UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

☒

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019~~

☐

~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~FOR THE TRANSITION PERIOD FROM TO~~

COMMISSION FILE NUMBER:814-00926

FS ~~Investment Corporation~~KKR Capital Corp. II

(Exact name of registrant as specified in its charter)

	~~Maryland~~			~~80-0741103~~
Maryland		80-0741103
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


	201 Rouse Boulevard ~~Philadelphia, Pennsylvania~~			~~19112~~
Philadelphia, Pennsylvania		19112
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code:(215) 495-1150

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” inRule 12b-2 of the Exchange Act.


Large accelerated filer		☐		Accelerated filer		☐

	Non-accelerated filer	☒	☑		Smaller reporting company		☐

					Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☑

☒

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

Trading

Symbol(s)

~~Trading Symbol(s)~~

Name of each exchange

on which registered

N/A

~~N/A~~

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The issuer had ~~330,513,904~~684,810,154 shares of common stock outstanding as of ~~November~~May 8, ~~2019.~~2020.

TABLE OF CONTENTS

~~TABLE OF CONTENTS~~

		~~Page~~
			Page
PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS			1
	Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 (Unaudited) and December 31, ~~2018~~2019			1	1
	Unaudited Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~			2	2
	Unaudited Consolidated Statements of Changes in Net Assets for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~			4	3
	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~			5	4
	Consolidated Schedules of Investments as of ~~September 30, 2019~~March 31, 2020 (Unaudited) and December 31, ~~2018~~2019			6	5
	Notes to Unaudited Consolidated Financial Statements			33	30
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			68	59
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			84	76
ITEM 4.	CONTROLS AND PROCEDURES			85	77

PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS			86	79
ITEM 1A.	RISK FACTORS			86	79
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			87	79
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES			87	79
ITEM 4.	MINE SAFETY DISCLOSURES			87	79
ITEM 5.	OTHER INFORMATION			87	79
ITEM 6.	EXHIBITS			88	79
	SIGNATURES			93	83

~~TABLE OF CONTENTS~~

PART I—FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements.~~

Item 1.

Financial Statements.

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Balance Sheets

(in ~~thousands,~~millions, except share and per share amounts)

September 30, 2019
(Unaudited) December 31, 2018
Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$4,210,751 and $4,312,105, respectively) $ 3,992,671 $ 4,131,877
Non-controlled/affiliated investments (amortized cost—$269,315 and $248,500, respectively) 262,609 227,403
Total investments, at fair value (amortized cost—$4,480,066 and $4,560,605, respectively) 4,255,280 4,359,280
Cash 107,095 148,172
Foreign currency, at fair value (cost—$2,570 and $2,264, respectively) 2,567 2,286
Collateral held at broker for open interest rate swap contracts 17,390 —
Receivable for investments sold and repaid 12,178 4,025
Interest receivable 42,207 34,221
Deferred financing costs 6,769 6,000
Deferred merger costs 911 —
Receivable on interest rate swaps 1,151 173
Prepaid expenses and other assets 147 97
Total assets $ 4,445,695 $ 4,554,254
Liabilities
Payable for investments purchased $ 53,688 $ 42,236
Credit facilities payable (net of deferred financing costs of $1,687 and $3,122, respectively)(1)
1,826,687 1,887,132
Stockholder distributions payable 12,308 11,688
Management fees payable 16,735 17,256
Subordinated income incentive fees payable(2)
5,045 5,796
Administrative services expense payable 1,606 365
Interest payable 13,866 16,480
Directors’ fees payable 98 243
Interest rate swap income payable 1,304 174
Unrealized depreciation on interest rate swaps 13,947 1,743
Other accrued expenses and liabilities 1,656 3,732
Total liabilities 1,946,940 1,986,845
Commitments and contingencies(3)
Stockholders’ equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and
outstanding — —
Common stock, $0.001 par value, 450,000,000 shares authorized, 329,433,102 and 326,445,320 shares issued and outstanding, respectively 329 326
Capital in excess of par value 3,014,469 2,990,996
Retained earnings (accumulated deficit)(4)
(516,043) (423,913)
Total stockholders’ equity 2,498,755 2,567,409
Total liabilities and stockholders’ equity $ 4,445,695 $ 4,554,254
Net asset value per share of common stock at period end $ 7.59 $ 7.86

~~(1)~~

~~See Note 9 for a discussion of the Company’s financing arrangements.~~

~~(2)~~

~~See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.~~

~~(3)~~

~~See Note 10 for a discussion of the Company’s commitments and contingencies.~~

~~(4)~~

~~See Note 5 for a discussion of the sources of distributions paid by the Company.~~


	March 31, 2020 (Unaudited)			December 31, 2019
Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$7,364 and $8,004 respectively)	$	6,600		$	7,670
Non-controlled/affiliated investments (amortized cost—$543 and $478, respectively)		325			356
Controlled/affiliated investments (amortized cost—$612 and $559, respectively)		539			565

Total investments, at fair value (amortized cost—$8,519 and $9,041, respectively)		7,464			8,591
Cash		225			163
Foreign currency, at fair value (cost—$7 and $4, respectively)		7			4
Collateral held at broker for open interest rate swap contracts		59			44
Due from counterparty		4			45
Receivable for investments sold and repaid		321			23
Interest receivable		88			84
Deferred financing costs		11			12
Unrealized appreciation on foreign currency forward contracts		1			—
Prepaid expenses and other assets		4			4

Total assets	$	8,184		$	8,970

Liabilities
Payable for investments purchased	$	114		$	37
Debt (net of deferred financing costs of $5 and $0, respectively)⁽¹⁾		3,629			3,809
Stockholder distributions payable		102			—
Management fees payable		33			35
Subordinated income incentive fees payable⁽²⁾		23			11
Administrative services expense payable		3			3
Interest payable		25			30
Unrealized depreciation on foreign currency forward contracts		—			1
Unrealized depreciation on total return swap		1			4
Unrealized depreciation on interest rate swaps		59			29
Other accrued expenses and liabilities		9			15

Total liabilities		3,998			3,974

Commitments and contingencies⁽³⁾
Stockholders’ equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 900,000,000 shares authorized, 678,379,301 and 678,379,301 shares issued and outstanding, respectively		1			1
Capital in excess of par value		5,794			5,794
Retained earnings (accumulated deficit)⁽⁴⁾		(1,609	)		(799	)

Total stockholders’ equity		4,186			4,996

Total liabilities and stockholders’ equity	$	8,184		$	8,970

Net asset value per share of common stock at period end	$	6.17		$	7.36

(1)	See Note 9 for a discussion of the Company’s financing arrangements.

(2)	See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.

(3)	See Note 10 for a discussion of the Company’s commitments and contingencies.

(4)	See Note 5 for a discussion of the sources of distributions paid by the Company.

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Statements of Operations

(in ~~thousands,~~millions, except share and per share amounts)

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Investment income
From non-controlled/unaffiliated investments:
Interest income $ 89,398 $ 92,684 $ 287,970 $ 282,218
Paid-in-kind interest income 4,590 2,491 8,803 6,467
Fee income 5,270 14,181 18,496 22,641
Dividend income 768 468 839 7,962
From non-controlled/affiliated investments:
Interest income 5,587 4,697 16,173 15,699
Paid-in-kind interest income 2,138 2,865 7,249 7,080
Fee income — — 43 1,123
Total investment income 107,751 117,386 339,573 343,190
Operating expenses
Management fees(1)
16,735 17,567 51,581 61,739
Subordinated income incentive fees(2)
5,045 11,939 24,912 18,994
Administrative services expenses 1,833 799 3,387 2,371
Stock transfer agent fees 471 506 1,677 1,502
Accounting and administrative fees 362 395 1,106 1,227
Interest expense(3)
23,969 26,924 79,047 77,958
Directors’ fees 84 254 301 1,053
Other general and administrative expenses 710 1,217 2,798 3,539
Operating expenses 49,209 59,601 164,809 168,383
Management fee waiver(1)
— — — (3,432)
Net expenses 49,209 59,601 164,809 164,951
Net investment income 58,542 57,785 174,764 178,239
Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated investments (8,142) 18,501 (48,767) 14,901
Non-controlled/affiliated investments 3 �� 3 185 (25,706)
Net realized gain (loss) on interest rate swaps (290) — (290) —
Net realized gain (loss) on foreign currency 944 446 1,059 (220)
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated investments (80,367) (42,337) (37,852) (101,939)
Non-controlled/affiliated investments 5,470 2,298 14,391 (44,034)
Net change in unrealized appreciation (depreciation) on interest rate swaps (1,551) — (12,204) —
Net change in unrealized gain (loss) on foreign currency 3,169 (693) 504 84
Total net realized and unrealized gain (loss) on investments (80,764) (21,782) (82,974) (156,914)
Net increase (decrease) in net assets resulting from operations $ (22,222) $ 36,003 $ 91,790 $ 21,325
Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share) $ (0.07) $ 0.11 $ 0.28 $ 0.07
Weighted average shares outstanding 327,346,481 324,359,144 325,302,803 324,577,481

~~(1)~~

See Note 4 for a discussion of the waiver by FSIC II Advisor, LLC, the Company’s former investment adviser, of certain management fees to which it was otherwise entitled during the applicable period.

~~(2)~~

~~See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.~~

~~(3)~~

~~See Note 9 for a discussion of the Company’s financing arrangements.~~


	Three Months Ended March 31,
	2020		2019
Investment income
Fromnon-controlled/unaffiliated investments:
Interest income	$	145	$	103
Paid-in-kind interest income		11		2
Fee income		15		7
Dividend income		2		—
Fromnon-controlled/affiliated investments:
Interest income		3		5
Paid-in-kind interest income		3		3
Fee income		—		—
From controlled/affiliated investments:
Interest income		3		—
Paid-in-kind interest income		—		—
Dividend income		13		—

Total investment income		195		120

Operating expenses
Management fees		33		18
Subordinated income incentive fees⁽¹⁾		23		11
Administrative services expenses		2		1
Stock transfer agent fees		1		1
Accounting and administrative fees		1		0
Interest expense⁽²⁾		40		30
Other general and administrative expenses		2		1

Net expenses		102		62

Net investment income		93		58

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Statements of Operations (continued)

(in millions, except share and per share amounts)


	Three Months Ended March 31,
	2020			2019
Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated investments		(217	)		(19	)
Non-controlled/affiliated investments		0			0
Controlled/affiliated investments		—			—
Net realized gain (loss) on total return swap		(2	)		—
Net realized gain (loss) on foreign currency forward contracts		0			—
Net realized gain (loss) on interest rate swaps		(2	)		—
Net realized gain (loss) on foreign currency		1			0
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated investments		(429	)		37
Non-controlled/affiliated investments		(96	)		0
Controlled/affiliated investments		(80	)		—
Net change in unrealized appreciation (depreciation) on total return swap		3			—
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		2			—
Net change in unrealized appreciation (depreciation) on interest rate swaps		(30	)		(4	)
Net change in unrealized gain (loss) on foreign currency		49			(1	)

Total net realized and unrealized gain (loss) on investments		(801	)		13

Net increase (decrease) in net assets resulting from operations	$	(708	)	$	71

Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	(1.04	)	$	0.22

Weighted average shares outstanding		678,379,301			324,309,084

(1)	See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.

(2)	See Note 9 for a discussion of the Company’s financing arrangements.

See notes to unaudited consolidated financial statements.

FS KKR Capital Corp. II

Unaudited Consolidated Statements of Changes in Net Assets

(in ~~thousands)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Operations
Net investment income $ 58,542 $ 57,785 $ 174,764 $ 178,239
Net realized gain (loss) on investments and foreign
currency (7,485) 18,950 (47,813) (11,025)
Net change in unrealized appreciation (depreciation) on investments and interest rate swaps(1)
(76,448) (40,039) (35,665) (145,973)
Net change in unrealized gain (loss) on foreign currency 3,169 (693) 504 84
Net increase (decrease) in net assets resulting from
operations (22,222) 36,003 91,790 21,325
Stockholder distributions(2)
Distributions to stockholders (61,698) (61,137) (183,920) (183,436)
Net decrease in net assets resulting from stockholder distributions (61,698) (61,137) (183,920) (183,436)
Capital share transactions(3)
Reinvestment of stockholder distributions 25,011 27,211 75,709 84,192
Repurchases of common stock — (28,023) (52,233) (86,976)
Net increase (decrease) in net assets resulting from capital share transactions 25,011 (812) 23,476 (2,784)
Total increase (decrease) in net assets (58,909) (25,946) (68,654) (164,895)
Net assets at beginning of period 2,557,664 2,714,072 2,567,409 2,853,021
Net assets at end of period $ 2,498,755 $ 2,688,126 $ 2,498,755 $ 2,688,126

~~(1)~~

~~See Note 7 for a discussion of these financial instruments.~~

~~(2)~~

~~See Note 5 for a discussion of the sources of distributions paid by the Company.~~

~~(3)~~

~~See Note 3 for a discussion of the Company’s capital share transactions.~~

millions)


	Three Months Ended March 31,
	2020			2019
Operations
Net investment income	$	93		$	58
Net realized gain (loss) on investments and foreign currency		(220	)		(19	)
Net change in unrealized appreciation (depreciation) on investments and interest rate swaps⁽¹⁾		(630	)		33
Net change in unrealized gain (loss) on foreign currency		49			(1	)

Net increase (decrease) in net assets resulting from operations		(708	)		71

Stockholder distributions⁽²⁾
Distributions to stockholders		(102	)		(61	)

Net decrease in net assets resulting from stockholder distributions		(102	)		(61	)

Capital share transactions⁽³⁾
Reinvestment of stockholder distributions		—			26
Repurchases of common stock		—			(27	)

Net increase (decrease) in net assets resulting from capital share transactions		—			(1	)

Total increase (decrease) in net assets		(810	)		9
Net assets at beginning of period		4,996			2,567

Net assets at end of period	$	4,186		$	2,576

(1)	See Note 7 for a discussion of these financial instruments.

(2)	See Note 5 for a discussion of the sources of distributions paid by the Company.

(3)	See Note 3 for a discussion of the Company’s capital share transactions.

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Statements of Cash Flows

(in ~~thousands)~~

Nine Months Ended
September 30,
2019 2018
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations $ 91,790 $ 21,325
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments (1,157,274) (1,063,874)
Paid-in-kind interest (16,052) (13,547)
Proceeds from sales and repayments of investments 1,213,529 1,190,908
Net realized (gain) loss on investments 48,582 10,805
Net change in unrealized (appreciation) depreciation on investments 23,461 145,973
Net change in unrealized (appreciation) depreciation on interest rate swaps 12,204 —
Accretion of discount (8,246) (6,215)
Amortization of deferred financing costs and discount 3,058 5,192
Unrealized (gain) loss on borrowings in foreign currency (530) 186
(Increase) decrease in receivable for investments sold and repaid (8,153) (4,737)
(Increase) decrease in interest receivable (7,986) 2,269
(Increase) decrease in receivable on interest rate swaps (978) —
(Increase) decrease in deferred merger costs (911) —
(Increase) decrease in prepaid expenses and other assets (50) 719
Increase (decrease) in payable for investments purchased 11,452 32,804
Increase (decrease) in management fees payable (521) (5,028)
Increase (decrease) in subordinated income incentive fees payable (751) (7,190)
Increase (decrease) in administrative services expense payable 1,241 179
Increase (decrease) in interest payable (2,614) 24
Increase (decrease) in directors’ fees payable (145) 23
Increase (decrease) in interest rate swap income payable 1,130 —
Increase (decrease) in other accrued expenses and liabilities (2,076) (1,827)
Net cash provided by (used in) operating activities 200,160 307,989
Cash flows from financing activities
Repurchases of common stock (52,233) (86,976)
Stockholder distributions (107,591) (98,366)
Borrowings under credit facilities(1)
765,000 436,346
Repayments of credit facilities(1)
(826,350) (727,617)
Deferred financing costs paid (2,392) (4,411)
Net cash provided by financing activities (223,566) (481,024)
Total increase (decrease) in cash (23,406) (173,035)
Cash, restricted cash and foreign currency at beginning of period 150,458 460,409
Cash, restricted cash and foreign currency at end of period(2)
$ 127,052 $ 287,374
Supplemental disclosure
Non-cash purchase of investments $ (35,333) $ (267,992)
Non-cash sale of investments $ 35,333 $ 267,992
Distributions reinvested $ 75,709 $ 84,192
Local and excise taxes paid $ 2,098 $ 2,584

~~(1)~~

See Note 9 for a discussion of the Company’s financing arrangements. During the nine months ended September 30, 2019 and 2018, the Company paid $78,603 and $72,742 respectively, in interest expense on the credit facilities.

~~(2)~~

~~As of September 30, 2019, balance includes cash and foreign currency of $109,662 and restricted cash and collateral of $17,390.~~

millions)


	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(708	)	$	71
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(1,317	)		(454	)
Paid-in-kind interest		(18	)		(5	)
Proceeds from sales and repayments of investments		1,643			203
Net realized (gain) loss on investments		217			18
Net change in unrealized (appreciation) depreciation on investments		605			(36	)
Net change in unrealized (appreciation) depreciation on total return swap⁽¹⁾		(3	)		—
Net change in unrealized (appreciation) depreciation on foreign currency forward contracts		(2	)		—
Net change in unrealized (appreciation) depreciation on interest rate swaps		30			4
Accretion of discount		(5	)		(2	)
Amortization of deferred financing costs		1			1
Unrealized (gain) loss on borrowings in foreign currency		(49	)		1
(Increase) decrease in collateral held at broker for open swap contracts		(15	)		—
(Increase) decrease in due from counterparty		41			—
(Increase) decrease in receivable for investments sold and repaid		(298	)		1
(Increase) decrease in income receivable		(4	)		(9	)
(Increase) decrease in prepaid expenses and other assets		—			(2	)
Increase (decrease) in payable for investments purchased		77			12
Increase (decrease) in management fees payable		(2	)		1
Increase (decrease) in subordinated income incentive fees payable		12			5
Increase (decrease) in administrative services expense payable		—			0
Increase (decrease) in interest payable		(5	)		2
Increase (decrease) in other accrued expenses and liabilities		(6	)		0

Net cash provided by (used in) operating activities		194			(189	)

Cash flows from financing activities
Repurchases of common stock		—			(27	)
Stockholder distributions		—			(35	)
Borrowings under financing arrangements⁽¹⁾		1,108			437
Repayments of financing arrangements⁽¹⁾		(1,232	)		(217	)
Deferred financing costs paid		(5	)		(2	)

Net cash provided by financing activities		(129	)		156

Total increase (decrease) in cash		65			(33	)
Cash, restricted cash and foreign currency at beginning of period		167			151

Cash, restricted cash and foreign currency at end of period	$	232		$	118

Supplemental disclosure
Non-cash purchase of investments	$	(69	)	$	0

Non-cash sale of investments	$	69		$	0

Distributions reinvested	$	—		$	26

Local and excise taxes paid	$	2		$	2

(1)	See Note 9 for a discussion of the Company’s financing arrangements. During the three months ended March 31, 2020 and 2019, the Company paid $44 and $27 respectively, in interest expense on the credit facilities.

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Senior Secured Loans—First Lien—119.4%
5 Arch Income Fund 2, LLC (m)(q) Diversified Financials 10.5% 11/18/23 $ 31,016 $ 31,016 $ 30,949
5 Arch Income Fund 2, LLC (m)(n)(q) Diversified Financials 10.5% 11/18/23 42,984 42,984 42,892
Abaco Energy Technologies LLC (h)(i) Energy L+700, 2.5% PIK (2.5% Max PIK) 1.0% 11/20/20 23,366 23,070 23,133
ABB CONCISE Optical Group LLC (s) Retailing L+500 1.0% 6/15/23 2,747 2,756 2,620
Accuride Corp (j)(s) Capital Goods L+525 1.0% 11/17/23 4,072 3,500 3,443
Acosta Holdco Inc (h)(k)(l)(s) Commercial & Professional Services L+325 1.0% 9/26/21 6,592 5,281 2,068
Advanced Lighting Technologies Inc (t) Materials L+750 1.0% 10/4/22 9,056 8,044 8,128
Advantage Sales & Marketing Inc (i)(s) Commercial & Professional Services L+325 1.0% 7/23/21 15,250 14,734 14,280
All Systems Holding LLC (g)(h)(i) Commercial & Professional Services L+625 1.0% 10/31/23 123,603 123,603 124,839
All Systems Holding LLC (n) Commercial & Professional Services L+625 1.0% 10/31/23 214 214 216
Altus Power America Inc (i) Energy L+750 1.5% 9/30/21 3,750 3,750 3,642
American Tire Distributors Inc (s) Automobiles & Components L+600, 1.0% PIK (1.0% Max PIK) 1.0% 9/1/23 634 599 630
American Tire Distributors Inc (s) Automobiles & Components L+750 1.0% 9/2/24 4,001 3,494 3,536
Ammeraal Beltech Holding BV (m)(s) Capital Goods E+375 7/30/25 € 1,491 1,725 1,575
Apex Group Limited (m)(n) Diversified Financials L+650 1.3% 6/15/23 $ 2,302 2,248 2,300
Apex Group Limited (i)(m) Diversified Financials L+650 1.3% 6/15/25 7,471 7,346 7,464
Apex Group Limited (i)(m) Diversified Financials L+700 1.0% 6/15/25 27,386 27,281 27,359
Apex Group Limited (f)(g)(m) Diversified Financials L+700 1.3% 6/15/25 15,447 15,180 15,432
Apex Group Limited (m) Diversified Financials L+700 1.5% 6/15/25 £ 22,253 28,265 27,507
Arrotex Australia Group Pty Ltd (m) Pharmaceuticals, Biotechnology & Life Sciences B+525 1.0% 7/10/24 A$ 47,322 32,473 31,447
Aspect Software Inc (n) Software & Services L+500 1.0% 7/15/23 $ 865 865 865
Aspect Software Inc (h) Software & Services L+500 1.0% 1/15/24 5,628 5,031 5,086
ATX Networks Corp (f)(m)(s) Technology Hardware & Equipment L+600, 1.0% PIK (1.0% Max PIK) 1.0% 6/11/21 26,124 25,807 24,687
AVF Parent LLC (h)(i)(k)(l) Retailing L+725 1.3% 3/1/24 73,019 72,421 41,539
Belk Inc (s) Retailing L+475 1.0% 12/12/22 22,403 19,982 16,479
Borden Dairy Co (g)(h) Food, Beverage & Tobacco L+750 1.0% 7/6/23 52,500 52,500 45,732
Brand Energy & Infrastructure Services
Inc (j)(s) Capital Goods L+425 1.0% 6/21/24 2,336 2,296 2,289
Caprock Midstream LLC (s) Energy L+475 11/3/25 6,118 5,992 5,526
CEPSA Holdco (Matador Bidco) (j)(m)(s) Energy L+475 6/19/26 1,877 1,858 1,884
CHS/Community Health Systems, Inc. (g)(m)(s) Health Care Equipment & Services 8.0% 3/15/26 7,231 7,025 7,231
Cimarron Energy Inc Energy L+1,000 1.0% 6/30/21 7,500 7,500 7,472
Conservice LLC (n) Consumer Services L+525 11/29/24 1,702 1,687 1,690
Conservice LLC (h) Consumer Services L+525 11/29/24 34,551 34,251 34,493


Portfolio Company^(a)	Footnotes		Industry		Rate^(b)	Floor^(b)			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Senior Secured Loans—First Lien—122.2%
5 Arch Income Fund 2, LLC		(r)(x)(y)		Diversified Financials	10.5%				11/18/23	$	97.3	$	97.3	$	92.3
5 Arch Income Fund 2, LLC		(r)(s)(x)(y)		Diversified Financials	10.5%				11/18/23		16.2		16.2		15.4
Accuride Corp		(l)(n)(ab)		Capital Goods	L+525		1.0	%	11/17/23		12.6		10.6		5.5
Acproducts Inc		(k)(l)(o)(p)		Consumer Durables & Apparel	L+650		1.0	%	8/18/25		64.9		64.2		63.0
Advanced Lighting Technologies Inc		(n)(t)(u)(ad)		Materials	L+750		1.0	%	10/4/22		9.0		7.8		6.6
Advantage Sales & Marketing Inc		(n)(ab)		Commercial & Professional Services	L+325		1.0	%	7/23/21		31.3		29.9		25.3
All Systems Holding LLC		(f)(k)(l)(m)(n)(o)(p)		Commercial & Professional Services	L+625		1.0	%	10/31/23		209.3		209.3		204.6
All Systems Holding LLC		(s)		Commercial & Professional Services	L+625		1.0	%	10/31/23		3.0		3.0		2.9
American Tire Distributors Inc		(n)(ab)		Automobiles & Components	L+600, 1.0% PIK (1.0% Max PIK)		1.0	%	9/1/23		2.6		2.5		2.4
American Tire Distributors Inc		(n)(ab)		Automobiles & Components	L+750		1.0	%	9/2/24		16.3		14.4		11.0
Apex Group Limited		(n)(r)		Diversified Financials	L+700		1.3	%	6/15/23		2.3		2.2		2.2
Apex Group Limited		(r)(s)		Diversified Financials	L+700		1.3	%	6/15/23		2.3		2.2		2.2
Apex Group Limited		(f)(n)(q)(r)		Diversified Financials	L+700		1.0	%	6/15/25		32.5		32.4		31.7
Apex Group Limited		(f)(k)(l)(n)(q)(r)		Diversified Financials	L+700		1.3	%	6/15/25		37.7		37.1		36.8
Apex Group Limited		(n)(r)		Diversified Financials	L+700		1.5	%	6/15/25	£	23.1		29.4		28.5
Arrotex Australia Group Pty Ltd		(n)(r)		Pharmaceuticals, Biotechnology & Life Sciences	B+525		1.0	%	7/10/24	A$	47.8		32.8		28.0
Aspect Software Inc		(n)		Software & Services	8.0% PIK (8.0% Max PIK)				6/30/20	$	0.2		—		0.2
Aspect Software Inc		(n)		Software & Services	L+500		1.0	%	7/15/23		1.4		1.4		1.4
Aspect Software Inc		(s)		Software & Services	L+500		1.0	%	7/15/23		1.9		1.9		1.9
Aspect Software Inc		(l)(n)(p)		Software & Services	L+500		1.0	%	1/15/24		21.1		19.1		19.1
ATX Networks Corp		(n)(o)(r)(ab)		Technology Hardware & Equipment	L+600, 1.0% PIK (1.0% Max PIK)		1.0	%	6/11/21		81.4		78.6		67.6
Belk Inc		(n)(ab)		Retailing	L+675		1.0	%	7/31/25		50.7		42.3		29.0
Bellatrix Exploration Ltd		(n)(r)		Energy	10.0%				5/29/20		0.6		0.6		0.6
Bellatrix Exploration Ltd		(r)(s)		Energy	10.0%				5/29/20		0.8		0.8		0.8
Berner Food & Beverage LLC		(n)		Food & Staples Retailing	L+875		1.0	%	2/2/23		4.3		4.3		4.2
Borden Dairy Co		(n)(t)(u)		Food, Beverage & Tobacco	L+750		1.0	%	7/6/23		105.0		103.1		45.4
Bugaboo International BV		(n)(r)		Consumer Durables & Apparel	7.8% PIK (7.8% Max PIK)				3/20/25	€	1.6		1.9		1.7
Caprock Midstream LLC		(n)(ab)		Energy	L+475				11/3/25	$	13.5		12.8		7.8
Charles Taylor PLC		(n)(r)		Diversified Financials	L+575				1/24/27	£	19.4		24.7		23.1
CHS/Community Health Systems, Inc.		(g)(h)(k)(r)(aa)(ab)		Health Care Equipment & Services	8.0%				3/15/26	$	17.6		17.1		16.8
Cimarron Energy Inc		(n)		Energy	10.0%				6/30/21		7.5		7.5		6.9
Conservice LLC		(f)(n)(o)(p)		Consumer Services	L+525				11/29/24		59.4		58.9		59.4
Conservice LLC		(s)		Consumer Services	L+525				11/29/24		2.9		2.9		2.9
Conservice LLC		(n)		Consumer Services	L+525				11/29/24		1.1		1.1		1.1
Conservice LLC		(s)		Consumer Services	L+525				11/29/24		2.3		2.3		2.3
Constellis Holdings LLC		(n)(ad)		Capital Goods	L+1,000		1.0	%	6/30/21		8.4		8.4		8.4
Constellis Holdings LLC		(n)(ad)		Capital Goods	L+750		1.0	%	3/31/24		15.0		15.0		15.0
CSafe Global		(n)		Capital Goods	L+650		1.0	%	11/1/21		9.1		9.1		8.9
CSafe Global		(f)(k)(l)(p)(q)		Capital Goods	L+650				10/31/23		76.8		76.8		74.8
CSafe Global		(l)(n)		Capital Goods	L+650		1.0	%	10/31/23		14.4		14.4		14.1
CSafe Global		(s)		Capital Goods	L+650		1.0	%	10/31/23		13.2		13.2		12.9
CSM Bakery Products		(l)(n)(ab)		Food, Beverage & Tobacco	L+400		1.0	%	7/3/20		6.4		6.2		5.3
CTI Foods Holding Co LLC		(n)		Food, Beverage & Tobacco	L+700		1.0	%	5/3/24		0.0		0.0		0.0

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Conservice LLC (n) Consumer Services L+525 11/29/24 $ 1,446 $ 1,440 $ 1,444
Constellis Holdings LLC (h) Capital Goods L+625 1.0% 4/15/22 46,970 46,401 39,779
CSafe Global Capital Goods L+650 1.0% 11/1/21 2,504 2,504 2,492
CSafe Global (n) Capital Goods L+650 1.0% 11/1/21 3,757 3,757 3,738
CSafe Global (f)(g)(h) Capital Goods L+650 1.0% 10/31/23 59,456 59,456 59,159
CSafe Global (n) Capital Goods L+650 1.0% 10/31/23 12,522 12,522 12,459
CSM Bakery Products (i)(j)(s) Food, Beverage & Tobacco L+400 1.0% 7/3/20 5,545 5,444 5,185
Dayton Superior Corp (i)(s) Materials L+800, 6.0% PIK (6.0% Max PIK) 1.0% 11/15/21 3,560 3,523 1,869
Diamond Resorts International Inc (i)(s) Consumer Services L+375 1.0% 9/2/23 13,979 13,729 13,651
Distribution International Inc (s) Retailing L+575 1.0% 12/15/23 3,381 3,252 3,178
Eagle Family Foods Inc Food, Beverage & Tobacco L+650 1.0% 6/14/23 1,742 1,727 1,675
Eagle Family Foods Inc (n) Food, Beverage & Tobacco L+650 1.0% 6/14/23 2,384 2,364 2,293
Eagle Family Foods Inc (g)(h) Food, Beverage & Tobacco L+675 1.0% 6/14/24 27,162 26,908 26,124
Eagleclaw Midstream Ventures LLC (i)(s) Energy L+425 1.0% 6/24/24 11,368 10,891 10,479
EIF Van Hook Holdings LLC (i)(s) Energy L+525 �� 9/5/24 7,099 6,976 6,913
Electronics For Imaging Inc (i)(s) Technology Hardware & Equipment L+500 7/23/26 15,483 14,723 14,477
Empire Today LLC (f)(g)(h)(i) Retailing L+650 1.0% 11/17/22 87,525 87,525 87,546
Entertainment Benefits Group LLC Media & Entertainment L+575 1.0% 9/30/24 587 587 587
Entertainment Benefits Group LLC (n) Media & Entertainment L+575 1.0% 9/30/24 2,347 2,347 2,347
Entertainment Benefits Group LLC (g) Media & Entertainment L+575 1.0% 9/30/25 17,555 17,336 17,336
Fairway Group Holdings Corp Food & Staples Retailing 4.0%, 11.0% PIK (11.0% Max PIK) 8/28/23 1,877 1,862 1,877
Fairway Group Holdings Corp Food & Staples Retailing 12.0% PIK (12.0% Max PIK) 1.0% 11/27/23 3,364 3,364 3,086
Fairway Group Holdings Corp (k)(l) Food & Staples Retailing 10.0% PIK (10.0% Max PIK) 1.0% 11/28/23 2,118 1,733 93
Foresight Energy LLC (h)(k)(l)(m)(s) Materials L+575 1.0% 3/28/22 10,319 10,308 5,684
Fox Head Inc (h)(i) Consumer Durables & Apparel L+850 1.0% 12/19/20 50,517 50,517 47,532
FullBeauty Brands Holdings Corp Retailing L+1,000 1.0% 2/7/22 188 188 183
FullBeauty Brands Holdings Corp (s) Retailing L+900 1.0% 2/7/24 1,094 1,069 574
HM Dunn Co Inc (h)(k)(l)(t) Capital Goods L+875 PIK (L+875 Max PIK) 1.0% 6/30/21 47,668 38,571 16,743
HM Dunn Co Inc (t) Capital Goods 15.0% PIK (15.0% Max PIK) 6/30/21 2,775 2,775 2,775
HM Dunn Co Inc (n)(t) Capital Goods 15.0% PIK (15.0% Max PIK) 6/30/21 1,644 1,644 1,644
Hudson Technologies Co (m) Commercial & Professional Services L+1,025 1.0% 10/10/23 49,946 49,572 27,845
Icynene Group Ltd (f)(h)(i) Materials L+700 1.0% 11/30/24 35,370 35,370 35,478
Industria Chimica Emiliana Srl (m) Pharmaceuticals, Biotechnology & Life Sciences L+650 6/30/26 € 51,357 54,749 54,327
Industria Chimica Emiliana Srl (m)(n) Pharmaceuticals, Biotechnology & Life Sciences L+650 6/30/26 7,285 7,973 7,707


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor^(b)			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Eacom Timber Corp	(n)(r)	Materials	L+650		1.0	%	11/30/23	$	2.6	$	2.6	$	2.3
Eagle Family Foods Inc	(n)	Food, Beverage & Tobacco	L+675		1.0	%	6/14/23		2.9		2.9		2.7
Eagle Family Foods Inc	(s)	Food, Beverage & Tobacco	L+675		1.0	%	6/14/23		5.3		5.2		4.9
Eagle Family Foods Inc	(f)(k)(l)(n)(p)	Food, Beverage & Tobacco	L+675		1.0	%	6/14/24		53.5		53.1		49.4
Eagleclaw Midstream Ventures LLC	(n)(ab)	Energy	L+425		1.0	%	6/24/24		8.9		8.2		4.0
EIF Van Hook Holdings LLC	(n)(ab)	Energy	L+525				9/5/24		2.2		2.1		1.6
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+500				7/23/26		15.6		14.8		13.0
Empire Today LLC	(f)(k)(l)(n)(o)(p)(q)	Retailing	L+650		1.0	%	11/17/22		133.5		133.5		130.5
Entertainment Benefits Group LLC	(n)	Media & Entertainment	L+575		1.0	%	9/30/24		5.0		5.0		4.5
Entertainment Benefits Group LLC	(s)	Media & Entertainment	L+575		1.0	%	9/30/24		0.9		0.9		0.9
Entertainment Benefits Group LLC	(f)(k)(l)(n)	Media & Entertainment	L+575		1.0	%	9/30/25		32.5		32.2		29.8
Fairway Group Holdings Corp	(n)(ad)	Food & Staples Retailing	L+1,000				10/21/20		3.0		2.9		3.0
Fairway Group Holdings Corp	(n)(ad)	Food & Staples Retailing	L+1,000				10/23/20		7.1		7.1		7.1
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	12.0% PIK (12.0% Max PIK)				11/27/23		11.3		11.3		3.0
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	10.0% PIK (10.0% Max PIK)				11/28/23		7.3		5.6		—
Fox Head Inc	(l)(n)(p)	Consumer Durables & Apparel	L+850		1.0	%	12/19/20		36.4		36.4		33.7
Frontline Technologies Group LLC	(n)	Software & Services	L+575		1.0	%	9/18/23		5.3		5.3		5.1
Greystone Equity Member Corp	(n)(r)	Diversified Financials	L+725		3.8	%	4/1/26		161.7		161.7		159.1
Greystone Equity Member Corp	(r)(s)	Diversified Financials	L+725		3.8	%	4/1/26		2.5		2.5		2.5
Heniff Transportation Systems LLC	(n)	Transportation	L+575		1.0	%	12/3/24		4.0		4.0		3.8
Heniff Transportation Systems LLC	(s)	Transportation	L+575		1.0	%	12/3/24		5.6		5.6		5.3
Heniff Transportation Systems LLC	(f)(k)(l)(n)	Transportation	L+575		1.0	%	12/3/26		75.2		74.9		72.0
HM Dunn Co Inc	(n)(t)(u)(ad)	Capital Goods	L+875 PIK (L+875 Max PIK)		1.0	%	6/30/21		56.3		44.4		13.0
HM Dunn Co Inc	(n)(ad)	Capital Goods	15.0% PIK (15.0% Max PIK)				6/30/21		5.3		5.3		5.3
HM Dunn Co Inc	(s)(ad)	Capital Goods	15.0% PIK (15.0% Max PIK)				6/30/21		1.5		1.5		1.5
Hudson Technologies Co	(n)(r)	Commercial & Professional Services	L+1,025		1.0	%	10/10/23		54.2		53.9		28.2
ID Verde	(n)(r)	Commercial & Professional Services	E+700				3/29/24	€	0.2		0.2		0.2
ID Verde	(n)(r)	Commercial & Professional Services	E+700				3/29/24	£	0.1		0.1		0.1
ID Verde	(n)(r)	Commercial & Professional Services	E+700				3/29/25	€	0.9		1.1		1.0
ID Verde	(n)(r)	Commercial & Professional Services	L+725				3/29/25	£	0.6		0.8		0.7
Industria Chimica Emiliana Srl	(r)(s)	Pharmaceuticals, Biotechnology & Life Sciences	E+650				6/30/26	€	13.6		14.8		14.1
Industria Chimica Emiliana Srl	(n)(r)	Pharmaceuticals, Biotechnology & Life Sciences	L+650				6/30/26		51.8		55.4		53.8
Industry City TI Lessor LP	(n)(p)	Consumer Services	10.8%, 1.0% PIK (1.0% Max PIK)				6/30/26	$	10.4		10.4		11.5
J S Held LLC	(f)(n)(o)(p)	Insurance	L+600		1.0	%	7/1/25		71.5		70.9		69.8
J S Held LLC	(s)	Insurance	L+600		1.0	%	7/1/25		13.5		13.5		13.2
J S Held LLC	(n)	Insurance	L+600		1.0	%	7/1/25		4.6		4.5		4.5
J S Held LLC	(s)	Insurance	L+600		1.0	%	7/1/25		3.3		3.3		3.2
JC Penney Corp Inc	(n)(r)(ab)	Retailing	L+425		1.0	%	6/23/23		3.8		3.4		1.6
Jo-Ann Stores Inc	(n)(ab)	Retailing	L+500		1.0	%	10/20/23		13.1		11.7		5.1
Kellermeyer Bergensons Services LLC	(f)(k)(l)(n)(o)(p)(q)	Commercial & Professional Services	L+650		1.0	%	11/7/26		164.5		163.3		155.3
Kellermeyer Bergensons Services LLC	(s)	Commercial & Professional Services	L+650		1.0	%	11/7/26		40.6		40.6		38.3
Kodiak BP LLC	(f)(k)(l)(m)(n)(o)(p)(q)	Capital Goods	L+725		1.0	%	12/1/24		222.6		222.6		222.3
Kodiak BP LLC	(s)	Capital Goods	L+725		1.0	%	12/1/24		10.7		10.7		10.7
LBM Borrower LLC	(l)(n)(ab)	Capital Goods	L+375		1.0	%	8/20/22		5.3		5.0		4.7

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Industry City TI Lessor LP (h) Consumer Services 10.8%, 1.0% PIK (1.0% Max PIK) 6/30/26 $ 10,863 $ 10,863 $ 11,949
J S Held LLC Insurance L+600 1.0% 7/1/25 274 271 271
J S Held LLC (n) Insurance L+600 1.0% 7/1/25 3,638 3,604 3,602
J S Held LLC Insurance L+600 1.0% 7/1/25 34,109 33,791 33,767
J S Held LLC (n) Insurance L+600 1.0% 7/1/25 8,372 8,372 8,289
JC Penney Corp Inc (m)(s) Retailing L+425 1.0% 6/23/23 1,180 1,134 1,032
Jo-Ann Stores Inc (i)(s) Retailing L+500 1.0% 10/20/23 4,877 4,869 3,379
Jostens Inc (s) Consumer Services L+550 12/19/25 3,477 3,381 3,474
JSS Holdings Ltd (f)(h)(i) Capital Goods L+800, 0.0% PIK (2.5% Max PIK) 1.0% 3/31/23 72,946 72,467 75,134
Kodiak BP LLC (g)(h)(i) Capital Goods L+725 1.0% 12/1/24 114,695 114,696 113,548
Kodiak BP LLC (n) Capital Goods L+725 1.0% 12/1/24 5,082 5,082 5,031
Laird PLC (j)(m)(s) Technology Hardware & Equipment L+450 7/9/25 402 369 370
Greystone Equity Member Corp (m) Diversified Financials L+725 3.8% 4/1/26 41,393 41,393 41,031
Greystone Equity Member Corp (m)(n) Diversified Financials L+725 3.8% 4/1/26 3,607 3,607 3,575
LD Intermediate Holdings Inc (i)(s) Software & Services L+588 1.0% 12/9/22 15,513 14,655 15,422
Lipari Foods LLC (h)(i) Food & Staples Retailing L+588 1.0% 1/6/25 121,573 120,672 121,435
Lipari Foods LLC (n) Food & Staples Retailing L+588 1.0% 1/6/25 25,220 25,220 25,191
MB Precision Holdings LLC (g)(t) Capital Goods L+725, 2.3% PIK (2.3% Max PIK) 1.3% 1/23/21 21,441 21,118 21,441
Mitel US Holdings Inc (i)(s) Technology Hardware & Equipment L+450 11/30/25 119 118 111
Monitronics International Inc (j)(s) Commercial & Professional Services L+650 1.3% 3/29/24 15,184 14,658 14,030
Monitronics International Inc (s) Commercial & Professional Services L+500 1.5% 7/3/24 5,166 5,166 5,179
Monitronics International Inc (n)(s) Commercial & Professional Services L+500 1.5% 7/3/24 29,673 29,673 29,747
Monitronics International Inc (s) Commercial & Professional Services L+500 1.5% 7/3/24 17,653 17,653 17,808
Multi-Color Corp (m)(s) Commercial & Professional Services 6.8% 7/15/26 4,012 4,012 4,180
Murray Energy Corp (h) Energy L+900 1.0% 2/12/21 10,891 10,844 10,909
NaviHealth Inc. (i)(s) Health Care Equipment & Services L+500 8/1/25 14,998 14,385 14,960
North Haven Cadence Buyer Inc (n) Consumer Services L+500 1.0% 9/2/21 2,625 2,625 2,625
North Haven Cadence Buyer Inc (h) Consumer Services L+650 1.0% 9/2/22 24,832 24,832 24,739
North Haven Cadence Buyer Inc (n) Consumer Services L+650 1.0% 9/2/22 17,792 17,792 17,725
North Haven Cadence Buyer Inc (h)(i) Consumer Services L+794 1.0% 9/2/22 51,188 51,188 50,995
One Call Care Management Inc (s) Insurance L+400 1.0% 11/27/20 252 225 222
One Call Care Management Inc (s) Insurance L+525 1.0% 11/27/22 5,790 4,942 4,584
P2 Energy Solutions, Inc. (s) Software & Services L+400 1.0% 10/30/20 73 73 73
PAE Holding Corp (s) Capital Goods L+550 1.0% 10/20/22 1,944 1,954 1,953


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor^(b)			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Lexitas Inc	(k)(l)(n)	Commercial & Professional Services	L+575		1.0	%	11/14/25	$	26.9	$	26.7	$	25.7
Lexitas Inc	(s)	Commercial & Professional Services	L+575		1.0	%	11/14/25		4.3		4.3		4.1
Lexitas Inc	(s)	Commercial & Professional Services	L+575		1.0	%	11/14/25		2.9		2.9		2.8
Lionbridge Technologies Inc	(f)(k)(p)(q)	Consumer Services	L+625		1.0	%	12/29/25		90.0		89.6		87.5
Lipari Foods LLC	(f)(m)(n)(o)(p)	Food & Staples Retailing	L+588		1.0	%	1/6/25		151.0		149.7		145.2
Lipari Foods LLC	(f)(n)	Food & Staples Retailing	L+588		1.0	%	1/6/25		22.0		22.0		21.1
Luxembourg Life Fund—Absolute Return Fund I	(n)(r)	Insurance	L+750		1.5	%	3/1/25		8.2		8.1		8.0
MB Precision Holdings LLC	(k)(n)(ad)	Capital Goods	L+725, 2.3% PIK (2.3% Max PIK)		1.3	%	7/23/22		21.5		21.1		20.9
Monitronics International Inc	(f)(n)(ab)(ac)	Commercial & Professional Services	L+650		1.3	%	3/29/24		39.3		37.5		27.0
Monitronics International Inc	(f)(ab)	Commercial & Professional Services	L+500		1.5	%	7/3/24		1.9		1.9		1.5
Monitronics International Inc	(n)(ab)	Commercial & Professional Services	L+500		1.5	%	7/3/24		30.7		30.7		30.7
Monitronics International Inc	(s)(ab)	Commercial & Professional Services	L+500		1.5	%	7/3/24		39.3		39.3		39.3
Motion Recruitment Partners LLC	(n)(q)	Commercial & Professional Services	L+600		1.0	%	12/20/25		43.8		43.4		41.8
Motion Recruitment Partners LLC	(s)	Commercial & Professional Services	L+600		1.0	%	12/20/25		34.6		34.6		33.0
NCI Inc	(n)	Software & Services	L+750		1.0	%	8/15/24		4.2		4.2		3.8
One Call Care Management Inc	(n)(ab)(ad)	Insurance	L+525		1.0	%	11/27/22		2.9		2.5		2.4
P2 Energy Solutions Inc	(n)	Software & Services	L+675		1.0	%	1/31/25		2.7		2.7		2.6
P2 Energy Solutions Inc	(s)	Software & Services	L+675		1.0	%	1/31/25		5.4		5.4		5.2
P2 Energy Solutions Inc	(f)(k)(p)(q)	Software & Services	L+675		1.0	%	1/31/26		136.1		134.4		130.2
Peak 10 Holding Corp	(n)(ab)	Telecommunication Services	L+350				8/1/24		25.5		23.0		18.4
PF Chang’s China Bistro Inc	(n)(ab)	Consumer Services	L+625				3/1/26		14.9		14.7		7.0
Premium Credit Ltd	(n)(r)	Diversified Financials	L+650				1/16/26	£	58.6		74.8		68.9
Pretium Packaging LLC	(f)(k)(l)(n)(p)(q)	Household & Personal Products	L+625		1.0	%	1/15/27	$	111.2		110.1		107.9
Pretium Packaging LLC	(s)	Household & Personal Products	L+625		1.0	%	1/15/27		22.7		22.4		22.0
Production Resource Group LLC	(m)(n)(t)(u)	Media & Entertainment	L+700		1.0	%	8/21/24		381.0		381.0		263.8
Project Marron	(n)(r)	Consumer Services	B+625				7/3/25	A$	36.5		24.0		21.1
Project Marron	(f)(n)(r)	Consumer Services	L+625				7/2/25	C$	28.7		21.9		19.3
Propulsion Acquisition LLC	(f)(l)(m)(n)(p)(q)	Capital Goods	L+600		1.0	%	7/13/21	$	113.9		112.6		110.7
PSKW LLC	(l)(m)(o)(p)(q)	Health Care Equipment & Services	L+625		1.0	%	3/9/26		161.7		159.7		159.7
Quorum Health Corp	(n)(ab)	Health Care Equipment & Services	L+675		1.0	%	4/29/22		7.6		7.6		6.4
Reliant Rehab Hospital Cincinnati LLC	(f)(l)(o)(p)	Health Care Equipment & Services	L+675				9/2/24		117.7		116.9		110.5
Roadrunner Intermediate Acquisition Co LLC	(l)(m)(o)(q)	Health Care Equipment & Services	L+675		1.0	%	3/15/23		95.7		95.7		94.1
RSC Insurance Brokerage Inc	(f)(k)(l)(n)(o)(p)	Insurance	L+550		1.0	%	11/1/26		93.2		92.4		87.9
RSC Insurance Brokerage Inc	(s)	Insurance	L+550		1.0	%	11/1/26		19.3		19.1		18.2
RSC Insurance Brokerage Inc	(s)	Insurance	L+550		1.0	%	11/1/26		3.7		3.6		3.5
Safe-Guard Products International LLC	(f)(p)(q)	Diversified Financials	L+575				1/27/27		76.1		75.4		70.6
Savers Inc	(f)(n)(o)(p)	Retailing	L+650, 0.8% PIK (0.8% Max PIK)		1.5	%	3/28/24		52.6		52.1		50.9
Savers Inc	(f)(n)	Retailing	L+700, 0.8% PIK (0.8% Max PIK)		1.5	%	3/28/24	C$	73.1		53.9		50.1
Sequa Corp	(n)(ab)	Materials	L+500		1.0	%	11/28/21	$	4.8		4.7		3.9
Sequel Youth & Family Services LLC	(f)(o)(p)	Health Care Equipment & Services	L+700		1.0	%	9/1/23		15.5		15.5		15.0
Sequel Youth & Family Services LLC	(f)(l)(n)(p)	Health Care Equipment & Services	L+800				9/1/23		90.0		90.0		86.9
Sequential Brands Group Inc.	(k)(l)(n)	Consumer Durables & Apparel	L+875				2/7/24		213.9		210.7		205.8
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+550				8/4/25		7.4		7.3		5.6
Smart & Final Stores LLC	(m)(n)(ab)	Food & Staples Retailing	L+675				6/20/25		20.3		18.4		17.9

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Peak 10 Holding Corp (g)(s) Telecommunication Services L+350 8/1/24 $ 10,984 $ 10,289 $ 9,522
PF Chang’s China Bistro Inc (s) Consumer Services L+625 3/1/26 5,788 5,734 4,949
PHRC License LLC (g)(h) Consumer Services L+850, 0.3% PIK (4.3% Max PIK) 1.5% 4/28/22 66,372 66,372 66,787
Power Distribution Inc (f) Capital Goods L+725 1.3% 1/25/23 41,950 41,950 37,702
Production Resource Group LLC (f)(g)(h)(i) Media & Entertainment L+700 1.0% 8/21/24 207,992 207,993 183,293
Project Marron (m) Consumer Services L+625 7/3/25 A$ 18,162 11,850 12,253 ��
Project Marron (m) Consumer Services L+625 7/2/25 C$ 14,265 10,874 10,772
Propulsion Acquisition LLC (f)(h)(i)(s) Capital Goods L+600 1.0% 7/13/21 $ 52,322 51,339 51,798
PSKW LLC (f)(h) Health Care Equipment & Services L+769 1.0% 11/25/21 56,025 55,992 56,025
Reliant Rehab Hospital Cincinnati LLC (h) Health Care Equipment & Services L+675 1.0% 9/2/24 59,724 59,254 58,712
Roadrunner Intermediate Acquisition Co
LLC (f) Health Care Equipment & Services L+675 1.0% 3/15/23 6,874 6,874 6,689
Safariland LLC Capital Goods L+725 1.1% 11/18/23 1,181 1,181 1,134
Safariland LLC (g)(h) Capital Goods L+775 1.1% 11/18/23 69,053 69,053 66,291
Savers Inc Retailing L+650, 0.8% PIK (0.8% Max PIK) 1.5% 3/28/24 26,213 25,912 25,948
Savers Inc Retailing L+700, 0.8% PIK (0.8% Max PIK) 1.0% 3/28/24 C$ 36,402 26,804 27,716
Sequa Corp (i)(j)(s) Materials L+500 1.0% 11/28/21 $ 20,958 20,740 20,814
Sequel Youth & Family Services LLC (h) Health Care Equipment & Services L+700 1.0% 9/1/23 12,137 12,137 12,258
Sequel Youth & Family Services LLC (f)(h)(i) Health Care Equipment & Services L+800 9/1/23 70,000 70,000 70,700
Sequential Brands Group Inc. (g) Consumer Durables & Apparel L+875 2/7/24 117,336 115,562 116,309
SI Group Inc (s) Materials L+475 10/15/25 1,219 1,179 1,187
SIRVA Worldwide Inc (i)(s) Commercial & Professional Services L+550 8/4/25 2,724 2,689 2,643
Smart & Final Stores LLC (i)(m)(s) Food & Staples Retailing L+675 6/20/25 17,744 16,016 16,251
Smart Foodservice (m)(s) Food & Staples Retailing L+475 6/20/26 2,522 2,497 2,535
Sorenson Communications LLC (g)(i)(s) Telecommunication Services L+650 4/29/24 54,547 52,504 54,615
Staples Canada (m) Retailing L+700 1.0% 9/12/24 C$ 50,049 38,727 38,243
Sungard Availability Services Capital Inc Software & Services L+750 1.0% 2/3/22 $ 634 615 656
Sungard Availability Services Capital Inc (n) Software & Services L+750 1.0% 2/3/22 634 615 656
Sutherland Global Services Inc (h)(i)(m)(s) Software & Services L+538 1.0% 4/23/21 12,922 12,538 12,829
Swift Worldwide Resources Holdco Ltd (f)(g) Energy L+1,000, 1.0% PIK (1.0% Max PIK) 1.0% 7/20/21 19,807 19,807 19,806
Tangoe LLC (h) Software & Services L+650 1.0% 11/28/25 51,439 50,970 51,500
Team Health Inc (s) Health Care Equipment & Services L+275 1.0% 2/6/24 77 71 64
Torrid Inc (g) Retailing L+675 1.0% 12/14/24 20,060 19,845 19,853
Total Safety US Inc (s) Capital Goods L+600 1.0% 8/16/25 3,570 3,220 3,380


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor^(b)			Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
SMART Global Holdings Inc	(r)(s)	Semiconductors & Semiconductor Equipment	L+400				2/9/21	$	0.1	$	0.1		$	0.1
Sorenson Communications LLC	(f)(k)(m)(n)(q)(ab)	Telecommunication Services	L+650				4/29/24		76.5		73.9			71.7
Staples Canada	(n)(r)	Retailing	L+700		1.0	%	9/12/24	C$	4.3		3.5			3.1
Sungard Availability Services Capital Inc	(n)	Software & Services	L+750		1.0	%	2/3/22	$	2.4		2.3			2.5
Sungard Availability Services Capital Inc	(s)	Software & Services	L+750		1.0	%	2/3/22		2.4		2.3			2.5
Sutherland Global Services Inc	(n)(p)(r)(ab)	Software & Services	L+538		1.0	%	4/23/21		6.1		6.0			4.5
Swift Worldwide Resources Holdco Ltd	(k)(n)(q)	Energy	9.5% L+150 PIK (L+150 Max PIK)		2.5	%	7/20/21		37.9		37.9			37.6
Syncsort Inc	(n)(ab)	Software & Services	L+600		1.0	%	8/16/24		4.8		3.8			3.9
Tangoe LLC	(f)(n)(o)(p)	Software & Services	L+650		1.0	%	11/28/25		102.5		101.6			99.0
Torrid Inc	(f)(k)(l)(n)	Retailing	L+675		1.0	%	12/14/24		39.7		39.3			39.1
Total Safety US Inc	(f)(n)(ab)	Capital Goods	L+600		1.0	%	8/16/25		1.0		0.9			0.8
Trace3 Inc	(f)(k)(l)(n)(o)(p)	Software & Services	L+675		1.0	%	8/3/24		168.9		168.9			165.3
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	A$	72.7		48.2			40.9
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	£	7.7		9.8			8.8
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600				10/15/26	$	20.1		20.1			18.4
Truck-Lite Co LLC	(n)	Capital Goods	L+625		1.0	%	12/13/24	USD	8.8		8.7			8.4
Truck-Lite Co LLC	(s)	Capital Goods	L+625		1.0	%	12/13/24		4.9		4.8			4.6
Truck-Lite Co LLC	(f)(k)(n)(o)(p)	Capital Goods	L+625		1.0	%	12/13/26		127.6		126.4			121.5
Truck-Lite Co LLC	(s)	Capital Goods	L+625		1.0	%	12/13/26		18.8		18.6			17.9
Virgin Pulse Inc	(f)(l)(m)(o)(p)	Software & Services	L+650		1.0	%	5/22/25		159.0		158.0			155.2
Warren Resources Inc	(n)(ad)	Energy	L+1,000, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		21.0		21.0			19.1
West Corp	(l)(ab)	Software & Services	L+350		1.0	%	10/10/24		4.9		4.4			3.7
West Corp	(l)(o)(ab)	Software & Services	L+400		1.0	%	10/10/24		19.6		18.1			14.8
Wheels Up Partners LLC	(n)	Transportation	L+855		1.0	%	1/26/21		0.5		0.5			0.5
Wheels Up Partners LLC	(n)	Transportation	L+855		1.0	%	8/26/21		0.3		0.3			0.3
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	6/30/24		1.0		1.0			1.0
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	11/1/24		0.4		0.4			0.4
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	12/21/24		0.2		0.2			0.2
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	12/21/24		0.7		0.7			0.7
Wheels Up Partners LLC	(n)	Transportation	L+710		1.0	%	12/21/24		0.7		0.7			0.7
Zeta Interactive Holdings Corp	(m)(n)(o)(p)(q)	Software & Services	L+750		1.0	%	7/29/22		122.2		122.2			122.2
Zeta Interactive Holdings Corp	(s)	Software & Services	L+750		1.0	%	7/29/22		4.4		4.4			4.4

Total Senior Secured Loans—First Lien											5,908.4			5,419.0
Unfunded Loan Commitments											(302.9	)		(302.9	)

Net Senior Secured Loans—First Lien											5,605.5			5,116.1

Senior Secured Loans—Second Lien—16.5%
Advantage Sales & Marketing Inc	(n)(ab)	Commercial & Professional Services	L+650		1.0	%	7/25/22		8.1		7.1			5.9
American Bath Group LLC	(l)(n)(ab)	Capital Goods	L+975		1.0	%	9/30/24		3.0		3.0			2.7
Ammeraal Beltech Holding BV	(f)(n)(o)(r)	Capital Goods	L+800				7/27/26		51.3		50.4			47.7
Applied Systems Inc	(n)(ab)	Software & Services	L+700		1.0	%	9/19/25		2.6		2.6			2.4
Arena Energy LP	(l)(n)(o)(p)(t)(u)	Energy	L+900, 4.0% PIK (4.0% Max PIK)		1.0	%	1/24/21		54.4		53.5			36.0
athenahealth Inc	(f)(m)(n)(p)	Health Care Equipment & Services	L+850				2/11/27		129.2		128.0			126.3
BCA Marketplace PLC	(n)(r)	Retailing	L+825				11/12/27	£	30.2		37.3			35.1

