[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements and management's discussion for FS KKR Capital Corp. as of March 31, 2021 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents FS KKR Capital Corp.'s unaudited consolidated financial statements, including balance sheets, operations, cash flows, and investment schedules, for Q1 2021 and 2020 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets decreased to $6.96 billion, while total stockholders' equity increased to $3.22 billion, raising NAV per share to $26.03 Consolidated Balance Sheet Summary (in millions, except per share data) | Metric | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Total investments, at fair value | $6,457 | $6,780 | | Total assets | $6,964 | $7,237 | | Total liabilities | $3,743 | $4,141 | | Total stockholders' equity | $3,221 | $3,096 | | Net asset value per share | $26.03 | $25.02 | [Unaudited Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) Net assets increased by $199 million ($1.61 per share) in Q1 2021, a significant turnaround from a $703 million decrease in Q1 2020, driven by unrealized gains Consolidated Statements of Operations Summary (in millions, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total investment income | $151 | $179 | | Total operating expenses | $73 | $81 | | Net investment income | $78 | $98 | | Total net realized and unrealized gain (loss) | $121 | $(801) | | **Net increase (decrease) in net assets** | **$199** | **$(703)** | | **Earnings per Share (basic and diluted)** | **$1.61** | **$(5.59)** | [Unaudited Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Net assets increased by $125 million to $3.221 billion in Q1 2021, primarily due to a $199 million operational gain, contrasting with an $838 million decrease in Q1 2020 Changes in Net Assets (in millions) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net assets at beginning of period | $3,096 | $3,866 | | Net increase (decrease) from operations | $199 | $(703) | | Distributions to stockholders | $(74) | $(95) | | Repurchases of common stock | $— | $(40) | | **Total increase (decrease) in net assets** | **$125** | **$(838)** | | **Net assets at end of period** | **$3,221** | **$3,028** | [Unaudited Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $435 million, while financing activities used $477 million, resulting in a $42 million net cash decrease for Q1 2021 Consolidated Statements of Cash Flows Summary (in millions) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $435 | $131 | | Net cash provided by (used in) financing activities | $(477) | $(44) | | **Total increase (decrease) in cash** | **$(42)** | **$87** | [Consolidated Schedules of Investments](index=7&type=section&id=Consolidated%20Schedules%20of%20Investments) The investment portfolio's fair value was $6.46 billion, primarily debt-weighted with 51.2% in Senior Secured First Lien loans, and key concentrations in Capital Goods, Software & Services, and SCJV Investment Portfolio Composition by Type (as of March 31, 2021) | Investment Type | Fair Value (in millions) | Percentage of Portfolio | | :--- | :--- | :--- | | Senior Secured Loans—First Lien | $3,303 | 51.2% | | Senior Secured Loans—Second Lien | $713 | 11.0% | | Other Senior Secured Debt | $81 | 1.3% | | Subordinated Debt | $79 | 1.2% | | Asset Based Finance | $948 | 14.7% | | Strategic Credit Opportunities Partners, LLC | $732 | 11.3% | | Equity/Other | $601 | 9.3% | | **Total** | **$6,457** | **100.0%** | - The company's total investments had an amortized cost of **$6.89 billion** and a fair value of **$6.46 billion** as of March 31, 2021[46](index=46&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=35&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes detail the company's business, accounting policies, and financial activities, including the pending FSKR merger, advisor fees, investment portfolio, SCJV, financing, distributions, and Level 3 asset valuation - The company has entered into a merger agreement with FS KKR Capital Corp II (FSKR), expected to close in the second or third quarter of 2021, with FSK as the surviving company[124](index=124&type=chunk)[287](index=287&type=chunk) - The company's investment in its joint venture, Strategic Credit Opportunities Partners, LLC (SCJV), had a fair value of **$731.9 million** as of March 31, 2021, with SCJV itself holding total investments with a fair value of **$1.66 billion**[40](index=40&type=chunk)[193](index=193&type=chunk) - As of March 31, 2021, the company had total unfunded commitments of **$523.5 million**, consisting of **$252.0 million** in debt investments, **$205.7 million** in equity/other, and **$65.8 million** to its