GBDC 10-Q Quarterly Report March 31, 2016 | Alphaminr
GOLUB CAPITAL BDC, Inc.
ALPHAMINR

GBDC 10-Q Quarter ended March 31, 2016

Balance Sheet
Cash Flow
Income Statement
Debt
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10-Q 1 v438678_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 March 31, 2016

OR

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 o

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 o No o

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

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 May 5, 2016, the Registrant had 51,511,221 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 March 31, 2016 (unaudited) and September 30, 2015 3
Consolidated Statements of Operations for the three and six months ended March 31, 2016 (unaudited) and 2015 (unaudited) 4
Consolidated Statements of Changes in Net Assets for the three and six months ended March 31, 2016 (unaudited) and 2015 (unaudited) 5
Consolidated Statements of Cash Flows for the six months ended March 31, 2016 (unaudited) and 2015 (unaudited) 6
Consolidated Schedules of Investments as of March 31, 2016 (unaudited) and September 30, 2015 7
Notes to Consolidated Financial Statements (unaudited) 25
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 59
Item 3. Quantitative And Qualitative Disclosures About Market Risk 88
Item 4. Controls and Procedures 89
Part II.  Other Information
Item 1. Legal Proceedings 90
Item 1A. Risk Factors 90
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 90
Item 3. Defaults Upon Senior Securities 90
Item 4. Mine Safety Disclosures 90
Item 5. Other Information 90
Item 6. Exhibits 91

2

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share and per share data)

March 31, 2016 September 30, 2015
(unaudited)
Assets
Investments, at fair value
Non-controlled/non-affiliate company investments $ 1,485,073 $ 1,425,325
Non-controlled affiliate company investments 9,610 5,523
Controlled affiliate company investments 117,019 98,936
Total investments, at fair value (amortized cost of $1,601,440 and $1,517,314, respectively) 1,611,702 1,529,784
Cash and cash equivalents 5,335 5,468
Restricted cash and cash equivalents 36,863 92,016
Interest receivable 6,021 5,700
Receivable from investments sold 4,822 -
Other assets 272 458
Total Assets $ 1,665,015 $ 1,633,426
Liabilities
Debt $ 840,050 $ 813,250
Less unamortized debt issuance costs 6,454 7,624
Debt less unamortized debt issuance costs 833,596 805,626
Secured borrowings, at fair value (proceeds of $330 and $351, respectively) 334 355
Interest payable 3,136 2,722
Management and incentive fees payable 9,590 11,754
Accounts payable and accrued expenses 2,053 2,042
Accrued trustee fees 56 57
Total Liabilities 848,765 822,556
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 March 31, 2016 and September 30, 2015 - -
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 51,511,221 and 51,300,193 shares issued and outstanding as of March 31, 2016 and September 30, 2015, respectively 51 51
Paid in capital in excess of par 794,135 790,713
Undistributed net investment income 3,239 4,230
Net unrealized appreciation (depreciation) on investments and secured borrowings 12,927 15,134
Net realized gain (loss) on investments 5,898 742
Total Net Assets 816,250 810,870
Total Liabilities and Total Net Assets $ 1,665,015 $ 1,633,426
Number of common shares outstanding 51,511,221 51,300,193
Net asset value per common share $ 15.85 $ 15.80

See Notes to Consolidated Financial Statements.

3

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

(In thousands, except share and per share data)

Three months ended March 31, Six months ended March 31,
2016 2015 2016 2015
Investment income
From non-controlled/non-affiliate company investments:
Interest income $ 27,322 $ 26,837 $ 54,889 $ 53,606
Dividend income 51 63 282 81
Fee income 474 595 774 803
Total investment income from non-controlled/non-affiliate company investments 27,847 27,495 55,945 54,490
From non-controlled affiliate company investments:
Interest income 21 - 21 -
Total investment income from non-controlled affiliate company investments 21 - 21 -
From controlled affiliate company investments:
Interest income 1,767 652 3,393 1,202
Dividend income 1,127 314 1,903 314
Total investment income from controlled affiliate company investments 2,894 966 5,296 1,516
Total investment income 30,762 28,461 61,262 56,006
Expenses
Interest and other debt financing expenses 6,833 6,017 13,564 11,711
Base management fee 5,405 4,855 10,719 9,676
Incentive fee 180 2,258 1,951 3,329
Professional fees 700 840 1,431 1,469
Administrative service fee 609 584 1,112 1,191
General and administrative expenses 136 153 285 319
Total expenses 13,863 14,707 29,062 27,695
Net investment income - before excise tax 16,899 13,754 32,200 28,311
Excise tax 31 - 333 -
Net investment income - after excise tax 16,868 13,754 31,867 28,311
Net gain (loss) on investments and secured borrowings
Net realized gain (loss) on investments:
Non-controlled/non-affiliate company investments 178 4,523 2,434 6,249
Non-controlled affiliate company investments - - 2,722 -
Net realized gain (loss) on investments 178 4,523 5,156 6,249
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/non-affiliate company investments 1,118 (1,009 ) 2,949 (2,421 )
Non-controlled affiliate company investments (4,142 ) 344 (2,799 ) 671
Controlled affiliate company investments 155 248 (2,357 ) 222
Net change in unrealized appreciation (depreciation) on investments (2,869 ) (417 ) (2,207 ) (1,528 )
Net change in unrealized depreciation (appreciation) on secured borrowings - 1 - 1
Net gain (loss) on investments and secured borrowings (2,691 ) 4,107 2,949 4,722
Net increase in net assets resulting from operations $ 14,177 $ 17,861 $ 34,816 $ 33,033
Per Common Share Data
Basic and diluted earnings per common share $ 0.28 $ 0.38 $ 0.68 $ 0.70
Dividends and distributions declared per common share $ 0.32 $ 0.32 $ 0.64 $ 0.64
Basic and diluted weighted average common shares outstanding 51,382,676 47,174,501 51,342,514 47,147,555

See Notes to Consolidated Financial Statements.

4

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Changes in Net Assets (unaudited)

(In thousands, except share data)

Net Unrealized
Appreciation
Common Stock Paid in Capital (Depreciation) on
Par in Excess Undistributed Net Investments and Net Realized Gain Total
Shares Amount of Par Investment Income Secured Borrowings (Loss) on Investments Net Assets
Balance at September 30, 2014 47,119,498 $ 47 $ 720,479 $ 3,627 $ 12,694 $ (4,108 ) $ 732,739
Net increase in net assets resulting from operations - - - 28,311 (1,527 ) 6,249 33,033
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan 105,714 - 1,793 - - - 1,793
Distributions from net investment income - - - (30,173 ) - - (30,173 )
Total increase (decrease) for the period ended March 31, 2015 105,714 - 1,793 (1,862 ) (1,527 ) 6,249 4,653
Balance at March 31, 2015 47,225,212 $ 47 $ 722,272 $ 1,765 $ 11,167 $ 2,141 $ 737,392
Balance at September 30, 2015 51,300,193 $ 51 $ 790,713 $ 4,230 $ 15,134 $ 742 $ 810,870
Net increase in net assets resulting from operations - - - 31,867 (2,207 ) 5,156 34,816
Distributions to stockholders:
Stock issued in connection with dividend reinvestment plan 211,028 - 3,422 - - - 3,422
Distributions from net investment income - - - (32,858 ) - - (32,858 )
Total increase (decrease) for the period ended March 31, 2016 211,028 - 3,422 (991 ) (2,207 ) 5,156 5,380
Balance at March 31, 2016 51,511,221 $ 51 $ 794,135 $ 3,239 $ 12,927 $ 5,898 $ 816,250

See Notes to Consolidated Financial Statements.

5

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

Six months ended March 31,
2016 2015
Cash flows from operating activities
Net increase in net assets resulting from operations $ 34,816 $ 33,033
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities:
Amortization of debt issuance costs 2,250 2,135
Accretion of discounts and amortization of premiums (3,686 ) (3,489 )
Net realized (gain) loss on investments (5,156 ) (6,249 )
Net change in unrealized (appreciation) depreciation on investments 2,207 1,528
Net change in unrealized appreciation (depreciation) on secured borrowings - (1 )
Proceeds from (fundings of) revolving loans, net (4,681 ) (4,261 )
Fundings of investments (318,255 ) (290,334 )
Proceeds from principal payments and sales of portfolio investments 247,969 227,939
PIK interest (316 ) (584 )
Changes in operating assets and liabilities:
Interest receivable (321 ) (156 )
Receivable for investments sold (4,822 ) (8,232 )
Other assets 186 52
Interest payable 414 (585 )
Management and incentive fees payable (2,164 ) (1,293 )
Accounts payable and accrued expenses 11 155
Accrued trustee fees (1 ) 2
Net cash (used in) provided by operating activities (51,549 ) (50,340 )
Cash flows from investing activities
Net change in restricted cash and cash equivalents 55,153 20,338
Net cash (used in) provided by investing activities 55,153 20,338
Cash flows from financing activities
Borrowings on debt 161,750 110,100
Repayments of debt (134,950 ) (52,800 )
Capitalized debt issuance costs (1,080 ) (968 )
Repayments on secured borrowings (21 ) (17 )
Dividends and distributions paid (29,436 ) (28,380 )
Net cash (used in) provided by financing activities (3,737 ) 27,935
Net change in cash and cash equivalents (133 ) (2,067 )
Cash and cash equivalents, beginning of period 5,468 5,135
Cash and cash equivalents, end of period $ 5,335 $ 3,068
Supplemental information:
Cash paid during the period for interest $ 10,892 $ 10,152
Dividends and distributions declared during the period 32,858 30,173

See Notes to Consolidated Financial Statements.

6

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Investments
Non-controlled/non-affiliate company investments
Debt investments
Aerospace and Defense
ILC Dover, LP One stop P + 6.00% 9.50 % 03/2019 $ 781 $ 771 0.1 % $ 630
ILC Dover, LP*^ # One stop P + 6.00% 9.50 % 03/2020 17,888 17,729 1.9 15,205
ILC Industries, Inc. (4) One stop L + 6.00% N/A (5) 07/2020 - (20 ) - -
ILC Industries, Inc.*^ # One stop L + 6.00% 7.00 % 07/2020 22,556 22,428 2.8 22,556
Loar Group Inc. # Senior loan L + 4.75% 5.75 % 01/2022 2,244 2,205 0.3 2,233
NTS Technical Systems (4) One stop L + 6.00% N/A (5) 06/2021 - (92 ) - -
NTS Technical Systems*^ # One stop L + 6.00% 7.00 % 06/2021 26,308 25,910 3.2 26,308
NTS Technical Systems (4) One stop L + 6.00% N/A (5) 06/2021 - (43 ) - -
Tresys Technology Holdings, Inc. One stop L + 6.75% 8.00 % 12/2017 349 346 - 349
Tresys Technology Holdings, Inc. (6) One stop L + 6.75% 8.00 % 12/2017 3,899 3,845 0.1 1,170
Whitcraft LLC (4) One stop L + 6.50% N/A (5) 05/2020 - (1 ) - -
Whitcraft LLC*^ One stop L + 6.50% 7.50 % 05/2020 13,572 13,458 1.7 13,572
87,597 86,536 10.1 82,023
Automobile
American Driveline Systems, Inc. Senior loan P + 4.75% 8.25 % 03/2020 25 18 - 16
American Driveline Systems, Inc.* Senior loan L + 5.75% 6.75 % 03/2020 1,807 1,761 0.2 1,717
American Driveline Systems, Inc.^ Senior loan L + 5.75% 6.75 % 03/2020 233 228 - 228
CH Hold Corp. (Caliber Collision)* # Senior loan L + 5.25% 6.25 % 11/2019 5,170 5,127 0.6 5,170
Dent Wizard International Corporation* Senior loan L + 4.75% 5.75 % 04/2020 2,482 2,471 0.3 2,482
Integrated Supply Network, LLC (4) Senior loan L + 5.25% N/A (5) 02/2020 - (8 ) - -
Integrated Supply Network, LLC*^ Senior loan L + 5.25% 6.25 % 02/2020 6,942 6,862 0.9 6,942
K&N Engineering, Inc. (4) Senior loan L + 4.25% N/A (5) 07/2019 - (3 ) - (3 )
K&N Engineering, Inc.^ Senior loan L + 4.25% 5.25 % 07/2019 2,869 2,837 0.4 2,811
K&N Engineering, Inc.^ Senior loan L + 4.25% 5.25 % 07/2019 135 123 - 133
T5 Merger Corporation (4) One stop L + 6.25% N/A (5) 03/2022 - (2 ) - (1 )
T5 Merger Corporation^ One stop L + 6.25% 7.25 % 03/2022 2,400 2,358 0.3 2,376
22,063 21,772 2.7 21,871
Banking
HedgeServ Holding L.P. (4) One stop L + 8.00% N/A (5) 02/2019 - (5 ) - -
HedgeServ Holding L.P.* ^# One stop L + 8.00% 7.00% cash/2.00% PIK 02/2019 17,353 17,258 2.1 17,353
17,353 17,253 2.1 17,353
Beverage, Food and Tobacco
Abita Brewing Co., L.L.C. One stop L + 5.75% 6.75 % 04/2021 8 7 - 8
Abita Brewing Co., L.L.C. One stop L + 5.75% 6.75 % 04/2021 8,033 7,898 1.0 8,033
ABP Corporation Senior loan P + 3.50% 7.25 % 09/2018 209 205 - 209
ABP Corporation* Senior loan L + 4.75% 6.00 % 09/2018 4,721 4,682 0.6 4,721
Atkins Nutritionals, Inc* ^# One stop L + 5.00% 6.25 % 01/2019 16,872 16,726 2.1 16,872
Atkins Nutritionals, Inc*^ One stop L + 8.50% 9.75 % 04/2019 21,636 21,429 2.7 21,636
C. J. Foods, Inc. (4) One stop L + 5.50% N/A (5) 05/2019 - (6 ) - -
C. J. Foods, Inc. One stop L + 5.50% 6.50 % 05/2019 668 660 0.1 668
C. J. Foods, Inc.* One stop L + 5.50% 6.50 % 05/2019 3,176 3,145 0.4 3,176
Candy Intermediate Holdings, Inc. (Ferrara Candy)^ Senior loan L + 6.25% 7.50 % 06/2018 4,813 4,751 0.6 4,825
Firebirds International, LLC (4) One stop L + 5.75% N/A (5) 05/2018 - (1 ) - -
Firebirds International, LLC* One stop L + 5.75% 7.00 % 05/2018 1,079 1,071 0.1 1,079
Firebirds International, LLC* One stop L + 5.75% 7.00 % 05/2018 303 300 - 303
Firebirds International, LLC (4) One stop L + 5.75% N/A (5) 05/2018 - (3 ) - -
First Watch Restaurants, Inc. One stop P + 5.00% 8.50 % 12/2020 1,634 1,625 0.2 1,634
First Watch Restaurants, Inc.* ^# One stop L + 6.00% 7.00 % 12/2020 25,727 25,491 3.1 25,727
First Watch Restaurants, Inc. (4) One stop L + 6.00% N/A (5) 12/2020 - (11 ) - -
First Watch Restaurants, Inc. (4) One stop L + 6.00% N/A (5) 12/2020 - (11 ) - -
First Watch Restaurants, Inc. (4) One stop L + 6.00% N/A (5) 12/2020 - (9 ) - -
Hopdoddy Holdings, LLC One stop L + 8.00% N/A (5) 08/2020 - - - -
Hopdoddy Holdings, LLC One stop L + 8.00% 9.00 % 08/2020 663 651 0.1 663
Hopdoddy Holdings, LLC (4) One stop L + 8.00% N/A (5) 08/2020 - (3 ) - -
IT'SUGAR LLC Subordinated debt N/A 8.00 % 10/2017 1,707 1,707 0.2 1,911
Northern Brewer, LLC One stop P + 5.25% 8.75 % 02/2018 699 692 0.1 647
Northern Brewer, LLC One stop L + 6.50% 8.07 % 02/2018 6,002 5,935 0.7 5,552
Smashburger Finance LLC (4) Senior loan L + 5.50% N/A (5) 05/2018 - (2 ) - -
Smashburger Finance LLC Senior loan L + 5.50% 6.75 % 05/2018 87 87 - 87
Surfside Coffee Company LLC One stop L + 5.25% 6.25 % 06/2020 21 20 - 21
Surfside Coffee Company LLC^ One stop L + 5.25% 6.25 % 06/2020 4,492 4,454 0.5 4,492
Surfside Coffee Company LLC One stop L + 5.25% 6.25 % 06/2020 131 123 - 131
Tate's Bake Shop, Inc. # Senior loan L + 5.00% 6.00 % 08/2019 600 595 0.1 600
The Original Cakerie Ltd. (7)(8) Senior loan L + 5.00% N/A (5) 12/2020 - - - -
The Original Cakerie Ltd. #(7)(8) Senior loan L + 5.00% 6.00 % 12/2020 1,652 1,636 0.2 1,652
Uinta Brewing Company One stop L + 7.00% 8.00 % 08/2019 678 673 0.1 666
Uinta Brewing Company^ One stop L + 7.00% 8.00 % 08/2019 3,195 3,174 0.4 3,147
United Craft Brews LLC One stop L + 6.25% 7.25 % 03/2020 1,084 1,070 0.1 1,084
United Craft Brews LLC One stop L + 6.25% 7.25 % 03/2020 539 526 0.1 539
United Craft Brews LLC One stop L + 6.25% 7.25 % 03/2020 12,097 11,884 1.5 12,097
122,526 121,171 15.0 122,180

See Notes to Consolidated Financial Statements.

7

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Broadcasting and Entertainment
TouchTunes Interactive Networks, Inc.^ Senior loan L + 4.75% 5.75 % 05/2021 1,484 1,478 0.2 1,485
Building and Real Estate
Accruent, LLC* One stop L + 6.25% 7.27 % 11/2019 4,697 4,663 0.6 4,697
Brooks Equipment Company, LLC (4) One stop L + 5.00% N/A (5) 08/2020 - (15 ) - -
Brooks Equipment Company, LLC*^ One stop L + 5.00% 6.00 % 08/2020 23,967 23,706 2.9 23,967
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 637 633 0.1 637
29,301 28,986 3.6 29,301
Cargo Transport
Worldwide Express Operations, LLC*^ Senior loan L + 5.00% 6.00 % 07/2019 4,900 4,851 0.6 4,851
Worldwide Express Operations, LLC (4) Senior loan L + 5.00% N/A (5) 07/2019 - (1 ) - (1 )
4,900 4,850 0.6 4,850
Containers, Packaging and Glass
Fort Dearborn Company*^ Senior loan L + 4.25% 5.25 % 10/2017 538 536 0.1 538
Fort Dearborn Company*^ Senior loan L + 4.75% 5.75 % 10/2018 2,577 2,567 0.3 2,577
Packaging Coordinators, Inc.* Senior loan L + 4.25% 5.25 % 08/2021 2,836 2,814 0.3 2,810
Packaging Coordinators, Inc. Second lien L + 8.00% 9.00 % 08/2022 10,000 9,920 1.2 9,450
15,951 15,837 1.9 15,375
Diversified Conglomerate Manufacturing
Chase Industries, Inc. # One stop L + 5.75% 6.75 % 09/2020 3,376 3,340 0.4 3,376
Chase Industries, Inc. One stop L + 5.75% 6.75 % 09/2020 234 218 - 234
Chase Industries, Inc.* ^# One stop L + 5.75% 6.75 % 09/2020 20,774 20,620 2.6 20,774
Harvey Tool Company, LLC Senior loan L + 5.00% N/A (5) 03/2019 - - - -
Harvey Tool Company, LLC* Senior loan L + 5.00% 6.01 % 03/2020 3,123 3,096 0.4 3,123
Inventus Power, Inc (4) One stop L + 5.50% N/A (5) 04/2020 - (3 ) - (21 )
Inventus Power, Inc*^ One stop L + 5.50% 6.50 % 04/2020 8,547 8,498 1.0 8,205
Onicon Incorporated (4) One stop L + 6.00% N/A (5) 04/2020 - (5 ) - -
Onicon Incorporated *# One stop L + 6.00% 7.07 % 04/2020 9,168 9,103 1.1 9,168
Plex Systems, Inc. (4) One stop L + 7.50% N/A (5) 06/2018 - (26 ) - -
Plex Systems, Inc.*^ One stop L + 7.50% 8.75 % 06/2018 18,797 18,441 2.3 18,797
Sunless Merger Sub, Inc. Senior loan P + 4.00% 7.50 % 07/2016 247 247 - 238
Sunless Merger Sub, Inc. Senior loan L + 5.25% 6.50 % 07/2016 1,534 1,536 0.2 1,380
65,800 65,065 8.0 65,274
Diversified Conglomerate Service
Accellos, Inc. (4) One stop L + 5.75% N/A (5) 07/2020 - (15 ) - -
Accellos, Inc.* ^# One stop L + 5.75% 6.75 % 07/2020 31,960 31,675 3.9 31,960
Actiance, Inc. One stop L + 9.00% N/A (5) 04/2018 - - - -
Actiance, Inc.*^ One stop L + 9.00% 10.00 % 04/2018 2,502 2,427 0.3 2,502
Agility Recovery Solutions Inc. (4) One stop L + 6.50% N/A (5) 03/2020 - (7 ) - (7 )
Agility Recovery Solutions Inc.*^ One stop L + 6.50% 7.50 % 03/2020 14,163 13,998 1.7 14,021
Bomgar Corporation (4) One stop L + 6.00% N/A (5) 09/2020 - (18 ) - -
Bomgar Corporation* One stop L + 6.00% 7.00 % 09/2020 29,491 29,060 3.6 29,491
Daxko, LLC (4) One stop L + 5.75% N/A (5) 03/2020 - (22 ) - -
Daxko, LLC *^# One stop L + 5.75% 6.75 % 03/2020 28,943 28,631 3.5 28,943
DTI Holdco, Inc. # Senior loan L + 5.00% 6.00 % 08/2020 8,302 8,236 1.0 8,302
HealthcareSource HR, Inc. (4) One stop L + 6.75% N/A (5) 05/2020 - (1 ) - -
HealthcareSource HR, Inc. # One stop L + 6.75% 7.75 % 05/2020 17,814 17,462 2.2 17,814
Host Analytics, Inc. (4) One stop N/A N/A (5) 02/2020 - (5 ) - -
Host Analytics, Inc. One stop N/A 8.50% cash/2.25% PIK 02/2020 2,994 2,954 0.4 2,994
Integration Appliance, Inc. (4) One stop L + 8.25% N/A (5) 09/2018 - (10 ) - (9 )
Integration Appliance, Inc. One stop L + 8.25% 9.50 % 09/2020 5,396 5,296 0.6 5,342
Integration Appliance, Inc. One stop L + 8.25% 9.50 % 09/2020 7,913 7,753 1.0 7,834
Integration Appliance, Inc.* One stop L + 8.25% 9.50 % 09/2020 719 708 0.1 712
Integration Appliance, Inc.*^ One stop L + 8.25% 9.50 % 09/2020 16,123 15,969 2.0 15,962
Mediaocean LLC # Senior loan L + 4.75% 5.75 % 08/2022 167 164 - 167
NetSmart Technologies, Inc. One stop P + 4.25% 7.75 % 02/2019 1,045 1,030 0.1 1,045
NetSmart Technologies, Inc.^ # One stop L + 5.25% 6.25 % 02/2019 14,741 14,634 1.8 14,741
Secure-24, LLC (4) One stop L + 6.00% N/A (5) 08/2017 - (2 ) - -
Secure-24, LLC* One stop L + 6.00% 7.25 % 08/2017 9,976 9,891 1.2 9,976
Secure-24, LLC^ One stop L + 6.00% 7.25 % 08/2017 1,459 1,450 0.2 1,459
Severin Acquisition, LLC^ Senior loan L + 5.00% 6.00 % 07/2021 798 791 0.1 798
Severin Acquisition, LLC^ Senior loan L + 5.38% 6.38 % 07/2021 897 888 0.1 911
Source Medical Solutions, Inc. Second lien L + 8.00% 9.00 % 03/2018 9,294 9,211 1.1 8,829
Steelwedge Software, Inc. (5) One stop L + 10.00% N/A (5) 09/2020 - - - -
Steelwedge Software, Inc.^ One stop L + 10.00% 9.00% cash/2.00% PIK 09/2020 2,174 2,087 0.3 2,174
TA MHI Buyer, Inc. (5) One stop L + 6.50% N/A (5) 09/2021 - - - -
TA MHI Buyer, Inc.^ One stop L + 6.50% 7.50 % 09/2021 8,274 8,208 1.0 8,274
TA MHI Buyer, Inc.^ One stop L + 6.50% 7.50 % 09/2021 239 236 - 239
Trintech, Inc. (4) One stop L + 5.75% N/A (5) 10/2021 - (1 ) - -
Trintech, Inc. *# One stop L + 5.75% 6.75 % 10/2021 7,341 7,257 0.9 7,341
Vendavo, Inc. (4) One stop L + 8.50% N/A (5) 10/2019 - (11 ) - -
Vendavo, Inc. One stop L + 8.50% 9.50 % 10/2019 15,501 15,254 1.9 15,501
Vendor Credentialing Service LLC (4) One stop L + 6.00% N/A (5) 11/2021 - (1 ) - -

See Notes to Consolidated Financial Statements.

8

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Vendor Credentialing Service LLC One stop L + 6.00% 7.00 % 11/2021 10,246 9,998 1.3 10,246
Vitalyst, LLC Senior loan P + 4.25% 7.75 % 09/2017 66 65 - 58
Vitalyst, LLC Senior loan L + 5.25% 6.50 % 09/2017 1,481 1,475 0.2 1,437
250,019 246,715 30.5 249,057
Electronics
Appriss Holdings, Inc. Senior loan L + 4.75% 5.75 % 11/2020 902 868 0.1 902
Appriss Holdings, Inc. *# Senior loan L + 4.75% 5.75 % 11/2020 20,842 20,595 2.6 20,842
Compusearch Software Holdings, Inc.^ Senior loan L + 4.50% 5.50 % 05/2021 1,315 1,312 0.2 1,315
ECI Acquisition Holdings, Inc. (4) One stop L + 6.25% N/A (5) 03/2019 - (11 ) - -
ECI Acquisition Holdings, Inc.* ^# One stop L + 6.25% 7.25 % 03/2019 21,779 21,537 2.7 21,779
ECI Acquisition Holdings, Inc. One stop L + 6.25% 7.25 % 03/2019 1,410 1,395 0.2 1,410
Gamma Technologies, LLC (4) One stop L + 5.50% N/A (5) 06/2021 - (1 ) - -
Gamma Technologies, LLC ^# One stop L + 5.50% 6.50 % 06/2021 18,092 17,935 2.2 18,092
Park Place Technologies LLC (4) One stop L + 5.25% N/A (5) 06/2022 - (2 ) - -
Park Place Technologies LLC *# One stop L + 5.25% 6.25 % 06/2022 12,529 12,349 1.5 12,529
Sloan Company, Inc., The One stop L + 6.25% 7.25 % 04/2020 31 30 - 23
Sloan Company, Inc., The # One stop L + 6.25% 7.25 % 04/2020 7,551 7,474 0.8 6,419
Sovos Compliance (4) One stop L + 6.75% N/A (5) 03/2022 - (1 ) - (1 )
Sovos Compliance* One stop L + 6.75% 7.75 % 03/2022 4,930 4,845 0.6 4,856
Sparta Holding Corporation (4) One stop L + 5.50% N/A (5) 07/2020 - (27 ) - -
Sparta Holding Corporation* ^# One stop L + 5.50% 6.50 % 07/2020 22,309 22,107 2.7 22,309
Syncsort Incorporated (4) One stop L + 5.50% N/A (5) 11/2021 - (2 ) - -
Syncsort Incorporated *^# One stop L + 5.50% 6.50 % 11/2021 16,693 16,379 2.0 16,693
Systems Maintenance Services Holding, Inc.^ Senior loan L + 4.00% 5.00 % 10/2019 2,610 2,602 0.3 2,610
Watchfire Enterprises, Inc. Second lien L + 8.00% 9.00 % 10/2021 9,435 9,259 1.2 9,435
140,428 138,643 17.1 139,213
Grocery
MyWebGrocer, Inc. One stop L + 8.75% 10.00 % 05/2018 1,586 1,577 0.2 1,586
MyWebGrocer, Inc.^ One stop L + 8.75% 10.00 % 05/2018 14,271 14,145 1.7 14,271
Teasdale Quality Foods, Inc. # Senior loan L + 4.75% 5.77 % 10/2020 557 552 0.1 566
16,414 16,274 2.0 16,423
Healthcare, Education and Childcare
Active Day, Inc. (4) One stop L + 6.00% N/A (5) 12/2021 - (2 ) - -
Active Day, Inc. One stop L + 6.00% 7.00 % 12/2021 13,606 13,252 1.7 13,606
Active Day, Inc. (4) One stop L + 6.00% N/A (5) 12/2021 - (40 ) - -
Agilitas USA, Inc.^ Senior loan L + 4.00% 5.00 % 10/2020 2,125 2,109 0.3 2,125
Aris Teleradiology Company, LLC Senior loan L + 4.75% N/A (5) 03/2021 - - - -
Aris Teleradiology Company, LLC* Senior loan L + 4.75% 5.75 % 03/2021 946 936 0.1 936
Avalign Technologies, Inc.^ Senior loan L + 4.50% 5.50 % 07/2021 1,136 1,131 0.1 1,136
Avatar International, LLC One stop L + 7.89% 6.19% cash/2.95% PIK 09/2016 658 657 0.1 658
Avatar International, LLC* (6) One stop L + 7.89% 6.19% cash/2.95% PIK 09/2016 7,641 7,615 0.3 2,560
Avatar International, LLC #(6) One stop L + 7.89% 6.19% cash/2.95% PIK 09/2016 1,648 1,644 0.1 552
BIORECLAMATIONIVT, LLC (4) One stop L + 6.25% N/A (5) 01/2021 - (2 ) - -
BIORECLAMATIONIVT, LLC *^# One stop L + 6.25% 7.25 % 01/2021 14,464 14,223 1.8 14,464
California Cryobank, LLC One stop P + 4.25% 7.75 % 08/2019 22 20 - 22
California Cryobank, LLC^ One stop L + 5.50% 6.50 % 08/2019 1,550 1,540 0.2 1,550
California Cryobank, LLC One stop L + 5.50% 6.50 % 08/2019 43 42 - 43
Certara L.P. (4) One stop L + 6.25% N/A (5) 12/2018 - (12 ) - -
Certara L.P. *^# One stop L + 6.25% 7.25 % 12/2018 30,694 30,447 3.8 30,694
CPI Buyer, LLC (Cole-Parmer)*^ Senior loan L + 4.50% 5.50 % 08/2021 7,900 7,658 0.9 7,574
Curo Health Services LLC # Senior loan L + 5.50% 6.50 % 02/2022 1,980 1,963 0.2 1,964
DCA Investment Holding, LLC One stop P + 4.25% 7.75 % 07/2021 372 356 - 359
DCA Investment Holding, LLC *^# One stop L + 5.25% 6.25 % 07/2021 19,063 18,693 2.3 18,872
DCA Investment Holding, LLC *^# One stop L + 5.25% 6.25 % 07/2021 13,672 13,513 1.7 13,536
Deca Dental Management LLC One stop L + 6.25% 7.25 % 07/2020 37 36 - 37
Deca Dental Management LLC One stop L + 6.25% 7.25 % 07/2020 183 173 - 183
Deca Dental Management LLC*^ One stop L + 6.25% 7.25 % 07/2020 4,168 4,114 0.5 4,168
Delta Educational Systems* Senior loan P + 4.75% 8.25 % 12/2016 1,483 1,477 0.2 1,260
Delta Educational Systems (4) Senior loan L + 6.00% N/A (5) 12/2016 - - - (7 )
Dental Holdings Corporation One stop P + 4.25% 7.75 % 02/2020 184 173 - 184
Dental Holdings Corporation One stop L + 5.50% 6.50 % 02/2020 7,638 7,500 0.9 7,638
Dental Holdings Corporation One stop L + 5.50% 6.50 % 02/2020 630 616 0.1 630
Encore GC Acquisition, LLC (4) Senior loan L + 5.25% N/A (5) 01/2020 - (8 ) - (14 )
Encore GC Acquisition, LLC*^ Senior loan L + 5.25% 6.25 % 01/2020 4,796 4,731 0.6 4,701
eSolutions, Inc. (4) One stop L + 6.50% N/A (5) 03/2022 - (1 ) - (1 )
eSolutions, Inc. One stop L + 6.50% 7.50 % 03/2022 13,141 12,849 1.6 13,009
G & H Wire Company, Inc. One stop P + 4.50% 8.00 % 12/2017 250 246 - 250
G & H Wire Company, Inc.*^ One stop L + 5.75% 6.75 % 12/2017 13,224 13,156 1.6 13,224
Joerns Healthcare, LLC* One stop L + 5.00% 6.00 % 05/2020 3,301 3,273 0.4 3,272
Katena Holdings, Inc. (4) One stop L + 6.25% N/A (5) 06/2021 - (1 ) - -
Katena Holdings, Inc.^ One stop L + 6.25% 7.25 % 06/2021 8,743 8,663 1.1 8,743
Katena Holdings, Inc. (4) One stop L + 6.25% N/A (5) 06/2021 - (7 ) - -
Maverick Healthcare Group, LLC* Senior loan L + 9.50% 9.25% cash/2.00% PIK 12/2016 1,922 1,910 0.2 1,922
PPT Management, LLC (4) One stop L + 5.00% N/A (5) 04/2020 - (7 ) - -
PPT Management, LLC One stop L + 5.00% 6.00 % 04/2020 2,457 2,433 0.3 2,457
Premise Health Holding Corp. (4) One stop L + 4.50% N/A (5) 06/2020 - (18 ) - -
Premise Health Holding Corp. # One stop L + 4.50% 5.50 % 06/2020 15,000 14,907 1.8 15,000

See Notes to Consolidated Financial Statements.