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Trace3 Inc (f)(g)(h)(i) Software & Services L+675 1.0% 8/3/24 $ 160,168 $ 160,168 $ 157,165
Vertiv Group Corp (j)(s) Technology Hardware & Equipment L+400 1.0% 11/30/23 10,983 10,548 10,479
Virgin Pulse Inc (h)(i) Software & Services L+650 1.0% 5/22/25 79,290 78,744 78,751
Vivint Inc (i)(s) Commercial & Professional Services L+500 4/1/24 18,443 18,402 18,121
Warren Resources Inc (t) Energy L+1,000, 1.0% PIK (1.0% Max PIK) 1.0% 5/22/20 14,772 14,772 14,772
Zeta Interactive Holdings Corp (f)(h) Software & Services L+750 1.0% 7/29/22 42,041 42,041 42,461
Zeta Interactive Holdings Corp (n) Software & Services L+750 1.0% 7/29/22 4,929 4,929 4,978
Total Senior Secured Loans—First Lien 3,304,396 3,165,110
Unfunded Loan Commitments (181,564) (181,564)
Net Senior Secured Loans—First Lien 3,122,832 2,983,546
Senior Secured Loans—Second Lien—17.6%
Access CIG LLC (s) Software & Services L+775 2/27/26 1,326 1,341 1,326
Advantage Sales & Marketing Inc (s) Commercial & Professional Services L+650 1.0% 7/25/22 2,291 2,080 1,992
American Bath Group LLC (i)(s) Capital Goods L+975 1.0% 9/30/24 7,000 6,640 7,000
Ammeraal Beltech Holding BV (h)(m) Capital Goods L+800 7/27/26 52,309 51,350 50,704
Arena Energy LP (f)(h) Energy L+900, 4.0% PIK (4.0% Max PIK) 1.0% 1/24/21 26,665 26,665 26,536
athenahealth Inc (h) Health Care Equipment & Services L+850 2/11/27 65,229 64,621 65,800
BCA Marketplace PLC (j)(m) Retailing L+825 9/4/27 € 30,091 36,654 36,654
Bellatrix Exploration Ltd (m) Energy 8.5% 9/11/23 $ 1,872 1,872 1,872
Bellatrix Exploration Ltd (k)(l)(m) Energy 8.5% 9/11/23 4,500 4,127 1,473
Byrider Finance LLC Automobiles & Components L+1,000, 0.5% PIK (4.0% Max PIK) 1.3% 6/7/22 29,808 29,808 29,733
Chisholm Oil & Gas Operating LLC (h) Energy L+800 1.0% 3/21/24 16,000 16,000 16,160
Electronics For Imaging Inc (i)(s) Technology Hardware & Equipment L+900 7/23/27 3,871 3,680 3,581
Emerald Performance Materials LLC (j)(s) Materials L+775 1.0% 8/1/22 4,457 4,434 4,401
Excelitas Technologies Corp (s) Technology Hardware & Equipment L+750 1.0% 12/1/25 5,793 5,828 5,812
Fairway Group Holdings Corp (k)(l) Food & Staples Retailing 4.0%, 11.0% PIK (11.0% Max PIK) 1.0% 2/24/24 1,895 1,520 —
Gruden Acquisition Inc (h)(s) Transportation L+850 1.0% 8/18/23 15,000 14,573 14,919
LBM Borrower LLC (f)(h)(i)(s) Capital Goods L+925 1.0% 8/20/23 29,332 29,118 28,874
Misys Ltd (j)(m)(s) Software & Services L+725 1.0% 6/13/25 4,670 4,646 4,486
NEP Broadcasting LLC (s) Media & Entertainment L+700 10/19/26 1,683 1,652 1,652
OEConnection LLC Software & Services L+825 9/25/27 21,374 21,161 21,161
One Call Care Management Inc (h) Insurance L+375, 6.0% PIK (6.0% Max PIK) 1.0% 4/11/24 13,003 12,904 10,616
OPE Inmar Acquisition Inc (i)(s) Software & Services L+800 1.0% 5/1/25 2,615 2,586 2,456


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor^(b)			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Bellatrix Exploration Ltd	(n)(r)(t)(u)	Energy	8.5%				9/11/23	$	5.6	$	5.6	$	4.4
Bellatrix Exploration Ltd	(n)(r)(t)(u)	Energy	8.5%				9/11/23		13.5		12.3		—
Byrider Finance LLC	(n)	Automobiles & Components	L+1,000, 0.5% PIK (0.5% Max PIK)		1.3	%	6/7/22		35.9		35.9		35.9
CDS US Intermediate Holdings Inc	(l)(n)(r)(t)(u)(ab)	Media & Entertainment	L+825		1.0	%	7/10/23		21.2		18.9		8.7
Chisholm Oil & Gas Operating LLC	(n)(t)(u)	Energy	L+550, 3.0% PIK (3.0% Max PIK)		1.3	%	3/21/24		38.6		38.3		14.6
CommerceHub Inc	(n)	Software & Services	L+775				5/21/26		3.2		3.1		3.1
Constellis Holdings LLC	(f)(n)(ad)	Capital Goods	L+100, 10% PIK (10% Max PIK)		1.0	%	3/31/25		13.5		13.5		13.5
Dayton Superior Corp	(n)	Materials	L+700		2.0	%	12/4/24		1.9		1.9		1.9
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+900				7/23/27		3.9		3.7		3.1
Emerald Performance Materials LLC	(l)(n)(ab)	Materials	L+775		1.0	%	8/1/22		5.3		5.3		4.4
Excelitas Technologies Corp	(l)(n)(ab)	Technology Hardware & Equipment	L+750		1.0	%	12/1/25		6.6		6.7		5.2
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	11.0% PIK (11.0% Max PIK)				2/24/24		6.5		5.0		—
Gruden Acquisition Inc	(m)(p)(ab)	Transportation	L+850		1.0	%	8/18/23		25.0		24.4		22.8
Invictus	(n)(ab)	Materials	L+675				3/30/26		0.1		0.1		0.1
LBM Borrower LLC	(l)(n)(p)(q)(ab)	Capital Goods	L+925		1.0	%	8/20/23		75.0		72.1		68.8
NEP Broadcasting LLC	(n)(ab)	Media & Entertainment	L+700				10/19/26		5.8		5.6		3.0
OEConnection LLC	(f)(p)	Software & Services	L+825				9/25/27		42.9		42.5		40.4
Ontic Engineering & Manufacturing Inc	(f)(n)	Capital Goods	L+850				10/29/27		26.8		26.3		24.8
OPE Inmar Acquisition Inc	(l)(n)(ab)	Software & Services	L+800		1.0	%	5/1/25		15.0		15.0		11.1
Paradigm Acquisition Corp	(l)(n)(ab)	Health Care Equipment & Services	L+750				10/26/26		3.7		3.7		2.9
Peak 10 Holding Corp	(n)(ab)	Telecommunication Services	L+725		1.0	%	8/1/25		15.9		13.6		6.4
Polyconcept North America Inc	(n)	Household & Personal Products	L+1,000		1.0	%	2/16/24		0.6		0.6		0.6
Pure Fishing Inc	(f)(n)	Consumer Durables & Apparel	L+838		1.0	%	12/31/26		45.9		45.5		36.7
Rise Baking Company	(f)(l)(n)	Food, Beverage & Tobacco	L+800		1.0	%	8/9/26		17.6		17.5		17.0
Sequa Corp	(n)(ab)	Materials	L+900		1.0	%	4/28/22		2.3		2.3		1.7
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+950				8/3/26		6.5		5.9		5.2
Sorenson Communications LLC	(n)(o)(p)	Telecommunication Services	11.5% PIK (11.5% Max PIK)				4/30/25		15.4		15.4		15.4
Sparta Systems Inc	(n)	Software & Services	L+825		1.0	%	8/21/25		2.4		2.4		2.1
Sungard Availability Services Capital Inc	(m)(n)	Software & Services	L+400, 2.5% PIK (2.5% Max PIK)		1.0	%	11/3/22		12.7		12.7		12.7
Titan Energy LLC	(n)(t)(u)(ad)	Energy	L+900		1.0	%	5/23/20		137.2		100.7		—
Vantage Specialty Chemicals Inc	(n)(ab)	Materials	L+825		1.0	%	10/27/25		0.8		0.7		0.5
WireCo WorldGroup Inc	(n)(ab)	Capital Goods	L+900		1.0	%	9/30/24		14.1		13.9		12.4
Wittur Holding GmbH	(n)(r)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)				9/23/27	€	55.2		60.5		57.1

Total Senior Secured Loans—Second Lien											913.5		692.6

Other Senior Secured Debt—3.6%
Advanced Lighting Technologies Inc	(n)(t)(u)(ad)	Materials	L+1,700 PIK (L+1,700 Max PIK)		1.0	%	10/4/23	$	15.1		10.7		—
APTIM Corp	(g)(n)(ab)	Diversified Financials	7.8%				6/15/25		8.2		8.1		2.8
Black Swan Energy Ltd	(n)(r)	Energy	9.0%				1/20/24		4.0		4.0		3.2
Cleaver-Brooks Inc	(h)(aa)(ab)	Capital Goods	7.9%				3/1/23		0.2		0.2		0.2
Diamond Resorts International Inc	(m)(ab)	Consumer Services	7.8%				9/1/23		4.9		4.9		3.5
Enterprise Development Authority	(g)(h)(aa)(ab)	Consumer Services	12.0%				7/15/24		8.2		8.5		7.2
FourPoint Energy LLC	(n)(p)	Energy	9.0%				12/31/21		46.3		45.7		37.1

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

P2 Energy Solutions, Inc. (i)(s) Software & Services L+800 1.0% 4/30/21 $ 14,500 $ 14,582 $ 14,119
Paradigm Acquisition Corp (s) Health Care Equipment & Services L+750 10/26/26 1,599 1,595 1,591
Peak 10 Holding Corp (i)(s) Telecommunication Services L+725 1.0% 8/1/25 5,814 5,644 4,303
Pure Fishing Inc (i) Consumer Durables & Apparel L+838 1.0% 12/31/26 46,828 46,390 40,826
Rise Baking Company (i) Food, Beverage & Tobacco L+800 1.0% 8/9/26 17,990 17,828 17,685
Sequa Corp (i)(s) Materials L+900 1.0% 4/28/22 7,462 7,424 7,364
SIRVA Worldwide Inc (i)(s) Commercial & Professional Services L+950 8/3/26 2,494 2,322 2,170
SMG/PA (s) Consumer Services L+700 1/23/26 3,641 3,669 3,696
Sorenson Communications LLC (h) Telecommunication Services 11.5% PIK (11.5% Max PIK) 4/30/25 5,364 5,196 5,364
Titan Energy LLC (h)(k)(l) Energy L+1,300 PIK (L+1,300 Max PIK) 1.0% 2/23/20 91,946 67,595 913
WireCo WorldGroup Inc (s) Capital Goods L+900 1.0% 9/30/24 5,115 5,172 5,064
Total Senior Secured Loans—Second Lien 520,677 440,303
Other Senior Secured Debt—8.1%
Advanced Lighting Technologies Inc (k)(l)(t) Materials L+1,700 PIK (L+1,700 Max PIK) 1.0% 10/4/23 13,773 10,663 —
Artesyn Embedded Technologies Inc (s) Technology Hardware & Equipment 9.8% 10/15/20 2,238 2,183 2,249
Black Swan Energy Ltd (m) Energy 9.0% 1/20/24 1,333 1,333 1,326
Enterprise Development Authority (s) Consumer Services 12.0% 7/15/24 3,356 3,483 3,692
FourPoint Energy LLC (h)(i) Energy 9.0% 12/31/21 46,313 45,474 45,618
Frontier Communications Corp (m)(s) Telecommunication Services 8.5% 4/1/26 10,722 10,397 10,748
Genesys Telecommunications Laboratories
Inc (s) Technology Hardware & Equipment 10.0% 11/30/24 144 157 156
JC Penney Corp Inc (m)(s) Retailing 5.7% 6/1/20 126 118 119
JW Aluminum Co (h)(s)(t) Materials 10.3% 6/1/26 33,001 33,001 34,899
Lycra (g)(m)(s) Consumer Durables & Apparel 7.5% 5/1/25 6,732 6,732 6,076
Mood Media Corp (h)(t) Media & Entertainment L+1,400 PIK (L+1,400 Max PIK) 12/31/23 40,563 39,448 39,813
MultiPlan Inc (s) Health Care Equipment & Services 7.1% 6/1/24 6,952 7,001 6,439
PAREXEL International Corp (s) Pharmaceuticals, Biotechnology & Life Sciences 6.4% 9/1/25 72 70 67
Pattonair Holdings Ltd (m)(s) Capital Goods 9.0% 11/1/22 6,767 6,946 7,122
Ply Gem Holdings Inc (s) Capital Goods 8.0% 4/15/26 7,807 7,481 7,709
Sungard Availability Services Capital Inc (f) Software & Services L+400, 2.5% PIK (2.5% Max PIK) 1.0% 11/3/22 3,311 3,311 3,311
Velvet Energy Ltd (i)(m) Energy 9.0% 10/5/23 15,000 15,000 15,338
Vivint Inc (g)(h)(s) Commercial & Professional Services 7.9% 12/1/22 11,307 11,115 11,335
Vivint Inc (h)(s) Commercial & Professional Services 7.6% 9/1/23 7,309 6,786 6,542
Total Other Senior Secured Debt 210,699 202,559


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor^(b)	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
JW Aluminum Co	(g)(h)(p)(aa)(ab)(ad)	Materials	10.3%		6/1/26	$	34.5	$	34.5		$	30.3
Lycra	(g)(h)(n)(r)(aa)(ab)	Consumer Durables & Apparel	7.5%		5/1/25		16.4		16.4			9.6
Mood Media Corp	(n)(t)(u)(ad)	Media & Entertainment	14.0% PIK (14.0% Max PIK)		12/31/23		43.9		42.9			23.3
TruckPro LLC	(g)(h)(aa)(ab)	Capital Goods	11.0%		10/15/24		7.9		7.5			7.5
Velvet Energy Ltd	(n)(r)	Energy	9.0%		10/5/23		7.5		7.5			6.4
Vivint Inc	(g)(h)(k)(m)(aa)(ab)	Commercial & Professional Services	7.9%		12/1/22		19.2		18.9			18.4

Total Other Senior Secured Debt									209.8			149.5

Subordinated Debt—5.5%
All Systems Holding LLC	(n)	Commercial & Professional Services	10.0% PIK (10.0% Max PIK)		10/31/22		0.2		0.2			0.2
Ascent Resources Utica Holdings LLC / ARU Finance Corp	(g)(h)(aa)(ab)	Energy	10.0%		4/1/22		26.0		26.0			14.1
athenahealth Inc	(n)	Health Care Equipment & Services	L+1,125 PIK (L+1,125 Max PIK)		2/11/27		74.9		74.8			72.3
Byrider Finance LLC	(n)	Automobiles & Components	20.0% PIK (20.0% Max PIK)		3/31/22		2.3		2.3			2.3
ClubCorp Club Operations Inc	(g)(h)(n)(aa)(ab)	Consumer Services	8.5%		9/15/25		31.8		30.9			19.4
Craftworks Rest & Breweries Group Inc	(n)(t)(u)	Consumer Services	12.0% PIK (12.0% Max PIK)		11/1/24		6.2		6.2			—
Diamond Resorts International Inc	(g)(h)(aa)(ab)	Consumer Services	10.8%		9/1/24		4.4		4.6			2.7
Intelsat Jackson Holdings SA	(g)(h)(n)(r)(aa)(ab)	Media & Entertainment	5.5%		8/1/23		3.7		3.4			2.3
Kenan Advantage Group Inc	(h)(aa)(ab)	Transportation	7.9%		7/31/23		19.2		17.2			16.3
LifePoint Hospitals Inc	(g)(h)(aa)(ab)	Health Care Equipment & Services	9.8%		12/1/26		10.3		10.6			9.8
Montage Resources Corp	(h)(n)(r)(aa)(ab)	Energy	8.9%		7/15/23		10.6		10.5			7.2
MultiPlan Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	7.1%		6/1/24		10.0		10.1			8.8
Opendoor Labs Inc	(n)(r)	Real Estate	10.0%		1/23/26		26.8		26.8			26.8
Opendoor Labs Inc	(r)(s)	Real Estate	10.0%		1/23/26		53.6		53.6			53.7
Plastipak Holdings Inc	(g)(h)(aa)(ab)	Materials	6.3%		10/15/25		1.4		1.3			1.3
Quorum Health Corp	(g)(h)(n)(t)(u)(aa)(ab)	Health Care Equipment & Services	11.6%		4/15/23		6.0		6.0			4.0
Radiology Partners Inc	(h)(aa)(ab)	Health Care Equipment & Services	9.3%		2/1/28		2.5		2.5			2.2
SRS Distribution Inc	(g)(h)(p)(aa)(ab)	Capital Goods	8.3%		7/1/26		22.8		22.6			20.7
Team Health Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	6.4%		2/1/25		20.5		18.4			7.4
Vivint Inc	(g)(h)(aa)(ab)	Commercial & Professional Services	7.6%		9/1/23		14.3		13.4			11.2

Total Subordinated Debt									341.4			282.7

Unfunded Debt Commitments									(53.6	)		(53.6	)

Net Subordinated Debt									287.8			229.1

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Subordinated Debt—9.6%
All Systems Holding LLC Commercial & Professional Services 10.0% PIK (10.0% Max PIK) 10/31/22 $ 206 $ 206 $ 206
Ascent Resources Utica Holdings LLC /
ARU Finance Corp (h)(i)(s) Energy 10.0% 4/1/22 26,026 26,026 26,148
athenahealth Inc Health Care Equipment & Services L+1,125 PIK (L+1,125 Max PIK) 2/11/27 35,521 35,521 35,751
Avantor Inc (i)(s) Pharmaceuticals, Biotechnology & Life Sciences 9.0% 10/1/25 25,000 25,633 28,156
Byrider Finance LLC Automobiles & Components 20.0% PIK (20.0% Max PIK) 3/31/22 1,765 1,765 1,765
ClubCorp Club Operations Inc (h)(s) Consumer Services 8.5% 9/15/25 10,733 10,394 9,043
Craftworks Rest & Breweries Group Inc Consumer Services 11/1/24 4,907 4,863 4,397
Diamond Resorts International Inc (s) Consumer Services 10.8% 9/1/24 3,048 3,177 3,155
GFL Environmental Inc (m)(s) Commercial & Professional Services 8.5% 5/1/27 8,827 9,070 9,809
Hub International Ltd (s) Insurance 7.0% 5/1/26 3,518 3,471 3,628
Intelsat Jackson Holdings SA (m)(s) Media & Entertainment 5.5% 8/1/23 5,752 5,258 5,395
Ken Garff Automotive LLC (s) Retailing 7.5% 8/15/23 6,004 6,048 6,312
Kenan Advantage Group Inc (s) Transportation 7.9% 7/31/23 7,434 6,302 6,691
LifePoint Hospitals Inc (s) Health Care Equipment & Services 9.8% 12/1/26 9,789 9,850 10,498
Montage Resources Corp (m)(s) Energy 8.9% 7/15/23 8,175 8,077 6,295
Nouryon (fka Akzo Nobel Specialty
Chemicals) (m)(s) Materials 8.0% 10/1/26 6,305 6,284 6,321
Plastipak Holdings Inc (s) Materials 6.3% 10/15/25 974 913 816
Quorum Health Corp (s) Health Care Equipment & Services 11.6% 4/15/23 2,396 2,385 2,162
SRS Distribution Inc (h)(s) Capital Goods 8.3% 7/1/26 11,667 11,489 11,930
Stars Group Holdings BV (m)(s) Consumer Services 7.0% 7/15/26 1,438 1,438 1,535
Team Health Inc (s) Health Care Equipment & Services 6.4% 2/1/25 6,901 6,047 4,803
Vertiv Group Corp (h)(s) Technology Hardware & Equipment 9.3% 10/15/24 16,559 16,405 16,042
Vivint Inc (h)(s) Commercial & Professional Services 8.8% 12/1/20 9,300 9,026 9,149
York Risk Services Group Inc (h)(i)(s) Insurance 8.5% 10/1/22 28,876 27,374 29,490
Total Subordinated Debt 237,022 239,497


Portfolio Company^(a)	Footnotes		Industry		Rate^(b)		Floor^(b)	Maturity		Principal Amount^(c)/ Shares		Cost			Fair Value^(d)
Asset Based Finance—14.0%
801 5th Ave, Seattle, Private Equity		(n)(r)(t)(ae)		Real Estate							7,819,411	$	7.8		$	7.6
801 5th Ave, Seattle, Structure Mezzanine		(n)(r)(ae)		Real Estate		8.0%, 0.0% PIK (3.0% Max PIK)			12/19/29	$	47.1		47.1			47.1
Abacus JV, Private Equity		(n)(r)		Insurance							34,147,572		34.1			36.8
Accelerator Investments Aggregator LP, Private Equity		(n)(r)(t)		Diversified Financials							153,628		0.2			0.1
Altavair AirFinance, Private Equity		(n)(r)		Capital Goods							31,984,765		32.0			29.1
Australis Maritime, Common Stock		(n)(r)(t)		Transportation							19,832,267		19.8			19.8
Global Jet Capital LLC, Preferred Stock		(i)(n)(t)		Commercial & Professional Services							76,447,526		76.4			—
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			1/30/25	$	2.4		2.2			2.0
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			4/30/25	$	15.1		13.9			12.9
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			9/3/25	$	3.1		2.9			2.7
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			9/29/25	$	2.9		2.7			2.5
Global Jet Capital LLC, Structured Mezzanine		(i)(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/4/25	$	88.7		81.6			75.8
Global Jet Capital LLC, Structured Mezzanine		(i)(n)(r)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/4/25	$	19.7		18.2			16.9
Global Jet Capital LLC, Structured Mezzanine		(i)(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/9/25	$	2.0		1.9			1.7
Global Jet Capital LLC, Structured Mezzanine		(i)(n)(r)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/9/25	$	15.7		14.4			13.4
Global Jet Capital LLC, Structured Mezzanine		(i)(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			1/29/26	$	7.6		7.0			6.5
Global Jet Capital LLC, Structured Mezzanine		(i)(n)(r)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			1/29/26	$	1.7		1.6			1.4
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			2/17/26	$	20.4		18.8			17.5
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			4/14/26	$	12.7		11.6			10.8
Global Jet Capital LLC, Structured Mezzanine		(n)		Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/2/26	$	21.5		19.8			18.4
Global Lending Services LLC, Private Equity		(n)(r)(t)		Diversified Financials							12,984,642		13.0			13.3
Home Partners JV, Common Stock		(n)(r)(t)		Real Estate							16,434,441		16.4			17.8
Home Partners JV, Private Equity		(n)(r)(t)(ab)		Real Estate							706,596		0.7			—
Home Partners JV, Structured Mezzanine		(n)(r)		Real Estate		11.0% PIK (11.0% Max PIK)			3/25/29	$	35.8		35.8			35.8
Home Partners JV, Structured Mezzanine		(r)(s)		Real Estate		11.0% PIK (11.0% Max PIK)			3/25/29	$	19.5		19.5			19.5
KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest		(n)(r)		Capital Goods							5,432,797		5.4			6.0
Lenovo Group Ltd, Structured Mezzanine		(n)(r)		Technology Hardware & Equipment		8.0%			6/22/22	€	9.3		10.6			10.2
Lenovo Group Ltd, Structured Mezzanine		(n)(r)		Technology Hardware & Equipment		8.0%			6/22/22	$	19.5		19.5			19.5
Lenovo Group Ltd, Structured Mezzanine		(n)(r)		Technology Hardware & Equipment		12.0%			6/22/22	€	5.9		6.7			6.5
Lenovo Group Ltd, Structured Mezzanine		(n)(r)		Technology Hardware & Equipment		12.0%			6/22/22	$	12.4		12.4			12.4
NewStar Clarendon2014-1A Class D		(n)(r)(t)		Diversified Financials					1/25/27	$	8.3		2.5			2.7
Pretium Partners LLC P1, Structured Mezzanine		(n)(r)		Real Estate		2.8%, 5.3% PIK (5.3% Max PIK)			10/22/26	$	6.5		6.5			6.3
Pretium Partners LLC P2, Structured Mezzanine		(n)(r)		Real Estate		2.0%, 7.5% PIK (7.5% Max PIK)			5/29/25	$	14.8		14.8			14.7
Prime ST LLC, Private Equity		(n)(r)(t)(ae)		Real Estate							6,635,747		6.6			6.6
Prime ST LLC, Structured Mezzanine		(n)(r)(ae)		Real Estate		5.0%, 6.0% PIK (6.0% Max PIK)			3/12/30	$	47.2		47.2			47.2
Sofi Lending Corp, Purchase Facility		(n)(r)(t)		Diversified Financials							40,637,805		40.6			43.0
Toorak Capital Funding LLC, Membership Interest		(n)(r)		Diversified Financials							N/A		18.7			21.7

Total Asset Based Finance													690.9			606.2
Unfunded Commitments													(19.5	)		(19.5	)

Net Asset Based Finance													671.4			586.7

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)/
Shares
Cost
Fair
Value(d)

Asset Based Finance—4.9%
Abacus JV, Private Equity (m) Insurance 12,746,354 $ 12,746 $ 12,746
Altavair NewCo, Private Equity (m) Capital Goods 5,293,732 5,294 5,865
Altus Power America Inc, Preferred Stock (r) Energy 9.0%, 5.0% PIK (5.0% Max PIK) 10/3/23 1,107,723 1,108 1,108
Australis Maritime, Common Stock (l)(m) Transportation 5,448,630 5,449 5,449
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 1/30/25 $ 1,102 1,041 1,086
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 4/30/25 $ 7,007 6,618 6,902
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 9/3/25 $ 1,448 1,368 1,426
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 9/29/25 $ 1,363 1,288 1,343
Global Jet Capital LLC, Structured Mezzanine (e) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/4/25 $ 8,229 7,773 8,106
Global Jet Capital LLC, Structured Mezzanine (e)(m) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/4/25 $ 1,832 1,731 1,805
Global Jet Capital LLC, Structured Mezzanine (e) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/9/25 $ 189 179 186
Global Jet Capital LLC, Structured Mezzanine (e)(m) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/9/25 $ 1,456 1,376 1,434
Global Jet Capital LLC, Structured Mezzanine (e) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 1/29/26 $ 705 665 694
Global Jet Capital LLC, Structured Mezzanine (e)(m) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 1/29/26 $ 157 148 155
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/2/26 $ 2,608 2,463 2,568
Global Jet Capital LLC, Preferred Stock (e)(l) Commercial & Professional Services 7,806,703 7,807 586
Home Partners JV, Structured Mezzanine (m) Real Estate 11.0% PIK (11.0% Max PIK) 3/25/29 $ 13,030 13,030 13,030
Home Partners JV, Structured Mezzanine (m)(n) Real Estate 11.0% PIK (11.0% Max PIK) 3/25/29 $ 13,030 13,030 13,030
Home Partners JV, Common Stock (l)(m) Real Estate 6,514,831 6,515 6,733
Home Partners JV, Private Equity (l)(m)(s) Real Estate 351,531 352 25
Lenovo Group Ltd, Structured Mezzanine (m) Technology Hardware & Equipment 8.0% 6/22/22 € 4,618 5,251 5,036
Lenovo Group Ltd, Structured Mezzanine (m) Technology Hardware & Equipment 8.0% 6/22/22 $ 9,705 9,705 9,705
Lenovo Group Ltd, Structured Mezzanine (m) Technology Hardware & Equipment 12.0% 6/22/22 € 2,939 3,342 3,205
Lenovo Group Ltd, Structured Mezzanine (m) Technology Hardware & Equipment 12.0% 6/22/22 $ 6,176 6,176 6,176
NewStar Clarendon 2014-1A Class D (l)(m) Diversified Financials 1/25/27 $ 12,140 7,180 5,564
Pretium Partners LLC P2, Structured Mezzanine (m) Real Estate 9.5% 5/29/25 $ 14,115 14,115 14,248
Sofi Lending Corp, 2019-C R1 (m) Diversified Financials 11/16/48 $ 13,283 7,523 7,518
Toorak Capital Funding LLC, Membership Interest (m) Diversified Financials $ 339 339 339
Total Asset Based Finance 143,612 136,068
Unfunded Commitments (13,030) (13,030)
Net Asset Based Finance 130,582 123,038


Portfolio Company^(a)	Footnotes		Industry		Rate^(b)		Floor^(b)	Maturity		Principal Amount^(c)/ Shares		Cost		Fair Value^(d)
Credit Opportunities Partners, LLC—10.3%
Credit Opportunities Partners, LLC		(n)(r)(ae)		Diversified Financials						$	503.1	$	503.1	$	430.2

Total Credit Opportunities Partners, LLC													503.1		430.2

Equity/Other—6.2%
Abaco Energy Technologies LLC, Common Stock		(n)(t)		Energy							3,055,556		3.1		0.5
Abaco Energy Technologies LLC, Preferred Stock		(n)(t)		Energy							12,734,481		0.6		3.0
Advanced Lighting Technologies Inc, Common Stock		(n)(t)(ad)		Materials							265,747		7.5		—
Advanced Lighting Technologies Inc, Warrant		(n)(t)(ad)		Materials					10/4/27		4,189		0.0		—
All Systems Holding LLC, Common Stock		(n)(t)		Commercial & Professional Services							1,880,308		1.8		1.8
ASG Technologies, Common Stock		(n)(t)(ad)		Software & Services							625,178		13.5		24.6
ASG Technologies, Warrant		(n)(t)(ad)		Software & Services					6/27/22		314,110		9.0		5.5
Aspect Software Inc, Common Stock		(l)(n)(p)(t)		Software & Services							1,148,694		1.9		1.7
Aspect Software Inc, Warrant		(l)(n)(p)(t)		Software & Services					1/15/24		1,146,890		—		—
ATX Networks Corp, Common Stock		(n)(r)(t)		Technology Hardware & Equipment							156,123		0.2		—
AVF Parent LLC, Trade Claim		(n)(t)		Retailing							121,058		—		1.7
Bellatrix Exploration Ltd, Warrant		(n)(r)(t)		Energy					9/11/23		382,476		—		—
Byrider Finance LLC, Common Stock		(n)(t)		Automobiles & Components							1,667		—		—
Catalina Marketing Corp, Common Stock		(n)(t)		Media & Entertainment							6,522		—		—
Chisholm Oil & Gas Operating LLC, Series A Units		(t)(v)(w)(z)		Energy							225,000		0.2		—
Cimarron Energy Inc, Common Stock		(n)(t)		Energy							4,302,293		3.9		0.2
Cimarron Energy Inc, Participation Option		(n)(t)		Energy							25,000,000		1.3		1.1
Constellis Holdings LLC, Private Equity		(f)(n)(t)(ad)		Capital Goods							849,702		18.9		18.9
Crossmark Holdings Inc, Warrant		(n)(t)		Commercial & Professional Services							8,358		—		—
CSafe Global, Common Stock		(n)(t)		Capital Goods							608,700		0.6		0.8
CTI Foods Holding Co LLC, Common Stock		(n)(t)		Food, Beverage & Tobacco							56		0.0		0.0
Dayton Superior Corp, Common Stock		(n)(t)		Materials							16,977		1.0		1.0
Dayton Superior Corp, Warrants		(n)(t)		Materials					12/2/21		4,287		—		—
Empire Today LLC, Common Stock		(n)(t)		Retailing							630		1.9		2.8
Envigo Laboratories Inc, Series A Warrant		(p)(t)		Health Care Equipment & Services					4/29/24		10,924		—		—
Envigo Laboratories Inc, Series B Warrant		(p)(t)		Health Care Equipment & Services					4/29/24		17,515		—		—
Fairway Group Holdings Corp, Common Stock		(n)(t)(ad)		Food & Staples Retailing							103,091		3.3		—
FourPoint Energy LLC, Common Stock, Class C—II—A Units		(t)(v)		Energy							13,000		13.0		0.2
FourPoint Energy LLC, Common Stock, Class D Units		(t)(v)		Energy							2,437		1.6		0.0
FourPoint Energy LLC, Common Stock, Class E—II Units		(t)(v)		Energy							29,730		7.4		0.4
FourPoint Energy LLC, Common Stock, Class E—III Units		(t)(v)		Energy							43,875		11.0		0.6
Fox Head Inc, Common Stock		(i)(n)(t)		Consumer Durables & Apparel							10,000,000		10.0		—
Harvey Industries Inc, Common Stock		(n)(t)		Capital Goods							2,666,667		2.7		6.4
HM Dunn Co Inc, Preferred Stock, Series A		(n)(p)(t)(ad)		Capital Goods							14,786		—		—
HM Dunn Co Inc, Preferred Stock, Series B		(n)(p)(t)(ad)		Capital Goods							14,786		—		—
JHC Acquisition LLC, Common Stock		(n)(t)		Capital Goods							9,517		9.5		5.6
JSS Holdings Ltd, Net Profits Interest		(n)(t)		Capital Goods							54		—		0.6
JW Aluminum Co, Common Stock		(i)(n)(t)(ad)		Materials							631		—		—
JW Aluminum Co, Preferred Stock		(i)(n)(ad)		Materials		12.5% PIK (12.5% Max PIK)			2/15/28		6,875		55.6		75.8

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)/
Shares
Cost
Fair
Value(d)

Equity/Other—10.7%
Abaco Energy Technologies LLC, Common Stock (l) Energy 3,055,556 $ 3,056 $ 1,163
Abaco Energy Technologies LLC, Preferred Stock (l) Energy 12,734,481 637 6,297
Advanced Lighting Technologies Inc, Common Stock (l)(t) Materials 265,747 7,471 —
Advanced Lighting Technologies Inc, Warrant (l)(t) Materials 10/4/27 4,189 39 —
All Systems Holding LLC, Common Stock (l) Commercial & Professional Services 1,240,204 1,201 1,448
Ascent Resources Utica Holdings LLC / ARU Finance Corp, CommonStock (l)(o) Energy 13,556 12,900 3,104
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim (o) Energy 115,178,571 25,800 26,376
ASG Technologies, Common Stock (l)(t) Software & Services 625,178 13,475 34,710
ASG Technologies, Warrant (l)(t) Software & Services 6/27/22 253,704 7,231 8,568
Aspect Software Inc, Common Stock (h)(l) Software & Services 304,599 494 471
Aspect Software Inc, Warrant (h)(l) Software & Services 1/15/24 304,120 — —
ATX Networks Corp, Common Stock (l)(m) Technology Hardware & Equipment 72,635 116 67
Bellatrix Exploration Ltd, Warrant (l)(m) Energy 9/11/23 127,489 — —
Byrider Finance LLC, Common Stock (l) Automobiles & Components 1,389 — —
Catalina Marketing Corp, Common Stock (l) Media & Entertainment 6,522 — —
Chisholm Oil & Gas Operating LLC, Series A Units (l)(p) Energy 75,000 75 73
Cimarron Energy Inc, Common Stock (l) Energy 4,302,293 3,950 290
Cimarron Energy Inc, Participation Option (l) Energy 25,000,000 1,289 1,688
Crossmark Holdings Inc, Warrant (i)(l) Commercial & Professional Services 7,007 — —
CSafe Global, Common Stock (l) Capital Goods 417,400 417 768
Empire Today LLC, Common Stock (l) Retailing 411 1,227 2,192
Envigo Laboratories Inc, Series A Warrant (h)(l) Health Care Equipment & Services 4/29/24 10,924 — —
Envigo Laboratories Inc, Series B Warrant (h)(l) Health Care Equipment & Services 4/29/24 17,515 — —
Fairway Group Holdings Corp, Common Stock (l) Food & Staples Retailing 31,626 1,016 —
FourPoint Energy LLC, Common Stock, Class C—II—A Units (l)(p) Energy 13,000 13,000 1,905
FourPoint Energy LLC, Common Stock, Class D Units (l)(p) Energy 2,437 1,610 361
FourPoint Energy LLC, Common Stock, Class E—II Units (l)(p) Energy 29,730 7,432 4,355
FourPoint Energy LLC, Common Stock, Class E—III Units (l)(p) Energy 43,875 10,969 6,428
Fox Head Inc, Common Stock (e)(l) Consumer Durables & Apparel 8,857,143 8,857 1,038
FullBeauty Brands Holdings Corp, Common Stock (l) Retailing 5,583 26 —
Harvey Industries Inc, Common Stock (l) Capital Goods 666,667 667 2,320
HM Dunn Co Inc, Preferred Stock, Series A (h)(l)(t) Capital Goods 12,857 — —


Portfolio Company^(a)	Footnotes		Industry		Rate^(b)		Floor^(b)	Maturity		Principal Amount^(c)/ Shares		Cost		Fair Value^(d)
MB Precision Holdings LLC, Class A—2 Units		(t)(v)(ad)		Capital Goods							6,655,178	$	2.3	$	—
MB Precision Holdings LLC, Preferred Stock		(t)(v)(ad)		Capital Goods							41,778,909		8.8		5.5
Misys Ltd, Preferred Stock		(n)(r)		Software & Services		L+1,025					2,841		2.8		2.5
Mood Media Corp, Common Stock		(n)(t)(ad)		Media & Entertainment							17,400,835		12.6		—
One Call Care Management Inc, Common Stock		(n)(t)(ad)		Insurance							2,604,293,203		1.8		1.5
One Call Care Management Inc, Preferred Stock A		(n)(t)(ad)		Insurance							277,791		19.3		16.3
One Call Care Management Inc, Preferred Stock B		(n)(ad)		Insurance		9.0% PIK (9.0% Max PIK)			10/25/29		5,729,445		5.8		6.0
Polyconcept North America Inc, Class A—1 Units		(n)(t)		Household & Personal Products							624		0.1		0.1
Professional Plumbing Group Inc, Common Stock		(i)(t)		Materials							3,000,000		3.0		4.1
Ridgeback Resources Inc, Common Stock		(i)(n)(r)(t)		Energy							1,644,464		10.1		5.0
Sequential Brands Group Inc., Common Stock		(i)(n)(t)(ab)		Consumer Durables & Apparel							534,076		7.2		0.1
Sorenson Communications LLC, Common Stock		(i)(n)(t)		Telecommunication Services							43,796		—		25.5
SSC (Lux) Limited S.a r.l., Common Stock		(n)(r)(t)		Health Care Equipment & Services							125,000		2.5		3.8
Sungard Availability Services Capital Inc, Common Stock		(m)(n)(o)(t)		Software & Services							217,659		15.2		8.7
Swift Worldwide Resources Holdco Ltd, Common Stock		(n)(t)		Energy							1,250,000		2.0		0.3
Templar Energy LLC, Common Stock		(i)(t)(v)(w)(ab)		Energy							847,547		7.2		0.1
Templar Energy LLC, Preferred Stock		(i)(n)(t)(ab)		Energy							561,819		5.6		—
Titan Energy LLC, Common Stock		(i)(n)(t)(ab)(ad)		Energy							272,778		8.6		—
Trace3 Inc, Common Stock		(n)(t)		Software & Services							42,486		0.4		0.5
Warren Resources Inc, Common Stock		(n)(t)(ad)		Energy							3,370,272		15.8		—
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1		(n)(t)		Software & Services							1,051,348		8.4		10.9
Zeta Interactive Holdings Corp, Preferred Stock, Series F		(n)(t)		Software & Services							956,233		8.4		15.1
Zeta Interactive Holdings Corp, Warrant		(n)(t)		Software & Services					4/20/27		143,435		—		0.1

Total Equity/Other													327.4		259.3

TOTAL INVESTMENTS—178.3%												$	8,518.5		7,463.5

LIABILITIES IN EXCESS OF OTHER ASSETS—(78.3%)															(3,277.5	)

NET ASSETS—100.0%														$	4,186.0

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)

Floor(b)
Maturity
Principal
Amount(c)/
Shares
Cost
Fair
Value(d)

HM Dunn Co Inc, Preferred Stock, Series B (h)(l)(t) Capital Goods 12,857 $ — $ —
JHC Acquisition LLC, Common Stock (l) Capital Goods 1,449 1,449 1,739
JSS Holdings Ltd, Net Profits Interest (l) Capital Goods 27 — 781
JW Aluminum Co, Common Stock (e)(i)(l)(t) Materials 548 — —
JW Aluminum Co, Preferred Stock (e)(i)(t) Materials 12.5% PIK 2/15/28 62,275,520 37,856 67,741
MB Precision Holdings LLC, Class A—2 Units (g)(h)(l)(p)(t) Capital Goods 6,655,178 2,288 —
MB Precision Holdings LLC, Preferred Stock (g)(l)(t) Capital Goods 41,778,909 8,774 5,138
Mood Media Corp, Common Stock (l)(t) Media & Entertainment 17,400,835 12,644 1,810
North Haven Cadence Buyer Inc, Common Stock (l) Consumer Services 2,916,667 2,917 6,781
Power Distribution Inc, Common Stock (l) Capital Goods 2,912,147 2,495 291
Professional Plumbing Group Inc, Common Stock (e)(l) Materials 3,000,000 3,000 6,465
Ridgeback Resources Inc, Common Stock (e)(l)(m) Energy 817,308 5,022 4,135
Sequential Brands Group Inc., Common Stock (e)(l)(s) Consumer Durables & Apparel 408,685 5,517 91
Sorenson Communications LLC, Common Stock (e)(l) Telecommunication Services 43,796 — 33,201
SSC (Lux) Limited S.a r.l., Common Stock (l)(m) Health Care Equipment & Services 261,364 5,227 7,465
Sungard Availability Services Capital Inc, Common Stock (f)(l) Software & Services 57,588 4,025 3,674
Sunnova Energy International Inc, Common Stock (l)(s) Energy 195,017 2,194 2,096
Swift Worldwide Resources Holdco Ltd, Common Stock (l) Energy 1,250,000 2,010 481
Templar Energy LLC, Common Stock (e)(l)(p)(s) Energy 717,718 6,101 449
Templar Energy LLC, Preferred Stock (e)(l)(s) Energy 475,758 4,751 —
Titan Energy LLC, Common Stock (e)(l)(s) Energy 200,039 6,322 6
Trace3 Inc, Common Stock (l) Software & Services 33,216 332 892
Warren Resources Inc, Common Stock (l)(t) Energy 2,371,337 11,145 6,071
White Star Petroleum LLC, Common Stock (l)(p) Energy 1,613,753 1,372 —
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 (l) Software & Services 620,025 4,929 6,922
Zeta Interactive Holdings Corp, Preferred Stock, Series F (l) Software & Services 563,932 4,929 6,268
Zeta Interactive Holdings Corp, Warrant (l) Software & Services 4/20/27 84,590 — 218
Total Equity/Other 258,254 266,337
TOTAL INVESTMENTS—170.3% $ 4,480,066 4,255,280
LIABILITIES IN EXCESS OF OTHER ASSETS—(70.3%) (1,756,525)
NET ASSETS—100.0% $ 2,498,755

Foreign currency forward contracts


Foreign Currency	Settlement Date		Counterparty		Amount and Transaction			US$ Value at Settlement Date		US$ Value at March 31, 2020		Unrealized Appreciation (Depreciation)
AUD		4/8/2020		ING Capital LLC	A$		6.8 Sold	$	4.6	$	4.2	$	0.4
EUR		4/8/2020		ING Capital LLC	€		5.6 Sold		6.3		6.2		0.1
GBP		4/8/2020		ING Capital LLC	£		0.4 Sold		0.5		0.4		0.1
EUR		7/17/2023		JP Morgan Chase Bank	€		0.1 Sold		0.1		0.1		—

Total								$	11.5	$	10.9	$	0.6
						��

Interest rate swaps


Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Depreciation
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(18	)	$	(18	)
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.81	%		12/18/2021		—		(9	)		(9	)
ING Capital Markets	$	250		3-Month LIBOR		2.59	%		1/14/2024		—		(22	)		(22	)
ING Capital Markets	$	250		3-Month LIBOR		2.62	%		1/14/2022		—		(10	)		(10	)

										$	—	$	(59	)	$	(59	)

(a)	Security may be an obligation of one or more entities affiliated with the named company.

(b)

Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2020, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.45%, the Euro Interbank Offered Rate, or EURIBOR, was (0.36)%, Candian Dollar Offer Rate, or CDOR was 1.24%, and the Australian Bank Bill Swap Bid Rate, or BBSY, or “B”, was 0.42%, and the U.S. Prime Lending Rate, or Prime, was 3.25%. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

(c)	Denominated in U.S. dollars unless otherwise noted.

(d)	Fair value determined by the Company’s board of directors (see Note 8).

(e)

Not used.

(f)	Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Ally Bank (see Note 9).

(g)

Security or portion thereof held within Broomall Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Broomall Funding LLC may be rehypothecated from time to time as permitted under Rule15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9).

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

~~A summary of outstanding financial instruments as of September 30, 2019 is as follows:~~

~~Interest rate swaps~~

Counterparty Notional
Amount Company Receives
Floating Rate Company Pays
Fixed Rate Termination
Date Premiums Paid/
(Received) Value Unrealized
Depreciation
JP Morgan Chase Bank $ 80,000 3-Month LIBOR 2.78% 12/18/2023 $ — $ (4,427) $ (4,427)
JP Morgan Chase Bank $ 80,000 3-Month LIBOR 2.81% 12/18/2021 — (2,206) (2,206)
ING Capital Markets $ 100,000 3-Month LIBOR 2.59% 1/14/2024 — (4,860) (4,860)
ING Capital Markets $ 100,000 3-Month LIBOR 2.62% 1/14/2022 — (2,454) (2,454)
$ — $ (13,947) $ (13,947)

~~(a)~~

~~Security may be an obligation of one or more entities affiliated with the named company.~~

~~(b)~~

Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of September 30, 2019, the three-month London Interbank Offered Rate, or LIBOR, or “L”, was 2.09%, the Euro Interbank Offered Rate, or EURIBOR, or “E”, was (0.42)%, Canadian Dollar Offer Rate, or CDOR, or “C”, was 1.97%, Australian Bank BIll Swap Bid Rate, or BBSY, or “B”, was 0.95% and the U.S. Prime Lending Rate, or Prime, or “P”, was 5.00%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

~~(c)~~

~~Denominated in U.S. dollars unless otherwise noted.~~

~~(d)~~

~~Fair value determined by the Company’s board of directors (see Note 8).~~

~~(e)~~

~~Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with ING Capital LLC (see Note 9).~~

~~(f)~~

~~Security or portion thereof held within Cooper River LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Citibank, N.A. (see Note 9).~~

~~(g)~~

Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

~~(h)~~

Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with JPMorgan Chase Bank, N.A. (see Note 9).

~~(i)~~

~~Security or portion thereof held within Green Creek LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs Bank USA (see Note 9).~~

~~(j)~~

~~Position or portion thereof unsettled as of September 30, 2019.~~

~~(k)~~

~~Security was on non-accrual status as of September 30, 2019.~~

~~(l)~~

~~Security is non-income producing.~~

~~(m)~~

The investment is not a qualifying asset under the Investment Company Act of 1940, as amended. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of September 30, 2019, 84.4% of the Company’s total assets represented qualifying assets.

~~(n)~~

~~Security is an unfunded commitment. The stated rate reflects the spread disclosed at the time of commitment and may not indicate the actual rate received upon funding.~~

~~(o)~~

~~Security held within IC II American Energy Investments, Inc., a wholly-owned subsidiary of the Company.~~

~~(p)~~

~~Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.~~

~~(q)~~

~~Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.~~

~~(r)~~

~~Security held within IC II Altus Investments, LLC, a wholly-owned subsidiary of the Company.~~

~~(s)~~

~~Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8).~~

(h)

Security or portion thereof held within Burholme Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Burholme Funding LLC may be rehypothecated from time to time as permitted under Rule15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9).

(i)	Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(j)

Not used.

(k)	Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(l)	Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(m)	Security or portion thereof held within Germantown Funding LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs (see Note 9).

(n)	Security or portion thereof is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(o)	Security or portion thereof held within Jefferson Square Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, National Association (see Note 9).

(p)	Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, N.A. (see Note 9).

(q)	Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Morgan Stanley Senior Funding, Inc. (see Note 9).

(r)

(s)	Security is an unfunded commitment. Reflects the stated spread at the time of commitment, but may not be the actual rate received upon funding.

(t)	Security isnon-income producing.

(u)	Asset is onnon-accrual status.

(v)	Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.

(w)	Security held within FSIC III Investments, Inc., a wholly-owned subsidiary of the Company.

(x)	Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(y)	Security held within IC III Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(z)	Security held within FSIC IV Investments, LLC, a wholly-owned subsidiary of the Company.

(aa)

Security or portion thereof held within Burholme Funding LLC has been rehypothecated under Rule15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). As of March 31, 2020, the fair value of securities rehypothecated by BNPP was $114.

(ab)	Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8).

(ac)	Position or portion thereof unsettled as of March 31, 2020.

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments (continued)

As of ~~September 30, 2019~~
March 31, 2020

(in ~~thousands,~~millions, except share amounts)

~~(t)~~

Under the Investment Company Act of 1940, as amended, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of September 30, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the nine months ended September 30, 2019:

Portfolio Company Fair Value at
December 31,
2018
Gross
Additions(1)

Gross
Reductions(2)
Net Realized
Gain (Loss) Net Change in
Unrealized
Appreciation
(Depreciation) Fair Value at
September 30,
2019
Interest
Income(3)

PIK
Income(3)

Fee
Income(3)

Senior Secured Loans—First Lien
Advanced Lighting Technologies Inc $ 9,125 $ 172 $ (69) $ 8 $ (1,108) $ 8,128 $ 695 $ — $ —
HM Dunn Co Inc 7,022 — — — 9,721 16,743 — — —
HM Dunn Co Inc (4)
— 2,775 — — — 2,775 87 133 43
MB Precision Holdings LLC 21,339 1,248 (671) 177 (652) 21,441 1,938 365 —
Warren Resources Inc 14,652 120 — — — 14,772 1,299 120 —
Other Senior Secured Debt —
Advanced Lighting Technologies Inc 3,630 — — — (3,630) — — — —
JW Aluminum Co 32,919 — — — 1,980 34,899 2,537 — —
Mood Media Corp 28,478 47,387 (36,322) — 270 39,813 4,042 1,139 —
Equity/Other
Advanced Lighting Technologies Inc, Common Equity — — — — — — — — —
Advanced Lighting Technologies Inc, Warrant — — — — — — — — —
ASG Technologies, Common Equity 31,743 — — — 2,967 34,710 — — —
ASG Technologies, Warrants 7,364 — — — 1,204 8,568 — — —
HM Dunn Co Inc, Preferred Stock, Series A — — — — — — — — —
HM Dunn Co Inc, Preferred Stock, Series B — — — — — — — — —
JW Aluminum Co, Common Stock — — — — — — — — —
JW Aluminum Co, Preferred Stock 43,890 5,816 — — 18,035 67,741 5,575 5,492 —
MB Precision Holdings LLC, Class A-2 Units — — — — — — — — —
MB Precision Holdings LLC, Preferred Stock 5,826 174 — — (862) 5,138 — — —
Mood Media Corp, Common Stock 15,842 — — — (14,032) 1,810 — — —
Warren Resources Inc, Common Stock 5,573 — — — 498 6,071 — — —
Total $ 227,403 $ 57,692 $ (37,062) $ 185 $ 14,391 $ 262,609 $ 16,173 $ 7,249 $ 43

~~(1)~~

Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category.

~~(2)~~

Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

~~(3)~~

~~Interest, PIK and fee income presented for the nine months ended September 30, 2019.~~

~~(4)~~

~~Security includes a partially unfunded commitment as of September 30, 2019 with an amortized cost of $1,644 and a fair value of $1,644.~~

(ad)

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2020, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the three months ended March 31, 2020:


Portfolio Company	Fair Value at December 31, 2019		Gross Additions⁽¹⁾		Gross Reductions⁽²⁾			Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at March 31, 2020		Interest Income⁽³⁾		PIK Income⁽³⁾		Fee Income⁽³⁾
Senior Secured Loans—First Lien
Advanced Lighting Technologies Inc	$	5.9	$	—	$	(0.3	)	$	0.0	$	1.0		$	6.6	$	0.0	$	—	$	—
Constellis Holdings LLC		—		8.4		—			—		—			8.4		0.0		—		—
Constellis Holdings LLC		—		15.0		—			—		—			15.0		—		—		—
Fairway Group Holdings Corp		—		3.0		(0.1	)		—		0.1			3.0		—		—		—
Fairway Group Holdings Corp		—		7.1		—			—		—			7.1		0.1		—		—
Fairway Group Holdings Corp		6.3		0.0		(6.3	)		0.1		(0.1	)		—		0.0		0.0		—
Fairway Group Holdings Corp		6.5		—		—			—		(3.5	)		3.0		—		—		—
Fairway Group Holdings Corp		—		—		—			—		—			—		—		—		—
HM Dunn Co Inc		26.0		—		—			—		(13.0	)		13.0		—		—		—
HM Dunn Co Inc		5.2		0.6		(0.5	)		—		—			5.3		0.3		0.2		—
MB Precision Holdings LLC		21.4		0.2		(0.1	)		0.0		(0.6	)		20.9		0.6		0.1		—
One Call Care Management Inc		2.7		0.0		0.0			0.0		(0.3	)		2.4		0.1		—		—
Warren Resources Inc		21.0		0.0		—			—		(1.9	)		19.1		0.6		0.1		—
Senior Secured Loans—Second Lien
Constellis Holdings LLC		—		13.5		—			—		—			13.5		0.0		—		—
Fairway Group Holdings Corp		—		—		—			—		—			—		—		—		—
Titan Energy LLC		—		—		—			—		—			—		—		—		—
Other Senior Secured Debt
Advanced Lighting Technologies Inc		—		—		—			—		—			—		—		—		—
JW Aluminum Co		36.3		—		—			—		(6.0	)		30.3		0.9		—		—
Mood Media Corp		39.0		3.4		—			—		(19.1	)		23.3		0.5		—		—
Equity/Other
Advanced Lighting Technologies Inc, Common Stock		—		—		—			—		—			—		—		—		—
Advanced Lighting Technologies Inc, Warrant		—		—		—			—		—			—		—		—		—
ASG Technologies, Common Stock		30.7		—		—			—		(6.1	)		24.6		—		—		—
ASG Technologies, Warrant		8.6		—		—			—		(3.1	)		5.5		—		—		—
Constellis Holdings LLC		—		18.9		—			—		—			18.9		—		—		—
Fairway Group Holdings Corp, Common Stock		—		—		—			—		—			—		—		—		—
HM Dunn Co Inc, Preferred Stock, Series A		—		—		—			—		—			—		—		—		—
HM Dunn Co Inc, Preferred Stock, Series B		—		—		—			—		—			—		—		—		—
JW Aluminum Co, Common Stock		—		—		—			—		—			—		—		—		—
JW Aluminum Co, Preferred Stock		104.1		3.0		—			—		(31.3	)		75.8		—		2.8		—
MB Precision Holdings LLC, Class A—2 Units		—		—		—			—		—			—		—		—		—
MB Precision Holdings LLC, Preferred Stock		5.6		—		—			—		(0.1	)		5.5		—		—		—
Mood Media Corp, Common Stock		1.0		—		—			—		(1.0	)		—		—		—		—

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Unaudited Consolidated Schedule of Investments
(continued)

As of ~~December~~March 31, ~~2018~~
2020

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Senior Secured Loans—First Lien—128.3%
5 Arch Income Fund 2, LLC (m)(q) Diversified Financials 9.0% 11/18/23 $ 39,540 $ 39,561 $ 39,540
5 Arch Income Fund 2, LLC (m)(n)(q) Diversified Financials 9.0% 11/18/23 34,461 34,461 34,461
Abaco Energy Technologies LLC (h)(i)(t) Energy L+700, 2.5% PIK (2.5% Max PIK) 1.0% 11/20/20 24,428 23,941 24,153
ABB CONCISE Optical Group LLC (t) Retailing L+500 1.0% 6/15/23 2,769 2,779 2,658
Accuride Corp (j)(t) Capital Goods L+525 1.0% 11/17/23 540 520 518
Acosta Holdco Inc (h)(t) Commercial & Professional Services L+325 1.0% 9/26/21 6,644 5,383 4,081
Addison Holdings (f)(g)(h)(i) Commercial & Professional Services L+675 1.0% 12/29/23 83,832 83,832 83,974
Advanced Lighting Technologies Inc (h)(u) Materials L+750 1.0% 10/4/22 9,125 7,933 9,125
Advantage Sales & Marketing Inc (i)(t) Commercial & Professional Services L+325 1.0% 7/23/21 15,370 14,681 13,654
Aleris International Inc (h)(t) Materials L+475 2/27/23 1,367 1,354 1,358
All Systems Holding LLC (g)(h)(i) Commercial & Professional Services L+767 1.0% 10/31/23 111,623 111,623 112,739
Altus Power America Inc (i) Energy L+750 1.5% 9/30/21 3,183 3,183 3,087
Altus Power America Inc (n) Energy L+750 1.5% 9/30/21 140 140 136
American Tire Distributors Inc (t) Automobiles & Components L+750 1.0% 8/30/24 4,031 3,521 3,319
American Tire Distributors Inc (t) Automobiles & Components L+650, 1.0% PIK (1.0% Max PIK) 1.0% 9/1/23 634 593 593
Ammeraal Beltech Holding BV (m)(t) Capital Goods E+375 7/30/25 € 1,491 1,725 1,701
Apex Group Limited (m)(n) Diversified Financials L+650 6/15/23 $ 2,302 2,238 1,970
Apex Group Limited (f)(g)(m) �� Diversified Financials L+650 1.0% 6/15/25 15,565 15,271 14,948
Apex Group Limited (m)(n) Diversified Financials L+650 1.0% 6/15/25 7,509 7,370 7,211
Apex Group Limited (m) Diversified Financials L+650 1.0% 6/15/25 2,503 2,466 2,404
Apex Group Limited (m)(n) Diversified Financials L+650 1.0% 6/15/25 3,754 3,699 3,606
Ascension Insurance Inc (f)(g)(h) Insurance L+825 1.3% 3/5/19 77,635 77,567 77,635
Ascension Insurance Inc (n) Insurance L+825 1.3% 3/5/19 27,800 27,800 27,800
Aspect Software Inc (k)(l) Software & Services L+400, 6.5% PIK (6.5% Max PIK) 5/25/20 4,671 4,657 3,480
Aspect Software Inc (h)(k)(l) Software & Services L+1100 1.0% 5/25/20 3,598 3,556 2,680
ATX Networks Corp (f)(m)(t) Technology Hardware & Equipment L+600, 1.0% PIK (1.0% Max PIK) 1.0% 6/11/21 1,852 1,839 1,759
ATX Networks Corp (f)(i)(m)(t) Technology Hardware & Equipment L+600, 1.0% PIK (1.0% Max PIK) 1.0% 6/11/21 24,804 24,368 23,564
AVF Parent LLC (h)(i) Retailing L+725 1.3% 3/1/24 74,461 74,461 69,605
Belk Inc (t) Retailing L+475 1.0% 12/12/22 22,635 19,743 18,366
Borden Dairy Co (g)(h) Food, Beverage & Tobacco L+808 1.0% 7/6/23 52,500 52,500 47,738
Caprock Midstream LLC (t) Energy L+475 11/3/25 6,046 5,916 5,638
Cimarron Energy Inc Energy L+900 1.0% 6/30/21 7,500 7,500 7,500


Portfolio Company	Fair Value at December 31, 2019		Gross Additions⁽¹⁾		Gross Reductions⁽²⁾			Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at March 31, 2020		Interest Income⁽³⁾		PIK Income⁽³⁾		Fee Income⁽³⁾
One Call Care Management Inc, Common Stock	$	1.8	$	—	$	—		$	—	$	(0.3	)	$	1.5	$	—	$	—	$	—
One Call Care Management Inc, Preferred Stock A		19.3		—		—			—		(3.0	)		16.3		—		—		—
One Call Care Management Inc, Preferred Stock B		5.8		—		0.0			—		0.2			6.0		—		0.1		—
Titan Energy LLC, Common Stock		—		—		—			—		—			—		—		—		—
Warren Resources Inc, Common Stock		8.3		—		—			—		(8.3	)		—		—		—		—

Total	$	355.5	$	73.1	$	(7.3	)	$	0.1	$	(96.4	)	$	325.0	$	3.1	$	3.3	$	—

(1)

(2)

(3)	Interest, PIK and fee income presented for the three months ended March 31, 2020.