SCJV[181](index=181&type=chunk)[277](index=277&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=73&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reviews Q1 2021 financial performance, noting a $199 million net asset increase driven by portfolio appreciation, $460 million net repayments, 94.9% direct originations, strong liquidity, and the pending FSKR merger Q1 2021 vs Q1 2020 Performance Summary (in millions) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Total Investment Income | $151 | $179 | | Net Investment Income | $78 | $98 | | Net Realized/Unrealized Gain (Loss) | $121 | $(801) | | **Net Increase (Decrease) in Net Assets** | **$199** | **$(703)** | - During Q1 2021, portfolio activity resulted in net repayments of **$460 million**, with **$417 million** in purchases and **$877 million** in sales and repayments[330](index=330&type=chunk) - As of March 31, 2021, **94.9%** of the total portfolio at fair value consisted of direct originations, with a weighted average annual yield on all direct origination debt investments of **7.7%**[339](index=339&type=chunk) - The company's asset coverage ratio was **189%** as of March 31, 2021, exceeding the required minimum of **150%**[252](index=252&type=chunk)[357](index=357&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=88&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate and foreign currency risks, with 60.1% of its portfolio in variable-rate debt; a 300 bps rate hike could increase net interest income by $63 million, and foreign currency exposure is hedged - As of March 31, 2021, **60.1%** of the investment portfolio at fair value consisted of variable-rate debt investments[386](index=386&type=chunk) Interest Rate Sensitivity Analysis (Annual Impact in millions) | Basis Point Change | Increase (Decrease) in Net Interest Income | | :--- | :--- | | Down 19 bps | $1 | | Up 100 bps | $1 | | Up 300 bps | $63 | | Up 500 bps | $126 | - The company manages foreign currency risk through derivative instruments and borrowing in foreign currencies, holding **$64.8 million** in notional foreign currency forward contracts and outstanding borrowings in Euros, Canadian dollars, British pounds, and Australian dollars as of March 31, 2021[393](index=393&type=chunk)[395](index=395&type=chunk) [Controls and Procedures](index=90&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and procedures as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[397](index=397&type=chunk) - No changes occurred during the quarter ended March 31, 2021, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[398](index=398&type=chunk) [PART II—OTHER INFORMATION](index=91&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides other required information, including legal proceedings, risk factors, equity sales, and exhibits [Legal Proceedings](index=91&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings, nor is it aware of any threatened against it - FS KKR Capital Corp. reports no material legal proceedings as of the filing date[401](index=401&type=chunk) [Risk Factors](index=91&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's most recent Annual Report on Form 10-K are reported - The company states there are no material changes from the risk factors included in its most recent Annual Report on Form 10-K[402](index=402&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=91&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Affiliated Purchaser did not purchase any of the company's common stock during the quarter ended March 31, 2021 - The Affiliated Purchaser, an investment vehicle associated with the Advisor's owners, made no purchases of the company's common stock during the first quarter of 2021[403](index=403&type=chunk) [Defaults upon Senior Securities](index=91&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This section is not applicable to the company's current reporting requirements [Mine Safety Disclosures](index=91&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's current reporting requirements [Other Information](index=91&type=section&id=Item%205.%20Other%20Information) This section is not applicable to the company's current reporting requirements [Exhibits](index=91&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including key agreements, corporate documents, and certifications

FS KKR Capital Corp. (NYSE:FSK) Q4 2020 Earnings Conference Call March 2, 2021 8:00 AM ET Company Participants Robert Paun - Head, Investor Relations Michael Forman - Chairman & Chief Executive Officer Dan Pietrzak - Chief Investment Officer & Co-President Brian Gerson - Co-President Steven Lilly - Chief Financial Officer Conference Call Participants Casey Alexander - Compass Point Finian O’Shea - Wells Fargo Securities John Hecht - Jefferies Paul Johnson - Keefe, Bruyette & Woods Robert Dodd - Raymond Jame ...