9

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Radiology Partners, Inc. (4) One stop L + 5.00% N/A (5) 09/2020 - (6 ) - -
Radiology Partners, Inc.*^ One stop L + 5.00% 6.00 % 09/2020 16,951 16,749 2.1 16,951
Radiology Partners, Inc. One stop L + 5.00% 6.00 % 09/2020 1,919 1,885 0.2 1,919
Reliant Pro ReHab, LLC Senior loan P + 4.00% 7.50 % 06/2017 129 126 - 129
Reliant Pro ReHab, LLC* Senior loan L + 5.00% 6.00 % 06/2017 3,185 3,170 0.4 3,185
Renaissance Pharma (U.S.) Holdings Inc.^ Senior loan L + 4.00% 5.03 % 05/2018 418 414 0.1 418
RXH Buyer Corporation One stop P + 4.75% 8.25 % 09/2021 10 6 - 10
RXH Buyer Corporation (4) One stop L + 5.75% N/A (5) 09/2021 - (51 ) - -
RXH Buyer Corporation*^ One stop L + 5.75% 6.75 % 09/2021 17,524 17,206 2.2 17,524
Sarnova HC, LLC # Senior loan L + 4.75% 5.76 % 01/2022 3,740 3,704 0.5 3,703
Southern Anesthesia and Surgical (4) One stop L + 5.50% N/A (5) 11/2017 - (5 ) - -
Southern Anesthesia and Surgical One stop L + 5.50% 6.50 % 11/2017 5,610 5,558 0.7 5,610
Southern Anesthesia and Surgical^ One stop L + 5.50% 6.50 % 11/2017 2,728 2,708 0.3 2,728
Surgical Information Systems, LLC^ Senior loan L + 3.00% 4.01 % 09/2018 1,879 1,876 0.2 1,879
U.S. Anesthesia Partners, Inc. # One stop L + 5.00% 6.00 % 12/2019 5,927 5,906 0.7 5,927
WIL Research Company, Inc.* Senior loan L + 4.50% 5.75 % 02/2018 752 748 0.1 752
Young Innovations, Inc. *# Senior loan L + 4.25% 5.25 % 01/2019 1,742 1,733 0.2 1,742
Young Innovations, Inc. Senior loan P + 3.25% 6.75 % 01/2018 52 52 - 51
Zest Holdings, LLC # Senior loan L + 4.75% 5.75 % 08/2020 5,309 5,110 0.7 5,309
262,552 258,847 31.3 # 255,144
Home and Office Furnishings,
Housewares, and Durable Consumer
1A Smart Start LLC* Senior loan L + 4.75% 5.75 % 02/2022 2,126 2,107 0.2 2,124
Floor & Decor Outlets of America, Inc.*^ One stop L + 6.50% 7.75 % 05/2019 11,073 11,002 1.4 11,073
Plano Molding Company, LLC *^# One stop L + 6.00% 7.00 % 05/2021 18,024 17,871 2.2 18,024
31,223 30,980 3.8 31,221
Hotels, Motels, Inns, and Gaming
Aimbridge Hospitality, LLC^ Senior loan L + 4.50% 5.75 % 10/2018 827 812 0.1 827
Insurance
Captive Resources Midco, LLC (4) One stop L + 5.75% N/A (5) 06/2020 - (20 ) - -
Captive Resources Midco, LLC (4) One stop L + 5.75% N/A (5) 06/2020 - (18 ) - -
Captive Resources Midco, LLC* ^# One stop L + 5.75% 6.75 % 06/2020 26,261 25,978 3.2 26,261
Higginbotham Insurance Agency, Inc.* Senior loan L + 5.25% 6.25 % 11/2021 1,308 1,295 0.2 1,301
Internet Pipeline, Inc. (4) One stop L + 7.25% N/A (5) 08/2021 - (1 ) - -
Internet Pipeline, Inc. One stop L + 7.25% 8.25 % 08/2022 4,935 4,812 0.6 4,935
32,504 32,046 4.0 32,497
Leisure, Amusement, Motion Pictures and Entertainment
Self Esteem Brands, LLC (4) Senior loan L + 4.00% N/A (5) 02/2020 - (3 ) - -
Self Esteem Brands, LLC^ Senior loan L + 4.00% 5.00 % 02/2020 3,525 3,512 0.4 3,525
Teaching Company, The (4) One stop L + 6.25% N/A (5) 08/2020 - (1 ) - -
Teaching Company, The One stop L + 6.25% 7.25 % 08/2020 19,021 18,771 2.3 19,021
Titan Fitness, LLC (4) One stop L + 6.50% N/A (5) 09/2019 - (15 ) - -
Titan Fitness, LLC (4) One stop L + 6.50% N/A (5) 09/2019 - (42 ) - -
Titan Fitness, LLC One stop P + 5.25% 8.75 % 09/2019 373 357 0.1 373
Titan Fitness, LLC* One stop L + 6.50% 7.75 % 09/2019 13,292 13,112 1.6 13,292
36,211 35,691 4.4 36,211
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc. One stop P + 7.75% 11.25 % 10/2017 152 148 - 20
Benetech, Inc.* One stop L + 9.00% 10.25 % 10/2017 4,561 4,542 0.5 4,013
4,713 4,690 0.5 4,033
Oil and Gas
Drilling Info, Inc. (9) One stop L + 5.00% N/A (5) 06/2018 - - - -
Drilling Info, Inc. (9) One stop L + 5.00% 6.00 % 06/2018 334 332 - 334
Drilling Info, Inc.^ One stop L + 5.00% 6.00 % 06/2018 881 875 0.1 881
Drilling Info, Inc. (4)(9) One stop L + 5.00% N/A (5) 06/2018 - (8 ) - -
1,215 1,199 0.1 1,215
Personal and Non-Durable Consumer Products
Georgica Pine Clothiers, LLC (4) One stop L + 5.50% N/A (5) 11/2021 - (1 ) - -
Georgica Pine Clothiers, LLC One stop L + 5.50% 6.50 % 11/2021 5,765 5,657 0.7 5,765
The Hygenic Corporation (4) Senior loan L + 5.00% N/A (5) 10/2019 - (4 ) - -
The Hygenic Corporation* Senior loan L + 5.00% 6.00 % 10/2020 3,259 3,220 0.4 3,259
Massage Envy, LLC (4) One stop L + 7.25% N/A (5) 09/2018 - (8 ) - -
Massage Envy, LLC* One stop L + 7.25% 8.50 % 09/2018 15,568 15,406 1.9 15,568
Orthotics Holdings, Inc (4)(7) One stop L + 5.00% N/A (5) 02/2020 - (1 ) - (7 )
Orthotics Holdings, Inc *#(7) One stop L + 5.00% 6.00 % 02/2020 1,380 1,366 0.1 1,311
Orthotics Holdings, Inc (4) One stop L + 5.00% N/A (5) 02/2020 - (14 ) - (70 )
Orthotics Holdings, Inc (4) One stop L + 5.00% N/A (5) 02/2020 - (12 ) - (63 )
Orthotics Holdings, Inc *# One stop L + 5.00% 6.00 % 02/2020 8,418 8,335 1.0 7,996
Team Technologies Acquisition Company (4) Senior loan L + 5.00% N/A (5) 12/2017 - (1 ) - (3 )
Team Technologies Acquisition Company^ Senior loan L + 5.00% 6.25 % 12/2017 4,757 4,736 0.6 4,710
Team Technologies Acquisition Company # Senior loan L + 5.50% 6.76 % 12/2017 877 869 0.1 874
40,024 39,548 4.8 39,340

See Notes to Consolidated Financial Statements.

10

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC One stop L + 5.50% N/A (5) 10/2021 - - - -
Community Veterinary Partners, LLC* One stop L + 5.50% 6.50 % 10/2021 2,479 2,456 0.3 2,479
Community Veterinary Partners, LLC One stop L + 5.50% 6.50 % 10/2021 267 267 - 267
Focus Brands Inc.*^ Second lien L + 9.00% 10.25 % 08/2018 11,195 11,133 1.4 11,195
Ignite Restaurant Group, Inc (Joe's Crab Shack)^ One stop L + 7.00% 8.00 % 02/2019 4,775 4,727 0.6 4,775
PetVet Care Centers LLC Senior loan L + 4.75% 5.75 % 12/2019 68 58 - 68
PetVet Care Centers LLC^ Senior loan L + 4.75% 5.75 % 12/2020 1,225 1,207 0.2 1,225
PetVet Care Centers LLC^ Senior loan L + 4.75% 5.75 % 12/2020 5,866 5,773 0.7 5,866
Vetcor Professional Practices LLC (4) One stop L + 6.00% N/A (5) 04/2021 - (4 ) - -
Vetcor Professional Practices LLC* ^# One stop L + 6.00% 7.00 % 04/2021 25,056 24,632 3.1 25,056
Vetcor Professional Practices LLC (4) One stop L + 6.00% N/A (5) 04/2021 - (2 ) - -
Vetcor Professional Practices LLC One stop L + 6.00% 7.00 % 04/2021 971 963 0.1 971
Vetcor Professional Practices LLC (4) One stop L + 6.00% N/A (5) 04/2021 - (49 ) - -
Vetcor Professional Practices LLC One stop L + 6.00% 7.00 % 04/2021 290 287 - 290
Veterinary Specialists of North America, LLC (4) One stop L + 5.00% N/A (5) 11/2020 - (1 ) - -
Veterinary Specialists of North America, LLC (4) One stop L + 5.00% N/A (5) 11/2020 - (9 ) - -
Veterinary Specialists of North America, LLC* One stop L + 5.00% 6.00 % 11/2020 2,709 2,691 0.3 2,709
54,901 54,129 6.7 54,901
Printing and Publishing
Market Track, LLC* One stop L + 7.00% 8.00 % 10/2019 2,186 2,165 0.3 2,186
Market Track, LLC (4) One stop L + 7.00% N/A (5) 10/2019 - (7 ) - -
Market Track, LLC # One stop L + 7.00% 8.00 % 10/2019 2,152 2,135 0.3 2,152
Market Track, LLC One stop L + 7.00% 8.00 % 10/2019 1,774 1,752 0.2 1,774
Market Track, LLC *^# One stop L + 7.00% 8.00 % 10/2019 28,827 28,538 3.5 28,827
34,939 34,583 4.3 34,939
Retail Stores
Benihana, Inc. One stop P + 4.75% 8.25 % 07/2018 325 289 - 304
Benihana, Inc.*^ One stop L + 6.00% 7.25 % 01/2019 15,318 15,055 1.8 15,166
CVS Holdings I, LP (4) One stop L + 6.25% N/A (5) 08/2020 - (4 ) - -
CVS Holdings I, LP *^# One stop L + 6.25% 7.25 % 08/2021 20,472 20,106 2.5 20,472
CVS Holdings I, LP One stop L + 6.25% 7.25 % 08/2021 1,923 1,889 0.2 1,923
Cycle Gear, Inc. One stop P + 5.25% 8.75 % 01/2020 467 447 0.1 450
Cycle Gear, Inc.^ One stop L + 6.50% 7.50 % 01/2020 10,559 10,381 1.3 10,453
Cycle Gear, Inc. (4) One stop L + 6.50% N/A (5) 01/2020 - (9 ) - (6 )
DTLR, Inc.*^ One stop L + 6.50% 7.50 % 10/2020 11,452 11,348 1.4 11,452
Elite Sportswear, L.P. (4) Senior loan L + 5.00% N/A (5) 03/2020 - (6 ) - -
Elite Sportswear, L.P. Senior loan L + 5.00% 6.00 % 03/2020 2,835 2,790 0.3 2,835
Express Oil Change, LLC^ Senior loan L + 5.00% 6.00 % 12/2017 490 486 0.1 490
Marshall Retail Group, LLC, The One stop L + 6.00% 7.00 % 08/2019 702 682 0.1 527
Marshall Retail Group, LLC, The (4) One stop L + 6.00% N/A (5) 08/2020 - (8 ) - (71 )
Marshall Retail Group, LLC, The ^# One stop L + 6.00% 7.00 % 08/2020 12,268 12,156 1.4 11,287
Mills Fleet Farm Group LLC* One stop L + 5.50% 6.50 % 02/2022 5,000 4,848 0.6 4,900
Paper Source, Inc. (4) One stop L + 6.25% N/A (5) 09/2018 - (6 ) - -
Paper Source, Inc. *^# One stop L + 6.25% 7.25 % 09/2018 12,824 12,757 1.6 12,824
RCPSI Corporation (4) One stop L + 5.75% N/A (5) 04/2020 - (3 ) - -
RCPSI Corporation* ^# One stop L + 5.75% 6.75 % 04/2021 22,287 21,913 2.7 22,287
Restaurant Holding Company, LLC # Senior loan L + 7.75% 8.75 % 02/2019 4,818 4,789 0.6 4,722
Rubio's Restaurants, Inc*^ Senior loan L + 4.75% 6.00 % 11/2018 8,964 8,914 1.1 8,874
Sneaker Villa, Inc.*^ One stop L + 7.75% 8.75 % 12/2020 12,530 12,411 1.5 12,530
Specialty Commerce Corp. (4) One stop L + 6.00% N/A (5) 07/2017 - (2 ) - -
Specialty Commerce Corp. One stop L + 6.00% 7.50 % 07/2017 4,073 4,059 0.5 4,073
147,307 145,282 17.8 145,492
Telecommunications
Arise Virtual Solutions, Inc. (4) One stop L + 6.00% N/A (5) 12/2018 - (1 ) - (5 )
Arise Virtual Solutions, Inc.^ One stop L + 6.00% 7.25 % 12/2018 1,471 1,459 0.2 1,382
Hosting.com Inc. Senior loan L + 4.50% 5.99 % 12/2017 85 84 - 85
Hosting.com Inc.* Senior loan L + 4.50% 5.75 % 12/2017 755 750 0.1 755
2,311 2,292 0.3 2,217
Textile and Leather
5.11, Inc.*^ Senior loan L + 5.00% 6.00 % 02/2020 986 982 0.1 986
SHO Holding I Corporation (4) Senior loan L + 4.00% N/A (5) 10/2021 - (1 ) - -
SHO Holding I Corporation* Senior loan L + 5.00% 6.00 % 10/2022 2,073 2,053 0.3 2,063
Southern Tide, LLC One stop L + 6.75% 7.75 % 06/2019 893 887 0.1 893
Southern Tide, LLC^ One stop L + 6.75% 7.75 % 06/2019 4,301 4,273 0.5 4,301
8,253 8,194 1.0 8,243
Utilities
Arcos, LLC One stop L + 6.50% N/A (5) 02/2021 - - - -
Arcos, LLC One stop L + 6.50% 7.50 % 02/2021 4,035 3,956 0.5 3,994
PowerPlan Consultants, Inc. (4) Senior loan L + 5.25% N/A (5) 02/2021 - (6 ) - -
PowerPlan Consultants, Inc. *# Senior loan L + 5.25% 6.25 % 02/2022 6,793 6,695 0.8 6,793
10,828 10,645 1.3 10,787
Total non-controlled/non-affiliate company debt investments $ 1,441,644 $ 1,423,518 174.2 % $ 1,421,472

See Notes to Consolidated Financial Statements.

11

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Equity Investments (10)(11)
Aerospace and Defense
NTS Technical Systems Common stock N/A N/A N/A 2 $ 1,506 0.2 % $ 1,675
Tresys Technology Holdings, Inc. Common stock N/A N/A N/A 295 295 - -
Whitcraft LLC Preferred stock B N/A N/A N/A 1 670 0.2 1,050
Whitcraft LLC Warrant N/A N/A N/A - - - 204
2,471 0.4 2,929
Automobile
K&N Engineering, Inc. Preferred stock A N/A N/A N/A - - - 6
K&N Engineering, Inc. Preferred stock B N/A N/A N/A - - - 6
K&N Engineering, Inc. Common stock N/A N/A N/A - - - 47
- - 59
Beverage, Food and Tobacco
Atkins Nutritionals, Inc. LLC interest N/A N/A N/A 57 746 0.3 2,398
C. J. Foods, Inc. Preferred stock N/A N/A N/A - 157 - 219
First Watch Restaurants, Inc. Common stock N/A N/A N/A 9 964 0.2 1,530
Hopdoddy Holdings, LLC LLC interest N/A N/A N/A 27 130 - 92
Hopdoddy Holdings, LLC LLC interest N/A N/A N/A 12 36 - 20
Julio & Sons Company LLC interest N/A N/A N/A 521 521 0.1 732
Northern Brewer, LLC LLC interest N/A N/A N/A 438 362 - 63
Richelieu Foods, Inc. LP interest N/A N/A N/A 220 220 - 349
Tate's Bake Shop, Inc. LP interest N/A N/A N/A 462 428 0.1 439
Uinta Brewing Company LP interest N/A N/A N/A 462 462 - 61
United Craft Brews LLC LP interest N/A N/A N/A 1 657 0.1 619
4,683 0.8 6,522
Buildings and Real Estate
Brooks Equipment Company, LLC Common stock N/A N/A N/A 10 1,021 0.1 1,008
Chemicals, Plastics and Rubber
Flexan, LLC Preferred stock N/A N/A N/A - 72 - 79
Flexan, LLC Common stock N/A N/A N/A 1 - - 17
72 - 96
Containers, Packaging and Glass
Packaging Coordinators, Inc. (7) Common stock N/A N/A N/A 25 2,065 0.5 3,918
Packaging Coordinators, Inc. Common stock N/A N/A N/A 48 1,563 0.6 4,877
3,628 1.1 8,795
Diversified Conglomerate Manufacturing
Chase Industries, Inc. LLC units N/A N/A N/A 1 1,186 0.2 1,345
Inventus Power, Inc Preferred stock N/A N/A N/A - 370 - 269
Inventus Power, Inc Common stock N/A N/A N/A - - - -
Sunless Merger Sub, Inc. LP interest N/A N/A N/A - 160 - -
1,716 0.2 1,614
Diversified Conglomerate Service
Actiance, Inc. Warrant N/A N/A N/A 344 82 - 84
Agility Recovery Solutions Inc. Preferred stock N/A N/A N/A 67 341 0.1 523
Daxko, LLC LLC units N/A N/A N/A 219 219 0.1 482
DISA Holdings Acquisition Subsidiary Corp. Common stock N/A N/A N/A - 154 - 34
HealthcareSource HR, Inc. LLC interest N/A N/A N/A - 348 - 321
Host Analytics, Inc. Warrant N/A N/A N/A 180 - - 92
Marathon Data Operating Co., LLC LLC units N/A N/A N/A 1 264 - -
Marathon Data Operating Co., LLC LLC units N/A N/A N/A 1 264 0.1 536
Secure-24, LLC LLC units N/A N/A N/A 263 263 - 380
Steelwedge Software, Inc. Warrant N/A N/A N/A 36,575 76 - 84
TA MHI Buyer, Inc. Preferred stock N/A N/A N/A - 202 - 188
Vendavo, Inc. Preferred stock A N/A N/A N/A 827 827 0.1 1,056
Vitalyst, LLC Common stock N/A N/A N/A 1 7 - -
Vitalyst, LLC Preferred stock A N/A N/A N/A - 61 - 37
3,108 0.4 3,817
Electronics
ECI Acquisition Holdings, Inc. Common stock N/A N/A N/A 9 873 0.1 1,038
Gamma Technologies, LLC LLC units N/A N/A N/A 1 134 - 134
SEI, Inc. LLC units N/A N/A N/A 340 340 - 370
Sloan Company, Inc., The LLC units N/A N/A N/A 1 14 - -
Sloan Company, Inc., The LLC units N/A N/A N/A - 122 - -
Sparta Holding Corporation Common stock N/A N/A N/A 1 567 0.1 658
Sparta Holding Corporation Common stock N/A N/A N/A 235 6 - 93
Syncsort Incorporated Preferred stock N/A N/A N/A 90 226 0.1 226
2,282 0.3 2,519
Grocery
MyWebGrocer, Inc. LLC units N/A N/A N/A 1,418 1,446 0.2 2,000
Healthcare, Education and Childcare
Active Day, Inc. LLC interest N/A N/A N/A 1 614 0.1 614
Advanced Pain Management Holdings, Inc. Common stock N/A N/A N/A 67 67 - -
Advanced Pain Management Holdings, Inc. Preferred stock N/A N/A N/A 8 829 0.1 597
Advanced Pain Management Holdings, Inc. Preferred stock N/A N/A N/A 1 64 - 196
Avatar International, LLC LP interest N/A N/A N/A 1 741 - -
BIORECLAMATIONIVT, LLC LLC interest N/A N/A N/A - 365 - 365
California Cryobank, LLC LLC units N/A N/A N/A - 28 - 32
California Cryobank, LLC LLC units N/A N/A N/A - - - 2
Certara L.P. LP interest N/A N/A N/A - 635 0.1 1,070
DCA Investment Holding, LLC LLC units N/A N/A N/A 8,637 864 0.1 864
DCA Investment Holding, LLC LLC units N/A N/A N/A 87 9 - 9
Deca Dental Management LLC LLC units N/A N/A N/A 357 357 - 348

See Notes to Consolidated Financial Statements.

12

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Dental Holdings Corporation LLC units N/A N/A N/A 775 775 0.1 965
Encore GC Acquisition, LLC LLC units N/A N/A N/A 18 182 - 196
Encore GC Acquisition, LLC LLC units N/A N/A N/A 18 - - 38
G & H Wire Company, Inc LP interest N/A N/A N/A 102 102 - 127
Global Healthcare Exchange, LLC Common stock N/A N/A N/A - 5 - 110
Global Healthcare Exchange, LLC Common stock N/A N/A N/A - 481 0.1 572
IntegraMed America, Inc. LLC interest N/A N/A N/A - 417 0.1 565
IntegraMed America, Inc. LLC interest N/A N/A N/A - 458 - 19
Katena Holdings, Inc. LLC units N/A N/A N/A - 387 0.1 416
Northwestern Management Services, LLC LLC units N/A N/A N/A 3 3 - 270
Northwestern Management Services, LLC LLC units N/A N/A N/A - 249 0.1 321
Pentec Acquisition Sub, Inc. Preferred stock N/A N/A N/A 1 116 - 242
Radiology Partners, Inc. LLC units N/A N/A N/A 43 85 - 136
Reliant Pro ReHab, LLC Preferred stock A N/A N/A N/A 2 183 0.1 907
RXH Buyer Corporation LP interest N/A N/A N/A 7 683 0.1 745
Southern Anesthesia and Surgical LLC units N/A N/A N/A 487 487 0.1 585
Spear Education, LLC LLC units N/A N/A N/A - 86 - 98
Spear Education, LLC LLC units N/A N/A N/A 1 1 - 23
SSH Corporation Common stock N/A N/A N/A - 40 - 65
Surgical Information Systems, LLC Common stock N/A N/A N/A 4 414 0.1 531
U.S. Renal Care, Inc. LP interest N/A N/A N/A 1 2,665 0.5 3,571
Young Innovations, Inc. LLC units N/A N/A N/A - 236 0.1 632
12,628 1.9 15,231
Home and Office Furnishings,
Housewares, and Durable Consumer
Top Knobs USA, Inc. Common stock N/A N/A N/A 3 27 - 288
Insurance
Captive Resources Midco, LLC LLC units N/A N/A N/A 1 - - 164
Internet Pipeline, Inc. Common stock N/A N/A N/A 43 1 - 12
Internet Pipeline, Inc. Preferred stock N/A N/A N/A - 98 - 105
99 - 281
Leisure, Amusement, Motion Pictures
and Entertainment
LMP TR Holdings, LLC LLC units N/A N/A N/A 712 712 - 163
Titan Fitness, LLC LLC units N/A N/A N/A 6 583 0.1 763
1,295 0.1 926
Personal and Non-Durable Consumer
Products
C.B. Fleet Company, Incorporated LLC units N/A N/A N/A 2 134 - 230
Georgica Pine Clothiers, LLC LLC interest N/A N/A N/A 11 106 - 106
Hygenic Corporation, The LP interest N/A N/A N/A 1 61 - 128
Massage Envy, LLC LLC interest N/A N/A N/A 749 749 0.1 987
Team Technologies Acquisition Company Common stock N/A N/A N/A - 114 0.1 288
1,164 0.2 1,739
Personal, Food and Miscellaneous Services
Community Veterinary Partners, LLC Common stock N/A N/A N/A 1 114 - 114
R.G. Barry Corporation Preferred stock N/A N/A N/A - 161 0.1 188
Vetcor Professional Practices LLC LLC units N/A N/A N/A 85 85 - 105
Vetcor Professional Practices LLC LLC units N/A N/A N/A 766 766 0.1 824
1,126 0.2 1,231
Printing and Publishing
Brandmuscle, Inc. LLC interest N/A N/A N/A - 240 - 240
Market Track, LLC Preferred stock N/A N/A N/A - 145 - 205
Market Track, LLC Common stock N/A N/A N/A 1 145 0.1 276
530 0.1 721
Retail Stores
Barcelona Restaurants, LLC LP interest N/A N/A N/A 1,996 - 0.6 5,208
Benihana, Inc. LLC units N/A N/A N/A 43 699 0.1 498
Cycle Gear, Inc. LLC interest N/A N/A N/A 19 248 - 248
DentMall MSO, LLC LLC units N/A N/A N/A 2 - - -
DentMall MSO, LLC LLC units N/A N/A N/A 2 97 - 20
Elite Sportswear, L.P. LLC interest N/A N/A N/A - 73 - 91
Express Oil Change, LLC LLC interest N/A N/A N/A 81 81 - 187
Marshall Retail Group LLC, The LLC units N/A N/A N/A 15 154 - 47
Paper Source, Inc. Common stock N/A N/A N/A 8 1,387 0.2 1,567
RCP PetPeople LP LP interest N/A N/A N/A 889 889 0.2 1,476
RCPSI Corporation LLC interest N/A N/A N/A 455 455 0.1 465
Rubio's Restaurants, Inc. Preferred stock A N/A N/A N/A 2 945 0.3 2,673
Sneaker Villa, Inc. LLC interest N/A N/A N/A 4 411 0.1 713
5,439 1.6 13,193
Textiles and Leather
Southern Tide, LLC LLC interest N/A N/A N/A 2 191 - 226
Utilities
PowerPlan Holdings, Inc. Common stock N/A N/A N/A - 303 0.1 333
PowerPlan Holdings, Inc. Common stock N/A N/A N/A 151 3 - 73
306 0.1 406
Total non-controlled/non-affiliate company equity investments $ 43,232 7.7 % $ 63,601
Total non-controlled/non-affiliate company investments $ 1,441,644 $ 1,466,750 181.9 % $ 1,485,073

See Notes to Consolidated Financial Statements.

