GBDC 10-Q Quarterly Report June 30, 2014

GOLUB CAPITAL BDC, INC.

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10-Q 1 v385529_10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2014

o 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 814-00794

Golub Capital BDC, Inc.

(Exact name of registrant as specified in its charter)

Delaware		27-2326940
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

150 South Wacker Drive, Suite 800

Chicago, IL 60606

(Address of principal executive offices)

(312) 205-5050

(Registrant's telephone number, including area code)

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 þ 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 of Regulation S-T 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, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer þ
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of August 7, 2014, the Registrant had 47,065,030 shares of common stock, $0.001 par value, outstanding.

Part I. Financial Information

Item 1.	Financial Statements	3

	Consolidated Statements of Financial Condition as of June 30, 2014 (unaudited) and September 30, 2013	3

	Consolidated Statements of Operations for the three and nine months ended June 30, 2014 (unaudited) and 2013 (unaudited)	4

	Consolidated Statements of Changes in Net Assets for the nine months ended June 30, 2014 (unaudited) and 2013 (unaudited)	5

	Consolidated Statements of Cash Flows for the nine months ended June 30, 2014 (unaudited) and 2013 (unaudited)	6

	Consolidated Schedules of Investments as of June 30, 2014 (unaudited) and September 30, 2013	7

	Notes to Consolidated Financial Statements (unaudited)	23

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	54

Item 3.	Quantitative And Qualitative Disclosures About Market Risk	83

Item 4.	Controls and Procedures	84

Part II. Other Information

Item 1.	Legal Proceedings	85

Item 1A.	Risk Factors	85

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85

Item 3.	Defaults Upon Senior Securities	85

Item 4.	Mine Safety Disclosures	85

Item 5.	Other Information	85

Item 6.	Exhibits	86

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share and per share data)

	June 30, 2014			September 30, 2013
	(unaudited)
Assets
Investments, at fair value
Non-controlled/non-affiliate company investments	$	1,287,616		$	1,011,586
Non-controlled affiliate company investments		2,877			8,225
Controlled affiliate company investments		34,397			4,834
Total investments, at fair value (cost of $1,309,706 and $1,017,961, respectively)		1,324,890			1,024,645
Cash and cash equivalents		11,392			16,309
Restricted cash and cash equivalents		109,818			38,408
Interest receivable		5,222			4,316
Deferred financing costs		10,514			7,742
Other assets		277			236
Total Assets	$	1,462,113		$	1,091,656

Liabilities
Debt	$	703,300		$	412,100
Secured borrowings, at fair value (proceeds of $20,064 and $8,683, respectively)		20,264			8,809
Interest payable		3,689			1,277
Management and incentive fees payable		5,897			5,579
Payable for open trades		-			3,677
Accounts payable and accrued expenses		2,140			1,978
Accrued trustee fees		49			-
Total Liabilities		735,339			433,420
Commitments and contingencies (Note 8)

Net Assets
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of June 30, 2014 and September 30, 2013		-			-
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 47,065,030 and 43,282,932 shares issued and outstanding as of June 30, 2014 and September 30, 2013, respectively		47			43
Paid in capital in excess of par		718,760			652,669
Undistributed net investment income		1,647			2,725
Net unrealized appreciation (depreciation) on investments, derivative instruments and secured borrowings		17,652			9,225
Net realized gain (loss) on investments and derivative instruments		(11,332	)		(6,426	)
Total Net Assets		726,774			658,236
Total Liabilities and Total Net Assets	$	1,462,113		$	1,091,656

Number of common shares outstanding		47,065,030			43,282,932
Net asset value per common share	$	15.44		$	15.21

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

(In thousands, except share and per share data)

	Three months ended June 30,						Nine months ended June 30,
	2014			2013			2014			2013
Investment income
From non-controlled/non-affiliate company investments:
Interest income	$	25,441		$	20,453		$	73,935		$	56,339
Dividend income		952			1,081			1,230			1,827
Fee income		1,042			579			1,976			2,328
Total investment income from non-controlled/non-affiliate company investments		27,435			22,113			77,141			60,494

From non-controlled affiliate company investments:
Interest income		-			155			225			463
Fee income		-			15			171			15
Total investment income from non-controlled affiliate company investments		-			155			396			463

From controlled affiliate company investments:
Interest income		594			-			1,331			-
Total investment income from controlled affiliate company investments		594			-			1,331			-

Total investment income		28,029			22,268			78,868			60,957

Expenses
Interest and other debt financing expenses		5,609			2,967			14,241			9,254
Base management fee		4,394			3,114			12,403			8,268
Incentive fee		1,607			2,785			6,295			7,647
Professional fees		578			534			1,876			1,540
Administrative service fee		655			715			1,979			1,873
General and administrative expenses		113			153			389			404

Total expenses		12,956			10,268			37,183			28,986

Net investment income		15,073			12,000			41,685			31,971

Net gain (loss) on investments and secured borrowings
Net realized gains (losses) on investments:
Non-controlled/non-affiliate company investments		1			(77	)		(4,906	)		18
Net realized gains (losses) on investments:		1			(77	)		(4,906	)		18

Net unrealized appreciation (depreciation) on investments:
Non-controlled/non-affiliate company investments		989			1,081			7,775			2,576
Non-controlled affiliate company investments		(2	)		(347	)		272			(338	)
Controlled affiliate company investments		205			-			454			-
Net unrealized appreciation (depreciation) on investments		1,192			734			8,501			2,238

Net change in unrealized (appreciation) depreciation on secured borrowings		14			-			(74	)		-

Net gain (loss) on investments and secured borrowings		1,207			657			3,521			2,256

Net increase in net assets resulting from operations	$	16,280		$	12,657		$	45,206		$	34,227

Per Common Share Data
Basic and diluted earnings per common share	$	0.35		$	0.34		$	1.01		$	1.05
Dividends and distributions declared per common share	$	0.32		$	0.32		$	0.96		$	0.96
Basic and diluted weighted average common shares outstanding		46,985,908			37,118,379			44,673,591			32,511,415

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Changes in Net Assets (unaudited)

(In thousands, except share data)

							Capital			Net Unrealized Appreciation (Depreciation) on Investments,		Net Realized Gain
	Common Stock				Paid in Capital		Distributions and			Derivative Instruments		(Loss) on Investments
			Par		in Excess		Undistributed Net			and Secured		and Derivative			Total
	Shares		Amount		of Par		Investment Income			Borrowings		Instruments			Net Assets
Balance at September 30, 2012		25,688,101	$	26	$	375,563	$	347		$	5,737	$	(6,544	)	$	375,129
Issuance of common stock, net of offering and underwriting costs ⁽¹⁾		14,016,382		14		223,404		-			-		-			223,418
Net increase in net assets resulting from operations		-		-		-		31,971			2,238		18			34,227
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan		87,322		-		1,385		-			-		-			1,385
Dividends and distributions		-		-		-		(32,661	)		-		-			(32,661	)
Balance at June 30, 2013		39,791,805	$	40	$	600,352	$	(343	)	$	7,975	$	(6,526	)	$	601,498
Balance at September 30, 2013		43,282,932	$	43	$	652,669	$	2,725		$	9,225	$	(6,426	)	$	658,236
Issuance of common stock, net of offering and underwriting costs ⁽²⁾		3,666,855		4		64,102		-			-		-			64,106
Net increase in net assets resulting from operations		-		-		-		41,685			8,427		(4,906	)		45,206
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan		115,243		-		1,989		-			-		-			1,989
Dividends and distributions		-		-		-		(42,763	)		-		-			(42,763	)
Balance at June 30, 2014		47,065,030	$	47	$	718,760	$	1,647		$	17,652	$	(11,332	)	$	726,774

⁽¹⁾ On October 16, 2012, Golub Capital BDC, Inc. priced a public offering of 2,600,000 shares of its common stock at a public offering price of $15.58 per share. On November 14, 2012, Golub Capital BDC, Inc. sold an additional 294,120 shares of its common stock at a public offering price of $15.58 per share pursuant to the underwriters’ partial exercise of the over-allotment option. On January 15, 2013, Golub Capital BDC, Inc. priced a public offering of 4,500,000 shares of its common stock at a public offering price of $15.87 per share. On February 20, 2013, Golub Capital BDC, Inc. sold an additional 622,262 shares of its common stock at a public offering price of $15.87 per share pursuant to the underwriters’ partial exercise of the over-allotment option. On May 7, 2013, Golub Capital BDC, Inc. priced a public offering of 6,000,000 shares of its common stock at a public offering prices of $17.47 per share.

⁽²⁾ On March 18, 2014, Golub Capital BDC, Inc. priced a public offering of 3,500,000 shares of its common stock at a public offering price of $18.05 per share. On April 23, 2014, Golub Capital BDC, Inc. sold an additional 166,855 shares of its common stock at a public offering price of $18.05 per share pursuant to the underwriters’ partial exercise of the option granted in connection with the public offering in March 2014.

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

	Nine Months Ended June 30,
	2014			2013
Cash flows from operating activities
Net increase in net assets resulting from operations	$	45,206		$	34,227
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities
Amortization of deferred financing costs		2,026			1,444
Accretion of discounts and amortization of premiums		(5,451	)		(6,104	)
Net realized loss (gain) on investments		4,906			(18	)
Net change in unrealized (appreciation) depreciation on investments		(8,501	)		(2,238	)
Net change in unrealized appreciation (depreciation) on secured borrowings		74			-
Proceeds from (fundings of) revolving loans, net		2,363			(8,155	)
Fundings of investments		(580,522	)		(554,022	)
Proceeds from principal payments and sales of portfolio investments		286,778			276,506
PIK interest		251			(851	)
Changes in operating assets and liabilities:
Interest receivable		(906	)		(1,614	)
Other assets		(41	)		7
Interest payable		2,412			1,035
Management and incentive fees payable		318			1,605
Payable for open trades		(3,677	)		-
Accounts payable and accrued expenses		162			1,152
Accrued trustee fees		49			-
Net cash (used in) provided by operating activities		(254,553	)		(257,026	)

Cash flows from investing activities
Net change in restricted cash and cash equivalents		(71,410	)		15,347
Net cash (used in) provided by investing activities		(71,410	)		15,347

Cash flows from financing activities
Borrowings on debt		759,850			304,350
Repayments of debt		(468,650	)		(252,850	)
Capitalized debt financing costs		(4,798	)		(2,918	)
Proceeds from secured borrowings		26,082			-
Repayments on secured borrowings		(14,770	)		-
Proceeds from shares sold, net of underwriting costs		64,170			224,065
Offering costs paid		(64	)		(647	)
Dividends and distributions paid		(40,774	)		(31,276	)
Net cash (used in) provided by financing activities		321,046			240,724

Net change in cash and cash equivalents		(4,917	)		(955	)

Cash and cash equivalents, beginning of period		16,309			13,891

Cash and cash equivalents, end of period	$	11,392		$	12,936

Supplemental information:
Cash paid during the period for interest	$	9,024		$	6,775
Dividends and distributions declared during the period	$	42,763		$	32,661

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited)

June 30, 2014

(In thousands)

		Spread										Percentage
	Investment	Above	Interest			Maturity	Principal / Par					of			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets			Value
Investments
United States
Debt investments
Aerospace and Defense
ILC Dover, LP	One stop	P + 4.50%		7.75	%	03/2019	$	360	$	352			-	%	$	351
ILC Dover, LP^	One stop	L + 5.50%		6.50	%	03/2020		18,713		18,579			2.6			18,572
NTS Technical Systems	One stop	L + 6.00%		7.25	%	11/2018		314		284			-			298
NTS Technical Systems*^	One stop	L + 6.00%		7.25	%	11/2018		18,918		18,606			2.6			18,729
NTS Technical Systems ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	11/2018		-		(63	)		-			(30	)
Tresys Technology Holdings, Inc. ⁽³⁾	One stop	L + 6.75%		N/A	⁽⁴⁾	12/2017		-		(7	)		-			-
Tresys Technology Holdings, Inc.	One stop	L + 6.75%		8.00	%	12/2017		3,899		3,832			0.3			2,340
Whitcraft LLC	Subordinated debt	N/A		12.00	%	12/2018		1,877		1,856			0.3			1,877
White Oak Technologies, Inc. ⁽³⁾	Senior loan	L + 5.00%		N/A	⁽⁴⁾	03/2017		-		(7	)		-			-
White Oak Technologies, Inc.*	Senior loan	L + 5.00%		6.25	%	03/2017		1,721		1,694			0.2			1,721
								45,802		45,126			6.0			43,858

Automobile
ABRA, Inc. ⁽³⁾⁽⁵⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	05/2018		-		(16	)		-			-
ABRA, Inc.* ⁽⁵⁾	One stop	L + 6.00%		7.25	%	05/2018		31,138		30,885			4.3			31,138
ABRA, Inc. ⁽⁵⁾	One stop	L + 6.00%		7.25	%	05/2018		5,166		5,135			0.7			5,166
ABRA, Inc. ⁽⁵⁾	One stop	L + 6.00%		7.25	%	05/2018		6,861		6,818			0.9			6,861
ABRA, Inc.*^	One stop	L + 7.75%		9.00	%	05/2018		4,334		4,271			0.6			4,334
American Driveline Systems, Inc.	Senior loan	L + 5.50%		7.16	%	01/2016		300		296			-			261
American Driveline Systems, Inc.*	Senior loan	L + 5.50%		7.00	%	01/2016		2,804		2,777			0.4			2,524
K&N Engineering, Inc. ⁽³⁾	Senior loan	L + 4.50%		N/A	⁽⁴⁾	04/2018		-		(6	)		-			-
K&N Engineering, Inc.*^	Senior loan	P + 3.50%		6.75	%	04/2018		6,799		6,719			0.9			6,799
Take 5 Oil Change, L.L.C. ⁽³⁾	Senior loan	L + 5.25%		N/A	⁽⁴⁾	07/2018		-		(3	)		-			-
Take 5 Oil Change, L.L.C.^	Senior loan	L + 4.75%		5.75	%	07/2018		2,953		2,935			0.4			2,953
Tectum Holdings, Inc.*	Senior loan	L + 4.25%		5.25	%	09/2018		874		872			0.1			874
								61,229		60,683			8.3			60,910

Banking
HedgeServ Holding L.P.^	One stop	L + 8.25%		5.25% cash/4.00% PIK		02/2019		17,240		17,082			2.4			17,240
HedgeServ Holding L.P. ⁽³⁾	One stop	L + 4.25%		N/A	⁽⁴⁾	02/2019		-		(9	)		-			-
Prommis Fin Co. ⁽⁶⁾	Senior loan	P + 10.00%		13.25	%	06/2015		85		84			-			2
Prommis Fin Co.* ⁽⁶⁾	Senior loan	N/A		2.25% cash/11.5% PIK		06/2015		124		124			-			3
								17,449		17,281			2.4			17,245
Beverage, Food and Tobacco
ABP Corporation ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	06/2016		-		(3	)		-			-
ABP Corporation*	Senior loan	L + 4.75%		6.00	%	06/2016		4,455		4,420			0.6			4,455
American Importing Company, Inc.^	One stop	P + 4.50%		7.75	%	05/2018		14,694		14,543			2.0			14,694
Ameriqual Group, LLC*	Senior loan	L + 6.00%		6.50% cash/1.00% PIK		03/2016		1,711		1,693			0.2			1,643
Ameriqual Group, LLC*	Senior loan	L + 7.50%		9.00% cash/1.50% PIK		03/2016		830		825			0.1			685
ARG IH Corporation (Arby's)^	Senior loan	L + 4.00%		5.00	%	11/2020		2,343		2,316			0.3			2,361
Atkins Nutritionals, Inc.*^	One stop	L + 5.00%		6.25	%	01/2019		21,455		21,254			3.0			21,481
Atkins Nutritionals, Inc.*	One stop	L + 8.50%		9.75	%	04/2019		18,997		18,642			2.7			19,281
C. J. Foods, Inc.	One stop	L + 5.50%		6.50	%	05/2019		43		34			-			37
C. J. Foods, Inc. ⁽³⁾	One stop	L + 5.50%		N/A	⁽⁴⁾	05/2019		-		(13	)		-			(9	)
C. J. Foods, Inc.	One stop	L + 5.50%		6.50	%	05/2019		3,232		3,185			0.4			3,200
Candy Intermediate Holdings, Inc. (Ferrara Candy)^	Senior loan	L + 6.25%		6.57	%	06/2018		4,900		4,784			0.7			4,849
Diversified Foodservice Supply, Inc.	Senior loan	P + 3.75%		7.00	%	12/2018		96		93			-			96
Diversified Foodservice Supply, Inc.*	Senior loan	L + 4.75%		6.00	%	12/2018		4,606		4,565			0.6			4,606
Firebirds International, LLC	One stop	L + 5.75%		7.00	%	05/2018		41		40			-			41
Firebirds International, LLC*	One stop	L + 5.75%		7.00	%	05/2018		905		896			0.1			905
Firebirds International, LLC	One stop	L + 5.75%		7.00	%	05/2018		262		259			-			262
Firebirds International, LLC ⁽³⁾	One stop	L + 5.75%		N/A	⁽⁴⁾	05/2018		-		(3	)		-			-
First Watch Restaurants, Inc. ⁽³⁾	One stop	L + 7.50%		N/A	⁽⁴⁾	12/2018		-		(25	)		-			-
First Watch Restaurants, Inc.*^	One stop	L + 7.50%		8.75	%	12/2018		11,293		11,157			1.6			11,293
First Watch Restaurants, Inc.*^	One stop	P + 6.50%		9.75	%	12/2018		3,107		3,070			0.5			3,107
First Watch Restaurants, Inc.	One stop	L + 7.50%		8.75	%	12/2018		1,750		1,744			0.2			1,750
IT'SUGAR LLC	Senior loan	L + 7.50%		9.00	%	04/2018		7,585		7,467			1.0			7,585
IT'SUGAR LLC	Subordinated debt	N/A		5.00	%	10/2017		1,707		1,707			0.3			2,287
Julio & Sons Company	One stop	L + 5.50%		6.50	%	09/2016		277		270			-			277

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread										Percentage
	Investment	Above	Interest			Maturity	Principal / Par					of		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Julio & Sons Company*	One stop	L + 5.50%		6.50	%	09/2016		6,996		6,947			1.0		6,996
Julio & Sons Company ⁽³⁾	One stop	L + 5.50%		N/A	⁽⁴⁾	09/2016		-		(29	)		-		-
Northern Brewer, LLC	One stop	P + 9.25%		8.50% cash/4.00% PIK		02/2018		670		658			0.1		535
Northern Brewer, LLC	One stop	P + 9.25%		8.50% cash/4.00% PIK		02/2018		6,338		6,215			0.7		5,071
Richelieu Foods, Inc.	Senior loan	P + 4.50%		7.75	%	11/2015		127		121			-		127
Richelieu Foods, Inc.*	Senior loan	L + 5.50%		7.25	%	11/2015		1,872		1,853			0.3		1,872
								120,292		118,685			16.4		119,487

Building and Real Estate
ITEL Laboratories, Inc. ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	06/2018		-		(1	)		-		-
ITEL Laboratories, Inc.*	Senior loan	L + 4.75%		6.00	%	06/2018		758		750			0.1		758
								758		749			0.1		758

Cargo Transport
RP Crown Parent (RedPrairie Corp)*	Senior loan	L + 5.00%		6.00	%	12/2018		1,975		1,945			0.3		1,979

Containers, Packaging and Glass
Fort Dearborn Company*	Senior loan	L + 4.25%		5.25	%	10/2017		26		26			-		26
Fort Dearborn Company*^	Senior loan	L + 4.25%		5.25	%	10/2017		522		520			0.1		522
Fort Dearborn Company*	Senior loan	L + 4.75%		5.75	%	10/2018		102		101			-		102
Fort Dearborn Company*^	Senior loan	L + 4.75%		5.75	%	10/2018		2,185		2,172			0.3		2,185
Packaging Coordinators, Inc.*^	Senior loan	L + 4.25%		5.50	%	05/2020		6,759		6,723			0.9		6,759
Packaging Coordinators, Inc.	Second lien	L + 8.25%		9.50	%	11/2020		29,098		28,330			4.0		29,098
Packaging Coordinators, Inc.^	Senior loan	L + 4.25%		5.50	%	05/2020		9,286		9,265			1.3		9,286
								47,978		47,137			6.6		47,978

Diversified Conglomerate Manufacturing
Chase Industries, Inc.*	One stop	L + 5.62%		6.87	%	11/2017		13,249		13,097			1.8		13,249
ICCN Acquisition Corp. ⁽³⁾	One stop	L + 5.25%		N/A	⁽⁴⁾	03/2019		-		(4	)		-		(3	)
ICCN Acquisition Corp.^	One stop	L + 5.25%		6.25	%	03/2019		4,008		3,942			0.5		3,968
ICCN Acquisition Corp. ⁽³⁾	One stop	L + 5.25%		N/A	⁽⁴⁾	03/2019		-		(15	)		-		(11	)
Metal Spinners, Inc.*	Senior loan	L + 7.50%		9.00	%	04/2015		1,309		1,298			0.2		1,309
Metal Spinners, Inc.*	Senior loan	L + 7.50%		9.00	%	04/2015		2,573		2,554			0.4		2,573
Onicon Incorporated ⁽³⁾	One stop	L + 6.75%		N/A	⁽⁴⁾	12/2017		-		(11	)		-		-
Onicon Incorporated	One stop	L + 4.50%		5.50	%	12/2017		3,162		3,117			0.4		3,162
Pasternack Enterprises, Inc.*	Senior loan	L + 5.00%		6.25	%	12/2017		1,149		1,141			0.2		1,149
Plex Systems, Inc. ⁽³⁾	Senior loan	L + 7.50%		N/A	⁽⁴⁾	06/2018		-		(26	)		-		-
Plex Systems, Inc.*^	Senior loan	L + 7.50%		8.75	%	06/2018		18,797		18,404			2.6		18,797
Sunless Merger Sub, Inc.	Senior loan	P + 4.00%		7.25	%	07/2016		77		76			-		50
Sunless Merger Sub, Inc.*	Senior loan	L + 5.25%		6.50	%	07/2016		1,847		1,843			0.2		1,293
TIDI Products, LLC	One stop	L + 6.50%		7.75	%	07/2017		78		66			-		78
TIDI Products, LLC*	One stop	L + 6.50%		7.75	%	07/2018		12,662		12,459			1.7		12,662
Vintage Parts, Inc.*	One stop	L + 4.50%		5.75	%	12/2015		4,175		4,142			0.6		4,175
Vintage Parts, Inc.*	One stop	L + 4.50%		5.75	%	12/2015		58		58			-		58
Vintage Parts, Inc.*	One stop	L + 4.50%		5.75	%	12/2015		873		877			0.1		873
								64,017		63,018			8.7		63,382

Diversified Conglomerate Service
Aderant North America, Inc.*	Senior loan	L + 4.25%		5.25	%	12/2018		4,220		4,188			0.6		4,220
Agility Recovery Solutions Inc. ⁽³⁾	One stop	L + 6.75%		N/A	⁽⁴⁾	09/2018		-		(6	)		-		-
Agility Recovery Solutions Inc.*	One stop	L + 6.75%		8.00	%	09/2018		8,288		8,144			1.1		8,288
Bomgar Corporation ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	05/2019		-		(19	)		-		(20	)
Bomgar Corporation	One stop	L + 6.00%		7.00	%	05/2020		23,539		23,091			3.2		23,303
Daxko, LLC ⁽³⁾	One stop	L + 7.75%		N/A	⁽⁴⁾	03/2019		-		(25	)		-		(22	)
Daxko, LLC	One stop	L + 7.75%		8.75	%	03/2019		16,840		16,548			2.3		16,671
Document Technologies, LLC ⁽³⁾	Senior loan	L + 4.25%		N/A	⁽⁴⁾	12/2018		-		(10	)		-		-
Document Technologies, LLC*^	Senior loan	L + 4.25%		5.50	%	12/2018		6,999		6,945			1.0		6,999
EAG, INC. (Evans Analytical Group)*	Senior loan	L + 4.00%		5.00	%	07/2017		2,435		2,409			0.3		2,435
HighJump Acquisition LLC	One stop	L + 7.50%		16.23	%	07/2018		7,089		7,033			1.0		7,089
Integration Appliance, Inc.	Senior loan	L + 8.25%		9.50	%	09/2018		719		710			0.1		710
Integration Appliance, Inc.	Senior loan	L + 8.25%		9.50	%	09/2018		5,396		5,281			0.7		5,328
Integration Appliance, Inc.	Senior loan	L + 8.25%		9.50	%	06/2019		7,914		7,717			1.1		7,815
Marathon Data Operating Co., LLC ⁽³⁾	One stop	L + 6.25%		N/A	⁽⁴⁾	08/2017		-		(7	)		-		-
Marathon Data Operating Co., LLC	One stop	L + 6.25%		7.50	%	08/2017		4,606		4,533			0.6		4,606
Navex Global, Inc. ⁽³⁾	One stop	L + 5.50%		N/A	⁽⁴⁾	12/2016		-		(22	)		-		-

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread										Percentage
	Investment	Above	Interest			Maturity	Principal / Par					of		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Navex Global, Inc.*	One stop	L + 5.50%		6.50	%	12/2016		19,174		18,810			2.6		19,174
NetSmart Technologies, Inc.*	One stop	L + 7.54%		8.79	%	12/2017		8,121		8,061			1.1		8,121
NetSmart Technologies, Inc.	One stop	L + 7.88%		9.13	%	12/2017		642		632			0.1		642
PC Helps Support, LLC ⁽³⁾	Senior loan	L + 5.25%		N/A	⁽⁴⁾	09/2017		-		(2	)		-		-
PC Helps Support, LLC	Senior loan	L + 5.25%		6.52	%	09/2017		1,795		1,778			0.2		1,795
Secure-24, LLC ⁽³⁾	One stop	L + 6.50%		N/A	⁽⁴⁾	08/2017		-		(5	)		-		-
Secure-24, LLC*	One stop	L + 6.50%		7.75	%	08/2017		10,460		10,260			1.4		10,460
Secure-24, LLC^	One stop	L + 6.50%		7.75	%	08/2017		1,530		1,509			0.2		1,530
SoftWriters, Inc. ⁽³⁾	One stop	L + 5.00%		N/A	⁽⁴⁾	05/2019		-		(2	)		-		(2	)
SoftWriters, Inc. ⁽³⁾	One stop	L + 5.00%		N/A	⁽⁴⁾	05/2019		-		(3	)		-		(4	)
SoftWriters, Inc.	One stop	L + 5.00%		6.00	%	05/2019		6,427		6,402			0.9		6,401
Source Medical Solutions, Inc.	Second lien	L + 8.00%		9.00	%	03/2018		9,294		9,136			1.3		9,294
Vericlaim, Inc. ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	05/2018		-		(3	)		-		-
Vericlaim, Inc.^	Senior loan	L + 4.75%		6.00	%	05/2018		6,311		6,283			0.9		6,311
Vericlaim, Inc.*	Senior loan	L + 4.75%		6.00	%	05/2018		367		363			0.1		367
								152,166		149,729			20.8		151,511

Electronics
BeyondTrust Software, Inc.^	One stop	L + 7.62%		8.88	%	12/2019		11,939		11,702			1.6		11,939
ECI Acquisition Holdings, Inc. ⁽³⁾	One stop	L + 6.25%		N/A	⁽⁴⁾	03/2019		-		(18	)		-		(10	)
ECI Acquisition Holdings, Inc.^	One stop	L + 6.25%		7.25	%	03/2019		22,270		21,878			3.0		22,047
ECI Acquisition Holdings, Inc. ⁽³⁾	One stop	L + 6.25%		N/A	⁽⁴⁾	03/2019		-		(84	)		-		(48	)
Rogue Wave Holdings, Inc.*^	One stop	L + 8.06%		9.06	%	12/2018		10,613		10,493			1.5		10,613
Sloan Company, Inc., The	One stop	L + 7.50%		8.75	%	10/2018		267		253			-		267
Sloan Company, Inc., The*^	One stop	L + 7.50%		8.75	%	10/2018		13,110		12,969			1.8		13,110
Sparta Systems, Inc. ⁽³⁾	Senior loan	L + 5.25%		N/A	⁽⁴⁾	12/2017		-		(6	)		-		-
Sparta Systems, Inc.*	Senior loan	L + 5.25%		6.50	%	12/2017		6,327		6,272			0.9		6,327
Syncsort Incorporated ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	03/2019		-		(3	)		-		(3	)
Syncsort Incorporated ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	03/2019		-		(13	)		-		(14	)
Syncsort Incorporated*	Senior loan	L + 4.75%		5.75	%	03/2019		6,158		6,101			0.8		6,097
Systems Maintenance Services Holding, Inc.^	Senior loan	L + 4.25%		5.25	%	10/2019		2,657		2,645			0.4		2,657
Taxware, LLC	Second lien	L + 8.50%		9.50	%	10/2019		11,099		10,902			1.5		11,099
Watchfire Enterprises, Inc.	Second lien	L + 8.00%		9.00	%	10/2021		9,435		9,265			1.3		9,435
								93,875		92,356			12.8		93,516

Farming and Agriculture
AGData, L.P.*^	One stop	L + 6.00%		7.25	%	08/2016		3,691		3,663			0.5		3,691

Finance
Ascensus, Inc. ⁽³⁾	One stop	L + 4.00%		N/A	⁽⁴⁾	11/2018		-		(17	)		-		-
Ascensus, Inc.^	One stop	L + 4.00%		5.00	%	12/2019		4,203		4,127			0.6		4,203
Ascensus, Inc.^	One stop	L + 8.00%		9.00	%	12/2020		6,337		6,134			0.9		6,337
Pillar Processing LLC* ⁽⁶⁾	Senior loan	L + 5.50%		5.72	%	11/2018		702		701			-		210
Pillar Processing LLC* ⁽⁶⁾	Senior loan	N/A		14.50	%	05/2019		2,377		2,368			-		-
								13,619		13,313			1.5		10,750
Grocery
MyWebGrocer, Inc. ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	05/2018		-		(12	)		-		-
MyWebGrocer, Inc.^	Senior loan	L + 8.75%		6.00% cash/4.00% PIK		05/2018		14,271		14,079			2.0		14,271
Teasdale Quality Foods, Inc.*	Senior loan	L + 4.50%		5.75	%	05/2018		2,681		2,659			0.4		2,681
								16,952		16,726			2.4		16,952

Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc. ⁽³⁾	Senior loan	L + 5.00%		N/A	⁽⁴⁾	02/2018		-		(8	)		-		-
Advanced Pain Management Holdings, Inc.*	Senior loan	L + 5.00%		6.25	%	02/2018		7,121		7,068			1.0		7,121
Advanced Pain Management Holdings, Inc.	Senior loan	L + 5.00%		6.25	%	02/2018		487		481			0.1		487
Avatar International, LLC ⁽³⁾	One stop	L + 4.94%		N/A	⁽⁴⁾	09/2016		-		(4	)		-		-
Avatar International, LLC*	One stop	L + 7.89%		6.19% cash/2.95% PIK		09/2016		7,589		7,532			0.9		6,602
Avatar International, LLC	One stop	L + 7.89%		6.19% cash/2.95% PIK		09/2016		1,637		1,628			0.2		1,424
Certara L.P. ⁽³⁾	One stop	L + 6.25%		N/A	⁽⁴⁾	12/2018		-		(20	)		-		(13	)
Certara L.P.*^	One stop	L + 6.25%		7.25	%	12/2018		23,006		22,765			3.1		22,834
Data Innovations LLC	One stop	L + 5.75%		6.75	%	05/2019		8,823		8,631			1.2		8,734
Delta Educational Systems*	Senior loan	P + 4.75%		8.00	%	12/2016		1,693		1,671			0.2		1,693
Delta Educational Systems ⁽³⁾	Senior loan	L + 6.00%		N/A	⁽⁴⁾	12/2016		-		-			-		-
Encore Rehabilitation Services, LLC ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	06/2017		-		(9	)		-		-