Financial Performance (FSK) - FSK's Net Investment Income (NII) for Q4 2020 was $78 million, or $0.63 per share, the same as Q3 2020[1] - Adjusted NII for Q4 2020 was $89 million, or $0.72 per share, compared to $78 million, or $0.63 per share, in Q3 2020[1] - NAV per share as of December 31, 2020, was $25.02, up from $24.46 as of September 30, 2020[1] - Net realized and unrealized gains on investments were $65 million, or $0.53 per share, for Q4 2020, compared to $132 million, or $1.06 per share, in Q3 2020[1] Financial Performance (FSKR) - FSKR's Net Investment Income (NII) for Q4 2020 was $101 million, or $0.59 per share, compared to $90 million, or $0.52 per share, in Q3 2020[16] - Adjusted NII for Q4 2020 was $104 million, or $0.61 per share, compared to $90 million, or $0.52 per share, in Q3 2020[16] - NAV per share as of December 31, 2020, was $25.10, compared to $24.66 as of September 30, 2020[16] - Net realized and unrealized gains on investments were $60 million, or $0.35 per share, for Q4 2020, similar to $59 million, or $0.35 per share, in Q3 2020[16] Portfolio & Investment Activity (FSK) - New investment fundings in Q4 2020 were approximately $613 million[1] - The portfolio is diversified with 164 portfolio companies across 23 industries, with the top ten largest holdings representing 22% of the portfolio's fair value[1] - As of December 31, 2020, 88% of debt investments are floating rate[4] Portfolio & Investment Activity (FSKR) - New investment fundings in Q4 2020 were approximately $1.299 billion[16] - The portfolio is diversified with 155 portfolio companies across 22 industries, with the top ten largest holdings representing 24% of the portfolio's fair value[16] - As of December 31, 2020, 90% of debt investments are floating rate[22]

Valuation and Fair Value Measurement - The Advisor employs a 1 to 4 investment rating system to assess expected returns on portfolio investments [78]. - The net asset value of the investment portfolio is determined quarterly, with fair value assessed based on various inputs including recent financial statements and independent valuations [79]. - Fair value measurements are guided by ASC Topic 820, which establishes a three-tier hierarchy prioritizing observable inputs [80]. - A multi-step valuation process is conducted quarterly for investments without readily available market quotations, involving detailed analyses and independent third-party evaluations [81]. - The fair value of fixed income investments is influenced by factors such as prevailing interest rates and the borrower's ability to service debt [84]. - Equity interests in portfolio companies are valued based on multiples of EBITDA, cash flows, and other financial metrics, with adjustments made for specific circumstances [86]. - The Advisor and independent valuation services consider private M&A statistics and public trading multiples in determining fair value [87]. - The board of directors is responsible for approving fair valuations based on recommendations from the valuation committee and the Advisor [90]. - Fair value determinations may differ materially from actual realizable values, potentially causing net asset value to understate or overstate the true value of investments [220]. - The investment portfolio is primarily recorded at fair value, leading to uncertainty in the valuation of portfolio investments due to the lack of a public market for privately held companies [219]. Regulatory Compliance and Taxation - The company is regulated as a BDC under the 1940 Act, which imposes restrictions on transactions and requires a majority of independent directors [102]. - The company must distribute at least 90% of its investment company taxable income each tax year to maintain its RIC status, which generally includes net ordinary income and excess short-term capital gains [114]. - The company is subject to a 4% nondeductible federal excise tax on certain undistributed income unless it meets specific distribution requirements [116]. - The company must ensure that at least 50% of its assets consist of cash, U.S. government securities, and other qualifying securities to satisfy diversification requirements [127]. - The company must distribute at least 90% of its net ordinary income and net short-term capital gain to satisfy the Annual Distribution Requirement to maintain RIC status [276]. - The company is subject to a 4% nondeductible U.S. federal excise tax if it does not meet certain minimum distribution requirements on a calendar year basis [276]. - The company must earn at least 90% of its gross income from dividends, interest, and gains from the sale of securities to satisfy the 90% Income Test for RIC qualification [276]. - The company must meet specific asset diversification requirements, including that at least 50% of its assets consist of cash, U.S. government securities, and other RICs [276]. - The company may face risks related to corporate-level income tax if it fails to qualify as a RIC under Subchapter M of the Code [274]. Investment Strategy and Risks - Managerial assistance is provided to portfolio companies, which may include operational monitoring and financial guidance [91]. - The company competes with other BDCs, investment funds, and traditional financial services companies for investment opportunities [131]. - The advisor's limited experience as an investment adviser to a BDC may hinder the company's ability to achieve its investment objectives [153]. - The company may face significant risks related to compliance with regulations applicable to BDCs and RICs, which could affect its ability to raise capital [146]. - The company’s investment strategy may be adversely affected by the inability to maintain relationships with private equity sponsors and banks, impacting growth opportunities [154]. - The competitive pressures in the private debt markets could lead to lower short-term returns compared to long-term targets [156]. - The company may face challenges in obtaining debt or equity financing on acceptable terms, adversely affecting its ability to acquire investments and expand operations [184]. - The company may incur additional leverage under the SBCA Act, which could impact its operational flexibility [142]. - The company may face conflicts of interest due to compensation arrangements with the Advisor, potentially leading to riskier investments [174]. - The Advisor may receive incentive fees based on accrued income that has not yet been collected, impacting financial results [175]. - The company may need to periodically access capital markets to fund new investments, which could limit investment opportunities compared to other companies [186]. - The company may face liquidity risks from investments in private investment funds, which may not provide the required liquidity [208]. - The company may acquire unsecured debt investments, which do not benefit from collateral and may rank equally with other creditors' claims in the event of liquidation [214]. - The company may invest in non-U.S. securities, exposing it to additional risks such as political and economic developments [196]. - The company may invest in structured products, which are subject to higher risks of total loss and may be illiquid [198]. - Investments in below investment grade securities, often referred to as "junk," carry predominantly speculative characteristics and may be difficult to value and illiquid [200][201]. - The company may face significant risks from political, economic, and legal instability in countries where it invests, potentially leading to nationalization or expropriation of assets [203]. - The company relies on information from managers of private investment funds for valuation, which may lead to inaccurate valuations affecting the value of its common stock [206]. - Investments in middle market companies may involve risks such as limited financial resources and less predictable operating results, which could adversely affect the company's operating results [210]. - The company may not control most of its portfolio companies, leading to risks associated with business decisions made by those companies that may not align with the company's interests [217]. - The company may face challenges in meeting the Annual Distribution Requirement due to the illiquid nature of its portfolio [128]. Financial Performance and Market Conditions - The company has total assets of $8.8 billion and $5.1 billion in outstanding debt, with a weighted average cost of funds of 3.71% [250]. - The corresponding return to stockholders could range from (34.49)% to 22.28% based on various assumed returns on the portfolio [252]. - The company may need to achieve an annual return of approximately 2.15% to cover interest payments on its outstanding debt [252]. - There are financial and operational covenants in the company's debt financing arrangements that must be maintained, including asset coverage and minimum stockholders' equity [253]. - Failure to comply with these covenants could lead to defaults, potentially forcing the company to liquidate investments at unfavorable times [254]. - The company may pay distributions from offering proceeds, borrowings, or asset sales if cash flows from operations are insufficient [259]. - Stockholders may experience dilution if the company issues additional shares, which could reduce the overall value of their investment [260]. - The company is authorized to issue up to 750 million shares of common stock, which could lead to further dilution for existing stockholders [261]. - Distributions may exceed earnings, resulting in a return of capital to stockholders, which lowers their tax basis in shares [257]. - The company's shares may trade at a discount to net asset value, affecting the ability to issue additional shares without stockholder approval [258]. - The net asset value of the company's common stock may fluctuate significantly due to factors such as changes in regulatory policies, loss of RIC or BDC status, and variations in operating results [265]. - The company has obtained stockholder approval to issue shares of common stock at prices below the then-current net asset value, which could materially dilute stockholders' interests [273]. - The issuance of preferred stock, debt securities, or convertible debt may increase the volatility of the net asset