13

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) - (continued)

March 31, 2016

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par ($), Amortized of Fair
Type Index (1) Rate (2) Date Shares/Units (3) Cost Net Assets Value
Non-controlled affiliated company investments (12)
Debt investments
Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc. One stop L + 9.25% 5.00% cash/5.50% PIK 11/2018 $ 1,065 $ 1,025 0.1 % $ 1,011
Competitor Group, Inc. *# One stop L + 9.25% 5.00% cash/5.50% PIK 11/2018 8,988 8,500 1.1 8,540
10,053 9,525 1.2 9,551
Total non-controlled affiliate company debt investments $ 10,053 $ 9,525 1.2 % $ 9,551
Equity investments
Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc. LLC interest N/A N/A N/A 1 $ 714 - % $ -
Competitor Group, Inc. *# Preferred stock N/A N/A N/A 4 4,226 - 59
Competitor Group, Inc. *# Common stock N/A N/A N/A 27 - - -
4,940 - 59
Total non-controlled affiliate company equity investments $ 4,940 - % $ 59
Total non-controlled affiliate company investments $ 10,053 $ 14,465 1.2 % $ 9,610
Controlled affiliate company investments (13)
Debt investments
Investment Funds and Vehicles
Senior Loan Fund LLC (7) Subordinated debt L + 8.00% 8.43% 05/2020 $ 86,182 $ 86,182 10.4 % $ 85,321
Total controlled affiliate company debt investments $ 86,182 $ 86,182 10.4 % $ 85,321
Equity investments
Investment Funds and Vehicles
Senior Loan Fund LLC (7) LLC interest N/A N/A N/A 34,043 $ 34,043 3.9 % $ 31,698
Total controlled affiliate company equity investments $ 34,043 3.9 % $ 31,698
Total controlled affiliate company investments $ 86,182 $ 120,225 14.3 % $ 117,019
Total investments $ 1,537,879 $ 1,601,440 197.4 % $ 1,611,702
Cash, Restricted Cash and Cash Equivalents
Cash and Restricted Cash $ 17,986 2.2 % $ 17,986
BlackRock Liquidity Funds T-Fund Institutional Shares (CUSIP 09248U718) 2,607 0.3 2,607
BNY Mellon US Dollar Liquidity Fund Institutional Shares (CUSIP G1206E235) 5,556 0.7 5,556
US Bank Money Market Account (CUSIP 8AMMF0176) 11,451 1.4 11,451
US Bank Money Market Account (CUSIP 9AMMF05B2) 4,598 0.6 4,598
Total Cash, Restricted Cash and Cash Equivalents $ 42,198 5.2 % $ 42,198
Total Investments and Cash, Restricted Cash and Cash Equivalents $ 1,643,638 202.6 % $ 1,653,900

* 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).
# Denotes that all or a portion of the loan collateralizes the Credit Facility (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 March 31, 2016. 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 March 31, 2016.
(3) The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
(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 amortized 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 March 31, 2016. As such, no interest is being earned on this investment.
(6) Loan was on non-accrual status as of March 31, 2016, meaning that the Company has ceased recognizing interest income on the loan.
(7) The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (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.
(8) The headquarters of this portfolio company is located in Canada.
(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.)
(10) Non-income producing securities.
(11) Ownership of certain equity investments may occur through a holding company or partnership.
(12) As defined in the 1940 Act, the Company is deemed to be an "Affiliated Person" of the company as the Company along with affiliated entities owns five percent or more of the portfolio company's securities.
(13) 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 three months ended March 31, 2016 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.

See Notes to Consolidated Financial Statements.

14

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par Amortized 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 + 6.00% 9.25 % 03/2019 $ 781 $ 769 0.1 % $ 697
ILC Dover, LP*^ One stop L + 7.00% 8.00 % 03/2020 18,124 17,941 2.1 16,855
ILC Industries, Inc. (3) One stop L + 6.00% N/A (5) 07/2020 - (22 ) - (94 )
ILC Industries, Inc.*^ One stop L + 6.00% 7.00 % 07/2020 22,670 22,527 2.7 22,386
NTS Technical Systems (3) One stop L + 6.00% N/A (5) 06/2021 - (47 ) - -
NTS Technical Systems (3) One stop L + 6.00% N/A (5) 06/2021 - (100 ) - -
NTS Technical Systems*^ One stop L + 6.00% 7.00 % 06/2021 26,441 26,001 3.3 26,441
Tresys Technology Holdings, Inc. One stop L + 6.75% 8.00 % 12/2017 349 345 - 349
Tresys Technology Holdings, Inc. (6) One stop L + 6.75% 8.00 % 12/2017 3,899 3,845 0.1 1,170
Whitcraft LLC One stop P + 5.25% 8.50 % 05/2020 3 2 - 2
Whitcraft LLC^ One stop L + 6.50% 7.50 % 05/2020 13,640 13,513 1.7 13,505
85,907 84,774 10.0 81,311
Automobile
American Driveline Systems, Inc. Senior loan P + 4.50% 7.75 % 03/2020 57 50 - 57
American Driveline Systems, Inc.* Senior loan L + 5.50% 6.50 % 03/2020 1,817 1,763 0.2 1,817
CH Hold Corp. (Caliber Collision) Senior loan L + 4.75% 5.75 % 11/2019 333 330 0.1 333
CH Hold Corp. (Caliber Collision) Senior loan L + 4.75% 5.75 % 11/2019 1,862 1,846 0.2 1,862
Dent Wizard International Corporation* Senior loan L + 4.75% 5.75 % 04/2020 2,585 2,572 0.3 2,566
Integrated Supply Network, LLC Senior loan P + 4.00% 6.87 % 02/2020 347 338 0.1 347
Integrated Supply Network, LLC* Senior loan L + 5.25% 6.25 % 02/2020 5,662 5,590 0.7 5,662
K&N Engineering, Inc.^ Senior loan L + 4.25% 5.25 % 07/2019 136 122 - 132
K&N Engineering, Inc. (3) Senior loan L + 4.25% N/A (5) 07/2019 - (4 ) - (5 )
K&N Engineering, Inc.^ Senior loan L + 4.25% 5.25 % 07/2019 2,883 2,844 0.3 2,797
15,682 15,451 1.9 15,568
Banking
HedgeServ Holding L.P. (3) One stop L + 6.00% N/A (5) 02/2019 - (6 ) - -
HedgeServ Holding L.P.^ One stop L + 8.00% 7.00% cash/2.00% PIK 02/2019 17,177 17,065 2.2 17,177
17,177 17,059 2.2 17,177
Beverage, Food and Tobacco
Abita Brewing Co., L.L.C. (3) One stop L + 5.75% N/A (5) 04/2021 - (1 ) - -
Abita Brewing Co., L.L.C. One stop L + 5.75% 6.75 % 04/2021 8,074 7,924 1.0 8,074
ABP Corporation Senior loan P + 3.50% 7.25 % 09/2018 167 162 - 167
ABP Corporation* Senior loan L + 4.75% 6.00 % 09/2018 4,746 4,697 0.6 4,746
American Seafoods Group LLC Senior loan L + 5.00% 6.00 % 08/2021 5,001 4,952 0.6 4,976
Atkins Nutritionals, Inc*^ One stop L + 5.00% 6.25 % 01/2019 17,490 17,314 2.2 17,512
Atkins Nutritionals, Inc*^ One stop L + 8.50% 9.75 % 04/2019 21,636 21,396 2.7 21,733
C. J. Foods, Inc. (3) One stop L + 5.50% N/A (5) 05/2019 - (9 ) - -
C. J. Foods, Inc. (3) One stop L + 5.50% N/A (5) 05/2019 - (7 ) - -
C. J. Foods, Inc. One stop L + 5.50% 6.50 % 05/2019 3,192 3,157 0.4 3,192
Candy Intermediate Holdings, Inc. (Ferrara Candy)^ Senior loan L + 6.25% 7.50 % 06/2018 4,838 4,761 0.6 4,801
Firebirds International, LLC One stop L + 5.75% 7.00 % 05/2018 304 300 - 304
Firebirds International, LLC (3) One stop L + 5.75% N/A (5) 05/2018 - (3 ) - -
Firebirds International, LLC (3) One stop L + 5.75% N/A (5) 05/2018 - (1 ) - -
Firebirds International, LLC* One stop L + 5.75% 7.00 % 05/2018 1,085 1,074 0.1 1,085
First Watch Restaurants, Inc. (3) One stop L + 6.00% N/A (5) 12/2020 - (12 ) - -
First Watch Restaurants, Inc. (3) One stop L + 6.00% N/A (5) 12/2020 - (12 ) - -
First Watch Restaurants, Inc. (3) One stop L + 6.00% N/A (5) 12/2020 - (10 ) - -
First Watch Restaurants, Inc. (3) One stop L + 6.00% N/A (5) 12/2020 - (9 ) - -
First Watch Restaurants, Inc.*^ One stop L + 6.00% 7.00 % 12/2020 25,860 25,598 3.2 25,860
Hopdoddy Holdings, LLC (3) One stop L + 8.00% N/A (5) 08/2020 - (3 ) - (3 )
Hopdoddy Holdings, LLC One stop L + 8.00% N/A (5) 08/2020 - - - -
Hopdoddy Holdings, LLC One stop L + 8.00% 9.00 % 08/2020 666 653 0.1 660
IT'SUGAR LLC Senior loan L + 8.50% 10.00 % 04/2018 7,489 7,393 0.9 7,489
IT'SUGAR LLC Subordinated debt N/A 5.00 % 10/2017 1,707 1,707 0.2 1,715
Northern Brewer, LLC One stop P + 7.25% 8.50% cash/2.00% PIK 02/2018 697 688 0.1 558
Northern Brewer, LLC One stop P + 7.25% 8.50% cash/2.00% PIK 02/2018 6,394 6,305 0.6 5,116
Surfside Coffee Company LLC One stop L + 5.25% 6.25 % 06/2020 132 122 - 122
Surfside Coffee Company LLC One stop L + 5.25% 6.25 % 06/2020 10 10 - 10
Surfside Coffee Company LLC^ One stop L + 5.25% 6.25 % 06/2020 4,515 4,472 0.6 4,470
Uinta Brewing Company One stop L + 6.00% 7.00 % 08/2019 385 379 - 362
Uinta Brewing Company^ One stop L + 6.00% 7.00 % 08/2019 3,203 3,178 0.4 3,107
United Craft Brews LLC One stop L + 6.25% 7.25 % 03/2020 542 527 0.1 542
United Craft Brews LLC One stop L + 6.25% 7.25 % 03/2020 68 53 - 68

See Notes to Consolidated Financial Statements.

15

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par Amortized of Fair
Type Index (1) Rate (2) Date Amount Cost Net Assets Value
United Craft Brews LLC One stop L + 6.25% 7.25 % 03/2020 12,158 11,916 1.5 12,158
130,359 128,671 15.9 128,824
Broadcasting and Entertainment
TouchTunes Interactive Networks, Inc.^ Senior loan L + 4.75% 5.75 % 05/2021 1,492 1,485 0.2 1,496
Building and Real Estate
Accruent, LLC* One stop L + 6.25% 7.27 % 11/2019 4,721 4,682 0.6 4,721
Brooks Equipment Company, LLC (3) One stop L + 5.75% N/A (5) 08/2020 - (16 ) - -
Brooks Equipment Company, LLC*^ One stop L + 5.75% 6.75 % 08/2020 24,967 24,661 3.1 24,967
ITEL Laboratories, Inc. (3) Senior loan L + 4.75% N/A (5) 06/2018 - (1 ) - -
ITEL Laboratories, Inc.* Senior loan L + 4.75% 6.00 % 06/2018 697 692 0.1 697
30,385 30,018 3.8 30,385
Chemicals, Plastics and Rubber
Flexan, LLC (3) One stop L + 5.25% N/A (5) 02/2020 - (6 ) - -
Flexan, LLC One stop L + 5.25% 6.25 % 02/2020 6,152 6,099 0.8 6,152
Flexan, LLC One stop L + 5.25% N/A (5) 02/2020 - - - -
6,152 6,093 0.8 6,152
Containers, Packaging and Glass
Fort Dearborn Company*^ Senior loan L + 4.25% 5.25 % 10/2017 567 565 0.1 567
Fort Dearborn Company*^ Senior loan L + 4.75% 5.77 % 10/2018 2,612 2,599 0.3 2,612
Packaging Coordinators, Inc.*^ Senior loan L + 4.25% 5.25 % 08/2021 14,850 14,724 1.8 14,786
Packaging Coordinators, Inc. Second lien L + 8.00% 9.00 % 08/2022 10,000 9,913 1.2 9,850
28,029 27,801 3.4 27,815
Diversified Conglomerate Manufacturing
Chase Industries, Inc. One stop L + 5.75% 6.83 % 09/2020 3,393 3,353 0.4 3,393
Chase Industries, Inc. One stop P + 4.50% 7.75 % 09/2020 234 216 - 234
Chase Industries, Inc.*^ One stop L + 5.75% 6.75 % 09/2020 20,880 20,706 2.6 20,880
Harvey Tool Company, LLC Senior loan L + 5.00% N/A (5) 03/2019 - - - -
Harvey Tool Company, LLC* Senior loan L + 5.00% 6.00 % 03/2020 3,131 3,100 0.4 3,100
ICC-Nexergy, Inc (3) One stop L + 5.50% N/A (5) 04/2020 - (3 ) - -
ICC-Nexergy, Inc^ One stop L + 5.50% 6.50 % 04/2020 8,590 8,535 1.1 8,590
Onicon Incorporated (3) One stop L + 6.00% N/A (5) 04/2020 - (6 ) - -
Onicon Incorporated* One stop L + 6.00% 7.00 % 04/2020 9,286 9,212 1.2 9,286
Plex Systems, Inc. (3) One stop L + 7.50% N/A (5) 06/2018 - (26 ) - -
Plex Systems, Inc.*^ One stop L + 7.50% 8.75 % 06/2018 18,797 18,431 2.3 18,797
Sunless Merger Sub, Inc. Senior loan P + 4.00% 7.25 % 07/2016 59 58 - 32
Sunless Merger Sub, Inc.* Senior loan L + 5.25% 6.50 % 07/2016 1,651 1,647 0.1 1,156
66,021 65,223 8.1 65,468
Diversified Conglomerate Service
Accellos, Inc. (3) One stop L + 5.75% N/A (5) 07/2020 - (17 ) - -
Accellos, Inc.*^ One stop L + 5.75% 6.75 % 07/2020 32,121 31,804 3.9 32,121
Actiance, Inc. One stop L + 9.00% N/A (5) 04/2018 - - - -
Actiance, Inc. *^ One stop L + 9.00% 10.00 % 04/2018 2,502 2,410 0.3 2,502
Aderant North America, Inc.^ Senior loan L + 4.25% 5.25 % 12/2018 446 442 0.1 446
Agility Recovery Solutions Inc. (3) One stop L + 6.50% N/A (5) 03/2020 - (6 ) - -
Agility Recovery Solutions Inc.*^ One stop L + 6.50% 7.50 % 03/2020 10,352 10,260 1.3 10,352
Bomgar Corporation (3) One stop L + 6.00% N/A (5) 09/2020 - (20 ) - (15 )
Bomgar Corporation* One stop L + 6.00% 7.00 % 09/2020 29,638 29,158 3.6 29,416
Daxko, LLC (3) One stop L + 5.00% N/A (5) 03/2019 - (18 ) - -
Daxko, LLC* One stop L + 5.00% 6.00 % 03/2019 15,528 15,327 1.9 15,528
DTI Holdco, Inc. Senior loan L + 5.00% 6.00 % 08/2020 8,527 8,447 1.0 8,271
HealthcareSource HR, Inc. (3) One stop L + 6.75% N/A (5) 05/2020 - (2 ) - -
HealthcareSource HR, Inc. One stop L + 6.75% 7.75 % 05/2020 17,903 17,508 2.2 17,903
Host Analytics, Inc. (3) One stop N/A N/A (5) 02/2020 - (6 ) - -
Host Analytics, Inc. One stop N/A 8.50% cash/2.25% PIK 02/2020 2,960 2,914 0.4 2,960
Integration Appliance, Inc. One stop L + 8.25% 9.50 % 09/2018 899 890 0.1 899
Integration Appliance, Inc.* One stop L + 8.25% 9.50 % 09/2020 719 709 0.1 719
Integration Appliance, Inc. One stop L + 8.25% 9.50 % 06/2019 7,914 7,766 1.0 7,914
Integration Appliance, Inc. One stop L + 8.25% 9.50 % 09/2018 5,396 5,315 0.7 5,396
Mediaocean LLC (3) Senior loan L + 4.50% N/A (5) 08/2020 - (1 ) - -
Mediaocean LLC Senior loan L + 4.75% 5.75 % 08/2022 3,000 2,934 0.4 2,970
NetSmart Technologies, Inc. One stop P + 4.25% 7.50 % 02/2019 340 323 - 340
NetSmart Technologies, Inc.*^ One stop L + 5.25% 6.25 % 02/2019 14,816 14,690 1.8 14,816
PC Helps Support, LLC Senior loan P + 4.25% 7.50 % 09/2017 66 65 - 62
PC Helps Support, LLC Senior loan L + 5.25% 6.51 % 09/2017 1,522 1,513 0.2 1,492
Saldon Holdings, Inc. Senior loan L + 4.50% N/A (5) 09/2021 - - - -
Saldon Holdings, Inc. Senior loan L + 4.50% 5.50 % 09/2021 2,990 2,960 0.4 2,960

See Notes to Consolidated Financial Statements.

16

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par Amortized of Fair
Type Index (1) Rate (2) Date Amount Cost Net Assets Value
Secure-24, LLC (3) One stop L + 6.00% N/A (5) 08/2017 - (3 ) - -
Secure-24, LLC* One stop L + 6.00% 7.25 % 08/2017 10,028 9,911 1.2 10,028
Secure-24, LLC^ One stop L + 6.00% 7.25 % 08/2017 1,467 1,454 0.2 1,467
Severin Acquisition, LLC (3) Senior loan L + 4.50% N/A (5) 07/2021 - (1 ) - (1 )
Severin Acquisition, LLC Senior loan L + 4.50% 5.50 % 07/2021 4,931 4,859 0.6 4,882
Source Medical Solutions, Inc. Second lien L + 8.00% 9.00 % 03/2018 9,294 9,189 1.1 9,294
Steelwedge Software, Inc. One stop L + 10.00% N/A (5) 09/2020 - - - -
Steelwedge Software, Inc.^ One stop P + 10.75% 12.00% cash/2.00% PIK 09/2020 2,153 2,055 0.3 2,055
TA MHI Buyer, Inc. One stop L + 6.50% N/A (5) 09/2021 - - - -
TA MHI Buyer, Inc.^ One stop L + 6.50% 7.50 % 09/2021 8,294 8,222 1.0 8,222
Vendavo, Inc. (3) One stop L + 8.50% N/A (5) 10/2019 - (13 ) - -
Vendavo, Inc. One stop L + 8.50% 9.50 % 10/2019 15,501 15,219 1.9 15,501
209,307 206,257 25.7 208,500
Electronics
Appriss Holdings, Inc. Senior loan L + 4.75% 5.07 % 11/2020 902 865 0.1 873
Appriss Holdings, Inc.* Senior loan L + 4.75% 5.75 % 11/2020 20,948 20,673 2.5 20,738
Compusearch Software Holdings, Inc.^ Senior loan L + 4.50% 5.50 % 05/2021 1,321 1,318 0.2 1,321
ECI Acquisition Holdings, Inc. One stop L + 6.25% 7.25 % 03/2019 1,410 1,349 0.2 1,410
ECI Acquisition Holdings, Inc. (3) One stop L + 6.25% N/A (5) 03/2019 - (13 ) - -
ECI Acquisition Holdings, Inc.*^ One stop L + 6.25% 7.25 % 03/2019 21,779 21,495 2.7 21,779
Gamma Technologies, LLC (3) One stop L + 5.50% N/A (5) 06/2021 - (1 ) - -
Gamma Technologies, LLC^ One stop L + 5.50% 6.50 % 06/2021 18,183 18,010 2.2 18,183
Park Place Technologies LLC One stop L + 5.50% N/A (5) 07/2021 - - - -
Park Place Technologies LLC*^ One stop L + 5.50% 6.50 % 07/2021 4,950 4,914 0.6 4,926
Sloan Company, Inc., The One stop L + 6.25% 7.25 % 04/2020 30 30 - 29
Sloan Company, Inc., The One stop L + 6.25% 7.25 % 04/2020 7,589 7,503 0.9 7,362
Sparta Holding Corporation (3) One stop L + 5.50% N/A (5) 07/2020 - (31 ) - -
Sparta Holding Corporation*^ One stop L + 5.50% 6.50 % 07/2020 23,125 22,893 2.9 23,125
Syncsort Incorporated (3) Senior loan L + 4.75% N/A (5) 03/2019 - (3 ) - -
Syncsort Incorporated (3) Senior loan L + 4.75% N/A (5) 03/2019 - (1 ) - -
Syncsort Incorporated* Senior loan L + 4.75% 5.75 % 03/2019 1,984 1,970 0.2 1,984
Systems Maintenance Services Holding, Inc.^ Senior loan L + 4.00% 5.00 % 10/2019 2,623 2,614 0.3 2,623
Taxware, LLC (3) One stop L + 6.50% N/A (5) 04/2022 - (5 ) - -
Taxware, LLC*^ One stop L + 6.50% 7.50 % 04/2022 19,899 19,609 2.5 19,899
Watchfire Enterprises, Inc. Second lien L + 8.00% 9.00 % 10/2021 9,435 9,242 1.2 9,435
134,178 132,431 16.5 133,687
Finance
Ascensus, Inc. (3) One stop L + 4.00% N/A (5) 11/2018 - (12 ) - -
Ascensus, Inc.^ One stop L + 4.00% 5.00 % 12/2019 3,953 3,895 0.5 3,953
Ascensus, Inc.*^ One stop L + 8.00% 9.00 % 12/2020 6,337 6,173 0.8 6,337
10,290 10,056 1.3 10,290
Grocery
AG Kings Holdings Inc. (3) One stop L + 5.50% N/A (5) 04/2020 - (7 ) - -
AG Kings Holdings Inc. One stop L + 5.50% 6.50 % 04/2020 6,183 6,127 0.8 6,183
MyWebGrocer, Inc. (3) One stop L + 8.75% N/A (5) 05/2018 - (11 ) - -
MyWebGrocer, Inc.^ One stop L + 8.75% 10.00 % 05/2018 14,271 14,115 1.7 14,271
20,454 20,224 2.5 20,454
Healthcare, Education and Childcare
Agilitas USA, Inc.^ Senior loan L + 4.00% 5.00 % 10/2020 2,125 2,107 0.3 2,125
Avalign Technologies, Inc.^ Senior loan L + 4.50% 5.50 % 07/2021 1,165 1,160 0.2 1,159
Avatar International, LLC (6) One stop L + 7.89% 6.19% cash/2.95% PIK 09/2016 1,648 1,644 0.1 548
Avatar International, LLC One stop L + 7.89% 6.19% cash/2.95% PIK 09/2016 573 571 0.1 573
Avatar International, LLC (6)* One stop L + 7.89% 6.19% cash/2.95% PIK 09/2016 7,641 7,615 0.3 2,540
California Cryobank, LLC^ One stop L + 5.50% 6.50 % 08/2019 1,550 1,538 0.2 1,550
California Cryobank, LLC One stop L + 5.50% 6.50 % 08/2019 43 42 - 43
California Cryobank, LLC One stop P + 4.25% 7.50 % 08/2019 43 41 - 43
Certara L.P. (3) One stop L + 6.25% N/A (5) 12/2018 - (14 ) - -
Certara L.P.*^ One stop L + 6.25% 7.25 % 12/2018 30,848 30,555 3.8 30,848
CPI Buyer, LLC (Cole-Parmer)*^ Senior loan L + 4.50% 5.50 % 08/2021 7,940 7,674 1.0 7,900
Curo Health Services LLC Senior loan L + 5.50% 6.50 % 02/2022 1,990 1,972 0.3 1,997
DCA Investment Holding, LLC (3) One stop L + 5.25% N/A (5) 07/2021 - (2 ) - (1 )
DCA Investment Holding, LLC* One stop L + 5.25% 6.25 % 07/2021 14,336 13,990 1.8 14,192
Deca Dental Management LLC (3) One stop L + 6.25% N/A (5) 07/2020 - (11 ) - (8 )
Deca Dental Management LLC One stop P + 5.25% 8.50 % 07/2020 20 19 - 20
Deca Dental Management LLC*^ One stop L + 6.25% 7.25 % 07/2020 4,188 4,128 0.5 4,146

See Notes to Consolidated Financial Statements.

17

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par Amortized of Fair
Type Index (1) Rate (2) Date Amount Cost Net Assets Value
Delta Educational Systems* Senior loan P + 4.75% 8.00 % 12/2016 1,435 1,424 0.2 1,220
Delta Educational Systems (3) Senior loan L + 6.00% N/A (5) 12/2016 - - - (8 )
Dental Holdings Corporation (3) One stop L + 5.50% N/A (5) 02/2020 - (16 ) - -
Dental Holdings Corporation (3) One stop L + 5.50% N/A (5) 02/2020 - (12 ) - -
Dental Holdings Corporation One stop L + 5.50% 6.50 % 02/2020 6,575 6,444 0.8 6,575
Encore GC Acquisition, LLC (3) Senior loan L + 4.50% N/A (5) 01/2020 - (9 ) - -
Encore GC Acquisition, LLC* Senior loan L + 4.50% 5.50 % 01/2020 3,484 3,439 0.4 3,484
G & H Wire Company, Inc. One stop L + 5.75% 6.75 % 12/2017 268 263 - 268
G & H Wire Company, Inc.*^ One stop L + 5.75% 6.75 % 12/2017 13,291 13,197 1.6 13,291
GSDM Holdings Corp. Senior loan L + 4.25% 5.25 % 06/2019 870 867 0.1 870
IntegraMed America, Inc. One stop L + 7.25% 8.50 % 09/2017 406 402 - 398
IntegraMed America, Inc.*^ One stop L + 7.25% 8.50 % 09/2017 14,975 14,839 1.8 14,676
Joerns Healthcare, LLC* One stop L + 5.00% 6.17 % 05/2020 3,318 3,286 0.4 3,301
Katena Holdings, Inc. (3) One stop L + 6.25% N/A (5) 06/2021 - (8 ) - -
Katena Holdings, Inc. (3) One stop L + 6.25% N/A (5) 06/2021 - (1 ) - -
Katena Holdings, Inc.^ One stop L + 6.25% 7.25 % 06/2021 8,142 8,064 1.0 8,142
Maverick Healthcare Group, LLC* Senior loan L + 5.50% 7.25 % 12/2016 1,933 1,912 0.2 1,933
Pentec Acquisition Sub, Inc. (3) Senior loan L + 5.00% N/A (5) 05/2017 - (1 ) - -
Pentec Acquisition Sub, Inc.* Senior loan L + 5.00% 6.25 % 05/2018 1,588 1,574 0.2 1,588
PPT Management, LLC (3) One stop L + 5.00% N/A (5) 04/2020 - (1 ) - -
PPT Management, LLC*^ One stop L + 5.00% 6.00 % 04/2020 13,158 13,037 1.6 13,158
Premise Health Holding Corp. One stop L + 4.50% 5.50 % 06/2020 394 374 - 394
Premise Health Holding Corp. One stop L + 4.50% 5.50 % 06/2020 15,000 14,896 1.9 15,000
Pyramid Healthcare, Inc. One stop P + 4.50% 7.75 % 08/2019 313 309 - 313
Pyramid Healthcare, Inc.^ One stop L + 5.75% 6.75 % 08/2019 8,439 8,377 1.0 8,439
Radiology Partners, Inc. (3) One stop L + 5.00% N/A (5) 09/2020 - (38 ) - -
Radiology Partners, Inc. (3) One stop L + 5.00% N/A (5) 09/2020 - (6 ) - -
Radiology Partners, Inc.*^ One stop L + 5.00% 6.00 % 09/2020 17,037 16,813 2.1 17,037
Reliant Pro ReHab, LLC Senior loan P + 4.00% 7.25 % 06/2017 424 419 0.1 424
Reliant Pro ReHab, LLC* Senior loan L + 5.00% 6.00 % 06/2017 3,226 3,206 0.4 3,226
RXH Buyer Corporation (3) One stop L + 5.75% N/A (5) 09/2021 - (56 ) - (28 )
RXH Buyer Corporation (3) One stop L + 5.75% N/A (5) 09/2021 - (4 ) - (2 )
RXH Buyer Corporation*^ One stop L + 5.75% 6.75 % 09/2021 17,612 17,264 2.2 17,435
Southern Anesthesia and Surgical (3) One stop L + 5.50% N/A (5) 11/2017 - (27 ) - -
Southern Anesthesia and Surgical (3) One stop L + 5.50% N/A (5) 11/2017 - (7 ) - -
Southern Anesthesia and Surgical One stop L + 5.50% 6.50 % 11/2017 5,638 5,570 0.7 5,638
Surgical Information Systems, LLC^ Senior loan L + 3.00% 4.01 % 09/2018 1,934 1,930 0.2 1,934
U.S. Anesthesia Partners, Inc. One stop L + 5.00% 6.00 % 12/2019 5,942 5,918 0.7 5,942
WIL Research Company, Inc.* Senior loan L + 4.50% 5.75 % 02/2018 756 751 0.1 737
Young Innovations, Inc. Senior loan L + 3.25% N/A (5) 01/2018 - - - -
Young Innovations, Inc.* Senior loan L + 4.25% 5.25 % 01/2019 1,830 1,819 0.2 1,830
222,098 219,237 26.5 214,890
Home and Office Furnishings,
Housewares, and Durable Consumer
1A Smart Start LLC* Senior loan L + 4.75% 5.75 % 02/2022 2,132 2,111 0.3 2,127
Plano Molding Company, LLC* One stop L + 6.00% 7.00 % 05/2021 18,115 17,946 2.2 18,115
WII Components, Inc. Senior loan L + 4.50% N/A (5) 07/2018 - - - -
WII Components, Inc.* Senior loan L + 4.25% 5.25 % 07/2018 1,048 1,044 0.1 1,048
Zenith Products Corporation (6) One stop P + 1.75% 5.00 % 09/2013 81 48 - 41
Zenith Products Corporation* (6) One stop P + 3.50% 6.75 % 09/2013 4,376 3,926 0.3 2,188
25,752 25,075 2.9 23,519
Insurance
Captive Resources Midco, LLC (3) One stop L + 5.75% N/A (5) 06/2020 - (22 ) - (19 )
Captive Resources Midco, LLC (3) One stop L + 5.75% N/A (5) 06/2020 - (20 ) - (17 )
Captive Resources Midco, LLC*^ One stop L + 5.75% 6.75 % 06/2020 26,845 26,525 3.3 26,575
Internet Pipeline, Inc. (3) One stop L + 7.25% N/A (5) 08/2021 - (1 ) - -
Internet Pipeline, Inc. One stop L + 7.25% 8.25 % 08/2022 4,960 4,826 0.6 4,910
31,805 31,308 3.9 31,449
Investment Funds and Vehicles
Senior Loan Fund LLC (7)(8) Subordinated debt L + 8.00% 8.19 % 05/2020 76,563 76,563 9.5 76,563

See Notes to Consolidated Financial Statements.