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread										Percentage
	Investment	Above	Interest			Maturity	Principal / Par					of		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Encore Rehabilitation Services, LLC	One stop	L + 6.00%		7.25	%	06/2017		5,001		4,920			0.7		5,001
G & H Wire Company, Inc.	Senior loan	P + 4.50%		7.75	%	12/2017		179		172			-		179
G & H Wire Company, Inc.*^	Senior loan	L + 5.75%		6.75	%	12/2017		12,934		12,786			1.8		12,934
Global Healthcare Exchange, LLC ⁽³⁾	One stop	L + 9.00%		N/A	⁽⁴⁾	03/2020		-		(24	)		-		(25	)
Global Healthcare Exchange, LLC	One stop	L + 9.00%		10.00	%	03/2020		20,087		19,706			2.7		19,886
GSDM Holdings Corp.	Senior loan	L + 4.25%		5.25	%	06/2019		629		626			0.1		626
Healogics, Inc.*	Second lien	L + 8.00%		9.25	%	02/2020		16,454		16,322			2.3		16,454
Hospitalists Management Group, LLC	Senior loan	L + 5.00%		6.77	%	05/2017		910		902			0.1		819
Hospitalists Management Group, LLC	Senior loan	L + 5.00%		6.51	%	05/2017		3,694		3,643			0.5		3,324
Hospitalists Management Group, LLC	Senior loan	L + 5.00%		6.50	%	05/2017		430		426			0.1		387
IntegraMed America, Inc. ⁽³⁾	One stop	L + 7.25%		N/A	⁽⁴⁾	09/2017		-		(12	)		-		(6	)
IntegraMed America, Inc.*^	One stop	L + 7.25%		8.50	%	09/2017		15,626		15,398			2.1		15,509
Joerns Healthcare, LLC	One stop	L + 5.00%		6.00	%	05/2020		9,819		9,722			1.3		9,782
Maverick Healthcare Group, LLC*	Senior loan	L + 5.50%		7.25	%	12/2016		1,999		1,971			0.3		1,899
NeuroTherm, Inc.	Senior loan	P + 3.50%		6.75	%	02/2016		23		18			-		23
NeuroTherm, Inc.*^	Senior loan	L + 4.50%		5.75	%	02/2016		2,183		2,162			0.3		2,183
Northwestern Management Services, LLC ⁽³⁾	Senior loan	L + 5.25%		N/A	⁽⁴⁾	10/2017		-		(10	)		-		-
Northwestern Management Services, LLC*	Senior loan	L + 5.25%		6.50	%	10/2017		3,976		3,921			0.5		3,976
Northwestern Management Services, LLC	Senior loan	L + 5.25%		6.50	%	10/2017		47		43			-		47
Onsite Holding Corp. ⁽³⁾	One stop	L + 5.25%		N/A	⁽⁴⁾	06/2020		-		(44	)		-		(25	)
Onsite Holding Corp.*^	One stop	L + 5.25%		6.25	%	06/2020		26,921		26,686			3.7		26,786
Paradigm Management Services, LLC^	Senior loan	L + 4.50%		5.51	%	01/2019		1,920		1,903			0.3		1,920
Pentec Acquisition Sub, Inc. ⁽³⁾	Senior loan	L + 5.25%		N/A	⁽⁴⁾	05/2017		-		(2	)		-		-
Pentec Acquisition Sub, Inc.*	Senior loan	L + 5.25%		6.50	%	05/2018		1,815		1,792			0.2		1,815
Precision Dermatology, Inc. ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	09/2018		-		(5	)		-		-
Precision Dermatology, Inc.	One stop	L + 6.00%		7.25	%	09/2018		9,991		9,907			1.4		10,092
Reliant Pro ReHab, LLC ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	06/2016		-		(7	)		-		-
Reliant Pro ReHab, LLC*^	Senior loan	L + 5.00%		6.00	%	06/2017		7,652		7,588			1.1		7,652
Renaissance Pharma (U.S.) Holdings Inc.	Senior loan	P + 3.00%		6.25	%	05/2018		97		94			-		97
Renaissance Pharma (U.S.) Holdings Inc.*^	Senior loan	L + 4.00%		5.03	%	05/2018		4,259		4,203			0.6		4,259
Southern Anesthesia and Surgical ⁽³⁾	One stop	L + 5.50%		N/A	⁽⁴⁾	11/2017		-		(11	)		-		-
Southern Anesthesia and Surgical	One stop	L + 5.50%		6.50	%	11/2017		6,027		5,911			0.8		6,027
Southern Anesthesia and Surgical ⁽³⁾	One stop	L + 5.50%		N/A	⁽⁴⁾	11/2017		-		(43	)		-		-
Surgical Information Systems, LLC^	Senior loan	L + 3.00%		4.01	%	09/2018		2,062		2,057			0.3		2,062
WIL Research Company, Inc.*	Senior loan	L + 4.50%		5.75	%	02/2018		778		771			0.1		759
Young Innovations, Inc. ⁽³⁾	Senior loan	L + 4.25%		N/A	⁽⁴⁾	01/2018		-		(3	)		-		-
Young Innovations, Inc.*^	Senior loan	L + 4.25%		5.29	%	01/2019		5,457		5,423			0.8		5,457
								211,326		208,647			28.8		208,781

Home and Office Furnishings,
Housewares, and Durable Consumer
Plano Molding Company, LLC^	Senior loan	L + 4.25%		5.25	%	10/2018		1,997		1,984			0.3		1,997
WII Components, Inc.*	Senior loan	L + 4.75%		6.25	%	07/2016		1,513		1,504			0.2		1,513
WII Components, Inc.	Senior loan	P + 3.75%		7.00	%	07/2016		10		9			-		10
Zenith Products Corporation	One stop	P + 1.75%		5.00	%	09/2013		29		29			-		15
Zenith Products Corporation*	One stop	P + 3.50%		6.75	%	09/2013		3,684		3,684			0.3		1,842
								7,233		7,210			0.8		5,377

Insurance
Captive Resources Midco, LLC ⁽³⁾	One stop	L + 5.00%		N/A	⁽⁴⁾	01/2019		-		(16	)		-		-
Captive Resources Midco, LLC*^	One stop	L + 5.00%		6.50	%	01/2019		20,047		19,859			2.8		20,047
Evolution1, Inc.*	Senior loan	P + 3.75%		7.00	%	06/2016		4,461		4,434			0.6		4,461
Evolution1, Inc.	Senior loan	P + 3.75%		7.00	%	06/2016		56		54			-		56
								24,564		24,331			3.4		24,564

Investment Funds and Vehicles
Senior Loan Fund LLC ⁽⁷⁾⁽⁸⁾	Subordinated debt	L + 8.00%		8.15	%	05/2020		29,610		29,610			4.1		29,610

Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc.	One stop	P + 6.75%		9.76	%	11/2018		884		873			0.1		716
Competitor Group, Inc.*	One stop	L + 8.75%		9.00% cash/1.00% PIK		11/2018		12,797		12,634			1.5		11,134
Octane Fitness, LLC ⁽³⁾	One stop	L + 5.25%		N/A	⁽⁴⁾	10/2018		-		(4	)		-		-
Octane Fitness, LLC*	One stop	L + 5.25%		6.50	%	10/2018		8,096		8,061			1.1		8,096

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread										Percentage
	Investment	Above	Interest			Maturity	Principal / Par					of		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Pride Manufacturing Company, LLC*	Senior loan	L + 6.00%		7.75	%	11/2015		513		510			0.1		513
Self Esteem Brands, LLC ⁽³⁾	Senior loan	L + 4.00%		N/A	⁽⁴⁾	02/2020		-		(5	)		-		(5	)
Self Esteem Brands, LLC^	Senior loan	L + 4.00%		5.25	%	02/2020		7,707		7,662			1.1		7,659
Starplex Operating, L.L.C.	One stop	L + 7.50%		9.00	%	12/2017		958		943			0.1		958
Starplex Operating, L.L.C.*^	One stop	L + 7.50%		9.00	%	12/2017		17,170		16,956			2.4		17,170
Titan Fitness, LLC ⁽³⁾	One stop	L + 6.50%		N/A	⁽⁴⁾	09/2019		-		(23	)		-		-
Titan Fitness, LLC*	One stop	L + 6.50%		7.75	%	09/2019		13,637		13,360			1.9		13,637
Titan Fitness, LLC ⁽³⁾	One stop	L + 6.50%		N/A	⁽⁴⁾	09/2019		-		(23	)		-		-
								61,762		60,944			8.3		59,878

Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc.	One stop	P + 7.75%		11.00	%	10/2017		273		264			-		273
Benetech, Inc.*	One stop	L + 9.00%		10.25	%	10/2017		5,191		5,149			0.7		5,191
								5,464		5,413			0.7		5,464

Oil and Gas
Drilling Info, Inc. ⁽³⁾⁽⁵⁾	One stop	L + 5.00%		N/A	⁽⁴⁾	06/2018		-		(1	)		-		-
Drilling Info, Inc.^ ⁽⁵⁾	One stop	L + 5.00%		6.00	%	06/2018		1,342		1,331			0.2		1,342
Drilling Info, Inc. ⁽³⁾⁽⁵⁾	One stop	L + 5.00%		N/A	⁽⁴⁾	06/2018		-		(4	)		-		-
								1,342		1,326			0.2		1,342

Personal and Non-Durable Consumer Products
Hygenic Corporation, The	Senior loan	P + 3.75%		6.80	%	10/2017		153		150			-		153
Hygenic Corporation, The*^	Senior loan	L + 4.75%		6.00	%	10/2018		4,549		4,502			0.6		4,549
Massage Envy, LLC ⁽³⁾	One stop	L + 7.25%		N/A	⁽⁴⁾	09/2018		-		(13	)		-		-
Massage Envy, LLC*	One stop	L + 7.25%		8.50	%	09/2018		15,999		15,718			2.2		15,999
Rug Doctor LLC	Senior loan	L + 5.25%		6.25	%	12/2016		465		454			0.1		465
Rug Doctor LLC*	Senior loan	L + 5.25%		6.25	%	12/2016		5,435		5,390			0.7		5,435
Team Technologies Acquisition Company^	Senior loan	L + 5.00%		6.25	%	12/2017		4,843		4,800			0.7		4,843
Team Technologies Acquisition Company ⁽³⁾	Senior loan	P + 3.75%		7.00	%	12/2017		-		(2	)		-		-
								31,444		30,999			4.3		31,444

Personal, Food and Miscellaneous Services
Affordable Care Inc. ⁽³⁾	Senior loan	L + 4.75%		N/A	⁽⁴⁾	12/2017		-		(2	)		-		-
Affordable Care Inc.^	Senior loan	L + 4.75%		6.00	%	12/2018		3,356		3,331			0.5		3,356
El Pollo Loco Inc^	Senior loan	L + 4.25%		5.25	%	10/2018		5,162		5,117			0.7		5,201
Focus Brands Inc.	Second lien	L + 9.00%		10.25	%	08/2018		11,195		11,085			1.6		11,404
National Veterinary Associates, Inc.	Senior loan	L + 5.00%		6.25	%	12/2017		72		71			-		72
National Veterinary Associates, Inc.^	Senior loan	L + 5.00%		6.25	%	12/2017		5,976		5,940			0.8		5,976
National Veterinary Associates, Inc.^	Senior loan	L + 5.00%		6.25	%	12/2017		1,671		1,661			0.2		1,671
PMI Holdings, Inc. ⁽³⁾	One stop	L + 4.50%		N/A	⁽⁴⁾	10/2018		-		(9	)		-		-
PMI Holdings, Inc.*^	One stop	L + 4.50%		5.50	%	10/2018		22,366		22,272			3.1		22,366
Vetcor Merger Sub LLC	One stop	L + 6.50%		7.75	%	12/2017		199		193			-		199
Vetcor Merger Sub LLC*^	One stop	L + 6.50%		7.75	%	12/2017		5,870		5,824			0.8		5,870
Vetcor Merger Sub LLC ⁽³⁾	One stop	L + 6.50%		N/A	⁽⁴⁾	12/2017		-		(7	)		-		-
Vetcor Merger Sub LLC^	One stop	L + 6.50%		7.75	%	12/2017		373		373			0.1		373
Vetcor Merger Sub LLC^	One stop	L + 6.50%		7.75	%	12/2017		575		575			0.1		575
Vetcor Merger Sub LLC^	One stop	L + 6.50%		7.75	%	12/2017		385		385			0.1		385
								57,200		56,809			8.0		57,448

Printing and Publishing
Market Track, LLC ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	10/2019		-		(19	)		-		-
Market Track, LLC*^	One stop	L + 6.00%		7.25	%	10/2019		29,344		29,084			4.0		29,344
Market Track, LLC ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	10/2019		-		(19	)		-		-
								29,344		29,046			4.0		29,344

Retail Stores
Benihana, Inc.	One stop	P + 4.25%		7.50	%	07/2018		274		238			-		274
Benihana, Inc.*^	One stop	L + 5.50%		6.75	%	01/2019		14,000		13,637			1.9		14,000
Boot Barn, Inc.*^	One stop	L + 5.75%		7.00	%	05/2019		24,491		24,188			3.4		24,491
Boot Barn, Inc.*	One stop	L + 5.75%		7.00	%	05/2019		7,745		7,672			1.1		7,669
Capital Vision Services, LLC ⁽³⁾	One stop	L + 7.25%		N/A	⁽⁴⁾	12/2017		-		(10	)		-		-
Capital Vision Services, LLC*^	One stop	L + 7.25%		8.50	%	12/2017		15,440		15,294			2.1		15,440
Capital Vision Services, LLC^	One stop	L + 7.25%		8.50	%	12/2017		1,238		1,225			0.2		1,238
Capital Vision Services, LLC	One stop	L + 7.25%		8.50	%	12/2017		731		725			0.1		731
DTLR, Inc.*^	One stop	L + 8.00%		11.00	%	12/2015		16,108		16,025			2.2		16,108
Express Oil Change, LLC	Senior loan	L + 4.75%		6.17	%	12/2017		64		62			-		64

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread										Percentage
	Investment	Above	Interest			Maturity	Principal / Par					of			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets			Value
Express Oil Change, LLC*	Senior loan	P + 3.50%		6.75	%	12/2017		1,747		1,735			0.2			1,747
Express Oil Change, LLC	Senior loan	P + 3.50%		6.75	%	12/2017		112		111			-			112
Floor & Decor Outlets of America, Inc.*^	One stop	L + 6.50%		7.75	%	05/2019		11,272		11,158			1.6			11,272
Marshall Retail Group, LLC, The ⁽³⁾	Senior loan	L + 6.00%		N/A	⁽⁴⁾	10/2016		-		(9	)		-			-
Marshall Retail Group, LLC, The*^	Senior loan	L + 6.00%		7.50	%	10/2016		9,105		9,012			1.3			9,105
Paper Source, Inc. ⁽³⁾	One stop	L + 6.25%		N/A	⁽⁴⁾	09/2018		-		(11	)		-			-
Paper Source, Inc.*^	One stop	L + 6.25%		7.25	%	09/2018		12,607		12,501			1.7			12,607
Restaurant Holding Company, LLC	Senior loan	L + 7.75%		8.75	%	02/2019		4,989		4,942			0.7			4,970
Rubio's Restaurants, Inc*^	Senior loan	L + 4.75%		6.00	%	11/2018		9,400		9,393			1.3			9,400
Sneaker Villa, Inc.	One stop	P + 7.00%		11.50	%	12/2017		251		238			-			251
Sneaker Villa, Inc.	One stop	L + 8.50%		10.00	%	12/2017		4,462		4,384			0.6			4,462
Sneaker Villa, Inc.^	One stop	L + 8.50%		10.00	%	12/2017		627		620			0.1			627
Sneaker Villa, Inc.^	One stop	L + 8.50%		10.00	%	12/2017		1,245		1,234			0.2			1,245
Sneaker Villa, Inc. ⁽³⁾	One stop	L + 8.50%		N/A	⁽⁴⁾	12/2017		-		(11	)		-			-
Specialty Catalog Corp. ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	07/2017		-		(5	)		-			-
Specialty Catalog Corp.	One stop	L + 6.00%		7.50	%	07/2017		4,711		4,672			0.6			4,711
Vision Source L.P. ⁽³⁾	One stop	L + 5.00%		N/A	⁽⁴⁾	04/2016		-		(7	)		-			-
Vision Source L.P.*^	One stop	L + 5.00%		6.00	%	04/2016		16,957		16,853			2.3			16,957
								157,576		155,866			21.6			157,481

Telecommunications
Arise Virtual Solutions, Inc. ⁽³⁾	One stop	L + 6.00%		N/A	⁽⁴⁾	12/2018		-		(12	)		-			-
Arise Virtual Solutions, Inc.*^	One stop	L + 6.00%		7.25	%	12/2018		13,958		13,833			1.9			13,958
Hosting.com Inc.	Senior loan	P + 3.25%		6.50	%	12/2017		7		5			-			7
Hosting.com Inc.*	Senior loan	L + 4.50%		5.75	%	12/2017		873		862			0.1			873
ITC Global, Inc. ⁽³⁾	One stop	L + 6.75%		N/A	⁽⁴⁾	07/2018		-		(13	)		-			-
ITC Global, Inc.*	One stop	L + 6.75%		7.75	%	07/2018		8,410		8,334			1.2			8,410
ITC Global, Inc.^	One stop	L + 6.75%		7.75	%	07/2018		1,434		1,421			0.2			1,434
								24,682		24,430			3.4			24,682

Textile and Leather
5.11, Inc.*^	Senior loan	L + 5.00%		6.00	%	02/2020		1,033		1,029			0.1			1,036
Southern Tide, LLC ⁽³⁾	One stop	L + 6.75%		N/A	⁽⁴⁾	06/2019		-		(9	)		-			(9	)
Southern Tide, LLC^	One stop	L + 6.75%		7.75	%	06/2019		4,106		4,065			0.6			4,065
								5,139		5,085			0.7			5,092

Utilities
PowerPlan Consultants, Inc. ⁽³⁾	Senior loan	L + 4.25%		N/A	⁽⁴⁾	10/2018		-		(1	)		-			-
PowerPlan Consultants, Inc.*^	Senior loan	L + 4.25%		5.30	%	10/2019		3,837		3,790			0.5			3,837
								3,837		3,789			0.5			3,837

Total debt investments United States							$	1,290,326	$	1,273,916			175.6	%	$	1,276,361

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread							Percentage
	Investment	Above	Interest	Maturity	Shares /				of			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾	Date	Contracts		Cost		Net Assets			Value

Equity Investments ⁽⁹⁾
Aerospace and Defense
NTS Technical Systems	Common stock	N/A	N/A	N/A		2	$	1,506		0.2	%	$	1,506
Tresys Technology Holdings, Inc.	Common stock	N/A	N/A	N/A		295		295		-			3
Whitcraft LLC	Common stock	N/A	N/A	N/A		1		670		0.1			409
Whitcraft LLC	Warrant	N/A	N/A	N/A		-		-		-			80
								2,471		0.3			1,998
Automobile
ABRA, Inc	LLC interest	N/A	N/A	N/A		208		352		0.6			4,175
K&N Engineering, Inc.	Preferred stock A	N/A	N/A	N/A		-		26		-			42
K&N Engineering, Inc.	Preferred stock B	N/A	N/A	N/A		-		-		-			12
K&N Engineering, Inc.	Common stock	N/A	N/A	N/A		-		4		-			95
								382		0.6			4,324
Beverage, Food and Tobacco
Atkins Nutritionals, Inc.	LLC interest	N/A	N/A	N/A		57		746		0.1			827
C. J. Foods, Inc.	Common stock	N/A	N/A	N/A		157		157		-			157
First Watch Restaurants, Inc.	Common stock	N/A	N/A	N/A		8		816		0.1			879
Goode Seed Co-Invest, LLC	LLC units	N/A	N/A	N/A		356		356		0.1			411
Julio & Sons Company	LLC interest	N/A	N/A	N/A		521		521		0.1			440
Northern Brewer, LLC	LLC interest	N/A	N/A	N/A		438		362		-			37
Richelieu Foods, Inc.	LP interest	N/A	N/A	N/A		220		220		-			139
								3,178		0.4			2,890

Containers, Packaging and Glass		N/A	N/A	N/A
Packaging Coordinators, Inc.	LLC interest	N/A	N/A	N/A		48		1,563		0.4			2,641

Diversified Conglomerate Manufacturing		N/A	N/A	N/A
ICCN Acquisition Corp.	Preferred stock	N/A	N/A	N/A		-		162		-			162
ICCN Acquisition Corp.	Common stock	N/A	N/A	N/A		-		-		-			-
Oasis Outsourcing Holdings, Inc.	LLC interest	N/A	N/A	N/A		1,088		860		0.2			1,719
Sunless Merger Sub, Inc.	LP interest	N/A	N/A	N/A		-		160		-			4
TIDI Products, LLC	LLC units	N/A	N/A	N/A		315		158		-			263
		N/A	N/A	N/A				1,340		0.2			2,148

Diversified Conglomerate Service
Daxko, LLC	LLC units	N/A	N/A	N/A		219		219		-			219
Document Technologies, LLC	LLC interest	N/A	N/A	N/A		24		490		0.1			909
Marathon Data Operating Co., LLC	Preferred stock	N/A	N/A	N/A		1		264		0.1			305
Marathon Data Operating Co., LLC	Common stock	N/A	N/A	N/A		1		264		0.1			309
Navex Global, Inc.	LP interest	N/A	N/A	N/A		-		666		0.1			798
PC Helps Support, LLC	Common stock	N/A	N/A	N/A		1		7		-			-
PC Helps Support, LLC	Preferred stock	N/A	N/A	N/A		-		61		-			70
Secure-24, LLC	LLC units	N/A	N/A	N/A		263		263		-			225
		N/A	N/A	N/A				2,234		0.4			2,835
Electronics		N/A	N/A	N/A
ECI Acquisition Holdings, Inc.	Common stock	N/A	N/A	N/A		9		873		0.1			873
		N/A	N/A	N/A
Grocery		N/A	N/A	N/A
MyWebGrocer, Inc.	LLC units	N/A	N/A	N/A		1,315		1,322		0.2			1,322
		N/A	N/A	N/A
Healthcare, Education and Childcare		N/A	N/A	N/A
Advanced Pain Management Holdings, Inc.	Common stock	N/A	N/A	N/A		67		67		0.1			769
Advanced Pain Management Holdings, Inc.	Preferred stock	N/A	N/A	N/A		8		829		0.1			901
Avatar International, LLC	LP interest	N/A	N/A	N/A		1		741		-			35
Certara L.P.	LP interest	N/A	N/A	N/A		-		635		0.1			635
Dialysis Newco, Inc.	LLC units	N/A	N/A	N/A		871		-		0.1			1,027
Encore Rehabilitation Services, LLC	LLC interest	N/A	N/A	N/A		270		270		0.1			548
G & H Wire Company, Inc.	LP interest	N/A	N/A	N/A		-		102		-			127
Global Healthcare Exchange, LLC	Common stock	N/A	N/A	N/A		-		4		-			4
Global Healthcare Exchange, LLC	Preferred stock	N/A	N/A	N/A		-		398		0.1			398
Healogics, Inc.	Preferred stock	N/A	N/A	N/A		695		799		0.2			1,557

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread							Percentage
	Investment	Above	Interest	Maturity	Shares /				of			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾	Date	Contracts		Cost		Net Assets			Value
Hospitalists Management Group, LLC	Common stock	N/A	N/A	N/A		-		38		-			1
IntegraMed America, Inc.	Common stock	N/A	N/A	N/A		1		634		0.1			794
NeuroTherm, Inc.	Common stock	N/A	N/A	N/A		1		569		0.2			1,462
Northwestern Management Services, LLC	Common stock	N/A	N/A	N/A		3		3		-			76
Northwestern Management Services, LLC	LLC units	N/A	N/A	N/A		-		249		0.1			279
Pentec Acquisition Sub, Inc.	Preferred stock	N/A	N/A	N/A		1		116		-			98
Reliant Pro ReHab, LLC	Preferred stock	N/A	N/A	N/A		2		183		0.1			427
Southern Anesthesia and Surgical	Common stock	N/A	N/A	N/A		487		487		0.1			613
Surgical Information Systems, LLC	Common stock	N/A	N/A	N/A		4		414		0.1			554
Young Innovations, Inc.	Preferred stock	N/A	N/A	N/A		-		236		-			244
		N/A	N/A	N/A				6,774		1.5			10,549
Home and Office Furnishings,		N/A	N/A	N/A
Housewares, and Durable Consumer		N/A	N/A	N/A
Top Knobs USA, Inc.	Common stock	N/A	N/A	N/A		3		35		-			166
		N/A	N/A	N/A
Insurance		N/A	N/A	N/A
Captive Resources Midco, LLC	LLC units	N/A	N/A	N/A		1		86		-			172
		N/A	N/A	N/A
Investment Funds and Vehicles		N/A	N/A	N/A
Senior Loan Fund LLC ⁽⁷⁾⁽⁸⁾	LLC interest	N/A	N/A	N/A		4,230		4,230		0.7			4,787
		N/A	N/A	N/A
Leisure, Amusement, Motion Pictures		N/A	N/A	N/A
and Entertainment		N/A	N/A	N/A
Competitor Group, Inc.	LLC interest	N/A	N/A	N/A		708		713		-			43
LMP TR Holdings, LLC	LLC units	N/A	N/A	N/A		712		712		0.1			712
Starplex Operating, L.L.C.	Common stock	N/A	N/A	N/A		1		183		-			208
Titan Fitness, LLC	Common stock	N/A	N/A	N/A		6		583		0.1			650
								2,191		0.2			1,613
Personal and Non-Durable Consumer Products
Hygenic Corporation, The	LP interest	N/A	N/A	N/A		1		61		-			96
Massage Envy, LLC	LLC interest	N/A	N/A	N/A		749		749		0.1			749
Team Technologies Acquisition Company	Common stock	N/A	N/A	N/A		-		148		-			225
								958		0.1			1,070
Personal Transportation
PODS Funding Corp. II	Warrant	N/A	N/A	N/A		271		-		0.1			687

Printing and Publishing		N/A	N/A	N/A
Market Track, LLC	Preferred stock	N/A	N/A	N/A		-		145		-			174
Market Track, LLC	Common stock	N/A	N/A	N/A		1		145		-			239
								290		-			413
Retail Stores
Barcelona Restaurants, LLC ^(8)(10)	LP interest	N/A	N/A	N/A		1,996		1,996		0.4			2,877
Benihana, Inc.	LLC units	N/A	N/A	N/A		43		699		0.1			747
Capital Vision Services, LLC	LLC interest	N/A	N/A	N/A		402		17		0.1			520
Express Oil Change, LLC	LLC interest	N/A	N/A	N/A		81		81		-			66
Paper Source, Inc.	LLC interest	N/A	N/A	N/A		8		1,387		0.2			1,417
PetPeople Enterprises, LLC	LP interest	N/A	N/A	N/A		889		889		0.1			889
Rubio's Restaurants, Inc.	Preferred stock	N/A	N/A	N/A		199		945		0.2			1,388
Sneaker Villa, Inc.	LLC interest	N/A	N/A	N/A		4		411		0.1			511
Vision Source L.P.	Common stock	N/A	N/A	N/A		9		936		0.2			1,124
Vision Source L.P.	Common stock	N/A	N/A	N/A		-		-		-			-
								7,361		1.4			9,539
Telecommunications
ITC Global, Inc.	Preferred stock	N/A	N/A	N/A		17		311		0.1			311

Textiles and Leather
Southern Tide, LLC	LLC interest	N/A	N/A	N/A		2		191		-			191

Total equity investments United States								35,790		6.7	%		48,529

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (Continued)

June 30, 2014

(In thousands)

		Spread						Percentage
	Investment	Above	Interest	Maturity	Shares /			of			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾	Date	Contracts	Cost		Net Assets			Value
Total United States							1,309,706		182.3	%		1,324,890

Total Investments						$	1,309,706		182.3	%	$	1,324,890

Cash, Restricted Cash and Cash Equivalents
Cash and Restricted Cash						$	93,117		12.8	%	$	93,117
US Bank Money Market Account (cusip 9AMMF05B2)							28,093		3.9			28,093
Total Cash, Restricted Cash and Cash Equivalents						$	121,210		16.7		$	121,210

Total Investments and Cash, Restricted Cash and Cash Equivalents						$	1,430,916		199.0		$	1,446,100

Denotes that all or a portion of the loan secures the notes offered in the 2010 Debt Securitization (as defined in Note 7).

Denotes that all or a portion of the loan secures the notes offered in the 2014 Debt Securitization (as defined in Note 7).

(1)

The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") or Prime ("P") and which reset daily, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect at June 30, 2014. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.

(2)

For portfolio companies with multiple interest rate contracts, the interest rate shown is a weighted average current interest rate in effect at June 30, 2014.

(3)

The negative fair value is the result of the unfunded commitment being valued below par. The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

(4)

The entire commitment was unfunded at June 30, 2014. As such, no interest is being earned on this investment.

(5)

The sale of a portion of this loan does not qualify for sale accounting under ASC Topic 860 - Transfers and Servicing, and therefore, the entire one stop loan asset remains in the Consolidated Schedule of Investments. (See Note 7 in the accompanying notes to the consolidated financial statements.)

(6)

Loan was on non-accrual status as of June 30, 2014, meaning that the Company has ceased recognizing interest income on the loan.

(7)

As defined in the Investment Company Act of 1940, as amended (the "1940 Act"), the Company is deemed to be both an "Affiliated Person" of and "Control" this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Note 5 in the accompanying notes to the consolidated financial statements for transactions during the nine months ended June 30, 2014 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.

(8)

The investment is treated as a non-qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(9)

Non-income producing securities.

(10)

As defined in the 1940 Act, the Company is deemed to be an "Affiliated Person" of the portfolio company as the Company owns five percent or more of the portfolio company's voting securities. See Note 5 in the accompanying notes to the financial statements for transactions during the nine months ended June 30, 2014 in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).

