount invested includes the Company’s $13.6 million debt investment in ProPetro. This investment payspaid-in-kind interest at an annual rate of 13.0%. | ||||||
Interest Expense – Interest expense is estimated to be approximately $0.45 million per quarter based on $72.0 million borrowed under the Company’s credit facility, assuming a 30-day LIBOR rate of 0.20% and a spread of 2.00%.
Based on the foregoing assumptions, the Company is expected to generate net distributable income (“NDI”) per share of $0.435 to $0.445 in the first quarter of fiscal 2013. AVAILABLE INFORMATION The Company’s filings with the Securities and Exchange Commission, press releases and other financial information are available on the Company’s website at www.kaynefunds.com.KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 2012 (amounts in 000’s, except share and per share amounts) | ||||||
ASSETS | ||||||
Investments, at fair value: | ||||||
Non-affiliated (Cost — $167,453) | $ | 201,347 | ||||
Affiliated (Cost — $138,306) | 134,242 | |||||
Total investments (Cost — $305,759) | 335,589 | |||||
Cash | 1,648 | |||||
Receivable for securities sold | 5,449 | |||||
Interest, dividends and distributions receivable | 632 | |||||
Other receivable | 2,900 | |||||
Debt issuance costs, prepaid expenses and other assets | 838 | |||||
Total Assets | 347,056 | |||||
LIABILITIES | ||||||
Payable for securities purchased | 559 | |||||
Investment management fee payable | 1,510 | |||||
Accrued directors’ fees and expenses | 78 | |||||
Accrued expenses and other liabilities | 573 | |||||
Current income tax liability | 460 | |||||
Deferred income tax liability | 24,859 | |||||
Credit facility | 72,000 | |||||
Total Liabilities | 100,039 | |||||
NET ASSETS | $ | 247,017 | ||||
NET ASSETS CONSIST OF | ||||||
Common stock, $0.001 par value (200,000,000 shares authorized; 10,405,130 shares issued | ||||||
and outstanding) | $ | 10 | ||||
Paid-in capital | 200,903 | |||||
Accumulated net investment loss, net of income taxes, less dividends | (36,042) | |||||
Accumulated net realized gains on investments, net of income taxes | 63,571 | |||||
Net unrealized gains on investments, net of income taxes | 18,575 | |||||
NET ASSETS | $ | 247,017 | ||||
NET ASSET VALUE PER SHARE | $ | 23.74 | ||||
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 2012 (amounts in 000’s) | |||||
INVESTMENT INCOME | |||||
Income | |||||
Dividends and distributions: | |||||
Non-affiliated investments | $ | 9,961 | |||
Affiliated investments | 11,838 | ||||
Total dividends and distributions | 21,799 | ||||
Return of capital | (16,980) | ||||
Net dividends and distributions | 4,819 | ||||
Interest and other income — non-affiliated investments | 4,154 | ||||
Interest — affiliated investments | 1,834 | ||||
Total Investment Income | 10,807 | ||||
Expenses | |||||
Investment management fees | 5,994 | ||||
Professional fees | 542 | ||||
Directors’ fees and expenses | 300 | ||||
Insurance | 95 | ||||
Administration fees | 89 | ||||
Other expenses | 278 | ||||
Total expenses — Before Interest Expense | 7,298 | ||||
Interest expense | 2,306 | ||||
Total Expenses | 9,604 | ||||
Net Investment Income — Before Income Taxes | 1,203 | ||||
Current income tax expense | (104) | ||||
Deferred income tax expense | (291) | ||||
Net Investment Income | 808 | ||||
REALIZED AND UNREALIZED GAINS | |||||
Net Realized Gains | |||||
Investments — non-affiliated | 10,772 | ||||
Investments — affiliated | 4,759 | ||||
Current income tax expense | (1,503) | ||||
Deferred income tax expense | (4,143) | ||||
Net Realized Gains | 9,885 | ||||
Net Change in Unrealized Gains | |||||
Investments — non-affiliated | 16,244 | ||||
Investments — affiliated | 5,170 | ||||
Deferred income tax expense | (7,784) | ||||
Net Change in Unrealized Gains | 13,630 | ||||
Net Realized and Unrealized Gains | 23,515 | ||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 24,323 | |||