FS KKR Capital Corp

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

We bear all other expenses of our operations and transactions, including all other expenses incurred by the Adviser or us in connection with administering our business, including expenses incurred by the Adviser in performing administrative services for us and administrative personnel paid by the Adviser, to the extent they are not controlling persons of the Adviser or any of its affiliates, subject to the limitations included in the investment advisory agreement and the administration agreement.

Current wording

We bear all other expenses of our operations and transactions, including all other expenses incurred by the Adviser or us in connection with administering our business, including expenses incurred by the Adviser in performing administrative services for us and administrative personnel paid by the Adviser, to the extent they are not controlling persons of the Adviser or any of its affiliates, subject to the limitations included in the investment advisory agreement and the administration agreement. See Note 4 to our unaudited consolidated financial statements included herein for more information regarding the expenses borne by us and, thus, our stockholders.

Previous wording

Portfolio Investment Activity for the Three and Nine Months Ended September 30, 2024 and for the Year Ended December 31, 2023

Current wording

Portfolio Investment Activity for the Three Months Ended March 31, 2025 and for the Year Ended December 31, 2024

Previous wording

The following tables present certain selected information regarding our portfolio investment activity for the three and nine months ended September 30, 2024 and the year ended December 31, 2023:

Current wording

The following tables present certain selected information regarding our portfolio investment activity for the three months ended March 31, 2025 and the year ended December 31, 2024:

Previous wording

For the nine months ended September 30, 2024, our total return based on net asset value was 6.38% and our total return based on market value was 10.19%. 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 5 and 6 to the table included in Note 11 to our unaudited 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 three months ended March 31, 2025, our total return based on net asset value was 1.82% and our total return based on market value was (0.33)%. 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%. See footnotes 5 and 6 to the table included in Note 11 to our unaudited 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.

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 March 31, 2025, 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 March 31, 2025.

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, as amended, 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 September 30, 2024, 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 $2,800 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 March 31, 2025, the Company and SCRS have funded approximately $2,140.0 to COPJV, of which $1,872.5 was from the Company.

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2024 and September 30, 2023

Current wording

Comparison of the Three Months Ended March 31, 2025 and March 31, 2024

Previous wording

Our investment income for the three and nine months ended September 30, 2024 and 2023 was as follows:

Current wording

Our investment income for the three months ended March 31, 2025 and 2024 was as follows:

Previous wording

(1)Such revenues represent $365 and $395 of cash income earned as well as $76 and $70 in non-cash portions relating to accretion of discount and PIK interest for the three months ended September 30, 2024 and 2023, respectively, and represent $1,136 and $1,186 of cash income earned as well as $178 and $197 in non-cash portions relating to accretion of discount and PIK interest for the nine months ended September 30, 2024 and 2023, 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 $330 and $388 of cash income earned as well as $70 and $46 in non-cash portions relating to accretion of discount and PIK interest for the three months ended March 31, 2025 and 2024, 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 decrease in interest and PIK income during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 is primarily attributable to the repayment of higher yielding positions and lost interest income on certain assets that were placed on non-accrual status during the year ended December 31, 2023.

Current wording

The decrease in interest and PIK income during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is primarily attributable to the decline in base rates, coupled with spread compression on new investments during the year ended December 31, 2024.

Previous wording

The decrease in dividend income during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 is primarily attributable to lower dividends on certain asset based finance investments during the three and nine months ended September 30, 2024.

Current wording

The increase in dividend income during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is primarily attributable to higher dividends on certain asset based finance investments during the three months ended March 31, 2025.

Previous wording

Our operating expenses for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Our operating expenses for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

The following table reflects selected expense ratios as a percent of average net assets for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table reflects selected expense ratios as a percent of average net assets for the three months ended March 31, 2025 and 2024:

Previous wording

The decrease in expenses during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 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.

Current wording

The decrease in expenses during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 can primarily be attributed to a decrease in subordinated income incentive fees as a result of lower investment income as discussed above.