See Notes to Consolidated Financial Statements

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments

September 30, 2013

(In thousands)

												Percentage
	Investment	Spread Above	Interest			Maturity	Principal / Par					of			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets			Value
Investments
Canada
Debt investments
Leisure, Amusement, Motion Pictures,
Entertainment
Extreme Fitness, Inc. ^{(3) (8)}	Subordinated debt	N/A		12.00% cash/2.50% PIK		11/2015	$	2,842	$	2,810			-	%	$	-

Total Canada							$	2,842	$	2,810			-	%	$	-

Fair Value as percentage of Principal Amount																0.0	%

United States
Debt investments
Aerospace and Defense
ILC Dover, LP	Senior loan	L + 6.00%		7.25	%	07/2017	$	606	$	601			0.1	%	$	594
ILC Dover, LP	Senior loan	P + 5.00%		8.25	%	07/2017		148		141			-			139
ILC Dover, LP	Senior loan	L + 6.00%		7.25	%	07/2017		4,352		4,286			0.6			4,265
Tresys Technology Holdings, Inc. ⁽⁴⁾	One stop	L + 6.75%		N/A	⁽⁵⁾	12/2017		-		(8	)		-			(34	)
Tresys Technology Holdings, Inc.	One stop	L + 6.75%		8.00	%	12/2017		3,975		3,891			0.6			3,776
TurboCombustor Technology Inc.*	Senior loan	L + 4.75%		5.75	%	12/2017		381		379			0.1			381
TurboCombustor Technology Inc.*	Senior loan	L + 5.00%		6.00	%	12/2017		895		892			0.1			895
Whitcraft LLC	Subordinated debt	N/A		12.00	%	12/2018		1,877		1,853			0.3			1,877
White Oak Technologies, Inc. ⁽⁴⁾	Senior loan	L + 5.00%		N/A	⁽⁵⁾	03/2017		-		(9	)		-			-
White Oak Technologies, Inc.*	Senior loan	L + 5.00%		6.25	%	03/2017		1,833		1,797			0.3			1,833
								14,067		13,823			2.1			13,726

Automobile
ABRA, Inc. ⁽⁹⁾	One stop	P + 4.50%		7.75	%	05/2018		841		821			0.1			841
ABRA, Inc.* ⁽⁹⁾	One stop	L + 5.75%		7.00	%	05/2018		26,372		26,189			4.0			26,372
ABRA, Inc.* ^(4),(9)	One stop	L + 5.75%		N/A	⁽⁵⁾	05/2018		-		(12	)		-			-
ABRA, Inc. ^(4),(9)	One stop	L + 5.75%		N/A	⁽⁵⁾	05/2018		-		(48	)		-			-
American Driveline Systems, Inc.	Senior loan	P + 6.50%		9.75	%	01/2016		391		386			0.1			352
American Driveline Systems, Inc.*	Senior loan	P + 6.50%		9.75	%	01/2016		2,826		2,793			0.4			2,543
Express Oil Change, LLC	Senior loan	P + 3.50%		6.75	%	12/2017		116		112			-			116
Express Oil Change, LLC	Senior loan	P + 3.50%		6.75	%	12/2017		181		178			-			181
Express Oil Change, LLC*	Senior loan	P + 3.50%		6.75	%	12/2017		1,818		1,803			0.3			1,818
K&N Engineering, Inc. ⁽⁴⁾	Senior loan	L + 4.50%		N/A	⁽⁵⁾	04/2018		-		(7	)		-			-
K&N Engineering, Inc.*	Senior loan	L + 4.50%		5.75	%	04/2018		7,279		7,179			1.1			7,279
Take 5 Oil Change, L.L.C.	Senior loan	L + 5.25%		6.25	%	07/2018		118		114			-			114
Take 5 Oil Change, L.L.C.	Senior loan	L + 5.25%		6.25	%	07/2018		2,978		2,957			0.5			2,956
								42,920		42,465			6.5			42,572

Banking
Prommis Fin Co.* ⁽³⁾	Senior loan	P + 10.50%		2.25% cash/11.50% PIK		06/2015		146		145			-			40
Prommis Fin Co.	Senior loan	P + 11.00%		13.25	%	06/2015		98		98			-			23
Prommis Fin Co.* ⁽³⁾	Second lien	P + 10.50%		2.25% cash/11.50% PIK		06/2015		384		382			-			-
Prommis Fin Co.* ⁽³⁾	Subordinated debt	P + 10.50%		2.25% cash/11.50% PIK		06/2015		192		191			-			-
								820		816			-			63

Beverage, Food and Tobacco
ABP Corporation	Senior loan	P + 3.50%		7.25	%	06/2016		63		58			-			63
ABP Corporation*	Senior loan	L + 4.75%		6.00	%	06/2016		4,490		4,442			0.7			4,490
American Importing Company, Inc.	One stop	L + 5.75%		7.00	%	05/2018		14,806		14,624			2.3			14,806
Ameriqual Group, LLC*	Senior loan	L + 5.00%		6.50	%	03/2016		1,727		1,710			0.3			1,658
Ameriqual Group, LLC*	Senior loan	L + 7.50%		9.00	%	03/2016		831		823			0.1			731
Atkins Nutritionals, Inc.*	One stop	L + 5.00%		6.25	%	01/2019		22,339		22,097			3.4			22,395
Atkins Nutritionals, Inc.*	One stop	L + 8.50%		9.75	%	04/2019		17,270		16,830			2.7			17,529
Candy Intermediate Holdings, Inc. (Ferrara Candy)	Senior loan	L + 6.25%		7.50	%	06/2018		4,937		4,800			0.7			4,777
Firebirds International, LLC	One stop	L + 5.75%		7.00	%	05/2018		83		79			-			79
Firebirds International, LLC ⁽⁴⁾	One stop	L + 5.75%		N/A	⁽⁵⁾	05/2018		-		(3	)		-			(3	)
Firebirds International, LLC ⁽⁴⁾	One stop	L + 5.75%		N/A	⁽⁵⁾	05/2018		-		(2	)		-			(1	)
Firebirds International, LLC*	One stop	L + 5.75%		7.00	%	05/2018		912		901			0.1			902
First Watch Restaurants, Inc.	One stop	L + 7.50%		8.75	%	12/2016		418		396			0.1			418
First Watch Restaurants, Inc.	One stop	L + 7.50%		8.75	%	12/2016		955		933			0.1			955
First Watch Restaurants, Inc.*	One stop	L + 7.50%		8.75	%	12/2016		11,385		11,238			1.7			11,385
IT'SUGAR LLC	Subordinated debt	N/A		8.00	%	10/2017		1,707		1,707			0.4			2,697
IT'SUGAR LLC	Senior loan	L + 8.50%		10.00	%	04/2017		4,213		4,153			0.6			4,213
Julio & Sons Company ⁽⁴⁾	One stop	L + 7.00%		N/A	⁽⁵⁾	09/2014		-		(7	)		-			-
Julio & Sons Company*	One stop	L + 7.00%		8.50	%	09/2016		7,049		7,008			1.1			7,049
Julio & Sons Company ⁽⁴⁾	One stop	L + 7.00%		N/A	⁽⁵⁾	09/2014		-		(9	)		-			-
Northern Brewer, LLC	One stop	L + 6.50%		8.00	%	02/2018		695		683			0.1			695
Northern Brewer, LLC	One stop	L + 6.50%		8.00	%	02/2018		6,413		6,271			1.0			6,413
Richelieu Foods, Inc.	Senior loan	P + 4.00%		7.25	%	11/2015		132		123			-			132
Richelieu Foods, Inc.*	Senior loan	L + 5.00%		6.75	%	11/2015		1,988		1,958			0.3			1,988
Smashburger Finance LLC ⁽⁴⁾	Senior loan	L + 4.25%		N/A	⁽⁵⁾	05/2018		-		(9	)		-			(6	)
Smashburger Finance LLC*	Senior loan	L + 4.25%		5.50	%	05/2018		6,532		6,485			1.0			6,500
								108,945		107,289			16.7			109,865

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments - (Continued)

September 30, 2013 658,236

(In thousands)

												Percentage
	Investment	Spread Above	Interest			Maturity	Principal / Par					of Total		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Building and Real Estate
ITEL Laboratories, Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	06/2018		-		(1	)		-		-
ITEL Laboratories, Inc.*	Senior loan	L + 4.75%		6.00	%	06/2018		801		792			0.1		801
KHKI Acquisition, Inc.	Senior loan	P + 5.00%		8.50	%	03/2017		2,547		2,547			0.2		1,401
								3,348		3,338			0.3		2,202
Cargo Transport
RP Crown Parent (RedPrairie Corp)*	Senior loan	L + 5.50%		6.75	%	12/2018		1,985		1,950			0.3		2,003
								1,985		1,950			0.3		2,003
Chemicals, Plastics and Rubber
Integrated DNA Technologies, Inc.	Subordinated debt	N/A		12.00% cash/2.00% PIK		04/2015		450		447			0.1		450
Integrated DNA Technologies, Inc.	Subordinated debt	N/A		12.00% cash/2.00% PIK		04/2015		1,267		1,246			0.2		1,267
Integrated DNA Technologies, Inc.	Subordinated debt	N/A		12.00% cash/2.00% PIK		04/2015		450		442			0.1		450
Road Infrastructure Investment, LLC	Senior loan	L + 5.00%		5.18	%	03/2017		49		17			-		48
Road Infrastructure Investment, LLC*	Senior loan	L + 5.00%		6.25	%	03/2018		4,515		4,469			0.7		4,557
								6,731		6,621			1.1		6,772

Containers, Packaging and Glass
Fort Dearborn Company*	Senior loan	L + 4.25%		5.25	%	10/2017		39		39			-		39
Fort Dearborn Company*	Senior loan	L + 4.75%		5.75	%	10/2018		156		155			-		156
Fort Dearborn Company*	Senior loan	L + 4.25%		5.25	%	10/2017		559		555			0.1		559
Fort Dearborn Company*	Senior loan	L + 4.75%		5.75	%	10/2018		2,202		2,187			0.3		2,202
Packaging Coordinators, Inc.*	Senior loan	L + 4.25%		5.50	%	05/2020		6,810		6,778			1.0		6,776
Packaging Coordinators, Inc.	Second lien	L + 8.25%		9.50	%	11/2020		29,098		28,539			4.4		28,807
								38,864		38,253			5.8		38,539

Diversified Conglomerate Manufacturing
Chase Industries, Inc.*	One stop	L + 5.66%		6.91	%	11/2017		13,815		13,622			2.1		13,815
Metal Spinners, Inc.*	Senior loan	L + 6.50%		8.00	%	12/2014		1,352		1,333			0.2		1,352
Metal Spinners, Inc.*	Senior loan	L + 6.50%		8.00	%	12/2014		2,684		2,649			0.4		2,684
Onicon Incorporated ⁽⁴⁾	One stop	L + 6.75%		N/A	⁽⁵⁾	12/2017		-		(14	)		-		-
Onicon Incorporated	One stop	L + 6.75%		8.25	%	12/2017		3,606		3,544			0.5		3,606
Pasternack Enterprises, Inc.*	Senior loan	L + 5.00%		6.25	%	12/2017		1,208		1,198			0.2		1,208
Plex Systems, Inc. ⁽⁴⁾	Senior loan	L + 7.50%		N/A	⁽⁵⁾	06/2018		-		(26	)		-		(26	)
Plex Systems, Inc.*	Senior loan	L + 7.50%		8.75	%	06/2018		13,670		13,375			2.0		13,465
Sunless Merger Sub, Inc.	Senior loan	P + 4.00%		7.25	%	07/2016		56		55			-		24
Sunless Merger Sub, Inc.*	Senior loan	L + 5.25%		6.50	%	07/2016		2,171		2,165			0.3		1,910
Tecomet Inc. ⁽⁴⁾	Senior loan	L + 4.50%		N/A	⁽⁵⁾	12/2016		-		(5	)		-		-
Tecomet Inc.*	Senior loan	L + 4.50%		5.75	%	12/2016		5,610		5,546			0.9		5,610
TIDI Products, LLC ⁽⁴⁾	Senior loan	L + 7.00%		N/A	⁽⁵⁾	07/2017		-		(10	)		-		-
TIDI Products, LLC*	Senior loan	L + 7.00%		8.25	%	07/2018		8,703		8,552			1.3		8,703
Vintage Parts, Inc.*	One stop	L + 4.50%		5.75	%	12/2013		4,865		4,836			0.7		4,865
Vintage Parts, Inc.*	One stop	L + 4.50%		5.75	%	12/2013		68		67			-		68
Vintage Parts, Inc.*	One stop	L + 4.50%		5.75	%	12/2013		1,016		1,008			0.2		1,016
								58,824		57,895			8.8		58,300

Diversified Conglomerate Service
Aderant North America, Inc.*	Senior loan	L + 5.00%		6.25	%	12/2018		4,506		4,467			0.7		4,506
Agility Recovery Solutions Inc. ⁽⁴⁾	One stop	L + 7.00%		N/A	⁽⁵⁾	12/2017		-		(7	)		-		-
Agility Recovery Solutions Inc.*	One stop	L + 7.00%		8.25	%	12/2017		9,409		9,221			1.4		9,409
API Healthcare Corporation*	One stop	L + 8.63%		9.88	%	04/2018		34,156		33,882			5.2		34,156
Consona Holdings, Inc. ⁽⁴⁾	Senior loan	L + 5.50%		N/A	⁽⁵⁾	08/2017		-		(2	)		-		-
Consona Holdings, Inc.*	Senior loan	L + 5.50%		6.75	%	08/2018		1,037		1,008			0.2		1,037
Consona Holdings, Inc.*	Senior loan	L + 6.00%		7.25	%	08/2018		1,551		1,538			0.2		1,551
Document Technologies, LLC ⁽⁴⁾	Senior loan	L + 4.25%		N/A	⁽⁵⁾	12/2018		-		(13	)		-		-
Document Technologies, LLC*	Senior loan	L + 4.25%		5.50	%	12/2018		6,724		6,659			1.0		6,724
EAG, INC. (Evans Analytical Group)*	Senior loan	L + 4.50%		6.00	%	07/2017		2,459		2,432			0.4		2,459
HighJump Acquisition LLC	One stop	L + 7.50%		8.75	%	07/2016		7,142		7,075			1.1		7,142
Integration Appliance, Inc.	Senior loan	P + 7.00%		10.25	%	09/2018		719		709			0.1		709
Integration Appliance, Inc.	Senior loan	P + 7.00%		10.25	%	09/2018		5,396		5,261			0.8		5,315
Marathon Data Operating Co., LLC ⁽⁴⁾	One stop	L + 6.25%		N/A	⁽⁵⁾	08/2017		-		(8	)		-		-
Marathon Data Operating Co., LLC	One stop	L + 6.25%		7.50	%	08/2017		4,772		4,679			0.7		4,772
MSC.Software Corporation*	One stop	L + 7.15%		8.40	%	11/2017		10,028		9,867			1.5		10,028
Navex Global, Inc. ⁽⁴⁾	One stop	L + 7.50%		N/A	⁽⁵⁾	12/2016		-		(16	)		-		(25	)
Navex Global, Inc.*	One stop	L + 7.50%		9.00	%	12/2016		17,758		17,460			2.7		17,403
NetSmart Technologies, Inc.	Senior loan	L + 7.50%		8.75	%	12/2017		654		642			0.1		654
NetSmart Technologies, Inc.*	Senior loan	L + 7.50%		8.75	%	12/2017		8,377		8,302			1.3		8,377
PC Helps Support, LLC ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	09/2017		-		(2	)		-		-
PC Helps Support, LLC	Senior loan	L + 5.25%		6.50	%	09/2017		2,007		1,984			0.3		2,007
Secure-24, LLC ⁽⁴⁾	One stop	L + 7.00%		N/A	⁽⁵⁾	08/2017		-		(6	)		-		-
Secure-24, LLC*	One stop	L + 7.00%		8.25	%	08/2017		10,539		10,290			1.6		10,539
Secure-24, LLC	One stop	L + 7.00%		8.25	%	03/2015		1,541		1,520			0.2		1,541
Source Medical Solutions, Inc.	Second lien	L + 9.50%		10.75	%	03/2018		9,294		9,104			1.4		9,201
Vericlaim, Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	05/2018		-		(3	)		-		(4	)
Vericlaim, Inc.	Senior loan	L + 4.75%		6.00	%	05/2018		5,822		5,795			0.9		5,793
								143,891		141,838			21.8		143,294

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments - (Continued)

September 30, 2013

(In thousands)

												Percentage
	Investment	Spread Above	Interest			Maturity	Principal / Par					of Total		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Electronics
Ecommerce Industries, Inc. ⁽⁴⁾	One stop	L + 6.75%		N/A	⁽⁵⁾	10/2016		-		(20	)		-		-
Ecommerce Industries, Inc.*	One stop	L + 8.39%		9.64	%	10/2016		12,519		12,378			1.9		12,519
Entrust, Inc./Entrust Limited*	Second lien	L + 9.50%		10.75	%	04/2019		5,204		5,159			0.7		5,204
Entrust, Inc./Entrust Limited*	Second lien	L + 9.50%		10.75	%	04/2019		11,523		11,424			1.8		11,523
Rogue Wave Holdings, Inc.*	One stop	L + 9.28%		10.53	%	11/2017		7,249		7,162			1.1		7,249
Sparta Systems, Inc. ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	12/2017		-		(7	)		-		-
Sparta Systems, Inc.	Senior loan	L + 5.25%		6.50	%	12/2017		6,375		6,307			1.0		6,375
Syncsort Incorporated	Senior loan	P + 4.25%		7.50	%	03/2015		160		158			-		160
Syncsort Incorporated*	Senior loan	P + 4.25%		7.50	%	03/2015		6,365		6,291			1.0		6,365
Time-O-Matic, Inc.	Subordinated debt	N/A		12.00% cash/1.25% PIK		12/2016		11,709		11,576			1.8		11,709
								61,104		60,428			9.3		61,104

Farming and Agriculture
AGData, L.P.	One stop	L + 6.00%		7.25	%	08/2016		3,837		3,799			0.6		3,837

Finance
Ascensus, Inc.*	Senior loan	L + 6.75%		8.00	%	12/2018		17,958		17,643			2.7		17,958
Bonddesk Group LLC*	Senior loan	L + 5.00%		6.50	%	09/2016		869		864			0.2		869
Pillar Processing LLC*	Senior loan	L + 5.50%		5.78	%	11/2018		1,604		1,601			0.2		1,524
Pillar Processing LLC* ⁽³⁾	Senior loan	N/A		14.50	%	05/2019		2,478		2,483			0.1		625
								22,909		22,591			3.2		20,976

Grocery
MyWebGrocer, Inc. ⁽⁴⁾	Senior loan	L + 8.75%		N/A	⁽⁵⁾	05/2018		-		(15	)		-		(16	)
MyWebGrocer, Inc.	Senior loan	L + 8.75%		6.00% cash/4.00% PIK		05/2018		14,271		14,036			2.1		14,128
Teasdale Quality Foods, Inc.*	Senior loan	L + 4.50%		5.75	%	05/2018		2,800		2,773			0.4		2,772
								17,071		16,794			2.5		16,884

Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc. ⁽⁴⁾	Senior loan	L + 5.00%		N/A	⁽⁵⁾	02/2018		-		(7	)		-		-
Advanced Pain Management Holdings, Inc. ⁽⁴⁾	Senior loan	L + 5.00%		N/A	⁽⁵⁾	02/2018		-		(10	)		-		-
Advanced Pain Management Holdings, Inc.*	Senior loan	L + 5.00%		6.25	%	02/2018		7,364		7,299			1.1		7,364
Avatar International, LLC	Senior loan	L + 8.00%		9.25	%	09/2016		1,651		1,638			0.2		1,618
Avatar International, LLC ⁽⁴⁾	One stop	L + 7.50%		N/A	⁽⁵⁾	09/2016		-		(6	)		-		(24	)
Avatar International, LLC*	One stop	L + 7.50%		8.75	%	09/2016		7,653		7,575			1.1		7,424
DDC Center Inc.	One stop	L + 6.25%		N/A	⁽⁵⁾	10/2013		-		-			-		-
DDC Center Inc.*	One stop	L + 6.25%		9.25	%	10/2014		7,920		7,913			1.2		7,920
Delta Educational Systems*	Senior loan	P + 4.75%		8.00	%	12/2016		1,806		1,778			0.3		1,806
Dialysis Newco, Inc.	Senior loan	L + 4.25%		5.25	%	08/2020		6,346		6,283			1.0		6,314
Dialysis Newco, Inc. ⁽⁴⁾	Second lien	L + 8.50%		N/A	⁽⁵⁾	02/2021		-		(25	)		-		(22	)
Dialysis Newco, Inc.*	Second lien	L + 8.50%		9.75	%	02/2021		23,901		23,490			3.6		23,543
Encore Rehabilitation Services, LLC ⁽⁴⁾	One stop	L + 6.25%		N/A	⁽⁵⁾	06/2017		-		(12	)		-		-
Encore Rehabilitation Services, LLC	One stop	L + 6.25%		7.50	%	06/2017		5,099		4,994			0.8		5,099
G & H Wire Company, Inc. ⁽⁴⁾	Senior loan	L + 5.50%		N/A	⁽⁵⁾	11/2016		-		(9	)		-		-
G & H Wire Company, Inc.*	Senior loan	L + 5.50%		7.00	%	11/2016		8,555		8,452			1.3		8,555
Healogics, Inc.*	Second lien	L + 8.00%		9.25	%	02/2020		16,454		16,304			2.6		16,851
Hospitalists Management Group, LLC	Senior loan	L + 5.00%		6.50	%	05/2017		438		433			0.1		403
Hospitalists Management Group, LLC	Senior loan	P + 4.00%		7.25	%	05/2017		888		878			0.1		815
Hospitalists Management Group, LLC	Senior loan	L + 5.00%		6.50	%	05/2017		3,694		3,629			0.5		3,398
IntegraMed America, Inc. ⁽⁴⁾	One stop	L + 7.25%		N/A	⁽⁵⁾	09/2017		-		(15	)		-		-
IntegraMed America, Inc.*	One stop	L + 7.25%		8.50	%	09/2017		14,457		14,196			2.2		14,457
Maverick Healthcare Group, LLC *	Senior loan	L + 5.50%		7.25	%	12/2016		2,030		2,011			0.3		2,030
NeuroTherm, Inc.	Senior loan	P + 4.00%		7.25	%	02/2016		64		60			-		64
NeuroTherm, Inc.*	Senior loan	L + 5.00%		6.50	%	02/2016		1,332		1,318			0.2		1,332
Northwestern Management Services, LLC ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	10/2017		-		(13	)		-		-
Northwestern Management Services, LLC ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	10/2017		-		(5	)		-		-
Northwestern Management Services, LLC*	Senior loan	L + 5.25%		6.50	%	10/2017		4,031		3,963			0.6		4,031
Pentec Acquisition Sub, Inc. ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	05/2017		-		(3	)		-		(6	)
Pentec Acquisition Sub, Inc.*	Senior loan	L + 5.25%		6.50	%	05/2018		1,895		1,865			0.3		1,819
Precision Dermatology, Inc. ⁽⁴⁾	Senior loan	L + 6.00%		N/A	⁽⁵⁾	09/2018		-		(9	)		-		(4	)
Precision Dermatology, Inc.	Senior loan	L + 6.00%		7.25	%	09/2018		11,086		10,977			1.7		11,031
Reliant Pro ReHab, LLC	Senior loan	L + 4.75%		6.00	%	06/2016		949		943			0.1		949
Reliant Pro ReHab, LLC	Senior loan	P + 3.75%		7.00	%	06/2016		185		179			-		185
Reliant Pro ReHab, LLC*	Senior loan	L + 4.75%		6.00	%	06/2016		3,409		3,376			0.5		3,409
Renaissance Pharma (U.S.) Holdings Inc. ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	05/2018		-		(4	)		-		-
Renaissance Pharma (U.S.) Holdings Inc.*	Senior loan	L + 5.25%		6.75	%	05/2018		4,493		4,436			0.7		4,493
Southern Anesthesia and Surgical ⁽⁴⁾	One stop	L + 7.00%		N/A	⁽⁵⁾	11/2017		-		(13	)		-		-
Southern Anesthesia and Surgical	One stop	L + 7.00%		8.25	%	11/2017		6,217		6,090			0.9		6,217
Surgical Information Systems, LLC	Second lien	L + 3.00%		4.00	%	09/2018		1,714		1,714			0.3		1,714
WIL Research Company, Inc.*	Senior loan	L + 4.50%		5.75	%	02/2018		784		775			0.1		776
Young Innovations, Inc. ⁽⁴⁾	Senior loan	L + 4.50%		N/A	⁽⁵⁾	01/2018		-		(2	)		-		-
Young Innovations, Inc.	Senior loan	L + 4.50%		5.75	%	01/2019		4,594		4,564			0.7		4,594
								149,009		147,000			22.5		148,155

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments - (Continued)

September 30, 2013

(In thousands)

												Percentage
	Investment	Spread Above	Interest			Maturity	Principal / Par					of Total		Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets		Value
Home and Office Furnishings,
Housewares, and Durable Consumer
WII Components, Inc.	Senior loan	P + 3.75%		7.00	%	07/2016		26		25			-		26
WII Components, Inc.*	Senior loan	L + 4.75%		6.25	%	07/2016		1,639		1,626			0.3		1,639
Zenith Products Corporation	One stop	P + 1.75%		5.00	%	09/2013		29		29			-		24
Zenith Products Corporation*	One stop	P + 3.50%		6.75	%	09/2013		3,684		3,684			0.4		2,947
								5,378		5,364			0.7		4,636
Insurance
AssuredPartners Capital, Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	06/2019		-		(4	)		-		-
AssuredPartners Capital, Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	12/2019		-		(22	)		-		-
AssuredPartners Capital, Inc.*	Senior loan	L + 4.50%		5.75	%	12/2018		2,377		2,358			0.4		2,377
Captive Resources Midco, LLC ⁽⁴⁾	Senior loan	L + 5.50%		N/A	⁽⁵⁾	10/2017		-		(3	)		-		-
Captive Resources Midco, LLC*	Senior loan	L + 5.50%		6.75	%	10/2018		3,552		3,522			0.5		3,552
Evolution1, Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	06/2016		-		(14	)		-		-
Evolution1, Inc.	Senior loan	P + 3.75%		7.00	%	06/2016		89		86			-		89
Evolution1, Inc.*	Senior loan	L + 4.75%		6.25	%	06/2016		4,561		4,523			0.7		4,561
								10,579		10,446			1.6		10,579

Investment Funds and Vehicles
Senior Loan Fund LLC ⁽⁷⁾	Senior loan	L + 4.00%		4.20	%	05/2020		4,140		4,140			0.6		4,066
								4,140		4,140			0.6		4,066
Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc. ⁽⁴⁾	One stop	L + 7.75%		N/A	⁽⁵⁾	11/2018		-		(44	)		-		-
Competitor Group, Inc.	One stop	P + 6.75%		10.00	%	11/2018		884		871			0.1		796
Competitor Group, Inc.*	One stop	L + 8.75%		7.75% cash/1.00% PIK		11/2018		12,774		12,581			1.8		11,496
Octane Fitness, LLC*	One stop	L + 5.50%		7.00	%	12/2015		4,675		4,590			0.7		4,675
Pride Manufacturing Company, LLC*	Senior loan	L + 6.00%		7.75	%	11/2015		591		586			0.1		591
Service Companies, The	Senior loan	P + 5.25%		10.25	%	03/2014		155		155			-		155
Service Companies, The*	Senior loan	L + 6.50%		9.00	%	03/2014		6,354		6,336			1.0		6,354
Starplex Operating, L.L.C.	One stop	L + 7.50%		9.00	%	12/2017		958		940			0.1		958
Starplex Operating, L.L.C.*	One stop	L + 7.50%		9.00	%	12/2017		17,432		17,171			2.6		17,432
Titan Fitness, LLC ⁽⁴⁾	One stop	L + 6.50%		N/A	⁽⁵⁾	09/2019		-		(26	)		-		(26	)
Titan Fitness, LLC	One stop	P + 5.25%		8.50	%	09/2019		687		661			0.1		661
Titan Fitness, LLC	One stop	P + 5.25%		8.50	%	09/2019		13,740		13,421			2.1		13,533
								58,250		57,242			8.6		56,625
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc. ⁽⁴⁾	One stop	L + 6.00%		N/A	⁽⁵⁾	10/2017		-		(5	)		-		-
Benetech, Inc.*	One stop	L + 6.00%		7.25	%	10/2017		5,506		5,484			0.8		5,506
								5,506		5,479			0.8		5,506
Oil and Gas
Drilling Info, Inc. ⁽⁴⁾	One stop	L + 5.50%		N/A	⁽⁵⁾	06/2018		-		(1	)		-		(1	)
Drilling Info, Inc.	One stop	L + 5.50%		6.75	%	06/2018		1,368		1,355			0.2		1,354
Drilling Info, Inc. ⁽⁴⁾	One stop	L + 5.50%		N/A	⁽⁵⁾	06/2018		-		(5	)		-		(5	)
								1,368		1,349			0.2		1,348

Personal and Non-Durable Consumer Products
Hygenic Corporation, The ⁽⁴⁾	Senior loan	L + 4.50%		N/A	⁽⁵⁾	10/2017		-		(3	)		-		-
Hygenic Corporation, The*	Senior loan	L + 4.50%		5.75	%	10/2018		3,534		3,492			0.6		3,534
Massage Envy, LLC ⁽⁴⁾	One stop	L + 7.25%		N/A	⁽⁵⁾	09/2018		-		(15	)		-		-
Massage Envy, LLC	One stop	L + 7.25%		8.50	%	09/2018		16,634		16,291			2.5		16,634
Team Technologies Acquisition Company ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	12/2017		-		(4	)		-		-
Team Technologies Acquisition Company	Senior loan	L + 4.75%		6.00	%	12/2017		3,519		3,490			0.6		3,519
								23,687		23,251			3.7		23,687
Personal, Food and Miscellaneous Services
Affordable Care Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	12/2017		-		(2	)		-		-
Affordable Care Inc.	Senior loan	L + 4.75%		6.00	%	12/2018		3,541		3,510			0.5		3,541
Automatic Bar Controls, Inc. ⁽⁴⁾	Senior loan	L + 5.75%		N/A	⁽⁵⁾	03/2016		-		(1	)		-		-
Automatic Bar Controls, Inc.*	Senior loan	L + 5.50%		7.00	%	03/2016		904		897			0.1		904
Focus Brands Inc.	Second lien	L + 9.00%		10.25	%	08/2018		11,195		11,076			1.7		11,418
National Veterinary Associates, Inc.	Senior loan	L + 5.00%		6.25	%	12/2017		955		943			0.2		955
National Veterinary Associates, Inc. ⁽⁴⁾	Senior loan	L + 5.00%		N/A	⁽⁵⁾	12/2017		-		(1	)		-		-
National Veterinary Associates, Inc.	Senior loan	L + 5.00%		6.25	%	12/2017		6,006		5,963			0.9		6,006
PMI Holdings, Inc. ⁽⁴⁾	Senior loan	L + 4.75%		N/A	⁽⁵⁾	06/2017		-		(2	)		-		-
PMI Holdings, Inc.	Senior loan	L + 4.75%		5.75	%	06/2017		2,629		2,609			0.4		2,629
Vetcor Merger Sub LLC	Senior loan	L + 6.50%		7.75	%	12/2017		377		356			0.1		377
Vetcor Merger Sub LLC	Senior loan	L + 6.50%		7.75	%	12/2017		520		513			0.1		520
Vetcor Merger Sub LLC*	Senior loan	L + 6.50%		7.75	%	12/2017		5,938		5,881			0.9		5,938
								32,065		31,742			4.9		32,288

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments - (Continued)

September 30, 2013

(In thousands)

												Percentage
	Investment	Spread Above	Interest			Maturity	Principal / Par					of Total			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾			Date	Amount		Cost			Net Assets			Value
Personal Transportation
PODS Funding Corp. II	Subordinated debt	N/A		21.00	%	11/2017		702		702			0.1			702
PODS Funding Corp. II	Subordinated debt	N/A		21.00	%	11/2017		3,400		3,400			0.5			3,400
PODS Funding Corp. II	Subordinated debt	N/A		10.50% cash/5.00% PIK		05/2017		1,217		1,267			0.2			1,278
PODS Funding Corp. II	Subordinated debt	N/A		10.50% cash/5.00% PIK		05/2017		4,829		4,980			0.8			5,070
PODS Funding Corp. II	Senior loan	L + 6.00%		7.25	%	11/2016		691		678			0.1			691
PODS Funding Corp. II*	Senior loan	L + 6.00%		7.25	%	11/2016		6,091		5,978			0.9			6,091
								16,930		17,005			2.6			17,232

Printing and Publishing
Market Track, LLC ⁽⁴⁾	Senior loan	L + 6.11%		N/A	⁽⁵⁾	08/2018		-		(5	)		-			-
Market Track, LLC*	Senior loan	L + 6.11%		7.36	%	08/2018		3,114		3,076			0.5			3,114
Market Track, LLC ⁽⁴⁾	Senior loan	L + 7.65%		N/A	⁽⁵⁾	08/2018		-		(3	)		-			-
								3,114		3,068			0.5			3,114

Retail Stores
Barcelona Restaurants, LLC ⁽⁴⁾⁽⁶⁾	One stop	L + 8.25%		N/A	⁽⁵⁾	03/2017		-		(4	)		-			-
Barcelona Restaurants, LLC* ⁽⁶⁾	One stop	L + 8.25%		9.50	%	03/2017		5,707		5,623			0.9			5,707
Benihana, Inc. ⁽⁴⁾	One stop	L + 5.50%		N/A	⁽⁵⁾	07/2018		-		(42	)		-			-
Benihana, Inc.*	One stop	L + 5.50%		6.75	%	01/2019		14,106		13,679			2.1			14,106
Boot Barn, Inc.*	One stop	L + 5.75%		7.00	%	05/2019		24,677		24,327			3.7			24,430
Capital Vision Services, LLC ⁽⁴⁾	One stop	L + 7.25%		N/A	⁽⁵⁾	12/2017		-		(16	)		-			-
Capital Vision Services, LLC	One stop	P + 6.25%		9.50	%	12/2017		323		311			0.1			323
Capital Vision Services, LLC*	One stop	L + 7.25%		8.50	%	12/2017		13,358		13,190			2.0			13,358
DTLR, Inc.*	One stop	L + 8.00%		11.00	%	12/2015		16,757		16,625			2.6			16,757
Floor & Decor Outlets of America, Inc.*	One stop	L + 6.50%		7.75	%	05/2019		11,358		11,226			1.7			11,216
Marshall Retail Group, LLC, The ⁽⁴⁾	Senior loan	L + 6.50%		N/A	⁽⁵⁾	10/2016		-		(11	)		-			-
Marshall Retail Group, LLC, The*	Senior loan	L + 6.50%		8.00	%	10/2016		9,495		9,370			1.4			9,495
Paper Source, Inc.	One stop	L + 6.25%		7.25	%	09/2018		169		157			-			157
Paper Source, Inc.*	One stop	L + 6.25%		7.25	%	09/2018		12,703		12,562			1.9			12,576
Restaurant Holding Company, LLC	Senior loan	L + 7.50%		9.00	%	02/2017		9,274		9,149			1.4			9,298
Rubio's Restaurants, Inc.*	One stop	L + 7.25%		8.75% cash/0.25% PIK		06/2015		7,695		7,637			1.2			7,695
Sneaker Villa, Inc.	One stop	L + 8.50%		10.00	%	12/2017		626		619			0.1			626
Sneaker Villa, Inc.	One stop	P + 7.00%		11.50	%	12/2017		752		736			0.1			752
Sneaker Villa, Inc.	One stop	L + 8.50%		10.00	%	12/2017		4,549		4,453			0.7			4,549
Specialty Catalog Corp. ⁽⁴⁾	One stop	L + 6.00%		N/A	⁽⁵⁾	07/2017		-		(6	)		-			-
Specialty Catalog Corp.	One stop	L + 6.00%		7.50	%	07/2017		5,187		5,134			0.8			5,187
Vision Source L.P.	One stop	P + 5.50%		8.75	%	04/2016		129		123			-			129
Vision Source L.P.*	One stop	L + 6.75%		8.00	%	04/2016		11,703		11,580			1.8			11,703
								148,568		146,422			22.5			148,064

