FS KKR Capital Corp

Previous wording

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

Current wording

•our business prospects and the prospects of the companies in which we may invest;

Previous wording

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

Current wording

•general economic, political and industry trends and other external factors, including uncertainty surrounding the financial and political stability of the United States and other countries;

Previous wording

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

Current wording

•employing a defensive investment approach focused on long-term credit performance and preservation of principal;

Previous wording

For the year ended December 31, 2023, our total return based on net asset value was 10.12% and our total return based on market value was 32.45%. For the year ended December 31, 2022, our total return based on net asset value was 1.40% and our total return based on market value was (4.61)%. See footnotes 7 and 8 to the table included in Note 12 to our audited consolidated financial statements included herein for information regarding the calculation of our total return based on net asset value and total return based on market value, respectively.

Current wording

For the year ended December 31, 2024, our total return based on net asset value was 8.50% and our total return based on market value was 25.29%. For the year ended December 31, 2023, our total return based on net asset value was 10.12% and our total return based on market value was 32.45%. See footnotes 7 and 8 to the table included in Note 12 to our audited consolidated financial statements included herein for information regarding the calculation of our total return based on net asset value and total return based on market value, respectively.

Previous wording

(1)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. Does not include Debt Investments on non-accrual status. Stated annual interest rate for floating rate Debt Investments assumes the greater of (a) the respective base rate in effect as of December 31,

Current wording

(1)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. Does not include Debt Investments on non-accrual status. Stated annual interest rate for floating rate Debt Investments assumes the greater of (a) the respective base rate in effect as of December 31, 2024, and (b) the stated base rate floor. The base rate utilized in this calculation may not be indicative of the base rates for specific contracts as of December 31, 2024.

Previous wording

COPJV, is a joint venture between the Company and South Carolina Retirement Systems Group Trust, or SCRS. SCRS purchased its interests in COPJV from Conway Capital, LLC, an affiliate of Guggenheim Life and Annuity Company and Delaware Life Insurance Company, in June 2019, which had no impact on the significant terms governing COPJV other than an increase in the aggregate capital commitment (but not the percentage of the aggregate capital committed by each member) to COPJV. Effective as of June 18, 2021, Credit Opportunities Partners, LLC, or COP, merged with and into COPJV, with COPJV surviving the merger, or the COPJV Merger. As of June 18, 2021, COPJV assumed all of COP’s obligations under its credit facilities, and COP’s wholly- owned special purpose financing subsidiaries became wholly-owned special purpose financing subsidiaries of COPJV, in each case, as a result of the consummation of the COPJV Merger. COPJV’s second amended and restated limited liability company agreement, or the COPJV Agreement, requires the Company and SCRS to provide capital to COPJV of up to $2,440 in the aggregate where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed capital. Pursuant to the terms of the COPJV Agreement, the Company and SCRS each have 50% voting control of COPJV and are required to agree on all investment decisions as well as certain other significant actions for COPJV. COPJV 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 COPJV, the Company performs certain day-to-day management responsibilities on behalf of COPJV and is entitled to a fee of 0.25% of COPJV’s assets under administration, calculated and payable quarterly in arrears. As of December 31, 2023, the Company and SCRS have funded approximately $1,799.8 to COPJV, of which $1,574.8 was from the Company.

Current wording

COPJV, is a joint venture between the Company and South Carolina Retirement Systems Group Trust, or SCRS. COPJV’s second amended and restated limited liability company agreement, or the COPJV Agreement, requires the Company and SCRS to provide capital to COPJV of up to $2,640 in the aggregate where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed capital. Pursuant to the terms of the COPJV Agreement, the Company and SCRS each have 50% voting control of COPJV and are required to agree on all investment decisions as well as certain other significant actions for COPJV. COPJV 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 COPJV, the Company performs certain day-to-day management responsibilities on behalf of COPJV and is entitled to a fee of 0.25% of COPJV’s assets under administration, calculated and payable quarterly in arrears. As of December 31, 2024, the Company and SCRS have funded approximately $1,799.8 to COPJV, of which $1,574.8 was from the Company.