(ae)

Under the Investment Company Act of 1940, as amended, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2020, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” and deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the three months ended March 31, 2020:


Portfolio Company	Fair Value at December 31, 2019		Gross Additions⁽¹⁾		Gross Reductions⁽²⁾			Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at March 31, 2020		Interest Income⁽³⁾		PIK Income⁽³⁾		Dividend Income⁽³⁾
Asset Based Finance
801 5th Ave, Seattle, Structure Mezzanine	$	47.1	$	—	$	—		$	—	$	—		$	47.1	$	1.3	$	—	$	—
801 5th Ave, Seattle, Private Equity		7.8		—		—			—		(0.2	)		7.6		—		—		—
Prime ST LLC, Structured Mezzanine		—		47.2		—			—		—			47.2		1.5		—		—
Prime ST LLC, Private Equity		—		6.6		—			—		—			6.6		—		—		—
Credit Opportunities Partners, LLC
Credit Opportunities Partners, LLC		510.0		—		(0.3	)		—		(79.5	)		430.2		—		—		13.1

Total	$	564.9	$	53.8	$	(0.3	)	$	—	$	(79.7	)	$	538.7	$	2.8	$	—	$	13.1

(1)

(2)

(3)	Interest, PIK and dividend income presented for the three months ended March 31, 2020.

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments ~~(continued)~~

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Constellis Holdings LLC / Constellis Finance
Corp Capital Goods L+575 1.0% 4/1/22 $ 47,325 $ 46,621 $ 46,615
CSafe Global Capital Goods L+725 1.0% 11/1/21 626 626 632
CSafe Global (n) Capital Goods L+725 1.0% 11/1/21 5,635 5,635 5,691
CSafe Global (f)(g)(h) Capital Goods L+725 1.0% 10/31/23 53,605 53,605 54,141
CSM Bakery Products (i)(t) Food, Beverage & Tobacco L+400 1.0% 7/3/20 5,217 5,071 4,845
Dade Paper and Bag Co Inc (f)(g)(h)(i) Capital Goods L+750 1.0% 6/10/24 135,734 135,734 133,019
Dade Paper and Bag Co Inc (f)(g)(h) Capital Goods L+700 1.0% 6/10/24 17,312 17,312 16,620
Dayton Superior Corp (i)(t) Materials L+800, 6.0% PIK (6.0% Max PIK) 1.0% 11/15/21 11,790 11,585 9,874
Diamond Resorts International Inc (i)(t) Consumer Services L+375 1.0% 9/2/23 14,085 13,795 13,170
Distribution International Inc (t) Retailing L+500 1.0% 12/15/21 3,398 3,247 3,024
Eagle Family Foods Inc (n) Food, Beverage & Tobacco L+650 1.0% 6/14/23 4,126 4,084 3,516
Eagle Family Foods Inc (g)(h) Food, Beverage & Tobacco L+650 1.0% 6/14/24 27,368 27,082 26,950
Eagleclaw Midstream Ventures LLC (i)(j)(t) Energy L+425 1.0% 6/24/24 11,455 10,917 10,747
EIF Van Hook Holdings LLC (i)(t) Energy L+525 9/5/24 7,378 7,234 7,184
Empire Today LLC (f)(g)(h)(i) Retailing L+700 1.0% 11/17/22 88,200 88,200 88,361
Fairway Group Holdings Corp (k)(l) Food & Staples Retailing 10.0% PIK (10.0% Max PIK) 11/27/23 1,964 1,733 258
Fairway Group Holdings Corp (h) Food & Staples Retailing 12.0% PIK (12.0% Max PIK) 11/27/23 3,072 3,072 2,984
Fairway Group Holdings Corp Food & Staples Retailing 4.0%, 11.0% PIK (11.0% Max PIK) 8/28/23 212 210 212
Fairway Group Holdings Corp (n) Food & Staples Retailing 4.0%, 11.0% PIK (11.0% Max PIK) 8/28/23 455 455 455
Fairway Group Holdings Corp Food & Staples Retailing 4.0%, 11.0% PIK (11.0% Max PIK) 8/28/23 1,070 1,055 1,070
Foresight Energy LLC (h)(m)(t) Materials L+575 1.0% 3/28/22 10,591 10,575 10,423
Fox Head Inc (h)(i) Consumer Durables & Apparel L+850 1.0% 12/19/20 5,051 5,051 4,989
Fox Head Inc (h)(i) Consumer Durables & Apparel L+850 1.0% 12/19/20 47,253 47,253 46,671
FullBeauty Brands Holdings Corp (k)(l)(t) Retailing L+475 1.0% 10/14/22 4,910 4,574 1,495
Gulf Finance LLC (i)(t) Energy L+525 1.0% 8/25/23 4,687 4,585 3,615
HM Dunn Co Inc (h)(k)(l)(u) Capital Goods L+875 PIK (L+875 Max PIK) 6/30/21 43,885 38,571 7,022
Hudson Technologies Co (h)(i)(m) Commercial & Professional Services L+1025 1.0% 10/10/23 50,717 50,286 36,262
Icynene Group Ltd (f)(h)(i) Materials L+700 1.0% 11/30/24 35,640 35,640 34,656
Industrial Group Intermediate Holdings
LLC (f)(g)(h)(i) Materials L+800 1.3% 5/31/20 118,840 118,840 118,098
Industry City TI Lessor LP (h) Consumer Services 10.8%, 1.0% PIK (1.0% Max PIK) 6/30/26 11,522 11,522 11,522
JAKKS Pacific Inc (h) Consumer Durables & Apparel L+900 1.5% 6/14/21 2,793 2,775 2,803
JC Penney Corp Inc (m)(t) Retailing L+425 1.0% 6/23/23 1,205 1,149 1,034


Portfolio Company^(a)	Footnotes		Industry	Rate^(b)		Floor	Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Senior Secured Loans—First Lien—114.4%
5 Arch Income Fund 2, LLC		(r)(x)(y)	Diversified Financials		10.5%		11/18/23	$	109.5	$	109.6	$	106.0
5 Arch Income Fund 2, LLC		(r)(s)(x)(y)	Diversified Financials		10.5%		11/18/23		112.9		112.9		109.2
ABB CONCISE Optical Group LLC		(n)(ab)	Retailing		L+500	1.0%	6/15/23		3.6		3.6		3.4
Accuride Corp		(n)(ab)	Capital Goods		L+525	1.0%	11/17/23		9.2		7.9		7.3
Advanced Lighting Technologies Inc		(n)(ad)	Materials		L+750	1.0%	10/4/22		9.0		8.1		5.9
Advantage Sales & Marketing Inc		(n)(ab)	Commercial & Professional Services		L+325	1.0%	7/23/21		30.6		29.0		29.7
All Systems Holding LLC		(f)(k)(l)(m)(n)(o)(p)	Commercial & Professional Services		L+625	1.0%	10/31/23		198.3		198.3		200.4
All Systems Holding LLC		(n)	Commercial & Professional Services		L+625	1.0%	10/31/23		4.4		4.4		4.4
All Systems Holding LLC		(s)	Commercial & Professional Services		L+625	1.0%	10/31/23		10.2		10.2		10.3
Alstom SA		(n)(r)(ab)	Transportation		L+450	1.0%	8/29/21		6.2		6.0		5.8
American Tire Distributors Inc		(n)(ab)	Automobiles & Components		L+600, 1.0% PIK (1.0% Max PIK)	1.0%	9/1/23		2.6		2.5		2.6
American Tire Distributors Inc		(n)(ab)	Automobiles & Components		L+750	1.0%	9/2/24		16.3		14.5		14.7
Ammeraal Beltech Holding BV		(n)(r)(ab)	Capital Goods		E+375		7/30/25	€	3.3		3.8		3.6
Apex Group Limited		(r)(s)	Diversified Financials		L+700	1.3%	6/15/23	$	4.6		4.5		4.5
Apex Group Limited		(f)(k)(l)(n)(q)(r)	Diversified Financials		L+700	1.3%	6/15/25		70.4		69.7		70.5
Apex Group Limited		(n)(r)	Diversified Financials		L+700	1.5%	6/15/25	£	23.2		29.5		30.9
Arrotex Australia Group Pty Ltd		(n)(r)	Pharmaceuticals, Biotechnology & Life Sciences		B+525	1.0%	7/10/24	A$	47.8		32.8		33.0
Aspect Software Inc		(s)	Software & Services		L+500	1.0%	7/15/23	$	3.3		3.3		3.3
Aspect Software Inc		(l)(n)(p)	Software & Services		L+500	1.0%	1/15/24		21.2		19.0		19.2
ATX Networks Corp		(j)(n)(o)(r)(ab)	Technology Hardware & Equipment		L+600, 1.0% PIK (1.0% Max PIK)	1.0%	6/11/21		48.8		47.8		45.7
AVF Parent LLC		(n)(t)(u)	Retailing		L+925 PIK (L+925 Max PIK)	1.3%	3/1/24		118.9		114.7		37.5
Belk Inc		(n)(ab)	Retailing		L+675	1.0%	7/31/25		54.3		45.1		38.2
Bellatrix Exploration Ltd		(n)(r)	Energy		10.0%		3/31/20		2.0		2.0		2.0
Bellatrix Exploration Ltd		(r)(s)	Energy		10.0%		3/31/20		0.8		0.8		0.8
Berner Food & Beverage LLC		(n)	Food & Staples Retailing		L+875	1.0%	2/2/23		4.3		4.3		4.3
Borden Dairy Co		(n)(t)(u)	Food, Beverage & Tobacco		L+750	1.0%	7/6/23		105.0		103.3		54.3
Brand Energy & Infrastructure Services Inc		(n)(ab)(ac)	Capital Goods		L+425	1.0%	6/21/24		22.2		21.5		22.2
Bugaboo International BV		(n)(r)	Consumer Durables & Apparel		7.8% PIK (7.8% Max PIK)		3/20/25	€	1.5		1.8		1.7
Caprock Midstream LLC		(n)(ab)	Energy		L+475		11/3/25	$	11.7		11.1		10.8
CEPSA Holdco (Matador Bidco)		(n)(r)(ab)	Energy		L+475		10/15/26		4.8		4.8		4.9
CHS/Community Health Systems, Inc.		(g)(h)(k)(n)(r)(aa)(ab)	Health Care Equipment & Services		8.0%		3/15/26		17.6		17.1		18.1
Cimarron Energy Inc		(n)	Energy		10.0%		6/30/21		7.5		7.5		7.5
Compassus LLC		(n)(ab)(ac)	Health Care Equipment & Services		L+500	1.0%	12/31/26		6.8		6.7		6.8
Conservice LLC		(f)(n)(o)(p)	Consumer Services		L+525		11/29/24		59.5		59.0		59.8
Conservice LLC		(s)	Consumer Services		L+525		11/29/24		2.9		2.9		2.9
Conservice LLC		(s)	Consumer Services		L+525		11/29/24		3.4		3.3		3.4
Constellis Holdings LLC		(f)(n)(o)(p)(t)(u)	Capital Goods		L+625	1.0%	4/15/22		92.8		91.8		61.4
CSafe Global		(n)	Capital Goods		L+650	1.0%	11/1/21		5.9		5.9		5.9
CSafe Global		(s)	Capital Goods		L+650	1.0%	11/1/21		3.2		3.2		3.2
CSafe Global		(f)(k)(l)(n)(p)(q)	Capital Goods		L+650	1.0%	10/31/23		86.4		86.5		85.8
CSafe Global		(s)	Capital Goods		L+650	1.0%	10/31/23		18.3		18.3		18.1
CSM Bakery Products		(l)(n)(ab)	Food, Beverage & Tobacco		L+400	1.0%	7/3/20		7.5		7.2		7.3
CTI Foods Holding Co LLC		(n)	Food, Beverage & Tobacco		L+700	1.0%	5/3/24		—		—		—

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

JHC Acquisition LLC (f)(g)(h) Capital Goods L+750 1.0% 1/29/24 $ 121,947 $ 121,947 $ 121,947
JHC Acquisition LLC (n) Capital Goods L+750 1.0% 1/29/24 35,269 35,268 35,269
Jo-Ann Stores Inc (i)(t) Retailing L+500 1.0% 10/20/23 5,013 5,004 4,794
Jostens Inc (j)(t) Consumer Services L+550 12/19/25 3,663 3,552 3,574
JSS Holdings Ltd (f)(h)(i) Capital Goods L+800, 0.0% PIK (2.5% Max PIK) 1.0% 3/31/23 72,696 72,140 74,877
Kodiak BP LLC (g)(h)(i) Capital Goods L+725 1.0% 12/1/24 110,681 110,681 108,329
Kodiak BP LLC (n) Capital Goods L+725 1.0% 12/1/24 9,849 9,849 9,639
Lazard Global Compounders Fund (m) Diversified Financials L+725 3.8% 4/1/26 38,356 38,356 38,644
Lazard Global Compounders Fund (m)(n) Diversified Financials L+725 3.8% 4/1/26 6,644 6,644 6,694
LD Intermediate Holdings Inc (i)(t) Software & Services L+588 1.0% 12/9/22 16,150 15,058 14,656
MB Precision Holdings LLC (g)(h)(k)(l)(u) Capital Goods L+725, 2.3% PIK (2.3% Max PIK) 1.3% 1/23/21 21,339 20,364 21,339
Mitel US Holdings Inc (i)(t) Technology Hardware & Equipment L+450 11/30/25 4,559 4,548 4,431
Monitronics International Inc (j)(m)(t) Commercial & Professional Services L+550 1.0% 9/30/22 3,838 3,702 3,442
Murray Energy Corp (h) Energy L+900 1.0% 2/12/21 10,891 10,824 10,842
NaviHealth Inc. (i)(j)(t) Health Care Equipment & Services L+500 8/1/25 15,111 14,437 14,318
North Haven Cadence Buyer Inc (n) Consumer Services L+500 1.0% 9/2/21 2,625 2,625 2,625
North Haven Cadence Buyer Inc (h) Consumer Services L+777 1.0% 9/2/24 14,762 14,762 14,614
North Haven Cadence Buyer Inc (h)(i) Consumer Services L+798 1.0% 9/2/24 51,187 51,187 50,676
North Haven Cadence Buyer Inc (n) Consumer Services L+650 1.0% 9/2/24 10,500 10,500 10,395
P2 Energy Solutions, Inc. (t) Energy L+400 1.3% 10/30/20 74 73 71
PAE Holding Corp (j)(t) Capital Goods L+550 1.0% 10/20/22 9 9 9
Panda Liberty LLC (f)(g)(t) Energy L+650 1.0% 8/21/20 11,515 11,525 10,383
Peak 10 Holding Corp (j)(t) Telecommunication Services L+325 1.0% 8/1/24 8,965 8,329 8,181
PHRC License LLC (g)(h) Consumer Services L+850, 0.3% PIK (0.3% Max PIK) 1.5% 4/28/22 66,842 66,842 68,262
Power Distribution Inc (f)(i) Capital Goods L+725 1.3% 1/25/23 44,021 44,021 44,021
Production Resource Group LLC (f)(g)(h)(i) Media L+700 1.0% 8/21/24 207,992 207,992 204,352
Propulsion Acquisition LLC (f)(h)(i)(t) Capital Goods L+600 1.0% 7/13/21 58,267 56,734 57,684
PSKW LLC (f)(h) Health Care Equipment & Services L+850 1.0% 11/25/21 56,025 55,983 56,166
Reliant Rehab Hospital Cincinnati LLC (h) Health Care Equipment & Services L+675 1.0% 8/30/24 55,015 54,490 54,850
Roadrunner Intermediate Acquisition Co
LLC (f) Health Care Equipment & Services L+675 1.0% 3/15/23 7,165 7,165 6,673
Rogue Wave Software Inc (h) Software & Services L+843 1.0% 9/25/21 72,434 72,434 72,343
Safariland LLC (g)(h) Capital Goods L+765 1.1% 11/18/23 70,234 70,234 62,947


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Diamond Resorts International Inc	(l)(n)(ab)	Consumer Services	L+375	1.0%	9/2/23	$	46.1	$	43.9	$	45.2
Distribution International Inc	(n)(ab)	Retailing	L+575	1.0%	12/15/23		13.1		11.8		12.6
Eacom Timber Corp	(n)(r)	Materials	L+650	1.0%	11/30/23		2.6		2.6		2.5
Eagle Family Foods Inc	(n)	Food, Beverage & Tobacco	L+650	1.0%	6/14/23		1.5		1.4		1.4
Eagle Family Foods Inc	(s)	Food, Beverage & Tobacco	L+650	1.0%	6/14/23		6.7		6.7		6.5
Eagle Family Foods Inc	(f)(k)(l)(n)(p)	Food, Beverage & Tobacco	L+650	1.0%	6/14/24		53.7		53.2		52.0
Eagleclaw Midstream Ventures LLC	(n)(ab)	Energy	L+425	1.0%	6/24/24		5.5		5.1		5.1
EaglePicher Technologies LLC	(n)(ab)(ac)	Capital Goods	L+325		3/8/25		—		—		—
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+500		7/23/26		13.9		13.3		13.0
Empire Today LLC	(f)(k)(l)(n)(o)(p)(q)	Retailing	L+650	1.0%	11/17/22		133.9		133.9		133.6
Entertainment Benefits Group LLC	(n)	Media & Entertainment	L+575	1.0%	9/30/24		1.2		1.2		1.2
Entertainment Benefits Group LLC	(s)	Media & Entertainment	L+575	1.0%	9/30/24		4.7		4.7		4.7
Entertainment Benefits Group LLC	(f)(k)(l)(n)	Media & Entertainment	L+575	1.0%	9/30/25		32.6		32.2		32.3
Fairway Group Holdings Corp	(n)(ad)	Food & Staples Retailing	4.0%, 11.0% PIK (11.0% Max PIK)		8/28/23		6.3		6.2		6.3
Fairway Group Holdings Corp	(n)(ad)	Food & Staples Retailing	12.0% PIK (12.0% Max PIK)		11/27/23		11.3		11.3		6.5
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	10.0% PIK (10.0% Max PIK)		11/28/23		7.2		5.6		—
FHC Health Systems Inc	(n)(ab)	Health Care Equipment & Services	L+400	1.0%	12/23/21		8.7		7.6		8.8
Fox Head Inc	(l)(n)(p)	Consumer Durables & Apparel	L+850	1.0%	12/19/20		36.5		36.5		36.1
Frontline Technologies Group LLC	(n)	Software & Services	L+575	1.0%	9/18/23		5.3		5.3		5.3
FullBeauty Brands Holdings Corp	(n)	Retailing	L+1,000	1.0%	2/7/22		0.7		0.7		0.7
FullBeauty Brands Holdings Corp	(n)(ab)	Retailing	L+900	1.0%	2/7/24		4.0		3.9		1.9
Greystone Equity Member Corp	(n)(r)	Diversified Financials	L+725	3.8%	4/1/26		158.3		158.3		154.3
Greystone Equity Member Corp	(r)(s)	Diversified Financials	L+725	3.8%	4/1/26		5.9		5.9		5.8
Heniff Transportation Systems LLC	(n)	Transportation	L+575	1.0%	12/3/24		0.8		0.8		0.8
Heniff Transportation Systems LLC	(s)	Transportation	L+575	1.0%	12/3/24		8.8		8.8		8.8
Heniff Transportation Systems LLC	(f)(l)	Transportation	L+575	1.0%	12/3/26		45.1		45.1		45.1
Heniff Transportation Systems LLC	(k)(l)(n)	Transportation	L+575	1.0%	12/3/26		30.1		29.8		29.8
HM Dunn Co Inc	(n)(t)(u)(ad)	Capital Goods	L+875 PIK (L+875 Max PIK)	1.0%	6/30/21		56.3		44.4		26.0
HM Dunn Co Inc	(n)(ad)	Capital Goods	15.0% PIK (15.0% Max PIK)		6/30/21		5.2		5.2		5.2
Hudson Technologies Co	(n)(r)	Commercial & Professional Services	L+1,025	1.0%	10/10/23		54.6		54.2		31.1
Icynene Group Ltd	(f)(l)(m)(n)(o)(p)(q)	Materials	L+700	1.0%	11/30/24		117.6		117.6		118.8
ID Verde	(n)(r)	Commercial & Professional Services	E+700		3/29/24	€	0.2		0.2		0.2
ID Verde	(n)(r)	Commercial & Professional Services	E+700		3/29/24	£	0.1		0.1		0.1
ID Verde	(n)(r)	Commercial & Professional Services	E+700		3/29/25	€	0.9		1.1		1.1
ID Verde	(n)(r)	Commercial & Professional Services	L+725		3/29/25	£	0.6		0.8		0.8
Industria Chimica Emiliana Srl	(n)(r)	Pharmaceuticals, Biotechnology & Life Sciences	L+650		6/30/26	€	51.8		55.3		56.8
Industria Chimica Emiliana Srl	(r)(s)	Pharmaceuticals, Biotechnology & Life Sciences	E+650		6/30/26		13.6		14.8		14.8
Industry City TI Lessor LP	(n)(p)	Consumer Services	10.8%, 1.0% PIK (1.0% Max PIK)		6/30/26	$	10.6		10.6		11.5
Ivanti Software Inc	(l)(ab)	Software & Services	L+425	1.0%	1/20/24		7.4		7.3		7.4
J S Held LLC	(f)(n)(o)(p)	Insurance	L+600	1.0%	7/1/25		68.8		68.2		68.8
J S Held LLC	(s)	Insurance	L+600	1.0%	7/1/25		16.4		16.4		16.4
J S Held LLC	(n)	Insurance	L+600	1.0%	7/1/25		1.4		1.4		1.4
J S Held LLC	(s)	Insurance	L+600	1.0%	7/1/25		6.4		6.4		6.4
JC Penney Corp Inc	(n)(r)(ab)	Retailing	L+425	1.0%	6/23/23		3.4		3.1		3.0

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Savers Inc (t) Retailing L+375 1.3% 7/9/19 $ 1,539 $ 1,529 $ 1,473
Sequa Corp (i)(j)(t) Materials L+500 1.0% 11/28/21 18,467 18,212 17,705
Sequel Youth & Family Services LLC (h) Health Care Equipment & Services L+700 1.0% 9/1/23 12,229 12,229 12,448
Sequel Youth & Family Services LLC (f)(h)(i) Health Care Equipment & Services L+800 9/1/23 70,000 70,000 71,247
Sequential Brands Group Inc. (g)(h)(i) Consumer Durables & Apparel L+875 2/7/24 118,929 116,976 118,929
SI Group Inc (j)(t) Materials L+475 10/15/25 2,922 2,814 2,820
SIRVA Worldwide Inc (i)(t) Commercial & Professional Services L+550 8/2/25 2,776 2,737 2,728
Sorenson Communications LLC (f)(g)(h)(j)(t) Telecommunication Services L+575 2.3% 4/30/20 107,393 107,217 106,991
SSC (Lux) Limited S.a r.l. (g)(h)(i)(m) Health Care Equipment & Services L+750 1.0% 9/10/24 104,545 104,545 105,591
Staples Canada (m) Retailing L+700 1.0% 9/12/24 C$ 56,874 44,009 42,101
Strike LLC (i)(t) Energy L+800 1.0% 11/30/22 $ 4,285 4,191 4,290
Sungard Availability Services Capital Inc (f)(t) Software & Services L+700 1.0% 9/30/21 10,336 10,266 8,827
Sungard Availability Services Capital Inc (t) Software & Services L+1000 1.0% 10/1/22 962 918 933
Sutherland Global Services Inc (h)(i)(j)(m)(t) Software & Services L+538 1.0% 4/23/21 10,564 10,143 9,974
Sutherland Global Services Inc (h)(i)(j)(m)(t) Software & Services L+538 1.0% 4/23/21 2,459 2,361 2,322
Swift Worldwide Resources Holdco Ltd (f)(g) Energy L+1000, 1.0% PIK (1.0% Max PIK) 1.0% 7/20/21 19,492 19,492 19,492
Tangoe LLC Software & Services L+650 1.0% 11/28/25 52,024 51,511 51,504
Team Health Inc (j)(t) Health Care Equipment & Services L+275 1.0% 2/6/24 78 71 70
Trace3 Inc (f)(g)(h)(i) Diversified Financials L+675 1.0% 8/5/24 161,585 161,585 159,970
Virgin Pulse Inc (h)(i) Software & Services L+650 1.0% 5/22/25 79,891 79,290 77,407
Vivint Inc (i)(t) Commercial & Professional Services L+500 4/1/24 18,583 18,537 18,111
Warren Resources Inc (h)(u) Energy L+1000, 1.0% PIK (1.0% Max PIK) 1.0% 5/22/20 14,652 14,652 14,652
York Risk Services Group Inc (t) Insurance L+375 1.0% 10/1/21 980 975 919
Zeta Interactive Holdings Corp (f)(h) Software & Services L+750 1.0% 7/29/22 37,112 37,112 37,483
Zeta Interactive Holdings Corp (n) Software & Services L+750 1.0% 7/29/22 6,571 6,571 6,637
Total Senior Secured Loans—First Lien 3,539,497 3,450,630
Unfunded Loan Commitments (157,339) (157,339)
Net Senior Secured Loans—First Lien 3,382,158 3,293,291
Senior Secured Loans—Second Lien—13.0%
Access CIG LLC (t) Software & Services L+775 2/27/26 1,326 1,342 1,314
Advantage Sales & Marketing Inc (t) Commercial & Professional Services L+650 1.0% 7/25/22 2,291 2,039 1,815
American Bath Group LLC (i)(t) Capital Goods L+975 1.0% 9/30/24 7,000 6,588 6,965


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Jo-Ann Stores Inc	(n)(ab)	Retailing	L+500	1.0%	10/20/23	$	11.2	$	10.3		$	7.9
Jostens Inc	(n)(ab)	Consumer Services	L+550		12/19/25		16.0		15.8			16.0
Kellermeyer Bergensons Services LLC	(s)	Commercial & Professional Services	L+650	1.0%	2/5/20		31.1		31.1			30.8
Kellermeyer Bergensons Services LLC	(f)(k)(l)(n)(o)(p)	Commercial & Professional Services	L+650	1.0%	11/7/26		135.2		133.9			133.9
Kellermeyer Bergensons Services LLC	(s)	Commercial & Professional Services	L+650	1.0%	11/7/26		40.6		40.6			40.2
Kodiak BP LLC	(f)(k)(l)(m)(n)(o)(p)	Capital Goods	L+725	1.0%	12/1/24		223.1		223.1			223.0
Kodiak BP LLC	(s)	Capital Goods	L+725	1.0%	12/1/24		10.7		10.7			10.7
Laird PLC	(n)(r)(ab)	Technology Hardware & Equipment	L+450		7/9/25		4.4		4.0			4.4
LBM Borrower LLC	(l)(n)(ab)	Capital Goods	L+375	1.0%	8/20/22		13.7		13.4			13.8
LD Intermediate Holdings Inc	(n)(ab)	Software & Services	L+588	1.0%	12/9/22		31.5		29.8			31.6
Lexitas Inc	(s)	Commercial & Professional Services	L+575	1.0%	11/14/25		2.9		2.9			2.9
Lexitas Inc	(k)(l)(n)	Commercial & Professional Services	L+575	1.0%	11/14/25		22.0		21.8			21.8
Lexitas Inc	(s)	Commercial & Professional Services	L+575	1.0%	11/14/25		9.3		9.3			9.2
Lionbridge Technologies Inc	(f)(k)(l)(p)(q)	Consumer Services	L+625	1.0%	12/27/25		115.3		114.7			114.7
Lipari Foods LLC	(f)(n)	Food & Staples Retailing	L+588	1.0%	1/6/25		22.0		22.0			22.0
Lipari Foods LLC	(s)	Food & Staples Retailing	L+588	1.0%	1/6/25		49.9		49.9			49.9
Lipari Foods LLC	(f)(m)(n)(o)(p)	Food & Staples Retailing	L+588	1.0%	1/6/25		151.0		149.7			150.9
MB Precision Holdings LLC	(k)(n)(ad)	Capital Goods	L+725, 2.3% PIK (2.3% Max PIK)	1.3%	1/23/21		21.5		21.0			21.4
MedAssets Inc	(n)(ab)	Health Care Equipment & Services	L+450	1.0%	10/20/22		0.1		0.1			0.1
MI Windows & Doors Inc	(n)(ab)	Capital Goods	L+550	1.0%	11/6/26		20.0		19.0			20.1
Mitel US Holdings Inc	(n)(ab)	Technology Hardware & Equipment	L+450		11/30/25		0.3		0.3			0.3
Monitronics International Inc	(f)(n)(ab)(ac)	Commercial & Professional Services	L+650	1.3%	3/29/24		36.1		34.8			30.8
Monitronics International Inc	(f)(n)(ab)	Commercial & Professional Services	L+500	1.5%	7/3/24		17.8		17.8			17.8
Monitronics International Inc	(n)(ab)	Commercial & Professional Services	L+500	1.5%	7/3/24		7.7		7.7			7.7
Monitronics International Inc	(s)(ab)	Commercial & Professional Services	L+500	1.5%	7/3/24		62.3		62.3			62.3
Motion Recruitment Partners LLC	(n)	Commercial & Professional Services	L+600	1.0%	12/20/25		43.9		43.5			43.5
Motion Recruitment Partners LLC	(s)	Commercial & Professional Services	L+600	1.0%	12/20/25		7.9		7.9			7.9
Motion Recruitment Partners LLC	(s)	Commercial & Professional Services	L+600	1.0%	12/20/25		34.6		34.6			34.6
Multi-Color Corp	(n)(r)(ab)	Commercial & Professional Services	6.8%		7/15/26		10.4		10.4			11.0
NaviHealth Inc.	(n)(ab)	Health Care Equipment & Services	L+500		8/1/25		24.9		24.2			24.9
NCI Inc	(n)	Software & Services	L+750	1.0%	8/15/24		4.2		4.2			4.1
North Haven Cadence Buyer Inc	(s)	Consumer Services	L+500	1.0%	9/2/21		3.6		3.6			3.6
North Haven Cadence Buyer Inc	(f)(k)(n)(p)	Consumer Services	L+650	1.0%	9/2/22		44.0		44.0			44.0
North Haven Cadence Buyer Inc	(s)	Consumer Services	L+650	1.0%	9/2/22		10.7		10.7			10.7
North Haven Cadence Buyer Inc	(f)(l)(n)(o)(p)	Consumer Services	L+793	1.0%	9/2/22		72.5		72.5			72.5
One Call Care Management Inc	(n)(ab)(ad)	Insurance	L+525	1.0%	11/27/22		2.9		2.5			2.7
Ontic Engineering & Manufacturing Inc	(n)(ab)	Capital Goods	L+475		10/30/26		1.9		1.9			1.9
Ontic Engineering & Manufacturing Inc	(s)(ab)	Capital Goods	L+238		10/31/26		0.3		0.3			0.3
Onvoy LLC	(n)(ab)	Telecommunication Services	L+450	1.0%	2/10/24		0.2		0.1			0.1
P2 Energy Solutions, Inc.	(n)(ab)	Software & Services	L+375	1.0%	10/30/20		2.5		2.4			2.5
PAE Holding Corp	(n)(ab)	Capital Goods	L+550	1.0%	10/20/22		7.3		7.4			7.4
Peak 10 Holding Corp	(k)(n)(ab)	Telecommunication Services	L+350		8/1/24		22.4		20.2			18.7
PF Chang’s China Bistro Inc	(n)(ab)	Consumer Services	L+625		3/1/26		14.9		14.8	��		12.2
Power Distribution Inc	(f)(n)	Capital Goods	L+725	1.3%	1/25/23		65.1		65.1			60.6

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Ammeraal Beltech Holding BV (m) Capital Goods L+800 7/27/26 $ 52,309 $ 51,285 $ 51,183
Arena Energy LP (f)(h) Energy L+900, 4.0% PIK (4.0% Max PIK) 1.0% 1/24/21 25,872 25,872 25,872
Bellatrix Exploration Ltd (m) Energy 8.5% 7/26/23 4,500 4,076 3,979
Bellatrix Exploration Ltd (m) Energy 8.5% 7/26/23 1,872 1,872 1,866
Bellatrix Exploration Ltd (m)(n) Energy 8.5% 7/26/23 624 624 622
Byrider Finance LLC Automobiles & Components L+1000, 0.5% PIK (4.0% Max PIK) 1.3% 8/22/20 29,695 29,695 29,138
Catalina Marketing Corp (i)(k)(l)(t) Media L+675 1.0% 4/11/22 10,000 9,958 237
Chisholm Oil & Gas Operating LLC (h) Energy L+800 1.0% 3/21/24 16,000 16,000 15,811
Crossmark Holdings Inc (i)(k)(l)(t) Media L+750 1.3% 12/21/20 7,778 7,786 311
Envigo Laboratories Inc (h)(t) Health Care Equipment & Services L+775 4/29/20 3,272 3,189 3,051
Fairway Group Holdings Corp (k)(l) Food & Staples Retailing 11.0% PIK (11.0% Max PIK) 2/24/24 1,744 1,520 —
Grocery Outlet Inc (t) Food & Staples Retailing L+725 10/22/26 2,287 2,265 2,273
Gruden Acquisition Inc (h)(t) Transportation L+850 1.0% 8/18/23 15,000 14,511 15,038
Jazz Acquisition Inc (f)(t) Capital Goods L+675 1.0% 6/19/22 3,700 3,729 3,460
LBM Borrower LLC (f)(i)(j)(t) Capital Goods L+925 1.0% 8/20/23 29,332 29,090 28,746
One Call Care Management Inc (h) Insurance L+375, 6.0% PIK (6.0% Max PIK) 4/11/24 12,472 12,362 11,946
OPE Inmar Acquisition Inc (i)(t) Software & Services L+800 1.0% 5/1/25 2,615 2,583 2,589
P2 Energy Solutions, Inc. (i)(t) Energy L+800 1.0% 4/30/21 14,500 14,614 13,920
Paradigm Acquisition Corp (t) Health Care Equipment & Services L+750 10/26/26 1,599 1,595 1,607
Peak 10 Holding Corp (i)(j)(t) Telecommunication Services L+725 1.0% 8/1/25 5,814 5,630 5,247
Pure Fishing Inc Consumer Durables & Apparel L+838 1.0% 12/31/26 46,828 46,362 46,359
Rise Baking Company (i) Food, Beverage & Tobacco L+800 1.0% 8/9/26 17,990 17,817 17,822
Sequa Corp (i)(t) Materials L+900 1.0% 4/28/22 7,462 7,416 7,089
SIRVA Worldwide Inc (i)(t) Commercial & Professional Services L+950 8/2/26 2,494 2,312 2,207
SMG/PA (j)(t) Consumer Services L+700 1/23/26 3,641 3,671 3,599
Spencer Gifts LLC (i)(t) Retailing L+825 1.0% 6/29/22 20,000 20,063 17,100
Titan Energy LLC (h)(k)(l) Energy L+1300 PIK (L+1300 Max PIK) 1.0% 2/23/20 89,408 67,595 8,316
WireCo WorldGroup Inc (t) Capital Goods L+900 1.0% 9/30/24 5,115 5,178 5,128
Total Senior Secured Loans—Second Lien 418,639 334,610
Unfunded Loan Commitments (624) (624)
Net Senior Secured Loans—Second Lien 418,015 333,986


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Production Resource Group LLC	(k)(l)(m)(n)(p)	Media & Entertainment	L+700	1.0%	8/21/24	$	381.0	$	381.0	$	306.2
Project Marron	(n)(r)	Consumer Services	B+625		7/3/25	A$	36.5		23.9		25.7
Project Marron	(f)(n)(r)	Consumer Services	L+625		7/2/25	C$	28.7		21.9		22.4
Propulsion Acquisition LLC	(f)(l)(m)(n)(p)(q)	Capital Goods	L+600	1.0%	7/13/21	$	113.9		112.4		112.9
PSKW LLC	(n)(o)(p)	Health Care Equipment & Services	L+768	1.0%	11/25/21		16.5		16.5		16.5
PSKW LLC	(l)(m)(n)(o)(p)(q)	Health Care Equipment & Services	L+768	1.0%	11/25/21		191.6		191.6		191.6
PSKW LLC	(m)(n)	Health Care Equipment & Services	L+768	1.0%	11/25/21		20.4		20.2		20.4
Qdoba Restaurant Corp	(n)(ab)	Consumer Services	L+700	1.0%	3/21/25		2.0		1.9		2.0
Quorum Health Corp	(n)(ab)	Health Care Equipment & Services	L+675	1.0%	4/29/22		7.6		7.6		7.5
Reliant Rehab Hospital Cincinnati LLC	(f)(n)(o)(p)	Health Care Equipment & Services	L+675	1.0%	9/2/24		118.0		117.1		115.6
Roadrunner Intermediate Acquisition Co LLC	(l)(m)(o)(q)	Health Care Equipment & Services	L+675	1.0%	3/15/23		96.4		96.4		94.7
RSC Insurance Brokerage Inc	(f)(k)(l)(n)(o)(p)	Insurance	L+550	1.0%	11/1/26		90.0		89.1		89.1
RSC Insurance Brokerage Inc	(s)	Insurance	L+550	1.0%	11/1/26		22.7		22.5		22.5
RSC Insurance Brokerage Inc	(s)	Insurance	L+550	1.0%	11/1/26		3.7		3.6		3.6
Safariland LLC	(n)	Capital Goods	L+775	1.1%	11/18/23		2.2		2.2		2.1
Safariland LLC	(f)(k)(l)(n)(p)	Capital Goods	L+775	1.1%	11/18/23		115.7		115.7		109.0
Savers Inc	(f)(n)(o)(p)	Retailing	L+650, 0.8% PIK (0.8% Max PIK)	1.5%	3/28/24		52.7		52.1		52.2
Savers Inc	(f)(n)	Retailing	L+700, 0.8% PIK (0.8% Max PIK)	1.5%	3/28/24	C$	73.1		53.9		57.4
Sequa Corp	(n)(ab)(ac)	Materials	L+500	1.0%	11/28/21	$	30.2		29.8		30.2
Sequel Youth & Family Services LLC	(f)(o)(p)	Health Care Equipment & Services	L+700	1.0%	9/1/23		15.6		15.6		15.6
Sequel Youth & Family Services LLC	(f)(l)(n)(p)	Health Care Equipment & Services	L+800		9/1/23		90.0		90.0		90.1
Sequential Brands Group Inc.	(k)(l)(n)	Consumer Durables & Apparel	L+875		2/7/24		213.9		210.6		210.4
SI Group Inc	(n)(ab)	Materials	L+475		10/15/25		2.0		1.9		2.0
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+550		8/4/25		6.6		6.4		6.5
Smart Foodservice	(n)(ab)	Food & Staples Retailing	L+475		6/20/26		5.8		5.7		5.8
Smart & Final Stores LLC	(m)(n)(ab)	Food & Staples Retailing	L+675		6/20/25		28.0		25.4		27.1
SMART Global Holdings Inc	(r)(s)	Semiconductors & Semiconductor Equipment	L+400		2/9/21		0.1		0.1		0.1
SMART Global Holdings Inc	(n)(r)	Semiconductors & Semiconductor Equipment	L+625	1.0%	8/9/22		3.2		3.2		3.2
Sorenson Communications LLC	(f)(k)(m)(n)(ab)	Telecommunication Services	L+650		4/29/24		78.6		75.8		78.2
Staples Canada	(n)(r)	Retailing	L+700	1.0%	9/12/24	C$	4.4		3.6		3.5
Sungard Availability Services Capital Inc	(n)	Software & Services	L+750	1.0%	2/3/22		2.4		2.3		2.5
Sungard Availability Services Capital Inc	(s)	Software & Services	L+750	1.0%	2/3/22		2.4		2.3		2.5
Sutherland Global Services Inc	(n)(p)(r)(ab)	Software & Services	L+538	1.0%	4/23/21		26.9		26.1		26.7
Swift Worldwide Resources Holdco Ltd	(k)(n)(q)	Energy	9.5% L+150 PIK (L+150 Max PIK)	2.5%	7/20/21		37.6		37.6		37.6
Syncsort Inc	(n)(ab)	Software & Services	L+600	1.0%	8/16/24		9.5		8.7		9.1
Tangoe LLC	(f)(n)(o)(p)	Software & Services	L+650	1.0%	11/28/25		102.7		101.8		102.8
Team Health Inc	(n)(ab)	Health Care Equipment & Services	L+275	1.0%	2/6/24		1.1		1.1		0.9
Torrid Inc	(f)(k)(l)(n)	Retailing	L+675	1.0%	12/14/24		40.0		39.6		40.2
Total Safety US Inc	(f)(n)(ab)	Capital Goods	L+600	1.0%	8/16/25		9.1		8.2		8.6
Trace3 Inc	(f)(k)(l)(n)(o)(p)	Software & Services	L+675	1.0%	8/3/24		169.8		169.8		168.3
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600		10/15/26	A$	63.0		41.8		43.4
Transaction Services Group Ltd	(n)(r)	Consumer Services	L+600		10/15/26	£	7.7		9.8		10.1
Transaction Services Group Ltd	(r)(s)	Consumer Services	L+600		10/15/26	$	26.6		26.6		26.1
Truck-Lite Co LLC	(s)	Automobiles & Components	L+625	1.0%	12/13/24		13.7		13.5		13.5

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Other Senior Secured Debt—7.6%
Advanced Lighting Technologies Inc (k)(l)(u) Materials L+700, 10.0% PIK (10.0% Max PIK) 1.0% 10/4/23 $ 11,342 $ 10,663 $ 3,630
Artesyn Embedded Technologies Inc (t) Technology Hardware & Equipment 9.8% 10/15/20 1,574 1,518 1,456
Black Swan Energy Ltd (m) Energy 9.0% 1/20/24 1,333 1,333 1,286
Boyne USA Inc (t) Consumer Services 7.3% 5/1/25 44 46 46
DJO Finance LLC / DJO Finance Corp (t) Health Care Equipment & Services 8.1% 6/15/21 6,838 6,886 7,060
FourPoint Energy LLC (h)(i) Energy 9.0% 12/31/21 46,313 45,107 45,502
Genesys Telecommunications Laboratories
Inc (t) Technology Hardware & Equipment 10.0% 11/30/24 144 159 152
Global A&T Electronics Ltd (i)(m)(t) Semiconductors & Semiconductor Equipment 8.5% 1/12/23 15,949 16,079 14,155
JC Penney Corp Inc (j)(m)(t) Retailing 5.7% 6/1/20 126 117 101
JW Aluminum Co (h)(t)(u) Materials 10.3% 6/1/26 33,001 33,001 32,919
Lycra (m)(t) Consumer Durables & Apparel 7.5% 5/1/25 3,659 3,687 3,444
Mood Media Corp (h)(u) Media L+1400 PIK (L+1400 Max PIK) 1.0% 6/28/24 28,478 28,383 28,478
Numericable-SFR (m)(t) Software & Services 8.1% 2/1/27 917 917 869
Pattonair Holdings Ltd (m)(t) Capital Goods 9.0% 11/1/22 4,111 4,252 4,153
Ply Gem Holdings Inc (t) Capital Goods 8.0% 4/15/26 7,807 7,453 7,182
Sorenson Communications LLC (h)(t) Telecommunication Services 9.0%, 0.0% PIK (9.0% Max PIK) 10/31/20 7,058 6,952 6,987
Sunnova Energy Corp Energy 6.0%, 6.0% PIK (6.0% Max PIK) 7/31/19 1,123 1,123 1,116
Talos Production LLC (h)(t) Energy 11.0% 4/3/22 4,500 4,701 4,376
Velvet Energy Ltd (i)(m) Energy 9.0% 10/5/23 15,000 15,000 15,120
Vivint Inc (h)(t) Commercial & Professional Services 7.6% 9/1/23 7,309 6,707 5,981
Vivint Inc (h)(t) Commercial & Professional Services 7.9% 12/1/22 11,307 11,078 10,713
Total Other Senior Secured Debt 205,162 194,726
Subordinated Debt—8.7%
Akzo Nobel Specialty Chemicals (m)(t) Materials 8.0% 10/1/26 2,019 2,019 1,890
All Systems Holding LLC Commercial & Professional Services 10.0% PIK (10.0% Max PIK) 10/31/22 206 206 206
Ascent Resources Utica Holdings LLC / ARU
Finance Corp (h)(i)(t) Energy 10.0% 4/1/22 26,026 26,026 26,635
Aurora Diagnostics Holdings LLC / Aurora
Diagnostics Financing Inc (h)(t) Health Care Equipment & Services 12.3%, 1.5% PIK (1.5% Max PIK) 1/15/20 6,235 5,951 6,235
Avantor Inc (i)(t) Pharmaceuticals, Biotechnology & Life Sciences 9.0% 10/1/25 20,000 20,000 20,012


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Truck-Lite Co LLC	(f)(k)(n)(o)(p)	Automobiles & Components	L+625	1.0%	12/13/26	$	127.9	$	126.7		$	126.6
Truck-Lite Co LLC	(s)	Automobiles & Components	L+625	1.0%	12/13/26		18.8		18.6			18.6
Vertiv Group Corp	(n)(ab)	Technology Hardware & Equipment	L+400	1.0%	11/30/23		16.5		15.7			16.5
Virgin Pulse Inc	(f)(l)(m)(n)(o)(p)	Software & Services	L+650	1.0%	5/22/25		159.4		158.4			159.5
Vivint Inc	(l)(n)(ab)	Commercial & Professional Services	L+500		4/1/24		20.8		20.0			20.8
Warren Resources Inc	(n)(ad)	Energy	L+1,000, 1.0% PIK (1.0% MaxPIK)	1.0%	5/22/20		21.0		21.0			21.0
West Corp	(l)(ab)	Software & Services	L+350	1.0%	10/10/24		4.9		4.4			4.1
West Corp	(l)(o)(ab)	Software & Services	L+400	1.0%	10/10/24		19.6		18.1			16.7
Wheels Up Partners LLC	(n)	Transportation	L+855	1.0%	1/26/21		0.6		0.6			0.6
Wheels Up Partners LLC	(n)	Transportation	L+855	1.0%	8/26/21		0.3		0.3			0.3
Wheels Up Partners LLC	(n)	Transportation	L+710	1.0%	6/30/24		1.1		1.1			1.1
Wheels Up Partners LLC	(n)	Transportation	L+710	1.0%	11/1/24		0.4		0.4			0.4
Wheels Up Partners LLC	(n)	Transportation	L+710	1.0%	12/21/24		1.7		1.7			1.7
WireCo WorldGroup Inc	(n)(ab)	Capital Goods	L+500	1.0%	9/29/23		0.1		0.1			0.1
Zeta Interactive Holdings Corp	(m)(n)(o)(p)(q)	Software & Services	L+750	1.0%	7/29/22		122.2		122.2			122.2
Zeta Interactive Holdings Corp	(s)	Software & Services	L+750	1.0%	7/29/22		4.4		4.4			4.4

Total Senior Secured Loans—First Lien									6,596.0			6,295.8
Unfunded Loan Commitments									(578.6	)		(578.6	)

Net Senior Secured Loans—First Lien									6,017.4			5,717.2

Senior Secured Loans—Second Lien—16.2%
Access CIG LLC	(n)(ab)	Software & Services	L+775		2/27/26	$	1.5	$	1.5		$	1.5
Advantage Sales & Marketing Inc	(n)(ab)	Commercial & Professional Services	L+650	1.0%	7/25/22		7.2		6.2			6.5
Albany Molecular Research Inc	(n)(ab)	Pharmaceuticals, Biotechnology & Life Sciences	L+700	1.0%	8/30/25		0.9		0.9			0.9
American Bath Group LLC	(l)(n)(ab)	Capital Goods	L+975	1.0%	9/30/24		10.0		9.6			10.0
Ammeraal Beltech Holding BV	(f)(n)(o)(r)	Capital Goods	L+800		7/27/26		51.3		50.4			49.5
Applied Systems Inc	(n)(ab)	Software & Services	L+700	1.0%	9/19/25		2.6		2.6			2.7
Arena Energy LP	(l)(n)(o)(p)	Energy	L+900, 4.0% PIK (4.0% Max PIK)	1.0%	1/24/21		53.9		53.9			52.4
athenahealth Inc	(f)(m)(n)(p)	Health Care Equipment & Services	L+850		2/11/27		129.2		128.0			131.8
BCA Marketplace PLC	(n)(r)	Retailing	L+825		9/24/27	£	30.2		37.3			39.5
Bellatrix Exploration Ltd	(n)(r)(t)(u)	Energy	8.5%		9/11/23	$	13.5		12.3			4.3
Bellatrix Exploration Ltd	(n)(r)	Energy	8.5%		9/11/23		5.6		5.6			5.6
Byrider Finance LLC	(n)	Automobiles & Components	L+1,000, 0.5% PIK (4.0% Max PIK)	1.3%	6/7/22		35.8		35.8			35.9
CDS US Intermediate Holdings Inc	(l)(n)(r)(ab)	Media & Entertainment	L+825	1.0%	7/10/23		18.0		16.4			15.1
Chisholm Oil & Gas Operating LLC	(n)(p)	Energy	L+550, 3.0% PIK (3.0% Max PIK)	1.3%	3/21/24		38.3		38.0			28.9
CommerceHub Inc	(n)	Software & Services	L+775		5/21/26		3.2		3.1			3.2
Dayton Superior Corp	(n)	Materials	L+700	2.0%	12/3/24		1.7		1.6			1.6
EaglePicher Technologies LLC	(n)(ab)	Capital Goods	L+725		3/8/26		0.4		0.4			0.4
Electronics For Imaging Inc	(n)(ab)	Technology Hardware & Equipment	L+900		7/23/27		3.9		3.7			3.7
Emerald Performance Materials LLC	(l)(n)(ab)	Materials	L+775	1.0%	8/1/22		10.0		9.9			9.8
Excelitas Technologies Corp	(l)(n)(ab)	Technology Hardware & Equipment	L+750	1.0%	12/1/25		13.3		13.3			12.9
Fairway Group Holdings Corp	(n)(t)(u)(ad)	Food & Staples Retailing	11.0% PIK (11.0% Max PIK)		2/24/24		6.5		5.0			—
Gruden Acquisition Inc	(m)(p)(ab)	Transportation	L+850	1.0%	8/18/23		25.0		24.4			24.8

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)
Amortized
Cost
Fair
Value(d)

Byrider Finance LLC Automobiles & Components 20.0% PIK (20.0% Max PIK) 3/31/22 $ 1,458 $ 1,458 $ 1,458
CEC Entertainment Inc (t) Consumer Services 8.0% 2/15/22 18,510 18,397 16,659
ClubCorp Club Operations Inc (h)(t) Consumer Services 8.5% 9/15/25 10,733 10,361 9,660
Diamond Resorts International Inc (t) Consumer Services 10.8% 9/1/24 3,048 3,191 2,751
Eclipse Resources Corp (m)(t) Energy 8.9% 7/15/23 9,175 9,049 7,879
Great Lakes Dredge & Dock Corp (m)(t) Capital Goods 8.0% 5/15/22 5,276 5,276 5,364
Intelsat Jackson Holdings SA (m)(t) Media 5.5% 8/1/23 5,752 5,178 5,058
Ken Garff Automotive LLC (t) Retailing 7.5% 8/15/23 6,004 6,055 5,959
Lazard Global Compounders Fund (m)(n) Diversified Financials L+650 4.5% 9/15/25 15,000 15,000 14,682
LifePoint Hospitals Inc (t) Health Care Equipment & Services 9.8% 12/1/26 7,656 7,571 7,295
Logan’s Roadhouse Inc (l) Consumer Services 11/1/24 4,907 4,857 4,855
PF Chang’s China Bistro Inc (h)(i)(t) Consumer Services 10.3% 6/30/20 28,977 28,320 26,460
Quorum Health Corp (t) Health Care Equipment & Services 11.6% 4/15/23 2,566 2,554 2,446
Sorenson Communications LLC (h)(t) Telecommunication Services 13.9%, 0.0% PIK (13.9% Max PIK) 10/31/21 5,364 5,170 5,498
SRS Distribution Inc (h)(t) Capital Goods 8.3% 7/1/26 11,667 11,476 10,734
Stars Group Holdings BV (m)(t) Consumer Services 7.0% 7/15/26 1,438 1,438 1,398
Sungard Availability Services Capital Inc (t) Software & Services 8.8% 4/1/22 5,900 4,860 1,322
Team Health Inc (t) Health Care Equipment & Services 6.4% 2/1/25 6,901 5,958 5,633
Vertiv Group Corp (h)(t) Technology Hardware & Equipment 9.3% 10/15/24 16,584 16,411 14,760
Vivint Inc (h)(t) Commercial & Professional Services 8.8% 12/1/20 7,602 7,328 7,250
York Risk Services Group Inc (h)(i)(t) Insurance 8.5% 10/1/22 38,070 35,701 26,649
Total Subordinated Debt 259,811 238,748
Unfunded Debt Commitments (15,000) (15,000)
Net Subordinated Debt 244,811 223,748


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Invictus	(n)(ab)	Materials	L+675		3/30/26	$	0.1	$	0.1	$	0.1
LBM Borrower LLC	(l)(n)(p)(q)(ab)	Capital Goods	L+925	1.0%	8/20/23		58.6		57.6		57.8
Misys Ltd	(n)(r)(ab)	Software & Services	L+725	1.0%	6/13/25		7.3		7.2		7.1
NEP Broadcasting LLC	(n)(ab)	Media & Entertainment	L+700		10/19/26		5.6		5.4		5.1
New Arclin US Holding Corp	(n)(r)(ab)	Materials	L+875	1.0%	2/14/25		0.3		0.3		0.3
OEConnection LLC	(f)(n)	Software & Services	L+825		9/25/27		42.9		42.5		42.6
Ontic Engineering & Manufacturing Inc	(f)(n)	Capital Goods	L+850		10/29/27		26.8		26.3		26.3
OPE Inmar Acquisition Inc	(l)(n)(ab)	Software & Services	L+800	1.0%	5/1/25		24.6		24.1		23.1
P2 Energy Solutions, Inc.	(n)(ab)	Software & Services	L+800	1.0%	4/30/21		14.5		14.6		14.2
Paradigm Acquisition Corp	(n)(ab)	Health Care Equipment & Services	L+750		10/26/26		3.7		3.7		3.7
Peak 10 Holding Corp	(n)(ab)	Telecommunication Services	L+725	1.0%	8/1/25		11.9		11.1		7.5
Polyconcept North America Inc	(n)	Household & Personal Products	L+1,000	1.0%	2/16/24		0.6		0.6		0.6
Pure Fishing Inc	(f)(n)	Consumer Durables & Apparel	L+838	1.0%	12/31/26		45.9		45.5		39.6
Rise Baking Company	(f)(l)(n)	Food, Beverage & Tobacco	L+800	1.0%	8/9/26		17.6		17.5		17.3
Sequa Corp	(n)(ab)	Materials	L+900	1.0%	4/28/22		11.5		11.2		11.3
SIRVA Worldwide Inc	(n)(ab)	Commercial & Professional Services	L+950		8/3/26		5.7		5.1		5.5
Sorenson Communications LLC	(n)(o)(p)	Telecommunication Services	11.5% PIK (11.5% Max PIK)		4/30/25		15.4		15.4		15.4
Sparta Systems Inc	(n)	Software & Services	L+825	1.0%	7/27/25		2.4		2.4		2.2
Sungard Availability Services Capital Inc	(m)(n)	Software & Services	L+400, 2.5% PIK (2.5% Max PIK)	1.0%	11/3/22		12.6		12.6		12.6
Titan Energy LLC	(n)(t)(u)(ad)	Energy	L+1,300 PIK (L+1,300 Max PIK)	1.0%	2/23/20		137.2		100.7		—
Transplace	(n)(ab)	Transportation	L+875	1.0%	10/6/25		3.3		3.2		3.1
Vantage Specialty Chemicals Inc	(n)(ab)	Materials	L+825	1.0%	10/27/25		0.8		0.7		0.7
WireCo WorldGroup Inc	(n)(ab)	Capital Goods	L+900	1.0%	9/30/24		12.5		12.5		11.4
Wittur Holding GmbH	(n)(r)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)		9/23/27	€	55.2		60.5		60.2