Telecommunications
Hosting.com Inc.	Senior loan	P + 3.25%		6.50	%	10/2016		20		19			-			20
Hosting.com Inc.*	Senior loan	L + 4.50%		5.75	%	10/2016		812		802			0.1			812
ITC Global, Inc. ⁽⁴⁾	One stop	P + 5.50%		8.75	%	07/2018		10		(5	)		-			(4	)
ITC Global, Inc.	One stop	L + 6.75%		7.75	%	07/2018		8,605		8,513			1.3			8,519
NameMedia, Inc.	Senior loan	L + 6.00%		N/A	⁽⁵⁾	11/2014		-		-			-			-
NameMedia, Inc.	Senior loan	P + 5.00%		8.25	%	11/2014		1,170		1,162			0.2			1,170
								10,617		10,491			1.6			10,517

Utilities
PowerPlan Consultants, Inc. ⁽⁴⁾	Senior loan	L + 5.25%		N/A	⁽⁵⁾	03/2017		-		(1	)		-			-
PowerPlan Consultants, Inc.*	Senior loan	L + 5.25%		6.75	%	03/2018		4,218		4,171			0.6			4,218
								4,218		4,170			0.6			4,218

Total debt investments United States							$	998,745	$	985,069			150.4	%	$	990,172

Fair Value as a percentage of Principal Amount																99.1	%

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments - (Continued)

September 30, 2013

(In thousands)

					Principal				Percentage
	Investment	Spread Above	Interest	Maturity	Amount/Shares/				of Total			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾	Date	Contracts		Cost		Net Assets			Value
Equity investments
Aerospace and Defense
Tresys Technology Holdings, Inc.	Common stock	N/A	N/A	N/A		295	$	295		0.1	%	$	232
Whitcraft LLC	Common stock	N/A	N/A	N/A		1		670		0.1			626
Whitcraft LLC	Warrant	N/A	N/A	N/A		-		-		-			122
								965		0.2			980
Automobile
ABRA, Inc	LLC interest	N/A	N/A	N/A		208		1,471		0.5			3,000
Express Oil Change, LLC	LLC interest	N/A	N/A	N/A		81		81		-			66
K&N Engineering, Inc.	Common stock	N/A	N/A	N/A		-		4		-			57
K&N Engineering, Inc.	Preferred stock A	N/A	N/A	N/A		-		26		-			34
K&N Engineering, Inc.	Preferred stock B	N/A	N/A	N/A		-		-		-			7
								1,582		0.5			3,164
Banking
Prommis Solutions Inc.*	Preferred LLC interest	N/A	N/A	N/A		1		472		-			-
								472		-			-
Beverage, Food and Tobacco
Atkins Nutritionals, Inc.	LLC interest	N/A	N/A	N/A		57		746		0.1			824
First Watch Restaurants, Inc.	Common stock	N/A	N/A	N/A		7		691		0.1			691
Goode Seed Co-Invest, LLC	LLC units	N/A	N/A	N/A		356		356		0.1			411
Julio & Sons Company	LLC interest	N/A	N/A	N/A		521		521		0.1			555
Northern Brewer, LLC	LLC interest	N/A	N/A	N/A		142		315		-			271
Richelieu Foods, Inc.	LP interest	N/A	N/A	N/A		220		220		-			138
								2,849		0.4			2,890
Containers, Packaging and Glass
Packaging Coordinators, Inc.	LLC interest	N/A	N/A	N/A		48		2,476		0.4			2,476
								2,476		0.4			2,476
Diversified Conglomerate Manufacturing
Oasis Outsourcing Holdings, Inc.	LLC interest	N/A	N/A	N/A		1,088		1,088		0.3			1,797
Sunless Merger Sub, Inc.	LP interest	N/A	N/A	N/A		-		148		-			23
TIDI Products, LLC	LLC interest	N/A	N/A	N/A		315		315		0.1			368
								1,551		0.4			2,188
Diversified Conglomerate Service
Document Technologies, LLC	LLC interest	N/A	N/A	N/A		24		490		0.1			624
Marathon Data Operating Co., LLC	Common stock	N/A	N/A	N/A		1		264		-			264
Marathon Data Operating Co., LLC	Preferred stock	N/A	N/A	N/A		1		264		-			264
Navex Global, Inc.	LP interest	N/A	N/A	N/A		-		666		0.1			386
PC Helps Support, LLC	Common stock	N/A	N/A	N/A		1		7		-			7
PC Helps Support, LLC	Preferred stock	N/A	N/A	N/A		-		61		-			61
Secure-24, LLC	LLC Units	N/A	N/A	N/A		263		263		-			263
								2,015		0.2			1,869
Grocery
MyWebGrocer, Inc.	LLC units	N/A	N/A	N/A		1,269		1,269		0.2			1,269

Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc.	Common stock	N/A	N/A	N/A		67		67		0.1			675
Advanced Pain Management Holdings, Inc.	Preferred stock	N/A	N/A	N/A		13		829		0.2			869
Avatar International, LLC	LP interest	N/A	N/A	N/A		1		695		0.1			350
Dialysis Newco, Inc.	LLC interest	N/A	N/A	N/A		871		124		0.1			765
Encore Rehabilitation Services, LLC	LLC interest	N/A	N/A	N/A		270		271		0.1			349
G & H Wire Company, Inc.	LP interest	N/A	N/A	N/A		-		103		-			103
Hospitalists Management Group, LLC	Common stock	N/A	N/A	N/A		-		38		-			13
IntegraMed America, Inc.	Common stock	N/A	N/A	N/A		1		514		0.1			665
National Healing Corporation	Preferred stock	N/A	N/A	N/A		695		799		0.1			812
NeuroTherm, Inc.	Common stock	N/A	N/A	N/A		1		569		0.1			731
Northwestern Management Services, LLC	LLC units	N/A	N/A	N/A		3		3		-			8
Northwestern Management Services, LLC	LLC units	N/A	N/A	N/A		-		249		-			259
Pentec Acquisition Sub, Inc.	Preferred stock	N/A	N/A	N/A		1		116		-			62
Reliant Pro ReHab, LLC	Preferred stock	N/A	N/A	N/A		2		264		-			278
Southern Anesthesia and Surgical	LLC units	N/A	N/A	N/A		487		487		0.1			603
Surgical Information Systems, LLC	Common stock	N/A	N/A	N/A		4		414		0.1			495
Young Innovations, Inc.	Preferred stock	N/A	N/A	N/A		-		236		-			236
								5,778		1.1			7,273
Home and Office Furnishings,
Housewares, and Durable Consumer
Top Knobs USA, Inc.	Common stock	N/A	N/A	N/A		3		73		-			110

Investment Funds and Vehicles
Senior Loan Fund LLC ⁽⁷⁾	LLC interest	N/A	N/A	N/A		591		591		0.1			768

Insurance
Captive Resources Midco, LLC	LLC units	N/A	N/A	N/A		1		121		-			135

Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc.	LLC interest	N/A	N/A	N/A		711		711		0.1			393
LMP TR Holdings, LLC	LLC units	N/A	N/A	N/A		712		712		0.1			712
Titan Fitness, LLC	LLC units	N/A	N/A	N/A		6		582		0.1			582
								2,005		0.3			1,687

See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments - (Continued)

September 30, 2013

(In thousands)

					Principal				Percentage
	Investment	Spread Above	Interest	Maturity	Amount/Shares/				of Total			Fair
	Type	Index ⁽¹⁾	Rate ⁽²⁾	Date	Contracts		Cost		Net Assets			Value
Personal and Non-Durable Consumer Products
Hygenic Corporation, The	LP interest	N/A	N/A	N/A		1		61		-			61
Massage Envy, LLC	LLC interest	N/A	N/A	N/A		749		749		0.1			749
Team Technologies Acquisition Company	Common stock	N/A	N/A	N/A		-		148		-			148
								958		0.1			958
Personal Transportation
PODS Funding Corp. II	Warrant	N/A	N/A	N/A		271		-		-			256

Printing and Publishing
Market Track, LLC	Preferred stock	N/A	N/A	N/A		-		145		-			180
Market Track, LLC	Common stock	N/A	N/A	N/A		1		145		-			162
								290		-			342
Retail Stores
Barcelona Restaurants, LLC ⁽⁶⁾	LP interest	N/A	N/A	N/A		1,996		1,996		0.4			2,518
Benihana, Inc.	LLC interest	N/A	N/A	N/A		43		699		0.1			830
Capital Vision Services, LLC	LLC interest	N/A	N/A	N/A		402		402		0.1			473
Paper Source, Inc.	LLC interest	N/A	N/A	N/A		8		1,387		0.2			1,387
Rubio's Restaurants, Inc.	Preferred stock	N/A	N/A	N/A		199		945		0.2			1,178
Sneaker Villa, Inc.	LLC interest	N/A	N/A	N/A		4		411		0.1			462
Vision Source L.P.	Common stock	N/A	N/A	N/A		9		936		0.1			949
								6,776		1.2			7,797
Telecommunications
ITC Global, Inc.	Preferred stock	N/A	N/A	N/A		17		311		0.1			311

Total equity investments United States							$	30,082		5.2	%	$	34,473


Total United States							$	1,015,151		155.6	%	$	1,024,645

Total Investments							$	1,017,961		155.6	%	$	1,024,645

*		Denotes that all or a portion of the loan secures the notes offered in the Debt Securitization (as defined in Note 7).
(1)		The majority of the investments bear interest at a rate that may be determined by reference to LIBOR or Prime and which reset daily, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect at September 30, 2013. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.
(2)		For portfolio companies with multiple interest rate contracts, the interest rate shown is a weighted average current interest rate in effect at September 30, 2013.
(3)		Loan was on non-accrual status as of September 30, 2013, meaning that the Company has ceased recognizing interest income on the loan.
(4)		The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(5)		The entire commitment was unfunded at September 30, 2013. As such, no interest is being earned on this investment.
(6)		As defined in the 1940 Act, the Company is deemed to be an "Affiliated Person" of the portfolio company as it owns five percent or more of the portfolio company's voting securities. See Note 5 in the accompanying notes to the financial statements for transactions during the year ended September 30, 2013 in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to Control.)
(7)		As defined in the 1940 Act, the Company is deemed to be both an "Affiliated Person" of and "Control" this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Note 5 in the accompanying notes to the consolidated financial statements for transactions during the year ended September 30, 2013 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.
(8)		Non-U.S. company or principal place of business outside the U.S. and as a result is not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets.
(9)		The sale of a portion of this loan does not qualify for sale accounting under ASC Topic 860 - Transfers and Servicing, and therefore, the entire one stop loan asset remains in the Consolidated Schedule of Investments. (See Note 7 in the accompanying notes to the consolidated financial statements.)

		See Notes to Consolidated Financial Statements.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Note 1.

Organization

Golub Capital BDC, Inc. (“GBDC” and, collectively with its subsidiaries, the “Company”) is an externally managed, closed-end, non-diversified management investment company. GBDC has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the "1940 Act"). In addition, for U.S. federal income tax purposes, GBDC has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company’s investment strategy is to invest in senior secured, one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans), second lien and subordinated (a loan that ranks senior only to a borrower’s equity securities and ranks junior to all of such borrower’s other indebtedness in priority of payment) loans, warrants and equity securities of middle market companies that are, in most cases, sponsored by private equity investors. The Company has entered into an investment advisory agreement (the “Investment Advisory Agreement”) with GC Advisors LLC (the “Investment Adviser”), under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. Under an administration agreement (the “Administration Agreement”) the Company is provided with certain services by an administrator (the “Administrator”), which is currently Golub Capital LLC.

Note 2.

Significant Accounting Policies and Recent Accounting Updates

Basis of presentation: The accompanying interim consolidated financial statements of the Company and related financial information have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications consisting solely of normal accruals that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.

Fair value of financial instruments: The Company applies fair value to all of its financial instruments in accordance with Accounting Standards Codification (“ASC”) Topic 820 — Fair Value Measurements and Disclosures (“ASC Topic 820”) . ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Any changes to the valuation methodology are reviewed by management and the Company’s board of directors (the “Board”) to confirm that the changes are appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies. See further description of fair value methodology in Note 6.

Use of estimates: The preparation of the 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation: As provided under Regulation S-X and ASC Topic 946 – Financial Services – Investment Companies , the Company will generally not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries in its consolidated financial statements. The Company does not consolidate its noncontrolling interest in Senior Loan Fund LLC (“SLF”). See further description of the Company’s investment in SLF in Note 4.

Assets related to transactions that do not meet ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”) requirements for accounting sale treatment are reflected in the Company’s consolidated statements of financial condition as investments. Those assets are owned by special purpose entities, including Golub Capital BDC 2010-1 LLC ("2010 Issuer"), Golub Capital BDC CLO 2014 LLC (“2014 Issuer”), Golub Capital BDC Funding LLC ("Funding") and Golub Capital BDC Revolver Funding, LLC (“Revolver Funding”), that are consolidated in the Company’s consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are not intended to be available to the creditors of GBDC (or any affiliate of GBDC).

Cash and cash equivalents: Cash and cash equivalents are highly liquid investments with an original maturity of three months or less at the date of acquisition. The Company deposits its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.

Restricted cash and cash equivalents: Restricted cash and cash equivalents include amounts that are collected and are held by trustees who have been appointed as custodians of the assets securing certain of the Company’s financing transactions. Restricted cash is held by the trustees for payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets. In addition, restricted cash and cash equivalents include amounts held within the Company’s small business investment companies (“SBICs”). The amounts held within the SBICs are generally restricted to the originations of new loans from the SBICs and the payment of U.S. Small Business Administration (“SBA”) debentures and related interest expense.

Revenue recognition:

Investments and related investment income: Interest income is accrued based upon the outstanding principal amount and contractual interest terms of debt investments. For the three and nine months ended June 30, 2014, the Company earned interest of $26,035 and $75,491, respectively. For the three and nine months ended June 30, 2013, the Company earned interest of $20,608 and $56,802, respectively. As of June 30, 2014 and September 30, 2013, the Company had interest receivable of $5,222 and $4,316, respectively.

Loan origination fees, original issue discount and market discount or premium are capitalized, and the Company accretes or amortizes such amounts over the life of the loan as interest income. For the three and nine months ended June 30, 2014, interest income included $1,873 and $5,520, respectively, of accretion of discounts. For the three and nine months ended June 30, 2013, interest income included $1,639 and $6,104, respectively, of accretion of discounts. For the three and nine months ended June 30, 2014, the Company received loan origination fees of

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

$2,205 and $7,695, respectively. For the three and nine months ended June 30, 2013, the Company received loan origination fees of $3,380 and $7,848 respectively. These loan origination fees are capitalized and amortized over the life of the loan as interest income.

For investments with contractual payment-in-kind (“PIK”) interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, the Company will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible. For the three and nine months ended June 30, 2014, the Company recorded PIK income of $497 and $1,246, respectively, and received PIK payments in cash of $144 and $2,051, respectively. For the three and nine months ended June 30, 2013, the Company recorded PIK income of $386 and $1,476, respectively, and received PIK payments in cash of $59 and $906, respectively.

In addition, the Company may generate revenue in the form of amendment, structuring or due diligence fees, fees for providing managerial assistance, consulting fees and prepayment premiums on loans. The Company records these fees as fee income when received. All other income is recorded into income when earned. For the three and nine months ended June 30, 2014, fee income included $950 and $1,950 of prepayment premiums, respectively. For the three and nine months ended June 30, 2013, fee income included $437 and $1,705 of prepayment premiums, respectively.

For the three and nine months ended June 30, 2014, the Company received interest and fees in cash, which excludes capitalized loan origination fees, in the amounts of $24,223 and $71,193, respectively. For the three and nine months ended June 30, 2013, the Company received interest and fees in cash, which excludes capitalized loan origination fees, in the amounts of $17,979 and $50,843, respectively.

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For the three and nine months ended June 30, 2014, the Company recorded dividend income of $952 and $1,230, respectively, and return of capital distributions of $2,095 and $4,393, respectively. For the three and nine months ended June 30, 2013, the Company recorded dividend income of $1,081 and $1,827, respectively, and return of capital distributions of zero and $668, respectively.

Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations.

Non-accrual loans: A loan may be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issued discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

principal and interest is paid and, in management’s judgment, are likely to remain current. The total fair value of non-accrual loans was $215 and $665 as of June 30, 2014 and September 30, 2013, respectively.

Partial loan sales: The Company follows the guidance in ASC Topic 860 when accounting for loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain on the Company’s consolidated statements of financial condition and the proceeds are recorded as a secured borrowing until the definition is met. Secured borrowings are carried at fair value to correspond with the related investments, which are carried at fair value. See Note 7 for additional information.

Income taxes: The Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year. The Company has made, and intends to continue to make, the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to its stockholders.

Depending on the level of taxable income earned in a tax year, the Company may choose to retain taxable income in excess of current year dividend distributions, and would distribute such taxable income in the next tax year. The Company would then pay a 4% excise tax on such income, as required. To the extent that the Company determines that it’s estimated current year annual taxable income, determined on a calendar basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the three and nine months ended June 30, 2014 and 2013, no amount was recorded for U.S. federal excise tax.

The Company accounts for income taxes in conformity with ASC Topic 740 — Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material uncertain income tax positions through December 31, 2013. The 2010 through 2013 tax years remain subject to examination by U.S. federal and most state tax authorities.

Dividends and distributions: Dividends and distributions to common stockholders are recorded on the record date. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash dividend. The Company may use newly issued shares under the guidelines of the DRIP (if the Company’s shares are trading at a premium to net asset value), or the Company may purchase shares in the open market in connection with the obligations under the plan. In particular, if the Company’s shares are trading at a significant discount to net asset value and the Company is otherwise permitted under applicable law

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

to purchase such shares, the Company intends to purchase shares in the open market in connection with any obligations under the DRIP.

In the event the market price per share of the Company’s common stock on the date of a distribution exceeds the most recently computed net asset value per share of the common stock, the Company will issue shares of common stock to participants in the DRIP at the greater of the most recently computed net asset value per share of common stock or 95% of the current market price per share of common stock (or such lesser discount to the current market price per share that still exceeds the most recently computed net asset value per share of common stock).

Deferred financing costs: Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of June 30, 2014 and September 30, 2013, the Company had deferred financing costs of $10,514 and $7,742, respectively. These amounts are amortized and included in interest expense in the consolidated statements of operations over the estimated average life of the borrowings. Amortization expense for the three and nine months ended June 30, 2014 was $1,127 and $2,026, respectively. Amortization expense for the three and nine months ended June 30, 2013 was $360 and $1,444, respectively.

Deferred offering costs: Deferred offering costs consist of fees paid in relation to legal, accounting, regulatory and printing work completed in preparation of equity offerings. Deferred offering costs are charged against the proceeds from equity offerings when received. As of June 30, 2014 and September 30, 2013, deferred offering costs, which are included in other assets on the consolidated statements of financial condition, were $220 and $0, respectively.

Recently adopted accounting pronouncements: In June 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-08, Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement and Disclosure Requirements (“ASU 2013-08”), containing new guidance on assessing whether an entity is an investment company, requiring non-controlling ownership interests in investment companies to be measured at fair value and requiring certain additional disclosures. On January 1, 2014, the Company adopted ASU 2013-08 and the required disclosures, which did not have a material impact on the Company’s consolidated financial statements and disclosures.

Note 3.

Related Party Transactions

Investment Advisory Agreement: On April 14, 2010, GBDC entered into the Investment Advisory Agreement with the Investment Adviser, under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, GBDC. The Board most recently reapproved the Investment Advisory Agreement in May 2014. The Investment Adviser is a registered investment adviser with the Securities and Exchange Commission (the “SEC”). The Investment Adviser receives fees for providing services, consisting of two components, a base management fee and an Incentive Fee (as defined below).

The base management fee is calculated at an annual rate equal to 1.375% of average adjusted gross assets at the end of the two most recently completed calendar quarters (including assets purchased with borrowed funds and securitization-related assets, leverage, unrealized depreciation or appreciation on derivative instruments and cash collateral on deposit with custodian but adjusted to exclude cash and cash equivalents so that investors do not pay the base management fee on such assets) and is payable quarterly in arrears. Additionally, the Investment Adviser is voluntarily excluding assets funded with secured borrowing proceeds from the management fee. The base management fee is adjusted, based on the actual number of days elapsed relative to the total number of days in such calendar quarter, for any share issuances or repurchases during such calendar quarter. For purposes of the Investment Advisory Agreement, cash equivalents means U.S. government securities and commercial paper instruments maturing within 270 days of purchase (which is different than the GAAP definition, which defines cash equivalents as U.S. government securities and commercial paper instruments maturing within 90 days of purchase). To the extent that the Investment Adviser or any of its affiliates provides investment advisory, collateral management

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

or other similar services to a subsidiary of the Company, the base management fee will be reduced by an amount equal to the product of (1) the total fees paid to the Investment Adviser by such subsidiary for such services and (2) the percentage of such subsidiary’s total equity, including membership interests and any class of notes not exclusively held by one or more third parties, that is owned, directly or indirectly, by the Company.

The Company has structured the calculation of the Incentive Fee to include a fee limitation such that an Incentive Fee for any quarter can only be paid to the Investment Adviser if, after such payment, the cumulative Incentive Fees paid to the Investment Adviser since April 13, 2010, the effective date of the Company’s election to become a BDC, would be less than or equal to 20.0% of the Company’s Cumulative Pre-Incentive Fee Net Income (as defined below).

The Company accomplishes this limitation by subjecting each quarterly Incentive Fee payable under the Income and Capital Gain Incentive Fee Calculation (as defined below) to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in any quarter is equal to the difference between (a) 20.0% of Cumulative Pre-Incentive Fee Net Income and (b) cumulative Incentive Fees of any kind paid to the Investment Adviser by GBDC since April 13, 2010. To the extent the Incentive Fee Cap is zero or a negative value in any quarter, no Incentive Fee would be payable in that quarter. “Cumulative Pre-Incentive Fee Net Income” is equal to the sum of (a) Pre-Incentive Fee Net Investment Income (as defined below) for each period since April 13, 2010 and (b) cumulative aggregate realized capital gains, cumulative aggregate realized capital losses, cumulative aggregate unrealized capital depreciation and cumulative aggregate unrealized capital appreciation since April 13, 2010.

“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the calendar quarter (including the base management fee, taxes, any expenses payable under the Investment Advisory Agreement and the Administration Agreement, any expenses of securitizations and any interest expense and dividends paid on any outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that the Company has not yet received in cash.

Incentive Fees are calculated and payable quarterly in arrears (or, upon termination of the Investment Advisory Agreement, as of the termination date).

The income and capital gains incentive fee calculation (the “Income and Capital Gain Incentive Fee Calculation”) has two parts, the income component (the “Income Incentive Fee”) and the capital gains component (the “Capital Gain Incentive Fee” and, together with the Income Incentive Fee, the “Incentive Fee”). The Income Incentive Fee is calculated quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter.

For the three and nine months ended June 30, 2014, the Income Incentive Fee incurred was $1,607 and $6,295, respectively. For the three and nine months ended June 30, 2013, the Income Incentive Fee incurred was $2,785 and $7,647, respectively.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the Income Incentive Fee, it is possible that an Incentive Fee may be calculated under this formula with respect to a period in which the Company has incurred a loss. For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the hurdle rate (as defined below) for a calendar quarter, the Income Incentive Fee will result in a positive value and an Incentive Fee will be paid unless the payment of such Incentive Fee would cause the Company to pay Incentive Fees on a cumulative basis that exceed 20.0% of Cumulative Pre-Incentive Fee Net Investment Income. Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any Incentive Fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 2.0% quarterly. If market interest rates rise, the Company may be able to invest funds in debt instruments that provide for a higher return, which would increase Pre-Incentive Fee Net Investment Income and make it easier for the Investment Adviser to surpass the fixed hurdle rate and receive an Incentive Fee based on such net investment income.

The Company’s Pre-Incentive Fee Net Investment Income used to calculate this part of the Incentive Fee is also included in the amount of its total assets (excluding cash and cash equivalents but including assets purchased with borrowed funds and securitization-related assets, unrealized depreciation or appreciation on derivative instruments and cash collateral on deposit with custodian) used to calculate the 1.375% base management fee annual rate.

The Company calculates the Income Incentive Fee with respect to its Pre-Incentive Fee Net Investment Income quarterly, in arrears, as follows:

Zero in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate;

100% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than 2.5% in any calendar quarter. This portion of the Company’s Pre-Incentive Fee Net Investment Income (which exceeds the hurdle rate but is less than 2.5%) is referred to as the “catch-up” provision. The catch-up is meant to provide the Investment Adviser with 20.0% of the Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply if this net investment income exceeds 2.5% in any calendar quarter; and

20.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.5% in any calendar quarter.

The sum of these calculations yields the “Income Incentive Fee”. This amount is appropriately adjusted for any share issuances or repurchases during the quarter.

The Capital Gain Incentive Fee equals (a) 20.0% of the Company’s Capital Gain Incentive Fee Base (as defined below), if any, calculated in arrears as of the end of each calendar year (or, upon termination of the Investment Advisory Agreement, as of the termination date), which commenced with the calendar year ending December 31, 2010, less (b) the aggregate amount of any previously paid Capital Gain Incentive Fees. On August 5, 2014, the Company amended the Investment Advisory Agreement, effective as of June 30, 2014, to provide that the Capital Gain Incentive Fee Base is reduced by the amount of any unamortized deferred financing costs, if and to the degree that such costs exceed unrealized capital appreciation. The Company’s “Capital Gain Incentive Fee Base” equals (1) the sum of (i) realized capital gains, if any, on a cumulative positive basis from the date the Company elected to become a BDC through the end of each calendar year, (ii) all realized capital losses on a cumulative basis, (iii) all unrealized capital depreciation on a cumulative basis less (2) all unamortized deferred financing costs, if and to the extent such costs exceed all unrealized capital appreciation on a cumulative basis.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in the Company’s portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.

The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.

The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company’s portfolio as of the applicable Capital Gain Incentive Fee calculation date and (b) the accreted or amortized cost basis of such investment.

The Capital Gain Incentive Fee payable as calculated under the Investment Advisory Agreement (as described above) for the three and nine months ended June 30, 2014 was $0. However, in accordance with GAAP, the Company is required to accrue for the Capital Gain Incentive Fee on a quarterly basis and is further required to include the aggregate unrealized capital appreciation on investments when calculating the capital gain incentive fee accrual, as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement. If the Capital Gain Incentive Fee Base, adjusted as required by GAAP to include unrealized appreciation, is positive at the end of a period, then GAAP requires the Company to accrue a capital gain Incentive fee equal to 20% of such amount, less the aggregate amount of the actual Capital Gain Incentive Fees paid or capital gain incentive fees accrued under GAAP in all prior periods. If such amount is negative, then there is no accrual for such period. The resulting accrual under GAAP for any capital gain incentive fee payable in a given period may result in additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. There can be no assurance that such unrealized capital appreciation will be realized in the future. Since inception through June 30, 2014, the Company has not made any Capital Gain Incentive Fee payments. For the three and nine months ended June 30, 2014 and 2013, the Company did not accrue a capital gain incentive fee payable under GAAP.

The sum of the Income Incentive Fee and the Capital Gain Incentive Fee is the “Incentive Fee.”

As described above, the Incentive Fee will not be paid at any time if, after such payment, the cumulative Incentive Fees paid to date would be greater than 20.0% of the Company’s Cumulative Pre-Incentive Fee Net Investment Income since the effective date of the Company’s election to be treated as a BDC. Such amount, less any Incentive Fees previously paid, is referred to as the “Incentive Fee Cap.” If, for any relevant period, the Incentive Fee Cap calculation results in the Company paying less than the amount of the Incentive Fee calculated above, then the difference between the Incentive Fee and the Incentive Fee Cap will not be paid by GBDC and will not be received by the Investment Adviser as an Incentive Fee either at the end of such relevant period or at the end of any future period.

Administration Agreement: Under the Administration Agreement, the Administrator furnishes GBDC with office facilities and equipment, provides GBDC with clerical, bookkeeping and record keeping services at such facilities and provides GBDC with other administrative services as the Administrator, subject to review by the Board, determines necessary to conduct the Company’s day-to-day operations. GBDC reimburses the Administrator the allocable portion (subject to the review and approval of the Board) of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, fees and expenses associated with performing compliance functions and GBDC’s allocable portion of the cost of its chief financial officer and chief compliance officer and their respective staffs. The Board reviews such expenses to determine that these expenses are reasonable and comparable to administrative services charged by unaffiliated third party asset managers. Under the Administration Agreement, the Administrator also provides, on the Company’s behalf, significant managerial assistance to those portfolio companies to which the Company is required to provide such assistance and will be paid

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

an additional amount based on the cost of the services provided, not to exceed the amount the Company receives from such portfolio companies.

Included in accounts payable and accrued expenses is $655 and $752 as of June 30, 2014 and September 30, 2013, respectively, for accrued allocated shared services under the Administration Agreement. The administrative service fee expense under the Administration Agreement for the three and nine months ended June 30, 2014 was $655 and $1,979, respectively. The administrative service fee expense under the Administration Agreement for the three and nine months ended June 30, 2013 was $715 and $1,873, respectively.

Other related party transactions: The Administrator pays for certain unaffiliated third-party expenses incurred by the Company. Such expenses include postage, printing, office supplies and rating agency fees. These expenses are not marked-up and represent the same amount the Company would have paid had the Company paid the expenses directly. These expenses are subsequently reimbursed in cash.

Total expenses reimbursed to the Administrator during the three and nine months ended June 30, 2014 were zero and $801, respectively. Total expenses reimbursed to the Administrator during the three and nine months ended June 30, 2013 were zero and $279, respectively.

As of June 30, 2014 and September 30, 2013, included in accounts payable and accrued expenses were $587 and $323, respectively, for accrued expenses paid on behalf of the Company by the Administrator.

Note 4.

Investments

Investments as of June 30, 2014 and September 30, 2013 consisted of the following:

	As of June 30, 2014						As of September 30, 2013
	Par		Cost		Fair Value		Par		Cost		Fair Value
Senior secured	$	294,416	$	291,329	$	289,390	$	301,613	$	297,808	$	296,158
One stop		876,141		864,374		866,413		558,140		549,855		554,523
Second lien		86,575		85,040		86,784		113,098		111,701		112,873
Subordinated debt		3,584		3,563		4,164		24,596		24,375		22,552
Investment in SLF ^{(1), (3)}		29,610		29,610		29,610		4,140		4,140		4,066
Investment in SLF ^{(2) , (3)}		N/A		4,230		4,787		N/A		591		768
Equity		N/A		31,560		43,742		N/A		29,491		33,705
Total	$	1,290,326	$	1,309,706	$	1,324,890	$	1,001,587	$	1,017,961	$	1,024,645

(1)

Amount presented represents the Company's investment in SLF subordinated notes.