Previous wording

(1)Such revenues represent $1,584, $1,398 and $915 of cash income earned as well as $246, $237 and $166 in non-cash portions relating to accretion of discount and PIK interest for the years ended December 31, 2023, 2022 and 2021, respectively. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

Current wording

(1)Such revenues represent $1,467, $1,584 and $1,398 of cash income earned as well as $254, $246 and $237 in non-cash portions relating to accretion of discount and PIK interest for the years ended December 31, 2024, 2023 and 2022, respectively. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

Previous wording

The increase in interest and PIK income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can primarily be attributed to the rising rate environment. The increase in interest and PIK income during the year ended December 31, 2022 compared to the year ended December 31, 2021 can primarily be attributed to the rising interest rate environment, along with the increase in assets resulting from the 2021 Merger.

Current wording

PIK income increased during the year ended December 31, 2024, as the number of investments paying PIK interest during the year increased. The increase in interest and PIK income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can primarily be attributed to the rising interest rate environment.

Previous wording

The decrease in fee income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can primarily be attributed to reduced structuring fees and repayment activity during the current period. The decrease in fee income during the year ended December 31, 2022 compared to the year ended December 31, 2021 can primarily be attributed to reduced structuring fees and repayment activity during the period.

Current wording

The increase in fee income during the year ended December 31, 2024 compared to the year ended December 31, 2023 can primarily be attributed to increased origination activity during the year ended December 31, 2024. The decrease in fee income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can primarily be attributed to reduced structuring fees and repayment activity during the year ended December 31, 2023.

Previous wording

The increase in dividend income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can be primarily attributed to the increase in dividends paid in respect to our investment in COPJV. The increase in dividend income during the year ended December 31, 2022 compared to the year ended December 31, 2021 can be primarily attributed to the increase in dividends paid in respect to our investment in COPJV.

Current wording

The decrease in dividend income during the year ended December 31, 2024 compared to the year ended December 31, 2023 can be primarily attributed to lower dividends on certain asset based finance investments during the year ended December 31, 2024. The increase in dividend income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can be primarily attributed to the increase in dividends paid in respect to our investment in COPJV.

Previous wording

The increase in expenses during the year ended December 31, 2023 compared to the year ended December 31, 2022 can primarily be attributed to an increase in subordinated income incentive fees and interest expense as a result of the rising rate environment.

Current wording

The decrease in expenses during the year ended December 31, 2024 compared to the year ended December 31, 2023 can primarily be attributed to a decrease in subordinated income incentive fees and management fees as a result of the lower asset base and lower investment income, as discussed above.

Previous wording

Our net investment income totaled $892 ($3.18 per share), $865 ($3.05 per share) and $584 ($2.76 per share) for the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Our net investment income totaled $813 ($2.90 per share), $892 ($3.18 per share) and $865 ($3.05 per share) for the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

The increase in net investment income during the year ended December 31, 2023 compared to the year ended December 31, 2022 and during the year ended December 31, 2022 compared to the year ended December 31, 2021 can primarily be attributed to higher investment income during the respective years ended December 31, 2023 and December 31, 2022 as discussed above.

Current wording

The decrease in net investment income during the year ended December 31, 2024 compared to the year ended December 31, 2023 can primarily be attributed to lower investment income during the year ended December 31, 2024, as discussed above. The increase in net investment income during the year ended December 31, 2023 compared to the year ended December 31, 2022 can primarily be attributed to higher investment income during the respective year ended December 31, 2023, as discussed above.

Previous wording

(1)We sold investments and received principal repayments, respectively, of $1,659 and $911 during the year ended December 31, 2023, $2,076 and $2,665 during the year ended December, 31, 2022 and $2,258 and $3,317 during the year ended December 31, 2021.

Current wording

(1)We sold investments and received principal repayments, respectively, of $1,892 and $4,082 during the year ended December 31, 2024, $1,659 and $911 during the year ended December, 31, 2023 and $2,076 and $2,665 during the year ended December 31, 2022.