Total Senior Secured Loans—Second Lien									940.7		808.7

Other Senior Secure Debt—4.6%
Advanced Lighting Technologies Inc	(n)(t)(u)(ad)	Materials	L+1,700 PIK (L+1,700 Max PIK)	1.0%	10/4/23	$	14.4		10.7		—
APTIM Corp	(g)(n)(ab)	Diversified Financials	7.8%		6/15/25		8.2		8.2		4.9
Black Swan Energy Ltd	(n)(r)	Energy	9.0%		1/20/24		4.0		4.0		4.0
Cleaver-Brooks Inc	(n)(ab)	Capital Goods	7.9%		3/1/23		0.3		0.3		0.3
Cornerstone Chemical Co	(n)(ab)	Materials	6.8%		8/15/24		2.7		2.7		2.4
Diamond Resorts International Inc	(m)(ab)	Consumer Services	7.8%		9/1/23		12.0		12.0		12.3
Enterprise Development Authority	(g)(h)(n)(aa)(ab)	Consumer Services	12.0%		7/15/24		8.2		8.5		9.4
FourPoint Energy LLC	(n)(p)	Energy	9.0%		12/31/21		46.3		45.6		44.0
Genesys Telecommunications Laboratories Inc	(g)(h)(n)(aa)(ab)	Technology Hardware & Equipment	10.0%		11/30/24		2.6		2.8		2.8
JC Penney Corp Inc	(g)(h)(n)(r)(aa)(ab)	Retailing	5.7%		6/1/20		0.3		0.3		0.3
JW Aluminum Co	(g)(n)(p)(ab)(ad)	Materials	10.3%		6/1/26		34.5		34.5		36.3
Lycra	(g)(h)(n)(r)(aa)(ab)	Consumer Durables & Apparel	7.5%		5/1/25		16.4		16.4		13.2
Mood Media Corp	(n)(ad)	Media & Entertainment	L+1,400 PIK (L+1,400 Max PIK)		12/31/23		40.6		39.5		39.0
Pattonair Holdings Ltd	(g)(h)(n)(r)(aa)(ab)	Capital Goods	9.0%		11/1/22		16.5		16.9		17.3
TruckPro LLC	(g)(h)(n)(aa)(ab)	Capital Goods	11.0%		10/15/24		7.9		7.4		8.2
Velvet Energy Ltd	(n)(r)	Energy	9.0%		10/5/23		7.5		7.5		7.7
Vivint Inc	(g)(h)(k)(m)(n)(aa)(ab)	Commercial & Professional Services	7.9%		12/1/22		25.5		25.2		25.8

Total Other Senior Secured Debt									242.5		227.9

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)/
Shares
Cost
Fair
Value(d)

Asset Based Finance—1.9%
Altus Power America Inc, Preferred Stock (r) Energy 9.0%, 5.0% PIK 10/3/23 1,060,975 $ 1,061 $ 1,045
Australis Maritime, Private Equity (l)(m) Transportation — 1,136 1,136
CGMS CLO 2013-3A Class Subord., 7/15/2025 (m) Diversified Financials 27.8% 7/15/25 $ 23,263 9,222 12,050
Global Jet Capital LLC, Preferred Stock (e)(l) Commercial & Professional Services 5,385,440 5,386 754
Global Jet Capital LLC, Preferred Stock (e)(l)(m) Commercial & Professional Services 843,426 843 118
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 1/30/25 $ 986 971 986
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 4/30/25 $ 6,267 6,174 6,267
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 9/3/25 $ 1,295 1,276 1,295
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 9/29/25 $ 1,219 1,201 1,219
Global Jet Capital LLC, Structured Mezzanine (e) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/4/25 $ 7,287 7,179 7,287
Global Jet Capital LLC, Structured Mezzanine (e)(m) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/4/25 $ 1,712 1,687 1,712
Global Jet Capital LLC, Structured Mezzanine (e) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/9/25 $ 219 216 219
Global Jet Capital LLC, Structured Mezzanine (e)(m) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/9/25 $ 1,253 1,234 1,253
Global Jet Capital LLC, Structured Mezzanine (e) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 1/29/26 $ 625 616 625
Global Jet Capital LLC, Structured Mezzanine (e)(m) Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 1/29/26 $ 146 143 146
Global Jet Capital LLC, Structured Mezzanine Commercial & Professional Services 15.0% PIK (15.0% Max PIK) 12/2/26 $ 2,332 2,298 2,332
NewStar Clarendon 2014-1A Class Subord. B (m) Diversified Financials L+435 1/25/27 $ 1,060 1,014 1,055
NewStar Clarendon 2014-1A Class D (m) Diversified Financials 13.2% 1/25/27 $ 12,140 7,758 8,661
Total Asset Based Finance 49,415 48,160


Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Subordinated Debt—9.8%
All Systems Holding LLC	(n)	Commercial & Professional Services	10.0% PIK (10.0% Max PIK)		10/31/22	$	0.3	$	0.3	$	0.3
Ascent Resources Utica Holdings LLC / ARU Finance Corp	(g)(h)(aa)(ab)	Energy	10.0%		4/1/22		26.0		26.0		25.9
athenahealth Inc	(n)	Health Care Equipment & Services	L+1,125 PIK (L+1,125 Max PIK)		2/11/27		72.6		72.6		73.1
Avantor Inc	(g)(m)(n)(o)(ab)	Pharmaceuticals, Biotechnology & Life Sciences	9.0%		10/1/25		85.0		85.6		95.2
Byrider Finance LLC	(n)	Automobiles & Components	20.0% PIK (20.0% Max PIK)		3/31/22		2.3		2.3		2.3
Calumet Specialty Products	(h)(n)(r)(aa)(ab)	Energy	7.8%		4/15/23		10.3		10.3		10.3
ClubCorp Club Operations Inc	(g)(h)(n)(aa)(ab)	Consumer Services	8.5%		9/15/25		31.8		30.9		27.8
Craftworks Rest & Breweries Group Inc	(n)	Consumer Services	12.0% PIK (12.0% Max PIK)		11/1/24		6.2		6.2		4.7
Diamond Resorts International Inc	(g)(h)(aa)(ab)	Consumer Services	10.8%		9/1/24		4.4		4.6		4.6
GFL Environmental Inc	(g)(h)(n)(r)(aa)(ab)	Commercial & Professional Services	8.5%		5/1/27		13.4		13.7		14.7
Intelsat Jackson Holdings SA	(g)(h)(n)(r)(aa)(ab)	Media & Entertainment	5.5%		8/1/23		11.1		10.2		9.5
Kenan Advantage Group Inc	(n)(ab)	Transportation	7.9%		7/31/23		19.2		17.0		18.8
LifePoint Hospitals Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	9.8%		12/1/26		24.8		25.2		28.1
Montage Resources Corp	(h)(n)(r)(aa)(ab)	Energy	8.9%		7/15/23		16.4		16.2		15.1
MultiPlan Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	7.1%		6/1/24		17.1		17.2		16.6
Nouryon (fka Akzo Nobel Specialty Chemicals)	(g)(h)(n)(r)(aa)(ab)	Materials	8.0%		10/1/26		15.3		15.3		16.3
PAREXEL International Corp	(g)(h)(n)(aa)(ab)	Pharmaceuticals, Biotechnology & Life Sciences	6.4%		9/1/25		0.8		0.8		0.8
Plastipak Holdings Inc	(g)(h)(n)(aa)(ab)	Materials	6.3%		10/15/25		2.4		2.2		2.1
Ply Gem Holdings Inc	(g)(h)(n)(aa)(ab)	Capital Goods	8.0%		4/15/26		19.1		18.3		20.0
Quorum Health Corp	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	11.6%		4/15/23		6.0		6.0		5.1
SRS Distribution Inc	(g)(h)(n)(p)(aa)(ab)	Capital Goods	8.3%		7/1/26		28.5		28.2		29.5
Team Health Inc	(g)(h)(n)(aa)(ab)	Health Care Equipment & Services	6.4%		2/1/25		20.5		18.3		13.8
Vertiv Group Corp	(g)(h)(aa)(ab)	Technology Hardware & Equipment	9.3%		10/15/24		23.7		23.4		25.6
Vivint Inc	(g)(h)(m)(n)(p)(aa)(ab)	Commercial & Professional Services	8.8%		12/1/20		15.5		15.1		15.5
Vivint Inc	(g)(h)(n)(aa)(ab)	Commercial & Professional Services	7.6%		9/1/23		14.3		13.3		13.5

Total Subordinated Debt									479.2		489.2

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)/
Shares
Cost
Fair
Value(d)

Equity/Other—10.3%
5 Arch Income Fund 2, LLC, Common Stock (m)(p) Diversified Financials 8,000 $ 197 $ 400
Abaco Energy Technologies LLC, Common Equity (l) Energy 3,055,556 3,056 1,299
Abaco Energy Technologies LLC, Preferred Equity (l) Energy 12,734,481 637 6,686
Advanced Lighting Technologies Inc, Common Stock (l)(u) Materials 265,747 7,471 —
Advanced Lighting Technologies Inc, Warrant (l)(u) Materials 10/4/27 4,189 39 —
All Systems Holding LLC, Common Stock Commercial & Professional Services 124 1,201 1,384
Altus Power America Inc, Common Stock (l) Energy 462,008 462 81
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock (o) Energy 13,555,557 12,900 3,768
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim (o) Energy 115,178,572 25,800 32,020
ASG Technologies, Common Stock (l)(u) Software & Services 625,178 13,475 31,743
ASG Technologies, Warrants (l)(u) Software & Services 6/27/22 253,704 7,231 7,364
Aspect Software Inc, Common Stock (l) Software & Services 38,574 9,932 —
ATX Networks Corp, Common Stock (l)(m) Technology Hardware & Equipment 72,635 116 56
Aurora Diagnostics Holdings LLC / Aurora Diagnostics Financing Inc,
Warrant (h)(l) Health Care Equipment & Services 5/25/27 94,193 686 135
Byrider Finance LLC, Common Stock (l) Automobiles & Components 1,389 — —
Chisholm Oil & Gas Operating LLC, Series A Units (l)(p) Energy 75,000 75 32
Cimarron Energy Inc, Common Stock (l) Energy 4,302,293 3,950 194
Cimarron Energy Inc, Participation Option (l) Energy 25,000,000 1,289 1,125
CSafe Global, Common Stock (l) Capital Goods 417,400 417 584
Eastman Kodak Co, Common Stock (l)(t) Consumer Durables & Apparel 354 7 1
Empire Today LLC, Common Stock (l) Retailing 411 1,227 1,189
Envigo Laboratories Inc, Warrant (h)(l)(t) Health Care Equipment & Services 4/29/24 10,924 — —
Envigo Laboratories Inc, Warrant (h)(l)(t) Health Care Equipment & Services 4/29/24 17,515 — —
Fairway Group Holdings Corp, Common Stock (l) Food & Staples Retailing 31,626 1,016 —
FourPoint Energy LLC, Common Stock, Class C—II—A Units (l)(p) Energy 13,000 13,000 2,909
FourPoint Energy LLC, Common Stock, Class D Units (l)(p) Energy 2,437 1,610 551
FourPoint Energy LLC, Common Stock, Class E—II Units (l)(p) Energy 29,730 7,432 6,652
FourPoint Energy LLC, Common Stock, Class E—III Units (l)(p) Energy �� 43,875 10,969 9,817
Fox Head Inc, Common Stock (e)(l) Consumer Durables & Apparel 8,857,143 8,857 3,947
Harvest Oil & Gas Corp, Common Stock (e)(l)(t) Energy 7,161 158 129
Harvey Industries Inc, Common Stock (l) Capital Goods 666,667 667 1,350
HM Dunn Co Inc, Preferred Stock, Series A (h)(l)(u) Capital Goods 12,857 — —



Portfolio Company^(a)	Footnotes		Industry	Rate^(b)		Floor	Maturity		Principal Amount^(c)/ Number of Shares		Cost			Fair Value^(d)
Asset Based Finance—9.7%
801 5th Ave, Seattle, Structure Mezzanine		(n)(r)(ae)	Real Estate		8.0%, 0.0% PIK (3.0% Max PIK)			12/19/29	$	47.1	$	47.1		$	47.1
801 5th Ave, Seattle, Private Equity		(n)(r)(t)(ae)	Real Estate							7,819,411		7.8			7.8
Abacus JV, Private Equity		(n)(r)	Insurance							31,301,941		31.3			31.3
Accelerator Investments Aggregator LP, Private Equity		(n)(r)(t)	Diversified Financials							153,628		0.2			0.2
Altavair Air Finance, Private Equity		(n)(r)	Capital Goods							10,964,023		11.0			11.2
Australis Maritime, Common Stock		(n)(r)(t)	Transportation							10,790,511		10.8			10.8
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			1/30/25	$	2.3		2.1			2.3
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			4/30/25	$	14.6		13.6			14.6
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			9/3/25	$	3.0		2.8			3.0
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			9/29/25	$	2.8		2.6			2.8
Global Jet Capital LLC, Structured Mezzanine		(i)(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/4/25	$	85.4		79.6			85.4
Global Jet Capital LLC, Structured Mezzanine		(i)(n)(r)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/4/25	$	19.0		17.7			19.0
Global Jet Capital LLC, Structured Mezzanine		(i)(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/9/25	$	2.0		1.8			2.0
Global Jet Capital LLC, Structured Mezzanine		(i)(n)(r)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/9/25	$	15.1		14.1			15.1
Global Jet Capital LLC, Structured Mezzanine		(i)(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			1/29/26	$	7.3		6.8			7.3
Global Jet Capital LLC, Structured Mezzanine		(i)(n)(r)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			1/29/26	$	1.6		1.5			1.6
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			2/17/26	$	19.7		18.3			19.7
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			4/14/26	$	12.2		11.4			12.2
Global Jet Capital LLC, Structured Mezzanine		(n)	Commercial & Professional Services		15.0% PIK (15.0% Max PIK)			12/2/26	$	20.7		19.3			20.7
Global Jet Capital LLC, Preferred Stock		(i)(n)(t)	Commercial & Professional Services							76,447,526		76.4			9.6
Global Lending Services LLC, Private Equity		(n)(r)(t)	Diversified Financials							8,092,505		8.1			8.1
Home Partners JV, Structured Mezzanine		(n)(r)	Real Estate		11.0% PIK (11.0% Max PIK)			3/25/29	$	30.1		30.1			30.1
Home Partners JV, Structured Mezzanine		(r)(s)	Real Estate		11.0% PIK (11.0% Max PIK)			3/25/29	$	22.3		22.3			22.3
Home Partners JV, Common Stock		(n)(r)(t)	Real Estate							15,059,448		15.1			16.0
Home Partners JV, Private Equity		(n)(r)(t)(ab)	Real Estate							706,596		0.7			0.1
KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest		(n)(r)	Capital Goods							5,432,797		5.4			6.4
Lenovo Group Ltd, Structured Mezzanine		(n)(r)	Technology Hardware & Equipment		8.0%			6/22/22	€	9.3		10.6			10.4
Lenovo Group Ltd, Structured Mezzanine		(n)(r)	Technology Hardware & Equipment		8.0%			6/22/22	$	19.5		19.5			19.5
Lenovo Group Ltd, Structured Mezzanine		(n)(r)	Technology Hardware & Equipment		12.0%			6/22/22	€	5.9		6.7			6.6
Lenovo Group Ltd, Structured Mezzanine		(n)(r)	Technology Hardware & Equipment		12.0%			6/22/22	$	12.4		12.4			12.4
NewStar Clarendon2014-1A Class D		(n)(r)(t)	Diversified Financials					1/25/27	$	8.3		4.6			3.3
Pretium Partners LLC P1, Structured Mezzanine		(n)(r)	Real Estate		2.8%, 5.3% PIK (5.3% Max PIK)			10/22/26	$	6.5		6.5			6.5
Pretium Partners LLC P2, Structured Mezzanine		(n)(r)	Real Estate		2.0%, 7.5% PIK (7.5% Max PIK)			5/29/25	$	14.3		14.3			14.4
Sofi Lending Corp,2019-C R1		(n)(r)	Diversified Financials					11/16/48	$	26.7		15.1			15.2
Toorak Capital Funding LLC, Membership Interest		(n)(r)	Diversified Financials							N/A		9.9			12.6

Total Asset Based Finance												557.5			507.6
Unfunded Loan Commitments												(22.3	)		(22.3	)

Net Asset Based Finance												535.2			485.3

Credit Opportunities Partners, LLC—10.2%
Credit Opportunities Partners, LLC		(n)(r)(ae)	Diversified Financials						$	503.1		503.4			510.0

Total Credit Opportunities Partners, LLC												503.4			510.0

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

Portfolio Company(a)
Footnotes Industry
Rate(b)
Floor Maturity
Principal
Amount(c)/
Shares
Cost
Fair
Value(d)

HM Dunn Co Inc, Preferred Stock, Series B (h)(l)(u) Capital Goods 12,857 — —
Industrial Group Intermediate Holdings LLC, Common Stock (l)(p) Materials 2,678,947 2,679 1,607
JHC Acquisition LLC, Common Stock (l) Capital Goods 1,449 1,449 1,946
JSS Holdings Ltd, Net Profits Interest (l) Capital Goods — — 471
JW Aluminum Co, Common Stock (e)(i)(l)(u) Materials 548 — —
JW Aluminum Co, Preferred Stock (e)(i)(u) Materials 12.5% PIK 11/17/25 4,869 32,040 43,890
MB Precision Holdings LLC, Class A—2 Units (g)(h)(l)(u) Capital Goods 6,655,178 2,288 —
MB Precision Holdings LLC, Preferred Stock (g)(h)(l)(p)(u) Capital Goods 41,778,909 8,600 5,826
Mood Media Corp, Common Stock (l)(u) Media 17,400,835 12,644 15,842
North Haven Cadence Buyer Inc, Common Equity (l) Consumer Services 2,916,667 2,917 4,448
Power Distribution Inc, Common Stock (l) Capital Goods 2,076,923 2,077 1,090
Professional Plumbing Group Inc, Common Stock (e)(l) Capital Goods 3,000,000 3,000 7,800
Ridgeback Resources Inc, Common Stock (e)(l)(m)(s) Energy 817,308 5,022 4,043
Sequential Brands Group Inc., Common Stock (e)(l)(t) Consumer Durables & Apparel 408,685 5,517 327
Sorenson Communications LLC, Common Stock (e)(l) Telecommunication Services 43,796 — 36,026
SSC (Lux) Limited S.a r.l., Common Stock (l)(m) Health Care Equipment & Services 261,364 5,227 6,403
Sunnova Energy Corp, Common Stock (l) Energy 384,746 1,444 —
Sunnova Energy Corp, Preferred Stock (l) Energy 70,229 374 385
Swift Worldwide Resources Holdco Ltd, Common Stock (l) Energy 1,250,000 2,009 625
Templar Energy LLC, Common Stock (e)(l)(p)(t) Energy 717,718 6,101 449
Templar Energy LLC, Preferred Stock (e)(l)(t) Energy 475,758 4,751 1,427
Titan Energy LLC, Common Stock (e)(l)(t) Energy 200,040 6,321 60
Trace3 Inc, Common Stock Diversified Financials 33,216 332 616
Warren Resources Inc, Common Stock (l)(u) Energy 2,371,337 11,145 5,573
White Star Petroleum LLC (l)(p) Energy 1,613,753 1,372 524
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 (l) Software & Services 620,025 4,929 6,519
Zeta Interactive Holdings Corp, Preferred Stock, Series F (l) Software & Services 563,932 4,929 5,816
Zeta Interactive Holdings Corp, Warrant (l) Software & Services 4/20/27 84,590 — 240
Total Equity/Other 261,044 265,369
TOTAL INVESTMENTS—169.8% $ 4,560,605 4,359,280
LIABILITIES IN EXCESS OF ASSETS—(69.8%) (1,791,871)
NET ASSETS—100.0% $ 2,567,409



Portfolio Company^(a)	Footnotes		Industry	Rate^(b)		Floor	Maturity		Principal Amount^(c)/ Number of Shares		Cost		Fair Value^(d)
Equity/Other—7.1%^(e)
Abaco Energy Technologies LLC, Preferred Stock		(n)(t)	Energy							12,734,481	$	0.6	$	5.3
Abaco Energy Technologies LLC, Common Stock		(n)(t)	Energy							3,055,556		3.1		1.0
Advanced Lighting Technologies Inc, Common Stock		(n)(t)(ad)	Materials							265,747		7.5		—
Advanced Lighting Technologies Inc, Warrant		(n)(t)(ad)	Materials					10/4/27		4,189		—		—
All Systems Holding LLC, Common Stock		(n)(t)	Commercial & Professional Services							1,880,308		1.8		2.5
ASG Technologies, Common Stock		(n)(t)(ad)	Software & Services							625,178		13.5		30.7
ASG Technologies, Warrant		(n)(t)(ad)	Software & Services					6/27/22		314,110		9.0		8.6
Aspect Software Inc, Common Stock		(l)(n)(p)(t)	Software & Services							1,148,694		1.9		2.0
Aspect Software Inc, Warrant		(l)(n)(p)(t)	Software & Services					1/15/24		1,146,890		—		—
ATX Networks Corp, Common Stock		(n)(r)(t)	Technology Hardware & Equipment							83,488		0.1		0.1
Bellatrix Exploration Ltd, Warrant		(n)(r)(t)	Energy					9/11/23		382,476		—		—
Byrider Finance LLC, Common Stock		(n)(t)	Automobiles & Components							1,667		—		—
Catalina Marketing Corp, Common Stock		(n)(t)	Media & Entertainment							6,522		—		—
Chisholm Oil & Gas Operating LLC, Series A Units		(t)(v)(w)(z)	Energy							225,000		0.2		—
Cimarron Energy Inc, Common Stock		(n)(t)	Energy							4,302,293		3.9		0.3
Cimarron Energy Inc, Participation Option		(n)(t)	Energy							25,000,000		1.3		1.6
Crossmark Holdings Inc, Warrant		(n)(t)	Commercial & Professional Services							8,358		—		—
CSafe Global, Common Stock		(n)(t)	Capital Goods							608,700		0.6		1.0
CTI Foods Holding Co LLC, Common Stock		(n)(t)	Food, Beverage & Tobacco							56		—		—
Dayton Superior Corp, Common Stock		(n)(t)	Materials							14,552		0.9		0.9
Dayton Superior Corp, Warrants		(n)(t)	Materials					12/2/21		3,675		—		—
Empire Today LLC, Common Stock		(n)(t)	Retailing							630		1.9		3.5
Envigo Laboratories Inc, Series A Warrant		(p)(t)	Health Care Equipment & Services					4/29/24		10,924		—		—
Envigo Laboratories Inc, Series B Warrant		(p)(t)	Health Care Equipment & Services					4/29/24		17,515		—		—
Fairway Group Holdings Corp, Common Stock		(n)(t)(ad)	Food & Staples Retailing							103,091		3.3		—
FourPoint Energy LLC, Common Stock, Class C—II—A Units		(t)(v)	Energy							13,000		13.0		1.4
FourPoint Energy LLC, Common Stock, Class D Units		(t)(v)	Energy							2,437		1.6		0.3
FourPoint Energy LLC, Common Stock, Class E—II Units		(t)(v)	Energy							29,730		7.4		3.1
FourPoint Energy LLC, Common Stock, Class E—III Units		(t)(v)	Energy							43,875		11.0		4.6
Fox Head Inc, Common Stock		(i)(n)(t)	Consumer Durables & Apparel							10,000,000		10.0		0.9
FullBeauty Brands Holdings Corp, Common Stock		(n)(t)	Retailing							20,297		0.1		—
Harvey Industries Inc, Common Stock		(n)(t)	Capital Goods							2,666,667		2.7		6.7
HM Dunn Co Inc, Preferred Stock, Series A		(n)(p)(t)(ad)	Capital Goods							14,786		—		—
HM Dunn Co Inc, Preferred Stock, Series B		(n)(p)(t)(ad)	Capital Goods							14,786		—		—
JHC Acquisition LLC, Common Stock		(n)(t)	Capital Goods							9,517		9.5		15.5
JSS Holdings Ltd, Net Profits Interest		(n)(t)	Capital Goods							54		—		1.6
JW Aluminum Co, Common Stock		(i)(n)(t)(ad)	Materials							631		—		—
JW Aluminum Co, Preferred Stock		(i)(n)(ad)	Materials		12.5% PIK			2/15/28		6,875		52.6		104.1
MB Precision Holdings LLC, Class A—2 Units		(t)(v)(ad)	Capital Goods							6,655,178		2.3		—

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

~~A summary of outstanding financial instruments as of December 31, 2018 is as follows:~~

~~Interest rate swaps~~

~~(a)~~

~~Security may be an obligation of one or more entities affiliated with the named company.~~

~~(b)~~

Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2018, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 2.81%, and the U.S. Prime Lending Rate, or Prime, was 5.50%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of underlying investment.

~~(c)~~

~~Denominated in U.S. dollars unless otherwise noted.~~

~~(d)~~

~~Fair value determined by the Company’s board of directors (see Note 8).~~

~~(e)~~

~~Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with ING Capital LLC (see Note 9).~~

~~(f)~~

~~Security or portion thereof held within Cooper River LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Citibank, N.A. (see Note 9).~~

~~(g)~~

~~(h)~~

~~Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with JPMorgan Chase Bank, N.A.~~
~~(see Note 9).~~

~~(i)~~

~~Security or portion thereof held within Green Creek LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs Bank USA (see Note 9).~~

~~(j)~~

~~Position or portion thereof unsettled as of December 31, 2018.~~

~~(k)~~

~~Security was on non-accrual status as of December 31, 2018.~~

~~(l)~~

~~Security is non-income producing.~~

~~(m)~~

The investment is not a qualifying asset under the Investment Company Act of 1940, as amended. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2018, 88.2% of the Company’s total assets represented qualifying assets.

~~(n)~~

~~Security is an unfunded commitment. The stated rate reflects the spread disclosed at the time of commitment and may not indicate the actual rate received upon funding.~~

~~(o)~~

~~Security held within IC II American Energy Investments, Inc., a wholly-owned subsidiary of the Company.~~

~~(p)~~

~~Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.~~

~~(q)~~

~~Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.~~

~~(r)~~

~~Security held within IC II Altus Investments, LLC, a wholly-owned subsidiary of the Company.~~

~~(s)~~

~~Investment denominated in Canadian dollars. Cost and fair value are converted into U.S. dollars at an exchange rate of CAD $1.00 to $0.73 as of December 31, 2018.~~

~~(t)~~

~~Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8).~~



Portfolio Company^(a)	Footnotes		Industry	Rate^(b)		Floor	Maturity		Principal Amount^(c)/ Number of Shares		Cost		Fair Value^(d)
MB Precision Holdings LLC, Preferred Stock		(t)(v)(ad)	Capital Goods							41,778,909	$	8.8	$	5.6
Misys Ltd, Preferred Stock		(n)(r)(t)	Software & Services		L+1,025					2,841		2.8		2.8
Mood Media Corp, Common Stock		(n)(t)(ad)	Media & Entertainment							17,400,835		12.6		1.0
North Haven Cadence Buyer Inc, Common Stock		(n)(t)	Consumer Services							3,958,333		4.0		8.5
One Call Care Management Inc, Common Stock		(n)(t)(ad)	Insurance							2,604,293,203		1.8		1.8
One Call Care Management Inc, Preferred Stock A		(n)(t)(ad)	Insurance							277,791		19.3		19.3
One Call Care Management Inc, Preferred Stock B		(n)(ad)	Insurance		9.0% PIK (9.0% Max PIK)			10/25/29		5,729,445		5.8		5.8
Polyconcept North America Inc, Class A—1 Units		(n)(t)	Household & Personal Products							624		0.1		0.1
Power Distribution Inc, Common Stock		(n)(t)	Capital Goods							4,530,006		3.9		1.8
Professional Plumbing Group Inc, Common Stock		(i)(t)	Materials							3,000,000		3.0		9.0
Ridgeback Resources Inc, Common Stock		(i)(n)(r)(t)	Energy							1,644,464		10.1		8.7
Sequential Brands Group Inc., Common Stock		(i)(n)(t)(ab)	Consumer Durables & Apparel							534,076		7.2		0.2
Sorenson Communications LLC, Common Stock		(i)(n)(t)	Telecommunication Services							43,796		—		33.6
SSC (Lux) Limited S.a r.l., Common Stock		(n)(r)(t)	Health Care Equipment & Services							125,000		2.5		3.9
Sungard Availability Services Capital Inc, Common Stock		(m)(n)(o)(t)	Software & Services							217,659		15.2		14.2
Sunnova Energy International Inc, Common Stock		(n)(t)(ab)	Energy							487,528		5.5		5.4
Swift Worldwide Resources Holdco Ltd, Common Stock		(n)(t)	Energy							1,250,000		2.0		0.5
Templar Energy LLC, Common Stock		(i)(t)(v)(w)(ab)	Energy							847,547		7.2		0.1
Templar Energy LLC, Preferred Stock		(i)(n)(t)(ab)	Energy							561,819		5.6		—
Titan Energy LLC, Common Stock		(i)(n)(t)(ab)(ad)	Energy							272,778		8.6		—
Trace3 Inc, Common Stock		(n)(t)	Software & Services							42,486		0.4		1.5
VICI Properties Inc, Common Stock		(n)(t)(ab)	Consumer Services							66,020		1.2		1.7
Warren Resources Inc, Common Stock		(n)(t)(ad)	Energy							3,370,272		15.8		8.3
White Star Petroleum LLC, Common Stock		(t)(v)(w)	Energy							3,351,997		2.8		—
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1		(n)(t)	Software & Services							1,051,348		8.4		12.0
Zeta Interactive Holdings Corp, Preferred Stock, Series F		(n)(t)	Software & Services							956,233		8.4		10.9
Zeta Interactive Holdings Corp, Warrant		(n)(t)	Software & Services					4/20/27		143,435		—		0.4

Total Equity/Other												322.8		352.8

TOTAL INVESTMENTS—172.0%											$	9,010.7		8,561.0

LIABILITIES IN EXCESS OF OTHER ASSETS—(72.0%)														(3,565.0	)

NET ASSETS—100.0%													$	4,996.0

											Notional		Unrealized
Total Return Swap											Amount		Depreciation
Citibank TRS Facility (Note 9)												93.5		(4.4	)

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

~~(u)~~

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2018, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the year ended December 31, 2018:

Portfolio Company Fair Value at
December 31,
2017 Transfers
In or Out Purchases and
Paid-in-Kind
Interest Sales and
Repayments Accretion of
Discount Net Realized
Gain (Loss) Net Change in
Unrealized
Appreciation
(Depreciation) Fair Value at
December 31,
2018
Interest
Income(1)

PIK
Income(1)

Fee
Income(1)

Senior Secured Loans—First Lien
Advanced Lighting Technologies, Inc. $ 9,218 $ — $ — $ (92) $ 223 $ 13 $ (237) $ 9,125 $ 1,119 $ — $ —
H.M. Dunn Co., Inc.(2)
— 64,286 — — — (25,715) (31,549) 7,022 1,656 — —
Logan’s Roadhouse, Inc.(3)
4,669 — 2,223 (6,875) — (25) 8 — 17 710 —
Logan’s Roadhouse, Inc. — — 1,347 (1,333) — (14) — — 529 529 —
MB Precision Holdings LLC(2)
— 64,367 710 (12,581) — (32,132) 975 21,339 3,507 — —
Warren Resources, Inc. 43,613 — 170 (28,068) — — (1,063) 14,652 1,939 170 1,123
Senior Secured Loans—Second Lien
JW Aluminum Co. 34,382 — — (33,874) 1 7 (516) — 1,492 — —
Logan’s Roadhouse, Inc. 6,771 — 194 (1,839) 6 (13,001) 7,869 — 188 194 —
Other Senior Secured Debt
Advanced Lighting Technologies, Inc. 10,278 — 646 (261) — — (7,033) 3,630 1,182 646 —
JW Aluminum Co. — — 33,001 — — — (82) 32,919 1,983 — —
Mood Media Corp. 23,219 — 5,274 — 5 — (20) 28,478 4,429 1,901 —
Equity/Other
Advanced Lighting Technologies, Inc., Common Equity 5,900 — — — — — (5,900) — — — —
Advanced Lighting Technologies, Warrants, 10/4/2027 26 — — — — — (26) — — — —
ASG Everglades Holdings, Inc., Common
Equity 30,727 — — — — — 1,016 31,743 — — —
ASG Everglades Holdings, Inc., 6/27/2022, Warrants 6,951 — — — — — 413 7,364 — — —
HM Dunn Aerosystems, Inc., Preferred Equity, Series A(2)
— — — — — — — — — — —
HM Dunn Aerosystems, Inc., Preferred Equity, Series B(2)
— — — — — — — — — — —
JW Aluminum Co., Common Equity — — — — — — — — — — —
JW Aluminum Co., Preferred Equity 15,074 — 18,992 — 210 — 9,614 43,890 5,632 4,785 —

Foreign currency forward contracts


Foreign Currency	Settlement Date		Counterparty		Amount and Transaction			US$ Value at Settlement Date		US$ Value at December 31, 2019		Unrealized Appreciation (Depreciation)
AUD		1/14/2020		ING Capital LLC		A$	4.8 Sold	$	3.3		3.4		(0.1	)
AUD		1/14/2020		ING Capital LLC		A$	1.9 Sold		1.3		1.3		—
AUD		1/14/2020		ING Capital LLC		A$	0.3 Sold		0.2		0.2		—
AUD		4/8/2020		ING Capital LLC		A$	6.8 Sold		4.6		4.8		(0.2	)
CAD		1/14/2020		JP Morgan Chase Bank		C$	5.7 Sold		4.3		4.4		(0.1	)
CAD		1/14/2020		ING Capital LLC		C$	1.5 Sold		1.2		1.2		—
CAD		1/14/2020		ING Capital LLC		C$	3.9 Sold		3.0		3.0		—
EUR		1/14/2020		ING Capital LLC		€	1.0 Sold		1.1		1.1		—
EUR		1/14/2020		ING Capital LLC		€	0.8 Sold		0.9		0.9		—
EUR		4/8/2020		ING Capital LLC		€	5.6 Sold		6.3		6.3		—
EUR		7/17/2023		JP Morgan Chase Bank		€	0.1 Sold		0.1		0.1		—
GBP		1/14/2020		ING Capital LLC		£	2.9 Sold		3.6		3.9		(0.3	)
GBP		1/14/2020		ING Capital LLC		£	3.3 Sold		4.1		4.4		(0.3	)
GBP		4/8/2020		ING Capital LLC		£	0.4 Sold		0.5		0.5		—

Total								$	34.5	$	35.5	$	(1.0	)

Interest rate swaps


Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Depreciation
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(9	)	$	(9	)
JP Morgan Chase Bank	$	200		3-Month LIBOR		2.81	%		12/18/2021		—		(5	)		(5	)
ING Capital LLC	$	250		3-Month LIBOR		2.59	%		1/14/2024		—		(8	)		(8	)
ING Capital LLC	$	250		3-Month LIBOR		2.62	%		1/14/2022		—		(7	)		(7	)

										$—		$(29)			$(29)

(a)	Security may be an obligation of one or more entities affiliated with the named company.

(b)

Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2019, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.91%, the Euro Interbank Offered Rate, or EURIBOR, was (0.38)%, Candian Dollar Offer Rate, or CDOR was 2.08%, and the Australian Bank Bill Swap Bid Rate, or BBSY, or “B”, was 0.92%, and the U.S. Prime Lending Rate, or Prime, was 4.75%. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

(c)	Denominated in U.S. dollars unless otherwise noted.

(d)	Fair value determined by the Company’s board of directors (see Note 8).

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, ~~2018~~
2019

(in ~~thousands,~~millions, except share amounts)

~~(1)~~

~~Interest, PIK and fee income presented for the year ended December 31, 2018.~~

~~(2)~~

The Company held this investment as of December 31, 2017 but it was not deemed to be an “affiliated person” of the portfolio company or deemed to “control” the portfolio company as of December 31, 2017. Transfers in or out have been presented at amortized cost.

~~(3)~~

~~Security includes a partially unfunded commitment as of December 31, 2017 with an amortized cost of $760 and a fair value of $752.~~

(e)	Listed investments may be treated as debt for GAAP or tax purposes.

(f)	Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Ally Bank (see Note 9).

(g)

(h)

(i)	Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(j)	Security or portion thereof held within Cooper River LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Citibank, N.A. (see Note 9).

(k)	Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(l)	Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9).

(m)	Security or portion thereof held within Germantown Funding LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs (see Note 9).

(n)	Security or portion thereof is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9).

(o)	Security or portion thereof held within Jefferson Square Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, National Association (see Note 9).

(p)	Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, N.A. (see Note 9).

(q)	Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Morgan Stanley Senior Funding, Inc. (see Note 9).

(r)

The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2019, 79.5% of the Company’s total assets represented qualifying assets. In addition, the Company also calculates its compliance with the qualifying asset test on a “look through” basis by disregarding the value of the Company’s total return swap and treating each loan underlying the total return swap as either a qualifying asset ornon-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 79.6% of the Company’s total assets represented qualifying assets as of December 31, 2019.

(s)	Security is an unfunded commitment. Reflects the stated spread at the time of commitment, but may not be the actual rate received upon funding.

(t)	Security isnon-income producing.

(u)	Asset is onnon-accrual status.

(v)	Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.

(w)	Security held within FSIC III Investments, Inc., a wholly-owned subsidiary of the Company.

(x)	Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(y)	Security held within IC III Arches Investments, LLC, a wholly-owned subsidiary of the Company.

(z)	Security held within FSIC IV Investments, LLC, a wholly-owned subsidiary of the Company.

See notes to unaudited consolidated financial statements.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)

(aa)

Security or portion thereof held within Burholme Funding LLC has been rehypothecated under Rule15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). As of December 31, 2019, the fair value of securities rehypothecated by BNPP was $123.

(ab)	Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8).

(ac)	Position or portion thereof unsettled as of December 31, 2019.

(ad)

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the year ended December 31, 2019:


Portfolio Company	Fair Value at December 31, 2018		Gross Additions⁽¹⁾		Gross Reductions⁽²⁾			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2019		Interest Income⁽³⁾		PIK Income⁽³⁾		Fee Income⁽³⁾
Senior Secured Loans—First Lien
Advanced Lighting Technologies Inc	$	9.1	$	0.2	$	—		$	—		$	(3.4	)	$	5.9	$	0.9	$	—	$	—
Fairway Group Holdings Corp⁽⁴⁾		—		6.2		—			—			0.1			6.3		0.4		0.4		—
Fairway Group Holdings Corp⁽⁴⁾		—		11.3		—			—			(4.8	)		6.5		0.6		0.6		—
Fairway Group Holdings Corp⁽⁴⁾		—		5.6		—			—			(5.6	)		—		—		—		—
HM Dunn Co Inc		7.1		5.8		—			—			13.1			26.0		—		—		—
HM Dunn Co Inc		—		5.2		—			—			—			5.2		0.2		0.1		—
MB Precision Holdings LLC		21.3		1.2		(0.8	)		0.2			(0.5	)		21.4		2.6		0.5		—
One Call Care Management Inc		—		5.8		(8.2	)		4.9			0.2			2.7		0.2		—		—
Warren Resources Inc		14.7		6.3		—			—			—			21.0		2.1		0.1		—
Senior Secured Loans—Second Lien
Fairway Group Holdings Corp⁽⁴⁾		—		5.0		—			—			(5.0	)		—		—		—		—
One Call Care Management Inc⁽⁴⁾		—		13.2		(5.4	)		(7.8	)		—			—		1.6		0.5		—
Titan Energy LLC⁽⁴⁾		—		100.7		—			—			(100.7	)		—		—		—		—
Other Senior Secured Debt
Advanced Lighting Technologies Inc		3.6		—		—			—			(3.6	)		—		—		—		—
JW Aluminum Co		32.9		1.5		—			—			1.9			36.3		3.4		—		—
Mood Media Corp		28.5		11.1		—			—			(0.6	)		39.0		5.5		—		—
Equity/Other
Advanced Lighting Technologies Inc, Common Stock		—		—		—			—			—			—		—		—		—
Advanced Lighting Technologies Inc, Warrant		—		—		—			—			—			—		—		—		—
Advanced Lighting Technologies Inc, Warrant		—		—		—			—			—			—		—		—		—
ASG Technologies, Common Stock		31.7		—		—			—			(1.0	)		30.7		—		—		—
ASG Technologies, Warrant		7.4		1.8		—			—			(0.6	)		8.6		—		—		—
Fairway Group Holdings Corp, Common Stock⁽⁴⁾		—		3.3		—			—			(3.3	)		—		—		—		—
HM Dunn Co Inc, Preferred Stock, Series A		—		—		—			—			—			—		—		—		—
HM Dunn Co Inc, Preferred Stock, Series B		—		—		—			—			—			—		—		—		—
JW Aluminum Co, Common Stock		—		—		—			—			—			—		—		—		—
JW Aluminum Co, Preferred Stock		43.9		20.6		—			—			39.6			104.1		—		7.4		—

See notes to unaudited consolidated financial statements.

FS KKR Capital Corp. II

Consolidated Schedule of Investments (continued)

As of December 31, 2019

(in millions, except share amounts)


Portfolio Company	Fair Value at December 31, 2018		Gross Additions⁽¹⁾		Gross Reductions⁽²⁾			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2019		Interest Income⁽³⁾		PIK Income⁽³⁾		Fee Income⁽³⁾
MB Precision Holdings LLC, Class A—2 Units	$	—	$	—	$	—		$	—		$	—		$	—	$	—	$	—	$	—
MB Precision Holdings LLC, Preferred Stock		5.8		0.2		—			—			(0.4	)		5.6		—		—		—
Mood Media Corp, Common Stock		15.8		—		—			—			(14.8	)		1.0		—		—		—
One Call Care Management Inc, Common Stock		—		1.8		—			—			—			1.8		—		—		—
One Call Care Management Inc, Preferred Stock A		—		19.3		—			—			—			19.3		—		—		—
One Call Care Management Inc, Preferred Stock B		—		5.8		—			—			—			5.8		—		0.1		—
Titan Energy LLC, Common Stock⁽⁴⁾		—		8.6		—			—			(8.6	)		—		—		—		—
Warren Resources Inc, Common Stock		5.6		4.7		—			—			(2.0	)		8.3		—		—		—

Total	$	227.4	$	245.2	$	(14.4	)	$	(2.7	)	$	(100.0	)	$	355.5	$	3.1	$	3.3	$	—

(1)

(2)

(3)	Interest, PIK and fee income presented for the year ended December 31, 2019.

(4)	The Company held this investment as of December 31, 2018 but it was not deemed to be an “affiliated person” of the portfolio company as December 31, 2018. Transfers in or out have been presented at amortized cost.

(ae)

Under the Investment Company Act of 1940, as amended, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” and deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the year ended December 31, 2019:


Portfolio Company	Fair Value at December 31, 2018		Gross Additions⁽¹⁾		Gross Reductions⁽²⁾		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at December 31, 2019		Interest Income⁽³⁾		PIK Income⁽³⁾		Dividend Income⁽³⁾
Asset Based Finance
801 5th Ave, Seattle, Structure Mezzanine	$	—	$	47.1	$	—	$	—	$	—	$	47.1	$	0.2	$	—	$	—
801 5th Ave, Seattle, Private Equity		—		7.8		—		—		—		7.8		—		—		—
Credit Opportunities Partners, LLC
Credit Opportunities Partners, LLC		—		503.4		—		—		6.6		510.0		—		—		13.1

Total	$	—	$	558.3	$	—	$	—	$	6.6	$	564.9	$	2.8	$	—	$	13.1

(1)

(2)

(3)	Interest, PIK and dividend income presented for the year ended December 31, 2019.

See notes to unaudited consolidated financial statements.

FS KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements

(in ~~thousands,~~millions, except share and per share amounts)

Note 1. Principal Business and Organization

FS ~~Investment Corporation~~KKR Capital Corp. II, or the Company, was incorporated under the general corporation laws of the State of Maryland on July 13, 2011 and formally commenced investment operations on June 18, 2012. The Company is an externally managed,non-diversified,closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, the Company has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of ~~September 30, 2019,~~March 31, 2020, the Company had various wholly-owned subsidiaries, including ~~special purpose~~special-purpose financing subsidiaries and subsidiaries through which it holds interests in portfolio companies. The unaudited consolidated financial statements include both the Company’s accounts and the accounts of its wholly-owned subsidiaries as of ~~September 30, 2019.~~March 31, 2020. All significant intercompany transactions have been eliminated in consolidation. Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state income taxes.

The Company’s investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Company’s portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle-market U.S. companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private U.S. companies. In addition, a portion of the Company’s portfolio may be comprised of equity and equity-related securities, corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps.

The Company is externally managed by FS/KKR Advisor, LLC, or the Advisor, pursuant to an investment advisory ~~and administrative services~~ agreement, dated as of ~~April 9, 2018,~~December 18, 2019, or the investment advisory ~~and administrative services~~ agreement. On April 9, 2018, GSO/Blackstone Debt Funds Management LLC, or GDFM, resigned as the investmentsub-adviser to the Company and terminated the investmentsub-advisory agreement, or the investmentsub-advisory agreement, between FSIC II Advisor, LLC, or FSIC II Advisor, and GDFM, effective April 9, 2018. In connection with GDFM’s resignation as the investmentsub-adviser to the Company, on April 9, 2018, the Company entered into ~~the~~an investment advisory and administrative services agreement, ~~which~~or the prior investment advisory and administrative services agreement, with the Advisor. The prior investment advisory and administrative services agreement replaced an investment advisory and administrative services agreement, dated February 8, 2012, or the FSIC II Advisor investment advisory and administrative services agreement, by and between the Company and FSIC II Advisor.

On ~~May 31,~~December 18, 2019, the Company ~~entered into an~~completed its acquisitions, or the Mergers, of FS Investment Corporation III, or FSIC III, FS Investment Corporation IV, or FSIC IV, and Corporate Capital Trust II, or CCT II, pursuant to that certain Agreement and Plan of Merger, or the Merger Agreement, with Corporate Capital Trust II, a Delaware statutory trust, or CCT II, FS Investment Corporation IV, a Maryland corporation, or FSIC IV, FS Investment Corporation III, a Maryland corporation, or FSIC IIIdated as of May 31, 2019, by and ~~collectively with~~among the Company, FSIC III, FSIC IV, ~~and~~ CCT II, ~~the Funds,~~ NT Acquisition 1, Inc., a ~~Maryland corporation and~~former wholly-owned subsidiary of the Company, or Merger Sub 1, NT Acquisition 2, Inc., a ~~Delaware corporation and~~former wholly-owned subsidiary of the Company, or Merger Sub 2, NT Acquisition 3, Inc., a ~~Maryland corporation and~~former wholly-owned subsidiary of the Company, or Merger Sub 3, and the Advisor. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, (i) Merger Sub 1 will merge with and into FSIC III, with FSIC III continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 1A, and, immediately thereafter, FSIC III will merge with and into the Company, with the Company continuing as the surviving company or, together with Merger 1A, Merger 1, (ii) Merger Sub 2 will merge with and into CCT II, with CCT II continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 2A, and, immediately thereafter, CCT II will merge with and into the Company, with the Company continuing as the surviving company or, together with Merger 2A, Merger 2, and (iii) Merger Sub 3 will merge with and into FSIC IV, with FSIC IV continuing as the surviving

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 1. Principal Business and Organization (continued)~~

company and as a wholly-owned subsidiary of the Company, or Merger 3A, and, immediately thereafter, FSIC IV will merge with and into the Company, with the Company continuing as the surviving company or, collectively with the Merger 3A, Merger 3 and, together with Merger 1 and Merger 2, the Mergers. See Note 12 for additional information.

Note 2. Summary of Significant Accounting Policies

Basis of ~~Presentation:~~Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions for Form10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of and for the year ended December 31, ~~2018~~2019 included in the Company’s annual report on Form10-K for the year ended December 31, ~~2018.~~2019. Operating results for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020. The December 31, ~~2018~~2019 consolidated balance sheet and consolidated schedule of investments are derived from the Company’s audited consolidated financial statements as of and for the year ended December 31, ~~2018.~~2019. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Financial Accounting Standards Boards, or the FASB, Accounting Standards Codification ~~or ASC,~~ Topic 946,Financial Services—Investment Companies..

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

Use of ~~Estimates:~~Estimates: The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Capital Gains Incentive ~~Fee:~~Fee: Pursuant to the terms of the investment advisory ~~and administrative services~~ agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory ~~and administrative services~~ agreement). This fee equals 20.0% of the Company’s incentive fee capital gains, which ~~equals~~shall equal each of FSIC III, FSIC IV, CCT II and the Company’s realized capital gains (without duplication) on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation (without duplication) on a cumulative basis, less the aggregate amount of any capital gain incentive fees previously paid by FSIC III, FSIC IV, CCT II and the Company. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fees as if it were due and payable as of the end of such period.

The Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to the Advisor if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though the Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Subordinated Income Incentive ~~Fee:~~Fee: Pursuant to the terms of the investment advisory ~~and administrative services~~ agreement, the Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income under the investment advisory ~~and administrative services~~ agreement, which is calculated and payable quarterly in arrears, equals 20.0% of theCompany’s

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 2. Summary of Significant Accounting Policies (continued)~~

~~“pre-incentive~~ “pre-incentive fee net investment income” for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on ~~adjusted capital~~the value of the Company’s net assets, equal to 1.75% per quarter, ~~(1.875% under the FSIC II Advisor investment advisory and administrative services agreement),~~ or an annualized hurdle rate of 7.0% ~~(7.5% under the FSIC II Advisor investment advisory and administrative services agreement)~~. For purposes of this fee, “adjusted capital” means cumulative gross proceeds generated from sales of the Company’s common stock (including proceeds from its distribution reinvestment plan) reduced for distributions paid to stockholders from proceeds of non-liquidating dispositions of the Company’s investments and amounts paid for share repurchases pursuant to the Company’s share repurchase program. As a result, the Advisor will not earn this incentive fee for any quarter until theCompany’s pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.75% ~~(1.875% under the FSIC II Advisor investment advisory and administrative services agreement)~~. Once theCompany’s pre-incentive fee net investment income in any quarter exceeds the hurdle rate, the Advisor will be entitled toa “catch-up” fee equal to the amount ofthe pre-incentive fee net investment income in excess of the hurdle rate, until theCompany’s pre-incentive fee net investment income for such quarter equals 2.1875%, or 8.75% annually, ~~(2.34375%, or 9.375% annually under the FSIC II Advisor investment advisory and administrative services agreement),~~ of ~~the Company’s adjusted capital.~~net assets. Thereafter, the Advisor will be entitled to receive 20.0% of thepre-incentive fee net investment income.

Commencing with the ninth full calendar quarter following the closing of the Mergers, the subordinated incentive fee on income is subject to a cap equal to (i) 20.0% of the “per sharepre-incentive fee return” for the then-current calendar quarter and the eleven calendar quarters (or fewer number of calendar quarters) preceding the then-current calendar quarter (commencing with the first full calendar quarter following the Mergers) minus the cumulative “per share incentive fees” accrued and/or payable for the eleven calendar quarters (or fewer number of calendar quarters) preceding the then-current calendar quarter (commencing with the first full calendar quarter following the Mergers) multiplied by (ii) the weighted average number of shares outstanding during the calendar quarter (or any portion thereof) for which the subordinated incentive fee on income is being calculated.

Reclassifications: Certain amounts in the unaudited consolidated financial statements as of and for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and the audited consolidated financial statements as of and for the year ended December 31, ~~2018~~2019 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three ~~and nine~~ months ended ~~September 30, 2019.~~

March 31, 2020.

Revenue Recognition:Security transactions are accounted for on the trade date. The Company records interest income on an accrual basis to the extent that it expects to collect such amounts. The Company records dividend income on theex-dividend date. Distributions received from limited liability company (“LLC”) and limited partnership (“LP”) investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. The Company’s policy is to place investments onnon-accrual status when there is reasonable doubt that interest income will be collected. The Company considers many factors relevant to an investment when placing it on or removing it fromnon-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Company will receive any previously accrued interest, then the accrued interest income will bewritten-off. Payments received onnon-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest.Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on the Company’s judgment.

Loan origination fees, original issue discount and market discount are capitalized and the Company amortizes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. Structuring and othernon-recurring upfront fees are recorded as fee income when earned. For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company recognized ~~$8,609~~$8 in structuring fee revenue. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.

Derivative Instruments:The Company’s derivative instruments include foreign currency forward contracts and interest rate swaps. The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements. Derivative contracts entered into by the Company are not

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 2. Summary of Significant Accounting Policies (continued)~~

designated as hedging instruments, and as a result, the Company presents changes in fair value through net change in unrealized appreciation (depreciation) on derivative instruments in the consolidated statements of operations. Realized gains and losses ~~that occur upon the cash settlement~~ of the derivative instruments are included in net realized gains (losses) on derivative instruments in the consolidated statements of operations. ~~As of September 30, 2019, the Company’s derivative instruments included interest rate swaps.~~

Recent Accounting Pronouncements: In August 2018 ~~the Financial Accounting Standards Board, or~~ FASB issued Accounting Standards Update2018-13,Fair Value Measurement—Disclosures Framework—Changes to Disclosure Requirements ~~for~~of Fair Value Measurement (Topic 820), orASU 2018-13. ASU2018-13 introduces new fair value disclosure requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company ~~is currently evaluating~~implemented ASU2018-13 during the three months ended March 31, 2020, and it did not have a significant impact ~~of ASU 2018-13~~ on ~~its financial statements.~~

the Company’s disclosure over fair value.

Note 3. Share Transactions

Below is a summary of transactions with respect to shares of the Company’s common stock during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

Nine Months Ended September 30,
2019 2018
Shares Amount Shares Amount
Reinvestment of Distributions 9,476,410 $ 75,709 9,802,626 $ 84,192
Share Repurchase Program (6,488,628) (52,233) (10,072,672) (86,976)
Net Proceeds from Share Transactions 2,987,782 $ 23,476 (270,046) $ (2,784)

2019:


	Three Months Ended March 31,
	2020				2019
	Shares		Amount		Shares			Amount
Reinvestment of Distributions		—	$	—		3,191,361		$	26
Share Repurchase Program		—		—		(3,297,056	)		(27	)

Net Proceeds from Share Transactions		—	$	—		(105,695	)	$	(1	)

During the period from ~~October~~April 1, ~~2019~~2020 to ~~November~~May 8, ~~2019,~~2020, the Company issued ~~1,080,802~~6,430,853 shares of common stock pursuant to its distribution reinvestment plan, or DRP, for gross proceeds of ~~$8,322,175~~$39,871,288 at an average price per share of ~~$7.70.~~$6.20. For additional information regarding the terms of the DRP, see Note 5.

Acquisitions of FSIC III, FSIC IV and CCT II

In accordance with the terms of the Merger Agreement, at the time of the transactions contemplated by the Merger Agreement, (i) each outstanding share of FSIC III common stock was converted into the right to receive 0.9804 shares of the Company’s common stock, (ii) each outstanding share of beneficial interest of CCT II was converted into the right to receive 1.1319 shares of the Company’s common stock and (iii) each outstanding share of FSIC IV common stock was converted into the

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 3. Share Transactions (continued)

right to receive 1.3634 shares of the Company’s common stock. As a result, the Company issued an aggregate of approximately 289,084,117 shares of its common stock to former FSIC III stockholders, 14,031,781 shares of its common stock to former CCT II shareholders and 43,668,803 shares of its common stock to former FSIC IV stockholders.

Share Repurchase Program

Historically, the Company ~~has~~ conducted quarterly tender offers pursuant to ~~its~~a share repurchase program. The Company’s board of directors ~~considers~~suspended the ~~following factors, among others,~~share repurchase program in ~~making its determination regarding whether to cause~~connection with the ~~Company to offer to repurchase shares of common stock and under what terms:~~

•

~~the effect of such repurchases on the Company’s qualification as a RIC (including the consequences of any necessary asset sales);~~

•

~~the liquidity~~execution of the ~~Company’s assets (including fees and costs associated with disposing of assets);~~

•

~~the Company’s investment plans and working capital requirements;~~

•

~~the relative economies of scale with respect~~Merger Agreement. The Company is not obligated to ~~the Company’s size;~~

•

~~the Company’s history in repurchasing shares of common stock~~reimplement a share repurchase program on any specific terms or ~~portions thereof; and~~

•

~~the condition of the securities markets.~~

at all.

Historically, the Company limited the number of shares of common stock to be repurchased during any calendar year to the lesser of (i) the number of shares of common stock that the Company could repurchase with the proceeds it received from the issuance of shares of common stock under the DRP and

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 3. Share Transactions (continued)~~

(ii) 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter. On May 8, 2017, the board of directors of the Company amended the share repurchase program. As amended, the Company limits the maximum number of shares of common stock to be repurchased for any repurchase offer to the greater of (A) the number of shares of common stock that the Company can repurchase with the proceeds it has received from the sale of shares of common stock under the DRP during the twelve-month period ending on the date the applicable repurchase offer expires (less the amount of proceeds used to repurchase shares of common stock on each previous repurchase date for repurchase offers conducted during such twelve-month period) (the Company refers to this limitation as the twelve-month repurchase limitation) and (B) the number of shares of common stock that the Company can repurchase with the proceeds it received from the sale of shares of common stock under the DRP during the three-month period ending on the date the applicable repurchase offer expires (the Company refers to this limitation as the three-month repurchase limitation). In addition to this limitation, the maximum number of shares of common stock to be repurchased for any repurchase offer will also be limited to 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter. As a result, the maximum number of shares of common stock to be repurchased for any repurchase offer will not exceed the lesser of (i) 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter, and (ii) whichever is greater of the twelve-month repurchase limitation described in clause (A) above and the three-month repurchase limitation described in clause (B) above. ~~At the discretion of~~

Under the Company’s board of directors, the Company may also use cash on hand, cash available from borrowings and cash from the liquidation of securities investments as of the end of the applicable period to repurchase shares of common stock. The actual number of shares of common stock that the Company offers to repurchase may be less in light of the limitations noted above. The Company’s board of directors may amend, suspend or terminate the share repurchase program at any time upon 30 days’ notice.