(2)

Amount presented represents the Company's investment in SLF LLC equity interests.

(3)

SLF's proceeds from the subordinated notes and LLC equity interests invested in SLF were utilized by SLF to invest in senior secured loans.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The Company has invested in portfolio companies located in the United States and in Canada. The following tables show the portfolio composition by geographic region at cost and fair value as a percentage of total investments in portfolio companies as of June 30, 2014 and September 30, 2013. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business.

	As of June 30, 2014				As of September 30, 2013
Cost:
United States
Mid-Atlantic	$	231,388	17.7	%	$	119,950	11.8	%
Midwest		354,749	27.1			298,567	29.3
Northeast		75,204	5.7			68,319	6.7
Southeast		274,610	20.9			261,948	25.7
Southwest		116,160	8.9			94,301	9.3
West		257,595	19.7			172,066	16.9
Canada		-	-			2,810	0.3
Total	$	1,309,706	100.0	%	$	1,017,961	100.0	%

Fair Value:
United States
Mid-Atlantic	$	227,111	17.1	%	$	118,237	11.6	%
Midwest		362,650	27.4			302,154	29.5
Northeast		77,652	5.9			69,647	6.8
Southeast		281,437	21.2			266,831	26.0
Southwest		117,831	8.9			95,608	9.3
West		258,209	19.5			172,168	16.8
Canada		-	-			-	-
Total	$	1,324,890	100.0	%	$	1,024,645	100.0	%

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The industry compositions of the portfolio at cost and fair value were as follows:

	As of June 30, 2014				As of September 30, 2013
Cost:
Aerospace and Defense	$	47,597	3.6	%	$	14,789	1.5	%
Automobile		61,065	4.7			44,048	4.4
Banking		17,281	1.3			1,288	0.2
Beverage, Food and Tobacco		121,863	9.3			110,138	10.8
Buildings and Real Estate		749	0.1			3,338	0.3
Cargo Transport		1,945	0.1			1,950	0.2
Chemicals, Plastics and Rubber		-	-			6,622	0.7
Containers, Packaging and Glass		48,700	3.7			40,729	4.0
Diversified Conglomerate Manufacturing		64,358	4.9			59,445	5.8
Diversified Conglomerate Service		151,963	11.6			143,850	14.1
Electronics		93,229	7.1			60,428	5.9
Farming and Agriculture		3,663	0.3			3,798	0.4
Finance		13,313	1.0			22,591	2.2
Grocery		18,048	1.4			18,063	1.8
Healthcare, Education and Childcare		215,421	16.4			152,778	15.0
Home and Office Furnishings, Housewares and Durable Consumer		7,245	0.6			5,437	0.5
Insurance		24,417	1.9			10,568	1.0
Investment Funds and Vehicles		33,840	2.6			4,731	0.5
Leisure, Amusement, Motion Pictures and Entertainment		63,135	4.8			62,057	6.1
Mining, Steel, Iron and Non-Precious Metals		5,413	0.4			5,479	0.5
Oil and Gas		1,326	0.1			1,349	0.1
Personal and Non-Durable Consumer Products		31,957	2.4			24,208	2.4
Personal, Food and Miscellaneous Services		-	-			31,742	3.1
Personal Transportation		56,809	4.3			17,006	1.7
Printing and Publishing		29,336	2.3			3,359	0.3
Retail Stores		163,227	12.5			153,198	15.0
Telecommunications		24,741	1.9			10,802	1.1
Textiles and Leather		5,276	0.4			-	-
Utilities		3,789	0.3			4,170	0.4
Total	$	1,309,706	100.0	%	$	1,017,961	100.0	%

	As of June 30, 2014				As of September 30, 2013
Fair Value:
Aerospace and Defense	$	45,856	3.5	%	$	14,707	1.4	%
Automobile		65,234	4.9			45,737	4.4
Banking		17,245	1.3			62	-
Beverage, Food and Tobacco		122,377	9.2			112,755	11.0
Buildings and Real Estate		758	0.1			2,202	0.2
Cargo Transport		1,979	0.1			2,003	0.2
Chemicals, Plastics and Rubber		-	-			6,772	0.7
Containers, Packaging and Glass		50,619	3.8			41,015	4.0
Diversified Conglomerate Manufacturing		65,530	4.9			60,488	5.9
Diversified Conglomerate Service		154,346	11.6			145,162	14.2
Electronics		94,389	7.1			61,103	6.0
Farming and Agriculture		3,691	0.3			3,838	0.4
Finance		10,750	0.8			20,976	2.0
Grocery		18,274	1.4			18,154	1.8
Healthcare, Education and Childcare		219,330	16.6			155,426	15.2
Home and Office Furnishings, Housewares and Durable Consumer		5,543	0.4			4,746	0.5
Insurance		24,736	1.9			10,713	1.0
Investment Funds and Vehicles		34,397	2.6			4,834	0.5
Leisure, Amusement, Motion Pictures and Entertainment		61,491	4.6			58,314	5.7
Mining, Steel, Iron and Non-Precious Metals		5,464	0.4			5,506	0.5
Oil and Gas		1,342	0.1			1,348	0.1
Personal and Non-Durable Consumer Products		32,514	2.5			24,646	2.4
Personal, Food and Miscellaneous Services		687	0.1			32,288	3.2
Personal Transportation		57,448	4.3			17,488	1.7
Printing and Publishing		29,757	2.3			3,456	0.3
Retail Stores		167,020	12.6			155,860	15.2
Telecommunications		24,993	1.9			10,828	1.1
Textiles and Leather		5,283	0.4			-	-
Utilities		3,837	0.3			4,218	0.4
Total	$	1,324,890	100.0	%	$	1,024,645	100.0	%

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Senior Loan Fund:

Effective May 31, 2013, the Company entered an agreement to co-invest with United Insurance Company of America (“United Insurance”) through SLF, an unconsolidated Delaware LLC whose purpose is to primarily invest in senior secured loans of middle market companies. SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee consisting of one representative of each of the Company and United Insurance (with approval of each representative required). SLF is capitalized with subordinated notes and LLC equity interest subscriptions from the Company and United Insurance. As of June 30, 2014, the Company and United Insurance owned 87.5% and 12.5%, respectively, of both the outstanding subordinated notes and LLC equity interests. Additionally, SLF has entered into a $100,000 senior secured revolving credit facility (“SLF Credit Facility”) with Wells Fargo Bank, N.A., through its wholly owned subsidiary Senior Loan Fund II LLC (“SLF II”). As of June 30, 2014, SLF had subordinated note commitments from the Company and United Insurance totaling $100,000, of which approximately $33,840 and $4,732 in aggregate principal amount was funded at June 30, 2014 and September 30, 2013, respectively. As of June 30, 2014, SLF had LLC equity interest subscriptions from the Company and United Insurance totaling $25,000, of which approximately $4,834 and $676 in aggregate was called and contributed as of June 30, 2014 and September 30, 2013, respectively.

As of June 30, 2014 and September 30, 2013, SLF had total assets at fair value of $106,866 and $13,821, respectively. As of June 30, 2014 and September 30, 2013, SLF’s portfolio was comprised of first lien senior secured loans to 31 and four different borrowers, respectively. As of June 30, 2014 and September 30, 2013, none of these loans was on non-accrual status. The portfolio companies in SLF are U.S. middle market companies in industries similar to those in which the Company may invest directly. Additionally, as of June 30, 2014 and September 30, 2013, SLF had commitments to fund various undrawn revolvers and delayed draw investments to its portfolio companies totaling $9,850 and $2,688, respectively.

Below is a summary of SLF’s portfolio, followed by a listing of the individual loans in SLF’s portfolio as of June 30, 2014 and September 30, 2013:

	As of June 30, 2014			As of September 30, 2013
Senior secured loans ⁽¹⁾	$	103,860		$	13,677
Weighted average current interest rate on senior secured loans ⁽²⁾		5.2	%		5.9	%
Number of borrowers in SLF		31			4
Largest loan to a single borrower ⁽¹⁾	$	8,250		$	8,313
Total of five largest loans to borrowers ⁽¹⁾	$	31,469		$	13,620

(1)

At principal/par amount.

(2)

Computed as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total senior secured loans at principal/par amount.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

SLF Loan Portfolio as of June 30, 2014
				Current
			Maturity	Interest			Principal/Par		Fair
Portfolio Company	Business Description	Investment Type	Date	Rate ⁽¹⁾			Amount		Value ⁽²⁾
5.11, Inc. ⁽³⁾	Textiles and Leather	Senior Loan	02/2020		6.0	%	$	3,298	$	3,306
ACTIVE Network, Inc.	Electronics	Senior Loan	11/2020		5.5			1,990		1,984
ARG IH Corporation ⁽³⁾	Beverage, Food and Tobacco	Senior Loan	11/2020		5.0			2,156		2,172
Atrium Innovations	Personal and Non Durable Consumer Products	Senior Loan	02/2021		4.3			3,565		3,542
BJ's Wholesale Club, Inc.	Retail Stores	Senior Loan	09/2019		4.5			2,992		3,000
Blue Coat Systems, Inc.	Electronics	Senior Loan	05/2019		4.0			1,995		1,999
BMC Software, Inc.	Electronics	Senior Loan	09/2020		5.0			1,990		1,990
Brasa (Holdings) Inc.	Personal, Food and Miscellaneous Services	Senior Loan	07/2019		5.0			8,250		8,263
Connect Merger Sub, Inc.	Telecommunications	Senior Loan	04/2020		4.8			3,985		4,006
Dell, Inc.	Electronics	Senior Loan	04/2020		4.5			1,990		2,003
Dialysis Newco, Inc.	Healthcare, Education and Childcare	Senior Loan	04/2021		4.8			2,500		2,508
Diversified Foodservice Supply, Inc. ⁽³⁾	Beverage, Food and Tobacco	Senior Loan	12/2018		6.0			4,240		4,240
Diversified Foodservice Supply, Inc. ⁽³⁾	Beverage, Food and Tobacco	Senior Loan	12/2018		7.0			88		88
El Pollo Loco Inc. ⁽³⁾	Personal, Food and Miscellaneous Services	Senior Loan	10/2018		5.3			4,752		4,788
Federal-Mogul Corporation	Automobile	Senior Loan	04/2021		4.8			4,000		4,010
GSDM Holdings Corp. ⁽³⁾	Healthcare, Education and Childcare	Senior Loan	06/2019		5.3			1,804		1,795
Nuveen Investments, Inc.	Finance	Senior Loan	05/2017		4.1			3,000		3,009
Paradigm DKD Group, LLC	Buildings and Real Estate	Senior Loan	11/2018		5.8			2,063		2,063
Paradigm DKD Group, LLC	Buildings and Real Estate	Senior Loan	11/2018		5.8			468		468
Paradigm Management Services, LLC ⁽³⁾	Healthcare, Education and Childcare	Senior Loan	01/2019		5.5			6,279		6,279
Payless ShoeSource, Inc.	Retail Stores	Senior Loan	03/2021		5.0			2,000		2,009
Plano Molding Company, LLC ⁽³⁾	Home and Office Furnishings, Housewares, and Durable Consumer	Senior Loan	10/2018		5.3			1,838		1,838
Print Payroll Services, LLC	Diversified Conglomerate Service	Senior Loan	06/2019		5.5			2,390		2,378
Print Payroll Services, LLC	Diversified Conglomerate Service	Senior Loan	06/2019		3.2			568		565
Print Payroll Services, LLC ⁽⁴⁾	Diversified Conglomerate Service	Senior Loan	06/2019		N/A	⁽⁵⁾		-		(6	)
Rug Doctor LLC ⁽³⁾	Personal and Non Durable Consumer Products	Senior Loan	12/2016		6.3			5,003		5,003
Rug Doctor LLC ⁽³⁾	Personal and Non Durable Consumer Products	Senior Loan	12/2016		6.3			428		428
Scientific Games International, Inc.	Hotels, Motels, Inns, and Gaming	Senior Loan	10/2020		4.3			3,985		3,948
Self Esteem Brands, LLC ⁽³⁾	Leisure, Amusement, Motion Pictures, Entertainment	Senior Loan	02/2020		5.3			6,531		6,490
Self Esteem Brands, LLC ^{(3) (4)}	Leisure, Amusement, Motion Pictures, Entertainment	Senior Loan	02/2020		N/A	⁽⁵⁾		-		(4	)
Smashburger Finance LLC	Beverage, Food and Tobacco	Senior Loan	05/2018		5.5			973		973
Syncsort Incorporated ⁽³⁾	Electronics	Senior Loan	03/2019		5.8			4,978		4,929
Syncsort Incorporated ^{(3) (4)}	Electronics	Senior Loan	03/2019		N/A	⁽⁵⁾		-		(11	)
Syncsort Incorporated ^{(3) (4)}	Electronics	Senior Loan	03/2019		N/A	⁽⁵⁾		-		(3	)
Systems Maintenance Services Holding, Inc. ⁽³⁾	Electronics	Senior Loan	10/2019		5.3			2,446		2,446
Take 5 Oil Change, L.L.C. ⁽³⁾	Automobile	Senior Loan	07/2018		5.8			1,432		1,432
Tectum Holdings, Inc. ⁽³⁾	Automobile	Senior Loan	09/2018		5.3			2,790		2,790
U.S. Water Services, Inc.	Utilities	Senior Loan	08/2018		5.8			3,470		3,470
U.S. Water Services, Inc.	Utilities	Senior Loan	08/2018		6.8			465		465
U.S. Water Services, Inc.	Utilities	Senior Loan	08/2018		5.8			166		166
W3 Co.	Oil and Gas	Senior Loan	03/2020		5.8			2,992		2,951
							$	103,860	$	103,770

(1)

Represents the weighted average annual current interest rate as of June 30, 2014. All interest rates are payable in cash.

(2)

Represents the fair value in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures . The determination of such fair value is not included in our board of directors' valuation process described elsewhere herein.

(3)

The Company also holds a portion of the first lien senior secured loan in this portfolio company.

(4)

The negative fair value is the result of the unfunded commitment being valued below par.

(5)

The entire commitment was unfunded at June 30, 2014. As such, no interest is being earned on this investment.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

SLF Loan Portfolio as of September 30, 2013

Current

Portfolio

Maturity

Interest

Principal/Par

Fair

Company

Business Description

Investment Type

Date

Rate ⁽¹⁾

Amount

Value ⁽²⁾

Brasa (Holdings) Inc.

Personal, Food and Miscellaneous Services

Senior Loan

07/2019

5.8

8,313

8,365

SoftWriters, Inc.

Diversified Conglomerate Service

Senior Loan

09/2018

6.5

1,578

1,559

SoftWriters, Inc. ⁽³⁾

Diversified Conglomerate Service

Senior Loan

09/2018

N/A

⁽⁴⁾

)

SoftWriters, Inc. ⁽³⁾

Diversified Conglomerate Service

Senior Loan

09/2018

N/A

⁽⁴⁾

)

Take 5 Oil Change, L.L.C. ⁽⁴⁾

Automobile

Senior Loan

07/2018

6.3

1,445

1,434

Take 5 Oil Change, L.L.C. ⁽⁴⁾

Automobile

Senior Loan

07/2018

6.3

U.S. Water Services, Inc.

Utilities

Senior Loan

08/2018

5.5

2,218

2,206

U.S. Water Services, Inc.

Utilities

Senior Loan

08/2018

5.5

U.S. Water Services, Inc.

Utilities

Senior Loan

08/2018

N/A

⁽³⁾

)

13,677

13,666

(1)

Represents the weighted average annual current interest rate as of September 30, 2013. All interest rates are payable in cash.

(2)

(3)

The negative fair value is the result of the unfunded commitment being valued below par.

(4)

The entire commitment was unfunded at September 30, 2013. As such, no interest is being earned on this investment.

(5)

The Company also holds a portion of the first lien senior secured loan in this portfolio company.

The Company has committed to fund $87,500 of subordinated notes and $21,875 of LLC equity interest subscriptions to SLF. The amortized cost and fair value of the subordinated notes held by the Company was $29,610 and $29,610, respectively, as of June 30, 2014, and $4,140 and $4,066, respectively, as of September 30, 2013. As of June 30, 2014, the subordinated notes pay a weighted average interest rate of three-month London Interbank Offered Rate (“LIBOR”) plus 8.0%, which increased from three-month LIBOR plus 4.0% subsequent to closing the SLF Credit Facility. For the three and nine months ended June 30, 2014, the Company earned interest income on the subordinated notes of $594 and $1,331, respectively. The Company did not hold any subordinated notes during the three and nine months ended June 30, 2013, as SLF was formed in May 2013 and commenced operations in July 2013.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Below is certain summarized financial information for SLF as of June 30, 2014 and September 30, 2013 and for the three and nine months ended June 30, 2014 and 2013:

	As of June 30, 2014		As of September 30, 2013
Selected Balance Sheet Information, at fair value
Investments in loans receivable, net of discount for loan origination fees	$	103,770	$	13,666
Cash and other assets		3,096		155
Total assets	$	106,866	$	13,821

Senior credit facility	$	66,350	$	-
Payable for open trades		-		8,259
Other liabilities		1,205		37
Total liabilities		67,555		8,296
Subordinated notes and members' equity		39,311		5,525
Total liabilities and net assets	$	106,866	$	13,821

	Three months ended June 30,					Nine months ended June 30,
	2014		2013			2014		2013
Selected Statement of Operations Information:
Total revenues	$	1,277		NA	⁽¹⁾	$	2,390		NA	⁽¹⁾
Total expenses	$	1,157		NA	⁽¹⁾	$	2,198		NA	⁽¹⁾
Net change in unrealized appreciation (depreciation) on investments and subordinated notes	$	114		NA	⁽¹⁾	$	241		NA	⁽¹⁾
Net increase in net assets	$	234		NA	⁽¹⁾	$	433		NA	⁽¹⁾

(1)

SLF was formed in May 2013 and commenced operations in July 2013.

Note 5.

Transactions with Affiliated Companies

An affiliated company is a company in which the Company has an ownership of 5% or more of its voting securities. A controlled affiliate is a company in which the Company owns more than 25% of its voting securities. Transactions related to our investments with both controlled and non-controlled affiliates for the nine months ended June 30, 2014 were as follows:

Portfolio	Fair value at		Purchases		Redemptions			Sales		Discount		Net realized		Net unrealized		Fair value at		Interest and		Dividend
Company	September 30, 2013		(cost)		(cost)			(cost)		accretion		gains / (losses)		gains / (losses)		June 30, 2014		fee income		income
Controlled Affiliates
Senior Loan Fund LLC *	$	4,834	$	39,609	$	(10,500	)	$	-	$	-	$	-	$	454	$	34,397	$	1,331	$	-
Non-Controlled Affiliates
Barcelona Restaurants, LLC		8,225		-		(5,707	)		-		87		-		272		2,877		309		-
Total Controlled and Non-Controlled Affiliates	$	13,059	$	39,609	$	(16,207	)	$	-	$	87	$	-	$	726	$	37,274	$	1,640	$	-

Together with United Insurance, the Company co-invests through SLF. SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee consisting of representatives of the Company and United Insurance (with approval from a representative of each required). Therefore, although the Company owns more than 25% of the voting securities of SLF (even though these "voting securities" do not afford the Company the right to elect directors of SLF or any other special rights), the Company does not believe that it has control over SLF for purposes of the 1940 Act or otherwise.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Note 6.

Fair Value Measurements

The Company follows ASC Topic 820 for measuring fair value. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Assets and liabilities are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the asset or liability as of the measurement date. The three levels are defined as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the assets or liabilities.

Level 3: Inputs include significant unobservable inputs for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or a liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company assesses the levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and liabilities during the three and nine months ended June 30, 2014 and 2013. The following section describes the valuation techniques used by the Company to measure different assets and liabilities at fair value and includes the level within the fair value hierarchy in which the assets and liabilities are categorized.

Investments

Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observable market data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by the Board, based on input of management, the audit committee and independent valuation firms that have been engaged at the direction of the Board to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with approximately 25% (based on fair value) of the Company’s valuations of debt and equity investments without readily available market quotations subject to review by an independent valuation firm. All investments as of June 30, 2014 and September 30, 2013, with the exception of money market funds included in cash and cash equivalents (Level 1 investments), were valued using Level 3 inputs of the fair value hierarchy.

When determining fair value of Level 3 debt and equity investments, the Company may take into account the following factors, where relevant: the enterprise value of a portfolio company, the nature and realizable value of any

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made and other relevant factors. The primary method for determining enterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s net income before net interest expense, income tax expense, depreciation and amortization (“EBITDA”). The enterprise value analysis is performed to determine the value of equity investments and to determine if debt investments are credit impaired. If debt investments are credit impaired, the Company will use the enterprise value analysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, the Company uses a market interest rate yield analysis to determine fair value.

In addition, for certain debt investments, the Company may base its valuation on indicative bid and ask prices provided by an independent third party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.

Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company may realize significantly less than the value at which such investment had previously been recorded.

The Company’s investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.

Secured Borrowings

The Company has elected the fair value option under ASC Topic 825 — Financial Instruments (“ASC Topic 825”) relating to accounting for debt obligations at their fair value for its secured borrowings which arose due to partial loan sales which did not meet the criteria for sale treatment under ASC Topic 860. The Company reports changes in the fair value of its secured borrowings as a component of the net change in unrealized (appreciation) depreciation on secured borrowings in the consolidated statements of operations. The net gain or loss reflects the difference between the fair value and the principal amount due on maturity.

All secured borrowings as of June 30, 2014 and September 30, 2013 were valued using Level 3 inputs under the fair value hierarchy, and the Company’s approach to determining fair value of Level 3 secured borrowings is consistent with its approach to determining fair value of the Level 3 investments that are associated with these secured borrowings as previously described.

The following tables present fair value measurements of the Company’s investments and secured borrowings and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of June 30, 2014 and September 30, 2013:

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

As of June 30, 2014:	Fair Value Measurements Using
Description	Level 1		Level 2		Level 3		Total
Assets:
Debt investments ⁽¹⁾	$	-	$	-	$	1,276,361	$	1,276,361
Equity investments ⁽¹⁾		-		-		48,529		48,529
Money market funds ⁽¹⁾⁽²⁾		28,093		-		-		28,093
Total assets:	$	28,093	$	-	$	1,324,890	$	1,352,983
Secured borrowings:	$	-	$	-	$	20,264	$	20,264

As of September 30, 2013:	Fair Value Measurements Using
Description	Level 1		Level 2		Level 3		Total
Assets:
Debt investments ⁽¹⁾	$	-	$	-	$	990,172	$	990,172
Equity investments ⁽¹⁾		-		-		34,473		34,473
Money market funds ⁽¹⁾⁽²⁾		22,737		-		-		-
Total assets:	$	22,737	$	-	$	1,024,645	$	1,024,645
Secured borrowings:	$	-	$	-	$	8,809	$	8,809

⁽¹⁾

Refer to the consolidated schedules of investments for further details.

⁽²⁾

Incuded in cash and cash equivalents and restricted cash and cash equivalents on the consolidated statements of financial condition.

The net change in unrealized appreciation (depreciation) for the three and nine months ended June 30, 2014 reported within the net change in unrealized appreciation (depreciation) on investments in the Company’s consolidated statements of operation attributable to the Company’s Level 3 investments held as of June 30, 2014 was $4,434 and $7,554, respectively. The net change in unrealized appreciation (depreciation) for the three and nine months ended June 30, 2013 reported within the net change in unrealized appreciation (depreciation) on investments in the Company’s consolidated statements of operation attributable to the Company’s Level 3 investments held as of June 30, 2013 was $1,516 and $6,395, respectively.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The following table presents the changes in investments and secured borrowings measured at fair value using Level 3 inputs for the nine months ended June 30, 2014 and 2013:

	Nine months ended June 30, 2014									Nine months ended June 30, 2014
	Debt Investments			Equity Investments			Total Investments			Secured borrowings

Fair value, beginning of period	$	990,172		$	34,473		$	1,024,645		$	8,809

Net change in unrealized appreciation (depreciation) on investments		152			8,349			8,501			-
Net change in unrealized appreciation (depreciation) on secured borrowings		-			-			-			74
Realized gain (loss) on investments		(4,434	)		(472	)		(4,906	)		-
Fundings of revolving loans, net		(2,363	)		-			(2,363	)		-
Fundings of investments		569,950			10,572			580,522			-
PIK interest		(251	)		-			(251	)		-
Proceeds from principal payments and sales of portfolio investments		(282,385	)		(4,393	)		(286,778	)		-
Proceeds from secured borrowings		-			-			-			26,082
Repayments on secured borrowings		-			-			-			(14,770	)
Accretion of discounts and amortization of premiums		5,520			-			5,520			69
Fair value, end of period	$	1,276,361		$	48,529		$	1,324,890		$	20,264

	Nine months ended June 30, 2013
	Debt Investments			Equity Investments			Total Investments

Fair value, beginning of period	$	651,485		$	21,425		$	672,910

Net change in unrealized appreciation (depreciation) on investments		313			1,925			2,238
Realized gain (loss) on investments		(21	)		39			18
Fundings of revolving loans, net		8,155			-			8,155
Fundings of investments		545,417			8,605			554,022
PIK Interest		851			-			851
Proceeds from principal payments and sales of portfolio investments		(275,747	)		(759	)		(276,506	)
Accretion of discounts and amortization of premiums		6,104			-			6,104
Fair value, end of period	$	936,557		$	31,235		$	967,792

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 investments and secured borrowings as of June 30, 2014 and September 30, 2013.

Quantitative information about Level 3 Fair Value Measurements
	Fair value at June 30, 2014		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Assets:
Senior secured loans ^(1)(2)(3)	$	268,020	Market rate approach	Market interest rate	4.0% - 25.8% (7.2%)
			Market comparable companies	EBITDA multiples ⁽⁴⁾	5.0x - 13.5x (8.9x)
				Revenue multiples ⁽⁴⁾	0.8x - 4.8x (3.9x)

Subordinated Notes of SLF	$	29,610	Market rate approach	Market interest rate	8.0%

One stop loans ^(1)(5)(6)	$	814,012	Market rate approach	Market interest rate	5.0% - 33.3% (8.4%)
			Market comparable companies	EBITDA multiples ⁽⁷⁾	5.5x - 30.0x (9.2x)
				Revenue multiples ⁽⁷⁾	0.8x - 19.2x (8.5x)

Subordinated and second lien loans ⁽¹⁾⁽⁸⁾	$	63,090	Market rate approach	Market interest rate	9.0% - 12.0% (9.1%)
			Market comparable companies	EBITDA multiples	8.0x - 16.3x (10.4x)

Equity securities ⁽⁹⁾	$	43,742	Market comparable companies	EBITDA multiples ⁽¹⁰⁾	4.5x - 13.0x (9.7x)
				Revenue multiples ⁽¹⁰⁾	2.8x - 19.2x (6.0x)

Liabilities:
Secured borrowings ⁽¹¹⁾	$	20,264	Market rate approach	Market interest rate	6.0% - 7.3% (7.2%)
			Market comparable companies	EBITDA multiples	10.0x - 30.0x (10.4x)

⁽¹⁾

The fair value of this asset class was determined using the market rate approach as the investments in this asset class were determined not to be credit impaired using the market comparable companies approach. The unobservable inputs for both valuation techniques have been presented, but the fair value at June 30, 2014 was determined using the market rate approach.

⁽²⁾

Excludes $21,155 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.

⁽³⁾

Excludes $215 of non-accrual loans at fair value, which the Company valued on a liquidation basis.

⁽⁴⁾

The Company valued $228,914 and $39,106 of senior secured loans using EBITDA and revenue multiples, respectively. All senior secured loans were also valued using the market rate approach.

⁽⁵⁾

Excludes $50,544 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.

⁽⁶⁾

Excludes $1,857 of loans at fair value, which the Company valued on a liquidation basis.

⁽⁷⁾

The Company valued $729,164 and $84,848 of equity investments using EBITDA and revenue multiples, respectively.

⁽⁸⁾

Excludes $27,858 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.

⁽⁹⁾

Excludes $4,787 of LLC equity interests in SLF at fair value, which the Company valued using the net asset value.

⁽¹⁰⁾

The Company valued $41,799 and $1,943 of equity investments using EBITDA and revenue multiples, respectively.

⁽¹¹⁾

The fair value of the secured borrowings was determined using the market rate approach as the corresponding investments were determined not to be credit impaired using the market comparable companies approach. The unobservable inputs for both valuation techniques have been presented, but the fair value at June 30, 2014 was determined using the market rate approach.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Quantitative information about Level 3 Fair Value Measurements

	Fair value at September 30, 2013		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Assets:
Senior secured loans ^(1)(2)(3)	$	266,294	Market rate approach	Market interest rate	5.3% - 28.8% (7.9%)
			Market comparable companies	EBITDA multiples ⁽⁴⁾	5.0x - 13.5x (8.6x)
				Revenue multiples ⁽⁴⁾	3.2x - 7.0x (4.9x)

Subordinated Notes of SLF	$	4,066	Discounted cash flow analysis	Discount rate	5.3%

One stop loans ^(1)(5)(6)	$	511,630	Market rate approach	Market interest rate	5.8% - 15.3% (8.7%)
			Market comparable companies	EBITDA multiples	6.5x - 18.4x (9.1x)

Subordinated and second lien loans ⁽¹⁾⁽⁷⁾	$	107,156	Market rate approach	Market interest rate	8.0% - 21.0% (11.7%)
			Market comparable companies	EBITDA multiples	7.0x - 16.5x (9.2x)

Equity securities ⁽⁸⁾	$	33,704	Market comparable companies	EBITDA multiples	6.0x - 29.1x (9.8x)

Liabilities:
Secured borrowings ⁽⁹⁾	$	8,809	Market rate approach	Market interest rate	7.0% - 7.8% (7.1%)
			Market comparable companies	EBITDA multiples	8.5x

⁽¹⁾

The fair value of this asset class was determined using the market rate approach as the investments in this asset class were determined not to be credit impaired using the market comparable companies approach. The unobservable inputs for both valuation techniques have been presented, but the fair value at September 30, 2013 was determined using the market rate approach.

⁽²⁾

Excludes $27,773 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.

⁽³⁾

Excludes $665 of non-accrual loans at fair value and $1,424 of loans at fair value, which the Company valued on a liquidation basis.

⁽⁴⁾

The Company valued $232,719 and $33,575 of senior secured loans using EBITDA and revenue multiples, respectively. All senior secured loans were also valued using the market rate approach.

⁽⁵⁾

Excludes $39,924 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.

⁽⁶⁾

Excludes $2,971 of loans at fair value, which the Company valued on a liquidation basis.

⁽⁷⁾

Excludes $28,269 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.

⁽⁸⁾

Excludes $769 of LLC equity interests in SLF at fair value, which the Company valued using the net asset value.

⁽⁹⁾

The fair value of the secured borrowings was determined using the market rate approach as the corresponding investments were determined not to be credit impaired using the market comparable companies approach. The unobservable inputs for both valuation techniques have been presented, but the fair value at September 30, 2013 was determined using the market rate approach.

The above tables are not intended to be all-inclusive but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity investments and secured borrowings are EBITDA multiples, revenue multiples and market interest rates. The Company uses EBITDA multiples and, to a lesser extent revenue multiples, on its debt and equity investments and secured borrowings to determine any credit gains or losses. Significant increases or decreases in either of these inputs in isolation would result in a significantly lower or higher fair value measurement. The Company uses market interest rates for loans to determine if the effective yield on a loan is commensurate with the market yields for that type of loan. If a loan’s effective yield is significantly less than the market yield for a similar loan with a similar credit profile, then the resulting fair value of the loan may be lower.

Other Financial Assets and Liabilities

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. As a result, with the exception of the line item titled “debt” which is reported at cost, all assets and liabilities approximate fair value on the consolidated statements of financial condition due to their short maturity. Fair value of the Company’s debt is estimated using Level 3 inputs by discounting remaining payments using comparable market rates or market quotes for similar instruments at the measurement date, if available.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The following are the carrying values and fair values of the Company’s debt as of June 30, 2014 and September 30, 2013. Fair value is estimated using Level 3 inputs by discounting remaining payments using comparable market rates or market quotes for similar instruments at the measurement date, if available.

	As of June 30, 2014				As of September 30, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value

Debt	$	703,300	$	699,920	$	412,100	$	403,619

Note 7.