18

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par Amortized of Fair
Type Index (1) Rate (2) Date Amount Cost Net Assets Value
Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc. One stop L + 7.75% 9.00 % 11/2018 884 876 0.1 773
Competitor Group, Inc.* One stop L + 9.25% 9.00% cash/1.50% PIK 11/2018 12,331 12,221 1.4 11,098
Self Esteem Brands, LLC (3) Senior loan L + 4.00% N/A (5) 02/2020 - (4 ) - -
Self Esteem Brands, LLC^ Senior loan L + 4.00% 5.00 % 02/2020 3,669 3,653 0.5 3,669
Starplex Operating, L.L.C. (3) One stop L + 7.00% N/A (5) 12/2017 - (9 ) - -
Starplex Operating, L.L.C.*^ One stop L + 7.00% 8.00 % 12/2017 9,979 9,863 1.2 9,979
Teaching Company, The One stop L + 6.25% 7.25 % 08/2020 30 29 - 29
Teaching Company, The One stop L + 6.25% 7.25 % 08/2020 19,069 18,789 2.3 18,878
Titan Fitness, LLC (3) One stop L + 6.50% N/A (5) 09/2019 - (17 ) - -
Titan Fitness, LLC* One stop L + 6.50% 7.75 % 09/2019 13,326 13,120 1.6 13,326
Titan Fitness, LLC (3) One stop L + 6.50% N/A (5) 09/2019 - (17 ) - -
59,288 58,504 7.1 57,752
Mining, Steel, Iron and Non-Precious Metals
Benetech, Inc. One stop P + 7.75% 11.00 % 10/2017 303 297 - 303
Benetech, Inc.* One stop L + 9.00% 10.25 % 10/2017 4,696 4,671 0.6 4,696
4,999 4,968 0.6 4,999
Oil and Gas
Drilling Info, Inc. (3)(4) One stop L + 5.00% N/A (5) 06/2018 - (1 ) - -
Drilling Info, Inc. (4) One stop L + 5.00% 6.00 % 06/2018 355 353 - 355
Drilling Info, Inc.^ One stop L + 5.00% 6.00 % 06/2018 901 894 0.1 901
Drilling Info, Inc. (3)(4) One stop L + 5.00% N/A (5) 06/2018 - (5 ) - -
1,256 1,241 0.1 1,256
Personal and Non-Durable Consumer Products
The Hygenic Corporation (3) Senior loan L + 5.00% N/A (5) 10/2019 - (5 ) - -
The Hygenic Corporation* Senior loan L + 5.00% 6.00 % 10/2020 3,275 3,231 0.4 3,275
Massage Envy, LLC (3) One stop L + 7.25% N/A (5) 09/2018 - (9 ) - -
Massage Envy, LLC* One stop L + 7.25% 8.50 % 09/2018 15,570 15,375 1.9 15,570
Orthotics Holdings, Inc (3)(8) One stop L + 5.00% N/A (5) 02/2020 - (2 ) - -
Orthotics Holdings, Inc* (8) One stop L + 5.00% 6.00 % 02/2020 1,387 1,372 0.2 1,387
Orthotics Holdings, Inc (3) One stop L + 5.00% N/A (5) 02/2020 - (15 ) - -
Orthotics Holdings, Inc (3) One stop L + 5.00% N/A (5) 02/2020 - (14 ) - -
Orthotics Holdings, Inc* One stop L + 5.00% 6.00 % 02/2020 8,460 8,367 1.0 8,460
Team Technologies Acquisition Company (3) Senior loan L + 5.00% N/A (5) 12/2017 - (2 ) - -
Team Technologies Acquisition Company^ Senior loan L + 5.00% 6.25 % 12/2017 4,782 4,754 0.6 4,782
Team Technologies Acquisition Company Senior loan L + 5.50% 6.75 % 12/2017 881 871 0.1 881
34,355 33,923 4.2 34,355
Personal, Food and Miscellaneous Services
Focus Brands Inc.*^ Second lien L + 9.00% 10.25 % 08/2018 11,195 11,120 1.4 11,195
Ignite Restaurant Group, Inc (Joe's Crab Shack)^ One stop L + 7.00% 8.00 % 02/2019 6,108 6,039 0.7 6,108
PetVet Care Centers LLC Senior loan L + 4.50% 5.50 % 12/2020 646 626 0.1 646
PetVet Care Centers LLC (3) Senior loan L + 4.50% N/A (5) 12/2019 - (11 ) - -
PetVet Care Centers LLC^ Senior loan L + 4.50% 5.50 % 12/2020 5,896 5,800 0.7 5,896
Vetcor Merger Sub LLC (3) One stop L + 6.00% N/A (5) 04/2021 - (14 ) - -
Vetcor Merger Sub LLC One stop L + 6.00% 7.00 % 04/2021 8 4 - 8
Vetcor Merger Sub LLC*^ One stop L + 6.00% 7.00 % 04/2021 25,181 24,715 3.1 25,181
Veterinary Specialists of North America, LLC One stop L + 5.00% N/A (5) 05/2020 - - - -
Veterinary Specialists of North America, LLC* One stop L + 5.00% 6.00 % 05/2020 587 582 0.1 587
49,621 48,861 6.1 49,621
Printing and Publishing
Market Track, LLC One stop P + 6.00% 9.25 % 10/2019 369 345 - 347
Market Track, LLC*^ One stop L + 7.00% 8.00 % 10/2019 28,976 28,643 3.5 28,686
Market Track, LLC* One stop L + 7.00% 8.00 % 10/2019 2,197 2,173 0.3 2,175
Market Track, LLC One stop L + 7.00% 8.00 % 10/2019 1,379 1,340 0.2 1,344
32,921 32,501 4.0 32,552
Retail Stores
Benihana, Inc. One stop P + 4.75% 8.00 % 07/2018 868 823 0.1 825
Benihana, Inc.*^ One stop L + 6.00% 7.25 % 01/2019 15,436 15,124 1.9 15,127
Boot Barn, Inc.*^ Senior loan L + 4.50% 5.50 % 06/2021 10,775 10,621 1.3 10,775
CVS Holdings I, LP One stop L + 6.25% 7.25 % 08/2021 366 329 - 347
CVS Holdings I, LP (3) One stop L + 6.25% N/A (5) 08/2020 - (4 ) - (2 )
CVS Holdings I, LP^ One stop L + 6.25% 7.25 % 08/2021 20,575 20,173 2.5 20,369
Cycle Gear, Inc. (3) One stop L + 6.00% N/A (5) 01/2020 - (15 ) - -
Cycle Gear, Inc. One stop L + 6.00% 7.00 % 01/2020 6,486 6,362 0.8 6,486
DTLR, Inc.*^ One stop L + 8.00% 11.00 % 12/2015 15,026 15,017 1.8 15,026
Elite Sportswear, L.P. (3) Senior loan L + 5.00% N/A (5) 03/2020 - (7 ) - -

See Notes to Consolidated Financial Statements.

19

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Principal / Par Amortized of Fair
Type Index (1) Rate (2) Date Amount Cost Net Assets Value
Elite Sportswear, L.P. Senior loan L + 5.00% 6.00 % 03/2020 2,849 2,798 0.4 2,849
Express Oil Change, LLC* Senior loan L + 5.00% 6.00 % 12/2017 104 103 - 104
Express Oil Change, LLC* Senior loan L + 5.00% 6.00 % 12/2017 1,371 1,366 0.2 1,371
Express Oil Change, LLC (3) Senior loan L + 5.00% N/A (5) 12/2017 - (3 ) - -
Express Oil Change, LLC* Senior loan L + 5.00% 6.00 % 12/2017 3,672 3,647 0.5 3,672
Floor & Decor Outlets of America, Inc.*^ One stop L + 6.50% 7.75 % 05/2019 11,130 11,047 1.4 11,130
Marshall Retail Group, LLC, The (3) One stop L + 6.00% N/A (5) 08/2020 - (9 ) - (27 )
Marshall Retail Group, LLC, The One stop L + 6.00% 7.00 % 08/2019 146 124 - 80
Marshall Retail Group, LLC, The^ One stop L + 6.00% 7.00 % 08/2020 12,331 12,205 1.5 11,960
Paper Source, Inc. One stop P + 5.00% 7.75 % 09/2018 677 670 0.1 677
Paper Source, Inc.*^ One stop L + 6.25% 7.25 % 09/2018 12,888 12,810 1.6 12,888
RCPSI Corporation (3) One stop L + 5.75% N/A (5) 04/2020 - (4 ) - -
RCPSI Corporation*^ One stop L + 5.75% 6.75 % 04/2021 22,400 21,986 2.8 22,400
Restaurant Holding Company, LLC Senior loan L + 7.75% 8.75 % 02/2019 4,843 4,809 0.5 4,310
Rubio's Restaurants, Inc Senior loan L + 4.75% 6.00 % 11/2018 3,985 3,985 0.4 3,985
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 752 740 0.1 752
Sneaker Villa, Inc.^ One stop L + 8.50% 10.00 % 12/2017 1,206 1,195 0.1 1,206
Sneaker Villa, Inc. One stop P + 7.00% 10.25 % 12/2017 1,253 1,240 0.2 1,253
Sneaker Villa, Inc. One stop L + 8.50% 10.00 % 12/2017 2,506 2,489 0.3 2,506
Sneaker Villa, Inc.^ One stop L + 8.50% 10.00 % 12/2017 4,154 4,126 0.5 4,154
Sneaker Villa, Inc. One stop L + 8.50% 10.00 % 12/2017 4,317 4,254 0.5 4,317
Specialty Catalog Corp. (3) One stop L + 6.00% N/A (5) 07/2017 - (3 ) - -
Specialty Catalog Corp. One stop L + 6.00% 7.50 % 07/2017 4,125 4,105 0.5 4,125
164,868 162,723 20.1 163,292
Telecommunications
Arise Virtual Solutions, Inc. (3) One stop L + 5.50% N/A (5) 12/2018 - (1 ) - (3 )
Arise Virtual Solutions, Inc.^ One stop L + 5.50% 6.75 % 12/2018 1,500 1,495 0.2 1,470
Hosting.com Inc. Senior loan P + 3.25% 6.50 % 12/2017 37 37 - 37
Hosting.com Inc.* Senior loan L + 4.50% 5.75 % 12/2017 790 784 0.1 790
2,327 2,315 0.3 2,294
Textile and Leather
5.11, Inc.*^ Senior loan L + 5.00% 6.00 % 02/2020 991 987 0.1 994
Southern Tide, LLC (3) One stop L + 6.75% N/A (5) 06/2019 - (7 ) - -
Southern Tide, LLC^ One stop L + 6.75% 7.75 % 06/2019 4,055 4,024 0.5 4,055
5,046 5,004 0.6 5,049
Utilities
PowerPlan Consultants, Inc. (3) Senior loan L + 5.25% N/A (5) 02/2021 - (7 ) - -
PowerPlan Consultants, Inc. Senior loan L + 5.25% 6.25 % 02/2022 4,885 4,818 0.6 4,885
4,885 4,811 0.6 4,885
Total debt investments United States $ 1,471,217 $ 1,452,577 178.8 % $ 1,449,603
Fair Value as a percentage of Principal Amount 98.5 %

See Notes to Consolidated Financial Statements.

20

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Shares / Amortized of Fair
Type Index (1) Rate (2) Date Contracts Cost Net Assets Value
Equity Investments (9) (10)
Aerospace and Defense
NTS Technical Systems Common stock N/A N/A N/A 2 $ 1,506 0.3 % $ 2,078
Tresys Technology Holdings, Inc. Common stock N/A N/A N/A 295 295 - -
Whitcraft LLC Preferred stock B N/A N/A N/A 1 670 0.1 821
Whitcraft LLC Warrant N/A N/A N/A - - - 160
2,471 0.4 3,059
Automobile
K&N Engineering, Inc. Preferred stock A N/A N/A N/A - - - 6
K&N Engineering, Inc. Preferred stock B N/A N/A N/A - - - 6
K&N Engineering, Inc. Common stock N/A N/A N/A - - - 47
- - 59
Beverage, Food and Tobacco
Atkins Nutritionals, Inc. LLC interest N/A N/A N/A 57 746 0.4 2,996
C. J. Foods, Inc. Preferred stock N/A N/A N/A - 157 - 160
First Watch Restaurants, Inc. Common stock N/A N/A N/A 9 964 0.2 1,481
Hopdoddy Holdings, LLC LLC interest N/A N/A N/A 27 130 - 130
Julio & Sons Company LLC interest N/A N/A N/A 521 521 0.1 769
Northern Brewer, LLC LLC interest N/A N/A N/A 438 362 - 32
Richelieu Foods, Inc. LP interest N/A N/A N/A 220 220 - 197
Tate's Bake Shop, Inc. LP interest N/A N/A N/A - 462 0.1 503
Uinta Brewing Company LP interest N/A N/A N/A - 462 - 192
United Craft Brews LLC LP interest N/A N/A N/A 1 657 0.1 653
4,681 0.9 7,113
Buildings and Real Estate
Brooks Equipment Company, LLC Common stock N/A N/A N/A 10 1,021 0.1 892
Chemicals, Plastics and Rubber
Flexan, LLC Preferred stock N/A N/A N/A - 73 - 75
Flexan, LLC Common stock N/A N/A N/A 1 - - 14
73 - 89
Containers, Packaging and Glass
Packaging Coordinators, Inc. (8) Common stock N/A N/A N/A 25 2,065 0.3 2,533
Packaging Coordinators, Inc. Common stock N/A N/A N/A 48 1,563 0.3 2,205
3,628 0.6 4,738
Diversified Conglomerate Manufacturing
Chase Industries, Inc. LLC units N/A N/A N/A 1 1,186 0.2 1,509
ICCN Acquisition Corp. Preferred stock N/A N/A N/A - 370 - 360
ICCN Acquisition Corp. Common stock N/A N/A N/A - - - -
Sunless Merger Sub, Inc. LP interest N/A N/A N/A - 160 - -
1,716 0.2 1,869
Diversified Conglomerate Service
Actiance, Inc. Warrant N/A N/A N/A 344 82 - 82
Agility Recovery Solutions Inc. Preferred stock N/A N/A N/A 67 430 0.1 447
Daxko, LLC LLC units N/A N/A N/A 219 219 - 343
DISA Holdings Acquisition Subsidiary Corp. Common stock N/A N/A N/A - 154 - 72
HealthcareSource HR, Inc. LLC interest N/A N/A N/A - 348 - 348
Host Analytics, Inc. Warrant N/A N/A N/A 180 - - 98
Marathon Data Operating Co., LLC LLC units N/A N/A N/A 1 264 - -
Marathon Data Operating Co., LLC LLC units N/A N/A N/A 1 264 0.1 604
PC Helps Support, LLC Common stock N/A N/A N/A 1 7 - -
PC Helps Support, LLC Preferred stock A N/A N/A N/A - 61 - 62
Secure-24, LLC LLC units N/A N/A N/A 263 263 0.1 379
Steelwedge Software, Inc. Warrant N/A N/A N/A 36,575 76 - 76
TA MHI Buyer, Inc. Preferred stock N/A N/A N/A - 202 - 202
Vendavo, Inc. Preferred stock A N/A N/A N/A 827 827 0.2 1,198
3,197 0.5 3,911

See Notes to Consolidated Financial Statements.

21

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Shares / Amortized of Fair
Type Index (1) Rate (2) Date Contracts Cost Net Assets Value
Electronics
ECI Acquisition Holdings, Inc. Common stock N/A N/A N/A 9 873 0.2 1,027
Gamma Technologies, LLC LLC units N/A N/A N/A 1 134 - 134
SEI, Inc. LLC units N/A N/A N/A 340 340 - 340
Sloan Company, Inc., The LLC units N/A N/A N/A 1 14 - 14
Sloan Company, Inc., The LLC units N/A N/A N/A - 122 - 122
Sparta Holding Corporation Common stock N/A N/A N/A 1 567 0.1 629
Sparta Holding Corporation Common stock N/A N/A N/A 235 6 - 208
2,056 0.3 2,474
Grocery
MyWebGrocer, Inc. LLC units N/A N/A N/A 1,418 1,446 0.2 1,389
Healthcare, Education and Childcare
Advanced Pain Management Holdings, Inc. Common stock N/A N/A N/A 67 67 - -
Advanced Pain Management Holdings, Inc. Preferred stock N/A N/A N/A 8 829 0.1 871
Advanced Pain Management Holdings, Inc. Preferred stock N/A N/A N/A 1 64 - 194
Avatar International, LLC LP interest N/A N/A N/A 1 741 - -
California Cryobank, LLC LLC units N/A N/A N/A - 28 - 32
California Cryobank, LLC LLC units N/A N/A N/A - - - 5
Certara L.P. LP interest N/A N/A N/A - 635 0.1 923
DCA Investment Holding, LLC LLC units N/A N/A N/A 65 6 - 6
DCA Investment Holding, LLC LLC units N/A N/A N/A 6,386 639 0.1 639
Deca Dental Management LLC LLC units N/A N/A N/A 357 357 - 357
Dental Holdings Corporation LLC units N/A N/A N/A 734 734 0.1 736
Dialysis Newco, Inc. (DSI Renal) LLC units N/A N/A N/A 871 - 0.5 3,447
Encore GC Acquisition, LLC LLC units N/A N/A N/A 14 141 - 143
Encore GC Acquisition, LLC LLC units N/A N/A N/A 14 - - -
G & H Wire Company, Inc LP interest N/A N/A N/A - 102 - 122
Global Healthcare Exchange, LLC Common stock N/A N/A N/A - 5 - 111
Global Healthcare Exchange, LLC Preferred stock N/A N/A N/A - 481 0.1 547
IntegraMed America, Inc. Common stock N/A N/A N/A 1 875 - 281
Katena Holdings, Inc. LLC units N/A N/A N/A - 387 0.1 387
Northwestern Management Services, LLC LLC units N/A N/A N/A 3 3 - 228
Northwestern Management Services, LLC LLC units N/A N/A N/A - 249 - 309
Pentec Acquisition Sub, Inc. Preferred stock N/A N/A N/A 1 116 - 252
Radiology Partners, Inc. LLC units N/A N/A N/A 43 85 - 82
Reliant Pro ReHab, LLC Preferred stock A N/A N/A N/A 2 183 0.2 956
RXH Buyer Corporation LP interest N/A N/A N/A 7 683 0.1 683
Southern Anesthesia and Surgical LLC units N/A N/A N/A 487 487 0.1 794
Spear Education, LLC LLC units N/A N/A N/A 1 1 - 20
Spear Education, LLC LLC units N/A N/A N/A - 86 - 94
Surgical Information Systems, LLC Common stock N/A N/A N/A 4 414 0.1 681
Young Innovations, Inc. LLC units N/A N/A N/A - 236 - 346
8,634 1.6 13,246
Home and Office Furnishings,
Housewares, and Durable Consumer
Top Knobs USA, Inc. Common stock N/A N/A N/A 3 27 - 231
Zenith Products Corporation Common stock N/A N/A N/A 1 - - -
27 - 231

See Notes to Consolidated Financial Statements.

22

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Shares / Amortized of Fair
Type Index (1) Rate (2) Date Contracts Cost Net Assets Value
Insurance
Captive Resources Midco, LLC LLC units N/A N/A N/A 1 - - 146
Internet Pipeline, Inc. Common stock N/A N/A N/A 43 1 - 1
Internet Pipeline, Inc. Preferred stock N/A N/A N/A - 98 - 98
99 - 245
Investment Funds and Vehicles
Senior Loan Fund LLC (7)(8) LLC interest N/A N/A N/A 23,222 23,222 2.8 22,373
Leisure, Amusement, Motion Pictures and Entertainment
Competitor Group, Inc. LLC interest N/A N/A N/A 1 714 - 22
LMP TR Holdings, LLC LLC units N/A N/A N/A 712 712 - 22
Starplex Operating, L.L.C. Common stock N/A N/A N/A 1 183 0.1 409
Titan Fitness, LLC LLC units N/A N/A N/A 6 583 0.1 827
2,192 0.2 1,280
Personal and Non-Durable Consumer Products
C.B. Fleet Company, Incorporated LLC units N/A N/A N/A 2 174 - 268
The Hygenic Corporation LP interest N/A N/A N/A 1 61 - 87
Massage Envy, LLC LLC interest N/A N/A N/A 749 749 0.2 1,058
Team Technologies Acquisition Company Common stock N/A N/A N/A - 114 - 351
1,098 0.2 1,764
Personal, Food and Miscellaneous Services
R.G. Barry Corporation Preferred stock N/A N/A N/A - 161 - 157
Vetcor Professional Practices LLC LLC units N/A N/A N/A 85 85 - 85
Vetcor Professional Practices LLC LLC units N/A N/A N/A 766 766 0.1 766
1,012 0.1 1,008
Printing and Publishing
Market Track, LLC Preferred stock N/A N/A N/A - 145 - 195
Market Track, LLC Common stock N/A N/A N/A 1 145 - 272
290 - 467
Retail Stores
Barcelona Restaurants, LLC (8)(11) LP interest N/A N/A N/A 1,996 1,996 0.7 5,523
Benihana, Inc. LLC units N/A N/A N/A 43 699 0.1 595
Cycle Gear, Inc. LLC units N/A N/A N/A 15 150 - 153
DentMall MSO, LLC LLC units N/A N/A N/A 2 - - -
DentMall MSO, LLC LLC units N/A N/A N/A 2 97 - 106
Elite Sportswear, L.P. LLC interest N/A N/A N/A - 73 - 71
Express Oil Change, LLC LLC interest N/A N/A N/A 81 81 - 153
Marshall Retail Group LLC, The LLC units N/A N/A N/A 15 154 - 59
Paper Source, Inc. Common stock N/A N/A N/A 8 1,387 0.2 1,455
RCP PetPeople LP LP interest N/A N/A N/A 889 889 0.2 1,331
RCPSI Corporation LLC interest N/A N/A N/A 455 455 0.1 455
Rubio's Restaurants, Inc. Preferred stock A N/A N/A N/A 2 945 0.3 2,711
Sneaker Villa, Inc. LLC interest N/A N/A N/A 4 411 0.1 583
SSH Corporation Common stock N/A N/A N/A - 40 - 146
7,377 1.7 13,341

See Notes to Consolidated Financial Statements.

23

Golub Capital BDC, Inc. and Subsidiaries

Consolidated Schedule of Investments (continued)

September 30, 2015

(In thousands)

Spread Percentage
Investment Above Interest Maturity Shares / Amortized of Fair
Type Index (1) Rate (2) Date Contracts Cost Net Assets Value
Textiles and Leather
Southern Tide, LLC LLC interest N/A N/A N/A 2 191 - 222
Utilities
PowerPlan Holdings, Inc. Common stock N/A N/A N/A - 303 - 319
PowerPlan Holdings, Inc. Common stock N/A N/A N/A 151 3 - 92
306 - 411
Total equity investments United States $ 64,737 9.8 % $ 80,181
Total United States $ 1,517,314 188.6 % $ 1,529,784
Total Investments $ 1,517,314 188.6 % $ 1,529,784
Cash, Restricted Cash and Cash Equivalents
Cash and Restricted Cash $ 20,137 2.5 % $ 20,137
BlackRock Liquidity Funds T-Fund Institutional Shares (CUSIP 09248U718) 13,367 1.6 13,367
BNY Mellon US Dollar Liquidity Fund Institutional Shares (CUSIP G1206E235) 18,430 2.3 18,430
US Bank Money Market Account (CUSIP 9AMMF05B2) 45,550 5.6 45,550
Total Cash, Restricted Cash and Cash Equivalents $ 97,484 12.0 % $ 97,484
Total Investments and Cash, Restricted Cash and Cash Equivalents $ 1,614,798 200.6 % $ 1,627,268

* 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 LIBOR ("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 September 30, 2015. 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, 2015.
(3) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(4) 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.)
(5) The entire commitment was unfunded at September 30, 2015. As such, no interest is being earned on this investment.
(6) Loan was on non-accrual status as of September 30, 2015, meaning that the Company has ceased recognizing interest income on the loan.
(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).
(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) Ownership of certain equity investments may occur through a holding company or partnership.
(11) As defined in the 1940 Act, the Company is deemed to be an "Affiliated Person" of the portfolio company as the Company along with affiliated entities owns five percent or more of the portfolio company's voting securities.

See Notes to Consolidated Financial Statements.

24

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 primarily in senior secured and one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans) loans of U.S. middle-market companies. The Company may also selectively invest in 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 of, and warrants and minority equity securities in, U.S. middle-market companies. 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 Company is an investment company as defined in the accounting and reporting guidance under Accounting Standards Codification (“ASC”) Topic 946 – Financial Services – Investment Companies (“ASC Topic 946”).

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 ASC Topic 820 — Fair Value Measurement (“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.

25

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, 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 company (“SBIC”) subsidiaries. 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.

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 six months ended March 31, 2016, interest income included $1,795 and $3,686, respectively, of accretion of discounts. For the three and six months ended March 31, 2015, interest income included $1,820 and $3,490, respectively, of accretion of discounts. For the three and six months ended March 31, 2016, the Company received loan origination fees of $2,635 and $4,791, respectively. For the three and six months ended March 31, 2015, the Company received loan origination fees of $2,145 and $5,207, respectively.

26

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

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 six months ended March 31, 2016, the Company recorded PIK income of $124 and $315, respectively, and received PIK payments in cash of $0 and $0, respectively. For the three and six months ended March 31, 2015, the Company recorded PIK income of $313 and $815, respectively, and received PIK payments in cash of $178 and $379, 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 six months ended March 31, 2016, fee income included $402 and $567, respectively, of prepayment premiums. For the three and six months ended March 31, 2015, fee income included $554 and $701, respectively, of prepayment premiums.

For the three and six months ended March 31, 2016, the Company received interest and fees in cash, which excludes capitalized loan origination fees, in the amounts of $27,519 and $54,743 respectively. For the three and six months ended March 31, 2015, the Company received interest and fees in cash, which excludes capitalized loan origination fees, in the amounts of $26,361 and $51,516, 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 six months ended March 31, 2016, the Company recorded dividend income of $1,178 and $2,185, respectively, and return of capital distributions of $88 and $2,158. For the three and six months ended March 31, 2015, the Company recorded dividend income of $377 and $395, respectively, and return of capital distributions of $0 and $8.

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 issue 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 principal and interest is paid and, in management’s judgment, payments are likely to remain current. The total fair value of non-accrual loans was $4,282 and $6,487 as of March 31, 2016 and September 30, 2015, respectively.

27

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

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 be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax 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 may then be required to pay a 4% excise tax on such income. To the extent that the Company determines that it’s estimated current year annual taxable income, determined on a calendar year 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 six months ended March 31, 2016, $31 and $333, respectively, was recorded for U.S. federal excise tax. For the three and six months ended March 31, 2015, 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 March 31, 2016. The 2012 through 2015 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 ex-dividend 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 declares a cash distribution, then stockholders who participate in the DRIP will have their cash distribution 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 discount to net asset value (“NAV”) and the Company is otherwise permitted under applicable law to purchase such shares, the Company intends to purchase shares in the open market in connection with any obligations under the DRIP.

28

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

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 NAV 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 NAV 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 NAV per share of common stock).

Share repurchase plan: The Company has 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 most recently published consolidated financial statements. The Board most recently reapproved the Program in August 2015 and 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. The Company did not make any repurchases of its common stock during the three and six months ended March 31, 2016.

Deferred debt issuance costs: Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of March 31, 2016 and September 30, 2015, the Company had deferred debt issuance costs of $6,454 and $7,624, 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 six months ended March 31, 2016 was $1,001 and $2,250, respectively. Amortization expense for the three and six months ended March 31, 2015 was $1,088 and $2,135, 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 March 31, 2016 and September 30, 2015, deferred offering costs, which are included in other assets on the consolidated statements of financial condition, were $174 and $174, respectively.