~~Under the Company’s~~former share repurchase program, the Company ~~intends to offer~~offered to repurchase shares of common stock at a price equal to the price at which shares of common stock are issued pursuant to the DRP on the distribution date coinciding with the applicable share repurchase date. The price at which shares of common stock are issued under the DRP is determined by the Company’s board of directors or a committee thereof, in its sole discretion, and will be (i) not less than the net asset value per share of the Company’s common stock as determined in good faith by the Company’s board of directors or a committee thereof, in its sole discretion, immediately prior to the payment date of the distribution and (ii) not more than 2.5% greater than the net asset value per share as of such date.

~~In conjunction with the announced Merger Agreement, the Company’s board of directors suspended the Company’s share repurchase program.~~

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 3. Share Transactions (continued)

The following table provides information concerning the Company’s repurchases of shares of common stock pursuant to its former share repurchase program during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

For the Three Months Ended Repurchase
Date Shares
Repurchased Percentage of
Shares
Tendered
That Were
Repurchased Percentage of
Outstanding
Shares
Repurchased
as of the
Repurchase
Date Repurchase
Price Per
Share Aggregate
Consideration
for
Repurchased
Shares
Fiscal 2018
December 31, 2017 January 12, 2018 3,408,305 28.0% 1.04% $ 8.800 $ 29,993
March 31, 2018 April 2, 2018 3,367,488 21.0% 1.03% $ 8.600 28,960
June 30, 2018 July 3, 2018 3,296,879 20.0% 1.01% $ 8.500 28,023
Total 10,072,672 $ 86,976
Fiscal 2019
December 31, 2018 January 2, 2019 3,297,056 16.7% 1.01% $ 8.050 $ 26,541
March 31, 2019 April 1, 2019 3,191,572 14.2% 0.98% $ 8.050 25,692
June 30, 2019(1)
— — — — — —
Total 6,488,628 $ 52,233

~~(1)~~

~~The Company suspended its share repurchase program on May 31, 2019.~~

2019:


For the Three Months Ended	Repurchase Date		Shares Repurchased		Percentage of Shares Tendered That Were Repurchased			Percentage of Outstanding Shares Repurchased as of the Repurchase Date			Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares
Fiscal 2019
December 31, 2018		January 2, 2019		3,297,056		16.7	%		1.01	%	$	8.050	$	(27	)

Total				3,297,056									$	(27	)

Fiscal 2020
December 31, 2019⁽¹⁾				—		—			—		$	—	$	—

Total				—									$	—

(1)	The Company suspended its share repurchase program on May 31, 2019.

Note 4. Related Party Transactions

Compensation of the Investment Adviser

Pursuant to the investment advisory ~~and administrative services~~ agreement, the Advisor is entitled to a base management fee calculated at an annual rate of 1.50% of the average weekly value of the Company’s gross assets excluding cash and cash equivalents (gross assets equal the total assets of the Company as set forth on the Company’s consolidated balance sheets), which base management fee is reduced from 1.50% to 1.00% on all assets financed using leverage over 1.0xdebt-to-equity, and an incentive fee based on the Company’s performance. The base management fee is payable quarterly in arrears. All or any part of the base management fee not taken as to any quarter will be deferred without interest and may be taken in such other quarter as the Advisor determines. The prior investment advisory and administrative services agreement had substantially similar terms, except that cash and cash equivalents were not excluded from gross assets. See Note 2 for a discussion of the capital gains and subordinated income incentive fees that the Advisor may be entitled to under the investment advisory ~~and administrative services~~ agreement.

On December 18, 2019, the Company entered into an administration agreement with the Advisor, or the administration agreement. Pursuant to the FSIC II Advisor investment advisory and administrative services agreement, which was in effect until April 9, 2018, FSIC II Advisor was entitled to an annual base management fee equal to 2.0% of the average value of the Company’s gross assets (gross assets equal the total assets of the Company as set forth on the Company’s consolidated balance sheets) and an incentive fee based on the Company’s performance. Effective March 5, 2015, FSIC II Advisor had agreed to permanently waive 0.25% of its base management fee to which it was entitled under the FSIC II Advisor investment advisory and administrative services agreement, so that the fee received equaled 1.75% of the average value of the Company’s gross assets. Pursuant to the investment sub-advisory agreement, GDFM was entitled to receive 50% of all management and incentive fees payable to FSIC II Advisor under the FSIC II Advisor investment advisory and administrative services agreement with respect to each year.

~~Pursuant to the investment advisory and administrative services~~administration agreement, the Advisor oversees the Company’sday-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 4. Related Party Transactions (continued)~~

administrative services. The Advisor also performs, or oversees the performance of, the Company’s corporate operations and required administrative services, which includes being responsible for the financial records that the Company is required to maintain and preparing reports for the Company’s stockholders and reports filed with the U.S. Securities and Exchange Commission, or the SEC. In addition, the Advisor assists the Company in calculating its net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to the Company’s stockholders, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others.

Pursuant to the ~~investment advisory and administrative services~~administration agreement, the Company reimburses the Advisor for expenses necessary to perform services related to its administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings, L.P. ~~(which~~, which does business as FS ~~Investments),~~Investments, or FS Investments, and KKR Credit Advisors (US), LLC, or KKR Credit, ~~for~~ providing administrative services to the Company on behalf of the Advisor. The Company reimburses the Advisor no less than ~~monthly~~quarterly for all costs and expenses ~~necessary to perform services related to~~incurred by the ~~Company’s~~Advisor in performing its obligations and providing personnel and facilities under the administration and operations. The amount of this reimbursement is set at the lesser of (1) the Advisor’s actual costs incurred in providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers for comparable services in the same geographic location.agreement. The Advisor allocates the cost of such services to the Company based on factors such as total assets, revenues, time allocations and/or other reasonable metrics. The Company’s board of directors reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 4. Related Party Transactions (continued)

allocation of administrative expenses among the Company and certain affiliates of the Advisor. The Company’s board of directors then assesses the reasonableness of such reimbursements for expenses allocated to it based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party service providers known to be available. In addition, the Company’s board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Company’s board of directors compares the total amount paid to the Advisor for such services as a percentage of the Company’s net assets to the same ratio as reported by other comparable BDCs. The administrative services provisions of the FSIC II Advisor investment advisory and administrative services agreement and the prior investment advisory and administrative services agreement were substantially similar to the ~~administrative services provisions of the investment advisory and administrative services~~administration agreement.

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 4. Related Party Transactions (continued)~~

The following table describes the fees and expenses accrued under the investment advisory agreement, the administration agreement, the prior investment advisory and administrative services agreement and the FSIC II Advisor investment advisory and administrative services agreement, as applicable, during the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
Related Party Source Agreement Description 2019 2018 2019 2018
The Advisor and FSIC II Advisor FS/KKR Advisor Investment Advisory
and Administrative Services Agreement
and FSIC II Advisor Investment
Advisory and Administrative Services
Agreement Base Management Fee(1) $ 16,735 $ 17,567 $ 51,581 $ 58,307
The Advisor and FSIC II Advisor FS/KKR Advisor Investment Advisory
and Administrative Services Agreement
and FSIC II Advisor Investment
Advisory and Administrative Services
Agreement Subordinated Incentive Fee on Income(2) $ 5,045 $ 11,939 $ 24,912 $ 18,994
The Advisor and FSIC II Advisor FS/KKR Advisor Investment Advisory
and Administrative Services Agreement
and FSIC II Advisor Investment
Advisory and Administrative Services
Agreement Administrative
Services Expenses(3) $ 1,833 $ 799 $ 3,387 $ 2,371

~~(1)~~

FSIC II Advisor agreed, effective March 5, 2015, to permanently waive a portion of the base management fee to which it was entitled under the FSIC II Advisor investment advisory and administrative services agreement so that the fee received equaled 1.75% of the average value of the Company’s gross assets. As a result, the amount shown for the nine months ended September 30, 2018 is net of waivers $3,432. During the nine months ended September 30, 2019 and 2018, $52,102 and $63,335, respectively, in base management fees were paid to FSIC II Advisor and the Advisor. As of September 30, 2019, $16,735 in base management fees were payable to the Advisor.

~~(2)~~

During the nine months ended September 30, 2019 and 2018, $25,663 and $26,185, respectively, of subordinated incentive fees on income were paid to the Advisor and FSIC II Advisor. As of September 30, 2019, a subordinated incentive fee on income of $5,045 was payable to the Advisor.

~~(3)~~

During the nine months ended September 30, 2019 and 2018, $2,385 and $1,992, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by the Advisor and FSIC II Advisor and the remainder related to other reimbursable expenses, including reimbursement of fees related to transactional expenses for prospective investments, such as fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as “broken deal” costs. Broken deal costs were $284 and $164 for the nine months ended September 30, 2019 and 2018, respectively. The Company paid $2,146 and $2,192 in administrative services expenses to the Advisor and FSIC II Advisor during the nine months ended September 30, 2019 and 2018, respectively.

2019:


			Three Months Ended March 31,
Related Party	Source Agreement	Description	2020	2019
The Advisor	Investment advisory agreement and prior investment advisory and administrative services agreement	Base Management Fee⁽¹⁾	$33	$18
The Advisor	Investment advisory agreement and prior investment advisory and administrative services agreement	Subordinated Incentive Fee on Income⁽²⁾	$23	$11
The Advisor	Administration agreement and prior investment advisory and administrative services agreement	Administrative Services Expenses⁽³⁾	$2	$1

(1)	During the three months ended March 31, 2020 and 2019, $35 and $17, respectively, in base management fees were paid to the Advisor. As of March 31, 2020, $33 in base management fees were payable to the Advisor.

(2)	During the three months ended March 31, 2020 and 2019, $11 and $6, respectively, of subordinated incentive fees on income were paid to the Advisor. As of March 31, 2020, a subordinated incentive fee on income of $23 was payable to the Advisor.

(3)

During the three months ended March 31, 2020 and 2019, $1 and $1, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by the Advisor and the remainder related to other reimbursable expenses, including reimbursement of fees related to transactional expenses for prospective investments, including fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as “broken deal” costs. Broken deal costs were $0.2 for the three months ended March 31, 2020. The Company paid $2 and $1 in administrative services expenses to the Advisor during the three months ended March 31, 2020 and 2019, respectively.

Potential Conflicts of Interest

The members of the senior management and investment teams of the Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Company does, or of investment vehicles managed by the same personnel. For example, the Advisor is the investment adviser to FS KKR Capital Corp., ~~FS Investment Corporation III, FS Investment Corporation IV, and Corporate Capital Trust II,~~ and the officers, managers and other personnel of the Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or KKR Credit. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Company’s best interests or in the best interest of the Company’s stockholders. The Company’s investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For additional information regarding potential conflicts of interest, see the Company’s annual report on Form10-K for the year ended December 31, ~~2018.~~

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~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 4. Related Party Transactions (continued)~~

2019.

Exemptive Relief

As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, BDCs generally are not permittedto co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs are permitted to, and may,simultaneously co-invest in transactions where price is the only negotiated term.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 4. Related Party Transactions (continued)

In an order dated June 4, 2013, or the FS Order, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions,to co-invest in certain privately negotiated investment transactions with certain affiliates of ~~FSIC II Advisor,~~its former investment adviser, including FS Energy and Power Fund, FS KKR Capital Corp., ~~FS Investment Corporation III, FS Investment Corporation IV~~ and any future BDCs that are advised by ~~FSIC II Advisor~~its former investment adviser or its affiliated investment advisers. However, in connection with the investment advisory relationship with the Advisor, and in an effort to mitigate potential future conflicts of interest, the Company’s board of directors authorized and directed that the Company (i) withdraw from the FS Order, except with respect to any transaction in which the Company participated in reliance on the FS Order prior to April 9, 2018, and (ii) rely on an exemptive relief order, dated April 3, 2018, that permits the Company, subject to the satisfaction of certain conditions,to co-invest in certain privately negotiated investment transactions, including investments originated and directly negotiated by the Advisor or KKR Credit, with certain affiliates of the Advisor.

Note 5. Distributions

The following table reflects the cash distributions per share that the Company declared and paid on its common stock during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

Distribution
For the Three Months Ended Per Share Amount
Fiscal 2018
March 31, 2018 $ 0.1885 $ 61,153
June 30, 2018 0.1885 61,146
September 30, 2018 0.1885 61,137
Total $ 0.5655 $ 183,436
Fiscal 2019
March 31, 2019 $ 0.1885 $ 61,114
June 30, 2019 0.1885 61,108
September 30, 2019 0.1885 61,698
Total $ 0.5655 $ 183,920

~~The Company intends to declare regular cash distributions on a quarterly basis and pay such distributions on a monthly basis.~~ 2019:


	Distribution
For the Three Months Ended	Per Share		Amount
Fiscal 2019
March 31, 2019	$	0.1885	$	61

Total	$	0.1885	$	61

Fiscal 2020
March 31, 2020	$	0.1500	$	102

Total	$	0.1500	$	102

On ~~October 11, 2019,~~April 28, 2020, the Company’s board of directors declared a regular ~~monthly~~quarterly cash distribution ~~for October 2019 in the amount~~ of ~~$0.06283~~$0.15 per ~~share. These distributions have been or~~share, which will be paid ~~monthly~~on or about July 2, 2020 to stockholders of record as of ~~monthly record dates previously determined by~~ the ~~Company’s board~~close of ~~directors.~~business on June 17, 2020. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of the Company’s board of directors.

The Company has adopted an “opt in” ~~distribution reinvestment plan~~DRP for its stockholders. As a result, if the Company makes a cash distribution, its stockholders will receive the distribution in cash unless they specifically “opt in” to the DRP so as to have their cash distributions reinvested in additional shares of the Company’s common stock. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a stockholder’s ability to participate in the DRP.

Under the Company’s DRP, cash distributions to participating stockholders will be reinvested in additional shares of the Company’s common stock at a purchase price determined by the Company’s board

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 5. Distributions (continued)~~

of directors, or a committee thereof, in its sole discretion, that is (i) not less than the net asset value per share of the Company’s common stock as determined in good faith by the Company’s board of directors or a committee thereof, in its sole discretion, immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the net asset value per share of the Company’s common stock as of such date. Although distributions paid in the form of additional shares of common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders who elect to participate in the Company’s DRP will not receive any corresponding cash distributions with which to pay any such applicable taxes. Stockholders receiving distributions in the form of additional shares of common stock will be treated as receiving a distribution in the amount of the fair market value of the Company’s shares of common stock.

~~The Company has suspended the DRP with respect to any distributions with a record date between December 1, 2019 and the closing of the Mergers.~~

The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of the Company’s common stock, borrowings, net investment income from operations, capital gains

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 5. Distributions (continued)

proceeds from the sale of assets, gains from interest rate swaps,non-capital gains proceeds from the sale of assets and dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies. The Company has not established limits on the amount of funds it may use from available sources to make distributions. During certain periods, the Company’s distributions may exceed its earnings. As a result, it is possible that a portion of the distributions the Company makes may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from the Company’s investment activities. Each year a statement on Form1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of capital, which is a nontaxable distribution) will be mailed to the Company’s stockholders. There can be no assurance that the Company will be able to pay distributions at a specific rate or at all.

The following table reflects the sources of the cash distributions on a tax basis that the Company paid on its common stock during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

Nine Months Ended September 30,
2019 2018
Source of Distribution Distribution
Amount Percentage Distribution
Amount Percentage
Offering proceeds $ — — $ — —
Borrowings — — — —
Net investment income(1)
183,920 100% 183,436 100%
Short-term capital gains proceeds from the sale of assets — — — —
Long-term capital gains proceeds from the sale of assets — — — —
Non-capital gains proceeds from the sale of assets — — — —
Distributions on account of preferred and common equity — — — —
Total $ 183,920 100% $ 183,436 100%

~~(1)~~

During the nine months ended September 30, 2019 and 2018, 93.3% and 94.4%, respectively, of the Company’s gross investment income was attributable to cash income earned, 2.0% and 1.6%, respectively, was attributable to non-cash accretion of discount and 4.7% and 4.0%, respectively, was attributable to paid-in-kind, or PIK, interest.

The Company’s net investment income on a tax basis for the nine months ended September 30, 2019 and 2018 was $173,209 and $168,957, respectively. As of September 30, 2019 and December 31, 2018, the Company had $42,556 and $53,267, respectively, of undistributed net investment income and $235,873 and $191,708, respectively, of accumulated capital losses on a tax basis.

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 5. Distributions (continued)~~

The difference between the Company’s GAAP-basis net investment income and its tax-basis net investment income is primarily due to the reclassification of unamortized original issue discount and prepayment fees recognized upon prepayment of loans from income for GAAP purposes to realized gains or deferred to future periods for tax purposes, the impact of consolidating certain subsidiaries for purposes of computing GAAP-basis net investment income but not for purposes of computing tax-basis net investment income and income recognized for tax purposes on certain transactions but not recognized for GAAP purposes.

~~The following table sets forth a reconciliation between GAAP-basis net investment income and tax-basis net investment income during the nine months ended September 30, 2019 and 2018:~~

Nine Months Ended
September 30,
2019 2018
GAAP-basis net investment income $ 174,764 $ 178,239
Income subject to tax not recorded for GAAP (income recorded for GAAP not subject to tax) (321) 2,538
GAAP versus tax-basis impact of consolidation of certain subsidiaries 4,708 5,192
Reclassification of unamortized original issue discount, prepayment fees and
other income (6,601) (16,781)
Other miscellaneous differences 659 (231)
Tax-basis net investment income $ 173,209 $ 168,957

2019:


	Three Months Ended March 31,
	2020					2019
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Return of capital	$	—		—		$	—		—
Net investment income⁽¹⁾		102		100	%		61		100	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			—		—

Total	$	102		100	%	$	61		100	%

(1)

During the three months ended March 31, 2020 and 2019, 90.2% and 94.0%, respectively, of the Company’s gross investment income was attributable to cash income earned, 2.6% and 1.9%, respectively, was attributable tonon-cash accretion of discount and 7.2% and 4.1%, respectively, was attributable topaid-in-kind, or PIK, interest.

The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company’s distributions for a full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form1099-DIV.

~~As of September 30, 2019 and December 31, 2018, the components of accumulated earnings on a tax basis were as follows:~~

September 30, 2019
(Unaudited) December 31, 2018
Distributable ordinary income $ 42,556 $ 53,267
Distributable realized gains — —
Capital loss carryover(1)
(235,873) (191,708)
Other temporary differences (122) (139)
Net unrealized appreciation (depreciation) on investments and interest
rate swaps and gain (loss) on foreign currency(2)
(317,909) (285,333)
Total $ (511,348) $ (423,913)

~~(1)~~

Net capital losses ~~recognized~~incurred for tax years beginning after December 22, 2010, may be carried forward indefinitely, and their character is retained as short-term or long-term losses. As of ~~September 30, 2019,~~March 31, 2020, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $0$13 and ~~$235,873,~~$601, respectively.

~~(2)~~

$191 of such losses were carried over from the target companies due to the Merger, and $246 of such losses were carried over from losses generated by the Company prior to the Merger. Because of the loss limitation rules of the Code, some of the tax basis losses may be limited in their use. Any unused balances resulting from such limitations may be carried forward into future years indefinitely.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the gross unrealized appreciation ~~on the Company’s investments~~was $162 and ~~interest rate swaps and gain on foreign currency was $165,919 and $131,142,~~$276, respectively. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the gross unrealized depreciation ~~on the Company’s investments~~$1,197 and ~~interest rate swaps and loss on foreign currency was $483,828 and $416,475,~~$687, respectively.

The aggregate cost of the Company’s investments for U.S. federal income tax purposes totaled ~~$4,561,895~~$8,689 and ~~$4,645,022~~$9,167 as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The aggregate net

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 5. Distributions (continued)~~

unrealized appreciation (depreciation) on a tax basis was ~~$(317,909)~~$(1,285) and ~~$(285,333)~~$(609) as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

As of ~~September 30, 2019,~~March 31, 2020, the Company had a deferred tax ~~liability of $3,261 resulting from unrealized appreciation on investments held by the Company’s wholly-owned taxable subsidiaries and a deferred tax~~ asset of ~~$21,489~~$21 resulting from net operating losses and capital losses of the Company’s wholly-owned taxable subsidiaries. As of ~~September 30, 2019, certain~~March 31, 2020, the wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net operating losses, therefore the deferred tax asset was offset by a valuation allowance of ~~$18,228.~~$21. For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company did not record a provision for taxes related to its wholly-owned taxable subsidiaries.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio

The following table summarizes the composition of the Company’s investment portfolio at cost and fair value as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, 2019
(Unaudited) December 31, 2018

Amortized
Cost(1)
Fair Value Percentage
of Portfolio
Amortized
Cost(1)
Fair Value Percentage
of Portfolio
Senior Secured Loans—First Lien $ 3,122,832 $ 2,983,546 70% $ 3,382,158 $ 3,293,291 76%
Senior Secured Loans—Second Lien 520,677 440,303 10% 418,015 333,986 8%
Other Senior Secured Debt 210,699 202,559 5% 205,162 194,726 4%
Subordinated Debt 237,022 239,497 6% 244,811 223,748 5%
Asset Based Finance 130,582 123,038 3% 49,415 48,160 1%
Equity/Other 258,254 266,337 6% 261,044 265,369 6%
Total $ 4,480,066 $ 4,255,280 100% $ 4,560,605 $ 4,359,280 100%

~~(1)~~

~~Amortized~~2019:


	March 31, 2020 (Unaudited)							December 31, 2019
	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	5,606	$	5,116		69	%	$	6,017	$	5,717		67	%
Senior Secured Loans—Second Lien		914		693		9	%		941		809		9	%
Other Senior Secured Debt		210		150		2	%		243		228		3	%
Subordinated Debt		288		229		3	%		479		489		5	%
Asset Based Finance		671		587		8	%		535		485		6	%
Credit Opportunities Partners, LLC		503		430		6	%		503		510		6	%
Equity/Other		327		259		3	%		323		353		4	%

Total	$	8,519	$	7,464		100	%	$	9,041	$	8,591		100	%

The following table summarizes the composition of the Company’s investment portfolio at cost ~~represents~~and fair value as of March 31, 2020 and December 31, 2019 to include, on a look-through basis, the ~~original cost adjusted for~~investments underlying the ~~amortization~~TRS, as disclosed in Note 9 to our unaudited financial statements included herein. The investments underlying the TRS had a notional amount and market value of ~~premiums and/or accretion~~$0 and $0, and $94 and $89, respectively, as of ~~discounts, as applicable, on investments.~~

March 31, 2020 and December 31, 2019:


	March 31, 2020 (Unaudited)							December 31, 2019
	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	5,606	$	5,116		69	%	$	6,090	$	5,788		67	%
Senior Secured Loans—Second Lien		914		693		9	%		961		827		10	%
Other Senior Secured Debt		210		150		2	%		243		228		3	%
Subordinated Debt		288		229		3	%		479		489		5	%
Asset Based Finance		671		587		8	%		535		485		5	%
Credit Opportunities Partners, LLC		503		430		6	%		503		510		6	%
Equity/Other		327		259		3	%		324		353		4	%

Total	$	8,519	$	7,464		100	%	$	9,135	$	8,680		100	%

(1)	Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

In general, under the 1940 Act, the Company would be presumed to “control” a portfolio company if it owned more than 25% of its voting securities or it had the power to exercise control over the management or policies of such portfolio company, and would be an “affiliated person” of a portfolio company if it owned 5% or more of its voting securities.

As of ~~September 30, 2019, the Company did not “control” any of its portfolio companies. As of September 30, 2019,~~March 31, 2020, the Company held investments in ~~seven~~three portfolio companies of which it is deemed to “control”. As of March 31, 2020, the Company held investments in eleven portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control.” For additional information with respect to such portfolio companies, see ~~footnote (t)~~footnotes (ad) and (ae) to the unaudited consolidated schedule of investments as of ~~September 30, 2019~~March 31, 2020 in this quarterly report on Form10-Q.

As of December 31, ~~2018, the Company did not “control” any of its portfolio companies. As of December 31, 2018,~~2019, the Company held investments in ~~seven~~two portfolio companies of which it is deemed to “control”. As of December 31, 2019, the Company held investments in ten portfolio companies of which it was deemed to be an “affiliated person” but was not deemed to “control.” For additional information with respect to such portfolio companies, see ~~footnote (u)~~footnotes (ad) and (ae) to the consolidated schedule of investments as of December 31, ~~2018~~2019 in this quarterly report on Form10-Q.

The Company’s investment portfolio may contain loans and other unfunded arrangements that are in the form of lines of credit, revolving credit facilities, delayed draw credit facilities or other investments, ~~pursuant to~~ which require the Company ~~may be required~~ to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of ~~September 30,~~March 31,

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

2020, the Company had unfunded debt investments with aggregate unfunded commitments of $376.0, unfunded equity/other commitments of $245.1, and unfunded commitments of $371.9 of Credit Opportunities Partners, LLC. As of December 31, 2019, the Company had unfunded debt investments with aggregate unfunded commitments of ~~$194,594 and~~

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 6. Investment Portfolio (continued)~~

$600.9, unfunded equity/other commitments of ~~$150,447. As of December 31, 2018, the Company had unfunded debt investments with aggregate~~$258.0 and unfunded commitments of ~~$172,963 and an unfunded commitment to purchase up to $47 in shares~~$21.9 of ~~preferred stock of Altus Power America Holdings,~~Credit Opportunities Partners, LLC. The Company maintains sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise. For additional details regarding the Company’s unfunded debt investments, see the Company’s unaudited consolidated schedule of investments as of ~~September 30, 2019~~March 31, 2020 and audited consolidated schedule of investments as of December 31, ~~2018.~~

2019.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, 2019
(Unaudited) December 31, 2018
Industry Classification FairValue Percentage
of Portfolio FairValue Percentage
of Portfolio
Automobiles & Components $ 35,664 1% $ 34,508 1%
Capital Goods 635,808 15% 893,250 21%
Commercial & Professional Services 300,011 7% 328,760 8%
Consumer Durables & Apparel 211,872 5% 227,470 5%
Consumer Services 266,301 6% 231,589 5%
Diversified Financials 163,091 4% 277,500 6%
Energy 312,601 7% 372,720 9%
Food & Staples Retailing 145,248 3% 6,797 0%
Food, Beverage & Tobacco 96,330 2% 96,787 2%
Health Care Equipment & Services 361,148 9% 361,228 8%
Insurance 95,239 2% 117,149 3%
Materials 201,167 5% 295,084 7%
Media & Entertainment 249,886 6% 254,278 6%
Pharmaceuticals, Biotechnology & Life Sciences 113,731 3% 20,012 0%
Real Estate 34,036 1% — —
Retailing 313,567 7% 257,260 6%
Semiconductors & Semiconductor Equipment — — 14,155 0%
Software & Services 472,615 11% 339,451 8%
Technology Hardware & Equipment 102,153 2% 46,178 1%
Telecommunication Services 117,753 3% 168,930 4%
Transportation 27,059 1% 16,174 0%
Total $ 4,255,280 100% $ 4,359,280 100%

2019:


	March 31, 2020 (Unaudited)					December 31, 2019
Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Automobiles & Components	$	52		1	%	$	182		2	%
Capital Goods		961		13	%		1,139		13	%
Commercial & Professional Services		769		10	%		861		10	%
Consumer Durables & Apparel		351		5	%		302		3	%
Consumer Services		308		4	%		548		6	%
Credit Opportunities Partners, LLC		430		6	%		510		6	%
Diversified Financials		596		8	%		402		5	%
Energy		212		3	%		328		4	%
Food & Staples Retailing		201		3	%		223		3	%
Food, Beverage & Tobacco		120		1	%		132		2	%
Health Care Equipment & Services		727		10	%		888		10	%
Household & Personal Products		108		1	%		1		0	%
Insurance		232		3	%		220		3	%
Materials		134		2	%		354		4	%
Media & Entertainment		335		4	%		409		5	%
Pharmaceuticals, Biotechnology & Life Sciences		81		1	%		187		2	%
Real Estate		210		3	%		122		1	%
Retailing		349		4	%		435		5	%
Semiconductors & Semiconductor Equipment		—		—			3		0	%
Software & Services		875		12	%		874		10	%
Technology Hardware & Equipment		138		2	%		174		2	%
Telecommunication Services		137		2	%		154		2	%
Transportation		138		2	%		143		2	%

Total	$	7,464		100	%	$	8,591		100	%

Credit Opportunities Partners, LLC

On September 30, 2019, Credit Opportunities Partners, LLC, or COP, a joint venture between the Company and South Carolina Retirement Systems Group Trust, or SCRS, was formed pursuant to the terms of a limited liability company agreement between the Company and SCRS, or the COP Agreement. The COP Agreement requires the Company and SCRS to provide capital to COP of up to ~~$600,000~~$1,000 in the aggregate where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 6. Investment Portfolio (continued)~~

capital. Pursuant to the terms of the COP Agreement, the Company and SCRS each have 50% voting control of COP and are required to agree on all investment decisions as well as certain other significant actions for COP. COP ~~was formed to invest~~invests its capital in a range of investments, including senior secured loans (both first lien and second lien) to middle market companies, broadly syndicated loans, equity, warrants and other investments. As administrative agent of COP, the Company performscertain day-to-day management responsibilities on behalf of COP and is entitled to a fee of 0.25% of COP’s assets under administration, calculated and payable quarterly in arrears. As of ~~September 30, 2019,~~March 31, 2020, the Company and SCRS have funded $0approximately $575.0 to COP, of which $503.1 was from the Company.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

On May 15, 2017, Green Creek LLC, or Green Creek, then a wholly-owned special-purpose financing subsidiary of the Company, entered into a revolving credit facility with Goldman Sachs Bank, or Goldman Sachs, as lender, sole lead arranger and administrative agent, and Wells Fargo Bank, National Association, or Wells Fargo, as collateral administrator and collateral agent. On December 19, 2019, the Company contributed all of its outstanding equity in Green Creek to COP. As a result, Green Creek became a wholly-owned special-purpose financing subsidiary of COP. Concurrently, Green Creek amended and restated its revolving credit facility, or the Green Creek Credit Facility.

The Green Creek Credit Facility provides for borrowings in U.S. dollars, and certain agreed upon foreign currencies, in an aggregate principal amount up to $500 on a committed basis. The end of the reinvestment period and the maturity date for the Green Creek Credit Facility are November 15, 2020 and December 15, 2020, respectively. U.S. dollar borrowings bear interest at the rate of three-month LIBOR (subject to a 0% floor) plus 2.50% per annum. Foreign currency borrowings bear interest at the rate of the relevant reference rate (subject to a 0% floor) plus the spread applicable to the specified currency. During the reinvestment period, Green Creek is subject to unused fees in an amount equal to the sum of (i) 2.50% per annum on the average daily unborrowed portion of the facility amount up to 85% of the facility amount, or the Green Creek Minimum Utilization Amount, plus (ii) 0.50% per annum on the average daily unborrowed portion of the facility amount above the Green Creek Minimum Utilization Amount. Borrowings under the Green Creek Credit Facility are secured by a first priority security interest in substantially all of the assets of Green Creek, including its portfolio of assets. As of March 31, 2020, total outstanding borrowings under the Green Creek Credit Facility were $400.

On March 11, 2020, Big Cedar Creek LLC, or Big Cedar Creek, a wholly-owned special-purpose financing subsidiary of COP, entered into a revolving credit facility, or the Big Cedar Creek Credit Facility, with BNP Paribas, as lender and administrative agent, each of the lenders from time to time party thereto, COP, as equityholder and servicer, and Wells Fargo, as collateral agent. The Big Cedar Creek Credit Facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an aggregate principal amount up to $300 on a committed basis. The end of the reinvestment period and the maturity date for the Big Cedar Creek Credit Facility are March 11, 2023 and March 11, 2025, respectively. Under the Big Cedar Creek Credit Facility, borrowings bear interest at the rate of LIBOR (or the relevant reference rate for any foreign currency borrowings) (subject to a 0% floor) plus a spread of (i) during the reinvestment period, 1.85% to 2.55% per annum, and (ii) after the reinvestment period, 2.00% to 2.65% per annum, in each case, determined based on the currency of the borrowing and the composition of the collateral portfolio. During the reinvestment period, Big Cedar Creek is subject to an unused fee ranging from 0.375% to 1.00% per annum on the average daily unborrowed portion of the facility amount below 85% of the facility amount. Borrowings under the Big Cedar Creek Credit Facility are secured by a first priority security interest in substantially all of the assets of Big Cedar Creek, including its portfolio of assets. As of March 31, 2020, total outstanding borrowings under the Big Cedar Creek Credit Facility were $0.

During the three months ended March 31, 2020, the Company sold investments with a cost of $303.5 for proceeds of $252.6 to COP and recognized a net realized gain (loss) of $(50.9) in connection with the transactions. As of March 31, 2020, $252.6 of these sales to COP are included in receivable for investments sold in the consolidated statements of assets and liabilities.

As of March 31, 2020, COP had total investments with a fair value of $1,085.7. As of March 31, 2020, COP had no investmentson non-accrual status.

Below is a summary of COP’s portfolio, followed by a listing of the individual loans in COP’s portfolio as of March 31, 2020 and December 31, 2019:


	As of
	March 31, 2020			December 31, 2019
Total debt investments⁽¹⁾	$	1,115.8		$	899.4
Weighted average current interest rate on debt investments⁽²⁾		10.4	%		9.2	%
Number of portfolio companies in COP		68			37
Largest investment in a single portfolio company⁽¹⁾	$	69.4		$	69.3

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

(1)	Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

(2)	Computed as the (a) annual stated interest rate on accruing debt, divided by (b) total debt at par amount.

Credit Opportunities Partners, LLC Portfolio

As of March 31, 2020 (Unaudited) (in millions)


Company^(a)	Footnotes	Industry	Interest Rate^(b)	Base Rate Floor^(b)	Maturity Date	No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Senior Secured Loans—First Lien—136.4%
ABB CONCISE Optical Group LLC	(j)	Retailing	L+500	1.0%	6/15/23	$	3.6	$	2.8	$	2.7
Alstom SA	(j)	Transportation	L+450	1.0%	8/29/21		6.2		4.5		4.4
Ammeraal Beltech Holding BV	(i)(j)	Capital Goods	E+375		7/30/25	€	4.8		4.4		4.0
Apex Group Limited	(e)(i)	Diversified Financials	L+700	1.0%	6/15/25	$	21.5		21.5		20.9
Apex Group Limited	(e)(i)	Diversified Financials	L+700	1.3%	6/15/25		7.4		7.4		7.2
Apex Group Limited	(e)(i)	Diversified Financials	L+700	1.5%	6/15/25	£	22.1		29.1		27.3
Arrotex Australia Group Pty Ltd	(e)(i)	Pharmaceuticals, Biotechnology & Life Sciences	B+525	1.0%	7/10/24	A$	47.3		31.9		27.7
Brand Energy & Infrastructure Services Inc	(j)	Capital Goods	L+425	1.0%	6/21/24	$	23.5		17.6		19.1
Cambium Learning Group Inc	(i)	Consumer Services	L+450		12/18/25		55.6		53.4		45.9
Conservice LLC	(e)(i)	Consumer Services	L+525		11/29/24		8.7		8.7		8.7
CSM Bakery Products	(i)(j)	Food, Beverage & Tobacco	L+400	1.0%	7/3/20		7.7		7.2		6.4
Diamond Resorts International Inc	(i)	Consumer Services	L+375	1.0%	9/2/23		13.9		13.6		9.7
Distribution International Inc	(j)	Retailing	L+575	1.0%	12/15/23		14.1		11.4		11.4
Eagleclaw Midstream Ventures LLC	(i)	Energy	L+425	1.0%	6/24/24		11.3		10.5		5.1
EaglePicher Technologies LLC	(j)	Capital Goods	L+325		3/8/25		-		-		-
EIF Van Hook Holdings LLC	(i)	Energy	L+525		9/5/24		7.1		6.8		5.1
Electronics For Imaging Inc	(i)	Technology Hardware & Equipment	L+500		7/23/26		15.4		14.5		12.9
Entertainment Benefits Group LLC	(e)(i)	Media & Entertainment	L+575	1.0%	9/30/25		2.5		2.5		2.3
Fox Head Inc	(e)(i)	Consumer Durables & Apparel	L+850	1.0%	12/19/20		20.3		20.1		18.9
Industria Chimica Emiliana Srl	(e)(i)	Pharmaceuticals, Biotechnology & Life Sciences	L+650		6/30/26	€	51.4		55.9		53.3

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)


Company^(a)	Footnotes	Industry	Interest Rate^(b)	Base Rate Floor^(b)		Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Jostens Inc	(j)	Consumer Services	L+550				12/19/25	$	3.6	$	2.7	$	2.8
Laird PLC	(j)	Technology Hardware & Equipment	L+450				7/9/25		4.3		3.7		3.7
LBM Borrower LLC	(j)	Capital Goods	L+375		1.0%		8/20/22		8.4		7.1		7.5
LD Intermediate Holdings Inc	(j)	Software & Services	L+588		1.0%		12/9/22		31.1		25.6		26.7
Lipari Foods LLC	(e)(i)	Food & Staples Retailing	L+588		1.0%		1/6/25		44.2		44.2		42.5
Lipari Foods LLC	(e)(i)	Food & Staples Retailing	L+588		1.0%		1/6/25		22.4		22.4		21.6
MedAssets Inc	(j)	Health Care Equipment & Services	L+450		1.0%		10/20/22		5.7		4.8		4.8
MI Windows & Doors Inc	(j)	Capital Goods	L+550		1.0%		11/6/26		5.0		4.2		4.3
Monitronics International Inc	(i)(j)	Commercial & Professional Services	L+500		1.5%		7/3/24		33.5		29.6		25.6
NaviHealth Inc.	(j)	Health Care Equipment & Services	L+500				8/1/25		25.2		22.1		23.5
Ontic Engineering & Manufacturing Inc	(j)	Capital Goods	L+475				10/30/26		2.2		1.8		2.0
Onvoy LLC	(j)	Telecommunication Services	L+450		1.0%		2/10/24		0.2		0.1		0.1
Parts Town LLC	(e)(i)	Retailing	L+550		1.0%		10/15/25		24.9		24.8		23.6
Qdoba Restaurant Corp	(j)	Consumer Services	L+700		1.0%		3/21/25		2.0		1.7		1.7
Sequa Corp	(i)(j)	Materials	L+500		1.0%		11/28/21		33.9		31.2		27.9
Smart & Final Stores LLC	(i)(j)	Food & Staples Retailing	L+675				6/20/25		25.4		23.9		22.5
Staples Canada	(e)(j)	Retailing	L+700		1.0%		9/12/24	C$	47.8		36.8		34.0
Sutherland Global Services Inc	(j)	Software & Services	L+538		1.0%		4/23/21	$	25.2		19.9		18.8
Syncsort Inc	(j)	Software & Services	L+600		1.0%		8/16/24		10.7		8.6		8.6
Total Safety US Inc	(j)	Capital Goods	L+600		1.0%		8/16/25		8.0		6.5		6.6
Trace3 Inc	(e)(i)	Software & Services	L+675		1.0%		8/3/24		34.2		33.9		33.4
Transaction Services Group Ltd	(e)(i)	Consumer Services	L+600				10/15/26	A$	62.5		42.0		35.2
WireCo WorldGroup Inc	(j)	Capital Goods	L+500		1.0%		9/29/23	$	0.1		0.1		0.1

Total Senior Secured Loans—First Lien											721.5		670.5

Senior Secured Loans—Second Lien—56.4%
Access CIG LLC	(j)	Commercial & Professional Services	L+775				2/27/26		1.9		1.6		1.7

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)


Company^(a)	Footnotes		Industry	Interest Rate^(b)	Base Rate Floor^(b)		Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Albany Molecular Research Inc		(j)	Pharmaceuticals, Biotechnology & Life Sciences	L+700		1.0%		8/30/25	$	0.9	$	0.7	$	0.7
American Bath Group LLC		(j)	Capital Goods	L+975		1.0%		9/30/24		10.0		9.0		9.0
Ammeraal Beltech Holding BV		(e)(i)	Capital Goods	L+800				7/27/26		52.3		50.5		48.6
BCA Marketplace PLC		(e)(i)	Retailing	L+825				11/7/27	£	29.9		38.6		34.8
EaglePicher Technologies LLC		(j)	Capital Goods	L+725				3/8/26	$	0.4		0.4		0.4
Electronics For Imaging Inc		(i)	Technology Hardware & Equipment	L+900				7/23/27		3.9		3.7		3.1
Emerald Performance Materials LLC		(j)	Materials	L+775		1.0%		8/1/22		5.7		4.7		4.7
Excelitas Technologies Corp		(j)	Technology Hardware & Equipment	L+750		1.0%		12/1/25		7.5		5.7		5.9
LBM Borrower LLC		(i)(j)	Capital Goods	L+925		1.0%		8/20/23		14.9		14.4		13.6
Misys Ltd		(i)(j)	Software & Services	L+725		1.0%		6/13/25		12.5		10.6		9.6
New Arclin US Holding Corp		(j)	Materials	L+875		1.0%		2/14/25		0.3		0.2		0.2
OPE Inmar Acquisition Inc		(j)	Software & Services	L+800		1.0%		5/1/25		9.6		7.1		7.1
Paradigm Acquisition Corp		(j)	Health Care Equipment & Services	L+750				10/26/26		0.5		0.5		0.4
Pure Fishing Inc		(e)(i)	Consumer Durables & Apparel	L+838		1.0%		12/31/26		46.8		40.6		37.5
Rise Baking Company		(e)(i)	Food, Beverage & Tobacco	L+800		1.0%		8/9/26		18.0		17.7		17.3
Sequa Corp		(i)(j)	Materials	L+900		1.0%		4/28/22		18.9		15.5		13.8
Transplace		(j)	Transportation	L+875		1.0%		10/6/25		3.3		2.5		2.5
Wittur Holding GmbH		(e)(i)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)				9/23/27	€	64.3		69.4		66.4

Total Senior Secured Loans—Second Lien												293.4		277.3

Other Senior Secured Debt—3.2%
Velvet Energy Ltd		(e)(i)	Energy	9.0%				10/5/23		15.0		15.3		12.8
Vivint Inc		(i)	Commercial & Professional Services	7.9%				12/1/22		3.0		3.0		2.8

Total Other Senior Secured Debt												18.3		15.6

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)


Company^(a)	Footnotes		Industry	Interest Rate^(b)	Base Rate Floor^(b)	Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Subordinated Debt—9.8%
Ascent Resources Utica Holdings LLC / ARU Finance Corp		(i)	Energy	10.0%			4/1/22	$	26.0	$	25.9	$	14.1
Diamond Resorts International Inc		(i)	Consumer Services	10.8%			9/1/24		3.0		3.0		1.9
GFL Environmental Inc		(i)	Commercial & Professional Services	8.5%			5/1/27		5.3		5.8		5.4
LifePoint Hospitals Inc		(j)	Health Care Equipment & Services	9.8%			12/1/26		10.7		9.3		10.2
MultiPlan Inc		(j)	Health Care Equipment & Services	7.1%			6/1/24		7.1		5.7		6.2
Plastipak Holdings Inc		(j)	Materials	6.3%			10/15/25		1.0		0.7		0.9
Ply Gem Holdings Inc		(j)	Capital Goods	8.0%			4/15/26		0.2		0.2		0.2
SRS Distribution Inc		(j)	Capital Goods	8.3%			7/1/26		5.7		4.4		5.2
Vivint Inc		(i)	Commercial & Professional Services	7.6%			9/1/23		5.0		4.4		3.9

Total Subordinated Debt											59.4		48.0

Asset Based Finance—5.1%
NewStar Clarendon2014-1A Class D		(e)(h)(i)	Diversified Financials				1/25/27	$	12.1		1.6		4.0
Pretium Partners LLC P1, Structured Mezzanine		(e)(i)	Real Estate	2.8%, 5.3% PIK (5.3% Max PIK)			10/22/26	$	6.8		6.8		6.5
Pretium Partners LLC P2, Structured Mezzanine		(e)(i)	Real Estate	2.0%, 7.5% PIK (7.5% Max PIK)			5/29/25	$	14.6		14.8		14.6

Total Asset Based Finance											23.2		25.1

Equity/Other—10.0%
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock		(e)(h)(i)	Energy						13,556		3.6		2.7
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim		(e)(h)(i)	Energy						115,178,571		30.5		23.2

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)


Company^(a)	Footnotes		Industry	Interest Rate^(b)	Base Rate Floor^(b)	Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
SSC (Lux) Limited S.a r.l., Common Stock		(e)(h)(i)	Health Care Equipment & Services						261,364	$	8.1	$	7.9
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1		(e)(h)(i)	Software & Services						620,025		7.1		6.5
Zeta Interactive Holdings Corp, Preferred Stock, Series F		(e)(h)(i)	Software & Services						563,932		6.4		8.9
Zeta Interactive Holdings Corp, Warrant		(e)(h)(i)	Software & Services				4/20/27		84,590		0.2		—

Total Equity/Other											55.9		49.2

TOTAL INVESTMENTS—220.9%										$	1,171.7	$	1,085.7

(a)	Security may be an obligation of one or more entities affiliated with the named company.

(b)

Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2020, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.45% , the Euro Interbank Offered Rate, or EURIBOR or “E”, was (0.36)%, and the Australian Bank Bill Swap Bid Rate, or BBSY or “B”, was 0.42%,. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.

(c)	Denominated in U.S. dollars unless otherwise noted.

(d)	Fair value determined by the Company’s board of directors. See Note 8.

(e)	Investments classified as Level 3.

(f)

Not used.

(g)

Not used.

(h)	Security is non-income producing.

(i)	Security or portion thereof held within Green Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Goldman Sachs Bank.

(j)	Security or portion thereof held within Big Cedar Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with BNP Paribas.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

Credit Opportunities Partners, LLC Portfolio

As of December 31, 2019 (in millions)


Company^(a)	Footnotes		Industry	Interest Rate^(b)	Base Rate Floor^(b)		Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Senior Secured Loans—First Lien—93.9%
Ammeraal Beltech Holding BV			Capital Goods	E + 375				7/30/25	€	1.5	$	1.6	$	1.6
Apex Group Limited		(e)	Diversified Financials	L+700		1.5%		6/15/25	£	22.2		29.2		29.6
Apex Group Limited		(e)	Diversified Financials	L+700		1.3%		6/15/25	$	29.0		29.0		29.0
Arrotex Australia Group Pty Ltd		(e)	Pharmaceuticals, Biotechnology & Life Sciences	B+525		1.0%		7/10/24	A$	47.3		31.9		32.7
ATX Networks Corp.			Technology Hardware & Equipment	L+600, 1.0% PIK (1.0% Max PIK)		1.0%		6/11/21	$	25.9		24.4		24.3
Conservice LLC		(e)	Consumer Services	L+525				11/29/24		8.7		8.8		8.8
CSM Bakery Products			Food, Beverage & Tobacco	L+400		1.0%		7/3/20		5.0		5.2		4.8
Diamond Resorts International Inc			Consumer Services	L+375		1.0%		9/2/23		13.9		13.7		13.7
Eagleclaw Midstream Ventures LLC			Energy	L+425		1.0%		6/24/24		11.3		10.4		10.5
EIF Van Hook Holdings LLC			Energy	L+525				9/5/24		7.1		6.8		6.8
Electronics For Imaging Inc			Technology Hardware & Equipment	L+500				7/23/26		15.5		14.4		14.4
Entertainment Benefits Group LLC		(e)	Media & Entertainment	L+575		1.0%		9/30/25	$	2.5	$	2.5	$	2.5
Fox Head Inc		(e)	Consumer Durables & Apparel	L+850		1.0%		12/19/20		20.4		20.1		20.1
Industria Chimica Emiliana Srl		(e)	Pharmaceuticals, Biotechnology & Life Sciences	L+650				6/30/26	€	51.4		55.9		56.2
Lipari Foods LLC		(e)	Food & Staples Retailing	L+588		1.0%		1/6/25	$	66.6		66.6		66.6
Monitronics International Inc			Commercial & Professional Services	L+500		1.5%		7/3/24		17.7		17.7		17.7
Parts Town LLC		(e)	Retailing	L+550		1.0%		10/15/25		25.0		24.9		24.9
Sequa Corp			Materials	L+500		1.0%		11/28/21		17.8		17.9		17.9
Smart & Final Stores LLC			Food & Staples Retailing	L+675				6/20/25		17.7		17.1		17.1
Staples Canada		(e)	Retailing	L+700		1.0%		9/12/24	C$	49.0		37.8		38.7
Trace3 Inc		(e)	Software & Services	L+675		1.0%		8/3/24	$	34.3		34.0		34.0
Transaction Services Group Ltd		(e)	Consumer Services	L+600				10/15/26	A$	62.5		42.0		43.0
Vertiv Group Corp			Technology Hardware & Equipment	L+400		1.0%		11/30/23	$	13.7		13.7		13.7

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)


Company^(a)	Footnotes		Industry	Interest Rate^(b)	Base Rate Floor^(b)		Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Vivint Inc			Commercial & Professional Services	L+500				4/1/24	$	18.4	$	18.3	$	18.4

Total Senior Secured Loans—First Lien												543.9		547.0

Senior Secured Loans—Second Lien—41.8%
Ammeraal Beltech Holding BV		(e)	Capital Goods	L+800				7/27/26		52.3		50.5		50.5
BCA Marketplace PLC		(e)	Retailing	L+825				9/24/27	£	29.9		38.6		39.2
Electronics For Imaging Inc			Technology Hardware & Equipment	L+900				7/23/27	$	3.9		3.7		3.7
LBM Borrower, LLC			Capital Goods	L+925		1.0%		8/20/23		10.0		9.9		9.9
Misys Ltd			Software & Services	L+725		1.0%		6/13/25		4.7		4.6		4.6
Pure Fishing Inc		(e)	Consumer Durables & Apparel	L+838		1.0%		12/31/26		46.8		40.4		40.4
Rise Baking Company		(e)	Food, Beverage & Tobacco	L+800		1.0%		8/9/26		18.0		17.7		17.7
Sequa Corp			Materials	L+900		1.0%		4/28/22		7.5		7.4		7.4
Wittur Holding GmbH		(e)	Capital Goods	E+850, 0.5% PIK (0.5% Max PIK)				9/23/27	€	64.3		69.3		70.0

Total Senior Secured Loans—Second Lien												242.1		243.4

Other Senior Secured Debt—4.1%
Velvet Energy Ltd		(e)	Energy	9.0%				10/5/23	$	15.0	$	15.3	$	15.3
Vivint Inc			Commercial & Professional Services	7.9%				12/1/22		3.9		3.9		4.0
Vivint Inc			Commercial & Professional Services	7.6%				9/1/23		5.0		4.4		4.7

Total Other Senior Secured Debt												23.6		24.0

Subordinated Debt—11.1%
Ascent Resources Utica Holdings LLC / ARU Finance Corp			Energy	10.0%				4/1/22		26.0		25.8		26.0
Diamond Resorts International Inc			Consumer Services	10.8%				9/1/24		3.0		3.0		3.2
GFL Environmental Inc			Commercial & Professional Services	8.5%				5/1/27		8.8		9.7		9.7
Vertiv Group Corp.			Technology Hardware & Equipment	9.3%				10/15/24		16.6		17.8		17.8

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)


Company^(a)	Footnotes		Industry	Interest Rate^(b)	Base Rate Floor^(b)	Maturity Date		No. Shares/ Principal Amount^(c)		Cost		Fair Value^(d)
Vivint Inc			Commercial & Professional Services	8.8%			12/1/20	$	7.8	$	7.5	$	7.8

Total Subordinated Debt											63.8		64.5

Asset Based Finance—4.4%
NewStar Clarendon2014-1A Class D		(e)	Diversified Financials				1/25/27	$	12.1		4.9		4.8
Pretium Partners LLC P1, Structured Mezzanine		(e)	Real Estate	2.8%, 5.3% PIK (5.3% Max PIK)			10/22/26	$	6.8		6.8		6.8
Pretium Partners LLC P2, Structured Mezzanine		(e)	Real Estate	2.0%, 7.5%PIK (7.5% Max PIK)			5/29/25	$	14.1		14.3		14.3

Total Asset Based Finance											26.0		25.9

Equity/Other—9.6%
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock		(e)	Energy						13,556		3.6		3.6
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim		(e)	Energy						115,178,571		30.5		30.5
ATX Networks Corp, Common Stock		(e)	Technology Hardware & Equipment						72,635		0.1		0.1
SSC (Lux) Limited S.a r.l., Common Stock		(e)	Health Care Equipment & Services						261,364		8.1		8.1
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1		(e)	Software & Services						620,025		7.1		7.1
Zeta Interactive Holdings Corp, Preferred Stock, Series F		(e)	Software & Services						563,932		6.4		6.4
Zeta Interactive Holdings Corp, Warrant		(e)	Software & Services				4/20/27		84,590		0.2		0.2

Total Equity/Other											56.0		56.0

TOTAL INVESTMENTS—164.9%											955.4		960.8

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 6. Investment Portfolio (continued)

(a)	Security may be an obligation of one or more entities affiliated with the named company.

(b)

Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2019, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.91%, the Euro Interbank Offered Rate, or EURIBOR or “E”, was (0.38)% and the Australian Bank Bill Swap Bid Rate, or BBSY or “B”, was 0.92%,. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.

(c)	Denominated in U.S. dollars unless otherwise noted.

(d)	Fair value determined by the Company’s board of directors. See Note 8.

(e)	Investments classified as Level 3.

Below is selected balance sheet information for COP as of March 31, 2020 and December 31, 2019:


	As of
	March 31, 2020		December 31, 2019
Selected Balance Sheet Information
Investments at fair value	$	1,085.7	$	960.8
Cash and other assets		79.8		98.7

Total assets		1,165.5		1,059.5

Debt		400.0		475.0
Other liabilities		273.9		1.7

Total liabilities		673.9		476.7

Member’s equity	$	491.6	$	582.8

Below is selected statement of operations information for COP for the three months ended March 31, 2020:


	March 31, 2020
Selected Statement of Operations Information
Total investment income	$	22.3
Expenses
Interest expense		5.3
Administrative services		0.7
Custody and administrative fees		—
Other		0.1

Total expenses		6.1

Net investment income		16.2
Net realized and unrealized losses		(92.4	)

Net increase in net assets resulting from operations	$	(76.2	)

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 7. Financial Instruments

The following is a summary of the fair value and location of the Company’s derivative instruments in the consolidated balance sheets held as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

Derivative Instrument Statement Location Fair Value
September 30, 2019
(Unaudited) December 31,
2018
Interest rate swaps Unrealized appreciation on interest rate swaps $ — $ —
Interest rate swaps Unrealized depreciation on interest rate swaps (13,947) (1,743)
Total $ (13,947) $ (1,743)

2019:


		Fair Value
Derivative Instrument	Statement Location	March 31, 2020 (Unaudited)			December 31, 2019
Interest rate swaps	Unrealized appreciation on interest rate swaps	$	—		$	—
Interest rate swaps	Unrealized depreciation on interest rate swaps		(59	)		(29	)
Foreign currency forward contracts	Unrealized appreciation on foreign currency forward contracts		1			—
Foreign currency forward contracts	Unrealized depreciation on foreign currency forward contracts		—			(1	)

Total		$	(58	)	$	(30	)

Net realized and unrealized gains and losses on derivative instruments recorded by the Company for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ are in the following locations in the consolidated statements of operations:


		Net Realized Gains (Losses)
		Three Months Ended March 31,
Derivative Instrument	Statement Location	2020			2019
Interest Rate Swaps	Net realized gains (losses) on interest rate swaps	$	(2	)	$	—
Foreign currency forward contracts	Net realized gains (losses) on foreign currency forward contracts		0			—

Total		$	(2	)	$	—


		Net Unrealized Gains (Losses)
		Three Months Ended March 31,
Derivative Instrument	Statement Location	2020			2019
Interest Rate Swaps	Net change in unrealized appreciation (depreciation) on interest rate swaps	$	(30	)	$	(4	)
Foreign currency forward contracts	Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		2			—

Total		$	(28	)	$	(4	)

Net Realized Gains (Losses) Net Realized Gains (Losses)
Three Months Ended
September 30, Nine Months Ended
September 30,
Derivative Instrument Statement Location 2019 2018 2019 2018
Interest Rate Swaps Net realized gains
(losses) on interest rate
swaps $ (290) $ — $ (290) $ —
Total $ (290) $ — $ (290) $ —

Net Unrealized Gains (Losses) Net Unrealized Gains (Losses)
Three Months Ended
September 30, Nine Months Ended
September 30,
Derivative Instrument Statement Location 2019 2018 2019 2018
Interest Rate Swaps Net change in unrealized
appreciation
(depreciation) on interest
rate swaps $ (1,551) $ — $ (12,204) $ —
Total $ (1,551) $ — $ (12,204) $ —

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 7. Financial Instruments (continued)

Offsetting of Derivative Instruments

The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties. The Company’s unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the condensed consolidated ~~balance sheets.~~statements of assets and liabilities. The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

As of September 30, 2019 (Unaudited)
Counterparty Derivative Liabilities
Subject to Master
Netting Agreement Derivatives
Available
for Offset
Non-cash
Collateral
Received(1)

Cash
Collateral
Pledged(1)

Net Amount
of Derivative
Liabilities(3)

JP Morgan Chase Bank $ 6,633 $ — $ — $ 6,633 $ —
ING Capital Markets 7,314 — — 7,314 —
Total $ 13,947 $ — $ — $ 13,947 $ —

As of December 31, 2018
Counterparty Derivative Liabilities
Subject to Master
Netting Agreement Derivatives
Available
for Offset
Non-cash
Collateral
Received(1)

Cash
Collateral
Pledged(1)

Net Amount
of Derivative
Liabilities(3)

JP Morgan Chase Bank $ 1,743 $ — $ — $ — $ 1,743
Total $ 1,743 $ — $ — $ — $ 1,743

~~(1)~~

2019:


As of March 31, 2020 (Unaudited)
Counterparty	Derivative Assets Subject to Master Netting Agreement		Derivatives Available for Offset			Non-cash Collateral Received⁽¹⁾		Cash Collateral Received⁽¹⁾		Net Amount of Derivative Assets⁽²⁾
JP Morgan Chase Bank	$	0	$	—		$	—	$	—	$	0
ING Capital Markets		1		(1	)		—		—		0

Total	$	1	$	(1	)	$	—	$	—	$	—


Counterparty	Derivative Liabilities Subject to Master Netting Agreement			Derivatives Available for Offset		Non-cash Collateral Pledged⁽¹⁾		Cash Collateral Pledged⁽¹⁾			Net Amount of Derivative Liabilities⁽³⁾
JP Morgan Chase Bank	$	(27	)	$	—	$	—	$	(27	)	$	—
ING Capital Markets		(32	)		1		—		(31	)		—

Total	$	(59	)	$	1	$	—	$	(58	)	$	—


As of December 31, 2019
Counterparty	Derivative Assets Subject to Master Netting Agreement		Derivatives Available for Offset		Non-cash Collateral Received⁽¹⁾		Cash Collateral Received⁽¹⁾		Net Amount of Derivative Assets⁽²⁾
JP Morgan Chase Bank	$	0	$	—	$	—	$	—	$	0
ING Capital Markets		0		—		—		—		0

Total	$	0	$	—	$	—	$	—	$	0


Counterparty	Derivative Liabilities Subject to Master Netting Agreement			Derivatives Available for Offset		Non-cash Collateral Pledged⁽¹⁾		Cash Collateral Pledged⁽¹⁾		Net Amount of Derivative Liabilities⁽³⁾
JP Morgan Chase Bank	$	(14	)	$	—	$	—	$	14	$	—
ING Capital Markets		(16	)		—		—		15		(1	)

Total	$	(30	)	$	—	$	—	$	29	$	(1	)

(1)	In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization.