Borrowings

In accordance with the 1940 Act, with certain limited exceptions, the Company is only allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. On September 13, 2011, the Company received exemptive relief from the SEC allowing it to modify the asset coverage requirement to exclude the SBA debentures from this calculation. As such, the Company’s ratio of total consolidated assets to outstanding indebtedness may be less than 200%. This provides the Company with increased investment flexibility but also increases its risks related to leverage. As of June 30, 2014, the Company’s asset coverage for borrowed amounts was 240.8%.

Debt Securitizations : On July 16, 2010, the Company completed a $300,000 term debt securitization (“2010 Debt Securitization”). The notes (“2010 Notes”) offered in the 2010 Debt Securitization were issued by the 2010 Issuer, a subsidiary of Golub Capital BDC 2010-1 Holdings LLC (“Holdings”), a direct subsidiary of the Company, and the Class A 2010 Notes and Class B 2010 Notes are secured by the assets held by the 2010 Issuer. The 2010 Debt Securitization was executed through a private placement of $174,000 of Aaa/AAA Class A 2010 Notes of the 2010 Issuer which, as amended, bear interest at three-month LIBOR plus 1.74%. The $10,000 face amount of Class B 2010 Notes bears interest at a rate of three-month LIBOR plus 2.40%, and the $116,000 face amount of Subordinated 2010 Notes does not bear interest. In partial consideration for the loans transferred to the 2010 Issuer as part of the 2010 Debt Securitization, Holdings retained all of the Class B and Subordinated 2010 Notes totaling $10,000 and $116,000, respectively, and all of the membership interests in the 2010 Issuer, which Holdings initially purchased for two hundred and fifty dollars. On February 15, 2013, the Company amended the 2010 Debt Securitization to issue an additional $29,000 in Class A 2010 Notes, $2,000 in Class B 2010 Notes and $19,000 in Subordinated 2010 Notes. The additional Class A 2010 Notes of the 2010 Issuer were sold through a private placement and the additional Class B 2010 Notes and additional Subordinated 2010 Notes were retained by Holdings. On November 15, 2013, Holdings sold the $12,000 of Class B 2010 Notes and on November 20, 2013, the transaction closed and proceeds of $11,999 were received. The Class A 2010 Notes are included in the June 30, 2014 and September 30, 2013 consolidated statements of financial condition as debt of the Company. The Class B 2010 Notes are included in the June 30, 2014 consolidated statements of financial condition as debt of the Company and as of September 30, 2013 were eliminated in consolidation. As of June 30, 2014 and September 30, 2013, the Subordinated 2010 Notes were eliminated in consolidation.

Through July 20, 2015, all principal collections received on the underlying collateral may be used by the 2010 Issuer to purchase new collateral under the direction of the Investment Adviser in its capacity as collateral manager of the 2010 Issuer and in accordance with the Company’s investment strategy, allowing the Company to maintain the initial leverage in the 2010 Debt Securitization. The 2010 Notes are scheduled to mature on July 20, 2023. As part of the 2010 Debt Securitization, the Company entered into a master loan sale agreement with Holdings and the 2010 Issuer under which the Company agreed to sell or contribute certain senior secured and second lien loans (or participation interests therein) to Holdings, and Holdings agreed to sell or contribute such loans (or participation interests therein) to the 2010 Issuer and to purchase or otherwise acquire the Subordinated 2010 Notes. The 2010 Notes are the secured obligations of the 2010 Issuer, and an indenture governing the 2010 Notes includes customary covenants and events of default.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

As of June 30, 2014 and September 30, 2013, there were 88 and 91 portfolio companies with a total fair value of $343,200 and $343,166, respectively, securing the 2010 Notes. The pool of loans in the 2010 Debt Securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements.

The interest charged under the 2010 Debt Securitization is based on three-month LIBOR, which as of June 30, 2014 was 0.2%. For the three and nine months ended June 30, 2014 and 2013, the components of interest expense, cash paid for interest, annualized average interest rates and average outstanding balances for the 2010 Debt Securitization were as follows:

	For the three months ended June 30,						For the nine months ended June 30,
	2014			2013			2014			2013
Stated interest expense	$	1,091		$	1,032		$	3,243		$	3,351
Amortization of debt issuance costs		195			141			478			447
Total interest and other debt financing expenses	$	1,286		$	1,173		$	3,721		$	3,798
Cash paid for interest expense	$	1,082		$	1,056		$	3,196		$	3,563
Annualized average stated interest rate		2.0	%		2.0	%		2.0	%		2.4	%
Average outstanding balance	$	215,000		$	203,000		$	212,803		$	188,447

The classes, amounts, ratings and interest rates (expressed as a spread to three-month LIBOR) of the Class A and B 2010 Notes are as follows:

Description	Class A 2010 Notes	Class B 2010 Notes

Type	Senior Secured Floating Rate	Senior Secured Floating Rate
Amount Outstanding	$203,000	$12,000
Moody's Rating	"Aaa"	"Aa"
S&P Rating	"AAA"	"AA"
Interest Rate	LIBOR + 1.74%	LIBOR + 2.40%
Stated Maturity	July 20, 2023	July 20, 2023

On June 5, 2014, the Company completed a $402,569 term debt securitization (“2014 Debt Securitization”). The notes (“2014 Notes”) offered in the 2014 Debt Securitization were issued by the 2014 Issuer, a wholly-owned subsidiary of the Company, and are secured by a diversified portfolio of senior secured and second lien loans held by the 2014 Issuer. The 2014 Debt Securitization was executed through a private placement of $191,000 of Aaa/AAA Class A-1 2014 Notes which bear interest at three-month LIBOR plus 1.75%, $20,000 of Aaa/AAA Class A-2 2014 Notes which bear interest at a rate of three-month LIBOR plus 1.45% through December 4, 2015 and three-month LIBOR plus 1.95% thereafter and $35,000 of Aa2/AA Class B 2014 Notes which bear interest at a rate of three-month LIBOR plus 2.50%. The $37,500 face amount of Class C 2014 Notes bear interest at a rate of three-month LIBOR plus 3.50%, and the LLC equity interests do not bear interest. In partial consideration for the loans transferred to the 2014 Issuer as part of the 2014 Debt Securitization, the Company received $119,069 of LLC equity interests in the 2014 Issuer. The Company retained all of the Class C 2014 Notes and LLC equity interests totaling $37,500 and $119,069, respectively. The Class A-1, Class A-2 and Class B 2014 Notes are included in the June 30, 2014 consolidated statements of financial condition as debt of the Company. As of June 30, 2014, the Class C 2014 Notes and LLC equity interests were eliminated in consolidation.

Through April 28, 2018, all principal collections received on the underlying collateral may be used by the 2014 Issuer to purchase new collateral under the direction of the Investment Adviser in its capacity as collateral manager of the 2014 Issuer and in accordance with the Company’s investment strategy, allowing the Company to maintain the initial leverage in the 2014 Debt Securitization. The 2014 Notes are scheduled to mature on April 25, 2026. As part of the 2014 Debt Securitization, the Company entered into a master loan sale agreement with the 2014 Issuer under which

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

the Company agreed to sell or contribute certain senior secured and second lien loans (or participation interests therein) to the 2014 Issuer and to purchase or otherwise acquire the LLC equity interestsissued by the 2014 Issuer. The 2014 Notes are the secured obligations of the 2014 Issuer, and an indenture governing the 2014 Notes includes customary covenants and events of default.

As of June 30, 2014, there were 64 portfolio companies with a total fair value of $343,040 securing the 2014 Notes. The pool of loans in the 2014 Debt Securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements.

The interest charged under the 2014 Debt Securitization is based on three-month LIBOR, which as of June 30, 2014 was 0.2%. For the three and nine months ended June 30, 2014 and 2013, the components of interest expense, cash paid for interest, annualized average interest rates and average outstanding balances for the 2014 Debt Securitization were as follows:

	For the three months ended June 30,					For the nine months ended June 30,
	2014			2013		2014			2013
Stated interest expense	$	366			N/A	$	366			N/A
Amortization of debt issuance costs		45			N/A		45			N/A
Total interest and other debt financing expenses	$	411			N/A	$	411			N/A
Cash paid for interest expense	$	-			N/A	$	-			N/A
Annualized average stated interest rate		2.1	%		N/A		2.1	%		N/A
Average outstanding balance	$	70,286			N/A	$	23,429			N/A

The classes, amounts, ratings and interest rates (expressed as a spread to three-month LIBOR) of the Class A-1, A-2 and B 2014 Notes are as follows:

Description	Class A-1 2014 Notes	Class A-2 2014 Notes	Class B 2014 Notes

Type	Senior Secured Floating Rate	Senior Secured Floating Rate	Senior Secured Floating Rate
Amount Outstanding	$191,000	$20,000	$35,000
Moody's Rating	"Aaa"	"Aaa"	"Aa2"
S&P Rating	"AAA"	"AAA"	"AA"
Interest Rate	LIBOR + 1.75%	LIBOR + 1.45% ⁽¹⁾	LIBOR + 2.50%
Stated Maturity	April 25, 2026	April 25, 2026	April 25, 2026

(1) The Class A-2 Notes bear interest at three-month LIBOR plus 1.45% through December 4, 2015 and three-month LIBOR plus 1.95% thereafter.

The Investment Adviser serves as collateral manager to the 2010 Issuer and the 2014 Issuer (collectively the “Issuers”) under separate collateral management agreements and receives a fee for providing these services. The total fees payable by the Company under its Investment Advisory Agreement are reduced by an amount equal to the total fees that are paid to the Investment Adviser by each of the Issuers for rendering such collateral management services.

SBA Debentures : On August 24, 2010, GC SBIC IV, L.P. (“SBIC IV”), a wholly-owned subsidiary of the Company, received approval for a license from the SBA to operate as an SBIC. On December 5, 2012, GC SBIC V, L.P. (“SBIC V”), a wholly-owned subsidiary of the Company, received a license from the SBA to operate as an SBIC. SBICs are subject to a variety of regulations and oversight by the SBA concerning the size and nature of the companies in which they may invest as well as the structures of those investments.

The licenses allow the Company’s SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to issuance of a capital commitment by the SBA and customary procedures. These debentures are non-recourse to the

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Company, have interest payable semiannually and a ten-year maturity. The interest rate is fixed at the time of issuance at a market-driven spread over U.S. Treasury Notes with ten-year maturities.

Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management is $225,000 and the maximum amount that may be issued by a single SBIC licensee is $150,000. As of June 30, 2014, SBIC IV and SBIC V had $150,000 and $58,750 of outstanding SBA-guaranteed debentures, respectively, leaving incremental borrowing capacity of $16,250 for SBIC V under present SBIC regulations. As of September 30, 2013, SBIC IV and SBIC V had $146,250 and $33,250, respectively, of outstanding SBA-guaranteed debentures.

SBIC IV and SBIC V may each borrow up to two times the amount of its regulatory capital, subject to customary regulatory requirements. As of June 30, 2014, the Company had committed and funded $75,000 to SBIC IV and SBIC IV had SBA-guaranteed debentures of $150,000 outstanding that mature between March 2021 and March 2024. As of June 30, 2014, the Company had committed and funded $37,500 to SBIC V, and SBIC V had SBA-guaranteed debentures of $58,750 outstanding that mature between September 2023 and September 2024.

The interest rate on $202,350 of outstanding debentures as of June 30, 2014 is fixed at an average annualized interest rate of 3.7%. The annualized interim financing rate on the remaining $6,400 of outstanding debentures was 1.5% as of June 30, 2014. For the three and nine months ended June 30, 2014 and 2013, the components of interest expense, cash paid for interest, annualized average interest rates and average outstanding balances for the SBA debentures were as follows:

	For the three months ended June 30,						For the nine months ended June 30,
	2014			2013			2014			2013
Stated interest expense	$	1,870		$	1,197		$	5,086		$	3,382
Amortization of debt issuance costs		319			181			775			500
Total interest and other debt financing expenses	$	2,189		$	1,378		$	5,861		$	3,882
Cash paid for interest expense	$	-		$	-		$	3,079		$	2,133
Annualized average stated interest rate		3.6	%		3.2	%		3.5	%		3.3	%
Average outstanding balance	$	206,640		$	148,670		$	195,587		$	137,588

Revolving Credit Facility: On July 21, 2011, Funding, a wholly-owned subsidiary of the Company, entered into a senior secured revolving credit facility (as amended, the “Credit Facility”) with Wells Fargo Securities, LLC, as administrative agent, and Wells Fargo Bank, N.A., as lender, which as of June 30, 2014 allowed Funding to borrow up to $150,000 at any one time outstanding, subject to leverage and borrowing base restrictions.

On June 5, 2014, the Company and Funding amended the Credit Facility to, among other things, decrease the size of the Credit Facility from $250,000 to $150,000. The expiration of the reinvestment period of the Credit Facility is October 21, 2014, during which period Funding, subject to certain conditions may make borrowings under the Credit Facility, and the stated maturity date of the Credit Facility is October 22, 2018.

Through the reinvestment period, the Credit Facility bears interest at one-month LIBOR plus 2.25% per annum. After the reinvestment period, the rate will reset to one-month LIBOR plus 2.75% per annum for the remaining term of the Credit Facility. In addition to the stated interest expense on the Credit Facility, the Company is required to pay a non-usage fee rate between 0.50% and 2.00% per annum depending on the size of the unused portion of the Credit Facility.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

The Credit Facility is collateralized by all of the assets held by Funding, and the Company has pledged its interests in Funding as collateral to Wells Fargo Bank, N.A., as the collateral agent, under an ancillary agreement to secure the obligations of the Company as the transferor and servicer under the Credit Facility. Both the Company and Funding have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Borrowing under the Credit Facility is subject to the leverage restrictions contained in the 1940 Act.

The Company plans to transfer certain loans and debt securities it has originated or acquired from time to time to Funding through a purchase and sale agreement and may cause Funding to originate or acquire loans in the future, consistent with the Company’s investment objectives.

As of June 30, 2014 and September 30, 2013, the Company had outstanding debt under the Credit Facility of $33,550 and $29,600, respectively. For the three and nine months ended June 30, 2014, the Company had borrowings on the Credit Facility of $145,850 and $471,300 and repayments on the Credit Facility of $266,300 and $467,350, respectively. For the three and nine months ended June 30, 2013, the Company had borrowings on the Credit Facility of $102,400 and $234,850 and repayments on the Credit Facility of $113,300 and $252,850, respectively. For the three and nine months ended June 30, 2014 and 2013, the components of interest expense, cash paid for interest, annualized average interest rates and average outstanding balances for the Credit Facility were as follows:

	For the three months ended June 30,						For the nine months ended June 30,
	2014			2013			2014			2013
Stated interest expense	$	608		$	323		$	2,241		$	872
Facility fees		196			55			471			205
Amortization of debt issuance costs		551			38			706			497
Total interest and other debt financing expenses	$	1,355		$	416		$	3,418		$	1,574
Cash paid for interest expense	$	1,048		$	429		$	2,720		$	1,079
Annualized average stated interest rate		2.4	%		2.5	%		2.4	%		2.5	%
Average outstanding balance	$	100,232		$	52,178		$	122,710		$	46,625

Revolver: On November 22, 2013, Revolver Funding, a wholly owned subsidiary of the Company, entered into a $15,000 revolving line of credit (“Revolver”), which may be increased up to $30,000, with The PrivateBank and Trust Company (“PrivateBank”) that matures on November 22, 2019. The Revolver bears an interest rate of either one-month, two-month or three-month LIBOR plus 3.50% per annum or PrivateBank’s prime rate plus 1.50% per annum through November 22, 2014 and one-month, two-month or three-month LIBOR plus 2.50% per annum or PrivateBank’s prime rate plus 0.50% per annum for the period subsequent to November 22, 2014. The Revolver is collateralized by all of the assets held by Revolver Funding. Both the Company and Revolver Funding have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Borrowing under the Revolver is subject to the leverage restrictions contained in the 1940 Act. In addition, the Company pays a fee of 0.25% per annum on any unused portion of the Revolver.

As of June 30, 2014 and September 30, 2013, the Company had $0 outstanding debt under the Revolver. For the three and nine months ended June 30, 2014, the Company had borrowings of $0 and $1,300 and repayments of $800 and $1,300 on the Revolver. For the three and nine months ended June 30, 2014 and 2013, the components of interest expense, cash paid for interest, annualized average interest rates and average outstanding balances for the Revolver were as follows:

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

	For the three months ended June 30,					For the nine months ended June 30,
	2014			2013		2014			2013
Stated interest expense	$	2			N/A	$	7			N/A
Facility fees		9			N/A		23			N/A
Amortization of debt issuance costs		16			N/A		22			N/A
Total interest and other debt financing expenses	$	27			N/A	$	52			N/A
Cash paid for interest expense	$	12			N/A	$	29			N/A
Annualized average stated interest rate		4.0	%		N/A		3.8	%		N/A
Average outstanding balance	$	149			N/A	$	247			N/A

The average total debt outstanding (including the debt under the 2010 Debt Securitization, the 2014 Debt Securitization, SBA debentures, Credit Facility and Revolver) for the three and nine months ended June 30, 2014 was $592,307 and $554,775, respectively. The average total debt outstanding (including the debt under the 2010 Debt Securitization, SBA debentures and Credit Facility) for the three and nine months ended June 30, 2013 was $403,848 and $372,660, respectively.

For the three and nine months ended June 30, 2014, the effective annualized average interest rate, which includes amortization of debt financing costs and non-usage facility fees, on the Company’s total debt outstanding (excluding secured borrowings) was 3.6% and 3.2%, respectively. For the three and nine months ended June 30, 2013, the effective annualized average interest rate, which includes amortization of debt financing costs and non-usage facility fees, on the Company’s total debt outstanding (excluding secured borrowings) was 2.9% and 3.3%, respectively.

A summary of the Company’s maturity requirements for borrowings as of June 30, 2014 is as follows:

	Payments Due by Period
			Less Than						More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years

2010 Debt Securitization	$	215,000	$	-	$	-	$	-	$	215,000
2014 Debt Securitization		246,000		-		-		-		246,000
SBA debentures		208,750		-		-		-		208,750
Credit Facility		33,550		-		-		33,550		-
Revolver		-		-		-		-		-
Total borrowings	$	703,300	$	-	$	-	$	33,550	$	669,750

Secured Borrowings: Certain partial loan sales do not qualify for sale accounting under ASC Topic 860 because these sales do not meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment on the consolidated statement of financial condition and the portion sold is recorded as a secured borrowing in the liabilities section of the consolidated statement of financial condition. For these partial loan sales, the interest earned on the entire loan balance is recorded within “interest income” and the interest earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses” in the consolidated statement of operations.

As of June 30, 2014 and September 30, 2013, the Company recognized secured borrowings at fair value of $20,264 and $8,809, respectively, and the fair values of the loans that are associated with these secured borrowings were $44,508 and $27,213, respectively. These secured borrowings were the result of the Company’s completion of partial loan sales of one stop loans associated with two portfolio companies that did not meet the definition of a

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

“participating interest”. As a result, sale treatment was not allowed and these partial loan sales were treated as secured borrowings. During the three and nine months ended June 30, 2014, there were partial loan sales totaling $0 and $10,295, respectively, net funding of revolving and delayed draw secured borrowings totaling $2,139 and $4,092, respectively, and repayments on secured borrowings totaled $97 and $3,075, respectively. For the three and nine months ended June 30, 2014, the effective annualized average interest rate on secured borrowings, which excludes amortization of original issuance costs, was 6.7% and 6.5%, respectively, interest expense was $327 and $709, respectively, and amortization of original issue discount was $14 and $69, respectively. There were no such partial loan sales during the three and nine months ended June 30, 2013.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Note 8.

Commitments and Contingencies

Commitments: The Company had outstanding commitments to fund investments totaling $101,870 and $76,269 under various undrawn revolvers and other credit facilities as of June 30, 2014 and September 30, 2013, respectively.

Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as these involve future claims that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations under these indemnifications to be remote.

Off-balance sheet risk: Off-balance sheet risk refers to an unrecorded potential liability that may result in a future obligation or loss, even though it does not appear on the consolidated statements of financial condition. The Company has entered and, in the future, may again enter into derivative instruments that contain elements of off-balance sheet market and credit risk. Derivative instruments can be affected by market conditions, such as interest rate volatility, which could impact the fair value of the derivative instruments. If market conditions move against the Company, it may not achieve the anticipated benefits of the derivative instruments and may realize a loss. The Company minimizes market risk through monitoring its investments and borrowings.

Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of the contract. The Company has engaged and, in the future, may engage again in derivative transactions with counterparties. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. The Company’s maximum loss that it could incur related to counterparty risk on its derivative instruments is the value of the collateral for that respective derivative instrument. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.

Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company does not believe any disposition will have a material adverse effect on the Company’s consolidated financial statements.

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Note 9.

Financial Highlights

The financial highlights for the Company are as follows:

	Nine months ended June 30,
Per share data ⁽¹⁾ :	2014			2013
Net asset value at beginning of period	$	15.21		$	14.60
Net increase in net assets as a result of public offering		0.18			0.43
Costs related to public offering		-			-
Dividends and distributions declared		(0.96	)		(0.96	)
Net investment income		0.94			0.98
Net realized (loss) gain on investments		(0.11	)		-
Net change in unrealized appreciation (depreciation) on investments		0.18			0.07
Net change in unrealized appreciation (depreciation) on secured borrowings		-			-
Net asset value at end of period	$	15.44		$	15.12

Per share market value at end of period	$	17.70		$	17.50
Total return based on market value ⁽²⁾		7.74	%		16.10	%
Total return based on average net asset value/members' equity *		8.82	%		9.42	%
Shares outstanding at end of period		47,065,030			39,791,805

Ratios/Supplemental Data:

Ratio of total expenses to average net assets/members' equity ^*		7.26	%		7.97	%
Ratio of net investment income to average net assets/members' equity *		8.14	%		8.80	%
Ratio of expenses (without incentive fees) to average net assets/members' equity *		6.03	%		5.87	%
Ratio of incentive fees to average net assets/members' equity ^*		1.23	%		2.10	%

Net assets at end of period	$	726,774		$	601,498
Average debt outstanding	$	554,775		$	372,660
Average debt outstanding per share	$	11.79		$	9.37
Asset coverage ratio ⁽³⁾		240.82	%		349.93	%
Portfolio turnover *		31.96	%		46.52	%

Annualized for a period less than one year.

(1)

Based on actual number of shares outstanding at the end of the corresponding period or the weighted average shares outstanding for the period, unless otherwise noted, as appropriate.

(2)

Total return based on market value assumes dividends are reinvested.

(3)

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

Note 10.

Earnings Per Share

The following information sets forth the computation of the net increase in net assets per share resulting from operations for the three and nine months ended June 30, 2014 and 2013:

	Three months ended June 30,				Nine months ended June 30,
	2014		2013		2014		2013
Earnings available to stockholders	$	16,280	$	12,657	$	45,206	$	34,227
Basic and diluted weighted average shares outstanding		46,985,908		37,118,379		44,673,591		32,511,415
Basic and diluted earnings per share	$	0.35	$	0.34	$	1.01	$	1.05

Note 11.

Dividends and Distributions

The Company’s dividends and distributions are recorded on the record date. The following table summarizes the Company’s dividend declarations and distributions during the nine months ended June 30, 2014 and 2013:

			Amount		Cash		DRIP Shares		DRIP Shares
Date Declared	Record Date	Payment Date	Per Share		Distribution		Issued		Value

Nine months ended June 30, 2014
5/6/2014	6/16/2014	6/27/2014	$	0.32	$	14,356		40,567	$	692
2/4/2014	3/17/2014	3/28/2014	$	0.32	$	13,326		32,033	$	539
11/26/2013	12/17/2013	12/27/2013	$	0.32	$	13,092		42,643	$	758

Nine months ended June 30, 2013
5/1/2013	6/13/2013	6/27/2013	$	0.32	$	12,102		37,293	$	620
2/5/2013	3/14/2013	3/28/2013	$	0.32	$	10,370		26,914	$	423
11/27/2012	12/14/2012	12/28/2012	$	0.32	$	8,804		23,115	$	342

Note 12.

Subsequent Events

On August 5, 2014, the Company’s Board declared a quarterly distribution of $0.32 per share payable on September 26, 2014 to holders of record as of September 16, 2014.

On August 5, 2014, the Company’s Board approved, and the Company entered into, an amendment and restatement of the Investment Advisory Agreement, effective as of June 30, 2014, in which the Capital Gain Incentive Fee Base is reduced by the amount of any unamortized deferred financing costs, if and to the degree that such costs exceed unrealized capital appreciation.

On August 5, 2014, the Company’s Board approved a share repurchase program (the “Program”) which allows the Company to repurchase up to $50,000 of the Company’s outstanding common stock on the open market at prices below the Company’s NAV as reported in its then most recently published consolidated financial statements. The Program may be implemented at the discretion of management. The shares may be purchased from time to time at prevailing market prices, through open market transactions, including block transactions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our interim and unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In this report, “we,” “us,” “our” and “Golub Capital BDC” refer to Golub Capital BDC, Inc. and its consolidated subsidiaries.

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including statements as to:

our future operating results;

our business prospects and the prospects of our portfolio companies;

the effect of investments that we expect to make;

our contractual arrangements and relationships with third parties;

actual and potential conflicts of interest with our investment adviser, GC Advisors, LLC, or GC Advisors, and other affiliates of Golub Capital Incorporated and Golub Capital LLC (formerly Golub Capital Management LLC), collectively, Golub Capital;

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

the ability of our portfolio companies to achieve their objectives;

the use of borrowed money to finance a portion of our investments;

the adequacy of our financing sources and working capital;

the timing of cash flows, if any, from the operations of our portfolio companies;

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

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

our ability to qualify and maintain our qualification as a regulated investment company, or RIC, and as a business development company;

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

the effect of changes to tax legislation and our tax position.

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” ”predict,” “potential,” “plan” or similar words. The forward looking statements contained in this quarterly report on Form 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, including the factors set forth elsewhere in this quarterly report on Form 10-Q and as “Risk Factors” in our annual report on Form 10-K for the year ended September 30, 2013.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission, or the SEC, including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K. This quarterly report on Form 10-Q contains statistics and other data that have been obtained from or compiled from information made available by third-party service providers. We have not independently verified such statistics or data.

Overview

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As a business development company and a RIC, we are also subject to certain constraints, including limitations imposed by the 1940 Act and the Code. We were formed in November 2009 to continue and expand the business of our predecessor, Golub Capital Master Funding LLC which commenced operations in July 2007, in making investments in senior secured, one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans), second lien and subordinated (a loan that ranks senior only to a borrower’s equity securities and ranks junior to all of such borrower’s other indebtedness in priority of payment) loans and warrants and minority equity securities of middle market companies that are, in most cases, sponsored by private equity firms.

Our shares are currently listed on The NASDAQ Global Select Market under the symbol “GBDC”.

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and minority equity investments. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, a leading lender to middle market companies with over $10.0 billion in capital under management as of June 30, 2014, (2) selecting investments within our core middle market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom we have invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital.

Our investment activities are managed by GC Advisors and supervised by our board of directors of which a majority of the members are independent of us.

Under an investment advisory agreement, or the Investment Advisory Agreement, which was most recently reapproved by our board of directors in May 2014, we have agreed to pay GC Advisors an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. Under an administration agreement, or the Administration Agreement, we are provided with certain administrative services by an administrator, or the Administrator, which is currently Golub Capital LLC. Under the Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion (subject to the review and approval of our independent directors) of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement.

We seek to create a diverse portfolio that includes senior secured, one stop, second lien and subordinated loans and warrants and minority equity securities by investing approximately $5.0 to $30.0 million of capital, on average, in the securities of middle market companies. We may also selectively invest more than $30.0 million in some of our portfolio companies and generally expect that the size of our individual investments will vary proportionately with the size of our capital base.

We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities, which may be referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity, which may increase our risk of losing part or all of our investment.

As of June 30, 2014, our portfolio at fair value was comprised of 21.8% senior secured loans, 65.4% one stop loans, 6.6% second lien loans, 0.3% subordinated loans, 3.3% equity and 2.6% of investments in Senior Loan Fund LLC, or SLF. As of September 30, 2013, our portfolio at fair value was comprised of 28.9% senior secured loans, 54.1% one stop loans, 11.0% second lien loans, 2.2% subordinated loans, 3.3% equity and 0.5% of investments in SLF.

As of June 30, 2014 and September 30, 2013, we had debt and equity investments in 146 and 135 portfolio companies, respectively, and investments in subordinated notes and limited liability company, or LLC, equity interests in SLF. For the three and nine months ended June 30, 2014, our income producing assets, which represented nearly 100% of our total portfolio, had a weighted average annualized income yield (which is calculated as income from interest and fees excluding amortization of capitalized fees and discounts divided by the average fair value of earning investments) of 8.3% and 8.3%, respectively, and a weighted average annualized investment income yield (which is calculated as income from interest, fees and amortization of capitalized fees and discounts divided by average fair value of earning investments) of 8.9% and 8.9%, respectively. For the three and nine months ended June 30, 2013, our income producing assets, which represented nearly 100% of our total portfolio, had a weighted average annualized income yield of 9.2% and 9.4%, respectively, and a weighted average annualized investment income yield of 9.9% and 10.5%, respectively.

Revenues: We generate revenue in the form of interest and fee income on debt investments and capital gains and distributions, if any, on portfolio company investments that we originate or acquire. Our debt investments, whether in the form of senior secured, one stop, second lien or subordinated loans, typically have a term of three to seven years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. In some cases, our investments provide for deferred interest payments or payment-in-kind, or PIK, interest. The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans as fee income. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Distributions received from LLC, and limited partnership, or LP, investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment or derivative instrument, without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments and derivative instruments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations.

Partial loan sales: We follow the guidance in Accounting Standards Codification, or ASC, Topic 860 – Transfers and Servicing , or ASC Topic 860, when accounting for loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales, which do not meet the definition of a participating interest, remain on our consolidated statements of assets and liabilities and the proceeds are recorded as a secured borrowing until the definition is met.

Expenses: Our primary operating expenses include the payment of fees to GC Advisors under the Investment Advisory Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described below. Additionally, we pay interest expense on our outstanding debt. We bear all out-of-pocket costs and expenses of our operations and transactions, including:

organizational expenses;

calculating our net asset value (including the cost and expenses of any independent valuation firm);

fees and expenses incurred by GC Advisors payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments, which fees and expenses may include, among other items, due diligence reports, appraisal reports, any studies that may be commissioned by GC Advisors and travel and lodging expenses; interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio acquisition efforts;

offerings of our common stock and other securities;

investment advisory and management fees, including any incentive fees;

administration fees and expenses, if any, payable under the Administration Agreement (including payments under the Administration Agreement between us and the Administrator based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief compliance officer, chief financial officer and their respective staffs);

fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with evaluating and making, investments in portfolio companies, including costs associated with meeting financial sponsors;

transfer agent, dividend agent and custodial fees and expenses;

U.S. federal and state registration and franchise fees;

all costs of registration and listing our shares on any securities exchange;

U.S. federal, state and local taxes;

independent directors’ fees and expenses;

costs of preparing and filing reports or other documents required by the SEC or other regulators;

costs of any reports, proxy statements or other notices to stockholders, including printing costs;

costs associated with individual or group stockholders;

costs associated with compliance under the Sarbanes-Oxley Act of 2002;

our allocable portion of any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;

direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs;

proxy voting expenses; and

all other expenses incurred by us or the Administrator in connection with administering our business.

During periods of asset growth, we expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets and increase during periods of asset declines.