value and market value of the company's common stock [268]. - The company may need to liquidate investments to fund redemptions of preferred stock or debt securities, which could lead to substantial losses [271]. Operational and Management Risks - The company has no employees and relies on the advisor for investment operations, which poses risks if the advisor loses senior management [149]. - The board of directors has the authority to change operating policies and strategies without prior notice, which could adversely affect business and stockholder interests [161]. - Changes in laws or regulations could require alterations to business practices, potentially impacting operations and financial condition [162]. - Compliance with the Sarbanes-Oxley Act incurs significant expenses, which may negatively impact financial performance and distributions [167]. - Quarterly results may fluctuate due to various factors, including investment opportunities and general economic conditions [168]. - Cybersecurity risks could compromise business operations and lead to significant losses or reputational damage [169]. - The Advisor's liability is limited under investment advisory agreements, which may lead to riskier actions on behalf of the company [181]. - The company may use structured financial instruments for hedging, which could be costly and may not effectively reduce risks, potentially impacting cash available for debt servicing or distributions [209]. - An increase in interest rates could significantly reduce net investment income and increase the cost of financing, adversely affecting investment objectives and returns [221][223]. - The company has structured most debt investments with floating interest rates to mitigate exposure to rising interest rates, although this strategy may not fully protect against risks [225]. - Portfolio companies may be highly leveraged, which could impair their ability to finance operations and respond to changing economic conditions [232]. - Investments may include original issue discount and PIK instruments, which carry higher credit risks and may lead to unreliable valuations [239][240]. - Prepayments of debt investments by portfolio companies could adversely impact results of operations and reduce return on equity [238]. - The transition from LIBOR to alternative reference rates poses uncertainties that could materially affect the company's financial condition and results of operations [226][227]. - The lack of liquidity in certain investments may hinder the ability to sell them at favorable prices, potentially leading to losses [235].

FS KKR Capital Corp. (NYSE:FSK) Q3 2020 Earnings Conference Call November 10, 2020 8:00 AM ET Company Participants Robert Paun - Head, Investor Relations Michael Forman - Chairman & Chief Executive Officer Dan Pietrzak - Chief Investment Officer & Co-President Brian Gerson - Co-President Steven Lilly - Chief Financial Officer Conference Call Participants Casey Alexander - Compass Point Rick Shane - JPMorgan Finian O'Shea - Wells Fargo Securities Robert Dodd - Raymond James Bryce Rowe - National Securities R ...

FS KKR BDC Franchise Financial Information QUARTER ENDED SEPTEMBER 30, 2020 Including: FS KKR Capital Corp. (FSK) and FS KKR Capital Corp. II (FSKR) FSK | FS KKR Capital Corp. FSK Third Quarter Results FSK - Summary of Quarterly Results | --- | --- | |---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

FORM 10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FS KKR Capital Corp. (Exact name of registrant as specified in its charter) 201 Rouse Boulevard Philadelphia, Pennsylvania 19112 (Address of principal executive offices) (Zip Code) Maryland 26-1630040 (State of Incorporation) (I.R.S. Employer Identification Number) Registrant's telephone number, including area code: (215) 495-1150 Indicate by check mark whether the Registrant (1) has filed all reports require ...

FS KKR Capital Corp (NYSE:FSK) Q2 2020 Earnings Conference Call August 11, 2020 8:30 AM ET Company Participants Robert Paun - Head, IR Michael Forman - Chairman and CEO Dan Pietrzak - CIO and Co-President Brian Gerson - Co-President Steven Lilly - CFO Conference Call Participants Casey Alexander - Compass Point Rick Shane - JPMorgan Ryan Carr - Jefferies Ryan Lynch - KBW Finian O'Shea - Wells Fargo Robert Dodd - Raymond James Operator Good morning ladies and gentlemen. Welcome to FS KKR Capital Corp.'s Seco ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q FS KKR Capital Corp. (Exact name of registrant as specified in its charter) 201 Rouse Boulevard Philadelphia, Pennsylvania 19112 (Address of principal executive offices) (Zip Code) Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or fo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q FS KKR Capital Corp. (Exact name of registrant as specified in its charter) 201 Rouse Boulevard Philadelphia, Pennsylvania 19112 (Address of principal executive offices) (Zip Code) Maryland 26-1630040 (State of Incorporation) (I.R.S. Employer Identification Number) Registrant's telephone number, including area code: (215) 495-1150 Indicate by check mark whether the Registrant (1) has filed all reports require ...