(2)	Net amount of derivative assets represents the net amount due from the counterparty to the Company in the event of default.

(3)	Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default.

FS KKR Capital Corp. II

Notes to ~~overcollateralization.~~

~~(2)~~

~~Net amount of derivative assets represents the net amount due from the counterparty to the Company.~~

~~(3)~~

~~Net amount of derivative liabilities represents the net amount due from the Company to the counterparty.~~

Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 7. Financial Instruments (continued)

Interest Rate Swaps

Interest rate swap contracts are privately negotiated agreements between the Company and a counterparty. Pursuant to interest rate swap agreements, the Company makes fixed-rate payments to a counterparty in exchange for payments on a floating benchmark interest rate. Payments received or made are recorded as realized gains or losses. During the term of the outstanding swap agreement, changes in the underlying value of the swap are recorded as unrealized gains or losses. The value of the swap is determined by changes in the relationship between two rates of interest. The Company is exposed to credit loss in the event ofnon-performance by the swap counterparty. Risk may also arise from movements in interest rates. The Company attempts to limit counterparty risk by dealing only with well-known counterparties. ~~The Company utilizes interest rate swaps from time to time in order to hedge a portion of its fixed-rate portfolio investments.~~

The average notional balance for interest rate swaps during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and March 31, 2019 was ~~$353,407.~~

$900 and $340, respectively.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company’s open interest rate swaps were as follows:


As of March 31, 2020 (Unaudited)
Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Appreciation (Depreciation)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(18	)	$	(18	)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.81	%		12/18/2021		—		(9	)		(9	)
ING Capital Markets		$250		3-Month LIBOR		2.59	%		1/14/2024		—		(22	)		(22	)
ING Capital Markets		$250		3-Month LIBOR		2.62	%		1/14/2022		—		(10	)		(10	)

										$	—	$	(59	)	$	(59	)


As of December 31, 2019
Counterparty	Notional Amount		Company Receives Floating Rate		Company Pays Fixed Rate			Termination Date		Premiums Paid/ (Received)		Value			Unrealized Appreciation (Depreciation)
JP Morgan Chase Bank		$200		3-Month LIBOR		2.78	%		12/18/2023	$	—	$	(9	)	$	(9	)
JP Morgan Chase Bank		$200		3-Month LIBOR	��	2.81	%		12/18/2021		—		(5	)		(5	)
ING Capital Markets		$250		3-Month LIBOR		2.59	%		1/14/2024		—		(8	)		(8	)
ING Capital Markets		$250		3-Month LIBOR		2.62	%		1/14/2022		—		(7	)		(7	)

										$	—	$	(29	)	$	(29	)

Foreign Currency Forward Contracts

The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts aremarked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit counterparty risk by only dealing with well-known counterparties.

The average notional balance for foreign currency forward contracts during the three months ended March 31, 2020 and March 31, 2019 was $15 and $0, respectively.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 7. Financial Instruments (continued)

As of September 30, 2019 (Unaudited)
Counterparty Notional
Amount Company
Receives
Floating Rate Company
Pays Fixed
Rate Termination
Date Premiums
Paid/
(Received) Value Unrealized
Appreciation
(Depreciation)
JP Morgan Chase Bank $ 80,000 3-Month LIBOR 2.78% 12/18/2023 $ — $ (4,427) $ (4,427)
JP Morgan Chase Bank $ 80,000 3-Month LIBOR 2.81% 12/18/2021 — (2,206) (2,206)
ING Capital Markets $ 100,000 3-Month LIBOR 2.59% 1/14/2024 — (4,860) (4,860)
ING Capital Markets $ 100,000 3-Month LIBOR 2.62% 1/14/2022 — (2,454) (2,454)
$ — $ (13,947) $ (13,947)

As of December 31, 2018
Counterparty Notional
Amount Company
Receives
Floating Rate Company
Pays Fixed
Rate Termination
Date Premiums
Paid/
(Received) Value Unrealized
Appreciation
(Depreciation)
JP Morgan Chase Bank $ 80,000 3-Month LIBOR 2.78% 12/18/2023 $ — $ (1,090) $ (1,090)
JP Morgan Chase Bank $ 80,000 3-Month LIBOR 2.81% 12/18/2021 — (653) (653)
$ — $ (1,743) $ (1,743)

As of March 31, 2020 and December 31, 2019, the Company’s open foreign currency forward contracts were as follows:


As of March 31, 2020 (Unaudited)
Foreign Currency	Settlement Date		Counterparty		Amount and Transaction		US$ Value at Settlement Date		US$ Value at March 31, 2020		Unrealized Appreciation (Depreciation)
AUD		4/8/2020		ING Capital LLC	A$	6.8 Sold	$	4.6	$	4.2	$	0.4
EUR		4/8/2020		ING Capital LLC	€	5.6 Sold		6.3		6.2		0.1
GBP		4/8/2020		ING Capital LLC	£	0.4 Sold		0.5		0.4		0.1
EUR		7/17/2023		JP Morgan Chase Bank	€	0.1 Sold		0.1		0.1		—

Total							$	11.5	$	10.9	$	0.6


As of December 31, 2019
Foreign Currency	Settlement Date		Counterparty		Amount and Transaction		US$ Value at Settlement Date		US$ Value at December 31, 2019		Unrealized Appreciation (Depreciation)
AUD		1/14/2020		ING Capital LLC	A$	4.8 Sold	$	3.3		3.4		(0.1	)
AUD		1/14/2020		ING Capital LLC	A$	1.9 Sold		1.3		1.3		—
AUD		1/14/2020		ING Capital LLC	A$	0.3 Sold		0.2		0.2		—
AUD		4/8/2020		ING Capital LLC	A$	6.8 Sold		4.6		4.8		(0.2	)
CAD		1/14/2020		JP Morgan Chase Bank	C$	5.7 Sold		4.3		4.4		(0.1	)
CAD		1/14/2020		ING Capital LLC	C$	1.5 Sold		1.2		1.2		—
CAD		1/14/2020		ING Capital LLC	C$	3.9 Sold		3.0		3.0		—
EUR		1/14/2020		ING Capital LLC	€	1.0 Sold		1.1		1.1		—
EUR		1/14/2020		ING Capital LLC	€	0.8 Sold		0.9		0.9		—
EUR		4/8/2020		ING Capital LLC	€	5.6 Sold		6.3		6.3		—
EUR		7/17/2023		JP Morgan Chase Bank	€	0.1 Sold		0.1		0.1		—
GBP		1/14/2020		ING Capital LLC	£	2.9 Sold		3.6		3.9		(0.3	)
GBP		1/14/2020		ING Capital LLC	£	3.3 Sold		4.1		4.4		(0.3	)
GBP		4/8/2020		ING Capital LLC	£	0.4 Sold		0.5		0.5		—

Total							$	34.5	$	35.5	$	(1.0	)

Note 8. Fair Value of Financial Instruments

Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes valuation techniques that maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Company classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance:

Level 1: 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: 2: Inputs that are quoted prices for similar assets or liabilities in active markets.

Level 3: 3: Inputs that are unobservable for an asset or liability.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company’s investments were categorized as follows in the fair value hierarchy:

Valuation Inputs September 30,
2019
(Unaudited) December 31, 2018
Level 1—Price quotations in active markets $ 2,193 $ 517
Level 2—Significant other observable inputs 854,107 906,192
Level 3—Significant unobservable inputs 3,398,980 3,452,571
Total $ 4,255,280 $ 4,359,280

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 8. Fair Value of Financial Instruments (continued)~~


	March 31, 2020 (Unaudited)					December 31, 2019
Valuation Inputs	Investments		Total Return Swap			Investments		Total Return Swap
Level 1—Price quotations in active markets	$	—	$	—		$	7	$	—
Level 2—Significant other observable inputs		796		—			1,594		—
Level 3—Significant unobservable inputs		6,238		(1	)		6,480		(4	)
Investments measured at net asset value⁽¹⁾		430		—			510		—

Total	$	7,464	$	(1	)	$	8,591	$	(4	)

(1)

Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company’s interest rate swaps were categorized as follows in the fair value hierarchy:

September 30, 2019
(Unaudited) December 31, 2018
Valuation Inputs Assets Liability Asset Liability
Level 1—Price quotations in active markets $ — $ — $ — $ —
Level 2—Significant other observable inputs — (13,947) — (1,743)
Level 3—Significant unobservable inputs — — — —
Total $ — $ (13,947) $ — $ (1,743)


	March 31, 2020 (Unaudited)					December 31, 2019
Valuation Inputs	Assets		Liability			Asset		Liability
Level 1—Price quotations in active markets	$	—	$	—		$	—	$	—
Level 2—Significant other observable inputs		—		(59	)		—		(29	)
Level 3—Significant unobservable inputs		—		—			—		—

Total	$	—	$	(59	)	$	—	$	(29	)

The Company’s investments consist primarily of debt investments that were acquired directly from the issuer. Debt investments, for which broker quotes are not available, are valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, the borrower’s ability to adequately service its debt, prevailing interest rates for like investments, expected cash flows, call features, anticipated repayments and other relevant terms of the investments. Except as described below, all of the Company’s equity/other investments are also valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. An investment that is newly issued and purchased near the date of the financial statements is valued at cost if the Company’s board of directors determines that the cost of such investment is the best indication of its fair value. Such investments described above are typically classified as Level 3 within the fair value hierarchy. Investments that are traded on an active public market are valued at their closing price as of the date of the financial statements and are classified as Level 1 within the fair value hierarchy. Except as described above, the Company typically values its other investments and interest rate swaps by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which are provided by independent third-party pricing services and screened for validity by such services and are typically classified as Level 2 within the fair value hierarchy.

The Company periodically benchmarks the bid and ask prices it receives from the third-party pricing services and/or dealers and independent valuation firms as applicable, against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management in purchasing and

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

selling these investments, the Company believes that these prices are reliable indicators of fair value. The valuation committee and the board of directors reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with the Company’s valuation policy.

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 8. Fair Value of Financial Instruments (continued)~~

The following is a reconciliation for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ of investments for which significant unobservable inputs (Level 3) were used in determining fair value:


	For the Three Months Ended March 31, 2020
	Senior Secured Loans—First Lien			Senior Secured Loans—Second Lien			Other Senior Secured Debt			Subordinated Debt			Asset Based Finance			Equity/ Other			Total
Fair value at beginning of period	$	4,905		$	570		$	95		$	80		$	485		$	345		$	6,480
Accretion of discount (amortization of premium)		2			0			0			0			0			0			2
Net realized gain (loss)		(189	)		0			—			—			1			6			(182	)
Net change in unrealized appreciation (depreciation)		(101	)		(58	)		(28	)		(8	)		(35	)		(98	)		(328	)
Purchases		1,007			13			—			55			146			18			1,239
Paid-in-kind interest		1			0			3			2			8			3			17
Sales and repayments		(930	)		0			—			(27	)		(18	)		(15	)		(990	)
Net transfers in or out of Level 3		—			—			—			—			—			—			—

Fair value at end of period	$	4,695		$	525		$	70		$	102		$	587		$	259		$	6,238

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(219	)	$	(53	)	$	(28	)	$	(3	)	$	(25	)	$	(84	)	$	(412	)
	$	(219	)	$	(53	)	$	(28	)	$	(3	)	$	(25	)	$	(84	)	$	(412	)


	For the Three Months Ended March 31, 2019
	Senior Secured Loans—First Lien			Senior Secured Loans—Second Lien			Other Senior Secured Debt			Subordinated Debt			Asset Based Finance			Equity/ Other			Total
Fair value at beginning of period	$	2,828		$	212		$	95		$	6		$	46		$	265		$	3,452
Accretion of discount (amortization of premium)		1			0			0			0			0			0			1
Net realized gain (loss)		(2	)		—			—			—			0			(10	)		(12	)
Net change in unrealized appreciation (depreciation)		(9	)		(1	)		(3	)		1			0			23			11
Purchases		291			65			1			33			—			4			394
Paid-in-kind interest		1			0			1			—			1			2			5
Sales and repayments		(87	)		—			—			—			(1	)		—			(88	)
Net transfers in or out of Level 3		2			—			—			—			—			—			2

Fair value at end of period	$	3,025		$	276		$	94		$	40		$	46		$	284		$	3,765

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	0		$	14		$	(3	)	$	(9	)	$	(1	)	$	0		$	1
	$	0		$	14		$	(3	)	$	(9	)	$	(1	)	$	0		$	1

For the Nine Months Ended September 30, 2019
Senior
Secured
Loans—
First Lien Senior
Secured
Loans—
Second Lien Other
Senior
Secured
Debt Subordinated
Debt Asset Based
Finance Equity/
Other Total
Fair value at beginning of period $ 2,827,812 $ 212,290 $ 95,132 $ 6,201 $ 48,160 $ 262,976 $ 3,452,571
Accretion of discount (amortization
of premium) 2,354 218 395 6 6 1,128 4,107
Net realized gain (loss) (1,677) — 2 — 964 (10,609) (11,320)
Net change in unrealized appreciation (depreciation) (52,682) (16,028) (3,347) 84 (5,962) 5,539 (72,396)
Purchases 551,815 133,559 14,372 32,615 90,122 5,138 827,621
Paid-in-kind interest 2,620 1,437 1,208 3,213 1,654 5,492 15,624
Sales and repayments (816,666) (5,979) (2,356) — (11,931) (5,969) (842,901)
Net transfers in or out of Level 3 25,674 — — — — — 25,674
Fair value at end of period $ 2,539,250 $ 325,497 $ 105,406 $ 42,119 $ 123,013 $ 263,695 $ 3,398,980
The amount of total gains or losses for
the period included in changes in net
assets attributable to the change in
unrealized gains or losses relating to
investments still held at the reporting
date $ (56,012) $ (16,133) $ 373 $ (235) $ (3,090) $ (1,895) $ (76,992)

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

For the Nine Months Ended September 30, 2018
Senior
Secured
Loans—
First Lien Senior
Secured
Loans—
Second Lien Other
Senior
Secured
Debt Subordinated
Debt Asset Based
Finance Equity/
Other Total
Fair value at beginning of period $ 3,436,962 $ 311,243 $ 125,003 $ 345,263 $ 52,779 $ 319,976 $ 4,591,226
Accretion of discount (amortization
of premium) 2,272 57 414 — 4 117 2,864
Net realized gain (loss) (25,716) 611 (1,846) — — 32,186 5,235
Net change in unrealized appreciation (depreciation) (97,582) (30,940) (4,537) (783) (5,601) (10,643) (150,086)
Purchases 826,657 92,816 3,370 18,783 1,135 31,042 973,803
Paid-in-kind interest 3,773 1,355 2,636 69 2,375 3,065 13,273
Sales and repayments (841,856) (134,310) (18,746) (58,151) (1,741) (96,180) (1,150,984)
Net transfers in or out of Level 3 (392,341) (82,452) (7,058) (303,910) — (5,686) (791,447)
Fair value at end of period $ 2,912,169 $ 158,380 $ 99,236 $ 1,271 $ 48,951 $ 273,877 $ 3,493,884
The amount of total gains or losses for
the period included in changes in net
assets attributable to the change in
unrealized gains or losses relating to
investments still held at the reporting
date $ (85,545) $ (30,579) $ (5,579) $ (188) $ (5,601) $ 18,927 $ (108,565)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows:

Type of Investment

Fair Value at
March 31, 2020
(Unaudited)⁽¹⁾

Valuation
Technique⁽²⁾

Unobservable Input

Range

(Weighted Average)⁽³⁾

Impact to
Valuation from
an Increase in
Input⁽⁴⁾

Senior Debt

4,552

Discounted Cash Flow

Discount Rate

6.7% - 23.2% (9.3%)

Decrease

573

Waterfall

EBITDA Multiple

0.1x - 12.5x (6.9x)

Increase

165

Other

Subordinated Debt

102

Discounted Cash Flow

Discount Rate

10.6% - 17.5% (12.6%)

Decrease

Waterfall

EBITDA Multiple

9.3x - 9.3x (9.3x)

Increase

Asset Based Finance

312

Waterfall

EBITDA Multiple

1.0x - 9.5x (2.3x)

Increase

181

Discounted Cash Flow

Discount Rate

7.0% - 15.6% (10.1%)

Decrease

Cost

Other

Indicative Dealer Quotes

33.0% - 33.0% (33.0%)

Increase

Equity/Other

227

Waterfall

EBITDA Multiple

2.8x - 11.5x (7.1x)

Increase

Option Pricing Model

Equity Illiquidity Discount

50.0% - 60.0% (59.8%)

Decrease

Discounted Cash Flow

Discount Rate

16.7% - 16.7% (16.7%)

Decrease

Other

Total

6,238

(1)	Certain investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value.

(2)

For the assets and investments that have more than one valuation technique, the Company may rely on the stated techniques individually or in the aggregate based on a weight ascribed to each valuation technique, ranging from 0—100%. Indicative dealer quotes obtained for valuation purposes are reviewed by the Company relative to other valuation techniques.

(3)	Weighted average amounts are based on the estimated fair values.

(4)

This column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements.

(5)	Fair value based on expected outcome of proposed corporate transactions and/or other factors.

Type of Investment

Fair Value at
December 31, 2019

Valuation
Technique⁽¹⁾

Unobservable
Input

Range

(Weighted Average)

Impact to
Valuation from
an Increase in
Input⁽²⁾

Senior Debt

4,816

Discounted Cash Flow

Discount Rate

6.4% - 27.5% (9.9%)

Decrease

362

Cost

257

Waterfall

EBITDA Multiple

0.1x - 8.5x (5.5x)

Increase

135

Other⁽³⁾

Subordinated Debt

Discounted Cash Flow

Discount Rate

9.3% - 20.8% (13.9%)

Decrease

Asset Based Finance

229

Waterfall

EBITDA Multiple

1.0x - 13.0x (1.4x)

Increase

105

Cost

102

Discounted Cash Flow

Discount Rate

7.8% - 12.9% (9.8%)

Decrease

Other⁽³⁾

Indicative Dealer Quotes

61.0% - 61.0% (61.0%)

Increase

Equity/Other

314

Waterfall

EBITDA Multiple

0.5x - 14.0x (7.7x)

Increase

Other⁽³⁾

Option Pricing Model

Equity Illiquidity Discount

30.0% - 30.0% (30.0%)

Decrease

Total

6,480

Total Return Swap

)

Indicative Dealer Quotes

0.0% - 100.6% (70.0%)

Increase

(1)

Investments using a market quotes valuation technique were primarily valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by independent third-party pricing services and screened for validity by such services. Investments valued using an EBITDA multiple or a revenue multiple pursuant to the market comparables valuation technique may be conducted using an enterprise valuation waterfall analysis.

Type of Investment
Fair Value at
September 30,
2019
(Unaudited)(1)

Valuation
Technique(2)
Unobservable Input
Range(3)

Impact to
Valuation from
an Increase in
Input(4)

Senior Debt $ 2,617,572 Discounted Cash Flow Discount Rate 6.5% – 16.7% (9.6)% Decrease
173,465 Waterfall EBITDA Multiple 0.1x – 8.8x (5.1x) Increase
132,574 Cost
46,542 Other(5)
Subordinated Debt 41,913 Discounted Cash Flow Discount Rate 13.2% – 18.0% (13.8)% Decrease
206 Waterfall EBITDA Multiple 9.9x – 9.9x (9.9x) Increase
Asset Based Finance 51,753 Discounted Cash Flow Discount Rate 7.8% – 12.9% (9.8)% Decrease
27,184 Waterfall EBITDA Multiple 1.0x – 13.5x (1.3x) Increase
20,317 Other(5)
18,195 Cost
5,564 Indicative Dealer Quotes 63.0% – 63.0% (63.0)% Increase
Equity/Other 217,771 Waterfall EBITDA Multiple 0.6x – 14.3x (7.1x) Increase
45,143 Other(5)
781 Option Pricing Model Equity Illiquidity Discount 15.0% – 15.0% (15.0)% Decrease
Total $ 3,398,980

~~(1)~~

~~Certain investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value.~~

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

~~(2)~~

For the assets and investments that have more than one valuation technique, the Company may rely on the stated techniques individually or in the aggregate based on a weight ascribed to each valuation technique, ranging from 0 — 100%. Indicative dealer quotes obtained for valuation purposes are reviewed by the Company relative to other valuation techniques.

~~(3)~~

~~Weighted average amounts are based on the estimated fair values.~~

~~(4)~~

~~(5)~~

~~Fair value based on expected outcome of proposed corporate transactions and/or other factors.~~

Type of Investment Fair Value at
December 31, 2018
Valuation
Technique(1)
Unobservable Input Range Weighted
Average
Senior Secured Loans—
First Lien
$ 2,668,002 Market Comparables Market Yield (%) 5.5% – 16.8% 10.5%
EBITDA Multiples (x) 5.3x – 9.5x 6.9x
Revenue Multiples (x) 0.1x – 0.1x 0.1x
61,692 Other(2) Other N/A N/A
98,118 Cost Cost 99.0% – 100.0% 99.5%
Senior Secured Loans—
Second Lien
157,615 Market Comparables Market Yield (%) 8.9% – 15.0% 12.6%
8,316 Other(2) Other N/A N/A
46,359 Cost Cost 98.5% – 98.5% 98.5%
Other Senior Secured
Debt
95,132 Market Comparables Market Yield (%) 8.2% – 13.6% 9.7%
EBITDA Multiples (x) 7.0x – 8.5x 7.5x
Subordinated Debt 6,201 Market Comparables Market Yield (%) 12.0% – 20.0% 14.3%
EBITDA Multiples (x) 9.6x – 10.1x 9.9x
Asset Based Finance 24,385 Market Comparables Market Yield (%) 17.7% – 19.0% 18.4%
Net Aircraft Book Value Multiple (x) 1.0x – 1.0x 1.0x
21,767 Market Quotes Indicative Dealer Quotes 51.8% – 99.6% 61.9%
Equity/Other 223,197 Market Comparables Capacity Multiple $(/kW) $1,875.0 – $2,125.0 $2,000.0
EBITDA Multiples (x) 4.0x – 14.3x 7.6x
Net Aircraft Book Value Multiple (x) 1.0x – 1.0x 1.0x
Price to Book Multiple (x) 1.0x – 1.0x 1.0x
Production Multiples (Mboe/d) $25,000.0 – $38,750.0 $28,034.2
Production Multiples (MMcfe/d) $4,708.0 – $5,167.0 $4,937.5
Proved Reserves Multiples (Bcfe) $1.2 – $1.3 $1.2
Proved Reserves Multiples (Mmboe) $3.5 – $13.8 $5.4
PV-10 Multiples (x) 0.8x – 2.3x 1.7x
19,929 Discounted Cash
Flow Discount Rate (%) 11.8% – 13.8% 12.8%
471 Option Valuation
Model Volatility (%) 30.0% – 30.0% 30.0%
20,251 Other(2) Other N/A N/A
1,136 Cost Cost 100.0% – 100.0% 100.0%
Total $ 3,452,571

~~(1)~~

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 8. Fair Value of Financial Instruments (continued)~~

in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, in isolation, would result in a significantly lower (higher) fair value measurement. For investments utilizing an option valuation model valuation technique, a significant increase (decrease) in the volatility, in isolation, would result in a significantly higher (lower) fair value measurement.

~~(2)~~

~~Fair value based on expected outcome of proposed corporate transactions and/or other factors.~~

(2)

Represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements.

(3)	Fair value based on expected outcome of proposed corporate transactions and/or other factors.

Note 9. Financing Arrangements

The following tables present summary information with respect to the Company’s outstanding financing arrangements as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. For additional information regarding these financing arrangements, see the notes to the Company’s audited consolidated financial statements contained in its annual report on Form10-K for the year ended December 31, ~~2018.~~2019. Any significant changes to the Company’s financing arrangements during the three months ended ~~September 30, 2019~~March 31, 2020 are discussed below.

As of March 31, 2020
(Unaudited)

Arrangement

Type of Arrangement

Rate⁽¹⁾

Amount
Outstanding

Amount
Available

Maturity
Date

Senior Secured Revolving Credit Facility⁽²⁾

Revolving Credit Facility

L+2.00% - 2.25%⁽³⁾

837

⁽⁴⁾

928

November 7, 2024

Germantown Credit Facility⁽²⁾

Term Loan Credit Facility

L+2.50%

300

—

December 15, 2020

Darby Creek Credit Facility⁽²⁾

Revolving Credit Facility

L+1.95%

220

February 26, 2024

Dunlap Credit Facility⁽²⁾

Revolving Credit Facility

L+2.00%

400

100

February 26, 2024

Jefferson Square Credit Facility⁽²⁾

Revolving Credit Facility

L+2.50%

320

July 15, 2022

Juniata River Credit Facility⁽²⁾

Revolving Credit Facility

L+2.45%

720

130

October 11, 2021

Burholme Prime Brokerage Facility⁽²⁾

Prime Brokerage Facility

L+1.25%

September 26, 2020⁽⁶⁾

Broomall Prime Brokerage Facility⁽²⁾

Prime Brokerage Facility

L+1.25%

December 26, 2020⁽⁷⁾

Ambler Credit Facility⁽²⁾

Revolving Credit Facility

L+2.25%

123

November 22, 2024

Meadowbrook Run Credit Facility⁽²⁾

Revolving Credit Facility

L+2.25%

160

140

November 22, 2024

4.250% Notes due 2025⁽⁸⁾

Unsecured Notes

4.250%

475

—

February 14, 2025

Total

3,634

1,556

Center City Total Return Swap

Total Return Swap

L+1.55%

—

N/A⁽⁹⁾

Cheltenham Total Return Swap

Total Return Swap

L+1.60%

—

N/A⁽¹⁰⁾

As of December 31, 2019

Arrangement⁽²⁾

Type of Arrangement

Rate⁽¹⁾

Amount
Outstanding

Amount
Available

Maturity
Date

Senior Secured Revolving Credit Facility

Revolving Credit Facility

L+2.00% - 2.25%⁽³⁾

1,516

⁽⁵⁾

159

November 7, 2024

Germantown Credit Facility

Term Loan Credit Facility

L+2.50%

300

—

December 15, 2020

Darby Creek Credit Facility

Revolving Credit Facility

L+1.95%

215

February 26, 2024

Dunlap Credit Facility

Revolving Credit Facility

L+2.00%

405

February 26, 2024

Jefferson Square Credit Facility

Revolving Credit Facility

L+2.50%

370

July 15, 2022

Juniata River Credit Facility

Revolving Credit Facility

L+2.45%

730

120

October 11, 2021

Burholme Prime Brokerage Facility

Prime Brokerage Facility

L+1.25%

100

—

June 27, 2020⁽⁶⁾

Broomall Prime Brokerage Facility

Prime Brokerage Facility

L+1.25%

September 26, 2020⁽⁷⁾

Ambler Credit Facility

Revolving Credit Facility

L+2.25%

115

November 22, 2024

Meadowbrook Run Credit Facility

Revolving Credit Facility

L+2.25%

250

November 22, 2024

Total

3,809

816

Center City Total Return Swap

Total Return Swap

L+1.55%

—

N/A⁽⁹⁾

Cheltenham Total Return Swap

Total Return Swap

L+1.60%

N/A⁽¹⁰⁾

(1)	LIBOR is subject to a 0% floor.

(2)	The carrying amount outstanding under the facility approximates its fair value.

(3)	The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.

As of September 30, 2019
(Unaudited)
Arrangement(1)
Type of Arrangement Rate Amount
Outstanding Amount
Available Maturity
Date
Green Creek Credit Facility Term Loan Credit Facility L+2.50% $ 500,000 $ — December 15, 2019
Cooper River Credit Facility Revolving Credit Facility L+2.75% 44,500 155,500 March 31, 2021
Darby Creek Credit Facility Revolving Credit Facility L+1.95% 185,000 65,000 February 26, 2024
Juniata River Credit Facility Revolving Credit Facility L+2.68% 680,000 170,000 October 11, 2020
Senior Secured Revolving Credit Facility Revolving Credit Facility
L+2.00% –
2.25%(2)
418,874(3) 306,126 August 9, 2023
Total $ 1,828,374 $ 696,626
As of December 31, 2018
Arrangement(1)
Type of Arrangement Rate Amount
Outstanding Amount
Available Maturity
Date
Green Creek Credit Facility Term Loan Credit Facility L+2.50% $ 500,000 $ — December 15, 2019
Cooper River Credit Facility Revolving Credit Facility L+2.25% 107,000 93,000 May 29, 2020
Darby Creek Credit Facility Revolving Credit Facility L+2.50% 135,000 115,000 August 19, 2020
Juniata River Credit Facility Term Loan Credit Facility L+2.68% 850,000 — October 11, 2020
Senior Secured Revolving Credit Facility Revolving Credit Facility
L+2.00% –
2.25%(2)
298,254(4) 351,746 August 9, 2023
Total $ 1,890,254 $ 559,746

~~(1)~~

~~The carrying amount outstanding under the facility approximates its fair value.~~

~~(2)~~

~~The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.~~

~~(3)~~

Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €60,350 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.09 as of September 30, 2019 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $104,750 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.76 as of September 30, 2019 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $64,300 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.67 as of September 30, 2019 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £22,500 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.23 as of September 30, 2019 to reflect total amount outstanding in U.S. dollars.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 9. Financing Arrangements (continued)

~~(4)~~

(4)

Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €231 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $148 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.71 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $245 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.61 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £183 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.25 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars.

(5)

Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €232 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.12 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $151 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.77 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $238 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.70 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £112 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.33 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars.

(6)	The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility.

(7)	The Broomall Prime Brokerage Facility generally is terminable upon 270 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility.

(8)	As of March 31, 2020, the fair value of the 4.250% notes was approximately $366. The valuation is considered a Level 2 valuation within the fair value hierarchy.

(9)

Center City Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past September 30, 2019 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.

(10)

Cheltenham Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past February 19, 2020 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in ~~U.S. dollars, Euros,~~millions, except share and Canadian Dollars. Euro balance outstanding of €1,500 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.13 as of December 31, 2018 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $63,500 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.77 as of December 31, 2018 to reflect total amount outstanding in U.S. dollars.

per share amounts)

Note 9. Financing Arrangements (continued)

For the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the components of total interest expense for the Company’s financing arrangements were as follows:

Three Months Ended September 30,
2019 2018
Arrangement(1)

Direct Interest
Expense(2)
Amortization of
Deferred
Financing Costs Total Interest
Expense
Direct Interest
Expense(2)
Amortization of
Deferred
Financing Costs Total Interest
Expense
Green Creek Credit Facility $ 6,069 $ 136 $ 6,205 $ 6,187 $ 315 $ 6,502
Cooper River Credit Facility 958 128 1,086 1,901 117 2,018
Wissahickon Creek Credit Facility — — — 1,118 1,816 2,934
Darby Creek Credit Facility 2,204 134 2,338 2,243 139 2,382
Dunning Creek Credit Facility — — — 268 — 268
Juniata River Credit Facility 9,347 384 9,731 10,907 370 11,277
FSIC II Revolving Credit Facility — — — 11 4 15
Senior Secured Revolving Credit Facility 4,342 267 4,609 1,395 133 1,528
Total $ 22,920 $ 1,049 $ 23,969 $ 24,030 $ 2,894 $ 26,924

~~(1)~~

Borrowings of each of the Company’s wholly owned, special-purpose financing subsidiaries are considered borrowings of the Company for purposes of complying with the asset coverage requirements applicable to BDCs under the 1940 Act.

~~(2)~~

~~Direct interest expense includes the effect of non-usage fees.~~

Nine Months Ended September 30,
2019 2018
Arrangement(1)

Direct Interest
Expense(2)
Amortization of
Deferred
Financing Costs Total Interest
Expense
Direct Interest
Expense(2)
Amortization of
Deferred
Financing Costs Total Interest
Expense
Green Creek Credit Facility $ 19,058 $ 404 $ 19,462 $ 17,225 $ 583 $ 17,808
Cooper River Credit Facility 3,867 381 4,248 5,876 347 6,223
Wissahickon Creek Credit Facility — — — 6,342 2,342 8,684
Darby Creek Credit Facility 6,913 394 7,307 7,759 527 8,286
Dunning Creek Credit Facility — — — 2,914 136 3,050
Juniata River Credit Facility 30,849 1,117 31,966 30,767 1,095 31,862
FSIC II Revolving Credit Facility — — — 488 29 517
Senior Secured Revolving Credit Facility 15,302 762 16,064 1,395 133 1,528
Total $ 75,989 $ 3,058 $ 79,047 $ 72,766 $ 5,192 $ 77,958

~~(1)~~

~~(2)~~

~~Direct interest expense includes the effect of non-usage fees.~~


	Three Months Ended March 31,
	2020						2019
Arrangement⁽¹⁾	Direct Interest Expense⁽²⁾		Amortization of Deferred Financing Costs and Discount		Total Interest Expense		Direct Interest Expense⁽²⁾		Amortization of Deferred Financing Costs and Discount		Total Interest Expense
Green Creek Credit Facility	$	—	$	—	$	—	$	7	$	0	$	7
Germantown Credit Facility		3		—		3		—		—		—
Cooper River Credit Facility		—		—		—		2		0		2
Darby Creek Credit Facility		2		0		2		2		0		2
Dunlap Credit Facility		4		—		4		—		—		—
Jefferson Square Credit Facility		4		—		4		—		—		—
Juniata River Credit Facility		8		1		9		12		1		13
Senior Secured Revolving Credit Facility		11		0		11		6		0		6
Burholme Prime Brokerage Facility		1		—		1		—		—		—
Broomall Prime Brokerage Facility		0		—		—		—		—		—
Ambler Credit Facility		1		0		1		—		—		—
Meadowbrook Run Credit Facility		2		0		2		—		—		—
4.250% Notes due 2025		3		0		3		—		—		—

Total	$	39	$	1	$	40	$	29	$	1	$	30

(1)	Borrowings of each of the Company’s wholly owned, special-purpose financing subsidiaries are considered borrowings of the Company for purposes of complying with the asset coverage requirements applicable to BDCs under the 1940 Act.

(2)	Direct interest expense includes the effect ofnon-usage fees.

The Company’s average borrowings and weighted average interest rate, including the effect ofnon-usage fees, for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 were ~~$1,946,403~~$4,035 and ~~5.15%~~3.92%, respectively. As of ~~September 30,~~March 31, 2020, the Company’s weighted average effective interest rate on borrowings, including the effect ofnon-usage fees, was 3.94%.

The Company’s average borrowings and weighted average interest rate, including the effect ofnon-usage fees, for the three months ended March 31, 2019 were $2,154 and 5.31%, respectively. As of March 31, 2019, the Company’s weighted average effective interest rate on borrowings, including the effect ofnon-usage fees, was ~~4.78%~~5.29%.

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 9. Financing Arrangements (continued)~~

The Company’s average borrowings and weighted average interest rate, including the effect of non-usage fees, for the nine months ended September 30, 2018 were $2,051,616 and 4.68%, respectively. As of September 30, 2018, the Company’s weighted average effective interest rate on borrowings, including the effect of non-usage fees, was 5.03%.

Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar financing arrangements. The Company was in compliance with all covenants required by its financing arrangements as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~

~~Juniata River~~2019.

Senior Secured Revolving Credit Facility

On ~~October 11, 2019, Juniata River~~March 3, 2020, the Company entered into a Commitment Increase Agreement in connection with its senior secured revolving credit facility, or as amended and restated, the Senior Secured Revolving Credit Facility, with FS KKR Capital Corp., as an additional borrower, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto, which, among other things, increased the total facility amount from $3,890 to $3,980 and increased the sublimit of the total facility amount available for the Company to borrow from $1,675 to $1,765.

4.250% Notes due 2025

On February 14, 2020, the Company issued $475 aggregate principal amount of 4.250% notes due 2025, or the Unsecured Notes. The Unsecured Notes will mature on February 14, 2025 and may be redeemed in whole or in part at the Company’s option

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 9. Financing Arrangements (continued)

at any time or from time to time at the applicable redemption price set forth in the indenture governing the Unsecured Notes. The Unsecured Notes bear interest at a rate of 4.250% per year, payable semi-annually.

The Unsecured Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The Unsecured Notes contain certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940, as amended, whether or not it is subject to those requirements, and to provide financial information to the holders of the Unsecured Notes if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the indenture governing the Unsecured Notes.

In addition, on the occurrence of a “change of control repurchase event,” as defined in the indenture governing the Unsecured Notes, the Company will generally be required to make an offer to purchase the outstanding Unsecured Notes at a price equal to 100% of the principal amount of such Unsecured Notes plus accrued and unpaid interest to the repurchase date.

Center City Funding Total Return Swap


Counterparty	Description	Termination Date	Value as of March 31, 2020
Citibank	A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate.	Prior to September 30, 2019 Citibank and Center City Funding mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.	$	1

On June 26, 2014, the Company’s wholly-owned financing subsidiary, Center City Funding LLC, or Center City Funding, a wholly owned special purpose financing subsidiary of the Company, entered into a TRS for a portfolio of primarily senior secured floating rate loans with Citibank, which has subsequently been amended.

As of March 31, 2020, the ~~first amendment~~fair value of the TRS was $1 which is reflected in the Company’s consolidated balance sheets as unrealized appreciation (depreciation) on total return swap. As of March 31, 2020, the payable due on the TRS was $0 which is reflected within other accrued expenses and liabilities on the Company’s consolidated balance sheets. As of March 31, 2020, all assets held within the TRS were sold.

As of March 31, 2020, the Company posted $1 in cash collateral held by Citibank (of which only $0 and was required to be posted). The cash collateral held by Citibank is reflected in the Company’s consolidated balance sheets as due from counterparty. The Company does not offset collateral posted in relation to the ~~Amended~~TRS with any unrealized appreciation (depreciation) outstanding on the consolidated balance sheets as of March 31, 2020.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and ~~Restated Loan Agreement with JPMorgan Chase Bank, N.A.,~~per share amounts)

Note 9. Financing Arrangements (continued)

For the three months ended March 31, 2020, transactions in the TRS resulted in net realized gain (loss) on total return swap of $(1) and net change unrealized appreciation (depreciation) on total return swap of $0 which are reflected in the Company’s consolidated statements of operations.

Cheltenham Funding Total Return Swap


Counterparty	Description	Termination Date	Value as of March 31, 2020
Citibank	A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate.	Prior to February 1, 2020 Citibank and Cheltenham Funding mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Cheltenham Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS.	$	(2	)

On January 19, 2016, the Company’s wholly-owned financing subsidiary, Cheltenham Funding LLC, or ~~JPMorgan, as lender and administrative agent, Wells Fargo Bank, or Wells Fargo, as collateral agent, collateral administrator and securities intermediary and~~Cheltenham Funding, a wholly owned special purpose financing subsidiary of the Company, ~~as investment manager,~~entered into a TRS for a portfolio of primarily senior secured floating rate loans with Citibank, which ~~among other matters, (i) extended~~has subsequently been amended.

As of March 31, 2020, the ~~maturity date~~fair value of the ~~facility~~TRS was $(2) which is reflected in the Company’s consolidated balance sheets as unrealized appreciation (depreciation) on total return swap. As of March 31, 2020, the payable due on the TRS was $1 which is reflected within other accrued expenses and liabilities on the Company’s consolidated balance sheets. As of March 31, 2020, all assets held within the TRS were sold.

As of March 31, 2020, the Company posted $4 in cash collateral held by Citibank (of which only $4 and was required to ~~October 11, 2021, (ii) extended~~be posted). The cash collateral held by Citibank is reflected in the ~~reinvestment period~~Company’s consolidated balance sheets as due from counterparty. The Company does not offset collateral posted in relation to the TRS with any unrealized appreciation (depreciation) outstanding on the consolidated balance sheets as of March 31, 2020.

For the ~~facility to October 12,~~three months ended March 31, 2020, transactions in the TRS resulted in net realized gain (loss) on total return swap of $(1) and ~~will require mandatory repayment~~net change unrealized appreciation (depreciation) on total return swap of ~~any advances outstanding~~$3 which are reflected in ~~excess~~the Company’s consolidated statements of $550,000 on that date, (iii) decreased the margin payable on borrowings to 2.45% over three-month LIBOR, (iv) increased the maximum advance rate to sixty percent (60%), and (v) reduced the required minimum utilization of the facility to $440,000.

operations.

Note 10. Commitments and Contingencies

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. The Advisor has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.

FS KKR Capital Corp. II

Notes to Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Note 10. Commitments and Contingencies (continued)

Unfunded commitments to provide funds to portfolio companies are not recorded in the Company’s consolidated balance sheets. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company has sufficient liquidity to fund these commitments. As of ~~September 30, 2019,~~March 31, 2020, the Company’s unfunded commitments consisted of the following:


Category/Company⁽¹⁾	Commitment Amount
Senior Secured Loans—First Lien
5 Arch Income Fund 2, LLC	$	16.2
All Systems Holding LLC		3.0
Apex Group Limited		2.2
Aspect Software Inc		1.9
Bellatrix Exploration Ltd		0.8
Conservice LLC		2.9
Conservice LLC		2.3
CSafe Global		13.2
Eagle Family Foods Inc		5.2
Entertainment Benefits Group LLC		0.9
Greystone Equity Member Corp		2.5
Heniff Transportation Systems LLC		5.6
HM Dunn Co Inc		1.5
Industria Chimica Emiliana Srl		14.8
J S Held LLC		13.5
J S Held LLC		3.3
Kellermeyer Bergensons Services LLC		40.6
Kodiak BP LLC		10.7
Lexitas Inc		4.3
Lexitas Inc		2.9
Monitronics International Inc		39.3
Motion Recruitment Partners LLC		34.6
P2 Energy Solutions Inc		5.4
Pretium Packaging LLC		22.4
RSC Insurance Brokerage Inc		19.1
RSC Insurance Brokerage Inc		3.6
SMART Global Holdings Inc		0.1
Sungard Availability Services Capital Inc		2.3
Truck-Lite Co LLC		4.8
Truck-Lite Co LLC		18.6
Zeta Interactive Holdings Corp		4.4
Subordinated Debt
Opendoor Labs Inc		53.6
Asset Based Finance
Home Partners JV, Structured Mezzanine		19.5

Total	$	376.0

Unfunded Asset Based Finance / Other commitments	$	245.1

(1)	May be commitments to one or more entities affiliated with the named company.

~~TABLE OF CONTENTS~~

FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 10. Commitments and Contingencies (continued)

Category/Company (1)
Commitment
Amount
Senior Secured Loans—First Lien
5 Arch Income Fund 2, LLC $ 42,984
All Systems Holding LLC 214
Apex Group Limited 2,248
Aspect Software Inc 865
Conservice LLC 1,687
Conservice LLC 1,440
CSafe Global 3,757
CSafe Global 12,522
Eagle Family Foods Inc 2,364
Entertainment Benefits Group LLC 2,347
HM Dunn Co Inc 1,644
Industria Chimica Emiliana Srl 7,973
J S Held LLC 3,604
J S Held LLC 8,372
Kodiak BP LLC 5,082
Greystone Equity Member Corp 3,607
Lipari Foods LLC 25,220
Monitronics International Inc 29,673
North Haven Cadence Buyer Inc 2,625
North Haven Cadence Buyer Inc 17,792
Sungard Availability Services Capital Inc 615
Zeta Interactive Holdings Corp 4,929
Asset Based Finance
Home Partners JV, Structured Mezzanine 13,030
Total $ 194,594
Unfunded equity/other commitments $ 150,447

~~(1)~~

~~May be commitments to one or more entities affiliated with the named company.~~

As of ~~September 30, 2019,~~March 31, 2020, the Company’s debt commitments are comprised of $96.2 revolving credit facilities and $279.8 of delayed draw term loans, which generally are used for acquisitions or capital expenditures and are subject to certain performance tests. Such unfunded debt commitments have a fair value representing unrealized appreciation (depreciation) of ~~$(550)~~$(9.4). The ~~Company funds its equity investments as it receives funding notices~~Company’s unfunded Asset Based Finance/Other commitments generally require certain conditions to be met or actual approval from the Advisor prior to funding.

As of March 31, 2020, the Company also has an unfunded commitment to provide $371.9 of capital to COP. The capital commitment can be satisfied with contributions of cash and/or investments. The capital commitments cannot be drawn without an affirmative vote by both the Company’s and SCRS’s representatives on COP’s board of managers.

While the Company does not expect to fund all of its unfunded commitments, there can be no assurance that it will not be required to do so.

In the normal course of business, the Company may enter into guarantees on behalf of portfolio companies. ~~As of September 30, 2019,~~Under such arrangements, the ~~Company’s unfunded equity/other commitments have a fair value of zero.~~

~~TABLE OF CONTENTS~~

~~FS Investment Corporation II~~

~~Notes~~Company would be required to ~~Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share~~make payments to third parties if the portfolio companies were to default on their related payment obligations. The Company has no such guarantees outstanding at March 31, 2020 and ~~per share amounts)~~

December 31, 2019.

Note 11. Financial Highlights

The following is a schedule of financial highlights of the Company for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and the year ended December 31, ~~2018:~~2019:


	Three Months Ended March 31, 2020 (Unaudited)			Year Ended December 31, 2019
Per Share Data:⁽¹⁾
Net asset value, beginning of period	$	7.36		$	7.86
Results of operations⁽²⁾
Net investment income		0.14			0.70
Net realized gain (loss) and unrealized appreciation (depreciation)		(1.18	)		(0.42	)

Net increase (decrease) in net assets resulting from operations		(1.04	)		0.28

Stockholder distributions⁽³⁾
Distributions from net investment income		(0.15	)		(0.75	)

Net decrease in net assets resulting from stockholder distributions		(0.15	)		(0.75	)

Capital share transactions
Issuance of common stock⁽⁴⁾		—			—
Repurchases of common stock⁽⁵⁾		—			—
Deduction of deferred costs⁽⁶⁾		—			(0.03	)

Net increase (decrease) in net assets resulting from capital share transactions		—			(0.03	)

Net asset value, end of period	$	6.17		$	7.36

Shares outstanding, end of period		678,379,301			678,379,301

Total return⁽⁷⁾		(14.13	)%		2.96	%

Total return (without assuming reinvestment of distributions)⁽⁷⁾		(14.13	)%		3.18	%

Ratio/Supplemental Data:
Net assets, end of period	$	4,186		$	4,996

Ratio of net investment income to average net assets⁽⁸⁾		7.58	%		9.07	%
Ratio of operating expenses and excise taxes to average net assets⁽⁸⁾		8.31	%		8.46	%
Ratio of net operating expenses and excise taxes to average net assets⁽⁸⁾		8.31	%		8.46	%
Portfolio turnover⁽⁹⁾		15.67	%		53.43	%
Total amount of senior securities outstanding, exclusive of treasury securities	$	3,636		$	3,809
Asset coverage per unit⁽¹⁰⁾		2.15			2.31

Nine Months Ended
September 30, 2019
(Unaudited) Year Ended
December 31, 2018
Per Share Data:(1)
Net asset value, beginning of period $ 7.86 $ 8.73
Results of operations(2)
Net investment income 0.54 0.73
Net realized gain (loss) and unrealized appreciation (depreciation) (0.24) (0.85)
Net increase (decrease) in net assets resulting from operations 0.30 (0.12)
Stockholder distributions(3)
Distributions from net investment income (0.57) (0.75)
Net decrease in net assets resulting from stockholder distributions (0.57) (0.75)
Capital share transactions
Issuance of common stock(4)
— —
Repurchases of common stock(5)
— —
Net increase (decrease) in net assets resulting from capital share transactions — —
Net asset value, end of period $ 7.59 $ 7.86
Shares outstanding, end of period 329,433,102 326,445,320
Total return(6)
3.62% (1.64)%
Total return (without assuming reinvestment of distributions)(6)
3.82% (1.37)%
Ratio/Supplemental Data:
Net assets, end of period $ 2,498,755 $ 2,567,409
Ratio of net investment income to average net assets(7)
9.12% 8.68%
Ratio of operating expenses and excise taxes to average net assets(7)
8.60% 8.12%
Ratio of net operating expenses and excise taxes to average net assets(7)
8.60% 7.99%
Portfolio turnover(8)
26.76% 43.12%
Total amount of senior securities outstanding, exclusive of treasury securities $ 1,828,374 $ 1,890,254
Asset coverage per unit(9)
2.37 2.36

~~(1)~~

~~Per share data may be rounded in order to recompute the ending net asset value per share.~~

~~(2)~~

~~The per share data was derived by using the weighted average shares outstanding during the applicable period.~~

~~(3)~~

~~The per share data for distributions reflects the actual amount of distributions paid per share during the applicable period.~~

~~(4)~~

The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at a price that is greater than the net asset value per share results in an increase in net asset value per share.

~~(5)~~

~~The per share impact of the Company’s distribution reinvestment plan is a reduction to net asset value of less than $0.01 per share during the period.~~

~~(6)~~

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FS ~~Investment Corporation~~KKR Capital Corp. II

Notes to ~~Unaudited~~ Consolidated Financial Statements (continued)

(in ~~thousands,~~millions, except share and per share amounts)

Note 11. Financial Highlights (continued)

companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s investment portfolio during the applicable period and do not represent an actual return to stockholders.

~~(7)~~

Weighted average net assets during the applicable period are used for this calculation. Ratios for the nine months ended September 30, 2019 are annualized. Annualized ratios for the nine months ended September 30, 2019 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2019. The following is a schedule of supplemental ratios for the nine months ended September 30, 2019 and the year ended December 31, 2018:

Nine Months Ended
September 30, 2019
(Unaudited) Year Ended
December 31, 2018
Ratio of subordinated income incentive fees to average net assets 1.30% 0.91%
Ratio of interest expense to average net assets 4.13% 3.78%
Ratio of excise taxes to average net assets — 0.09%

~~(8)~~

~~Portfolio turnover for the nine months ended September 30, 2019 is not annualized.~~

~~(9)~~

Asset coverage per unit is the ratio of the carrying value of the Company’s total consolidated assets, less liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

(1)	Per share data may be rounded in order to recompute the ending net asset value per share.

(2)	The per share data was derived by using the weighted average shares outstanding during the applicable period.

(3)	The per share data for distributions reflect the actual amount of distributions paid per share during the applicable period.

(4)

(5)	The per share impact of the Company’s distribution reinvestment plan is a reduction to net asset value of less than $0.01 per share during the period.

(6)	As a result of the purchase price allocation for the Mergers, the Company permanently wrote off approximately $18 of deferred costs and prepaid assets from FSIC III, FSIC IV and CCT II’s balance sheets.

(7)

The total return based on net asset value for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share that were declared during the applicable period and dividing the total by the net asset value per share at the beginning of the period. Total return based on net asset value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of the Company’s common stock. The historical calculation of total return based on net asset value in the table should not be considered a representation of the Company’s future total return based on net asset value, which may be greater or less than the return shown in the table due to a number of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s investment portfolio during the applicable period and do not represent an actual return to stockholders.

(8)

Weighted average net assets during the applicable period are used for this calculation. Ratios for the three months ended March 31, 2020 are annualized. Annualized ratios for the three months ended March 31, 2020 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2020. The following is a schedule of supplemental ratios for the three months ended March 31, 2020 and the year ended December 31, 2019:


	Three Months Ended March 31, 2020 (Unaudited)			Year Ended December 31, 2019
Ratio of subordinated income incentive fees to average net assets		1.87	%		1.11	%
Ratio of interest expense to average net assets		3.26	%		4.04	%
Ratio of excise taxes to average net assets		—			0.04	%

(9)	Portfolio turnover for the three months ended March 31, 2020 is not annualized.

(10)	Asset coverage per unit is the ratio of the carrying value of the Company’s total consolidated assets, less liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Note 12. ~~Fund Mergers~~

~~Pending Mergers with FSIC III, FSIC IV and CCT II~~

Subsequent Events

On May 31, 2019, the Funds entered into the Merger Agreement with Merger Sub 1, Merger Sub 2, Merger Sub 3 and the Advisor. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, (i) Merger Sub 1 will merge with and into FSIC III, with FSIC III continuing as the surviving company and as a wholly-owned subsidiary of the Company, and, immediately thereafter, FSIC III will merge with and into the Company, with the Company continuing as the surviving company, (ii) Merger Sub 2 will merge with and into CCT II, with CCT II continuing as the surviving company and as a wholly-owned subsidiary of the Company, and, immediately thereafter, CCT II will merge with and into the Company, with the Company continuing as the surviving company and (iii) Merger Sub 3 will merge with and into FSIC IV, with FSIC IV continuing as the surviving company and as a wholly-owned subsidiary of the Company, and, immediately thereafter, FSIC IV will merge with and into the Company, with the Company continuing as the surviving company. The parties to the Merger Agreement intend the Mergers to be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

In the Mergers, each share of FSIC III common stock, CCT II common stock and FSIC IV common stock issued and outstanding immediately prior to the effective time of Merger 1A, Merger 2A and Merger 3A, respectively, will be converted into the right to receive a number of shares of the Company’s common stock equal to an exchange ratio with respect to the applicable Merger, to be determined in connection with the closing of such Merger, or each, the applicable Exchange Ratio. The Exchange Ratio for each of Merger 1A, Merger 2A and Merger 3A will equal the net asset value per share of FSIC III common stock, CCT II common stock and FSIC IV common stock, respectively (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the applicable Merger), divided by the net asset value per share of the Company’s common stock (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the applicable Merger).

Consummation of the Mergers, which is currently anticipated to occur during the fourth quarter of 2019, is subject to certain closing conditions, including (1) requisite approvals of the applicable Funds’ stockholders, (2) certain required charter amendments for each of the Funds, (3) the absence of certain

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~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 12. Fund Mergers (continued)~~

legal impediments to the consummation of the Mergers, (4) effectiveness of the registration statement on Form N-14, which includes a joint proxy statement of the Funds and a prospectus of the Company, and (5) subject to certain exceptions, the accuracy of the representations and warranties and compliance with the covenants of each party to the Merger Agreement. Merger 1A (involving a wholly-owned subsidiary of the Company and FSIC III) is a condition precedent to each of the Mergers. Therefore, Merger 2A (including a wholly-owned subsidiary of the Company and CCT II) and Merger 3A (including a wholly-owned subsidiary of the Company and FSIC IV) will not occur unless Merger 1A also occurs. No other Merger is a condition precedent to any other Merger.

~~The Merger Agreement also contains certain termination rights in favor of each Fund including if the Mergers are not completed on or before May 31,~~5, 2020, ~~or if the requisite approvals of the applicable Fund’s stockholders are not obtained.~~

~~The Mergers are expected to be accounted for as asset acquisitions in accordance with the asset acquisition method of accounting as detailed in ASC 805-50,~~ ~~Business Combinations—Related Issues~~. Generally, under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than certain “non-qualifying” assets (for example cash) and does not give rise to goodwill. The final allocation of the purchase price will be determined after the Mergers are completed and after completion of a final analysis to determine the estimated relative fair values of CCT II’s, FSIC III’s and FSIC IV’s assets and liabilities.

In connection with the Mergers, the Company is seeking approval of an amendment to the investment advisory and administrative services agreement, to (a) reduce the annual base management fee from 1.5% to 1.0% on all assets financed using leverage over 1.0x debt to equity and exclude cash and cash equivalents from the gross assets on which the annual base management fee is calculated, (b) amend the hurdle rate applicable to the Company’s payment of a subordinated incentive fee on income to be based on net assets rather than adjusted capital, (c) revise the definition of pre-incentive net investment income to exclude interest expense and dividends paid on certain shares of preferred stock, (d) introduce a cap on subordinated incentive fees, (e) incorporate in the calculation of the incentive fee on capital gains the historical net realized losses and unrealized depreciation of FSIC III, CCT II and FSIC IV in addition to the Company and (f) implement certain other revisions to bring the investment advisory agreement of the Company in line with those of other listed business development companies.

Following the closing of the Mergers and subject to approval of the board of directors of the combined company, the Company currently intends to issue perpetual preferred stock of the Company with an aggregate liquidation preference representing approximately 20% of the combined company’s net asset value to holders of the Company’s common stock following the Mergers, or the Recapitalization Transaction. In addition, the Company currently intends to pursue a listing of the Company’s common stock on a national securities exchange, or the Listing, following the Mergers and the Recapitalization Transaction, subject to final board approval and market conditions. No assurance can be made regarding the timing of the Recapitalization Transaction or the Listing, or that the Listing or the Recapitalization Transaction will occur at all.

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~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 12. Fund Mergers (continued)~~

November 22, 2019 with respect to certain other proposals, including proposals necessary to consummate the Mergers and the Recapitalization Transaction. The stockholders of CCT II approved all proposals necessary to consummate the Mergers and the Recapitalization Transaction.

~~Note 13. Subsequent Events~~

On November 4, 2019, Cooper River LLC, a wholly owned financing subsidiary of the Company, repaid and terminated its revolving credit facility originally entered into May 29, 2015 with Citibank, N.A., as administrative agent and a lender, and the financial institutions and other lenders from time to time party thereto.