Previous wording

Our net investment income totaled $215 ($0.77 per share) and $234 ($0.84 per share) for the three months ended September 30, 2024 and 2023, respectively. Our net investment income totaled $642 ($2.29 per share) and $692 ($2.47 per share) for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Our net investment income totaled $187 ($0.67 per share) and $212 ($0.76 per share) for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

The decrease in net investment income during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 can primarily be attributed to lower investment income during the three and nine months ended September 30, 2024 as discussed above.

Current wording

The decrease in net investment income during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 can primarily be attributed to lower investment income during the three months ended March 31, 2025 as discussed above.

Previous wording

Our net realized gains (losses) on investments, foreign currency forward contracts and foreign currency for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Our net realized gains (losses) on investments, foreign currency forward contracts and foreign currency for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

(1)We sold investments and received principal repayments, respectively, of $768 and $553 during the three months ended September 30, 2024 and $456 and $219 during the three months ended September 30, 2023. We sold investments and received principal repayments, respectively, of $2,103 and $2,409 during the nine months ended September 30, 2024 and $1,315 and $591 during the nine months ended September 30, 2023.

Current wording

(1)We sold investments and received principal repayments, respectively, of $881 and $526 during the three months ended March 31, 2025 and $1,324 and $531 during the three months ended March 31, 2024.

Previous wording

Our net change in unrealized appreciation (depreciation) on investments, foreign forward currency forward contracts and unrealized gain (loss) on foreign currency for the three and nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Our net change in unrealized appreciation (depreciation) on investments, foreign forward currency forward contracts and unrealized gain (loss) on foreign currency for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

The net change in unrealized appreciation (depreciation) during the three and nine months ended September 30, 2024 was driven primarily by depreciation on several specific assets in the portfolio along with the conversion of unrealized depreciation to realized losses during the quarter. The net change in unrealized appreciation (depreciation) during the three and nine months ended September 30, 2023 was driven primarily by depreciation on several specific assets in the portfolio, partially offset by appreciation on several assets in the portfolio.

Current wording

The net change in unrealized appreciation (depreciation) on investments during the three months ended March 31, 2025 was driven primarily by reduced valuations of certain portfolio companies during the year, including Production Resources Group and 48Forty Solutions. The net change in unrealized appreciation (depreciation) during the three months ended March 31, 2024 was driven primarily by depreciation on several specific assets in the portfolio along with the conversion of unrealized depreciation to realized losses during the quarter.

Previous wording

For the three months ended September 30, 2024, the net increase in net assets resulting from operations was $160 ($0.57 per share) compared to a net increase in net assets resulting from operations of $265 ($0.95 per share) during the three months ended September 30, 2023.

Current wording

For the three months ended March 31, 2025, the net increase in net assets resulting from operations was $120 ($0.43 per share) compared to a net increase in net assets resulting from operations of $173 ($0.62 per share) during the three months ended March 31, 2024.

Previous wording

As of September 30, 2024, we had $371 in cash, cash equivalents and foreign currency, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $3,537 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of September 30, 2024, we also held broadly syndicated investments and opportunistic investments that we believe could be sold to create additional liquidity. As of September 30, 2024, we had unfunded debt investments with aggregate unfunded commitments of $1,600.5, unfunded equity/other commitments of $533.8 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.

Current wording

As of March 31, 2025, we had $472 in cash, cash equivalents and foreign currency, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $2,635 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of March 31, 2025, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of March 31, 2025, we had unfunded debt investments with aggregate unfunded commitments of $1,636.5, unfunded equity/other commitments of $394.8 and unfunded commitments of $577.5 to 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 September 30, 2024, the aggregate amount outstanding of the senior securities issued by us was $8.1 billion. As of September 30, 2024, 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 March 31, 2025, the aggregate amount outstanding of the senior securities issued by us was $8.0 billion. As of March 31, 2025, our asset coverage was 182%. See “—Financing Arrangements.”