GC Advisors, as collateral manager for Golub Capital BDC 2010-1 LLC, or the 2010 Issuer, under a collateral management agreement, or the 2010 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.35% of the principal balance of the portfolio loans held by the 2010 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. This fee, which is less than the management fee payable under the Investment Advisory Agreement, is paid directly by the 2010 Issuer to GC Advisors and offset against such management fee. Accordingly, the 1.375% management fee paid by us to GC Advisors under the Investment Advisory Agreement on all of our assets, including those indirectly held through the 2010 Issuer, is reduced, on a dollar-for-dollar basis, by an amount equal to such 0.35% fee paid to GC Advisors by the 2010 Issuer. Under the 2010 Collateral Management Agreement, the term ‘‘collection period’’ refers to a quarterly period running from the day after the end of the prior collection period to the fifth business day of the calendar month in which a payment date occurs. This fee may be waived by the collateral manager. The 2010 Collateral Management Agreement does not include any incentive fee payable to GC Advisors. In addition, the 2010 Issuer paid Wells Fargo Securities, LLC a structuring and placement fee for its services in connection with the initial structuring and subsequent amendment of a $350 million term debt securitization, or the 2010 Debt Securitization. The 2010 Issuer also agreed to pay ongoing administrative expenses to the trustee, collateral manager, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with, the administration of the 2010 Debt Securitization. The administrative expenses are paid by the 2010 Issuer on each payment date in two parts: (1) a component that is paid in a priority to other amounts distributed by the 2010 Issuer, subject to a cap equal to the sum of 0.04% per annum on the adjusted principal balance of the portfolio loans and other assets held by the 2010 Securitization Issuer on the last day of the collection period relating to such payment date, plus $150,000 per annum, and (2) a component that is paid in a subordinated position relative to other amounts distributed by the 2010 Issuer, equal to any amounts that exceed the aforementioned administrative expense cap. We believe that these administrative expenses approximate the amount of ongoing fees and expenses that we would be required to pay in connection with a traditional secured credit facility. Our common stockholders indirectly bear all of these expenses.

GC Advisors, as collateral manager for Golub Capital BDC CLO 2014 LLC, or the 2014 Issuer, under a collateral management agreement, or the 2014 Collateral Management Agreement, is entitled to receive an annual fee in an amount equal to 0.25% of the principal balance of the portfolio loans held by the 2014 Issuer at the beginning of the collection period relating to each payment date, which is payable in arrears on each payment date. This fee, which is less than the management fee payable under the Investment Advisory Agreement, is paid directly by the 2014 Issuer to GC Advisors and offset against such management fee. Accordingly, the 1.375% management fee paid by us to GC Advisors under the Investment Advisory Agreement on all of our assets, including those indirectly held through the 2014 Issuer, is reduced, on a dollar-for-dollar basis, by an amount equal to such 0.25% fee paid to GC Advisors by the 2014 Issuer. Under the 2014 Collateral Management Agreement, the term ‘‘collection period’’ refers to a quarterly period running from the day after the end of the prior collection period to the tenth business day prior to the payment date. This fee may be waived by the collateral manager. The 2014 Collateral Management Agreement does not include any incentive fee payable to GC Advisors. In addition, the 2014 Issuer paid Wells Fargo Securities, LLC a structuring and placement fee for its services in connection with the initial structuring of a $403 million term debt securitization, or the 2014 Debt Securitization. The 2014 Issuer also agreed to pay ongoing administrative expenses to the trustee, collateral manager, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with, the administration of the 2014 Debt Securitization. The administrative expenses are paid by the 2014 Issuer on each payment date in two parts: (1) a component that is paid in a priority to other amounts distributed by the 2014 Issuer, subject to a cap equal to the sum of 0.04% per annum on the adjusted principal balance of the portfolio loans and

other assets held by the 2014 Issuer on the last day of the collection period relating to such payment date, plus $150,000 per annum, and (2) a component that is paid in a subordinated position relative to other amounts distributed by the 2014 Issuer, equal to any amounts that exceed the aforementioned administrative expense cap. We believe that these administrative expenses approximate the amount of ongoing fees and expenses that we would be required to pay in connection with a traditional secured credit facility. Our common stockholders indirectly bear all of these expenses.

Recent Developments

On August 5, 2014, our Board declared a quarterly distribution of $0.32 per share payable on September 26, 2014 to holders of record as of September 16, 2014.

On August 5, 2014, our Board approved, and we entered into, an amendment and restatement of the Investment Advisory Agreement, effective as of June 30, 2014, in which the Capital Gain Incentive Fee Base is reduced by the amount of any unamortized deferred financing, if and to the degree that such costs exceed unrealized capital appreciation.

On August 5, 2014, our Board approved a share repurchase program (the “Program”) which allows us to repurchase up to $50.0 million of our outstanding common stock on the open market at prices below our NAV as reported in our then most recently published consolidated financial statements. The Program may be implemented at the discretion of management. The shares may be purchased from time to time at prevailing market prices, through open market transactions, including block transactions.

Consolidated Results of Operations

Consolidated operating results for the three and nine months ended June 30, 2014 and 2013 are as follows:

	For the three months ended June 30,					Variances			For the nine months ended June 30,					Variances
	2014		2013			2014 vs. 2013			2014			2013		2014 vs. 2013
	(In thousands)								(In thousands)

Interest income	$	23,568	$	18,954		$	4,614		$	68,640		$	50,683	$	17,957
Income from accretion of discounts and origination fees		1,873		1,639			234			5,520			6,104		(584	)
Interest income from subordinated notes in SLF		594		-			594			1,331			-		1,331
Dividend income		952		1,081			(129	)		1,230			1,827		(597	)
Fee income		1,042		594			448			2,147			2,343		(196	)

Total investment income		28,029		22,268			5,761			78,868			60,957		17,911

Total expenses		12,956		10,268			2,688			37,183			28,986		8,197

Net investment income		15,073		12,000			3,073			41,685			31,971		9,714

Net realized (losses) gains on investments		1		(77	)		78			(4,906	)		18		(4,924	)
Net change in unrealized appreciation (depreciation) on investments and secured borrowings		1,206		734			472			8,427			2,238		6,189

Net income	$	16,280	$	12,657		$	3,623		$	45,206		$	34,227	$	10,979

Average earning portfolio company investments, at fair value	$	1,223,685	$	866,377		$	357,308		$	1,163,812		$	759,294	$	404,518

Average debt outstanding ⁽¹⁾	$	592,307	$	403,848		$	188,459		$	554,775		$	372,660	$	182,115

(1)

For the three and nine months ending June 30, 2014, we have excluded $20.3 million of secured borrowings, at fair value, which were the result of participations and partial loan sales that did not meet the definition of a "participating interest", as defined in the guidance to ASC Topic 860.

The results of operations for the three and nine months ended June 30, 2014 and 2013 may not be indicative of the results we report in future periods. Net income can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, quarterly comparisons of net income may not be meaningful.

Investment Income

Interest income increased by $4.6 million from the three months ended June 30, 2013 to the three months ended June 30, 2014 and was primarily driven by an increase in the average earning investment balance, which is the annual average balance of accruing loans in our investment portfolio, of $357.3 million. These gains were partially offset by a decline in the weighted average annualized income yield, which declined from 9.2% for the three months ended June 30, 2013 to 8.3% for the three months ended June 30, 2014. The decrease in yield was primarily driven by interest rate compression on new investments.

Interest income increased by $18.0 million from the nine months ended June 30, 2013 to the nine months ended June 30, 2014 and was primarily driven by an increase in the average earning investment balance of $404.5 million. These gains were partially offset by a decline in the weighted average annualized income yield, which declined from 9.4% for the nine months ended June 30, 2013 to 8.3% for the nine months ended June 30, 2014. The decrease in yield was primarily driven by interest rate compression on new investments.

Income from accretion of discounts and amortization of premiums increased by $0.2 million from the three months ended June 30, 2013 to the three months ended June 30, 2014. Income from accretion of discounts and amortization of premiums decreased by $0.6 million from the nine months ended June 30, 2013 to the nine months ended June 30, 2014. Income from the accretion of discounts and the amortization of premiums fluctuates from quarter-to-quarter depending on the volume of payoffs and the discounts and premiums on the loans at the time of payoffs.

For the three and nine months ended June 30, 2014, we recorded dividend income of $1.0 million and $1.2 million, respectively, and received return of capital distributions of $2.1 million and $4.4 million, respectively. For the three and nine months ended June 30, 2013, we recorded dividend income of $1.1 million and $1.8 million, respectively, and received return of capital distributions of zero and $0.7 million, respectively.

Fee income increased by $0.4 million from the three months ended June 30, 2013 to the three months ended June 30, 2014 and was primarily driven by an increase in prepayment fees. Fee income decreased by $0.2 million from the nine months ended June 30, 2013 to the nine months ended June 30, 2014 and was primarily driven by a decrease in amendment and structuring fees.

The annualized income yield by security type for the three and nine months ended June 30, 2014 and 2013 was as follows:

	For the three months ended June 30,						For the nine months ended June 30,
	2014			2013			2014			2013
Senior secured		6.9	%		7.6	%		7.1	%		7.0	%
One stop		8.2	%		8.7	%		8.3	%		9.3	%
Second lien		12.7	%		10.5	%		11.4	%		11.0	%
Subordinated debt		7.5	%		13.7	%		10.8	%		13.5	%
Subordinated notes in SLF ⁽¹⁾		8.3	%		N/A			6.9	%		N/A

⁽¹⁾ SLF's proceeds from the subordinated notes were utilized by SLF to fund senior secured loans.

Annualized income yields on senior secured and one stop investments have declined from the three and nine months ended June 30, 2013 to the three and nine months ended June 30, 2014 due to a general trend of interest rate compression on new investments between the periods. The increase in yield on second lien debt is attributed to the inclusion of $0.7 million and $1.1 million, respectively, of prepayment fees for the three and nine month periods ending June 30, 2014. The decrease in yield on subordinated debt is due to the significant repayments in subordinated debt investments over the past twelve months and the current yield on the two remaining subordinated debt investments as of June 30, 2014 as shown in the Consolidated Schedule of Investments. For additional details on investment yields and asset mix, refer to the “ Liquidity and Capital Resources - Portfolio Composition, Investment Activity and Yield” section below.

Expenses

The following table summarizes our expenses:

	For the three months ended June 30,				Variances			For the nine months ended June 30,				Variances
	2014		2013		2014 vs. 2013			2014		2013		2014 vs. 2013
	(In thousands)							(In thousands)

Interest expense and debt facility fees	$	4,483	$	2,607	$	1,876		$	12,215	$	7,810	$	4,405
Amortization of debt issuance costs		1,126		360		766			2,026		1,444		582
Base management fee		4,394		3,114		1,280			12,403		8,268		4,135
Incentive fee		1,607		2,785		(1,178	)		6,295		7,647		(1,352	)
Professional fees		578		534		44			1,876		1,540		336
Administrative service fee		655		715		(60	)		1,979		1,873		106
General and administrative expenses		113		153		(40	)		389		404		(15	)

Total expenses	$	12,956	$	10,268	$	2,688		$	37,183	$	28,986	$	8,197

Interest expense and debt facility fees increased by $1.9 million from the three months ended June 30, 2013 to the three months ended June 30, 2014 primarily due to an increase in the weighted average of outstanding borrowings from $403.8 million for the three months ended June 30, 2013 to $592.3 million for the three months ended June 30, 2014. The increase in our debt was driven by $246.0 million of notes pursuant to the 2014 Debt Securitization as well as the increase in our use of debt under our Small Business Administration, or SBA, debentures through small business investment companies, or SBICs, which had outstanding balances of $208.8 million outstanding as of June 30, 2014 and $164.0 million as of June 30, 2013. These increases were partially offset by a decrease in our use of debt under the senior secured revolving credit facility, or Credit Facility, entered into by Golub Capital BDC Funding LLC, a wholly-owned subsidiary of ours, with Wells Fargo Securities, LLC as administrative agent and Wells Fargo Bank, N.A. as lender, to $33.5 million as of June 30, 2014 from an outstanding balance of $36.8 million as of June 30, 2013.

Amortization of debt issuance costs increased by $0.8 million from the three months ended June 30, 2013 to the three months ended June 30, 2014 primarily due to additional capitalized debt issuance costs associated with the 2014 Debt Securitization and the acceleration of $0.4 million of capitalized debt issuance costs resulting from the amendment to our Credit Facility to, among other things, decrease the size of the Credit Facility from $250.0 million to $150.0 million. The increase in our effective annualized average interest rate on our outstanding debt from 2.9% for the three months ended June 30, 2013 to 3.6% for the three months ended June 30, 2014 was primarily the result of the increase in amortization of debt issuance costs and the issuance of new SBA debentures at higher interest rates. The interest rates on the SBA debentures are fixed at the time of issuance at a market driven spread over U.S. Treasury Notes with ten-year maturities.

Interest expense and debt facility fees increased by $4.4 million from the nine months ended June 30, 2013 to the nine months ended June 30, 2014 primarily due to an increase in the weighted average of outstanding borrowings from $372.7 million for the nine months ended June 30, 2013 to $554.8 million for the nine months ended June 30, 2014. Amortization of debt issuance costs increased by $0.6 million from the nine months ended June 30, 2013 to the nine months ended June 30, 2014 primarily due to additional capitalized debt issuance costs associated with the 2014 Debt Securitization and the acceleration of $0.4 million of capitalized debt issuance costs resulting from the amendment to our Credit Facility noted above. The increases in interest expense and debt facility fees and amortization of debt issuance costs were partially offset by a decrease in the effective annualized average interest rate on our outstanding debt from 3.3% for the nine months ended June 30, 2013 to 3.2% for the nine months ended June 30, 2014.

The base management fee increased as a result of a sequential increase in average assets from June 30, 2013 to June 30, 2014. The administrative service fee increased during the same period due to an increase in costs associated with servicing a growing investment portfolio.

The incentive fee decreased by $1.2 million and $1.4 million from the three and nine months ended June 30, 2013 to the three and nine months ended June 30, 2014, respectively, as our pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets, declined as the result of yield compression on new investments.

The Administrator pays for certain expenses incurred by us. These expenses are subsequently reimbursed in cash. Total expenses reimbursed by us to the Administrator for the three and nine months ended June 30, 2014 were zero and $0.8 million, respectively. Total expenses reimbursed by us to the Administrator for the three and nine months ended June 30, 2013 were zero and $0.3 million, respectively.

As of June 30, 2014 and September 30, 2013, included in accounts payable and accrued expenses were $0.6 million and $0.3 million, respectively, for accrued expenses paid on behalf of us by the Administrator.

Net Realized and Unrealized Gains and Losses

The following table summarizes our net realized and unrealized gains (losses) for the periods presented:

	For the three months ended June 30,						Variances			For the nine months ended June 30,						Variances
	2014			2013			2014 vs. 2013			2014			2013			2014 vs. 2013
	(In thousands)									(In thousands)

Net realized gain (loss) on investments	$	1		$	(77	)	$	78		$	(4,906	)	$	18		$	(4,924	)

Net realized gain (loss)		1			(77	)		78			(4,906	)		18			(4,924	)

Unrealized appreciation on investments		8,778			4,590			4,188			22,934			12,293			10,641
Unrealized (depreciation) on investments		(7,791	)		(3,856	)		(3,935	)		(14,887	)		(10,055	)		(4,832	)
Unrealized appreciation on investments in SLF ⁽¹⁾		205			-			205			454			-			454
Unrealized (depreciation) on investments in SLF ⁽¹⁾		-			-			-			-			-			-
Unrealized (appreciation) on secured borrowings		-			-			-			(91	)		-			(91	)
Unrealized depreciation on secured borrowings		14			-			14			17			-			17

Net change in unrealized appreciation (depreciation) on investments, investments in SLF and secured borrowings	$	1,206		$	734		$	472		$	8,427		$	2,238		$	6,189

(1) Unrealized appreciation and (depreciation) on investments in SLF include our investments in the subordinated notes and LLC equity interests in SLF.

For the three months ended June 30, 2014, we had a net realized gain of less than $0.1 million primarily due to a post-close syndication of an investment. For the nine months ended June 30, 2014, we had net realized losses on investments totaling $4.9 million primarily due to the sale of one underperforming portfolio company and the write off of two non-accrual portfolio companies.

During the three months ended June 30, 2014, we had $8.8 million in unrealized appreciation on 90 portfolio company investments, which was partially offset by $7.8 million in unrealized depreciation on 118 portfolio company investments. For the nine months ended June 30, 2014, we had $22.9 million in unrealized appreciation on 114 portfolio company investments, which was partially offset by $14.9 million in unrealized depreciation on 122 portfolio company investments. Unrealized appreciation during the three and nine months ended June 30, 2014 resulted from an increase in fair value primarily due to the rise in market prices and a reversal of prior period unrealized depreciation associated with the portfolio company investment sales and write-offs. Unrealized depreciation primarily resulted from the amortization of discounts and negative credit related adjustments that caused a reduction in fair value. Additionally, we had less than $0.1 million in net unrealized depreciation and less than $0.1 million of net unrealized appreciation on secured borrowing proceeds for the three and nine months ended June 30, 2014, respectively. The unrealized appreciation resulted from the amortization of discounts associated with the investments funded by the secured borrowing proceeds.

For the three months ended June 30, 2014, we had $0.2 million in unrealized appreciation on our investment in SLF LLC equity interests. Unrealized appreciation on the SLF LLC equity interests was driven by positive credit related adjustments associated with SLF’s investment portfolio. For the three months ended June 30, 2014, we had no unrealized appreciation or depreciation on our investment in SLF subordinated notes. For the nine months ended June 30, 2014, we had $0.4 million and $0.1 million of unrealized appreciation on our investment in SLF LLC equity

interests and subordinated notes, respectively. Unrealized appreciation on the SLF LLC equity interests was driven by positive credit related adjustments associated with SLF’s investment portfolio, and unrealized appreciation of the SLF subordinated notes was the result of an increase of the contractual coupon rate of the subordinated notes.

During the three months ended June 30, 2013, we had $4.6 million in unrealized appreciation on 42 portfolio company investments, which was partially offset by $3.9 million in unrealized appreciation on 99 portfolio company investments. For the nine months ended June 30, 2013, we had $12.3 million in unrealized appreciation on 77 portfolio company investments, which was partially offset by $10.1 million in unrealized depreciation on 81 portfolio company investments. Unrealized appreciation during the three and nine months ended June 30, 2013 resulted from an increase in fair value primarily due to the rise in market prices and a reversal of prior period unrealized depreciation. Unrealized depreciation during the three and nine months ended June 30, 2013 primarily resulted from the accretion of discounts and negative credit related adjustments that caused a reduction in fair value.

Liquidity and Capital Resources

For the nine months ended June 30, 2014, we experienced a net decrease in cash and cash equivalents of $4.9 million. During the period, we used $254.6 million in operating activities primarily as a result of funding portfolio investments of $580.5 million. This was partially offset by proceeds from principal payments and sales of portfolio investments of $286.8 million and net investment income of $41.7 million. During the same period, cash used in investment activities of $71.4 million was driven by the increase in restricted cash and cash equivalents. Lastly, cash provided by financing activities was $321.0 million, primarily driven by borrowings on debt of $759.9 million and proceeds from shares sold of $64.2 million that were partially offset by repayments of debt of $468.7 million and distributions paid of $40.8 million.

For the nine months ended June 30, 2013, we experienced a net decrease in cash and cash equivalents of $1.0 million. During the same period, we used $257.0 million in operating activities, primarily as a result of fundings of portfolio investments of $554.0 million. This was partially offset by proceeds from principal payments and sales of portfolio investments of $276.5 million and net investment income of $32.0 million. During the same period, cash used in investment activities of $15.3 million was driven by the change in restricted cash and cash equivalents. Lastly, cash provided by financing activities was $240.7 million, primarily due to borrowings on debt of $304.4 million and proceeds from shares sold of $224.1 million, partially offset by repayments of debt of $252.9 million and distributions paid of $31.3 million.

As of June 30, 2014 and September 30, 2013, we had cash and cash equivalents of $11.4 million and $16.3 million, respectively. In addition, we had restricted cash and cash equivalents of $109.8 million and $38.4 million as of June 30, 2014 and September 30, 2013, respectively. Cash and cash equivalents are available to fund new investments, pay operating expenses and pay distributions. As of June 30, 2014, $71.4 million of our restricted cash and cash equivalents could be used to fund new investments that meet the investment guidelines established in each of the 2010 Debt Securitization and the 2014 Debt Securitization, collectively the Debt Securitizations, which are described in further detail in Note 7 to our consolidated financial statements, and for the payment of interest expense on the notes issued in the Debt Securitizations. $29.1 million of such restricted cash and cash equivalents can be used to fund investments that meet the guidelines under the Credit Facility as well as for the payment of interest expense and revolving debt of the Credit Facility. $2.5 million of such restricted cash and cash equivalents can be used to fund investments that meet the guidelines under the $15 million revolving line of credit, or the Revolver, entered into by Golub Capital BDC Revolver Funding, LLC, our wholly-owned subsidiary, with the PrivateBank and Trust Company on November 22, 2013, as well as for the payment of interest expense and revolving debt of the Revolver. The remaining $6.8 million of restricted cash and cash equivalents can be used to fund new investments that meet the regulatory and investment guidelines established by the SBA for our SBICs, which are described in further detail in Note 7 to our consolidated financial statements, and for interest expense and fees on our outstanding SBA debentures.

As of June 30, 2014 and September 30, 2013, we had outstanding commitments to fund investments totaling $101.9 million and $76.3 million, respectively. These amounts may or may not be funded to the borrowing party now or in the future. The unfunded commitments relate to loans with various maturity dates, but the entire amount was eligible for funding to the borrowers as of June 30, 2014 and September 30, 2013, respectively, subject to the terms of each loan’s respective credit agreement.

As of June 30, 2014 and September 30, 2013, subject to leverage and borrowing base restrictions, we had approximately $116.5 million and $70.4 million, respectively, of remaining commitments and $52.2 million and $60.5 million, respectively, of availability on the Credit Facility. As of June 30, 2014, subject to leverage and borrowing base restrictions, we had approximately $15.0 million of remaining commitments and $0.6 million of availability on the Revolver. As of September 30, 2013, the Revolver was not in place.

On November 15, 2013, Golub Capital BDC 2010-1 Holdings LLC, a wholly-owned subsidiary of ours, or Holdings, sold $12.0 million of Class B 2010 Notes of the 2010 Debt Securitization and on November 20, 2013, the transaction closed and proceeds of $12.0 million were received. The Class A 2010 Notes of the 2010 Debt Securitization are included in the June 30, 2014 and September 30, 2013 consolidated statements of financial condition as our debt. The Class B 2010 Notes are included in the June 30, 2014 consolidated statement of financial condition as our debt and at September 30, 2013 were eliminated in consolidation.

On June 5, 2014, we completed the 2014 Debt Securitization. The notes, or the 2014 Notes, offered in the 2014 Debt Securitization were issued by the 2014 Issuer, a wholly-owned subsidiary of ours, and the Class A-1, Class A-2, Class B and Class C 2014 Notes are secured by the assets held by the 2014 Issuer. The 2014 Debt Securitization was executed through a private placement of $191.0 million of Aaa/AAA Class A-1 2014 Notes which bear interest at three-month London Interbank Offered Rate, or LIBOR, plus 1.75%, $20.0 million of Aaa/AAA Class A-2 2014 Notes which bear interest at a rate of three-month LIBOR plus 1.45% through December 5, 2015 and three-month LIBOR plus 1.95% thereafter and $35.0 million of Aa2/AA Class B 2014 Notes which bears interest at a rate of three-month LIBOR plus 2.50%. The $37.5 million face amount of Class C 2014 Notes bear interest at a rate of three-month LIBOR plus 3.50%. In partial consideration for the loans transferred to the 2014 Securitization Issuer as part of the 2014 Debt Securitization, we received $119.1 million of LLC equity interests in the 2014 Securitization Issuer. We retained all of the Class C 2014 Notes and LLC equity interests totaling $37.5 million and $119.1 million, respectively. The Class A-1, Class A-2 and Class B 2014 Notes are included in the June 30, 2014 consolidated statements of financial condition as our debt. As of June 30, 2014, the Class C 2014 Notes and LLC equity interests were eliminated in consolidation.

The Credit Facility, as most recently amended on June 5, 2014, allows Funding to borrow up to $150.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. The reinvestment period of the Credit Facility expires on October 21, 2014, and the stated maturity date of the Credit Facility is October 22, 2018.

Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management is $225.0 million and the maximum amount that a single SBIC licensee may issue is $150.0 million. As of June 30, 2014, GC SBIC IV, L.P., or SBIC IV, and GC SBIC V, L.P., or SBIC V, had $150.0 million and $58.8 million of outstanding SBA-guaranteed debentures, respectively, leaving incremental borrowing capacity of $16.2 million for SBIC V, under present SBIC regulations. As of September 30, 2013, SBIC IV and SBIC V had $146.3 million and $33.2 million, respectively, of outstanding SBA-guaranteed debentures.

SBIC IV and SBIC V may each borrow up to two times the amount of its regulatory capital, subject to customary regulatory requirements. As of June 30, 2014, we had committed and funded $75.0 million to SBIC IV, and SBIC IV had SBA-guaranteed debentures of $150.0 million outstanding that mature between March 2021 and March 2024. As of June 30, 2014, we had committed and funded $37.5 million to SBIC V, and SBIC V had SBA-guaranteed debentures of $58.8 million outstanding that mature between September 2023 and September 2024.

In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. On September 13, 2011, we received exemptive relief from the SEC allowing us to modify the asset coverage requirement to exclude the SBA debentures from this calculation. As such, our ratio of total consolidated assets to outstanding indebtedness may be less than 200%. This provides us with increased investment flexibility but also increases our risks related to leverage. As of June 30, 2014, our asset coverage for borrowed amounts was 240.8% (excluding the SBA debentures).

On March 18, 2014, we priced a public offering of 3,500,000 shares of common stock at a public offering price of $18.05 per share, raising approximately $63.2 million in gross proceeds. On March 21, 2014, the transaction closed, the shares were issued, and proceeds, net of offering costs but before expenses, of $61.3 million were received. On April 23, 2014, we sold an additional 166,855 shares of our common stock at a public offering price of $18.05 per share pursuant to the underwriters’ partial exercise of the option granted in connection with this offering.

Although we expect to fund the growth of our investment portfolio through the net proceeds from future securities offerings and through our dividend reinvestment plan as well as future borrowings, to the extent permitted by the 1940 Act, we cannot assure you that our efforts to raise capital will be successful. In addition to capital not being available, it also may not be available on favorable terms.

We believe that our existing cash and cash equivalents and available borrowings as of June 30, 2014 will be sufficient to fund our anticipated requirements through at least June 30, 2015.

Portfolio Composition, Investment Activity and Yield

As of June 30, 2014 and September 30, 2013, we had investments in 146 and 135 portfolio companies, respectively, with a total value of $1,290.5 million and $1,019.8 million, respectively, and had investments in subordinated notes and LLC equity interests in SLF with a total value of $34.4 million and $4.8 million, respectively. The following table shows the asset mix of our new origination commitments for the three and nine months ended June 30, 2014 and 2013:

	For the three months ended June 30,										For the nine months ended June 30,
	2014					2013					2014					2013
	(In thousands)		Percentage of Commitments			(In thousands)		Percentage of Commitments			(In thousands)		Percentage of Commitments			(In thousands)		Percentage of Commitments

Senior secured	$	29,220		18.5	%	$	57,956		20.1	%	$	89,285		14.2	%	$	136,875		22.5	%
One stop		125,034		78.8			179,599		62.3			474,887		75.6			355,036		58.3
Second lien		-		-			46,432		16.1			20,534		3.3			108,295		17.8
Subordinated notes in SLF ⁽¹⁾		2,610		1.6			-		-			34,658		5.5			-		-
LLC equity interests in SLF ⁽¹⁾		373		0.2			-		-			2,923		0.5			-		-
Equity securities		1,452		0.9			4,457		1.5			5,621		0.9			8,600		1.4

Total new investment commitments	$	158,689		100.0	%	$	288,444		100.0	%	$	627,908		100.0	%	$	608,806		100.0	%

(1) SLF's proceeds from the subordinated notes and LLC interests were utilized by SLF to fund senior secured loans. As of June 30, 2014, SLF funded senior secured loans to 31 different borrowers.

For the three and nine months ended June 30, 2014, we had approximately $77.5 million and $276.8 million, respectively, in proceeds from principal payments and return of capital distributions of portfolio companies. For the three and nine months ended June 30, 2014, we had sales of securities in two and eight portfolio companies aggregating approximately $1.8 million and $9.8 million, respectively, in net proceeds.

For the three and nine months ended June 30, 2013, we had approximately $67.5 million and $234.9 million, respectively, in proceeds from principal payments and return of capital distributions of portfolio companies. For the three and nine months ended June 30, 2013, we had sales of securities in three and ten portfolio companies aggregating approximately $25.2 million and $41.6 million, respectively, in net proceeds.

The following table shows the par, amortized cost and fair value of our portfolio of investments by asset class:

	As of June 30, 2014 ⁽¹⁾						As of September 30, 2013 ⁽¹⁾
			Amortized		Fair				Amortized		Fair
	Par		Cost		Value		Par		Cost		Value
	(In thousands)

Senior secured:
Performing	$	291,128	$	288,052	$	289,175	$	298,989	$	295,180	$	295,493
Non-accrual ⁽²⁾		3,288		3,277		215		2,624		2,628		665

One stop:
Performing		876,141		864,374		866,413		558,140		549,855		554,523
Non-accrual ⁽²⁾		-		-		-		-		-		-

Second lien:
Performing		86,575		85,040		86,784		112,714		111,319		112,873
Non-accrual ⁽²⁾		-		-		-		384		382		-

Subordinated debt:
Performing		3,584		3,563		4,164		21,562		21,374		22,552
Non-accrual ⁽²⁾		-		-		-		3,034		3,001		-

Subordinated notes in SLF: ⁽³⁾
Performing		29,610		29,610		29,610		4,140		4,140		4,066
Non-accrual ⁽²⁾		-		-		-		-		-		-

LLC equity interests in SLF: ⁽³⁾		N/A		4,230		4,787		N/A		591		768

Equity:		N/A		31,560		43,742		N/A		29,491		33,705

Total	$	1,290,326	$	1,309,706	$	1,324,890	$	1,001,587	$	1,017,961	$	1,024,645

(1)

Ten and nine of our loans included a feature permitting a portion of the interest due on such loan to be PIK interest as of June 30, 2014 and September 30, 2013, respectively.

(2)

We refer to a loan as non-accrual when we cease recognizing interest income on the loan because we have stopped pursuing repayment of the loan or, in certain circumstances, it is past due 90 days or more on principal and interest or our management has reasonable doubt that principal or interest will not be collected. See "—Critical Accounting Policies—Revenue Recognition."

(3)

SLF's proceeds from the subordinated notes and LLC equity interests in SLF were utilized by SLF to fund senior secured loans.

The following table shows the weighted average rate, spread over LIBOR of floating rate, fixed rate and fees of investments originated and the weighted average rate of sales and payoffs of portfolio companies during the three and nine months ended June 30, 2014 and 2013:

	For the three months ended June 30,						For the nine months ended June 30,
	2014			2013			2014			2013
Weighted average rate of new investment fundings		7.1	%		8.0	%		7.3	%		8.2	%
Weighted average spread over LIBOR of new floating rate investment fundings		6.0	%		6.6	%		6.2	%		6.7	%
Weighted average rate of new fixed rate investment fundings		N/A			N/A			N/A			16.0	%
Weighted average fees of new investment fundings		1.3	%		1.3	%		1.2	%		1.4	%
Weighted average rate of sales and payoffs of portfolio companies		7.8	%		8.9	%		8.8	%		8.8	%

For the three and nine months ended June 30, 2014, the weighted average annualized income yield on the fair value of income producing loans in our portfolio was 8.3% and 8.3%, respectively. For the three and nine months ended June 30, 2013, the weighted average annualized income yield on the fair value of income producing loans in our portfolio was 9.2% and 9.4%, respectively. As of June 30, 2014, 97.2% and 96.9% of our debt portfolio at fair value and at cost, respectively, had interest rate floors that limit the minimum applicable interest rates on such loans. As of September 30, 2013, 96.1% and 95.6% of our debt portfolio at fair value and at cost, respectively, had interest rate floors that limit the minimum applicable interest rates on such loans.

As of June 30, 2014, the portfolio median earnings before interest, taxes, depreciation and amortization, or EBITDA, for our portfolio companies was $29.8 million. The portfolio median EBITDA is based on the most recently reported trailing twelve-month EBITDA received from the portfolio company. The portfolio median EBITDA excludes underlying borrowers in SLF.

As part of the monitoring process, GC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal system developed by Golub Capital and its affiliates. This system is not generally accepted in our industry or used by our competitors. It is based on the following categories, which we refer to as GC Advisors’ internal performance rating:

Internal Performance Ratings
Rating		Definition

5		Involves the least amount of risk in our portfolio. The borrower is performing above expectations, and the trends and risk factors are generally favorable.