~~On November 7, 2019,~~ the Company entered into ~~an amended~~that certain Amendment No. 1 to Amended and ~~restated senior secured revolving credit facility,~~Restated Senior Secured Revolving Credit Agreement, or the ~~Amended and Restated~~Amendment, to the Senior Secured Revolving Credit Facility, with FS KKR Capital Corp., ~~or FSK, and FSIC III, as borrowers,~~ JPMorgan Chase Bank, N.A., ~~or JPMorgan,~~ as administrative agent, ING Capital LLC, ~~or ING,~~ as collateral agent, and the lenders party thereto ~~which amended~~to, among other things, (i) reset the minimum shareholders’ equity test at $2,720.9 plus 37.5% of net equity proceeds after April 15, 2021, (ii) remove the 0.9091 multiplier previously applicable to its borrowing base, and restated the senior secured revolving credit facility originally entered into on August 9, 2018, among the Company, FSK (as successor by merger to FS Investment Corporation and Corporate Capital Trust, Inc.) and FSIC III, as borrowers, JPMorgan, as administrative agent, ING, as collateral agent, and the lenders party thereto. The Amended and Restated Senior Secured Revolving Credit Facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an initial aggregate amount of up to $3,890,000 with an option for the Company to request, at one or more times, that existing and/or new lenders, at their election, provide up to $1,945,000 of additional commitments. The Amended and Restated Senior Secured Revolving Credit Facility initially provides for a sublimit available for the Company to borrow up to $837,500 of the total facility amount, subject to increase or reduction from time to time pursuant to the terms of the Amended and Restated Senior Secured Revolving Credit Facility and the oversight and approval of the Company’s board of directors. A sublimit of the total facility amount also is available to each of FSK and FSIC III, as additional borrowers, and the obligations of the other borrowers under the Amended and Restated Senior Secured Revolving Credit Facility are several (and not joint) in all respects. The Amended and Restated Senior Secured Revolving Credit Facility provides for the issuance of letters of credit in an initial aggregate face amount of up to $400,000, with a sublimit available for the Company to request the issuance of letters of credit in an aggregate face amount of up to $37,677, subject to increase or reduction from time to time pursuant to the terms of the Amended and Restated Senior Secured Revolving Credit Facility.

Availability under the Amended and Restated Senior Secured Revolving Credit Facility will terminate on November 7, 2023, or the Revolver Termination Date, and the outstanding loans under the Amended and Restated Senior Secured Revolving Credit Facility will mature on November 7, 2024. The Amended and Restated Senior Secured Revolving Credit Facility also requires mandatory prepayment of interest and principal upon certain events during the term-out period commencing on the Revolver Termination Date and at certain other times when the Company’s adjusted(iii) reduce its asset coverage ratio ~~is less than 185%.~~

Borrowings under the Amended and Restated Senior Secured Revolving Credit Facility are subject to compliance with a borrowing base test. Interest under the Amended and Restated Senior Secured Revolving Credit Facility for (i) loans for which the Company elects the base rate option, (A) (1)test (for so long as it remains a borrower that has not yet listed on a nationally recognized securities exchange in the Company remains unlisted, 0.25%, plus (2) if the value of the borrowing base is equal to or greater than 1.85 times the aggregate amount of certain outstanding indebtedness of the Company, or the Combined Debt Amount, is payable at an “alternate base rate” (which is the greatest of (a) the prime rate as publicly announced by JPMorgan, (b) the sum of (x) the greater of (I) the federal funds effective rate and (II) the overnight bank funding rate plus (y) 0.5%, and (c) the one month LIBOR plus 1% per annum) plus 0.75% and, (B) (1) so long as the Company remains unlisted, 0.25%, plus (2) if the value of the borrowing base is

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~~FS Investment Corporation II~~

~~Notes to Unaudited Consolidated Financial Statements (continued)~~
~~(in thousands, except share and per share amounts)~~

~~Note 13. Subsequent Events (continued)~~

less than 1.85 times the Combined Debt Amount, the alternate base rate plus 1.00%; and (ii) loans for which the Company elects the Eurocurrency option (A) (1) so long as the Company remains unlisted, 0.25%, plus (2) if the value of the borrowing base is equal to or greater than 1.85 times the Combined Debt Amount, is payable at a rate equal to LIBOR plus 1.75% and (B) (1) so long as the Company remains unlisted, 0.25%, plus (2) if the value of the borrowing base is less than 1.85 times the Combined Debt Amount, is payable at a rate equal to LIBOR plus 2.00%. The Company will pay a commitment fee of at least 0.375% and up to 0.50% per annum (based on the immediately preceding quarter’s average usage) on the unused portion of its sublimit under the Amended and Restated Senior Secured Revolving Credit Facility during the revolving period. The Company also will be required to pay letter of credit participation fees and a fronting fee on the average daily amount of any lender’s exposure with respect to any letters of credit issued at the request of the Company under the Amended and Restated Senior Secured Revolving Credit Facility.

In connection with the Amended and Restated Senior Secured Revolving Credit Facility, the Company has made certain representations and warranties and must comply with various covenants and reporting requirements customary for facilities of this type. In addition, the Company must comply with the following financial covenants: (a) the Company must maintainUnited States) from a minimum ~~shareholders’ equity, measured as~~ of ~~each fiscal quarter end; and (b) the Company must maintain at all times~~200% to a ~~150% asset coverage ratio (or, if greater, the statutory requirement then applicable to the Company).~~

~~The Amended and Restated Senior Secured Revolving Credit Facility contains events~~minimum of default customary for facilities of this type. Upon the occurrence of an event of default, JPMorgan, at the instruction of the lenders, may terminate the commitments and declare the outstanding advances and all other obligations under the Amended and Restated Senior Secured Revolving Credit Facility immediately due and payable.175%.

The Company’s obligations under the Amended and Restated Senior Secured Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries. The Company’s obligations under the Amended and Restated Senior Secured Revolving Credit Facility are secured by a first priority security interest in substantially all of the assets of the Company and certain of the Company’s subsidiaries.

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~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~
~~(in thousands, except share and per share amounts)~~

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations. (in millions, except share and per share amounts)

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form10-Q.

In this report, “we,” “us,” “our” and the “Company” refer to FS KKR Capital Corp. II and the “Advisor” refers to FS/KKR Advisor, LLC.

Forward-Looking Statements

Some of the statements in this quarterly report onForm 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report onForm 10-Q may include statements as to:

•

our future operating results;

•

our business prospects and the prospects of the companies in which we may ~~invest;~~invest, including our and their ability to achieve our respective objectives as a result of the currentCOVID-19 pandemic;

•

the impact of the investments that we expect to make;

•

the ability of our portfolio companies to achieve their objectives;

•

our current and expected financings and investments;

•

receiving and maintaining corporate credit ratings and changes in the general interest rate environment;

•

the adequacy of our cash resources, financing sources and working capital;

•

the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

actual and potential conflicts of interest with the ~~other funds advised by the~~ Advisor, ~~their respective current or future investment advisers~~FS Investments, KKR Credit or any of their ~~affiliates.~~respective affiliates;

•

the dependence of our future success on the general economy and its effect on the industries in which we may invest;

general economic and political trends and other external factors, including the currentCOVID-19 pandemic and related disruptions caused thereby;

•

our use of financial leverage;

•

the ability of the Advisor to locate suitable investments for us and to monitor and administer our investments;

•

the ability of the Advisor or its affiliates to attract and retain highly talented professionals;

•

our ability to maintain our qualification as a RIC and as a BDC;

•

the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the rules and regulations issued thereunder;

•

the effect of changes to tax legislation on us and the portfolio companies in which we may invest and our and their tax position; and

•

the tax status of the enterprises in which we may ~~invest; and~~invest.

•

~~the Mergers, the likelihood the Mergers are completed and the anticipated timing of their completion.~~

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report onForm 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. Factors that could cause actual results to differ materially include:

•

changes in the economy;

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•

risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or ~~natural disasters;~~pandemics; and

•

future changes in laws or regulations and conditions in our operating areas.

We have based the forward-looking statements included in this quarterly report onForm 10-Q on information available to us on the date of this quarterly report onForm 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the SEC, including annual reports onForm 10-K, quarterly reports onForm 10-Q and current reports onForm 8-K. The forward-looking statements and projections contained in this quarterly report onForm 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Overview

We were incorporated under the general corporation laws of the State of Maryland on July 13, 2011 and formally commenced investment operations on June 18, 2012. We are an externally managed,non-diversified,closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. In March 2014, we closed our continuous public offering of shares of common stock to new investors.

We are externally managed by the Advisor pursuant to an investment advisory agreement, or the investment advisory ~~and administrative services~~ agreement, and supervised by our board of directors, a majority of whom are independent. On April 9, 2018, GSO/Blackstone Debt Funds Management LLC, or GDFM, resigned as our investment sub-adviser and terminated its investment sub-advisory agreement effective April 9, 2018. In connection with GDFM’s resignation as our investment sub-adviser, on April 9, 2018, we entered into the investment advisory and administrative services agreement with the Advisor, which replaced an investment advisory and administrative services agreement, or the FSIC II Advisor investment advisory and administrative services agreement with our former investment adviser, FSIC II Advisor, LLC, or FSIC II Advisor.

Our investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. We seek to meet our investment objectives by:

utilizing the experience and expertise of the management team of the Advisor;

employing a defensive investment approach focused on long-term credit performance and principal protection;

focusing primarily on debt investments in a broad array of private U.S. companies, including middle-market companies, which we define as companies with annual EBITDA of $25 million to $100 million at the time of investment;

investing primarily in established, stable enterprises with positive cash flows; and

maintaining rigorous portfolio monitoring in an attempt to anticipate andpre-empt negative credit events within our portfolio, such as an event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company.

We pursue our investment objective by investing primarily in the debt of middle market U.S. companies with a focus on originated transactions sourced through the network of the Advisor and its affiliates. We define direct originations as any investment where the ~~Advisor~~Company’s investment adviser,sub-adviser or ~~its~~their affiliates ~~negotiates~~had negotiated the terms of the transaction beyond just the price, which, for example, may include negotiating financial covenants, maturity dates or interest rate terms. These directly originated transactions include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club, or similar transactions.

These direct originations include investments originated by our former investment adviser, our former investmentsub-adviser or their affiliates.

Our portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle market U.S. companies and, to a lesser extent, subordinated loans and certain-asset based financing loans of private U.S. companies. Although we do not expect a significant portion of our portfolio to be comprised of subordinated loans, there is no limit on the amount of such loans in which we may invest. We may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the ~~“over-the-counter”~~“over-the-counter” market or directly from our target companies as primary market or directly originated investments. In connection with our debt investments, we may on occasion receive equity interests such as warrants or options as additional consideration. We may also purchase or otherwise acquire interests in the form of common or preferred equity or equity-related securities, such as rights and warrants that may be converted into or exchanged for common stock or other equity or the cash value of common stock or other equity, ~~in our target companies, generally in conjunction with one of our debt investments,~~ including through ~~the restructuring of such investments, or through~~ aco-investment with a financial sponsor ~~such as~~or possibly the restructuring of, an ~~institutional investor or private equity firm.~~investment. In addition, a portion of our portfolio may be comprised of corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps. The Advisor will seek to tailor our

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investment focus as market conditions evolve.

Depending on market conditions, we may increase or decrease our exposure to less senior portions of the capital ~~structure~~structures of our portfolio companies or otherwise make opportunistic investments, such as where the market price of loans, bonds or other securities reflects a lower value than deemed warranted by the Advisor’s fundamental ~~analysis, which~~analysis. Such investment opportunities may occur due to general dislocations in the markets, a misunderstanding by the market of a particular company or an industry being out of favor with the broader investment community and may include event driven investments, anchor orders and structured products. The senior secured loans, second lien secured loans and senior secured bonds in which we invest generally have stated terms of three to seven years and subordinated debt investments that we make generally have stated terms of up to ten years, but the expected average life of such securities is generally ~~between~~ three ~~and seven~~to four years. However, ~~there is no limit on the~~we may invest in loans and securities with any maturity or ~~duration of any security in our portfolio.~~duration. Our debt investments may be rated by a NRSRO and, in such case, generally will carry a rating below investment grade (rated lower than “Baa3” by Moody’s, or lower than ~~“BBB-~~“BBB-” by S&P). We ~~also~~may invest without limit in ~~non-rated~~ debt ~~securities.~~

or other securities of any rating, as well as debt or other securities that have not been rated by a NRSRO.

Acquisitions of FS Investment Corporation III, FS Investment Corporation IV and Corporate Capital Trust II

On December 18, 2019, we completed the Mergers. Pursuant to the Merger Agreement, (i) Merger Sub 1 merged with and into FSIC III, with FSIC III continuing as the surviving company, and, immediately thereafter, FSIC III merged with and into the Company, with the Company continuing as the surviving company, (ii) Merger Sub 2 merged with and into CCT II, with CCT II continuing as the surviving company, and, immediately thereafter, CCT II merged with and into the Company, with the Company continuing as the surviving company, and (iii) Merger Sub 3 merged with and into FSIC IV, with FSIC IV continuing as the surviving company, and, immediately thereafter, FSIC IV merged with and into the Company, with the Company continuing as the surviving company. In accordance with the terms of the Merger Agreement, upon the closing of the transactions contemplated by the Merger Agreement, (i) each outstanding share of FSIC III common stock was converted into the right to receive 0.9804 shares of our common stock, (ii) each outstanding share of beneficial interest of CCT II was converted into the right to receive 1.1319 shares of our common stock and (iii) each outstanding share of FSIC IV common stock was converted into the right to receive 1.3634 shares of our common stock. As a result, we issued an aggregate of approximately 289,084,117 share of our common stock to former FSIC III stockholders, 14,031,781 shares of our common stock to former CCT II stockholders and 43,668,803 shares of our common stock to former FSIC IV stockholders. Following the consummation of the Mergers, we entered into the investment advisory agreement, which replaced the prior investment advisory and administrative services agreement.

Revenues

The principal measure of our financial performance is net increase in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net unrealized appreciation or depreciation on investments and net unrealized ~~appreciation~~gain or ~~depreciation~~loss on foreign currency. Net investment income is the difference between our income from interest, dividends, fees and other investment income and our operating and other expenses. Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions. Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations. Net unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments. Net unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations.

We principally generate revenues in the form of interest income on the debt investments we hold. In addition, we generate revenues in the form ofnon-recurring commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees. We may also generate revenues in the form of dividends and other distributions on the equity or other securities we hold.

Expenses

Our primary operating expenses include the payment of management and incentive fees and other expenses under the investment advisory agreement and ~~administrative services~~the administration agreement, interest expense from financing arrangements and other indebtedness, and other expenses necessary for our operations. The management and incentive fees compensate the Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

The Advisor oversees ourday-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other administrative services. The

Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports for our stockholders and reports filed with the SEC. In addition, the Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Pursuant to the ~~investment advisory and administrative services~~administration agreement, we reimburse the Advisor for expenses necessary to perform services related to our administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain personnel of FS Investments and KKR Credit providing administrative services to us on behalf of the Advisor. We

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reimburse the Advisor no less than ~~monthly~~quarterly for all costs and expenses ~~necessary to perform services related to our~~incurred by the Advisor in performing its obligations and providing personnel and facilities under the administration and operations. The amount of this reimbursement is set at the lesser of (1) the Advisor’s actual costs incurred in providing such services and (2) the amount that we estimate we would be required to pay alternative service providers for comparable services in the same geographic location.agreement. The Advisor allocates the cost of such services to us based on factors such as total assets, revenues, time allocations and/or other reasonable metrics. Our board of directors reviews the methodology employed in determining how the expenses are allocated to us and the proposed allocation of administrative expenses among us and certain affiliates of the Advisor. Our board of directors then assesses the reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of directors compares the total amount paid to the Advisor for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs.

We bear all other expenses of our operations and transactions, including ~~(without limitation) fees and expenses relating to:~~

•

~~corporate and organization expenses relating to offerings of our securities, subject to limitations included in the investment advisory and administrative services agreement;~~

•

~~the cost of calculating our net asset value, including the cost of any third-party pricing or valuation services;~~

•

~~the cost of effecting sales and repurchases of shares of our common stock and other securities;~~

•

~~investment advisory fees;~~

•

fees payable to third parties relating to, or associated with, making investments and valuing investments, including fees and expenses associated with performing due diligence reviews of prospective investments;

•

~~interest payments on our debt or related obligations;~~

•

~~transfer agent and custodial fees;~~

•

research and market data (including news and quotation equipment and services, and any computer hardware and connectivity hardware (e.g., telephone and fiber optic lines) incorporated into the cost of obtaining such research and market data);

•

~~fees and expenses associated with marketing efforts;~~

•

~~federal and state registration fees;~~

•

~~federal, state and local taxes;~~

•

~~fees and expenses of directors not also serving in an executive officer capacity for us or the Advisor;~~

•

~~costs of proxy statements, stockholders’ reports, notices and other filings;~~

•

~~fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums;~~

•

~~direct costs such as printing, mailing, long distance telephone and staff;~~

•

~~fees and expenses associated with accounting, corporate governance, government and regulatory affairs activities, independent audits and outside legal costs;~~

•

~~costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws, including compliance with the Sarbanes-Oxley Act;~~

•

~~brokerage commissions for our investments;~~

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•

~~and~~ all other expenses incurred by the Advisor ~~or us in connection with administering our business, including expenses incurred by the Advisor~~ in performing ~~administrative~~ services for us and administrative personnel paid by the Advisor, to the extent they are not controlling persons of the Advisor or any of its affiliates, subject to the limitations included in the investment advisory agreement and ~~administrative services~~the administration agreement.

In addition, we have contracted with State Street Bank and Trust Company to provide various accounting and administrative services, including, but not limited to, preparing preliminary financial information for review by the Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing with respect to RIC compliance.

~~Pending Mergers with FSIC III, FSIC IV~~

COVID-19 Developments

The rapid spread of theCOVID-19 pandemic, and ~~CCT II~~

~~On May 31, 2019,~~associated impacts on the ~~Funds, Merger Sub 1, Merger Sub 2, Merger Sub 3,~~U.S. and global economies, has negatively impacted, and is likely to continue to negatively impact, the business operations of some of our portfolio companies. We cannot at this time fully predict the impact ofCOVID-19 on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our portfolio companies’ operating results or our own results of operations or financial condition. We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress. These developments could result in a decrease in the value of our investments.

COVID-19 has already had adverse effects on our investment income and we expect that such adverse effects will continue for some time. These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments. In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas. These market disruptions and illiquidity are likely to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions caused byCOVID-19 can also be expected to increase our funding costs and limit our access to the capital markets. These events have limited our investment originations, which is likely to continue for the immediate future, and have also had a material negative impact on our operating results.

We will continue to carefully monitor the impact of theCOVID-19 pandemic on our business and the ~~Advisor entered into~~business of our portfolio companies. Because the ~~Merger Agreement. The Merger Agreement provides~~full effects of theCOVID-19 pandemic are not capable of being known at this time, we cannot estimate the impacts ofCOVID-19 on our future financial condition, results of operations or cash flows. We do, however, expect that ~~subject~~it will continue to ~~the conditions set forth in the Merger Agreement, (i) Merger Sub 1 will merge with and into FSIC III, with FSIC III continuing as the surviving company and as~~have a wholly-owned subsidiary of the Company, or Merger 1A, and, immediately thereafter, FSIC III will merge with and into the Company, with the Company continuing as the surviving company, or Merger 1, (ii) Merger Sub 2 will merge with and into CCT II, with CCT II continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 2A, and, immediately thereafter, CCT II will merge with and into the Company, with the Company continuing as the surviving company, or Merger 2, and (iii) Merger Sub 3 will merge with and into FSIC IV, with FSIC IV continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 3A, and, immediately thereafter, FSIC IV will merge with and into the Company, with the Company continuing as the surviving company. See Note 12 for additional information. The parties to the Merger Agreement intend the Mergers to be treated as a “reorganization” within the meaning of Section 368(a) of the Code.

In the Mergers, each share of FSIC III common stock, CCT II common stock and FSIC IV common stock issued and outstanding immediately prior to the effective time of Merger 1A, Merger 2A and Merger 3A, respectively, will be converted into the right to receive a number of shares of the Company’s common stock equal to the applicable Exchange Ratio. The Exchange Ratio for each of Merger 1A, Merger 2A and Merger 3A will equal the net asset value per share of FSIC III common stock, CCT II common stock and FSIC IV common stock, respectively (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the applicable Merger), divided by the net asset value per share of the Company’s common stock (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the applicable Merger).

~~The Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the operation of each of the Funds’~~negative impact on our business and the ~~Advisor’s businesses during the period prior to the closing~~financial condition of the Mergers. The Funds have agreed to convene and hold meetings of their respective stockholders for the purpose of obtaining the required approvals of the Funds’ stockholders, respectively, and have agreed to recommend that their stockholders approve their respective proposals.our portfolio companies.

The Merger Agreement provides that the board of directors or trustees of each Fund may not solicit proposals relating to alternative transactions, or, subject to certain exceptions, enter into discussions or negotiations or provide information in connection with any proposal for an alternative transaction. However, each of the Funds may, subject to certain conditions, change its recommendation to its respective stockholders, terminate the Merger Agreement and enter into an agreement with respect to a superior alternative proposal if the board of directors or trustees of such Fund determines in its reasonable good faith judgment, after consultation with its outside legal counsel, that the failure to take such action would be reasonably likely to breach its standard of conduct under applicable law (taking into account any changes to the Merger Agreement proposed by the other Funds).

Consummation of the Mergers, which is currently anticipated to occur during the fourth quarter of 2019, is subject to certain closing conditions, including (1) requisite approvals of the Funds’ stockholders, (2) certain required charter amendments for each of the Funds, (3) the absence of certain legal impediments to the consummation of the Mergers, (4) effectiveness of the registration statement on Form N-14, which

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includes a joint proxy statement of the Company, FSIC III, CCT II, and FSIC IV and a prospectus of the Company, and (5) subject to certain exceptions, the accuracy of the representations and warranties and compliance with the covenants of each party to the Merger Agreement. Merger 1A (involving a wholly-owned subsidiary of the Company and FSIC III) is a condition precedent to each of the Mergers. Therefore, Merger 2A (including a wholly-owned subsidiary of the Company and CCT II) and Merger 3A (including a wholly-owned subsidiary of the Company and FSIC IV) will not occur unless Merger 1A also occurs. No other Merger is a condition precedent to any other Merger.

The Merger Agreement also contains certain termination rights in favor of each Fund including if the Mergers are not completed on or before May 31, 2020 or if the requisite approvals of the applicable Fund’s stockholders are not obtained.

Following the closing of the Mergers and subject to approval of the board of directors of the combined company, the Company currently intends to issue perpetual preferred stock of the Company with an aggregate liquidation preference representing approximately 20% of the combined company’s net asset value to holders of the Company’s common stock following the Mergers. In addition, the Company currently intends to pursue a listing of the Company’s common stock on a national securities exchange following the Mergers and the Recapitalization Transaction, subject to final board approval and market conditions. No assurance can be made regarding the timing of the Recapitalization Transaction or the Listing, or that the Listing or the Recapitalization Transaction will occur at all.

On November 6, 2019, each of the Funds held its annual stockholder meeting at which stockholders voted on the applicable Mergers, the Recapitalization Transactions and certain other proposals. The stockholders of each of the Funds approved the applicable Mergers and the Recapitalization Transaction, but each of the Company, FSIC III and FSIC IV adjourned its respective annual stockholder meeting until November 22, 2019 with respect to certain other proposals, including proposals necessary to consummate the Mergers and the Recapitalization Transaction. The stockholders of CCT II approved all proposals necessary to consummate the Mergers and the Recapitalization Transaction.

Portfolio Investment Activity for the Three ~~and Nine~~ Months Ended ~~September 30, 2019~~March 31, 2020 and for the Year Ended December 31, ~~2018~~

2019

Total Portfolio Activity

The following tables present certain selected information regarding our portfolio investment activity for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and the year ended December 31, ~~2018:~~

Net Investment Activity For the Three Months Ended
September 30, 2019 For the Nine Months Ended
September 30, 2019
Purchases $ 427,864 $ 1,157,274
Sales and Repayments (140,873) (1,213,529)
Net Portfolio Activity $ 286,991 $ (56,255)

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For the Three Months Ended
September 30, 2019 For the Nine Months Ended
September 30, 2019
New Investment Activity by Asset Class Purchases Percentage Purchases Percentage
Senior Secured Loans—First Lien $ 295,868 69% $ 816,567 71%
Senior Secured Loans—Second Lien 74,701 17% 142,962 12%
Other Senior Secured Debt — — 37,247 3%
Subordinated Debt 15,822 4% 69,084 6%
Asset Based Finance 41,473 10% 90,474 8%
Equity/Other — — 940 0%
Total $ 427,864 100% $ 1,157,274 100%

2019:


Net Investment Activity	For the Three Months Ended March 31, 2020			For the Year Ended December 31, 2019
Purchases	$	1,317		$	6,858
Sales and Repayments		(1,643	)		(2,540	)

Net Portfolio Activity	$	(326	)	$	4,318


	For the Three Months Ended March 31, 2020					For the Year Ended December 31, 2019
New Investment Activity by Asset Class⁽¹⁾	Purchases		Percentage			Purchases		Percentage
Senior Secured Loans—First Lien	$	1,080		82	%	$	4,459		65	%
Senior Secured Loans—Second Lien		36		3	%		765		11	%
Other Senior Secured Debt		—		—			140		2	%
Subordinated Debt		56		4	%		386		6	%
Asset Based Finance		145		11	%		482		7	%
Credit Opportunities Partners, LLC		—		—			503		7	%
Equity/Other		0		0	%		123		2	%

Total	$	1,317		100	%	$	6,858		100	%

(1)	Purchases and new investments for the year ended December 31, 2019 include investments acquired at fair value of $4,425 in connection with the Mergers.

The following table summarizes the composition of our investment portfolio at cost and fair value as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


	March 31, 2020 (Unaudited)							December 31, 2019
	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	5,606	$	5,116		69	%	$	6,017	$	5,717		67	%
Senior Secured Loans—Second Lien		914		693		9	%		941		809		9	%
Other Senior Secured Debt		210		150		2	%		243		228		3	%
Subordinated Debt		288		229		3	%		479		489		5	%
Asset Based Finance		671		587		8	%		535		485		6	%
Credit Opportunities Partners, LLC		503		430		6	%		503		510		6	%
Equity/Other		327		259		3	%		323		353		4	%

Total	$	8,519	$	7,464		100	%	$	9,041	$	8,591		100	%

~~(1)~~

~~Amortized~~

March 31, 2020 and December 31, 2019:


	March 31, 2020 (Unaudited)							December 31, 2019
	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	5,606	$	5,116		69	%	$	6,090	$	5,788		67	%
Senior Secured Loans—Second Lien		914		693		9	%		961		827		10	%
Other Senior Secured Debt		210		150		2	%		243		228		3	%
Subordinated Debt		288		229		3	%		479		489		5	%
Credit Opportunities Partners, LLC		671		587		8	%		535		485		5	%
Asset Based Finance		503		430		6	%		503		510		6	%
Equity/Other		327		259		3	%		324		353		4	%

Total	$	8,519	$	7,464		100	%	$	9,135	$	8,680		100	%

(1)	Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

The following table presents certain selected information regarding the composition of our investment portfolio as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, 2019 December 31, 2018
Number of Portfolio Companies 174 160
% Variable Rate Debt Investments (based on fair value)(1)(2)
79.1% 81.4%
% Fixed Rate Debt Investments (based on fair value)(1)(2)
13.5% 12.2%
% Other Income Producing Investments (based on fair value)(3)
1.3% 0.1%
% Non-Income Producing Investments (based on fair value)(2)
4.5% 5.2%
% of Investments on Non-Accrual (based on fair value) 1.6% 1.1%
Weighted Average Annual Yield on Accruing Debt Investments(2)(4)
9.9% 10.5%
Weighted Average Annual Yield on All Debt Investments(5)
9.2% 10.1%

~~(1)~~

~~“Debt Investments” means investments that pay or are expected to pay a stated interest rate, stated dividend rate or other similar stated return.~~

~~(2)~~

~~Does not include investments on non-accrual status.~~

~~(3)~~

2019:


	March 31, 2020			December 31, 2019
Number of Portfolio Companies		179			213
% Variable Rate Debt Investments (based on fair value)⁽¹⁾⁽²⁾		71.5	%		72.9	%
% Fixed Rate Debt Investments (based on fair value)⁽¹⁾⁽²⁾		12.0	%		14.7	%
% Other Income Producing Investments (based on fair value)⁽³⁾		7.0	%		6.9	%
%Non-Income Producing Investments (based on fair value)⁽²⁾		3.8	%		3.4	%
% of Investments onNon-Accrual (based on fair value)		5.7	%		2.1	%
Weighted Average Annual Yield on Accruing Debt Investments⁽²⁾⁽⁴⁾		8.9	%		9.5	%
Weighted Average Annual Yield on All Debt Investments⁽⁵⁾		7.3	%		8.8	%

(1)	“Debt Investments” means investments that pay or are expected to pay a stated interest rate, stated dividend rate or other similar stated return.

(2)	Does not include investments onnon-accrual status.

(3)	“Other Income Producing Investments” means investments that pay or are expected to pay interest, dividends or other income to the Company on an ongoing basis but do not have a stated interest rate, stated dividend rate or other similar stated return.

(4)

The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

(5)

The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

For the ~~Company on an ongoing basis but do not have a stated interest rate, stated dividend rate or other similar stated return.~~

~~(4)~~

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applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

~~(5)~~

Based on our regular monthly cash distribution amount of $0.06283 per share as of September 30, 2019 and our distribution reinvestment price of $7.75 per share, the annualized distribution rate to stockholders as of September 30, 2019 was 9.73%. The annualized distribution rate to stockholders is expressed as a percentage equal to the projected annualized distribution amount per share divided by our distribution reinvestment price per share. Our annualized distribution rate to stockholders may include income, realized capital gains and a return of investors’ capital. During the ninethree months ended ~~September 30, 2019,~~March 31, 2020, our total return was ~~3.62% and our total return without assuming reinvestment of distributions was 3.82%.~~

Based on our regular monthly cash distribution amount of $0.06283 per share as of December 31, 2018 and our distribution reinvestment price of $8.05 per share, the annualized distribution rate to stockholders as of December 31, 2018 was 9.37%. During the year ended December 31, 2018, our total return was (1.64)(14.13)% and our total return without assuming reinvestment of distributions was ~~(1.37)~~(14.13)%.

Our weighted average annual yield on accruing debt investments may be higher than a stockholder’s yield on an investment in shares of our common stock. Our weighted average annual yield on accruing debt investments does not reflect operating expenses that may be incurred by us, nor does it include all of our investments. In addition, our weighted average annual yield on accruing debt investments and total return figures disclosed above do not consider the effect of any sales commissions or charges that may have been incurred in connection with the sale of shares of our common stock. Our weighted average annual yield on accruing debt investments, total return and annualized distribution rate to stockholders do not represent actual investment returns to stockholders, are subject to change and, in the future, may be greater or less than the rates set forth above. See the section entitled “Item 1A. Risk Factors” in our annual report on Form 10-K for For the year ended December 31, ~~2018~~2019, our total return was 2.96% and our ~~other periodic reports filed with the SEC for a discussion~~total return without assuming reinvestment of ~~the uncertainties, risks and assumptions associated with these statements.~~distributions was 3.18%. See footnote 67 to the financial highlights table included in Note 11 to our unaudited consolidated financial statements included herein for information regarding the ~~calculations~~calculation of our total ~~return.~~return based on net asset value and total return based on net asset value without assuming reinvestment of distributions.

Direct Originations

The following table presents certain selected information regarding our direct originations as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

Characteristics of All Direct Originations Held in Portfolio September 30, 2019 December 31, 2018
Number of Portfolio Companies 84 74
% of Investments on Non-Accrual (based on fair value) 1.8% 1.2%
Total Cost of Direct Originations $3,475,838 $3,615,151
Total Fair Value of Direct Originations $3,264,357 $3,497,141
% of Total Investments, at Fair Value 76.7% 80.2%
Weighted Average Annual Yield on Accruing Debt Investments(1)
9.7% 10.5%
Weighted Average Annual Yield on All Debt Investments(2)
9.0% 10.1%

~~(1)~~

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~~(2)~~

2019:


Characteristics of All Direct Originations Held in Portfolio	March 31, 2020			December 31, 2019
Number of Portfolio Companies		113			110
% of Investments onNon-Accrual (based on fair value)		5.2	%		2.5	%
Total Cost of Direct Originations	$	7,227		$	7,161
Total Fair Value of Direct Originations	$	6,433		$	6,713
% of Total Investments, at Fair Value		86.2	%		78.1	%
Weighted Average Annual Yield on Accruing Debt Investments⁽¹⁾		8.6	%		9.3	%
Weighted Average Annual Yield on All Debt Investments⁽²⁾		7.0	%		8.5	%

(1)

(2)

Portfolio Composition by Industry Classification

See Note 6 to our unaudited consolidated financial statements included herein for additional information regarding the composition of our investment portfolio by industry classification.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of March 31, 2020 and December 31, 2019:


	March 31, 2020 (Unaudited)					December 31, 2019
Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Automobiles & Components	$	52		1	%	$	182		2	%
Capital Goods		961		13	%		1,139		13	%
Commercial & Professional Services		769		10	%		861		10	%
Consumer Durables & Apparel		351		5	%		302		3	%
Consumer Services		308		4	%		548		6	%
Credit Opportunities Partners, LLC		430		6	%		510		6	%
Diversified Financials		596		8	%		402		5	%
Energy		212		3	%		328		4	%
Food & Staples Retailing		201		3	%		223		3	%
Food, Beverage & Tobacco		120		1	%		132		2	%
Health Care Equipment & Services		727		10	%		888		10	%
Household & Personal Products		108		1	%		1		0	%
Insurance		232		3	%		220		3	%
Materials		134		2	%		354		4	%
Media & Entertainment		335		4	%		409		5	%
Pharmaceuticals, Biotechnology & Life Sciences		81		1	%		187		2	%
Real Estate		210		3	%		122		1	%
Retailing		349		4	%		435		5	%
Semiconductors & Semiconductor Equipment		—		—			3		0	%
Software & Services		875		12	%		874		10	%
Technology Hardware & Equipment		138		2	%		174		2	%
Telecommunication Services		137		2	%		154		2	%
Transportation		138		2	%		143		2	%

Total	$	7,464		100	%	$	8,591		100	%

Portfolio Asset Quality

In addition to various risk management and monitoring tools, the Advisor uses an investment rating system to characterize and monitor the expected level of returns on each investment in our portfolio. The Advisor uses an investment rating scale of 1 to 4. The following is a description of the conditions associated with each investment rating:


Investment Rating			Summary Description
1			Performing ~~Investment-generally~~investment-generally executing in accordance with plan and there are no concerns about the portfolio company’s performance or ability to meet covenant requirements.

2			Performinginvestment-no concern about repayment of both interest and our cost basis but company’s recent performance or trends in the industry require closer monitoring.

3			Underperforming investment-some loss of interest or dividend possible, but still expecting a positive return on investment.

4			Underperforming investment-concerns about the recoverability of principal or interest.

The following table shows the distribution of our investments on the 1 to 4 investment rating scale at fair value as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

September 30, 2019 December 31, 2018
Investment Rating FairValue Percentage of
Portfolio FairValue Percentage of
Portfolio
1 $ 2,645,332 62% $ 2,817,253 65%
2 1,372,019 32% 1,377,931 32%
3 112,155 3% 95,013 2%
4 125,774 3% 69,083 1%
Total $ 4,255,280 100% $ 4,359,280 100%

2019:


	March 31, 2020					December 31, 2019
Investment Rating	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
1	$	4,357		58	%	$	5,299		62	%
2		1,884		25	%		2,624		30	%
3		797		11	%		356		4	%
4		426		6	%		312		4	%

Total	$	7,464		100	%	$	8,591		100	%

The amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment values.

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Results of Operations

Comparison of the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

Revenues

Our investment income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ was as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Amount Percentage
of Total
Income Amount Percentage
of Total
Income Amount Percentage
of Total
Income Amount Percentage
of Total
Income
Interest income $ 94,985 88% $ 97,381 83% $ 304,143 90% $ 297,917 87%
Paid-in-kind interest income 6,728 6% 5,356 5% 16,052 5% 13,547 4%
Fee income 5,270 5% 14,181 12% 18,539 5% 23,764 7%
Dividend income 768 1% 468 0% 839 0% 7,962 2%
Total investment income(1)
$ 107,751 100% $ 117,386 100% $ 339,573 100% $ 343,190 100%

~~(1)~~

For the three months ended September 30, 2019 and 2018, such revenues represent $98,751 and $108,833, respectively, of cash income earned as well as $9,000 and $8,553, respectively, in non-cash portions relating to accretion of discount and PIK interest. For the nine months ended September 30, 2019 and 2018, such revenues represent $316,891 and $324,041, respectively, of cash income earned as well as $22,682 and $19,149, respectively, in non-cash portions relating to accretion of discount and PIK interest. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.


	Three Months Ended March 31,
	2020					2019
	Amount		Percentage of Total Income			Amount		Percentage of Total Income
Interest income	$	151		77	%	$	108		90	%
Paid-in-kind interest income		14		7	%		5		4	%
Fee income		15		8	%		7		6	%
Dividend income		15		8	%		0		0	%

Total investment income⁽¹⁾	$	195		100	%	$	120		100	%

(1)

For the three months ended March 31, 2020 and 2019, such revenues represent $172 and $113, respectively, of cash income earned as well as $23 and $7, respectively, innon-cash portions relating to accretion of discount and PIK interest. Cash flows related to suchnon-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

The level of interest income we receive is generally related to the balance of income-producing investments, multiplied by the weighted average yield of our investments. Fee income is transaction based and typically consists of prepayment fees and structuring fees. As such, fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees.

The increase in interest ~~income during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily due to the higher average invested balance. The decrease in interest~~and fee income during the three months ended ~~September 30, 2019~~March 31, 2020 compared to the three months ended ~~September 30, 2018 was~~March 31, 2019 can primarily ~~due~~be attributed to the ~~prepayment of certain higher yielding~~increase in assets ~~and~~resulting from the ~~reduced LIBOR rate occurring during the quarter.~~

Mergers.

The decrease in fee income during the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018 was primarily due to the decrease in prepayment and origination activity.

~~The decrease~~increase in dividend income during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was primarily due to ~~a one-time dividend~~dividends paid in respect ~~of one of~~to our ~~investments during the nine months ended September 30, 2018.~~investment in Credit Opportunities Partners, LLC.

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Expenses

Our operating expenses for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Management fees $ 16,735 $ 17,567 $ 51,581 $ 61,739
Subordinated income incentive fees 5,045 11,939 24,912 18,994
Administrative services expenses 1,833 799 3,387 2,371
Stock transfer agent fees 471 506 1,677 1,502
Accounting and administrative fees 362 395 1,106 1,227
Interest expense 23,969 26,924 79,047 77,958
Directors’ fees 84 254 301 1,053
Expenses associated with our independent audit and related fees 139 74 338 275
Legal fees 194 308 582 632
Printing fees (62) 137 486 330
Other 439 698 1,392 2,302
Total operating expenses $ 49,209 $ 59,601 $ 164,809 $ 168,383
Management fee waiver — — — (3,432)
Net operating expenses $ 49,209 $ 59,601 $ 164,809 $ 164,951


	Three Months Ended March 31,
	2020		2019
Management fees	$	33	$	18
Subordinated income incentive fees		23		11
Administrative services expenses		2		1
Stock transfer agent fees		1		1
Accounting and administrative fees		1		0
Interest expense		40		30
Other		2		1

Total operating expenses	$	102	$	62

The following table reflects selected expense ratios as a percent of average net assets for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Ratio of operating expenses to average net assets 1.93% 2.21% 6.45% 6.12%
Ratio of management fee waiver to average
net assets — — — (0.12)%
Ratio of net operating expenses to average net
assets 1.93% 2.21% 6.45% 6.00%
Ratio of incentive fees and interest expense
to average net assets(1)
1.14% 1.44% 4.07% 3.52%
Ratio of net operating expenses, excluding certain expenses, to average net assets 0.79% 0.77% 2.38% 2.48%

~~(1)~~

~~Ratio data may be rounded in order to recompute the ending ratio of net operating expenses, excluding certain expenses, to average net assets.~~

2019:


	Three Months Ended March 31,
	2020			2019
Ratio of operating expenses to average net assets		2.08	%		2.41	%
Ratio of incentive fees and interest expense to average net assets⁽¹⁾		1.28	%		1.59	%

Ratio of net operating expenses, excluding certain expenses, to average net assets		0.80	%		0.82	%

(1)	Ratio data may be rounded in order to recompute the ending ratio of net operating expenses, excluding certain expenses, to average net assets.

Incentive fees and interest expense, among other things, may increase or decrease our expense ratios relative to comparative periods depending on portfolio performance and changes in amounts outstanding under our financing arrangements and benchmark interest rates such as LIBOR, among other factors.

Net Investment Income

Our net investment income totaled ~~$58,542~~$93 ($~~0.18~~0.14 per share) and ~~$57,785~~$58 ($0.18 per share) for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively.~~

~~Our net investment income totaled $174,764 ($0.54 per share) and $178,239 ($0.55 per share) for the nine months ended September 30, 2019 and 2018,~~ respectively. The ~~decrease~~increase in net investment income for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 can be attributed to the ~~decrease~~increase in interest income as discussed ~~above, in addition to higher incentive fees and interest expense.~~

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above.

Net Realized Gains or Losses

Our net realized gains (losses) on investments and foreign currency for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:


	Three Months Ended March 31,
	2020			2019
Net realized gain (loss) on investments⁽¹⁾	$	(217	)	$	(19	)
Net realized gain (loss) on total return swap		(2	)		—
Net realized gain (loss) on foreign currency forward contracts		0			—
Net realized gain (loss) on interest rate swaps		(2	)		—
Net realized gain (loss) on foreign currency		1			0

Total net realized gain (loss)	$	(220	)	$	(19	)

(1)	We sold investments and received principal repayments, respectively, of $953 and $760 during the three months ended March 31, 2020 and $115 and $88 during the three months ended March 31, 2019.

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net realized gain (loss) on investments(1)
$ (8,139) $ 18,504 $ (48,582) $ (10,805)
Net realized gain (loss) on interest rate swaps (290) — (290) —
Net realized gain (loss) on foreign currency 944 446 1,059 (220)
Total net realized gain (loss) $ (7,485) $ 18,950 $ (47,813) $ (11,025)

~~(1)~~

We sold investments and received principal repayments, respectively, of $112,988 and $27,885 during the three months ended September 30, 2019 and $169,872 and $287,365 during the three months ended September 30, 2018. We sold investments and received principal repayments, respectively, of $258,249 and $955,280 during the nine months ended September 30, 2019 and $385,404 and $805,504 during the nine months ended September 30, 2018.

Net Change in Unrealized Appreciation (Depreciation)

Our net change in unrealized appreciation (depreciation) on investments and interest rate swaps and unrealized gain (loss) on foreign currency for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net change in unrealized appreciation (depreciation) on investments $ (74,897) $ (40,039) $ (23,461) $ (145,973)
Net change in unrealized appreciation (depreciation) on interest rate swaps (1,551) — (12,204) —
Net change in unrealized gain (loss) on foreign
currency 3,169 (693) 504 84
Total net change in unrealized appreciation (depreciation) $ (73,279) $ (40,732) $ (35,161) $ (145,889)


	Three Months Ended March 31,
	2020			2019
Net change in unrealized appreciation (depreciation) on investments	$	(605	)	$	37
Net change in unrealized appreciation (depreciation) on total return swap		3			—
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts		2			—
Net change in unrealized appreciation (depreciation) on interest rate swaps		(30	)		(4	)
Net change in unrealized gain (loss) on foreign currency		49			(1	)

Total net change in unrealized appreciation (depreciation)	$	(581	)	$	32

During the three months ended September 30, 2019, the net change in unrealized appreciation (depreciation) on investments was driven by mark to market declines in certain debt investments. During the nine months ended September 30, 2019,March 31, 2020, the net change in unrealized appreciation (depreciation) was driven primarily by mark to market declines ~~in certain debt investments mitigated by higher valuations~~across the portfolio resulting from ~~Level 2 categorized assets during~~uncertainty related to the ~~six months ended June 30, 2019.~~

currentCOVID-19 pandemic.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended ~~September 30, 2019,~~March 31, 2020, the net decrease in net assets resulting from operations was ~~$(22,222)~~$(708) ($~~(0.07)~~(1.04) per share) compared to a net increase in net assets resulting from operations of ~~$36,003~~$71 ($~~0.11~~0.22 per share) during the three months ended ~~September 30, 2018.~~

~~For~~March 31, 2019.

This “Results of Operations” section should be read in conjunction with the nine months ended September 30, 2019, the net increase in net assets resulting from operations was $91,790 ($0.28 per share) compared to a net decrease in net assets resulting from operations of $21,325 ($0.07 per share) during the nine months ended September 30, 2018.

“COVID-19 Developments” above.

Financial Condition, Liquidity and Capital Resources

Overview

As of ~~September 30, 2019,~~March 31, 2020, we had ~~$109,662~~$232 in cash and foreign currency, which we and our wholly-owned financing subsidiaries held in custodial accounts, and ~~$696,626~~$1,556 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of ~~September 30, 2019,~~March 31, 2020, we

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also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of ~~September 30, 2019,~~March 31, 2020, we had unfunded debt investments with aggregate unfunded commitments of ~~$194,594 and~~$376.0, unfunded equity/other commitments of ~~$150,447.~~$245.1, and unfunded commitments of $371.9 of Credit Opportunities Partners, LLC. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments as well as ~~from the issuance of shares under the DRP, and~~ principal repayments and proceeds from sales of our investments. To seek to enhance our returns, we also employ leverage as market conditions permit and at the discretion of the Advisor, but in no event will leverage employed exceed ~~50% of~~ the ~~value of our assets, as required~~maximum amount permitted by the 1940 Act. With certain limited exceptions, we are only allowed to borrow amounts or issue debt securities if our asset coverage, as calculated pursuant to the 1940 Act, equals at least 200% immediately after such borrowing. The minimum asset coverage requirement applicable to BDCs under the 1940 Act, however, is currently 150% provided that certain disclosure, approval and other requirements are met. We are currently seeking a vote from our stockholders to reduce the asset coverage ratio applicable to us to 150%, but we do not plan to hold a stockholder vote on the proposal until after our common stock is listed on a national securities exchange, or a Listing. We have announced our intention to list our common stock on the New York Stock Exchange during the first half of 2020, which we continue to evaluate, subject to market conditions and board approval. See “—Financing Arrangements.”

Prior to investing in securities of portfolio companies, we invest the cash received from fees, interest and dividends earned from our investments and ~~from the issuance of shares under the distribution reinvestment plan, as well as~~ principal repayments and proceeds from sales of our investments primarily in cash, cash equivalents, including money market funds, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.

This “Financial Condition, Liquidity and Capital Resources” section should be read in conjunction with“COVID-19 Developments” above.

Financing Arrangements

The following table presents summary information with respect to our outstanding financing arrangements as of ~~September 30, 2019:~~March 31, 2020:

Arrangement⁽¹⁾

Type of Arrangement

Rate⁽¹⁾

Amount
Outstanding

Amount
Available

Maturity
Date

Senior Secured Revolving Credit Facility⁽²⁾

Revolving Credit Facility

L+2.00% - 2.25%⁽³⁾

837

⁽⁴⁾

928

November 7, 2024

Germantown Credit Facility⁽²⁾

Term Loan Credit Facility

L + 2.50%

300

—

December 15, 2020

Darby Creek Credit Facility⁽²⁾

Revolving Credit Facility

L + 1.95%

220

February 26, 2024

Dunlap Credit Facility⁽²⁾

Revolving Credit Facility

L + 2.00%

400

100

February 26, 2024

Jefferson Square Credit Facility⁽²⁾

Revolving Credit Facility

L + 2.50%

320

July 15, 2022

Juniata River Credit Facility⁽²⁾

Revolving Credit Facility

L + 2.45%

720

130

October 11, 2021

Burholme Prime Brokerage Facility⁽²⁾

Prime Brokerage Facility

L + 1.25%

September 26, 2020⁽⁵⁾

Broomall Prime Brokerage Facility⁽²⁾

Prime Brokerage Facility

L + 1.25%

December 26, 2020⁽⁶⁾

Ambler Credit Facility⁽²⁾

Revolving Credit Facility

L + 2.25%

123

November 22, 2024

Meadowbrook Run Credit Facility⁽²⁾

Revolving Credit Facility

L + 2.25%

160

140

November 22, 2024

4.250% Notes due 2025⁽⁷⁾

Unsecured Notes

4.250%

475

—

February 14, 2025

Total

3,634

1,556

Center City Total Return Swap

Total Return Swap

L + 1.55%

—

N/A⁽⁸⁾

Cheltenham Total Return Swap

Total Return Swap

L + 1.60%

—

N/A⁽⁹⁾

(1)	LIBOR is subject to a 0% floor.

(2)	The carrying amount outstanding under the facility approximates its fair value.

(3)	The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.

(4)

(5)	The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility.

(6)	The Broomall Prime Brokerage Facility generally is terminable upon 270 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility.

(7)	As of March 31, 2020, the fair value of the 4.250% notes was approximately $366. The valuation is considered a Level 2 valuation within the fair value hierarchy.

(8)

(9)

Arrangement(1)
Type of Arrangement Rate Amount
Outstanding Amount
Available Maturity
Date
Green Creek Credit Facility Term Loan Credit Facility L+2.50% $ 500,000 $ — December 15, 2019
Cooper River Credit Facility Revolving Credit Facility L+2.75% 44,500 155,500 March 31, 2021
Darby Creek Credit Facility Revolving Credit Facility L+1.95% 185,000 65,000 February 26, 2024
Juniata River Credit Facility Revolving Credit Facility L+2.68% 680,000 170,000 October 11, 2020
Senior Secured Revolving Credit Facility Revolving Credit Facility
L+2.00% –
2.25%(2)
418,874(3) 306,126 August 9, 2023
Total $ 1,828,374 $ 696,626

~~(1)~~

~~The carrying amount outstanding under the facility approximates its fair value.~~

~~(2)~~

~~The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company.~~

~~(3)~~

~~For additional information regarding our financing arrangements, see~~

See Note 9 to our unaudited consolidated financial statements included ~~herein.~~

herein for additional information regarding our financing arrangements.

RIC Status and Distributions

We have elected to be subject to tax as a RIC under Subchapter M of the Code. In order to qualify for RIC tax treatment, we must, among other things, make distributions of an amount at least equal to 90% of our investment company taxable income, determined without regard to any deduction for distributions paid, each tax year. As long as the distributions are declared by the later of the fifteenth day of the ninth month following the close of a tax year or the due date of the tax return for such tax year, including extensions, distributions paid up to twelve months after the current tax year can be carried back to the prior

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tax year for determining the distributions paid in such tax year. We intend to make sufficient distributions to our stockholders to qualify for and maintain our RIC tax status each tax year. We are also subject to a 4% nondeductible federal excise tax on certain undistributed income unless we make distributions in a timely manner to our stockholders generally of an amount at least equal to the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains in excess of capital losses, or “capital gain net income” (adjusted for certain ordinary losses), for theone-year period ending October 31 of that calendar year and (3) any net ordinary income and capital gain net income for the preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. Any distribution declared by us during October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our stockholders, on December 31 of the calendar year in which the distribution was declared. We can offer no assurance that we will achieve results that will permit us to pay any cash distributions. If we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

Subject to applicable legal restrictions and the sole discretion of our board of directors, we intend to authorize, declare and pay regular cash distributions on a quarterly ~~basis and pay such distributions on a monthly~~ basis. We will calculate each stockholder’s specific distribution amount for the period using record and declaration dates and each stockholder’s distributions will begin to accrue on the date that shares of our common stock are issued to such stockholder. From time to time, we may also pay special interim distributions in the form of cash or shares of our common stock at the discretion of our board of directors. ~~The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of our board of directors.~~

During certain periods, our distributions may exceed our earnings. As a result, it is possible that a portion of the distributions we make may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from our investment activities. Each year a statement onForm 1099-DIV identifying the sources of the distributions will be mailed to our stockholders. No portion of the distributions paid during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 or 2019 ~~and 2018~~ represented a return of capital.

We intend to continue to make our regular distributions in the form of cash, out of assets legally available for distribution, except for those stockholders who receive their distributions in the form of shares of our common stock under our distribution reinvestment plan. Any distributions reinvested under the plan will nevertheless remain taxable to a U.S. stockholder.

The following table reflects the cash distributions per share that we have declared ~~and paid~~ on our common stock during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~

Distribution
For the Three Months Ended Per Share Amount
Fiscal 2018
March 31, 2018 $ 0.1885 $ 61,153
June 30, 2018 0.1885 �� 61,146
September 30, 2018 0.1885 61,137
Total $ 0.5655 $ 183,436
Fiscal 2019
March 31, 2019 $ 0.1885 $ 61,114
June 30, 2019 0.1885 61,108
September 30, 2019 0.1885 61,698
Total $ 0.5655 $ 183,920

2019:


	Distribution
For the Three Months Ended	Per Share		Amount
Fiscal 2019
March 31, 2019	$	0.1885	$	61

Total	$	0.1885	$	61

Fiscal 2020
March 31, 2020	$	0.1500	$	102

Total	$	0.1500	$	102

See Note 5 to our unaudited consolidated financial statements included herein for additional information regarding our ~~distributions, including a reconciliation~~distributions.

Recent Developments

On May 5, 2020, the Company entered into the Amendment. For additional discussion of ~~our GAAP-basis net investment income~~the Amendment, see Note 12 to our ~~tax-basis net investment income for the nine months ended September 30, 2019 and 2018.~~

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unaudited consolidated financial statements included herein.

Critical Accounting Policies

Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our most significant accounting policies in “Note 2. Summary of Significant Accounting Policies” in our consolidated financial statements. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. ~~In preparing~~We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. We have identified one of our accounting policies, valuation of portfolio investments, as critical because it involves significant judgments and assumptions about highly complex and inherently uncertain matters, and the ~~financial statements, management has made~~use of reasonably different estimates and assumptions ~~that affect the~~could have a material impact on our reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations or financial condition. As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those ~~of companies in similar businesses.~~

discussed below.

Valuation of Portfolio Investments

We determine the ~~fair~~net asset value of our investment portfolio each quarter. Securities are valued at fair value as determined in good faith by our board of directors. In connection with that determination, the Advisor provides our board of directors with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by independent third-party valuation services.

Accounting Standards Codification Topic 820,Fair Value Measurements and Disclosure, or ASC Topic 820, issued by the FASB, clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

•

our quarterly fair valuation process begins ~~with~~by the Advisor ~~reviewing~~providing financial and ~~documenting valuations of~~operating information with respect to each portfolio company or investment ~~which valuations are obtained from an~~to our independent third-party valuation service providers;

our independent third-party valuation service providers review this information, along with other public and private information, and provide the Advisor with a valuation ~~range;~~range for each portfolio company or investment;

•

the Advisor then discusses the independent third-party valuation service providers’ valuation ranges and provides the valuation committee of ~~our~~the board of directors, or the valuation committee, with ~~its~~a valuation recommendation for each ~~portfolio company or~~ investment, along with supporting materials;

•

preliminary valuations are then discussed with the valuation committee;

•

our valuation committee reviews the preliminary valuations and the Advisor, together with our independent third-party valuation ~~services,~~service providers and, if applicable, ~~supplement~~supplements the preliminary valuations to reflect any comments provided by the valuation committee;

•

following the completion of its review, ~~the~~our valuation committee ~~will recommend~~recommends that our board of directors ~~approve our~~approves the fair ~~valuations;~~valuations determined by the valuation committee; and

•

our board of directors discusses the valuations and determines the fair value of each such investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of the Advisor, the valuation committee and ~~any~~our independent third-party valuation ~~services, if applicable.~~service providers.

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Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements. In making its determination of fair value, our board of directors may use any approved independent third-party pricing or valuation services. However, our board of directors is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information obtained from the Advisor or any approved independent third-party valuation or pricing service that our board of directors deems to be reliable in determining fair value under the circumstances. Below is a description of factors that the Advisor, any approved independent third party valuation services and our board of directors may consider when determining the fair value of our investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments.

For convertible debt securities, fair value generally approximates the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.

Our equity interests in portfolio companies for which there is no liquid public market are valued at fair value. Our board of directors, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.

The Advisor, any approved independent third-party valuation services and our board of directors may also consider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. The Advisor, any approved independent third-party valuation services and our board of directors may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of directors, in consultation with the Advisor and any approved independent third party valuation services, if applicable, may consider relevant in assessing fair value. Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security.

When we receive warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Our board of directors subsequently values these warrants or other equity securities received at their fair value.

The fair values of our investments are determined in good faith by our board of directors. Our board of directors is responsible for the valuation of our portfolio investments at fair value as determined in good faith pursuant to our valuation policy and consistently applied valuation process. Our board of directors has delegatedday-to-day responsibility for implementing our valuation policy to the Advisor, and has authorized the Advisor to utilize independent third-party valuation and pricing services that have been approved by our board of directors. The valuation committee is responsible for overseeing the Advisor’s implementation of the valuation process.

See Note 8 to our unaudited consolidated financial statements included herein for additional information regarding the fair value of our financial instruments.

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~~Revenue Recognition~~

Security transactions are accounted for on the trade date. We record interest income on an accrual basis to the extent that we expect to collect such amounts. We record dividend income on the ex-dividend date. Distributions received from limited liability company (“LLC”) and limited partnership (“LP”) investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. We do not accrue as a receivable interest or dividends on loans and securities if we have reason to doubt our ability to collect such income. Our policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected. We consider many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that we will receive any previously accrued interest, then the interest income will be written-off. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on our judgment.

Loan origination fees, original issue discount and market discount are capitalized and we amortize such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. Structuring and other non-recurring upfront fees are recorded as fee income when earned. For the nine months ended September 30, 2019, we recognized $8,609 in structuring fee revenue. We record prepayment premiums on loans and securities as fee income when we receive such amounts.

~~Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign Currency~~

Gains or losses on the sale of investments are calculated by using the specific identification method. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gains or losses when gains or losses are realized. Net change in unrealized gains or losses on foreign currency reflects the change in the value of receivables or accruals during the reporting period due to the impact of foreign currency fluctuations.