Recent accounting pronouncements: In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2015 and early adoption is permitted. The Company has elected to adopt the ASU which did not have a material impact on the Company’s consolidated financial statements other than corresponding reductions to total assets and total liabilities on the consolidated statements of financial condition. Prior to adoption, the Company recorded deferred debt issuance costs as deferred financing costs as an asset on the consolidated statements of financial condition. Upon adoption, the Company reclassified these costs as unamortized debt issuance costs that reduce debt in the liabilities on the consolidated statements of financial condition and retrospectively reclassified the $7,624 of deferred debt issuance costs that were previously presented as deferred financing costs as an asset as of September 30, 2015.

In May 2015, FASB issued ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) , which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. This guidance is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2015 and early adoption is permitted. The Company adopted the ASU during the year ended September 30, 2015, which did not have a material impact on the Company’s consolidated financial statements other than the enhanced disclosures around fair value measurements.

29

Golub Capital BDC, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(In thousands, except shares and per share data)

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which, among other things, requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, the ASU changes the disclosure requirements for financial instruments. This guidance is effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2017 and early adoption is permitted for certain provisions. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.

Note 3. Related Party Transactions

Investment Advisory Agreement: Under the Investment Advisory Agreement, 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 2016. 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 base 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 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. 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. “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)

30

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

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 six months ended March 31, 2016, the Income Incentive Fee incurred was $720 and $1,127, respectively. For the three and six months ended March 31, 2015, the Income Incentive Fee incurred was $1,220 and $2,152, respectively.

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 the Incentive Fee Cap. 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;

31

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

· 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 the Company’s Pre-Incentive Fee 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 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. 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 and (iii) all unrealized capital depreciation on a cumulative basis less (2) all unamortized deferred debt issuance costs, if and to the extent such costs exceed all unrealized capital appreciation on a cumulative basis.

· 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 six months ended March 31, 2016 and 2015 was $0. However, in accordance with GAAP, we are required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee on a quarterly basis 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 and 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 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. From inception through March 31, 2016, the Company has not made any Capital Gain Incentive Fee payments. For the three months ended March 31, 2016, the Company recorded a reversal in the accrual for capital gain incentive fee under GAAP of $540 and for the six months ended March 31, 2016, the Company accrued a capital gain incentive fee under GAAP of $824. For the three and six months ended March 31, 2015, the Company accrued a capital gain incentive fee under GAAP of $1,038 and $1,177, respectively.

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

32

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

Administration Agreement: Under the Administration Agreement, the Administrator furnishes the Company with office facilities and equipment, provides the Company with clerical, bookkeeping and record keeping services at such facilities and provides the Company 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 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, managerial assistance to those portfolio companies to which the Company is required to provide such assistance and will be paid an additional amount based on the cost of the services provided, which amount shall not exceed the amount the Company receives from such portfolio companies.

Included in accounts payable and accrued expenses is $609 and $606 as of March 31, 2016 and September 30, 2015, respectively, for accrued allocated shared services under the Administration Agreement.

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 six months ended March 31, 2016 were $822 and $1,379, respectively. Total expenses reimbursed to the Administrator during the three and six months ended March 31, 2015 were $301 and $457, respectively.

As of March 31, 2016 and September 30, 2015, included in accounts payable and accrued expenses were $715 and $554, respectively, for accrued expenses paid on behalf of the Company by the Administrator.

During the three and six months ended March 31, 2016, the Company sold $35,923 and $115,146, respectively, of investments and unfunded commitments to SLF at fair value and recognized $158 and $753, respectively, of net realized gains. During the three and six months ended March 31, 2015, the Company sold $83,376 and $99,201, respectively, of investments and unfunded commitments to SLF at fair value and recognized $662 and $783, respectively, of net realized gains.

33

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

Note 4. Investments

Investments as of March 31, 2016 and September 30, 2015 consisted of the following:

As of March 31, 2016 As of September 30, 2015
Amortized Fair Amortized Fair
Par Cost Value Par Cost Value
Senior secured $ 180,933 $ 178,830 $ 179,513 $ 199,573 $ 197,189 $ 197,329
One stop 1,229,133 1,212,983 1,210,690 1,153,450 1,137,654 1,134,222
Second lien 39,924 39,523 38,909 39,924 39,464 39,774
Subordinated debt 1,707 1,707 1,911 1,707 1,707 1,715
Subordinated notes in SLF (1) 86,182 86,182 85,321 76,563 76,563 76,563
LLC equity interests in SLF (1) N/A 34,043 31,698 N/A 23,222 22,373
Equity N/A 48,172 63,660 N/A 41,515 57,808
Total $ 1,537,879 $ 1,601,440 $ 1,611,702 $ 1,471,217 $ 1,517,314 $ 1,529,784

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

The following tables show the portfolio composition by geographic region at amortized cost and fair value as a percentage of total investments in portfolio companies. 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 March 31, 2016 As of September 30, 2015
Amortized Cost:
United States
Mid-Atlantic $ 413,767 25.8 % $ 400,538 26.4 %
Midwest 304,974 19.0 288,923 19.0
West 260,681 16.3 245,455 16.2
Southeast 412,263 25.7 376,243 24.8
Southwest 108,195 6.8 92,714 6.1
Northeast 99,924 6.3 113,441 7.5
Canada 1,636 0.1 - -
Total $ 1,601,440 100.0 % $ 1,517,314 100.0 %
Fair Value:
United States
Mid-Atlantic $ 408,067 25.3 % $ 395,779 25.9 %
Midwest 312,994 19.4 292,826 19.1
West 259,376 16.1 250,264 16.4
Southeast 410,341 25.5 376,653 24.6
Southwest 111,511 6.9 95,524 6.2
Northeast 107,761 6.7 118,738 7.8
Canada 1,652 0.1 - -
Total $ 1,611,702 100.0 % $ 1,529,784 100.0 %

34

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 amortized cost and fair value were as follows:

As of March 31, 2016 As of September 30, 2015
Amortized Cost:
Aerospace and Defense $ 89,007 5.5 % $ 87,245 5.7 %
Automobile 21,772 1.4 15,451 1.0
Banking 17,253 1.1 17,059 1.1
Beverage, Food and Tobacco 125,854 7.9 133,352 8.8
Broadcasting and Entertainment 1,478 0.1 1,485 0.1
Buildings and Real Estate 30,007 1.9 31,039 2.0
Cargo Transport 4,850 0.3 - -
Chemicals, Plastics and Rubber 72 - * 6,166 0.4
Containers, Packaging and Glass 19,465 1.2 31,429 2.1
Diversified Conglomerate Manufacturing 66,781 4.2 66,939 4.4
Diversified Conglomerate Service 249,823 15.6 209,454 13.8
Electronics 140,925 8.8 134,487 8.9
Finance - - 10,056 0.7
Grocery 17,720 1.1 21,670 1.4
Healthcare, Education and Childcare 271,475 17.0 227,871 15.0
Home and Office Furnishings, Housewares and Durable Consumer 31,007 1.9 25,102 1.7
Hotels, Motels, Inns, and Gaming 812 0.1 - -
Insurance 32,145 2.0 31,407 2.1
Investment Funds and Vehicles 120,225 7.5 99,785 6.6
Leisure, Amusement, Motion Pictures and Entertainment 51,451 3.2 60,696 4.0
Mining, Steel, Iron and Non-Precious Metals 4,690 0.3 4,968 0.3
Oil and Gas 1,199 0.1 1,241 0.1
Personal and Non-Durable Consumer Products 40,712 2.5 35,021 2.3
Personal, Food and Miscellaneous Services 55,255 3.4 49,873 3.3
Printing and Publishing 35,113 2.2 32,791 2.2
Retail Stores 150,721 9.4 170,100 11.2
Telecommunications 2,292 0.1 2,315 0.2
Textiles and Leather 8,385 0.5 5,195 0.3
Utilities 10,951 0.7 5,117 0.3
Total $ 1,601,440 100.0 % $ 1,517,314 100.0 %

As of March 31, 2016 As of September 30, 2015
Fair Value:
Aerospace and Defense $ 84,952 5.3 % $ 84,370 5.5 %
Automobile 21,930 1.4 15,627 1.0
Banking 17,353 1.1 17,177 1.1
Beverage, Food and Tobacco 128,702 8.0 135,937 8.9
Broadcasting and Entertainment 1,485 0.1 1,496 0.1
Buildings and Real Estate 30,309 1.9 31,277 2.0
Cargo Transport 4,850 0.3 - -
Chemicals, Plastics and Rubber 96 - * 6,241 0.4
Containers, Packaging and Glass 24,170 1.5 32,553 2.1
Diversified Conglomerate Manufacturing 66,888 4.1 67,337 4.4
Diversified Conglomerate Service 252,874 15.7 212,411 13.9
Electronics 141,732 8.8 136,161 8.9
Finance - - 10,290 0.7
Grocery 18,423 1.1 21,843 1.4
Healthcare, Education and Childcare 270,375 16.8 228,136 14.9
Home and Office Furnishings, Housewares and Durable Consumer 31,509 2.0 23,750 1.6
Hotels, Motels, Inns, and Gaming 827 0.1 - -
Insurance 32,778 2.0 31,694 2.1
Investment Funds and Vehicles 117,019 7.3 98,936 6.5
Leisure, Amusement, Motion Pictures and Entertainment 46,747 2.9 59,032 3.9
Mining, Steel, Iron and Non-Precious Metals 4,033 0.2 4,999 0.3
Oil and Gas 1,215 0.1 1,256 0.1
Personal and Non-Durable Consumer Products 41,079 2.5 36,119 2.4
Personal, Food and Miscellaneous Services 56,132 3.5 50,629 3.3
Printing and Publishing 35,660 2.2 33,019 2.2
Retail Stores 158,685 9.8 176,633 11.5
Telecommunications 2,217 0.1 2,294 0.1
Textiles and Leather 8,469 0.5 5,271 0.3
Utilities 11,193 0.7 5,296 0.4
Total $ 1,611,702 100.0 % $ 1,529,784 100.0 %

*Represents an amount less than 0.1%

35

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

Senior Loan Fund LLC:

The Company co-invests with RGA Reinsurance Company (“RGA”) in senior secured loans through SLF, an unconsolidated Delaware LLC. 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 two representatives of each of the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both representatives of each of the Company and RGA). SLF may cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal course of business. Investments held by SLF are measured at fair value using the same valuation methodologies as described in Note 6.

SLF is capitalized with subordinated notes and LLC equity interest subscriptions from its members. As of March 31, 2016, the Company and RGA owned 87.5% and 12.5%, respectively, of both the outstanding subordinated notes and LLC equity interests. SLF’s profits and losses are allocated to the Company and RGA in accordance with their 87.5% and 12.5%, respectively, ownership interests. Additionally, SLF has entered into a senior secured revolving credit facility (as amended, the “SLF Credit Facility”) with Wells Fargo Bank, N.A., through its wholly-owned subsidiary Senior Loan Fund II LLC (“SLF II”), which as of March 31, 2016 allowed SLF II to borrow up to $300,000 at any one time outstanding, subject to leverage and borrowing base restrictions.

As of March 31, 2016 and September 30, 2015, SLF had the following commitments from its members:

As of March 31, 2016 As of September 30, 2015
Committed Funded Committed Funded
Subordinated note commitments (1) $ 160,000 $ 98,494 $ 160,000 $ 87,500
LLC equity commitments (1) 40,000 38,906 40,000 26,540
Total $ 200,000 $ 137,400 $ 200,000 $ 114,040

(1) Commitments presented are combined for the Company and RGA.

As of March 31, 2016 and September 30, 2015, SLF had total assets at fair value of $383,873 and $323,395, respectively. As of March 31, 2016 and September 30, 2015, SLF did not have any investments on non-accrual status. The portfolio companies in SLF are in industries similar to those in which the Company may invest directly. Additionally, as of March 31, 2016 and September 30, 2015, SLF had commitments to fund various undrawn revolvers and delayed draw investments to its portfolio companies totaling $28,029 and $30,840, respectively.

36

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

Below is a summary of SLF’s portfolio, followed by a listing of the individual loans in SLF’s portfolio as of March 31, 2016 and September 30, 2015:

As of March
31, 2016 		As of
September 30,
2015
Senior secured loans (1) $ 367,302 $ 320,583
Weighted average current interest rate on senior secured loans (2) 5.9 % 5.8 %
Number of borrowers in SLF 63 62
Largest portfolio company investment (1) $ 13,122 $ 12,734
Total of five largest portfolio company investments (1) $ 62,117 $ 59,917

(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.

37

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 March 31, 2016
Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Security Type Date Rate (1) Amount Value (2)
5.11, Inc. (3) Textiles and Leather Senior loan 02/2020 6.0 % $ 3,146 $ 3,146
ACTIVE Network, Inc. Electronics Senior loan 11/2020 5.5 1,955 1,866
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 6,805 6,737
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 466 461
Advanced Pain Management Holdings, Inc. (4) Healthcare, Education and Childcare Senior loan 02/2018 N/A (5) - (12 )
AG Kings Holdings Inc. Grocery Senior loan 04/2020 6.5 6,175 6,175
Aimbridge Hospitality, LLC (3) Hotels, Motels, Inns, and Gaming Senior loan 10/2018 5.8 5,110 5,110
American Seafoods Group LLC Beverage, Food and Tobacco Senior loan 08/2021 6.0 4,938 4,809
Argon Medical Devices, Inc. Healthcare, Education and Childcare Senior loan 12/2021 5.8 4,000 4,000
Arise Virtual Solutions, Inc. (3) Telecommunications Senior loan 12/2018 7.3 11,499 10,809
Arise Virtual Solutions, Inc. (3) (4) Telecommunications Senior loan 12/2018 N/A (5) - (34 )
Atkins Nutritionals, Inc (3) Beverage, Food and Tobacco Senior loan 01/2019 6.3 5,664 5,664
Atrium Innovations Personal and Non Durable Consumer Products Senior loan 02/2021 4.3 3,503 3,161
BMC Software, Inc. Electronics Senior loan 09/2020 5.0 1,886 1,586
Boot Barn, Inc. Retail Stores Senior loan 06/2021 5.5 10,721 10,721
Brandmuscle, Inc. Printing and Publishing Senior loan 12/2021 5.8 4,972 4,972
C.B. Fleet Company, Incorporated Personal and Non Durable Consumer Products Senior loan 12/2021 5.8 7,670 7,670
Checkers Drive-In Restaurants, Inc. Beverage, Food and Tobacco Senior loan 01/2022 6.5 4,859 4,822
CLP Healthcare Services, Inc. Healthcare, Education and Childcare Senior loan 12/2020 5.8 8,721 8,721
CLP Healthcare Services, Inc. Healthcare, Education and Childcare Senior loan 12/2020 5.8 4,395 4,395
CPI Buyer, LLC (Cole-Parmer) (3) Healthcare, Education and Childcare Senior loan 08/2021 5.5 5,925 5,680
Curo Health Services LLC (3) Healthcare, Education and Childcare Senior loan 02/2022 6.5 5,940 5,894
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 10,199 9,077
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 1,000 705
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 5.5 4,591 4,362
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 5.5 255 202
EAG, INC. (Evans Analytical Group) Diversified/Conglomerate Service Senior loan 07/2017 5.0 2,179 2,157
Express Oil Change, LLC (3) Retail Stores Senior loan 12/2017 6.0 3,573 3,573
Express Oil Change, LLC Retail Stores Senior loan 12/2017 6.0 1,336 1,336
Express Oil Change, LLC Retail Stores Senior loan 12/2017 6.0 101 101
Express Oil Change, LLC Retail Stores Senior loan 12/2017 7.5 50 50
Extreme Reach Inc. Broadcasting and Entertainment Senior loan 02/2020 7.3 5,193 5,184
Federal-Mogul Corporation Automobile Senior loan 04/2021 4.8 3,940 3,587
Flexan, LLC Chemicals, Plastics and Rubber Senior loan 02/2020 6.3 6,121 6,121
Hygenic Corporation, The (3) Personal and Non Durable Consumer Products Senior loan 10/2020 6.0 4,493 4,493
Integrated Supply Network, LLC (3) Automobile Senior loan 02/2020 6.3 11,940 11,940
Jensen Hughes, Inc. Diversified/Conglomerate Service Senior loan 12/2021 6.0 2,360 2,360
Jensen Hughes, Inc. Diversified/Conglomerate Service Senior loan 12/2021 6.0 66 66
Joerns Healthcare, LLC (3) Healthcare, Education and Childcare Senior loan 05/2020 6.0 9,647 9,563
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 6,870 6,870
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 733 733
Julio & Sons Company (UJ Merger) Beverage, Food and Tobacco Senior loan 09/2017 6.5 598 598
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 3,845 3,768
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 182 178
K&N Engineering, Inc. (3) (4) Automobile Senior loan 07/2019 N/A (5) - (4 )
Mediaocean LLC (3) Diversified/Conglomerate Service Senior loan 08/2022 5.8 2,985 2,985
Mediaocean LLC Diversified/Conglomerate Service Senior loan 08/2020 4.9 5 5
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 6.3 10,395 10,395
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 7.8 709 709
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.5 3,888 3,888
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.5 425 425
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 7.5 276 276
Packaging Coordinators, Inc.(AndersonBrecon) (3) Containers, Packaging and Glass Senior loan 08/2021 5.3 11,939 11,830
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.5 2,027 1,865
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.7 259 202
Pasternack Enterprises, Inc. Diversified/Conglomerate Manufacturing Senior loan 12/2017 6.3 1,044 1,044
Payless ShoeSource, Inc. Retail Stores Senior loan 03/2021 5.0 1,965 999
Pentec Acquisition Sub, Inc. Healthcare, Education and Childcare Senior loan 05/2018 6.3 1,510 1,510
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.8 5,925 5,925
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.8 1,226 1,226
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2019 5.8 68 68

38

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 March 31, 2016 (continued)
Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Security Type Date Rate (1) Amount Value (2)
PowerPlan Holdings, Inc. (3) Utilities Senior loan 02/2022 6.3 12,000 12,000
PPT Management, LLC Healthcare, Education and Childcare Senior loan 04/2020 6.0 13,092 13,092
PPT Management, LLC Healthcare, Education and Childcare Senior loan 04/2020 6.0 30 30
Premise Health Holding Corp. (3) Healthcare, Education and Childcare Senior loan 06/2020 5.5 11,921 11,921
Pyramid Healthcare, Inc. Healthcare, Education and Childcare Senior loan 08/2019 6.8 8,396 8,396
Pyramid Healthcare, Inc. Healthcare, Education and Childcare Senior loan 08/2019 8.0 597 597
R.G. Barry Corporation Personal, Food and Miscellaneous Services Senior loan 09/2019 6.0 6,192 6,130
Reliant Pro ReHab, LLC (3) Healthcare, Education and Childcare Senior loan 06/2017 6.0 4,171 4,171
Renaissance Pharma (U.S.) Holdings Inc. (3) Healthcare, Education and Childcare Senior loan 05/2018 5.0 3,675 3,675
Renaissance Pharma (U.S.) Holdings Inc. Healthcare, Education and Childcare Senior loan 05/2018 6.5 67 67
RSC Acquisition, Inc. Insurance Senior loan 11/2022 6.3 3,444 3,444
RSC Acquisition, Inc. Insurance Senior loan 11/2022 6.3 306 306
Rubio's Restaurants, Inc (3) Retail Stores Senior loan 11/2018 6.0 5,070 5,019
Rug Doctor LLC Personal and Non Durable Consumer Products Senior loan 06/2018 6.3 8,807 8,807
Saldon Holdings, Inc. Diversified/Conglomerate Service Senior loan 09/2021 5.5 2,901 2,901
Scientific Games International, Inc. Hotels, Motels, Inns, and Gaming Senior loan 10/2020 6.0 3,915 3,804
SEI, Inc. Electronics Senior loan 07/2021 5.8 8,755 8,755
Self Esteem Brands, LLC (3) Leisure, Amusement, Motion Pictures, Entertainment Senior loan 02/2020 5.0 7,621 7,621
Severin Acquisition, LLC Diversified/Conglomerate Service Senior loan 07/2021 5.9 4,906 4,879
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 956 956
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 5,930 5,930
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 499 499
Systems Maintenance Services Holding, Inc. (3) Electronics Senior loan 10/2019 5.0 2,402 2,402
Tate's Bake Shop, Inc. (3) Beverage, Food and Tobacco Senior loan 08/2019 6.0 2,970 2,970
Teasdale Quality Foods, Inc. Grocery Senior loan 10/2020 5.3 4,639 4,630
Transaction Data Systems, Inc. Diversified/Conglomerate Service Senior loan 06/2021 5.5 4,522 4,522
W3 Co. Oil and Gas Senior loan 03/2020 5.8 2,939 2,344
Young Innovations, Inc. (3) Healthcare, Education and Childcare Senior loan 01/2019 5.3 3,824 3,824
Young Innovations, Inc. (3) Healthcare, Education and Childcare Senior loan 01/2018 6.8 187 183
$ 367,302 $ 360,900

(1) Represents the weighted average annual current interest rate as of March 31, 2016. All interest rates are payable in cash.
(2) Represents the fair value in accordance with ASC Topic 820. 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 March 31, 2016. As such, no interest is being earned on this investment.

39

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, 2015
Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Security Type Date Rate (1) Amount Value (2)
1011778 B.C. ULC (New Red Finance/Burger King) Beverage, Food and Tobacco Senior loan 12/2021 3.8 % $ 2,271 $ 2,264
5.11, Inc. (3) Textiles and Leather Senior loan 02/2020 6.0 3,162 3,172
Acosta, Inc. Diversified/Conglomerate Service Senior loan 09/2021 4.3 2,978 2,938
ACTIVE Network, Inc. Electronics Senior loan 11/2020 5.5 1,965 1,951
Aderant North America, Inc. Diversified/Conglomerate Service Senior loan 12/2018 5.3 4,195 4,195
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 6,946 6,807
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 475 460
Advanced Pain Management Holdings, Inc. (4) Healthcare, Education and Childcare Senior loan 02/2018 N/A (5) - (23 )
Affordable Care Inc. Personal, Food and Miscellaneous Services Senior loan 12/2018 5.5 3,976 3,976
Aimbridge Hospitality, LLC Hotels, Motels, Inns, and Gaming Senior loan 10/2018 5.8 5,204 5,204
ARG IH Corporation Beverage, Food and Tobacco Senior loan 11/2020 4.8 4,370 4,385
Arise Virtual Solutions, Inc. (3) (4) Telecommunications Senior loan 12/2018 N/A (5) - (23 )
Arise Virtual Solutions, Inc. (3) Telecommunications Senior loan 12/2018 6.8 11,729 11,494
Atkins Nutritionals, Inc (3) Beverage, Food and Tobacco Senior loan 01/2019 6.3 5,872 5,879
Atrium Innovations Personal and Non Durable Consumer Products Senior loan 02/2021 4.3 3,520 3,336
BJ's Wholesale Club, Inc. Retail Stores Senior loan 09/2019 4.5 2,957 2,934
BMC Software, Inc. Electronics Senior loan 09/2020 5.0 1,895 1,729
Brickman Group Ltd. LLC Farming and Agriculture Senior loan 12/2020 4.0 1,980 1,954
C.B. Fleet Company, Incorporated Personal and Non Durable Consumer Products Senior loan 10/2020 5.4 5,630 5,630
C.B. Fleet Company, Incorporated Personal and Non Durable Consumer Products Senior loan 10/2020 5.4 696 696
CLP Healthcare Services, Inc. Healthcare, Education and Childcare Senior loan 12/2020 5.8 4,417 4,401
Connect Merger Sub, Inc. Telecommunications Senior loan 04/2020 4.8 3,935 3,820
CPI Buyer, LLC (Cole-Parmer) (3) Healthcare, Education and Childcare Senior loan 08/2021 5.5 5,955 5,925
Curo Health Services LLC (3) Healthcare, Education and Childcare Senior loan 02/2022 6.5 5,970 5,990
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 10,251 10,046
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 1,000 946
Dialysis Newco, Inc. Healthcare, Education and Childcare Senior loan 04/2021 4.5 2,469 2,470
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 5.5 4,614 4,384
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 6.8 96 43
EAG, INC. (Evans Analytical Group) Diversified/Conglomerate Service Senior loan 07/2017 5.0 2,245 2,245
Extreme Reach Inc. Broadcasting and Entertainment Senior loan 01/2020 6.8 5,612 5,591
Federal-Mogul Corporation Automobile Senior loan 04/2021 4.8 3,960 3,769
GSDM Holdings Corp. (3) Healthcare, Education and Childcare Senior loan 06/2019 5.3 1,782 1,782
Hygenic Corporation, The (3) Personal and Non Durable Consumer Products Senior loan 10/2020 6.0 4,515 4,515
Integrated Supply Network, LLC (3) Automobile Senior loan 02/2020 6.3 12,000 12,000
Integrated Supply Network, LLC (3) Automobile Senior loan 02/2020 6.9 734 734
Joerns Healthcare, LLC Healthcare, Education and Childcare Senior loan 05/2020 6.2 9,696 9,647
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 6,906 6,906
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 254 254
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 3,865 3,749
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 183 177
K&N Engineering, Inc. (3) (4) Automobile Senior loan 07/2019 N/A (5) - (6 )
Mister Car Wash Holdings, Inc. Automobile Senior loan 08/2021 5.0 2,970 2,971
National Veterinary Associates, Inc. Personal, Food and Miscellaneous Services Senior loan 08/2021 4.8 990 991
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 6.3 10,448 10,448
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 7.5 231 231
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.3 3,912 3,912
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 7.0 147 147
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.3 47 47
Octane Fitness, LLC Leisure, Amusement, Motion Pictures, Entertainment Senior loan 10/2018 6.5 7,718 7,718
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.8 2,037 2,037
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.9 292 292
Pasternack Enterprises, Inc. Diversified/Conglomerate Manufacturing Senior loan 12/2017 6.3 1,044 1,044
Payless ShoeSource, Inc. Retail Stores Senior loan 03/2021 5.0 1,975 1,580
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.5 5,955 5,955
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.5 646 646
PowerPlan Holdings, Inc. (3) Utilities Senior loan 02/2022 6.3 12,000 12,000
Premise Health Holding Corp. (3) Healthcare, Education and Childcare Senior loan 06/2020 5.5 11,921 11,921
Premise Health Holding Corp. (3) Healthcare, Education and Childcare Senior loan 06/2020 5.5 283 283

40

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, 2015 (continued)
Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Security Type Date Rate (1) Amount Value (2)
R.G. Barry Corporation Personal, Food and Miscellaneous Services Senior loan 09/2019 6.0 6,272 6,209
Reliant Pro ReHab, LLC (3) Healthcare, Education and Childcare Senior loan 06/2017 6.0 4,225 4,225
Renaissance Pharma (U.S.) Holdings Inc. Healthcare, Education and Childcare Senior loan 05/2018 5.0 3,758 3,758
Renaissance Pharma (U.S.) Holdings Inc. Healthcare, Education and Childcare Senior loan 05/2018 6.3 71 71
Rubio's Restaurants, Inc (3) Retail Stores Senior loan 11/2018 6.0 5,095 5,095
Rug Doctor LLC (3) Personal and Non Durable Consumer Products Senior loan 12/2016 6.3 9,769 9,769
Scientific Games International, Inc. Hotels, Motels, Inns, and Gaming Senior loan 10/2020 6.0 3,935 3,891
SEI, Inc. Electronics Senior loan 07/2021 5.8 8,799 8,711
Self Esteem Brands, LLC (3) Leisure, Amusement, Motion Pictures, Entertainment Senior loan 02/2020 5.0 7,930 7,930
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.3 960 960
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.3 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.3 75 75
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 5,960 5,960
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 500 500
Syncsort Incorporated (3) Electronics Senior loan 03/2019 5.8 8,860 8,860
Systems Maintenance Services Holding, Inc. (3) Electronics Senior loan 10/2019 5.0 2,415 2,415
Take 5 Oil Change, L.L.C. Automobile Senior loan 07/2018 6.3 6,647 6,647
Take 5 Oil Change, L.L.C. Automobile Senior loan 07/2018 6.3 187 187
Tate's Bake Shop, Inc. Beverage, Food and Tobacco Senior loan 08/2019 5.8 2,978 2,978
Teasdale Quality Foods, Inc. Grocery Senior loan 10/2020 5.3 4,651 4,651
Transaction Data Systems, Inc. Diversified/Conglomerate Service Senior loan 06/2021 5.5 4,545 4,545
W3 Co. Oil and Gas Senior loan 03/2020 5.8 2,954 2,516
WII Components, Inc. (3) Home and Office Furnishings, Housewares, and Durable Consumer Senior loan 07/2018 5.3 3,008 3,008
Young Innovations, Inc. (3) Healthcare, Education and Childcare Senior loan 01/2019 5.3 4,018 4,018
$ 320,583 $ 317,623

(1) Represents the weighted average annual current interest rate as of September 30, 2015. All interest rates are payable in cash.
(2) Represents the fair value in accordance with ASC Topic 820. 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 September 30, 2015. As such, no interest is being earned on this investment.

The Company has committed to fund $140,000 of subordinated notes and $35,000 of LLC equity interest subscriptions to SLF. The amortized cost and fair value of the subordinated notes held by the Company was $86,182 and $85,321, respectively, as of March 31, 2016, and $76,563 and $76,563, respectively, as of September 30, 2015. As of March 31, 2016, the subordinated notes pay a weighted average interest rate of three-month London Interbank Offered Rate (“LIBOR”) plus 8.0%. For the three and six months ended March 31, 2016, the Company earned interest income on the subordinated notes of $1,767 and $3,393, respectively. For the three and six months ended March 31, 2015, the Company earned interest income on the subordinated notes of $652 and $1,202, respectively.