Previous wording

(3)As of September 30, 2024, there was $139 term loan outstanding at SOFR+1.90% and $69 revolving commitment outstanding at SOFR+2.05%.

Current wording

(3)As of March 31, 2025, there was $85 term loan outstanding at SOFR+1.90% and $42 revolving commitment outstanding at SOFR+2.05%.

Previous wording

(5)Amount includes borrowing in Euros, Canadian dollars and pounds sterling. Euro balance outstanding of €464 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.11 as of September 30, 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 $0.74 as of September 30, 2024 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £146 has been converted to U.S dollars at an exchange rate of £1.00 to $1.34 as of September 30, 2024 to reflect total amount outstanding in U.S. dollars.

Current wording

(5)Amount includes borrowing in Euros, pounds sterling and Australian dollars. Euro balance outstanding of €485 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.08 as of March 31, 2025 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £416 has been converted to U.S dollars at an exchange rate of £1.00 to $1.29 as of March 31, 2025 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD60 has been converted to U.S dollars at an exchange rate of AUD1.00 to $0.62 as of March 31, 2025 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 September 30, 2024, $26 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 March 31, 2025, $29 of such letters of credit have been issued.

Previous wording

(7)As of September 30, 2024, the fair value of 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, the 7.875% notes and the 6.875% notes was approximately $499, $467, $472, $253, $975, $376, $474, $682, $430 and $625, respectively. These valuations are considered Level 2 valuations within the fair value hierarchy.

Current wording

(7)As of March 31, 2025, the fair value of 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 $987, $382, $479, $683, $424, $609 and $720, respectively. These valuations are considered Level 2 valuations within the fair value hierarchy.

Previous wording

(8)The carrying value of the 6.875% Notes due 2029 as of September 30, 2024 includes a $18 increase as a result of an effective hedge accounting relationship. See Note 7 for additional information.

Current wording

(8)The carrying value of the 6.875% Notes and 6.125% Notes as of March 31, 2025 includes a $9 and $20 increase, respectively, as a result of an effective hedge accounting relationship. See Note 7 for additional information.

Previous wording

(9)As of September 30, 2024, there were $178.4 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%. In addition to the spread over the benchmark rate, a credit spread adjustment of 0.26161% is applicable to Class A-1R and Class B-1R notes outstanding.

Current wording

(9)As of March 31, 2025, there were $125.7 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%. In addition to the spread over the benchmark rate, a credit spread adjustment of 0.26161% is applicable to Class A-1R, Class A-2R and Class B-1R notes outstanding.

Previous wording

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

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 on Form 1099-DIV identifying the sources of the distributions will be mailed to our stockholders. No portion of the distributions paid during the nine months ended September 30, 2024 or 2023 represented a return of capital.

Current wording

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 on Form 1099-DIV identifying the sources of the distributions will be mailed to our stockholders. No portion of the distributions paid during the three months ended March 31, 2025 or 2024 represented a return of capital.

Previous wording

The following tables reflect the distributions per share that we have declared on our common stock during the nine months ended September 30, 2024 and 2023:

Current wording

The following tables reflect the distributions per share that we have declared on our common stock during the three months ended March 31, 2025 and 2024:

Previous wording

We have entered into agreements with the Adviser to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory 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 Adviser is reimbursed for administrative expenses incurred on our behalf. See Note 4 to our unaudited consolidated financial statements included herein for a discussion of these agreements and for the amount of fees and expenses accrued under these agreements during the nine months ended September 30, 2024 and 2023.

Current wording

We have entered into agreements with the Adviser to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory 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 Adviser is reimbursed for administrative expenses incurred on our behalf. See Note 4 to our unaudited consolidated financial statements included herein for a discussion of these agreements and for the amount of fees and expenses accrued under these agreements during the three months ended March 31, 2025 and 2024.