~~Uncertainty in Income Taxes~~

We evaluate our tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in our consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. We recognize interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in our consolidated statements of operations. During the nine months ended September 30, 2019 and 2018, we did not incur any interest or penalties.

~~Derivative Instruments~~

Our derivative instruments include foreign currency forward contracts and cross currency swaps. We recognize all derivative instruments as assets or liabilities at fair value in our consolidated financial statements. Derivative contracts entered into by us are not designated as hedging instruments, and as a result, we present changes in fair value through net change in unrealized appreciation (depreciation) on derivative instruments in the consolidated statements of operations. Realized gains and losses that occur upon the cash settlement of the derivative instruments are included in net realized gains (losses) on derivative instruments in the consolidated statements of operations.

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~~See Note 2 to our unaudited consolidated financial statements included herein for additional information regarding our significant accounting policies.~~

Contractual Obligations

We have entered into ~~an agreement~~agreements with the Advisor to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory ~~and administrative services~~ agreement are equal to (a) an annual base management fee based on the average weekly value of our gross assets (excluding cash and cash equivalents) and (b) an incentive fee based on our performance. The Advisor is reimbursed for administrative expenses incurred on our behalf. See Note 4 to our unaudited consolidated financial statements included herein for a discussion of ~~this agreement~~these agreements and for the amount of fees and expenses accrued under ~~similar~~these agreements ~~with FSIC II Advisor~~ during the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~

2019.

A summary of our significant contractual payment obligations ~~related to~~for the repayment of ~~our~~ outstanding indebtedness at ~~September 30, 2019~~March 31, 2020 is as follows:

Payments Due By Period

Maturity Date(1)
Total Less than 1 year 1 – 3 years 3 – 5 years More than
5years
Green Creek Credit Facility(2)
December 15, 2019 $ 500,000 $ 500,000 — — —
Cooper River Credit Facility(3)
March 31, 2021 $ 44,500 — $ 44,500 — —
Darby Creek Credit Facility(4)
February 26, 2024 $ 185,000 — — $ 185,000 —
Juniata River Credit Facility(5)
October 11, 2020 $ 680,000 — $ 680,000 — —
Senior Secured Revolving Credit Facility(6)
August 9, 2023 $ 418,874 — — $ 418,874 —

~~(1)~~

~~Amounts outstanding under the financing arrangements will mature, and all accrued and unpaid interest thereunder will be due and payable, on the maturity date.~~

~~(2)~~

~~At September 30, 2019, no amounts remained unused under the financing arrangement.~~

~~(3)~~

~~At September 30, 2019, $155,500 remained unused under the Cooper River credit facility.~~

~~(4)~~

~~At September 30, 2019, $65,000 remained unused under the Darby Creek credit facility.~~

~~(5)~~

~~At September 30, 2019, $170,000 remained unused under the Juniata River credit facility.~~

~~(6)~~

~~At September 30, 2019, $306,126 remained unused under the Senior Secured Revolving Credit Facility.~~


	Payments Due By Period
	Maturity Date⁽¹⁾	Total	Less than 1 year		1-3 years		3-5 years	More than 5 years
Senior Secured Revolving Credit Facility⁽²⁾	November 7, 2024	$837		—		—	$837	—
Germantown Credit Facility⁽³⁾	December 15, 2020	$300	$	300		—	—	—
Darby Creek Credit Facility⁽⁴⁾	February 26, 2024	$220		—		—	$220	—
Dunlap Credit Facility⁽⁵⁾	February 26, 2024	$400		—		—	$400	—
Jefferson Square Credit Facility⁽⁶⁾	July 15, 2022	$320		—	$	320	—	—
Juniata River Credit Facility⁽⁷⁾	October 11, 2021	$720		—	$	720	—	—
Burholme Prime Brokerage Facility⁽⁸⁾	September 26, 2020	$67	$	67		—	—	—
Broomall Prime Brokerage Facility⁽⁹⁾	December 26, 2020	$12	$	12		—	—	—
Ambler Credit Facility⁽¹⁰⁾	November 22, 2024	$123		—		—	$123	—
Meadowbrook Run Credit Facility⁽¹¹⁾	November 22, 2024	$160		—		—	$160	—
4.250% Notes due 2025	February 14, 2025	$475		—		—	$475	—

(1)	Amounts outstanding under the financing arrangements will mature, and all accrued and unpaid interest thereunder will be due and payable, on the maturity date.

(2)

At March 31, 2020, $928 remained unused under the Senior Secured Revolving Credit Facility. Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €231 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $148 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.71 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $245 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.61 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £183 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.25 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars.

(3)	At March 31, 2020, no amounts remained unused under the financing arrangement.

(4)	At March 31, 2020, $30 remained unused under the Darby Creek Credit Facility.

(5)	At March 31, 2020, $100 remained unused under the Dunlap Credit Facility.

(6)	At March 31, 2020, $80 remained unused under the Jefferson Square Credit Facility.

(7)	At March 31, 2020, $130 remained unused under the Juniata River Credit Facility.

(8)	At March 31, 2020, $33 remained unused under the Burholme Prime Brokerage Facility.

(9)	At March 31, 2020, $38 remained unused under the Broomall Prime Brokerage Facility.

(10)	At March 31, 2020, $77 remained unused under the Ambler Credit Facility.

(11)	At March 31, 2020, $140 remained unused under the Meadowbrook Run Credit Facility.

Off-Balance Sheet Arrangements

We currently have nooff-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

~~Recently Issued Accounting Standards~~

~~In August 2018, the FASB issued Accounting Standards Update 2018-13,~~

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

~~Fair Value Measurement—Disclosures Framework—Changes to Disclosure Requirements for Fair Value Measurement~~ (Topic 820), or ASU 2018-13. ASU 2018-13 introduces new fair value disclosure requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact of ASU 2018-13 on our financial statements.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

Interest Rate Risk

We are subject to financial market risks, including changes in interest rates. As of ~~September 30, 2019, 79.1%~~March 31, 2020, 71.5% of our portfolio investments (based on fair value) were debt investments paying variable interest rates and ~~13.5%~~12.0% were debt investments paying fixed interest rates, while ~~1.3%~~7.0% were other income producing

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investments, ~~4.5% were~~3.8% consisted ofnon-income producing investments and the remaining ~~1.6% consisting~~5.7% consisted of investments onnon-accrual status. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed the hurdle rate applicable to the subordinated incentive fee on income, and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to the Advisor with respect to our increasedpre-incentive fee net investment income.

In recent weeks, the U.S. Federal Reserve and other central banks have reduced certain interest rates in response to theCOVID-19 pandemic and market conditions. A prolonged reduction in interest rates may reduce our net investment income.

Subject to the requirements of the 1940 Act, we may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. Although hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates. As of ~~September 30, 2019,~~March 31, 2020, we have fourpay-fixed, receive-floating interest rate swaps which we pay an annual fixed rate of 2.59% to 2.81% and receive three-month LIBOR on an aggregate notional amount of ~~$360~~$900 million. The interest rate swaps have quarterly settlement payments.

Pursuant to the terms of all of our financing arrangements, borrowings are at a floating rate based on LIBOR. To the extent that any present or future credit facilities, total return swap agreements or other financing arrangements that we or any of our subsidiaries enter into are based on a floating interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we or our subsidiaries have such debt outstanding or financing arrangements in effect, our interest expense would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.

The following table shows the effect over a twelve month period of changes in interest rates on our interest income, interest expense and net interest income, assuming no changes in the composition of our investment portfolio, including the accrual status of our investments, and our financing arrangements in effect as of ~~September 30, 2019~~March 31, 2020 (dollar amounts are presented in ~~thousands)~~millions):

Basis Point Change in Interest Rates
Increase
(Decrease)
in Interest
Income(1)
Increase
(Decrease)
in Interest
Expense Increase
(Decrease) in
Net Interest
Income Percentage
Change in Net
Interest Income
Down 100 basis points $ (32,916) $ (18,462) $ (14,454) (4.7)%
No change — — — —
Up 100 basis points $ 34,155 $ 18,462 $ 15,693 5.1%
Up 300 basis points $ 103,565 $ 55,386 $ 48,179 15.6%
Up 500 basis points $ 173,249 $ 92,310 $ 80,939 26.2%

~~(1)~~

~~Assumes no defaults or prepayments by portfolio companies over the next twelve months.~~


Basis Point Change in Interest Rates	Increase (Decrease) in Interest Income⁽¹⁾			Increase (Decrease) in Interest Expense			Increase (Decrease) in Net Interest Income		Percentage Change in Net Interest Income
Down 100 basis points	$	(27	)	$	(31	)	$	4		0.9	%
No change		—			—			—		—
Up 100 basis points	$	54		$	31		$	23		5.1	%
Up 300 basis points	$	166		$	92		$	74		16.1	%
Up 500 basis points	$	280		$	153		$	127		27.6	%

(1)	Assumes no defaults or prepayments by portfolio companies over the next twelve months.

We expect that our long-term investments will be financed primarily with equity and debt. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.

Foreign Currency Risk

From time to time, we may make investments that are denominated in a foreign currency that are subject to the effects of exchange rate movements between the foreign currency of each such investment and the U.S. dollar, which may affect future fair values and cash flows, as well as amounts translated into U.S. dollars for inclusion in our consolidated financial statements.

The table below presents the effect that a 10% immediate, unfavorable change in the foreign currency exchange rates (i.e. strengthening of the U.S. dollar) would have on the fair value of our investments denominated in foreign currencies as of

March 31, 2020, by foreign currency, all other valuation assumptions remaining constant. In addition, the table below presents the par value of our investments denominated in foreign currencies and the notional amount of foreign currency forward contracts in local currency in place as of March 31, 2020 to hedge against foreign currency risks.


	Investments Denominated in Foreign Currencies As of March 31, 2020								Hedges As of March 31, 2020
	Cost in Local Currency		Cost in US$		Fair Value		Reduction in Fair Value as of March 31, 2020 if 10% Adverse Change in Exchange Rate⁽¹⁾		Net Foreign Currency Hedge Amount in Local Currency		Net Foreign Currency Hedge Amount in U.S. Dollars
Australian Dollars	A$	152.6	$	105.0	$	90.0	$	9.0	A$	6.8	$	4.6
British Pound Sterling	£	138.7		178.9		165.5		16.6	£	0.4		0.5
Canadian Dollars	C$	118.9		89.4		77.5		7.8	C$	—		—
Euros	€	135.8		136.6		129.9		13.0	€	5.7		6.4

Total			$	509.9	$	462.9	$	46.4			$	11.5

(1)	Excludes effect, if any, of any foreign currency hedges.

As illustrated in the table above, we use derivative instruments from time to time, including foreign currency forward contracts, to manage the impact of fluctuations in foreign currency exchange rates. In addition, we have the ability to borrow in foreign currencies under our Senior Secured Revolving Credit Facility, which provides a natural hedge with regard to changes in exchange rates between the foreign currencies and the U.S. dollar and reduces our exposure to foreign exchange rate differences. We are typically a net receiver of these foreign currencies as related to our international investment positions, and, as a result, our investments denominated in foreign currencies, to the extent not hedged, benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar.

As of March 31, 2020, the net contractual amount of our foreign currency forward contracts totaled $11.5, all of which related to the hedging of our foreign currency denominated debt investments. As of March 31, 2020, we had outstanding borrowings denominated in foreign currencies of €231, CAD $148, £183 and A$245 under our Senior Secured Revolving Credit Facility.

In addition, we may have risk regarding portfolio valuation. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments.”

~~Item 4.~~

~~Controls and Procedures.~~

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required byRule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2019.~~

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March 31, 2020.

Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined inRules 13a-15(f) or15d-15(f) promulgated under the Exchange Act) that occurred during the three-month period ended ~~September 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

Item 1.

Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material adverse effect upon our financial condition or results of operations.

~~Item 1A.~~

~~Risk Factors.~~

~~You~~

Item 1A.

Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form10-Q, you should carefully consider the risk factors ~~set forth~~that appeared under Item 1A. “Risk Factors” in our ~~annual report~~most recent Annual Report on Form10-K. There are no material changes from the risk factors included within our most recent Annual Report on Form10-K other than the risks described below.

Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of operations.

Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected, and could continue to adversely affect operating results for us and for our portfolio companies. For example,the COVID-19 pandemic has resulted in the following in many affected jurisdictions, including the United States: (i) restrictions on travel and the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories, resulting in significant disruption to the business of many companies, (ii) increased defaults by borrowers, (iii) volatility in credit markets and (iv) rapidly evolving action by government officials to address the economic and market problems. In addition to these developments having adverse consequences for us and our portfolio companies, the operations of the Advisor have been, and could continue to be, adversely impacted, including through quarantine measures and travel restrictions imposed on its personnel or service providers based or temporarily located in affected countries, or any related health issues of such personnel or service providers.

As the potential impactof COVID-19 is difficult to predict, the extent towhich COVID-19 could negatively affect our and our portfolio companies’ operating results or the duration of any potential business or supply-chain disruption is uncertain. Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity ofthe COVID-19 pandemic and the actions taken by authorities and other entities to contain the spreadof COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.

We are currently operating in a period of capital markets disruption and economic uncertainty.

The U.S. capital markets have experienced extreme volatility and disruption following the global outbreakof COVID-19 that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.

If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

As announced, our next quarterly distribution to stockholders has been reduced to $0.15 per share. Our ability to pay reduced distributions, to resume paying distributions consistent with our historical range or to continue to pay our distribution fully in cash rather than shares of common stock might be adversely affected by the impact of one or more of the risk factors described in this Quarterly Report onForm 10-Q and in our most recent Annual Report onForm 10-K, includingthe COVID-19 pandemic described above. If we are unable to satisfy the asset coverage test applicable to us under the 1940 Act as a business development company or if we violate certain covenants under our existing or future credit facilities or other

leverage, we mayalso be limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment. Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in our common stock and may therefore increase such stockholder’s tax liability for capital gains upon the ~~year ended December 31, 2018, as supplemented by~~future sale of such stock. A return of capital distribution may cause a stockholder to recognize a capital gain from the sale of our ~~definitive proxy statement~~common stock even if the stockholder sells its shares for less than the ~~Mergers (filed on August 13, 2019).~~

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

original purchase price.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

~~Item 3.~~

~~Defaults upon Senior Securities.~~

Item 3.

Defaults upon Senior Securities.

Not applicable.

~~Item 4.~~

~~Mine Safety Disclosures.~~

Item 4.

Mine Safety Disclosures.

Not applicable.

~~Item 5.~~

~~Other Information.~~

Item 5.

Other Information.

Not applicable.

~~Item 6.~~

~~Exhibits.~~

~~Exhibit Index~~

Item 6.

Exhibits.

	~~2.1~~

2.1		Agreement and Plan of Merger, dated as of May 31, 2019, by and among FS Investment Corporation II, Corporate Capital Trust II, FS Investment Corporation III, FS Investment Corporation IV, NT Acquisition 1, Inc., NT Acquisition 2, Inc., NT Acquisition 3, Inc. and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form8-K filed on June 3, 2019.)

3.1	~~3.1~~		Second Articles of Amendment and Restatement of the Company. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form8-K filed on ~~June 14, 2012.~~December 18, 2019.)

3.2	~~3.2~~		Articles ~~Supplementary~~ of ~~the Company.~~Amendment. (Incorporated by reference to Exhibit ~~3.1~~3.2 to the Company’s Current Report on Form8-K filed on ~~June 1, 2017.~~December 18, 2019.)

3.3	~~3.3~~		Articles ~~Supplementary~~ of ~~the Company.~~Amendment. (Incorporated by reference to Exhibit ~~3.1~~3.3 to the Company’s Current Report on Form8-K filed on ~~June 13, 2017.~~December 18, 2019.)

3.4	~~3.4~~		Third Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report onForm 8-K filed on June 13, 2017.)

3.5	~~3.5~~		Amendment ~~No.1~~No. 1 to the Third Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form8-K filed on June 3, 2019.)

4.1	~~4.1~~		Amended and Restated Distribution Reinvestment Plan of the Company, effective as of March 26, 2014. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form8-K filed on February 24, 2014.)

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4.2		~~10.1~~Indenture, dated as of February 14, 2020, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form8-K filed on February 14, 2020.)

4.3		First Supplemental Indenture, dated as of February 14, 2020, relating to the 4.250% Notes due 2025, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form8-K filed on February 14, 2020.)

4.4		Form of 4.250% Notes due 2025. (Included as Exhibit A to the First Supplemental Indenture in Exhibit 4.3). (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form8-K filed on February 14, 2020.)

10.1		Amended and Restated Investment Advisory ~~and Administrative Services~~ Agreement, dated as of ~~April 9, 2018,~~December 18, 2019, by and between ~~FS Investment Corporation II~~the Company and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form8-K filed on ~~April 9, 2018.~~December 18, 2019.)

10.2	~~10.2~~	Administration Agreement, dated as of December 18, 2019, by and between the Company and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form8-K filed on December 18, 2019.)

10.3		Custodian Agreement, dated as of February 8, 2012, by and between the Company and State Street Bank and Trust Company. (Incorporated by reference to Exhibit (j) filed withPre-Effective Amendment No. 3 to the Company’s registration statement on FormN-2 (File No. 333-175654) filed on February 10, 2012.)
			~~10.3~~			Amended and Restated Credit Agreement, dated as of May 29, 2015, by and among Cooper River LLC, as borrower, Citibank, N.A., as administrative agent, Citibank, N.A. acting through its Agency and Trust division, as collateral custodian and collateral agent, each of the lenders from time to time party thereto and Virtus Group, LP, as collateral administrator. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 4, 2015.)
10.4		~~10.4~~			Second Amendment, dated as of June 1, 2018, by and among Cooper River LLC, as borrower, Citibank, N.A., as administrative agent, Citibank, N.A. acting through its Agency and Trust division, as collateral custodian and collateral agent, each of the lenders from time to time party thereto and Virtus Group, LP, as collateral administrator. (Incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 filed on August 14, 2018.)
		~~10.5~~			Third Amendment, dated as of July 30, 2018, by and among Cooper River LLC, as borrower, Citibank, N.A., as administrative agent, Citibank, N.A. acting through its Agency and Trust division, as collateral custodian and collateral agent, each of the lenders from time to time party thereto and Virtus Group, LP, as collateral administrator. (Incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 filed on November 14, 2018.)
		~~10.6~~			~~Fourth Amendment, dated as of September 10, 2018, by and among Cooper River LLC, as~~ ~~borrower, Citibank, N.A., as administrative agent, Citibank, N.A. acting through its Agency and~~ ~~Trust division, as collateral custodian and collateral agent, each of the lenders from time to time~~ ~~party thereto and Virtus Group, LP, as collateral administrator. (Incorporated by reference to~~ ~~Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended~~ ~~September 30, 2018 filed on November 14, 2018.)~~
		~~10.7~~			~~Fifth Amendment, dated as of November 30, 2018, by and among Cooper River LLC, as~~ ~~borrower, Citibank, N.A., as administrative agent, Citibank, N.A. acting through its Agency and~~ ~~Trust division, as collateral custodian and collateral agent, each of the lenders from time to time~~ ~~party thereto and Virtus Group, LP, as collateral administrator. (Incorporated by reference to~~ ~~Exhibit 10.9 to the Company's Quarterly Report on Form 10-K filed on March 19, 2019.)~~
		~~10.8~~			~~Omnibus Sixth Amendment to Amended and Restated Credit and Security Agreement and~~ ~~Lender Fee Letter, dated as of March 29, 2019, between Cooper River LLC, as borrower,~~ ~~Citibank N.A., as administrative agent, the lenders party thereto, Citibank, N.A., acting through~~ ~~its agency & trust division, as collateral custodian and collateral agent, and Virtus Group, LP, as~~ ~~collateral administrator. (Incorporated by reference to Exhibit 10.1 to the Company's Current~~ ~~Report on Form 8-K filed on April 3, 2019.)~~
		~~10.9~~			Loan Financing and Servicing Agreement, dated as of February 20, 2014, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report onForm 8-K filed on February 25, 2014.)

10.5	~~10.10~~			Amendment No. 1 to Loan Financing and Servicing Agreement, dated as of January 12, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative ~~agent, Wells Fargo Bank, National Association, as collateral agent and collateral~~ ~~custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated~~ ~~by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K filed on March 25,~~ ~~2016.)~~

~~TABLE OF CONTENTS~~

		~~10.11~~		~~Amendment No. 2 to Loan Financing and Servicing Agreement, dated as of February 3, 2015, by~~ ~~and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as~~ ~~administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral~~ ~~custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated~~ ~~by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K filed on March 25,~~ ~~2016.)~~
		~~10.12~~		~~Amendment No. 3 to Loan Financing and Servicing Agreement, dated as of May 7, 2015, by and~~ ~~among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative~~ agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit ~~10.29~~10.27 to the ~~Company's~~Company’s Annual Report on Form10-K filed on March 25, 2016.)

10.6	~~10.13~~		Amendment No. 4 2 to Loan Financing and Servicing Agreement, dated as of ~~October 8,~~February 3, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit ~~10.30~~10.28 to the ~~Company's~~Company’s Annual Report on Form10-K filed on March 25, 2016.)



10.7	~~10.14~~		Amendment No. 6 3 to Loan Financing and Servicing Agreement, dated as of ~~August 19, 2016,~~May 7, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit ~~10.1~~10.29 to the ~~Company's Current~~Company’s Annual Report on Form ~~8-K~~10-K filed on ~~August 22,~~ March 25, 2016.)

10.8	~~10.15~~		Amendment No. 7 4 to Loan Financing and Servicing Agreement, dated as of ~~February 15, 2019,~~ October 8, 2015, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form10-K filed on March 25, 2016.)

10.9		Amendment No. 6 to Loan Financing and Servicing Agreement, dated as of August 19, 2016, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K filed on August 22, 2016.)

10.10		Amendment No. 7 to Loan Financing and Servicing Agreement, dated as of February 15, 2019, by and among Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.16 to the ~~Company's~~Company’s Quarterly Report on Form10-K filed on March 19, 2019.)

10.11	~~10.16~~		Omnibus Amendment, dated as of February 20, 2019, between Darby Creek LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed on February 25, 2019.)

10.12	~~10.17~~		Amended and Restated Loan and Security Agreement, dated as of March 13, 2019, by and between Juniata River LLC, as borrower, JPMorgan Chase Bank, National Association, as administrative agent, the lenders party thereto, and Wells Fargo Bank, National Association, as collateral administrator, collateral agent and securities intermediary. (Incorporated by reference to Exhibit 10.20 to the ~~Company's~~Company’s Quarterly Report on Form10-K filed on March 19, 2019.)

10.13	~~10.18~~		First Amendment to Amended and Restated Loan Agreement, dated as of October 11, 2019, among Juniata River LLC, JPMorgan Chase Bank, National Association, as lender and Administrative Agent, Wells Fargo Bank, National Association, as Collateral Agent, Collateral Administrator and Securities Intermediary, and FS Investment Corporation II, as Investment Manager. (Incorporated by reference to Exhibit 10.1 to the ~~Company's Current Report on Form 8-K filed on October 15, 2019.)~~
		~~10.19~~		Credit Agreement, dated as of May 15, 2017, among Green Creek LLC, Goldman Sachs Bank USA, as lender, sole lead arranger and administrative agent, Citibank, N.A., as collateral agent, and Virtus Group, LP, as collateral administrator. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form8-K filed on ~~May 16, 2017.~~October 15, 2019.)

~~TABLE OF CONTENTS~~

10.14		~~10.20~~	Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 7, 2019, by and among FS KKR Capital Corp., FS Investment Corporation II, and FS Investment Corporation III, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders, documentation agents, joint bookrunners, and joint lead arrangers party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K filed on November 13, 2019.)

10.15*	31.1*	Commitment Increase Letter, dated as of March 3, 2020, among BNP Paribas, ING Capital LLC, the Company, FS KKR Capital Corp. and JPMorgan Chase Bank, N.A., as administrative agent.

10.16		Amendment No. 1 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 5, 2020, by and among the Company, FS KKR Capital Corp., JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K filed on May 8, 2020.)

10.17		Credit Agreement, dated as of July 10, 2019, among Germantown Funding LLC, Goldman Sachs Bank USA, as lender, sole lead arranger, administrative agent and calculation agent, and Wells Fargo Bank, National Association, as collateral agent and collateral administrator.(Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on July 16, 2019).



10.18		Amendment No. 1 to Credit Agreement, dated as of December 13, 2019, among Germantown Funding LLC, as borrower, FS Investment Corporation III, as equity owner and investment manager, Goldman Sachs Bank USA, as sole lead arranger, sole lender, and administrative agent, and Wells Fargo Bank, National Association, as collateral administrator and collateral agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on December 17, 2019).

10.19		Loan Financing and Servicing Agreement, dated as of December 2, 2014, by and among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on December 8, 2014).

10.20		Amendment No. 1 to Loan Financing and Servicing Agreement, dated as of February 24, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on March 2, 2015).

10.21		Amendment No. 2 to Loan Financing and Servicing Agreement, dated as of March 24, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on March 26, 2015).

10.22		Amendment No. 3 to Loan Financing and Servicing Agreement, dated as of August 25, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.29 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 11, 2016).

10.23		Amendment No. 4 to Loan Financing and Servicing Agreement, dated as of September 22, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on September 24, 2015).

10.24		Amendment No. 5 to Loan Financing and Servicing Agreement, dated as of October 8, 2015, between Dunlap Funding LLC, as borrower, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.31 to FS Investment Corporation III’s Annual Report onForm 10-K for the fiscal year ended December 31, 2015 filed on March 11, 2016).

10.25		Amendment No. 7 to Loan Financing and Servicing Agreement, dated as of January 12, 2017, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, each lender party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to the FS Investment Corporation III’s Current Report onForm 8-K filed on January 19, 2017).

10.26		Amendment No. 8 to Loan Financing and Servicing Agreement, dated as of April 5, 2017, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent, each lender party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.37 to FS Investment Corporation III’s Quarterly Report onForm 10-Q for the quarterly period ended March 31, 2017 filed on May 10, 2017).

10.27		Amendment No. 9 to Loan Financing and Servicing Agreement, dated as of March 12, 2018, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent (formerly administrative agent), each lender party thereto, and Wells Fargo, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on March 15, 2018).

10.28		Amendment No. 10 to Loan Financing and Servicing Agreement, dated as of June 20, 2018, among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent (formerly administrative agent), each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.48 to FS Investment Corporation III’s Quarterly Report on Form 10-Q filed on August 14, 2018).

10.29		Waiver, Assignment and Amendment No. 11 to Loan Financing and Servicing Agreement, dated as of September 17, 2018, among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent (formerly administrative agent), each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.46 to FS Investment Corporation III’s Quarterly Report on Form 10-Q filed on November 14, 2018).



10.30		Amendment No. 12 to Loan Financing and Servicing Agreement, dated as of December 21, 2018, among Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.43 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 19, 2019).

10.31		Omnibus Amendment, dated as of February 19, 2019, between Dunlap Funding LLC, as borrower, Deutsche Bank AG, New York Branch, as facility agent, each lender party thereto, each agent party thereto, and Wells Fargo Bank, National Association, as collateral agent and collateral custodian. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-K filed on February 25, 2019).

10.32		Second Amended and Restated Loan and Security Agreement, dated as of March 4, 2019, by and between Jefferson Square Funding LLC, as borrower, JPMorgan Chase Bank, National Association, as administrative agent, the lenders party thereto, and Wells Fargo Bank, National Association, as collateral administrator, collateral agent and securities intermediary party thereto. (Incorporated by reference to Exhibit 10.49 to FS Investment Corporation III’s Annual Report on Form 10-K filed on March 19, 2019).

10.33		Committed Facility Agreement, dated as of October 17, 2014, by and between Burholme Funding LLC and BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on October 23, 2014).

10.34		U.S. PB Agreement, dated as of October 17, 2014, by and between Burholme Funding LLC and BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities. (Incorporated by reference to Exhibit 10.2 to FS Investment Corporation III’s Current Report onForm 8-K filed on October 23, 2014).

10.35		Special Custody and Pledge Agreement, dated as of October 17, 2014, by and among Burholme Funding LLC, BNP Paribas Prime Brokerage, Inc. and State Street Bank and Trust Company, as custodian. (Incorporated by reference to Exhibit 10.3 to FS Investment Corporation III’s Current Report on Form 8-K filed on October 23, 2014).

10.36		First Amendment Agreement, dated as of March 11, 2015, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities, and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on March 13, 2015).

10.37		Second Amendment Agreement, dated as of October 21, 2015, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.21 to FS Investment Corporation III’s Annual Report onForm 10-K filed on March 11, 2016).

10.38		Third Amendment Agreement, dated as of March 16, 2016, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.23 to FS Investment Corporation III’s Quarterly Report onForm 10-Q for the quarterly period ended September 30, 2016 filed on November 14, 2016).

10.39		Fourth Amendment Agreement, dated as of August 29, 2016, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report onForm 8-K filed on September 2, 2016).

10.40		Fifth Amendment Agreement, dated as of November 15, 2016, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.34 to FS Investment Corporation III’s Current Reporton Form 8-K filed on November 21, 2016).

10.41		Sixth Amendment Agreement, dated as of May 29, 2018, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage International, Ltd. And Burholme Funding LLC. (Incorporated by reference to Exhibit 10.34 to the Registrant’s Quarterly Report on Form10-Q filed on August 14, 2018).

10.42		Seventh Amendment Agreement, dated as of June 12, 2019, to the Committed Facility Agreement, dated as of October 17, 2014, between BNP Paribas Prime Brokerage International, Ltd. and Burholme Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation III’s Current Report on Form 8-Kfiled on June 17, 2019).



10.43		Committed Facility Agreement, dated and effective as of March 1, 2017, by and between Broomall Funding LLC and BNP Paribas Prime Brokerage International, Ltd. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation IV’s Current Report on Form8-K filed on February 15, 2017).

10.44		U.S. PB Agreement, dated and effective as of March 1, 2017, by and between Broomall Funding LLC and BNP Paribas Prime Brokerage International, Ltd., on behalf of itself and as agent for the BNPP Entities. (Incorporated by reference to Exhibit 10.2 to FS Investment Corporation IV’s Current Report on Form8-K filed on February 15, 2017).

10.45		First Amendment Agreement, dated as of May 29, 2018, to the Committed Facility Agreement, dated as of March 1, 2017, between BNP Paribas Prime Brokerage International, Ltd. and Broomall Funding LLC. (Incorporated by reference to Exhibit 10.32 to FS Investment Corporation IV’s Quarterly Report on Form10-Q filed on August 14, 2018).

10.46		Second Amendment Agreement, dated as of December 31, 2018, to the Committed Facility Agreement, dated as of March 1, 2017, between BNP Paribas Prime Brokerage International, Ltd. and Broomall Funding LLC. (Incorporated by reference to Exhibit 10.28 to FS Investment Corporation IV’s Annual Report on Form10-K filed on March 18, 2019).

10.47		Loan and Security Agreement, dated as of November 22, 2019, by and among Ambler Funding LLC, as borrower, Ally Bank, as administrative agent and arranger, Wells Fargo Bank, N.A., as collateral administrator and collateral custodian, and the lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation IV’s Current Report on Form8-K filed on November 26, 2019).

10.48		Loan and Servicing Agreement, dated as of November 22, 2019, by and among Meadowbrook Run LLC, as borrower, Morgan Stanley Senior Funding, Inc., as administrative agent, Wells Fargo Bank, N.A., as collateral agent, account bank and collateral custodian, and the lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to Company’s Current Report on Form8-K filed on November 29, 2019).

10.49*		First Amendment to Loan and Servicing Agreement and Omnibus Amendment to Transaction Documents, dated as of March 3, 2020, by and among Meadowbrook Run LLC, as borrower, Morgan Stanley Senior Funding, Inc., as lender and administrative agent, and the Company, as servicer.

10.50		ISDA 2002 Master Agreement, together with the Schedule thereto and Credit Support Annex to such Schedule, each dated as of January 19, 2016, by and between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Investment Corporation IV’s Current Report on Form8-K filed on January 22, 2016).

10.51		Amended and Restated Paragraph 13 of the Credit Support Annex, dated as of September 5, 2017, by and between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit (k)(6) to Post-Effective Amendment No. 9 to FS Investment Corporation IV’s registration statement on FormN-2 (File No. 333-204239) filed on October 18, 2017).

10.52		Thirteenth Amended and Restated Confirmation Letter Agreement, dated as of December 19, 2019, by and between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 the Company’s Current Report on Form8-K filed on December 26, 2019).

10.53		Schedule to the ISDA 2002 Master Agreement, amended and restated as of June 28, 2019, between Cheltenham Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.2 to FS Investment Corporation IV’s Current Report on Form8-K filed on July 5, 2019).

10.54		Guarantee, dated as of January 19, 2016, by FS Investment Corporation IV in favor of Citibank, N.A. (Incorporated by reference to Exhibit 10.4 to FS Investment Corporation IV’s Current Report on Form8-K filed on January 22, 2016).

31.1*		Certification of Chief Executive Officer pursuant to Rule13a-14 of the Securities Exchange Act of 1934, as amended.

31.2*	31.2*		Certification of Chief Financial Officer pursuant to Rule13a-14 of the Securities Exchange Act of 1934, as amended.

32.1*	32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

*	Filed herewith.

~~Filed herewith.~~

~~TABLE OF CONTENTS~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~November 14, 2019.~~

May 12, 2020.

			~~FS INVESTMENT CORPORATION II~~
FS KKR CAPITAL CORP. II

By:		/s/ Michael C. Forman
	Michael C. Forman Chief Executive Officer (Principal Executive Officer)

By:		/s/ ~~William Goebel~~ ~~William Goebel~~ Steven Lilly
	Steven Lilly Chief Financial Officer (Principal Financial ~~and Accounting~~ Officer)

	September 30, 2019 (Unaudited)			December 31, 2018
Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$4,210,751 and $4,312,105, respectively)		$	3,992,671		$	4,131,877
Non-controlled/affiliated investments (amortized cost—$269,315 and $248,500, respectively)			262,609			227,403
Total investments, at fair value (amortized cost—$4,480,066 and $4,560,605, respectively)			4,255,280			4,359,280
Cash			107,095			148,172
Foreign currency, at fair value (cost—$2,570 and $2,264, respectively)			2,567			2,286
Collateral held at broker for open interest rate swap contracts			17,390			—
Receivable for investments sold and repaid			12,178			4,025
Interest receivable			42,207			34,221
Deferred financing costs			6,769			6,000
Deferred merger costs			911			—
Receivable on interest rate swaps			1,151			173
Prepaid expenses and other assets			147			97
Total assets		$	4,445,695		$	4,554,254
Liabilities
Payable for investments purchased		$	53,688		$	42,236
Credit facilities payable (net of deferred financing costs of $1,687 and $3,122, respectively)(1)			1,826,687			1,887,132
Stockholder distributions payable			12,308			11,688
Management fees payable			16,735			17,256
Subordinated income incentive fees payable(2)			5,045			5,796
Administrative services expense payable			1,606			365
Interest payable			13,866			16,480
Directors’ fees payable			98			243
Interest rate swap income payable			1,304			174
Unrealized depreciation on interest rate swaps			13,947			1,743
Other accrued expenses and liabilities			1,656			3,732
Total liabilities			1,946,940			1,986,845
Commitments and contingencies(3)
Stockholders’ equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding			—			—
Common stock, $0.001 par value, 450,000,000 shares authorized, 329,433,102 and 326,445,320 shares issued and outstanding, respectively			329			326
Capital in excess of par value			3,014,469			2,990,996
Retained earnings (accumulated deficit)(4)			(516,043)			(423,913)
Total stockholders’ equity			2,498,755			2,567,409
Total liabilities and stockholders’ equity		$	4,445,695		$	4,554,254
Net asset value per share of common stock at period end		$	7.59		$	7.86

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Investment income
From non-controlled/unaffiliated investments:
Interest income		$	89,398		$	92,684		$	287,970		$	282,218
Paid-in-kind interest income			4,590			2,491			8,803			6,467
Fee income			5,270			14,181			18,496			22,641
Dividend income			768			468			839			7,962
From non-controlled/affiliated investments:
Interest income			5,587			4,697			16,173			15,699
Paid-in-kind interest income			2,138			2,865			7,249			7,080
Fee income			—			—			43			1,123
Total investment income			107,751			117,386			339,573			343,190
Operating expenses
Management fees(1)			16,735			17,567			51,581			61,739
Subordinated income incentive fees(2)			5,045			11,939			24,912			18,994
Administrative services expenses			1,833			799			3,387			2,371
Stock transfer agent fees			471			506			1,677			1,502
Accounting and administrative fees			362			395			1,106			1,227
Interest expense(3)			23,969			26,924			79,047			77,958
Directors’ fees			84			254			301			1,053
Other general and administrative expenses			710			1,217			2,798			3,539
Operating expenses			49,209			59,601			164,809			168,383
Management fee waiver(1)			—			—			—			(3,432)
Net expenses			49,209			59,601			164,809			164,951
Net investment income			58,542			57,785			174,764			178,239
Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated investments			(8,142)			18,501			(48,767)			14,901
Non-controlled/affiliated investments			3		��	3			185			(25,706)
Net realized gain (loss) on interest rate swaps			(290)			—			(290)			—
Net realized gain (loss) on foreign currency			944			446			1,059			(220)
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated investments			(80,367)			(42,337)			(37,852)			(101,939)
Non-controlled/affiliated investments			5,470			2,298			14,391			(44,034)
Net change in unrealized appreciation (depreciation) on interest rate swaps			(1,551)			—			(12,204)			—
Net change in unrealized gain (loss) on foreign currency			3,169			(693)			504			84
Total net realized and unrealized gain (loss) on investments			(80,764)			(21,782)			(82,974)			(156,914)
Net increase (decrease) in net assets resulting from operations		$	(22,222)		$	36,003		$	91,790		$	21,325
Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)		$	(0.07)		$	0.11		$	0.28		$	0.07
Weighted average shares outstanding			327,346,481			324,359,144			325,302,803			324,577,481

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)		Maturity	Principal Amount(c)			Amortized Cost			Fair Value(d)
Senior Secured Loans—First Lien—119.4%
5 Arch Income Fund 2, LLC	(m)(q)	Diversified Financials	10.5%			11/18/23		$	31,016		$	31,016		$	30,949
5 Arch Income Fund 2, LLC	(m)(n)(q)	Diversified Financials	10.5%			11/18/23			42,984			42,984			42,892
Abaco Energy Technologies LLC	(h)(i)	Energy	L+700, 2.5% PIK (2.5% Max PIK)		1.0%	11/20/20			23,366			23,070			23,133
ABB CONCISE Optical Group LLC	(s)	Retailing	L+500		1.0%	6/15/23			2,747			2,756			2,620
Accuride Corp	(j)(s)	Capital Goods	L+525		1.0%	11/17/23			4,072			3,500			3,443
Acosta Holdco Inc	(h)(k)(l)(s)	Commercial & Professional Services	L+325		1.0%	9/26/21			6,592			5,281			2,068
Advanced Lighting Technologies Inc	(t)	Materials	L+750		1.0%	10/4/22			9,056			8,044			8,128
Advantage Sales & Marketing Inc	(i)(s)	Commercial & Professional Services	L+325		1.0%	7/23/21			15,250			14,734			14,280
All Systems Holding LLC	(g)(h)(i)	Commercial & Professional Services	L+625		1.0%	10/31/23			123,603			123,603			124,839
All Systems Holding LLC	(n)	Commercial & Professional Services	L+625		1.0%	10/31/23			214			214			216
Altus Power America Inc	(i)	Energy	L+750		1.5%	9/30/21			3,750			3,750			3,642
American Tire Distributors Inc	(s)	Automobiles & Components	L+600, 1.0% PIK (1.0% Max PIK)		1.0%	9/1/23			634			599			630
American Tire Distributors Inc	(s)	Automobiles & Components	L+750		1.0%	9/2/24			4,001			3,494			3,536
Ammeraal Beltech Holding BV	(m)(s)	Capital Goods	E+375			7/30/25		€	1,491			1,725			1,575
Apex Group Limited	(m)(n)	Diversified Financials	L+650		1.3%	6/15/23		$	2,302			2,248			2,300
Apex Group Limited	(i)(m)	Diversified Financials	L+650		1.3%	6/15/25			7,471			7,346			7,464
Apex Group Limited	(i)(m)	Diversified Financials	L+700		1.0%	6/15/25			27,386			27,281			27,359
Apex Group Limited	(f)(g)(m)	Diversified Financials	L+700		1.3%	6/15/25			15,447			15,180			15,432
Apex Group Limited	(m)	Diversified Financials	L+700		1.5%	6/15/25		£	22,253			28,265			27,507
Arrotex Australia Group Pty Ltd	(m)	Pharmaceuticals, Biotechnology & Life Sciences	B+525		1.0%	7/10/24		A$	47,322			32,473			31,447
Aspect Software Inc	(n)	Software & Services	L+500		1.0%	7/15/23		$	865			865			865
Aspect Software Inc	(h)	Software & Services	L+500		1.0%	1/15/24			5,628			5,031			5,086
ATX Networks Corp	(f)(m)(s)	Technology Hardware & Equipment	L+600, 1.0% PIK (1.0% Max PIK)		1.0%	6/11/21			26,124			25,807			24,687
AVF Parent LLC	(h)(i)(k)(l)	Retailing	L+725		1.3%	3/1/24			73,019			72,421			41,539
Belk Inc	(s)	Retailing	L+475		1.0%	12/12/22			22,403			19,982			16,479
Borden Dairy Co	(g)(h)	Food, Beverage & Tobacco	L+750		1.0%	7/6/23			52,500			52,500			45,732
Brand Energy & Infrastructure Services Inc	(j)(s)	Capital Goods	L+425		1.0%	6/21/24			2,336			2,296			2,289
Caprock Midstream LLC	(s)	Energy	L+475			11/3/25			6,118			5,992			5,526
CEPSA Holdco (Matador Bidco)	(j)(m)(s)	Energy	L+475			6/19/26			1,877			1,858			1,884
CHS/Community Health Systems, Inc.	(g)(m)(s)	Health Care Equipment & Services	8.0%			3/15/26			7,231			7,025			7,231
Cimarron Energy Inc		Energy	L+1,000		1.0%	6/30/21			7,500			7,500			7,472
Conservice LLC	(n)	Consumer Services	L+525			11/29/24			1,702			1,687			1,690
Conservice LLC	(h)	Consumer Services	L+525			11/29/24			34,551			34,251			34,493

Portfolio Company	Fair Value at December 31, 2018			Gross Additions(1)			Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at September 30, 2019			Interest Income(3)			PIK Income(3)			Fee Income(3)
Senior Secured Loans—First Lien
Advanced Lighting Technologies Inc		$	9,125		$	172		$	(69)		$	8		$	(1,108)		$	8,128		$	695		$	—		$	—
HM Dunn Co Inc			7,022			—			—			—			9,721			16,743			—			—			—
HM Dunn Co Inc (4)			—			2,775			—			—			—			2,775			87			133			43
MB Precision Holdings LLC			21,339			1,248			(671)			177			(652)			21,441			1,938			365			—
Warren Resources Inc			14,652			120			—			—			—			14,772			1,299			120			—
Other Senior Secured Debt																					—
Advanced Lighting Technologies Inc			3,630			—			—			—			(3,630)			—			—			—			—
JW Aluminum Co			32,919			—			—			—			1,980			34,899			2,537			—			—
Mood Media Corp			28,478			47,387			(36,322)			—			270			39,813			4,042			1,139			—
Equity/Other
Advanced Lighting Technologies Inc, Common Equity			—			—			—			—			—			—			—			—			—
Advanced Lighting Technologies Inc, Warrant			—			—			—			—			—			—			—			—			—
ASG Technologies, Common Equity			31,743			—			—			—			2,967			34,710			—			—			—
ASG Technologies, Warrants			7,364			—			—			—			1,204			8,568			—			—			—
HM Dunn Co Inc, Preferred Stock, Series A			—			—			—			—			—			—			—			—			—
HM Dunn Co Inc, Preferred Stock, Series B			—			—			—			—			—			—			—			—			—
JW Aluminum Co, Common Stock			—			—			—			—			—			—			—			—			—
JW Aluminum Co, Preferred Stock			43,890			5,816			—			—			18,035			67,741			5,575			5,492			—
MB Precision Holdings LLC, Class A-2 Units			—			—			—			—			—			—			—			—			—
MB Precision Holdings LLC, Preferred Stock			5,826			174			—			—			(862)			5,138			—			—			—
Mood Media Corp, Common Stock			15,842			—			—			—			(14,032)			1,810			—			—			—
Warren Resources Inc, Common Stock			5,573			—			—			—			498			6,071			—			—			—
Total		$	227,403		$	57,692		$	(37,062)		$	185		$	14,391		$	262,609		$	16,173		$	7,249		$	43

Counterparty	Notional Amount			Company Receives Floating Rate	Company Pays Fixed Rate		Termination Date	Premiums Paid/ (Received)			Value			Unrealized Depreciation
JP Morgan Chase Bank		$	80,000	3-Month LIBOR		2.78%	12/18/2023		$	—		$	(1,090)		$	(1,090)
JP Morgan Chase Bank		$	80,000	3-Month LIBOR		2.81%	12/18/2021			—			(653)			(653)
									$	—		$	(1,743)		$	(1,743)

Portfolio Company	Fair Value at December 31, 2017			Transfers In or Out			Purchases and Paid-in-Kind Interest			Sales and Repayments			Accretion of Discount			Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2018			Interest Income(1)			PIK Income(1)			Fee Income(1)
Senior Secured Loans—First Lien
Advanced Lighting Technologies, Inc.		$	9,218		$	—		$	—		$	(92)		$	223		$	13		$	(237)		$	9,125		$	1,119		$	—		$	—
H.M. Dunn Co., Inc.(2)			—			64,286			—			—			—			(25,715)			(31,549)			7,022			1,656			—			—
Logan’s Roadhouse, Inc.(3)			4,669			—			2,223			(6,875)			—			(25)			8			—			17			710			—
Logan’s Roadhouse, Inc.			—			—			1,347			(1,333)			—			(14)			—			—			529			529			—
MB Precision Holdings LLC(2)			—			64,367			710			(12,581)			—			(32,132)			975			21,339			3,507			—			—
Warren Resources, Inc.			43,613			—			170			(28,068)			—			—			(1,063)			14,652			1,939			170			1,123
Senior Secured Loans—Second Lien
JW Aluminum Co.			34,382			—			—			(33,874)			1			7			(516)			—			1,492			—			—
Logan’s Roadhouse, Inc.			6,771			—			194			(1,839)			6			(13,001)			7,869			—			188			194			—
Other Senior Secured Debt
Advanced Lighting Technologies, Inc.			10,278			—			646			(261)			—			—			(7,033)			3,630			1,182			646			—
JW Aluminum Co.			—			—			33,001			—			—			—			(82)			32,919			1,983			—			—
Mood Media Corp.			23,219			—			5,274			—			5			—			(20)			28,478			4,429			1,901			—
Equity/Other
Advanced Lighting Technologies, Inc., Common Equity			5,900			—			—			—			—			—			(5,900)			—			—			—			—
Advanced Lighting Technologies, Warrants, 10/4/2027			26			—			—			—			—			—			(26)			—			—			—			—
ASG Everglades Holdings, Inc., Common Equity			30,727			—			—			—			—			—			1,016			31,743			—			—			—
ASG Everglades Holdings, Inc., 6/27/2022, Warrants			6,951			—			—			—			—			—			413			7,364			—			—			—
HM Dunn Aerosystems, Inc., Preferred Equity, Series A(2)			—			—			—			—			—			—			—			—			—			—			—
HM Dunn Aerosystems, Inc., Preferred Equity, Series B(2)			—			—			—			—			—			—			—			—			—			—			—
JW Aluminum Co., Common Equity			—			—			—			—			—			—			—			—			—			—			—
JW Aluminum Co., Preferred Equity			15,074			—			18,992			—			210			—			9,614			43,890			5,632			4,785			—

	Nine Months Ended September 30,
	2019					2018
	Shares		Amount			Shares		Amount
Reinvestment of Distributions		9,476,410		$	75,709		9,802,626		$	84,192
Share Repurchase Program		(6,488,628)			(52,233)		(10,072,672)			(86,976)
Net Proceeds from Share Transactions		2,987,782		$	23,476		(270,046)		$	(2,784)

	September 30, 2019 (Unaudited)			December 31, 2018
Distributable ordinary income		$	42,556		$	53,267
Distributable realized gains			—			—
Capital loss carryover(1)			(235,873)			(191,708)
Other temporary differences			(122)			(139)
Net unrealized appreciation (depreciation) on investments and interest rate swaps and gain (loss) on foreign currency(2)			(317,909)			(285,333)
Total		$	(511,348)		$	(423,913)

	September 30, 2019 (Unaudited)								December 31, 2018
	Amortized Cost(1)			Fair Value			Percentage of Portfolio		Amortized Cost(1)			Fair Value			Percentage of Portfolio
Senior Secured Loans—First Lien		$	3,122,832		$	2,983,546		70%		$	3,382,158		$	3,293,291		76%
Senior Secured Loans—Second Lien			520,677			440,303		10%			418,015			333,986		8%
Other Senior Secured Debt			210,699			202,559		5%			205,162			194,726		4%
Subordinated Debt			237,022			239,497		6%			244,811			223,748		5%
Asset Based Finance			130,582			123,038		3%			49,415			48,160		1%
Equity/Other			258,254			266,337		6%			261,044			265,369		6%
Total		$	4,480,066		$	4,255,280		100%		$	4,560,605		$	4,359,280		100%

As of September 30, 2019 (Unaudited)
Counterparty	Derivative Liabilities Subject to Master Netting Agreement			Derivatives Available for Offset			Non-cash Collateral Received(1)			Cash Collateral Pledged(1)			Net Amount of Derivative Liabilities(3)
JP Morgan Chase Bank		$	6,633		$	—		$	—		$	6,633		$	—
ING Capital Markets			7,314			—			—			7,314			—
Total		$	13,947		$	—		$	—		$	13,947		$	—

As of December 31, 2018
Counterparty	Derivative Liabilities Subject to Master Netting Agreement			Derivatives Available for Offset			Non-cash Collateral Received(1)			Cash Collateral Pledged(1)			Net Amount of Derivative Liabilities(3)
JP Morgan Chase Bank		$	1,743		$	—		$	—		$	—		$	1,743
Total		$	1,743		$	—		$	—		$	—		$	1,743

Valuation Inputs	September 30, 2019 (Unaudited)			December 31, 2018
Level 1—Price quotations in active markets		$	2,193		$	517
Level 2—Significant other observable inputs			854,107			906,192
Level 3—Significant unobservable inputs			3,398,980			3,452,571
Total		$	4,255,280		$	4,359,280

	For the Nine Months Ended September 30, 2019
	Senior Secured Loans— First Lien			Senior Secured Loans— Second Lien			Other Senior Secured Debt			Subordinated Debt			Asset Based Finance			Equity/ Other			Total
Fair value at beginning of period		$	2,827,812		$	212,290		$	95,132		$	6,201		$	48,160		$	262,976		$	3,452,571
Accretion of discount (amortization of premium)			2,354			218			395			6			6			1,128			4,107
Net realized gain (loss)			(1,677)			—			2			—			964			(10,609)			(11,320)
Net change in unrealized appreciation (depreciation)			(52,682)			(16,028)			(3,347)			84			(5,962)			5,539			(72,396)
Purchases			551,815			133,559			14,372			32,615			90,122			5,138			827,621
Paid-in-kind interest			2,620			1,437			1,208			3,213			1,654			5,492			15,624
Sales and repayments			(816,666)			(5,979)			(2,356)			—			(11,931)			(5,969)			(842,901)
Net transfers in or out of Level 3			25,674			—			—			—			—			—			25,674
Fair value at end of period		$	2,539,250		$	325,497		$	105,406		$	42,119		$	123,013		$	263,695		$	3,398,980
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date		$	(56,012)		$	(16,133)		$	373		$	(235)		$	(3,090)		$	(1,895)		$	(76,992)

	Three Months Ended September 30,
	2019									2018
Arrangement(1)	Direct Interest Expense(2)			Amortization of Deferred Financing Costs			Total Interest Expense			Direct Interest Expense(2)			Amortization of Deferred Financing Costs			Total Interest Expense
Green Creek Credit Facility		$	6,069		$	136		$	6,205		$	6,187		$	315		$	6,502
Cooper River Credit Facility			958			128			1,086			1,901			117			2,018
Wissahickon Creek Credit Facility			—			—			—			1,118			1,816			2,934
Darby Creek Credit Facility			2,204			134			2,338			2,243			139			2,382
Dunning Creek Credit Facility			—			—			—			268			—			268
Juniata River Credit Facility			9,347			384			9,731			10,907			370			11,277
FSIC II Revolving Credit Facility			—			—			—			11			4			15
Senior Secured Revolving Credit Facility			4,342			267			4,609			1,395			133			1,528
Total		$	22,920		$	1,049		$	23,969		$	24,030		$	2,894		$	26,924

Category/Company (1)	Commitment Amount
Senior Secured Loans—First Lien
5 Arch Income Fund 2, LLC		$	42,984
All Systems Holding LLC			214
Apex Group Limited			2,248
Aspect Software Inc			865
Conservice LLC			1,687
Conservice LLC			1,440
CSafe Global			3,757
CSafe Global			12,522
Eagle Family Foods Inc			2,364
Entertainment Benefits Group LLC			2,347
HM Dunn Co Inc			1,644
Industria Chimica Emiliana Srl			7,973
J S Held LLC			3,604
J S Held LLC			8,372
Kodiak BP LLC			5,082
Greystone Equity Member Corp			3,607
Lipari Foods LLC			25,220
Monitronics International Inc			29,673
North Haven Cadence Buyer Inc			2,625
North Haven Cadence Buyer Inc			17,792
Sungard Availability Services Capital Inc			615
Zeta Interactive Holdings Corp			4,929
Asset Based Finance
Home Partners JV, Structured Mezzanine			13,030
Total		$	194,594
Unfunded equity/other commitments		$	150,447

	Nine Months Ended September 30, 2019 (Unaudited)			Year Ended December 31, 2018
Per Share Data:(1)
Net asset value, beginning of period		$	7.86		$	8.73
Results of operations(2)
Net investment income			0.54			0.73
Net realized gain (loss) and unrealized appreciation (depreciation)			(0.24)			(0.85)
Net increase (decrease) in net assets resulting from operations			0.30			(0.12)
Stockholder distributions(3)
Distributions from net investment income			(0.57)			(0.75)
Net decrease in net assets resulting from stockholder distributions			(0.57)			(0.75)
Capital share transactions
Issuance of common stock(4)			—			—
Repurchases of common stock(5)			—			—
Net increase (decrease) in net assets resulting from capital share transactions			—			—
Net asset value, end of period		$	7.59		$	7.86
Shares outstanding, end of period			329,433,102			326,445,320
Total return(6)			3.62%			(1.64)%
Total return (without assuming reinvestment of distributions)(6)			3.82%			(1.37)%
Ratio/Supplemental Data:
Net assets, end of period		$	2,498,755		$	2,567,409
Ratio of net investment income to average net assets(7)			9.12%			8.68%
Ratio of operating expenses and excise taxes to average net assets(7)			8.60%			8.12%
Ratio of net operating expenses and excise taxes to average net assets(7)			8.60%			7.99%
Portfolio turnover(8)			26.76%			43.12%
Total amount of senior securities outstanding, exclusive of treasury securities		$	1,828,374		$	1,890,254
Asset coverage per unit(9)			2.37			2.36

Net Investment Activity	For the Three Months Ended September 30, 2019			For the Nine Months Ended September 30, 2019
Purchases		$	427,864		$	1,157,274
Sales and Repayments			(140,873)			(1,213,529)
Net Portfolio Activity		$	286,991		$	(56,255)

	For the Three Months Ended September 30, 2019					For the Nine Months Ended September 30, 2019
New Investment Activity by Asset Class	Purchases			Percentage		Purchases			Percentage
Senior Secured Loans—First Lien		$	295,868		69%		$	816,567		71%
Senior Secured Loans—Second Lien			74,701		17%			142,962		12%
Other Senior Secured Debt			—		—			37,247		3%
Subordinated Debt			15,822		4%			69,084		6%
Asset Based Finance			41,473		10%			90,474		8%
Equity/Other			—		—			940		0%
Total		$	427,864		100%		$	1,157,274		100%

	September 30, 2019	December 31, 2018
Number of Portfolio Companies	174	160
% Variable Rate Debt Investments (based on fair value)(1)(2)	79.1%	81.4%
% Fixed Rate Debt Investments (based on fair value)(1)(2)	13.5%	12.2%
% Other Income Producing Investments (based on fair value)(3)	1.3%	0.1%
% Non-Income Producing Investments (based on fair value)(2)	4.5%	5.2%
% of Investments on Non-Accrual (based on fair value)	1.6%	1.1%
Weighted Average Annual Yield on Accruing Debt Investments(2)(4)	9.9%	10.5%
Weighted Average Annual Yield on All Debt Investments(5)	9.2%	10.1%

		Payments Due By Period
	Maturity Date(1)	Total			Less than 1 year			1 – 3 years			3 – 5 years			More than 5years
Green Creek Credit Facility(2)	December 15, 2019		$	500,000		$	500,000			—			—		—
Cooper River Credit Facility(3)	March 31, 2021		$	44,500			—		$	44,500			—		—
Darby Creek Credit Facility(4)	February 26, 2024		$	185,000			—			—		$	185,000		—
Juniata River Credit Facility(5)	October 11, 2020		$	680,000			—		$	680,000			—		—
Senior Secured Revolving Credit Facility(6)	August 9, 2023		$	418,874			—			—		$	418,874		—

Basis Point Change in Interest Rates	Increase (Decrease) in Interest Income(1)			Increase (Decrease) in Interest Expense			Increase (Decrease) in Net Interest Income			Percentage Change in Net Interest Income
Down 100 basis points		$	(32,916)		$	(18,462)		$	(14,454)		(4.7)%
No change			—			—			—		—
Up 100 basis points		$	34,155		$	18,462		$	15,693		5.1%
Up 300 basis points		$	103,565		$	55,386		$	48,179		15.6%
Up 500 basis points		$	173,249		$	92,310		$	80,939		26.2%