As of March 31, 2016 and September 30, 2015, $34,043 and $23,222 of the Company’s LLC equity interest subscriptions to SLF had been called and contributed. For the three and six months ended March 31, 2016, the Company received $1,127 and $1,903 in dividend income from the SLF LLC equity interests, respectively. For the three and six months ended March 31, 2015, the Company received $314 and $314 in dividend income from the SLF LLC equity interests, respectively.

41

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

See below for certain summarized financial information for SLF as of March 31, 2016 and September 30, 2015 and for the three and six months ended March 31, 2016 and 2015:

As of March 31, 2016 As of September 30, 2015
(In thousands)
Selected Balance Sheet Information:
Investments, at fair value $ 360,900 $ 317,623
Cash and other assets 7,336 5,772
Receivable from investments sold 15,637 -
Total assets $ 383,873 $ 323,395
Senior credit facility $ 246,400 $ 212,300
Unamortized debt issuance costs (1) (1,719 ) (2,464 )
Payable for open trades 4,822 -
Other liabilities 634 489
Total liabilities 250,137 210,325
Subordinated notes and members' equity 133,736 113,070
Total liabilities and members' equity $ 383,873 $ 323,395

(1) On October 1, 2015, SLF adopted ASU 2015-03 which requires that debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability rather than as an asset. Adoption of ASU 2015-03 requires the changes to be applied retrospectively.

Three months ended March 31, Six months ended March 31,
2016 2015 2016 2015
(In thousands) (In thousands)
Selected Statement of Operations Information:
Interest income $ 5,649 $ 2,041 $ 11,004 $ 3,641
Fee income 22 2 22 4
Total investment income 5,671 2,043 11,026 3,645
Interest expense 4,040 1,408 7,759 2,516
Administrative service fee 115 49 200 96
Other expenses 40 23 75 48
Total expenses 4,195 1,480 8,034 2,660
Net investment income 1,476 563 2,992 985
Net realized gains (losses) on investments (430 ) - (430 ) -
Net change in unrealized appreciation (depreciation)
on investments, subordinated notes and secured borrowings 1,405 80 (2,096 ) (372 )
Net increase (decrease) in net assets $ 2,451 $ 643 $ 466 $ 613

42

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

Note 5. Transactions with Affiliated Companies

An affiliated company is generally a portfolio company in which the Company owns 5% or more of its voting securities. A controlled affiliate is generally a portfolio company in which the Company owns more than 25% of the portfolio company’s outstanding voting securities. Transactions related to our investments with both controlled and non-controlled affiliates for the six months ended March 31, 2016 and 2015 were as follows:

For the six months ended March 31, 2016
Portfolio Fair value at Purchases (1) Redemptions Sales Transfer in (out) Discount Net unrealized Fair value at Net realized Interest and Dividend
Company September 30, 2015 (cost) (cost) (cost) (cost) accretion gains / (losses) March 31, 2016 gains / (losses) fee income income
Controlled Affiliates
Senior Loan Fund LLC * $ 98,936 $ 20,440 $ - $ - $ - $ - $ (2,357 ) $ 117,019 $ - $ 3,393 $ 1,903
Non-Controlled Affiliates
Barcelona Restaurants, LLC (2) 5,523 - (1,995 ) - (4,871 ) - 1,343 - 2,722 - -
Competitor Group, Inc. (3) - 9 - - 13,743 - (4,142 ) 9,610 - 21 -
Total Controlled and
Non-Controlled Affiliates $ 104,459 $ 20,449 $ (1,995 ) $ - $ 8,872 $ - $ (5,156 ) $ 126,629 $ 2,722 $ 3,414 $ 1,903

* Together with RGA, 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 two representatives of the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both representatives of each of the Company and RGA). Therefore, although the Company owns more than 25% of the voting securities of SLF, the Company does not believe that it has control over SLF for purposes of the 1940 Act or otherwise.

(1) Purchases at cost includes amounts related to PIK capitalized and added to the principal balance of the respective loans.
(2) During the three months ended December 31, 2015, a portion of the Company's investment was sold diluting the Company's ownership to less than five percent of the portfolio company's voting securities. Effective as of and for the periods subsequent to December 31, 2015, the Company no longer classified the portfolio company as a non-controlled affiliate company.
(3) During the three months ended March 31, 2016, the company's ownership increased to over five percent of the portfolio company's voting securities as a result of a partial debt to equity conversion.

For the six months ended March 31, 2015
Portfolio Fair value at Purchases Redemptions Sales Transfer in (out) Discount Net unrealized Fair value at Net realized Interest and Dividend
Company September 30, 2014 (cost) (cost) (cost) (cost) accretion gains / (losses) March 31, 2015 gains / (losses) fee income income
Controlled Affiliates
Senior Loan Fund LLC * $ 34,831 $ 21,962 $ - $ - $ - $ - $ 222 $ 57,015 $ - $ 1,202 $ 314
Non-Controlled Affiliates
Barcelona Restaurants, LLC 3,080 - - - - - 671 3,751 - - -
Total Controlled and
Non-Controlled Affiliates $ 37,911 $ 21,962 $ - $ - $ - $ - $ 893 $ 60,766 $ - $ 1,202 $ 314

* Together with RGA, 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 two representatives of the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both representatives of each of the Company and RGA). 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.

(1) Purchases at cost includes amounts related to PIK capitalized and added to the principal balance of the respective loans.

43

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 six months ended March 31, 2016 and 2015. 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 the number of portfolio companies) 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 March 31, 2016 and September 30, 2015, with the exception of money market funds included in cash and cash equivalents (Level 1 investments) and investments measured at fair value using the NAV, were valued using Level 3 inputs of the fair value hierarchy.

44

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

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 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 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 March 31, 2016 and September 30, 2015 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 indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of March 31, 2016 and September 30, 2015:

45

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

As of March 31, 2016: Fair Value Measurements Using
Description Level 1 Level 2 Level 3 Total
Assets:
Debt investments (1) $ - $ - $ 1,516,344 $ 1,516,344
Equity investments (1) - - 63,660 63,660
Money market funds (1)(2) 24,212 - - 24,212
Investment measured at NAV (3)(4) - - - 31,698
Total assets: $ 24,212 $ - $ 1,580,004 $ 1,635,914
Secured borrowings: $ - $ - $ 334 $ 334

As of September 30, 2015: Fair Value Measurements Using
Description Level 1 Level 2 Level 3 Total
Assets:
Debt investments (1) $ - $ - $ 1,449,603 $ 1,449,603
Equity investments (1) - - 57,808 57,808
Money market funds (1)(2) 77,346 - - 77,346
Investment measured at NAV (3)(4) - - - 22,373
Total assets: $ 77,346 $ - $ 1,507,411 $ 1,607,130
Secured borrowings: $ - $ - $ 355 $ 355

(1) Refer to the consolidated schedules of investments for further details.
(2) Included in cash and cash equivalents and restricted cash and cash equivalents on the consolidated statements of financial condition.
(3) Certain investments that are measured at fair value using the NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of financial condition.
(4) Represents the Company's investment in LLC equity interests in SLF. The fair value of this investment has been estimated using the NAV of the Company's ownership interest in members' capital.

The net change in unrealized appreciation (depreciation) for the three and six months ended March 31, 2016 and 2015 reported within the net change in unrealized appreciation (depreciation) on investments in the Company’s consolidated statements of operations attributable to the Company’s Level 3 assets held as of March 31, 2016 was ($6,884) and $494, respectively. The net change in unrealized appreciation (depreciation) for the three and six months ended March 31, 2015 reported within the net change in unrealized appreciation (depreciation) on investments in the Company’s consolidated statements of operations attributable to the Company’s Level 3 assets held as of March 31, 2015 was $3,720 and $3,853, respectively.

46

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 six months ended March 31, 2016 and 2015:

For the six months ended March 31, 2016
Debt Investments Equity Investments Total Investments Secured Borrowings
Fair value, beginning of period $ 1,449,603 $ 57,808 $ 1,507,411 $ 355
Net change in unrealized appreciation (depreciation) on investments 96 (808 ) (712 ) -
Net realized gain (loss) on investments (505 ) 5,661 5,156 -
Proceeds from (funding of) revolving loans, net 4,681 - 4,681 -
Fundings of investments 298,434 9,001 307,435 -
PIK interest 316 - 316 -
Proceeds from principal payments and sales of portfolio investments (239,967 ) (8,002 ) (247,969 ) -
Repayments on secured borrowings - - - (21 )
Accretion of discounts and amortization of premiums 3,686 - 3,686 -
Fair value, end of period $ 1,516,344 $ 63,660 $ 1,580,004 $ 334

For the six months ended March 31, 2015
Debt Investments Equity Investments (1) Total Investments (1) Secured Borrowings
Fair value, beginning of period $ 1,292,851 $ 45,519 $ 1,338,370 $ 389
Net change in unrealized appreciation (depreciation) on investments (1,834 ) 84 (1,750 ) -
Net change in unrealized appreciation (depreciation) on secured borrowings - - - (1 )
Net realized gain (loss) on investments 611 5,638 6,249 -
Proceeds from (funding of) revolving loans, net 4,261 - 4,261 -
Fundings of investments 280,189 4,151 284,340 -
PIK interest 584 - 584 -
Proceeds from principal payments and sales of portfolio investments (220,460 ) (7,479 ) (227,939 ) -
Proceeds from secured borrowings - - - -
Repayments on secured borrowings - - - (17 )
Accretion of discounts and amortization of premiums 3,490 - 3,490 1
Fair value, end of period $ 1,359,692 $ 47,913 $ 1,407,605 $ 372

(1) The changes in Level 3 equity investments presented for the six months ended March 31, 2015 have been restated to exclude certain investments that are measured at fair value using the NAV in accordance with the retrospective application of the Company’s adoption of ASU 2015-07.

47

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments and secured borrowings as of March 31, 2016 and September 30, 2015.

Quantitative information about Level 3 Fair Value Measurements
Fair value as of
March 31, 2016 		Valuation Techniques Unobservable Input Range (Weighted Average)
Assets:
Senior secured loans (1)(2) $ 155,367 Market rate approach Market interest rate 4.0% - 41.8% (6.8%)
Market comparable companies EBITDA multiples 4.0x - 17.5x (11.1x)
24,146 Market comparable Broker/dealer bids or quotes N/A
Subordinated Notes of SLF $ 85,321 Discounted cash flow Discount rate 9.4%
analysis
One stop loans (1)(2)(3) $ 1,203,136 Market rate approach Market interest rate 5.5% - 21.3% (7.7%)
Market comparable companies EBITDA multiples (5) 4.0x - 20.0x (11.1x)
Revenue multiples (5) 2.0x - 4.3x (3.7x)
3,272 Market comparable Broker/dealer bids or quotes N/A
Subordinated and second lien loans (1) $ 31,370 Market rate approach Market interest rate 9.0% - 14.8% (10.8%)
Market comparable companies EBITDA multiples 6.5x - 12.0x (10.3x)
9,450 Market comparable Broker/dealer bids or quotes N/A
Equity securities (4) $ 63,660 Market comparable companies EBITDA multiples (5) 4.0x - 20.0x (10.4x)
Revenue multiples (5) 2.0x - 4.0x (3.3x)
Liabilities:
Secured borrowings (6) $ 334 Market rate approach Market interest rate 6.0%
Market comparable companies EBITDA multiples 16.0x

(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 as of March 31, 2016 was determined using the market rate approach.
(2) Excludes $4,282 of non-accrual loans at fair value, which the Company valued on a liquidation basis.
(3) The Company valued $1,098,117 and $105,019 of one stop loans using EBITDA and revenue multiples, respectively. All one stop loans were also valued using the market rate approach.
(4) Excludes $31,698 of LLC equity interests in SLF at fair value, which the Company valued using the NAV.
(5) The Company valued $60,344 and $3,316 of equity investments using EBITDA and revenue multiples, respectively.
(6) 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 as of March 31, 2016 was determined using the market rate approach.

48

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 as of
September 30,
2015 		Valuation Techniques Unobservable Input Range (Weighted Average)
Assets:
Senior secured loans (1)(2) $ 153,205 Market rate approach Market interest rate 4.0% - 25.3% (6.5%)
Market comparable companies EBITDA multiples 4.0x - 17.5x (11.7x)
Subordinated Notes of SLF $ 76,563 Discounted cash flow Discount rate 8.2%
analysis
One stop loans (1)(3)(4) $ 1,085,189 Market rate approach Market interest rate 5.0% - 24.0% (7.8%)
Market comparable companies EBITDA multiples (5) 4.5x - 40.0x (10.9x)
Revenue multiples (5) 2.1x - 5.0x (3.6x)
Subordinated and second lien loans (1)(6) $ 20,444 Market rate approach Market interest rate 9.0% - 14.6% (9.5%)
Market comparable companies EBITDA multiples 7.5x - 16.0x (12.5x)
Equity securities (7) $ 57,808 Market comparable companies EBITDA multiples (8) 4.0x - 40.0x (10.9x)
Revenue multiples (8) 2.1x - 5.0x (3.0x)
Liabilities:
Secured borrowings (9) $ 355 Market rate approach Market interest rate 6.0%
Market comparable companies EBITDA multiples 30.0x

(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 as of September 30, 2015 was determined using the market rate approach.
(2) Excludes $44,124 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 $42,546 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.
(4) Excludes $6,487 of non-accrual loans at fair value, which the Company valued on a liquidation basis.
(5) The Company valued $996,998 and $88,191 of one stop loans using EBITDA and revenue multiples, respectively. All one stop loans were also valued using the market rate approach.
(6) Excludes $21,045 of loans at fair value, which the Company valued using indicative bid and ask prices provided by an independent third party pricing service.
(7) Excludes $22,373 of LLC equity interests in SLF at fair value, which the Company valued using the NAV.
(8) The Company valued $54,965 and $2,843 of equity investments using EBITDA and revenue multiples, respectively.
(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 as of September 30, 2015 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. Increases or decreases in either of these inputs in isolation may 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.

49

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 March 31, 2016 and September 30, 2015. Fair value is estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if available.

As of March 31, 2016 As of September 30, 2015
Carrying Value Fair Value Carrying Value Fair Value
Debt $ 840,050 $ 835,569 $ 813,250 $ 815,087

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 March 31, 2016, the Company’s asset coverage for borrowed amounts was 233.5% (excluding the SBA debentures).

Debt Securitizations : On July 16, 2010, the Company completed a $300,000 term debt securitization, which was subsequently increased to $350,000 (as amended, “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 consists of $203,000 of Aaa/AAA Class A 2010 Notes, $12,000 face amount of Class B 2010 Notes and $135,000 face amount of Subordinated 2010 Notes that do not bear interest. The Class A 2010 Notes and Class B 2010 Notes are included in the March 31, 2016 and September 30, 2015 consolidated statements of financial condition as debt of the Company. As of March 31, 2016 and September 30, 2015, the Subordinated 2010 Notes were eliminated in consolidation.

Through July 20, 2017, 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 leverage in the 2010 Debt Securitization. The 2010 Notes are scheduled to mature on July 20, 2023.

As of March 31, 2016 and September 30, 2015, there were 84 and 78 portfolio companies with a total fair value of $344,681 and $310,622, 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.

50

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

The interest charged under the 2010 Debt Securitization is based on three-month LIBOR, which as of March 31, 2016 was 0.6%. For the three and six months ended March 31, 2016 and 2015, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the 2010 Debt Securitization were as follows:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Stated interest expense $ 1,270 $ 1,090 $ 2,417 $ 2,193
Amortization of debt issuance costs 77 223 330 451
Total interest and other debt financing expenses $ 1,347 $ 1,313 $ 2,747 $ 2,644
Cash paid for interest expense $ 1,151 $ 1,103 $ 2,285 $ 2,196
Annualized average stated interest rate 2.4 % 2.1 % 2.2 % 2.0 %
Average outstanding balance $ 215,000 $ 215,000 $ 215,000 $ 215,000

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 diversifed portfolio of senior secured and second lien loans held by the 2014 Issuer. The 2014 Debt Securitization consists of $191,000 of Aaa/AAA Class A-1 2014 Notes, $20,000 of Aaa/AAA Class A-2 2014 Notes and $35,000 of Aa2/AA Class B 2014 Notes. In partial consideration for the loans transferred to the 2014 Issuer as part of the 2014 Debt Securitization, the Company received $37,500 of Class C 2014 Notes and $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 March 31, 2016 and September 30, 2015 consolidated statements of financial condition as debt of the Company. As of March 31, 2016 and September 30, 2015, 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 of March 31, 2016 and September 30, 2015, there were 79 and 71 portfolio companies with a total fair value of $398,011 and $382,077, respectively, 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.

51

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

The interest charged under the 2014 Debt Securitization is based on three-month LIBOR, which as of March 31, 2016 was 0.6%. For the three and six months ended March 31, 2016 and 2015, 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 March 31, For the six months ended March 31,
2016 2015 2016 2015
Stated interest expense $ 1,500 $ 1,281 $ 2,857 $ 2,571
Amortization of debt issuance costs 159 158 320 318
Total interest and other debt financing expenses $ 1,659 $ 1,439 $ 3,177 $ 2,889
Cash paid for interest expense $ 1,352 $ 1,285 $ 2,675 $ 3,296
Annualized average stated interest rate 2.5 % 2.1 % 2.3 % 2.1 %
Average outstanding balance $ 246,000 $ 246,000 $ 246,000 $ 246,000

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 + 1.95% LIBOR + 2.50%
Stated Maturity April 25, 2026 April 25, 2026 April 25, 2026

The Investment Adviser serves as collateral manager to the 2010 Issuer and the 2014 Issuer 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 aggregate fees that are paid to the Investment Adviser by the 2010 Issuer and the 2014 Issuer for rendering such collateral management services.

As part of each of the 2010 Debt Securitization and the 2014 Debt Securitization, the Company entered into master loan sale agreements under which the Company agreed to directly or indirectly sell or contribute certain senior secured and second lien loans (or participation interests therein) to the 2010 Issuer and the 2014 Issuer, as applicable, and to purchase or otherwise acquire the Subordinated 2010 Notes and the LLC equity interests in the 2014 Issuer, as applicable. The 2010 Notes (other than the 2010 Subordinated Notes) and the 2014 Notes are the secured obligations of the 2010 Issuer and 2014 Issuer, respectively, and indentures governing each of the 2010 Notes and the 2014 Notes include customary covenants and events of default. The pool of loans in the 2010 Debt Securitization and 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.

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.

52

Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

The licenses allow the 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 GBDC, 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 $350,000 and the maximum amount that a single SBIC licensee may issue is $150,000. On February 11, 2016, the SBA approved SBIC V’s application for an additional $75,000 of debenture commitments bringing SBIC V’s total debenture commitments up to $150,000. As of March 31, 2016, SBIC IV and SBIC V, our consolidated SBIC subsidiaries, had $150,000 and $81,500, respectively, of outstanding SBA-guaranteed debentures, respectively that mature between March 2021 and September 2026, leaving incremental borrowing capacity of $68,500 for SBIC V under present SBIC regulations. As of September 30, 2015, SBIC IV and SBIC V had $150,000 and $75,000 of outstanding SBA-guaranteed debentures, respectively that mature between March 2021 and September 2025.

The interest rate on $225,000 of outstanding debentures as of March 31, 2016 is fixed at an average annualized interest rate of 3.7%. The annualized interim financing rate on the remaining $6,500 of outstanding debentures was 1.9% as March 31, 2016. For the three and six months ended March 31, 2016 and 2015, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the SBA debentures were as follows:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Stated interest expense $ 2,062 $ 1,892 $ 4,144 $ 3,827
Amortization of debt issuance costs 444 476 931 964
Total interest and other debt financing expenses $ 2,506 $ 2,368 $ 5,075 $ 4,791
Cash paid for interest expense $ 4,083 $ 3,791 $ 4,083 $ 3,791
Annualized average stated interest rate 3.7 % 3.7 % 3.7 % 3.7 %
Average outstanding balance $ 225,747 $ 208,750 $ 225,372 $ 208,750

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 March 31, 2016 allowed Funding to borrow up to $200,000 at any one time outstanding, subject to leverage and borrowing base restrictions.

Through the reinvestment period, which ends July 29, 2017, the Credit Facility bears interest at one-month LIBOR plus 2.25% per annum. After the reinvestment period, through the stated maturity date of July 30, 2020, 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.

On March 1, 2016 the Credit Facility was amended to, among other things, make certain amendments to the computation of the borrowing base restrictions in the Credit Facility. Our maximum borrowing capacity under the Credit Facility, the expiration of the reinvestment period and the stated maturity date of the Credit Facility did not change in connection with this amendment.

The Credit Facility is collateralized by all of the assets held by Funding, and GBDC 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 GBDC as the transferor and servicer under the Credit Facility. Both GBDC and Funding have made

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Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

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 March 31, 2016 and September 30, 2015, the Company had outstanding debt under the Credit Facility of $147,550 and $127,250, respectively. For the three and six months ended March 31, 2016, the Company had borrowings on the Credit Facility of $98,700 and $155,250 and repayments on the Credit Facility of $74,200 and $134,950, respectively. For the three and six months ended March 31, 2015, the Company had borrowings on the Credit Facility of $76,550 and $110,100 and repayments on the Credit Facility of $36,750 and $52,800, respectively.

For the three and six months ended March 31, 2016 and 2015, the components of interest expense, cash paid for interest and facility fees, annualized average interest rates and average outstanding balances for the Credit Facility were as follows:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Stated interest expense $ 910 $ 366 $ 1,676 $ 508
Facility fees 86 287 210 449
Amortization of debt issuance costs 321 183 635 332
Total interest and other debt financing expenses $ 1,317 $ 836 $ 2,521 $ 1,289
Cash paid for interest expense and facility fees $ 978 $ 580 $ 1,847 $ 850
Annualized average stated interest rate 2.7 % 2.5 % 2.6 % 2.5 %
Average outstanding balance $ 134,273 $ 60,461 $ 126,991 $ 41,554

Revolver: On November 22, 2013, Revolver Funding, a wholly-owned subsidiary of GBDC, entered into a $15,000 revolving line of credit (as amended, the “Revolver”), which could have been increased up to $30,000, with The PrivateBank and Trust Company (“PrivateBank”). On October 21, 2015, the Company and Revolver Funding terminated the Revolver with PrivateBank. There were no borrowings outstanding on the Revolver at the time of termination and Revolver Funding was released of all obligations under the Revolver and all liens on the assets held by Revolver Funding collateralizing the Revolver were released.

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Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

For the three and six months ended March 31, 2016 and 2015, the components of interest expense, cash paid for interest and facility fees, annualized average interest rates and average outstanding balances for the Revolver were as follows:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Stated interest expense $ - $ - $ - $ -
Facility fees - 9 2 19
Amortization of debt issuance costs - 48 34 70
Total interest and other debt financing expenses $ - $ 57 $ 36 $ 89
Cash paid for interest expense and facility fees $ - $ 9 $ 2 $ 19
Annualized average stated interest rate N/A N/A N/A N/A
Average outstanding balance $ - $ - $ - $ -

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 six months ended March 31, 2016 was $821,020 and $813,363, respectively. 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 six months ended March 31, 2015 was $730,211 and $711,304, respectively.

For the three and six months ended March 31, 2016, 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 3.3% and 3.3%, respectively. For the three and six months ended March 31, 2015, 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 3.3% and 3.3%, respectively.

A summary of the Company’s maturity requirements for borrowings as of March 31, 2016 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 231,500 - - 20,000 211,500
Credit Facility 147,550 - - 147,550 -
Total borrowings $ 840,050 $ - $ - $ 167,550 $ 672,500

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 statements of financial condition and the portion sold is recorded as a secured borrowing in the liabilities section of the consolidated statements 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 statements of operations.

As of March 31, 2015 and September 30, 2015, the Company recognized secured borrowings at fair value of $334 and $355, respectively, and the fair values of the loans that are associated with these secured borrowings was

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Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

$1,215 and $1,256, respectively. These secured borrowings were the result of the Company’s completion of partial sales of one stop loans associated with one portfolio company that did not meet the definition of a “participating interest”. As a result, sale treatment was not allowed and these partial loan sales were treated as secured borrowings.

During the three and six months ended March 31, 2016, there were no partial loan sales, no fundings on revolving and delayed draw secured borrowings and repayments on secured borrowings totaled $12 and $21. During the three and six months ended March 31, 2015, there were no partial loan sales, no fundings on revolving and delayed draw secured borrowings and repayments on secured borrowings totaled $9 and $17, respectively.

For the three and six months ended March 31, 2016, the effective annualized average interest rate on secured borrowings, which includes amortization of original issuance costs, was 4.6% and 4.6%, interest expense was $4 and $8 and amortization of original issue discount were an amount less than $1 for each respective period. For the three and six months ended March 31, 2015, the effective annualized average interest rate on secured borrowings, which includes amortization of original issuance costs, was 4.5% and 4.5%, interest expense was $4 and $8 and amortization of original issue discount was $1 and an amount less than $1, respectively.

Note 8. Commitments and Contingencies

Commitments: The Company had outstanding commitments to fund investments totaling $107,107 and $121,545 under various undrawn revolvers and other credit facilities as of March 31, 2016 and September 30, 2015, respectively. As described in Note 4, the Company had commitments of up to $54,775 and $75,215 to SLF as of March 31, 2016 and September 30, 2015, respectively that may be contributed primarily for the purpose of funding new investments approved by the SLF investment committee.

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. There were no commitments outstanding for derivative contracts as of March 31, 2016 and September 30, 2015. 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 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

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Golub Capital BDC, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
(In thousands, except shares and per share data)

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.

Note 9. Financial Highlights

The financial highlights for the Company are as follows:

Six months ended March 31,
Per share data (1) : 2016 2015
Net asset value at beginning of period $ 15.80 $ 15.55
Net increase in net assets as a result of issuance of shares (2) 0.01 -
Net investment income 0.62 0.60
Net realized gain (loss) on investments 0.10 0.13
Net change in unrealized appreciation (depreciation) on investments (0.04 ) (0.03 )
Dividends and distributions declared
From net investment income (0.64 ) (0.64 )
Net asset value at end of period $ 16.49 $ 16.25
Per share market value at end of period $ 17.31 $ 17.55
Total return based on market value (3) 12.66 % 14.04 %
Shares outstanding at end of period 51,511,221 47,225,212
________________________________________________
Listed below are supplemental data and ratios to the financial highlights:
Ratio of expenses (without incentive fees) to average net assets * 6.66 % 6.63 %
Ratio of incentive fees to average net assets 0.24 % 0.45 %
Ratio of total expenses to average net assets * 7.14 % 7.54 %
Ratio of net investment income to average net assets * 7.83 % 7.71 %
Total return based on average net asset value * 8.56 % 8.99 %
Net assets at end of period $ 816,250 $ 737,392
Average debt outstanding $ 813,363 $ 711,304
Average debt outstanding per share $ 15.79 $ 15.06
Asset coverage ratio (4) 233.52 % 234.55 %
Portfolio turnover * 31.77 % 32.83 %

* 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) Net increase in net assets as a result of issuance of shares for the six months ended March 31, 2016 is related to shares issued  through the DRIP.
(3) Total return based on market value assumes dividends are reinvested.
(4) In accordance with the 1940 Act, with certain limited exceptions (including the Company's exemptive relief related to SBA debentures), 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.

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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 six months ended March 31, 2016 and 2015:

Three months ended March 31, Six months ended March 31,
2016 2015 2016 2015
Earnings available to stockholders $ 14,177 $ 17,861 $ 34,816 $ 33,033
Basic and diluted weighted average shares outstanding 51,382,676 47,174,501 51,342,514 47,147,555
Basic and diluted earnings per share $ 0.28 $ 0.38 $ 0.68 $ 0.70

Note 11. Dividends and Distributions

The Company’s dividends and distributions are recorded on the ex-dividend date. The following table summarizes the Company’s dividend declarations and distributions during three and six months ended March 31, 2016 and 2015:

Amount Cash DRIP Shares DRIP Shares
Date Declared Record Date Payment Date Per Share Distribution Issued Value
Six months ended March 31, 2016
02/02/2016 03/07/2016 03/30/2016 $ 0.32 $ 14,287 131,434 $ 2,155
11/17/2015 12/11/2015 12/29/2015 $ 0.32 $ 15,149 79,594 $ 1,267
Six months ended March 31, 2015
02/03/2015 03/20/2015 03/27/2015 $ 0.32 $ 14,187 53,694 $ 908
11/17/2014 12/18/2014 12/29/2014 $ 0.32 $ 14,193 52,020 $ 885

Note 12. Subsequent Events

On May 3, 2016, the Company’s Board declared a quarterly dividend of $0.32 per share payable on June 29, 2016 to holders of record as of June 6, 2016.

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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 and the competition for those investments;
· our contractual arrangements and relationships with third parties;
· actual and potential conflicts of interest with GC Advisors LLC, or GC Advisors, and other affiliates of Golub Capital Incorporated and Golub Capital 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;
· general economic trends and other external factors;
· 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;
· general price and volume fluctuations in the stock markets;
· 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, 2015.

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We have based the forward-looking statements included in this report on information available to us on the date of this report. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. 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.

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

Our investment objective is to generate current income and capital appreciation by investing primarily in senior secured and one stop loans of U.S. middle-market companies. We may also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in U.S. middle-market companies. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, a leading lender to U.S. middle-market companies with over $15.0 billion in capital under management as of March 31, 2016, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom Golub Capital has 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, GC Advisors and its affiliates.

Under an investment advisory agreement, or the Investment Advisory Agreement, which was most recently reapproved by our board of directors in May 2016, 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.