Previous wording

We recorded a provision for taxes on realized and unrealized gains with respect to two of our equity investments of $(3) and $(5) and $0 during the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

We recorded a provision for taxes on realized and unrealized gains with respect to two of our equity investments of $0 and $(3) and $(5) during the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

During the year ended December 31, 2023, the net change in unrealized appreciation (depreciation) was driven primarily by the conversion of unrealized depreciation to realized losses on several specific assets in the portfolio. During the year ended December 31, 2022, the net change in unrealized appreciation (depreciation) on our investments was driven primarily by a general widening of credit spreads. During the year ended December 31, 2021, the net change in unrealized appreciation (depreciation) on our investments was driven primarily by $628 of appreciation resulting from the merger accounting associated with the 2021 Merger.

Current wording

During the year ended December 31, 2024, the net losses and change in unrealized appreciation (depreciation) was driven primarily by reduced valuations of certain portfolio companies during the year, including Miami Beach Medical Group, Production Resources Group, Maverick Natural Resources and Bowery Farming. During the year ended December 31, 2023, the net change in unrealized appreciation (depreciation) was driven primarily by the conversion of unrealized depreciation to realized losses on several specific assets in the portfolio. During the year ended December 31, 2022, the net change in unrealized appreciation (depreciation) on our investments was driven primarily by a general widening of credit spreads.

Previous wording

For the years ended December 31, 2023, 2022 and 2021, the net increase (decrease) in net assets resulting from operations was $696 ($2.48 per share), $92 ($0.32 per share) and $1,515 ($7.16 per share), respectively.

Current wording

For the years ended December 31, 2024, 2023 and 2022, the net increase (decrease) in net assets resulting from operations was $585 ($2.09 per share), $696 ($2.48 per share) and $92 ($0.32 per share), respectively.

Previous wording

As of December 31, 2023, we had $231 in cash and foreign currency, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $3,409 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of December 31, 2023, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of December 31, 2023, we had unfunded debt investments with aggregate unfunded commitments of $995.1, unfunded equity/other commitments of $616.4 and unfunded commitments of $560.2 of COPJV. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

Current wording

As of December 31, 2024, we had $296 in cash, cash equivalents and foreign currency, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $4,363 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of December 31, 2024, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of December 31, 2024, we had unfunded debt investments with aggregate unfunded commitments of $1,534.1, unfunded equity/other commitments of $387.1 and unfunded commitments of $735.2 of COPJV. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

Previous wording

We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments, as well as 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 Adviser, but in no event will leverage employed exceed the maximum amount permitted by the 1940 Act. Prior to June 14, 2019, in accordance with the 1940 Act, we were allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such borrowing. Effective June 15, 2019, our asset coverage requirement applicable to senior securities was reduced from 200% to 150%. As of December 31, 2023, the aggregate amount outstanding of the senior securities issued by us was $8.2 billion. As of December 31, 2023, our asset coverage was 183%. See “—Financing Arrangements.”

Current wording

We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments, as well as 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 Adviser, but in no event will leverage employed exceed the maximum amount permitted by the 1940 Act. Prior to June 14, 2019, in accordance with the 1940 Act, we were allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such borrowing. Effective June 15, 2019, our asset coverage requirement applicable to senior securities was reduced from 200% to 150%. As of December 31, 2024, the aggregate amount outstanding of the senior securities issued by us was $7.4 billion. As of December 31, 2024, our asset coverage was 190%. See “—Financing Arrangements.”

Previous wording

(3)As of December 31, 2023, there was $196 term loan outstanding at SOFR+1.90% and $98 revolving commitment outstanding at SOFR+2.05%.

Current wording

(3)As of December 31, 2024, there was $98 term loan outstanding at SOFR+1.90% and $49 revolving commitment outstanding at SOFR+2.05%.

Previous wording

(5)Amount includes borrowing in Euros, Canadian dollars, pounds sterling and Australian dollars. Euro balance outstanding of €356 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.11 as of December 31, 2023 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD4 has been converted to U.S dollars at an exchange rate of CAD1.00 to $0.76 as of December 31, 2023 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £88 has been converted to U.S dollars at an exchange rate of £1.00 to $1.27 as of December 31, 2023 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD38 has been converted to U.S dollars at an exchange rate of AUD1.00 to $0.68 as of December 31, 2023 to reflect total amount outstanding in U.S. dollars.