4		Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is generally performing as expected, and the risk factors are neutral to favorable.

3		Involves a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination. The borrower may be out of compliance with debt covenants; however, loan payments are generally not past due.

2		Involves a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 180 days past due).

1		Involves a borrower performing substantially below expectations and indicates that the loan’s risk has substantially increased since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 1 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.

For any investment rated 1, 2 or 3, GC Advisors will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions.

GC Advisors monitors and, when appropriate, changes the internal performance ratings assigned to each investment in our portfolio. In connection with our valuation process, GC Advisors and our board of directors review these internal performance ratings on a quarterly basis.

The following table shows the distribution of our investments on the 1 to 5 internal performance rating scale at fair value as of June 30, 2014 and September 30, 2013:

	As of June 30, 2014					As of September 30, 2013
Internal	Investments		Percentage of			Investments		Percentage of
Performance	at Fair Value		Total			at Fair Value		Total
Rating	(In thousands)		Investments			(In thousands)		Investments
5	$	305,316		23.0	%	$	178,993		17.5	%
4		949,643		71.7			750,611		73.3
3		65,257		4.9			88,458		8.6
2		4,459		0.4			6,521		0.6
1		215		0.0	*		62		0.0	*
Total	$	1,324,890		100.0	%	$	1,024,645		100.0	%

* Represents an amount less than 0.1%.

Senior Loan Fund

Effective May 31, 2013, we entered an agreement to co-invest with United Insurance through SLF, an unconsolidated Delaware LLC whose purpose is to primarily invest in senior secured loans of middle market companies. SLF is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee consisting of representatives of us and United Insurance (with approval from a representative of each required). SLF is capitalized with subordinated notes and LLC equity interest subscriptions from us and United Insurance. As of June 30, 2014, we and United Insurance owned 87.5% and 12.5%, respectively, of both the outstanding subordinated notes and LLC equity interests. As of June 30, 2014, SLF had subordinated note commitments from us and United Insurance totaling $100.0 million, of which approximately $33.8 million and $4.7 million in aggregate principal amount was funded at June 30, 2014 and September 30, 2013, respectively. As of June 30, 2014, SLF had LLC equity interest subscriptions from us and United Insurance totaling $25.0 million, of which approximately $4.8 million and $0.7 million in aggregate was called and contributed at June 30, 2014 and September 30, 2013, respectively.

On January 17, 2014, Senior Loan Fund II LLC, a wholly owned subsidiary of SLF, or SLF II, entered into a senior secured revolving credit facility, or the SLF Credit Facility, with Wells Fargo Securities, LLC, as administrative agent, and Wells Fargo Bank, N.A., as lender, which, as amended, allows SLF II to borrow up to $100.0 million subject to leverage and borrowing base restrictions. The reinvestment period of the SLF Credit Facility ends April 11, 2015, and the stated maturity date is April 11, 2019. As of June 30, 2014, SLF II had outstanding debt under the SLF Credit Facility of $66.4 million.

Through the reinvestment period, the SLF Credit Facility bears interest at one-month LIBOR, plus a rate between 1.75% and 2.25%, depending on the composition of the collateral asset portfolio, per annum. After the reinvestment period, the rate will reset to one-month LIBOR plus 2.75% per annum for the remaining term of the SLF Credit Facility.

As of June 30, 2014 and September 30, 2013, SLF had total assets at fair value of $106.9 million and $13.8 million, respectively. As of June 30, 2014 and September 30, 2013, SLF’s portfolio was comprised of first lien senior secured loans to 31 and four different borrowers, respectively. As of June 30, 2014 and September 30, 2013, none of these loans was on non-accrual status. The portfolio companies in SLF are U.S. middle market companies in industries similar to those in which we may invest directly. Additionally, as of June 30, 2014 and September 30, 2013, SLF had commitments to fund various undrawn revolving credit and delayed draw loans to its portfolio companies totaling $9.9 million and $2.7 million, respectively.

Below is a summary of SLF’s portfolio, followed by a listing of the individual loans in SLF’s portfolio as of June 30, 2014 and September 30, 2013:

	As of June 30, 2014			As of September 30, 2013
	(Dollars in thousands)
Senior secured loans ⁽¹⁾	$	103,860		$	13,677
Weighted average current interest rate on senior secured loans ⁽²⁾		5.2	%		5.9	%
Number of borrowers in SLF		31			4
Largest loan to a single borrower ⁽¹⁾	$	8,250		$	8,313
Total of five largest loans to borrowers ⁽¹⁾	$	31,469		$	13,620

(1)

At principal amount.

(2)

Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at principal amount.

SLF Loan Portfolio as of June 30, 2014

				Current
			Maturity	Interest			Principal/Par		Fair
Portfolio Company	Business Description	Investment Type	Date	Rate (1)			Amount		Value (2)
							(In thousands)
5.11, Inc. ⁽³⁾	Textiles and Leather	Senior Loan	02/2020		6.0	%	$	3,298	$	3,306
ACTIVE Network, Inc.	Electronics	Senior Loan	11/2020		5.5			1,990		1,984
ARG IH Corporation ⁽³⁾	Beverage, Food and Tobacco	Senior Loan	11/2020		5.0			2,156		2,172
Atrium Innovations	Personal and Non Durable Consumer Products	Senior Loan	02/2021		4.3			3,565		3,542
BJ's Wholesale Club, Inc.	Retail Stores	Senior Loan	09/2019		4.5			2,992		3,000
Blue Coat Systems, Inc.	Electronics	Senior Loan	05/2019		4.0			1,995		1,999
BMC Software, Inc.	Electronics	Senior Loan	09/2020		5.0			1,990		1,990
Brasa (Holdings) Inc.	Personal, Food and Miscellaneous Services	Senior Loan	07/2019		5.0			8,250		8,263
Connect Merger Sub, Inc.	Telecommunications	Senior Loan	04/2020		4.8			3,985		4,006
Dell, Inc.	Electronics	Senior Loan	04/2020		4.5			1,990		2,003
Dialysis Newco, Inc.	Healthcare, Education and Childcare	Senior Loan	04/2021		4.8			2,500		2,508
Diversified Foodservice Supply, Inc. ⁽³⁾	Beverage, Food and Tobacco	Senior Loan	12/2018		6.0			4,240		4,240
Diversified Foodservice Supply, Inc. ⁽³⁾	Beverage, Food and Tobacco	Senior Loan	12/2018		7.0			88		88
El Pollo Loco Inc. ⁽³⁾	Personal, Food and Miscellaneous Services	Senior Loan	10/2018		5.3			4,752		4,788
Federal-Mogul Corporation	Automobile	Senior Loan	04/2021		4.8			4,000		4,010
GSDM Holdings Corp. ⁽³⁾	Healthcare, Education and Childcare	Senior Loan	06/2019		5.3			1,804		1,795
Nuveen Investments, Inc.	Finance	Senior Loan	05/2017		4.1			3,000		3,009
Paradigm DKD Group, LLC	Buildings and Real Estate	Senior Loan	11/2018		5.8			2,063		2,063
Paradigm DKD Group, LLC	Buildings and Real Estate	Senior Loan	11/2018		5.8			468		468
Paradigm Management Services, LLC ⁽³⁾	Healthcare, Education and Childcare	Senior Loan	01/2019		5.5			6,279		6,279
Payless ShoeSource, Inc.	Retail Stores	Senior Loan	03/2021		5.0			2,000		2,009
Plano Molding Company, LLC ⁽³⁾	Home and Office Furnishings, Housewares, and Durable Consumer	Senior Loan	10/2018		5.3			1,838		1,838
Print Payroll Services, LLC	Diversified Conglomerate Service	Senior Loan	06/2019		5.5			2,390		2,378
Print Payroll Services, LLC	Diversified Conglomerate Service	Senior Loan	06/2019		3.2			568		565
Print Payroll Services, LLC ⁽⁴⁾	Diversified Conglomerate Service	Senior Loan	06/2019		N/A	⁽⁵⁾		-		(6	)
Rug Doctor LLC ⁽³⁾	Personal and Non Durable Consumer Products	Senior Loan	12/2016		6.3			5,003		5,003
Rug Doctor LLC ⁽³⁾	Personal and Non Durable Consumer Products	Senior Loan	12/2016		6.3			428		428
Scientific Games International, Inc.	Hotels, Motels, Inns, and Gaming	Senior Loan	10/2020		4.3			3,985		3,948
Self Esteem Brands, LLC ⁽³⁾	Leisure, Amusement, Motion Pictures, Entertainment	Senior Loan	02/2020		5.3			6,531		6,490
Self Esteem Brands, LLC ^{(3) (4)}	Leisure, Amusement, Motion Pictures, Entertainment	Senior Loan	02/2020		N/A	⁽⁵⁾		-		(4	)
Smashburger Finance LLC	Beverage, Food and Tobacco	Senior Loan	05/2018		5.5			973		973
Syncsort Incorporated ⁽³⁾	Electronics	Senior Loan	03/2019		5.8			4,978		4,929
Syncsort Incorporated ^{(3) (4)}	Electronics	Senior Loan	03/2019		N/A	⁽⁵⁾		-		(11	)
Syncsort Incorporated ^{(3) (4)}	Electronics	Senior Loan	03/2019		N/A	⁽⁵⁾		-		(3	)
Systems Maintenance Services Holding, Inc. ⁽³⁾	Electronics	Senior Loan	10/2019		5.3			2,446		2,446
Take 5 Oil Change, L.L.C. ⁽³⁾	Automobile	Senior Loan	07/2018		5.8			1,432		1,432
Tectum Holdings, Inc. ⁽³⁾	Automobile	Senior Loan	09/2018		5.3			2,790		2,790
U.S. Water Services, Inc.	Utilities	Senior Loan	08/2018		5.8			3,470		3,470
U.S. Water Services, Inc.	Utilities	Senior Loan	08/2018		6.8			465		465
U.S. Water Services, Inc.	Utilities	Senior Loan	08/2018		5.8			166		166
W3 Co.	Oil and Gas	Senior Loan	03/2020		5.8			2,992		2,951
							$	103,860	$	103,770

(1)

Represents the weighted average annual current interest rate as of June 30, 2014. All interest rates are payable in cash.

(2)

(3)

We also hold a portion of the first lien senior secured loan in this portfolio company.

(4)

The negative fair value is the result of the unfunded commitment being valued below par.

(5)

The entire commitment was unfunded at June 30, 2014. As such, no interest is being earned on this investment.

SLF Loan Portfolio as of September 30, 2013

Current

Portfolio

Investment

Maturity

Interest

Principal/Par

Fair

Company

Business Description

Type

Date

Rate ⁽¹⁾

Amount

Value ⁽²⁾

(In thousands)

Brasa (Holdings) Inc.

Personal, Food and Miscellaneous Services

Senior Loan

07/2019

5.8

8,313

8,365

SoftWriters, Inc.

Diversified Conglomerate Service

Senior Loan

09/2018

6.5

1,578

1,559

SoftWriters, Inc. ⁽³⁾

Diversified Conglomerate Service

Senior Loan

09/2018

N/A

⁽⁴⁾

)

SoftWriters, Inc. ⁽³⁾

Diversified Conglomerate Service

Senior Loan

09/2018

N/A

⁽⁴⁾

)

Take 5 Oil Change, L.L.C. ⁽⁵⁾

Automobile

Senior Loan

07/2018

6.3

1,445

1,434

Take 5 Oil Change, L.L.C. ⁽⁵⁾

Automobile

Senior Loan

07/2018

6.3

U.S. Water Services, Inc.

Utilities

Senior Loan

08/2018

5.5

2,218

2,206

U.S. Water Services, Inc.

Utilities

Senior Loan

08/2018

6.5

U.S. Water Services, Inc. ⁽³⁾

Utilities

Senior Loan

08/2018

N/A

⁽⁴⁾

)

13,677

13,666

(1)

Represents the weighted average annual current interest rate as of September 30, 2013. All interest rates are payable in cash.

(2)

(3)

The negative fair value is the result of the unfunded commitment being valued below par.

(4)

The entire commitment was unfunded at September 30, 2013. As such, no interest is being earned on this investment.

(5)

We also hold a portion of the first lien senior secured loan in this portfolio company.

We have committed to fund $87.5 million of subordinated notes and $21.9 million of LLC equity interest subscriptions to SLF. The amortized cost and fair value of the subordinated notes in SLF held by us were $29.6 million and $29.6 million, respectively, as of June 30, 2014, and $4.1 million and $4.1 million, respectively, as of September 30, 2013. The subordinated notes pay a weighted average interest rate of three-month LIBOR plus 8.0%, which increased from three-month LIBOR plus 4.0% subsequent to closing the SLF Credit Facility. For the three and nine months ended June 30, 2014, we earned interest income of $0.6 million and $1.3 million, respectively, on the subordinated notes. We did not hold any subordinated notes during the three and nine months ended June 30, 2013 as SLF was formed in May 2013 and commenced operations in July 2013. For the three and nine months ended June 30, 2014, we earned an annualized total return on our weighted average capital invested in SLF of 9.6% and 8.0%, respectively. The annualized total return on weighted average capital invested is calculated by dividing total income earned on our investments in SLF subordinated notes and LLC equity interests by the combined daily average of our investments in (1) the principal of the SLF subordinated notes and (2) the net asset value of the SLF LLC equity interests.

Total investments at SLF continue to grow and now exceed $100.0 million as of June 30, 2014. We anticipate faster asset growth at SLF in the coming quarters. Below is certain summarized financial information for SLF as of June 30, 2014 and September 30, 2013 and for the three and nine months ended June 30, 2014 and 2013:

	As of June 30, 2014		As of September 30, 2013
	(In thousands)
Selected Balance Sheet Information, at fair value
Investments in loans receivable, net of discount for loan origination fees	$	103,770	$	13,666
Cash and other assets		3,096		155
Total assets	$	106,866	$	13,821

Senior credit facility	$	66,350	$	-
Payable for open trades		-		8,259
Other liabilities		1,205		37
Total liabilities		67,555		8,296
Subordinated notes and members' equity		39,311		5,525
Total liabilities and net assets	$	106,866	$	13,821

	Three months ended June 30,					Nine months ended June 30,
	2014		2013			2014		2013
	(In thousands)
Selected Statement of Operations Information:
Total revenues	$	1,277		NA	⁽¹⁾	$	2,390		NA	⁽¹⁾
Total expenses	$	1,157		NA	⁽¹⁾	$	2,198		NA	⁽¹⁾
Net change in unrealized appreciation (depreciation) on investments and subordinated notes	$	114		NA	⁽¹⁾	$	241		NA	⁽¹⁾
Net increase in net assets	$	234		NA	⁽¹⁾	$	433		NA	⁽¹⁾

(1)

SLF was formed in May 2013 and commenced operations in July 2013.

SLF has elected to fair value the subordinated notes issued to us and United Insurance under ASC Topic 825 – Financial Instruments . The subordinated notes are valued by calculating the net present value of the future expected cash flow streams using an appropriate risk-adjusted discount rate model. For the three and nine months ended June 30, 2014, SLF recognized zero and $0.1 million in unrealized appreciation, respectively, on the subordinated notes. The following table presents the difference between fair value and the aggregate contractual principal amounts of subordinated notes for which the fair value option has been elected as of June 30, 2014 and September 30, 2013:

	As of June 30, 2014
	(In thousands)
	Par Value		Carrying Value		Fair Value		Unrealized Appreciation / (Depreciation)

Subordinated notes	$	33,840	$	33,840	$	33,840	$	-

	As of September 30, 2013
	(In thousands)
	Par Value		Carrying Value		Fair Value		Unrealized Appreciation / (Depreciation)

Subordinated notes	$	4,731	$	4,731	$	4,646	$	(85	)

Contractual Obligations and Off-Balance Sheet Arrangements

A summary of our significant contractual payment obligations as of June 30, 2014 is as follows:

	Payments Due by Period (In millions)
			Less Than						More Than
	Total		1 Year		1-3 Years		3-5 Years ⁽¹⁾		5 Years ⁽¹⁾

2010 Debt Securitization	$	215.0	$	-	$	-	$	-	$	215.0
2014 Debt Securitization		246.0		-		-		-		246.0
SBA debentures		208.8		-		-		-		208.8
Credit Facility		33.5		-		-		33.5		-
Revolver		-		-		-		-		-
Unfunded commitments ⁽²⁾		101.9		101.9		-		-		-
Total contractual obligations ⁽³⁾	$	805.2	$	101.9	$	-	$	33.5	$	669.8

(1) The notes offered in the 2010 Debt Securitization are scheduled to mature on July 20, 2023, and the notes offered in the 2014 Debt Securitization are scheduled to mature on April 25, 2026. The SBA debentures are scheduled to mature between March 2021 and September 2024. The Credit Facility is scheduled to mature on October 22, 2018. The Revolver is scheduled to mature on November 22, 2019.

(2) Unfunded commitments represent all amounts unfunded as of June 30, 2014. These amounts may or may not be funded to the borrowing party now or in the future. The unfunded commitments relate to loans with various maturity dates, but we are showing this amount in the less than one year category as this entire amount was eligible for funding to the borrowers as of June 30, 2014.

(3) Total contractual obligations exclude $20.3 million of secured borrowings.

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of June 30, 2014 and September 30, 2013, we had outstanding commitments to fund investments totaling $101.9 million and $76.3 million, respectively.

We have certain contracts under which we have material future commitments. We have entered into the Investment Advisory Agreement with GC Advisors in accordance with the 1940 Act. Under the Investment Advisory Agreement, GC Advisors provides us with investment advisory and management services. For these services, we pay (1) a management fee equal to a percentage of the average adjusted value of our gross assets and (2) an incentive fee based on our performance. To the extent that GC Advisors or any of its affiliates provides investment advisory, collateral management or other similar services to a subsidiary of ours, we reduce the base management fee by an amount equal to the product of (1) the total fees paid to GC Advisors by such subsidiary for such services and (2) the percentage of such subsidiary’s total equity that is owned, directly or indirectly, by us.

Under the Administration Agreement, the Administrator furnishes us with office facilities and equipment, provides us clerical, bookkeeping and record keeping services at such facilities and provides us with other administrative services necessary to conduct our day-to-day operations. We reimburse the Administrator for the allocable portion (subject to the review and approval of our board of directors) of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs. The Administrator also provides on our behalf significant managerial assistance to those portfolio companies to which we are required to offer to provide such assistance.

If any of the contractual obligations discussed above is terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties

to provide the services we receive under our Investment Advisory Agreement and our Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.

Distributions

In order to qualify as a RIC and to avoid corporate-level U.S. federal income tax on the income we distribute to our stockholders, we are required under the Code to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis. Additionally, we must meet the annual distribution requirements of the U.S. federal excise tax rules. We intend to make quarterly distributions to our stockholders as determined by our board of directors.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse U.S. federal income tax consequences, including the possible loss of our qualification as a RIC. We cannot assure stockholders that they will receive any distributions.

To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then our stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our dividend reinvestment plan. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes.

Related Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

We entered into an Investment Advisory Agreement with GC Advisors. Mr. Lawrence Golub, our chairman, is a manager of GC Advisors, and Mr. David Golub, our chief executive officer, is a manager of GC Advisors, and each of Messrs. Lawrence Golub and David Golub owns an indirect pecuniary interest in GC Advisors.

Golub Capital LLC provides, and other affiliates of Golub Capital have historically provided, us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement.

We have entered into a license agreement with Golub Capital LLC, pursuant to which Golub Capital LLC has granted us a non-exclusive, royalty-free license to use the name “Golub Capital.”

Under the Staffing Agreement, Golub Capital has agreed to provide GC Advisors with the resources necessary to fulfill its obligations under the Investment Advisory Agreement. The Staffing Agreement provides that Golub Capital will make available to GC Advisors experienced investment professionals and access to the senior investment personnel of Golub Capital for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. The Staffing Agreement also includes a commitment that the members of GC Advisors’ investment committee will serve in such capacity. Services under the Staffing Agreement are provided on a direct cost reimbursement basis.

GC Advisors serves as collateral manager to the 2010 Issuer and the 2014 Issuer under collateral management agreements and receives a fee for providing these services that is offset against the base management fee payable by us under the Investment Advisory Agreement.

In our common stock offerings that closed on October 19, 2012, January 18, 2013 and September 17, 2013, Golub Capital Employee Grant Program Rabbi Trust, a trust organized for the purpose of awarding equity incentive compensation to employees of Golub Capital, purchased an aggregate of $3.0 million of shares, $1.0 million of shares and $1.7 million of shares, respectively, at each respective public offering price per share. In addition, in our common stock offerings that closed on October 19, 2012 and September 17, 2013, Mr. William M. Webster IV, one of our directors, and certain of his family members purchased 10,000 shares and 40,000 shares, respectively, at each respective public offering price per share.

GC Advisors irrevocably waived $0.3 million of the incentive fee payable by us to GC Advisors for the year ended September 30, 2013.

GC Advisors also sponsors or manages, and may in the future sponsor or manage, other investment funds, accounts or investment vehicles (together referred to as “accounts”) that have investment mandates that are similar, in whole and in part, with ours. GC Advisors and its affiliates may determine that an investment is appropriate for us and for one or more of those other accounts. In such event, depending on the availability of such investment and other appropriate factors, and pursuant to GC Advisors’ allocation policy, GC Advisors or its affiliates may determine that we should invest side-by-side with one or more other accounts. We do not intend to make any investments if they are not permitted by applicable law and interpretive positions of the SEC and its staff, or if they are inconsistent with GC Advisors’ allocation procedures.

In addition, we have adopted a formal code of ethics that governs the conduct of our and GC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Delaware General Corporation Law.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. Generally Accepted Accounting Principles, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.

Fair Value Measurements

We value investments for which market quotations are readily available at their market quotations. However, a readily available market value is not expected to exist for many of the investments in our portfolio, and we value these portfolio investments at fair value as determined in good faith by our board of directors under our valuation policy and process. We may seek pricing information with respect to certain of our investments from pricing services or brokers or dealers in order to value such investments. We also employ independent third party valuation firms for all of our investments for which there is not a readily available market value.

Valuation methods may include comparisons of the portfolio companies to peer companies that are public, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, discounted cash flow, the markets in which the portfolio company does business and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from values that may ultimately be received or settled.

Our board of directors is ultimately and solely responsible for determining, in good faith, the fair value of investments that are not publicly traded, whose market prices are not readily available on a quarterly basis or any other situation where portfolio investments require a fair value determination.

With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below:

Our quarterly valuation process begins with each portfolio company investment being initially valued by the investment professionals of GC Advisors responsible for credit monitoring.

Preliminary valuation conclusions are then documented and discussed with our senior management and GC Advisors.

The audit committee of our board of directors reviews these preliminary valuations.

At least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm.

The board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith.

The factors that are taken into account in fair value pricing investments include: available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does business; comparisons of financial ratios of peer companies that are public; comparable merger and acquisition transactions; and the principal market and enterprise values.

Determination of fair values involves subjective judgments and estimates. Under current auditing standards, 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.

We follow ASC Topic 820, Fair Value Measurements and Disclosures , as amended, for measuring fair value. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity. Our fair value analysis includes an analysis of the value of any unfunded loan commitments. Assets and liabilities are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the asset or liability as of the measurement date. The three levels are defined as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the assets or liabilities.

Level 3: Inputs include significant unobservable inputs for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or a liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and we consider factors specific to the asset or liability. We assess the levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and liabilities during the three and nine months ended June 30, 2014 and 2013. The following section describes the valuation techniques used by us to measure different assets and liabilities at fair value and includes the level within the fair value hierarchy in which the assets and liabilities are categorized.

Valuation of Investments

Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observable market data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by our board of directors, based on input of management, the audit committee and independent valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with approximately 25% (based on fair value) of our valuations of debt and equity investments without readily available market quotations subject to review by an independent valuation firm. All investments as of June 30, 2014 and September 30, 2013, with the exception of money market funds included in cash and cash equivalents (Level 1 investments), were valued using Level 3 inputs of the fair value hierarchy.

When determining fair value of Level 3 debt and equity investments and, we may take into account the following factors, where relevant: the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made and other relevant factors. The primary method for determining enterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s EBITDA. The enterprise value analysis is performed to determine the value of equity investments and to determine if debt investments are credit impaired. If debt investments are credit impaired, we will use the enterprise value analysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, we use a market interest rate yield analysis to determine fair value.

In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third party pricing service. Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept. We generally uses the midpoint of the bid/ask range as our best estimate of fair value of such investment.

Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a market existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid than publicly traded instruments. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize significantly less than the value at which such investment had previously been recorded.

Our investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.

Valuation of Secured Borrowings

We have elected the fair value option under ASC Topic 825 — Financial Instruments (“ASC Topic 825”) relating to accounting for debt obligations at their fair value for our secured borrowings which arose due to partial loan sales which did not meet the criteria for sale treatment under ASC Topic 860. All secured borrowings as of June 30, 2014 and September 30, 2013 were valued using Level 3 inputs under the fair value hierarchy, and our approach to determining fair value of Level 3 secured borrowings is consistent with our approach to determining fair value of the Level 3 investments that are associated with these secured borrowings as previously described.

Valuation of Other Financial Assets and Liabilities

Fair value of our debt is estimated using Level 3 inputs by discounting remaining payments using comparable market rates or market quotes for similar instruments at the measurement date, if available.

Revenue Recognition:

Our revenue recognition policies are as follows:

Investments and Related Investment Income: Interest income is accrued based upon the outstanding principal amount and contractual interest terms of debt investments. Premiums, discounts, and origination fees are amortized or accreted into interest income over the life of the respective debt investment. For investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, we do not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not likely to be collectible. In addition, we may generate revenue in the form of amendment, structuring or due diligence fees, fees for providing managerial assistance, consulting fees and prepayment premiums on loans and record these fees as fee income when received. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Distributions received from LLC and LP investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

We account for investment transactions on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. We report changes in fair value of investments from the prior period that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in our consolidated statement of operations.

Non-accrual: Loans may be left on accrual status during the period we are pursuing repayment of the loan. Management reviews all loans that become past due 90 days or more on principal and interest or when there is reasonable doubt that principal or interest will not be collected for possible placement on non-accrual status. We generally reverse accrued interest when a loan is placed on non-accrual. Additionally, any original issued discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. We restore non-accrual loans to accrual status when past due principal and interest is paid and, in our management’s judgment, are likely to remain current. The total fair value of our non-accrual loans was $0.2 million as of June 30, 2014 and $0.7 million as of September 30, 2013.

Partial loan sales: We follow the guidance in ASC Topic 860, when accounting for loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales that do not meet the definition of a participating interest remain on our statements of assets and liabilities and the proceeds are recorded as a secured borrowing until the definition is met. Secured borrowings are carried at fair value to correspond with the related investments, which are carried at fair value.

Income taxes :

We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC, we are required to meet certain source of income and asset diversification requirements, and timely distribute to our stockholders at least 90% of investment company taxable income, as defined by the Code, for each tax year. We have made and intend to continue to make the requisite distributions to our stockholders, which will generally relieve us from U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we may choose to retain taxable income in excess of current year distributions into the next tax year in an amount less than what would trigger payments of federal income tax under Subchapter M of the Code. We would then pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year distributions, we accrue excise tax, if any, on estimated excess taxable income as taxable income is earned.

Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified within capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes when distributed as dividends to our shareholders.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, most significantly changes in interest rates. Many of the loans in our portfolio have floating interest rates, and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate reset provisions that adjust applicable interest rates under such loans to current market rates on a quarterly basis. The loans that are subject to the floating LIBOR rates are also subject to a minimum base rate, or floor, that we charge on our loans if the current market rates are below the respective floors. As of June 30, 2014 and September 30, 2013, the weighted average LIBOR floor on the loans subject to floating interest rates was 1.20% and 1.34%, respectively. In addition, the Class A and B 2010 Notes issued as a part of the 2010 Debt Securitization and the Class A-1, A-2 and B 2014 Notes issued as part of the 2014 Debt Securitization have floating interest rate provisions based on three-month LIBOR that resets quarterly, the Credit Facility has a floating interest rate provision based on one-month LIBOR that resets daily and the Revolver has a floating interest rate provision based on, at the election of Revolver Funding, either one-month, two-month or three-month LIBOR or PrivateBank’s prime rate that resets at contract maturity. As of June 30, 2014 and September 30, 2013, the weighted average LIBOR floor on the secured borrowings, which reset quarterly, was 1.25% and 1.25%, respectively. We expect that other credit facilities into which we enter in the future may have floating interest rate provisions.

Assuming that the interim and unaudited consolidated statement of financial condition as of June 30, 2014 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.

							Net increase
	Increase (decrease) in			Increase (decrease) in			(decrease) in
Change in interest rates	interest income			interest expense			investment income
	(in thousands)
Down 25 basis points	$	(76	)	$	(1,236	)	$	1,160
Up 50 basis points		152			2,473			(2,321	)
Up 100 basis points		1,334			4,947			(3,613	)
Up 200 basis points		13,212			10,091			3,121
Up 300 basis points		25,499			15,239			10,260

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the Debt Securitizations, the Credit Facility, the Revolver or other borrowings, that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as interest rate swaps, futures, options and forward contracts to the limited extent permitted under the 1940 Act and applicable commodities laws. While 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 with respect to the investments in our portfolio with fixed interest rates.

Item 4: Controls and Procedures.

As of the period covered by this report, we, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based on our evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective in timely alerting management, including the chief executive officer and chief financial officer, of material information about us required to be included in our periodic SEC filings. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, are based upon certain assumptions about the likelihood of future events and can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There has not been any change in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II – Other Information

Item 1: Legal Proceedings.

Although we may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise, we are currently not a party to any pending material legal proceedings.

Item 1A: Risk Factors.

None.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3: Defaults Upon Senior Securities.

None.

Item 4: Mine Safety Disclosures.

None.

Item 5: Other Information.

None.

Item 6: Exhibits.

EXHIBIT INDEX

Number		Description

10.1		Twelfth Amendment to Loan and Servicing Agreement, dated June 5, 2014, by and among Golub Capital BDC Funding LLC, as the Borrower; Golub Capital BDC, Inc., as Transferor and Servicer; Wells Fargo Securities, LLC, as the Administrative Agent; the lenders from time to time party thereto; the lender agents from time to time party thereto; and Wells Fargo Bank, N.A., as the Collateral Agent, the Account Bank, and the Collateral Custodian (amending the Loan and Servicing Agreement, dated as of July 21, 2011) (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 6, 2014)

10.2		Purchase Agreement, dated June 5, 2014, by and among Golub Capital BDC, Inc., Golub Capital BDC CLO 2014 LLC and Wells Fargo Securities, LLC (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 6, 2014)

10.3		Loan Sale Agreement, dated June 5, 2014, by and between Golub Capital BDC, Inc. and Golub Capital BDC CLO 2014 LLC (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 6, 2014)

10.4		Indenture, dated June 5, 2014, by and between Golub Capital BDC CLO 2014 LLC and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 6, 2014)

10.5		Collateral Management Agreement, dated June 5, 2014, by and between Golub Capital BDC CLO 2014 LLC and GC Advisors LLC (Incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File No. 814-00794), filed on June 6, 2014)

10.6		Second Amended and Restated Investment Advisory Agreement, dated August 5, 2014, by and between Registrant and GC Advisors LLC*

31.1		Certifications by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certifications by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Golub Capital BDC, Inc.

Dated: August 7, 2014	By	/s/ David B. Golub
		David B. Golub
		Chief Executive Officer
		(Principal Executive Officer)

Dated: August 7, 2014	By	/s/ Ross A. Teune
		Ross A. Teune
		Chief Financial Officer
		(Principal Accounting and Financial Officer)

TABLE OF CONTENTS

Note 1. Organization Note 2. Significant Accounting Policies and Recent Accounting Updates Note 3. Related Party Transactions Note 4. Investments Note 5. Transactions with Affiliated Companies Note 6. Fair Value Measurements Note 7. Borrowings Note 8. Commitments and Contingencies Note 9. Financial Highlights Note 10. Earnings Per Share Note 11. Dividends and Distributions Note 12. Subsequent Events Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4: Controls and Procedures Part II Other Information Item 1: Legal Proceedings Item 1A: Risk Factors Item 2: Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3: Defaults Upon Senior Securities Item 4: Mine Safety Disclosures Item 5: Other Information Item 6: Exhibits

GBDC 10-Q Quarter ended June 30, 2014