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We seek to create a portfolio that includes primarily senior secured and one stop loans by primarily investing approximately $5.0 million to $30.0 million of capital, on average, in the securities of U.S. 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 March 31, 2016 and September 30, 2015, our portfolio at fair value was comprised of the following:

As of March 31, 2016 As of September 30, 2015
Investments Percentage of Investments Percentage of
Investment at Fair Value Total at Fair Value Total
Type (In thousands) Investments (In thousands) Investments
Senior secured $ 179,513 11.1 % $ 197,329 12.9 %
One stop 1,210,690 75.1 1,134,222 74.1
Second lien 38,909 2.4 39,774 2.6
Subordinated debt 1,911 0.1 1,715 0.1
Subordinated notes in SLF (1) 85,321 5.3 76,563 5.0
LLC equity interests in SLF (1) 31,698 2.0 22,373 1.5
Equity 63,660 4.0 57,808 3.8
Total $ 1,611,702 100.0 % $ 1,529,784 100.0 %

(1) Proceeds from the subordinated notes and limited liability company, or LLC, equity interests invested in Senior Loan Fund, LLC, or SLF, were utilized by SLF to invest in senior secured loans.

One stop loans include loans to technology companies undergoing strong growth due to new services, increased adoption and/or entry into new markets. We refer to loans to these companies as late stage lending loans. Other targeted characteristics of late stage lending businesses include strong customer revenue retention rates, a diversified customer base and backing from growth equity or venture capital firms. In some cases, the borrower’s high revenue growth is supported by a high level of discretionary spending. As part of the underwriting of such loans and consistent with industry practice, we may adjust our characterization of the earnings of such borrowers for a reduction or elimination of such discretionary expenses, if appropriate. As of March 31, 2016 and September 30, 2015, one stop loans included $105.0 million and $88.2 million, respectively, of late stage lending loans at fair value.

As of March 31, 2016 and September 30, 2015, we had debt and equity investments in 176 and 164 portfolio companies, respectively, and investments in subordinated notes and LLC equity interests in SLF.

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The weighted average annualized income yield and weighted average annualized investment income yield of our income producing debt investments, which represented nearly 100% of our debt investments, for the three and six months ended March 31, 2016 and 2015 was as follows:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Weighted average annualized income yield (1) 7.6 % 7.9 % 7.6 % 7.8 %
Weighted average annualized investment income yield (2) 8.0 % 8.4 % 8.1 % 8.3 %

(1) Represents income from interest, including subordordinated notes in SLF, and fees excluding amortization of capitalized fees and discounts divided by the average fair value of earning debt investments.
(2) Represents income from interest, including subordordinated notes in SLF, fees and amortization of capitalized fees and discounts divided by the average fair value of earning debt investments.

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. For additional details on revenues, see “Critical Accounting Policies—Revenue Recognition”.

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.

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

· calculating our net asset value, or NAV (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;
· expenses related to unsuccessful portfolio acquisition efforts;
· offerings of our common stock and other securities;
· administration fees and expenses, if any, payable under the Administration Agreement (including payments 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);

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· 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, as amended;
· 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.

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

GC Advisors, as collateral manager for Golub Capital BDC 2010-1 LLC, or the 2010 Issuer, our indirect subsidiary, 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. 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.

GC Advisors, as collateral manager for Golub Capital BDC CLO 2014 LLC, or the 2014 Issuer, our wholly-owned subsidiary, 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. 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.

Collateral management fees are paid directly by the 2010 Issuer and the 2014 Issuer to GC Advisors and offset against the management fees payable under the Investment Advisory Agreement. In addition, the 2010 Issuer and 2014 Issuer paid Wells Fargo Securities, LLC structuring and placement fees for its services in connection with the initial structuring and subsequent amendment of a $350.0 million term debt securitization, or the 2010 Debt Securitization, and the initial structuring of a $402.6 million term debt securitization, or the 2014 Debt Securitization. The 2010 Issuer and 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 2010 Debt Securitization and the 2014 Debt Securitization, or, collectively, the Debt Securitizations, as applicable.

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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 May 3, 2016, our board of directors declared a quarterly distribution of $0.32 per share payable on June 29, 2016 to holders of record as of June 6, 2016.

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Consolidated Results of Operations

Consolidated operating results for the three and six months ended March 31, 2016 and 2015 are as follows:

For the three months ended March 31, Variances For the six months ended March 31, Variances
2016 2015 2016 vs. 2015 2016 2015 2016 vs. 2015
(In thousands) (In thousands)
Interest income $ 25,548 $ 25,017 $ 531 $ 51,224 $ 50,116 $ 1,108
Income from accretion of discounts and origination fees 1,795 1,820 (25 ) 3,686 3,490 196
Interest income from subordinated notes of SLF 1,767 652 1,115 3,393 1,202 2,191
Dividend income 1,178 377 801 2,185 395 1,790
Fee income 474 595 (121 ) 774 803 (29 )
Total investment income 30,762 28,461 2,301 61,262 56,006 5,256
Total expenses 13,863 14,707 (844 ) 29,062 27,695 1,367
Net investment income - before excise tax 16,899 13,754 3,145 32,200 28,311 3,889
Excise tax 31 - 31 333 - 333
Net investment income - after excise tax 16,868 13,754 3,114 31,867 28,311 3,556
Net realized (losses) gains on investments 178 4,523 (4,345 ) 5,156 6,249 (1,093 )
Net change in unrealized appreciation (depreciation) on investment, and secured borrowings (2,869 ) (416 ) (2,453 ) (2,207 ) (1,527 ) (680 )
Net income $ 14,177 $ 17,861 $ (3,684 ) $ 34,816 $ 33,033 $ 1,783
Average earning portfolio company investments, at fair value $ 1,479,795 $ 1,354,214 $ 125,581 $ 1,453,117 $ 1,337,503 $ 115,614
Average debt outstanding (1) $ 821,020 $ 730,211 $ 90,809 $ 813,363 $ 711,304 $ 102,059

(1) For the three and six months ending March 31, 2016 and 2015 we have excluded $0.3 million and $0.4 million, respectively of secured borrowings, at fair value, which were the result of participations and partial loan sales that did not meetthe definition of a "participating interest", as defined in the guidance to Accounting Standards Codification, or ASC, Topic 860 - Transfers and Servicing, or ASC Topic 860.

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

Investment income increased from the three months ended March 31, 2015 to the three months ended March 31, 2016 by $2.3 million primarily as a result of an increase in interest income from subordinated notes of SLF of $1.1 million and an increase in dividend income of $0.8 million. The increase in dividend income was primarily a result of an increase of $0.8 million in dividend distributions received from our investment in SLF LLC equity interests.

Investment income increased from the six months ended March 31, 2015 to the six months ended March 31, 2016 by $5.3 million primarily as a result of an increase in the average earning investment balance, which is the annual average balance of accruing loans in our investment portfolio, of $115.6 million, an increase in interest income earned on the subordinated notes in SLF of $2.2 million and an increase of $1.6 million in dividend distributions received from our investment in SLF LLC equity interests.

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The annualized income yield by security type for the three and six months ended March 31, 2016 and 2015 was as follows:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Senior secured 6.3 % 6.3 % 6.3 % 6.3 %
One stop 7.6 % 8.1 % 7.7 % 8.1 %
Second lien 9.6 % 9.6 % 9.6 % 9.5 %
Subordinated debt 5.0 % 8.5 % 5.1 % 8.4 %
Subordinated notes in SLF (1) 8.4 % 8.3 % 8.3 % 8.3 %

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

Annualized income yields on one stop loans have declined for the three and six months ended March 31, 2016 compared to the three and six months ended March 31, 2015 primarily due to a continued general trend of interest rate compression on new investments. As of March 31, 2016, we have one remaining subordinated debt investment 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 March 31, 		Variances For the six months
ended March 31, 		Variances
2016 2015 2016 vs. 2015 2016 2015 2016 vs. 2015
(In thousands) (In thousands)
Interest and other debt financing expenses $ 5,832 $ 4,929 $ 903 $ 11,314 $ 9,576 $ 1,738
Amortization of debt issuance costs 1,001 1,088 (87 ) 2,250 2,135 115
Base management fee 5,405 4,855 550 10,719 9,677 1,042
Income Incentive Fee 720 1,220 (500 ) 1,127 2,152 (1,025 )
Capital gain incentive fee accrued under GAAP (540 ) 1,038 (1,578 ) 824 1,177 (353 )
Professional fees 700 840 (140 ) 1,431 1,469 (38 )
Administrative service fee 609 584 25 1,112 1,191 (79 )
General and administrative expenses 136 153 (17 ) 285 318 (33 )
Total expenses $ 13,863 $ 14,707 $ (844 ) $ 29,062 $ 27,695 $ 1,367

Interest expense and debt facility fees increased by $0.9 million from the three months ended March 31, 2015 to the three months ended March 31, 2016 primarily due to an increase in the weighted average of outstanding borrowings from $730.2 million for the three months ended March 31, 2015 to $821.0 million for the three months ended March 31, 2016 and an increase in the average London Interbank Offered Rate, or LIBOR rate which is the index that determines the interest rate on our floating rate liabilities. The increase in our debt was primarily driven by an increase in our use of debt under the senior secured revolving credit facility, or the Credit Facility, entered into by Golub Capital BDC Funding LLC, or Funding, our wholly-owned subsidiary, with Wells Fargo Securities, LLC, as administrative agent, and Wells Fargo Bank, N.A., as lender, to $147.6 million as of March 31, 2016 from an outstanding balance of $84.7 million as of March 31, 2015 as well as the increase in our use of debt under our Small Business Administration, or SBA, debentures through our small business investment companies, or SBICs, which had outstanding balances of $231.5 million as of March 31, 2016 and $208.8 million as of March 31, 2015.The effective annualized average interest rate on our outstanding debt remained stable at 3.3% for the three months ended March 31, 2016 and 2015.

Interest and other debt financing expenses increased by $1.7 million from the six months ended March 31, 2015 to the six months ended March 31, 2016 primarily due to an increase in the weighted average of outstanding

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borrowings from $711.4 million for the six months ended March 31, 2015 to $813.4 million for the six months ended March 31, 2016. The effective annualized average interest rate on our outstanding debt remained stable at 3.3% for the six months ended March 31, 2016 and 2015.

The base management fee increased as a result of a sequential increase in average assets from March 31, 2015 to March 31, 2016. The administrative service fee declined from the six months ended March 31, 2015 to the six months ended March 31, 2016 due to efficiencies gained by the Administrator in servicing a growing portfolio.

The incentive fee payable under the Investment Advisory Agreement consists of two parts: (1) the income component, or the Income Incentive Fee, and (2) the capital gains component, or the Capital Gain Incentive Fee. The Income Incentive Fee decreased $0.5 million and $1.0 million from the three and six months ended March 31, 2015 to the three months ended March 31, 2016 as the interest rate compression on new investments and the change in asset mix of our portfolio caused a decline in our Pre-Incentive Fee Net Investment Income (as defined below), expressed as a rate of return on the value of our net assets. Due to this decline, we were not fully through the catch-up provision of the Income Incentive Fee calculation. For the three months ended March 31, 2016, the Income Incentive Fee as a percentage of Pre-Incentive Fee Net Investment Income was 4.2% compared to 7.6% for the three months ended March 31, 2015. For the six months ended March 31, 2016, the Income Incentive Fee as a percentage of Pre-Incentive Fee Net Investment Income was 3.3% compared to 6.8% for the six months ended March 31, 2015.“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 we receive 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 we have not yet received in cash.

The Capital Gain Incentive Fee payable as calculated under the Investment Advisory Agreement for the three and six months ended March 31, 2016 and 2015 was $0. However, in accordance with GAAP, we are required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee 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.

For the three months ended March 31, 2016, we recorded a reversal in the accrual for capital gain incentive fee under GAAP of $0.5 million, or ($0.01) per share, and recorded an accrual of $0.8 million, or $0.02 per share, for the six months ended March 31, 2016. The accrual for capital gain incentive fee under GAAP was $1.0 million, or $0.02 per share, for the three months ended March 31, 2015 and $1.2 million, or $0.02 per share, for the six months ended March 31, 2015.The decrease in the accrual for capital gain incentive fee under GAAP for the three and six months ended March 31, 2016 from the three and six months ended March 31, 2015 was primarily the result of the reversal of unrealized appreciation of debt and equity investments.

For additional details on the liquidation of equity investments, refer to the “ Net Realized and Unrealized Gains and Losses” section below.

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 six months ended March 31, 2016 were $0.8 million and $1.4 million, respectively. Total expenses reimbursed by us to the Administrator for the three and six months ended March 31, 2015 were $0.3 million and $0.5 million, respectively.

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As of March 31, 2016 and September 30, 2015, included in accounts payable and accrued expenses were $0.7 million and $0.6 million, respectively, for accrued expenses paid on behalf of us by the Administrator.

Excise Tax Expense

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 be subject to tax as a RIC, we are required to meet certain source of income and asset diversification requirements, as well as timely distribute to our stockholders at least 90% of investment company taxable income, as defined by the Code, and determined without regard to any deduction for dividends paid 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 may then be required to pay a 4% excise tax on such income. 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. For the three and six months ended March 31, 2016, we recorded a net expense of $31,000 and $333,000, respectively, for U.S. federal excise tax. For the three and six months ended March 31, 2015, we recorded no U.S. federal excise tax expense.

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 March 31, Variances For the six months ended March 31, Variances
2016 2015 2016 vs. 2015 2016 2015 2016 vs. 2015
(In thousands) (In thousands)
Net realized gain (loss) on investments $ 178 $ 4,523 $ (4,345 ) $ 5,156 $ 6,249 $ (1,093 )
Net realized gain (loss) 178 4,523 (4,345 ) 5,156 6,249 (1,093 )
Unrealized appreciation on investments 12,973 9,103 3,870 22,254 11,822 10,432
Unrealized (depreciation) on investments (15,997 ) (9,768 ) (6,229 ) (22,104 ) (13,572 ) (8,532 )
Unrealized appreciation on investments in SLF (1) 1,017 248 769 - 222 (222 )
Unrealized (depreciation) on investments in SLF (1) (862 ) - (862 ) (2,357 ) - (2,357 )
Unrealized (depreciation) on secured borrowings - 1 (1 ) - 1 (1 )
Net change in unrealized appreciation (depreciation) on investments, investments in SLF, and secured borrowings $ (2,869 ) $ (416 ) $ (2,453 ) $ (2,207 ) $ (1,527 ) $ (680 )

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

For the three months ended March 31, 2016, we had a net realized gain of $0.2 million primarily due to the sale of debt investments. For the six months ended March 31, 2016, we had a net realized gain of $5.2 million primarily due to the sale of, or capital gain distributions received from, three equity investments that were partially offset by the realized loss on the write off of one non-accrual portfolio company investment.

During the three months ended March 31, 2016, we had $13.0 million in unrealized appreciation on 103 portfolio company investments, which was offset by $16.0 million in unrealized depreciation on 138 portfolio company investments. For the six months ended March 31, 2016, we had $22.3 million in unrealized appreciation on 119 portfolio company investments, which was offset by $22.1 million in unrealized depreciation on 134 portfolio company investments . Unrealized appreciation during the three and six months ended March 31, 2016 resulted from an increase in fair value primarily due to the rise in market prices of portfolio company investments and the reversal of prior period unrealized depreciation associated with the portfolio company investment write-off. Unrealized depreciation primarily resulted from the amortization of discounts, negative credit related adjustments that caused a reduction in fair value and the reversal of the net unrealized appreciation associated with the sales of portfolio company investments during the three and six months ended March 31, 2016.

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For the three months ended March 31, 2016, we had $1.0 million in unrealized appreciation on our investment in SLF LLC equity interests which was partially offset by $0.9 million in unrealized depreciation on our investment in SLF subordinated notes. The unrealized depreciation was the result of the lower yielding contractual rate compared to comparable market pricing of subordinated notes. The unrealized appreciation on the SLF LLC equity interests was driven by the offsetting impact of the pricing on the subordinated notes.

For the six months ended March 31, 2016, we had $1.5 million of unrealized depreciation on our investment in SLF LLC equity interests and $0.9 million of unrealized depreciation on our investment in SLF subordinated notes. The unrealized depreciation on the SLF LLC equity interests was driven by negative credit related adjustments associated with SLF’s investment portfolio.

For the three months ended March 31, 2015, we had a net realized gain of $4.5 million primarily due to the sale of two equity investments. For the six months ended March 31, 2015, we had net realized gains on investments totaling $6.2 million primarily due to the sale of four equity investments.

During the three months ended March 31, 2015, we had $9.1 million in unrealized appreciation on 83 portfolio company investments, which was offset by $9.8 million in unrealized depreciation on 125 portfolio company investments. For the six months ended March 31, 2015, we had $11.8 million in unrealized appreciation on 94 portfolio company investments, which was offset by $13.6 million in unrealized depreciation on 120 portfolio company investments. Unrealized appreciation during the three and six months ended March 31, 2015 resulted from an increase in fair value primarily due to the rise in market prices of portfolio company investments. Unrealized depreciation primarily resulted from the amortization of discounts, negative credit related adjustments that caused a reduction in fair value and the reversal of the net unrealized appreciation on the equity investments sold during the three and six months ended March 31, 2015.

For the three and six months ended March 31, 2015, we had $0.2 million in unrealized appreciation on our investment in SLF LLC equity interests. The unrealized appreciation on the SLF LLC equity interests was primarily driven by the lack of any negative mark-to-market losses in the aggregate associated with SLF’s investment portfolio. For the three and six months ended March 31, 2015, we had no unrealized appreciation or depreciation on our investment in SLF subordinated notes.

Liquidity and Capital Resources

For the six months ended March 31, 2016, we experienced a net decrease in cash and cash equivalents of $0.1 million. During the period, cash used in operating activities was $51.5, million primarily as a result of funding of portfolio investments of $318.3 million. This was partially offset by the proceeds from principal payments and sales of portfolio investments of $248.0 million and net investment income of $31.9 million. During the same period, cash provided by investment activities of $55.2 million was driven by the decrease in restricted cash and cash equivalents. Lastly, cash used in financing activities was $3.7 million, primarily driven by repayments of debt of $135.0 million and distributions paid of $29.4 million that were partially offset by borrowings on debt of $161.8 million.

For the six months ended March 31, 2015, we experienced a net decrease in cash and cash equivalents of $2.1 million. During the period, we used $50.3 million in operating activities primarily as a result of fundings of portfolio investments of $290.3 million. This was partially offset by proceeds from principal payments and sales of portfolio investments of $227.9 million and net investment income of $28.3 million. During the same period, cash provided by investment activities of $20.3 million was driven by the decrease in restricted cash and cash equivalents. Lastly, cash provided by financing activities was $27.9 million, primarily driven by borrowings on debt of $110.1 million that were partially offset by repayments of debt of $52.8 million and distributions paid of $28.4 million.

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As of March 31, 2016 and September 30, 2015, we had cash and cash equivalents of $5.3 million and $5.5 million, respectively. In addition, we had restricted cash and cash equivalents of $36.9 million and $92.0 million as of March 31, 2016 and September 30, 2015, respectively. Cash and cash equivalents are available to fund new investments, pay operating expenses and pay distributions. As of March 31, 2016, $18.0 million of our restricted cash and cash equivalents could be used to fund new investments that meet the investment guidelines established in the Debt Securitizations and for the payment of interest expense on the notes issued in the Debt Securitizations. $5.9 million of such restricted cash and cash equivalents could 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. As of March 31, 2016, $13.0 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 March 31, 2016 and September 30, 2015, we had outstanding commitments to fund investments totaling $107.1 million and $121.5 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 March 31, 2016 and September 30, 2015, respectively, subject to the terms of each loan’s respective credit agreement. As of March 31, 2016, we believe that we had sufficient assets and liquidity to adequately cover future obligations under our unfunded commitments based on historical rates of drawings upon unfunded commitments, cash and restricted cash balances that we maintain, availability under our Credit Facility, and ongoing principal repayments on debt investments. In addition, we generally hold some syndicated loans in larger portfolio companies that are salable over a relatively short period to generate cash.

As of March 31, 2016, the Credit Facility allowed Funding to borrow up to $200.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of March 31, 2016 and September 30, 2015, subject to leverage and borrowing base restrictions, we had approximately $52.4 million and $72.7 million, respectively, of remaining commitments and $9.7 million and $40.1 million, respectively, of availability on the Credit Facility. As of March 31, 2016 and September 30, 2015, we had $147.6 million and $127.3 million outstanding under the Credit Facility, respectively. On October 21, 2015, we terminated the $15.0 million revolving line of credit, or the Revolver, entered into by Golub Capital BDC Revolver Funding LLC, or Revolver Funding, our wholly-owned subsidiary, with PrivateBank and Trust Company. As of September 30, 2015, the Revolver allowed Revolver Funding to borrow up to $15.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of September 30, 2015, subject to leverage and borrowing base restrictions, we had approximately $15.0 million of remaining commitments and $2.9 million of availability on the Revolver.

On July 16, 2010, we completed the 2010 Debt Securitization, which was subsequently increased to $350 million. The notes offered in the 2010 Debt Securitization, or the 2010 Notes, were issued by the 2010 Issuer and consist of $203.0 million of Class A 2010 Notes, which bear interest at a rate of three-month LIBOR rate, plus 1.74%, $12.0 million of Class B 2010 Notes, which bear interest at a rate of three-month LIBOR plus 2.40%, and $135.0 million face amount of Subordinated 2010 Notes that do not bear interest. The Class A 2010 Notes and Class B 2010 Notes of the 2010 Debt Securitization are included in the March 31, 2016 and September 30, 2015 consolidated statements of financial condition as our debt and the Subordinated 2010 Notes were eliminated in consolidation.

On June 5, 2014, we completed the 2014 Debt Securitization in the which the 2014 Issuer issued an aggregate of $402.6 million of notes, or the 2014 Notes, including $191.0 million of Class A-1 2014 Notes, which bear interest at a rate of three-month LIBOR plus 1.75%, $20.0 million of Class A-2 2014 Notes, which bear interest at a rate of three-month LIBOR plus 1.95%, $35.0 million of Class B 2014 Notes, which bear interest at a rate of three-month LIBOR plus 2.50%, $37.5 million of Class C 2014 Notes, which bear interest at a rate of three-month LIBOR plus 3.50%, and $119.1 million of LLC equity interests in the 2014 Issuer that do not bear interest. We retained all of the Class C 2014

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Notes and LLC equity interests in the 2014 Issuer 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 March 31, 2016 and September 30, 2015 consolidated statements of financial condition as our debt and the Class C 2014 Notes and LLC equity interests in the 2014 Issuer were eliminated in consolidation. As of March 31, 2016 and September 30, 2015, we had outstanding debt under the 2014 Debt Securitization of $246.0 million.

Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management is $350.0 million. The maximum amount that a single SBIC licensee may issue is $150.0 million. On February 11, 2016, the SBA approved GC SBIC V, L.P.’s, or SBIC V, application for an additional $75.0 million of debenture commitments bringing SBIC V’s total debenture commitments up to $150.0 million. GC SBIC IV, L.P., or SBIC IV, and SBIC V, our consolidated SBIC subsidiaries, may each borrow up to two times the amount of its regulatory capital, subject to customary regulatory requirements. As of March 31, 2016, SBIC IV and SBIC V had $150.0 million and $81.5 million of outstanding SBA-guaranteed debentures, respectively, that mature between March 2021 and September 2026, leaving incremental borrowing capacity of $68.5 million for SBIC V under present SBIC regulations. As of September 30, 2015, SBIC IV and SBIC V had $150.0 million and $75.0 million of outstanding SBA-guaranteed debentures, respectively, that mature between March 2021 and September 2025.

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 March 31, 2016, our asset coverage for borrowed amounts was 233.5% (excluding the SBA debentures).

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. To the extent we are not able to raise capital on what we believe are favorable terms, we will focus on optimizing returns by investing capital generated from repayments into new investments we believe are attractive from a risk/reward perspective. Furthermore, to the extent we are not able to raise capital and are at or near our targeted leverage ratios, we may receive smaller allocations, if any, on new investment opportunities under GC Advisors’ allocation policy.

Portfolio Composition, Investment Activity and Yield

As of March 31, 2016 and September 30, 2015, we had investments in 176 and 164 portfolio companies, respectively, with a total fair value of $1,494.7 million and $1,430.9 million, respectively, and had investments in subordinated notes and LLC equity interests in SLF with a total fair value of $117.0 million and $98.9 million, respectively.

The following table shows the asset mix of our new investment commitments for the three and six months ended March 31, 2016 and 2015:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
(In thousands) Percentage of
Commitments 		(In thousands) Percentage of
Commitments 		(In thousands) Percentage of
Commitments 		(In thousands) Percentage of
Commitments
Senior secured $ 37,027 23.8 % $ 56,314 31.5 % $ 72,163 22.5 % $ 133,611 41.1 %
One stop 112,958 72.5 102,971 57.5 226,422 70.5 165,718 50.9
Subordinated notes in SLF (1) 3,452 2.2 12,687 7.1 9,620 3.0 15,968 4.9
LLC equity interests in SLF (1) 1,483 1.0 4,376 2.4 10,820 3.3 5,994 1.8
Equity securities 768 0.5 2,634 1.5 2,108 0.7 4,151 1.3
Total new investment commitments $ 155,688 100.0 % $ 178,982 100.0 % $ 321,133 100.0 % $ 325,442 100.0 %

(1) SLF's proceeds from the subordinated notes and LLC equity interests were utilized by SLF to fund senior secured loans. As of March 31, 2016, SLF funded senior secured loans to 63 different borrowers.

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For the three and six months ended March 31, 2016, we had approximately $42.0 million and $132.8 million, respectively, in proceeds from principal payments and return of capital distributions of portfolio companies. For the three and six months ended March 31, 2016, we had sales of securities in 10 and 22 portfolio companies, respectively, aggregating approximately $34.5 million and $114.9 million, respectively, in net proceeds.

For the three and six months ended March 31, 2015, we had approximately $66.2 million and $126.4 million, respectively, in proceeds from principal payments and return of capital distributions of portfolio companies. For the three and six months ended March 31, 2015, we had sales of securities in seven and 18 portfolio companies, respectively, aggregating approximately $80.8 million and $101.5 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 March 31, 2016 (1) As of September 30, 2015 (1)
Amortized Fair Amortized Fair
Par Cost Value Par Cost Value
(In thousands)
Senior secured:
Performing $ 180,933 $ 178,830 $ 179,513 $ 199,573 $ 197,189 $ 197,329
Non-accrual (2) - - - - - -
One stop:
Performing 1,215,945 1,199,879 1,206,408 1,135,805 1,120,576 1,127,735
Non-accrual (2) 13,188 13,104 4,282 17,645 17,078 6,487
Second lien:
Performing 39,924 39,523 38,909 39,924 39,464 39,774
Non-accrual (2) - - - - - -
Subordinated debt:
Performing 1,707 1,707 1,911 1,707 1,707 1,715
Non-accrual (2) - - - - - -
Subordinated notes in SLF (3)
Performing 86,182 86,182 85,321 76,563 76,563 76,563
Non-accrual (2) - - - - - -
LLC equity interests in SLF (3) N/A 34,043 31,698 N/A 23,222 22,373
Equity N/A 48,172 63,660 N/A 41,515 57,808
Total $ 1,537,879 $ 1,601,440 $ 1,611,702 $ 1,471,217 $ 1,517,314 $ 1,529,784

(1) Nine and nine of our loans included a feature permitting a portion of the interest due on such loan to be PIK interest as of March 31, 2016 and September 30, 2015, 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 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.

As of March 31, 2016 and September 30, 2015, the fair value of our debt investments, including our investment in SLF subordinated notes, as a percentage of the outstanding par value was 98.6% and 98.5%, respectively.

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The following table shows the weighted average rate, spread over LIBOR of floating rate, and fees of investments originated and the weighted average rate of sales and payoffs of portfolio companies during the three and six months ended March 31, 2016 and 2015:

For the three months ended March 31, For the six months ended March 31,
2016 2015 2016 2015
Weighted average rate of new investment fundings (1) 7.2 % 6.5 % 6.9 % 6.6 %
Weighted average spread over LIBOR of new floating rate investment fundings (1) 6.1 % 5.4 % 5.9 % 5.6 %
Weighted average rate of new fixed rate investment fundings N/A 10.8 % N/A 10.8 %
Weighted average fees of new investment fundings 1.8 % 1.3 % 1.6 % 1.6 %
Weighted average rate of sales and payoffs of portfolio companies 7.0 % 6.5 % 7.2 % 6.5 %
Weighted average annualized income yield (2) 7.6 % 7.9 % 7.6 % 7.8 %

(1) Excludes subordinated note investment in SLF.
(2) Represents income from interest, including subordordinated note investment in SLF, and fees excluding amortization of capitalized fees and discounts divided by the average fair value of earning debt investments.

As of March 31, 2016, 94.1% and 94.0% of our debt portfolio at fair value and at amortized cost, respectively, had interest rate floors that limit the minimum applicable interest rates on such loans. As of September 30, 2015, 94.2% and 94.1% of our debt portfolio at fair value and at amortized cost, respectively, had interest rate floors that limit the minimum applicable interest rates on such loans.

As of March 31, 2016, the portfolio median earnings before interest, taxes, depreciation and amortization, or EBITDA, for our portfolio companies was $24.0 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 ratings:

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.

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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 March 31, 2016 and September 30, 2015:

As of March 31, 2016 As of September 30, 2015
Internal Investments Percentage of Investments Percentage of
Performance at Fair Value Total at Fair Value Total
Rating (In thousands) Investments (In thousands) Investments
5 $ 109,610 6.8 % $ 134,142 8.8 %
4 1,370,545 85.0 1,298,558 84.9
3 126,689 7.9 87,687 5.7
2 1,746 0.1 9,397 0.6
1 3,112 0.2 - -
Total $ 1,611,702 100.0 % $ 1,529,784 100.0 %

Senior Loan Fund LLC

We co-invest with RGA Reinsurance Company, or RGA, in senior secured loans through SLF, an unconsolidated Delaware LLC. 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 two representatives of each of us and RGA (with unanimous approval required from (i) one representative of each of us and RGA or (ii) both representatives of each of us and RGA). SLF may cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal course of business.