Current wording

(5)Amount includes borrowing in Euros, Canadian dollars, pounds sterling and Australian dollars. Euro balance outstanding of €455 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.04 as of December 31, 2024 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD3 has been converted to U.S dollars at an exchange rate of CAD1.00 to $0.69 as of December 31, 2024 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £165 has been converted to U.S dollars at an exchange rate of £1.00 to $1.25 as of December 31, 2024 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD4 has been converted to U.S dollars at an exchange rate of AUD1.00 to $0.62 as of December 31, 2024 to reflect total amount outstanding in U.S. dollars.

Previous wording

(6)The amount available for borrowing under the Senior Secured Revolving Credit Facility is reduced by any standby letters of credit issued under the Senior Secured Revolving Credit Facility. As of December 31, 2023, $18 of such Letters of Credit have been issued.

Current wording

(6)The amount available for borrowing under the Senior Secured Revolving Credit Facility is reduced by any standby letters of credit issued under the Senior Secured Revolving Credit Facility. As of December 31, 2024, $21 of such Letters of Credit have been issued.

Previous wording

(7)As of December 31, 2023, the fair value of the 4.625% notes, the 1.650% notes, the 4.125% notes, the 4.250% notes, the 8.625% notes, the 3.400% notes, the 2.625% notes, the 3.250% notes, the 3.125% notes and the 7.875% notes was approximately $397, $483, $458, $463, $255, $947, $359, $455,$654 and $424 respectively. These valuations are considered Level 2 valuations within the fair value hierarchy.

Current wording

(7)As of December 31, 2024, the fair value of the 4.125% notes, the 4.250% notes, the 8.625% notes, the 3.400% notes, the 2.625% notes, the 3.250% notes, the 3.125% notes, the 7.875% notes, the 6.875% notes and the 6.125% notes was approximately $469, $474, $251, $981, $379, $474, $680, $426, $615 and $700 respectively. These valuations are considered Level 2 valuations within the fair value hierarchy.

Previous wording

(8)As of December 31, 2023, there were $273.6 of Class A-1R notes outstanding at SOFR+1.85%, $20.5 of Class A-2R notes outstanding at SOFR+2.25%, $32.4 of Class B-1R notes outstanding at SOFR+2.60% and $17.4 of Class B-2R notes outstanding at 3.011%.

Current wording

(9)As of December 31, 2024, there were $161.8 of Class A-1R notes outstanding at SOFR+1.85%, $20.5 of Class A-2R notes outstanding at SOFR+2.25%, $32.4 of Class B-1R notes outstanding at SOFR+2.60% and $17.4 of Class B-2R notes outstanding at 3.011%.

Previous wording

Wehave 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 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 the one-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.

Current wording

Wehave 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 tenth 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 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 the one-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.

Previous wording

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.

Current wording

We intend 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.

Previous wording

The following table reflects the cash distributions per share that we have declared on our common stock during the years ended December 31, 2023, 2022 and 2021:

Current wording

The following tables reflect the distributions per share that we have declared on our common stock during the years ended December 31, 2024, 2023 and 2022:

Previous wording

See Note 5 to our consolidated financial statements contained in this annual report on Form 10-K for additional information regarding our distributions, including a reconciliation of our GAAP-basis net investment income to our tax-basis net investment income for the years ended December 31, 2023,2022 and 2021.

Current wording

See Note 5 to our consolidated financial statements contained in this annual report on Form 10-K for additional information regarding our distributions, including a reconciliation of our GAAP-basis net investment income to our tax-basis net investment income for the years ended December 31, 2024,2023 and 2022.

Previous wording

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, the Adviser may incorporate these factors into discounted cash flow models to arrive at fair value. Various methods may be used to determine the appropriate rate in a discounted cash flow model.

Current wording

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, the Adviser may incorporate these factors into discounted cash flow models to arrive at fair value. Various methods may be used to determine the appropriate discount rate in a discounted cash flow model.

Previous wording

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.

Current wording

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 the debt investments.