SLF is capitalized with subordinated notes and LLC equity interest subscriptions from its members. As of March 31, 2016, we and RGA owned 87.5% and 12.5%, respectively, of both the outstanding subordinated notes and LLC equity interests.

As of March 31, 2016 and September 30, 2015, SLF had the following commitments from its members:

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As of March 31, 2016 As of September 30, 2015
Committed Funded Committed Funded
(Dollars in thousands)
Subordinated note commitments (1) $ 160,000 $ 98,494 $ 160,000 $ 87,500
LLC equity commitments (1) 40,000 38,906 40,000 26,540
Total $ 200,000 $ 137,400 $ 200,000 $ 114,040

(1) Commitments presented are combined for us and RGA.

As of March 31, 2016, the senior secured revolving credit facility, or, as amended, the SLF Credit Facility, which SLF entered into through its wholly-owned subsidiary, Senior Loan Fund II LLC, or SLF II, allows SLF II to borrow up to $300.0 million subject to leverage and borrowing base restrictions. The reinvestment period of the SLF Credit Facility ends May 12, 2017, and the stated maturity date is May 13, 2020. As of March 31, 2016 and September 30, 2015, SLF II had outstanding debt under the SLF Credit Facility of $246.4 million and $212.3 million, respectively.

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 March 31, 2016 and September 30, 2015, SLF had total assets at fair value of $383.9 million and $323.4 million, respectively. As of both March 31, 2016 and September 30, 2015, SLF did not have any investments on non-accrual status. The portfolio companies in SLF are in industries similar to those in which we may invest directly. Additionally, as of March 31, 2016 and September 30, 2015, SLF had commitments to fund various undrawn revolving credit and delayed draw loans to its portfolio companies totaling $28.0 million and $30.8 million, respectively.

Below is a summary of SLF’s portfolio, followed by a listing of the individual loans in SLF’s portfolio as of March 31, 2016 and September 30, 2015:

As of March 31, 2016 As of September 30, 2015
(Dollars in thousands)
Senior secured loans (1) $ 367,302 $ 320,583
Weighted average current interest rate on senior secured loans (2) 5.9 % 5.8 %
Number of borrowers in SLF 63 62
Largest portfolio company investment (1) $ 13,122 $ 12,734
Total of five largest portfolio company investments (1) $ 62,117 $ 59,917

(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.

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SLF Loan Portfolio as of March 31, 2016

Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Security Type Date Rate (1) Amount Value (2)
(In thousands)
5.11, Inc. (3) Textiles and Leather Senior loan 02/2020 6.0 % 3,146 3,146
ACTIVE Network, Inc. Electronics Senior loan 11/2020 5.5 1,955 1,866
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 6,805 6,737
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 466 461
Advanced Pain Management Holdings, Inc. (4) Healthcare, Education and Childcare Senior loan 02/2018 N/A (5) - (12 )
AG Kings Holdings Inc. Grocery Senior loan 04/2020 6.5 6,175 6,175
Aimbridge Hospitality, LLC (3) Hotels, Motels, Inns, and Gaming Senior loan 10/2018 5.8 5,110 5,110
American Seafoods Group LLC Beverage, Food and Tobacco Senior loan 08/2021 6.0 4,938 4,809
Argon Medical Devices, Inc. Healthcare, Education and Childcare Senior loan 12/2021 5.8 4,000 4,000
Arise Virtual Solutions, Inc. (3) Telecommunications Senior loan 12/2018 7.3 11,499 10,809
Arise Virtual Solutions, Inc. (3) (4) Telecommunications Senior loan 12/2018 N/A (5) - (34 )
Atkins Nutritionals, Inc (3) Beverage, Food and Tobacco Senior loan 01/2019 6.3 5,664 5,664
Atrium Innovations Personal and Non Durable Consumer Products Senior loan 02/2021 4.3 3,503 3,161
BMC Software, Inc. Electronics Senior loan 09/2020 5.0 1,886 1,586
Boot Barn, Inc. Retail Stores Senior loan 06/2021 5.5 10,721 10,721
Brandmuscle, Inc. Printing and Publishing Senior loan 12/2021 5.8 4,972 4,972
C.B. Fleet Company, Incorporated Personal and Non Durable Consumer Products Senior loan 12/2021 5.8 7,670 7,670
Checkers Drive-In Restaurants, Inc. Beverage, Food and Tobacco Senior loan 01/2022 6.5 4,859 4,822
CLP Healthcare Services, Inc. Healthcare, Education and Childcare Senior loan 12/2020 5.8 8,721 8,721
CLP Healthcare Services, Inc. Healthcare, Education and Childcare Senior loan 12/2020 5.8 4,395 4,395
CPI Buyer, LLC (Cole-Parmer) (3) Healthcare, Education and Childcare Senior loan 08/2021 5.5 5,925 5,680
Curo Health Services LLC (3) Healthcare, Education and Childcare Senior loan 02/2022 6.5 5,940 5,894
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 10,199 9,077
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 1,000 705
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 5.5 4,591 4,362
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 5.5 255 202
EAG, INC. (Evans Analytical Group) Diversified/Conglomerate Service Senior loan 07/2017 5.0 2,179 2,157
Express Oil Change, LLC (3) Retail Stores Senior loan 12/2017 6.0 3,573 3,573
Express Oil Change, LLC Retail Stores Senior loan 12/2017 6.0 1,336 1,336
Express Oil Change, LLC Retail Stores Senior loan 12/2017 6.0 101 101
Express Oil Change, LLC Retail Stores Senior loan 12/2017 7.5 50 50
Extreme Reach Inc. Broadcasting and Entertainment Senior loan 02/2020 7.3 5,193 5,184
Federal-Mogul Corporation Automobile Senior loan 04/2021 4.8 3,940 3,587
Flexan, LLC Chemicals, Plastics and Rubber Senior loan 02/2020 6.3 6,121 6,121
Hygenic Corporation, The (3) Personal and Non Durable Consumer Products Senior loan 10/2020 6.0 4,493 4,493
Integrated Supply Network, LLC (3) Automobile Senior loan 02/2020 6.3 11,940 11,940
Jensen Hughes, Inc. Diversified/Conglomerate Service Senior loan 12/2021 6.0 2,360 2,360
Jensen Hughes, Inc. Diversified/Conglomerate Service Senior loan 12/2021 6.0 66 66
Joerns Healthcare, LLC (3) Healthcare, Education and Childcare Senior loan 05/2020 6.0 9,647 9,563
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 6,870 6,870
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 733 733
Julio & Sons Company (UJ Merger) Beverage, Food and Tobacco Senior loan 09/2017 6.5 598 598
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 3,845 3,768
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 182 178
K&N Engineering, Inc. (3) (4) Automobile Senior loan 07/2019 N/A (5) - (4 )
Mediaocean LLC (3) Diversified/Conglomerate Service Senior loan 08/2022 5.8 2,985 2,985
Mediaocean LLC Diversified/Conglomerate Service Senior loan 08/2020 4.9 5 5
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 6.3 10,395 10,395
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 7.8 709 709
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.5 3,888 3,888
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.5 425 425
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 7.5 276 276
Packaging Coordinators, Inc.(AndersonBrecon) (3) Containers, Packaging and Glass Senior loan 08/2021 5.3 11,939 11,830
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.5 2,027 1,865
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.7 259 202
Pasternack Enterprises, Inc. Diversified/Conglomerate Manufacturing Senior loan 12/2017 6.3 1,044 1,044
Payless ShoeSource, Inc. Retail Stores Senior loan 03/2021 5.0 1,965 999
Pentec Acquisition Sub, Inc. Healthcare, Education and Childcare Senior loan 05/2018 6.3 1,510 1,510
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.8 5,925 5,925
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.8 1,226 1,226
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2019 5.8 68 68

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SLF Loan Portfolio as of March 31, 2016 (continued)

Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Investment Type Date Rate (1) Amount Value (2)
(In thousands)
PowerPlan Holdings, Inc. (3) Utilities Senior loan 02/2022 6.3 12,000 12,000
PPT Management, LLC Healthcare, Education and Childcare Senior loan 04/2020 6.0 13,092 13,092
PPT Management, LLC Healthcare, Education and Childcare Senior loan 04/2020 6.0 30 30
Premise Health Holding Corp. (3) Healthcare, Education and Childcare Senior loan 06/2020 5.5 11,921 11,921
Pyramid Healthcare, Inc. Healthcare, Education and Childcare Senior loan 08/2019 6.8 8,396 8,396
Pyramid Healthcare, Inc. Healthcare, Education and Childcare Senior loan 08/2019 8.0 597 597
R.G. Barry Corporation Personal, Food and Miscellaneous Services Senior loan 09/2019 6.0 6,192 6,130
Reliant Pro ReHab, LLC (3) Healthcare, Education and Childcare Senior loan 06/2017 6.0 4,171 4,171
Renaissance Pharma (U.S.) Holdings Inc. (3) Healthcare, Education and Childcare Senior loan 05/2018 5.0 3,675 3,675
Renaissance Pharma (U.S.) Holdings Inc. Healthcare, Education and Childcare Senior loan 05/2018 6.5 67 67
RSC Acquisition, Inc. Insurance Senior loan 11/2022 6.3 3,444 3,444
RSC Acquisition, Inc. Insurance Senior loan 11/2022 6.3 306 306
Rubio's Restaurants, Inc (3) Retail Stores Senior loan 11/2018 6.0 5,070 5,019
Rug Doctor LLC Personal and Non Durable Consumer Products Senior loan 06/2018 6.3 8,807 8,807
Saldon Holdings, Inc. Diversified/Conglomerate Service Senior loan 09/2021 5.5 2,901 2,901
Scientific Games International, Inc. Hotels, Motels, Inns, and Gaming Senior loan 10/2020 6.0 3,915 3,804
SEI, Inc. Electronics Senior loan 07/2021 5.8 8,755 8,755
Self Esteem Brands, LLC (3) Leisure, Amusement, Motion Pictures, Entertainment Senior loan 02/2020 5.0 7,621 7,621
Severin Acquisition, LLC Diversified/Conglomerate Service Senior loan 07/2021 5.9 4,906 4,879
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 956 956
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.8 75 75
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 5,930 5,930
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 499 499
Systems Maintenance Services Holding, Inc. (3) Electronics Senior loan 10/2019 5.0 2,402 2,402
Tate's Bake Shop, Inc. (3) Beverage, Food and Tobacco Senior loan 08/2019 6.0 2,970 2,970
Teasdale Quality Foods, Inc. Grocery Senior loan 10/2020 5.3 4,639 4,630
Transaction Data Systems, Inc. Diversified/Conglomerate Service Senior loan 06/2021 5.5 4,522 4,522
W3 Co. Oil and Gas Senior loan 03/2020 5.8 2,939 2,344
Young Innovations, Inc. (3) Healthcare, Education and Childcare Senior loan 01/2019 5.3 3,824 3,824
Young Innovations, Inc. (3) Healthcare, Education and Childcare Senior loan 01/2018 6.8 187 183
$ 367,302 $ 360,900

(1) Represents the weighted average annual current interest rate as of March 31, 2016.  All interest rates are payable in cash.
(2) Represents the fair value in accordance with ASC Topic 820 – Fair Value Measurement , or ASC Topic 820. The determination of such fair value is not included in our board of directors' valuation process described elsewhere herein.
(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 March 31, 2016.  As such, no interest is being earned on this investment.

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SLF Loan Portfolio as of September 30, 2015

Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Investment Type Date Rate (1) Amount Value (2)
(In thousands)
1011778 B.C. ULC (New Red Finance/Burger King) Beverage, Food and Tobacco Senior loan 12/2021 3.8 % $ 2,271 $ 2,264
5.11, Inc. (3) Textiles and Leather Senior loan 02/2020 6.0 3,162 3,172
Acosta, Inc. Diversified/Conglomerate Service Senior loan 09/2021 4.3 2,978 2,938
ACTIVE Network, Inc. Electronics Senior loan 11/2020 5.5 1,965 1,951
Aderant North America, Inc. Diversified/Conglomerate Service Senior loan 12/2018 5.3 4,195 4,195
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 6,946 6,807
Advanced Pain Management Holdings, Inc. Healthcare, Education and Childcare Senior loan 02/2018 6.3 475 460
Advanced Pain Management Holdings, Inc. (4) Healthcare, Education and Childcare Senior loan 02/2018 N/A (5) - (23 )
Affordable Care Inc. Personal, Food and Miscellaneous Services Senior loan 12/2018 5.5 3,976 3,976
Aimbridge Hospitality, LLC Hotels, Motels, Inns, and Gaming Senior loan 10/2018 5.8 5,204 5,204
ARG IH Corporation Beverage, Food and Tobacco Senior loan 11/2020 4.8 4,370 4,385
Arise Virtual Solutions, Inc. (3) (4) Telecommunications Senior loan 12/2018 N/A (5) - (23 )
Arise Virtual Solutions, Inc. (3) Telecommunications Senior loan 12/2018 6.8 11,729 11,494
Atkins Nutritionals, Inc (3) Beverage, Food and Tobacco Senior loan 01/2019 6.3 5,872 5,879
Atrium Innovations Personal and Non Durable Consumer Products Senior loan 02/2021 4.3 3,520 3,336
BJ's Wholesale Club, Inc. Retail Stores Senior loan 09/2019 4.5 2,957 2,934
BMC Software, Inc. Electronics Senior loan 09/2020 5.0 1,895 1,729
Brickman Group Ltd. LLC Farming and Agriculture Senior loan 12/2020 4.0 1,980 1,954
C.B. Fleet Company, Incorporated Personal and Non Durable Consumer Products Senior loan 10/2020 5.4 5,630 5,630
C.B. Fleet Company, Incorporated Personal and Non Durable Consumer Products Senior loan 10/2020 5.4 696 696
CLP Healthcare Services, Inc. Healthcare, Education and Childcare Senior loan 12/2020 5.8 4,417 4,401
Connect Merger Sub, Inc. Telecommunications Senior loan 04/2020 4.8 3,935 3,820
CPI Buyer, LLC (Cole-Parmer) (3) Healthcare, Education and Childcare Senior loan 08/2021 5.5 5,955 5,925
Curo Health Services LLC (3) Healthcare, Education and Childcare Senior loan 02/2022 6.5 5,970 5,990
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 10,251 10,046
DentMall MSO, LLC Retail Stores Senior loan 07/2019 6.0 1,000 946
Dialysis Newco, Inc. Healthcare, Education and Childcare Senior loan 04/2021 4.5 2,469 2,470
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 5.5 4,614 4,384
DISA Holdings Acquisition Subsidiary Corp. Diversified/Conglomerate Service Senior loan 12/2020 6.8 96 43
EAG, INC. (Evans Analytical Group) Diversified/Conglomerate Service Senior loan 07/2017 5.0 2,245 2,245
Extreme Reach Inc. Broadcasting and Entertainment Senior loan 01/2020 6.8 5,612 5,591
Federal-Mogul Corporation Automobile Senior loan 04/2021 4.8 3,960 3,769
GSDM Holdings Corp. (3) Healthcare, Education and Childcare Senior loan 06/2019 5.3 1,782 1,782
Hygenic Corporation, The (3) Personal and Non Durable Consumer Products Senior loan 10/2020 6.0 4,515 4,515
Integrated Supply Network, LLC (3) Automobile Senior loan 02/2020 6.3 12,000 12,000
Integrated Supply Network, LLC (3) Automobile Senior loan 02/2020 6.9 734 734
Joerns Healthcare, LLC Healthcare, Education and Childcare Senior loan 05/2020 6.2 9,696 9,647
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 6,906 6,906
Julio & Sons Company Beverage, Food and Tobacco Senior loan 09/2017 6.5 254 254
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 3,865 3,749
K&N Engineering, Inc. (3) Automobile Senior loan 07/2019 5.3 183 177
K&N Engineering, Inc. (3) (4) Automobile Senior loan 07/2019 N/A (5) - (6 )
Mister Car Wash Holdings, Inc. Automobile Senior loan 08/2021 5.0 2,970 2,971
National Veterinary Associates, Inc. Personal, Food and Miscellaneous Services Senior loan 08/2021 4.8 990 991
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 6.3 10,448 10,448
Netsmart Technologies, Inc. (3) Diversified/Conglomerate Service Senior loan 02/2019 7.5 231 231
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.3 3,912 3,912
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 7.0 147 147
Northwestern Management Services, LLC Healthcare, Education and Childcare Senior loan 10/2017 6.3 47 47
Octane Fitness, LLC Leisure, Amusement, Motion Pictures, Entertainment Senior loan 10/2018 6.5 7,718 7,718
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.8 2,037 2,037
Paradigm DKD Group, LLC Buildings and Real Estate Senior loan 11/2018 6.9 292 292
Pasternack Enterprises, Inc. Diversified/Conglomerate Manufacturing Senior loan 12/2017 6.3 1,044 1,044
Payless ShoeSource, Inc. Retail Stores Senior loan 03/2021 5.0 1,975 1,580
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.5 5,955 5,955
PetVet Care Centers LLC (3) Personal, Food and Miscellaneous Services Senior loan 12/2020 5.5 646 646
PowerPlan Holdings, Inc. (3) Utilities Senior loan 02/2022 6.3 12,000 12,000
Premise Health Holding Corp. (3) Healthcare, Education and Childcare Senior loan 06/2020 5.5 11,921 11,921
Premise Health Holding Corp. (3) Healthcare, Education and Childcare Senior loan 06/2020 5.5 283 283

78

SLF Loan Portfolio as of September 30, 2015 (continued)

Current
Maturity Interest Principal/Par Fair
Portfolio Company Business Description Investment Type Date Rate (1) Amount Value (2)
(In thousands)
R.G. Barry Corporation Personal, Food and Miscellaneous Services Senior loan 09/2019 6.0 6,272 6,209
Reliant Pro ReHab, LLC (3) Healthcare, Education and Childcare Senior loan 06/2017 6.0 4,225 4,225
Renaissance Pharma (U.S.) Holdings Inc. Healthcare, Education and Childcare Senior loan 05/2018 5.0 3,758 3,758
Renaissance Pharma (U.S.) Holdings Inc. Healthcare, Education and Childcare Senior loan 05/2018 6.3 71 71
Rubio's Restaurants, Inc (3) Retail Stores Senior loan 11/2018 6.0 5,095 5,095
Rug Doctor LLC (3) Personal and Non Durable Consumer Products Senior loan 12/2016 6.3 9,769 9,769
Scientific Games International, Inc. Hotels, Motels, Inns, and Gaming Senior loan 10/2020 6.0 3,935 3,891
SEI, Inc. Electronics Senior loan 07/2021 5.8 8,799 8,711
Self Esteem Brands, LLC (3) Leisure, Amusement, Motion Pictures, Entertainment Senior loan 02/2020 5.0 7,930 7,930
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.3 960 960
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.3 75 75
Smashburger Finance LLC Beverage, Food and Tobacco Senior loan 05/2018 6.3 75 75
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 5,960 5,960
Spear Education, LLC Healthcare, Education and Childcare Senior loan 08/2019 6.0 500 500
Syncsort Incorporated (3) Electronics Senior loan 03/2019 5.8 8,860 8,860
Systems Maintenance Services Holding, Inc. (3) Electronics Senior loan 10/2019 5.0 2,415 2,415
Take 5 Oil Change, L.L.C. Automobile Senior loan 07/2018 6.3 6,647 6,647
Take 5 Oil Change, L.L.C. Automobile Senior loan 07/2018 6.3 187 187
Tate's Bake Shop, Inc. Beverage, Food and Tobacco Senior loan 08/2019 5.8 2,978 2,978
Teasdale Quality Foods, Inc. Grocery Senior loan 10/2020 5.3 4,651 4,651
Transaction Data Systems, Inc. Diversified/Conglomerate Service Senior loan 06/2021 5.5 4,545 4,545
W3 Co. Oil and Gas Senior loan 03/2020 5.8 2,954 2,516
WII Components, Inc. (3) Home and Office Furnishings, Housewares, and Durable Consumer Senior loan 07/2018 5.3 3,008 3,008
Young Innovations, Inc. (3) Healthcare, Education and Childcare Senior loan 01/2019 5.3 4,018 4,018
$ 320,583 $ 317,623

(1) Represents the weighted average annual current interest rate as of September 30, 2015.  All interest rates are payable in cash.
(2) Represents the fair value in accordance with ASC Topic 820.  The determination of such fair value is not included in our board of directors' valuation process described elsewhere herein.
(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 September 30, 2015.  As such, no interest is being earned on this investment.

We have committed to fund $140.0 million of subordinated notes and $35.0 million of LLC equity interest subscriptions to SLF. The amortized cost and fair value of the subordinated notes in SLF held by us were $86.2 million and $85.3 million, respectively, as of March 31, 2016, and $76.6 million and $76.6 million, respectively, as of September 30, 2015. The subordinated notes pay a weighted average interest rate of three-month LIBOR plus 8.0%. For the three and six months ended March 31, 2016, we earned interest income of $1.8 million and $3.4 million, respectively, on the subordinated notes. For the three and six months ended March 31, 2015, we earned interest income of $0.6 million and $1.2 million, respectively, on the subordinated notes. As of March 31, 2016 and September 30, 2015, $34.0 million and $23.2 million of our LLC equity interest subscriptions to SLF had been called and contributed. For the three and six months ended March 31, 2016, we received $1.1 million and $1.9 million, respectively, in dividend income from the SLF LLC equity interests. For the three and six months ended March 31, 2015, we received $0.3 million and $0.3 million, respectively, in dividend income from the SLF LLC equity interests.

For the three and six months ended March 31, 2016, we earned an annualized total return on our weighted average capital invested in SLF of 10.8% and 5.3%, respectively. For the three and six months ended March 31, 2015, we earned an annualized total return on our weighted average capital invested in SLF of 11.0% and 8.6%, 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 NAV of the SLF LLC equity interests.

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Below is certain summarized financial information for SLF as of March 31, 2016 and September 30, 2015 and for the three and six months ended March 31, 2016 and 2015:

As of March 31, 2016 As of September 30, 2015
(In thousands)
Selected Balance Sheet Information:
Investments, at fair value $ 360,900 $ 317,623
Cash and other assets 7,336 5,772
Receivable from investments sold 15,637 -
Total assets $ 383,873 $ 323,395
Senior credit facility $ 246,400 $ 212,300
Unamortized debt issuance costs (1) (1,719 ) (2,464 )
Payable for open trades 4,822 -
Other liabilities 634 489
Total liabilities 250,137 210,325
Subordinated notes and members' equity 133,736 113,070
Total liabilities and members' equity $ 383,873 $ 323,395

(1) On October 1, 2015, SLF adopted ASU 2015-03 which requires that debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability rather than as an asset. Adoption of ASU 2015-03 requires the changes to be applied retrospectively.

Three months ended March 31, Six months ended March 31,
2016 2015 2016 2015
(In thousands) (In thousands)
Selected Statement of Operations Information:
Interest income $ 5,649 $ 2,041 $ 11,004 $ 3,641
Fee income 22 2 22 4
Total investment income 5,671 2,043 11,026 3,645
Interest expense 4,040 1,408 7,759 2,516
Administrative service fee 115 49 200 96
Other expenses 40 23 75 48
Total expenses 4,195 1,480 8,034 2,660
Net investment income 1,476 563 2,992 985
Net realized gains (losses) on investments (430 ) - (430 ) -
Net change in unrealized appreciation (depreciation)
on investments, subordinated notes and secured borrowings 1,405 80 (2,096 ) (372 )
Net increase (decrease) in net assets $ 2,451 $ 643 $ 466 $ 613

SLF has elected to fair value the subordinated notes issued to us and RGA under Accounting Standards Codification, or ASC, Topic 825 – Financial Instruments, or ASC Topic 825. 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 each of the three and six months ended March 31, 2016, SLF recognized $1.0 million in unrealized depreciation on the subordinated notes. For each of the three and six months ended March 31, 2015, SLF recognized $0.0 million in unrealized depreciation on the subordinated notes.

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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 March 31, 2016 and September 30, 2015:

As of March 31, 2016 As of September 30, 2015
(In thousands) (In thousands)
Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value
Subordinated notes $ 98,494 $ 98,494 $ 97,509 $ 87,500 $ 87,500 $ 87,500

Contractual Obligations and Off-Balance Sheet Arrangements

A summary of our significant contractual payment obligations as of March 31, 2016 is as follows:

Payments Due by Period (In millions)
Less Than More Than
Total 1 Year 1-3 Years 3-5 Years 5 Years
2010 Debt Securitization $ 215.0 $ - $ - $ - $ 215.0
2014 Debt Securitization 246.0 - - - 246.0
SBA debentures 231.5 - - 20.0 211.5
Credit Facility 147.6 - - 147.6 -
Unfunded commitments (1) 107.1 107.1 - - -
Total contractual obligations (2) $ 947.2 $ 107.1 $ - $ 167.6 $ 672.5

(1) Unfunded commitments represent all amounts unfunded as of March 31, 2016. 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 March 31, 2016, subject to the terms of each loan's respective credit agreement.

(2) Total contractual obligations exclude $0.3 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 March 31, 2016 and September 30, 2015, we had outstanding commitments to fund investments totaling $107.1 million and $121.5 million, respectively. We have commitments of up to $54.8 million and $75.2 million to SLF as of March 31, 2016 and September 30, 2015, respectively, that may be contributed primarily for the purpose of funding new investments approved by the SLF investment committee.

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.

Under the Administration Agreement, the Administrator furnishes us with office facilities and equipment, provides us with clerical, bookkeeping and record keeping services at such facilities and provides us with other administrative services necessary to conduct our day-to-day operations. 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 are 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.

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Distributions

We intend to make quarterly distributions to our stockholders as determined by our board of directors. For additional details on distributions, see “Income taxes” in Note 2 to our consolidated financial statements.

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 ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions.

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. For example, permanent differences in classification may result from the treatment of distributions paid from short-term gains as ordinary income dividends for tax purposes. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

To the extent our taxable earnings fall below the total amount of our distributions for any tax 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, 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.

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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. Each of Mr. Lawrence Golub, our chairman, 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 a staffing agreement, or the Staffing Agreement, Golub Capital LLC 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 LLC will make available to GC Advisors experienced investment professionals and access to the senior investment personnel of Golub Capital LLC 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.

· During calendar year 2016, the Golub Capital Employee Grant Program Rabbi Trust (the "Trust") purchased approximately $1.5 million, or 95,035 shares, of the Company, for the purpose of awarding incentive compensation to employees of Golub Capital. During calendar year 2015, the Trust purchased approximately $16.0 million, or 952,051 shares, of the Company, for the purpose of awarding incentive compensation to employees of Golub Capital. During calendar year 2014, the Trust purchased approximately $14.5 million, or 835,271 shares, of the Company, for the purpose of awarding incentive compensation to employees of Golub Capital.

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. For example, GC Advisors presently serves as the investment adviser to Golub Capital Investment Corporation, a private business development company that commenced operations on December 31, 2014, which primarily focuses on investing in senior secured and one stop loans. In addition, our officers and directors serve in similar capacities for Golub Capital Investment Corporation. 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 General Corporation Law of the State of Delaware.

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Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with 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.

Valuation methods may include comparisons of the portfolio companies to peer companies that are public, determination of the enterprise value of a portfolio company, discounted cash flow analysis and a market interest rate approach. 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. 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.

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.

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We follow 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. 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 six months ended March 31, 2016 and 2015. 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 the number of portfolio companies) 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 March 31, 2016 and September 30, 2015, with the exception of money market funds included in cash and cash equivalents (Level 1 investments) and investments measured at fair value using the NAV, were valued using Level 3 inputs of the fair value hierarchy.

When determining fair value of Level 3 debt and equity investments, 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

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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 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 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 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 March 31, 2016 and September 30, 2015 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. Loan origination fees, original issues discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income We record prepayment premiums on

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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 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 is measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in our consolidated statements 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 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 issue 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 are paid and, in our management’s judgment, are likely to remain current. The total fair value of our non-accrual loans was $4.3 million as of March 31, 2016 and $6.5 million as of September 30, 2015. Subsequent to March 31, 2016, we completed the sale of our non-accrual debt investments in Avatar International, LLC and received proceeds slightly in excess of the fair value of our debt investments at March 31, 2016.

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: See “Consolidated Results of Operations – Expenses – Excise Tax Expense.”

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including 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 March 31, 2016 and September 30, 2015, the weighted average LIBOR floor on the loans subject to floating interest rates was 1.05% and 1.08%, 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 and the Credit Facility has a floating interest rate provision based on one-month LIBOR that resets daily. As of March 31, 2016 and September 30, 2015, the weighted average LIBOR floor on the secured borrowings, which reset quarterly, was 1.00% and 1.00%, 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 statements of financial condition as of March 31, 2016 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 $ (215 ) $ (1,521 ) $ 1,306
Up 50 basis points 1,930 3,043 (1,113 )
Up 100 basis points 9,121 6,088 3,033
Up 150 basis points 16,653 9,132 7,521
Up 200 basis points 24,187 12,176 12,011

Although we believe that this analysis is indicative of our sensitivity to interest rate changes as of March 31, 2016, 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 and the Credit Facility, 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.

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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) and 15d–15(e) of 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 disclosed 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.

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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.

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Item 6: Exhibits.

EXHIBIT INDEX

Number Description
10.1 Second Amendment to Amended and Restated Loan and Servicing Agreement, dated as of March 1, 2016, by and among Golub Capital BDC Funding LLC, as the borrower; Golub Capital BDC, Inc., as the transferor and servicer; certain institutional lenders identified on the signature pages thereto; Wells Fargo Bank, N.A., as the swingline lender, Wells Fargo Bank, N.A., as the collateral agent, account bank and collateral custodian, and Wells Fargo Securities, LLC, as the administrative agent.*
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

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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:     May 5, 2016 By /s/ David B. Golub
David B. Golub
Chief Executive Officer
(Principal Executive Officer)
Dated:    May 5, 2016 By /s/ Ross A. Teune
Ross A. Teune
Chief Financial Officer
(Principal Accounting and Financial Officer)

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TABLE OF CONTENTS